|
|
|
|
|
|
|
|
|
|
Cayman Islands
|
7372
|
Not Applicable
|
(State or Other Jurisdiction of
Incorporation or Organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer
Identification Number) |
|
|
|
Floor 8, Building 12
Phase III of ChuangZhiTianDi
333 Songhu Road
Yangpu District, Shanghai
People’s Republic of China
+86-400-632-6626
|
|
|
|
|
|
|
|
|
|
Title of each class
of securities to be registered |
Proposed maximum
aggregate offering price(2)(3) |
Amount of
registration fee |
Class A ordinary shares, par value US$0.0001 per share(1)
|
US$100,000,000
|
US$12,980
|
(1)
|
American depositary shares, or ADSs, issuable upon deposit of the Class A ordinary shares registered hereby, will be registered under a separate registration statement on Form F-6 (Registration No. 333- ). Each ADS represents Class A ordinary shares.
|
(2)
|
Includes (a) Class A ordinary shares represented by ADSs that are issuable upon the exercise of the underwriters’ over-allotment option and (b) all Class A ordinary shares represented by ADSs initially offered and sold outside the United States that may be resold from time to time in the United States either as part of the distribution or within 40 days after the later of the effective date of this registration statement and the date the securities are first bona fide offered to the public.
|
(3)
|
Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.
|
|
|
|
|
|
|
Price to
Public |
|
Underwriting
Discounts and Commissions(1) |
|
Proceeds to Us
|
Per ADS
|
US$
|
|
US$
|
|
US$
|
Total
|
US$
|
|
US$
|
|
US$
|
(1)
|
See “Underwriters” beginning on page 189 of this prospectus for additional information regarding underwriting compensation.
|
|
MORGAN STANLEY
|
BofA SECURITIES
|
|
Page
|
|
Page
|
•
|
Social, Education, Entertainment and Gaming, which includes one-to-one and group video and voice chat, remote classroom, live interactive streaming and video or voice interactions in multi-player games.
|
•
|
Enterprise Solutions, which includes video conferencing and engagement-oriented workflows such as sales, customer support and consultation.
|
•
|
Internet of Things (IoT), which includes the use of real-time video and voice engagement across IoT devices to optimize operations, enhance public safety and increase employee productivity.
|
•
|
Public Internet is not Ideal for RTE. The public internet as it stands is an open and best efforts network with no assurance of service quality, which is not ideal for RTE. Network conditions vary across time of day,
|
•
|
Multi-way RTE is Significantly more Complex than One-way Content Delivery. Real-time engagement is by definition at least two-way and involves transmission of data back and forth between users under varying network conditions, sometimes across distant geographies. As more users join an engagement, the amount of data transmitted and the associated technical complexity increase significantly. Even more challenging is the low latency requirement. To deliver effective real-time video or voice engagement, multiple data streams need to be created, transmitted, synchronized and consumed simultaneously with millisecond end-to-end latency.
|
•
|
Convergence of Adoption Trends. The pace of RTE-PaaS adoption varies across regions. In the United States, enterprise applications drive the market, with digital transformation, omni-channel customer interactions and integrated platform tools being the key technology growth drivers. In China and other countries in the Asia Pacific region, consumer applications in social, education, entertainment and gaming drive adoption of RTE-PaaS solutions. Over time, it is expected that adoption across enterprise and consumer use cases will converge globally.
|
•
|
Organic Growth from Applications Built upon RTE-PaaS solutions. Applications that RTE-PaaS solutions enable have benefited from strong organic growth as end users demand a more immersive and high-quality video and voice engagement experience. As the number of applications built upon RTE proliferates and the end-user base and usage of these applications continue to increase, the demand for RTE-PaaS should continue to expand.
|
•
|
Rollout of 5G Will Likely Accelerate Innovation and Proliferation of RTE Use Cases. As 5G networks continue to be deployed, internet infrastructure will improve generally and, in particular, end users will benefit from a better connection between their devices and the internet backbone. This will allow RTE-PaaS providers to significantly improve the quality of the end-user experience, which could drive popularity and usage of existing use cases and enable new ones, particularly centered on real-time video engagement.
|
•
|
Further Conversion from In-house. In-house developers often lack the requisite expertise to develop RTE solutions, especially real-time video engagement. Even where the expertise exists, building the underlying infrastructure and maintaining compatibility with various hardware and software is time-consuming and expensive. With the rapid pace at which organizations are required to enhance their software applications to stay competitive and meet the evolving needs of their end users, RTE-PaaS solutions are expected to continue to displace in-house developed technologies.
|
•
|
Quality and Reliability. The most important reason why developers choose the Agora platform is the quality and reliability of real-time engagement we power. Our platform delivers industry-leading performance around latency and media quality, and works under challenging network conditions with up to 70% packet loss. Our customers can take comfort from our service level agreements that provide assurances on availability (uptime) levels and, increasingly, experience levels such as latency.
|
•
|
Comprehensive Features. We offer a breadth of product features that go beyond just enabling the video and voice aspects of real-time engagement. We provide a spectrum of building blocks through hundreds of APIs, use case products and third-party plug-ins that improve our customers’ offerings and enhance end-user experience, such as content moderation in social applications, interactive whiteboard in education and voice masking in gaming. Developers often find that they can build a significant portion of their applications with our software modules and services.
|
•
|
Easy to Integrate. Our SDK is designed to be easy to learn, simple to embed and highly customizable. We also provide detailed documentation, programming tools and a wide range of code samples. Compared with
|
•
|
Scalability. Our advanced architecture and global infrastructure allow applications to scale rapidly to serve millions of end users across geographies while maintaining the quality of the user experience.
|
•
|
Cost Efficiency. Our usage-based pricing model with no upfront fee allows customers to minimize initial investment and efficiently manage costs. Given our scale and the fact that peak usage of applications that use our platform usually occur at different times, we can support more usage with the same bandwidth, enabling us to offer our customers attractive pricing. We believe our ability to offer this benefit will be enhanced as we continue to scale.
|
•
|
Compatibility. Our SDK is broadly compatible with major operating systems, development frameworks and programming languages, and a wide variety of phones, PCs and other connected devices, including older and less sophisticated models. Our SDK is also designed to be compact in size and efficient in CPU usage and power consumption.
|
•
|
Transparency. Our platform is built with real-time analytics at the core, which allow customers to easily monitor and analyze the quality of each video and voice engagement session, manage billings and usage, and gain clear insights on user experience.
|
•
|
RTE-PaaS Pioneer and Global Leader. We pioneered RTE-PaaS and we are the global leader in this rapidly growing industry. Our platform is developed by a talented engineering team led by our founder and chief executive officer with extensive expertise in real-time engagement technology. As the industry leader we power more and more minutes for a growing number of customers and end users, which enables us to further improve the quality of experience of our products and in turn attract even more customers and end users. We believe the time and resources required to replicate our level of quality will only increase as we continue to scale our business.
|
•
|
Advanced Network Architecture. The SD-RTN is designed to handle the most demanding task in real-time engagement: real-time video. It runs on commodity hardware and adopts a globally distributed and all-software architecture, instead of relying on a few physical or private transmission lines. We believe our architecture is cost-effective, scalable, resilient and allows for highly flexible routing optimization, making it particularly suitable for enabling real-time video and voice engagement at massive scale.
|
•
|
Pure-Play and Independent Platform. Our singular focus on real-time engagement means we prioritize our entire platform for minimizing latency, which is challenging for a full-service cloud provider given the competing needs of its non-real-time products. By being focused we are able to “go deeper” and offer more comprehensive features, more control and more visibility, thereby making us more developer-friendly. Our positioning as an independent platform is also attractive to developers and partners who want to avoid conflicts of interest or reliance on a single cloud provider.
|
•
|
Developer Mind Share. We have cultivated a large and engaged developer community, with more than 180,000 applications that have registered on our platform from our inception through March 31, 2020. We believe we are recognized by developers as the leading platform for real-time engagement. We set the standard for integrating and operating real-time engagement within software applications in China, and increasingly in other markets.
|
•
|
Loyal Customer Base. Once developers have integrated our SDK and experienced the quality and reliability of our platform, we believe they are less inclined to try alternatives and incur potentially high switching cost. We rarely lose customers to competitors and their loyalty is reflected in our Constant Currency Dollar-Based Net Expansion Rate, which was 133% and 131% for 2018 and 2019, respectively. Our customer Net Promoter Score was 64 in May 2020, according to a customer survey conducted by us.
|
•
|
investing in our technology;
|
•
|
growing our developer community;
|
•
|
investing in our partnership ecosystem;
|
•
|
expanding our focus on enterprises; and
|
•
|
accelerating our international expansion.
|
•
|
If our market does not grow as we expect, or if we cannot expand our services to meet the demands of this market, our revenue may decline, or fail to grow, and we may incur operating losses.
|
•
|
Our operating results and growth prospects depend on acquiring and retaining customers and increasing usage of customers’ applications that integrate our products.
|
•
|
The COVID-19 pandemic has severely disrupted our business and operations and may continue to do so.
|
•
|
The market in which we participate is competitive, and if we do not compete effectively, our business, operating results and financial condition could be harmed.
|
•
|
We may not successfully manage growth.
|
•
|
Our limited operating history and our history of operating losses makes it difficult to evaluate our current business and prospects and may increase the risks associated with your investment.
|
•
|
If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, and changing customer needs, requirements or preferences, our products may become less competitive.
|
•
|
We rely on contractual arrangements with our VIE and its shareholders to operate our business, which may not be as effective as direct ownership in providing operational control and could adversely affect our business, operating results and financial condition.
|
•
|
If the PRC government deems that the contractual arrangements in relation to our VIE do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.
|
•
|
Complexities of, and changes in, the political, legal, regulatory and economic policies of the PRC government could adversely affect our business, operating results and financial condition, and may result in our inability to sustain our growth and expansion strategies.
|
•
|
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 A ordinary shares and ADSs may view as beneficial.
|
•
|
The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to direct how the Class A ordinary shares which are represented by your ADSs are voted.
|
•
|
As a foreign private issuer and “emerging growth company” as defined under SEC rules, and as a “controlled company” as defined under the Nasdaq Stock Market corporate governance rules, we are exempt from a number of rules under the U.S. securities laws and the Nasdaq Stock Market corporate governance rules, and are permitted to file less information with the SEC than U.S. domestic public companies, all of which may limit the information available to holders of the ADSs.
|
(1)
|
Mr. Zhao, our founder, chief executive officer and chairman, holds 90% of the equity interests in our VIE, and Ms. Wenjing Ma, a nominee shareholder, holds the remaining 10%.
|
•
|
“ADSs” refer to American depositary shares, each of which represents of our Class A ordinary shares;
|
•
|
“ADRs” refer to the American depositary receipts that evidence our ADSs;
|
•
|
“Agora,” “we,” “us,” “our company” and “our” refer to Agora, Inc., a Cayman Islands exempted company and its subsidiaries and, in the context of describing our operations and consolidated financial information, also include our VIE.
|
•
|
“China” or “PRC” refer to the People’s Republic of China, excluding, for the purposes of this prospectus only, Taiwan, Hong Kong and Macau;
|
•
|
“Class A ordinary shares” refer to our Class A ordinary shares, par value US$0.0001 per share;
|
•
|
“Class B ordinary shares” refer to our Class B ordinary shares, par value US$0.0001 per share;
|
•
|
“RMB” and “Renminbi” refers to the legal currency of China; and
|
•
|
“US$,” “U.S. dollars,” or “dollars” refer to the legal currency of the United States.
|
Offering price
|
|
We currently estimate that the initial public offering price will be between US$ and US$ per ADS.
|
|
|
|
ADSs offered by us
|
|
ADSs (or ADSs if the underwriters exercise their over-allotment option in full).
|
|
|
|
ADSs outstanding immediately after this offering
|
|
ADSs (or ADSs if the underwriters exercise their over-allotment option in full).
|
|
|
|
Class A ordinary shares to be outstanding immediately after this offering
|
|
shares (or shares if the underwriters exercise their over-allotment option in full).
|
|
|
|
Class B ordinary shares to be outstanding immediately after this offering
|
|
shares.
|
|
|
|
Total Class A ordinary shares and Class B ordinary shares to be outstanding immediately after this offering
|
|
shares (or shares if the underwriters exercise their over-allotment option in full).
|
|
|
|
The ADSs
|
|
Each ADS represents Class A ordinary shares.
The depositary will be the holder of the underlying Class A ordinary shares represented by the ADSs and you will have the rights of an ADR holder as provided in the deposit agreement among us, the depositary and registered holders and beneficial owners of ADSs from time to time.
You may surrender your ADSs to the depositary to withdraw the underlying Class A ordinary shares represented by your ADSs. The depositary will charge you a fee for any such exchange.
We may amend or terminate the deposit agreement for any reason without your consent. Any amendment that imposes or increases fees or charges or which materially prejudices any substantial existing right you have as an ADS holder will not become effective as to outstanding ADSs until 30 days after notice of the amendment is given to ADS holders. If an amendment becomes effective, you will be bound by the deposit agreement as amended if you continue to hold your ADSs.
To better understand the terms of the ADSs, see the section of this prospectus captioned “Description of American Depositary Shares.” We also encourage you to read the deposit agreement, which is an exhibit to the registration statement that includes this prospectus.
|
|
|
|
Over-allotment option
|
|
We have granted to the underwriters an option, exercisable within 30 days from the date of this prospectus, to purchase up to an aggregate of additional ADSs at the initial public offering price, less underwriting discounts and commissions.
|
|
|
|
Use of proceeds
|
|
We estimate that we will receive net proceeds of approximately US$ million from this offering (or US$ million if the underwriters exercise their over-allotment option in full), assuming an initial public offering price of US$ per ADS, the mid-point of the price range shown on the front cover of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
The principal purposes of this offering are to create a public market for our shares, increase our visibility in our markets and facilitate our future access to the public equity markets for us and our shareholders. We intend to use the net proceeds of this offering for research and development, marketing and branding, investment in technology infrastructure as well as for working capital and other general corporate purposes. See the section of this prospectus captioned “Use of Proceeds” for more information.
|
|
|
|
Voting rights
|
|
Upon the completion of this offering, our issued and outstanding share capital will consist of Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. Each Class A ordinary share is entitled to one vote, and each Class B ordinary share is entitled to 20 votes and is convertible into one Class A ordinary share. Following this offering, the issued and outstanding Class B ordinary shares, all of which will be held by our chief executive officer, will represent approximately % of the voting power of our issued and outstanding share capital. See the section of this prospectus captioned “Description of Share Capital.”
|
|
|
|
Lock-up
|
|
We and our directors and executive officers and the holders of substantially all of our equity interests including our shares and options to acquire our shares have agreed with the underwriters, subject to certain exceptions, not to sell, transfer or otherwise dispose of any ADSs, ordinary shares or similar securities or any securities convertible into or exchangeable or exercisable for our ordinary shares or ADSs, for a period of 180 days after the date of this prospectus. See the sections of this prospectus captioned “Shares Eligible for Future Sale” and “Underwriters.”
|
|
|
|
Risk factors
|
|
See the section of this prospectus captioned “Risk Factors” and other information included in this prospectus for a discussion of the risks related to investing in the ADSs. You should carefully consider these risks before deciding to invest in our ADSs.
|
|
|
|
Listing
|
|
We have applied to list the ADSs on the Nasdaq Global Select Market under the symbol “API.” Our Class A ordinary shares will not be listed on any exchange or quoted for trading on any over-the-counter trading system.
|
|
|
|
Payment and settlement
|
|
The underwriters expect to deliver the ADSs against payment on , 2020, through the facilities of the Depository Trust Company, or DTC.
|
|
|
|
Depositary
|
|
.
|
|
|
|
Directed ADS Program
|
|
At our request, the underwriters have reserved up to 5% of the ADSs offered by this prospectus, for sale at the initial public offering price to our customers and non-executive employees, to the extent permitted by local securities laws and regulations. If purchased by these persons, these shares will not be subject to a lock-up restriction. See the section of this prospectus captioned “Underwriters—Directed ADS Program.”
|
•
|
43,499,845 ordinary shares issuable upon the vesting of outstanding options; and
|
•
|
911,035 ordinary shares reserved for future issuance under our 2014 Equity Incentive Plan, or the 2014 Plan.
|
•
|
the re-designation of 76,179,938 ordinary shares beneficially owned by our chief executive officer into Class B ordinary shares on a one-for-one basis immediately prior to the completion of this offering;
|
•
|
the re-designation of all of the remaining issued and outstanding ordinary shares (that are not beneficially owned by our chief executive officer) into Class A ordinary shares on a one-for-one basis immediately prior to the completion of this offering;
|
•
|
the automatic conversion and the re-designation of all of our issued and outstanding preferred shares on a one-for-one basis into Class A ordinary shares immediately prior to the completion of this offering;
|
•
|
the completion of the Corporate Reorganization through which Agora, Agora IO and their shareholders entered into a share swap agreement and undertook mutual share repurchases, ultimately resulting in Agora IO becoming a wholly owned subsidiary of Agora and Agora becoming wholly owned by former Agora IO shareholders, as further described in the section of this prospectus captioned “Corporate History and Structure”; and
|
•
|
no exercise of the underwriters’ over-allotment option.
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands, except for share and per share data)
|
||||||||||||||
Real-time engagement service revenues
|
$
|
43,199
|
|
|
$
|
63,925
|
|
|
$
|
13,287
|
|
|
$
|
35,446
|
|
Other revenues
|
458
|
|
|
503
|
|
|
75
|
|
|
114
|
|
||||
Total revenues
|
43,657
|
|
|
64,429
|
|
|
13,362
|
|
|
35,560
|
|
||||
Cost of revenues(1)
|
(12,635
|
)
|
|
(20,417
|
)
|
|
(4,152
|
)
|
|
(11,082
|
)
|
||||
Gross profit
|
31,022
|
|
|
44,011
|
|
|
9,211
|
|
|
24,478
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development expenses(1)
|
(14,426
|
)
|
|
(23,623
|
)
|
|
(4,200
|
)
|
|
(11,688
|
)
|
||||
Sales and marketing expenses(1)
|
(11,986
|
)
|
|
(19,408
|
)
|
|
(4,006
|
)
|
|
(6,002
|
)
|
||||
General and administrative expenses(1)
|
(5,373
|
)
|
|
(7,177
|
)
|
|
(1,562
|
)
|
|
(3,545
|
)
|
||||
Total operating expenses
|
(31,785
|
)
|
|
(50,208
|
)
|
|
(9,768
|
)
|
|
(21,236
|
)
|
||||
Other operating income
|
1,025
|
|
|
108
|
|
|
5
|
|
|
23
|
|
||||
Income (loss) from operations
|
263
|
|
|
(6,089
|
)
|
|
(552
|
)
|
|
3,266
|
|
||||
Exchange gain (loss)
|
(21
|
)
|
|
87
|
|
|
(18
|
)
|
|
(7
|
)
|
||||
Interest income
|
239
|
|
|
626
|
|
|
43
|
|
|
97
|
|
||||
Income (loss) before income taxes
|
481
|
|
|
(5,376
|
)
|
|
(528
|
)
|
|
3,356
|
|
||||
Income taxes
|
(105
|
)
|
|
(801
|
)
|
|
(190
|
)
|
|
(369
|
)
|
||||
Net income (loss)
|
376
|
|
|
(6,177
|
)
|
|
(718
|
)
|
|
2,987
|
|
||||
Less: cumulative undeclared dividends on convertible redeemable preferred shares
|
(9,961
|
)
|
|
(9,961
|
)
|
|
(2,490
|
)
|
|
(3,399
|
)
|
||||
Less: accretion on convertible redeemable preferred shares to redemption value
|
(33,235
|
)
|
|
(50,715
|
)
|
|
(10,179
|
)
|
|
(35,964
|
)
|
||||
Net income (loss) attributable to ordinary shareholders
|
$
|
(42,820
|
)
|
|
$
|
(66,854
|
)
|
|
$
|
(13,387
|
)
|
|
$
|
(36,376
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(749
|
)
|
|
(358
|
)
|
|
321
|
|
|
(501
|
)
|
||||
Total comprehensive income (loss) attributable to Agora, Inc.’s ordinary shareholders
|
(43,569
|
)
|
|
(67,212
|
)
|
|
(13,066
|
)
|
|
(36,877
|
)
|
||||
Net loss per share attributable to Agora, Inc.’s ordinary shareholders—basic and diluted(2)
|
(0.39
|
)
|
|
(0.58
|
)
|
|
(0.12
|
)
|
|
(0.30
|
)
|
||||
Weighted average number of ordinary shares—basic and diluted(2)
|
109,141,311
|
|
|
115,716,392
|
|
|
113,245,308
|
|
|
119,882,136
|
|
||||
Pro forma basic earnings per ordinary share (unaudited)(3)
|
|
|
(0.02
|
)
|
|
|
|
0.01
|
|
||||||
Pro forma diluted earnings per ordinary share (unaudited)(3)
|
|
|
(0.02
|
)
|
|
|
|
0.01
|
|
||||||
Denominator for pro forma basic earnings per ordinary share (unaudited)(3)
|
|
|
283,571,873
|
|
|
|
|
295,848,199
|
|
||||||
Denominator for pro forma diluted earnings per ordinary share (unaudited)(3)
|
|
|
283,571,873
|
|
|
|
|
331,484,554
|
|
(1)
|
Share-based compensation expenses were allocated to cost of revenue and operating expenses as follows:
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands)
|
||||||||||||||
Cost of revenues
|
$
|
50
|
|
|
$
|
80
|
|
|
$
|
19
|
|
|
$
|
31
|
|
Research and development expenses
|
920
|
|
|
1,473
|
|
|
327
|
|
|
292
|
|
||||
Sales and marketing expenses
|
975
|
|
|
1,654
|
|
|
363
|
|
|
485
|
|
||||
General and administrative expenses
|
905
|
|
|
1,046
|
|
|
221
|
|
|
639
|
|
||||
Total share-based compensation expenses
|
$
|
2,850
|
|
|
$
|
4,253
|
|
|
$
|
930
|
|
|
$
|
1,447
|
|
(2)
|
See Note 14 to our consolidated financial statements and Note 14 to our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus for an explanation of the calculation of our net income (loss) per share attributable to ordinary shareholders—basic and diluted.
|
(3)
|
See Note 17 to our consolidated financial statements and Note 17 to our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus for an explanation of the calculation of our pro forma net income (loss) per share attributable to ordinary shareholders—basic and diluted.
|
|
Years Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands)
|
||||||||||||||
Net cash generated from (used in) operating activities
|
$
|
536
|
|
|
$
|
706
|
|
|
$
|
3,619
|
|
|
$
|
(919
|
)
|
Net cash used in investing activities
|
(3,773
|
)
|
|
(3,353
|
)
|
|
(5,951
|
)
|
|
(2,496
|
)
|
||||
Net cash provided by financing activities
|
65,772
|
|
|
—
|
|
|
—
|
|
|
49,769
|
|
||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted shares
|
(556
|
)
|
|
(269
|
)
|
|
194
|
|
|
(303
|
)
|
||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
61,979
|
|
|
(2,915
|
)
|
|
(2,139
|
)
|
|
46,050
|
|
||||
Cash, cash equivalents and restricted cash at beginning of year
|
46,619
|
|
|
108,598
|
|
|
108,598
|
|
|
105,683
|
|
||||
Cash, cash equivalents and restricted cash at end of year
|
108,598
|
|
|
105,683
|
|
|
106,459
|
|
|
151,733
|
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2019
|
||
Dollar-Based Net Expansion Rate(1)
|
135
|
%
|
|
127
|
%
|
Constant Currency Dollar-Based Net Expansion Rate(2)
|
133
|
%
|
|
131
|
%
|
|
As of and for the Year Ended December 31,
|
|
As of and for the Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands, except values)
|
||||||||||||||
Active customers(3)
|
586
|
|
|
1,041
|
|
|
678
|
|
|
1,176
|
|
||||
Adjusted EBITDA(4)
|
$
|
4,035
|
|
|
$
|
31
|
|
|
$
|
720
|
|
|
$
|
5,458
|
|
Free Cash Flow(5)
|
$
|
(1,725
|
)
|
|
$
|
(4,096
|
)
|
|
$
|
2,855
|
|
|
$
|
(3,416
|
)
|
(1)
|
Our Dollar-Based Net Expansion Rate compares the revenue from active customers in a year to the prior year. To calculate the Dollar-Based Net Expansion Rate, we first identify active customers in a year that were also active customers in the prior year. The Dollar-Based Net Expansion Rate is the quotient obtained by dividing the revenue generated from such customers in a year by the revenue generated from the same customers in the prior year.
|
(2)
|
Our Constant Currency Dollar-Based Net Expansion Rate is calculated the same way as our Dollar-Based Net Expansion Rate but using fixed exchange rates to remove the impact of foreign currency translations. We believe Constant Currency Dollar-Based Net Expansion Rate facilitates operating performance comparisons on a period-to-period basis as we do not consider the impact of foreign currency fluctuations to be indicative of our core operating performance.
|
(3)
|
We define an active customer at the end of any particular period as an organization or individual developer from which we generated more than US$100 of revenue during the preceding 12 months. We count customers based on unique customer account identifiers. Generally, one software application uses the same customer account identifier throughout its life cycle while one account may be used for multiple applications.
|
(4)
|
To provide investors with additional information regarding our financial results, we have disclosed in the table above and elsewhere in this prospectus Adjusted EBITDA, a non-GAAP financial measure that we calculate as net income (loss) before exchange gain (loss), interest income, income taxes, depreciation and amortization, and adjusted to exclude the effects of share-based compensation expense. We have provided a reconciliation below of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure.
|
•
|
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
|
•
|
Adjusted EBITDA does not reflect changes in exchange gain (loss);
|
•
|
Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
|
•
|
Adjusted EBITDA does not consider the potentially dilutive impact of share-based compensation;
|
•
|
Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and
|
•
|
other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands)
|
||||||||||||||
Net income (loss)
|
$
|
376
|
|
|
$
|
(6,177
|
)
|
|
$
|
(718
|
)
|
|
$
|
2,987
|
|
Excluding:
|
|
|
|
|
|
|
|
||||||||
Exchange gain (loss)
|
(21
|
)
|
|
87
|
|
|
(18
|
)
|
|
(7
|
)
|
||||
Interest income
|
239
|
|
|
626
|
|
|
43
|
|
|
97
|
|
||||
Income taxes
|
(105
|
)
|
|
(801
|
)
|
|
(190
|
)
|
|
(369
|
)
|
||||
Depreciation and amortization
|
922
|
|
|
1,868
|
|
|
342
|
|
|
745
|
|
||||
Share-based compensation expense
|
2,850
|
|
|
4,253
|
|
|
930
|
|
|
1,447
|
|
||||
Adjusted EBITDA
|
$
|
4,035
|
|
|
$
|
31
|
|
|
$
|
720
|
|
|
$
|
5,458
|
|
(5)
|
To provide investors with additional information regarding our financial results, we have also disclosed in the table above and elsewhere in this prospectus free cash flow, a non-GAAP financial measure that we calculate as net cash generated from (used in) operating activities less cash used in purchases of property and equipment. We have provided a reconciliation of free cash flow to net cash generated from (used in) operating activities, the most directly comparable GAAP financial measure.
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands)
|
||||||||||||||
Net cash generated from (used in) operating activities
|
$
|
536
|
|
|
$
|
706
|
|
|
$
|
3,619
|
|
|
$
|
(919
|
)
|
Purchases of property and equipment
|
(2,261
|
)
|
|
(4,802
|
)
|
|
(764
|
)
|
|
(2,496
|
)
|
||||
Free cash flow
|
(1,725
|
)
|
|
(4,096
|
)
|
|
2,855
|
|
|
(3,416
|
)
|
||||
Net cash used in investing activities(6)
|
(3,773
|
)
|
|
(3,353
|
)
|
|
(5,951
|
)
|
|
(2,496
|
)
|
||||
Net cash provided by financing activities
|
65,772
|
|
|
—
|
|
|
—
|
|
|
49,769
|
|
(6)
|
Net cash used in investing activities includes payments for purchases of property and equipment, which is also included in our calculation of free cash flow.
|
|
As of March 31, 2020
|
||||||||
|
Actual
|
|
Pro Forma(1)
|
|
Pro Forma As Adjusted(2)
|
||||
|
(US$ in thousands)
|
||||||||
Cash and cash equivalents
|
$
|
151,653
|
|
|
$
|
151,653
|
|
|
|
Working capital(3)
|
155,851
|
|
|
155,851
|
|
|
|
||
Total assets
|
197,154
|
|
|
197,154
|
|
|
|
||
Total liabilities
|
30,543
|
|
|
30,543
|
|
|
|
||
Total Mezzanine equity
|
325,934
|
|
|
—
|
|
|
|
||
Total shareholders’ equity (deficit)
|
(159,323
|
)
|
|
166,611
|
|
|
|
(1)
|
The pro forma consolidated balance sheet data gives effect to (a) the re-designation of ordinary shares beneficially owned by our chief executive officer into Class B ordinary shares on a one-for-one basis immediately prior to the completion of this offering, (b) the re-designation of all of the remaining ordinary shares into Class A ordinary shares on a one-for-one basis immediately prior to the completion of this offering and (c) the automatic conversion and the re-designation of all of our issued and outstanding preferred shares on a one-for-one basis into Class A ordinary shares immediately prior to the completion of this offering.
|
(2)
|
The pro forma as adjusted balance sheet data gives effect to (a) the pro forma adjustments described in footnote (1) above and (b) the issuance and sale of Class A ordinary shares in the form of ADSs by us in this offering at an assumed initial public offering price of US$ per ADS, the mid-point of the price range shown on the front cover of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. The pro forma as adjusted information provided above is illustrative only and will depend on the actual initial public offering price and other terms of our initial public offering determined in connection with the pricing of this offering. Each US$1.00 increase (decrease) in the assumed public offering price of US$ per ADS, which is the mid-point of the price range shown on the front cover of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash and cash equivalents, working capital, total assets and total shareholders’ equity (deficit) by US$ million, assuming that the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Each increase (decrease) of 1.0 million ADSs in the number of ADSs offered by us, as set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash and cash equivalents, working capital, total assets and total shareholders’ equity (deficit) by US$ million, assuming no change in the assumed initial public offering price of US$ per ADS, the mid-point of the price range shown on the front cover of this prospectus per ADS, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
|
(3)
|
Working capital is defined as current assets less current liabilities.
|
•
|
PaaS providers, such as Tencent in China and TokBox (part of Vonage Holdings Corp.) and Twilio Inc. in the United States, as well as smaller software companies, which compete with all or portions of our platform and products;
|
•
|
open-source projects, such as WebRTC, which offer capabilities that compete with some of the functionalities in our SDK; and
|
•
|
network operators or cloud providers that offer private lines on which similar functionalities to ours can be built.
|
•
|
failure to predict market demand accurately in terms of functionality and a failure to supply products that meet this demand in a timely fashion;
|
•
|
defects, errors, or failures;
|
•
|
negative publicity about our platform’s performance or effectiveness;
|
•
|
changes in the legal or regulatory requirements, or increased legal or regulatory scrutiny, adversely affecting our platform;
|
•
|
emergence of a competitor that achieves market acceptance before we do;
|
•
|
delays in releasing enhancements to our platform to the market; and
|
•
|
introduction or anticipated introduction of competing products by our competitors.
|
•
|
our ability to attract, retain and increase revenue from customers;
|
•
|
fluctuations in the amount of revenue from our customers;
|
•
|
market acceptance of our products and our ability to introduce new products and enhance existing products;
|
•
|
end-user demand for applications with real-time engagement features;
|
•
|
competition and the actions of our competitors, including pricing changes and the introduction of new products, services and geographies;
|
•
|
our ability to control costs and operating expenses, including the fees that we pay network- and cloud-service providers for data delivery;
|
•
|
changes in our pricing as a result of our optimization efforts or otherwise;
|
•
|
reductions in pricing as a result of negotiations with our larger customers;
|
•
|
the rate of expansion and productivity of our sales force;
|
•
|
change in the mix of products that our customers use;
|
•
|
changes in end-user and customer demand as end-users increase and decrease their time online due to the imposition or easing of stay-at-home, travel and other government mandates or changes in end-user or customer demand for our products in response to the COVID-19 pandemic;
|
•
|
the expansion of our business, particularly in international markets;
|
•
|
changes in foreign currency exchange rates;
|
•
|
changes in laws, regulations or regulatory enforcement, in China, the United States or other countries, that impact our ability to market, sell or deliver our products;
|
•
|
the amount and timing of operating costs and capital expenditures related to the operations and expansion of our business, including investments in international expansion;
|
•
|
significant security breaches of, technical difficulties with, or interruptions to, the delivery and use of our products on our platform;
|
•
|
general economic and political conditions that may adversely affect a prospective customer’s ability or willingness to adopt our products, delay a prospective customer’s adoption decision, reduce the revenue that we generate from the use of our products or impact customer retention;
|
•
|
extraordinary expenses such as litigation or other dispute-related settlement payments;
|
•
|
sales tax and other tax determinations by authorities in the jurisdictions in which we conduct business;
|
•
|
the impact of new accounting pronouncements;
|
•
|
expenses incurred in connection with mergers, acquisitions or other strategic transactions and integrating acquired business, technologies, services, products and other assets; and
|
•
|
fluctuations in share-based compensation expense.
|
•
|
the difficulty of managing and staffing international operations and the increased operations, travel, infrastructure and legal compliance costs associated with numerous international locations;
|
•
|
challenges to our corporate culture resulting from a dispersed workforce;
|
•
|
our ability to effectively price our products in competitive international markets;
|
•
|
new and different sources of competition;
|
•
|
our ability to comply with the General Data Protection Regulation 2016/679, or GDPR;
|
•
|
potentially greater difficulty collecting accounts receivable and longer payment cycles;
|
•
|
the need to adapt and localize our products for specific countries;
|
•
|
the effect of differing governmental responses to the COVID-19 pandemic and the continuing impact of the pandemic on individuals, businesses and economies in various foreign jurisdictions;
|
•
|
the need to offer customer support in various languages;
|
•
|
difficulties in understanding and complying with local laws, regulations and customs in foreign jurisdictions;
|
•
|
difficulties with differing technical and environmental standards, privacy, cybersecurity, data protection and telecommunications regulations and certification requirements outside China and the United States, which could prevent customers from deploying our products or limit their usage;
|
•
|
export controls and economic sanctions administered by the Department of Commerce Bureau of Industry and Security and the Treasury Department’s Office of Foreign Assets Control;
|
•
|
compliance with various anti-bribery and anti-corruption laws such as the Foreign Corrupt Practices Act of 1977, or FCPA, and the United Kingdom Bribery Act of 2010;
|
•
|
tariffs and other non-tariff trade barriers, such as quotas and local content rules;
|
•
|
more limited protection for intellectual property rights in some countries;
|
•
|
adverse tax consequences;
|
•
|
fluctuations in currency exchange rates, which could increase the price of our products in certain markets, increase the expenses of our international operations and expose us to foreign currency exchange rate risk or the cost and risk of hedging transaction if we choose to enter into such transactions in the future;
|
•
|
currency control regulations, which might restrict or prohibit our conversion of other currencies into U.S. dollars;
|
•
|
restrictions on the transfer of funds;
|
•
|
deterioration of political relations between China, the United States and other countries;
|
•
|
exposure to political developments in the United Kingdom, or the U.K., including the departure of the U.K. from the European Union, or the EU, which has created an uncertain political and economic environment, instability for businesses and volatility in global financial markets; and
|
•
|
political or social unrest or economic instability in a specific country or region in which we operate, which could have an adverse impact on our operations in that location.
|
•
|
issue additional equity securities that would dilute our existing shareholders;
|
•
|
use cash that we may need in the future to operate our business;
|
•
|
incur large charges or substantial liabilities;
|
•
|
incur debt on terms unfavorable to us or that we are unable to repay;
|
•
|
encounter difficulties retaining key employees of the acquired company or integrating diverse software codes or business cultures; or
|
•
|
become subject to adverse tax consequences, substantial depreciation, or deferred compensation charges. The occurrence of any of these foregoing could adversely affect our business, operating results and financial condition.
|
•
|
revoking our business and operating licenses;
|
•
|
levying fines on us;
|
•
|
confiscating any of our income that they deem to be obtained through illegal operations;
|
•
|
restricting our right to collect revenue;
|
•
|
shutting down our services;
|
•
|
discontinuing or restricting our operations in China;
|
•
|
imposing conditions or requirements with which we may not be able to comply;
|
•
|
requiring us to change our corporate structure and contractual arrangements;
|
•
|
restricting or prohibiting our use of the proceeds from overseas offering to finance our VIE’s business and operations; and
|
•
|
taking other regulatory or enforcement actions that could be harmful to our business.
|
•
|
We operate our business in China through businesses controlled via contractual arrangements versus direct ownership due to restrictions on foreign investment in businesses related to value-added telecommunication services.
|
•
|
Uncertainties relating to the regulation of the internet business in China, including evolving licensing practices, give rise to the risk that some of our permits, licenses or operations may be subject to challenge, which may be disruptive to our business, subject us to sanctions or require us to increase capital, compromise the enforceability of relevant contractual arrangements, or have other adverse effects on us. The numerous and often vague restrictions on acceptable content in China subject us to potential civil and criminal liability, temporary blockage or complete shut-down of our products. For example, the State Secrecy Bureau, which is directly responsible for the protection of state secrets of all Chinese government and Chinese Communist Party organizations, is authorized to block any website or mobile applications it deems to be leaking state secrets or failing to meet the relevant regulations relating to the protection of state secrets in the distribution of online information. In addition, the newly amended Law on Preservation of State Secrets which became effective on October 1, 2010 provides that whenever an internet service provider detects any leakage of state secrets in the distribution of online information, it should stop the distribution of such information and report to the authorities of state security and public security. As per request of the authorities of state security, public security or state secrecy, the internet service provider should delete any content on its website that may lead to disclosure of state secrets. Failure to do so on a timely and adequate basis may subject the service provider to liability and certain penalties imposed by the State Security Bureau, Ministry of Public Security or MIIT, or their respective local counterparts.
|
•
|
variations in our revenue, earnings and cash flows;
|
•
|
regulatory developments affecting us, our customers, or our industry;
|
•
|
announcements of new products or service offerings and expansions by us or our competitors;
|
•
|
announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;
|
•
|
changes in financial estimates by securities analysts;
|
•
|
changes in end-user and customer demand as end-users increase and decrease their time online due to the imposition or easing of stay-at-home, travel and other government mandates or changes in end-user or customer demand for our products in response to the COVID-19 pandemic;
|
•
|
detrimental adverse publicity about us, our products or services or our industry;
|
•
|
additions or departures of key personnel;
|
•
|
detrimental negative publicity about us, our management or our industry;
|
•
|
release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and
|
•
|
actual or potential litigation or regulatory investigations.
|
•
|
we have timely provided the depositary with notice of meeting and related voting materials;
|
•
|
we have instructed the depositary that we wish a discretionary proxy to be given;
|
•
|
we have informed the depositary that there is no substantial opposition as to a matter to be voted on at the meeting; and
|
•
|
a matter to be voted on at the meeting would not have a material adverse impact on shareholders.
|
•
|
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.
|
•
|
our ability to effectively manage our growth and expand our operations;
|
•
|
our ability to attract new developers to our platform and convert them into customers;
|
•
|
our ability to retain existing customers and expand their usage of our platform and products;
|
•
|
our ability to drive popularity and usage of existing use cases and enable new ones, particularly centered on real-time video engagement;
|
•
|
the impact of the COVID-19 pandemic on global markets and our business, operations and customers;
|
•
|
our ability to continue to introduce new products, features and functionalities;
|
•
|
our ability to continue to enhance the quality of the end-user experience and drive demand for RTE through our research and development efforts;
|
•
|
our ability to maintain and enhance our brand;
|
•
|
the growth of the RTE-PaaS market;
|
•
|
the effect of broader technological and market trends, such as the deployment of 5G networks and proliferation of IoT devices, on our business and prospects;
|
•
|
our ability to hire and retain experienced and talented employees as we grow our business;
|
•
|
our ability to remain competitive as we continue to scale our business; and
|
•
|
general economic conditions and their impact on customer and end-user demand.
|
•
|
on an actual basis;
|
•
|
on a pro forma basis to reflect (1) the re-designation of 76,179,938 ordinary shares beneficially owned by our chief executive officer into Class B ordinary shares on a one-for-one basis immediately prior to the completion of this offering, (2) the re-designation of all of the remaining ordinary shares into Class A ordinary shares on a one-for-one basis immediately prior to the completion of this offering and (3) the automatic conversion and the re-designation of all of our issued and outstanding preferred shares on a one-for-one basis into Class A ordinary shares immediately prior to the completion of this offering; and
|
•
|
on a pro forma as adjusted basis to reflect (1) the pro forma adjustments set forth above and (2) the issuance and sale of Class A ordinary shares in the form of ADSs by us in this offering at an assumed initial public offering price of US$ per ADS, the mid-point of the price range shown on the front cover of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
|
|
As of March 31, 2020
|
||||||||
|
Actual
|
|
Pro Forma
|
|
Pro Forma As Adjusted(1)
|
||||
|
(US$ in thousands)
|
||||||||
Cash and cash equivalents
|
$
|
151,653
|
|
|
$
|
151,653
|
|
|
$
|
Mezzanine equity:
|
|
|
|
|
|
||||
Series A convertible redeemable preferred shares ($0.0001 par value, 55,626,960 shares authorized, issued and outstanding, actual; no shares issued and outstanding, pro forma and pro forma as adjusted
|
$
|
123,629
|
|
|
$
|
—
|
|
|
|
Series B convertible redeemable preferred shares ($0.0001 par value, 50,783,698 shares authorized, issued and outstanding, actual; no shares issued and outstanding, pro forma and pro forma as adjusted
|
30,069
|
|
|
—
|
|
|
|
||
Series B+ convertible redeemable preferred shares ($0.0001 par value, 26,651,410 shares authorized, issued and outstanding, actual; no shares issued and outstanding, pro forma and pro forma as adjusted
|
46,375
|
|
|
—
|
|
|
|
||
Series C convertible redeemable preferred shares ($0.0001 par value, 36,533,085 shares authorized, 34,793,413 issued and outstanding, actual; no shares issued and outstanding, pro forma and pro forma as adjusted
|
75,114
|
|
|
—
|
|
|
|
||
Series C+ convertible redeemable preferred shares ($0.0001 par value, 15,062,510 shares authorized, issued and outstanding, actual; no shares issued and outstanding, pro forma and pro forma as adjusted
|
50,748
|
|
|
—
|
|
|
|
||
Total Mezzanine equity
|
$
|
325,934
|
|
|
$
|
—
|
|
|
|
Shareholders’ deficit:
|
|
|
|
|
|
||||
Ordinary shares ($0.0001 par value; 330,404,847 shares authorized, 121,979,938 shares issued and outstanding, actual; no shares issued and outstanding, pro forma and pro forma as adjusted
|
12
|
|
|
30
|
|
|
|
||
Class A ordinary shares, US$0.0001 par value per share, no shares authorized, issued or outstanding, actual; shares authorized and shares issued and outstanding, pro forma; shares authorized and shares issued and outstanding, pro forma as adjusted
|
—
|
|
|
|
|
|
|||
Class B ordinary shares, US$0.0001 par value per share, no shares authorized, issued or outstanding, actual; shares authorized and shares issued and outstanding, pro forma; shares authorized and shares issued and outstanding, pro forma as adjusted
|
—
|
|
|
|
|
|
|||
Additional paid-in capital
|
—
|
|
|
325,916
|
|
|
|
||
Accumulated other comprehensive loss
|
(1,490
|
)
|
|
(1,490
|
)
|
|
|
||
Accumulated deficit
|
(157,845
|
)
|
|
(157,845
|
)
|
|
|
||
Total shareholders’ equity (deficit)
|
(159,323
|
)
|
|
166,611
|
|
|
|
||
Total liabilities, mezzanine equity and shareholders’ equity (deficit)
|
197,154
|
|
|
197,154
|
|
|
|
(1)
|
Assuming the number of ADSs offered by us as set forth on the cover page of this prospectus remains the same, and after deducting underwriting discounts and commissions and the estimated offering expenses payable by us, a US$1.00 increase (decrease) in the assumed public offering price of US$ per ADS, which is the mid-point of the price range shown on the front cover of this prospectus, would increase (decrease) each of additional paid-in capital, total shareholders’ equity (deficit), total equity and total capitalization by US$ million. The pro forma as adjusted information discussed above is illustrative only. Our additional paid-in capital, total shareholders’ equity (deficit) and total capitalization following the completion of this
|
•
|
43,499,845 ordinary shares issuable upon the vesting of outstanding options; and
|
•
|
911,035 ordinary shares reserved for future issuance under the 2014 Plan.
|
|
Per Ordinary Share
|
|
Per ADS
|
Assumed initial public offering price
|
US$
|
|
US$
|
Pro forma net tangible book value before this offering
|
US$
|
|
US$
|
Increase in pro forma net tangible book value attributable to investors participating in this offering
|
US$
|
|
US$
|
Pro forma as adjusted net tangible book value as adjusted for this offering
|
US$
|
|
US$
|
Amount of dilution in net tangible book value to new investors in this offering
|
US$
|
|
US$
|
|
Ordinary Shares Purchased
|
|
Total Consideration
|
|
Average Price Per Ordinary Share
|
|
Average Price Per ADS
|
||||
|
Number
|
|
Percent
|
|
Amount
|
|
Percent
|
|
|||
Existing shareholders
|
|
|
%
|
|
|
|
%
|
|
|
|
|
New investors
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
•
|
the percentage of ordinary shares held by existing shareholders will decrease to of the total number of ordinary shares outstanding after this offering; and
|
•
|
the number of ordinary shares (including in the form of ADSs) held by new investors will increase to shares, or % of the total number of ordinary shares outstanding after this offering.
|
•
|
43,499,845 ordinary shares issuable upon the vesting of outstanding options; and
|
•
|
911,035 ordinary shares reserved for future issuance under the 2014 Plan.
|
•
|
Agora IO contributed all of its shares of Agora HK to Agora in exchange for Agora’s issuance of ordinary shares to Agora IO, resulting in Agora HK becoming a wholly owned subsidiary of Agora.
|
•
|
Each shareholder of Agora IO exchanged all of their ordinary and preferred shares of Agora IO for an equivalent number of ordinary and preferred shares of Agora issued via a share swap agreement, resulting in Agora becoming the sole shareholder of Agora IO, and Agora IO and its former shareholders becoming the shareholders of Agora.
|
•
|
Immediately after the share swap, (1) Agora IO reclassified and re-designated all of the preferred shares of Agora IO held by Agora into ordinary shares of Agora IO, (2) Agora repurchased all ordinary shares of Agora held by Agora IO and (3) Agora IO repurchased an equivalent number of ordinary shares of Agora IO held by Agora, collectively resulting in the former Agora IO shareholders remaining shareholders of Agora and Agora IO becoming a wholly owned subsidiary of Agora and no longer a shareholder of Agora.
|
•
|
Agora assumed all options granted by Agora IO under the 2018 Equity Incentive Plan, or the 2018 Plan, resulting in the shares subject to the options becoming the same number of shares of Agora instead of shares of Agora IO, but without otherwise affecting the number of options granted, the shares subject to the options, the exercise price of each award, the vesting commencement date or schedule, or the other terms and conditions in the respective award agreements. Agora IO then terminated the 2018 Plan without affecting the then-outstanding awards under the 2018 Plan.
|
(1)
|
Mr. Zhao, our founder, chief executive officer and chairman, holds 90% of the equity interests in our VIE, and Ms. Wenjing Ma, a nominee shareholder, holds the remaining 10%.
|
•
|
the ownership structures of our WFOE and our VIE in China, both currently and immediately after giving effect to this offering, do not and will not violate any applicable PRC law, regulation or rule currently in effect; and
|
•
|
the contractual arrangements among our WFOE, our VIE and our VIE’s shareholders governed by PRC laws are valid, binding and enforceable in accordance with their terms and applicable PRC laws, rules and regulations currently in effect, and will not violate any applicable PRC law, regulation or rule currently in effect.
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands, except for share and per share data)
|
||||||||||||||
Real-time engagement service revenues
|
$
|
43,199
|
|
|
$
|
63,925
|
|
|
$
|
13,287
|
|
|
$
|
35,446
|
|
Other revenues
|
458
|
|
|
503
|
|
|
75
|
|
|
114
|
|
||||
Total revenues
|
43,657
|
|
|
64,429
|
|
|
13,362
|
|
|
35,560
|
|
||||
Cost of revenues(1)
|
(12,635
|
)
|
|
(20,417
|
)
|
|
(4,152
|
)
|
|
(11,082
|
)
|
||||
Gross profit
|
31,022
|
|
|
44,011
|
|
|
9,211
|
|
|
24,478
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development expenses(1)
|
(14,426
|
)
|
|
(23,623
|
)
|
|
(4,200
|
)
|
|
(11,688
|
)
|
||||
Sales and marketing expenses(1)
|
(11,986
|
)
|
|
(19,408
|
)
|
|
(4,006
|
)
|
|
(6,002
|
)
|
||||
General and administrative expenses(1)
|
(5,373
|
)
|
|
(7,177
|
)
|
|
(1,562
|
)
|
|
(3,545
|
)
|
||||
Total operating expenses
|
(31,785
|
)
|
|
(50,208
|
)
|
|
(9,768
|
)
|
|
(21,236
|
)
|
||||
Other operating income
|
1,025
|
|
|
108
|
|
|
5
|
|
|
23
|
|
||||
Income (loss) from operations
|
263
|
|
|
(6,089
|
)
|
|
(552
|
)
|
|
3,266
|
|
||||
Exchange gain (loss)
|
(21
|
)
|
|
87
|
|
|
(18
|
)
|
|
(7
|
)
|
||||
Interest income
|
239
|
|
|
626
|
|
|
43
|
|
|
97
|
|
||||
Income (loss) before income taxes
|
481
|
|
|
(5,376
|
)
|
|
(528
|
)
|
|
3,356
|
|
||||
Income taxes
|
(105
|
)
|
|
(801
|
)
|
|
(190
|
)
|
|
(369
|
)
|
||||
Net income (loss)
|
376
|
|
|
(6,177
|
)
|
|
(718
|
)
|
|
2,987
|
|
||||
Less: cumulative undeclared dividends on convertible redeemable preferred shares
|
(9,961
|
)
|
|
(9,961
|
)
|
|
(2,490
|
)
|
|
(3,399
|
)
|
||||
Less: accretion on convertible redeemable preferred shares to redemption value
|
(33,235
|
)
|
|
(50,715
|
)
|
|
(10,179
|
)
|
|
(35,964
|
)
|
||||
Net income (loss) attributable to ordinary shareholders
|
$
|
(42,820
|
)
|
|
$
|
(66,854
|
)
|
|
$
|
(13,387
|
)
|
|
$
|
(36,376
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(749
|
)
|
|
(358
|
)
|
|
321
|
|
|
(501
|
)
|
||||
Total comprehensive income (loss) attributable to Agora, Inc.’s ordinary shareholders
|
$
|
(43,569
|
)
|
|
$
|
(67,212
|
)
|
|
$
|
(13,066
|
)
|
|
$
|
(36,877
|
)
|
Net loss per share attributable to Agora, Inc.’s ordinary shareholders—basic and diluted(2)
|
(0.39
|
)
|
|
(0.58
|
)
|
|
(0.12
|
)
|
|
(0.30
|
)
|
||||
Weighted average number of ordinary shares—basic and diluted(2)
|
109,141,311
|
|
|
115,716,392
|
|
|
113,245,308
|
|
|
119,882,136
|
|
||||
Pro forma basic earnings per ordinary share (unaudited)(3)
|
|
|
(0.02
|
)
|
|
|
|
0.01
|
|
||||||
Pro forma diluted earnings per ordinary share (unaudited)(3)
|
|
|
(0.02
|
)
|
|
|
|
0.01
|
|
||||||
Denominator for pro forma basic earnings per ordinary share (unaudited)(3)
|
|
|
283,571,873
|
|
|
|
|
295,848,199
|
|
||||||
Denominator for pro forma diluted earnings per ordinary share (unaudited)(3)
|
|
|
283,571,873
|
|
|
|
|
331,484,554
|
|
(1)
|
Share-based compensation expenses were allocated to cost of revenue and operating expenses as follows:
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands)
|
||||||||||||||
Cost of revenues
|
$
|
50
|
|
|
80
|
|
|
$
|
19
|
|
|
$
|
31
|
|
|
Research and development expenses
|
920
|
|
|
1,473
|
|
|
327
|
|
|
292
|
|
||||
Sales and marketing expenses
|
975
|
|
|
1,654
|
|
|
363
|
|
|
485
|
|
||||
General and administrative expenses
|
905
|
|
|
1,046
|
|
|
221
|
|
|
639
|
|
||||
Total share-based compensation expenses
|
$
|
2,850
|
|
|
$
|
4,253
|
|
|
$
|
930
|
|
|
$
|
1,447
|
|
(2)
|
See Note 14 to our consolidated financial statements and Note 14 to our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus for an explanation of the calculation of our net income (loss) per share attributable to ordinary shareholders—basic and diluted.
|
(3)
|
See Note 17 to our consolidated financial statements and Note 17 to our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus for an explanation of the calculation of our pro forma net loss per share attributable to ordinary shareholders—basic and diluted.
|
|
Years Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands)
|
||||||||||||||
Net cash generated from (used in) operating activities
|
$
|
536
|
|
|
$
|
706
|
|
|
$
|
3,619
|
|
|
$
|
(919
|
)
|
Net cash used in investing activities
|
(3,773
|
)
|
|
(3,353
|
)
|
|
(5,951
|
)
|
|
(2,496
|
)
|
||||
Net cash provided by financing activities
|
65,772
|
|
|
—
|
|
|
—
|
|
|
49,769
|
|
||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted shares
|
(556
|
)
|
|
(269
|
)
|
|
194
|
|
|
(303
|
)
|
||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
61,979
|
|
|
(2,915
|
)
|
|
(2,139
|
)
|
|
46,050
|
|
||||
Cash, cash equivalents and restricted cash at beginning of year
|
46,619
|
|
|
108,598
|
|
|
108,598
|
|
|
105,683
|
|
||||
Cash, cash equivalents and restricted cash at end of year
|
108,598
|
|
|
105,683
|
|
|
106,459
|
|
|
151,733
|
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2019
|
||
Dollar-Based Net Expansion Rate(1)
|
135
|
%
|
|
127
|
%
|
Constant Currency Dollar-Based Net Expansion Rate(1)
|
133
|
%
|
|
131
|
%
|
|
As of and for the Year Ended December 31,
|
|
As of and for the Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands, except values)
|
||||||||||||||
Active customers(1)
|
586
|
|
|
1,041
|
|
|
678
|
|
|
1,176
|
|
||||
Adjusted EBITDA(1)
|
$
|
4,035
|
|
|
$
|
31
|
|
|
$
|
720
|
|
|
$
|
5,458
|
|
Free cash flow(1)
|
$
|
(1,725
|
)
|
|
$
|
(4,096
|
)
|
|
$
|
2,855
|
|
|
$
|
(3,416
|
)
|
(1)
|
See the section of this prospectus captioned “Prospectus Summary—Summary Consolidated Financial and Operating Data—Key Operating and Financial Metrics” for information on how we define and calculate these measures.
|
|
As of December 31,
|
|
As of March 31,
|
||||||||
|
2018
|
|
2019
|
|
2020
|
||||||
|
(US$ in thousands)
|
||||||||||
Cash and cash equivalents
|
$
|
108,518
|
|
|
$
|
105,603
|
|
|
$
|
151,653
|
|
Short-term investments
|
1,457
|
|
|
—
|
|
|
—
|
|
|||
Working capital(1)
|
111,948
|
|
|
104,750
|
|
|
155,851
|
|
|||
Total assets
|
127,308
|
|
|
131,159
|
|
|
197,154
|
|
|||
Total liabilities
|
11,295
|
|
|
18,481
|
|
|
30,543
|
|
|||
Total Mezzanine equity
|
189,255
|
|
|
239,970
|
|
|
325,934
|
|
|||
Total shareholders’ equity (deficit)
|
(73,242
|
)
|
|
(127,293
|
)
|
|
(159,323
|
)
|
(1)
|
Working capital is defined as current assets less current liabilities.
|
•
|
In 2013, our chief executive officer, Mr. Zhao, founded our company in Silicon Valley.
|
•
|
In 2014, we launched our Real-Time Voice product and established our Shanghai office.
|
•
|
In 2015, we launched our Real-Time Video product, signed our first customers and organized the inaugural RTC Conference in Beijing, which was the first conference in Asia focused on real-time engagement technology and which we have hosted every year since.
|
•
|
In 2016, we powered more than 600 million minutes of real-time video and voice engagement through more than 1,000 applications in December alone.
|
•
|
In 2017, our products helped developers revolutionize live interactive streaming and social-based gaming by adding real-time video and voice engagement features.
|
•
|
In 2018, the SD-RTN expanded to more than 100 co-located data centers worldwide and we launched Agora Analytics, a suite of tools that help developers monitor and diagnose quality issues to improve the end-user experience. In the same year, adoption of our products for education use cases accelerated.
|
•
|
In 2019, we expanded the SD-RTN to more than 200 co-located data centers worldwide. Additionally, we launched our Real-Time Messaging product, high-definition video capabilities and the Agora Partner Gallery, our marketplace for third-party solutions and services. We also hosted the inaugural AllThingsRTC conference in San Francisco.
|
•
|
In the month of March 2020 alone we powered more than 40 billion minutes of real-time video and voice engagement for end users in more than 100 countries through more than 10,000 active applications.
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2019
|
||
Dollar-Based Net Expansion Rate
|
135
|
%
|
|
127
|
%
|
Constant Currency Dollar-Based Net Expansion Rate
|
133
|
%
|
|
131
|
%
|
|
As of and for the Year Ended December 31,
|
|
As of and for the Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands, except values)
|
||||||||||||||
Active customers
|
586
|
|
|
1,041
|
|
|
678
|
|
|
1,176
|
|
||||
Adjusted EBITDA
|
$
|
4,035
|
|
|
$
|
31
|
|
|
$
|
720
|
|
|
$
|
5,458
|
|
Free cash flow
|
$
|
(1,725
|
)
|
|
$
|
(4,096
|
)
|
|
$
|
2,855
|
|
|
$
|
(3,416
|
)
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands)
|
||||||||||||||
Real-time engagement service revenues
|
$
|
43,199
|
|
|
$
|
63,925
|
|
|
$
|
13,287
|
|
|
$
|
35,446
|
|
Other revenues
|
458
|
|
|
503
|
|
|
75
|
|
|
114
|
|
||||
Total revenues
|
43,657
|
|
|
64,429
|
|
|
13,362
|
|
|
35,560
|
|
||||
Cost of revenues(1)
|
(12,635
|
)
|
|
(20,417
|
)
|
|
(4,152
|
)
|
|
(11,082
|
)
|
||||
Gross profit
|
31,022
|
|
|
44,011
|
|
|
9,211
|
|
|
24,478
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development expenses(1)
|
(14,426
|
)
|
|
(23,623
|
)
|
|
(4,200
|
)
|
|
(11,688
|
)
|
||||
Sales and marketing expenses(1)
|
(11,986
|
)
|
|
(19,408
|
)
|
|
(4,006
|
)
|
|
(6,002
|
)
|
||||
General and administrative expenses(1)
|
(5,373
|
)
|
|
(7,177
|
)
|
|
(1,562
|
)
|
|
(3,545
|
)
|
||||
Total operating expenses
|
(31,785
|
)
|
|
(50,208
|
)
|
|
(9,768
|
)
|
|
(21,236
|
)
|
||||
Other operating income
|
1,025
|
|
|
108
|
|
|
5
|
|
|
23
|
|
||||
Income (loss) from operations
|
263
|
|
|
(6,089
|
)
|
|
(552
|
)
|
|
3,266
|
|
||||
Exchange gain (loss)
|
(21
|
)
|
|
87
|
|
|
(18
|
)
|
|
(7
|
)
|
||||
Interest income
|
239
|
|
|
626
|
|
|
43
|
|
|
97
|
|
||||
Income (loss) before income taxes
|
481
|
|
|
(5,376
|
)
|
|
(528
|
)
|
|
3,356
|
|
||||
Income taxes
|
(105
|
)
|
|
(801
|
)
|
|
(190
|
)
|
|
(369
|
)
|
||||
Net income (loss)
|
376
|
|
|
(6,177
|
)
|
|
(718
|
)
|
|
2,987
|
|
(1)
|
Share-based compensation expenses were allocated to cost of revenue and operating expenses as follows:
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands)
|
||||||||||||||
Cost of revenues
|
$
|
50
|
|
|
$
|
80
|
|
|
$
|
19
|
|
|
$
|
31
|
|
Research and development expenses
|
920
|
|
|
1,473
|
|
|
327
|
|
|
292
|
|
||||
Sales and marketing expenses
|
975
|
|
|
1,654
|
|
|
363
|
|
|
485
|
|
||||
General and administrative expenses
|
905
|
|
|
1,046
|
|
|
221
|
|
|
639
|
|
||||
Total share-based compensation expenses
|
$
|
2,850
|
|
|
$
|
4,253
|
|
|
$
|
930
|
|
|
$
|
1,447
|
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||
Real-time engagement service revenues
|
99.0
|
%
|
|
99.2
|
%
|
|
99.4
|
%
|
|
99.7
|
%
|
Other revenues
|
1.0
|
|
|
0.8
|
|
|
0.6
|
|
|
0.3
|
|
Total revenues
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
Cost of revenues
|
(28.9
|
)
|
|
(31.7
|
)
|
|
(31.1
|
)
|
|
(31.2
|
)
|
Gross profit
|
71.1
|
|
|
68.3
|
|
|
68.9
|
|
|
68.8
|
|
Operating expenses:
|
|
|
|
|
|
|
|
||||
Research and development expenses
|
(33.0
|
)
|
|
(36.7
|
)
|
|
(31.4
|
)
|
|
(32.9
|
)
|
Sales and marketing expenses
|
(27.5
|
)
|
|
(30.1
|
)
|
|
(30.0
|
)
|
|
(16.9
|
)
|
General and administrative expenses
|
(12.3
|
)
|
|
(11.1
|
)
|
|
(11.7
|
)
|
|
(10.0
|
)
|
Total operating expenses
|
(72.8
|
)
|
|
(77.9
|
)
|
|
(73.1
|
)
|
|
(59.7
|
)
|
Other operating income
|
2.3
|
|
|
0.2
|
|
|
—
|
|
|
0.1
|
|
Income (loss) from operations
|
0.6
|
|
|
(9.5
|
)
|
|
(4.1
|
)
|
|
9.2
|
|
Exchange gain (loss)
|
—
|
|
|
0.1
|
|
|
(0.1
|
)
|
|
—
|
|
Interest income
|
0.5
|
|
|
1.0
|
|
|
0.3
|
|
|
0.3
|
|
Income (loss) before income taxes
|
1.1
|
|
|
(8.3
|
)
|
|
(4.0
|
)
|
|
9.4
|
|
Income taxes
|
(0.2
|
)
|
|
(1.2
|
)
|
|
(1.4
|
)
|
|
(1.0
|
)
|
Net income (loss)
|
0.9
|
%
|
|
(9.6
|
)%
|
|
(5.4
|
)%
|
|
8.4
|
%
|
|
Three Months Ended
March 31,
|
|
Change
|
|||||||||||
|
2019
|
|
2020
|
|
$
|
|
%
|
|||||||
|
(US$ in thousands)
|
|||||||||||||
Total revenues
|
$
|
13,362
|
|
|
$
|
35,560
|
|
|
$
|
22,198
|
|
|
166.1
|
%
|
|
Three Months Ended
March 31,
|
|
Change
|
|||||||||||
|
2019
|
|
2020
|
|
$
|
|
%
|
|||||||
|
(US$ in thousands)
|
|||||||||||||
Cost of revenues
|
$
|
(4,152
|
)
|
|
$
|
(11,082
|
)
|
|
$
|
(6,930
|
)
|
|
166.9
|
%
|
Gross margin
|
68.9
|
%
|
|
68.8
|
%
|
|
|
|
|
|
Year Ended
December 31,
|
|
Change
|
|||||||||||
|
2018
|
|
2019
|
|
$
|
|
%
|
|||||||
|
(US$ in thousands)
|
|||||||||||||
Total revenues
|
$
|
43,657
|
|
|
$
|
64,429
|
|
|
$
|
20,772
|
|
|
47.6
|
%
|
|
Year Ended
December 31,
|
|
Change
|
|||||||||||
|
2018
|
|
2019
|
|
$
|
|
%
|
|||||||
|
(US$ in thousands)
|
|||||||||||||
Cost of revenues
|
$
|
12,635
|
|
|
$
|
20,417
|
|
|
$
|
7,782
|
|
|
61.6
|
%
|
Gross margin
|
71.1
|
%
|
|
68.3
|
%
|
|
|
|
|
|
Year Ended
December 31,
|
|
Change
|
|||||||||||
|
2018
|
|
2019
|
|
$
|
|
%
|
|||||||
|
(US$ in thousands)
|
|||||||||||||
Research and development expenses
|
$
|
14,426
|
|
|
$
|
23,623
|
|
|
$
|
9,197
|
|
|
63.8
|
%
|
Percentage of total revenues
|
33.0%
|
|
|
36.7
|
%
|
|
|
|
|
|
Year Ended
December 31,
|
|
Change
|
|||||||||||
|
2018
|
|
2019
|
|
$
|
|
%
|
|||||||
|
(US$ in thousands)
|
|||||||||||||
Sales and marketing expenses
|
$
|
11,986
|
|
|
$
|
19,408
|
|
|
$
|
7,422
|
|
|
61.9
|
%
|
Percentage of total revenues
|
27.5
|
%
|
|
30.1
|
%
|
|
|
|
|
|
Year Ended
December 31,
|
|
Change
|
|||||||||||
|
2018
|
|
2019
|
|
$
|
|
%
|
|||||||
|
(US$ in thousands)
|
|||||||||||||
General and administrative expenses
|
$
|
5,373
|
|
|
$
|
7,177
|
|
|
$
|
1,804
|
|
|
33.6
|
%
|
Percentage of total revenues
|
12.3
|
%
|
|
11.1
|
%
|
|
|
|
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||||||
|
March 31, 2018
|
|
June 30, 2018
|
|
September 30, 2018
|
|
December 31, 2018
|
|
March 31, 2019
|
|
June 30, 2019
|
|
September 30, 2019
|
|
December 31, 2019
|
|
March 31, 2020
|
||||||||||||||||||
|
(Unaudited, US$ in thousands)
|
||||||||||||||||||||||||||||||||||
Real-time engagement service revenues
|
$
|
8,069
|
|
|
$
|
10,377
|
|
|
$
|
12,492
|
|
|
$
|
12,261
|
|
|
$
|
13,287
|
|
|
$
|
14,863
|
|
|
$
|
16,935
|
|
|
$
|
18,840
|
|
|
$
|
35,446
|
|
Other revenues
|
6
|
|
|
132
|
|
|
161
|
|
|
160
|
|
|
75
|
|
|
38
|
|
|
125
|
|
|
265
|
|
|
114
|
|
|||||||||
Total revenues
|
8,074
|
|
|
10,509
|
|
|
12,652
|
|
|
12,421
|
|
|
13,362
|
|
|
14,901
|
|
|
17,061
|
|
|
19,105
|
|
|
35,560
|
|
|||||||||
Cost of revenues(1)
|
(2,355
|
)
|
|
(2,888
|
)
|
|
(3,482
|
)
|
|
(3,909
|
)
|
|
(4,152
|
)
|
|
(4,584
|
)
|
|
(5,248
|
)
|
|
(6,434
|
)
|
|
(11,082
|
)
|
|||||||||
Gross profit
|
5,719
|
|
|
7,621
|
|
|
9,170
|
|
|
8,512
|
|
|
9,211
|
|
|
10,317
|
|
|
11,813
|
|
|
12,671
|
|
|
24,478
|
|
|||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Research and development expenses(1)
|
(3,259
|
)
|
|
(3,625
|
)
|
|
(3,511
|
)
|
|
(4,030
|
)
|
|
(4,200
|
)
|
|
(5,708
|
)
|
|
(6,587
|
)
|
|
(7,128
|
)
|
|
(11,688
|
)
|
|||||||||
Sales and marketing expenses(1)
|
(2,152
|
)
|
|
(2,450
|
)
|
|
(3,595
|
)
|
|
(3,789
|
)
|
|
(4,006
|
)
|
|
(5,067
|
)
|
|
(4,778
|
)
|
|
(5,558
|
)
|
|
(6,002
|
)
|
|||||||||
General and administrative expenses(1)
|
(943
|
)
|
|
(1,226
|
)
|
|
(1,429
|
)
|
|
(1,774
|
)
|
|
(1,562
|
)
|
|
(1,535
|
)
|
|
(1,658
|
)
|
|
(2,421
|
)
|
|
(3,545
|
)
|
|||||||||
Total operating expenses
|
(6,354
|
)
|
|
(7,302
|
)
|
|
(8,535
|
)
|
|
(9,594
|
)
|
|
(9,768
|
)
|
|
(12,310
|
)
|
|
(13,024
|
)
|
|
(15,106
|
)
|
|
(21,236
|
)
|
|||||||||
Other operating income
|
(16
|
)
|
|
—
|
|
|
1,012
|
|
|
29
|
|
|
5
|
|
|
14
|
|
|
58
|
|
|
30
|
|
|
23
|
|
|||||||||
Income (loss) from operations
|
(652
|
)
|
|
320
|
|
|
1,647
|
|
|
(1,052
|
)
|
|
(552
|
)
|
|
(1,980
|
)
|
|
(1,153
|
)
|
|
(2,404
|
)
|
|
3,266
|
|
|||||||||
Exchange gain (loss)
|
6
|
|
|
11
|
|
|
—
|
|
|
(37
|
)
|
|
(18
|
)
|
|
31
|
|
|
40
|
|
|
34
|
|
|
(7
|
)
|
|||||||||
Interest income
|
53
|
|
|
92
|
|
|
71
|
|
|
23
|
|
|
43
|
|
|
81
|
|
|
262
|
|
|
240
|
|
|
97
|
|
|||||||||
Income (loss) before income taxes
|
(593
|
)
|
|
423
|
|
|
1,718
|
|
|
(1,066
|
)
|
|
(528
|
)
|
|
(1,868
|
)
|
|
(850
|
)
|
|
(2,131
|
)
|
|
3,356
|
|
|||||||||
Income taxes
|
(10
|
)
|
|
(25
|
)
|
|
(57
|
)
|
|
(13
|
)
|
|
(190
|
)
|
|
(136
|
)
|
|
(264
|
)
|
|
(212
|
)
|
|
(369
|
)
|
|||||||||
Net income (loss)
|
(603
|
)
|
|
398
|
|
|
1,660
|
|
|
(1,079
|
)
|
|
(718
|
)
|
|
(2,004
|
)
|
|
(1,113
|
)
|
|
(2,342
|
)
|
|
2,987
|
|
(1)
|
Share-based compensation expenses were allocated to cost of revenue and operating expenses as follows:
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||||||
|
March 31, 2018
|
|
June 30, 2018
|
|
September 30, 2018
|
|
December 31, 2018
|
|
March 31, 2019
|
|
June 30, 2019
|
|
September 30, 2019
|
|
December 31, 2019
|
|
March 31, 2020
|
||||||||||||||||||
|
(Unaudited, US$ in thousands)
|
||||||||||||||||||||||||||||||||||
Cost of revenues
|
$
|
13
|
|
|
$
|
13
|
|
|
$
|
12
|
|
|
$
|
12
|
|
|
$
|
19
|
|
|
$
|
19
|
|
|
$
|
21
|
|
|
$
|
20
|
|
|
$
|
31
|
|
Research and development expenses
|
161
|
|
|
232
|
|
|
288
|
|
|
238
|
|
|
327
|
|
|
793
|
|
|
169
|
|
|
183
|
|
|
292
|
|
|||||||||
Sales and marketing expenses
|
115
|
|
|
207
|
|
|
329
|
|
|
325
|
|
|
363
|
|
|
549
|
|
|
369
|
|
|
373
|
|
|
485
|
|
|||||||||
General and administrative expenses
|
158
|
|
|
216
|
|
|
284
|
|
|
248
|
|
|
221
|
|
|
295
|
|
|
260
|
|
|
271
|
|
|
639
|
|
|||||||||
Total share-based compensation expenses
|
$
|
447
|
|
|
$
|
667
|
|
|
$
|
914
|
|
|
$
|
822
|
|
|
$
|
930
|
|
|
$
|
1,656
|
|
|
$
|
820
|
|
|
$
|
847
|
|
|
$
|
1,447
|
|
|
Three Months Ended
|
|||||||||||||||||||||||||
|
March 31, 2018
|
|
June 30, 2018
|
|
September 30, 2018
|
|
December 31, 2018
|
|
March 31, 2019
|
|
June 30, 2019
|
|
September 30, 2019
|
|
December 31, 2019
|
|
March 31, 2020
|
|||||||||
|
(Unaudited)
|
|||||||||||||||||||||||||
Real-time engagement service revenues
|
99.9
|
%
|
|
98.7
|
%
|
|
98.7
|
%
|
|
98.7
|
%
|
|
99.4
|
%
|
|
99.7
|
%
|
|
99.3
|
%
|
|
98.6
|
%
|
|
99.7
|
%
|
Other revenues
|
0.1
|
|
|
1.3
|
|
|
1.3
|
|
|
1.3
|
|
|
0.6
|
|
|
0.3
|
|
|
0.7
|
|
|
1.4
|
|
|
0.3
|
|
Total revenues
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
Cost of revenues
|
(29.2
|
)
|
|
(27.5
|
)
|
|
(27.5
|
)
|
|
(31.5
|
)
|
|
(31.1
|
)
|
|
(30.8
|
)
|
|
(30.8
|
)
|
|
(33.7
|
)
|
|
(31.2
|
)
|
Gross profit
|
70.8
|
|
|
72.5
|
|
|
72.5
|
|
|
68.5
|
|
|
68.9
|
|
|
69.2
|
|
|
69.2
|
|
|
66.3
|
|
|
68.8
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Research and development expenses
|
(40.4
|
)
|
|
(34.5
|
)
|
|
(27.7
|
)
|
|
(32.4
|
)
|
|
(31.4
|
)
|
|
(38.3
|
)
|
|
(38.6
|
)
|
|
(37.3
|
)
|
|
(32.9
|
)
|
Sales and marketing expenses
|
(26.7
|
)
|
|
(23.3
|
)
|
|
(28.4
|
)
|
|
(30.5
|
)
|
|
(30.0
|
)
|
|
(34.0
|
)
|
|
(28.0
|
)
|
|
(29.1
|
)
|
|
(16.9
|
)
|
General and administrative expenses
|
(11.7
|
)
|
|
(11.7
|
)
|
|
(11.3
|
)
|
|
(14.3
|
)
|
|
(11.7
|
)
|
|
(10.3
|
)
|
|
(9.7
|
)
|
|
(12.7
|
)
|
|
(10.0
|
)
|
Total operating expenses
|
(78.7
|
)
|
|
(69.5
|
)
|
|
(67.5
|
)
|
|
(77.2
|
)
|
|
(73.1
|
)
|
|
(82.6
|
)
|
|
(76.3
|
)
|
|
(79.1
|
)
|
|
(59.7
|
)
|
Other operating income
|
(0.2
|
)
|
|
—
|
|
|
8.0
|
|
|
0.2
|
|
|
—
|
|
|
0.1
|
|
|
0.3
|
|
|
0.2
|
|
|
0.1
|
|
Income (loss) from operations
|
(8.1
|
)
|
|
3.0
|
|
|
13.0
|
|
|
(8.5
|
)
|
|
(4.1
|
)
|
|
(13.3
|
)
|
|
(6.8
|
)
|
|
(12.6
|
)
|
|
9.2
|
|
Exchange gain (loss)
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|
0.2
|
|
|
0.2
|
|
|
0.2
|
|
|
—
|
|
Interest income
|
0.7
|
|
|
0.9
|
|
|
0.6
|
|
|
0.2
|
|
|
0.3
|
|
|
0.5
|
|
|
1.5
|
|
|
1.3
|
|
|
0.3
|
|
Income (loss) before income taxes
|
(7.3
|
)
|
|
4.0
|
|
|
13.6
|
|
|
(8.6
|
)
|
|
(3.9
|
)
|
|
(12.5
|
)
|
|
(5.0
|
)
|
|
(11.2
|
)
|
|
9.4
|
|
Income taxes
|
(0.1
|
)
|
|
(0.2
|
)
|
|
(0.5
|
)
|
|
(0.1
|
)
|
|
(1.4
|
)
|
|
(0.9
|
)
|
|
(1.5
|
)
|
|
(1.1
|
)
|
|
(1.0
|
)
|
Net income (loss)
|
(7.5
|
)%
|
|
3.8
|
%
|
|
13.1
|
%
|
|
(8.7
|
)%
|
|
(5.4
|
)%
|
|
(13.4
|
)%
|
|
(6.5
|
)%
|
|
(12.3
|
)%
|
|
8.4
|
%
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||||||
|
March 31, 2018
|
|
June 30, 2018
|
|
September 30, 2018
|
|
December 31, 2018
|
|
March 31, 2019
|
|
June 30, 2019
|
|
September 30, 2019
|
|
December 31, 2019
|
|
March 31, 2020
|
||||||||||||||||||
|
(Unaudited, US$ in thousands)
|
||||||||||||||||||||||||||||||||||
Other Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Adjusted EBITDA(1)
|
$
|
(45
|
)
|
|
$
|
1,177
|
|
|
$
|
2,815
|
|
|
$
|
88
|
|
|
$
|
720
|
|
|
$
|
105
|
|
|
$
|
187
|
|
|
$
|
(981
|
)
|
|
$
|
5,458
|
|
Free cash flow(1)
|
$
|
(1,220
|
)
|
|
$
|
(3,033
|
)
|
|
$
|
225
|
|
|
$
|
2,303
|
|
|
$
|
2,855
|
|
|
$
|
(6,581
|
)
|
|
$
|
(1,267
|
)
|
|
$
|
897
|
|
|
$
|
(3,416
|
)
|
(1)
|
See the section of this prospectus captioned “Prospectus Summary—Summary Consolidated Financial and Operating Data—Key Operating and Financial Metrics” for information on how we define and calculate these measures.
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||||||
|
March 31, 2018
|
|
June 30, 2018
|
|
September 30, 2018
|
|
December 31, 2018
|
|
March 31, 2019
|
|
June 30, 2019
|
|
September 30, 2019
|
|
December 31, 2019
|
|
March 31, 2020
|
||||||||||||||||||
|
(Unaudited, US$ in thousands)
|
||||||||||||||||||||||||||||||||||
Net income (loss)
|
$
|
(603
|
)
|
|
$
|
398
|
|
|
$
|
1,660
|
|
|
$
|
(1,079
|
)
|
|
$
|
(718
|
)
|
|
$
|
(2,004
|
)
|
|
$
|
(1,113
|
)
|
|
$
|
(2,342
|
)
|
|
$
|
2,987
|
|
Excluding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Exchange gain (loss)
|
6
|
|
|
11
|
|
|
—
|
|
|
(37
|
)
|
|
(18
|
)
|
|
31
|
|
|
40
|
|
|
34
|
|
|
(7
|
)
|
|||||||||
Interest income
|
53
|
|
|
92
|
|
|
71
|
|
|
23
|
|
|
43
|
|
|
81
|
|
|
262
|
|
|
240
|
|
|
97
|
|
|||||||||
Income taxes
|
(10
|
)
|
|
(25
|
)
|
|
(57
|
)
|
|
(13
|
)
|
|
(190
|
)
|
|
(136
|
)
|
|
(264
|
)
|
|
(212
|
)
|
|
(369
|
)
|
|||||||||
Depreciation and amortization
|
160
|
|
|
190
|
|
|
254
|
|
|
318
|
|
|
342
|
|
|
429
|
|
|
520
|
|
|
577
|
|
|
745
|
|
|||||||||
Share-based compensation expense
|
447
|
|
|
667
|
|
|
914
|
|
|
822
|
|
|
930
|
|
|
1,656
|
|
|
820
|
|
|
847
|
|
|
1,447
|
|
|||||||||
Adjusted EBITDA
|
$
|
(45
|
)
|
|
$
|
1,177
|
|
|
$
|
2,815
|
|
|
$
|
88
|
|
|
$
|
720
|
|
|
$
|
105
|
|
|
$
|
187
|
|
|
$
|
(981
|
)
|
|
$
|
5,458
|
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||||||
|
March 31, 2018
|
|
June 30, 2018
|
|
September 30, 2018
|
|
December 31, 2018
|
|
March 31, 2019
|
|
June 30, 2019
|
|
September 30, 2019
|
|
December 31, 2019
|
|
March 31, 2020
|
||||||||||||||||||
|
(Unaudited, US$ in thousands)
|
||||||||||||||||||||||||||||||||||
Net cash generated from (used in) operating activities
|
$
|
(1,091
|
)
|
|
$
|
(2,404
|
)
|
|
$
|
1,300
|
|
|
$
|
2,731
|
|
|
$
|
3,619
|
|
|
$
|
(4,935
|
)
|
|
$
|
(54
|
)
|
|
$
|
2,077
|
|
|
$
|
(919
|
)
|
Purchases of property and equipment
|
(129
|
)
|
|
(629
|
)
|
|
(1,075
|
)
|
|
(429
|
)
|
|
(764
|
)
|
|
(1,645
|
)
|
|
(1,213
|
)
|
|
(1,180
|
)
|
|
(2,496
|
)
|
|||||||||
Free cash flow
|
(1,220
|
)
|
|
(3,033
|
)
|
|
225
|
|
|
2,303
|
|
|
2,855
|
|
|
(6,581
|
)
|
|
(1,267
|
)
|
|
897
|
|
|
(3,416
|
)
|
|||||||||
Net cash generated from (used in) investing activities(1)
|
(129
|
)
|
|
(629
|
)
|
|
(1,075
|
)
|
|
(1,941
|
)
|
|
(5,951
|
)
|
|
2,024
|
|
|
(2,644
|
)
|
|
3,219
|
|
|
(2,496
|
)
|
|||||||||
Net cash provided by (used in) financing activities
|
(785
|
)
|
|
—
|
|
|
—
|
|
|
66,557
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49,769
|
|
(1)
|
Net cash used in investing activities includes payments for purchases of property and equipment, which is also included in our calculation of free cash flow.
|
|
As of December 31,
|
|
As of March 31,
|
||||||||
|
2018
|
|
2019
|
|
2020
|
||||||
|
(US$ in thousands)
|
||||||||||
Cash and cash equivalents
|
$
|
108,518
|
|
|
$
|
105,603
|
|
|
$
|
151,653
|
|
Short-term investments
|
1,457
|
|
|
—
|
|
|
—
|
|
|||
Accounts receivable, net
|
11,659
|
|
|
16,248
|
|
|
31,240
|
|
|||
Working capital(1)
|
$
|
111,948
|
|
|
$
|
104,750
|
|
|
155,851
|
|
(1)
|
Working capital is defined as current assets less current liabilities.
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands)
|
||||||||||||||
Net cash generated from (used in) operating activities
|
$
|
536
|
|
|
$
|
706
|
|
|
$
|
3,619
|
|
|
$
|
(919
|
)
|
Net cash used in investing activities
|
(3,773
|
)
|
|
(3,353
|
)
|
|
(5,951
|
)
|
|
(2,496
|
)
|
||||
Net cash provided by financing activities
|
65,772
|
|
|
—
|
|
|
—
|
|
|
49,769
|
|
||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
$
|
61,979
|
|
|
$
|
(2,915
|
)
|
|
$
|
(2,139
|
)
|
|
$
|
46,050
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less Than
1 Year
|
|
1 - 3 Years
|
|
3 - 5 Years
|
|
More Than
5 Years
|
||||||||||
|
(US$ in thousands)
|
||||||||||||||||||
Operating lease obligations
|
$
|
3,834
|
|
|
$
|
1,746
|
|
|
$
|
1,990
|
|
|
$
|
98
|
|
|
$
|
—
|
|
Purchase obligations
|
$
|
4,239
|
|
|
4,239
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
8,073
|
|
|
$
|
5,985
|
|
|
$
|
1,990
|
|
|
$
|
98
|
|
|
$
|
—
|
|
(1)
|
Operating leases represent total future minimum rent payments under non-cancelable operating lease agreements.
|
(2)
|
Purchase obligations represent total future minimum payments under contracts with our cloud infrastructure provider, network service providers and other vendors.
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||
Exercise price
|
US$0.10-US$1.00
|
|
|
US$0.10-US$0.50
|
|
|
US$0.1-US$0.37
|
|
|
US$0.1-US$1.74
|
|
Fair value of the ordinary shares on the date of option grant
|
US$0.3493-US$0.6989
|
|
|
US$0.6989-US$1.4751
|
|
|
US$0.6989-US$0.8444
|
|
|
1.7358
|
|
Risk-free interest rate(1)
|
2.54%-3.18%
|
|
|
1.80%-2.83%
|
|
|
2.62%-2.83%
|
|
|
1.76
|
%
|
Expected term (in years)
|
10
|
|
|
10
|
|
|
10
|
|
|
10
|
|
Expected dividend yield(2)
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
Expected volatility(3)
|
49.18%-50.36%
|
|
|
47.54%-50.01%
|
|
|
49.31%-50.01%
|
|
|
47.29
|
%
|
Expected forfeiture rate (post-vesting)
|
3
|
%
|
|
3
|
%
|
|
3
|
%
|
|
0%-3%
|
|
(1)
|
The risk-free interest rate of periods within the contractual life of the share option is based on the market yield of the U.S. treasury bonds with a maturity life equal to the expected life to expiration.
|
(2)
|
We have no history or expectation of paying dividends on our ordinary shares.
|
(3)
|
Expected volatility is estimated based on the average of historical volatilities of the comparable companies in the same industry as at the valuation dates.
|
|
|
Tony Zhao
|
Founder, Chairman and CEO of Agora
|
•
|
Social, Education, Entertainment and Gaming. Real-time and immersive experiences promote application usage which leads to higher user retention and increased willingness to pay. Common use cases include one-to-one and group video and voice chat, remote classroom, live interactive streaming and video or voice interactions in multi-player games.
|
•
|
Enterprise Solutions. Increased user engagement and closer collaboration is catalyzing innovation and driving agility across enterprises. Common use cases include video conferencing and engagement-oriented workflows such as sales, customer support and consultation. These workflows span a diversified mix of industries including healthcare, financial services, e-commerce, professional services, field services and utilities.
|
•
|
Internet of Things (IoT). Real-time video and voice engagement across IoT devices is driving operational optimization, enhancing public safety and increasing employee productivity. As 5G deployment accelerates and the commercial and consumer usage of the network expands, real-time video is expected to become mainstream across several emerging IoT use cases.
|
•
|
Video Offerings. Unlike legacy A2P offerings that are unable to provide video solutions, RTE is well positioned to deliver real-time video engagement.
|
•
|
Cost Efficiency. RTE technologies consume bandwidth which is much cheaper than voice minutes and SMS messages purchased from telecom operators.
|
•
|
Immersive and Convenient Application Experiences. Since RTE technologies enable video, voice and chat engagement to occur natively within applications, end users are able to enjoy smoother, more immersive and more convenient experiences.
|
•
|
Privacy. With RTE technologies, end users are able to prevent disclosing their phone numbers through the use of proper in-application masking.
|
•
|
The Public Internet is not Ideal for RTE. The public internet as it stands is an open and best efforts network with no assurance of service quality, which is not ideal for RTE. Network conditions vary across time of day, geographies and network operators, often causing significant data packet loss and high latency. Real-time video engagement is particularly challenging as it requires much higher data volume, bandwidth and computing power than other forms of engagement.
|
•
|
Multi-way RTE is Significantly more Complex than One-way Content Delivery. The majority of public internet traffic flows downstream from content providers to users. One-way content delivery can be addressed by building widely distributed data warehouses and caching data near end users. However, real-time engagement is by definition at least two-way and involves transmission of data back and forth between users under varying network conditions, sometimes across distant geographies. As more users join an engagement, the amount of data transmitted and the associated technical complexity increase significantly. Even more challenging is the low latency requirement. To deliver effective real-time video or voice engagement, multiple data streams need to be created, transmitted, synchronized and consumed simultaneously with millisecond end-to-end latency. A problem at any step would be immediately noticed by end users.
|
•
|
Convergence of Adoption Trends. The pace of RTE-PaaS adoption varies across regions. In the United States, enterprise applications drive the market, with digital transformation, omni-channel customer interactions and integrated platform tools being the key technology growth drivers. In China and other countries in the Asia Pacific region, consumer applications in social, education, entertainment and gaming drive adoption of RTE-PaaS solutions. Over time, it is expected that adoption across enterprise and consumer use cases will converge globally.
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•
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Organic Growth from Applications Built upon RTE-PaaS solutions. Applications that RTE-PaaS solutions enable have benefited from strong organic growth as end users demand a more immersive and high-quality video and voice engagement experience. As the number of applications built upon RTE proliferates and the end-user base and usage of these applications continue to increase, the demand for RTE-PaaS should continue to expand.
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Rollout of 5G Will Likely Accelerate Innovation and Proliferation of RTE Use Cases. As 5G networks continue to be deployed, internet infrastructure will improve generally and, in particular, end users will benefit from a better connection between their devices and the internet backbone. This will allow RTE-PaaS providers to significantly improve the quality of the end-user experience, which could drive popularity and usage of existing use cases and enable new ones, particularly centered on real-time video engagement.
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•
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Further Conversion from In-house. In-house developers often lack the requisite expertise to develop RTE solutions, especially real-time video engagement. Even where the expertise exists, building and maintaining the underlying infrastructure is time-consuming and expensive. In addition, developers must continually customize their applications to address the continuous evolution and innovation of phones, PCs and other connected devices with a myriad of combinations of microphones, speakers, cameras and other components. With the rapid pace at which organizations are required to enhance their software applications to stay competitive and meet the evolving needs of their end users, RTE-PaaS solutions are expected to continue to displace in-house developed technologies.
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Quality and Reliability. The most important reason why developers choose the Agora platform is the quality and reliability of real-time engagement we power. Our platform delivers industry-leading performance around latency and media quality, and works under challenging network conditions with up to 70% packet loss. Our customers can take comfort from our service level agreements that provide assurances on availability (uptime) levels and, increasingly, experience levels such as latency.
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Comprehensive Features. We offer a breadth of product features that go beyond just enabling the video and voice aspects of real-time engagement. We provide a spectrum of building blocks through hundreds of APIs, use case products and third-party plug-ins that improve our customers’ offerings and enhance end-user experience, such as content moderation in social applications, interactive whiteboard in education and voice masking in gaming. Developers often find that they can build a significant portion of their applications with our software modules and services.
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Easy to Integrate. Our SDK is designed to be easy to learn, simple to embed and highly customizable. We also provide detailed documentation, programming tools and a wide range of code samples. Compared with developing real-time engagement solutions in-house, adopting the Agora platform can significantly simplify software development and shorten time to market.
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Scalability. Our advanced architecture and global infrastructure allow applications to scale rapidly to serve millions of end users across geographies while maintaining the quality of the user experience.
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Cost Efficiency. Our usage-based pricing model with no upfront fee allows customers to minimize initial investment and efficiently manage costs. Given our scale and the fact that peak usage of applications that use our platform usually occur at different times, we can support more usage with the same bandwidth, enabling us to offer our customers attractive pricing. We believe our ability to offer this benefit will be enhanced as we continue to scale.
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•
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Compatibility. Our SDK is broadly compatible with major operating systems, development frameworks and programming languages, and a wide variety of phones, PCs and other connected devices, including older and less sophisticated models. Our SDK is also designed to be compact in size and efficient in CPU usage and power consumption.
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•
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Transparency. Our platform is built with real-time analytics at the core, which allow customers to easily monitor and analyze the quality of each video and voice engagement session, manage billings and usage, and gain clear insights on user experience.
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•
|
RTE-PaaS Pioneer and Global Leader. We pioneered RTE-PaaS and we are the global leader in this rapidly growing industry. Our platform is developed by a talented engineering team led by our founder and chief executive officer with extensive expertise in real-time engagement technology. As the industry leader we power more and more minutes for a growing number of customers and end users, which enables us to further improve the quality of experience of our products and in turn attract even more customers and end users. We believe the time and resources required to replicate our level of quality will only increase as we continue to scale our business.
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•
|
Advanced Network Architecture. The SD-RTN is designed to handle the most demanding task in real-time engagement: real-time video. It runs on commodity hardware and adopts a globally distributed and all-software architecture, instead of relying on a few physical or private transmission lines. We believe our architecture is cost-effective, scalable, resilient and allows for highly flexible routing optimization, making it particularly suitable for enabling real-time video and voice engagement at massive scale.
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•
|
Pure-Play and Independent Platform. Our singular focus on real-time engagement means we prioritize our entire platform for minimizing latency, which is challenging for a full-service cloud provider given the competing needs of its non-real-time products. By being focused we are able to “go deeper” and offer more comprehensive features, more control and more visibility, thereby making us more developer-friendly. Our positioning as an independent platform is also attractive to developers and partners who want to avoid conflicts of interest or reliance on a single cloud provider.
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•
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Developer Mind Share. We have cultivated a large and engaged developer community, with more than 180,000 applications that have registered on our platform from our inception through March 31, 2020. We believe we are recognized by developers as the leading platform for real-time engagement. We set the standard for integrating and operating real-time engagement within software applications in China, and increasingly in other markets.
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•
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Loyal Customer Base. Once developers have integrated our SDK and experienced the quality and reliability of our platform, we believe they are less inclined to try alternatives and incur potentially high switching cost. We rarely lose customers to competitors and their loyalty is reflected in our Constant Currency Dollar-Based Net Expansion Rate, which was 133% and 131% for 2018 and 2019, respectively. Our customer Net Promoter Score was 64 in May 2020, according to a customer survey conducted by us.
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•
|
Invest in Technology. We will continue to focus on improving the quality of the end-user experience to drive overall demand for real-time engagement. We also plan to introduce products that complement our current offerings, and in particular, use-case products that support key customer industries such as education and entertainment as well as emerging technologies such as IoT and AR/VR. We have a substantial research and development team, comprising 57% of our headcount as of March 31, 2020. In 2018 and 2019 and the first three months of 2020, we invested US$13.5 million, US$22.2 million and US$11.4 million in research and development, excluding share-based compensation, representing 30.9%, 34.5% and 32.0% of our revenue, respectively.
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•
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Grow our Developer Community. We actively work with developers to brainstorm and test innovative ideas. For example, we worked with the developers of Werewolf, a mafia-type party game that requires constant dialogue among players, to develop an online version that was not possible in the absence of our Real-Time Voice product. We will continue to invest our resources to help developers innovate. We will also invest in brand marketing and developer relationships to drive awareness of our platform and attract more developers to our platform.
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•
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Invest in Partnership Ecosystem. We believe that in today’s technology landscape, it is imperative that we work with partners to extend our platform’s capabilities. In 2019, we introduced the Agora Partner Gallery, our marketplace for third-party solutions and services, to allow partners to develop specific use case functionalities that work as plugins on our core products. We have relationships with a variety of technology vendors, channel partners, independent software vendors and service integrators, and intend to grow and broaden these relationships. We will continue to invest in this ecosystem to drive adoption of our platform.
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•
|
Expand Focus on Enterprises. Currently, our customers mainly come from social, education, entertainment and gaming sectors and there is significant room for increased customer penetration in e-commerce, financial services, healthcare, professional services and IoT. We plan to increase our sales effort into these industries and use cases to drive greater adoption.
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•
|
Accelerate International Expansion. Although we believe that adoption of real-time engagement in China is still in the early stages, it is further advanced there than in other countries, especially for consumer-oriented applications. By expanding our developer engagement efforts and direct sales force in the United States and other markets and collaborating with ecosystem partners, we plan to grow our revenue globally.
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•
|
Real-Time Video. Our Real-Time Video product enables real-time video interactions at up to full high-definition resolution among multiple users. Our Real-Time Video product offers features such as adaptive compression according to network conditions, perceptual video coding and resolution enhancement. The SDK allows for seamless integration with third-party plugins and functions as well as deep customization of video resolution and layout.
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•
|
Live Interactive Video Streaming. Our Live Interactive Video Streaming product enables real-time video interactions that are simultaneously streamed to up to millions of users, offering immersive video streaming experiences.
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•
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Real-Time Voice. Our Real-Time Voice product enables real-time voice interactions among multiple users. Our Real-Time Voice product offers features such as 3D spatial audio, active speaker detection, audio mixing, noise reduction, echo cancellation, surge control and voice effects.
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•
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Live Interactive Audio Streaming. Our Live Interactive Audio Streaming product enables real-time audio interactions that are streamed to up to millions of users.
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•
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Real-Time Messaging. Our Real-Time Messaging product provides a highly reliable and low latency messaging service through the SD-RTN, including peer-to-peer messaging as well as channel messaging that can send messages to millions of recipients simultaneously.
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•
|
Real-Time Recording. Real-Time Recording is an add-on service to our Video and Audio products to record and save video and voice interactions and live interactive streaming, either on our platform or on servers designated by our customers. Our Real-Time Recording product enables a wide range of use cases such as course recording, regulatory compliance, record keeping and customer service quality evaluations.
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•
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Real-Time Streaming Acceleration. Our Real-Time Streaming Acceleration product facilitates ultra-low latency transmission of streaming content over the internet. It is intended to be used by developers who have developed their own media processing modules that can otherwise be provided by our SDK but would benefit from access to the SD-RTN to accelerate their streaming transmissions.
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•
|
Use Case Products. Our use case products provide value-added functionalities for common use cases, such as content moderation to remove inappropriate content in a video stream, interactive whiteboard for education applications and transcription services. In 2019, we introduced the Agora Partner Gallery, our marketplace for third-party solutions and services, to allow partners to develop specific use case functionalities that work as plugins on our core products, which we believe will extend the value and adoption of our platform.
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•
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Social. We enable a variety of real-time social interactions online, such as:
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Group Engagements. We enable real-time group video and voice chats that allow users to meet new people, connect with likeminded individuals and build intimate personal relationships. Users can see and talk to each other with low latency and high clarity while picking up non-verbal clues normally absent in online interactions.
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◦
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Matchmaking and Dating. For one customer, we enable online sessions in which a matchmaker introduces two potential partners to each other through three-way real-time video engagement. The matchmaker helps make introductions, breaks the ice and guides the conversation, facilitating deeper interactions between the potential partners and an overall more natural dating experience that is similar to traditional offline matchmaking. In other cases, we enable social exploration and dating via 1-on-1 real-time video engagement.
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Online Karaoke. Our technology enables individuals from different locations to sing songs together in a virtual karaoke room. The musical accompaniment, vocal tracks and physical cues of the singers are all important components of the experience and must be in sync throughout.
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•
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Education. We enable interactive online classes where students and teacher can interact via real-time video or voice, thereby promoting student engagement and enriching learning experiences. For educational service providers, latency and media quality are mission critical to their success, as any noticeable issues with the video or voice can be distracting to the students and negatively impact their ability to interact with teacher and other students. Below are some of the use cases we enable:
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1-on-1 Classes. We enable 1-on-1 online classes that provide exclusive and immersive learning experiences that closely replicate in-person tutoring. For one customer, we support 1-on-1 language classes where teacher and student are located in different countries or even continents. For another customer, we use high definition video for art classes to ensure effective observation and teaching.
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Small Classes. Online education platforms utilize our technology to offer interactive online small classes. Students can see and participate in discussions with other students in the same session in real-time, in addition to the teacher, thus closely replicating an in-person, small-group learning experience.
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Interactive large classes. We have enabled large interactive online classes that can support thousands of participants in one session. Traditionally, large classes utilize one-way video streaming technology which has limited ability for students to interact with the teacher given the high latency in the video. Additionally, class material or whiteboard content are often out of sync with the video given the unstable latency of traditional streaming technology. With our real-time engagement technology, students are able to raise their hand and interact with teachers via video or voice in real-time, and teachers can use an interactive virtual whiteboard that is delivered in real-time and highly synchronized with the main video stream, resulting in a rich learning experience.
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•
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Entertainment (Live Interactive Streaming). Traditional live streaming, such as those involving live performances of a host dancing or singing, offers limited ability for the audience to engage with the host. With our technology, audiences are able to interact with hosts via real-time video or voice as they are performing. More recently, our technology has been applied to enable “Host PK,” a type of live streaming performance popular in China in which multiple live streams are combined and hosts compete with one another in real-time “battles.” These involve performances where the real-time nature of engagements is critical to the experience, such as in singing competitions or live duets or heated debates between hosts. Our technology
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•
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Gaming. Our platform has empowered game developers to enhance multiplayer gaming experiences and create new gaming formats that were not previously possible.
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In-game Collaboration. Competitive online multiplayer games, such as multiplayer online battle arenas, or MOBAs, require close, real-time coordination among teams of players as they face off against each other. Our technologies allow players to seamlessly interact with one another during the heat of battle, execute well-timed strategies on the fly, and share moments of excitement with their teammates in real-time.
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Interaction-dependent Games. Real-time engagement technology allows for online gaming formats that would not have been possible in the past. Players can now view body language and reactions of teammates and competitors in real time to make gameplay decisions. For example, online poker players can now incorporate the critically important aspect of deciphering visual “tells” into their gameplay. Similarly, Werewolf, a popular social deduction game that was previously only playable offline as it requires constant dialogue between players and live deduction based on players’ social and language clues, can now be made playable online through our technology.
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•
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Enterprise Solutions. We offer the following enterprise solutions that can be used across industries.
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Customer Service. Businesses rely on our platform to improve the quality and efficiency of their services and increase customer satisfaction. Traditionally, remote customer service has typically been conducted over the phone, which not only lacks video capability but also can be costly and with potential privacy concerns since customers’ actual phone numbers are used. We enable cost effective real-time video and voice solutions that allow companies to provide a differentiated experience for the customers in order to drive sales, answer customer inquiries, and resolve any disputes, among many other uses. For example, an online food delivery customer has their delivery crew use our technology to call their customers through an application-to-application voice call when the delivery arrives, instead of using a traditional phone call. For an online travel agency customer, their customer service representatives use our technology to engage with their customers over application-to-application video or voice instead of traditional phone call.
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Collaboration. Enterprise customers use our technology to enable video and voice conferencing in their internal collaboration software. SaaS providers also adopt our technology to enable collaboration through real-time video and voice in their products.
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Financial Services. Our platform also powers use cases within the financial services industry, such as:
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Banking. A leading commercial bank in China leverages our technology to enable video banking. Customers can remotely open accounts or complete transactions with a customer service representative, in a way that closely replicates an in-person bank branch visit. Furthermore, video interactions between customers and service representatives are recorded using our Real-Time Recording product to comply with regulatory requirements.
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Insurance. A leading online-only insurance company in China uses our technology for its automotive insurance claims process. Following a car accident, insurance adjustors can engage with claimants through real-time video without being at the actual accident site, to assess damage and confirm coverage remotely.
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Healthcare. Our platform enables medical service providers to offer remote consultation to patients in real-time. Patients benefit from increased flexibility and convenience, and in emergency situations the improved access to medical advice could even potentially save lives.
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Consultation. An online medical aesthetics platform uses our technology to enable real-time video consultation for its patients who might not be able to make in-person appointments. Patients can consult with doctors on their treatment options and conduct follow-up appointments remotely after surgery.
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Emergency. A medical emergency service uses our technology to allow patients to receive first aid directions from a doctor through real-time video while waiting for an ambulance. Once the patient calls the emergency hotline, the service will send the patient the web link for the video connection and the patient does not need to install additional software. This allows the doctors to make critical assessments and give instructions that could save patient lives.
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Internet of Things. The number of connected devices globally is expected to grow rapidly. Many of them can benefit from our technology. Our technology has been integrated into various IoT devices and use cases and we believe there is still enormous potential in the future.
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Smart Watches. Our technology has been embedded in smart watches to enable users to conduct video calls directly from their wrists. This is often used as an emergency call for children or elderly people. For example, if they get lost in a shopping mall, they can simply press a button on their smart watch to initiate a video call with their parents or guardians and show them the surroundings.
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Smart Home Appliances. We have partnered with customers to integrate real-time video and voice functionalities into their smart home appliances and devices. For example, smart speakers and smart TVs can use our technology to conduct real-time video and voice calls with family and friends. Home security cameras and smart doorbells can establish real-time video connections with smart TVs, mobile phones and other smart home devices.
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Agora SDK. The Agora SDK contains all the software a developer needs to integrate our real-time engagement products into an application, is customizable by the developer and runs on end users’ devices as part of the developer’s application. The main software modules of the Agora SDK include:
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Capturing modules that capture audio and video streams, and rendering modules that combine and synchronize multiple video or audio streams.
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Pre-processing modules that modify the raw streams to reduce background noise, cancel echo, enable users to “beautify” their video appearance and add a variety of video special effects in real time, among other things, as well as post-processing modules that enhance the received streams, including resolution enhancement, noise reduction, image sharpening, concealment of audio or video defects such as jitter and color blocks, and video frame interpolation.
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Encoding and decoding modules that compress and decompress the streams before and after transmission. Our video and audio codecs dynamically adapt the size of video and audio streams based on network transmission environment and end-user device capabilities.
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“First-mile” and “last-mile” transmission modules that transmit data between end-user devices and an edge node of the SD-RTN. Our transmission modules dynamically select the optimal edge nodes based on changes in the network environment, for example, when the end-user device switches from a WiFi to a cellular network connection. Our transmission modules also use adaptive channel coding based on predicted packet-loss rate, as well as other strategies, to compensate for packet loss.
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SD-RTN. The SD-RTN is a virtual network overlay on top of the public internet that runs on more than 200 co-located data centers worldwide and handles real-time data transmission between end-user devices when using our SDK. A key distinguishing feature of the SD-RTN is its all-software architecture; we do not own or
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•
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PaaS providers, such as Tencent in China and TokBox (part of Vonage Holdings Corp.) and Twilio Inc. in the United States, as well as smaller software companies, which compete with all or portions of our platform and products;
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•
|
open-source projects, such as WebRTC, which offer capabilities that compete with some of the functionalities in our SDK; and
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•
|
network operators or cloud providers that offer private lines on which similar functionalities to ours can be built.
|
•
|
quality of data transmission and user experience;
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•
|
credibility with developers;
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•
|
global reach;
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•
|
ease of integration and programmability;
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•
|
product features;
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•
|
platform scalability, reliability, compatibility, security and performance;
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•
|
brand awareness and reputation;
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•
|
the strength of sales and marketing efforts;
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•
|
customer support; and
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•
|
the cost of deploying and using our products.
|
Function
|
|
Number of Employees
|
Research and development
|
|
282
|
Sales and marketing
|
|
92
|
Customer solutions and services
|
|
79
|
General and administrative (including executives)
|
|
45
|
Total
|
|
498
|
•
|
complying with security protection obligations in accordance with tiered requirements with respect to maintenance of the security of internet systems, which include formulating internal security management rules and developing manuals, appointing personnel who will be responsible for internet security, adopting technical measures to prevent computer viruses and activities that threaten internet security, adopting technical measures to monitor and record status of network operations, holding internet security training events, retaining user logs for at least six months, and adopting measures such as data classification, key data backup, and encryption for the purpose of securing networks from interference, vandalism, or unauthorized visits, and preventing network data from leakage, theft, or tampering;
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•
|
verifying users’ identities before signing agreements or providing services such as network access, domain name registration, landline telephone or mobile phone access, information publishing, or real-time communication services;
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•
|
clearly indicating the purposes, methods and scope of the information collection, the use of information collection, and obtain the consent of those from whom the information is collected when collecting or using personal information;
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•
|
strictly preserving the privacy of user information they collect, and establish and maintain systems to protect user privacy; and
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•
|
strengthening management of information published by users. When the network operators discover information prohibited by laws and regulations from publication or dissemination, they shall immediately stop dissemination of that information, including taking measures such as deleting the information, preventing the information from spreading, saving relevant records, and reporting to the relevant governmental agencies.
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Name
|
|
Age
|
|
Position
|
Executive Officers
|
|
|
|
|
Bin (Tony) Zhao
|
|
49
|
|
Chief Executive Officer and Chairman
|
Siming Tao
|
|
38
|
|
Senior Vice President of Products
|
Sheng (Shawn) Zhong
|
|
54
|
|
Chief Scientist
|
Regev (Reggie) Yativ
|
|
51
|
|
Chief Revenue Officer and Chief Operating Officer of Agora Lab
|
Jingbo Wang
|
|
38
|
|
Chief Financial Officer
|
Non-Employee Directors
|
|
|
|
|
Qin Liu
|
|
47
|
|
Director
|
Tuck Lye Koh
|
|
48
|
|
Director
|
Eric He*
|
|
60
|
|
Director nominee
|
Jenny Hong Wei Lee*
|
|
47
|
|
Director nominee
|
*
|
Each of Mr. He and Ms. Lee has accepted an appointment to serve on our board of directors effective immediately upon the SEC’s declaration of effectiveness of our registration statement on Form F-1, of which this prospectus forms a part.
|
•
|
approving the hiring, discharging and compensation of our independent registered public accounting firm;
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•
|
overseeing the work of our independent registered public accounting firm;
|
•
|
approving engagements of our independent registered public accounting firm to render any audit or permissible non-audit services;
|
•
|
reviewing the qualifications, independence and performance of our independent registered public accounting firm;
|
•
|
reviewing our consolidated financial statements and reviewing our critical accounting policies and estimates;
|
•
|
developing procedures for employees to anonymously submit concerns about questionable accounting or audit matters;
|
•
|
reviewing the adequacy and effectiveness of our internal controls; and
|
•
|
reviewing and discussing the scope and results of the audit with our independent registered public accounting firm and reviewing, with management and the independent accountants, our interim and annual operating results.
|
•
|
reviewing and recommending policies relating to compensation and benefits of our officers and employees;
|
•
|
reviewing and approving corporate goals and objectives relevant to compensation of our chief executive officer and other senior officers;
|
•
|
evaluating the performance of our officers in light of established goals and objectives;
|
•
|
recommending compensation of our officers based on its evaluations; and
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•
|
administering the issuance of equity awards and other awards under our equity incentive plans.
|
•
|
evaluating and making recommendations regarding the organization and governance of the board of directors and its committees;
|
•
|
assessing the performance of members of the board of directors and making recommendations regarding committee and chair assignments;
|
•
|
recommending desired qualifications for board of directors membership and conducting searches for potential members of the board of directors; and
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•
|
reviewing and making recommendations with regard to our corporate governance guidelines.
|
•
|
convening shareholders’ annual and extraordinary 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.
|
Name
|
|
Number of Ordinary Shares Underlying Options
|
|
Exercise Price
(US$/Share)
|
|
Date of Grant
|
|
Date of Expiration
|
Sheng (Shawn) Zhong
|
|
*
|
|
US$0.10
|
|
March 30, 2018
|
|
February 29, 2028
|
Regev (Reggie) Yativ
|
|
*
|
|
US$0.10
|
|
March 30, 2018
|
|
February 29, 2028
|
Jingbo Wang
|
|
*
|
|
US$0.10
|
|
February 12, 2020
|
|
February 11, 2030
|
*
|
Represents less than 1% of our total outstanding shares.
|
•
|
each of our directors and executive officers; and
|
•
|
each person known to us to own beneficially more than 5% of our ordinary shares on an as-converted basis.
|
|
Ordinary Shares Beneficially Owned Prior to This Offering
|
|
Ordinary Shares Beneficially Owned After This Offering
|
||||||||
|
|
Class A Ordinary Shares
|
|
Class B Ordinary Shares
|
|
Percentage of Beneficial Ownership
|
|
Percentage of Aggregate Voting Power**
|
|||
|
Number
|
|
Percent
|
||||||||
Directors and Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
Bin (Tony) Zhao(1)
|
83,402,160
|
|
27.4
|
|
|
|
|
|
|
|
|
Siming Tao(2)
|
14,900,000
|
|
4.9
|
|
|
|
|
|
|
|
|
Sheng (Shawn) Zhong
|
*
|
|
*
|
|
|
|
|
|
|
|
|
Regev (Reggie) Yativ
|
*
|
|
*
|
|
|
|
|
|
|
|
|
Jingbo Wang
|
—
|
|
—
|
|
|
|
|
|
|
|
|
Qin Liu
|
—
|
|
—
|
|
|
|
|
|
|
|
|
Tuck Lye Koh(3)
|
31,065,548
|
|
10.2
|
|
|
|
|
|
|
|
|
Eric He†
|
—
|
|
—
|
|
|
|
|
|
|
|
|
Jenny Hong Wei Lee†(4)
|
7,016,595
|
|
2.3
|
|
|
|
|
|
|
|
|
All directors and executive officers as a group
|
139,550,212
|
|
45.8
|
|
|
|
|
|
|
|
|
Principal Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
Soundscape Limited(1)
|
76,179,938
|
|
25.0
|
|
|
|
|
|
|
|
|
Entities affiliated with Morningside(5)
|
47,976,514
|
|
15.7
|
|
|
|
|
|
|
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Entities affiliated with SIG(6)
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39,074,811
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12.8
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Shunwei Technology II Limited(3)
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31,065,548
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10.2
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Coatue PE Asia XVI LLC(7)
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27,500,540
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9.0
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Easy Dynamic International Limited(8)
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22,489,831
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7.4
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*
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Represents beneficial ownership of voting power of less than 1%.
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**
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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 outstanding Class A ordinary shares and Class B ordinary shares as a single class. Each holder of our Class A ordinary shares is entitled to one vote per share. Each holder of Class B ordinary shares is entitled to 20 votes per share, and while on all matters submitted to them for a vote. Our Class A ordinary shares and Class B ordinary shares vote together as a single class on all matters submitted to a vote of our shareholders. Our Class B ordinary shares are convertible at any time by the holders thereof into Class A ordinary shares on a one-for-one basis.
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†
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Each of Mr. He and Ms. Lee has accepted an appointment to serve on our board of directors effective immediately upon the SEC’s declaration of effectiveness of our registration statement on Form F-1, of which this prospectus forms a part.
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(1)
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Represents (a) 76,179,938 ordinary shares held by Soundscape Limited, a British Virgin Islands company; and (b) 7,222,222 Series A preferred shares held by YY TZ Limited, a British Virgin Islands company. Soundscape Limited is wholly owned by Mr. Zhao, and Mr. Zhao is the sole director of YY TZ Limited and, as such, has discretionary authority to vote and dispose of the shares held by YY TZ Limited in our company. The registered address of Soundscape Limited is Trinity Chambers, PO Box 4301, Road Town, Tortola, British Virgin Islands, and the registered address of YY TZ Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. All of the ordinary shares held by Soundscape Limited will be re-designated and re-classified as Class B ordinary shares immediately prior to the completion of this offering and all of the Series A preferred shares held by YY TZ Limited will be automatically converted into Class A ordinary shares immediately prior to the completion of this offering.
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(2)
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Represents 14,900,000 ordinary shares held by Golden Dynamic International Limited, a British Virgin Islands company. Golden Dynamic International Limited is owned by a trust established under the laws of the British Virgin Islands for the benefit
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(3)
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Represents 20,000,000 Series A preferred shares, 5,078,370 Series B preferred shares, 2,507,837 Series B+ preferred shares and 3,479,341 Series C preferred shares held by Shunwei Technology II Limited. Shunwei China Internet Fund, L.P. is the sole shareholder of Shunwei Technology II Limited. Shunwei Capital Partners GP, L.P. is the general partner of Shunwei China Internet Fund, L.P. Shunwei Capital Partners GP Limited is the general partner of Shunwei Capital Partners GP, L.P. The shareholders of Shunwei Capital Partners GP Limited are Silver Unicorn Ventures Limited, a British Virgin Islands company wholly owned by Mr. Koh, and Grand Energy Ventures Limited, a British Virgin Islands company wholly owned by Mr. Lei Jun. The business address of Shunwei Technology II Limited is Vistra Corporate Services Center, Wickhams Cay II, Road Town, Tortola, VG 1110, British Virgin Islands. All of the preferred shares held by Shunwei Technology II Limited will be automatically converted into Class A ordinary shares immediately prior to the completion of this offering.
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(4)
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Represents 1,474,976 ordinary shares, 1,958,473 Series A preferred shares, 2,946,919 Series B preferred shares and 490,539 Series B+ preferred shares held by GGV Capital IV L.P., and 31, 275 ordinary shares, 41,527 Series A preferred shares, 62,485 Series B preferred shares and 10,401 Series B+ preferred shares held by GGV Capital IV Entrepreneurs Fund L.P. GGV Capital IV LLC is the general partner of GGV Capital IV L.P. and GGV Capital IV Entrepreneurs Fund L.P. Ms. Lee and Messrs. Jixun Foo, Glenn Solomon, Jeffrey Gordon Richards and Hans Tung are managing directors of GGV Capital IV LLC with shared voting and dispositive power over the shares held by GGV Capital IV L.P. and GGV Capital IV Entrepreneurs Fund L.P. Ms. Lee disclaims beneficial ownership of the shares held by GGV Capital IV L.P. and GGV Capital IV Entrepreneurs Fund L.P., except to the extent of her pecuniary interests therein. The business address of GGV IV L.P. and GGV IV Entrepreneurs Fund L.P. is 3000 Sand Hill Road, Building 4, Suite 230, Menlo Park, California 94025. All of the preferred shares held by GGV Capital IV L.P. and GGV Capital IV Entrepreneurs Fund L.P. will be automatically converted into Class A ordinary shares immediately prior to the completion of this offering.
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(5)
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Represents (a) 2,000,000 Series A preferred shares held by Morningside China TMT Fund II, L.P.; (b) 23,260,188 Series B preferred shares held by Morningside China TMT Top Up Fund, L.P.; (c) 7,814,192 Series B+ preferred shares and 4,744,556 Series C preferred shares held by Morningside China TMT Special Opportunity Fund II, L.P.; (d) 781,419 Series B+ preferred shares and 474,456 Series C preferred shares held by Morningside China TMT Fund IV Co-Investment, L.P.; (e) 6,163,632 Series A preferred shares and 1,576,979 Series C+ preferred shares held by Evolution Special Opportunity Fund I, L.P.; and (f) 924,545 Series A preferred shares and 236,547 Series C+ preferred shares held by Evolution Fund I Co-investment, L.P. The foregoing entities are collectively referred to in this prospectus as the Morningside entities. Morningside China TMT Fund II, L.P. and Morningside China TMT Top Up Fund, L.P. are controlled by Morningside China TMT GP II, L.P., their general partner. Morningside China TMT Special Opportunity Fund II, L.P. and Morningside China TMT Fund IV Co-Investment, L.P. are controlled by Morningside China TMT GP IV, L.P., their general partner. Morningside China TMT GP II, L.P. and Morningside China TMT GP IV, L.P. are controlled by TMT General Partner Ltd., their general partner. Each of Mr. Liu, Mr. Jianming Shi and Morningside Venture (VII) Investments Limited is entitled to exercise or control the exercise of one-third of the voting power at general meetings of TMT General Partner Ltd. Morningside Venture (VII) Investments Limited is wholly and indirectly owned by Landmark Trust Switzerland SA as trustee of a family trust for the benefit of certain members of Mdm. Chan Tan Ching Fen’s family and other charitable objects. Evolution Special Opportunity Fund I, L.P. and Evolution Fund I Co-investment, L.P. are controlled by MSVC GP Limited, their general partner. Each of Mr. Liu and Mr. Shi is entitled to exercise or control the exercise of one-half of the voting power at general meetings of MSVC GP Limited. The registered address of the Morningside entities is 75 Fort Street, PO Box 1350, Grand Cayman KY1-1108, Cayman Islands. All of the preferred shares held by the Morningside entities will be automatically converted into Class A ordinary shares immediately prior to the completion of this offering.
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(6)
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Represents (a) 18,808,777 Series B preferred shares and 15,047,022 Series B+ preferred shares held by SIG China Investments Master Fund III, LLLP; and (b) 5,219,012 Series C preferred shares held by SIG Global China Fund I, LLLP. The foregoing entities are collectively referred to in this prospectus as the SIG entities. SIG Asia Investment, LLLP, a Delaware limited liability limited partnership, is the investment manager for each of the SIG entities pursuant to an investment management agreement and, as such, has discretionary authority to vote and dispose of the shares held by each of the SIG entities. In addition, Heights Capital Management, Inc., a Delaware corporation, is the investment manager for SIG Asia Investment, LLLP pursuant to an investment management agreement and, as such, also has discretionary authority to vote and dispose of the shares held by each of the SIG entities. Mr. Arthur Dantchik, in his capacity as president of SIG Asia Investment, LLLP, and vice president of Heights Capital Management, Inc. may also be deemed to have investment discretion over the shares held by each of the SIG entities. Mr. Dantchik disclaims any such investment discretion or beneficial ownership with respect to the shares held by the SIG entities. The business address of Mr. Dantchik and the SIG entities is 401 City Avenue, Suite 220, Bala Cynwyd, PA 19004. All of the preferred shares held by the SIG entities will be automatically converted into Class A ordinary shares immediately prior to the completion of this offering.
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(7)
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Represents 20,876,048 Series C preferred shares and 6,624,492 Series C+ preferred shares held by Coatue PE Asia XVI L.L.C., which is managed by Coatue Management, L.L.C. as the investment manager. The sole owner of Coatue Management, L.L.C.
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(8)
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Represents 22,489,831 ordinary shares held by Easy Dynamic International Limited, a British Virgin Islands company. Easy Dynamic International Limited is owned by a trust established under the laws of the British Virgin Islands for the benefit of Ms. Xiaojing Li and her family members. Ms. Li is the sole director of Easy Dynamic International Limited and, as such, has discretionary authority to vote and dispose of the shares held by Easy Dynamic International Limited in our company. The business address of Ms. Li and Easy Dynamic International Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. All of the ordinary shares held by Easy Dynamic International Limited will be re-designated and re-classified as Class A ordinary shares immediately prior to the completion of this offering.
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•
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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;
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•
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the instrument of transfer is in respect of only one class of ordinary shares;
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•
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the instrument of transfer is properly stamped, if required;
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•
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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
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•
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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.
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•
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the designation of the series;
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•
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the number of shares of the series;
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•
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the dividend rights, dividend rates, conversion rights and voting rights; and
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•
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the redemption rights and terms and liquidation preferences.
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•
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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
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•
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limit the ability of shareholders to requisition and convene general meetings of shareholders.
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•
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does not have to file an annual return of its shareholders with the Registrar of Companies;
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•
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is not required to open its register of members for inspection;
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•
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does not have to hold an annual general meeting;
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•
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may issue negotiable or bearer shares or shares with no par value;
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•
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may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);
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•
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may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;
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•
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may register as a limited duration company; and
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•
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may register as a segregated portfolio company.
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Cayman Islands
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Delaware
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Title of Organizational Documents
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Memorandum and Articles of Association
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Certificate of Incorporation and Bylaws
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Duties of Directors
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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 company—a duty to act in good faith in the best interests of the company, a duty not to make a personal profit based on his position as director (unless the company permits him to do so), 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 and a duty to exercise powers for the purpose for which such powers were intended.
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. |
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Under Delaware law, the business and affairs of a corporation are managed by or under the direction of its board of directors. In exercising their powers, directors are charged with a fiduciary duty of care to protect the interests of the corporation and a fiduciary duty of loyalty to act in the best interests of the company and its stockholders. The duty of care requires that directors act in an informed and deliberative manner and inform themselves, prior to making a business decision, of all material information reasonably available to them. The duty of care also requires that directors exercise care in overseeing and investigating the conduct of the corporation’s employees. The duty of loyalty may be summarized as the duty to act in good faith, not out of self-interest, and in a manner which the director reasonably believes to be in the best interests of the stockholders.
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Limitations on Personal Liability of Directors
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The Companies Law has no equivalent provision to Delaware law regarding the limitation of director’s liability. However, as a matter of public policy, Cayman Islands law will not allow the limitation of a director’s liability to the extent that the liability is a consequence of the director committing a crime or of the director’s own fraud, dishonesty or wilful default.
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Subject to the limitations described below, a certificate of incorporation may provide for the elimination or limitation of the personal liability of a director for money damages to the corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director. Such provision cannot limit liability for breach of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, unlawful payment of dividends or unlawful stock repurchase or redemption. In addition, an exculpatory provision with terms described in the previous sentence cannot limit liability for any act or omission occurring prior to the date when such provision becomes effective.
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Cayman Islands
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Delaware
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Indemnification of Directors, Officers, Agents and Others
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Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of directors and officers, except to the extent any such provision may be held by the Cayman Islands Court to be contrary to public policy, such as to provide indemnification against the consequences of committing a crime, or against the indemnified person’s own fraud, dishonesty or wilful default.
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A corporation has the power to indemnify any director, officer, employee, or agent of the corporation who was, is or is threatened to be made a party to an action, suit or proceeding who acted in good faith and in a manner they believed to be in the best interests of the corporation, and if with respect to a criminal proceeding, had no reasonable cause to believe his or her conduct would be unlawful, against amounts actually and reasonably incurred. Additionally, under the Delaware General Corporation Law, a Delaware corporation must indemnify its present or former directors and officers against expenses (including attorneys’ fees) actually and reasonably incurred to the extent that the officer or director has been successful on the merits or otherwise in defense of any action, suit or proceeding brought against him or her by reason of the fact that he or she is or was a director or officer of the corporation.
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Interested Directors
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Under the Articles, directors who are in any way, whether directly or indirectly, interested in a contract or proposed contract with our company must declare the nature of their interest at a meeting of the board of directors. Following such declaration, a director may vote in respect of any contract or proposed contract notwithstanding his or her interest, provided that in exercising any such vote, such director’s duties remain as described above.
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Under Delaware law, a transaction in which a director has an interest is not void or voidable solely because such interested director is present at or participates in the meeting that authorizes the transaction if: (1) the material facts as to such interested director’s relationship or interests are disclosed or are known to the board of directors and the board in good faith authorizes the transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors are less than a quorum; (2) such material facts are disclosed or are known to the stockholders entitled to vote on such transaction and the transaction is specifically approved in good faith by vote of the stockholders; or (3) the transaction is fair as to the corporation as of the time it is authorized, approved or ratified by the board of directors, a committee of the board, or the stockholders. Under Delaware law, a director could be held liable for any transaction in which such director derived an improper personal benefit.
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Cayman Islands
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Delaware
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Voting Requirements
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As a matter of Cayman Islands law, certain matters must be approved by special resolution of the shareholders, including amending or adopting memorandum or articles of association of a Cayman Islands company, reduction of share capital, change of name, authorization of a plan of merger, voluntary winding up of the company or the recalling of the voluntary liquidation of the company.
The Companies Law requires that a special resolution be passed by a majority of at least two-thirds or such higher percentage as set forth in the articles of association, of shareholders being entitled to vote and do vote in person or by proxy at a general meeting, or by unanimous written consent of shareholders entitled to vote at a general meeting. The Articles do not provide for a higher threshold.
The Companies Law defines “special resolutions” only. A company’s articles of association can therefore tailor the definition of “ordinary resolutions” as a whole, or with respect to specific provisions. The Articles provide that an ordinary resolution is a resolution (1) passed by a simple majority of such shareholders as, being entitled to do so, vote in person (or, where proxies are allowed, by proxy) at a general meeting and regard shall be had in computing a majority to the number of votes to which each shareholder is entitled or (2) approved in writing by all of the shareholders entitled to vote at a general meeting in one or more instruments each signed by one or more of the shareholders and the effective date of the resolution so adopted shall be the date on which the instrument (or the last of such instruments, if more than one) is executed.
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Under Delaware law, each stockholder is entitled to one vote for each share of capital stock held by such stockholder as of the applicable record date, unless otherwise provided in a corporation’s certificate of incorporation. Except as otherwise provided under the Delaware General Corporation Law or by the corporation’s certificate of incorporation or bylaws, under Delaware law, all matters brought before a meeting of stockholders at which a quorum is present (other than the election of directors) require the affirmative vote of the majority of the shares present in person or represented by proxy and entitled to vote at that meeting. Certain matters for stockholder approval, including the approval of certain merger agreements, certain amendments to the certificate of incorporation, and the sale, lease, or exchange of all or substantially all of the corporation’s assets will require approval of the holders of a majority of the outstanding capital stock. The certificate of incorporation may also include a provision requiring supermajority approval by the directors or stockholders for any corporate action.
In addition, under Delaware law, certain business combinations involving interested stockholders of publicly traded corporations may require approval by a supermajority of the non-interested stockholders.
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Voting for Directors
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The Articles provide that, for as long as Soundscape Limited, the holding company of our chief executive officer, and its affiliates collectively hold such number of Class B ordinary shares that constitute not less than 5% of the issued and outstanding shares of our Company, our chief executive officer shall be entitled, through its holding company, appoint a majority of our directors and to remove or replace any such directors. Subject to the foregoing, our directors may be appointed by a resolution of our board of directors to fill a casual vacancy on the board of directors or as an addition to the board of directors or by an ordinary resolution of our shareholders.
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Under Delaware law, unless otherwise specified in the certificate of incorporation or bylaws of the corporation, directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors.
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Cayman Islands
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Delaware
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Cumulative Voting
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There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands.
The Articles do not provide for cumulative voting on the election of the directors as described above.
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No cumulative voting for the election of directors unless provided for in the certificate of incorporation.
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Directors’ Powers Regarding Bylaws
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The Articles may only be amended by a special resolution of the shareholders of the company.
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The certificate of incorporation may grant the directors the power to adopt, amend or repeal bylaws.
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Nomination and Removal of Directors and Filling Vacancies on Board
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Nomination and removal of directors and filling of board vacancies are governed by the terms of the articles of association. The Articles provide that subject to certain restrictions as contained therein (including that our chief executive officer, through his holding company, shall be entitled to remove or replace any directors appointed by his holding company), directors may be removed with or without cause, by an ordinary resolution of our shareholders. An appointment of a director may be on terms that the director shall automatically retire from office (unless he has sooner vacated office) at the next or a subsequent annual general meeting or upon any specified event or after any specified period in a written agreement between the company and the director, if any; but no such term shall be implied in the absence of express provision.
In addition, a director’s office shall be vacated if the director (1) becomes bankrupt or makes any arrangement or composition with his creditors; (2) is found to be or becomes of unsound mind or dies; (3) resigns his office by notice in writing to the company; or (4) is removed from office pursuant to any other provisions of our post-offering amended and restated memorandum and articles of association.
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Stockholders may generally nominate directors if they comply with any applicable advance notice provisions and other procedural requirements in company bylaws.
Holders of a majority of the shares then entitled to vote at an election of directors may remove a director with or without cause, except in certain cases involving a classified board or if the company uses cumulative voting. Unless otherwise provided for in the certificate of incorporation or bylaws, directorship vacancies may be filled by a majority of the directors elected or then in office, or by the stockholders.
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Cayman Islands
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Delaware
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Mergers and Similar Arrangements
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The Companies Law permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For these purposes, (1) “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 (2) 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 (1) a special resolution of the shareholders of each constituent company, and (2) such other authorization, if any, as may be specified in such constituent company’s 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.
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Under Delaware law, with certain exceptions, a merger, a consolidation, or a sale, lease or exchange of all or substantially all the assets of a corporation must be approved by the board of directors and a majority of the outstanding shares entitled to vote thereon. However, unless required by its certificate of incorporation, approval is not required by the holders of the outstanding stock of a constituent corporation surviving a merger if:
• the merger agreement does not amend in any respect its certificate of incorporation;
• each share of its stock outstanding prior to the merger will be an identical share of stock following the merger; and
• either no shares of the surviving corporation’s common stock and no shares, securities or obligations convertible into such stock will be issued or delivered pursuant to the merger, or the authorized unissued shares or treasury shares of the surviving corporation’s common stock to be issued or delivered pursuant to the merger plus those initially issuable upon conversion of any other shares, securities or obligations to be issued or delivered pursuant to the merger do not exceed 20% of the shares of the surviving corporation’s common stock outstanding immediately prior to the effective date of the merger.
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Cayman Islands
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Delaware
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Separate from the statutory provisions relating to mergers and consolidations, the Companies Law 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:
• the statutory provisions as to the required majority vote have been met;
• 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;
• 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
• the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Law.
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Cayman Islands
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Delaware
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The Companies Law 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 by way of scheme of arrangement is thus approved and sanctioned, or if a tender offer is made and accepted, in accordance with the foregoing statutory procedures, a dissenting shareholder would have no rights comparable to appraisal rights, 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.
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Cayman Islands
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Delaware
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Shareholder Suits
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The rights of shareholders under Cayman Islands law are not as extensive as those under Delaware law. Class actions are generally not available to shareholders under Cayman Islands laws; historically, there have not been any reported instances of such class actions having been successfully brought before the Cayman Islands Court. 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, the Cayman Islands courts can be expected (and have had occasion) to follow and apply the common law principles (namely the rule in Foss v. Harbottle and the exceptions thereto) which permit a minority shareholder to commence a class action against, or derivative actions in the name of, our company to challenge:
• an act which is ultra vires or illegal and is therefore incapable of ratification by the shareholders;
• an act which constitutes a fraud against the minority where the wrongdoer are themselves in control of the company; and
• an act which requires a resolution with a qualified (or special) majority (i.e. more than a simple majority) which has not been obtained.
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Class actions and derivative actions generally are available to stockholders under Delaware law for, among other things, breach of fiduciary duty, corporate waste and actions not taken in accordance with applicable law. In such actions, the court generally has discretion to permit a winning plaintiff to recover attorneys’ fees incurred in connection with such action.
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Inspection of Corporate Records
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Shareholders of a Cayman Islands exempted company have no general right under Cayman Islands law to inspect or obtain copies of the register of members or other corporate records (other than the memorandum and articles of association and the register of mortgages and charges) of the company. However, these rights may be provided in the company’s articles of association.
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Under Delaware law, stockholders of a Delaware corporation have the right during normal business hours to inspect for any proper purpose, and to obtain copies of lists of stockholders and other books and records of the corporation and its subsidiaries, if any, to the extent the books and records of such subsidiaries are available to the corporation. A complete list of the stockholders entitled to vote at a stockholders’ meeting generally must be available for stockholder inspection at least ten days before the meeting.
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Cayman Islands
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Delaware
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Shareholder Proposals and Calling of Special Shareholder Meetings
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The Companies Law 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 company’s articles of association. Our Articles allow our shareholders holding shares which carry in aggregate not less than one-third of all votes attaching to the outstanding shares of our company entitled to vote at general meetings to requisition an extraordinary general meeting of our shareholders, in which case our 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, our Articles do not provide our shareholders with any other right to put proposals before annual general meetings or extraordinary general meetings. As an exempted Cayman Islands company, we are not obliged by law to call shareholders’ annual general meetings.
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Unless provided in the corporation’s certificate of incorporation or bylaws, Delaware law does not include a provision restricting the manner in which stockholders may bring business before a meeting.
Delaware law permits the board of directors or any person who is authorized under a corporation’s certificate of incorporation or bylaws to call a special meeting of stockholders.
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Approval of Corporate Matters by Written Consent
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The Companies Law provide that shareholders may approve corporate matters by way of unanimous written resolutions 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 (if authorized by the articles of association).
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|
Delaware law provides that, unless otherwise provided in the certificate of incorporation, stockholders may take action by written consent signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting of stockholders.
|
|
|
|
|
Dissolution; Winding Up
|
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 Delaware law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by stockholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board. A Delaware corporation may also be dissolved by decree or judgment of a Delaware court in certain circumstances.
|
|
|
|
|
Variation of Rights of Shares
|
Under Cayman Islands law and our Articles, if our share capital is divided into more than one class of shares, we may materially adversely vary the rights attached to any class with the written consent of the holders of 50% of the issued shares of that class or with the sanction of an ordinary resolution passed at a separate general meeting of the holders of the shares of that class.
|
|
Under Delaware 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.
|
|
|
|
|
|
Cayman Islands
|
|
Delaware
|
Dividends and Stock Repurchases
|
|
|
The Delaware General Corporation Law provides that, subject to any restrictions in a corporation’s certificate of incorporation, dividends may be declared from the corporation’s surplus, or, if there is no surplus, from its net profits for the fiscal year in which the dividend is declared and for the preceding fiscal year, and Delaware common law also imposes a solvency requirement with respect to the payment of dividends. Dividends may not be declared out of net profits, however, if the corporation’s capital has been diminished to an amount less than the aggregate amount of all capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets until the deficiency in the amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets is repaired. Furthermore, applicable Delaware statutory and common law generally provides that a corporation may redeem or repurchase its shares only if the redemption or repurchase would not impair the capital of the corporation and only if the corporation is solvent at the time of the redemption or repurchase, and the redemption or repurchase would not render the corporation insolvent.
|
Persons Depositing or Withdrawing Shares or ADS Holders Must Pay:
|
|
For:
|
US$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)
|
|
Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property
Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates
|
|
|
|
US$0.05 (or less) per ADS
|
|
Any cash distribution to ADS holders
|
|
|
|
A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADSs
|
|
Distribution of securities distributed to holders of deposited securities (including rights) that are distributed by the depositary to ADS holders
|
|
|
|
US$0.05 (or less) per ADS per calendar year
|
|
Depositary services
|
|
|
|
Registration or transfer fees
|
|
Transfer and registration of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares
|
|
|
|
Expenses of the depositary
|
|
Cable (including SWIFT) and facsimile transmissions (when expressly provided in the deposit agreement)
Converting foreign currency to U.S. dollars
|
|
|
|
Taxes and other governmental charges the depositary or the custodian has to pay on any ADSs or shares underlying ADSs, such as stock transfer taxes, stamp duty or withholding taxes
|
|
As necessary
|
|
|
|
Any charges incurred by the depositary or its agents for servicing the deposited securities
|
|
As necessary
|
•
|
60 days have passed since the depositary told us it wants to resign but a successor depositary has not been appointed and accepted its appointment;
|
•
|
we delist the ADSs from an exchange in the United States on which they were listed and do not list the ADSs on another exchange in the United States or make arrangements for trading of ADSs on the U.S. over-the-counter market;
|
•
|
we delist our shares from an exchange outside the United States on which they were listed and do not list the shares on another exchange outside the United States;
|
•
|
the depositary has reason to believe the ADSs have become, or will become, ineligible for registration on Form F-6 under the Securities Act;
|
•
|
we appear to be insolvent or enter insolvency proceedings;
|
•
|
all or substantially all the value of the deposited securities has been distributed either in cash or in the form of securities;
|
•
|
there are no deposited securities underlying the ADSs or the underlying deposited securities have become apparently worthless; or
|
•
|
there has been a replacement of deposited securities.
|
•
|
are only obligated to take the actions specifically set forth in the deposit agreement without negligence or bad faith, and the depositary will not be a fiduciary or have any fiduciary duty to holders of ADSs;
|
•
|
are not liable if we are or it is prevented or delayed by law or by events or circumstances beyond our or its ability to prevent or counteract with reasonable care or effort from performing our or its obligations under the deposit agreement;
|
•
|
are not liable if we or it exercises discretion permitted under the deposit agreement;
|
•
|
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, or for any special, consequential or punitive damages for any breach of the terms of the deposit agreement;
|
•
|
have no obligation to become involved in a lawsuit or other proceeding related to the ADSs or the deposit agreement on your behalf or on behalf of any other person;
|
•
|
may rely upon any documents we believe or it believes in good faith to be genuine and to have been signed or presented by the proper person;
|
•
|
are not liable for the acts or omissions of any securities depository, clearing agency or settlement system; and
|
•
|
the depositary has no duty to make any determination or provide any information as to our tax status, or any liability for any tax consequences that may be incurred by ADS holders as a result of owning or holding ADSs or be liable for the inability or failure of an ADS holder to obtain the benefit of a foreign tax credit, reduced rate of withholding or refund of amounts withheld in respect of tax or any other tax benefit.
|
•
|
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 shares or other deposited securities;
|
•
|
satisfactory proof of the identity and genuineness of any signature or other information it deems necessary; and
|
•
|
compliance with regulations it may establish, from time to time, consistent with the deposit agreement, including presentation of transfer documents.
|
•
|
when temporary delays arise because (1) the depositary has closed its transfer books or we have closed our transfer books, (2) the transfer of shares is blocked to permit voting at a shareholders’ meeting or (3) we are paying a dividend on our shares;
|
•
|
when you owe money to pay fees, taxes and similar charges; or
|
•
|
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 shares or other deposited securities.
|
•
|
1% of the then outstanding Class A ordinary shares of the same class, in the form of ADSs or otherwise, which immediately after this offering will equal Class A ordinary shares, assuming the underwriters do not exercise their over-allotment option; or
|
•
|
the average weekly trading volume of our ordinary shares of the same class, in the form of ADSs or otherwise, during the four calendar weeks preceding the date on which notice of the sale is filed with the SEC.
|
•
|
banks and other financial institutions;
|
•
|
insurance companies;
|
•
|
pension plans;
|
•
|
cooperatives;
|
•
|
regulated investment companies;
|
•
|
real estate investment trusts;
|
•
|
broker-dealers;
|
•
|
traders that elect to use a mark-to-market method of accounting;
|
•
|
certain former U.S. citizens or long-term residents;
|
•
|
tax-exempt entities (including private foundations);
|
•
|
persons liable for alternative minimum tax;
|
•
|
holders who acquire their ADSs or ordinary shares pursuant to any employee share option or otherwise as compensation;
|
•
|
investors that will hold their ADSs or ordinary shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for U.S. federal income tax purposes;
|
•
|
investors that have a functional currency other than the U.S. dollar;
|
•
|
persons that actually or constructively own 10% or more of our stock (by vote or value);
|
•
|
persons required to accelerate the recognition of any item of gross income with respect to their ADSs or ordinary shares as a result of such income being recognized on an applicable financial statement; or
|
•
|
partnerships or other entities taxable as partnerships for U.S. federal income tax purposes, or persons holding ADSs or ordinary shares through such entities;
|
•
|
an individual who is a citizen or resident of the United States;
|
•
|
a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created in, or organized under the law of, the United States or any state thereof or the District of Columbia;
|
•
|
an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or
|
•
|
a trust (A) the administration of which is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise validly elected to be treated as a U.S. person under the Code.
|
•
|
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 fiscal year and any fiscal years in the U.S. Holder’s holding period prior to the first fiscal year in which we are a PFIC, each a pre-PFIC year, will be taxable as ordinary income; and
|
•
|
the amount allocated to each prior fiscal 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, increased by an additional tax equal to the interest on the resulting tax deemed deferred with respect to each such fiscal year.
|
Name
|
Number of ADSs
|
Morgan Stanley & Co. LLC
|
|
BofA Securities, Inc.
|
|
Total
|
|
|
|
|
Total
|
||
|
Per ADS
|
|
No Exercise
|
|
Full Exercise
|
Public offering price
|
US$
|
|
US$
|
|
US$
|
Underwriting discounts and commissions to be paid by us
|
US$
|
|
US$
|
|
US$
|
Proceeds, before expenses, to us
|
US$
|
|
US$
|
|
US$
|
•
|
offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any ordinary shares or ADSs or any securities convertible into or exercisable or exchangeable for ordinary shares or ADSs;
|
•
|
file any registration statement with the SEC relating to the offering of any ordinary shares, ADSs or any securities convertible into or exercisable or exchangeable for ordinary shares or ADSs; or
|
•
|
enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the ordinary shares or ADSs,
|
•
|
the sale of shares to the underwriters pursuant to the underwriting agreement;
|
•
|
the issuance by us of ordinary shares or ADSs pursuant to equity incentive plans existing on, or upon the exercise, conversion or exchange of exercisable, convertible or exchangeable securities outstanding as of, the date of the underwriting agreement and in each case described in this prospectus;
|
•
|
the conversion or reclassification of the outstanding preferred shares or other classes of our ordinary shares into Class A ordinary shares or Class B ordinary shares in connection with the consummation of this offering and in accordance with our amended and restated memorandum and articles of association that will become effective upon the completion of this offering, provided that any such Class A ordinary shares or Class B ordinary shares received upon such conversion or reclassification shall remain subject to the restrictions described above;
|
•
|
the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of ordinary shares or ADSs, provided that (1) such plan does not provide for the transfer of ordinary shares or ADSs during the restricted period and (2) to the extent a public announcement or filing under the Exchange Act, if any, is required or voluntarily made regarding the establishment of such plan, such announcement or filing shall include a statement to the effect that no transfer of ordinary shares or ADSs may be made under such plan during the restricted period;
|
•
|
the filing of any registration statement on Form S-8 relating to securities granted or to be granted pursuant to our equity incentive plans that are described in this prospectus;
|
•
|
the issuance by us of any class of ordinary shares or any securities convertible into or exercisable or exchangeable for any class of ordinary shares issued under a registration statement or pursuant to an exemption from registration in connection with one or more acquisitions by us or any of our subsidiaries of a company or a business, securities, property or assets of another person or entity or pursuant to an employee benefit plan assumed by us in connection with such acquisition, or a joint venture, commercial relationship or strategic alliance (or the entering into of an agreement or agreements with respect thereto), provided that the aggregate number of ordinary shares that we may sell or issue or agree to sell or issue pursuant to this exception shall not exceed 5% of the total number of ordinary shares outstanding immediately following the completion of this offering and each recipient of such securities shall have, on or prior to the issuance of such securities, executed and delivered a lock-up agreement;
|
•
|
securities acquired in open market transactions after the completion of this offering, provided that no filing under Section 16(a) of the Exchange Act shall be required or shall be voluntarily made in connection with subsequent sales of ordinary shares or other securities acquired in such open market transactions;
|
•
|
transfers of ordinary shares or any security convertible into or exercisable or exchangeable for ordinary shares (1) as a bona fide gift or charitable contribution; (2) to an immediate family member or a trust for the direct or indirect benefit of the security holder or one or more immediate family members of the security holder; (3) by will or intestacy; (4) pursuant to a domestic relations order, divorce decree or court order; (5) to limited partners, general partners, members, stockholders or holders of similar equity interests, or other business entity that controls, is controlled by or managed by or is under common control with the undersigned; or (6) if the security holder is a trust, to a trustor or beneficiary of the trust or to the estate of a beneficiary of such trust;
|
•
|
transfers of ordinary shares or any security convertible into or exercisable or exchangeable for ordinary shares to us pursuant to agreements under which we have the option to repurchase the security holder’s securities or a right of first refusal with respect to transfers of the security holder’s securities;
|
•
|
the exercise of a stock option granted under a stock incentive plan or stock purchase plan described in this prospectus, and the receipt by the security holder of ordinary shares upon such exercise, insofar as such option is outstanding as of the date of this prospectus and the exercise period for such option expires during the restricted period, provided that the underlying ordinary shares shall continue to be subject to the restrictions on transfer set forth in the lock-up agreement; or
|
•
|
through the disposition or forfeiture of the security holder’s securities to us to satisfy any income, employment or tax withholding and remittance obligations of the security holder or us in connection with the vesting of restricted stock, restricted stock units or other incentive awards settled in ordinary shares held by the security holder, provided that such restricted stock, restricted stock units or other incentive awards were granted under a stock incentive plan, stock purchase plan or pursuant to a contractual employment arrangement described in this prospectus and were outstanding as of the date of this prospectus,
|
•
|
does not constitute a product disclosure document or a prospectus under Chapter 6D.2 of the Corporations Act 2001 (Cth), or the Corporations Act;
|
•
|
has not been, and will not be, lodged with the Australian Securities and Investments Commission (“ASIC”), as a disclosure document for the purposes of the Corporations Act and does not purport to include the information required of a disclosure document under Chapter 6D.2 of the Corporations Act;
|
•
|
does not constitute or involve a recommendation to acquire, an offer or invitation for issue or sale, an offer or invitation to arrange the issue or sale, or an issue or sale, of interests to a “retail client” (as defined in section 761G of the Corporations Act and applicable regulations) in Australia; and
|
•
|
may only be provided in Australia to select investors who are able to demonstrate that they fall within one or more of the categories of investors, or Exempt Investors, available under section 708 of the Corporations Act.
|
•
|
to any legal entity which is a qualified investor as defined under the Prospectus Regulation;
|
•
|
to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Regulation), subject to obtaining the prior consent of the underwriters or the underwriters nominated by us for any such offer; or
|
•
|
in any other circumstances falling within Article 1(4) of the Prospectus Regulation,
|
SEC registration fee
|
US$
|
Nasdaq Global Select Market listing fee
|
|
Financial Industry Regulatory Authority filing fee
|
|
Printing and engraving expenses
|
|
Legal fees and expenses
|
|
Accounting fees and expenses
|
|
Miscellaneous
|
|
Total
|
US$
|
|
Page
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
108,518,039
|
|
|
$
|
105,603,153
|
|
Short-term investments
|
1,457,046
|
|
|
—
|
|
||
Accounts receivable, net
|
11,659,275
|
|
|
16,247,565
|
|
||
Prepayments and other current assets
|
1,608,018
|
|
|
1,381,037
|
|
||
Total current assets
|
123,242,378
|
|
|
123,231,755
|
|
||
Non-current assets:
|
|
|
|
||||
Property and equipment, net
|
3,124,571
|
|
|
6,281,990
|
|
||
Deferred tax assets
|
512,093
|
|
|
836,514
|
|
||
Other non-current assets
|
429,089
|
|
|
808,862
|
|
||
Total non-current assets
|
4,065,753
|
|
|
7,927,366
|
|
||
Total assets
|
$
|
127,308,131
|
|
|
$
|
131,159,121
|
|
Liabilities, mezzanine equity and shareholders’ equity (deficit)
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable (including accounts payable of the variable interest entity (“VIE”) without recourse to the Company of US$1,964,857 and US$2,992,628 as of December 31, 2018 and 2019, respectively)
|
2,765,825
|
|
|
4,088,283
|
|
||
Advances from customers (including advances from customers of the VIE without recourse to the Company of US$473,327 and US$733,518 as of December 31, 2018 and 2019, respectively)
|
628,954
|
|
|
920,925
|
|
||
Taxes payable (including taxes payable of the VIE without recourse to the Company of US$371,749 and US$756,020 as of December 31, 2018 and 2019, respectively)
|
1,313,002
|
|
|
2,493,137
|
|
||
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the VIE without recourse to the Company of US$2,195,527 and US$3,440,748 as of December 31, 2018 and 2019, respectively)
|
6,586,884
|
|
|
10,978,932
|
|
||
Total current liabilities
|
11,294,665
|
|
|
18,481,277
|
|
||
Total liabilities
|
$
|
11,294,665
|
|
|
$
|
18,481,277
|
|
Commitments and contingencies (Note 15)
|
|
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
Mezzanine equity
|
|
|
|
||||
Series A convertible redeemable preferred shares ($0.0001 par value, 55,626,960 shares authorized, issued and outstanding as of December 31, 2018 and 2019)
|
45,578,868
|
|
|
90,049,774
|
|
||
Series B convertible redeemable preferred shares ($0.0001 par value, 50,783,698 shares authorized, issued and outstanding as of December 31, 2018 and 2019)
|
29,955,293
|
|
|
30,045,929
|
|
||
Series B+ convertible redeemable preferred shares ($0.0001 par value, 26,651,410 shares authorized, issued and outstanding as of December 31, 2018 and 2019)
|
45,876,440
|
|
|
46,274,560
|
|
||
Series C convertible redeemable preferred shares ($0.0001 par value, 36,533,085 shares authorized, 34,793,413 issued and outstanding as of December 31, 2018 and 2019)
|
67,844,843
|
|
|
73,600,134
|
|
||
Total Mezzanine equity
|
$
|
189,255,444
|
|
|
$
|
239,970,397
|
|
Shareholders’ equity (deficit)
|
|
|
|
||||
Ordinary shares ($0.0001 par value; 330,404,847 shares authorized as of December 31, 2018 and 2019; 112,441,049 and 119,074,382 shares issued and outstanding as of December 31, 2018 and 2019, respectively)
|
11,244
|
|
|
11,907
|
|
||
Additional paid-in-capital
|
—
|
|
|
—
|
|
||
Accumulated other comprehensive loss
|
(630,334
|
)
|
|
(988,417
|
)
|
||
Accumulated deficit
|
(72,622,888
|
)
|
|
(126,316,043
|
)
|
||
Total shareholders’ equity (deficit)
|
$
|
(73,241,978
|
)
|
|
$
|
(127,292,553
|
)
|
Total liabilities, mezzanine equity and shareholders’ equity (deficit)
|
$
|
127,308,131
|
|
|
$
|
131,159,121
|
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
|
|
|
|
||||
Real-time engagement service revenues
|
$
|
43,199,085
|
|
|
$
|
63,925,303
|
|
Other revenues
|
457,869
|
|
|
503,387
|
|
||
Total revenues
|
43,656,954
|
|
|
64,428,690
|
|
||
Cost of revenues
|
(12,634,565
|
)
|
|
(20,417,464
|
)
|
||
Gross profit
|
31,022,389
|
|
|
44,011,226
|
|
||
Operating expenses:
|
|
|
|
||||
Research and development expenses
|
(14,425,536
|
)
|
|
(23,622,830
|
)
|
||
Sales and marketing expenses
|
(11,986,444
|
)
|
|
(19,408,377
|
)
|
||
General and administrative expenses
|
(5,372,990
|
)
|
|
(7,176,816
|
)
|
||
Total operating expenses
|
(31,784,970
|
)
|
|
(50,208,023
|
)
|
||
Other operating income
|
1,025,148
|
|
|
107,852
|
|
||
Income (loss) from operations
|
262,567
|
|
|
(6,088,945
|
)
|
||
Exchange gain (loss)
|
(20,549
|
)
|
|
86,874
|
|
||
Interest income
|
239,176
|
|
|
625,970
|
|
||
Income (loss) before income taxes
|
481,194
|
|
|
(5,376,101
|
)
|
||
Income taxes
|
(105,078
|
)
|
|
(801,337
|
)
|
||
Net income (loss)
|
376,116
|
|
|
(6,177,438
|
)
|
||
Less: cumulative undeclared dividends on convertible redeemable preferred shares
|
(9,961,473
|
)
|
|
(9,961,473
|
)
|
||
Less: accretion on convertible redeemable preferred shares to redemption value
|
(33,234,811
|
)
|
|
(50,714,953
|
)
|
||
Net loss attributable to Agora, Inc.’s ordinary shareholders
|
$
|
(42,820,168
|
)
|
|
$
|
(66,853,864
|
)
|
Other comprehensive loss:
|
|
|
|
||||
Foreign currency translation adjustments
|
(749,030
|
)
|
|
(358,083
|
)
|
||
Total comprehensive loss attributable to Agora, Inc.’s ordinary shareholders
|
$
|
(43,569,198
|
)
|
|
$
|
(67,211,947
|
)
|
|
|
|
|
||||
Net loss per share attributable to Agora, Inc.’s ordinary shareholders—basic and diluted
|
(0.39
|
)
|
|
(0.58
|
)
|
||
Weighted average number of ordinary shares—basic and diluted
|
109,141,311
|
|
|
115,716,392
|
|
||
|
|
|
|
||||
Share-based compensation expenses included in:
|
|
|
|
||||
Cost of revenues
|
49,893
|
|
|
79,552
|
|
||
Research and development expenses
|
919,773
|
|
|
1,472,528
|
|
||
Sales and marketing expenses
|
975,297
|
|
|
1,653,717
|
|
||
General and administrative expenses
|
905,389
|
|
|
1,046,372
|
|
|
Ordinary shares
|
|
Additional
paid-in capital
|
|
Accumulated
other
comprehensive income (loss)
|
|
Accumulated
deficit
|
|
Total
shareholders’ deficit
|
|||||||||||||
|
Number of
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
Balance as of January 1, 2018
|
106,527,778
|
|
|
$
|
10,653
|
|
|
$
|
—
|
|
|
$
|
118,696
|
|
|
$
|
(41,397,864
|
)
|
|
$
|
(41,268,515
|
)
|
Repurchase of ordinary shares (Note 10)
|
(820,062
|
)
|
|
(82
|
)
|
|
—
|
|
|
—
|
|
|
(784,717
|
)
|
|
(784,799
|
)
|
|||||
Vesting of restricted shares (Note 11)
|
6,733,333
|
|
|
673
|
|
|
165,038
|
|
|
—
|
|
|
—
|
|
|
165,711
|
|
|||||
Share-based compensation expense (Note 11)
|
—
|
|
|
—
|
|
|
2,253,350
|
|
|
—
|
|
|
—
|
|
|
2,253,350
|
|
|||||
Accretion on convertible redeemable preferred shares to redemption value (Note 9)
|
—
|
|
|
—
|
|
|
(2,418,388
|
)
|
|
—
|
|
|
(30,816,423
|
)
|
|
(33,234,811
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
376,116
|
|
|
376,116
|
|
|||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
(749,030
|
)
|
|
—
|
|
|
(749,030
|
)
|
|||||
Balance as of December 31, 2018
|
112,441,049
|
|
|
11,244
|
|
|
—
|
|
|
(630,334
|
)
|
|
(72,622,888
|
)
|
|
(73,241,978
|
)
|
|||||
Vesting of restricted shares (Note 11)
|
6,733,333
|
|
|
673
|
|
|
76,768
|
|
|
—
|
|
|
—
|
|
|
77,441
|
|
|||||
Share-based compensation expense (Note 11)
|
—
|
|
|
—
|
|
|
3,158,886
|
|
|
—
|
|
|
—
|
|
|
3,158,886
|
|
|||||
Repurchase of restricted shares (Note 11)
|
(100,000
|
)
|
|
(10
|
)
|
|
(84,430
|
)
|
|
—
|
|
|
—
|
|
|
(84,440
|
)
|
|||||
Reclassification of liability-classified awards to equity-classified awards (Note 11)
|
—
|
|
|
—
|
|
|
48,012
|
|
|
—
|
|
|
—
|
|
|
48,012
|
|
|||||
Accretion on convertible redeemable preferred shares to redemption value (Note 9)
|
—
|
|
|
—
|
|
|
(3,199,236
|
)
|
|
—
|
|
|
(47,515,717
|
)
|
|
(50,714,953
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,177,438
|
)
|
|
(6,177,438
|
)
|
|||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
(358,083
|
)
|
|
—
|
|
|
(358,083
|
)
|
|||||
Balance as of December 31, 2019
|
119,074,382
|
|
|
$
|
11,907
|
|
|
$
|
—
|
|
|
$
|
(988,417
|
)
|
|
$
|
(126,316,043
|
)
|
|
$
|
(127,292,553
|
)
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
376,116
|
|
|
$
|
(6,177,438
|
)
|
Share-based compensation expense
|
2,850,352
|
|
|
3,405,084
|
|
||
Depreciation of property and equipment
|
922,351
|
|
|
1,867,734
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(5,614,028
|
)
|
|
(4,807,207
|
)
|
||
Prepayments and other current assets
|
47,809
|
|
|
206,559
|
|
||
Deferred tax assets
|
(358,071
|
)
|
|
(336,463
|
)
|
||
Other non-current assets
|
(338,478
|
)
|
|
(135,120
|
)
|
||
Accounts payable
|
806,508
|
|
|
1,121,563
|
|
||
Advances from customers
|
292,655
|
|
|
302,655
|
|
||
Taxes payable
|
(1,134,236
|
)
|
|
1,214,926
|
|
||
Accrued expenses and other current liabilities
|
2,685,123
|
|
|
4,044,130
|
|
||
Net cash generated from operating activities
|
536,101
|
|
|
706,423
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchase of short-term investments
|
(1,511,800
|
)
|
|
(97,558,282
|
)
|
||
Proceeds from sale and maturity of short-term investments
|
—
|
|
|
99,007,872
|
|
||
Purchase of property and equipment
|
(2,260,791
|
)
|
|
(4,802,253
|
)
|
||
Net cash used in investing activities
|
(3,772,591
|
)
|
|
(3,352,663
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Repurchase of ordinary shares
|
(784,799
|
)
|
|
—
|
|
||
Proceeds from issuance of Series C convertible redeemable preferred shares, net of the issuance costs of $110,059
|
66,556,608
|
|
|
—
|
|
||
Net cash provided by financing activities
|
65,771,809
|
|
|
—
|
|
||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash
|
(555,985
|
)
|
|
(268,646
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
61,979,334
|
|
|
(2,914,886
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of year
|
46,618,705
|
|
|
108,598,039
|
|
||
Cash, cash equivalents and restricted cash at end of year
|
$
|
108,598,039
|
|
|
$
|
105,683,153
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Income taxes paid
|
421,560
|
|
|
411,068
|
|
||
Non-cash financing and investing activities:
|
|
|
|
||||
Accretion to redemption value of convertible redeemable preferred shares
|
33,234,811
|
|
|
50,714,953
|
|
||
Payables for property and equipment
|
366,503
|
|
|
613,463
|
|
|
Date of Incorporation
|
|
Place of Incorporation
|
|
Percentage of
Direct or Indirect Ownership
|
|
Principal Activities
|
Subsidiaries:
|
|
|
|
|
|
|
|
Agora Lab, Inc.
|
January 13, 2014
|
|
California, United States
|
|
100%
|
|
Provision of services
|
Agora IO, Inc
|
December 2, 2014
|
|
Cayman Islands
|
|
100%
|
|
Investment holding
|
Agora IO Hongkong Limited
|
December 12, 2014
|
|
Hong Kong
|
|
100%
|
|
Investment holding
|
Dayin Network Technology Co., Ltd. (“WFOE”)
|
April 30, 2015
|
|
PRC
|
|
100%
|
|
Provision of services
|
Agora.IO Ltd
|
July 25, 2019
|
|
United Kingdom
|
|
100%
|
|
Startup
|
|
|
|
|
|
|
|
|
VIE:
|
|
|
|
|
|
|
|
Shanghai Zhaoyan Network Technology Co., Ltd. (“VIE”)
|
March 28, 2014
|
|
PRC
|
|
100%
|
|
Provision of services
|
(c)
|
Consolidated Variable Interest Entities
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
8,917,074
|
|
|
$
|
17,308,887
|
|
Short-term investments
|
1,457,046
|
|
|
—
|
|
||
Accounts receivable, net
|
10,143,800
|
|
|
14,827,841
|
|
||
Amounts due from related parties
|
1,891,165
|
|
|
2,445,447
|
|
||
Prepayments and other current assets
|
1,189,673
|
|
|
886,022
|
|
||
Total current assets
|
23,598,758
|
|
|
35,468,197
|
|
||
Non-current assets:
|
|
|
|
||||
Property and equipment, net
|
1,506,939
|
|
|
3,292,978
|
|
||
Deferred tax assets
|
277,533
|
|
|
387,950
|
|
||
Other non-current assets
|
50,882
|
|
|
69,968
|
|
||
Total non-current assets
|
1,835,354
|
|
|
3,750,896
|
|
||
Total assets
|
$
|
25,434,112
|
|
|
$
|
39,219,093
|
|
Liabilities
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
1,964,857
|
|
|
2,992,628
|
|
||
Amounts due to related parties
|
18,188,331
|
|
|
27,780,440
|
|
||
Advances from customers
|
473,327
|
|
|
733,518
|
|
||
Taxes payable
|
371,749
|
|
|
756,020
|
|
||
Accrued expenses and other current liabilities
|
2,195,527
|
|
|
3,440,748
|
|
||
Total current liabilities
|
23,193,791
|
|
|
35,703,354
|
|
||
Total liabilities
|
$
|
23,193,791
|
|
|
$
|
35,703,354
|
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2019
|
||
|
(US$)
|
||||
Net cash and cash equivalents generated from operating activities
|
2,774,063
|
|
|
9,389,954
|
|
Net cash and cash equivalents used in investing activities
|
(2,251,153
|
)
|
|
(998,141
|
)
|
Net cash and cash equivalents used in financing activities
|
—
|
|
|
—
|
|
(a)
|
Basis of Presentation
|
(b)
|
Basis of Consolidation
|
(c)
|
Use of Estimates
|
(d)
|
Functional Currencies and Foreign Currency Translation
|
(e)
|
Concentration of Credit Risk
|
|
2018
|
|
2019
|
||
Customer A — Social media platform
|
30
|
%
|
|
*
|
|
Customer B — Social media platform
|
*
|
|
|
24
|
%
|
*
|
Less than 10%.
|
|
2018
|
|
2019
|
|
Customer A — Social media platform
|
16
|
%
|
|
*
|
*
|
Less than 10%.
|
(f)
|
Fair Value Measurements
|
•
|
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
|
•
|
Level 2: Observable, market-based inputs, other than quoted prices, in active markets for identical assets or liabilities.
|
•
|
Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
|
|
As of December 31, 2018
|
||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Balance at
Fair value
|
||
Short-term investments — Structured deposits
|
—
|
|
|
1,457,046
|
|
—
|
|
|
1,457,046
|
(g)
|
Cash and Cash Equivalents
|
(h)
|
Restricted Cash
|
(i)
|
Short-term Investment
|
(j)
|
Accounts Receivable
|
(k)
|
Property and Equipment, Net
|
|
Estimated Useful Lives
|
Electronic equipment
|
3 years
|
Furniture, computers and office equipment
|
3 years
|
Network equipment
|
3 years
|
Leasehold improvements
|
Shorter of the lease term or the estimated useful life
|
(l)
|
Impairment of Long-lived Assets
|
(m)
|
Advances from Customers
|
(n)
|
Mezzanine Equity
|
(o)
|
Deferred Equity Offering Costs
|
(p)
|
Value Added Taxes
|
(q)
|
Revenue Recognition
|
(r)
|
Cost of Revenues
|
(s)
|
Research and Development Expenses
|
(t)
|
Software Development Costs
|
(u)
|
Sales and Marketing Expenses
|
(v)
|
General and Administrative Expenses
|
(w)
|
Operating Leases
|
(x)
|
Income Tax
|
(y)
|
Share-based Compensation
|
(z)
|
Related Parties
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Primary geographical markets based on customers’ location
|
|
|
|
||||
PRC
|
$
|
33,311,919
|
|
|
$
|
50,583,684
|
|
United States
|
4,582,105
|
|
|
5,296,269
|
|
||
Others
|
5,762,930
|
|
|
8,548,737
|
|
||
Total revenues
|
$
|
43,656,954
|
|
|
$
|
64,428,690
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Accounts receivable
|
$
|
12,026,319
|
|
|
$
|
17,283,107
|
|
Less: allowance for doubtful accounts
|
(367,044
|
)
|
|
(1,035,542
|
)
|
||
Accounts receivable, net
|
$
|
11,659,275
|
|
|
$
|
16,247,565
|
|
|
Year-Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
At beginning of the period
|
$
|
(119,336
|
)
|
|
$
|
(367,044
|
)
|
Addition
|
(314,019
|
)
|
|
(779,671
|
)
|
||
Write-off
|
52,259
|
|
|
100,276
|
|
||
Foreign currency translation impact
|
14,052
|
|
|
10,897
|
|
||
At end of the period
|
$
|
(367,044
|
)
|
|
$
|
(1,035,542
|
)
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
VAT recoverable(1)
|
$
|
1,109,048
|
|
|
$
|
776,141
|
|
Prepayments(2)
|
267,715
|
|
|
419,376
|
|
||
Restricted cash
|
80,000
|
|
|
80,000
|
|
||
Others
|
151,255
|
|
|
105,520
|
|
||
|
$
|
1,608,018
|
|
|
$
|
1,381,037
|
|
(1)
|
VAT recoverable represented the balances that the Group can utilize to deduct its VAT liabilities within the next 12 months.
|
(2)
|
Prepayments are primarily related to a prepayment for company events, prepaid rental expenses and other deposits.
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Cost:
|
|
||||||
Network equipment
|
$
|
2,574,060
|
|
|
$
|
6,976,107
|
|
Leasehold improvements
|
1,077,271
|
|
|
1,089,970
|
|
||
Electronic equipment
|
709,854
|
|
|
1,170,866
|
|
||
Furniture, computers and office equipment
|
329,198
|
|
|
443,453
|
|
||
Total cost
|
4,690,383
|
|
|
9,680,396
|
|
||
Less: accumulated depreciation
|
(1,565,812
|
)
|
|
(3,398,406
|
)
|
||
Property and equipment, net
|
$
|
3,124,571
|
|
|
$
|
6,281,990
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Long-term deposits
|
$
|
359,492
|
|
|
$
|
470,086
|
|
Deferral of initial public offering costs
|
—
|
|
|
287,331
|
|
||
Others
|
69,597
|
|
|
51,445
|
|
||
|
$
|
429,089
|
|
|
$
|
808,862
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
VAT payable
|
$
|
647,072
|
|
|
$
|
868,270
|
|
Corporate income taxes payable
|
454,373
|
|
|
1,165,660
|
|
||
Other taxes payable
|
211,557
|
|
|
459,207
|
|
||
|
$
|
1,313,002
|
|
|
$
|
2,493,137
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Accrued salary and social welfare costs
|
$
|
4,802,987
|
|
|
$
|
8,388,819
|
|
Liability classified awards for share-based compensation (Note 11)
|
667,188
|
|
|
—
|
|
||
Accrued professional service fees
|
158,432
|
|
|
788,313
|
|
||
Accrued staff reimbursements
|
187,208
|
|
|
332,578
|
|
||
Stock option deposit held on behalf of employees
|
177,015
|
|
|
400,680
|
|
||
Accrued rental fee
|
113,122
|
|
|
204,669
|
|
||
Others
|
480,932
|
|
|
863,873
|
|
||
|
$
|
6,586,884
|
|
|
$
|
10,978,932
|
|
•
|
the voting rights of shares controlled by the Founder was modified to carry 2 votes in connection with the Series B Preferred Shares financing; and
|
•
|
the voting rights of shares controlled by the Founder was modified to carry 3 votes in connection with the Series B+ Preferred Shares financing.
|
(a)
|
an amount equal to the Series A issue price, plus all accrued or declared but unpaid dividends on such Series A Preferred Share (for a partial year, the dividends shall be calculated proportionally), plus an amount that would accrue on the Series A issue price at a rate of 15% per annum, compounding annually, during the period commencing from December 16, 2013 and ending on the date of the Series A redemption notice, and
|
(b)
|
the fair market value of the Series A Preferred Share determined by an independent third party appraising firm selected jointly by the board of directors and the requesting holder, provided however, that any redemption of all or any part of Series A Preferred Shares held by a holder of Series A Preferred Shares at a price determined by an independent third party appraising firm shall not cause any material adverse effect to the Group companies taken as a whole.
|
|
Series A Preferred Shares
|
|
Series B Preferred Shares
|
|
Series B+ Preferred Shares
|
|
Series C Preferred Shares
|
|
Total
|
||||||||||||||||||||||
|
Number of shares
|
|
Amount
(US$)
|
|
Number of shares
|
|
Amount
(US$)
|
|
Number of shares
|
|
Amount
(US$)
|
|
Number of shares
|
|
Amount
(US$)
|
|
Amount
(US$)
|
||||||||||||||
Balances as of January 1, 2018
|
55,626,960
|
|
|
$
|
25,409,604
|
|
|
50,783,698
|
|
|
$
|
27,493,192
|
|
|
26,651,410
|
|
|
$
|
36,561,229
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
89,464,025
|
|
Issuance of convertible redeemable preferred shares, net of issuance costs of US$110,059
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,793,413
|
|
|
66,556,608
|
|
|
66,556,608
|
|
|||||
Accretion on convertible redeemable preferred shares to redemption value
|
—
|
|
|
20,169,264
|
|
|
—
|
|
|
2,462,101
|
|
|
—
|
|
|
9,315,211
|
|
|
—
|
|
|
1,288,235
|
|
|
33,234,811
|
|
|||||
Balances as of December 31, 2018
|
55,626,960
|
|
|
$
|
45,578,868
|
|
|
50,783,698
|
|
|
$
|
29,955,293
|
|
|
26,651,410
|
|
|
$
|
45,876,440
|
|
|
34,793,413
|
|
|
$
|
67,844,843
|
|
|
$
|
189,255,444
|
|
Accretion on convertible redeemable preferred shares to redemption value
|
—
|
|
|
44,470,906
|
|
|
—
|
|
|
90,636
|
|
|
—
|
|
|
398,120
|
|
|
—
|
|
|
5,755,291
|
|
|
50,714,953
|
|
|||||
Balances as of December 31, 2019
|
55,626,960
|
|
|
$
|
90,049,774
|
|
|
50,783,698
|
|
|
$
|
30,045,929
|
|
|
26,651,410
|
|
|
$
|
46,274,560
|
|
|
34,793,413
|
|
|
$
|
73,600,134
|
|
|
$
|
239,970,397
|
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Cost of revenues
|
$
|
49,893
|
|
|
$
|
79,552
|
|
Research and development expenses
|
919,773
|
|
|
1,472,528
|
|
||
Sales and marketing expenses
|
975,297
|
|
|
1,653,717
|
|
||
General and administrative expenses
|
905,389
|
|
|
1,046,372
|
|
||
|
$
|
2,850,352
|
|
|
$
|
4,252,169
|
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Equity award – share options
|
$
|
1,250,676
|
|
|
$
|
2,177,975
|
|
Equity award – restricted shares(1)
|
1,002,674
|
|
|
980,911
|
|
||
Liability award – share options
|
428,855
|
|
|
960,177
|
|
||
Liability award – restricted shares
|
168,147
|
|
|
133,106
|
|
||
|
$
|
2,850,352
|
|
|
$
|
4,252,169
|
|
(1)
|
Including restricted shares granted by the Founder for equity classified award of US$843,139 and US$790,643 for the years ended December 31, 2018 and 2019, respectively.
|
|
Number of
Options
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Life
|
|
Aggregate Intrinsic Value
|
|
Weighted
Average
Grant Date
Fair Value
|
|||||||
|
|
|
(US$)
|
|
In Years
|
|
(US$)
|
|
(US$)
|
|||||||
Outstanding at January 1, 2018
|
20,412,350
|
|
|
$
|
0.10
|
|
|
7.84
|
|
$
|
5,087,933
|
|
|
$
|
0.12
|
|
Granted
|
14,689,473
|
|
|
0.12
|
|
|
|
|
|
|
0.37
|
|
||||
Forfeited
|
(1,440,866
|
)
|
|
0.10
|
|
|
|
|
|
|
|
|||||
Outstanding at December 31, 2018
|
33,660,957
|
|
|
0.11
|
|
|
7.91
|
|
19,994,575
|
|
|
0.23
|
|
|||
Granted
|
5,087,648
|
|
|
0.24
|
|
|
|
|
|
|
0.86
|
|
||||
Forfeited
|
(787,425
|
)
|
|
0.13
|
|
|
|
|
|
|
|
|||||
Reclassified from liability award
|
50,784
|
|
|
0.10
|
|
|
|
|
|
|
|
|||||
Outstanding at December 31, 2019
|
38,011,964
|
|
|
0.12
|
|
|
7.22
|
|
51,303,638
|
|
|
0.31
|
|
|||
Vested and expected to vest at December 31, 2019
|
20,719,325
|
|
|
0.11
|
|
|
6.29
|
|
28,263,729
|
|
|
0.18
|
|
|||
Exercisable at December 31, 2019
|
20,719,325
|
|
|
0.11
|
|
|
6.29
|
|
28,263,729
|
|
|
0.18
|
|
|
Number of Options
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Life
|
|
Aggregate Intrinsic Value
|
|
Weighted
Average
Grant Date
Fair Value
|
||||||||
|
|
|
(US$)
|
|
In Years
|
|
(US$)
|
|
(US$)
|
||||||||
Outstanding at January 1, 2018
|
1,150,784
|
|
|
$
|
0.10
|
|
|
6.97
|
|
|
$
|
286,842
|
|
|
$
|
0.07
|
|
Granted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Forfeited
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Outstanding at December 31, 2018
|
1,150,784
|
|
|
0.10
|
|
|
5.97
|
|
|
689,258
|
|
|
0.07
|
|
|||
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|
|
||||||
Repurchased
|
(1,100,000
|
)
|
|
0.10
|
|
|
5.67
|
|
|
818,845
|
|
|
0.07
|
|
|||
Forfeited
|
—
|
|
|
—
|
|
|
|
|
|
|
|
||||||
Reclassified to equity classified award
|
(50,784
|
)
|
|
0.10
|
|
|
6.81
|
|
|
37,804
|
|
|
0.10
|
|
|||
Outstanding at December 31, 2019
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2019
|
||
Exercise price
|
US$0.10- US$1.00
|
|
|
US$0.10-US$0.50
|
|
Fair value of the ordinary shares on the date of option grant
|
US$0.3493-US $0.6989
|
|
|
US$0.6989-US $1.4751
|
|
Risk-free interest rate(1)
|
2.54%-3.18%
|
|
|
1.80%-2.83%
|
|
Expected term (in years)
|
10
|
|
|
10
|
|
Expected dividend yield(2)
|
0%
|
|
|
0%
|
|
Expected volatility(3)
|
49.18%-50.36%
|
|
|
47.54%-50.01%
|
|
Expected forfeiture rate (post-vesting)
|
3
|
%
|
|
3
|
%
|
(1)
|
The risk-free interest rate of periods within the contractual life of the share option is based on the market yield of the U.S. treasury bonds with a maturity life equal to the expected life to expiration.
|
(2)
|
The Company has no history or expectation of paying dividends on its ordinary shares.
|
(3)
|
Expected volatility is estimated based on the average of historical volatilities of the comparable companies in the same industry as at the valuation dates.
|
|
Numbers of Shares
|
|
Weighted-average Grant Date Fair Value
|
|||
|
|
|
(US$)
|
|||
Outstanding at January 1, 2018
|
16,121,181
|
|
|
$
|
0.02
|
|
Granted
|
—
|
|
|
—
|
|
|
Vested
|
(6,670,833
|
)
|
|
0.02
|
|
|
Outstanding at December 31, 2018
|
9,450,348
|
|
|
0.02
|
|
|
Granted
|
—
|
|
|
—
|
|
|
Reclassified from liability classified restricted shares
|
26,042
|
|
|
0.02
|
|
|
Vested
|
(6,670,833
|
)
|
|
0.02
|
|
|
Outstanding at December 31, 2019
|
2,805,557
|
|
|
0.02
|
|
|
Numbers of Shares
|
|
Weighted-average Grant Date Fair Value
|
|||
|
|
|
(US$)
|
|||
Outstanding at January 1, 2018
|
151,042
|
|
|
$
|
0.02
|
|
Granted
|
—
|
|
|
—
|
|
|
Vested
|
(62,500
|
)
|
|
0.02
|
|
|
Outstanding at December 31, 2018
|
88,542
|
|
|
0.02
|
|
|
Granted
|
—
|
|
|
—
|
|
|
Vested
|
(62,500
|
)
|
|
0.02
|
|
|
Reclassified to equity classified restricted shares
|
(26,042
|
)
|
|
0.02
|
|
|
Outstanding at December 31, 2019
|
—
|
|
|
0.02
|
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Pre-tax income from PRC entities
|
$
|
4,813,122
|
|
|
$
|
6,790,182
|
|
Pre-tax loss from non-PRC entities
|
(4,331,928
|
)
|
|
(12,166,283
|
)
|
||
Total pre-tax loss
|
$
|
481,194
|
|
|
$
|
(5,376,101
|
)
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2019
|
||
|
(US$)
|
||||
Statutory income tax rate
|
25.00
|
%
|
|
25.00
|
%
|
Permanent differences(1)
|
(105.06
|
)%
|
|
9.07
|
%
|
Tax rate difference from statutory rate in other jurisdictions(2)
|
(51.95
|
)%
|
|
12.70
|
%
|
Change in valuation allowance(3)
|
236.64
|
%
|
|
(64.00
|
)%
|
Effect of tax holiday(4)
|
(82.96
|
)%
|
|
2.34
|
%
|
Others
|
0.17
|
%
|
|
(0.01
|
)%
|
Effective tax rate
|
21.84
|
%
|
|
(14.90
|
)%
|
(1)
|
The permanent differences are primarily related to additional tax deductions for qualified research and development expenses offset by non-deductible share-based compensation expenses.
|
(2)
|
The tax rate difference is attributed to varying rates in other jurisdictions where the Group is established or operates, such as the Cayman Islands or the United States.
|
(3)
|
The change in valuation allowance is primarily attributed to fully provisioning for net operating loss carry-forwards of Agora Lab, Inc.
|
(4)
|
The WFOE obtained its software enterprise certificate in 2018 and is entitled to a tax exemption from EIT for the year of 2018 and a 50% EIT rate reduction for the year of 2019.
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Current income tax expense
|
463,149
|
|
|
1,137,800
|
|
||
Deferred income tax benefit
|
(358,071
|
)
|
|
(336,463
|
)
|
||
Income tax expense (benefit)
|
$
|
105,078
|
|
|
$
|
801,337
|
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2019
|
||
|
(US$)
|
||||
The aggregate amount of effect
|
399,208
|
|
|
125,630
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Deferred tax assets:
|
|
|
|
||||
Tax loss carry-forwards
|
$
|
4,238,069
|
|
|
$
|
7,614,276
|
|
Payroll liabilities
|
402,783
|
|
|
627,010
|
|
||
Allowance for doubtful accounts
|
93,281
|
|
|
269,560
|
|
||
Other deductible temporary difference
|
64,455
|
|
|
52,955
|
|
||
Deferred tax assets
|
4,798,588
|
|
|
8,563,801
|
|
||
Deferred tax liabilities
|
—
|
|
|
—
|
|
||
Less valuation allowance
|
(4,286,495
|
)
|
|
(7,727,287
|
)
|
||
Deferred tax assets, net
|
$
|
512,093
|
|
|
$
|
836,514
|
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Balance at beginning of the year
|
$
|
(3,147,795
|
)
|
|
$
|
(4,286,495
|
)
|
Addition in current year
|
(1,138,700
|
)
|
|
(3,440,792
|
)
|
||
Reversals in current year
|
—
|
|
|
—
|
|
||
Balance at the end of the year
|
$
|
(4,286,495
|
)
|
|
$
|
(7,727,287
|
)
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Numerator:
|
|
|
|
||||
Net income (loss)
|
$
|
376,116
|
|
|
$
|
(6,177,438
|
)
|
Cumulative undeclared dividends on convertible redeemable preferred shares
|
(9,961,473
|
)
|
|
(9,961,473
|
)
|
||
Accretion on convertible redeemable preferred shares to redemption value (Note 9)
|
(33,234,811
|
)
|
|
(50,714,953
|
)
|
||
Net loss attributable to Agora, Inc.’s ordinary shareholders - basic and diluted
|
$
|
(42,820,168
|
)
|
|
$
|
(66,853,864
|
)
|
Denominator:
|
|
|
|
||||
Denominator for basic and diluted loss per share weighted-average ordinary shares outstanding
|
109,141,311
|
|
|
115,716,392
|
|
||
Basic and diluted loss per share
|
$
|
(0.39
|
)
|
|
$
|
(0.58
|
)
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2019
|
||
|
(US$)
|
||||
Preferred shares - weighted average
|
141,543,341
|
|
|
167,855,481
|
|
Share options - weighted average
|
17,280,175
|
|
|
26,923,735
|
|
Restricted share - weighted average
|
11,358,874
|
|
|
5,154,272
|
|
|
Contractual Purchase Obligations
|
||
2020
|
$
|
2,600,251
|
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2019
|
||
|
(US$)
|
||||
Rental fee charged by a related party
|
153,920
|
|
|
168,349
|
|
|
Year Ended December 31, 2019
|
||
|
(Unaudited)
|
||
|
(US$)
|
||
Numerator:
|
|
||
Net loss attributable to Agora, Inc.’s ordinary shareholders
|
$
|
(66,853,864
|
)
|
Pro forma adjustment of conversion of Preferred Shares
|
60,676,426
|
|
|
Numerator for pro forma basic and diluted earnings per share
|
$
|
(6,177,438
|
)
|
Denominator:
|
|
||
Weighted-average number of ordinary shares outstanding
|
115,716,392
|
|
|
Pro forma effect of conversion of Preferred Shares
|
167,855,481
|
|
|
Denominator for pro forma basic earnings per ordinary share
|
283,571,873
|
|
|
Pro forma basic and diluted earnings per ordinary share:
|
$
|
(0.02
|
)
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
30,503,879
|
|
|
$
|
85,858,429
|
|
Total current assets
|
30,503,879
|
|
|
85,858,429
|
|
||
Investments in subsidiaries and the VIE
|
95,926,958
|
|
|
92,591,336
|
|
||
Amounts due from related parties
|
9,782,695
|
|
|
28,282,695
|
|
||
Total assets
|
136,213,532
|
|
|
206,732,460
|
|
||
Liabilities, Mezzanine equity and Shareholders’ deficit
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Amounts due to related parties
|
20,200,066
|
|
|
94,054,616
|
|
||
Total liabilities
|
20,200,066
|
|
|
94,054,616
|
|
||
Mezzanine equity:
|
|
|
|
||||
Series A convertible redeemable preferred shares ($0.0001 par value, 55,626,960 shares authorized, issued and outstanding as of December 31, 2018 and 2019)
|
45,578,868
|
|
|
90,049,774
|
|
||
Series B convertible redeemable preferred shares ($0.0001 par value, 50,783,698 shares authorized, issued and outstanding as of December 31, 2018 and 2019)
|
29,955,293
|
|
|
30,045,929
|
|
||
Series B+ convertible redeemable preferred shares ($0.0001 par value, 26,651,410 shares authorized, issued and outstanding as of December 31, 2018 and 2019)
|
45,876,440
|
|
|
46,274,560
|
|
||
Series C convertible redeemable preferred shares ($0.0001 par value, 36,533,085 shares authorized, 34,793,413 issued and outstanding as of December 31, 2018 and 2019)
|
67,844,843
|
|
|
73,600,134
|
|
||
Total of mezzanine equity
|
189,255,444
|
|
|
239,970,397
|
|
||
Shareholders’ deficit:
|
|
|
|
||||
Ordinary shares ($0.0001 par value; 330,404,847 shares authorized as of December 31, 2018 and 2019; 112,441,049 and 119,074,382 shares issued and outstanding as of December 31, 2018 and 2019, respectively)
|
11,244
|
|
|
11,907
|
|
||
Additional paid-in-capital
|
—
|
|
|
—
|
|
||
Accumulated other comprehensive loss
|
(630,334
|
)
|
|
(988,417
|
)
|
||
Accumulated deficit
|
(72,622,888
|
)
|
|
(126,316,043
|
)
|
||
Total shareholders’ deficit
|
(73,241,978
|
)
|
|
(127,292,553
|
)
|
||
Total liabilities, mezzanine equity and shareholders’ deficit
|
$
|
136,213,532
|
|
|
$
|
206,732,460
|
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Interest income
|
$
|
152,273
|
|
|
$
|
—
|
|
Income from operations
|
152,273
|
|
|
—
|
|
||
Equity in income of subsidiaries and the VIE
|
223,843
|
|
|
(6,177,438
|
)
|
||
Income (loss) before income taxes
|
376,116
|
|
|
(6,177,438
|
)
|
||
Income taxes
|
—
|
|
|
—
|
|
||
Net income (loss)
|
376,116
|
|
|
(6,177,438
|
)
|
||
Less: cumulative undeclared dividends on Preferred Shares
|
(9,961,473
|
)
|
|
(9,961,473
|
)
|
||
Less: accretion on convertible redeemable preferred shares to redemption value
|
(33,234,811
|
)
|
|
(50,714,953
|
)
|
||
Net loss attributable to ordinary shareholders
|
$
|
(42,820,168
|
)
|
|
$
|
(66,853,864
|
)
|
Other comprehensive loss:
|
|
|
|
||||
Foreign currency translation adjustment, net of nil tax
|
(749,030
|
)
|
|
(358,083
|
)
|
||
Total comprehensive loss attributable to Agora, Inc.’s ordinary shareholders
|
$
|
(43,569,198
|
)
|
|
$
|
(67,211,947
|
)
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Net cash provided by operating activities
|
$
|
152,273
|
|
|
$
|
—
|
|
Net cash (used in) provided by investing activities
|
(5,899,959
|
)
|
|
55,354,550
|
|
||
Net cash provided by financing activities
|
—
|
|
|
—
|
|
||
Net (decrease) increase in cash and cash equivalents
|
(5,747,686
|
)
|
|
55,354,550
|
|
||
Cash, cash equivalents and restricted cash, beginning of year
|
36,251,565
|
|
|
30,503,879
|
|
||
Cash, cash equivalents and restricted cash, end of year
|
$
|
30,503,879
|
|
|
$
|
85,858,429
|
|
|
Page
|
|
As of
December 31,
|
|
As of
March 31,
|
|
Pro forma
|
||||||
As of
March 31,
|
|||||||||||
|
2019
|
|
2020
|
|
2020
|
||||||
|
|
|
|
|
Note 17
|
||||||
|
(US$)
|
||||||||||
Assets
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
105,603,153
|
|
|
$
|
151,652,655
|
|
|
$
|
151,652,655
|
|
Accounts receivable, net
|
16,247,565
|
|
|
31,239,641
|
|
|
31,239,641
|
|
|||
Prepayments and other current assets
|
1,381,037
|
|
|
3,501,117
|
|
|
3,501,117
|
|
|||
Total current assets
|
123,231,755
|
|
|
186,393,413
|
|
|
186,393,413
|
|
|||
Non-current assets:
|
|
|
|
|
|
||||||
Property and equipment, net
|
6,281,990
|
|
|
8,282,042
|
|
|
8,282,042
|
|
|||
Deferred tax assets
|
836,514
|
|
|
823,656
|
|
|
823,656
|
|
|||
Other non-current assets
|
808,862
|
|
|
1,654,975
|
|
|
1,654,975
|
|
|||
Total non-current assets
|
7,927,366
|
|
|
10,760,673
|
|
|
10,760,673
|
|
|||
Total assets
|
$
|
131,159,121
|
|
|
$
|
197,154,086
|
|
|
$
|
197,154,086
|
|
Liabilities, mezzanine equity and shareholders’ equity (deficit)
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
||||||
Accounts payable (including accounts payable of the variable interest entity (“VIE”) without recourse to the Company of US$2,992,628 and US$ 7,156,391 as of December 31, 2019 and March 31, 2020, respectively)
|
4,088,283
|
|
|
9,087,247
|
|
|
9,087,247
|
|
|||
Advances from customers (including advances from customers of the VIE without recourse to the Company of US$733,518 and US$699,464 as of December 31, 2019 and March 31, 2020, respectively)
|
920,925
|
|
|
771,941
|
|
|
771,941
|
|
|||
Taxes payable (including taxes payable of the VIE without recourse to the Company of US$756,020 and US$701,612 as of December 31, 2019 and March 31, 2020, respectively)
|
2,493,137
|
|
|
2,689,344
|
|
|
2,689,344
|
|
|||
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the VIE without recourse to the Company of US$3,440,748 and US$5,273,857 as of December 31, 2019 and March 31, 2020, respectively)
|
10,978,932
|
|
|
17,994,294
|
|
|
17,994,294
|
|
|||
Total current liabilities
|
18,481,277
|
|
|
30,542,826
|
|
|
30,542,826
|
|
|||
Total liabilities
|
$
|
18,481,277
|
|
|
$
|
30,542,826
|
|
|
$
|
30,542,826
|
|
Commitments and contingencies (Note 15)
|
|
|
|
|
|
|
As of
December 31,
|
|
As of
March 31,
|
|
Pro forma
|
||||||
As of
March 31,
|
|||||||||||
|
2019
|
|
2020
|
|
2020
|
||||||
|
|
|
|
|
Note 17
|
||||||
|
(US$)
|
||||||||||
Mezzanine equity
|
|
|
|
|
|
||||||
Series A convertible redeemable preferred shares ($0.0001 par value, 55,626,960 shares authorized, issued and outstanding as of December 31, 2019 and March 31, 2020; and none outstanding on a pro-forma basis as of March 31, 2020)
|
90,049,774
|
|
|
123,628,884
|
|
|
—
|
|
|||
Series B convertible redeemable preferred shares ($0.0001 par value, 50,783,698 shares authorized, issued and outstanding as of December 31, 2019 and March 31, 2020; and none outstanding on a pro-forma basis as of March 31, 2020)
|
30,045,929
|
|
|
30,068,632
|
|
|
—
|
|
|||
Series B+ convertible redeemable preferred shares ($0.0001 par value, 26,651,410 shares authorized, issued and outstanding as of December 31, 2019 and March 31, 2020; and none outstanding on a pro-forma basis as of March 31, 2020)
|
46,274,560
|
|
|
46,374,628
|
|
|
—
|
|
|||
Series C convertible redeemable preferred shares ($0.0001 par value, 36,533,085 shares authorized, 34,793,413 issued and outstanding as of December 31, 2019 and March 31, 2020; and none outstanding on a pro-forma basis as of March 31, 2020)
|
73,600,134
|
|
|
75,113,680
|
|
|
—
|
|
|||
Series C+ convertible redeemable preferred shares ($0.0001 par value, nil and 15,062,510 shares authorized, issued and outstanding as of December 31, 2019 and March 31, 2020; and none outstanding on a pro-forma basis as of March 31, 2020)
|
—
|
|
|
50,748,154
|
|
|
—
|
|
|||
Total Mezzanine equity
|
$
|
239,970,397
|
|
|
$
|
325,933,978
|
|
|
$
|
—
|
|
Shareholders’ equity (deficit)
|
|
|
|
|
|
||||||
Ordinary shares ($0.0001 par value; 330,404,847 shares authorized as of December 31, 2019 and March 31, 2020; 119,074,382 and 120,757,715 shares issued and outstanding as of December 31, 2019 and March 31, 2020, respectively; 303,675,706 shares issued and outstanding on a pro-forma basis as of March 31, 2020)
|
11,907
|
|
|
12,075
|
|
|
30,367
|
|
|||
Additional paid-in-capital
|
—
|
|
|
—
|
|
|
325,915,686
|
|
|||
Accumulated other comprehensive loss
|
(988,417
|
)
|
|
(1,489,615
|
)
|
|
(1,489,615
|
)
|
|||
Accumulated deficit
|
(126,316,043
|
)
|
|
(157,845,178
|
)
|
|
(157,845,178
|
)
|
|||
Total shareholders’ equity (deficit)
|
$
|
(127,292,553
|
)
|
|
$
|
(159,322,718
|
)
|
|
$
|
166,611,260
|
|
Total liabilities, mezzanine equity and shareholders’ equity (deficit)
|
$
|
131,159,121
|
|
|
$
|
197,154,086
|
|
|
$
|
197,154,086
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2020
|
||||
|
(US$)
|
||||||
Real-time engagement service revenues
|
$
|
13,287,047
|
|
|
$
|
35,446,490
|
|
Other revenues
|
75,446
|
|
|
113,945
|
|
||
Total revenues
|
13,362,493
|
|
|
35,560,435
|
|
||
Cost of revenues
|
(4,151,502
|
)
|
|
(11,082,363
|
)
|
||
Gross profit
|
9,210,991
|
|
|
24,478,072
|
|
||
Operating expenses:
|
|
|
|
||||
Research and development expenses
|
(4,199,568
|
)
|
|
(11,688,168
|
)
|
||
Sales and marketing expenses
|
(4,006,086
|
)
|
|
(6,002,444
|
)
|
||
General and administrative expenses
|
(1,562,462
|
)
|
|
(3,544,940
|
)
|
||
Total operating expenses
|
(9,768,116
|
)
|
|
(21,235,552
|
)
|
||
Other operating income
|
4,930
|
|
|
23,259
|
|
||
Income (loss) from operations
|
(552,195
|
)
|
|
3,265,779
|
|
||
Exchange loss
|
(18,248
|
)
|
|
(7,033
|
)
|
||
Interest income
|
42,840
|
|
|
97,235
|
|
||
Income (loss) before income taxes
|
(527,603
|
)
|
|
3,355,981
|
|
||
Income taxes
|
(190,375
|
)
|
|
(368,791
|
)
|
||
Net income (loss)
|
(717,978
|
)
|
|
2,987,190
|
|
||
Less: cumulative undeclared dividends on convertible redeemable preferred shares
|
(2,490,368
|
)
|
|
(3,399,132
|
)
|
||
Less: accretion on convertible redeemable preferred shares to redemption value
|
(10,178,895
|
)
|
|
(35,963,579
|
)
|
||
Net loss attributable to Agora, Inc.’s ordinary shareholders
|
$
|
(13,387,241
|
)
|
|
$
|
(36,375,521
|
)
|
Other comprehensive income (loss):
|
|
|
|
||||
Foreign currency translation adjustments
|
321,374
|
|
|
(501,198
|
)
|
||
Total comprehensive loss attributable to Agora, Inc.’s ordinary shareholders
|
$
|
(13,065,867
|
)
|
|
$
|
(36,876,719
|
)
|
|
|
|
|
||||
Net loss per share attributable to Agora, Inc.’s ordinary shareholders—basic and diluted
|
(0.12
|
)
|
|
(0.30
|
)
|
||
Weighted average number of ordinary shares-basic and diluted
|
113,245,308
|
|
|
119,882,136
|
|
||
|
|
|
|
||||
Share-based compensation expenses included in:
|
|
|
|
||||
Cost of revenues
|
18,752
|
|
|
31,009
|
|
||
Research and development expenses
|
327,112
|
|
|
292,393
|
|
||
Sales and marketing expenses
|
362,732
|
|
|
485,229
|
|
||
General and administrative expenses
|
221,234
|
|
|
638,791
|
|
|
Ordinary shares
|
|
Additional
paid-in capital
|
|
Accumulated
other
comprehensive income (loss)
|
|
Accumulated
deficit
|
|
Total
shareholders’ deficit
|
||||||||||||||
|
Number of
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||
Balance as of January 1, 2019
|
112,441,049
|
|
|
$
|
11,244
|
|
|
$
|
—
|
|
|
$
|
(630,334
|
)
|
|
$
|
(72,622,888
|
)
|
|
$
|
(73,241,978
|
)
|
|
Vesting of restricted shares (Note 11)
|
1,683,333
|
|
|
168
|
|
|
72,876
|
|
|
—
|
|
|
—
|
|
|
73,044
|
|
||||||
Share-based compensation expense (Note 11)
|
—
|
|
|
—
|
|
|
686,113
|
|
|
—
|
|
|
—
|
|
|
686,113
|
|
||||||
Accretion on convertible redeemable preferred shares to redemption value (Note 9)
|
—
|
|
|
—
|
|
|
(758,989
|
)
|
|
—
|
|
|
(9,419,906
|
)
|
|
(10,178,895
|
)
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(717,978
|
)
|
|
(717,978
|
)
|
||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
321,374
|
|
|
—
|
|
|
321,374
|
|
||||||
Balance as of March 31, 2019
|
114,124,382
|
|
|
11,412
|
|
|
—
|
|
|
(308,960
|
)
|
|
(82,760,772
|
)
|
|
(83,058,320
|
)
|
||||||
Balance as of January 1, 2020
|
119,074,382
|
|
|
11,907
|
|
|
—
|
|
|
(988,417
|
)
|
|
(126,316,043
|
)
|
|
(127,292,553
|
)
|
||||||
Vesting of restricted shares (Note 11)
|
1,683,333
|
|
|
168
|
|
|
(168
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Share-based compensation expense (Note 11)
|
—
|
|
|
—
|
|
|
1,447,422
|
|
|
—
|
|
|
—
|
|
|
1,447,422
|
|
||||||
Accretion on convertible redeemable preferred shares to redemption value (Note 9)
|
—
|
|
|
—
|
|
|
(1,447,254
|
)
|
|
—
|
|
|
(34,516,325
|
)
|
|
(35,963,579
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,987,190
|
|
|
2,987,190
|
|
||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
(501,198
|
)
|
|
—
|
|
|
(501,198
|
)
|
||||||
Balance as of March 31, 2020
|
120,757,715
|
|
|
$
|
12,075
|
|
|
$
|
—
|
|
|
$
|
(1,489,615
|
)
|
|
$
|
(157,845,178
|
)
|
|
$
|
(159,322,718
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2020
|
||||
|
(US$)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(717,978
|
)
|
|
$
|
2,987,190
|
|
Share-based compensation expense
|
929,830
|
|
|
1,447,422
|
|
||
Depreciation of property and equipment
|
342,304
|
|
|
744,654
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
1,135,417
|
|
|
(15,446,318
|
)
|
||
Prepayments and other current assets
|
374,698
|
|
|
(2,165,912
|
)
|
||
Other non-current assets
|
(15,312
|
)
|
|
18,747
|
|
||
Accounts payable
|
1,230,482
|
|
|
4,787,923
|
|
||
Advances from customers
|
(134,251
|
)
|
|
(138,056
|
)
|
||
Taxes payable
|
(17,193
|
)
|
|
232,461
|
|
||
Accrued expenses and other current liabilities
|
490,565
|
|
|
6,612,474
|
|
||
Net cash generated from (used in) operating activities
|
3,618,562
|
|
|
(919,415
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchase of short-term investments
|
(6,669,829
|
)
|
|
—
|
|
||
Proceeds from sale and maturity of short-term investments
|
1,482,184
|
|
|
—
|
|
||
Purchase of property and equipment
|
(763,642
|
)
|
|
(2,496,289
|
)
|
||
Net cash used in investing activities
|
(5,951,287
|
)
|
|
(2,496,289
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of Series C+ convertible redeemable preferred shares, net of the issuance costs of nil
|
—
|
|
|
50,000,002
|
|
||
Payment of deferred initial public offering cost
|
—
|
|
|
(231,312
|
)
|
||
Net cash provided by financing activities
|
—
|
|
|
49,768,690
|
|
||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash
|
194,052
|
|
|
(303,484
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(2,138,673
|
)
|
|
46,049,502
|
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
108,598,039
|
|
|
105,683,153
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
106,459,366
|
|
|
$
|
151,732,655
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Income taxes paid
|
—
|
|
|
—
|
|
||
Non-cash financing and investing activities:
|
|
|
|
||||
Accretion to redemption value of convertible redeemable preferred shares
|
10,178,895
|
|
|
35,963,579
|
|
||
Payables for property and equipment
|
479,249
|
|
|
936,482
|
|
||
Payables for deferred initial public offering cost
|
—
|
|
|
948,523
|
|
|
Date of Incorporation
|
|
Place of Incorporation
|
|
Percentage of
Direct or Indirect Ownership
|
|
Principal Activities
|
Subsidiaries:
|
|
|
|
|
|
|
|
Agora Lab, Inc.
|
January 13, 2014
|
|
California, United States
|
|
100%
|
|
Provision of services
|
Agora IO, Inc
|
December 2, 2014
|
|
Cayman Islands
|
|
100%
|
|
Investment holding
|
Agora IO Hongkong Limited
|
December 12, 2014
|
|
Hong Kong
|
|
100%
|
|
Investment holding
|
Dayin Network Technology Co., Ltd. (“WFOE”)
|
April 30, 2015
|
|
PRC
|
|
100%
|
|
Provision of services
|
Agora IO, Ltd.
|
July 25, 2019
|
|
United Kingdom
|
|
100%
|
|
Startup
|
|
|
|
|
|
|
|
|
VIE:
|
|
|
|
|
|
|
|
Shanghai Zhaoyan Network Technology Co., Ltd. (“VIE”)
|
March 28, 2014
|
|
PRC
|
|
100%
|
|
Provision of services
|
(c)
|
Consolidated Variable Interest Entities
|
|
As of December 31, 2019
|
|
As of March 31,
2020
|
||||
|
(US$)
|
||||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
17,308,887
|
|
|
$
|
16,770,070
|
|
Accounts receivable, net
|
14,827,841
|
|
|
29,487,637
|
|
||
Amounts due from related parties
|
2,445,447
|
|
|
2,557,014
|
|
||
Prepayments and other current assets
|
886,022
|
|
|
1,742,389
|
|
||
Total current assets
|
35,468,197
|
|
|
50,557,110
|
|
||
Non-current assets:
|
|
|
|
||||
Property and equipment, net
|
3,292,978
|
|
|
4,785,792
|
|
||
Deferred tax assets
|
387,950
|
|
|
381,987
|
|
||
Other non-current assets
|
69,968
|
|
|
69,316
|
|
||
Total non-current assets
|
3,750,896
|
|
|
5,237,095
|
|
||
Total assets
|
$
|
39,219,093
|
|
|
$
|
55,794,205
|
|
Liabilities
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
2,992,628
|
|
|
7,156,391
|
|
||
Amounts due to related parties
|
27,780,440
|
|
|
38,524,641
|
|
||
Advances from customers
|
733,518
|
|
|
699,464
|
|
||
Taxes payable
|
756,020
|
|
|
701,612
|
|
||
Accrued expenses and other current liabilities
|
3,440,748
|
|
|
5,273,857
|
|
||
Total current liabilities
|
35,703,354
|
|
|
52,355,965
|
|
||
Total liabilities
|
$
|
35,703,354
|
|
|
$
|
52,355,965
|
|
|
Three Months Ended March 31,
|
||||
|
2019
|
|
2020
|
||
|
(US$)
|
||||
Net cash and cash equivalents generated from operating activities
|
6,416,507
|
|
|
1,383,106
|
|
Net cash and cash equivalents used in investing activities
|
(5,435,194
|
)
|
|
(1,921,923
|
)
|
Net cash and cash equivalents used in financing activities
|
—
|
|
|
—
|
|
(a)
|
Basis of Presentation
|
(b)
|
Basis of Consolidation
|
(c)
|
Use of Estimates
|
(d)
|
Functional Currencies and Foreign Currency Translation
|
(e)
|
Concentration of Credit Risk
|
|
As of
December 31, 2019
|
|
As of
March 31, 2020
|
||
Customer A - Social media platform
|
24
|
%
|
|
15
|
%
|
Customer B - Educational institution application
|
*
|
|
|
15
|
%
|
*
|
Less than 10%.
|
|
For the three months ended
|
|||
|
2019
|
|
2020
|
|
Customer A - Social media platform
|
*
|
|
10
|
%
|
Customer B - Educational institution application
|
*
|
|
14
|
%
|
*
|
Less than 10%.
|
(f)
|
Mezzanine Equity
|
(g)
|
Deferred Equity Offering Costs
|
(h)
|
Revenue Recognition
|
(i)
|
Cost of Revenues
|
(j)
|
Research and Development Expenses
|
(k)
|
Software Development Costs
|
(l)
|
Sales and Marketing Expenses
|
(m)
|
General and Administrative Expenses
|
(n)
|
Operating Leases
|
(o)
|
Income Tax
|
(p)
|
Segment Reporting
|
|
Three months Ended March 31,
|
||||||
|
2019
|
|
2020
|
||||
|
(US$)
|
||||||
Primary geographical markets based on customers’ location
|
|
|
|
||||
PRC
|
$
|
9,767,402
|
|
|
$
|
31,933,887
|
|
United States
|
1,669,754
|
|
|
1,332,261
|
|
||
Others
|
1,925,337
|
|
|
2,294,287
|
|
||
Total revenues
|
$
|
13,362,493
|
|
|
$
|
35,560,435
|
|
(q)
|
Recently Issued Accounting Pronouncements
|
|
As of December 31, 2019
|
|
As of March 31,
2020
|
||||
|
(US$)
|
||||||
Accounts receivable
|
$
|
17,283,107
|
|
|
$
|
32,410,013
|
|
Less: allowance for doubtful accounts
|
(1,035,542
|
)
|
|
(1,170,372
|
)
|
||
Accounts receivable, net
|
$
|
16,247,565
|
|
|
$
|
31,239,641
|
|
|
Three months Ended March 31,
|
||||||
|
2019
|
|
2020
|
||||
|
(US$)
|
||||||
At beginning of the period
|
$
|
(367,044
|
)
|
|
$
|
(1,035,542
|
)
|
Addition
|
(181,196
|
)
|
|
(147,878
|
)
|
||
Foreign currency translation impact
|
(6,716
|
)
|
|
13,048
|
|
||
At end of the period
|
$
|
(554,956
|
)
|
|
$
|
(1,170,372
|
)
|
|
As of December 31, 2019
|
|
As of March 31,
2020
|
||||
|
(US$)
|
||||||
Loans and advance to employees(3)
|
$
|
—
|
|
|
$
|
2,059,749
|
|
VAT recoverable(1)
|
776,141
|
|
|
607,986
|
|
||
Prepayments(2)
|
419,376
|
|
|
556,727
|
|
||
Restricted cash
|
80,000
|
|
|
80,000
|
|
||
Others
|
105,520
|
|
|
196,655
|
|
||
|
$
|
1,381,037
|
|
|
$
|
3,501,117
|
|
(1)
|
VAT recoverable represented the balances that the Group can utilize to deduct its VAT liabilities within the next 12 months.
|
(2)
|
Prepayments are primarily related to a prepayment for company events, prepaid rental expenses and other deposits.
|
(3)
|
Loans and advance to employees as of March 31, 2020 primarily consist of loans to the employees for the payment of individual income taxes for granted options. The interest associated with these loans are based on the one year risk-free interest rate stipulated by the People’s Bank of China, and the loan plus interest will be repaid by the employee within one year. As of March 31, 2020, the loan balance due from a related party was US$146,000, which was repaid on May 14, 2020.
|
|
As of December 31, 2019
|
|
As of March 31, 2020
|
||||
|
(US$)
|
||||||
Cost:
|
|
||||||
Network equipment
|
$
|
6,976,107
|
|
|
$
|
9,468,745
|
|
Leasehold improvements
|
1,089,970
|
|
|
1,084,092
|
|
||
Electronic equipment
|
1,170,866
|
|
|
1,281,616
|
|
||
Furniture, computers and office equipment
|
443,453
|
|
|
438,361
|
|
||
Total cost
|
9,680,396
|
|
|
12,272,814
|
|
||
Less: accumulated depreciation
|
(3,398,406
|
)
|
|
(4,095,590
|
)
|
||
Construction-in-process
|
—
|
|
|
104,818
|
|
||
Property and equipment, net
|
$
|
6,281,990
|
|
|
$
|
8,282,042
|
|
|
As of December 31, 2019
|
|
As of March 31,
2020
|
||||
|
(US$)
|
||||||
Long-term deposits
|
$
|
470,086
|
|
|
$
|
463,899
|
|
Deferral of initial public offering costs
|
287,331
|
|
|
1,179,835
|
|
||
Others
|
51,445
|
|
|
11,241
|
|
||
|
$
|
808,862
|
|
|
$
|
1,654,975
|
|
|
As of December 31, 2019
|
|
As of March 31,
2020
|
||||
|
(US$)
|
||||||
VAT payable
|
$
|
868,270
|
|
|
$
|
916,039
|
|
Corporate income taxes payable
|
1,165,660
|
|
|
1,517,348
|
|
||
Other taxes payable
|
459,207
|
|
|
255,957
|
|
||
|
$
|
2,493,137
|
|
|
$
|
2,689,344
|
|
|
As of December 31,2019
|
|
As of March 31,
2020
|
||||
|
(US$)
|
||||||
Accrued salary and social welfare costs
|
$
|
8,388,819
|
|
|
$
|
15,134,411
|
|
Accrued professional service fees
|
788,313
|
|
|
1,495,516
|
|
||
Accrued staff reimbursements
|
332,578
|
|
|
138,789
|
|
||
Stock option deposit held on behalf of employees
|
400,680
|
|
|
411,783
|
|
||
Accrued rental fee
|
204,669
|
|
|
157,511
|
|
||
Others
|
863,873
|
|
|
656,284
|
|
||
|
$
|
10,978,932
|
|
|
$
|
17,994,294
|
|
•
|
the voting rights of shares controlled by the Founder was modified to carry 2 votes in connection with the Series B Preferred Shares financing; and
|
•
|
the voting rights of shares controlled by the Founder was modified to carry 3 votes in connection with the Series B+ Preferred Shares financing.
|
(a)
|
an amount equal to the Series A issue price, plus all accrued or declared but unpaid dividends on such Series A Preferred Share (for a partial year, the dividends shall be calculated proportionally), plus an amount that would accrue on the Series A issue price at a rate of 15% per annum, compounding annually, during the period commencing from December 16, 2013 and ending on the date of the Series A redemption notice, and
|
(b)
|
the fair market value of the Series A Preferred Share determined by an independent third party appraising firm selected jointly by the board of directors and the requesting holder, provided however, that any redemption of all or any part of Series A Preferred Shares held by a holder of Series A Preferred Shares at a price determined by an independent third party appraising firm shall not cause any material adverse effect to the Group companies taken as a whole.
|
|
Series A Preferred
Shares
|
|
Series B Preferred Shares
|
|
Series B+ Preferred Shares
|
|
Series C Preferred Shares
|
|
Series C+ Preferred Shares
|
|
Total
|
|||||||||||||||||||||||||||
|
Number of
|
|
Amount
|
|
Number of
|
|
Amount
|
|
Number of
|
|
Amount
|
|
Number of
|
|
Amount
|
|
Number of
|
|
Amount
|
|
Amount
|
|||||||||||||||||
|
shares
|
|
(US$)
|
|
Shares
|
|
(US$)
|
|
shares
|
|
(US$)
|
|
shares
|
|
(US$)
|
|
Shares
|
|
(US$)
|
|
(US$)
|
|||||||||||||||||
Balances as of January 1, 2019
|
55,626,960
|
|
|
$
|
45,578,868
|
|
|
50,783,698
|
|
|
$
|
29,955,293
|
|
|
26,651,410
|
|
|
$
|
45,876,440
|
|
|
34,793,413
|
|
|
$
|
67,844,843
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
189,255,444
|
|
Accretion on convertible redeemable preferred shares to redemption value
|
—
|
|
|
8,661,860
|
|
|
—
|
|
|
22,634
|
|
|
—
|
|
|
99,208
|
|
|
—
|
|
|
1,395,193
|
|
|
—
|
|
|
—
|
|
|
10,178,895
|
|
||||||
Balances as of March 31, 2019
|
55,626,960
|
|
|
54,240,728
|
|
|
50,783,698
|
|
|
29,977,927
|
|
|
26,651,410
|
|
|
45,975,648
|
|
|
34,793,413
|
|
|
69,240,036
|
|
|
—
|
|
|
—
|
|
|
199,434,339
|
|
||||||
Balances as of January 1, 2020
|
55,626,960
|
|
|
90,049,774
|
|
|
50,783,698
|
|
|
30,045,929
|
|
|
26,651,410
|
|
|
46,274,560
|
|
|
34,793,413
|
|
|
73,600,134
|
|
|
—
|
|
|
—
|
|
|
239,970,397
|
|
||||||
Issuance of convertible redeemable preferred shares, net of issuance costs of nil
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,062,510
|
|
|
50,000,002
|
|
|
50,000,002
|
|
||||||
Accretion on convertible redeemable preferred shares to redemption value
|
—
|
|
|
33,579,110
|
|
|
—
|
|
|
22,703
|
|
|
—
|
|
|
100,068
|
|
|
—
|
|
|
1,513,546
|
|
|
—
|
|
|
748,152
|
|
|
35,963,579
|
|
||||||
Balances as of March 31, 2020
|
55,626,960
|
|
|
$
|
123,628,884
|
|
|
50,783,698
|
|
|
$
|
30,068,632
|
|
|
26,651,410
|
|
|
$
|
46,374,628
|
|
|
34,793,413
|
|
|
$
|
75,113,680
|
|
|
15,062,510
|
|
|
$
|
50,748,154
|
|
|
$
|
325,933,978
|
|
|
Three months Ended March 31,
|
||||||
|
2019
|
|
2020
|
||||
|
(US$)
|
||||||
Cost of revenues
|
$
|
18,752
|
|
|
$
|
31,009
|
|
Research and development expenses
|
327,112
|
|
|
292,393
|
|
||
Sales and marketing expenses
|
362,732
|
|
|
485,229
|
|
||
General and administrative expenses
|
221,234
|
|
|
638,791
|
|
||
|
$
|
929,830
|
|
|
$
|
1,447,422
|
|
|
Three months Ended March 31,
|
||||||
|
2019
|
|
2020
|
||||
|
(US$)
|
||||||
Equity award - share options
|
$
|
486,863
|
|
|
$
|
1,185,341
|
|
Equity award - restricted shares(1)
|
199,250
|
|
|
262,081
|
|
||
Liability award - share options
|
170,618
|
|
|
—
|
|
||
Liability award - restricted shares
|
73,099
|
|
|
—
|
|
||
|
$
|
929,830
|
|
|
$
|
1,447,422
|
|
(1)
|
Including restricted shares granted by the Founder for equity classified award of US$159,913 and US$211,753 for the three months ended March 31, 2019 and 2020, respectively.
|
|
Number of
Options
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual Life
|
|
Aggregate
Intrinsic
Value
|
|
Weighted
Average
Grant Date
Fair Value
|
||||||||
|
|
|
(US$)
|
|
In Years
|
|
(US$)
|
|
(US$)
|
||||||||
Outstanding at January 1, 2019
|
33,660,957
|
|
|
$
|
0.11
|
|
|
7.91
|
|
|
$
|
19,994,575
|
|
|
$
|
0.23
|
|
Granted
|
1,567,500
|
|
|
0.29
|
|
|
|
|
|
|
0.62
|
|
|||||
Forfeited
|
(49,846
|
)
|
|
0.10
|
|
|
|
|
|
|
|
||||||
Outstanding at March 31, 2019
|
35,178,611
|
|
|
0.12
|
|
|
7.76
|
|
|
25,641,578
|
|
|
0.24
|
|
|||
Outstanding at January 1, 2020
|
38,011,964
|
|
|
0.12
|
|
|
7.22
|
|
|
51,303,638
|
|
|
0.31
|
|
|||
Granted
|
5,835,100
|
|
|
0.22
|
|
|
|
|
|
|
1.58
|
|
|||||
Forfeited
|
(347,219
|
)
|
|
0.21
|
|
|
|
|
|
|
|
||||||
Outstanding at March 31, 2020
|
43,499,845
|
|
|
0.14
|
|
|
7.34
|
|
|
83,669,193
|
|
|
0.48
|
|
|||
Vested and expected to vest at March 31, 2020
|
21,573,459
|
|
|
|
|
|
|
|
|
|
|||||||
Exercisable at March 31, 2020
|
21,573,459
|
|
|
|
|
|
|
|
|
|
|
Number of
Options
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual Life
|
|
Aggregate
Intrinsic
Value
|
|
Weighted
Average
Grant Date
Fair Value
|
||||
|
|
|
(US$)
|
|
In Years
|
|
(US$)
|
|
(US$)
|
||||
Outstanding at January 1, 2019
|
1,150,784
|
|
|
0.10
|
|
|
5.97
|
|
689,258
|
|
|
0.07
|
|
Granted
|
—
|
|
|
|
|
|
|
|
|
|
|||
Forfeited
|
—
|
|
|
|
|
|
|
|
|
|
|||
Outstanding at March 31, 2019
|
1,150,784
|
|
|
0.10
|
|
|
5.72
|
|
856,649
|
|
|
0.07
|
|
|
Three Months Ended March 31,
|
||
|
2019
|
|
2020
|
Exercise price
|
US$0.1-US$0.37
|
|
US$0.1-US$1.74
|
Fair value of the ordinary shares on the date of option grant
|
US$0.6989-US$0.8444
|
|
US$1.7358
|
Risk-free interest rate(1)
|
2.62%-2.83%
|
|
1.76%
|
Expected term (in years)
|
10
|
|
10
|
Expected dividend yield(2)
|
0%
|
|
0%
|
Expected volatility(3)
|
49.31%-50.01%
|
|
47.29%
|
Expected forfeiture rate (post-vesting)
|
3%
|
|
0%-3%
|
(1)
|
The risk-free interest rate of periods within the contractual life of the share option is based on the market yield of the U.S. treasury bonds with a maturity life equal to the expected life to expiration.
|
(2)
|
The Company has no history or expectation of paying dividends on its ordinary shares.
|
(3)
|
Expected volatility is estimated based on the average of historical volatilities of the comparable companies in the same industry as at the valuation dates.
|
|
Numbers of Shares
|
|
Weighted-average Grant Date Fair Value
|
|||
|
|
|
(US$)
|
|||
Outstanding at January 1, 2019
|
9,450,348
|
|
|
$
|
0.02
|
|
Granted
|
—
|
|
|
—
|
|
|
Vested
|
(1,667,708
|
)
|
|
0.02
|
|
|
Outstanding at March 31, 2019
|
7,782,640
|
|
|
0.02
|
|
|
Outstanding at January 1, 2020
|
2,805,557
|
|
|
0.02
|
|
|
Granted
|
—
|
|
|
—
|
|
|
Vested
|
(1,683,333
|
)
|
|
0.02
|
|
|
Outstanding at March 31, 2020
|
1,122,224
|
|
|
0.02
|
|
|
Numbers of Shares
|
|
Weighted-average Grant Date Fair Value
|
||
|
|
|
(US$)
|
||
Outstanding at January 1, 2019
|
88,542
|
|
|
0.02
|
|
Granted
|
—
|
|
|
—
|
|
Vested
|
(15,625
|
)
|
|
0.02
|
|
Outstanding at March 31, 2019
|
72,917
|
|
|
0.02
|
|
|
Three Months Ended March 31,
|
||||
|
2019
|
|
2020
|
||
|
(US$)
|
||||
Profit (loss) before income tax
|
(527,603
|
)
|
|
3,355,981
|
|
Income tax expense
|
190,375
|
|
|
368,791
|
|
Effective tax rate
|
(36.08
|
)%
|
|
10.99
|
%
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2020
|
||||
|
(US$)
|
||||||
Numerator:
|
|
|
|
||||
Net income (loss)
|
$
|
(717,978
|
)
|
|
$
|
2,987,190
|
|
Cumulative undeclared dividends on convertible redeemable preferred shares
|
(2,490,368
|
)
|
|
(3,399,132
|
)
|
||
Accretion on convertible redeemable preferred shares to redemption value
(Note 9)
|
(10,178,895
|
)
|
|
(35,963,579
|
)
|
||
Net loss attributable to Agora, Inc.’s ordinary shareholders - basic and diluted
|
$
|
(13,387,241
|
)
|
|
$
|
(36,375,521
|
)
|
Denominator:
|
|
|
|
||||
Denominator for basic and diluted loss per share weighted-average ordinary shares outstanding
|
113,245,308
|
|
|
119,882,136
|
|
||
Basic and diluted loss per share
|
$
|
(0.12
|
)
|
|
$
|
(0.30
|
)
|
|
Three Months Ended March 31,
|
||||
|
2019
|
|
2020
|
||
Preferred shares - weighted average
|
167,855,481
|
|
|
175,966,063
|
|
Share options - weighted average
|
24,352,696
|
|
|
33,982,260
|
|
Restricted share - weighted average
|
8,094,228
|
|
|
1,654,095
|
|
|
Contractual Purchase Obligations
|
||
|
(US$)
|
||
Remainder of 2020
|
$
|
4,238,710
|
|
|
Three Months Ended March 31,
|
||||
|
2019
|
|
2020
|
||
|
(US$)
|
||||
Rental fee charged by a related party
|
17,213
|
|
|
49,922
|
|
|
Three Months Ended March 31, 2020
|
||
|
(Unaudited)
|
||
|
(US$)
|
||
Numerator:
|
|
||
Net loss attributable to Agora, Inc.’s ordinary shareholders
|
$
|
(36,375,521
|
)
|
Pro forma adjustment of conversion of Preferred Shares
|
39,362,711
|
|
|
Numerator for pro forma basic and diluted earnings per share
|
$
|
2,987,190
|
|
Denominator:
|
|
||
Weighted-average number of ordinary shares outstanding
|
119,882,136
|
|
|
Pro forma effect of conversion of Preferred Shares
|
175,966,063
|
|
|
Denominator for pro forma basic earnings per ordinary share
|
295,848,199
|
|
|
Dilutive impact of share options
|
33,982,260
|
|
|
Dilutive impact of restricted shares
|
1,654,095
|
|
|
Denominator for pro forma diluted net earnings per ordinary share
|
331,484,554
|
|
|
Pro forma basic earnings per ordinary share:
|
$
|
0.01
|
|
Pro forma diluted earnings per ordinary share:
|
$
|
0.01
|
|
•
|
Each shareholder of Agora IO exchanged all of their ordinary and preferred shares of Agora IO for an equivalent number of ordinary and preferred shares of Agora issued via a share swap agreement, resulting in Agora becoming the sole shareholder of Agora IO, and Agora IO and its former shareholders becoming the shareholders of Agora;
|
•
|
Immediately after the share swap, (1) Agora IO reclassified and re-designated all of the preferred shares of Agora IO held by Agora into ordinary shares of Agora IO, (2) Agora repurchased all ordinary shares of Agora held by Agora IO and (3) Agora IO repurchased an equivalent number of ordinary shares of Agora IO held by Agora, collectively resulting in the former Agora IO shareholders remaining shareholders of Agora and Agora IO becoming a wholly owned subsidiary of Agora and no longer a shareholder of Agora; and
|
•
|
Agora assumed all options granted by Agora IO under the 2018 Equity Incentive Plan, or the 2018 Plan, resulting in the shares subject to the options becoming the same number of shares of Agora instead of shares of Agora IO, but without otherwise affecting the number of options granted, the shares subject to the options, the exercise price of each award, the vesting commencement date or schedule, or the other terms and conditions in the respective award agreements. Agora IO then terminated the 2018 Plan without affecting the then-outstanding awards under the 2018 Plan.
|
Securities/Purchaser
|
|
Issuer
|
|
Date of Issuance
|
|
Number of Securities
|
|
Consideration
|
||
Series C+ Preferred Shares
|
|
|
|
|
|
|
|
|
||
Coatue PE Asia XVI LLC
|
|
Agora
|
|
February 12, 2020
|
|
6,624,492
|
|
|
US$21,990,001.00
|
|
Internet Fund VI Pte. Ltd.
|
|
Agora
|
|
February 12, 2020
|
|
6,624,492
|
|
|
US$21,990,001.00
|
|
Evolution Special Opportunity Fund I, L.P.
|
|
Agora
|
|
February 12, 2020
|
|
1,576,979
|
|
|
US$5,234,783.00
|
|
Evolution Fund I Co-investment, L.P.
|
|
Agora
|
|
February12, 2020
|
|
236,547
|
|
|
US$785,217.00
|
|
|
|
|
|
|
|
|
|
|
||
Series C Preferred Shares
|
|
|
|
|
|
|
|
|
||
Shunwei Technology II Limited
|
|
Agora
|
|
January 19, 2020
|
|
3,479,341
|
|
No additional consideration
|
|
|
Morningside China TMT Special Opportunity Fund II, L.P.
|
|
Agora
|
|
January 19, 2020
|
|
4,744,556
|
|
No additional consideration
|
|
|
Morningside China TMT Fund IV Co-Investment, L.P.
|
|
Agora
|
|
January 19, 2020
|
|
474,456
|
|
No additional consideration
|
|
|
Coatue PE Asia XVI LLC
|
|
Agora
|
|
January 19, 2020
|
|
20,876,048
|
|
No additional consideration
|
|
|
SIG Global China Fund I, LLLP
|
|
Agora
|
|
January 19, 2020
|
|
5,219,012
|
|
No additional consideration
|
|
|
Shunwei Technology II Limited
|
|
Agora IO
|
|
October 23, 2018
|
|
3,479,341
|
|
|
US$6,666,667.00
|
|
Morningside China TMT Special Opportunity Fund II, L.P.
|
|
Agora IO
|
|
October 23, 2018
|
|
4,744,556
|
|
|
US$9,090,909.00
|
|
Morningside China TMT Fund IV Co-Investment, L.P.
|
|
Agora IO
|
|
October 23, 2018
|
|
474,456
|
|
|
US$909,091.00
|
|
Coatue PE Asia XVI LLC
|
|
Agora IO
|
|
October 1, 2018
|
|
20,876,048
|
|
|
US$40,000,000.00
|
|
SIG Global China Fund I, LLLP
|
|
Agora IO
|
|
October 1, 2018
|
|
5,219,012
|
|
|
US$10,000,000.00
|
|
|
|
|
|
|
|
|
|
|
||
Series B+ Preferred Shares
|
|
|
|
|
|
|
|
|
||
SIG China Investments Master Fund III, LLLP
|
|
Agora
|
|
January 19, 2020
|
|
15,047,022
|
|
No additional consideration
|
|
|
Shunwei Technology II Limited
|
|
Agora
|
|
January 19, 2020
|
|
2,507,837
|
|
No additional consideration
|
|
|
GGV Capital IV L.P.
|
|
Agora
|
|
January 19, 2020
|
|
490,539
|
|
No additional consideration
|
|
|
GGV Capital IV Entrepreneurs Fund L.P.
|
|
Agora
|
|
January 19, 2020
|
|
10,401
|
|
No additional consideration
|
|
|
Morningside China TMT Fund IV Co-Investment, L.P.
|
|
Agora
|
|
January 19, 2020
|
|
781,419
|
|
No additional consideration
|
|
|
Morningside China TMT Special Opportunity Fund II, L.P.
|
|
Agora
|
|
January 19, 2020
|
|
7,814,192
|
|
No additional consideration
|
|
|
SIG China Investments Master Fund III, LLLP
|
|
Agora IO
|
|
May 18, 2017
|
|
15,047,022
|
|
|
US$18,000,000.00
|
|
Shunwei Technology II Limited
|
|
Agora IO
|
|
May 18, 2017
|
|
2,507,837
|
|
|
US$3,000,000.02
|
|
Morningside China TMT Fund IV Co-Investment, L.P.
|
|
Agora IO
|
|
May 18, 2017
|
|
781,419
|
|
|
US$934,772.69
|
|
Morningside China TMT Special Opportunity Fund II, L.P.
|
|
Agora IO
|
|
May 18, 2017
|
|
7,814,192
|
|
|
US$9,347,726.87
|
|
GGV Capital IV L.P.
|
|
Agora IO
|
|
May 18, 2017
|
|
490,539
|
|
|
US$586,807.28
|
|
GGV Capital IV Entrepreneurs Fund L.P.
|
|
Agora IO
|
|
May 18, 2017
|
|
10,401
|
|
|
US$12,442.20
|
|
|
|
|
|
|
|
|
|
|
Securities/Purchaser
|
|
Issuer
|
|
Date of Issuance
|
|
Number of Securities
|
|
Consideration
|
||
Series B Preferred Shares
|
|
|
|
|
|
|
|
|
||
SIG China Investments Master Fund III, LLLP
|
|
Agora
|
|
January 19, 2020
|
|
18,808,777
|
|
No additional consideration
|
|
|
Morningside China TMT Top Up Fund, L.P.
|
|
Agora
|
|
January 19, 2020
|
|
23,260,188
|
|
No additional consideration
|
|
|
Shunwei Technology II Limited
|
|
Agora
|
|
January 19, 2020
|
|
5,078,370
|
|
No additional consideration
|
|
|
GGV Capital IV L.P.
|
|
Agora
|
|
January 19, 2020
|
|
2,946,919
|
|
No additional consideration
|
|
|
GGV Capital IV Entrepreneurs Fund L.P.
|
|
Agora
|
|
January 19, 2020
|
|
62,485
|
|
No additional consideration
|
|
|
IDG Technology Venture Investment V, L.P.
|
|
Agora
|
|
January 19, 2020
|
|
626,959
|
|
No additional consideration
|
|
|
|
|
|
|
|
|
|
|
|
||
Series A Preferred Shares
|
|
|
|
|
|
|
|
|
||
YY TZ Limited
|
|
Agora
|
|
January 19, 2020
|
|
7,222,222
|
|
No additional consideration
|
|
|
Shunwei Technology II Limited
|
|
Agora
|
|
January 19, 2020
|
|
20,000,000
|
|
No additional consideration
|
|
|
Duowan Entertainment Corp.
|
|
Agora
|
|
January 19, 2020
|
|
18,626,960
|
|
No additional consideration
|
|
|
Morningside China TMT Fund II, L.P.
|
|
Agora
|
|
January 19, 2020
|
|
2,000,000
|
|
No additional consideration
|
|
|
GGV Capital IV Entrepreneurs Fund L.P.
|
|
Agora
|
|
January 19, 2020
|
|
41,527
|
|
No additional consideration
|
|
|
GGV Capital IV L.P.
|
|
Agora
|
|
January 19, 2020
|
|
1,958,473
|
|
No additional consideration
|
|
|
CRCM Opportunity Fund, L.P.
|
|
Agora
|
|
January 19, 2020
|
|
3,000,000
|
|
No additional consideration
|
|
|
Yan Capital L.P.
|
|
Agora
|
|
January 19, 2020
|
|
2,777,778
|
|
No additional consideration
|
|
|
Yan Capital L.P.
|
|
Agora IO
|
|
May 18, 2017
|
|
2,777,778
|
|
US$277.78 and finder services
|
|
|
|
|
|
|
|
|
|
|
|
||
Ordinary Shares
|
|
|
|
|
|
|
|
|
||
Soundscape Limited
|
|
Agora
|
|
January 19, 2020
|
|
76,179,938
|
|
No additional consideration
|
|
|
VoiceCrew Limited
|
|
Agora
|
|
January 19, 2020
|
|
45,800,000
|
|
No additional consideration
|
|
|
Agora IO, Inc
|
|
Agora
|
|
January 19, 2020
|
|
109,825,419
|
|
No additional consideration
|
|
|
|
|
|
|
|
|
|
|
|
||
Options
|
|
|
|
|
|
|
|
|
||
Certain directors, officers, employees and consultants of the Company as a group
|
|
Agora and Agora IO
|
|
From April 30, 2017 through March 31, 2020
|
|
31,176,758
|
|
Past and future services to us
|
|
(a)
|
Exhibits
|
(b)
|
Financial Statement Schedules
|
(1)
|
For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant under Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
|
(2)
|
For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
Exhibit
Number
|
|
Description of Exhibit
|
1.1*
|
|
Form of Underwriting Agreement
|
3.1
|
|
|
3.2*
|
|
Form of Fifth Amended and Restated Memorandum and Articles of Association of the Registrant, effective immediately prior to the completion of this offering
|
4.1*
|
|
Registrant’s Specimen American Depositary Receipt (included in Exhibit 4.3)
|
4.2*
|
|
Registrant’s Specimen Certificate for Class A ordinary shares
|
4.3*
|
|
Form of Deposit Agreement by and among the Registrant, the depositary and the owners and holders of American Depositary Shares issued thereunder
|
4.4
|
|
|
5.1*
|
|
Opinion of Maples and Calder (Hong Kong) LLP regarding the validity of the Class A ordinary shares being registered
|
8.1*
|
|
Opinion of Maples and Calder (Hong Kong) LLP regarding certain Cayman Islands tax matters (included in Exhibit 5.1)
|
10.1
|
|
|
10.2
|
|
|
10.3
|
|
|
10.4
|
|
|
10.5
|
|
|
10.6
|
|
|
10.7
|
|
|
10.8
|
|
|
10.9*
|
|
Global Equity Incentive Plan
|
10.10*
|
|
Employee Stock Purchase Plan
|
10.11*
|
|
Form of Employment Agreement between the Registrant and its executive officers
|
21.1
|
|
|
23.1
|
|
|
23.2*
|
|
Consent of Maples and Calder (Hong Kong) LLP (included in Exhibit 5.1)
|
23.3
|
|
|
24.1
|
|
|
99.1*
|
|
Code of Business Conduct and Ethics of the Registrant
|
99.2
|
|
|
99.3
|
|
|
99.4
|
|
*
|
To be filed by amendment.
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AGORA, INC.
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By:
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/s/ Bin (Tony) Zhao
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Name:
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Bin (Tony) Zhao
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Title:
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Chief Executive Officer and Chairman
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Signatures
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Title
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Date
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/s/ Bin (Tony) Zhao
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Chief Executive Officer and Chairman
(Principal Executive Officer)
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June 5, 2020
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Bin (Tony) Zhao
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/s/ Jingbo Wang
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Chief Financial Officer
(Principal Financial and Accounting Officer)
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June 5, 2020
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Jingbo Wang
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/s/ Qin Liu
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Director
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June 5, 2020
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Qin Liu
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/s/ Tuck Lye Koh
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Director
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June 5, 2020
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Tuck Lye Koh
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AGORA LAB, INC.
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By:
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/s/ Regev (Reggie) Yativ
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Name:
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Regev (Reggie) Yativ
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Title:
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Chief Revenue Officer and Chief Operating Officer
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1.
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The name of the Company is Agora, Inc.
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2.
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The registered office of the Company shall be at the offices of Vistra (Cayman) Limited, P.O. Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1-1205, Cayman Islands or at such other place as the Directors may from time to time decide.
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3.
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The objects for which the Company is established are unrestricted and the Company shall have full power and authority to carry out any object not prohibited by the Companies Law (As Amended) or as the same may be revised from time to time, or any other law of the Cayman Islands.
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4.
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The Company shall have and be capable of exercising all of the functions of a natural person of full capacity irrespective of any question of corporate benefit as provided by the Companies Law (As Amended).
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5.
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The liability of each Member is limited to the amount from time to time unpaid on such Member’s Shares.
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6.
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The authorized share capital of the Company is US$100,000 divided into (i) 817,082,009 Ordinary Shares of par value US$0.0001 each, (ii) 55,626,960 Series A Preferred Shares of par value US$0.0001 each; (iii) 50,783,698 Series B Preferred Shares of par value US$0.0001 each; (iv) 26,651,410 Series B+ Preferred Shares of par value US$0.0001 each; (v) 34,793,413 Series C Preferred Shares of par value US$0.0001 each; (vi) 15,062,510 Series C+ Preferred Shares of par value US$0.0001 each.
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7.
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If the Company is registered as exempted, its operations will be carried on subject to the provisions of the Companies Law (As Amended) and the Articles of Association, it shall have the power to register by way of continuation as a body corporate limited by shares under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands.
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8.
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Capitalised terms that are not defined in this Memorandum of Association bear the same meaning as those given in the Articles of Association of the Company.
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1.
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In these Articles Table A in the First Schedule to the Statute does not apply and, unless there is something in the subject or context inconsistent therewith:
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“Articles”
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means these articles of association of the Company as originally formed or as from time to time altered by Special Resolution.
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“Auditor”
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means the Person for the time being performing the duties of auditor of the Company (if any).
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“Automatic Conversion”
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shall have the meaning set forth in Article 8.3(C) hereof.
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“Board” or “Board of Directors”
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means the board of directors of the Company.
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“Business Day”
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means any day that is not a Saturday, Sunday, legal holiday or other day on which commercial banks are required or authorized by law to be closed in the Cayman Islands, the British Virgin Islands, the PRC, the United States of America or Hong Kong, with respect to any action to be undertaken or notice to be given in such jurisdiction.
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“BVI Companies”
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means Soundscape Limited, VoiceCrew Limited and YY TZ Limited, each of which is incorporated under the laws of the British Virgin Islands.
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“Charter Documents”
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means, with respect to a particular legal entity, the articles of incorporation, formation or registration (including, if applicable, certificates of change of name), certificate of incorporation, memorandum of association, articles of association, bylaws, articles of organization, certificate of formation, limited liability company agreement, trust deed, trust instrument, operating agreement, joint venture agreement, business license, or similar or other constitutive, governing, or charter documents, or equivalent documents, of such entity.
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“Coatue”
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means Coatue PE Asia XVI LLC.
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“Company”
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means Agora, Inc.
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“Control”
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of a given Person means the power or authority, whether exercised or not, to direct the business, management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; provided, that such power or authority shall conclusively be presumed to exist upon possession of beneficial ownership or power to direct the vote of more than fifty percent (50%) of the votes entitled to be cast at a meeting of the members or shareholders of such Person or power to control the composition of a majority of the board of directors of such Person. The terms “Controlled” and “Controlling” have meanings correlative to the foregoing.
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“Conversion Price”
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shall have the meaning set forth in Article 8.3(A) hereof.
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“Conversion Shares”
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means Ordinary Shares issuable upon conversion of any Preferred Shares.
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“Convertible Securities”
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shall have the meaning set forth in Article 8.3(E)(5)(a)(ii) hereof.
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“Director”
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means a director serving on the Board for the time being of the Company and shall include an alternate Director appointed in accordance with these Articles.
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“Dragged Shareholders”
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shall have the meaning set forth in Article 123(ii) hereof.
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“Drag-Along Holders”
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shall have the meaning set forth in Article 123(i) hereof.
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“Drag-Along Notice”
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shall have the meaning set forth in Article 125 hereof.
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“Drag-Along Sale”
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shall have the meaning set forth in Article 123(i).
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“Drag-Along Sale Date”
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shall have the meaning set forth in Article 125.
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“Electronic Record”
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has the same meaning as given in the Electronic Transactions Law (2003 Revision).
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“Equity Securities”
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means, with respect to any Person that is a legal entity, any and all shares of capital stock, membership interests, units, profits interests, ownership interests, equity interests, registered capital, and other equity securities of such Person, and any right, warrant, option, call, commitment, conversion privilege, pre-emptive right or other right to acquire any of the foregoing, or security convertible into, exchangeable or exercisable for any of the foregoing, or any contract providing for the acquisition of any of the foregoing.
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“ESOP”
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means the equity incentive plan of the Company adopted by the Board on August 8, 2014, pursuant to which certain Ordinary Shares are reserved for issuance to employees, directors and consultants of the Company, as duly amended by the Board on January 19, 2020 and from time to time.
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“Excepted Issuances”
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shall have the meaning set forth in Article 8.3(E) (5) (a) (iii) hereof.
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“Exempted Distribution”
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means the purchase, repurchase or redemption of the Preferred Shares pursuant to these Articles (including in connection with the conversion of such Preferred Shares into Ordinary Shares).
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“Founder”
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means Mr. ZHAO Bin (赵斌), a citizen of the PRC with the identification card number [***].
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“Founder Director(s)”
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shall have the meaning set forth in Article 67.1(A) hereof.
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“Governmental Authority”
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means any government of any nation or any federation, province or state or any other political subdivision thereof, any entity, authority or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any government authority, agency, department, board, commission or instrumentality of any country, or any political subdivision thereof, any court, tribunal or arbitrator, and any self-regulatory organization.
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“Group Company”
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means any of the Company and its Subsidiaries.
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“Hong Kong”
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means the Hong Kong Special Administrative Region of the People’s Republic of China.
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“Indebtedness”
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of any Person means, without duplication, each of the following of such Person: (i) all indebtedness for borrowed money, (ii) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (other than trade payables entered into in the ordinary course of business), (iii) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (iv) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced that are incurred in connection with the acquisition of properties, assets or businesses, (v) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (vi) all obligations that are capitalized in accordance with the applicable accounting standards, (vii) all obligations under banker’s acceptance, letter of credit or similar facilities, (viii) all obligations to purchase, redeem, retire, defease or otherwise acquire for value any Equity Securities of such Person, (ix) all obligations in respect of any interest rate swap, hedge or cap agreement, and (x) all guarantees issued in respect of the Indebtedness referred to in clauses (i) through (ix) above of any other Person, but only to the extent of the Indebtedness guaranteed.
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“Intellectual Property”
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means any and all (i) patents, patent rights and applications therefor and reissues, reexaminations, continuations, continuations-in-part, divisions, and patent term extensions thereof, (ii) inventions (whether patentable or not), discoveries, improvements, concepts, innovations and industrial models, (iii) registered and unregistered copyrights, copyright registrations and applications, mask works and registrations and applications therefor, author’s rights and works of authorship (including artwork, software, computer programs, source code, object code and executable code, firmware, development tools, files, records and data, and related documentation), (iv) URLs, web sites, web pages and any part thereof, (v) technical information, know-how, trade secrets, drawings, designs, design protocols, specifications, proprietary data, customer lists, databases, proprietary processes, technology, formulae, and algorithms, (vi) trade names, trade dress, trademarks, domain names, service marks, logos, business names, and registrations and applications therefor, and (vii) the goodwill symbolized or represented by the foregoing.
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“Interested Transaction”
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shall have the meaning set forth in Article 86 hereof.
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“Investors”
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means collectively, Shunwei Technology II Limited (“Shunwei”), Duowan Entertainment Corp. (“YY”), CRCM Opportunity Fund, L.P. (“CRCM”), Morningside China TMT Fund II, L.P., and Morningside China TMT Top Up Fund, L.P., Morningside China TMT Special Opportunity Fund II, L.P., Morningside China TMT Fund IV Co-Investment, L.P., Evolution Special Opportunity Fund I, L.P., and Evolution Fund I Co-investment, L.P. (“Morningside”), GGV Capital IV Entrepreneurs Fund L.P. (“GGV Fund”), GGV Capital IV L.P. (“GGV Capital”), SIG China Investments Master Fund III, LLLP (“SIG Fund III”) and SIG Global China Fund I, LLLP (“SIG Fund I”, together with SIG Fund III, “SIG”), IDG Technology Venture Investment V, L.P. (“IDG”), Yan Capital L.P. (“Yan Capital”), Coatue and Tiger, and each an “Investor”.
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“Investor Director(s)”
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shall have the meaning set forth in Article 67.1(A) hereof.
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“IPO”
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means the first firm underwritten registered public offering by the Company of its Ordinary Shares pursuant to a registration statement that is filed with and declared effective by either the Commission under the US Securities Act or other document as applicable as required by another Governmental Authority for a public offering in a jurisdiction other than the United States.
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“Issue Price”
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means with respect to the Series A Preferred Shares, the Series A Issue Price, with respect to the Series B Preferred Shares, the Series B Issue Price, with respect to the Series B+ Preferred Shares, the Series B+ Issue Price, with respect to the Series C Preferred Shares, the Series C Issue Price, and with respect to the Series C+ Preferred Shares, the Series C+ Issue Price.
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“Losses”
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means any and all losses, claims, actions, damages, diminution in value and liabilities, including, without limitation, reasonable attorneys’ fees and disbursements and all other reasonable expenses incurred in investigating, preparing, compromising or defending against any such litigation, commenced or threatened, or any claim whatsoever and all amounts paid in settlement of any such claim or litigation, to which any of the Indemnified Persons (as defined in the Shareholders Agreement) may become subject under the Securities Act or any other law or otherwise, excluding any special, consequential, indirect, punitive, incidental, exemplary or other similar damages or damages based upon lost profits, lost revenues or loss of business opportunity or reputation.
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“Majority Preferred Holders”
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means the holders of in excess of fifty percent (50%) of the voting power of the then outstanding Preferred Shares (voting as a single class and calculated on as-converted basis).
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“Majority Series A Preferred Holders”
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means the holders of in excess of fifty percent (50%) of the voting power of the then outstanding Series A Preferred Shares (voting as a single class).
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“Majority Series B Preferred Holders”
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means the holders of in excess of fifty percent (50%) of the voting power of the then outstanding Series B Preferred Shares (voting as a single class).
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“Majority Series B+ Preferred Holders”
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means the holders of in excess of fifty percent (50%) of the voting power of the then outstanding Series B+ Preferred Shares (voting as a single class).
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“Majority Series C Preferred Holders”
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means the holders of in excess of fifty percent (50%) of the voting power of the then outstanding Series C Preferred Shares (voting as a single class).
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“Majority Series C+ Preferred Holders”
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means the holders of in excess of fifty percent (50%) of the voting power of the then outstanding Series C+ Preferred Shares (voting as a single class).
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“Material Adverse Effect”
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means any event, circumstance, condition, occurrence or situation or any combination of the foregoing that has or could be reasonably expected to have a material and adverse effect upon the conditions (financial or otherwise), business, properties or results of operations of the Group Companies taken as a whole.
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“Maturity Date”
|
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means the fifth (5th) anniversary of October 1, 2018.
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“Member(s)”
|
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has the same meaning as in the Statute.
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“Memorandum”
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means the memorandum of association of the Company.
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“Morningside Director”
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shall have the meaning set forth in Article 67.1 (A) hereof.
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“New Securities”
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shall have the meaning set forth in Article 8.3(E)(5)(a)(iii) hereof.
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“Optional Conversion”
|
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shall have the meaning set forth in Article 8.3(B).
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“Options”
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shall have the meaning set forth in Article 8.3(E)(5)(a)(i) hereof.
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“Ordinary Resolution”
|
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means a resolution passed by a simple majority of the votes cast calculated in accordance with Article 54.
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“Ordinary Share(s)”
|
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means an ordinary share of US$0.0001 par value per share in the capital of the Company having the rights attaching to it as set out herein.
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“Person”
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means any individual, sole proprietorship, partnership, limited partnership, limited liability company, firm, joint venture, estate, trust, unincorporated organization, association, corporation, institution, public benefit corporation, entity or governmental or regulatory authority or other enterprise or entity of any kind or nature.
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“Preferred Holders”
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means, collectively, the holders of the Series A Preferred Shares, the holders of the Series B Preferred Shares, the holders of the Series B+ Preferred Shares, holders of the Series C Preferred Shares and holders of the Series C+ Preferred Shares (with each of such Preferred Holders being referred to as a “Preferred Holder”).
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“Preferred Shares”
|
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means, collectively, the Series A Preferred Shares, Series B Preferred Shares, Series B+ Preferred Shares, Series C Preferred Shares and Series C+ Preferred Shares (with each of such Preferred Shares being referred to as a “Preferred Share”).
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“PRC”
|
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means the People’s Republic of China, but solely for the purposes of this Agreement, excluding Hong Kong, the Macau Special Administrative Region and the islands of Taiwan.
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“Purchase Agreement”
|
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means the Series C+ Convertible Redeemable Share Purchase Agreement, dated February 12, 2020 among the Company, Agora IO, Inc, Tiger, Coatue, and certain other parties thereto.
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“Qualified IPO”
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means an IPO of the Shares or other Equity Securities of the Company or the Group Companies (or as the case may be, the shares or other Equity Securities of the relevant entity resulting from any merger, reorganization or other arrangement made by or to the Company or the Group Companies for the purpose of an IPO) that has been registered under the applicable securities laws with an offering price per share (exclusive of underwriting commissions and expenses) of not less than the Series C+ Issue Price (as equitably adjusted for share splits, share dividends, combinations, or other similar recapitalizations after the Series C+ Issuance Date).
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“Redemption Date”
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shall have the meaning set forth in Article 8.5(D)(5).
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“Redemption Price”
|
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means collectively, the Series A Redemption Price, the Series B Redemption Price, the Series B+ Redemption Price, the Series C Redemption Price and the Series C+ Redemption Price, and each a “Redemption Price”.
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“Redemption Requests”
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means collectively, the Series A Redemption Request, the Series B Redemption Request, the Series B+ Redemption Request, the Series C Redemption Request and the Series C+ Redemption Request, and each a “Redemption Request”.
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“Redemption Notice”
|
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shall have the meaning set forth in Article 8.5(D)(1).
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“Register of Members”
|
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means the register maintained in accordance with the Statute and includes (except where otherwise stated) any duplicate Register of Members.
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“Registered Office”
|
|
means the registered office for the time being of the Company.
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“Restricted Shares Agreement”
|
|
means each of the Amended and Restated Restricted Shares Agreements, dated February 12, 2020 among the Company and certain other parties named therein, as amended and/or restated from time to time.
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“Restructuring Documents”
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|
means (i) the exclusive call option agreement (转让期权协议) by and among the WFOE, Shanghai Zhaoyan and all the shareholders of Shanghai Zhaoyan dated as of June 18, 2015; (ii) the equity pledge agreement (股权质押协议) by and among the WFOE, Shanghai Zhaoyan and all the shareholders of Shanghai Zhaoyan dated as of June 18, 2015; (iii) the exclusive technology service agreement (独家 咨询与服务协议) between the WFOE and Shanghai Zhaoyan dated as of June 18, 2015; (iv) the power of attorney (股东表决权委托协议) by and among the WFOE, Shanghai Zhaoyan and all the shareholders of Shanghai Zhaoyan dated June 18, 2015; and (v) the spousal consent dated as of May 18, 2017 and delivered by the spouse of Founder.
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“Right of First Refusal and Co-Sale Agreement”
|
|
means the Amended and Restated Right of First Refusal and Co-Sale Agreement dated February 12, 2020 among the Company, the Founder, the BVI Companies, the other Group Companies and the Investors, as amended from time to time.
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“Series A Issue Price”
|
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means US$0.10 per Series A Preferred Share, as appropriately adjusted for any share dividend, share split, combination of shares, reorganization, recapitalization, reclassification or other similar event affecting the Series A Preferred Shares.
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“Series A Preference Amount”
|
|
shall have the meaning set forth in Article 8.2(A)(5).
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“Series A Preferred Share(s)”
|
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means a Series A Preferred Share of US$0.0001 par value per share in the capital of the Company having the rights, preference and privileges attaching to it as set out herein, and each a “Series A Preferred Share”.
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“Series A Redemption Price”
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shall have the meaning set forth in Article 8.5(F)(6).
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“Series A Redemption Request”
|
|
shall have the meaning set forth in Article 8.5(E).
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“Series A Requesting Holder”
|
|
shall have the meaning set forth in Article 8.5(E).
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“Series B Issue Price”
|
|
means US$0.39875 per share, as appropriately adjusted for share splits, share dividends, combinations, recapitalizations and similar events with respect to the Series B Preferred Shares.
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“Series B Preference Amount”
|
|
shall have the meaning set forth in Article 8.2(A)(4).
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“Series B Preferred Share(s)”
|
|
means a Series B Preferred Share of US$0.0001 par value per share in the capital of the Company having the rights, preference and privileges attaching to it as set out herein, and each a “Series B Preferred Share”.
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“Series B Redemption Price”
|
|
shall have the meaning set forth in Article 8.5(F)(5).
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“Series B Redemption Request”
|
|
shall have the meaning set forth in Article 8.5(D).
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“Series B Requesting Holder”
|
|
shall have the meaning set forth in Article 8.5(D).
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“Series B+ Investors”
|
|
means the “Series B+ Investors” as defined under the Shareholders Agreement, and their successors, assigns and transferees, individually and collectively; and each a “Series B+ Investor”.
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|
“Series B+ Issue Price”
|
|
means US$1.1963 per share, as appropriately adjusted for share splits, share dividends, combinations, recapitalizations and similar events with respect to the Series B+ Preferred Shares.
|
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|
“Series B+ Preference Amount”
|
|
shall have the meaning set forth in Article 8.2(A)(3).
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“Series B+ Preferred Share(s)”
|
|
means a Series B+ Preferred Share of US$0.0001 par value per share in the capital of the Company having the rights, preference and privileges attaching to it as set out herein, and each a “Series B+ Preferred Share”.
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“Series B+ Redemption Price”
|
|
shall have the meaning set forth in Article 8.5(F)(4).
|
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|
“Series B+ Redemption Request”
|
|
shall have the meaning set forth in Article 8.5(C).
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|
“Series B+ Requesting Holder”
|
|
shall have the meaning set forth in Article 8.5(C).
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|
“Series C Investors”
|
|
means the “Series C Investors” as defined under the Shareholders Agreement, and their successors, assigns and transferees, individually and collectively; and each a “Series C Investor”.
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|
“Series C Issuance Date”
|
|
means the date of the first issue of a Series C Preferred Share.
|
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|
“Series C Issue Price”
|
|
means US$1.9161 per share, as appropriately adjusted for share splits, share dividends, combinations, recapitalizations and similar events with respect to the Series C Preferred Shares.
|
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|
|
“Series C Preference Amount”
|
|
shall have the meaning set forth in Article 8.2(A)(2).
|
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|
|
“Series C Preferred Share(s)”
|
|
means a Series C Preferred Share of US$0.0001 par value per share in the capital of the Company having the rights, preference and privileges attaching to it as set out herein, and each a “Series C Preferred Share”.
|
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|
“Series C Redemption Price”
|
|
shall have the meaning set forth in Article 8.5(F)(3).
|
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|
|
“Series C Redemption Request”
|
|
shall have the meaning set forth in Article 8.5(B).
|
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|
“Series C Requesting Holder”
|
|
shall have the meaning set forth in Article 8.5(B).
|
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|
“Series C+ Investors”
|
|
means the “Series C+ Investors” as defined under the Shareholders Agreement, and their successors, assigns and transferees, individually and collectively; and each a “Series C+ Investor”.
|
|
|
|
“Series C+ Issuance Date”
|
|
means the date of the first issue of a Series C+ Preferred Share.
|
|
|
|
“Series C+ Issue Price”
|
|
means US$3.3195 per share, as appropriately adjusted for share splits, share dividends, combinations, recapitalizations and similar events with respect to the Series C+ Preferred Shares.
|
|
|
|
“Series C+ Preference Amount”
|
|
shall have the meaning set forth in Article 8.2(A)(1).
|
|
|
|
“Series C+ Preferred Share(s)”
|
|
means a Series C+ Preferred Share of US$0.0001 par value per share in the capital of the Company having the rights, preference and privileges attaching to it as set out herein, and each a “Series C+ Preferred Share”.
|
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“Series C+ Redemption Price”
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|
shall have the meaning set forth in Article 8.5(F)(2).
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“Series C+ Redemption Request”
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|
shall have the meaning set forth in Article 8.5(A).
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“Series C+ Requesting Holder”
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shall have the meaning set forth in Article 8.5(A).
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“Seal”
|
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means the common seal of the Company and includes every duplicate seal.
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“Shanghai Zhaoyan”
|
|
means 上海兆言网络科技有限公司.
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“Share” and “Shares”
|
|
means a share or shares (including Ordinary Shares and Preferred Shares) in the capital of the Company and includes a fraction of a share.
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“Share Swap Agreement”
|
|
means the Share Swap Agreement dated January 19, 2020 among the Company, the BVI Companies, the Investors and Agora IO, Inc, as amended from time to time.
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“Shareholders”
|
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means the holders of any Share, and each a “Shareholder”.
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“Shareholders Agreement”
|
|
means the Amended and Restated Shareholders Agreement, dated February 12, 2020, among the Company, the Founder, the BVI Companies, other Group Companies and the Investors, as amended from time to time.
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“Shunwei Director”
|
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shall have the meaning set forth in Article 67.1 (A) hereof.
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“SIG Director”
|
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shall have the meaning set forth in Article 67.1(A) hereof.
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“Special Resolution”
|
|
means a resolution passed by a two-thirds (2/3) majority of votes cast calculated in accordance with Article 54 or, where passed by resolution in writing, by all Members entitled to vote as provided in Article 45.
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(1) any consolidation, amalgamation, scheme of arrangement or merger of any Group Company with or into any other Person or other corporate reorganization in which the Members or shareholders of such Group Company immediately prior to such consolidation, amalgamation, merger, scheme of arrangement or reorganization own less than fifty percent (50%) of such Group Company’s voting power in the aggregate immediately after such consolidation, merger, amalgamation, scheme of arrangement or reorganization, or any transaction or series of related transactions to which such Group Company is a party in which in excess of fifty percent (50%) of such Group Company’s voting power is transferred;
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(2) a sale, transfer, lease or other disposition of all or substantially all of the assets of any Group Company (or any series of related transactions resulting in such sale, transfer, lease or other disposition of all or substantially all of the assets of such Group Company); or
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(3) the exclusive licensing of all or substantially all of any Group Company’s intellectual property to a third party.
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“Transaction Documents”
|
|
means the Share Swap Agreement, these Articles, the Shareholders Agreement, the Right of First Refusal and Co-Sale Agreement, the Restricted Shares Agreements, the Restructuring Documents and the Purchase Agreement.
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“US Securities Act”
|
|
means the United States Securities Act of 1933, as amended.
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“WFOE”
|
|
means 达音网络科技(上海)有限公司.
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“YY Director”
|
|
shall have the meaning set forth in Article 67.1(A) hereof.
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2.
|
In the Articles:
|
2.1.
|
words importing the singular number include the plural number and vice-versa;
|
2.2.
|
words importing the masculine gender include the feminine gender;
|
2.3.
|
“written” and “in writing” include all modes of representing or reproducing words in visible form, including in the form of an Electronic Record;
|
2.4.
|
references to provisions of any law or regulation shall be construed as references to those provisions as amended, modified, re-enacted or replaced from time to time;
|
2.5.
|
any phrase introduced by the terms “including,” “include,” “in particular” or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms;
|
2.6.
|
the term “voting power” refers to the number of votes attributable to the Shares (on an as-converted basis) in accordance with the terms of the Memorandum and Articles;
|
2.7.
|
the term “or” is not exclusive;
|
2.8.
|
the term “including” will be deemed to be followed by, “but not limited to”;
|
2.9.
|
the terms “shall”, “will”, and “agrees” are mandatory, and the term “may” is permissive;
|
2.10.
|
the term “day” means “calendar day”, and “month” means calendar month;
|
2.11.
|
the phrase “directly or indirectly” means directly, or indirectly through one or more intermediate Persons or through contractual or other arrangements, and “direct or indirect” has the correlative meaning;
|
2.12.
|
references to any documents shall be construed as references to such document as the same may be amended, supplemented or novated from time to time;
|
2.13.
|
all references to dollars or to “US$” are to currency of the United States of America (and shall be deemed to include reference to the equivalent amount in other currencies); and
|
2.14.
|
headings are inserted for reference only and shall be ignored in construing these Articles.
|
3.
|
For the avoidance of doubt, each other Article herein is subject to the provisions of Articles 8 and 67, and, subject to the requirements of the Statute, in the event of any conflict, the provisions of Articles 8 and 67 shall prevail over any other Article herein.
|
4.
|
The business of the Company may be commenced as soon after incorporation as the Directors shall see fit notwithstanding that any part of the Shares may not have been allotted. The Company shall have perpetual existence until wound up or struck off in accordance with the Statute and these Articles.
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5.
|
The Directors may pay, out of the capital or any other monies of the Company, all expenses incurred in or about the formation and establishment of the Company, including the expenses of registration.
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6.
|
Subject to the provisions, if any, in the Memorandum (and to any direction that may be given by the Company in a general meeting) and to the provisions of Articles 8 and 9 and without prejudice to any rights, preferences and privileges attached to any existing Shares, (a) the Directors may allot, issue, grant options or warrants over or otherwise dispose of two (2) classes of Shares to be designated, respectively, as Ordinary Shares and Preferred Shares; (b) the Preferred Shares may be allotted and issued from time to time in one (1) or more series; and (c) the series of Preferred Shares shall be designated prior to their allotment and issue. In the event that any Preferred Shares shall be converted pursuant to Article 8.3 hereof, the Preferred Shares so converted shall be cancelled and shall not be re-issuable by the Company.
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7.
|
The Company shall not issue Shares to bearer.
|
8.
|
Certain rights, preferences and privileges of the Preferred Shares of the Company are as follows:
|
8.1.
|
Dividend Rights.
|
A.
|
The holders of the outstanding Series C+ Preferred Shares shall be entitled to receive, prior and in preference to any dividends or distributions to the holders of any Series C Preferred Shares, the holders of any Series B+ Preferred Shares, the holders of any Series B Preferred Shares, the holders of any Series A Preferred Shares and the holders of any Ordinary Shares, out of any funds legally available therefor, cumulative dividends at the simple rate of eight percent (8%) of the Series C+ Issue Price per annum for each Series C+ Preferred Share (as adjusted for share split, consolidation, dividend, recapitalization and other similar transactions) held by such holder, payable if, as and when declared by the Company’s Board of Directors.
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B.
|
If there are any funds remaining available for distribution after the dividend distribution declared and made pursuant to Article 8.1(A) above, the holders of the outstanding Series C Preferred Shares shall be entitled to receive, prior and in preference to any dividends or distributions to the holders of any Series B+ Preferred Shares, the holders of any Series B Preferred Shares, the holders of any Series A Preferred Shares and the holders of any Ordinary Shares, out of any funds legally available therefor, cumulative dividends at the simple rate of eight percent (8%) of the Series C Issue Price per annum for each Series C Preferred Share (as adjusted for share split, consolidation, dividend, recapitalization and other similar transactions) held by such holder, payable if, as and when declared by the Company’s Board of Directors.
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C.
|
If there are any funds remaining available for distribution after the dividend distribution declared and made pursuant to Articles 8.1(A) and 8.1(B) above, the holders of the outstanding Series B+ Preferred Shares shall be entitled to receive, prior and in preference to any dividends or distributions to the holders of any Series B Preferred Shares, the holders of any Series A Preferred Shares and the holders of any Ordinary Shares, out of any funds legally available therefor, cumulative dividends at the simple rate of eight percent (8%) of the Series B+ Issue Price per annum for each Series B+ Preferred Share (as adjusted for share split, consolidation, dividend, recapitalization and other similar transactions) held by such holder, payable if, as and when declared by the Company’s Board of Directors.
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D.
|
If there are any funds remaining available for distribution after the dividend distribution declared and made pursuant to Articles 8.1(A) , 8.1(B) and 8.1(C) above, the holders of the outstanding Series B Preferred Shares shall be entitled to receive, prior and in preference to any dividends or distributions to the holders of any Series A Preferred Shares and the holders of any Ordinary Shares, out of any funds legally available therefor, cumulative dividends at the simple rate of eight percent (8%) of the Series B Issue Price per annum for each Series B Preferred Share (as adjusted for share split, consolidation, dividend, recapitalization and other similar transactions) held by such holder, payable if, as and when declared by the Company’s Board of Directors.
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E.
|
If there are any funds remaining available for distribution after the dividend distribution declared and made pursuant to Articles 8.1(A), 8.1(B), 8.1(C) and 8.1(D) above, the holders of the outstanding Series A Preferred Shares shall be entitled to receive, prior and in preference to any dividends or distributions to the holders of any Ordinary Shares, out of any funds legally available therefor, cumulative dividends at the simple rate of eight percent (8%) of the Series A Issue Price per annum for each Series A Preferred Share (as adjusted for share split, consolidation, dividend, recapitalization and other similar transactions) held by such holder, payable if, as and when declared by the Company’s Board of Directors.
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F.
|
No dividends or other distributions shall be made or declared, whether in cash, in property, or in any other shares of the Company, with respect to any other class or series of shares of the Company, unless and until dividends in like amount have been paid in full to the holders of the Preferred Shares or declared and set apart for payment.
|
G.
|
If, after the preferential dividends relating to the Preferred Shares as described in Articles 8.1(A), 8.1(B), 8.1(C), 8.1(D) and 8.1(E) above have been paid in full or declared and set apart for payment in any fiscal year of the Company, the Board shall decide to declare a dividend or similar distribution to the holders of Ordinary Shares (other than a distribution described in Article 8.2), then, in each such case, the holders of Preferred Shares shall be entitled to a proportionate share of any such dividend or distribution as though the holders of Preferred Shares were holders of the number of Ordinary Shares into which their Preferred Shares are convertible as of the record date fixed for the determination of the holders of Ordinary Shares entitled to receive such distribution.
|
8.2.
|
Liquidation Rights.
|
A.
|
Liquidation Preferences. Notwithstanding anything to the contrary contained in Article 8.1, in the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, all assets and funds of the Company legally available for distribution to the Members (after satisfaction of all creditors’ claims and claims that may be preferred by law) shall be distributed to the Members of the Company as follows:
|
B.
|
Distribution on Trade Sale. Notwithstanding anything to the contrary contained in Article 8.2, a Trade Sale shall be deemed to be a liquidation, dissolution or winding up of the Company for purposes of Article 8.2(A), and any proceeds, whether in cash or properties, resulting from a Trade Sale shall be distributed in accordance with the terms of Article 8.2(A).
|
C.
|
Valuation of Properties. In the event the Company proposes to distribute assets other than cash in connection with any liquidation, dissolution or winding up of the Company pursuant to Article 8.2(A) or pursuant to a deemed liquidation, dissolution or winding up of the Company pursuant to Article 8.2(B), the value of the assets to be distributed to the Members shall be determined in good faith by the Board (including the affirmative vote of the Investor Directors); provided that any securities not subject to investment letter or similar restrictions on free marketability shall be valued as follows:
|
D.
|
Notices. In the event that the Company shall propose at any time to consummate a liquidation, dissolution or winding up of the Company or a Trade Sale, then, in connection with each such event, subject to any necessary approval required in the Statute and these Articles, the Company shall send to the holders of Preferred Shares at least thirty (30) days prior written notice of the date when the same shall take place; provided, however, that the foregoing notice periods may be shortened or waived with the vote or written consent of the Majority Preferred Holders.
|
E.
|
Enforcement. In the event the requirements of this Article 8.2 are not complied with, the Company shall forthwith either (i) cause the closing of the applicable transaction to be postponed until such time as the requirements of this Article 8.2 have been complied with, or (ii) cancel such transaction.
|
8.3.
|
Conversion Rights
|
A.
|
Conversion Ratio. The number of Ordinary Shares to which a holder shall be entitled upon conversion of each Preferred Share shall be the quotient of the applicable Issue Price divided by the then effective applicable Conversion Price with respect to such particular series of Preferred Shares, which shall initially be the applicable Issue Price for Series A Preferred Shares, Series B Preferred Shares, Series B+ Preferred Shares, Series C Preferred Shares or Series C+ Preferred Shares, as the case may be (the “Conversion Price”) resulting in an initial conversion ratio for the Preferred Shares of 1:1.
|
B.
|
Optional Conversion. Subject to the Statute and these Articles, any Preferred Share may, at the option of the holder thereof, be converted at any time after the date of issuance of such shares, without the payment of any additional consideration, into fully-paid and non assessable Ordinary Shares based on the then-effective Conversion Price. Any conversion pursuant to this Article 8.3(B) shall be referred to as an “Optional Conversion”.
|
C.
|
Automatic Conversion. Each Preferred Share shall automatically be converted, based on the then-effective Conversion Price, without the payment of any additional consideration, into fully-paid and non assessable Ordinary Shares upon the closing of a Qualified IPO. Any conversion pursuant to this Article 8.3(C) shall be referred to as an “Automatic Conversion”.
|
D.
|
Conversion Mechanism. The conversion hereunder of the Preferred Shares shall be effected in the following manner:
|
E.
|
Adjustment of Conversion Price. The Conversion Price shall be adjusted from time to time as provided below:
|
(i)
|
Cash and Property. Such consideration shall:
|
8.4.
|
Voting Rights.
|
1.
|
Subject to the provisions of the Memorandum and these Articles, at all general meetings of the Company: (a) the holder of each Ordinary Share issued and outstanding shall have one (1) vote in respect of each Ordinary Share held, (b) the holder of a Series A Preferred Share shall be entitled to such number of votes as equals the whole number of Ordinary Shares into which such holder’s collective Series A Preferred Shares are convertible at the then-effective Conversion Price for Series A Preferred Shares immediately after the close of business on the record date of the determination of the Company’s Members entitled to vote or, if no such record date is established, at the date such vote is taken or any written consent of the Company’s Members is first solicited, (c) the holder of a Series B Preferred Share shall be entitled to such number of votes as equals the whole number of Ordinary Shares into which such holder’s collective Series B Preferred Shares are convertible at the then-effective Conversion Price for Series B Preferred Shares immediately after the close of business on the record date of the determination of the Company’s Members entitled to vote or, if no such record date is established, at the date such vote is taken or any written consent of the Company’s Members is first solicited, (d) the holder of a Series B+ Preferred Share shall be entitled to such number of votes as equals the whole number of Ordinary Shares into which such holder’s collective Series B+ Preferred Shares are convertible at the then-effective Conversion Price for Series B+ Preferred Shares immediately after the close of business on the record date of the determination of the Company’s Members entitled to vote or, if no such record date is established, at the date such vote is taken or any written consent of the Company’s Members is first solicited, (e) the holder of a Series C Preferred Share shall be entitled to such number of votes as equals the whole number of Ordinary Shares into which such holder’s collective Series C+ Preferred Shares are convertible at the then-effective Conversion Price for Series C Preferred Shares immediately after the close of business on the record date of the determination of the Company’s Members entitled to vote or, if no such record date is established, at
|
2.
|
For matters to be resolved or decided by the Shareholders, except as otherwise required by law or as set forth here in these Articles, each share held by the Founder or the BVI Companies shall carry three (3) votes.
|
3.
|
In the case of joint holders of record the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members.
|
4.
|
A Member of unsound mind, or in respect of whom an order has been made by any court, having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee, receiver, curator bonis, or other person in the nature of a committee, receiver or curator bonis appointed by that court, and any such committee, receiver, curator bonis or other persons may vote by proxy.
|
5.
|
No Member shall be entitled to vote at any general meeting or at any separate meeting of the holders of a class or series of Shares unless he is registered as a Member of the Company on the record date for such meeting nor unless all calls or other sums presently payable by him in respect of Shares in the Company have been paid.
|
6.
|
No objection shall be raised to the qualification of any voter except at the general meeting or adjourned general meeting at which the vote
|
7
|
On a poll or on a show of hands votes may be given either personally or by proxy.
|
1.
|
Approval by Preferred Holders. For so long as any Series A Preferred Shares, any Series B Preferred Shares, any Series B+ Preferred Shares, any Series C Preferred Shares and/or any Series C+ Preferred Shares are outstanding, the Company shall not take, permit to occur, approve, authorize, or agree or commit to do any of the following, and no Member shall permit the Company to, take, permit to occur, approve, authorize, or agree or commit to do any of the following, and the Company shall not permit any other Group Company to take, permit to occur, approve, authorize, or agree or commit to do any of the following, whether in a single transaction or a series of related transactions, whether directly or indirectly, and whether or not by amendment, merger, consolidation, scheme of arrangement, amalgamation, or otherwise, unless approved in advance in writing by the Supermajority Series A Preferred Holders, the Supermajority Series B Preferred Holders, the Supermajority Series B+ Preferred Holders, the Supermajority Series C Preferred Holders and the Supermajority Series C+ Preferred Holders; provided that, where any such act requires the approval of the Members of the Company in accordance with the Statute, and the approval of the Supermajority Series A Preferred Holders, the Supermajority Series B Preferred Holders, the Supermajority Series B+ Preferred Holders, the Supermajority Series C Preferred Holders and/or the Supermajority Series C+ Preferred Holders has not yet been obtained, the Supermajority Series A Preferred Holders, the Supermajority Series B Preferred Holders, the Supermajority Series B+ Preferred Holders, the Supermajority Series C Preferred Holders and/or the Supermajority Series C+ Preferred Holders shall each have the voting rights equal to all the Members who vote in favour of the resolution plus one:
|
(1)
|
any amendment or change of the rights, preferences, privileges, or powers of or concerning, or the limitation or restrictions provided for the benefit of, the Preferred Shares; entry into any merger, consolidation, share acquisition or
|
(2)
|
any action that (A) authorizes, creates or issues (i) any other securities convertible into, exchangeable for or exercisable into any Equity Securities, (ii) any class or series of Equity Securities having rights, preferences, privileges, powers, limitations or restrictions superior to or on a parity with the Series A Preferred Shares, the Series B Preferred Shares, the Series B+ Preferred Shares, the Series C Preferred Shares and/or the Series C+ Preferred Shares, whether as to liquidation, conversion, dividend, voting, redemption, or otherwise, or (iii) any Equity Securities convertible into, exchangeable for, or exercisable into any Equity Securities having rights, preferences, privileges, powers, limitations or restrictions superior to or on a parity with the Series A Preferred Shares, the Series B Preferred Shares, the Series B+ Preferred Shares, the Series C Preferred Shares and/or the Series C+ Preferred Shares, or (B) reclassifies any outstanding shares into shares having rights, preferences, privileges, powers, limitations or restrictions senior to or on a parity with the Series A Preferred Shares, the Series B Preferred Shares, the Series B+ Preferred Shares, the Series C Preferred Shares and/or the Series C+ Preferred Shares, whether as to liquidation, conversion, dividend, voting, redemption or otherwise, or (C) increases or decreases the authorized numbers of any class or series of Equity Securities of a Group Company, any share split, share consolidation or share dividend, reclassification, reorganization, alteration or other forms of restructuring of capital of a Group Company, except for (i) the issuance of the Conversion Shares or those Equity Securities issued or to be issued under the Share Swap Agreement, (ii) the issuance of any Ordinary Shares to the holders of the Preferred Shares pursuant to Article 8.3(E) hereof for the purpose that the value of the Preferred Shares held by such holders shall not be diluted upon conversion into Ordinary Shares at the applicable Conversion Price, (iii) the issuance of any Equity Securities pursuant to the ESOP approved by the Administrator (as defined under the ESOP) or for the purpose of merger, acquisition and equipment financing lease approved by the Board, and (iv) the issuance of Shares of the Company in a certain class or series upon conversion of any issued convertible securities pursuant to the terms and conditions to which such convertible securities are bound;
|
(3)
|
any purchase, repurchase, redemption or retirement of any Equity Security of any Group Company other than (A) Exempted Distributions, (B) repurchase from employees, directors or consultants pursuant to the ESOP or the award or grant agreement entitled under the ESOP, (C) taken back by the Company pursuant to its obligation in a merger and acquisition approved by the Board, and (D) pursuant to equity incentive agreements with service providers giving the Company the right to repurchase shares upon the termination of services;
|
(4)
|
any cease of the business of any Group Company substantially as now conducted or carried on or the change of any part of any Group Company’s business activities;
|
(5)
|
a sale, transfer, lease or other disposition of all or substantially all of the assets of the Group Companies (or any series of related transactions resulting in such sale, transfer, lease or other disposition of all or substantially all of the assets of the Group Companies);
|
(6)
|
any action that makes any distribution of profits amongst the shareholders of any Group Company by way of dividend (interim or otherwise), capitalization of reserves or otherwise;
|
(7)
|
any change of the size of the board of directors of any Group Company and the composition of such board of directors other than in compliance with Article 67;
|
(8)
|
any material amendment of the accounting policies previously adopted by the any Group Company or any change of the term of a fiscal year for any Group Company;
|
(9)
|
any amendment or modification to or waiver under any of the Charter Documents of any Group Company;
|
(10)
|
any appointment or removal of the auditors for any Group Company;
|
(11)
|
any change to the shareholding structure of any Group Company except for (a) any issuance or repurchase of Equity Securities that does not require approval from Supermajority Series A Preferred Holders, the Supermajority Series B Preferred Holders, the Supermajority Series B+ Preferred Holders, the Supermajority Series C Preferred Holders and the Supermajority Series C+ Preferred Holders pursuant to
|
(12)
|
establishment, amendment or termination of, or waiver under any of the Restructuring Documents or any arrangement thereunder.
|
2.
|
Board Consent. In addition to any other vote or consent in these Articles and the Shareholders Agreement, the Company shall not, take any of the following actions without the prior approval of the Board, including affirmative votes of all the Investor Directors:
|
(1)
|
the acquisition or the incurrence of any commitment by any Group Company in excess of US$540,000 at any time in respect of any one transaction or in excess of US$2,160,000 at any time in a series of related transactions in any fiscal year of any Group Company;
|
(2)
|
the creation or issuance of any debenture constituting a pledge, lien or charge (whether by way of fixed or floating charge, mortgage encumbrance or other security) on all or any of the undertaking, assets or rights of any Group Company at any time in any financial year, except for the debenture not exceeding US$540,000 individually or not exceeding US$2,160,000 cumulatively and for the purpose of securing borrowings from banks or other financial institutions in the ordinary course of business;
|
(3)
|
any sale, transfer, license, charge, encumbrance or otherwise disposal of any trademarks, patents or other Intellectual Property owned by any Group Company to a party which is not a Group Company, other than granting non-exclusive licenses in the ordinary course of business;
|
(4)
|
any commencement of or consent to any proceeding seeking liquidation, winding up, dissolution, reorganization, merger or arrangement of any of the Group Companies, or any appointment of a receiver, trustee, manager, judicial manager or other similar official for any Group Company or for any
|
(5)
|
any equity investments in any other entities in excess of US$540,000, or the establishment of any brands for any other entity other than the existing members of the Group Companies;
|
(6)
|
any dispose or dilution of the Company’s equity interests, directly or indirectly, in any other Group Company;
|
(7)
|
any transfer of shares or equity interests in any Group Company;
|
(8)
|
any approval or amendment of the business plan or budget plan of any Group Company, and the approval of any transaction outside of the previously approved business plan or budget plan of any Group Company;
|
(9)
|
any initiation or settlement of any suit, arbitration or similar proceeding in relation to any Group Company;
|
(10)
|
any increase of compensation in excess of twenty percent (20%) in a twelve (12) month period afforded to any of the five highest paid employees of any Group Company;
|
(11)
|
any creation of or authorization of creating or issuance of any debt securities (other than equipment leases or bank lines of credit);
|
(12)
|
any incurrence of debt or expenditure by a Group Company in excess of US$540,000 at any time in respect of any one transaction or in excess of US$2,160,000 at any time in a series of related transactions in any fiscal year of any Group Company other than trade credit incurred in the ordinary course of business, unless such transaction is approved under the annual budget of such Group Company as approved by the Board;
|
(13)
|
approving, adjusting or changing any terms and conditions of any transaction in respect of the rights and benefits of the directors or shareholders of any Group Company, including without limitation directly or indirectly making any loan or advance to or security, compensation, guaranty for any Indebtedness of any director or shareholder of any Group Company, other than transactions resulting in payments to or
|
(14)
|
any appointment, replacement or settlement of the terms of appointment of chief executive officer, president, chief financial officer, chief operating officer, chief technical officer, and head of the human resources department of any Group Company and any other employee with the title of “vice president” or, including approving any option plans therefor; and
|
(15)
|
any activity out of the ordinary course of business of any Group Company.
|
8.5.
|
Redemption
|
A.
|
Optional Redemption of Series C+ Preferred Shares. (i) At any time and from time to time commencing on the Maturity Date or on such earlier date as another series of Shares is redeemable and subject to the Statute, or (ii) upon the occurrence of a material breach of any of the warranties, undertakings or covenants specified under the Transaction Documents, or where the Company fails to deliver the annual financial statements as set forth in Section 8.1(i) of the Shareholders Agreement, or where any arrangement contemplated under the Restructuring Documents become void as a result of material adverse change of applicable laws or regulations, each holder of the then outstanding Series C+ Preferred Shares (the “Series C+ Requesting Holder”) is entitled to, by written request to the Company (the “Series C+ Redemption Request”), request the Company to redeem all or part of the Series C+ Preferred Shares then outstanding held by such holder in accordance with this Article 8.5, provided that neither an Optional Conversion or Automatic Conversion has occurred with respect to such Series C+ Preferred Shares as of such redemption. The Series C+ Redemption Request shall be given by hand or by mail to the registered office of the Company at least sixty (60) days prior to the date set forth therein on which the Series C+ Preferred Shares are to be redeemed.
|
B.
|
Optional Redemption of Series C Preferred Shares. (i) At any time and from time to time commencing on the Maturity Date or on such earlier date
|
C.
|
Optional Redemption of Series B+ Preferred Shares. (i) At any time and from time to time commencing on the Maturity Date or on such earlier date as another series of Shares is redeemable and subject to the Statute, or (ii) upon the occurrence of a material breach of any of the warranties, undertakings or covenants specified under the Transaction Documents, or where the Company fails to deliver the annual financial statements as set forth in Section 8.1(i) of the Shareholders Agreement, or where any arrangement contemplated under the Restructuring Documents become void as a result of material adverse change of applicable laws or regulations, each holder of the then outstanding Series B+ Preferred Shares (the “Series B+ Requesting Holder”) is entitled to, by written request to the Company (the “Series B+ Redemption Request”), request the Company to redeem all or part of the Series B+ Preferred Shares then outstanding held by such holder in accordance with this Article 8.5, provided that neither an Optional Conversion or Automatic Conversion has occurred with respect to such Series B+ Preferred Shares as of such redemption. The Series B+ Redemption Request shall be given by hand or by mail to the registered office of the Company at least sixty (60) days prior to the date set forth therein on which the Series B+ Preferred Shares are to be redeemed.
|
D.
|
Optional Redemption of Series B Preferred Shares. (i) At any time after the Maturity Date or on such earlier date as another series of Shares is redeemable and subject to the Statute, or (ii) upon the occurrence of a material breach of any of the warranties, undertakings or covenants specified under the Transaction Documents, or where the Company fails to deliver the annual financial statements as set forth in Section 8.1(i) of the Shareholders Agreement, or where any arrangement contemplated under the Restructuring
|
E.
|
Optional Redemption of Series A Preferred Shares. (i) After the Maturity Date if there has not occurred any Qualified IPO, or (ii) on such earlier date as another series of Shares becomes redeemable, each holder of the then outstanding Series A Preferred Shares (the “Series A Requesting Holder”) is entitled to, by written request to the Company (the “Series A Redemption Request”), request the Company to redeem all or part of the Series A Preferred Shares then outstanding held by such holder in accordance with this Article 8.5, provided that neither an Optional Conversion or Automatic Conversion has occurred with respect to such Series A Preferred Shares as of such redemption. The Series A Redemption Request shall be given by hand or by mail to the registered office of the Company at least sixty (60) days prior to the date set forth therein on which the Series A Preferred Shares are to be redeemed.
|
F.
|
Redemption Procedure and Redemption Price.
|
(1)
|
Following receipt of the Redemption Request, the Company shall notify each non-requesting holder of Preferred Shares within ten (10) calendar days by written notice (the “Redemption Notice”) to the address last shown on the records of the Company for such holder(s). Such notice shall indicate that certain holder(s) of the Preferred Shares have elected redemption of certain Preferred Shares pursuant to the provisions of this Article 8.5, shall specify the redemption date and redemption price and shall indicate that the other holder(s) of the Preferred Shares may also submit their share certificates to the Company on or before the scheduled redemption date if they wish to also participate in such redemption. Each non-requesting holder of the Preferred Shares shall notify the Company respectively in writing within ten (10) Business Days of the date of the Redemption Notice whether or not it wishes to redeem all or any portion of the Preferred Shares held by such holder of the Preferred Shares.
|
(2)
|
The redemption price for each Series C+ Preferred Share redeemed pursuant to this Article 8.5 (the “Series C+ Redemption Price”) shall be (i) in the
|
(3)
|
The redemption price for each Series C Preferred Share redeemed pursuant to this Article 8.5 (the “Series C Redemption Price”) shall be (i) in the event of a redemption requested pursuant to Article 8.5(B)(i), an amount equal to 150% of the Series C Issue Price plus all accrued or declared but unpaid dividends on such Series C Preferred Share, and (ii) in the event of a redemption requested pursuant to Article 8.5(B)(ii), the greater of (a) an amount equal to 160% of the Series C Issue Price plus all accrued or declared but unpaid dividends on such Series C Preferred Share, or (b) the fair market value of the Series C Preferred Share determined by an independent third party appraising firm jointly selected by the Board and the Series C Requesting Holder.
|
(4)
|
The redemption price for each Series B+ Preferred Share redeemed pursuant to this Article 8.5 (the “Series B+ Redemption Price”) shall be (i) in the event of a redemption requested pursuant to Article 8.5(C)(i), an amount equal to 150% of the Series B+ Issue Price plus all accrued or declared but unpaid dividends on such Series B+ Preferred Share, and (ii) in the event of a redemption requested pursuant to Article 8.5(C)(ii), the greater of (a) an amount equal to 160% of the Series B+ Issue Price plus all accrued or declared but unpaid dividends on such Series B+ Preferred Share, or (b) the fair market value of the Series B+ Preferred Share determined by an independent third party appraising firm jointly selected by the Board and the Series B+ Requesting Holder.
|
(5)
|
The redemption price for each Series B Preferred Share redeemed pursuant to this Article 8.5 (the “Series B Redemption Price”) shall be (i) in the event of a redemption requested pursuant to Article 8.5(D)(i), an amount equal to 150% of the Series B Issue Price plus all accrued or declared but unpaid dividends on such Series B Preferred Share, and (ii) in the event of a redemption requested pursuant to Article 8.5(D)(ii), the greater of (a) an amount equal to 160% of the Series B Issue Price plus all accrued or declared but unpaid dividends on such Series B Preferred Share, or (b) the fair market value of the Series B Preferred Share determined by an independent third party appraising firm jointly selected by the Board and the Series B Requesting Holder.
|
(6)
|
The redemption price for each Series A Preferred Share redeemed pursuant to this Article 8.5 (the “Series A Redemption Price”) shall be the greater of (i) an amount equal to the Series A Issue Price, plus all accrued or declared but unpaid dividends on such Series A Preferred Share (for a partial year, the dividends shall be calculated proportionally), and plus an amount that would accrue on the Series A Issue Price at a rate of fifteen percent (15%) per annum, compounding annually, during the period commencing from December 16, 2013 and ending on the date of the Series A Redemption Notice, or (ii) the fair market value of the Series A Preferred Share determined by an independent third party appraising firm selected jointly by the Board and the Series A Requesting Holder, provided however, that any redemption of all or any part of Series A Preferred Shares held by a holder of Series A Preferred Shares at a price determined by Article 8.5(F)(6)(ii) shall not cause any Material Adverse Effect to the Group Companies and for the avoidance of doubt, such restriction shall not apply to any redemption of all or any part of Series A Preferred Shares held by a holder of Series A Preferred Shares at a price determined by Article 8.5(F)(6)(i).
|
(7)
|
The redemption of any Preferred Shares pursuant to this Article 8.5 shall be completed within sixty (60) days from the date of such Redemption Notice at the offices of the Company, or such other date or other place as the holders electing to redeem their Preferred Shares and the Board of Directors (including the affirmative vote of the Investor Directors) may mutually agree in writing (each a “Redemption Date”). At the Redemption Date, the Company shall, from any source of assets or funds legally available therefore, redeem all the Preferred Share required to be redeemed by paying in cash therefore the applicable Redemption Price, against surrender by such holder at the Company’s principal office of the certificate representing such share. Upon completion of the redemption and the payment of the applicable Redemption Price by the Company to each of the redeeming holders of Preferred Shares in full, all rights of the holder of such Preferred Share(s) (except the right to receive the applicable Redemption Price) will cease with respect to the Preferred Shares being redeemed by it, and such Preferred Shares will not thereafter be transferred on the books of the Company or be deemed outstanding for any purpose whatsoever.
|
G.
|
Insufficient Funds. If on the Redemption Date, the funds of the Company legally available for redemption of the Preferred Shares are insufficient to redeem the total number of such Preferred Shares to be redeemed on such dates, those funds which are legally available for redemption of Preferred Shares (i) will be paid first to redeem all Series C+ Preferred Shares requested to be redeemed ratably in proportion on the full amounts to which they would otherwise be respectively entitled thereon, (ii) any remaining amount after payment of Redemption Price in full on all Series C+ Preferred Shares to be redeemed will be allocated among the holders of the Series C Preferred Shares
|
H.
|
No Distribution. If the Company fails for whatever reason to redeem any Preferred Shares on its due date, until the date on which the same are redeemed, the Company shall not declare or pay any dividend nor otherwise make any distribution of or otherwise decrease its profits available for distribution.
|
I.
|
Distribution of Profits of Subsidiaries. To the extent permitted by law, the Company shall procure that the profits of each Subsidiary of the Company for the time being available for distribution shall be paid to the Company by way of dividend if and to the extent that, but for such payment, the Company would not itself otherwise have sufficient profits available for distribution to make any redemption of Preferred Shares required to be made pursuant to this Article 8.5.
|
9.
|
Certain rights, preferences, privileges and limitations of the Ordinary Shares of the Company are as follows:
|
9.1.
|
Dividend Provision. Subject to the preferential rights of the holders of Preferred Shares in the Company as described in Article 8.1, the holders of the Ordinary Shares shall, subject to the Statute and these Articles, be entitled to receive, when, as and if declared by the Directors, out of any assets of the Company legally available therefor, such dividends as may be declared from time to time by the Directors (including the affirmative vote of the Investor Directors).
|
9.2.
|
Liquidation. Upon the liquidation, dissolution or winding up of the Company, the assets of the Company shall be distributed as provided in Article 8.2.
|
9.3.
|
Voting Rights. Subject to Article 8.4(A)(2), the holder of each Ordinary Share shall have the right to one vote with respect to such Ordinary Share, and shall be entitled to notice of any Members’ meeting in accordance with these Articles, and shall be entitled to vote upon such matters and in such manner as may be provided for in these Articles.
|
9A.
|
Except as provided in the Memorandum and these Articles, the Shareholders Agreement, the Restricted Shares Agreements and the Right of First Refusal and Co-Sale Agreement, the Shares of the Company shall have the same rights, preferences, privileges and limitations.
|
10.
|
The Company shall maintain or cause to be maintained the Register of Members in accordance with the Statute. The Register of Members shall be the only evidence as to who are the Members entitled to examine the Register of Members, the list required to be sent to Members under Article 42, or the other books and records of the Company, or to vote in person or by proxy at any meeting of Members.
|
11.
|
For the purpose of determining Members entitled to notice of, or to vote at any meeting of Members or any adjournment thereof, or Members entitled to receive payment of any dividend, or in order to make a determination of Members for any other proper purpose, the
|
12.
|
In lieu of, or apart from, closing the Register of Members, the Directors may fix in advance a date as the record date for any such determination of Members entitled to notice of or to vote at a meeting of the Members, or any adjournment thereof, and for the purpose of determining the Members entitled to receive payment of any dividend the Directors may, at or within ninety (90) days prior to the date of declaration of such dividend fix a subsequent date as the record date for such determination.
|
13.
|
If the Register of Members is not so closed and no record date is fixed for the determination of Members entitled to notice of, or to vote at, a meeting of Members or Members entitled to receive payment of a dividend, the date on which notice of the meeting is sent or the date on which the resolution of the Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of Members. When a determination of Members entitled to vote at any meeting of Members has been made as provided in this Article, such determination shall apply to any adjournment thereof.
|
14.
|
Share certificates representing Shares, if any, shall be in such form as the Directors may determine. Share certificates shall be signed by one or more Directors or other Person authorised by the Directors. The Directors may authorise certificates to be issued with the authorised signature(s) affixed by mechanical process. All certificates for Shares shall be consecutively numbered or otherwise identified and shall specify the Shares to which they relate. All certificates surrendered to the Company for transfer shall be cancelled and, subject to these Articles, no new certificate shall be issued until the former certificate representing a like number of relevant Shares shall have been surrendered and cancelled.
|
15.
|
The Company shall not be bound to issue more than one (1) certificate for Shares held jointly by more than one Person and delivery of a certificate to one joint holder shall be a sufficient delivery to all of them.
|
16.
|
If a share certificate is defaced, worn out, lost or destroyed, it may be renewed on such terms (if any) as to evidence and indemnity and on the payment of such expenses reasonably incurred by the Company in investigating evidence, as the Directors may prescribe, and (in the case of defacement or wearing out) upon delivery of the old certificate.
|
17.
|
The Shares of the Company are subject to transfer restrictions as set forth in the Shareholders Agreement, the Restricted Shares Agreements and the Right of First Refusal and Co-Sale
|
18.
|
The instrument of transfer of any Share shall be in writing and shall be executed by or on behalf of the transferor (and, if the Directors so require, signed by the transferee). The transferor shall be deemed to remain the holder of a Share until the name of the transferee is entered in the Register of Members. The registration of transfers may be suspended at such time and for such periods as a majority of the Directors may from time to time determine, provided always that such registration shall not be suspended for more than forty-five (45) days in any year.
|
19.
|
Subject to the provisions of the Statute and Article 8, the Company may issue Shares that are to be redeemed or are liable to be redeemed at the option of the Member or the Company; provided that none of the Series A Preferred Shares is liable to be redeemed at the option of the Company (except in relation to the conversion thereof pursuant to Article 8.3).
|
20.
|
Subject to the provisions of the Statute and Articles 8 and 9, the Directors may authorize the purchase by the Company of its own Shares in such manner and on such terms as they think fit.
|
21.
|
Subject to the provisions of the Statute and Articles 8 and 9, the Company may make a payment in respect of the redemption or purchase of its own Shares in any manner permitted by the Statute, including out of capital.
|
22.
|
Subject to Article 8, if at any time the share capital of the Company is divided into different classes of Shares, the rights attached to any class (unless otherwise provided by the terms of issue of the Shares of that class) may, whether or not the Company is being wound-up, be varied with the consent in writing of the holders of a majority of the issued and outstanding Shares of that class.
|
23.
|
Subject to Articles 8, the rights conferred upon the holders of the Shares shall not, unless otherwise expressly provided by the terms of issue of the Shares, be deemed to be varied by the creation or issue of further Shares ranking senior thereto or pari passu therewith and the provisions of these Articles relating to general meetings shall apply to, to the extent applicable, every class meeting of the holders of one class of Shares except the necessary quorum shall be one or more Persons holding or representing by proxy at least a majority of the issued Shares of the class and that any holder of Shares of the class present in person or by proxy may demand a poll.
|
24.
|
The Company may, with the approval of a majority of the Board, so far as the Statute permits, pay a commission to any Person in consideration of his or her subscribing or agreeing to subscribe whether absolutely or conditionally for any Shares of the Company. Such commissions may be satisfied by the payment of cash and/or the issue of fully or partly paid-up Shares. The Company may also on any issue of Shares pay such brokerage as may be lawful.
|
25.
|
The Company shall not be bound by or compelled to recognise in any way (even when having notice thereof) any equitable, contingent, future or partial interest in any Share, or (except only as is otherwise provided by these Articles or the Statute) any other rights in respect of any Share other than an absolute right to the entirety thereof in the registered holder.
|
26.
|
If a Member dies, the survivor or survivors where such Member was a joint holder, and his or her legal personal representatives where such Member was a sole holder, shall be the only Persons recognised by the Company as having any title to such Member’s interest. The estate of a deceased Member is not thereby released from any liability in respect of any Share that had been jointly held by such Member.
|
27.
|
Any Person becoming entitled to a Share in consequence of the death or bankruptcy or liquidation or dissolution of a Member (or in any other way than by transfer) may, upon such evidence being produced as may from time to time be required by the Directors, elect either to become the holder of the Share or to have some Person nominated by him or her as the transferee. If he or she elects to become the holder, he or she shall give written notice to the Company to that effect but the Directors shall, in any case, have the same right to decline or suspend registration as they would have had in the case of a transfer by that Member before his death or bankruptcy, as the case may be.
|
28.
|
If the Person so becoming entitled shall elect to be registered as the holder, such Person shall deliver or send to the Company a notice in writing signed by such Person stating that he or she so elects.
|
29.
|
Subject to Article 8, the Company may by Ordinary Resolution:
|
29.1.
|
increase the share capital by such sum as the resolution shall prescribe and with such rights, priorities and privileges annexed thereto, as the Company in general meeting may determine;
|
29.2.
|
consolidate and divide all or any of its share capital into Shares of larger amount than its existing Shares;
|
29.3.
|
by subdivision of its existing Shares or any of them divide the whole or any part of its share capital into Shares of smaller amount than is fixed by the Memorandum or into Shares without par value;
|
29.4.
|
cancel any Shares that at the date of the passing of the resolution have not been taken or agreed to be taken by any Person; and
|
29.5.
|
perform any action not required to be performed by Special Resolution.
|
30.
|
Subject to the provisions of the Statute and the provisions of these Articles as regards the matters to be dealt with by Ordinary Resolution, and subject further to Article 8, the Company may by Special Resolution:
|
30.1.
|
change its name;
|
30.2.
|
alter or add to these Articles;
|
30.3.
|
alter or add to the Memorandum with respect to any objects, powers or other matters specified therein; and
|
30.4.
|
reduce its share capital and any capital redemption reserve fund.
|
31.
|
Subject to the provisions of the Statute, the Company may by resolution of the Directors change the location of its Registered Office.
|
32.
|
All general meetings other than annual general meetings shall be called extraordinary general meetings.
|
33.
|
The Company shall, if required by the Statute, in each year hold a general meeting as its annual general meeting, and shall specify the meeting as such in the notices calling it. The annual general meeting shall be held at such time and place as the Directors shall appoint. At these meetings, the report of the Directors (if any) shall be presented.
|
34.
|
The Company may hold an annual general meeting, but shall not (unless required by Statute) be obliged to hold an annual general meeting.
|
35.
|
The Directors may call general meetings, and they shall on a Members requisition forthwith proceed to convene an extraordinary general meeting of the Company.
|
36.
|
A Members requisition is a requisition of Members of the Company holding, on the date of deposit of the requisition, not less than either (i) a majority of the voting power of all of the Ordinary Shares, (ii) the Majority Series A Preferred Holders; (iii) the Majority Series B Preferred Holders, (iv) the Majority Series B+ Preferred Holders; (v) the Majority Series C Preferred Holders; or (vi) the Majority Series C+ Preferred Holders.
|
37.
|
The requisition must state the objects of the meeting and must be signed by the requisitionists and deposited at the Registered Office, and may consist of several documents in like form each signed by one (1) or more requisitionists.
|
38.
|
If the Directors do not within twenty-one (21) days from the date of the deposit of the requisition duly proceed to convene a general meeting to be held within a further twenty-one (21) days, the requisitionists, or any of them representing more than one-half of the total voting rights of all of them, may themselves convene a general meeting, but any meeting so convened shall not be held after the expiration of three (3) months after the expiration of the said twenty-one (21) days.
|
39.
|
A general meeting convened as aforesaid by requisitionists shall be convened in the same manner as nearly as possible as that in which general meetings are to be convened by Directors.
|
40.
|
At least five (5) days’ notice shall be given of any general meeting unless such notice is waived either before, at or after such meeting by both (i) by the Members (or their proxies) holding a majority of the aggregate voting power of the Shares entitled to attend and vote thereat (including the Preferred Shares on an as converted basis), and (ii) by the Members (or their proxies) holding a majority of the aggregate voting power of all the Preferred Shares (on an as converted basis) of the Company entitled to attend and vote thereat. Every notice shall be exclusive of the day on which it is given or deemed to be given and of the day for which it is given and shall specify the place, the day and the hour of the meeting and the general nature of the business and shall be given in the manner hereinafter mentioned or in such other manner, if any, as may be prescribed by the Company, provided that a general meeting of the Company shall, whether or not the notice specified in this regulation has been given and whether or not the provisions of the Articles regarding general meetings have been complied with, be deemed to have been duly convened if it is so agreed both (i) by the Members (or their proxies) holding a majority of the aggregate voting power of the Shares entitled to attend and vote thereat (including the Preferred Shares on an as converted basis), and (ii) by the Members (or their proxies) holding a majority of the aggregate voting power of all the Preferred Shares (on an as converted basis) of the Company entitled to attend and vote thereat.
|
41.
|
The accidental omission to give notice of a general meeting to, or the non-receipt of notice of a meeting by, any Person entitled to receive notice shall not invalidate the proceedings of that meeting.
|
42.
|
The officer of the Company who has charge of the Register of Members of the Company shall prepare and make, at least two (2) days before every general meeting, a complete list of the Members entitled to vote at the general meeting, arranged in alphabetical order, and showing the address of each Member and the number of shares registered in the name of each Member. Such list shall be open to examination by any Member for any purpose germane to the meeting, during ordinary business hours, for a period of at least two (2) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any Member of the Company who is present.
|
43.
|
The holders of a majority of the aggregate voting power of the Shares entitled to notice of and to attend and vote at such general meeting (including the Series A Preferred Shares, the Series B Preferred Shares, the Series B+ Preferred Shares, the Series C Preferred Shares and the Series C+ Preferred Shares on an as converted basis), the Supermajority Series A Preferred Holders, Supermajority Series B Preferred Holders, Supermajority Series B+ Preferred Holders, Supermajority Series C Preferred Holders and Supermajority Series C+ Preferred Holders, together, present in person or by proxy or if a company or other non-natural Person by its duly authorised representative shall constitute a quorum for a general meeting. Subject to Article 46, no business shall be transacted at any general meeting unless a quorum is present at the time when the meeting proceeds to business.
|
44.
|
A Person may participate at a general meeting by conference telephone or other communications equipment by means of which all the Persons participating in the meeting can communicate with each other. Participation by a Person in a general meeting in this manner is treated as presence in person at that meeting.
|
45.
|
A resolution in writing (in one or more counterparts) shall be as valid and effective as if the resolution had been passed at a duly convened and held general meeting of the Company if:
|
45.1.
|
in the case of a Special Resolution, it is signed by all Members required for such Special Resolution to be deemed effective under the Statute; or
|
45.2.
|
in the case of any resolution passed other than as a Special Resolution, it is signed by Members for the time being holding Shares carrying in aggregate not less than the minimum number of votes that would be necessary to authorize or take such action at a general meeting at which all Shares entitled to vote thereon were present and voted (calculated in accordance with Article 8.4(A)) (or, being companies, signed by their duly authorised representative).
|
46.
|
A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum and the votes present may continue to transact business until adjournment.
|
47.
|
The chairman, if any, of the Board of Directors shall preside as chairman at every general meeting of the Company, or if there is no such chairman, or if he or she shall not be present within ten (10) minutes after the time appointed for the holding of the meeting, or is unwilling or unable to act, the Directors present shall elect one of their members, or shall designate a Member, to be chairman of the meeting.
|
48.
|
With the consent of a general meeting at which a quorum is present, the chairman may (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. When a general meeting is adjourned, notice of the adjourned meeting shall be given as in the case of an original meeting.
|
49.
|
A resolution put to the vote of the meeting shall be decided on a show of hands unless before or on the declaration of the result of the show of hands, the chairman demands a poll, or any other Member or Members collectively present in person or by proxy and holding at least a majority of the aggregate voting power of all of the Shares of the Company entitled to attend and vote at the meeting demand a poll.
|
50.
|
Unless a poll is duly demanded, a declaration by the chairman that a resolution has been carried or carried unanimously, or by a particular majority, or lost or not carried by a particular majority and an entry to that effect in the minutes of the proceedings of the meeting shall be conclusive evidence of that fact without proof of the number or proportion of the votes recorded in favour of or against such resolution.
|
51.
|
The demand for a poll may be withdrawn.
|
52.
|
Except on a poll demanded on the election of a chairman or on a question of adjournment, a poll shall be taken as the chairman directs, and the result of the poll shall be deemed to be the resolution of the general meeting at which the poll was demanded.
|
53.
|
A poll demanded on the election of a chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such time as the chairman of the general meeting directs, and any business other than that upon which a poll has been demanded or is contingent thereon may proceed pending the taking of the poll.
|
54.
|
Except as otherwise required by law or these Articles, the Ordinary Shares and the Preferred Shares shall vote together on an as converted basis on all matters submitted to a vote of Members.
|
55.
|
In the case of joint holders of record, the vote of the senior holder who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and seniority shall be determined by the order in which the names of the holders stand in the Register of Members.
|
56.
|
A Member of unsound mind, or in respect of whom an order has been made by any court, having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his or her committee, receiver, or other Person on such Member’s behalf appointed by that court, and any such committee, receiver, or other Person may vote by proxy.
|
57.
|
No Person shall be entitled to vote at any general meeting or at any separate meeting of the holders of a series of Shares unless he or she is registered as a Member on the record date for such meeting nor unless all calls or other monies then payable by such Member in respect of Shares have been paid.
|
58.
|
No objection shall be raised to the qualification of any voter except at the general meeting or adjourned general meeting at which the vote objected to is given or tendered and every vote not disallowed at the meeting shall be valid. Any objection made in due time shall be referred to the chairman whose decision shall be final and conclusive.
|
59.
|
On a poll or on a show of hands, votes may be cast either personally or by proxy. A Member may appoint more than one proxy or the same proxy under one or more instruments to attend and vote at a meeting. Where a Member appoints more than one proxy, the instrument of proxy shall state which proxy is entitled to vote on a show of hands.
|
60.
|
A Member holding more than one Share need not cast the votes in respect of his or her Shares in the same way on any resolution and therefore may vote a Share or some or all such Shares either for or against a resolution and/or abstain from voting a Share or some or all of the Shares and, subject to the terms of the instrument appointing him or her, a proxy appointed under one or more instruments may vote a Share or some or all of the Shares in respect of which he or she is appointed either for or against a resolution and/or abstain from voting.
|
61.
|
The instrument appointing a proxy shall be in writing, be executed under the hand of the appointor or of his or her attorney duly authorised in writing, or, if the appointor is a corporation, under the hand of an officer or attorney duly authorised for that purpose. A proxy need not be a Member of the Company.
|
62.
|
The instrument appointing a proxy shall be deposited at the Registered Office or at such other place as is specified for that purpose in the notice convening the meeting, no later than the time for holding the meeting or adjourned meeting. The chairman may in any event, at his or her discretion, direct that an instrument of proxy shall be deemed to have been duly deposited. An instrument of proxy that is not deposited in the manner permitted shall be invalid.
|
63.
|
The instrument appointing a proxy may be in any usual or common form and may be expressed to be for a particular meeting or any adjournment thereof or generally until revoked. An instrument appointing a proxy shall be deemed to include the power to demand or join or concur in demanding a poll.
|
64.
|
Votes given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the Share in respect of which the proxy is given unless notice in writing of such death, insanity, revocation or transfer was received by the Company at the Registered Office before the commencement of the general meeting or adjourned meeting at which it is sought to use the proxy.
|
65.
|
Any corporation or other non-natural Person that is a Member may in accordance with its constitutional documents, or in the absence of such provision by resolution of its directors or other governing body, authorise such Person as it thinks fit to act as its representative at any meeting of the Company or any class of Members, and the Person so authorised shall be entitled to exercise the same powers on behalf of the corporation which he or she represents as the corporation could exercise if it were an individual Member.
|
66.
|
Shares in the Company that are beneficially owned by the Company or held by it in a fiduciary capacity shall not be voted, directly or indirectly, at any meeting and shall not be counted in determining the total number of outstanding Shares at any given time.
|
67.
|
The appointment of Directors shall follow the terms provided in this Article 67.
|
67.1.
|
Board of Directors.
|
A.
|
The maximum number of directors on the Board shall be six (6), with the composition of the Board determined as follows: (a) the Founder shall be entitled to appoint, replace and reappoint at any time or from time to time two (2) directors on the Board (the “Founder Directors”, and each a “Founder Director”), (b) Shunwei and/or its assignee(s), as long as it directly or indirectly holds not less than seven percent (7%) of all issued and outstanding Shares of the Company, shall be exclusively entitled to appoint, replace and reappoint at any time or from time to time one (1) director (the “Shunwei Director”) on the Board, (c) YY and/or its assignee(s), as long as it directly or indirectly holds not less than seven percent (7%) of all issued and outstanding Shares of the Company, shall be exclusively entitled to appoint, replace and reappoint at any time or from time to time one (1) director (the “YY Director”), and (d) SIG and/or its assignee(s), as long as it directly or indirectly holds not less than seven percent (7%) of all issued and outstanding Shares of the Company, shall be exclusively entitled to appoint, replace and reappoint at any time or from time to time one (1) director (the “SIG Director”), and (e) Morningside or its assignee, as long as it directly or indirectly holds not less than seven percent (7%) of all issued and outstanding Shares of the Company, shall be exclusively entitled to appoint, replace and reappoint at any time or from time to time one (1) director (the “Morningside Director”, together with Shunwei Director, YY Director and SIG Director, collectively the “Investor Directors” and each an “Investor Director”) on the Board.
|
B.
|
Upon the written request of any Investor, each of the other Group Companies shall have, and the Founder and the BVI Companies agree to cause each of the other Group Companies to have the same number of directors in its respective board (each a “Subsidiary Board”, and collectively, the “Subsidiary Boards”) as the Company’s Board, and the Founder, Shunwei, YY, SIG and Morningside shall be entitled to appoint the same number of directors to each Subsidiaries as they are entitled to appoint to the Company’s Board.
|
C.
|
Each Board committee (if any) shall include at least the Investor Directors. The Board shall meet at least quarterly, unless otherwise agreed by a vote of the majority of Directors
|
D.
|
Each Founder Director shall have two (2) votes and each Investor Director shall have one (1) vote in each and all Board meetings. In the case of an equality of votes, the chairman shall have a second or casting vote.
|
67.2.
|
Observer
|
A.
|
Right to Designate Observer. Each of SIG (so long as SIG holds any of the Shares), Morningside (so long as Morningside holds any of the Shares) and Tiger (so long as Tiger holds any of the Shares) may by notice in writing to the Company, designate an observer to attend all meetings (whether in person, telephonic or other) of the board of directors of the Company and of each member of the Group Companies, including all committees thereof (if any), in a non-voting observer capacity, and the Company shall provide to SIG, Morningside and Tiger, concurrently with and in the same manner as distributed to the directors or other voting members of the respective board, copies of all meeting notices, agendas, board materials, information, draft resolutions, proposed actions by written consent, and other communications so distributed. Notwithstanding the foregoing, the right to designate observer by Tiger shall be automatically terminated upon consummation of an IPO of the Company.
|
68.
|
Subject to the provisions of the Statute, the Memorandum and these Articles and to any directions given by Special Resolution, the business of the Company shall be managed by or under the direction of the Directors who may exercise all the powers of the Company; provided, however, that the Company shall not carry out any action inconsistent with Articles 8 and 9. No alteration of the Memorandum or these Articles and no such direction shall invalidate any prior act of the Directors that would have been valid if that alteration had not been made or that direction had not been given. A duly convened meeting of Directors at which a quorum is present may exercise all powers exercisable by the Directors.
|
69.
|
All cheques, promissory notes, drafts, bills of exchange and other negotiable instruments and all receipts for monies paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed as the case may be in such manner as the Directors shall determine.
|
70.
|
Subject to Article 8, the Directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any Director who has held any other salaried office or place of profit with the Company or to his or her spouse or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.
|
71.
|
Subject to Article 8, the Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital or any part thereof and to issue debentures, debenture shares, mortgages, bonds and other such securities whether outright or as security for any debt, liability or obligation of the Company or of any third party.
|
72.
|
The office of a Director shall be vacated if:
|
72.1.
|
such Director gives notice in writing to the Company that he or she resigns the office of Director; or
|
72.2.
|
such Director dies, becomes bankrupt or makes any arrangement or composition with such Director’s creditors generally; or
|
72.3.
|
such Director is found to be or becomes of unsound mind.
|
73.
|
Any Director who shall have been elected by a specified group of Members may be removed during the aforesaid term of office, either for or without cause, by, and only by, the affirmative vote of such specified group, given at a special meeting of such Members duly called or by an action by written consent for that purpose. Any vacancy in the Board of Directors caused as a result of such removal or one or more of the events set out in Articles 72.1 to 72.3 of any such Director who shall have been elected by a specified group of Members, may be filled by, and only by, the vote of such specified group given at a special meeting of such Members or by an action by written consent, unless otherwise agreed upon among such Members.
|
74.
|
A Director may by a written instrument appoint an alternate who need not be a Director and an alternate is entitled to attend meetings in the absence of the Director who appointed him and to vote or consent in place of the Director. At all meetings of the Board of Directors five (5) Directors shall constitute a quorum for the transaction of business, and the vote of a majority of the Directors present (in person or in alternate) at any meeting at which there is a quorum, shall be the act of the Board of Directors, except as may be otherwise specifically provided by the Statute, the Memorandum, these Articles, the Shareholders Agreement, the Restricted Shares Agreements or the Right of First Refusal and Co-Sale Agreement. If a quorum shall not be present at any meeting of the Board of Directors, the Directors present thereat may adjourn the meeting, until a quorum shall be present.
|
75.
|
Subject to the provisions of these Articles, the Directors may regulate their proceedings as they think fit, provided however that the board meetings shall be held at least once every fiscal quarter and that a written notice of each meeting, agenda of the business to be transacted at the meeting and all documents and materials to be circulated at or presented to the meeting shall be sent to all Directors entitled to receive notice of the meeting at least five (5) days before the meeting and a copy of the minutes of the meeting shall be sent to such Persons within twenty (20) days following the meeting.
|
76.
|
A Person may participate in a meeting of the Directors or committee of the Board of Directors by conference telephone or other communications equipment by means of which all the Persons participating in the meeting can communicate with each other at the same time.
|
77.
|
A resolution in writing (in one or more counterparts) signed by all the Directors or all the members of a committee of the Board of Directors shall be as valid and effectual as if it had been passed at a meeting of the Directors, or committee of the Board of Directors as the case may be, duly convened and held.
|
78.
|
Meetings of the Board of Directors may be called by the chairman, chief executive officer or the Investor Directors on forty-eight (48) hours’ notice to each Director in accordance with Articles 112 through 116; Without limitation to the foregoing, meetings shall be called by the chairman, chief executive officer or the secretary in like manner and on like notice on the written request of four (4) Directors unless the Board consists of only one Director; in which case meetings shall be called by the chairman, chief executive officer or secretary in like manner or on like notice on the written request of the sole Director.
|
79.
|
The continuing Directors may act notwithstanding any vacancy in their body, but if and so long as their number is reduced below the number fixed by or pursuant to these Articles as the necessary quorum of Directors, the continuing Directors or Director may act for the purpose of increasing the number of Directors to that number, or of summoning a general meeting of the Company, but for no other purpose.
|
80.
|
The Directors may elect a chairman of their Board and determine the period for which he or she is to hold office; but if no such chairman is elected, or if at any meeting the chairman shall not be present within ten (10) minutes after the time appointed for holding the same, the Directors present may choose one of their members to be chairman of the meeting.
|
81.
|
All acts done by any meeting of the Directors or of a committee of the Board of Directors shall, notwithstanding that it be afterwards discovered that there was some defect in the appointment of any Director or that they or any of them were disqualified, be as valid as if every such Person had been duly appointed and qualified to be a Director.
|
82.
|
A Director of the Company who is present at a meeting of the Directors at which action on any Company matter is taken shall be presumed to have assented to the action taken unless the Director’s dissent shall be entered in the minutes of the meeting or unless the Director shall file his or her written dissent from such action with the Person acting as the chairman or secretary of the meeting before the adjournment thereof or shall forward such dissent by registered post to such Person immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favour of such action.
|
83.
|
Subject to Article 86, a Director may hold any other office or place of profit under the Company (other than the office of Auditor) in conjunction with his or her office of Director for such period and on such terms as to remuneration and otherwise as the Directors may determine.
|
84.
|
Subject to Article 86, a Director may act by himself or herself or his or her firm in a professional capacity for the Company (other than as Auditor) and such Director or firm shall be entitled to remuneration for professional services as if such Director were not a Director.
|
85.
|
Subject to Article 86, a Director of the Company may be or become a director or other officer of or otherwise interested in any company promoted by the Company or in which the Company may be interested as Member or otherwise, and no such Director shall be accountable to the Company for any remuneration or other benefits received by such Director as a director or officer of, or from his or her interest in, such other company.
|
86.
|
Subject to any further restrictions set forth in these Articles and the Shareholders Agreement, no Person shall be disqualified from the office of Director or prevented by such office from contracting with the Company, either as vendor, purchaser or otherwise, nor shall any such contract or any contract or transaction entered into by or on behalf of the Company in which any Director shall be in any way interested (each, an “Interested Transaction”) be or be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company for any profit realised by any such Interested Transaction by reason of such Director holding office or of the fiduciary relation thereby established, so long as the material facts of the interest of each Director in the agreement or transaction and his interest in or relationship to any other party to the agreement or transaction are disclosed in good faith to and are known by the other Directors.
|
87.
|
The Directors shall cause minutes to be made in books kept for the purpose of all appointments of officers made by the Directors, all proceedings at meetings of the Company or the holders of any series of Shares and of the Directors, and of committees of the Board of Directors including the names of the Directors present at each meeting.
|
88.
|
Subject to these Articles, the Board of Directors may establish any committees, and approve the delegation of any of their powers to any committee consisting of one or more Directors. The Board of Directors may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. In the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not
|
89.
|
Any committee, to the extent allowed by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Company with the majority approval of all members of such committee. Each committee shall keep regular minutes and report to the Board of Directors when required. Subject to these Articles, the proceedings of a committee of the Board of Directors shall be governed by the Articles regulating the proceedings of the Board of Directors, so far as they are capable of applying.
|
90.
|
The Board of Directors may also delegate to any managing Director or any Director holding any other executive office such of their powers as they consider desirable to be exercised by such Person provided that the appointment of a managing Director shall be revoked forthwith if he or she ceases to be a Director. Any such delegation may be made subject to any conditions the Board of Directors may impose, and either collaterally with or to the exclusion of their own powers and may be revoked or altered.
|
91.
|
The Directors may by power of attorney or otherwise appoint any company, firm, Person or body of Persons, whether nominated directly or indirectly by the Directors, to be the attorney or authorised signatory of the Company for such purpose and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as they may think fit, and any such powers of attorney or other appointment may contain such provisions for the protection and convenience of Persons dealing with any such attorneys or authorised signatories as the Directors may think fit and may also authorise any such attorney or authorised signatory to delegate all or any of the powers, authorities and discretions vested in him or her.
|
92.
|
Subject to these Articles, the Directors may appoint such officers as they consider necessary on such terms, at such remuneration and to perform such duties, and subject to such provisions as to disqualification and removal as the Directors may think fit. Unless otherwise specified in the terms of an officer’s appointment, an officer may be removed by resolution of the Directors or Members.
|
93.
|
There is no minimum shareholding required to be held by a Director.
|
94.
|
The remuneration to be paid to the Directors, if any, shall be such remuneration as determined by the Board. The Directors shall also be entitled to be paid all travelling, hotel and other expenses properly incurred by them in connection with their attendance at meetings of the
|
95.
|
The Directors may by resolution of the majority of the Board approve additional remuneration to any Director for any services other than his or her ordinary routine work as a Director. Any fees paid to a Director who is also counsel or solicitor to the Company, or otherwise serves it in a professional capacity shall be in addition to his or her remuneration as a Director.
|
96.
|
The Company may, if the Directors so determine, have a Seal. The Seal shall only be used by the authority of the Directors or of a committee of the Board of Directors authorised by the Board of Directors. Every instrument to which the Seal has been affixed shall be signed by at least one Person who shall be either a Director or some officer or other Person appointed by the Directors for the purpose.
|
97.
|
The Company may have for use in any place or places outside the Cayman Islands a duplicate Seal or Seals each of which shall be a facsimile of the common Seal of the Company and, if the Directors so determine, with the addition on its face of the name of every place where it is to be used.
|
98.
|
A Director or officer, representative or attorney of the Company may without further authority of the Directors affix the Seal over his or her signature alone to any document of the Company required to be authenticated by him or her under seal or to be filed with the Registrar of Companies in the Cayman Islands or elsewhere wheresoever.
|
99.
|
Subject to the Statute and these Articles, the Directors may declare dividends and distributions on Shares in issue and authorise payment of the dividends or distributions out of the assets of the Company lawfully available therefore. No dividend or distribution shall be paid except out of the realised or unrealised profits of the Company, or out of the share premium account or as otherwise permitted by the Statute.
|
100.
|
All dividends and distributions shall be declared and paid according to the provisions of Articles 8 and 9.
|
101.
|
The Directors may deduct from any dividend or distribution payable to any Member all sums of money (if any) then payable by such Member to the Company on account of calls or otherwise.
|
102.
|
Subject to the provisions of Articles 8 and 9, the Directors may declare that any dividend or distribution be paid wholly or partly by the distribution of specific assets and in particular of shares, debentures or securities of any other company or in any one or more of such ways and where any difficulty arises in regard to such distribution, the Directors may settle the same as they think expedient and in particular may issue fractional Shares and fix the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to any Members upon the basis of the value so fixed in order to adjust the rights of all Members and may vest any such specific assets in trustees as may seem expedient to the Directors.
|
103.
|
Any dividend, distribution, interest or other monies payable in cash in respect of Shares may be paid by wire transfer to the holder or by cheque or warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the registered address of the holder who is first named on the Register of Members or to such Person and to such address as such holder or joint holders may in writing direct. Every such cheque or warrant shall be made payable to the order of the Person to whom it is sent. Any one of two or more joint holders may give effectual receipts for any dividends, bonuses or other monies payable in respect of the Share held by them as joint holders.
|
104.
|
No dividend or distribution shall bear interest against the Company.
|
105.
|
Any dividend that cannot be paid to a Member and/or that remains unclaimed after six (6) months from the date of declaration of such dividend may, in the discretion of the Directors, be paid into a separate account in the Company’s name, provided that the Company shall not be constituted as a trustee in respect of that account and the dividend shall remain as a debt due to the Member.
|
106.
|
Subject to these Articles, including but not limited to Article 8, the Directors may capitalise any sum standing to the credit of any of the Company’s reserve accounts (including share premium account and capital redemption reserve fund) or any sum standing to the credit of profit and loss account or otherwise available for distribution and to appropriate such sum to Members in the proportions in which such sum would have been divisible amongst them had the same been a distribution of profits by way of dividend as set forth in Articles 8 and 9 hereof and to apply such sum on their behalf in paying up in full unissued Shares for allotment and distribution credited as fully paid-up to and amongst them in the proportion aforesaid. In such event, the Directors shall do all acts and things required to give effect to such capitalization, with full power to the Directors to make such provisions as they think fit for the case of Shares becoming distributable in fractions (including provisions whereby the benefit of fractional entitlements accrue to the Company rather than to the Members concerned). The Directors may authorise any Person to enter on behalf of all of the Members interested into an agreement with the Company providing for such capitalization and matters incidental thereto and any agreement made under such authority shall be effective and binding on all concerned.
|
107.
|
The Directors shall cause proper books of account to be kept at such place as they may from time to time designate with respect to all sums of money received and expended by the Company and the matters in respect of which the receipt or expenditure takes place, all sales and purchases of goods by the Company and the assets and liabilities of the Company. Proper books shall not be deemed to be kept if there are not kept such books of account as are necessary to give a true and fair view of the state of the Company’s affairs and to explain its transactions. The Directors shall from time to time determine whether and to what extent and at what times and places, and under what conditions or regulations, the accounts and books of the Company or any of them shall be open to inspection of Members not being Directors and no such Member shall have any right of inspecting any account or book or document of the Company except as conferred by the Statute or authorized by the Directors or the Company in general meeting.
|
108.
|
The Directors may from time to time cause to be prepared and to be laid before the Company in general meeting profit and loss accounts, balance sheets, group accounts (if any) and such other reports and accounts as may be required by law.
|
109.
|
The Directors may appoint an Auditor of the Company who shall hold office until removed from office by a resolution of the Directors, and may fix the Auditor’s remuneration.
|
110.
|
Every Auditor of the Company shall have a right of access at all times to the books and accounts and vouchers of the Company and shall be entitled to require from the Directors and officers of the Company such information and explanation as may be necessary for the performance of the duties of the Auditor.
|
111.
|
Auditors shall, if so required by the Directors, make a report on the accounts of the Company during their tenure of office at the next annual general meeting or at the next extraordinary general meeting following their appointment and at any other time during their term of office, upon request of the Directors or any general meeting of the Members.
|
112.
|
Except as otherwise provided in these Articles, notices shall be in writing. Notice may be given by the Company to any Member or Director either personally or by sending it by next-day or second-day courier service, fax, electronic mail or similar means to such Member or Director (as the case may be) or to the address of such Member or Director as shown in the Register of Members or the register of directors (as the case may be) (or where the notice is given by electronic mail by sending it to the electronic mail address provided by such Member or Director).
|
113.
|
Where a notice is sent by next-day or second-day courier service, service of the notice shall be deemed to be effected by properly addressing, pre-paying and sending by next-day or
|
114.
|
A notice may be given by the Company to the Person or Persons that the Company has been advised are entitled to a Share or Shares in consequence of the death or bankruptcy of a Member in the same manner as other notices that are required to be given under these Articles and shall be addressed to them by name, or by the title of representatives of the deceased, or trustee of the bankrupt, or by any like description at the address supplied for that purpose by the Persons claiming to be so entitled, or at the option of the Company, by giving the notice in any manner in which the same might have been given if the death or bankruptcy had not occurred.
|
115.
|
Notice of every general meeting shall be given in any manner hereinbefore authorised to every Person shown as a Member in the Register of Members on the record date for such meeting except that in the case of joint holders the notice shall be sufficient if given to the joint holder first named in the Register of Members and every Person upon whom the ownership of a Share devolves by reason of his or her being a legal personal representative or a trustee in bankruptcy of a Member of record where the Member of record but for his or her death or bankruptcy would be entitled to receive notice of the meeting, and no other Person shall be entitled to receive notices of general meetings.
|
116.
|
Whenever any notice is required by law or these Articles to be given to any Director, member of a committee or Member, a waiver thereof in writing, signed by the Person or Persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.
|
117.
|
If the Company shall be wound up, assets available for distribution amongst the Members shall be distributed, in accordance with Articles 8 and 9.
|
118.
|
If the Company shall be wound up, the liquidator may, with the sanction of a Special Resolution of the Company and any other sanction required by the Statute, divide amongst the Members in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may for that purpose value any assets and, subject to Articles 8 and 9, determine how the division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the Members as the liquidator, with the like sanction, shall think fit, but so that no Member shall be compelled to accept any asset upon which there is a liability.
|
119.
|
To the maximum extent permitted by applicable law, the Directors and officers for the time being of the Company and any trustee for the time being acting in relation to any of the affairs of the Company and their heirs, executors, administrators and personal representatives respectively shall be indemnified out of the assets of the Company from and against all actions, proceedings, costs, charges, Losses, damages and expenses that they or any of them shall or may incur or sustain by reason of any act done or omitted in or about the execution of their duty in their respective offices or trusts, except such (if any) as they shall incur or sustain by or through their own fraud, dishonesty or willful misconduct, and no such Director or officer or trustee shall be answerable for the acts, receipts, neglects or defaults of any other Director or officer or trustee or for joining in any receipt for the sake of conformity or for the solvency or honesty of any banker or other Persons with whom any monies or effects belonging to the Company may be lodged or deposited for safe custody or for any insufficiency of any security upon which any monies of the Company may be invested or for any other loss or damage due to any such cause as aforesaid or which may happen in or about the execution of his or her office or trust unless the same shall happen through the fraud, dishonesty or willful misconduct of such Director or officer or trustee. Except with respect to proceedings to enforce rights to indemnification pursuant to this Article, the Company shall indemnify any such indemnitee pursuant to this Article in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors. The right to indemnification conferred in this Article 119 shall include the right to be paid by the Company the expenses incurred in defending any such proceeding in advance of its final disposition to the maximum extent provided by, and subject to the requirements of, applicable law, so long as the indemnitee agrees with the Company to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such indemnitee is not entitled to be indemnified for such expenses under this Article.
|
120.
|
To the maximum extent permitted by applicable law, the Directors and officers for the time being of the Company and any trustee for the time being acting in relation to any of the affairs of the Company and their heirs, executors, administrators and personal representatives respectively shall not be personally liable to the Company or its Members for monetary damages for breach of their duty in their respective offices, except such (if any) as they shall incur or sustain by or through their own fraud or dishonesty respectively.
|
121.
|
Unless the Directors otherwise prescribe, the financial year of the Company shall end on the 31st of December in each year and, following the year of incorporation, shall begin on the 1st of January in each year.
|
122.
|
If the Company is exempted as defined in the Statute, it shall, subject to the provisions of the Statute and with the approval of a Special Resolution, have the power to register by way
|
123.
|
Drag-Along Sale.
|
124.
|
Representation and Undertakings.
|
125.
|
Drag-Along Notice. Prior to making any Drag-Along Sale in which the Drag-Along Holders wish to exercise their rights under Articles 123 to 127, the Drag-Along Holders shall provide the Board, the Company and the Dragged Shareholders with written notice (the “Drag-Along Notice”) not less than thirty (30) days prior to the proposed date of the Drag-Along Sale (the “Drag-Along Sale Date”). The Drag-Along Notice shall set forth: (i) the name and address of the proposed purchasers; (ii) the proposed amount and form of consideration to be paid, and the terms and conditions of payment offered by each of the purchasers; (iii) the Drag-Along Sale Date; (iv) the number of shares held of record by the Drag-Along Holders on the date of the Drag-Along Notice which form the subject to be transferred, sold or otherwise disposed of by the Drag-Along Holders; (v) the nature and the structure of the Drag-Along Sale, and (vi) the number of shares of the Dragged Shareholders to be included in the Drag-Along Sale (if any).
|
126.
|
Transfer Certificate. On the Drag-Along Sale Date, to the extent the Drag-Along Sale is structured as an equity transfer transaction, each of Drag-Along Holders and the Dragged Shareholders shall each deliver or cause to be delivered an instrument of transfer and a certificate
|
127.
|
Payment. If the Drag-Along Holders or the Dragged Shareholders receive the purchase price for their shares or such purchase price is made available to them as part of a Drag-Along Sale, to the extent the Drag-Along Sale is structured as an equity transfer transaction, and, in either case they fail to deliver certificates evidencing their shares as described in Articles 123 to 127, they shall for all purposes be deemed no longer to be a shareholder of the Company (with the register of members of the Company updated to reflect such status), shall have no voting rights, shall not be entitled to any dividends or other distributions with respect to any shares held by them, shall have no other rights or privileges as a shareholder of the Company. In addition, the Company shall stop any subsequent transfer of any such shares held by such shareholders.
|
128.
|
The drag-along rights under Articles 123 to 127 shall terminate and cease to be effective upon a Qualified IPO.
|
1.
|
Agora, Inc., a company incorporated under the Laws of Cayman Islands (the “Company”);
|
2.
|
Mr. ZHAO Bin (赵斌), a citizen of the PRC with the identification card number
1101**********1835 (the “Founder”); |
3.
|
Soundscape Limited, a company incorporated under the Laws of the British Virgin Islands and wholly owned by the Founder (the “BVI Company 1”);
|
4.
|
VoiceCrew Limited, a company incorporated under the Laws of the British Virgin Islands and wholly owned by the Founder (the “BVI Company 2”);
|
5.
|
YY TZ Limited, a company incorporated under the Laws of the British Virgin Islands (the “Founder Investco”, together with the BVI Company 1 and BVI Company 2, each a “BVI Company” and together, the “BVI Companies”);
|
6.
|
Each of the persons set forth in Schedule I-A attached hereto (together with the Company and any direct and indirect Subsidiaries of the foregoing, the “Group Companies”, and each, a “Group Company”); and
|
7.
|
Each of the persons set forth in Schedule I-B attached hereto, and if applicable, each other Person who has become a party to this Agreement pursuant to Section 13.24 hereof (collectively, the “Investors”, and each, an “Investor”).
|
A
|
The Company, the BVI Companies, the Investors and the Cayman Co entered into a Share Swap Agreement on January 19, 2020 (the “Share Swap Agreement”), pursuant to which the Company issued certain Shares to the BVI Companies and the Investors on the term and conditions set forth therein.
|
B
|
The current shareholders of the Company immediately prior to the date hereof, the BVI Companies and the Group Companies entered into a Shareholders Agreement, dated January 19, 2020 (the “Prior Agreement”).
|
C
|
Certain Investors have agreed to purchase from the Company, and the Company has agreed to sell, allot and issue to such Investors, certain Series C+ Preferred Shares of the Company on the terms and conditions set forth in the Series C+ Convertible Redeemable Share Purchase Agreement dated February 12, 2020 by and among the Group Companies, the Founder and such Investors (the “Purchase Agreement”).
|
D
|
The Purchase Agreement provides that it is a condition precedent to the consummation of the transactions contemplated under the Purchase Agreement that the Parties amend and restate the Prior Agreement and enter into this Agreement.
|
E
|
The Investors desire to enter into this Agreement and to accept the rights, covenants and obligations hereof.
|
F
|
The Parties desire to enter into this Agreement and make the respective representations, warranties, covenants and agreements set forth herein on the terms and conditions set forth herein which shall amend, supersede and replace the Prior Agreement in its entirety.
|
2
|
|
Shareholders Agreement
|
3
|
|
Shareholders Agreement
|
4
|
|
Shareholders Agreement
|
5
|
|
Shareholders Agreement
|
6
|
|
Shareholders Agreement
|
7
|
|
Shareholders Agreement
|
8
|
|
Shareholders Agreement
|
9
|
|
Shareholders Agreement
|
10
|
|
Shareholders Agreement
|
11
|
|
Shareholders Agreement
|
Cayman Co
|
Schedule I-A
|
Chairman
|
Section 9.1(iv)
|
Company
|
Preamble
|
Confidential Information
|
Section 12.6 (i)
|
CRCM
|
Schedule I-B
|
Disclosing Party
|
Section 12.6 (iii)
|
Dispute
|
Section 13.5(i)
|
Dragged Shareholders
|
Section 11.1(ii)
|
Drag-Along Holders
|
Section 11.1(i)
|
Drag-Along Notice
|
Section 11.3
|
Drag-Along Sale
|
Section 11.1(i)
|
Drag-Along Sale Date
|
Section 11.3
|
Exempt Registrations
|
Section 3.4
|
First Participation Notice
|
Section 7.4(i)
|
Founder
|
Preamble
|
Founder Directors
|
Section 9.1(i)
|
Founder Investco
|
Preamble
|
GGV Capital
|
Schedule I-B
|
GGV Fund
|
Schedule I-B
|
Group Company(ies)
|
Preamble
|
HKIAC
|
Section 13.5(ii)
|
HKIAC Rules
|
Section 13.5(ii)
|
Hong Kong Holdco
|
Schedule I-A
|
IDG
|
Schedule I-B
|
Indemnification Agreement
|
Section 9.8
|
Indemnified Person(s)
|
Section 13.10
|
Interested Party
|
Section 9.9
|
Interested Transaction
|
Section 9.9
|
Investor(s)
|
Preamble
|
Investor Director(s)
|
Section 9.1(i)
|
Key Persons Incentive Plan
|
Section 12.8(i)
|
Key Persons Reserve Shares
|
Section 12.8 (i)
|
Key Person Shareholder
|
Section 12.8 (i)
|
MFA Terms
|
Section 12.7(i)
|
Morningside
|
Schedule I-B
|
Morningside Director
|
Section 9.1(i)
|
New Securities
|
Section 7.3
|
Oversubscription Participants
|
Section 7.4(ii)
|
Party(ies)
|
Preamble
|
Preemptive Right
|
Section 7.1
|
Preemptive Rights Holder
|
Section 7.1
|
Principal Tribunal
|
Section 13.5(ix)(1)
|
12
|
|
Shareholders Agreement
|
Pro Rata Share
|
Section 7.2
|
Recipient
|
Section 12.1
|
Relevant Period
|
Section 12.4(a)
|
Remaining Key Persons Reserve Shares
|
Section 12.8 (ii)
|
Restricted Business
|
Section 12.4(b)(i)
|
Second Participation Notice
|
Section 7.4(ii)
|
Second Participation Period
|
Section 7.4(ii)
|
Shanghai Zhaoyan
|
Schedule I-A
|
Share Swap Agreement
|
Recitals
|
Shunwei
|
Schedule I-B
|
Shunwei Director
|
Section 9.1(i)
|
SIG
|
Schedule I-B
|
SIG Director
|
Section 9.1(i)
|
Subsidiary Board(s)
|
Section 9.1(ii)
|
Transferred Shares
|
Section 12.8 (i)
|
US Company
|
Schedule I-A
|
Violation
|
Section 5.1(i)
|
WFOE
|
Schedule I-A
|
Yan Capital
|
Schedule I-B
|
YY
|
Schedule I-B
|
YY Director
|
Section 9.1(i)
|
13
|
|
Shareholders Agreement
|
14
|
|
Shareholders Agreement
|
15
|
|
Shareholders Agreement
|
16
|
|
Shareholders Agreement
|
17
|
|
Shareholders Agreement
|
18
|
|
Shareholders Agreement
|
19
|
|
Shareholders Agreement
|
20
|
|
Shareholders Agreement
|
21
|
|
Shareholders Agreement
|
22
|
|
Shareholders Agreement
|
23
|
|
Shareholders Agreement
|
24
|
|
Shareholders Agreement
|
25
|
|
Shareholders Agreement
|
26
|
|
Shareholders Agreement
|
27
|
|
Shareholders Agreement
|
28
|
|
Shareholders Agreement
|
29
|
|
Shareholders Agreement
|
30
|
|
Shareholders Agreement
|
31
|
|
Shareholders Agreement
|
32
|
|
Shareholders Agreement
|
33
|
|
Shareholders Agreement
|
34
|
|
Shareholders Agreement
|
35
|
|
Shareholders Agreement
|
36
|
|
Shareholders Agreement
|
37
|
|
Shareholders Agreement
|
38
|
|
Shareholders Agreement
|
39
|
|
Shareholders Agreement
|
40
|
|
Shareholders Agreement
|
41
|
|
Shareholders Agreement
|
42
|
|
Shareholders Agreement
|
43
|
|
Shareholders Agreement
|
44
|
|
Shareholders Agreement
|
45
|
|
Shareholders Agreement
|
46
|
|
Shareholders Agreement
|
47
|
|
Shareholders Agreement
|
48
|
|
Shareholders Agreement
|
COMPANY:
|
Agora, Inc
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ ZHAO Bin
|
|
Name:
|
ZHAO Bin
|
|
Title:
|
Director
|
FOUNDER:
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ ZHAO Bin
|
|
Name:
|
ZHAO Bin
|
|
|
|
|
|
|
BVI COMPANY:
|
Soundscape Limited
|
|
|
|
|
|
By:
|
/s/ ZHAO Bin
|
|
Name:
|
ZHAO Bin
|
|
Title:
|
Director
|
|
|
|
|
|
|
BVI COMPANY:
|
VoiceCrew Limited
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ ZHAO Bin
|
|
Name:
|
ZHAO Bin
|
|
Title:
|
Director
|
|
|
|
|
|
|
BVI COMPANY:
|
YY TZ Limited
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ ZHAO Bin
|
|
Name:
|
ZHAO Bin
|
|
Title:
|
Director
|
GROUP COMPANY:
|
Agora IO, Inc
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ ZHAO Bin
|
|
Name:
|
ZHAO Bin
|
|
Title:
|
Director
|
|
|
|
|
|
|
GROUP COMPANY:
|
Agora Lab, Inc
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ ZHAO Bin
|
|
Name:
|
ZHAO Bin
|
|
Title:
|
Director
|
|
|
|
|
|
|
GROUP COMPANY:
|
Agora IO Hongkong Limited
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ ZHAO Bin
|
|
Name:
|
ZHAO Bin
|
|
Title:
|
Director
|
|
|
|
|
|
|
GROUP COMPANY:
|
达音网络科技༈上海༉有限公司
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ ZHAO Bin
|
|
Name:
|
ZHAO Bin
|
|
Title:
|
Legal Representative
|
GROUP COMPANY:
|
上海兆言网络科技有限公司
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ ZHAO Bin
|
|
Name:
|
ZHAO Bin
|
|
Title:
|
Legal Representative
|
INVESTOR:
|
SIG China Investments Master Fund III, LLLP
|
|
|
|
|
|
|
|
|
By: SIG Asia Investment, LLLP,
|
|
|
Its Authorized Agent
|
|
|
|
|
|
By: Heights Capital Management, Inc.,
|
|
|
Its Authorized Agent
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Michael Spolan
|
|
Name:
|
Michael Spolan
|
|
Title:
|
General Counsel
|
|
|
|
|
|
|
INVESTOR:
|
SIG Global China Fund I,LLLP
|
|
|
|
|
|
|
|
|
By: SIG Asia Investment, LLLP,
|
|
|
Its Authorized Agent
|
|
|
|
|
|
By: Heights Capital Management, Inc.,
|
|
|
Its Authorized Agent
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Michael Spolan
|
|
Name:
|
Michael Spolan
|
|
Title:
|
General Counsel
|
INVESTOR:
|
IDG Technology Venture Investment V, L.P.
|
|
|
|
|
|
|
|
|
By: IDG Technology Venture Investment V, LLC, its General Partner
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Chi Sing HO
|
|
Name:
|
Chi Sing HO
|
|
Title:
|
Authorised Signatory
|
INVESTOR:
|
Shunwei Technology II Limited
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Koh Tuck Lye
|
|
Name:
|
Koh Tuck Lye
|
|
Title:
|
Director
|
INVESTOR:
|
Duowan Entertainment Corp.
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ LI Xueling
|
|
Name:
|
LI Xueling
|
|
Title:
|
Director
|
INVESTOR:
|
MORNINGSIDE CHINA TMT FUND II, L.P.,
|
|
|
a Cayman Islands exempted limited partnership
|
|
|
|
|
|
By:
|
|
|
MORNINGSIDE CHINA TMT GP II, L.P.,
|
|
|
|
|
|
a Cayman Islands exempted limited partnership, its general partner
|
|
|
|
|
|
By:
|
|
|
TMT GENERAL PARTNER LTD., a Cayman Islands limited company, its general partner
|
|
|
|
|
|
in
|
on
|
|
|
|
|
|
|
|
|
|
|
/s/ Jill Marie FRANKLIN
|
|
|
Jill Marie FRANKLIN
|
|
|
Authorised Signatory
|
INVESTOR:
|
MORNINGSIDE CHINA TMT TOP UP FUND, L.P.,
|
|
|
a Cayman Islands exempted limited partnership
|
|
|
|
|
|
By:
|
|
|
MORNINGSIDE CHINA TMT GP II, L.P., a Cayman Islands exempted limited partnership, its general partner
|
|
|
|
|
|
|
|
|
By:
|
|
|
TMT GENERAL PARTNER LTD.,
|
|
|
a Cayman Islands limited company, its general partner
|
|
|
|
|
|
in
|
on
|
|
|
|
|
|
|
|
|
|
|
/s/ Jill Marie FRANKLIN
|
|
|
Jill Marie FRANKLIN
|
|
|
Director/ Authorised Signatory
|
INVESTOR:
|
MORNINGSIDE CHINA TMT SPECIAL OPPORTUNITY FUND II, L.P.,
|
|
|
a Cayman Islands exempted limited partnership
|
|
|
|
|
|
By:
|
|
|
MORNINGSIDE CHINA TMT GP IV, L.P.,
|
|
|
a Cayman Islands exempted limited partnership, its general partner
|
|
|
|
|
|
By:
|
|
|
TMT GENERAL PARTNER LTD.,
|
|
|
a Cayman Islands limited company, its general partner
|
|
|
|
|
|
in
|
on
|
|
|
|
|
|
|
|
|
|
|
/s/ Jill Marie FRANKLIN
|
|
|
Jill Marie FRANKLIN
|
|
|
Title: Director/ Authorised Signatory
|
INVESTOR:
|
MORNINGSIDE CHINA TMT FUND IV CO-INVESTMENT, L.P.,
|
|
|
a Cayman Islands exempted limited partnership
|
|
|
|
|
|
By:
|
|
|
MORNINGSIDE CHINA TMT GP IV, L.P.,
|
|
|
a Cayman Islands exempted limited partnership, its general partner
|
|
|
|
|
|
By:
|
|
|
TMT GENERAL PARTNER LTD.,
|
|
|
a Cayman Islands limited company, its general partner
|
|
|
|
|
|
in
|
on
|
|
|
|
|
|
|
|
|
|
|
/s/ Jill Marie FRANKLIN
|
|
|
Jill Marie FRANKLIN
|
|
|
Title: Authorised Signatory
|
INVESTOR:
|
Evolution Special Opportunity Fund I, L.P.
|
|
|
a Cayman Islands exempted limited partnership
|
|
|
|
|
|
By: MSVC GP Limited,
|
|
|
a Cayman Islands exempted company, as its general partner
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Wai Shan WONG
|
|
Name:
|
Wai Shan WONG
|
|
Title:
|
Director
|
|
|
|
|
|
|
INVESTOR:
|
Evolution Fund I Co-investment, L.P.
|
|
|
a Cayman Islands exempted limited partnership
|
|
|
|
|
|
By: MSVC GP Limited,
|
|
|
a Cayman Islands exempted company, as its general partner
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Wai Shan WONG
|
|
Name:
|
Wai Shan WONG
|
|
Title:
|
Director
|
INVESTOR:
|
GGV CAPITAL IV L.P.
|
|
|
|
|
|
By: GGV Capital W L.L.C., its General Partner
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Stephen Hyndman
|
|
Name:
|
Stephen Hyndman
|
|
Title:
|
Attorney in Fact
|
|
|
|
|
|
|
INVESTOR:
|
GGV Capital IV Entrepreneurs Fund L.P.
|
|
|
|
|
|
By: GGV Capital W L.L.C., its General Partner
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Stephen Hyndman
|
|
Name:
|
Stephen Hyndman
|
|
Title:
|
Attorney in Fact
|
INVESTOR:
|
CRCM Opportunity Fund, L.P.
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Chun Ding
|
|
Name:
|
Chun Ding
|
|
Title:
|
Managing Partner
|
INVESTOR:
|
Yan Capital L.P.
|
|
|
|
|
|
By: Yan Capital Management Ltd.,
|
|
|
its Authorized Agent
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ YAN Dan
|
|
Name:
|
YAN Dan (闫丹)
|
|
Title:
|
Authorized Signatory
|
INVESTOR:
|
Coatue PE Asia XVI LLC
|
|
|
|
|
|
By: Coatue Management, L.L.C.,
|
|
|
its investment manager
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Zachary Feingold
|
|
Name:
|
Zachary Feingold
|
|
Title:
|
Authorized Signatory
|
INVESTOR:
|
Internet Fund VI Pte. Ltd.
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Venkatagiri Mudeliar
|
|
Name:
|
Venkatagiri Mudeliar
|
|
Title:
|
Director
|
Company
|
Place of Incorporation
|
Agora IO, Inc (“Cayman Co”)
|
Cayman Islands
|
Agora IO Hongkong Limited (“Hong Kong Holdco”)
|
Hong Kong
|
Agora Lab, Inc. (“US Company”)
|
California, U.S.
|
达音网络科技 (上海) 有限公
司
(“WFOE”)
|
The PRC
|
上海兆言网络科技有限公司)
(“Shanghai Zhaoyan”)
|
The PRC
|
1.
|
Shunwei Technology II Limited, a company incorporated under the Laws of the British Virgin Islands (“Shunwei”);
|
2.
|
Duowan Entertainment Corp., a company incorporated under the Laws of the British Virgin Islands (“YY”);
|
3.
|
(i) Morningside China TMT Fund II, L.P., a limited partnership organized and existing under the Laws of the Cayman Islands, (ii) Morningside China TMT Top Up Fund, L.P., a limited partnership organized and existing under the Laws of the Cayman Islands, (iii) Morningside China TMT Special Opportunity Fund II, L.P., a limited partnership organized and existing under the Laws of the Cayman Islands, (iv) Morningside China TMT Fund IV Co-Investment, L.P., a limited partnership organized and existing under the Laws of the Cayman Islands, (v) Evolution Special Opportunity Fund I, L.P., a limited partnership organized and existing under the Laws of the Cayman Islands, and (vi) Evolution Fund I Co-investment, L.P., a limited partnership organized and existing under the Laws of the Cayman Islands (collectively, “Morningside”);
|
4.
|
GGV Capital IV Entrepreneurs Fund L.P., a limited partnership formed under the Laws of the State of Delaware (“GGV Fund”);
|
5.
|
GGV Capital IV L.P., a limited partnership formed under the Laws of the State of Delaware (“GGV Capital”);
|
6.
|
CRCM Opportunity Fund, L.P., a limited partnership incorporated under the Laws of the Cayman Islands (“CRCM”);
|
7.
|
SIG China Investments Master Fund III, LLLP (“SIG Fund III”) and SIG Global China Fund I, LLLP (“SIG Fund I”, together with SIG Fund III, “SIG”), each a limited liability limited partnership incorporated under the Laws of the State of Delaware;
|
8.
|
IDG Technology Venture Investment V, L.P., a limited partnership organized and existing under the Laws of the State of Delaware (“IDG”);
|
9.
|
Yan Capital L.P., an exempted limited partnership duly formed and validly existing under the laws of the Cayman Islands (“Yan Capital”);
|
10.
|
Coatue PE Asia XVI LLC, a limited liability company formed in the State of Delaware, United States (“Coatue”); and
|
11.
|
Internet Fund VI Pte. Ltd., a company incorporated under the laws of Singapore (“Tiger”).
|
(a)
|
this Agreement has been duly and validly executed and delivered by the New Shareholder, and this Agreement and the Shareholders Agreement constitute legal and binding obligations of the New Shareholder, enforceable against the New Shareholder in accordance with its terms; and
|
(b)
|
the execution and delivery by the New Shareholder of this Agreement and performance by the New Shareholder of this Agreement and the Shareholders Agreement and the consummation by the New Shareholder of the transactions contemplated hereby and thereby will not, with or without the giving of notice or lapse of time, or both (A) violate any Laws, or (B) conflict with, or result in a breach or default under, any term or condition of any agreement or other instrument to which the New Shareholder is a party or by which the New Shareholder is bound, except for such violations, conflicts, breaches or defaults that would not, in the aggregate, materially affect the New Shareholder’s ability to perform its obligations hereunder and thereunder.
|
Address:
|
[●]
|
Attn:
|
[●]
|
Email:
|
[●]
|
(1)
|
Bin Zhao, Chinese citizen, ID No.: [***];
|
(2)
|
Wenjing Ma, Chinese citizen, ID No.: [***];
|
(3)
|
Shanghai Zhaoyan Network Technology Co., Ltd. (the “Zhaoyan Technology”);
|
(4)
|
Dayin Network Technology (Shanghai) Co., Ltd. (the “Pledgee”).
|
(1)
|
As of the execution date of this Agreement, the Pledgors are registered shareholders of Zhaoyan Technology who hold 100% of Zhaoyan Technology’s equity interests in total.
|
(2)
|
Pursuant to the Exclusive Option Agreement (hereinafter referred to as the “Option Agreement”) executed by and among the Pledgee, Zhaoyan Technology and the Pledgors on June 18, 2015, the Pledgors shall, at the request of the Pledgee and to the extent permitted under the PRC law, transfer all or part of the equity interest held by the Pledgors in Zhaoyan Technology to the Pledgee and/or any other entity or individual designated by the Pledgee.
|
(3)
|
Pursuant to the Voting Rights Proxy Agreement (hereinafter referred to as the “Voting Rights Proxy Agreement”) executed by and among the Pledgee, Zhaoyan Technology and the Pledgors on June 18, 2015, the Pledgors have irrevocably granted the person designated by the Pledgee at that time to represent the Pledgors and exercise all of their respective voting rights as shareholders of Zhaoyan Technology on behalf of the Pledgors.
|
(4)
|
Pursuant to the Exclusive Technology Consulting and Services Agreement (hereinafter referred to as the “Consulting Services Agreement”) executed by the Pledgee and Zhaoyan Technology on June 18, 2015, Zhaoyan Technology has, on an exclusive basis, engaged the Pledgee to provide Zhaoyan Technology with consultation services and technical support, and has agreed to pay corresponding service fees to the Pledgee for such provision of services.
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(5)
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As a guarantee for the performance by the Pledgors of their Contractual Obligations (as defined below) and their satisfaction of the Secured Indebtedness (as defined below), the Pledgors intend to pledge all of their equity interests in Zhaoyan Technology to the Pledgee, and Zhaoyan Technology agrees to such share pledge arrangements.
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1.
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Definitions
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1.1
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Unless otherwise provided herein by the context, the following terms shall have the following meanings in this Agreement:
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1.1.1.
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“Contractual Obligations” means all contractual obligations of the Pledgors under the Option Agreement and the Voting Rights Proxy Agreement; all contractual obligation of Zhaoyan Technology under the Option Agreement, the Voting Rights Proxy Agreement and the Consulting Service Agreement; and all contractual obligation of the Pledgors and Zhaoyan Technology under this Agreement.
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1.1.2.
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“Secured Indebtedness” means any and all actual losses as may be suffered by the Pledgee as a result of any Event of Default (as defined below) caused by the Pledgors and/or Zhaoyan Technology; and all costs as may be incurred by the Pledgee in connection with its enforcement of the performance of the Contractual Obligations against the Pledgors and/or Zhaoyan Technology.
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1.1.3.
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“Transaction Agreement” means the Option Agreement, the Voting Rights Proxy Agreement and the Consulting Service Agreement.
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1.1.4.
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“Event of Default” means a breach by any Pledgors of any of its Contractual Obligation under the Voting Rights Proxy Agreement, the Option Agreement and/or this Agreement; and a breach by Zhaoyan Technology of any of its Contractual Obligation under the Option Agreement, the Voting Rights Proxy Agreement and/or this Agreement.
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1.1.5.
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“Pledged Interests” means all of the Pledgors’ equity interests in Zhaoyan Technology as legally owned by the Pledgors as of the date of effectiveness of this Agreement, pledged hereunder to the Pledgee as security for the Pledgor’s and Zhaoyan Technology’s performance of their respective
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1.1.6.
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“PRC Law” means the then effective laws, administrative regulations, administrative rules, local regulations, judicial interpretations and other binding regulatory documents of the People’s Republic of China.
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1.2
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Any reference to any PRC Law in this Agreement shall be deemed to include (1) a reference to amendments, modifications, supplements, or reenactions of such PRC Law, effective either before or after the date of this Agreement; and (2) a reference to any other decisions, notices, or regulations made thereunder or effective as a result of its provisions.
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1.3
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Unless otherwise provided herein, a reference to an article, provision, clause, section or paragraph shall be a reference to an article, provision, clause, section or paragraph of this Agreement.
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2.
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Pledge of Equity Interest
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2.1
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Pursuant to this Agreement, the Pledgors hereby agree to pledge all the Pledged Interests which are legally held and rightfully disposable by the Pledgors to the Pledgee, as security for the performance of the Contractual Obligations and the repayment of the Secured Indebtedness. Zhaoyan Technology hereby agrees for the Pledgors to pledge all the Pledged Interests to the Pledgee in accordance with this Agreement.
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2.2
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The Pledgors covenant to record the share pledge arrangement made under this Agreement (“Equity Pledge”) on Zhaoyan Technology’s register of shareholders within five (5) working days after the execution date of this Agreement and make its best effort to file the Equity Pledge with the competent authority of Administration for Industry and Commerce (“AIC”) having jurisdiction over Zhaoyan Technology to complete the pledge registration. Zhaoyan Technology covenants to make its best effort to cooperate with the Pledgors to complete the pledge registration with AIC.
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2.3
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During the term of this Agreement, the Pledgee shall not be liable in whatsoever manner for any diminution in value of the Pledged Interests, and the Pledgors shall have no right to claim in any form of recourse or make any request against the Pledgee on the aforementioned diminution, unless such diminution arises out of any willful conduct of the Pledgee or out of its gross negligence having immediate causal link with such diminution.
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2.4
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The Pledgee enjoys the first ranking rights of pledge placed on the Pledged Interests. Upon occurrence of any Event of Default, the Pledgee shall be entitled to dispose of the Pledged Interest in accordance with Article 4 of this Agreement.
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2.5
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After obtaining prior consent from the Pledgee, the Pledgors may increase the capital of Zhaoyan Technology. Any increase in the capital contributed by the
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3.
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Release of Pledge
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3.1
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Once the Pledgors have fully and completely fulfilled all the Contractual Obligations and have paid off all the Secured Indebtedness (if any), the Pledgee shall, upon request of the Pledgors , release the pledge placed on the Pledged Interests, and cooperate with the Pledgors in cancellation of the Equity Pledge recorded in Zhaoyan Technology’s register of shareholders. If necessary, the Parties shall also cooperate with each other to cancel the registration of the Equity Pledge in the AIC. The reasonable expenses incurred due to the release of the Pledge shall be borne by the Pledgee.
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4.
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Disposal of Pledged Interests
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4.1
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The Pledgors, Zhaoyan Technology and the Pledgee hereby agree that upon the occurrence of any Event of Default, the Pledgee shall have the right to exercise, upon written notice to the Pledgors, all of the remedies, rights and powers available to it under the PRC law, the Transaction Agreements and this Agreement, including without limitation the right to auction or sell the Pledged Interests for prior satisfaction of claims. The Pledgee shall not be held liable for any loss caused by its reasonable exercise of such rights and powers.
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4.2
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The Pledgee shall have the right to appoint, in writing, its counsels or other agents to exercise any or all of the above-mentioned rights and powers, and neither the Pledgors nor Zhaoyan Technology shall raise any objection against it.
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4.3
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The Pledgors shall be responsible for all reasonable costs incurred by the Pledgee when the Pledgee exercises any or all of the above-mentioned rights and powers. The Pledgee shall have the right to fully deduct such costs from the proceeds obtained from the exercise of its rights and powers.
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4.4
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The proceeds obtained from the exercise by the Pledgee of its rights and powers shall be applied in the following order of precedence:
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4.5
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The Pledgee shall be entitled to exercise, at its option, simultaneously or successively, any of the pledge on the Pledged Interests against any pledgor or any of other remedies for breach of contract it enjoys. The Pledgee shall not be required to exercise any other remedies for breach of contract before first exercising the right to auction or sell the Pledged Interests under this Agreement. Neither the Pledgors nor Zhaoyan Technology has the right to challenge the Pledgee’s exercise of part of the pledge or the sequential order of the exercise of the pledge.
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5.
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Costs and Expenses
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5.1
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Any and all actual costs and expenses relating to the creation of the Equity Pledge under this Agreement, including without limitation to stamp duties, any other tax and all legal fees shall be borne by the Pledgee.
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6.
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Continuity and Non-Waiver
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6.1
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The Equity Pledge established under this Agreement shall be a continuous guarantee, and its validity shall continue until the Contractual Obligations are fully fulfilled or the Secured Indebtedness is fully paid off. Neither any waiver or extension granted by the Pledgee to the Pledgor with respect to any breach of the Pledgor, nor any delay of the Pledgee in exercising any of its rights under the Transaction Agreement and this Agreement shall affect the Pledgee’s rights under the Transaction Agreements, this Agreement and relevant PRC Law, to require at any time thereafter the Pledgors to strictly perform the Transaction Agreements and this Agreement or any rights the Pledgee enjoys as a result of any subsequent breach by the Pledgor of the Transaction Agreement and/or this Agreement.
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7.
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Representations and Warranties by the Pledgor
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7.1
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The Pledgors hereby each make representations and warranties to the Pledgee on its own and on behalf of Zhaoyan Technology as follows:
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7.1.1.
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The Pledgors are Chinese citizens with full capacity to act, and have full and independent legal status and legal capacity. The Pledgors have obtained proper authorization to sign, deliver, and perform this Agreement, and may sue or be sued as an independent party.
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7.1.2.
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Zhaoyan Technology held by the Pledgors is a limited liability company duly registered and legally existing in accordance with PRC Law with its independent legal personality. It has full and independent legal status and legal capacity to sign, deliver and fulfill this Agreement, and may sue or
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7.1.3.
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All reports, documents and information relating to each of the Pledgors and matters required by this Agreement provided by the Pledgors to the Pledgee before the effective date of this Agreement are true, accurate and valid in all material respects as of the effective date of this Agreement.
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7.1.4.
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All reports, documents and information relating to each of the Pledgors and matters required by this Agreement provided by the Pledgors to the Pledgee after the effective date of this Agreement are true, accurate and valid in all material respects as of the time of provision of the same.
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7.1.5.
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As of the effective date of this Agreement, the Pledgors are the registered owners of the Pledged Interests free from any ongoing disputes as to the ownership of the Pledged Interests.
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7.1.6.
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Other than the security interest created on the Pledged Interests and other rights created under this Agreement and Transaction Agreements, there is no other security interests on the Pledged Interests.
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7.1.7.
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The Pledged Interests may be lawfully pledged and assigned, and the Pledgors have full rights and powers to pledge the Pledged Interests to the Pledgee in accordance with the provisions of this Agreement.
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7.1.8.
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Once duly executed by the Pledgors, this Agreement constitutes a legal, valid and binding obligation to the Pledgors.
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7.1.9.
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All third party’s consent, permission, waiver, authorization or any government agency’s approval, permission, exemption or registration or filing formalities with any government agency (if required by law), requisite in each case for the execution of this Agreement, has been obtained or are being pursued and will remain fully valid during the term of this Agreement.
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7.1.10.
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The Pledgors’ entry into and performance of this Agreement do not violate or conflict with any laws applicable to the Pledgors, any agreement to which is the Pledgors are a party or by which they are bound, any court judgment, any arbitral award or any administrative decision.
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7.1.11.
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The pledge under this Agreement constitutes the first ranking security interest on the Pledged Interests.
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7.1.12.
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All taxes and costs in connection with the acquisition of the Pledged Interests have been paid in full by the Pledgors.
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7.1.13.
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There are no pending, or to the knowledge of the Pledgors, threaten, lawsuits, legal procedures or claims against the Pledgors, or their property,
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7.1.14.
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The Pledgors hereby warrants to the Pledgee that the above representations and warranties will remain true and accurate and completely complied with under any circumstance at any time before the Contractual Obligations are fully fulfilled or the Secured Indebtedness is fully satisfied.
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8.
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Representations and Warranties by Zhaoyan Technology
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8.1
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Zhaoyan Technology hereby make representations and warranties to the Pledgee as follows:
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8.1.1.
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Zhaoyan Technology is a limited liability company duly registered and legally existing in accordance with PRC law with its independent legal personality. It has full and independent legal status and legal capacity to sign, deliver and fulfill this Agreement, and may sue or be sued as an independent party.
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8.1.2.
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All reports, documents and information relating to the Pledged Interests and matters required by this Agreement provided by Zhaoyan Technology to the Pledgee before the effective date of this Agreement are true, accurate and valid in all material respects as of the effective date of this Agreement.
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8.1.3.
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All reports, documents and information relating to the Pledged Interests and matters required by this Agreement provided by Zhaoyan Technology to the Pledgee after the effective date of this agreement are true, accurate and valid in all material respects as of the time of provision of the same.
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8.1.4.
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Zhaoyan Technology has full power and authority within the company to sign and deliver this Agreement and all other related transaction agreements, and it has full power and authority to complete the transactions described in this Agreement. There are no pending, or to the knowledge of Zhaoyan Technology, threatened. lawsuits, legal procedures or claims against Zhaoyan Technology, or its property(including without limitation to Pledged Interests) in any court or arbitral tribunal, or by any governmental body or administrative department, which will have significant or adverse effects on Zhaoyan Technology’s financial condition or its capacity to perform the obligations and the guarantee liability under this Agreement.
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8.1.5.
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Zhaoyan Technology hereby agrees to by severally and jointly liable to the Pledgee for the representations and warranties made by Pledgor under Articles 7.1.5, 7.1.6, 7.1.7, 7.1.9 and 7.1.11 of this Agreement.
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8.1.6.
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Zhaoyan Technology hereby warrants to the Pledgee that the above representations and warranties will remain true and accurate and completely complied with under any circumstance at any time before the Contractual Obligations are fully fulfilled or the Secured Indebtedness is fully satisfied.
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9.
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Undertakings by Pledgors
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9.1
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The Pledgors hereby each undertake to the Pledgee on its own and on behalf of Zhaoyan Technology as follows:
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9.1.1.
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Without prior written consent from the Pledgee, the Pledgors shall not create or permit the existence of any new pledge or other security interests on the Pledged Interests.
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9.1.2.
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Without prior written notice to the Pledgee and obtaining its prior written consent, the Pledgors shall not assign the Pledged Interests, and all purported assignment of the Pledged Interests by the Pledgors shall be void. The proceeds from the assignment of the Pledged Interests by the Pledgors shall be first used to pay off the Secured Indebtedness to the Pledgee or deposited to a third party agreed by the Pledgee.
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9.1.3.
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Should there arise any lawsuits, arbitration or other claim that may adversely affect the Pledgors, or Pledged Interests, or the interests of the Pledgee under the Transaction Agreement and this Agreement, the Pledgors undertake that they will as promptly as possible without delay to notify the Pledgee in writing, and in accordance with the reasonable request of the Pledgee, make every effort to take all necessary measures to ensure the Pledgee’s pledge interest of the Pledged Interests.
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9.1.4.
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The Pledgor shall not perform or allow any act or action that may adversely affect the Pledged Interests or the interests of the Pledgee under the Transaction Agreement and this Agreement.
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9.1.5.
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The Pledgors guarantee to take all necessary measures and sign all necessary documents (including without limitation any supplementary agreement of this Agreement) in accordance with the reasonable request of the Pledgee, so as to ensure the Pledgee’s pledge and interests on the Pledged Interests and such exercise and realization by the Pledgee of its rights and interests.
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9.1.6.
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If any Pledged Interests is assigned as a result of the exercise of the pledge under this Agreement, the Pledgors undertake that they will make every effort to take all necessary measures to facilitate such assignment.
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9.1.7.
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Without the prior written consent of the Pledgee, if the business period of Zhaoyan Technology expires within the term of this Agreement, the
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10.
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Undertakings by Zhaoyan Technology
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10.1
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If the signing and performance of this Agreement and the Equity Pledge under this Agreement are subject to the consent, permission, waiver, authorization of any third party, or the approval, permission, exemption or registration of any government department, or registration or filing formalities with any government department (if required by law), Zhaoyan Technology will make every effort to assist in obtaining such consent, permission, waiver, authorization, approval, permission, exemption or registration and maintaining the same in full force and validity during the term of this Agreement.
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10.2
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Without the prior written consent of the Pledgee, Zhaoyan Technology will not assist or allow the Pledgors to establish any new pledge or any other security interests on the Pledged Interests.
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10.3
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Without the prior written consent of the Pledgee, Zhaoyan Technology will not assist or allow the Pledgors to assign the Pledged Interests.
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10.4
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Should there arise any lawsuits, arbitration or other claim that may adversely affect Zhaoyan Technology, the Pledged Interests, or the interests of the Pledgee under the Transaction Agreement and this Agreement, Zhaoyan Technology guarantee that it will as promptly as possible without delay notify the Pledgee in writing, and in accordance with the reasonable request of the Pledgee, make every effort to take all necessary measures to ensure the Pledgee’s pledge interest of the Pledged Interests.
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10.5
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Zhaoyan Technology shall not perform or allow any act or action that may adversely affect the interests or Pledged Interests of the Pledgee under the Transaction Agreement and this Agreement.
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10.6
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Zhaoyan Technology will during [the first month of each calendar quarter] provide the Pledgee with the financial statements of Zhaoyan Technology for the preceding calendar quarter, including (but not limited to) the balance sheet, income statement and cash flow statement.
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10.7
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Zhaoyan Technology guarantees to take all necessary measures and sign all necessary documents (including without limitation any supplementary agreement to this Agreement) in accordance with the reasonable request of the Pledgee, so as to ensure the Pledgee’s pledge and interests on the Pledged Interests and such exercise and realization by the Pledgee of its rights and interests.
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10.8
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If any Pledged Interests is assigned as a result of the exercise of the pledge under this Agreement, Zhaoyan Technology shall make every effort to take necessary measures to facilitate such assignment.
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11.
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Change of Circumstances
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11.1
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As a supplement, and without contravening other articles of the Transaction Agreement and other articles of this Agreement, if at any time, due to any promulgation or change of any PRC Law, rules or regulations, or due to the change of the interpretation or application of such laws, rules or regulations, or due to the change in the relevant registration procedures, which causes the Pledgee to consider that it becomes illegal or it violates such laws, rules or regulations to maintain the effectiveness of this Agreement and/or dispose Pledged Interests in the manner specified in this Agreement, the Pledgors and Zhaoyan Technology shall, on the Pledgee’s written instructions and in accordance with the Pledgee’s reasonable request, immediately make every effort to take any necessary actions, and/or execute any agreement or other document so as to:
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12.
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Effectiveness and Term of Agreement
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12.1
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This Agreement shall become effective after being signed by the Pledgee, Zhaoyan Technology and the Pledgors.
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12.2
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The Pledgors and Zhaoyan Technology shall record the Equity Pledge under this Agreement in the shareholder register of Zhaoyan Technology according to the format listed in Schedule I of this Agreement on the date of this Agreement.
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12.3
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The Pledgors shall provide the registration certificate of the Equity Pledge in the aforementioned shareholder register to the Pledgee in a form satisfactory to the Pledgee.
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12.4
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The term of this Agreement shall end when the Contractual Obligations are fully fulfilled or the Secured Indebtedness is fully satisfied.
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13.
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Notices
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13.1
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All notices, requests, demands and other correspondences required by or in accordance with this Agreement shall be delivered to the relevant Parties in writing.
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13.2
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If the above notice or other correspondences is sent by facsimile, it will be deemed to have been delivered once it has been sent; if delivered in person, it will be deemed to have been delivered once delivered in person; if sent by post, it will be deemed to have been delivered five (5) days after posting.
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14.
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Miscellaneous
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14.1
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The Pledgee may, upon notice to the Pledgors and Zhaoyan Technology and without obtaining any prior consent from the Pledgors or Zhaoyan Technology, assign its rights and/or obligations under this Agreement to any third party. Either the Pledgors or Zhaoyan Technology shall not assign their respective rights, obligations or liabilities under this Agreement to any third party without the prior written consent of the Pledgee. The successors or permitted assignees (if any) of the Pledgors and Zhaoyan Technology shall continue to fulfill the obligations of the Pledgors and Zhaoyan Technology under this Agreement.
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14.2
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This Agreement is written in Chinese in six (6) originals. Each Party of this Agreement shall have one (1) and the remaining copies are for the purpose of registration.
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14.3
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The execution, effectiveness, implementation, amendment, interpretation and termination of this Agreement shall be governed by PRC Law.
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14.4
|
Any dispute arising out of or in connection with this Agreement shall be first settled by the Parties through friendly negotiation. If the dispute cannot be resolved within thirty (30) days, the relevant dispute shall be submitted to Shanghai International Economic and Trade Arbitration Commission for arbitration in accordance with the arbitration rules then effective. The arbitration shall be conducted in Shanghai and the language used shall be Chinese. The decision of the arbitral tribunal shall be final and binding on the Parties.
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14.5
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Any rights, powers and remedies conferred on each Party by any provision of this Agreement shall not preclude any other rights, powers or remedies that the Party enjoys in accordance with law and other provisions under this Agreement, and the exercise of a Party’s rights, powers and remedies shall not preclude the Party’s exercise of other rights, powers and remedies.
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14.6
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Failure by a Party to exercise or delay in exercising any of its rights, powers and remedies under this Agreement or law (hereinafter referred to as the “Party’s Rights”) shall not result in a waiver of such rights. The waiver of any single or part of that Party’s rights shall not preclude the Party from exercising such rights in any other ways or the exercising the remaining part of the Party’s rights.
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14.7
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The headings of the articles of this Agreement are for reference only. Under no circumstance shall these headings be used in or affect the interpretation of the provisions of this Agreement.
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14.8
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Each article of this Agreement shall be severable and independent of any other article. If at any time any one or more of the articles of this Agreement become invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining articles of this Agreement shall not be affected.
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14.9
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This Agreement, upon execution, supersedes any other legal documents previously executed by the relevant Parties under this Agreement in respect of the same matter.
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14.10
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Any amendment or supplement of this Agreement shall be made in writing. Except where the Pledgee assigns its rights under this Agreement in accordance with Article 14.1, such amendment and supplement of this Agreement shall become effective only after being properly signed by the Parties under this agreement.
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14.11
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This Agreement shall be binding on the legal assignees or successors of all Parties.
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14.12
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After the signing of this Agreement, if requested by the Pledgee, each Pledgor shall execute one (1) Power of Attorney, the format of which is shown in Schedule II of this Agreement (hereinafter referred to as the “Power of Attorney”), entrusting any person designated by the Pledgee to execute any and all legal documents which are required for the Pledgee to exercise its rights under this Agreement on behalf of the Pledgee. The Power of Attorney shall be kept by the Pledgee, and the Pledgee may submit the Power of Attorney to the relevant government department at any time when needed.
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Bin Zhao
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Wenjing Ma
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|||
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||||
Signature:
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/s/ Bin Zhao
|
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Signature:
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/s/ Wenjing Ma
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|
||||
Shanghai Zhaoyan Network Technology Co., Ltd. (Seal)
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||||
|
||||
Signature:
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/s/ Bin Zhao
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|
||
Name:
|
Bin Zhao
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|||
Title:
|
Legal Representative
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|||
|
||||
Dayin Network Technology (Shanghai) Co., Ltd. (Seal)
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||||
|
||||
Signature:
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/s/ Bin Zhao
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|
||
Name:
|
Bin Zhao
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|||
Title:
|
Legal Representative
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Name of Shareholder
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Amount of Contribution
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Shareholding Ratio
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ID Number
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Notes
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Bin Zhao
|
RMB9,000,000
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90%
|
[***]
|
According to the Share Pledge Agreement signed by Bin Zhao, Wenjing Ma, Dayin Network Technology (Shanghai) Co., Ltd. and Shanghai Zhaoyan Network Technology Co., Ltd., Bin Zhao agreed to pledge 90% of its shares in Shanghai Zhaoyan Network Technology Co., Ltd. to Dayin Network Technology (Shanghai) Co., Ltd, which has been registered in the shareholder register since June 18, 2015.
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Wenjing Ma
|
RMB1,000,000
|
10%
|
[***]
|
According to the Share Pledge Agreement signed by Bin Zhao, Wenjing Ma, Dayin Network Technology (Shanghai) Co., Ltd. and Shanghai Zhaoyan Network Technology Co., Ltd., Wenjing Ma agreed to pledge 10% of its shares in Shanghai Zhaoyan Network Technology Co., Ltd. to Dayin Network Technology (Shanghai) Co., Ltd, which has been registered in the shareholder register since June 18, 2015.
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Signature:
|
Date:
|
(1)
|
Bin Zhao, Chinese Citizen, ID NO.: [***]
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(2)
|
Wenjing Ma, Chinese Citizen, ID NO.: [***]
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(3)
|
Shanghai Zhaoyan Network Technology Co., Ltd. (hereinafter referred to “Zhaoyan Technology”);
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(4)
|
Dayin Network Technology Co., Ltd. (hereinafter referred to “Dayin Technology”)
|
1.
|
As of the execution date of this Agreement, the Shareholders are the registered shareholders of Zhaoyan Technology, who collectively hold 100% equity interest of Zhaoyan Technology in accordance with PRC laws, and among whom, Bin Zhao holds 90% of Zhaoyan Technology’s equity interest and Wenjing Ma holds 10%.
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2.
|
The Shareholders intend to respectively delegate the individual designated by Dayin Technology with the exercise of the Shareholders’ voting rights in Zhaoyan Technology and Dayin Technology intend to designate the individual to accept such delegation.
|
Article 1
|
Voting Rights Proxy
|
1.1
|
The Shareholders hereby irrevocably undertake that they will execute the Power of Attorney respectively after the execution of this Agreement, to appoint the individual designated by Dayin Technology at that time (hereinafter referred to the “Assignee”) to, on behalf of the Shareholders, exercise the following rights respectively enjoyed
|
(1)
|
propose to convene and attend shareholders’ meetings of Zhaoyan Technology according to Zhaoyan Technology’s articles of association as the proxy of each of the Shareholders/
|
(2)
|
exercise the voting rights on behalf of the Shareholders on all the matters which are required to be discussed and resolved at Zhaoyan Technology’s shareholders’ meetings, including without limitation the appointment, election and removal of the directors and supervisors of Zhaoyan Technology, the decision to appoint or remove the general manager, vice-general manager, chief financial officer and other senior management.
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1.2
|
The Assignee shall prudently and diligently perform the Delegated Right within the scope of authorization specified in this Agreement. The Shareholders acknowledge, and assume liability for any legal consequence arising out of the Assignee’s exercising the above-mentioned Delegated Right.
|
1.3
|
The Shareholders hereby acknowledge that the Assignee will not be required to solicit the Shareholders’ opinion in advance when exercising the Delegated Right provided that the Assignee shall promptly inform the Shareholders of the resolutions adopted or the proposals for convening temporary shareholders’ meetings after such resolutions or proposals are made.
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1.4
|
Zhaoyan Technology and the Shareholders agree to accept the proposals made by Dayin Technology and the Assignee in relation to hiring and dismissal of employees, daily operation management and financial management system from time to time and execute such proposals strictly.
|
Article 2
|
Right to Information
|
2.1
|
For the purpose of exercising the rights hereunder, the Assignee shall be entitled to get access to relevant information with respect to Zhaoyan Technology’s operation,
|
Article 3
|
Exercise of the Delegated Right
|
3.1
|
The shareholders shall provide sufficient assistance with respect to the exercise of the Delegated Right by the Assignee, including, when necessary (e.g., in order to satisfy the requirements of the governmental authorities with respect to document submission for approval, registration and filing), promptly executing the Resolution of the shareholders meeting or other related legal documents made by the Assignee.
|
3.2
|
If, at any time during the term of this Agreement, the authorization or exercise of the Delegated Right under this Agreement cannot be realized for any reason (except for a breach of contract by any of the Shareholders or Zhaoyan Technology), the Parties shall immediately seek an alternative solution as closes as possible to the unrealizable provisions and shall, if necessary, execute a supplementary agreement to amend or modify the terms of this Agreement so that the purpose of this Agreement may continue to be achieved.
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Article 4
|
Release of Liability and Compensation
|
4.1
|
The Parties acknowledge that in no event shall Dayin Technology be required to bear any liability or provide any economic or other compensation to the other parties or to any third party in connection with the exercise of Delegated Right by Assignee under this Agreement.
|
4.2
|
The Shareholders and Zhaoyan Technology agree to indemnify and hold harmless Dayin Technology against any losses suffered or likely to be suffered by Dayin Technology as a result of appointing the Assignee to exercise the Delegated Right, including without limitation any losses arising out of any lawsuit, recourse, arbitration, claim brought by any third party against it or any administrative investigation, or sanction made by government departments. However, if the loss is arising out of the Assignee’s or Dayin Technology’s willful misconduct or gross negligence, the Shareholders and Zhaoyan Technology shall not indemnify such loss.
|
Article 5
|
Representations, Warranties and Covenants
|
5.1
|
The Shareholders hereby each represent, warrant and covenant that:
|
5.1.1
|
He/She is a Chinese citizen with full capacity to act; He/She has full and independent legal status and capability and is properly authorized to execute, deliver and perform this Agreement and may sue or be sued as an independent party.
|
5.1.2
|
He/She is a legally registered shareholder of Zhaoyan Technology as of the effectiveness of this Agreement. In accordance with this Agreement, the Assignee may completely and fully exercise its Delegated Right according to the Zhaoyan Technology’s article of association then effective.
|
5.2
|
Zhaoyan Technology hereby represents, warrants and covenants that:
|
5.2.1
|
It is a limited liability company duly registered and validly existing under PRC laws with its independent legal personality. It has full and independent legal status and capability to execute, deliver and perform this Agreement and may sue or be sued as an independent party.
|
5.2.2
|
It has the full internal power and authorization of the company to execute and deliver this Agreement and all other documents it is going to execute related to the transaction stated hereunder and has the full power and authorization to complete such transaction described in this Agreement.
|
5.2.3
|
The Shareholders are the legally registered shareholders of Zhaoyan Technology as of the effectiveness of this Agreement, among whom, Bin Zhao holds 90% equity interest of Zhaoyan Technology and Wenjing Ma holds 10%. In accordance with this Agreement, the Assignee may completely and fully exercise its Delegated Right according to Zhaoyan Technology’s article of association then effective.
|
Article 6
|
Term of Agreement
|
6.1
|
Subject to Article 6.2 and 6.3 of this Agreement, this Agreement shall come into effect on the date the Parties execute it formally. Unless earlier terminated with the Parties’ written agreement or in accordance with Article 8.1 of this Agreement, the term of this Agreement shall be ten (10) years. Unless the Agreement is no longer being extended as notified by Dayin Technology thirty (30) days in advance, this Agreement shall automatically be extended for one (1) year upon expiration, and will continue to be so extended.
|
6.2
|
If any of the Shareholders assigns, upon Dayin Technology’s prior consent, all of its equity interest held in Zhaoyan Technology, such Shareholder shall cease to be a Party to this Agreement but the obligations and covenants made by the other Shareholders hereunder shall not be adversely affected.
|
6.3
|
During the term of this Agreement, if Zhaoyan Technology’s operation period terminates for any reason, this Agreement shall be terminated to Zhaoyan Technology and its shareholders.
|
Article 7
|
Notice
|
7.1
|
Any notice, request, demand and other correspondences made as required by or in accordance with this Agreement shall be made in writing and delivered to the relevant Party.
|
7.2
|
The abovementioned notice or other correspondences shall be deemed to have been delivered when it is transmitted if transmitted by facsimile, or when it is delivered if received in person, or when five (5) days have elapsed after posting if posted by mail.
|
Article 8
|
Default Liability
|
8.1
|
The Parties agree and acknowledge that any substantial violation of any of the provisions under this Agreement of any Party (“Defaulting Party”), or any substantial failure of performing any obligation under this Agreement shall constitute a default under this Agreement (the “Default”). Any non-defaulting Party who suffers loss (“Non-Defaulting Party”) shall have the right to demand the Defaulting Party to cure or take remedial measures within a reasonable time period. If the Defaulting Party fails to cure or take remedial measures within such reasonable time period or within ten (10) days after the related Non-Defaulting Party notifies the Defaulting Party in writing of compensation requests, then the relevant Non-Defaulting Party shall have the right to decide in its own discretion (1) to terminate this Agreement and demand the Defaulting Party to compensate all loss suffered; or (2) to demand specific performance of the obligations of the Defaulting Party under this Agreement and compensate all loss suffered.
|
8.2
|
The Parties agree and acknowledge that unless otherwise specified by laws and this Agreement, the Shareholders and Zhaoyan Technology shall not be entitled to terminate this Agreement early under any circumstance.
|
8.3
|
Regardless of any provision otherwise agreed under this Agreement, the effectiveness of this Article shall not be affected by suspension or termination of this Agreement
|
Article 9
|
Miscellaneous
|
9.1
|
This Agreement is written in Chinese in four (4) originals and each Party of this Agreement shall have one (1) original.
|
9.2
|
PRC laws will apply to the execution, effectiveness, performance, amendment, interpretation and termination of this Agreement.
|
9.3
|
Any dispute arising out of or in connection with this Agreement shall be settled by the disputing Parties through friendly negotiation. If the disputing Parties cannot reach an agreement in thirty (30) days, such dispute shall be submitted to Shanghai
|
9.4
|
Any right, power and remedy empowered to any Party by any provision of this Agreement shall not preclude any other right, power and remedy enjoyed by such Party in accordance with laws and other provisions under this Agreement, and a Party’s exercise of its rights, powers and remedies shall not preclude its exercise of other rights, powers and remedies.
|
9.5
|
Any Party’s failure or delay in exercising any right, power or remedy enjoyed by it under this Agreement or laws (hereinafter referred to as the “Party’s Rights”) shall not result in a waiver of such rights. In addition, the waiver of any single or part of the Party’s Right shall not preclude such Party’s exercising such rights in any other ways or the exercising the remaining part of the Party’s rights.
|
9.6
|
The headings of Articles in this Agreement are set for reference only, and such headings shall not be used in or affect the interpretation of Articles in this Agreement under any circumstance.
|
9.7
|
Each provision of this Agreement shall be severable and independent from any other provision. If one or several provisions of this Agreement are found to be invalid, illegal or unenforceable at any time, the validity, legality or enforceability of remaining provisions of this Agreement shall not be affected.
|
9.8
|
This Agreement supersedes any other legal documents executed by the Parties hereto in respect of the same matter upon execution.
|
9.9
|
Any amendment or supplement to this Agreement shall be made in written and take effect only upon duly execution by the Parties.
|
9.10
|
The Shareholders and Zhaoyan Technology shall not assign any right and/or obligation hereunder to any third party without prior written consent of Dayin Technology; Dayin Technology has the right to assign any right and/or obligation hereunder to any third party designated by itself after notifying the Shareholders.
|
9.11
|
This Agreement shall be binding on the legal assignees or successors of the Parties.
|
Bin Zhao
|
Wenjing Ma
|
|||
|
||||
Signature:
|
/s/ Bin Zhao
|
|
Signature:
|
/s/ Wenjing Ma
|
|
||||
Shanghai Zhaoyan Network Technology Co., Ltd. (Chop)
|
||||
|
||||
Signature:
|
/s/ Bin Zhao
|
|
||
Name:
|
Bin Zhao
|
|||
Title:
|
Legal Representative
|
|||
|
||||
Dayin Network Technology Co., Ltd. (Chop)
|
||||
|
||||
Signature:
|
/s/ Bin Zhao
|
|
||
Name:
|
Bin Zhao
|
|||
Title:
|
Legal Representative
|
(1)
|
propose to convene and attend shareholders’ meetings according to the Company’s articles of association as my proxy;
|
(2)
|
exercise the voting rights as my proxy on all the items discussed and to be resolved on the shareholders’ meetings, including without limitation to the appointment and election of the directors of the Company and other senior management that shall be appointed or dismissed by the shareholders’ meeting;
|
(3)
|
exercise other shareholder’s voting rights given by the Company’s article of association (including any other voting rights of shareholders given by the amended article of association) as my proxy.
|
Name:
|
Bin Zhao
|
|
|
Signature:
|
/s/ Bin Zhao
|
Date:
|
June 18, 2015
|
(1)
|
propose to convene and attend shareholders’ meetings according to the Company’s articles of association as my proxy;
|
(2)
|
exercise the voting rights as my proxy on all the items discussed and to be resolved on the shareholders’ meetings, including without limitation to the appointment and election of the directors of the Company and other senior management that shall be appointed or dismissed by the shareholders’ meeting;
|
(3)
|
exercise other shareholder’s voting rights given by the Company’s article of association (including any other voting rights of shareholders given by the amended article of association) as my proxy.
|
Name:
|
Wenjing Ma
|
|
|
Signature:
|
/s/ Wenjing Ma
|
Date:
|
June 18, 2015
|
(1)
|
Dayin Network Technology Co., Ltd., whose registered address is at Room 2009, Floor 2, Block 1, 180 Huashen Road, Pilot Free Trade Zone, Shanghai, China and its legal representative is Bin Zhao. (“Party A”);
|
(2)
|
Shanghai Zhaoyan Network Technology Co., Ltd., whose registered address is at Room 21, Floor 2, 1222 Changyang Road, Yangpu District, Shanghai and its legal representative is Bin Zhao. (“Party B”).
|
1.
|
Party A is a legally registered wholly foreign-owned enterprise, with good consulting teams and sufficient consulting resources; and
|
2.
|
Party B needs the information consulting service and technical service provided by Party A during its operation.
|
1.1
|
Party A agrees to provide information consulting and technical service to Party B in accordance with the conditions and terms hereunder, and Party B agrees to accept such service provided by Party A in accordance with the conditions and terms hereunder. The information consulting and technical service shall include:
|
(1)
|
Provide information consulting service related to Party B’s business;
|
(2)
|
Assist Party B in relevant information collection and market research;
|
(3)
|
Training relevant business staffs for Party B;
|
(4)
|
Other information consulting and technical services required by Party B from time to time.
|
1.2.
|
Party B shall actively cooperate with Party A to complete the aforesaid work, including but not limited to being responsible for providing business information, technical specifications and instructions required.
|
1.3.
|
This Agreement shall take effect as of the date of execution. The term of this Agreement shall be ten (10) years, unless early terminated by the Parties in writing, or early terminated by Party A according to Article 5.2 hereunder.
|
1.4.
|
Party A is the exclusive consulting and technical service provider of Party B hereunder; without prior written consent of Party A, Party B shall not accept from any third party any information consulting or technical service similar or identical to those provided under this Agreement.
|
1.5.
|
Party A shall have exclusive rights and interests in any rights, ownership, interests and intellectual property rights (including but not limited to copyrights, patents, technical secrets, trade secrets and others) arising out of the performance of this Agreement, regardless of whether they have been developed by Party A or Party B, and Party B shall not claim for any aforesaid rights, ownership, interests and intellectual property rights, except for those must-have intellectual properties for maintaining necessary business qualifications or permits of Party B in accordance with laws, regulations or requirements of competent authorities. Both Parties agree that this Article shall survive any amendments, rescission, or termination of this Agreement until otherwise agreed by both Parties.
|
2.1
|
Both Parties agree that Party B shall pay service fees (“Service Fees”) to Party A for the information consulting and technical service provided by Party A to Party B under Article 1.1 of this Agreement. The calculation of Service Fees and method of payments are specified in the attachment to this Agreement. The attachment can be amended by both Parties through negotiation in accordance with the actual situation.
|
3.1
|
Party A hereby represents and warrants as follows:
|
(1)
|
Party A is an enterprise duly registered and validly existing in accordance with PRC laws.
|
(2)
|
Party A executes and performs this Agreement within the scope of its corporate power and business scope; and it has taken necessary corporate actions, achieved necessary authorizations, and obtained all consents and approvals from third parties and governmental authorities. The execution and performance of this Agreement by Party A does not violate any applicable laws or contracts binding on it.
|
(3)
|
This Agreement constitutes legal, valid and binding obligations of Party A and is enforceable against Party A pursuant hereto upon execution.
|
3.2
|
Party B hereby represents and warrants as follows:
|
(1)
|
Party B is an enterprise duly registered and validly existing in accordance with PRC laws.
|
(2)
|
Party B executes and performs this Agreement within the scope of its corporate power and business scope; and it has taken necessary corporate actions, achieved necessary authorizations, and obtained all consents and approvals from third parties and governmental authorities. The execution and performance of this Agreement by Party B does not violate any applicable laws or contracts binding on it.
|
(3)
|
This Agreement constitutes legal, valid and binding obligations of Party B and is enforceable against Party B pursuant hereto upon execution.
|
4.1
|
For the purpose of this Agreement, “Confidential Information” includes, but is not limited to, all or any portion of the content or information listed below: (1) any contract, agreement, memorandum, attachment, draft or record (including this Agreement) executed for the purpose of this Agreement; and (2) any notice provided by one party of this Agreement to the other Party for the purpose of this Agreement, which has not been declared as public information when providing. Upon termination of this Agreement, Party A shall, according to Party B’s request, return to Party B or destroy any documents, materials or software that contain the Confidential Information, delete any Confidential Information from any relevant memory devices, and cease the use of such Confidential Information.
|
4.2
|
One Party shall not disclose Confidential Information to any third party in any ways without prior written consent of the other Party.
|
4.3
|
Both Parties shall take necessary measures to restrict the access of Confidential Information to relevant employees, agents or consultants, and require the employees, agents or consultants to strictly comply with this Article and not to disclose relevant Confidential Information to any third party. Both Parties covenant that they will not disclose Confidential Information obtained from the other Party to unrelated employees.
|
4.4
|
Under the following circumstances, any Party shall not be deemed as disclosing or revealing Confidential Information:
|
(1)
|
Such Confidential Information has already been in the public domain before disclosure (provided that this is not the result of disclosure by violating this Article);
|
(2)
|
Such disclosure has obtained prior written consent of the other Party;
|
(3)
|
Such Confidential Information is obligated to be disclosed as required by mandatory requirements of governmental authorities or laws and legal orders. Such requirements of governmental authorities shall be written in official documents, otherwise the Party shall refuse to disclose or reveal any Confidential Information.
|
4.5
|
If any Party violates this Article, the violating Party shall indemnify the other Party for actual loss.
|
4.6
|
Both Parties agree that this Article will survive any amendments, rescission or termination of this Agreement.
|
5.1
|
The Parties agree and acknowledge that it constitutes a breach of contract under this Agreement (hereinafter referred to as the “Breach”) if any Party (hereinafter referred to as the “Breaching Party”) materially violates any of the articles under this Agreement, or materially fails to perform any of its obligations under this Agreement. The injured party (hereinafter referred to as the “Non-breaching Party”) is entitled to demand the Breaching Party to make corrections or take remedial measures within a reasonable period. If the Breaching Party fails to make corrections or take remedial measures within a reasonable period or within ten (10) days upon written request by the Non-breaching Party, the Non-breaching Party is entitled to demand specific performance of the Breaching Party's obligations under this Agreement and compensation for any direct economic loss incurred by the Non-breaching Party at the same time.
|
5.2
|
If Party B is the Breaching Party and does not make corrections or take any remedial measures during the aforementioned period, Party A is entitled to decide in its sole discretion to hold Party B liable for the Breach in accordance with Article 5.1, or to terminate this Agreement and ask for compensation for direct economic loss incurred by Party A at the same time.
|
5.3
|
An effective waiver on the part of any Party of any breach shall be made in writing. Any Party’s failure to exercise or delay in exercising any rights or
|
5.4
|
The effectiveness of this Article shall not be affected by the termination or rescission of this Agreement.
|
6.1
|
The “Force Majeure” hereunder refers to any natural disasters such as wars, fire, earthquake, flood, storm and snow damage, or other affairs which is unforeseeable as of the execution of this Agreement, inevitable, and insurmountable. However, any shortage of credits, capital or financing shall not be deemed as an uncontrollable matter for a Party. The Party who is affected by the Force Majeure and seeks to be exempted from the obligations hereunder shall notify the other Party as soon as possible and inform the Party of the steps that shall have been take to complete performance.
|
6.2
|
If a Party to this Agreement cannot fulfill or cannot fulfill in time all or any part of the obligations hereunder due to Force Majeure, such Party shall not be liable for any corresponding obligations, but it shall continue to perform the obligations when the Force Majeure is eliminated. If the performance of this Agreement becomes impossible or unnecessary due to Force Majeure, both Parties shall negotiate in good faith for other resolutions.
|
7.1
|
This Agreement can be amended by both Parties through negotiation.
|
7.2
|
Any amendment to this Agreement shall be made in writing and executed by both Parties. Otherwise, such amendment will not be binding on either Party.
|
7.3
|
During the term of this Agreement, Party B is not entitled to terminate this Agreement early under any circumstance. If the operating period of Party B is terminated for any reason, this Agreement shall be deemed terminated as to Party B and its shareholders.
|
7.4
|
Any Amendments or rescission of this Agreement shall not affect any Party’s rights to claim damages. If any Party incurs any loss due to such amendment or rescission of the Agreement, the responsible Party shall indemnify such Party for such losses, unless the liability is exempted under applicable laws and regulations. If this Agreement is terminated because of Party B, Party
|
8.1
|
Any notice, request, demand and other correspondences made as required by or in accordance with this Agreement shall be made in writing and delivered to the relevant Party.
|
8.2
|
The abovementioned notice or other correspondences shall be deemed given: if transmitted by facsimile, immediately upon transmission; if delivered in person, at the time of delivery; or if posted by mail, five (5) days after posting.
|
9.1
|
This Agreement shall take effect as of the date of execution by both Parties.
|
9.2
|
The execution, validity, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by PRC laws.
|
9.3
|
In the event of any dispute with respect to this Agreement or the performance of this Agreement, the Parties shall negotiate in good faith to resolve the dispute. In the event the Parties fail to reach an agreement on the resolution of such dispute within thirty (30) days after any Party's written request for resolution of the dispute through negotiations, any Party may submit the relevant dispute to the Shanghai International Economic and Trade Arbitration Commission for arbitration, in accordance with its then-effective arbitration rules. The arbitration shall be conducted in Shanghai, and the language used during arbitration shall be Chinese. The arbitration ruling shall be final and binding on both Parties.
|
9.4
|
The headings contained herein are for reference only, and in no circumstances shall such headings be used for or affect the interpretation of the provisions hereof.
|
9.5
|
Upon execution of this Agreement, both Parties can enter into supplemental agreements for the matters not addressed in this Agreement, or new situations occurred when performing this Agreement. Any supplemental agreement and this Agreement shall constitute an inseparable integrity and are equally effective.
|
9.6
|
The Confidentiality clause, Breach Liability clause and clause on resolution of disputes hereunder shall survive any amendment, rescission or termination of this Agreement.
|
9.7
|
Without prior written consent from Party A, Party B is not entitled to assign all or part of the rights or obligations hereunder to any third party; Party A may assign any rights and/or obligations to any third party designated by it after notifying Party B.
|
9.8
|
If any provisions hereunder become invalid, the validity of the remaining provisions hereunder that are not relevant to the invalid provision shall not be affected.
|
9.9
|
This Agreement is written in four (4) originals and each Party of this Agreement shall have two (2) originals. Each original has equal legal effect.
|
Signature:
|
/s/ Bin Zhao
|
|
|
Name: Bin Zhao
|
|
|
|
Title: Legal Representative
|
Signature:
|
/s/ Bin Zhao
|
|
|
Name: Bin Zhao
|
|
|
|
Title: Legal Representative
|
1.
|
Both Parties agree that Party B shall pay Service Fees to Party A for information consulting and technical service provided by Party A to Party B under Article 1.1 of this Agreement. Party B shall pay Service Fees to Party A according to the following provisions:
|
A.
|
The number and qualifications of employees deployed by Party A for the provision of annual supporting service to Party B;
|
B.
|
The complexity of and time spent by Party A’s employees on providing such annual supporting service;
|
C.
|
The inputs cost from Party A on providing such annual supporting service;
|
D.
|
Specific content and value of such annual supporting service provided by Party A; and
|
E.
|
Operation revenue of Party B.
|
2.
|
Party B shall provide the financial information required for calculating the floating fees of that year within ninety (90) days after the end of the year and pay such floating fees to Party A annually within one hundred and twenty (120) days after the end of the year. If Party A raises doubts to the financial information provided by Party B, it can engage independent accountants
|
3.
|
The specific amount of the aforementioned basic annual fees and floating fees shall be approved by Party A and its parent company AGORA IO HONGKONG LIMITED (“Offshore Company”). Such basic annual fees and floating fees shall be evaluated and adjusted according to the request of Party A from time to time. The adjustment and alteration of any fees shall all be approved by both Party A and the Offshore Company. Party B shall determine a new charge standard or mechanism according to Party A’s request within fifteen (15) business days after Party A’s written request for adjusting fees.
|
Exclusive Option Agreement
|
(1)
|
Bin Zhao, Chinese Citizen, ID No.: [***];
|
(2)
|
Wenjing Ma, Chinese Citizen, ID No.: [***];
|
(3)
|
Shanghai Zhaoyan Network Technology Co., Ltd. (the “Zhaoyan Technology”);
|
(4)
|
Dayin Network Technology (Shanghai) Co., Ltd. (the “Dayin Technology”).
|
(1)
|
As of the execution date of this Agreement, the Shareholders are registered shareholders of Zhaoyan Technology who hold 100% of Zhaoyan Technology’s equity interests in total, among whom, Zhao Bin holds 90% of Zhaoyan Technology’s equity interests, and Ma Wenjing holds 10%.
|
(2)
|
The Shareholders intend to transfer all the equity held by the Shareholders in Zhaoyan Technology to Dayin Technology on the premise of not violating PRC Law, and Dayin Technology intends to accept such transfer.
|
(3)
|
For the purpose of the above-mentioned equity transfer, the Shareholders agree to jointly and irrevocably grant an exclusive option (hereinafter referred to as “Equity Purchase Option”) to Dayin Technology. According to such Equity Purchase Option and to the extent permitted by the laws of China, the Shareholders shall, upon request of Dayin Technology, transfer the Optioned Equity (as defined below) to Dayin Technology and/or any other entity or individual designated by Dayin Technology in accordance with the provisions of this Agreement.
|
1.
|
Definitions
|
1.1.
|
Unless otherwise provided herein, the following words and terms shall have the respective meanings set forth below:
|
1.1.1.
|
“PRC Law” refers to the laws, administrative regulations, administrative rules, local regulations, judicial interpretations and other binding regulatory documents of the People’s Republic of China in force at that time.
|
1.1.2.
|
“Optioned Equity” refers to all the equity interests held by the Shareholders in Registered Capital of Zhaoyan Technology (as defined below).
|
1.1.3.
|
“Registered Capital of Zhaoyan Technology” refers to the registered capital of Zhaoyan Technology as of the execution date of this Agreement, including its increase or reduction if any during the term of this Agreement.
|
1.1.4.
|
“Transferred Equity” refers to all or part of the Optioned Equity that Dayin Technology is entitled to ask the Shareholders to transfer to itself and/or the entities or individuals designated by it in accordance with Article 3.2 of this Agreement in the execution of its Equity Purchase Option (hereinafter referred to as “Execution”). The specific amount of the Transferred Equity can be unilaterally decided by Dayin Technology in accordance with PRC Law and its business considerations at that time.
|
1.1.5.
|
“Equity Purchase Price” refers to the consideration to be paid to the Shareholders by Dayin Technology and/or the entities or individuals designated by Dayin Technology for the Transferred Equity at each execution. The Equity Purchase Price paid to a Shareholder shall be the Registered Capital of Zhaoyan Technology multiplying by the shareholding ratio of the Transferred Equity. If there are any mandatary regulations on the equity purchase price under the PRC Law at the time of execution, Dayin Technology and/or the entities or individuals designated by it shall have the right to set the lowest price permitted by PRC Law as the Equity Purchase Price.
|
1.1.6.
|
“Business License” refers to any approval, permit, filing, registration, license or qualification which is required in connection with the business operation of Zhaoyan Technology, including but not limited to the Business License of the Enterprise Legal Person, Tax Registration Certificate and other relevant permits and certificates required under PRC Law at that time.
|
1.1.7.
|
“Assets of Zhaoyan Technology” refers to all tangible and intangible assets owned or entitled to be used by Zhaoyan Technology during the term of this Agreement, including but not limited to any real property, movable property, intellectual property (i.e., trademarks, copyrights, patents, proprietary technologies, domain names, software use rights, etc.), and other documents, files and information such as customer information and databases.
|
1.1.8.
|
“Material Contracts” refers to such contracts to which Zhaoyan Technology is bound or subject to that have a significant impact on the business or assets of Zhaoyan Technology.
|
1.2.
|
Any reference to any PRC Law in this Agreement shall be deemed to include (1) references to amendments, modifications, supplements, and reenactions of such PRC Law, effective either before or after the date of this Agreement; and (2) references to any other decisions, notices, or regulations made thereunder or effective as a result of its provisions.
|
1.3.
|
Unless otherwise provided herein, reference to the articles, provisions, clauses, sections or paragraphs shall be refences to such articles, provisions, clauses, sections or paragraphs in this Agreement.
|
2.
|
Grant of Equity Purchase Option
|
2.1.
|
The Parties agree that the Shareholders hereby irrevocably and unconditionally grant Dayin Technology an exclusive Equity Purchase Option. According to the Equity Purchase Option, to the extent permitted under PRC Law, Dayin Technology is entitled to require the Shareholders to transfer the Optioned Equity to Dayin Technology and/or the entities or individuals designated by Dayin Technology in accordance with this Agreement. Dayin Technology hereby agrees to accept such Equity Purchase Option.
|
3.
|
Execution of Equity Purchase Option
|
3.1.
|
To the extent permitted under PRC Law, Dayin Technology is entitled to determine the specific time, method and frequency of its Execution at its sole discretion.
|
3.2.
|
Dayin Technology is entitled to execute all of its Equity Purchase Option at one time if it is permitted under PRC Law at that time, that is, Dayin Technology and/or the entities or individuals designated by it is entitled to purchase all the Optioned Equity at one time. If, according to PRC law at that time, Dayin Technology and/or the entities or individuals designated by it is only permitted to hold part of the equity of Zhaoyan Technology, Dayin Technology is entitled to unilaterally determine the specific amount of Transferred Equity and to purchase by itself and/or the entities or individuals designated by it to the extent permitted by PRC Law (hereinafter referred to as the “Maximum Shareholding Ratio”). In the latter case, Dayin Technology is entitled to execute its Equity Purchase Option in accordance with the gradually increased Maximum Shareholding Ratio if any in phases, and to finally obtain all of the Optioned Equity.
|
3.3.
|
For each Execution of Dayin Technology, the Shareholders shall transfer corresponding amount of equity in Zhaoyan Technology to Dayin Technology and/or the entities and individuals designated by it in accordance with the Purchase Notice mentioned in Article 3.5 of this Agreement. Dayin Technology and/or the entities or individuals designated by it shall pay the Equity Purchase Price to the Shareholders in respect of each Execution. Provided that no PRC Law shall be violated, Dayin Technology may offset the debt of
|
3.4.
|
For each Execution of Dayin Technology, Dayin Technology can purchase all or part of the Transferred Equity by itself or any third party designated by it.
|
3.5.
|
For each Execution, Dayin Technology shall send a notice of Execution to the Shareholders (hereinafter referred to as the “Purchase Notice”, the format of which is shown in Schedule I). Upon receipt of the Purchase Notice, the Shareholders shall immediately transfer the corresponding Transferred Equity to Dayin Technology and/or the entities or individuals designated by it in accordance with Article 3.3 of this Agreement.
|
3.6.
|
The Shareholders hereby covenant and warrant that once Dayin Technology sends the Purchase Notice:
|
(1)
|
He/she shall immediately convene or request the convening of a shareholder meeting of Zhaoyan Technology, at which a resolution shall be adopted and all necessary measure shall be taken to approve the Shareholder’ transfer of Transferred Equity to Dayin Technology and/or the entities or individuals designated by it at the Equity Purchase Price, and to waive the Shareholders’ preemptive rights if any.
|
(2)
|
He/she shall immediately sign the equity transfer agreement with Dayin Technology and/or the entities or individuals designated by it to transfer the Transferred Equity to Dayin Technology and/or its designated entities or individuals at the Equity Purchase Price.
|
(3)
|
He/she shall provide necessary support to Dayin Technology (including providing and signing all relevant legal documents, fulfilling all government approval and registration procedures and undertaking all relevant obligations) in comply with the requirements of Dayin Technology and PRC Law to ensure that Dayin Technology and/or the entities or individuals designated by it can obtain the Transferred Equity without legal defects.
|
3.7.
|
On the execution date of this Agreement, upon request of Dayin Technology, the Shareholders shall each sign a Letter of Authorization (hereinafter referred to as the “Letter of Authorization”, the format of which is shown in Schedule II) and entrust anyone designated by Dayin Technology to sign the legal documents which will enable Dayin Technology and/or the entities or individuals designated by it to acquire all the Transferred Equity without legal defects. The Letter of Authorization shall be kept by Dayin Technology, and if necessary, Dayin Technology may at any time require each of the Shareholders to sign multiple copies of the Letter of Authorization separately and submit the Letter of Authorization to the relevant government departments.
|
4.
|
Representations and Warranties
|
4.1.
|
The Shareholders hereby make representations and warranties respectively on their own and on behalf of Zhaoyan Technology as follows:
|
4.1.1.
|
The Shareholders are Chinese citizens with full capacity, and have full and independent legal status and legal capacity. The Shareholders have been properly authorized to sign, deliver, and perform this Agreement, and can independently be the subject of litigation proceedings as one party.
|
4.1.2.
|
This Agreement is duly signed and delivered by the Shareholders and constitutes a valid and binding obligation to the Shareholders, and can be enforceable against them in accordance with the provisions of this Agreement.
|
4.1.3.
|
The Shareholders are the registered owners of the Optioned Equity as of the date of this Agreement. According to this Agreement, Dayin Technology and/or the entities or individuals designated by it can obtain valid ownership of the Transferred Equity without liens, pledges, claims, or other third-party encumbrance after Execution.
|
4.1.4.
|
Zhaoyan Technology has obtained all the required licenses in connection with its business operation as of the date of this Agreement. Zhaoyan Technology has been operating in compliance with PRC Law since its establishment. There has been no material violation or possible violation of the regulations and requirements of government departments in industry and commerce, tax, culture, news, quality and technical supervision, labor and social insurance, and others. There is no dispute for breach of contracts of Zhaoyan Technology.
|
5.
|
Covenants of the Shareholders
|
5.1.
|
The Shareholders covenant that during the term of this Agreement, they shall make every effort and take all necessary measures to ensure that Zhaoyan Technology can obtain all the business licenses in time and keep all the business licenses continuously valid at all time. Unless with the prior written consent of Dayin Technology, if the business period of Zhaoyan Technology expires within the term of this Agreement, Shareholders will take all necessary measures to extend the business period of Zhaoyan Technology to the expiry date of this Agreement.
|
5.2.
|
Each of the Shareholders covenants that during the term of this Agreement, unless otherwise provided by applicable PRC Law by then, without the prior written consent of Dayin Technology it shall:
|
5.2.1.
|
Not transfer or dispose of any Optioned Equity or establish any secured interests or other third party’s rights on any Optioned Equity, except for the transfer under this Agreement.
|
5.2.2.
|
Not increase or decrease the Registered Capital of Zhaoyan Technology, or vote for the increase or decrease of the aforementioned registered capital.
|
5.2.3.
|
Not dispose of or facilitate the management of Zhaoyan Technology to dispose of any Assets of Zhaoyan Technology (except in the process of normal business operations).
|
5.2.4.
|
Not terminate or facilitate the management of Zhaoyan Technology to terminate any Major Contracts or to enter into any other agreement that conflicts with any of the existing Major Contracts.
|
5.2.5.
|
Not individually or jointly facilitate Zhaoyan Technology to make transactions that may materially affect Zhaoyan Technology’s assets, responsibilities, business operations, equity structure, equity holdings in third parties and other legal rights (except for those generated in the process of normal or daily business operation, or disclosed to Dayin Technology and obtained written consent of Dayin Technology).
|
5.2.6.
|
Not appoint or replace any of the executive directors or members of the board of directors of Zhaoyan Technology (if any), supervisors or other management personnel of Zhaoyan Technology who shall be appointed and replaced by shareholders.
|
5.2.7.
|
Not announce or distribute any distributable profits, dividends or interest, or vote for the aforementioned distribution.
|
5.2.8.
|
Ensure that Zhaoyan Technology exists effectively and will not be terminated, liquidated or dissolved.
|
5.2.9.
|
Not amend the articles of association of Zhaoyan Technology or vote for the amendment of the articles of association.
|
5.2.10.
|
Ensure that Zhaoyan Technology shall not provide or borrow loans, provide guarantees or make other forms of guarantees, or undertake any substantive liabilities except for those generated in normal business operations.
|
5.3.
|
Each of the Shareholders hereby covenants that during the term of this Agreement, it shall make every effort to develop Zhaoyan Technology’s business and ensure its operating in compliance with laws and regulations. The Shareholders will not carry out any activities or omissions that may damage the assets, business reputation of Zhaoyan Technology or any acts that will affect the validity of Zhaoyan Technology’s business licenses.
|
5.4.
|
Zhaoyan Technology covenants that before the Execution of all Equity Purchase Option of Dayin Technology, without the prior written consent of Dayin Technology, it shall not:
|
5.4.1.
|
sell, transfer, mortgage or dispose of any of its own assets, business, income or other legal rights, or allow any secured interests or other third party’s rights to be established on such assets, business, income or other legal rights (except for those generated in the process of normal or daily business operation, or disclosed to Dayin Technology and obtained written consent of Dayin Technology);
|
5.4.2.
|
enter into any legal documents that may substantially affect its assets, responsibilities, operations, shareholding structure, equity holdings in third parties and other legal rights or carry out such transactions (except those generated in the process of normal or daily business operation, or disclosed to Dayin Technology and obtained written consent of Dayin Technology);
|
5.4.3.
|
distribute dividends or profit to relevant Shareholders in any form.
|
6.
|
Confidentiality
|
6.1.
|
Whether this Agreement has been terminated or not, the Shareholders shall undertake the obligation to keep confidential of (i) the signing, performance and content of the Agreement, (ii) the trade secrets, proprietary information and customer information that it has learned or received due to the signing and performance of this Agreement, and (iii) the trade secrets, proprietary information, and customer information of Zhaoyan Technology that it has learned or received as Shareholders of Zhaoyan Technology (hereinafter collectively referred to as “Confidential Information”). The Shareholders may use such Confidential Information only for the purpose of fulfilling the obligations under this Agreement. Without the written permission of Dayin Technology, the Shareholders shall not disclose the above-mentioned Confidential Information to any third party, otherwise they shall bear the liability for breach of contract and compensate for losses.
|
6.2.
|
Once this Agreement is terminated, the Shareholders shall, upon request by Dayin Technology, return, destroy or dispose in any other method with all documents, materials or software containing Confidential Information, and stop using such Confidential Information.
|
6.3.
|
Notwithstanding other provisions of this Agreement, the validity of this Article shall not be affected by the suspension or termination of this Agreement.
|
7.
|
Term
|
7.1.
|
Subject to Article 7.2 and 7.3 of this Agreement, this Agreement shall enter into force on the date of its formal signing by the Parties and shall be valid for ten (10) years, unless the Parties agree to terminate this Agreement in advance in writing, or to terminate this agreement pursuant to Article 9.1 of this Agreement. This term of agreement will be automatically extended for one (1) year after expiration, unless Dayin Technology otherwise notifies the parties of its intent not to extend at least thirty (30) days before the end of the then-current term, and so on.
|
7.2.
|
For each of the Shareholders, after all the Optioned Equity of Zhaoyan Technology held by him/her has been transferred to Dayin Technology and/or the entities or individuals designated by it in accordance with the Agreement, his/her obligations as a shareholder of Zhaoyan Technology under this Agreement shall be terminated. This Agreement will remain in full force and effect to other remaining Shareholders and their Optioned Equity.
|
7.3.
|
If Zhaoyan Technology’s business period is terminated for any reason during the term of this Agreement, this Agreement will be terminated for Zhaoyan Technology and its shareholders (within the limits of being a shareholder of Zhaoyan Technology).
|
8.
|
Notice
|
8.1.
|
All notices, requests, demands and other communications required by or in accordance with this Agreement shall be delivered to the Parties in writing.
|
8.2.
|
If the above notice or other communication is sent by facsimile, it will be deemed to have been delivered once it has been sent; if delivered in person, it will be deemed to have been delivered once delivered in person; if sent by post, it will be deemed to have been delivered five (5) days after posting.
|
9.
|
Responsibility upon Breach
|
9.1.
|
The Parties agree and acknowledge that it constitutes a breach of contract under this Agreement (hereinafter referred to as the “Breach”) if any Party (hereinafter referred to as the “Breaching Party”) materially violates any articles under this Agreement, or materially fails to perform any of its obligations under this Agreement. The injured party (hereinafter referred to as the “Non-breaching Party”) is entitled to demand the Breaching Party to make corrections or take remedial measures within a reasonable period. If the Breaching Party fails to make corrections or take remedial measures within a reasonable period or within ten (10) days upon written request made by the Non-breaching Party, the Non-breaching Party is entitled to choose at its sole discretion any of the following remedies for breach of contract: (1) to terminate this Agreement and ask for full compensation for damages from the Breaching Party; or (2) to ask for specific performance of the Breaching Party’s obligations under this Agreement and full compensate for damages from the Breaching Party at the same time
|
9.2.
|
The Parties agree and acknowledge that, except as otherwise provided by law and this Agreement, the Shareholders shall not, under any circumstances, require termination of this Agreement for any reason.
|
9.3.
|
Notwithstanding other provisions of this Agreement, the effect of this Article shall not be affected by the suspension or termination of this Agreement.
|
10.
|
Miscellaneous
|
10.1.
|
This Agreement is written in Chinese in four (4) originals. Each Party of this Agreement shall have one (1) original.
|
10.2.
|
The execution, validity, implementation, amendment, interpretation and termination of this Agreement shall be governed by PRC Law.
|
10.3.
|
Any dispute arising from and relating to this Agreement shall be first settled by the Parties through friendly negotiation. If the dispute cannot be resolved within thirty (30) days, the relevant dispute shall be submitted to Shanghai International Economic and Trade Arbitration Commission for arbitration in accordance with the arbitration rules then effective. The arbitration shall be conducted in Shanghai and the language used shall be Chinese. The decision of the arbitral tribunal shall be final and binding on the Parties.
|
10.4.
|
Any rights, powers and remedies conferred on each Party by any provision of this Agreement shall not preclude any other rights, powers or remedies that the Party enjoys in accordance with law and other provisions under this Agreement, and the exercise of a Party’s rights, powers and remedies shall not preclude the Party’s exercise of other rights, powers and remedies.
|
10.5.
|
Failure by a Party to exercise or delay in exercising any of its rights, powers and remedies under this Agreement or law (hereinafter referred to as the “Party’s Rights”) shall not result in a waiver of such rights, and the waiver of any single or part of that Party’s rights shall not preclude the Party from exercising such rights in any other ways and the other Party’s rights.
|
10.6.
|
The headings of the articles of this Agreement are for reference only. In no circumstance shall these headings be used as or affect the interpretation of the provisions of this Agreement.
|
10.7.
|
Each article of this Agreement is severable and independent to every other article. If, at any time, any one or more of the articles of this Agreement become invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining articles of this Agreement shall not be affected.
|
10.8.
|
This Agreement, once signed, supersedes any other legal documents previously signed by relevant Parties under this Agreement on the same subject.
|
10.9.
|
Any amendment or supplement of this Agreement must be made in writing and shall become effective after being duly signed by all Parties under this agreement.
|
10.10.
|
Without the prior written consent of Dayin Technology, the Shareholders shall not transfer any of their rights and/or obligations under this Agreement to any third party. Dayin Technology is entitled to transfer the rights and/or obligations under this Agreement to any third party designated by it after notifying the Shareholders.
|
10.11.
|
This Agreement is binding on the legal successors of all Parties.
|
Bin Zhao
|
|
Wenjing Ma
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature:
|
/s/ Bin Zhao
|
|
Signature:
|
/s/ Wenjing Ma
|
Shanghai Zhaoyan Network Technology Co., Ltd. (Seal)
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Signature:
|
/s/ Bin Zhao
|
|
Name: Bin Zhao
Title: Legal Representative
|
Dayin Network Technology (Shanghai) Co., Ltd. (Seal)
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Signature:
|
/s/ Bin Zhao
|
|
Name: Bin Zhao
Title: Legal Representative
|
Authorized Representative:
|
|
|
Date:
|
|
Signature: [Name of Shareholder]
|
|
Date:
|
•
|
to attract and retain the best available personnel for positions of substantial responsibility,
|
•
|
to provide additional incentive to Employees, Directors and Consultants, and
|
•
|
to promote the success of the Company’s business.
|
•
|
to attract and retain the best available personnel for positions of substantial responsibility,
|
•
|
to provide additional incentive to Employees, Directors and Consultants, and
|
•
|
to promote the success of the Company’s business.
|
Subsidiaries
|
|
Place of Incorporation
|
Agora IO Hongkong Limited
|
|
Hong Kong
|
Agora IO, Inc
|
|
Cayman Islands
|
Agora Lab, Inc.
|
|
California, United States
|
Agora.IO Ltd
|
|
United Kingdom
|
Dayin Network Technology Co., Ltd.
|
|
PRC
|
|
|
|
Variable Interest Entity
|
|
Place of Incorporation
|
Shanghai Zhaoyan Network Technology Co., Ltd.
|
|
PRC
|
|
17th Floor, One IOC, Shanghai ICC
999 Huai Hai Road
200031 Shanghai
P.R. China
T + 86 21 2412 6000
F +86 21 24126150
www.kwm.com
|
(A)
|
the genuineness of all signatures, seals and chops, and the authenticity of all documents submitted to us as originals and the conformity with authentic original documents submitted to us as copies;
|
(B)
|
the Documents as submitted to us remain in full force and effect up to the date of this Opinion, and have not been revoked, amended, revised, modified or supplemented except as otherwise indicated in such Documents;
|
(C)
|
the truthfulness, accuracy, fairness and completeness of the Documents as well as all factual statements in the Documents;
|
|
||||
Member firm of the King & Wood Mallesons network. See www.kwm.com for more information.
|
||||
Asia Pacific
|
Europe
|
North America
|
Middle East
|
|
(D)
|
that all information provided to us by the Company in response to our inquiries for the purpose of this Opinion is true, accurate, complete and not misleading and that the Company has not withheld anything that, if disclosed to us, would reasonably cause us to alter this Opinion in whole or in part;
|
(E)
|
that all parties other than the PRC Companies have the requisite power, authority, and, in the case of the PRC Individuals, capacity for civil conduct, to enter into, execute, deliver and perform the Documents to which they are parties;
|
(F)
|
that all parties other than the PRC Companies have duly executed, delivered, performed, and will duly perform their obligations under the Documents to which they are parties;
|
(G)
|
that Governmental Authorizations (as defined below) and other official statement or documentation provided to us are obtained from the competent Government Agencies by lawful means in due course;
|
(H)
|
that all Documents are legal, valid, binding and enforceable under all such laws as govern or relate to them other than PRC Laws (as defined below); and
|
(I)
|
all required consents, licenses, permits, approvals, exemptions or authorizations required of or by, and any required registrations or filings with, any governmental authority or regulatory body of any jurisdiction other than of the PRC in connection with the transactions contemplated under the Prospectus (as defined below) have been obtained or made, or where such required consents, licenses, permits, approvals, exemptions or authorizations have not been obtained or made as of the date hereof, no circumstance will cause or result in any failure for the same to be obtained or made.
|
“Control Agreements”
|
means the agreements listed in Schedule 2 hereto.
|
|
|
“CSRC”
|
means the China Securities Regulatory Commission
|
|
|
“Government Agency” or
“Government Agencies”
|
means any competent governmental authorities, agencies, courts, arbitration commissions, or regulatory bodies of the PRC or any province, autonomous region, city or other administrative division of the PRC.
|
|
|
“Governmental Authorization”
|
means any approval, consent, permit, authorization, filing, registration, exemption, waiver, endorsement, annual inspection, qualification and license required by the PRC Laws to be obtained from any Government Agency.
|
|
|
“M&A Rules”
|
means the Rules on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, which were jointly promulgated on August 8, 2006 by the Ministry of Commerce, the State-owned Assets Supervision and Administration Commission of the State Council, the State Taxation Administration, the State Administration for Industry and Commerce, CSRC and the State Administration of Foreign Exchange, became effective on September 8, 2006 and was amended on June 22, 2009.
|
|
|
“PRC Companies”
|
means the WFOE and the VIE, collectively as listed in Schedule 1.
|
|
|
“PRC Laws”
|
means any and all laws, regulations, statues, rules, decrees, notices, and supreme court’s judicial interpretations currently in force and publicly available in the PRC as of the date hereof.
|
|
|
“Prospectus”
|
means the prospectus, including all amendments or supplements thereto, that forms part of the Registration Statement.
|
|
|
“Variable Interest Entity” or “VIE”
|
means Shanghai Zhaoyan Network Technology Co., Ltd. (上海兆言网络科技有限公司)
|
|
|
“WFOE”
|
means Dayin Network Technology Co., Ltd (达音网络科技(上海)有限公司)
|
1.
|
Schedule 2 hereto sets forth a true and correct list of the Control Agreements among the WFOE, the VIE and/or all shareholders of the VIE. Based on our understanding of the current PRC Laws, (A) the ownership structure of the WFOE and the VIE set forth in Schedule 1, both currently and immediately
|
2.
|
The M&A Rules require, among other things, that offshore special purpose vehicles, or SPVs, that are controlled by PRC companies or individuals and that have been formed for overseas listing purposes through acquisitions of PRC domestic interest held by such PRC companies or individuals, to obtain the approval of the CSRC prior to publicly listing their securities on an overseas stock exchange. We are of the opinion that the Offering is not subject to the M&A Rules since (A) the WFOE was incorporated as a foreign-invested enterprise by means of foreign direct investments at the time of its incorporation rather than by merger with or acquisition of any PRC domestic companies as defined under the M&A Rules; and (B) there is no statutory provision that clearly classifies the contractual arrangement among the WFOE, the VIE and its shareholders as transactions regulated by the M&A Rules. However, there are substantial uncertainties regarding the interpretation and application of PRC Laws and future PRC laws and regulations, and there can be no assurance that the Government Agencies will take a view that is not contrary to or otherwise different from our opinion stated above.
|
3.
|
The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedure Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedure Law based either on treaties or similar arrangements between China and the jurisdiction where the judgment is made or on principles of reciprocity between jurisdictions. Under PRC law, a foreign judgment violating basic legal principles of PRC law, state sovereignty, safety or social public interest will not be recognized and enforced by a PRC court. As no treaty exists and there is limited form of reciprocity between China and the United States governing the recognition and enforcement of judgments as of the date hereof, including those predicated upon the liability provisions of the United States federal securities laws, there is uncertainty whether and on what basis a PRC court would enforce judgments rendered by United States courts.
|
4.
|
As of the date hereof, the discussions of PRC taxation in the Prospectus are true and accurate based on the PRC Laws, and the statements of law and legal conclusions in the Registration Statement under the caption “Taxation - People’s Republic of China Taxation” constitute our opinion as to the material tax consequences of an investment in the ADSs under the PRC Laws.
|
5.
|
The statements in the Prospectus under the captions “Prospectus Summary”, “Risk Factors”, “Use of Proceeds”, “Dividend Policy”, “Enforceability of Civil Liabilities” “Corporate History and Structure”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Business”, “Regulation”, “Related Party Transactions - Contractual Arrangements with our VIE and its Shareholders”, and “Taxation”, insofar as such statements describe or summarize PRC legal or regulatory matters, or documents, agreements or proceedings governed by PRC Laws, are true, accurate and correct in all material respects, and fairly present or fairly summarize in all material respects the PRC legal and regulatory matters, documents, agreements or proceedings referred to therein; and such statements do not contain an untrue statement of a material fact, and do not omit to state any material fact necessary to make the statements, in light of the circumstances under which they were made, not misleading.
|
1.
|
This Opinion is subject to (A) applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar laws affecting creditors’ rights generally, (B) possible judicial or administrative actions or any PRC Law affecting creditors’ rights. In particular, the term “enforceable” used in this Opinion does not mean the relevant agreement, contract, or other legal instrument will be necessarily enforced. Whether such documents can be actually enforced is contingent upon various factors. While a court or arbitral body may find that a person is obligated to perform its obligations under a contract binding on such person, a claim from the non-defaulting party will not be necessarily be upheld and enforced, if, for example, (i) performance of the contractual obligation is legally or factually impossible, (ii) forcible performance is unsuitable for the subject matter, or the cost to enforce performance is unduly high, or (iii) the creditor fails to demand the performance within a reasonable period (Article 110, PRC Contract Law). Enforcement of creditors’ rights may also be limited by bankruptcy, insolvency, liquidation, reorganization, force majeure event, readjustment of debts or moratorium or other laws of general application relating to or affecting the rights of creditors. Some claims may become barred under the statute of limitation or may be or become subject to defenses of set-off, counterclaim, and similar defenses. An application requesting a court to enforce a ruling or arbitral award in effect may be also be halted if a third party disputes the enforcement based on its own rights on reasonable ground, and in other circumstances provided in the PRC Law on Civil Procedure and other applicable PRC Laws.
|
2.
|
This Opinion is subject to (A) certain equitable, legal or statutory principles in affecting the enforceability of contractual rights generally under concepts of public interest, interests of the state, national security, reasonableness, good faith and fair dealing, and applicable statutes of limitation; (B) any circumstances in connection with formulation, execution or implementation of any legal documents that would be deemed materially mistaken, clearly unconscionable, fraudulent, or coercionary at the conclusions thereof; (C) judicial discretion with respect to the availability of indemnifications, remedies or defenses, the calculation of damages, the entitlement to attorney fees and other costs, the waiver of immunity from jurisdiction of any court or from legal process; and (D) the legally vested discretion of any competent PRC legislative, administrative or judicial bodies in exercising their authority in the PRC.
|
3.
|
This Opinion relates only to PRC Laws and we express no opinion as to any laws other than PRC Laws. There is no guarantee that any of such PRC Laws will not be changed, amended, replaced or revoked in the immediate future or in the longer term with or without retroactive effect.
|
4.
|
Under relevant PRC laws and regulations, foreign investment is restricted in certain businesses. The interpretation and implementation of these laws and regulations, and their application to and effect on the legality, binding effect and enforceability of contracts and transactions are subject to the discretion of competent PRC legislative, administrative and judicial authorities.
|
5.
|
This Opinion is limited to paragraph 1 to 5 above only.
|
|
Full Name
|
Shareholder(s)
|
Percentage(s) of Equity Interests Owned
|
1.
|
Dayin Network Technology Co., Ltd. (达音网络科技(上海)有限公司)
|
Agora IO Hongkong Limited
|
100%
|
2.
|
Shanghai Zhaoyan Network Technology Co., Ltd. (上海兆言网络科技有限公司)
|
Zhao Bin (赵斌)
|
90%
|
Ma Wenjing (马文静)
|
10%
|
1.
|
The Exclusive Technology Consulting and Services Agreement entered into by the WFOE and the VIE on June 18, 2015;
|
2.
|
The Voting Rights Proxy Agreement entered into by the WFOE, the VIE and all shareholders of the VIE on June 18, 2015;
|
3.
|
The Share Pledge Agreement entered into by the WFOE, the VIE and all shareholders of the VIE on June 18, 2015; and
|
4.
|
The Exclusive Option Agreement entered into by the WFOE, the VIE and all shareholders of the VIE on June 18, 2015.
|
5.
|
The Power of Attorney of Bin (Tony) Zhao pursuant to the Voting Rights Proxy Agreement, dated as of June 18, 2015
|
6.
|
The Power of Attorney of Wenjing Ma pursuant to the Voting Rights Proxy Agreement, dated as of June 18, 2015
|
Sincerely yours,
|
|
|
|
/s/ Jenny Hong Wei Lee
|
|
Name:
|
Jenny Hong Wei Lee
|
Sincerely yours,
|
|
|
|
/s/ Eric He
|
|
Name:
|
Eric He
|