Exhibit 4.46

 

EXECUTION VERSION

 


 



AGREEMENT AND PLAN OF MERGER

 

among

 

ALI YK INVESTMENT HOLDING LIMITED,

 

ALI YK SUBSIDIARY HOLDING LIMITED,

 

YOUKU TUDOU INC.,

 

and

 

solely for purposes of Section 9.08, Section 9.09 and Section 9.10 hereof,

 

ALIBABA INVESTMENT LIMITED

 

Dated as of November 6, 2015

 


 













 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    
	
Article I
    
	
 
    
	
THE MERGER
    
	
SECTION 1.01
    	
The Merger
    	
1
    
	
SECTION 1.02
    	
Closing; Closing Date
    	
2
    
	
SECTION 1.03
    	
Effective Time
    	
2
    
	
SECTION 1.04
    	
Memorandum and Articles   of Association of Surviving Company
    	
2
    
	
SECTION 1.05
    	
Directors and Officers
    	
2
    
	
 
    
	
Article II
    
	
 
    
	
EFFECT ON ISSUED SECURITIES; EXCHANGE OF   CERTIFICATES
    
	
 
    	
 
    	
 
    
	
SECTION 2.01
    	
Effect of Merger on   Issued Securities
    	
3
    
	
SECTION 2.02
    	
Share Incentive Plans   and Outstanding Company Share Awards
    	
3
    
	
SECTION 2.03
    	
Dissenting Shares
    	
4
    
	
SECTION 2.04
    	
Exchange of Share   Certificates, etc.
    	
5
    
	
SECTION 2.05
    	
No Transfers
    	
8
    
	
SECTION 2.06
    	
Termination of Deposit   Agreement
    	
8
    
	
SECTION 2.07
    	
Agreement of Fair Value
    	
8
    
	
 
    
	
Article III
    
	
 
    
	
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
    
	
 
    	
 
    	
 
    
	
SECTION 3.01
    	
Organization and   Qualification
    	
9
    
	
SECTION 3.02
    	
Memorandum and Articles   of Association
    	
9
    
	
SECTION 3.03
    	
Capitalization
    	
9
    
	
SECTION 3.04
    	
Authority Relative to   this Agreement; Fairness
    	
11
    
	
SECTION 3.05
    	
No Conflict; Required   Filings and Consents
    	
12
    
	
SECTION 3.06
    	
Permits; Compliance   with Laws
    	
13
    
	
SECTION 3.07
    	
SEC Filings; Financial   Statements
    	
14
    
	
SECTION 3.08
    	
Absence of Certain   Changes or Events
    	
16
    
	
SECTION 3.09
    	
Absence of Litigation
    	
17
    
	
SECTION 3.10
    	
Labor and Employment   Matters; Employee Plans
    	
17
    
	
SECTION 3.11
    	
Real Property
    	
19
    
	
SECTION 3.12
    	
Intellectual Property
    	
19
    
	
SECTION 3.13
    	
Taxes
    	
21
    
	
SECTION 3.14
    	
Indebtedness and   Security
    	
22
    
	
SECTION 3.15
    	
Material Contracts
    	
23
    
	
SECTION 3.16
    	
Environmental Matters
    	
25
    
	
SECTION 3.17
    	
Operating Subsidiaries
    	
25
    
	
SECTION 3.18
    	
Interested Party   Transactions
    	
25
    
	
SECTION 3.19
    	
Insurance
    	
26
    
	
SECTION 3.20
    	
Anti-Takeover   Provisions
    	
26
    


 











 

	
SECTION 3.21
    	
Brokers
    	
26
    
	
SECTION 3.22
    	
No Other   Representations and Warranties
    	
26
    
	
 
    
	
Article IV
    
	
 
    
	
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER   SUB
    
	
 
    	
 
    	
 
    
	
SECTION 4.01
    	
Corporate Organization
    	
26
    
	
SECTION 4.02
    	
Capitalization of   Merger Sub; No Prior Activities
    	
26
    
	
SECTION 4.03
    	
Authority Relative to   This Agreement
    	
27
    
	
SECTION 4.04
    	
No Conflict; Required   Filings and Consents
    	
27
    
	
SECTION 4.05
    	
Sufficient Funds
    	
28
    
	
SECTION 4.06
    	
Brokers
    	
28
    
	
SECTION 4.07
    	
Absence of Litigation
    	
28
    
	
SECTION 4.08
    	
Non-Reliance on Company   Estimates
    	
28
    
	
SECTION 4.09
    	
Independent   Investigation
    	
29
    
	
SECTION 4.10
    	
No Other   Representations and Warranties
    	
29
    
	
 
    
	
Article V
    
	
 
    
	
CONDUCT OF BUSINESS PENDING THE MERGER
    
	
 
    	
 
    	
 
    
	
SECTION 5.01
    	
Conduct of Business by   the Company Pending the Merger
    	
29
    
	
 
    
	
Article VI
    
	
 
    
	
ADDITIONAL AGREEMENTS
    
	
 
    	
 
    	
 
    
	
SECTION 6.01
    	
Proxy Statement and   Schedule 13E-3
    	
33
    
	
SECTION 6.02
    	
Company Shareholders’   Meeting
    	
34
    
	
SECTION 6.03
    	
Access to Information
    	
35
    
	
SECTION 6.04
    	
No Solicitation of   Transactions
    	
36
    
	
SECTION 6.05
    	
Directors’ and   Officers’ Indemnification and Insurance
    	
39
    
	
SECTION 6.06
    	
Notification of Certain   Matters
    	
40
    
	
SECTION 6.07
    	
Further Action;   Reasonable Best Efforts
    	
41
    
	
SECTION 6.08
    	
Participation in   Litigation
    	
42
    
	
SECTION 6.09
    	
Resignations
    	
42
    
	
SECTION 6.10
    	
Public Announcements
    	
42
    
	
SECTION 6.11
    	
Stock Exchange   Delisting
    	
42
    
	
SECTION 6.12
    	
Takeover Statutes
    	
43
    
	
SECTION 6.13
    	
SAFE Registration
    	
43
    
	
SECTION 6.14
    	
Other Actions
    	
43
    
	
 
    
	
Article VII
    
	
 
    
	
CONDITIONS TO THE MERGER
    
	
 
    	
 
    	
 
    
	
SECTION 7.01
    	
Conditions to the   Obligations of Each Party
    	
43
    
	
SECTION 7.02
    	
Conditions to the   Obligations of Parent and Merger Sub
    	
43
    
	
SECTION 7.03
    	
Conditions to the   Obligations of the Company
    	
44
    
	
SECTION 7.04
    	
Frustration of Closing   Conditions
    	
44
    


 

ii











 

	
Article VIII
    
	
 
    
	
TERMINATION, AMENDMENT AND WAIVER
    
	
 
    	
 
    	
 
    
	
SECTION 8.01
    	
Termination
    	
45
    
	
SECTION 8.02
    	
Effect of Termination
    	
46
    
	
SECTION 8.03
    	
Fees and Expenses
    	
46
    
	
SECTION 8.04
    	
Limitations on   Liabilities
    	
48
    
	
SECTION 8.05
    	
Amendment
    	
48
    
	
SECTION 8.06
    	
Waiver
    	
49
    
	
 
    
	
Article IX
    
	
 
    
	
GENERAL PROVISIONS
    
	
 
    	
 
    	
 
    
	
SECTION 9.01
    	
Non-Survival of   Representations, Warranties and Agreements
    	
49
    
	
SECTION 9.02
    	
Notices
    	
49
    
	
SECTION 9.03
    	
Certain Definitions and   Interpretations
    	
50
    
	
SECTION 9.04
    	
Severability
    	
59
    
	
SECTION 9.05
    	
Entire Agreement;   Assignment
    	
60
    
	
SECTION 9.06
    	
Parties in Interest
    	
60
    
	
SECTION 9.07
    	
Specific Performance
    	
60
    
	
SECTION 9.08
    	
Guarantee
    	
60
    
	
SECTION 9.09
    	
Governing Law;   Jurisdiction
    	
60
    
	
SECTION 9.10
    	
Waiver of Jury Trial
    	
61
    
	
SECTION 9.11
    	
Headings
    	
61
    
	
SECTION 9.12
    	
Counterparts
    	
61
    


 

ANNEX A             Form of Plan of Merger

 

Company Disclosure Schedule

 

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AGREEMENT AND PLAN OF MERGER, dated as of November 6, 2015 (this “Agreement”), among Ali YK Investment Holding Limited, an exempted company with limited liability incorporated under the laws of the Cayman Islands (“Parent”), Ali YK Subsidiary Holding Limited, an exempted company with limited liability incorporated under the laws of the Cayman Islands and a wholly-owned subsidiary of Parent (“Merger Sub”), Youku Tudou Inc., an exempted company with limited liability incorporated under the laws of the Cayman Islands (the “Company”), and, solely for purposes of Section 9.08, Section 9.09 and Section 9.10 hereof, Alibaba Investment Limited, a business company incorporated under the laws of the British Virgin Islands (“AIL”).

 

WHEREAS, upon the terms and subject to the conditions of this Agreement and in accordance with the Companies Law (2013 Revision, as amended from time to time) of the Cayman Islands (the “CICL”), Parent and the Company will enter into a business combination transaction pursuant to which Merger Sub will merge with and into the Company (the “Merger”), with the Company being the surviving company in the Merger and becoming a wholly-owned subsidiary of Parent as a result of the Merger;

 

WHEREAS, the board of directors of the Company (the “Company Board”), acting upon the unanimous recommendation of the special committee of independent directors of the Company Board (the “Special Committee”), has (i) determined that it is in the best interests of the Company and its shareholders (other than Parent), and declared it advisable, to enter into this Agreement and the Plan of Merger, (ii) approved the execution, delivery and performance of this Agreement and the Plan of Merger and the consummation of the transactions contemplated hereby and thereby, including the Merger (collectively, the “Transactions”), and (iii) resolved to recommend the approval of this Agreement, the Plan of Merger and the Transactions by the shareholders of the Company at the Shareholders’ Meeting;

 

WHEREAS, the boards of directors of each of Parent and Merger Sub have (i) approved the execution, delivery and performance by Parent and Merger Sub, respectively, of this Agreement, the Plan of Merger and the consummation of the Transactions, and (ii) declared it advisable for Parent and Merger Sub, respectively, to enter into this Agreement and the Plan of Merger; and

 

WHEREAS, Parent, acting in the capacity as the sole shareholder of Merger Sub, has approved the execution, delivery and performance by Merger Sub of this Agreement, the Plan of Merger and the consummation of the Transactions.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, Parent, Merger Sub and the Company hereby agree as follows:

 

ARTICLE I

 

THE MERGER

 

SECTION 1.01                                      The Merger.  Upon the terms of this Agreement and subject to the conditions set forth in Article VII, and in accordance with the CICL, at the Effective Time, Merger Sub shall be merged with and into the Company.  As a result of the Merger, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the

 











 

surviving company of the Merger (the “Surviving Company”) under the Laws of the Cayman Islands as a wholly-owned subsidiary of Parent.

 

SECTION 1.02                                      Closing; Closing Date.  The closing of the Merger (the “Closing”) shall take place at 9:00 p.m. (Hong Kong time) on the fifth (5th) Business Day immediately following the satisfaction or waiver of the conditions set forth in Article VII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions), or another date or time agreed in writing by the Company and Parent (the “Closing Date”) at the offices of Simpson Thacher & Bartlett, 35/F ICBC Tower, 3 Garden Road, Central, Hong Kong, or at another place agreed in writing by the Company and Parent; provided that notwithstanding the satisfaction or waiver of the conditions set forth in Article VII, if Parent has made a Specified Filing for which it has not received consent or approval for the Merger from the applicable Governmental Authority, Parent and Merger Sub shall not be required to effect the Closing until the earlier of the date that is (a) the fifth (5th) Business Day immediately following receipt by Parent of approval or consent to the Merger from the applicable Governmental Authority pursuant to such Specified Filing and (b) one (1) Business Day prior to the Termination Date (as extended pursuant to Section 8.01(b)(i), if applicable).

 

SECTION 1.03                                      Effective Time.  Subject to the provisions of this Agreement, on the Closing Date, Merger Sub and the Company shall execute a plan of merger (the “Plan of Merger”) substantially in the form set out in Annex A and the parties shall file the Plan of Merger and other documents required under the CICL to effect the Merger with the Registrar of Companies of the Cayman Islands as provided by Section 233 of the CICL.  The Merger shall become effective on the date specified in the Plan of Merger (the “Effective Time”).

 

SECTION 1.04                                      Memorandum and Articles of Association of Surviving Company.  At the Effective Time, the memorandum and articles of association of the Surviving Company shall be amended to read in their entirety the same as the memorandum and articles of association of Merger Sub as in effect immediately prior to the Effective Time (which shall include the provisions required by Section 6.05(a)), until thereafter amended as provided by Law and such memorandum and articles of association; provided, however, that, at the Effective Time, (a) all references in the memorandum and articles of association to the name of the Surviving Company shall be amended to refer to “Youku Tudou Inc.” and (b) references therein to the authorized share capital of the Surviving Company shall be amended to refer to the authorized share capital of the Surviving Company as approved in the Plan of Merger.

 

SECTION 1.05                                      Directors and Officers.  The parties hereto shall take all actions necessary so that (a) the directors of Merger Sub immediately prior to the Effective Time shall be the initial directors of the Surviving Company as set out in the Plan of Merger, and (b) the officers (other than the directors) of the Company immediately prior to the Effective Time shall be the initial officers of the Surviving Company, in each case, unless otherwise determined by Parent prior to the Effective Time, and until their respective successors are duly elected or appointed and qualified or until the earlier of their death, resignation or removal in accordance with the memorandum and articles of association of the Surviving Company.

 

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ARTICLE II

 

EFFECT ON ISSUED SECURITIES; EXCHANGE OF CERTIFICATES

 

SECTION 2.01                                      Effect of Merger on Issued Securities.  At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the holders of any securities of the Company:

 

(a)                                 (i) Each Class A ordinary share, par value US$0.00001 per share, of the Company (a “Class A Ordinary Share” or, collectively, the “Class A Ordinary Shares”), including Class A Ordinary Shares represented by American Depositary Shares, each representing eighteen (18) Class A Ordinary Shares (the “ADSs”), issued and outstanding immediately prior to the Effective Time, and each Class B ordinary share, par value US$0.00001 per share, of the Company (a “Class B Ordinary Share” or, collectively, the “Class B Ordinary Shares”, and together with Class A Ordinary Shares, each an “Ordinary Share” and, collectively, the “Ordinary Shares”), other than (A) any Parent Shares, (B) any Dissenting Shares, (C) any Ordinary Shares owned by any Group Company (if any), and (D) any Ordinary Shares (including Ordinary Shares held by the Depositary in respect of ADSs) reserved (but not yet allocated) by the Company, immediately prior to the Effective Time, for issuance and allocation upon exercise of any Company Share Awards (collectively, the “Excluded Shares”), shall be cancelled and shall thereafter represent the right to receive an amount in cash (in United States dollars) per Ordinary Share equal to one eighteenth of the Per ADS Merger Consideration (as defined below) without interest (the “Per Share Merger Consideration”) pursuant to the terms and conditions set forth in this Agreement, and as each ADS represents eighteen (18) Ordinary Shares, each ADS issued and outstanding immediately prior to the Effective Time (other than ADSs that represent Excluded Shares) shall represent the right to surrender the ADS in exchange for US$27.60 in cash per ADS without interest (the “Per ADS Merger Consideration”), pursuant to the terms and conditions set forth in this Agreement and the Deposit Agreement; and (ii) the register of members of the Company will be amended accordingly.

 

(b)                                 Each Excluded Share (other than the Dissenting Shares), including Excluded Shares represented by ADSs (other than ADSs that represent the Dissenting Shares), issued and outstanding immediately prior to the Effective Time, by virtue of the Merger and without any action on the part of its holder, shall be cancelled and cease to exist without payment of any consideration or distribution therefor, and the register of members of the Company shall be amended accordingly.

 

(c)                                  Each ordinary share, par value US$1.00 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into one (1) validly issued, fully paid and non-assessable ordinary share, par value US$1.00 per share, of the Surviving Company.  Such ordinary shares shall be the only issued and outstanding share capital of the Surviving Company, and the Surviving Company shall make entries in its register of members to reflect the holder of ordinary shares of Merger Sub immediately prior to the Effective Time as the holder of the ordinary shares of the Surviving Company immediately after the Effective Time.

 

SECTION 2.02                                      Share Incentive Plans and Outstanding Company Share Awards. (a)  As soon as practicable following the date hereof, the Company, the Company Board or the compensation committee of the Company Board, as applicable, shall (i) terminate the Share Incentive Plans, and any relevant award agreements applicable to the

 

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Share Incentive Plans, as of the Effective Time, (ii) cancel each Company Share Award that is outstanding and unexercised, whether or not vested or exercisable, as of the Effective Time, and (iii) otherwise effectuate the provisions of this Section 2.02.  From and after the Effective Time, neither Parent nor the Surviving Company shall be required to issue any Ordinary Shares, other share capital of the Company or the Surviving Company or any other consideration (other than as required by this Section 2.02) to any person pursuant to or in settlement of any Company Share Award.

 

(b)                                 Each former holder of a Vested Company Option that is cancelled at the Effective Time shall, in exchange therefor, be paid by or at the direction of the Surviving Company or one of its Subsidiaries, as soon as practicable after the Effective Time (without interest), a cash amount equal to the product of (i) the excess, if any, of the Per Share Merger Consideration over the Exercise Price of such Vested Company Option and (ii) the number of Ordinary Shares underlying such Vested Company Option, net of any applicable withholding taxes; provided that if the Exercise Price of any such Vested Company Option is equal to or greater than the Per Share Merger Consideration, such Vested Company Option shall be cancelled without any payment therefor.

 

(c)                                  Each former holder of an Unvested Company Option and/or Company Restricted Share Award that is cancelled at the Effective Time shall, in exchange therefor, receive as soon as practicable after the Effective Time, a restricted cash award (“RCA”) in an amount in cash that is the equivalent of, (i) in the case of an Unvested Company Option, the product of (A) the excess, if any, of the Per Share Merger Consideration over the Exercise Price of such Unvested Company Option and (B) the number of Ordinary Shares, underlying such Unvested Company Option, and (ii) in the case of a Company Restricted Share Award, the product of (A) the Per Share Merger Consideration and (B) the number of Ordinary Shares underlying such Company Restricted Share Award; provided that, if the Exercise Price of any such Unvested Company Option is equal to or greater than the Per Share Merger Consideration, such Unvested Company Option shall be cancelled without any payment therefor.  Any RCA issued by Parent or the Surviving Company in respect of any Unvested Company Option or Company Restricted Share Award shall be subject to the same vesting conditions and schedules applicable to such Unvested Company Option or Company Restricted Share Award without giving effect to the Transactions, and on the date, and to the extent, that any Unvested Company Option or Company Restricted Share Award would have become vested without giving effect to the Transactions, such corresponding portion of the RCA shall be delivered to the holder of such RCA, net of any applicable withholding taxes, as soon as practicable thereafter.

 

(d)                                 As of the Effective Time, all Company Share Awards shall automatically cease to exist, and each holder of a Company Share Award shall cease to have any rights with respect thereto, except the right to receive the cash payment and/or the RCAs as provided in this Section 2.02.  Promptly following the date hereof, the Company shall deliver written notice to each holder of each Share Award informing such holder of the effect of the Merger on such Share Award.

 

SECTION 2.03                                      Dissenting Shares.  (a)  Notwithstanding any provision of this Agreement to the contrary and to the extent available under the CICL, Shares that are issued and outstanding immediately prior to the Effective Time and that are held by shareholders who shall have validly exercised and not effectively withdrawn or lost their rights to dissent from the Merger (“dissenter’s rights”) in accordance with Section 238 of the CICL (collectively, the “Dissenting Shares”; holders of Dissenting Shares being referred to as

 

4











 

“Dissenting Shareholders”) shall at the Effective Time be cancelled and cease to exist, and each such Dissenting Shareholder shall be entitled to receive only the payment of the fair value of such Dissenting Shares held by them in accordance with the provisions of Section 238 of the CICL, except that all Shares held by Dissenting Shareholders who shall have failed to exercise or who effectively shall have withdrawn or lost their dissenter’s rights in respect of such Shares under Section 238 of the CICL shall thereupon (i) not be deemed to be Dissenting Shares and (ii) be and be deemed to have been cancelled and cease to exist, as of the Effective Time, in consideration for the right of the holder thereof to receive the Per Share Merger Consideration, without any interest thereon, in the manner provided in Section 2.04.

 

(b)                                 The Company shall give Parent (i) prompt notice of any objection or dissent to the Merger or demands for appraisal received by the Company, attempted withdrawals of such dissenter’s rights or demands, and any other instruments or proceedings served pursuant to the CICL or applicable Law and received by the Company relating to the Transactions or its shareholders’ dissenter’s rights, and (ii) the opportunity to direct all negotiations and proceedings with respect to any exercise of dissenter’s rights or any demands for appraisal under the CICL or applicable Law.  The Company shall not, except with the prior written consent of Parent, make any payment with respect to any exercise of dissenter’s rights or any demands for appraisal or offer to settle or settle any such dissenter’s rights or any demands or approve any withdrawal of any such dissenter’s rights or demands.

 

(c)                                  In the event that any written notices of objection to the Merger are served by any shareholders of the Company pursuant to Section 238(2) of the CICL, the Company shall serve written notice of the authorization of the Merger on such shareholders pursuant to Section 238(4) of the CICL within two (2) days of the approval of the Merger by shareholders of the Company at the Shareholders’ Meeting.

 

SECTION 2.04                                      Exchange of Share Certificates, etc.  (a)  Paying Agent.  Prior to the Effective Time, Parent shall appoint a bank or trust company that is reasonably satisfactory to the Company (such consent not to be unreasonably withheld, conditioned or delayed) to act as paying agent (the “Paying Agent”) for all payments required to be made pursuant to Section 2.01(a) and the exception set forth in Section 2.03(a) (collectively, the “Merger Consideration”).  Prior to the Effective Time, Parent shall deposit, or cause to be deposited, with the Paying Agent, for the benefit of the holders of Ordinary Shares and ADSs (other than Excluded Shares), cash in an amount sufficient to pay the Merger Consideration (such cash being hereinafter referred to as the “Exchange Fund”).

 

(b)                                 Exchange Procedures.  As promptly as practicable after the Effective Time, the Surviving Company shall cause the Paying Agent to mail (or in the case of the Depositary, deliver) or otherwise disseminate to each person who was, at the Effective Time, a registered holder of Ordinary Shares entitled to receive the Per Share Merger Consideration pursuant to Section 2.01(a):  (i) a letter of transmittal (which shall be in customary form for a company incorporated in the Cayman Islands reasonably acceptable to Parent and the Company, and shall specify the manner in which the delivery of the Exchange Fund to registered holders of Ordinary Shares (other than Excluded Shares) shall be effected and contain such other provisions as Parent and the Company may mutually agree); and (ii) instructions for use in effecting the surrender of any issued share certificates representing Ordinary Shares (the “Share Certificates”) (or affidavits and indemnities of loss in lieu of the Share Certificates as provided in Section 2.04(c)) and/or such other documents as may be required in exchange for the Per Share Merger Consideration.  Upon surrender of, if

 

5











 

applicable, a Share Certificate (or affidavit and indemnity of loss in lieu of the Share Certificate as provided in Section 2.04(c)) and/or such other documents as may be required pursuant to such instructions to the Paying Agent in accordance with the terms of such letter of transmittal, duly executed in accordance with the instructions thereto, each registered holder of Ordinary Shares represented by such Share Certificate and each registered holder of Ordinary Shares which are not represented by a Share Certificate (the “Uncertificated Shares”) shall be entitled to receive in exchange therefor a check, in the amount equal to (x) the number of Ordinary Shares represented by such Share Certificate (or affidavit and indemnity of loss in lieu of the Share Certificate as provided in Section 2.04(c)) or the number of Uncertificated Shares multiplied by (y) the Per Share Merger Consideration, and the Share Certificate so surrendered shall forthwith be marked as cancelled.  Prior to the Effective Time, Parent and the Company shall establish procedures with the Paying Agent and the Depositary to ensure that (A) the Paying Agent will transmit to the Depositary as promptly as reasonably practicable following the Effective Time (but in any event not later than five (5) Business Days thereafter) an amount in cash in immediately available funds equal to the product of (x) the number of ADSs issued and outstanding immediately prior to the Effective Time (other than ADSs representing the Excluded Shares) and (y) the Per ADS Merger Consideration, and (B) the Depositary will distribute the Per ADS Merger Consideration to holders of ADSs pro rata to their holdings of ADSs (other than ADSs representing the Excluded Shares) upon surrender by them of the ADSs.  The holders of ADSs shall bear any applicable fees, charges and expenses of the Depositary and government charges due to or incurred by the Depositary in connection with distribution of the Per ADS Merger Consideration to holders of ADSs, including applicable ADS cancellation fees, and any such fees, charges and expenses incurred by the Depositary shall be treated for all purposes of this Agreement as having been paid to the holders of ADSs.  No interest shall be paid or will accrue on any amount payable in respect of the Ordinary Shares or ADSs pursuant to the provisions of this Article II.  In the event of a transfer of ownership of Ordinary Shares that is not registered in the register of members of the Company, the Per Share Merger Consideration in respect of such Ordinary Shares may be paid to such transferee upon delivery of evidence to the satisfaction of Parent (or any agent designated by Parent) of such transferee’s entitlement to the relevant Ordinary Shares and to receive the Per Share Merger Consideration, to the exclusion of the applicable transferor and evidence that any applicable share transfer taxes have been paid or are not applicable.

 

(c)                                  Lost Certificates.  If any Share Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Share Certificate to be lost, stolen or destroyed and, if required by the Surviving Company, the posting by such person of a bond, in such reasonable amount as the Surviving Company may direct, as indemnity against any claim that may be made against it with respect to such Share Certificate, the Paying Agent will pay in respect of the Ordinary Shares represented by such lost, stolen or destroyed Share Certificate an amount equal to the Per Share Merger Consideration multiplied by the number of Ordinary Shares represented by such Share Certificate to which the holder thereof is entitled pursuant to Section 2.01(a).

 

(d)                                 Untraceable Shareholders.  Remittances for the Per Share Merger Consideration shall not be sent to holders of Ordinary Shares who are untraceable unless and until, except as provided below, they notify the Paying Agent of their current contact details prior to the Effective Time.  A holder of Ordinary Shares will be deemed to be untraceable if (i) such person has no registered address in the register of members maintained by the Company or, (ii) on the last two consecutive occasions on which a dividend has been paid by

 

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the Company a check payable to such person either (x) has been sent to such person and has been returned undelivered or has not been cashed or, (y) has not been sent to such person because on an earlier occasion a check for a dividend so payable has been returned undelivered, and in any such case no valid claim in respect thereof has been communicated in writing to the Company or, (iii) notice of the Shareholders’ Meeting convened to vote on the Merger has been sent to such person and has been returned undelivered.  Dissenting Shareholders and holders of Ordinary Shares who are untraceable who subsequently wish to receive any monies otherwise payable in respect of the Merger within applicable time limits or limitation periods will be advised to contact the Surviving Company.

 

(e)                                  Adjustments to Merger Consideration.  The Per Share Merger Consideration and the Per ADS Merger Consideration shall be adjusted to reflect appropriately the effect of any share split, reverse share split, share dividend (including any dividend or distribution of securities convertible into Ordinary Shares), extraordinary cash dividends, reorganization, recapitalization, reclassification, combination, exchange of shares, change or readjustment in the ratio of Ordinary Shares represented by each ADS or other like change with respect to Ordinary Shares occurring, or with a record date, on or after the date hereof and prior to the Effective Time.

 

(f)                                   Investment of Exchange Fund.  The Exchange Fund, pending its disbursement to the holders of Ordinary Shares and ADSs, shall be invested by the Paying Agent as directed by Parent or, after the Effective Time, the Surviving Company in (a) short-term direct obligations of the United States of America, (b) short-term obligations for which the full faith and credit of the United States of America is pledged to provide for the payment of principal and interest, or (c) short-term commercial paper rated the highest quality by either Moody’s Investors Service, Inc. or Standard & Poor’s Corporation or certificates of deposit, bank repurchase agreements or banker’s acceptances of commercial banks acceptable to Parent.  Earnings from investments shall be the sole and exclusive property of Parent and the Surviving Company.

 

(g)                                  Termination of Exchange Fund.  Any portion of the Exchange Fund (including any income or proceeds thereof or of any investment thereof) that remains undistributed to the holders of Ordinary Shares or ADSs for nine (9) months after the Effective Time shall automatically and promptly be delivered to the Surviving Company, and any holders of Ordinary Shares or ADSs (other than Excluded Shares) that were issued and outstanding immediately prior to the Effective Time who have not theretofore complied with this Article II, shall thereafter look only to the Surviving Company for the cash to which they are entitled pursuant to Sections 2.01(a).  Any portion of the Exchange Fund remaining unclaimed by holders of Ordinary Shares or ADSs as of a date which is immediately prior to such time as such amounts would otherwise escheat to or become property of any Governmental Authority shall, to the extent permitted by applicable Law, become the property of the Surviving Company free and clear of any claims or interest of any person previously entitled thereto.

 

(h)                                 No Liability.  None of the Paying Agent, Parent or the Surviving Company shall be liable to any holder of Ordinary Shares in respect of any such Ordinary Shares (including Ordinary Shares represented by ADSs) or Company Share Awards (or dividends or distributions with respect thereto) for which payment was delivered to a public official pursuant to any abandoned property, escheat or similar Law.

 

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(i)                                     Withholding Rights.  Each of Parent, the Surviving Company, the Paying Agent and the Depositary (and any other Person that has a payment obligation pursuant to this Agreement), as applicable, shall be entitled to deduct and withhold from any amounts payable pursuant to this Agreement such amounts as it reasonably determines it is required to deduct and withhold with respect to the making of such payment under any provisions of applicable Law.  In the event that Parent or Merger Sub determines that any deduction or withholding is required to be made from any Merger Consideration payable pursuant to this Agreement, Parent or Merger Sub, as applicable, shall promptly inform the Company in writing of such determination and consult with the Company in good faith regarding such determination. To the extent that any such amounts are deducted, withheld and remitted to the applicable Governmental Authority by Parent, the Surviving Company, the Paying Agent or the Depositary, as the case may be, such amounts shall be treated for all purposes of this Agreement as having been paid to the recipients in respect of which such deduction and withholding was made by Parent, the Surviving Company, the Paying Agent or the Depositary, as the case may be.  Each former holder of Ordinary Shares, ADSs or Company Share Awards shall be personally responsible for the proper reporting and payment of all Taxes related to any Merger Consideration or amounts paid under Section 2.02, as applicable, payable by such holder under this Agreement.

 

SECTION 2.05                                      No Transfers.  From and after the Effective Time, (a) no transfers of Ordinary Shares shall be effected in the register of members of the Company, and (b) the holders of Ordinary Shares (including Ordinary Shares represented by ADSs) outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Ordinary Shares, except as otherwise provided in this Agreement or by Law.  On or after the Effective Time, any Share Certificates presented to the Paying Agent, Parent or Surviving Company for transfer or any other reason shall be canceled and (except for the Excluded Shares) exchanged for the cash consideration to which the holders thereof are entitled pursuant to Section 2.01(a).

 

SECTION 2.06                                      Termination of Deposit Agreement.  As soon as reasonably practicable after the Effective Time, the Surviving Company shall provide notice to Citibank, N.A. (the “Depositary”) to terminate the deposit agreement, dated as of December 8, 2010 between the Company, the Depositary and the Holders and Beneficial Owners of American Depositary Shares issued thereunder (the “Deposit Agreement”) in accordance with its terms.

 

SECTION 2.07                                      Agreement of Fair Value.  Parent, Merger Sub and the Company agree that the Per Share Merger Consideration represents the fair value of the Ordinary Shares for the purposes of Section 238(8) of the CICL.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except as set forth in (a) the section of the Company Disclosure Schedule that corresponds to a section of this Article III or any other section of the Company Disclosure Schedule to the extent that it is readily apparent that such information qualifies a section of this Article III, or (b) the Company SEC Reports filed prior to the date hereof (without giving effect to any amendment to any such Company SEC Reports filed on or after the date hereof and excluding disclosures in the Company SEC Reports contained in the “Risk Factors” or “Forward Looking Statements” sections or any other forward-looking statements or other disclosures to the extent they are general, non-specific, forward-looking or cautionary in

 

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nature, in each case, other than specific factual information contained therein), the Company hereby represents and warrants to Parent and Merger Sub that:

 

SECTION 3.01                                      Organization and Qualification.  (a)  The Company is an exempted company duly organized, validly existing and in good standing under the Laws of the Cayman Islands and has the requisite corporate or similar power and authority to own, lease, operate and use its properties and assets and to carry on its business as it is now being conducted.  Each Subsidiary of the Company is a legal entity duly organized, validly existing and, where such concept is recognized, in good standing under the laws of the jurisdiction of its organization and has the requisite corporate or similar power and authority to own, lease, operate and use its properties and assets and to carry on its business as it is now being conducted, except to the extent the failure of any such Subsidiary to be so organized, existing or in good standing has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.  Each of the Company and each Subsidiary of the Company is duly qualified or licensed to do business, and is in good standing, where such concept is recognized, in each jurisdiction where the character of the properties and assets owned, leased, operated or used by it or the nature of its business makes such qualification or licensing necessary, except to the extent such failures to be so qualified or licensed or in good standing has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

 

(b)                                 A true and complete list of all Subsidiaries of the Company and any other entities in which any Group Company owns any equity interest, together with (i) the jurisdiction of organization of each such Subsidiary or entity, (ii) the outstanding issued share capital or registered capital, as the case may be, of each such Subsidiary or entity, and (iii) a list of shareholders or other equity holders of, and their respective percentage ownership in, each such Subsidiary or entity, is set forth in Section 3.01(b) of the Company Disclosure Schedule. There are no other entities in which any Group Company controls or owns, of record or beneficially, any direct or indirect equity or other interest or right (contingent or otherwise) to acquire the same, and neither the Company nor any of its Subsidiaries is a participant in (nor is any part of their businesses conducted through) any joint venture, partnership or similar arrangement that is material to the business of the Company and its Subsidiaries, taken as a whole.

 

SECTION 3.02                                      Memorandum and Articles of Association.  The Company has heretofore furnished or otherwise made available to Parent a complete and correct copy of (a) the memorandum and articles of association or equivalent organizational documents, each as amended or modified as of the date hereof, of the Company and (b) the memorandum and articles of association or equivalent organizational documents of each Subsidiary of the Company, and all material amendments and modifications thereto as of the date hereof.  Such memorandum and articles of association or equivalent organizational documents are in full force and effect as of the date hereof.  No Group Company is in violation of any of the provisions of its memorandum and articles of association or equivalent organizational documents in any material respect.

 

SECTION 3.03                                      Capitalization.  (a) (i) The authorized share capital of the Company is US$100,000 divided into 9,340,238,793 Class A Ordinary Shares of a par value US$0.00001 per share and 659,761,207 Class B Ordinary Shares of a par value $0.00001 per share.  As of the date of this Agreement, (1) 2,880,578,665 Class A Ordinary Shares are issued and outstanding, all of which have been duly authorized and are validly issued, fully paid and non-assessable, (2) 36,749,878 Class A Ordinary Shares are represented by ADSs

 

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held by the Depositary in the name of the Company and have been reserved for future grant of Company Share Awards under the Share Incentive Plans, (3) 289,472,400 Ordinary Shares are held in the treasury of the Company, (4) 645,691,903 Class B Ordinary Shares are issued and outstanding, all of which have been duly authorized and are validly issued, fully paid and non-assessable, (5) Company Options with respect to 87,708,060 Class A Ordinary Shares are issued and outstanding, and (6) Company Restricted Share Awards with respect to 207,870,444 Class A Ordinary Shares are outstanding.  As of the date of this Agreement, (x) no Ordinary Shares are held by any Group Company, and, (y) other than as set forth in clause (a)(i)(2) above, no Ordinary Shares are held in brokerage accounts in a Group Company’s name.

 

(ii)                                  The outstanding share capital or registered capital, as the case may be, of each Subsidiary of the Company is duly authorized, validly issued, fully paid and non-assessable, and except as set forth in Section 3.03(a)(ii) of the Company Disclosure Schedule, all of the outstanding share capital or registered capital, as the case may be, of each such Subsidiary is owned by a Group Company free and clear of all Liens or controlled by a Group Company pursuant to the Control Agreements.  Subject to limitations imposed by applicable Law and the applicable Control Agreements, each Group Company has the unrestricted right to vote, and to receive dividends and distributions on, all equity securities of its Subsidiaries.

 

(iii)                               Except as set forth in this Section 3.03(a) or in Section 3.03(a)(iii) of the Company Disclosure Schedule, there is no share capital or other equity interest in the Company or any options, warrants, convertible debt, other convertible instruments, share appreciation rights, performance units, restricted share units, contingent value rights, “phantom” share units or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any share capital of or other equity interest in, the Company or any of its Subsidiaries, or any preemptive, conversion, redemption or other rights, agreements, arrangements or commitments of any character to which the Company or any of its Subsidiaries is a party relating to the issued or unissued share capital of the Company or any of its Subsidiaries or obligating the Company or any of its Subsidiaries to issue or sell any share capital, or other equity interests in, the Company or any of its Subsidiaries.  All Ordinary Shares subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and non-assessable.  There are no outstanding contractual obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Ordinary Shares or other equity interests in, the Company or any of its Subsidiaries or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, the Company or any of its Subsidiaries or any other Person.  Each grant of Company Share Awards was properly approved by the Company Board (or a duly authorized committee or subcommittee thereof) and issued in compliance with all applicable Laws and the terms set forth in the applicable Share Incentive Plan, and the per share exercise price of each Company Option requiring exercise was equal to or greater than the fair market value (within the meaning of Section 422 of the Code, in the case of each Company Option intended to qualify as an “incentive stock option”, and within the meaning of Section 409A of the Code, in the case of each other Company Option awarded to a U.S. person).  There are no commitments or agreements of any character to which any Group Company is bound obligating any

 

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Group Company to accelerate or otherwise alter the vesting of any Company Share Award as a result of the Transactions, and each Company Share Award may, by its terms, be treated at the Effective Time as set forth in Section 2.02.

 

(iv)                              The Company does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the shareholders of the Company on any matter.

 

(b)                                 Section 3.03(b) of the Company Disclosure Schedule sets forth the following information with respect to each Company Share Award outstanding as of the date hereof:  (i) the name of the Company Share Award recipient; (ii) the particular Share Incentive Plan pursuant to which such Company Share Award was granted and the type of such Company Share Award; (iii) the number and type of Ordinary Shares subject to such Company Share Award; (iv) the exercise or purchase price of such Company Share Award; (v) the date on which such Company Share Award was granted; (vi) the vesting schedule or other vesting conditions, if any, of each such Company Share Award; and (vii) the date on which such Company Share Award expires.

 

(c)                                  The Company has made available to Parent accurate and complete copies of (x) the Share Incentive Plans pursuant to which the Company has granted the Company Share Awards that are currently outstanding, (y) the form of all award agreements evidencing such Company Share Awards and (z) any award agreements evidencing any Company Share Award with terms that are materially different from those set forth in the form of award agreement.

 

SECTION 3.04              Authority Relative to this Agreement; Fairness.  (a)  The Company has the requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and, subject to receipt of the Requisite Company Vote, to consummate the Transactions.  The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the Transactions have been duly authorized by the Company Board, and no other corporate action on the part of the Company is necessary to authorize the execution and delivery by the Company of this Agreement and the Plan of Merger and the consummation by it of the Transactions, in each case, subject only to the approval of this Agreement, the Plan of Merger and the Merger by the affirmative vote of holders of Ordinary Shares representing at least two-thirds of the Ordinary Shares present and voting in person or by proxy as a single class at the Shareholders’ Meeting (the “Requisite Company Vote”) in accordance with Section 233(6) of the CICL and the memorandum and articles of association of the Company.  This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Parent and Merger Sub, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights and to general principles of equity (the “Bankruptcy and Equity Exception”).

 

(b)                                 The Company Board, acting upon the unanimous recommendation of the Special Committee, has (i) determined that this Agreement and the Transactions, on the terms and subject to the conditions set forth herein, are fair to and in the best interests of the Company and its shareholders (other than Parent), (ii) approved and declared advisable this Agreement, the Plan of Merger and the Transactions, and (iii) subject to Section 6.04(c),

 

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resolved to recommend approval of this Agreement, the Plan of Merger and the Transactions to the holders of Ordinary Shares (the “Company Recommendation”).  The Company Board, acting upon the unanimous recommendation of the Special Committee, has directed that this Agreement, the Plan of Merger and the Transactions be submitted to the holders of Ordinary Shares for approval.

 

(c)                                  The Special Committee has received the written opinion of J.P. Morgan Securities (Asia Pacific) Limited (the “Financial Advisor”), dated the date of this Agreement, to the effect that, subject to the limitations, qualifications and assumptions set forth therein and as of the date hereof, the Per Share Merger Consideration to be paid to the holders of Ordinary Shares and the Per ADS Merger Consideration to be paid to the holders of ADSs (in each case, other than holders of Excluded Shares, including Excluded Shares represented by ADSs) in the Merger is fair, from a financial point of view, to such holders, a copy of which opinion will be delivered to Parent for its information promptly after the date of this Agreement.  The Financial Advisor has consented to the inclusion of a copy of its opinion in the Proxy Statement.  It is agreed and understood that such opinion may not be relied on by Parent or any of its affiliates.

 

SECTION 3.05                                      No Conflict; Required Filings and Consents.  (a)  The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company and the consummation of the Transactions will not, (i) assuming (solely with respect to performance of this Agreement and consummation of the Transactions) that the Requisite Company Vote is obtained, conflict with or violate the memorandum and articles of association of the Company or any equivalent organizational documents of any other Group Company, (ii) assuming (solely with respect to performance of this Agreement and consummation of the Transactions) that the matters referred to in Section 3.05(b) are complied with and the Requisite Company Vote is obtained, conflict with or violate any Law applicable to any Group Company or by which any property or asset of any Group Company is bound or affected, or (iii) result in any breach of or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien on any property or asset of any Group Company pursuant to, any Contract to which any Group Company is a party or by which any properties or assets of any Group Company are bound, except, with respect to clauses (ii) and (iii), for any such conflict, violation, breach, default, right or other occurrences which would not, individually or in the aggregate, reasonably be expected to (x) prevent or materially delay the consummation of the Transactions or (y) have a Company Material Adverse Effect.

 

(b)                                 The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company and the consummation by the Company of the Transactions will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except (i) for compliance with the applicable requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder (including the joining of the Company in the filing of a Schedule 13E-3, the furnishing of a Form 6-K with the Proxy Statement, and the filing or furnishing of one or more amendments to the Schedule 13E-3 and such Form 6-K to respond to comments of the Securities and Exchange Commission (the “SEC”), if any, on such documents), (ii) for compliance with the rules and regulations of the New York Stock Exchange (“NYSE”), (iii) for the filing of the Plan of Merger and related documentation with the Registrar of Companies of the Cayman Islands

 

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pursuant to the CICL, (iv) for the consents, approvals, authorizations or permits of, or filings with or notifications to, the Governmental Authorities set forth in Section 3.05(b) of the Company Disclosure Schedule and Governmental Authorities with authority over the enforcement of applicable antitrust or competition Laws in any jurisdiction that is material to the business of Parent or the Company, and (v) where the failure to obtain or make, as applicable, any such consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

 

SECTION 3.06                                      Permits; Compliance with Laws.  (a)  Each Group Company is in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals and orders of any Governmental Authority necessary for such Group Company to own, lease, operate and use its properties and assets or to carry on its business as it is now being conducted other than those the lack thereof would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect (the “Material Company Permits”).  As of the date hereof, no suspension or cancellation of any of the Material Company Permits is pending or, to the knowledge of the Company, threatened.  All such Material Company Permits are valid and in full force and effect, except for any failure to be valid or in full force and effect that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

 

(b)                                 No Group Company is in default, breach or violation of any Material Company Permit, in each case except for any such default, breach or violation that individually, or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect.

 

(c)                                  Each Group Company is in compliance in all material respects with applicable Law (including, without limitation, (i) any Laws applicable to its business and (ii) any Laws related to the protection of personal data).  To the knowledge of the Company, no Group Company has received any written notice or communication from any applicable Governmental Authority of any material non-compliance with any applicable Laws or Material Company Permits that has not been cured.  This section shall not apply to infringement of any patent, trademark or copyright.

 

(d)                                 All approvals of, and filings and registrations and other requisite formalities with, Governmental Authorities in the People’s Republic of China (“PRC”) that are material to the Group Companies taken as a whole and required to be made by the Company or its Subsidiaries in respect of the Company and its Subsidiaries and their capital structure and operations, including but not limited to registrations with the State Administration for Industry and Commerce, the State Administration of Foreign Exchange (“SAFE”), the State Administration of Taxation, the State Administration of Press, Publication, Radio, Film and Television, the National Health and Family Planning Commission, and the Ministry of Industry and Information Technology and their respective local counterparts, have been duly completed in accordance with applicable PRC Laws in all material respects.  Each Onshore Subsidiary has complied in all material respects with all applicable PRC Laws regarding the contribution and payment of its registered capital.

 

(e)                                  The directors, officers and employees of the Group Companies, and to the knowledge of the Company, any other ultimate beneficial owners of the Company who are PRC residents subject to the requirements of SAFE Circular 37 or any other SAFE Rules

 

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and Regulations, have complied in all material respects with the requirements of the SAFE Rules and Regulations.  The relevant Onshore Subsidiaries have complied in all material respects with the filing and registration requirements of SAFE Circular 7 and any other applicable SAFE Rules and Regulations in respect of the Share Incentive Plans.

 

(f)                                   Neither the Company, any of its Subsidiaries or any director, officer or employee of the Company or any of its Subsidiaries, nor, to the knowledge of the Company, any agent of the Company or any of its Subsidiaries acting on behalf of the Company or any of its Subsidiaries, have offered, paid, promised to pay or authorized the payment of any money or anything else of value, whether directly or through another person, to any person in any manner that would constitute official or commercial bribery or an illegal kickback, or would otherwise violate any Applicable Anti-Bribery Law.

 

(g)                                  The Company has maintained complete and accurate books and records and effective internal controls in accordance with the Applicable Anti-Bribery Laws.

 

(h)                                 Neither the Company nor any of its Subsidiaries nor, to the knowledge of the Company, any director, officer, employee, representative, agent or affiliate of the Company or any of its Subsidiaries, or any person or company acting on behalf of the Company (i) is currently subject to or the target of any U.S. sanctions administered by the office of Foreign Assets Control of the U.S. Treasury Department or the U.S. Department of State, the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority; or pursuant to the Comprehensive Iran Sanctions and Divestment Act, the Iran Threat Reduction and Syria Human Rights Act of 2012, the National Defense Authorization Act for Fiscal Year 2012, the Iran Freedom and Counter-Proliferation Act of 2012, each as amended, or any executive order, directive or regulation pursuant to the authority of any of the foregoing, or any orders or licenses issued pursuant to such authority (collectively, “Sanctions”); or (ii) has violated any applicable Sanctions or anti-money laundering Law, anti-terrorism Law, export restrictions, anti-boycott regulations or embargo regulation.

 

(i)                                     No action, suit or proceeding by or before any Governmental Authority involving the Company or any of its Subsidiaries with respect to anti-money laundering Law is pending or, to the knowledge of the Company, threatened in writing.

 

SECTION 3.07                                      SEC Filings; Financial Statements.  (a)  The Company has filed or otherwise furnished (as applicable) all forms, reports and documents required to be filed with or furnished to the SEC by the Company since January 1, 2013 (the “Applicable Date”) (the forms, reports and other documents filed or furnished since the Applicable Date and those filed or furnished subsequent to the date hereof as have been supplemented, modified or amended since the time of filing or furnishing, collectively, the “Company SEC Reports”).  As of the date of filing, in the case of Company SEC Reports filed pursuant to the Exchange Act (and to the extent such Company SEC Reports were amended, then as of the date of filing of such amendment), and as of the date of effectiveness in the case of Company SEC Reports filed pursuant to the Securities Act of 1933, as amended (the “Securities Act”) (and to the extent such Company SEC Reports were amended, then as of the date of effectiveness of such amendment), the Company SEC Reports (i) complied as to form in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations promulgated thereunder, each as in effect on the date so filed or effective, and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements

 

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made therein, in the light of the circumstances under which they were made, not misleading as of its filing date or effective date (as applicable).

 

(b)                                 Each of the consolidated financial statements (including, in each case, any notes thereto) contained in or incorporated by reference into the Company SEC Reports was prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto) and each fairly presents, in all material respects, the consolidated financial position, results of operations, changes in shareholders’ equity and cash flows of the Group Companies, as applicable, as at the respective dates thereof and for the respective periods indicated therein (subject, in the case of unaudited interim statements, to normal year-end audit adjustments which are not material in the aggregate and the exclusion of certain notes in accordance with the rules of the SEC relating to unaudited financial statements), in each case, in accordance with GAAP.

 

(c)                                  No Group Company has any liabilities of any nature (whether accrued, absolute, determined, determinable, fixed, contingent or otherwise) which would be required to be reflected or reserved against on a consolidated balance sheet of the Company prepared in accordance with GAAP, except liabilities (i) reflected or reserved against in the consolidated balance sheet for the period ended December 31, 2014 (including the notes thereto) included in the Company SEC Reports, (ii) incurred pursuant to this Agreement or in connection with the Transactions, (iii) incurred since December 31, 2014 in the ordinary course of business and in a manner consistent with past practice, or (iv) that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

 

(d)                                 The Company has timely filed and made available to Parent all certifications and statements required by (x) Rule 13a-14 or Rule 15d-14 under the Exchange Act or (y) 18 U.S.C. Section 1350 (Section 906 of the United States Sarbanes-Oxley Act of 2002) with respect to any Company SEC Report.  The Company is in compliance, in all material respects, with all provisions of the United States Sarbanes-Oxley Act of 2002 which are applicable to it. The Company maintains disclosure controls and procedures (as defined in Rule 13a-15 or Rule 15d-15 under the Exchange Act) that are designed to ensure that all material information relating to the Company and its Subsidiaries is made known on a timely basis to its Chief Executive Officer and Chief Financial Officer or other persons performing similar functions. The Company’s Chief Executive Officer and Chief Financial Officer (the “Certifying Officers”) have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the Company’s most recently filed annual report under the Exchange Act (such date, the “Evaluation Date”).  The Company presented in its most recently filed annual report under the Exchange Act the conclusions of the Certifying Officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date, including any change in the Company’s internal control over financial reporting that occurred during the period ending on the Evaluation Date that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. Since the Evaluation Date, to the knowledge of the Company, there has been no change in the Company’s internal control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.  To the knowledge of the Company, there is no reason to believe that the matters certified by the Certifying Officers are not true and correct in all material respects.

 

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(e)                                  Neither the Company nor, to the knowledge of the Company, the Company’s independent registered public accounting firm, has identified or been made aware of “significant deficiencies” or “material weaknesses” (as defined by the Public Company Accounting Oversight Board) in the design or operation of the Company’s internal controls and procedures which could reasonably adversely affect the Company’s ability to record, process, summarize or report financial data, in each case which has not been subsequently remediated.

 

(f)                                   The Group Companies maintain a system of internal accounting controls designed to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

 

(g)                                  The Company is in compliance in all material respects with the applicable listing and corporate governance rules and regulations of the NYSE, subject to availing itself of any “home country” exemption from such rules and regulations available to a “foreign private issuer” (as defined under the Exchange Act and under the relevant rules and regulations of the NYSE).

 

(h)                                 There are no unconsolidated Subsidiaries of the Company or any off-balance sheet arrangements of any type (including any off-balance sheet arrangement required to be disclosed pursuant to Item 303(a)(4) of Regulation S-K promulgated under the Securities Act) that have not been so described in the Company SEC Reports nor any obligations to enter into any such arrangements.

 

SECTION 3.08                                      Absence of Certain Changes or Events.  Since December 31, 2014 to the date hereof, except as expressly contemplated by this Agreement, (a) the Company and its Subsidiaries have conducted their businesses in all material respects in the ordinary course and in a manner consistent with past practice, (b) there has not been any Company Material Adverse Effect, (c) the Company has not taken or permitted any of its Subsidiaries to take any of the following actions (i) declare, set aside or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of the Ordinary Shares (other than dividends or other distributions from any Subsidiary of the Company to the Company or to another wholly-owned Subsidiary of the Company), or redeem, purchase or otherwise acquire, directly or indirectly, any of its shares or other securities (other than in connection with the settlement of any Company Share Awards in accordance with the appropriate Share Incentive Plans and this Agreement) or (ii) adopt, pass any resolution to approve or make any petition or similar proceeding or order in relation to, a plan of complete or partial liquidation, dissolution, scheme of arrangement, merger, consolidation, restructuring, recapitalization or other reorganization of any Group Company (other than the Merger or any merger or consolidation among wholly-owned Subsidiaries of the Company), (d) there has not been any material change by the Company or any of its Subsidiaries in its method of accounting or accounting practice, except as may be appropriate to conform to changes in statutory or regulatory accounting rules or GAAP or regulatory requirements with respect thereto, (e) other than in the ordinary course of business and consistent with past practice (including with respect to amount and timing), there has not been any material increase in the compensation or benefits payable or to become payable to

 

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its officers or key employees, (f) none of the Group Companies has incurred any Indebtedness, other than Indebtedness receivable or payable solely between or among the Company’s wholly-owned Subsidiaries (including, for the purposes of this Section 3.08(f), the Operating Subsidiaries) or between or among the Company and any of its wholly-owned Subsidiaries (including, for the purposes of this Section 3.08(f), the Operating Subsidiaries) and accounts receivable and payable incurred in the ordinary course of business consistent with past practice, (g) none of the Group Companies has (i) acquired or made any capital contributions to or investments in any business or entity or (ii) acquired any assets outside of the ordinary course of business consistent with past practice, (h) no receiver, trustee, administrator or other similar person has been appointed in relation to the affairs of any Group Company or its property or any part thereof material to the Company and its Subsidiaries taken as a whole, (i) there has not been any making or revocation of any material Tax election, any settlement or compromise of any material Tax liability, or any change (or request to any taxing authority to change) in any material aspect of the method of accounting of the Company or any of its Subsidiaries for Tax purposes, and (j) there has not been any adoption of resolution to approve or petition or similar proceeding or order in relation to a plan of complete or partial liquidation, dissolution, scheme of arrangement, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries.

 

SECTION 3.09                                      Absence of Litigation.  (a)  There is no litigation, suit, claim, action, demand letter, or any judicial, criminal, administrative or regulatory proceeding, hearing, investigation, or formal or informal regulatory document production request proceeding (an “Action”) pending or, to the knowledge of the Company, threatened against any Group Company, or any property or asset of any Group Company, before any Governmental Authority, except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

 

(b)                                 Neither the Company nor any Subsidiary of the Company nor any property or asset of the Company or any Subsidiary of the Company is subject to any continuing order of, consent decree, settlement agreement or other similar written agreement with, or, to the knowledge of the Company, any continuing investigation by, any Governmental Authority, or any order, writ, judgment, injunction, decree, determination or award of any Governmental Authority, except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

 

SECTION 3.10                                      Labor and Employment Matters; Employee Plans.  (a)  No Group Company is a party to or bound by any collective bargaining agreement or other labor union contract applicable to persons employed by any Group Company as of the date hereof, and no labor union has requested or, to the knowledge of the Company, has sought to represent any of the employees, representatives or agents of any Group Company.  There are no unfair labor practice complaints pending or, to the knowledge of the Company, threatened against any Group Company before any Governmental Authority, and there is no pending dispute with any director, employee or former employee of any Group Company, in each case, except as would not, individually or in the aggregate, have a Company Material Adverse Effect.  There is no organized strike, slowdown, work stoppage or lockout, or similar activity currently occurring or, to the knowledge of the Company, threatened against or involving any Group Company, in each case, except as would not, individually or in the aggregate, have a Company Material Adverse Effect.

 

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(b)                                 Except as would not, individually or in the aggregate, have a Company Material Adverse Effect, (i) each Group Company is in compliance with all applicable Laws relating to employment and employment practices, including those related to wages, work hours, shifts, overtime, Social Security Benefits, holidays and leave, collective bargaining terms and conditions of employment and the payment and withholding of taxes and other sums as required by the appropriate Governmental Authority, (ii) each Group Company has withheld and paid in full to the appropriate Governmental Authority, or is holding for payment not yet due to such Governmental Authority, all amounts required to be withheld from or paid with respect to each Group Company’s employees (including the withholding and payment of all individual income taxes and contributions to Social Security Benefits payable), (iii) no Group Company is liable for any arrears of wages, taxes, penalties or other sums for failure to comply with any of the foregoing, (iv) there is no claim with respect to payment of wages, salary or overtime pay that has been asserted or is now pending or, to the knowledge of the Company, threatened before any Governmental Authority with respect to any persons currently or formerly employed by any Group Company, and (v) there is no charge or proceeding with respect to a violation of any occupational safety or health standards that is now pending or, to the knowledge of the Company, threatened with respect to any Group Company.

 

(c)                                  Section 3.10(c) of the Company Disclosure Schedule contains a list of each Company Employee Plan.  The Company has provided or otherwise made available to Parent true and complete copies of each Company Employee Plan (other than any Company Employee Plan mandated by applicable Law to which the sole liability of the Company and its Subsidiaries is to make contributions required by Law, including plans or programs maintained by a Government Authority requiring the payment of social insurance taxes or similar contributions by the Company or its Subsidiaries to a fund of a Governmental Authority with respect to wages of an employee), including (i) a copy of each trust agreement or other funding arrangement, (ii) each summary or other document delivered to participants, (iii) all forms of participation agreement, share purchase agreement, share option agreement or other agreement with participants, (iv) all documents filed with any Governmental Authority and (v) all documents received from any Governmental Authority.

 

(d)                                 No Company Employee Plans is subject to the U.S. Employee Retirement Income Security Act of 1974, as amended or is a defined benefit pension plan.   Each Company Employee Plan is now and always has been operated in all material respects in accordance with its terms and the requirements of all applicable Laws.  Except as would not, individually or in the aggregate, have a Company Material Effect, (i) all contributions or other amounts payable by a Group Company with respect to each Company Employee Plan in respect of current or prior plan years have been paid or accrued in accordance with GAAP, and (ii) there are no claims (other than for benefits incurred in the ordinary course) or, to the knowledge of the Company, threatened with respect to any Company Employee Plan or against the assets thereof, and no fact or event exists that could give rise to any such lawsuit, action, proceeding or claim. The Company does not maintain any funded Company Employee Plans (other than any Company Employee Plan mandated by applicable Law to which the sole liability of the Company and its Subsidiaries is to make contributions required by Law, including plans or programs maintained by a Government Authority requiring the payment of social insurance taxes or similar contributions by the Company or its Subsidiaries to a fund of a Governmental Authority with respect to wages of an employee).

 

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(e)                                  Except as otherwise specifically provided in this Agreement regarding the Company Share Awards, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby (either alone or in conjunction with another event, such as a termination of employment) will (i) result in any payment becoming due to any current or former director or current or former employee of the Company or any of its Subsidiaries under any of the Company Employee Plans, (ii) increase any benefits otherwise payable under any of the Company Employee Plans or (iii) result in any acceleration of the time of payment or vesting of any such benefits or result in the payment of any amount under any Company Employee Plan that would be, individually or in combination with any other such payment, an “excess parachute payment” within the meaning of Section 280G of the Code.  The Company is not obligated, pursuant to any of the Company Employee Plans, to grant any options or other rights to purchase or acquire Shares to any employees, consultants or directors of the Company after the date hereof.

 

SECTION 3.11                                      Real Property.  (a)  The Group Companies do not own any real property.

 

(b)                                 All current leases and subleases of real property entered into by any Group Company (the “Leased Real Property”) are in full force and effect, are valid and effective in accordance with their respective terms, subject to the Bankruptcy and Equity Exception, and there is not, under any of such leases, any existing material default or event of default (or event which, with notice or lapse of time, or both, would constitute a default) by such Group Company or, to the knowledge of the Company, by the other party to such lease or sublease, except in each case, as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.  The applicable Group Company has good and valid leasehold or subleasehold interests in each parcel of Leased Real Property, free and clear of any Liens other than Permitted Property Liens, except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

 

SECTION 3.12                                      Intellectual Property.

 

(a)                                 Section 3.12(a) of the Company Disclosure Schedule sets forth an accurate and complete list of all material (i) registered Intellectual Property owned by any Group Company and (ii) pending applications (whether or not published) for the registration of Intellectual Property owned by any Group Company (the “Registered Intellectual Property”).

 

(b)                                 Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, (i) the Group Companies exclusively own, free and clear of all Liens, their proprietary Intellectual Property, and own or have a valid and enforceable right or license to use all other Intellectual Property that is used in or necessary for the conduct of the Group Companies’ businesses as presently conducted or as presently planned to be conducted, (ii) no interference, opposition, reissue, reexamination, or other proceeding is or has been pending or, to the knowledge of the Company, threatened against the Group Companies, in which the scope, validity, or enforceability of any Intellectual Property owned by a Group Company is being or has been contested or challenged, (iii) (A) the Group Companies (1) are not subject to any agreement with any person pursuant to which they have deposited, or would be required to deposit into escrow the source code of any Software owned by them and (2) have not disclosed to or provided any person with past, current or contingent access to, or possession of, the source code of any

 

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Software owned by them to any third party or pursuant to duties and obligations arising by operation of applicable Law, and (B) no Software owned or used by the Group Companies is subject to any obligation that would require any Group Company to disclose to any person (other than non-employee contractors, consultants and other persons engaged by any Group Company who are subject to valid and enforceable written confidentiality obligations) any proprietary source code or Trade Secret that is part of any Software, (iv) all Registered Intellectual Property is subsisting and, to the knowledge of the Company, is valid and enforceable, (v) all Intellectual Property disclosed as owned by a Group Company belongs to such Group Company and is not the property of a third party customer, (vi) (A) all current and former employees, consultants, contractors, and any other persons who have participated in the creation or development of any proprietary Intellectual Property created or developed by, for or under the direction or supervision of any Group Company, have executed and delivered to such Group Company valid and enforceable agreements (1) providing for the non-disclosure by such person of confidential information, and (2) providing for the assignment by such person to such Group Company of their rights in any Intellectual Property developed or arising out of such person’s employment by, engagement by or contract with such Group Company and (B) no such current or former employees, consultants, contractors, or any other persons have excluded works or inventions from their assignment of their rights in any such Intellectual Property pursuant to any such agreements and no such employee or consultant is in violation thereof, (vii) the Group Companies have paid all such rewards and remuneration that are either legally required or due and payable to such persons pursuant to such valid agreements, and no Actions pending or, to the knowledge of the Company, threatened, regarding the payment of such legally required rewards and remuneration to such persons, (viii) there are no (A) Actions pending or, to the knowledge of the Company, threatened against a Group Company (including cease-and-desist letters or offers to license any Intellectual Property), by any person alleging infringement, dilution, unauthorized disclosure, or misappropriation by any Group Company of the Intellectual Property rights of such person, or (B) challenges to the validity, enforceability or ownership of, or the right to use, any Intellectual Property owned by a Group Company, (ix) the conduct of the business of the Group Companies does not infringe, dilute, or misappropriate and has not infringed, diluted, or misappropriated any Intellectual Property rights of any person, (x) no Group Company has interfered with, infringed upon, disclosed without authorization, misused, misappropriated or otherwise violated any Intellectual Property rights, any rights of privacy (including personal data privacy and related Laws), name, portrait, reputation, or personality under applicable Law or any personal or sensitive information (including personally identifiable information) owned by any other person, and (xi) no person is infringing, diluting or misappropriating, or has infringed, diluted or misappropriated, any Intellectual Property owned by any Group Company.

 

(c)                                  None of the material Software (including Software embodied in any material products and services) of the Company or any of its Subsidiaries is subject to any “open source”, “copyleft” or analogous license (including any GPL, AGPL or other open source software license) in a manner or relation which has or would require any licensing, availability or distribution of the source code to any such material Software or impose any material economic limitations on the Company’s and its Subsidiaries’ commercial exploitation thereof if such Software were licensed, distributed, conveyed or made available to any person.

 

(d)                                 The Group Companies have taken commercially reasonable measures to protect the confidentiality, integrity, and security of (i) the material confidential or

 

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proprietary information, of the Group Companies (or third parties for which the Group Companies have a legal or contractual obligation of protection), (ii) personally identifiable information, material confidential or proprietary information, and material Trade Secrets entrusted to any Group Company by its customers, clients, or other persons to whom the such Group Company owes a duty or obligation under applicable Law or any written Contract to maintain the security or confidentiality thereof, (iii) their material Trade Secrets and (iv) the IT Assets (and all material information and transactions stored or contained therein or transmitted thereby), and there have been no material outages, malfunctions, or unauthorized intrusions or breaches of security with respect to any Group Company system or IT Asset, other than those that were resolved without material liability or the obligation to disclose same to any third party.

 

(e)                                  Except as would not, individually or in the aggregate, reasonably be expected to have or result in a Company Material Adverse Effect, no Group Company is in breach of any requirements for or restrictions regarding subcontracting, sublicensing, or disclosure of Intellectual Property, Trade Secrets, or personally identifiable information of the Company, its Subsidiaries, or of their clients or customers to any person (including the Company’s Subsidiaries), contained in any applicable Contracts with any of the Company’s or its Subsidiaries’ customers or clients or under applicable Law.  No proceedings before any Governmental Authority are pending, or, to the knowledge of the Company, threatened, against a Group Company by any person alleging a violation of such person’s, or any other person’s, privacy, publicity, personal or confidentiality rights by such Group Company under applicable Laws, or a breach or other violation of any of the Group Companies’ internal rules, policies and procedures with respect to privacy, publicity, data protection, collection, storage, transfer, use or disclosure of personally identifiable information by such Group Company, in each case, except as would not, individually or in the aggregate, reasonably be expected to have or result in a Company Material Adverse Effect.

 

SECTION 3.13                                      Taxes.  (a)  Each Group Company has timely filed all material Tax Returns required to be filed by or with respect such Group Company and all such Tax Returns are true, accurate and complete in all material respects.

 

(b)                                 Each Group Company has paid and discharged all material Taxes due and payable (whether or not shown to be due on any Tax Return), and where payment is not yet due, each Group Company has made adequate provision for all material Taxes in its financial statements in accordance with GAAP.

 

(c)                                  There are no material Liens with respect to Taxes upon any of the assets or properties of any Group Company, other than with respect to Taxes not yet due and payable or which are being contested in good faith and by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP.

 

(d)                                 As of the date hereof, no Governmental Authority has asserted in writing or, to the knowledge of the Company, is threatening to assert against any Group Company any deficiency or claim for any material Taxes.

 

(e)                                  Each Group Company has properly and timely withheld, collected and deposited all material Taxes that are required to be withheld, collected and deposited under applicable Law, and to the extent required, such Taxes have been paid to the relevant taxing authority.

 

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(f)                                   There is no outstanding audit, assessment, dispute or claim concerning any material Tax liability of any Group Company, nor is one pending to the knowledge of any Group Company.

 

(g)                                  No Group Company has granted any waiver of any statute of limitations with respect to, or any extension of a period for the assessment of, any material Tax.

 

(h)                                 There are no unresolved claims by any Governmental Authority in a jurisdiction where any Group Company does not file Tax Returns that any Group Company is or may be subject to Taxes in such jurisdiction.

 

(i)                                     No Group Company (i) is or has ever been a member of a combined, consolidated, unitary, affiliated or similar Tax group (other than a group the common parent of which is or was one of the Group Companies) or (ii) has any material liability for Taxes of any person as a result of being a member of such a Tax group or arising from the application of any provision of Tax Law, or as a transferee or successor, by contract, or otherwise.

 

(j)                                    No Group Company has been either a “distributing corporation” or a “controlled corporation” in a distribution occurring during the last three (3) years in which the parties to such distribution treated the distribution as one to which Section 355 of the Code is applicable.

 

(k)                                 Neither the Company nor any Subsidiary that is not an Onshore Subsidiary takes the position for tax purposes that it is a “resident enterprise” of the PRC.

 

(l)                                     No Group Company is a party to, is bound by or has any obligation under any Tax sharing or Tax indemnity agreement or similar contract or arrangement, other than any such agreement or arrangement (A) solely between the Group Companies or (B) entered into in the ordinary course of business and for which the primary purpose does not relate to Taxes.

 

(m)                             Each Group Company is in material compliance with all terms and conditions of, any Tax exemption, Tax holiday, Tax incentive or other Tax reduction agreement or order of a Governmental Authority.  Any submissions made on behalf of any Group Company to any Governmental Authority in connection with obtaining Tax exemptions, Tax holidays, Tax incentives or other Tax reduction agreement or order of a Government Authority are accurate and complete in all material respects.  As of the date hereof, no suspension, revocation or cancellation of any Tax exemption, Tax holiday, Tax incentive or other Tax reduction agreement or order of a Governmental Authority is pending or, to the knowledge of the Company, threatened.

 

SECTION 3.14                                      Indebtedness and Security.  No Group Company has any Indebtedness nor any secured creditors holding fixed or floating security interests, other than (x) Indebtedness receivable or payable solely between or among the Company’s wholly-owned Subsidiaries (including, for the purposes of this Section 3.14, the Operating Subsidiaries) or between or among the Company and any of its wholly-owned Subsidiaries (including, for the purposes of this Section 3.14, the Operating Subsidiaries) and (y) accounts receivable and payable incurred in the ordinary course of business consistent with past practice.  No Group Company has taken any steps to seek protection pursuant to any bankruptcy law, nor does the Company have any knowledge or reason to believe that its

 

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creditors intend to initiate involuntary bankruptcy proceedings or any knowledge of any fact which would reasonably lead a creditor to do so.  The Group Companies on a consolidated basis are not Insolvent.

 

SECTION 3.15                                      Material Contracts.  (a)  Except for this Agreement, the Contracts filed as exhibits to the Company SEC Reports filed with the SEC prior to the date of this Agreement and as set forth on Section 3.15(a) of the Company Disclosure Schedule, no Group Company is a party to, and no Group Company’s properties or assets are bound by, any of the types of Contracts listed in clauses (i) through (xi) of this Section 3.15(a) (such types of Contracts being the “Material Contracts”):

 

(i)                                     each Contract that would be required to be filed by the Company pursuant to Item 4 of the Instructions to Exhibits to the Company’s most recently filed annual report on Form 20-F;

 

(ii)                                  each Contract relating to any Indebtedness in respect of any counterparty involving actual or potential liability to the Group Companies in excess of US$7,000,000 during any 12-month period, other than (x) Indebtedness receivable or payable solely between or among the Company’s wholly-owned Subsidiaries (including, for the purposes of this Section 3.15(a)(ii), the Operating Subsidiaries) or between or among the Company and any of its wholly-owned Subsidiaries (including, for the purposes of this Section 3.15(a)(ii), the Operating Subsidiaries) and (y) accounts receivable and payable incurred in the ordinary course of business consistent with past practice;

 

(iii)                               each Contract in respect of any (A) joint venture, strategic cooperation or collaboration arrangement, joint sales or marketing agreement, or partnership arrangement, in each case, that is material to the business of the Group Companies taken as a whole or (B) other agreement involving a sharing of profits, losses, costs or liabilities by any Group Company that is material to the business of the Group Companies taken as a whole;

 

(iv)                              each of the Contracts described under the caption “Item 4. Information on the Company—C. Organizational Structure” in the Company’s most recently filed annual report on Form 20-F, which (A) provide the Company with effective control over any of its Subsidiaries in respect of which it does not, directly or indirectly, own a majority of the equity interests (each, an “Operating Subsidiary”), (B) provide any Group Company the right or option to purchase the equity interests in any Operating Subsidiary, or (C) transfer economic benefits from any Operating Subsidiary to any other Subsidiary of the Company (the contracts and agreements described in (A), (B) and (C), together, the “Control Agreements”);

 

(v)                                 each Contract pursuant to which the Company or any of its Subsidiaries (A) receives or is granted any license to any material Intellectual Property (other than any non-exclusive license to off-the-shelf Software generally available on non-discriminatory pricing terms and other than a non-exclusive license granted in the ordinary course of the grantor’s business) or (B) grants any license to any material Intellectual Property (other than a non-exclusive license granted in the ordinary course of the grantor’s business), or each other Contract relating to Intellectual Property or IT Assets not covered by the foregoing (A) or (B) that is material to the Company and its Subsidiaries, taken as a whole;

 

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(vi)                              each Contract that involves the acquisition or disposition, directly or indirectly (by merger, license or otherwise), of any securities of any person (other than a Company Share Award) or any assets that have a fair market value or purchase price of more than US$3,000,000;

 

(vii)                           each Contract (including any distribution agreements) that limits, or purports to limit, the ability of any Group Company to compete in any line of business in any geographic area or during any period of time in a manner that is material to the Group Companies, taken as a whole, or any Contract that grants any exclusive rights to any third party (including any exclusive license or exclusive distribution or usage arrangements) if such Contract, exclusive rights or restrictions resulting therefrom are material to the Group Companies, taken as a whole;

 

(viii)                        each Contract between any Group Company, on the one hand, and any directors or officers of any Group Company or their immediate family members or shareholders (other than Parent) of any Group Company holding more than 5% of the voting securities of any Group Company, on the other hand, under which there are material rights or obligations outstanding;

 

(ix)                              each Contract providing for any earn-out or similar payment payable by any Group Company to any person (other than to another Group Company);

 

(x)                                 each Contract providing for any change of control or similar payments to any Third Party in excess of US$2,500,000;

 

(xi)                              each Contract involving payments by the Company or any of its Subsidiaries in excess of US$7,000,000 in the aggregate under each Contract, other than payments between or among the Company’s wholly-owned Subsidiaries (including, for the purposes of this Section 3.15(a)(xi), the Operating Subsidiaries) or between or among the Company and any of its wholly-owned Subsidiaries (including, for the purposes of this Section 3.15(a)(xi), the Operating Subsidiaries);

 

(xii)                           each Contract relating to any capital expenditure or any disbursement Contract with a contract value exceeding US$7,000,000;

 

(xiii)                        each Contract relating to a royalty or dividend arrangement that involves payment by the Company of more than US$5,000,000 annually based on revenues or profits of the Company or any of its Subsidiaries or based on the revenues or profits derived from any material Contract;

 

(xiv)                       each share or stock redemption or purchase or other Contract affecting or relating to the share capital of the Company or any of its Subsidiaries, including each Contract with any shareholder of the Company or any of its Subsidiaries which includes anti-dilution rights, voting arrangements or operating covenants;

 

(xv)                          each Contract under which the Company or any of its Subsidiaries has granted any Person any registration rights, or any right of first refusal, first offer or first negotiation with respect to any Ordinary Shares or securities of any Subsidiaries of the Company; and

 

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(xvi)                       each Contract that contains a put, call or similar right pursuant to which the Company or any of its Subsidiaries could be required to purchase or sell, as applicable, any equity interests of any Person.

 

(b)                                 Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, (i) each Material Contract is a legal, valid and binding obligation of a Group Company, as applicable, in full force and effect and enforceable against the such Group Company in accordance with its terms, subject to the Bankruptcy and Equity Exception, (ii) to the Company’s knowledge, each Material Contract is a legal, valid and binding obligation of the counterparty thereto, in full force and effect and enforceable against such counterparty in accordance with its terms, subject to the Bankruptcy and Equity Exception, (iii) no Group Company and, to the Company’s knowledge, no counterparty, is or is alleged to be in breach or violation of, or default under, any Material Contract, (iv) to the Company’s knowledge, no person intends to terminate any Material Contract and (v) neither the execution of this Agreement nor the consummation of any Transaction shall constitute a material default under, give rise to cancellation rights under, or otherwise adversely affect any of the material rights of any Group Company under any Material Contract.  The Company has furnished or made available to Parent true and complete copies of all Material Contracts, including any amendments thereto.

 

SECTION 3.16                                      Environmental Matters.  Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, (i) each Group Company is in compliance with all applicable Environmental Laws and has obtained and possess all permits, licenses and other authorizations currently required for their establishment and their operation under any Environmental Law (the “Environmental Permits”), and all such Environmental Permits are in full force and effect, (ii) to the knowledge of the Company, no property currently or formerly owned or operated by any Group Company has been contaminated with or is releasing any Hazardous Substance in a manner that would reasonably be expected to require remediation or other action pursuant to any Environmental Law, (iii) no Group Company has received any written notice, demand, letter, claim or request for information alleging that any Group Company is in violation of or liable under any Environmental Law, which remains unresolved, and (iv) no Group Company is subject to any Order with any Governmental Authority or agreement with any person concerning liability under any Environmental Law or relating to Hazardous Substances.

 

SECTION 3.17                                      Operating Subsidiaries.  The Company controls its Operating Subsidiaries through the Control Agreements, and there is no enforceable written agreement to rescind, amend or change the material terms of such Control Agreements other than as contemplated by this Agreement.

 

SECTION 3.18                                      Interested Party Transactions.  None of the officers or directors of any Group Company is presently a party to any transaction with the Company or any of its Subsidiaries which would be required to be reported under Item 404 of Regulation S-K of the SEC (other than for services as officers, directors and employees of a Group Company), other than for (a) payment of salary or fees for services rendered in the capacity of an officer, director or employee of the Company or any of its Subsidiaries), (b) reimbursement for expenses incurred on behalf of the Company or any of its Subsidiaries and (c) other employee benefits, including Company Share Awards, in each case, in the ordinary course of business and consistent with past practice.

 

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SECTION 3.19                                      Insurance.  Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, as of the date of this Agreement, (i) all insurance policies and all self-insurance programs and arrangements relating to the business, assets, liabilities and operations of the Group Companies are in full force and effect, (ii) the Company has no reason to believe that any Group Company will not be able to (A) renew its existing insurance policies as and when such policies expire or (B) obtain comparable coverage from comparable insurers as may be necessary to continue its business without a significant increase in cost, (iii) no Group Company has received any written notice of any threatened termination of, premium increase with respect to, or alteration of coverage under, any of its respective insurance policies, and (iv) no Group Company has been denied any insurance coverage which it has sought or for which it has applied.

 

SECTION 3.20                                      Anti-Takeover Provisions.  The Company is not party to a shareholder rights agreement, “poison pill” or similar agreement or plan.  The Company Board has taken all necessary action so that any takeover, anti-takeover, moratorium, “fair price”, “control share” or other similar Laws enacted under any Laws applicable to the Company (each, a “Takeover Statute”) does not, and will not, apply to this Agreement or the Transactions other than the CICL.

 

SECTION 3.21                                      Brokers.  Except for the Financial Advisor, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of the Company.

 

SECTION 3.22                                      No Other Representations and Warranties.  Except for the representations and warranties made by the Company in Article III and Section 6.01(c), neither the Company nor any other person on behalf of the Company makes any other express or implied representation or warranty with respect to the Company or any of its Subsidiaries or their respective business, operations, assets, liabilities, condition (financial or otherwise) or prospects or any information provided to Parent, Merger Sub or any of their respective affiliates or Representatives, notwithstanding the delivery or disclosure to Parent, Merger Sub or any of their respective affiliates or Representatives of any documentation, forecasts or other information in connection with the Transactions, and each of Parent and Merger Sub acknowledges the foregoing.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

 

Parent and Merger Sub hereby, jointly and severally, represent and warrant to the Company that:

 

SECTION 4.01                                      Corporate Organization.  Each of Parent and Merger Sub is an exempted company duly organized, validly existing and in good standing under the laws of the Cayman Islands and has the requisite corporate or similar power and authority to own, lease and operate its properties and assets to carry on its business as it is now being conducted.

 

SECTION 4.02                                      Capitalization of Merger Sub; No Prior Activities.  As of the date of this Agreement, the authorized share capital of Merger Sub consists solely of

 

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50,000 ordinary shares, par value US$1.00 per share, one (1) ordinary share of which is validly issued and outstanding.  All of the issued and outstanding share capital of Merger Sub is, and at the Effective Time will be, solely owned by Parent.  Merger Sub was formed solely for the purpose of engaging in the Transactions, and it has not conducted any business prior to the date hereof and has no, and prior to the Effective Time, will have no, assets, liabilities or obligations of any nature other than in connection with those incident to its formation and capitalization pursuant to this Agreement and the Transactions.  Merger Sub has no secured creditors holding any fixed or floating security interests.

 

SECTION 4.03                                      Authority Relative to This Agreement.  Each of Parent and Merger Sub has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions.  The execution, delivery and performance by Parent and Merger Sub of this Agreement and the consummation by Parent and Merger Sub of the Transactions have been duly and validly authorized by all necessary corporate action, and no other corporate action on the part of Parent or Merger Sub are necessary to authorize the execution and delivery of this Agreement by Parent and Merger Sub and the Plan of Merger by Merger Sub and the consummation by them of the Transactions (other than the filings, notifications and other obligations and actions described in Section 4.04(b)).  This Agreement has been duly and validly executed and delivered by Parent and Merger Sub and, assuming due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of each of Parent and Merger Sub, enforceable against each of Parent and Merger Sub in accordance with its terms, subject to the Bankruptcy and Equity Exception.

 

SECTION 4.04                                      No Conflict; Required Filings and Consents.  (a)  The execution and delivery of this Agreement by Parent and Merger Sub do not, and the performance of this Agreement by Parent and Merger Sub and consummation of the Transactions will not, (i) conflict with or violate the memorandum and articles of association of either Parent or Merger Sub, (ii) assuming (solely with respect to performance of this Agreement and the consummation of the Transactions) that all consents, approvals, authorizations and other actions described in Section 4.04(b) have been obtained and all filings and obligations described in Section 4.04(b) have been made, conflict with or violate any Law applicable to Parent or Merger Sub or by which any property or asset of either of them is bound or affected, or (iii) result in any breach of, or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of any Lien or other encumbrance on any property or asset of Parent or Merger Sub pursuant to, any Contract or obligation to which Parent or Merger Sub is a party or by which any property or asset of either of them is bound, except, with respect to clauses (ii) and (iii), for any such conflict, violation, breach, default, right or other occurrence which would not, individually or in the aggregate, reasonably be expected to prevent or materially delay consummation of the Transactions by Parent or Merger Sub.

 

(b)                                 The execution and delivery of this Agreement by Parent and Merger Sub do not, and the performance of this Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub of the Transactions will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except (i) for compliance with the applicable requirements of Section 13 of the Exchange Act and the rules and regulations promulgated thereunder (including the filing of a Schedule 13E-3 and furnishing of the Proxy Statement, and the filing or furnishing of one or

 

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more amendments to the Schedule 13E-3 and Proxy Statement to respond to comments of the SEC, if any, on such documents), (ii) for compliance with the rules and regulations of NYSE, (iii) for the filing of the Plan of Merger and related documentation with the Registrar of Companies of the Cayman Islands pursuant to the CICL, (iv) for the consents, approvals, authorizations or permits of, or filings with or notifications to the Governmental Authorities with authority over the enforcement of applicable antitrust or competition Laws in any jurisdiction that is material to the business of Parent or the Company, and (v) where the failure to obtain or make, as applicable, any such consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority would not, individually or in the aggregate, be expected to, prevent or materially delay consummation of any of the Transactions by Parent or Merger Sub.

 

SECTION 4.05                                      Sufficient Funds.  At the Closing, Parent will have available sufficient funds to pay the Merger Consideration in accordance with and subject to the terms and conditions of this Agreement.

 

SECTION 4.06                                      Brokers.  Except for Morgan Stanley Asia Limited, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Parent or Merger Sub.

 

SECTION 4.07                                      Absence of Litigation.  As of the date of this Agreement, there is no Action pending or, to the knowledge of Parent and Merger Sub, threatened against Parent, Merger Sub or AIL that, individually or in the aggregate, would prevent or materially delay consummation of the Transactions by Parent or Merger Sub.  As of the date of this Agreement, none of Parent, Merger Sub or AIL is subject to any continuing order of, consent decree, settlement agreement or other similar written agreement with, or, to the knowledge of Parent and Merger Sub, continuing investigation by, any Governmental Authority, or any order, writ, judgment, injunction, decree, determination or award of any Governmental Authority that, individually or in the aggregate, would prevent or materially delay consummation of the Transactions by Parent or Merger Sub.

 

SECTION 4.08                                      Non-Reliance on Company Estimates. The Company has made available to Parent, Merger Sub or their respective affiliates and Representatives, and may continue to make available, certain estimates, projections and other forecasts for the business of the Company and its Subsidiaries and certain plan and budget information.  Each of Parent and Merger Sub hereby acknowledges and agrees that (a) these estimates, projections, forecasts, plans and budgets and the assumptions on which they are based were prepared for specific purposes and may vary significantly from each other, (b) there are uncertainties inherent in attempting to make such estimates, projections, forecasts, plans and budgets, (c) Parent and Merger Sub are making their own evaluation of the adequacy and accuracy of all estimates, projections, forecasts, plans and budgets so furnished to them (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans or budgets), and (d) except to the extent expressly set forth in Article III, the Company does not make any representations or warranties with respect to any estimates, projections, forecasts, plans or budgets furnished by the Company, its Subsidiaries or their respective affiliates and Representatives; provided that, nothing contained in this Section 4.08 shall be deemed to limit in any way the representations and warranties of the Company set forth in this Agreement.

 

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SECTION 4.09                                      Independent Investigation. Parent and Merger Sub have conducted their own independent investigation, review and analysis of the business, operations, assets, liabilities, results of operations, financial condition and prospects of the Company and its Subsidiaries, which investigation, review and analysis was performed by Parent, Merger Sub, their respective affiliates and Representatives.  Each of Parent and Merger Sub acknowledges that as of the date of this Agreement, it, its affiliates and their respective Representatives have been provided sufficient access to the personnel, properties, facilities and records of the Company and its Subsidiaries for such purpose.

 

SECTION 4.10                                      No Other Representations and Warranties.  Except for the representations and warranties made by Parent and Merger Sub in Article IV and Section 6.01(b), neither Parent nor Merger Sub nor any other person on behalf of Parent or Merger Sub makes any other express or implied representation or warranty with respect to Parent or Merger Sub or any of their Subsidiaries or their respective business, operations, assets, liabilities, condition (financial or otherwise) or prospects or any information provided to the Company or any of its affiliates or Representatives, notwithstanding the delivery or disclosure to the Company or any of its affiliates or Representatives of any documentation, forecasts or other information in connection with the Transactions, and the Company acknowledges the foregoing.

 

ARTICLE V

 

CONDUCT OF BUSINESS PENDING THE MERGER

 

SECTION 5.01                                      Conduct of Business by the Company Pending the Merger.  (a)  The Company agrees that, between the date of this Agreement and the Effective Time, except as required by applicable Law or as set forth in Section 5.01 of the Company Disclosure Schedule, unless Parent shall otherwise provide its prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed):

 

(i)                                     the businesses of the Group Companies shall be conducted only in, and no Group Company shall take any action except in, a lawfully permitted manner in the ordinary course of business consistent with past practice; and

 

(ii)                                  the Company shall use its reasonable best efforts to preserve substantially intact the business organization of the Group Companies, maintain in effect all Material Company Permits, keep available the services of the current officers, key employees, and key consultants and contractors of the Group Companies and preserve the current material relationships and goodwill of the Group Companies with Governmental Authorities, key customers and suppliers, and any other persons with which any Group Company has material business relations.

 

(b)                                 In furtherance and without limitation of Section 5.01(a), except as set forth in Section 5.01(b) of the Company Disclosure Schedule, or as required by applicable Law or as expressly provided in Section 6.14, the Company will not, and will not permit any of its Subsidiaries to, between the date of this Agreement and the Effective Time, directly or indirectly, do, or propose to do, any of the following without the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed):

 

(i)                                     amend or otherwise change the memorandum and articles of association or equivalent organizational documents of the Company, or make any

 

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material amendments to the memorandum and articles of association or equivalent organizational documents of any other Group Company;

 

(ii)                                  issue, sell, transfer, lease, sublease, license, pledge, dispose of, grant or encumber, or authorize the issuance, sale, transfer, lease, sublease, license, pledge, disposition, grant or encumbrance of, (A) any shares of any class of any Group Company, or any options, warrants, convertible securities or other rights of any kind (including any Company Share Award) to acquire any shares, or any other ownership interest (including, without limitation, any phantom interest), of any Group Company (other than (x) in connection with the exercise or settlement of any Company Share Awards outstanding on the date hereof in accordance with the applicable Share Incentive Plan and applicable award agreement or (y) in transactions solely among the Company’s wholly-owned Subsidiaries or between the Company and any of its wholly-owned Subsidiaries), or (B) any material property or assets (whether real, personal or mixed, and including leasehold interests, intangible property and Intellectual Property) of the Company or any Subsidiary (other than (x) sale of such property or assets or non-exclusive licenses, in each case, in the ordinary course of business and consistent with past practice or (y) in transactions solely among the Company’s wholly-owned Subsidiaries or between the Company and any of its wholly-owned Subsidiaries);

 

(iii)                               declare, set aside, make or pay any dividend or other distribution, payable in cash, shares, property or otherwise, with respect to any of its shares, other than dividends or other distributions from any Group Company to the Company or another Group Company which is wholly-owned by the Company;

 

(iv)                              reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its shares, or any options, warrants, convertible securities or other rights exchangeable into or convertible or exercisable for any of its share capital, in each case other than in connection with the settlement of any Company Share Awards in accordance with the applicable Share Incentive Plans and this Agreement;

 

(v)                                 (A) effect or commence any liquidation, dissolution, scheme of arrangement, merger, consolidation, amalgamation, recapitalization, restructuring, reorganization or similar transaction involving any Group Company (other than the Merger or any merger or consolidation among wholly-owned Subsidiaries of the Company), or (B) create any new Subsidiaries;

 

(vi)                              (A) acquire (including, without limitation, by merger, consolidation, scheme of arrangement, amalgamation or acquisition of stock or assets or any other business combination) or make any capital contribution or investment in any corporation, partnership, other business organization or any division thereof (other than a wholly-owned Subsidiary of the Company), or (B) acquire any assets (other than (x) in the ordinary course of business consistent with past practice or (y) assets of a wholly-owned Subsidiary of the Company);

 

(vii)                           (A) incur, assume, alter, amend or modify any Indebtedness, guarantee any Indebtedness, or issue any debt securities, in each case, in excess of US$7,000,000 individually or US$15,000,000 in the aggregate, or (B) make (x) any loans or advances to any director or executive officer of the Company or (y) any

 

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loans or advances in excess of US$500,000 individually or US$2,000,000 in the aggregate to any other person, in each case, other than Indebtedness receivable or payable solely between or among the Company’s wholly-owned Subsidiaries (including, for the purposes of this Section 5.01(b)(vii), the Operating Subsidiaries) or between or among the Company and any of its wholly-owned Subsidiaries (including, for the purposes of this Section 5.01(b)(vii), the Operating Subsidiaries);

 

(viii)                        create or grant any Lien on any material assets (including material Intellectual Property) of the Company or any Subsidiaries of the Company other than in the ordinary course of business consistent with past practice;

 

(ix)                              (A) authorize, or make any commitment with respect to, any single capital expenditure which is in excess of US$3,000,000, unless included in the Company’s current budget and operating plan approved by the Company Board, or (B) authorize or make any commitment with respect to capital expenditures which are, in the aggregate (including capital expenditures included in the Company’s budget and operating plan), in excess of US$20,000,000 for the Group Companies taken as a whole, in each case other than ordinary course expenditures necessary to maintain existing assets in good repair; or

 

(x)                                 guarantee the performance or other obligations of any person (other than guarantees in connection with any Indebtedness as permitted by the foregoing clause (vii));

 

(xi)                              except as otherwise required by Law or pursuant to any Company Employee Plan in existence as of the date hereof, (A) enter into any new employment or compensatory agreements in connection with employment or service (including the renewal of any such agreements), or terminate or amend any such agreements, with any director or officer of any Group Company or any other employee or individual service provider of any Group Company who has an annual base salary in excess of US$100,000, (B) grant or provide any severance or termination payments or benefits to any director, officer, employee or individual service provider of any Group Company, (C) increase the compensation, bonus or pension, welfare, severance or other benefits of, pay any bonus to, or grant, issue or make any new equity awards to any director, officer, employee or individual service provider of any Group Company, except annual base salary increases to non-officer employees of any Group Company made in the ordinary course consistent with past practice, (D) establish, adopt, amend or terminate any Company Employee Plan or any plan, agreement, program, policy, trust, fund or other arrangement that would be a Company Employee Plan if it were in existence as of the date of this Agreement or amend the terms of any outstanding Company Share Awards, (E) take any action to accelerate or otherwise alter the vesting or payment, or fund or in any other way secure the payment, of compensation or benefits under the Company Employee Plan, to the extent not already required in any such plan, including voluntarily accelerating the vesting of any Company Share Award in connection with the Merger, or (F) change any actuarial or other assumptions used to calculate funding obligations with respect to any Company Employee Plan or to change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP;

 

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(xii)                           make any material changes with respect to any method of financial accounting, or financial accounting policies or procedures, except as required by changes in GAAP or applicable Law;

 

(xiii)                        enter into, or materially amend or modify, or consent to the termination of any Material Contract (or any Contract that would be a Material Contract if such Contract had been entered into prior to the date hereof), or amend, waive, modify or consent to the termination of the Company’s or any Subsidiary’s material rights thereunder, or fail to comply with or breach in any material respect the Investment Documents;

 

(xiv)                       enter into any Contract between any of the Group Companies, on the one hand, and any of their respective directors or officers, on the other hand, in each case required to be disclosed pursuant to Item 7B or Item 19 of Form 20-F under the Exchange Act (except as permitted under Section 5.01(b)(xi));

 

(xv)                          terminate or cancel, let lapse, or amend or modify in any material respect, other than renewals in the ordinary course of business, any material insurance policies maintained by it which is not promptly replaced by a comparable amount of insurance coverage with reputable independent insurance companies or underwriters;

 

(xvi)                       commence any material Action (other than in respect of collection of amounts owed in the ordinary course of business) or settle any Action other than any settlement involving only the payment of monetary damages not in excess of US$1,000,000 not relating to this Agreement or the Transactions;

 

(xvii)                    engage in the conduct of any new line of business material to the Group Companies, taken as a whole;

 

(xviii)                 permit any item of material Intellectual Property to lapse or to be abandoned, dedicated, or disclaimed, other than (i) with respect to such Intellectual Property that is no longer used or useful in any of the Company’s or its Subsidiaries’ respective businesses and (ii) as required pursuant to Contracts in effect prior to the date hereof which have been provided or otherwise made available to Parent, fail to perform or make any applicable filings, recordings or other similar actions or filings with respect to material Intellectual Property, or fail to pay all required fees and taxes required or advisable to maintain and protect its interest in material Intellectual Property;

 

(xix)                       fail to make in a timely manner any filings or registrations with the SEC required under the Securities Act or the Exchange Act or the rules and regulations promulgated thereunder;

 

(xx)                          make or change any material Tax election, amend any material Tax Return, enter into any material closing agreement with respect to Taxes, surrender any right to claim a material refund of Taxes, settle or finally resolve any material controversy with respect to Taxes, consent to any extension or waiver of the statute of limitations applicable to any Tax claim or assessment relating to the Group Companies, or change any method of Tax accounting; or

 

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(xxi)                       authorize or agree to take any of the foregoing actions, or enter into any letter of intent (binding or nonbinding) or similar written agreement or arrangement with respect to any of the foregoing.

 

ARTICLE VI

 

ADDITIONAL AGREEMENTS

 

SECTION 6.01                                      Proxy Statement and Schedule 13E-3.  (a)  Promptly following the date hereof, the Company, with the assistance of Parent and Merger Sub, shall prepare and cause to be filed with the SEC a proxy statement relating to the approval of this Agreement, the Plan of Merger and the Transactions by the shareholders of the Company (such proxy statement, as amended or supplemented, being referred to herein as the “Proxy Statement”).  Concurrently with the preparation of the Proxy Statement, the Company and Parent shall jointly prepare and cause to be filed a Schedule 13E-3 with the SEC. Each of the Company and Parent shall use its reasonable best efforts so that the Schedule 13E-3 will comply as to form in all material respects with the requirements of the Exchange Act and the rules and regulations promulgated thereunder.  Each of the Company and Parent shall use its reasonable best efforts to respond promptly to any comments of the SEC with respect to the Proxy Statement and Schedule 13E-3.  Each of the Company and Parent shall furnish all information concerning such party to the other as may be reasonably requested in connection with the preparation, filing and distribution of the Proxy Statement and Schedule 13E-3.  The Company shall promptly notify Parent upon the receipt of any comments from the SEC or its staff or any request from the SEC or its staff for amendments or supplements to the Proxy Statement and Schedule 13E-3 and shall provide Parent with copies of all correspondence between it and its representatives, on the one hand, and the SEC and its staff, on the other hand.  Prior to filing or mailing the Proxy Statement and Schedule 13E-3 (or any amendment or supplement thereto) or responding to any comments of the SEC with respect thereto, the Company (i) shall provide Parent a reasonable opportunity to review and comment on such document or response, (ii) shall include in such document or response all comments reasonably proposed by Parent and (iii) shall not file or mail such document or respond to the SEC prior to receiving the approval of Parent (which approval shall not be unreasonably withheld, conditioned or delayed).  If at any time prior to the Shareholders’ Meeting, any information relating to the Company, Parent or any of their respective affiliates, officers or directors, is discovered by the Company or Parent which should be set forth in an amendment or supplement to the Proxy Statement and Schedule 13E-3 so that the Proxy Statement and Schedule 13E-3 shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, the party which discovers such information shall promptly notify the other parties hereto and an appropriate amendment or supplement describing such information shall be filed with the SEC and, to the extent required by applicable Law, disseminated to the shareholders of the Company.

 

(b)                                 Parent represents and covenants that the information supplied by Parent for inclusion in the Proxy Statement and Schedule 13E-3 will not, at (i) the time the Proxy Statement and Schedule 13E-3 (or any amendment thereof or supplement thereto) are filed with the SEC, (ii) the time the Proxy Statement (or any amendment thereof or supplement thereto) is first mailed to the shareholders of the Company, and (iii) the time of the Shareholders’ Meeting, contain any untrue statement of a material fact or fail to state any

 

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material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that no representation or warranty is made by Parent or Merger Sub with respect to information supplied by or on behalf of the Company for inclusion or incorporation by reference in the Proxy Statement or Schedule 13E-3.

 

(c)                                  The Company represents and covenants that the information supplied by the Company for inclusion in the Proxy Statement and Schedule 13E-3 will not, at (i) the time the Proxy Statement and Schedule 13E-3 (or any amendment thereof or supplement thereto) are filed with the SEC, (ii) the time the Proxy Statement (or any amendment thereof or supplement thereto) is first mailed to the shareholders of the Company, and (iii) the time of the Shareholders’ Meeting, contain any untrue statement of a material fact or fail to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that no representation or warranty is made by the Company with respect to information supplied by or on behalf of Parent or Merger Sub for inclusion or incorporation by reference in the Proxy Statement or Schedule 13E-3.  The Company covenants that all documents that the Company is responsible for filing with and/or furnishing to the SEC in connection with any of the Transactions will comply as to form and substance in all material respects with the applicable requirements of the Securities Act, the Exchange Act and the rules and regulations promulgated thereunder, other than with respect to any information supplied by Parent or Merger Sub.

 

SECTION 6.02                                      Company Shareholders’ Meeting.  (a) As soon as reasonably practicable following the date of this Agreement, the Company shall cause a definitive Proxy Statement, letter to shareholders, notice of meeting and form of proxy accompanying the definitive Proxy Statement that will be provided to the holders of Ordinary Shares in connection with the solicitation of proxies for use at the Shareholders’ Meeting, to be mailed to the holders of Ordinary Shares at the earliest practicable date after the date that the SEC confirms it has no further comments, and, if necessary in order to comply with applicable Laws, after the Proxy Statement shall have been so mailed, promptly circulate amended, supplemental or supplemented proxy material, and, if required in connection therewith, re-solicit proxies.

 

(b)                                 As promptly as reasonably practicable after the SEC confirms that it has no further comments on the Schedule 13E-3 and Proxy Statement, the Company shall take, in accordance with applicable Law and its memorandum and articles of association, regardless of whether the Company Board determines at any time that this Agreement is no longer advisable or recommends that the shareholders of the Company reject it or any other Change in the Company Recommendation has occurred at any time, all actions reasonably necessary to (i) call, give notice of, set a record date for, and convene the shareholders’ meeting for the purpose of obtaining the Requisite Company Vote (the “Shareholders’ Meeting”), (ii) instruct or otherwise cause the Depositary to (A) fix the record date established by the Company for the Shareholders’ Meeting as the record date for determining the holders of ADSs who shall be entitled to give instructions for the exercise of the voting rights pertaining to the Ordinary Shares represented by ADSs (the “Record ADS Holders”), (B) provide all proxy solicitation materials to all Record ADS Holders and (C) vote all Ordinary Shares represented by ADSs in accordance with the instructions of such corresponding Record ADS Holders.  Except with the prior written consent of Parent, the only matter (other than procedural matters) that shall be proposed to be acted upon by the

 

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shareholders of the Company at the Shareholders’ Meeting shall be approval of this Agreement, the Plan of Merger and the Merger.

 

(c)                                  The Company may, and Parent may request that the Company, adjourn the Shareholders’ Meeting for up to thirty (30) days (but in any event no later than five (5) Business Days prior to the Termination Date) (x) if as of the time for which the Shareholders’ Meeting is originally scheduled (as set forth in the Proxy Statement) there are insufficient Shares represented (either in person or by proxy) voting in favor of approval of this Agreement and the Transactions to obtain the Requisite Company Vote or (y) at the reasonable request of any party hereto, in order to allow reasonable additional time for the filing and, if necessary or desirable, mailing of any supplemental or amended disclosure to be reviewed by the Company’s shareholders prior to the Shareholders’ Meeting, in which event the Company shall, in each case, cause the Shareholders’ Meeting to be adjourned.

 

(d)                                 Once the Company has established the record date, the Company shall not change such record date or establish a different record date for the Shareholders’ Meeting without the prior written consent of Parent, unless required to do so by applicable Law, the memorandum and articles of association of the Company, or if the Board has determined (based on the advice of outside legal counsel) that failure to do so would be reasonably likely to violate the directors’ fiduciary duties under applicable Law.  In the event that the date of the Shareholders’ Meeting as originally called is for any reason adjourned or otherwise delayed, the Company agrees that, unless Parent shall have otherwise approved in writing, it shall implement such adjournment or other delay in such a way that the Company does not establish a new record date for the Shareholders’ Meeting, as so adjourned or delayed, except as required by applicable Law or the memorandum and articles of association of the Company, or if the Board has determined (based on the advice of outside legal counsel) that failure to do so would be reasonably likely to violate the directors’ fiduciary duties under applicable Law.

 

(e)                                  Subject to Section 6.04(c), the Company Board shall recommend to holders of the Ordinary Shares that they approve and authorize this Agreement, the Plan of Merger and the Transactions, and shall include such recommendation in the Proxy Statement.  The Company shall use its reasonable best efforts to solicit from its shareholders proxies in favor of the approval of this Agreement, the Plan of Merger and the Transactions and shall take all other actions reasonably necessary or advisable to secure the Requisite Company Vote.  Notwithstanding anything to the contrary contained in this Agreement, the obligations of the Company under this Section 6.02 shall not be limited or otherwise affected by the commencement, disclosure, announcement or submission to it of any Acquisition Proposal, or by any Change in the Company Recommendation.

 

(f)                                   Unless this Agreement has been terminated in accordance with its terms or the Company Board has effected a change in the Company Recommendation, Parent shall, at the Shareholders’ Meeting, vote all Ordinary Shares for which Parent has voting power (including, without limitation, to the extent permitted under AIL’s proxy pursuant to the Support Agreement), in favor of the authorization and approval of this Agreement, the Plan of Merger and the Transactions.

 

SECTION 6.03                                      Access to Information.  (a)  From the date hereof until the Effective Time and subject to applicable Law, upon reasonable advance notice from Parent, the Company shall (i) provide to Parent and its Representatives reasonable access during normal business hours to the offices, properties, books and records of the Group Companies,

 

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(ii) furnish to Parent and its Representatives such existing financial and operating data and other existing information as such persons may reasonably request, and (iii) instruct the Representatives of the Group Companies to reasonably cooperate with Parent and its Representatives in its investigation; provided that the Company shall not be required to (A) furnish, or provide access to, any information to any person not a party to, or otherwise covered by, the Confidentiality Agreement with respect to such information, or (B) provide access to or furnish any information if doing so would (x) violate any Contract with any third party or any applicable Law, or (y) cause any Group Company, upon advice of outside legal counsel, to waive any privilege with respect to such information, provided that the Company shall take all commercially reasonable steps to permit inspection of or to disclose such information on a basis that does not waive such Group Company’s privilege with respect thereto, including, without limitation, by means of a joint interest or defense agreement.

 

(b)                                 No investigation pursuant to this Section 6.03 shall affect any representation or warranty in this Agreement of any party hereto or any condition to the obligations of the parties hereto.

 

SECTION 6.04                                      No Solicitation of Transactions.  (a)  The Company agrees that no Group Company and none of the directors or officers of any Group Company shall, and that it shall direct its and its Subsidiaries’ Representatives (including, without limitation, any investment banker, attorney or accountant retained by it or any Group Company), not to, in each case, directly or indirectly, (i) solicit, initiate or knowingly encourage (including by way of furnishing information in a manner designed to encourage), or take any other action to facilitate, any inquiries or the making of any Acquisition Proposal (including, without limitation, any proposal or offer to its shareholders) that constitutes, or would reasonably be expected to lead to, any Acquisition Proposal, or (ii) enter into, maintain or continue discussions or negotiations with, or provide any nonpublic information relating to any Group Company or the Transactions to, any person or entity in connection with, or in order to obtain, an Acquisition Proposal, or (iii) agree to, approve, adopt, endorse or recommend (or publicly propose to agree to approve, adopt, endorse or recommend) any Acquisition Proposal, or enter into any letter of intent, Contract, commitment or obligation contemplating or otherwise relating to, or consummate, any Acquisition Proposal , or (iv) authorize or permit any of the officers, directors or Representatives of any Group Company to take any action set forth in clauses (a)(i) — (a)(iii) of this Section 6.04 (in each case, other than to the extent expressly permitted pursuant to Section 6.04(b) or Section 6.04(c)).  The Company shall notify Parent in writing as promptly as practicable (and in any event within forty-eight (48) hours after the Company has knowledge thereof), of any proposal or offer, or any request for information or other inquiry or request, that could reasonably be expected to lead to an Acquisition Proposal, specifying (x) the material terms and conditions thereof (including material amendments or proposed material amendments) and providing, if applicable, copies of any written requests, proposals or offers, including proposed agreements, (y) the identity of the party making such proposal or offer or inquiry or contact, and (z) whether the Company has determined to provide confidential information to such person.  The Company shall keep Parent informed, on a reasonably current basis (and in any event within forty-eight (48) hours of the occurrence of any material changes, developments, discussions or negotiations) of the status and terms of any such proposal, offer, inquiry, contact or request and of any material changes in the status and terms of any such proposal, offer, inquiry, contact or request (including the material terms and conditions thereof) and providing, if applicable, copies of any written requests, proposals or offers, including proposed agreements.  The Company immediately shall cease and cause to be terminated all

 

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existing discussions or negotiations with any parties conducted heretofore with respect to an Acquisition Proposal.  The Company shall not, and shall cause its Subsidiaries not to, enter into any confidentiality agreement with any Third Party which prohibits the Company from providing such information to Parent, or release any Third Party from, or waive any provision of, any confidentiality or standstill agreement in connection with an Acquisition Proposal.

 

(b)                                 Subject to compliance with the other provisions of this Section 6.04, prior to obtaining the Requisite Company Vote, the Company Board may directly or indirectly through the Company’s Representatives (i) contact any Third Party that has made an unsolicited, written, bona fide proposal or offer regarding an Acquisition Proposal that was not initiated or solicited in breach of Section 6.04(a) solely in order to clarify the terms and conditions thereof so as to assess whether such proposal or offer constitutes or is reasonably expected to result in a Superior Proposal, and (ii) furnish information to, and enter into discussions with, such Third Party to the extent the Special Committee has (A) determined in good faith (after consultation with a financial advisor who shall be an internationally recognized investment banking firm and outside legal counsel, as applicable) that such proposal or offer constitutes or is reasonably likely to result in a Superior Proposal, and that, in light of such Superior Proposal, failure to furnish such information to or enter into discussions with such Third Party would be reasonably likely to violate the directors’ fiduciary duties under applicable Law, and (B) obtained from such person an executed confidentiality agreement on terms no less favorable to the Company in the aggregate than those contained in the Confidentiality Agreement (it being understood that such confidentiality agreement and any related agreements shall not include any provision for any exclusive right to negotiate with such party or having the effect of prohibiting the Company from satisfying its obligations under this Agreement); provided that the Company shall provide written notice to Parent at least one (1) Business Day prior to taking any action set forth in clauses (b)(i) of this Section 6.04, provide written notice to Parent at least forty-eight (48) hours prior to taking any action set forth in (b)(ii) of this Section 6.04 and shall concurrently make available to Parent any material information concerning any Group Company that is provided to any such person and that was not previously made available to Parent or its Representatives.

 

(c)                                  Except as set forth in this Section 6.04(c), neither the Company Board nor any committee thereof shall (i) (A) withhold, withdraw, qualify, amend or modify in a manner adverse to Parent or Merger Sub, or propose (publicly or otherwise) to withhold, withdraw, qualify, amend or modify in a manner adverse to Parent or Merger Sub, the Company Recommendation or (B) if a tender offer or exchange offer that constitutes an Acquisition Proposal is commenced, fail to recommend against acceptance of such tender offer or exchange offer by its shareholders within ten (10) Business Days after commencement (any of such actions described in the foregoing clause (A) or (B), a “Change in the Company Recommendation”) or (C) adopt, approve, endorse or recommend, or propose (publicly or otherwise) to adopt, approve, endorse or recommend any Acquisition Proposal, provided that a “stop, look and listen” communication by the Company Board or the Special Committee pursuant to Rule 14d-9(f) of the Exchange Act, or any substantially similar communication with respect to an Acquisition Proposal, which did not result from any breach of this Section 6.04(c) shall not be deemed to be a Change in the Company Recommendation, nor (ii) cause or permit the Company or any of its Subsidiaries to enter into any letter of intent, Contract, commitment or obligation with respect to any Acquisition Proposal.  Notwithstanding the foregoing but subject to compliance by the Company and the Company Board with this Section 6.04, from the date of this Agreement and at any time prior

 

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to the receipt of the Requisite Company Vote, if the Company has received an unsolicited, bona fide written Acquisition Proposal and the Special Committee determines, in its good faith judgment, upon advice by a financial advisor who shall be an internationally recognized investment banking firm and outside legal counsel, that such proposal or offer constitutes a Superior Proposal and failure to make a Change in the Company Recommendation would be reasonably likely to violate the directors’ fiduciary duties under applicable Law, the Company Board may, upon the unanimous recommendation of the Special Committee, effect a Change in the Company Recommendation with respect to such Superior Proposal but only if:

 

(1)                                 prior to effecting a Change in the Company Recommendation, the Company shall have complied with the requirements of Sections 6.04(a) and 6.04(b) and shall (x) provide at least thirty (30) days’ prior written notice to Parent (the “Notice Period”) advising Parent that the Company Board has received a Superior Proposal, specifying the material terms and conditions of such Superior Proposal and identifying the person making such Superior Proposal and indicating that the Company Board intends to effect a Change in the Company Recommendation and the manner in which it intends (or may intend) to do so, it being understood that such notice or any amendment or update thereto or the determination to so deliver such notice shall not constitute a Change in the Company Recommendation, (y) negotiate with and cause its financial and legal advisors to negotiate with Parent and its Representatives in good faith (to the extent Parent desires to negotiate) to make such adjustments in the terms and conditions of this Agreement so that such Superior Proposal would cease to constitute a Superior Proposal or so that a failure to effect a Change in the Company Recommendation would no longer be reasonably likely to violate the directors’ fiduciary duties under applicable Law, and (z) permit Parent and its Representatives to make a presentation to the Company Board and the Special Committee regarding this Agreement and any proposed modifications or adjustments with respect thereto (to the extent Parent desires to make such presentation) and consider in good faith any modifications or adjustments regarding this Agreement proposed by Parent; provided that any material modifications to such Acquisition Proposal that the Special Committee previously determined to be a Superior Proposal shall be deemed a new Acquisition Proposal and the Company shall be required to again comply with the requirements of this Section 6.04(c);

 

(2)                                 Parent has not exercised its right of first offer under the Investor Documents with respect to such Superior Proposal prior to the end of the Notice Period; and

 

(3)                                 following the end of the Notice Period (and any renewed period thereof), the Special Committee shall have unanimously determined in good faith (after consultation with a financial advisor who shall be an internationally recognized investment banking firm and outside legal counsel, as applicable) after considering the terms of any modifications or adjustments to this Agreement proposed by Parent, that (x) such Acquisition Proposal continues to constitute a Superior Proposal and (y) with respect to a Change in the Company Recommendation, failure to effect a Change in the Company Recommendation would be reasonably likely to violate the directors’ fiduciary duties under applicable Laws, and shall have communicated its unanimous recommendation to the Company Board

 

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to effect a Change in the Company Recommendation with respect to such Superior Proposal.

 

SECTION 6.05                                      Directors’ and Officers’ Indemnification and Insurance.  (a)  The memorandum and articles of association of the Surviving Company shall contain provisions no less favorable with respect to exculpation and indemnification than are set forth in the memorandum and articles of association of the Company in effect as of the date hereof, which provisions shall not be amended, repealed or otherwise modified for a period of six (6) years from the Effective Time in any manner that would affect adversely the rights thereunder of individuals who, at or prior to the Effective Time, were directors or officers of the Company, unless such modification shall be required by Law.

 

(b)                                 The Surviving Company shall maintain in effect for six (6) years from the Effective Time, the current directors’ and officers’ liability insurance policies maintained by the Company as of the date hereof with respect to matters occurring prior to the Effective Time, including acts or omissions occurring in connection with this Agreement and the consummation of the Transactions (the parties covered thereby, the “Indemnified Parties”); provided, however, that the Surviving Company may substitute therefor policies of at least the same coverage containing terms and conditions that are no less favorable, and provided, further, that in no event shall the Surviving Company be required to expend pursuant to this Section 6.05(b) more than an amount per year equal to 300% of current annual premiums paid by the Company for such insurance.  In addition, the Company may and, at Parent’s request, the Company shall, purchase a six (6)-year “tail” prepaid policy prior to the Effective Time on terms and conditions no less advantageous to the Indemnified Parties than the existing directors’ and officers’ liability insurance maintained by the Company.  If such “tail” prepaid policies have been obtained by the Company prior to the Effective Time, the Surviving Company shall, and Parent shall cause the Surviving Company to, maintain such policies in full force and effect, and continue to honor the respective obligations thereunder, and all other obligations of Parent or Surviving Company under this Section 6.05(b) shall terminate.

 

(c)                                  Subject to the terms and conditions of this Section 6.05, from and after the Effective Time, the Surviving Company shall comply with all of the Company’s obligations, and shall cause its Subsidiaries to comply with their respective obligations to indemnify and hold harmless (including any obligations to advance funds for expenses) the present and former officers and directors thereof against any and all costs or expenses (including reasonable attorneys’ fees and expenses), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement in connection with any actual or threatened claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of, relating to or in connection with (i) the fact that such person is or was a director or officer of the Company or such Subsidiary or (ii) any acts or omissions occurring or alleged to have occurred prior to or at the Effective Time, to the extent provided under the Company’s or such Subsidiaries’ respective organizational and governing documents or agreements in effect on the date hereof (true and complete copies of which shall have been delivered to Parent prior to the date hereof) and to the fullest extent permitted by the CICL or any other applicable Law, including the approval of this Agreement, the Merger or the other Transactions or arising out of or pertaining to the Transactions and actions to enforce this provision or any other indemnification or advancement right of any such person; provided that this Section 6.05(c) is not intended to confer any new or additional rights on any such person, and the indemnification and other

 

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obligations of the Company set forth above shall be subject to any limitation imposed from time to time under applicable Law and the Company’s and its Subsidiaries’ respective organizational and governing documents in effect as of the date hereof.

 

(d)                                 In the event the Surviving Company or any of its successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any person, then, and in each such case, proper provision shall be made so that the successors and assigns of the Surviving Company or at Parent’s option, Parent, shall assume the obligations set forth in this Section 6.05.

 

(e)                                  The provisions of this Section 6.05 shall survive the consummation of the Merger and are intended to be for the benefit of, and shall be enforceable by, each of the Indemnified Parties and their heirs and legal representatives, each of which shall be a third-party beneficiary of the provisions of this Section 6.05.

 

(f)                                   Nothing in this Agreement is intended to, shall be construed to or shall release, waive or impair any rights to directors’ and officers’ insurance claims under any policy that is or has been in existence with respect to the Company or any of its Subsidiaries or their respective officers, directors and employees, it being understood and agreed that the indemnification provided for in this Section 6.05 is not prior to or in substitution for any such claims under any such policies.

 

SECTION 6.06                                      Notification of Certain Matters.  Each of the Company and Parent shall promptly notify the other in writing of:

 

(a)                                 any notice or other communication from any person alleging that the consent of such person is or may be required in connection with the Transactions;

 

(b)                                 any notice or other communication from any Governmental Authority in connection with the Transactions;

 

(c)                                  any Actions commenced or, to the knowledge of the Company or the knowledge of Parent, threatened against the Company or any of its Subsidiaries or Parent and any of its Subsidiaries, as the case may be, that, if pending on the date of this Agreement, would have been required to have been disclosed by such party pursuant to any of such party’s representations and warranties contained herein, or that relate to such party’s ability to consummate the Transactions; and

 

(d)                                 if a breach of any representation or warranty or failure to perform any covenant or agreement on the part of such party set forth in this Agreement shall have occurred that would cause the conditions set forth in Sections 7.01, 7.02 and 7.03 not to be satisfied;

 

together, in each case, with a copy of any such notice, communication or Action; provided, that the delivery of any notice pursuant to this Section 6.06 shall not (A) cure any breach of, or non-compliance with, any other provision of this Agreement, (B) be deemed to amend or supplement the Company Disclosure Schedule, or (C) limit or otherwise affect the remedies available hereunder to the party receiving such notice.

 

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SECTION 6.07                                      Further Action; Reasonable Best Efforts.  (a)  Upon the terms and subject to the conditions of this Agreement, Parent shall as promptly as practicable make any filings, and thereafter make any other required submissions, with respect to the Transactions with or to each Governmental Authority with jurisdiction over enforcement of the antitrust or competition Laws if such filing is specified by Parent to the Company in writing (the “Specified Filings”), and each party shall reasonably coordinate and cooperate with the other parties in exchanging such information and providing such assistance as Parent may reasonably request in connection therewith.  In addition, each of the parties hereto shall (i) notify the other parties as promptly as practicable of any communication (whether oral or written) it or any of its affiliates receives from any Governmental Authority in connection with the Transactions, (ii) permit the other parties to review in advance, and consult with the other parties on (and obtain the prior written consent of Parent with respect to), any proposed filing, submission or communication (whether oral or written) by such party with or to any Governmental Authority in connection with the Transactions (including, for the avoidance of doubt, the Specified Filings), and (iii) to the extent permitted by such Governmental Authority, give the other parties the opportunity to attend and participate at (and obtain the prior written consent (not to be unreasonably withheld, conditioned or delayed) of the Company or Parent, as applicable, with respect to agreeing to or scheduling) any meeting or conference with any Governmental Authority in connection with the Transactions.  Notwithstanding the foregoing or anything contained herein to the contrary, neither the Company nor Parent or Merger Sub shall make any filings or submissions with respect to the Transactions with or to, or seek any approvals from, any Governmental Authority with jurisdiction over enforcement of antitrust or competition Laws other than the Specified Filings.

 

(b)                                 Notwithstanding anything in this Agreement to the contrary, with respect to the matters covered in this Section 6.07, Parent shall, after consulting with the Company and considering the Company’s views in good faith, to the extent permitted by applicable Law, take the lead in communicating with any Governmental Authority with respect to the Transactions and developing strategy for responding to any investigation or other inquiry by any Governmental Authority related to the Transactions, and, subject to its obligations under Section 6.07, shall make all final decisions with respect to any requests that may be made by, or any actions, consents, undertakings, approvals, or waivers that may be sought by or from, any Governmental Authority related to the Transactions, including determining the manner in which to contest or otherwise respond, by litigation or otherwise, to objections to, or proceedings or other actions by any Governmental Authority related to the Transactions.

 

(c)                                  Each party hereto shall, upon request by any other party, furnish such other party with all information concerning itself, its Subsidiaries, directors, officers and shareholders and such other matters as may be reasonably necessary or advisable in connection with the Proxy Statement, the Schedule 13E-3, or any other statement, filing, notice or application made by or on behalf of Parent, Merger Sub, the Company or any of their respective affiliates to any Governmental Authority in connection with the Merger and the Transactions.

 

(d)                                 Subject to the restrictions and other provisions of this Section 6.07, each party hereto shall use its reasonable best efforts to do and perform, or cause to be done and performed, all such further acts and things as may be necessary or desirable in order to consummate the Transactions.

 

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SECTION 6.08                                      Participation in Litigation.  Prior to the Effective Time, (a) each of Parent and the Company shall give prompt notice to the other of any Actions by shareholders of the Company commenced or, to the knowledge of Parent or the Company, as the case may be, threatened, against the Company and/or its directors which relate to this Agreement or the Transactions, and (b) the Company shall give Parent the opportunity to participate in the defense or settlement of any such shareholder Action against the Company and/or its directors relating to this Agreement or the Transactions, and, no such Action shall be settled or compromised, and the Company shall not take any action to adversely affect or prejudice any such Action, without Parent’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed).

 

SECTION 6.09                                      Resignations.  To the extent requested by Parent in writing at least three (3) Business Days prior to Closing, on the Closing Date, the Company shall use reasonable best efforts to cause to be delivered to Parent duly signed resignations, which shall include a waiver of any claims against the Group Companies in respect of such resignations, effective as of the Effective Time, of the directors of any Group Company designated by Parent.

 

SECTION 6.10                                      Public Announcements.  Except as may be required by applicable Law, the press release announcing the execution of this Agreement shall be issued only in such form as shall be mutually agreed upon by the Company and Parent.  Thereafter, Parent and the Company shall consult with each other before issuing any press release, having any communication with the press (whether or not for attribution), making any other public statement or scheduling any press conference or conference call with investors or analysts with respect to this Agreement or the Transactions and shall not, without the prior written consent of the other party (such consent to not be unreasonably withheld), issue any such press release, have any such communication, make any such other public statement or schedule any such press conference or conference call prior to such consultation; provided, however, that, in the event a party is required by applicable Law to make any press release, communication, other public statement, press conference or conference call, as the case may be, such party may do so without Parent’s (if the Company is the disclosing Party) or the Company’s (if Parent or Merger Sub is the disclosing party) prior written consent provided such party (i) individually notifies Parent (if the Company is the disclosing Party) or the Company (if Parent or Merger Sub is the disclosing party), in each case, in writing, of such press release, communication, other public statement, press conference or conference call to the extent legally permissible, (ii) only discloses information in respect of this Agreement and the Transactions to the extent required by applicable Law, upon the advice of outside counsel, and (iii) incorporates all reasonable comments of Parent (if the Company is the disclosing party) or the Company (if Parent or Merger Sub is the disclosing party), to the extent legally permissible.  Notwithstanding the foregoing, the restrictions set forth in this Section 6.10 shall not apply to any release or announcement made or proposed to be made by the Company pursuant to Section 6.04(c).

 

SECTION 6.11                                      Stock Exchange Delisting.  Prior to the Effective Time, the Company shall cooperate with Parent and use reasonable best efforts to take, or cause to be taken, all actions, and do or cause to be done all things, reasonably necessary, proper or advisable on its part under applicable Laws and rules and policies of NYSE to enable the delisting by the Surviving Company from NYSE and the deregistration of the Class A Ordinary Shares under the Exchange Act as promptly as practicable after the Effective Time.

 

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SECTION 6.12                                      Takeover Statutes.  If any Takeover Statute other than the CICL is or may become applicable to any of the Transactions, the parties shall use their respective reasonable best efforts (a) to take all action necessary so that no Takeover Statute is or becomes applicable to any of the Transactions and (b) if any such Takeover Statute is or becomes applicable to any of the foregoing, to take all action necessary (including, in the case of the Company and the Company Board, grant all necessary approvals) so that the Transactions may be consummated as promptly as practicable on the terms contemplated by this Agreement, including all actions to eliminate or lawfully minimize the effects of such Takeover Statute on the Merger and the other Transactions.

 

SECTION 6.13                                      SAFE Registration.  The Company shall as soon as practicable after the date hereof, (a) assist in the preparation of applications to SAFE by management members of the Company who are PRC residents for the registration of their respective holdings of Ordinary Shares (whether directly or indirectly) in accordance with the requirements of the SAFE Rules and Regulations (or any successor PRC Law), including by promptly providing such management members with such information relating to any Group Company as is required for such application, and (b) cause its Onshore Subsidiaries (to the extent applicable) to comply with the requirements of the SAFE Rules and Regulations  (or any successor PRC Law), including without limitation the required filings with SAFE in respect of the termination of any Share Incentive Plan, as applicable, at the Effective Time.

 

SECTION 6.14                                      Other Actions.  Prior to the Effective Time, the Company shall take the actions set forth in Section 6.14 of the Company Disclosure Schedule.

 

ARTICLE VII

 

CONDITIONS TO THE MERGER

 

SECTION 7.01                                      Conditions to the Obligations of Each Party.  The obligations of the Company, Parent and Merger Sub to consummate the Merger are subject to the satisfaction or waiver (where permissible) of the following conditions:

 

(a)                                 Shareholder Approval.  The Requisite Company Vote shall have been obtained in accordance with the CICL and the Company’s memorandum and articles of association.

 

(b)                                 No Injunction.  No Governmental Authority of competent jurisdiction shall have issued any injunction, restraining order or judgment which is then in effect that prohibits the consummation of the Transactions.

 

SECTION 7.02                                      Conditions to the Obligations of Parent and Merger Sub.  The obligations of Parent and Merger Sub to consummate the Merger are subject to the satisfaction or waiver (where permissible) of the following additional conditions:

 

(a)                                 Representations and Warranties.  (i) Other than the representations and warranties of the Company contained in Sections 3.03(a) (Capitalization), 3.04 (Authority Relative to this Agreement; Fairness), 3.05(a)(i) (No Conflict; Required Filings and Consents) and 3.21 (Brokers), the representations and warranties of the Company contained in this Agreement (disregarding for this purpose any limitation or qualification by “materiality” or “Company Material Adverse Effect” or any words of similar import set forth therein) shall be true and correct in all respects as of the date hereof and as of the Closing, as

 

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though made on and as of such date and time (except to the extent expressly made as of an earlier date, in which case as of such earlier date), except to the extent such failures to be true and correct, would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect; and (ii) the representations and warranties set forth in Sections 3.03(a), 3.04, 3.05(a)(i) and 3.21 shall be true and correct in all respects as of the date hereof and as of the Closing, as though made on and as of such date and time (except to the extent expressly made as of an earlier date, in which case as of such earlier date and except, with respect to Section 3.03(a), de minimis inaccuracies that do not, individually or in the aggregate, increase the aggregate amount of the Merger Consideration by more than US$200,000).

 

(b)                                 Agreements and Covenants.  The Company shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Closing.

 

(c)                                  Officer Certificate.  The Company shall have delivered to Parent a certificate, dated the Closing Date, signed by a senior executive officer of the Company, certifying as to the satisfaction of the conditions specified in Sections 7.02(a), 7.02(b) and 7.02(d).

 

(d)                                 Material Adverse Effect.  Since the date of this Agreement, there shall not have occurred and be continuing a Company Material Adverse Effect.

 

SECTION 7.03                                      Conditions to the Obligations of the Company.  The obligations of the Company to consummate the Merger are subject to the satisfaction or waiver (where permissible) of the following additional conditions:

 

(a)                                 Representations and Warranties.  The representations and warranties of Parent and Merger Sub contained in this Agreement (disregarding for this purpose any limitation or qualification by “materiality”) shall be true and correct in all material respects as of the date hereof and as of the Closing, as though made on and as of such date and time (except to the extent expressly made as of an earlier date, in which case as of such earlier date), except to the extent such failures to be true and correct, would not, individually or in the aggregate, reasonably be expected to prevent the consummation of any of the Transactions.

 

(b)                                 Agreements and Covenants.  Parent and Merger Sub shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Closing.

 

(c)                                  Officer Certificate.  Parent shall have delivered to the Company a certificate, dated the Closing Date, signed by an executive officer of Parent, certifying as to the satisfaction of the conditions specified in Sections 7.03(a) and 7.03(b).

 

SECTION 7.04                                      Frustration of Closing Conditions.  Prior to the Termination Date, none of the Company, Parent or Merger Sub may rely on the failure of any condition set forth in Article VII to be satisfied if such failure was caused by such party’s failure to act in good faith to comply with this Agreement and consummate the Transactions.

 

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ARTICLE VIII

 

TERMINATION, AMENDMENT AND WAIVER

 

SECTION 8.01                                      Termination.  This Agreement may be terminated and the Merger and the other Transactions may be abandoned at any time prior to the Effective Time (provided that, in the case of the Company, any such action must be authorized by a unanimous recommendation of the Special Committee), as follows:

 

(a)                                 by mutual written consent of Parent and the Company;

 

(b)                                 by either Parent or the Company, if:

 

(i)                                     the Effective Time shall not have occurred on or before May 6, 2016 (such date as may be extended in accordance with this Section 8.01(b)(i), the “Termination Date”), provided that the right to terminate this Agreement pursuant to this Section 8.01(b)(i) shall not be available to any party if the circumstances described in this Section 8.01(b)(i) are primarily caused by such party’s failure to comply with its obligations under this Agreement; and provided, further, that the Termination Date may be extended by Parent or the Company (by written notice to the other party) to a date which is no later than August 8, 2016 in the event that, on the Termination Date, (x) all of the conditions to Closing (other than those that by their terms are to be satisfied at the Closing) have been satisfied or waived (provided that the conditions to Closing that by their terms are to be satisfied at the Closing would be satisfied as of the Termination Date if the Closing were to occur on the Termination Date), (y) Parent has made a Specified Filing for which it has not received consent or approval for the Merger from the applicable Governmental Authority and (z) the Closing has not occurred pursuant to the proviso in Section 1.02, and following any such extension, the “Termination Date” for all purposes hereunder shall be deemed to be such extended date;

 

(ii)                                  an Injunction shall have been issued; or

 

(iii)                               if the Requisite Company Vote is not obtained at the Shareholders’ Meeting or any adjournment thereof at which this Agreement has been voted upon;

 

(c)                                  by the Company if there shall have been a breach of any representation, warranty, covenant or agreement on the part of Parent and Merger Sub set forth in this Agreement (including a failure by Parent and Merger Sub to complete the Closing subject to and in accordance with Section 1.02), or if any representation or warranty of Parent and Merger Sub shall have become untrue, in either case such that the conditions set forth in Section 7.03(a) or Section 7.03(b) would not be satisfied; provided, however, that, the Company shall not have the right to terminate this Agreement pursuant to this Section 8.01(c) if the Company is then in material breach of any of its representations, warranties, covenants or other agreements hereunder; or

 

(d)                                 by Parent:

 

(i)                                     if there shall have been a breach of any representation, warranty, covenant or agreement on the part of the Company set forth in this

 

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Agreement, or if any representation or warranty of the Company shall have become untrue, in either case such that the conditions set forth in Section 7.02(a) or Section 7.02(b) would not be satisfied; provided, however, that, Parent shall not have the right to terminate this Agreement pursuant to this Section 8.01(d)(i) if either Parent or Merger Sub is then in material breach of any of its representations, warranties, covenants or other agreements hereunder; or

 

(ii)                                  if (A) there shall have been a Change in the Company Recommendation, (B) the Company Board shall have adopted, approved, endorsed or recommended, or shall have proposed publicly to adopt, approve, endorse or recommend, an Acquisition Proposal, (C) the Company or any of its Subsidiaries shall have consummated or entered into any letter of intent, Contract, commitment or obligation with respect to any Acquisition Proposal (other than a confidentiality agreement entered into in compliance with Section 6.04(b)), (D) the Company shall have failed to include the Company Recommendation in the Proxy Statement, or (E) a tender offer or exchange offer by a Third Party for any Ordinary Shares representing ten percent (10%) or more of the outstanding Ordinary Shares is commenced, and the Company Board fails to recommend against acceptance of such tender offer or exchange offer by its shareholders (including by taking no position with respect to the acceptance of such tender offer or exchange offer by its shareholders) within ten (10) Business Days after the public announcement of such tender offer or exchange offer.

 

SECTION 8.02                                      Effect of Termination.  In the event of the termination of this Agreement pursuant to Section 8.01, this Agreement shall forthwith become void, and there shall be no liability under this Agreement on the part of any party hereto (or any Representatives of any party hereto); provided, however, that the terms of Section 6.10, this Article VIII and Article IX shall survive any termination of this Agreement.

 

SECTION 8.03                                      Fees and Expenses.

 

(a)                                 Subject to Section 8.03(b), all Expenses incurred in connection with this Agreement and the Transactions shall be paid by the party incurring such expenses, whether or not the Transactions are consummated.  “Expenses”, as used in this Agreement, shall include all reasonable out-of-pocket expenses (including, without limitation, all fees and expenses of counsel, accountants, investment bankers, experts, financing sources and consultants to a party hereto and its affiliates) incurred by a party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement, the preparation, printing and filing of the Proxy Statement and the Schedule 13E-3 and the mailing or other dissemination of the Proxy Statement, the solicitation of shareholder approvals, the filing of any required notices under applicable Law and all other matters related to the consummation of the Transactions.

 

(b)                                 The Company agrees that:

 

(i)                                     if Parent shall terminate this Agreement pursuant to Section 8.01(d)(i) or Section 8.01(d)(ii); or

 

(ii)                                  if (A) either Parent or the Company shall terminate this Agreement pursuant to Section 8.01(b)(i) or Section 8.01(b)(iii), (B) at or prior to the time of termination of this Agreement, a Third Party shall have publicly disclosed or communicated to the Company Board or Special Committee an Acquisition Proposal,

 

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that has not been withdrawn prior to the time of termination of this Agreement (in the case of termination pursuant to Section 8.01(b)(i)) or prior to the time of the Shareholders’ Meeting or any adjournment thereof at which this Agreement has been voted upon (in the case of termination pursuant to Section 8.01(b)(iii)), and (C) at any time prior to the date that is twelve (12) months after the date of such termination, the Company consummates or enters into a definitive agreement with respect to an Acquisition Proposal; provided, that for purposes of this Section 8.03(b)(ii), all references to “ten percent (10%)” in the definition of “Acquisition Proposal” shall be deemed to be references to “fifty percent (50%)”;

 

then the Company shall, subject to the next sentence, pay or cause to be paid to Parent promptly (but in any event, no later than two (2) Business Days after the first of such events shall have occurred) a fee of US$160,000,000 (one hundred sixty million United States dollars) (the “Company Termination Fee”), by wire transfer of same day funds to one or more accounts designated in writing by Parent.  In addition, if (x) either Parent or the Company shall terminate this Agreement pursuant to Section 8.01(b)(iii) under circumstances in which the Company Termination Fee is not then payable pursuant to this Section 8.03(b), the Company shall, within twenty (20) Business Days following receipt of an invoice therefor, reimburse Parent and Merger Sub for all of their reasonably documented Expenses incurred prior to such termination, which amount shall in no event exceed US$5,000,000 (five million United States dollars) in the aggregate, by wire transfer of same day funds to one or more accounts designated in writing by Parent, regardless of the existence of circumstances which could require the Company thereafter to pay or cause to be paid to Parent a Company Termination Fee pursuant to this Section 8.03(b); provided, that in the event the Company shall be required to pay a Company Termination Fee pursuant to this Section 8.03(b), the Company shall be entitled to credit the aggregate amount of Expenses of Parent and Merger Sub actually reimbursed by the Company to Parent (or an affiliate designated by Parent) pursuant to this Section 8.03(b) against the amount of such Company Termination Fee.

 

(c)                                  Parent agrees that if (i) (A) the Company or Parent shall terminate this Agreement pursuant to Section 8.01(b)(ii) as a result of an Injunction having been issued and in effect by an applicable Governmental Authority of competent jurisdiction with authority over the enforcement of applicable antitrust or competition Laws, (B) the Company has not breached in any material respect any of its covenants or other agreements hereunder and (C) all conditions to Closing (other than the condition to Closing set forth in Section 7.01(b) and other than those conditions to Closing that by their terms are to be satisfied at the Closing) have been satisfied or waived, (ii) the Company shall terminate this Agreement pursuant to Section 8.01(c), or (iii) (A) the Company or Parent shall terminate this Agreement pursuant to Section 8.01(b)(i), (B) the Company has not breached in any material respect any of its covenants or other agreements hereunder and (C) all conditions to Closing (other than those conditions to Closing that by their terms are to be satisfied at the Closing) have been satisfied or waived, then Parent shall pay or cause to be paid to the Company promptly (but in any event no later than two (2) Business Days after the date of such termination) a fee of US$380,000,000 (three hundred eighty million United States dollars) (the “Parent Termination Fee”), by wire transfer of same day funds to one or more accounts designated in writing by the Company.

 

(d)                                 In the event that the Company shall fail to pay the Company Termination Fee, or Parent shall fail to pay the Parent Termination Fee, when due and in accordance with the requirements of this Agreement, the Company or Parent, as the case may

 

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be, shall reimburse the other party for all costs and expenses actually incurred or accrued by the other party (including, without limitation, fees and expenses of counsel) in connection with the collection under and enforcement of this Section 8.03, together with interest on such unpaid Company Termination Fee or Parent Termination Fee, as the case may be, commencing on the date that the Company Termination Fee or Parent Termination Fee, as the case may be, became due, at the prime rate established by the Wall Street Journal Table of Money Rates on such date plus 2.00%.  Such collection expenses shall not otherwise diminish in any way the payment obligations hereunder.

 

(e)                                  Each party acknowledges that (i) the agreements contained in this Section 8.03 are an integral part of the Transactions, (ii) the damages resulting from termination of this Agreement under circumstances where a Company Termination Fee or Parent Termination Fee is payable are uncertain and incapable of accurate calculation and therefore, the amounts payable pursuant to Section 8.03(b) or Section 8.03(c) are not a penalty but rather constitute amounts akin to liquidated damages in a reasonable amount that will compensate Parent or the Company, as the case may be, for the efforts and resources expended and opportunities foregone while negotiating this Agreement and in reliance on this Agreement and on the expectation of the consummation of the Transactions, and (iii) without the agreements contained in this Section 8.03, the parties hereto would not have entered into this Agreement.

 

SECTION 8.04                                      Limitations on Liabilities.  In no event shall any party or any of such party’s affiliates be entitled to seek the remedy of specific performance of this Agreement other than as set forth in Section 9.07.  For the avoidance of doubt, while the Company or Parent may pursue both a grant of specific performance as permitted by Section 9.07 and the payment of the Parent Termination Fee pursuant to Section 8.03(c) or the Company Termination Fee pursuant to Section 8.03(b), as applicable, and any amounts pursuant to Section 8.03(d) (if any), under no circumstances shall the Company or Parent be permitted or entitled to receive both such grant of specific performance and the payment of the Parent Termination Fee, in the case of the Company, or the Company Termination Fee, in the case of Parent.  If Parent pays the Parent Termination Fee pursuant to Section 8.03(c), then such payment shall be the sole and exclusive remedy of the Company, its Subsidiaries, its shareholders and holders of ADSs (collectively, the “Company Related Parties”) against Parent and Merger Sub and any of their respective former, current or future officers, directors, partners, stockholders, managers, members, affiliates or successors (collectively, the “Parent Related Parties”) and none of the Parent Related Parties shall have any further liability or obligation relating to or arising out of this Agreement or the Transactions, including the failure of the Merger to be consummated or for a breach or failure to perform hereunder (whether intentionally, unintentionally, knowingly, willfully or otherwise) or otherwise. If the Company pays the Company Termination Fee pursuant to Section 8.03(b), then such payment shall be the sole and exclusive remedy of the Parent Related Parties against the Company Related Parties and none of the Company Related Parties shall have any further liability or obligation relating to or arising out of this Agreement or the Transactions, including the failure of the Merger to be consummated or for a breach or failure to perform hereunder (whether intentionally, unintentionally, knowingly, willfully or otherwise) or otherwise.

 

SECTION 8.05                                      Amendment.  This Agreement may be amended by the parties hereto by action taken by Parent and the Company (provided that, in the case of the Company, such action must be taken or authorized by the Special Committee) at any time

 

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prior to the Effective Time; provided, however, that, after the approval of this Agreement and the Transactions by the shareholders of the Company, no amendment may be made that would reduce the amount or change the type of consideration into which each Ordinary Share (including Ordinary Shares represented by ADSs) shall be converted upon consummation of the Merger.  This Agreement may not be amended except by an instrument in writing signed by each of the parties hereto.

 

SECTION 8.06                                      Waiver.  At any time prior to the Effective Time, any party hereto may (a) extend the time for the performance of any obligation or other act of any other party hereto, (b) waive any inaccuracy in the representations and warranties of any other party contained herein or in any document delivered pursuant hereto and (c) waive compliance with any agreement of any other party or any condition to its own obligations contained herein.  Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party or parties to be bound thereby.  No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

 

ARTICLE IX

 

GENERAL PROVISIONS

 

SECTION 9.01                                      Non-Survival of Representations, Warranties and Agreements.  The representations, warranties and agreements in this Agreement and in any certificate delivered pursuant hereto shall terminate at the Effective Time, except that the agreements set forth in Articles I and II, Section 6.05, Section 6.10 and this Article IX shall survive the Effective Time.

 

SECTION 9.02                                      Notices.  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by telecopy or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 9.02):

 

if to Parent or Merger Sub, to:

 

Ali YK Investment Holding Limited

Ali YK Subsidiary Investment Holding Limited

 

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with a copy to:

 

Simpson Thacher & Bartlett

 

if to the Company:

 

Youku Tudou Inc.

 

with a copy to:

 

Skadden Arps Slate Meagher & Flom

 

SECTION 9.03                                      Certain Definitions and Interpretations.  (a)  For purposes of this Agreement:

 

“Acquisition Proposal” means any proposal or offer relating to any of the following (other than the Transactions):  (i) any merger, reorganization, consolidation, share exchange, business combination, scheme of arrangement, amalgamation, recapitalization, liquidation, dissolution, joint venture or other similar transaction involving the Company or any of its Subsidiaries whose assets, individually or in the aggregate, constitute ten percent (10%) or more of the consolidated assets of the Company or to which ten percent (10%) or more of the total revenue or net income of the Company are attributable, (ii) any sale, lease, license, exchange, transfer or other disposition of assets which would result in a Third Party acquiring assets, individually or in the aggregate, constituting ten percent (10%) or more of the consolidated assets of the Company and its Subsidiaries or to which ten percent (10%) or more of the total revenue or net income of the Company and its Subsidiaries are attributable, (iii) any sale, exchange, transfer or other disposition of ten percent (10%) or more of any class of equity securities of the Company to any Third Party, (iv) any general offer, tender offer or exchange offer that, if consummated, would result in any Third Party beneficially owning ten percent (10%) or more of any class of equity securities of the Company, (v) any public solicitation of proxies in opposition to approval and adoption of this Agreement and approval of the Merger by the Company’s shareholders or (vi) any other transaction proposed in writing to the Special Committee by any Third Party the consummation of which would reasonably be expected to prevent, impede or materially delay the Transactions.

 

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“affiliate” of a specified person means a person who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified person.  For the avoidance of doubt, prior to the Closing, the Company and its Subsidiaries, officers and directors are not affiliates of Parent or Merger Sub.

 

“Agreement” has the meaning set forth in the Preamble, which shall, for the avoidance of doubt, include all annexes and schedules hereto.

 

“Applicable Anti-Bribery Law” means any anti-bribery or anti-corruption laws, including the U.S. Foreign Corrupt Practices Act of 1977, as amended, the PRC Law Criminal Law, the PRC Law on Anti-Unfair Competition adopted on September 2, 1993, the Interim Rules on Prevention of Commercial Bribery issued by the PRC State Administration of Industry and Commerce on November 15, 1996, if applicable, and all other anti-bribery and anti-corruption laws to which a Group Company is subject.

 

“beneficial owner”, “beneficially owned” or “beneficially owning”, with respect to any Ordinary Shares, has the meaning ascribed to such term under Rule 13d-3(a) of the Exchange Act.

 

“Business Day” means any day on which the principal offices of the SEC in Washington, D.C. are open to accept filings, or, in the case of determining a date when any payment is due, any day on which banks are not required or authorized to close in the City of New York, the PRC or Hong Kong.

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

 

“Company Disclosure Schedule” means the disclosure schedule delivered by the Company to, and accepted by, Parent and Merger Sub on the date hereof.

 

“Company Employee Plan” means any written plan, program, policy, Contract or other arrangement providing for compensation, severance, termination pay, deferred compensation, performance awards, share or share-related awards, housing funds, insurance arrangements, material fringe benefits, material perquisites, superannuation funds retirement benefits, pension schemes or other employee benefits, that is maintained, contributed to or required to be contributed to by the Company or any of its Subsidiaries for the benefit of any current or former employee, director, officer or independent contractor of the Company or its Subsidiaries, or with respect to which the Company or any of its Subsidiaries has or would reasonably expect to have any liability or obligation, other than, in each case, one that is sponsored and maintained by a Governmental Authority.

 

“Company Material Adverse Effect” means any event, circumstance, change or effect that, individually or in the aggregate with all other events, circumstances, changes and effects, is or would reasonably be expected to (a) be materially adverse to the business, condition (financial or otherwise), assets, properties, liabilities or results of operations of the Group Companies, taken as a whole, or (b) prevent or materially delay the consummation of the Transactions; provided, however, that in no event shall any of the following, either alone or in combination, constitute or be taken into account in determining whether there has been or would reasonably be expected to have a “Company Material Adverse Effect” under clause (a):  (A) changes after the date hereof affecting general economic conditions in the PRC or the United States; (B) changes in GAAP or any interpretation thereof after the date hereof, or changes to applicable Laws or the interpretation thereof after the date hereof; (C) changes

 

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after the date hereof generally affecting the industries or markets in which the Company and its Subsidiaries operate; (D) changes after the date hereof in financial, credit or securities markets in the U.S. or the PRC, including changes in interest rates or foreign exchange rates; (E) effects resulting from the public announcement of this Agreement, the pendency or the consummation of the Transactions (other than for purposes of any representation or warranty contained in Section 3.05), or the identity of Parent as the acquirer of the Company, including the impact or effect thereof on the relationships, contractual or otherwise, of the Company or any of its Subsidiaries with any employees, customers, suppliers or partners of the Company, (F) natural disasters, declarations of war, acts of sabotage or terrorism or armed hostilities, in each case occurring after the date hereof, (G) any change in the price of the ADSs or trading volume as quoted on NYSE or any failure to meet any financial projections, forecasts or forward-looking statements (provided that facts and circumstances giving rise to any such change or failure may constitute or be taken into account in determining whether there has been or would reasonably be expected to have a “Company Material Adverse Effect”), or (H) actions taken (or omitted to be taken) at the written request of Parent or Merger Sub; provided, further that events, circumstances, changes or effects set forth in clauses (A), (B), (C), (D) and (F) above shall be taken into account in determining whether a “Company Material Adverse Effect” has occurred or reasonably would be expected to occur if and to the extent any such events, circumstances, changes or effects, individually or in the aggregate, have a materially disproportionate impact on the Group Companies, taken as a whole, relative to the other participants in the industry or geographic markets in which the Company and its Subsidiaries conduct their businesses.

 

“Company Option” means each outstanding option award issued by the Company pursuant to any Share Incentive Plan that entitles the holder thereof to purchase one (1) Class A Ordinary Share upon the vesting of such award.

 

“Company Restricted Share Award” means each outstanding restricted share unit issued by the Company pursuant to any Share Incentive Plan that entitles the holder thereof to be issued one (1) Class A Ordinary Share upon the vesting of such award.

 

“Company Share Award” means each Company Option and each Company Restricted Share Award.

 

“Confidentiality Agreement” means the confidentiality agreement, dated as of October 28, 2015, between the Company and AIL.

 

“Contract” means any note, bond, mortgage, indenture, deed of trust, contract, agreement, lease, license, permit, franchise or other instrument.

 

“control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, or as trustee or executor, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities or the possession of voting power, as trustee or executor, by contract (including, without limitation, contractual arrangements similar to those provided by the Control Agreements) or credit arrangement or otherwise.

 

“Environmental Law” means any applicable local, provincial or national Laws relating to (a) the protection of health, safety or the environment or (b) the handling, use, transportation, disposal, release or threatened release of any Hazardous Substance.

 

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“Exercise Price” means, with respect to any Company Option, the exercise price per Class A Ordinary Share underlying such Company Option.

 

“Governmental Authority” means any nation or government, any agency, self-regulatory body, public, regulatory or taxing authority, instrumentality, department, commission, court, arbitrator, ministry, tribunal or board of any nation or government or political subdivision thereof, in each case, whether foreign or domestic and whether national, supranational, federal, provincial, state, regional, local or municipal.

 

“Governmental Entity” means (i) any national, federal, state, local or foreign government or any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, (ii) any public international organization, (iii) any agency, division, bureau, department or other sector of any government, entity or organization described in the foregoing clauses (i) or (ii) of this definition, or (iii) any company, business, enterprise or other entity owned or controlled by any government, entity, organization described in the foregoing clauses (i), (ii) or (iii) of this definition.

 

“Governmental Official” means any employee, agent, or instrumentality of any government, including departments or agencies of a government and businesses that are wholly or partially government-owned, and any employees of such businesses; departments or agencies of public international organizations; and  individuals who are members of political parties or hold positions in political parties, as well as candidates for political office.

 

“Group Company” means any of the Company and its Subsidiaries.

 

“Hazardous Substance” means any chemical, pollutant, waste or substance that is (a) listed, classified or regulated under any Environmental Law as hazardous substance, toxic substance, pollutant, contaminant or oil or (b) any petroleum product or by product, asbestos containing material, polychlorinated biphenyls or radioactive material.

 

“Indebtedness” means, with respect to any person, (a) all indebtedness of such person, whether or not contingent, for borrowed money, (b) all obligations of such person for the deferred purchase price of property or services, (c) all obligations of such person evidenced by notes, bonds, debentures or other similar instruments, (d) all obligations of such person under currency, interest rate or other swaps, and all hedging and other obligations of such person under other derivative instruments, (e) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (f) all obligations of such person as lessee under leases that have been or should be, in accordance with GAAP, recorded as capital leases, (g) all obligations, contingent or otherwise, of such person under acceptance, letter of credit or similar facilities, (h) all obligations of such person to purchase, redeem, retire, defease or otherwise acquire for value any share capital of such person or any warrants, rights or options to acquire such share capital, valued, in the case of redeemable preferred shares, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (i) all Indebtedness of others referred to in clauses (a) through (h) above guaranteed directly or indirectly in any manner by such person, and (j) all Indebtedness referred to in clauses (a) through (h) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Liens on property (including accounts and contract rights) owned by such person,

 

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even though such person has not assumed or become liable for the payment of such Indebtedness.

 

“Injunction” means, as of any date, any final, non-appealable judgment, restraining order or permanent injunction, which is in effect as of such date that prohibits the consummation of the Transactions and has been issued by any Governmental Authority in any jurisdiction that is material to the business of Parent or the Company.

 

“Insolvent” means, with respect to any person (a) the present fair saleable value of such person’s assets is less than the amount required to pay such person’s total Indebtedness, (b) such person is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (c) such person intends to incur or believes that it will incur debts that would be beyond its ability to pay as such debts mature, or (d) such person has unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.

 

“Intellectual Property” means all U.S., PRC, and other foreign intellectual property and rights therein, including (a) patents, patent applications, patent disclosures, provisionals, inventions (whether or not patentable and whether or not reduced to practice), and any reissues, continuations, continuations in part, counterparts, divisions, extensions or reexaminations thereof, and any statutory invention registrations, (b) trademarks, service marks, trade dress, logos, trade names, corporate names and other source identifiers, and all goodwill associated therewith, and all registrations and applications for registration thereof, (c) copyrightable works, copyrights, moral rights, and registrations and applications for registration thereof, (d) Internet domain names and social and mobile media identifiers, (e) confidential and proprietary information, including Trade Secrets, know-how, inventions (whether or not patentable and whether or not reduced to practice), drawings, specifications, designs, techniques, technical information, algorithms, processes, methods net lists, and code modules, (f) Software, (g) all other intellectual property rights, and (h) all income, royalties, damages and payments due or payable, the right to sue and recover for past or future infringements or misappropriation thereof and any and all corresponding rights that, now or hereafter, may be secured throughout the world.

 

“Investment Documents” means (i) the Investment Agreement, dated as of April 28, 2014, by and among the Company, Parent and, solely for purposes of Sections 11.4, 11.5 and 11.16 thereof, Alibaba Group Holding Limited, and (ii) the Investor Rights Agreement, dated as of April 28, 2014, by and among the Company, Parent, and, solely for the purposes of Sections 7.1 and 7.2 and Article VIII therein, Alibaba Group Holding Limited and YF Venus Ltd.

 

“IT Assets” means computers, hardware, Software, firmware, middleware, servers, workstations, routers, hubs, switches, data communications lines, and all other information technology equipment, and all associated documentation, in each case, owned by the Group Companies or licensed or leased by the Group Companies pursuant to written agreement.

 

“knowledge” means, with respect to the Company, the knowledge, after reasonable inquiry and investigation, of the individuals listed in Section 9.03(a) of the Company Disclosure Schedule, and with respect to any other party hereto, the actual knowledge of any director of such party, in each case, after due inquiry and investigation.

 

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“Law” means any statute, law, ordinance, code or Order.

 

“Liens” means any security interest, pledge, hypothecation, mortgage, lien (including environmental and Tax liens), violation, charge, lease, license, encumbrance, servient easement, adverse claim, reversion, reverter, preferential arrangement, restrictive covenant, condition or restriction of any kind, including any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership.

 

“Onshore Subsidiary” means any Subsidiary incorporated within the PRC.

 

“Order” means any award, writ, injunction, determination, rule, regulation, judgment, decree or executive order.

 

“Parent Shares” means all Class A Ordinary Shares or ADSs owned by Parent.

 

“Permitted Property Liens” means (i) Taxes, assessments and other governmental levies, fees or charges imposed which are not yet due and payable, or which are being contested in good faith and by appropriate proceedings, (ii) mechanics liens and similar liens arising or incurred in the ordinary course of business relating to obligations as to which there is no default on the part of the Company or any of its Subsidiaries or that secure a liquidated amount, that are being contested in good faith, (iii) zoning, building codes and other land use Laws regulating the use or occupancy of such real property or the activities conducted thereon which are imposed by any Governmental Authority having jurisdiction over such real property which are not violated by the current use or occupancy of such real property or the operation of the business thereon, (iv) easements, covenants, conditions, restrictions and other similar matters of record affecting title to such real property which do not or would not materially impair the use or occupancy of such real property in the operation of the business conducted thereon, (v) matters which would be disclosed by an accurate survey or physical inspection of such real property and (vi) any other Liens that have been incurred or suffered in the ordinary course of business and that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

 

“person” means an individual, corporation, partnership, limited partnership, limited liability company, syndicate, person (including, without limitation, a “person” as defined in Section 13(d)(3) of the Exchange Act), trust, association or entity or government, political subdivision, agency or instrumentality of a government.

 

“Representatives” means, with respect to any party, such party’s officers, directors, employees, accountants, consultants, financial and legal advisors, agents and other representatives.

 

“SAFE Circular 7” means the SAFE Circular on Certain Issues on Foreign Exchange Registration on Domestic Individuals Participation in Equity Incentive Plan of Foreign Listed Companies issued by SAFE on March 16, 2012.

 

“SAFE Circular 37” means the Notice on Relevant Issues Concerning Foreign Exchange Control of Domestic Residents’ Overseas Investment and Financing and Roundtrip Investment Through Offshore Special Purpose Vehicles issued by SAFE on July 4, 2014, and any implementation, successor rule or regulation related thereto under the PRC law.

 

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“SAFE Rules and Regulations” means, collectively, SAFE Circular 7, SAFE Circular 37 and any other applicable PRC foreign exchange Laws.

 

“Share Incentive Plans” means, collectively, the Company’s 2006 Stock Option Scheme (as amended), Youku Tudou Inc. Share Incentive Plan (formerly named as Youku Inc. 2010 Share Incentive Plan, as amended), and 2014 Share Incentive Plan, and “Share Incentive Plan” means any one of the foregoing plans.

 

“Social Security Benefits” means any social insurance, pension insurance benefits, medical insurance benefits, work-related injury insurance benefits, maternity insurance benefits, unemployment insurance benefits and public housing reserve fund benefits or similar benefits, in each case as required by any applicable Law or contractual arrangements.

 

“Software” means any and all (i) computer programs and software code, including any and all software implementations of algorithms, applications, application programming interfaces, architecture, utilities, models and methodologies, whether in object code, interpreted code or source code, (ii) databases and compilations, including any and all data and collections of data (including geospatial or mobile related data and rights thereto), whether machine readable or otherwise, and (iii) descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing, including any and all screens, user interfaces, report formats, firmware, middleware, software applications, development tools, templates, menus, diagnostics, files, records, schematics, verilog files, netlists, emulation and simulation reports, test vectors, buttons and icons.

 

“Subsidiary” of any person means any legal entity (i) of which such person or any other Subsidiary of such person is a general or managing partner, (ii) the outstanding voting securities or interests of which, having by their terms ordinary voting power to elect a majority of the board of directors or other body performing similar functions with respect to such corporation or other organization, are directly or indirectly owned or controlled by such person or by any one or more of its Subsidiaries or (iii) which such person controls through the Control Agreements or similar contractual arrangements.

 

“Superior Proposal” means any unsolicited bona fide written Acquisition Proposal (each reference to “ten percent (10%) or more” in the definition of “Acquisition Proposal” shall be replaced with “more than fifty percent (50%)” on terms that the Special Committee shall have determined in good faith (after receiving the advice of its financial advisor who shall be an internationally recognized investment banking firm and outside legal counsel) (i) would be reasonably likely to be consummated in accordance with its terms, taking into account all legal, financial, regulatory, timing and other aspects of the proposal (including conditionality) and the person making the proposal and (ii) if consummated, would result in a transaction more favorable to the holders of the Ordinary Shares (other than the Parent Shares) and holders of ADSs from a financial point of view than the Merger, after giving effect to all adjustments to the terms thereof which may be offered by Parent in writing (including pursuant to Section 6.04(c)(1)); provided, however, that any such offer shall not be deemed to be a “Superior Proposal” if (A) the offer is subject to the conduct of any due diligence review or investigation of the Company or any of its Subsidiaries by the party making the offer, (B) the consummation of the transactions contemplated by such offer is conditioned upon receipt of financing or (C) the consummation of the transactions contemplated by such offer is conditioned upon obtaining any consent or approval of a Governmental Authority or other third party that is not required pursuant to this Agreement

 

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as a condition to the closing of the Merger (after giving effect to all modifications or adjustments to the terms thereof which may be offered by Parent in writing (including pursuant to Section 6.04(c)(1)).

 

“Support Agreement” means the Support Agreement, dated as of October 16, 2015, by and among AIL, Victor Wing Cheung Koo, 1Verge Holdings Ltd., 1Look Holdings Ltd., The Koo 2012 Irrevocable Children’s Trust, Chengwei Partners, L.P., Chengwei Evergreen Capital, L.P. and Chengwei Ventures Evergreen Advisors Fund, LLC.

 

“Taxes” means any and all taxes of any kind or any other similar charges (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Governmental Authority, including, without limitation:  taxes or other charges on or with respect to income, franchise, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, environmental, employment (including withholding obligations imposed on employer/payer), social security, workers’ compensation, unemployment compensation or net worth, excise, withholding, alternative or add-on minimum, ad valorem, stamp, transfer, value-added or gains taxes, license, registration and documentation fees, customers’ duties, tariffs and other like assessment or charge of any kind whatsoever, in each case, whether disputed or not.

 

“Tax Return” means any return, report or similar filing (including the attached schedules) filed or required to be filed with respect to Taxes, including any information return, claim for refund, amended return or declaration of estimated Taxes.

 

“Third Party” means any person or “group” (as defined under Section 13(d) of the Exchange Act) of persons, other than Parent or the Company or any of their respective affiliates or Representatives.

 

“Trade Secrets” means trade secrets and confidential and proprietary information, whether oral or written, including ideas, designs, concepts, compilations of information, methods, techniques, procedures, processes and other know-how, whether or not patentable, of any nature in any form, including all writings, memoranda, copies, reports, papers, surveys, analyses, drawings, letters, computer printouts, computer programs, computer applications, specifications, business methods, business processes, business techniques, business plans, data (including customer data), graphs, charts, sound recordings and/or pictorial reproductions.

 

“Unvested Company Option” means any Company Option that is not a Vested Company Option.

 

“Vested Company Option” means any Company Option that shall have become vested on or prior to the Closing Date in accordance with the terms of such Company Option.

 

(b)                                 The following terms have the meaning set forth in the Sections set forth below:

 

	
Defined Term
    	
 
    	
Location of Definition
    


 

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Action
    	
 
    	
3.09(a)
    
	
ADSs
    	
 
    	
2.01(a)
    
	
Agreement
    	
 
    	
Preamble
    
	
AIL
    	
 
    	
Preamble
    
	
Applicable Date
    	
 
    	
3.07(a)
    
	
Bankruptcy and Equity Exception
    	
 
    	
3.04(a)
    
	
Certifying Officers
    	
 
    	
3.07(d)
    
	
Change in the Company Recommendation
    	
 
    	
6.04(c)
    
	
CICL
    	
 
    	
Recitals
    
	
Class A Ordinary Share
    	
 
    	
2.01(a)
    
	
Class A Ordinary Shares
    	
 
    	
2.01(a)
    
	
Class B Ordinary Share
    	
 
    	
2.01(a)
    
	
Class B Ordinary Shares
    	
 
    	
2.01(a)
    
	
Closing
    	
 
    	
1.02
    
	
Closing Date
    	
 
    	
1.02
    
	
Company
    	
 
    	
Preamble
    
	
Company Board
    	
 
    	
Recitals
    
	
Company Recommendation
    	
 
    	
3.04(b)
    
	
Company Related Parties
    	
 
    	
8.04
    
	
Company SEC Reports
    	
 
    	
3.07(a)
    
	
Company Termination Fee
    	
 
    	
8.03(b)(ii)
    
	
Control Agreements
    	
 
    	
3.15(a)(iv)
    
	
Deposit Agreement
    	
 
    	
2.06
    
	
Depositary
    	
 
    	
2.06
    
	
dissenter rights
    	
 
    	
2.03(a)
    
	
Dissenting Shareholders
    	
 
    	
2.03(a)
    
	
Dissenting Shares
    	
 
    	
2.03(a)
    
	
Effective Time
    	
 
    	
1.03
    
	
Environmental Permits
    	
 
    	
3.16
    
	
Evaluation Date
    	
 
    	
3.07(d)
    
	
Exchange Act
    	
 
    	
3.05(b)
    
	
Exchange Fund
    	
 
    	
2.04(a)
    
	
Excluded Shares
    	
 
    	
2.01(a)
    
	
Expenses
    	
 
    	
8.03
    
	
Financial Advisor
    	
 
    	
3.04(c)
    
	
GAAP
    	
 
    	
3.07(b)
    
	
Indemnified Parties
    	
 
    	
6.05(b)
    
	
Leased Real Property
    	
 
    	
3.11(b)
    
	
Material Company Permits
    	
 
    	
3.06(a)
    
	
Material Contracts
    	
 
    	
3.15(a)
    
	
Merger
    	
 
    	
Recitals
    
	
Merger Consideration
    	
 
    	
2.04(a)
    
	
Merger Sub
    	
 
    	
Preamble
    
	
Notice Period
    	
 
    	
6.04(c)(1)
    
	
NYSE
    	
 
    	
3.05(b)
    
	
Operating Subsidiary
    	
 
    	
3.15(a)(iv)
    
	
Ordinary Share
    	
 
    	
2.01(a)
    
	
Ordinary Shares
    	
 
    	
2.01(a)
    
	
Parent
    	
 
    	
Preamble
    


 

58











 

	
Parent Related Parties
    	
 
    	
8.04
    
	
Parent Termination Fee
    	
 
    	
8.03(c)
    
	
Paying Agent
    	
 
    	
2.04(a)
    
	
Per ADS Merger Consideration
    	
 
    	
2.01(a)
    
	
Per Share Merger Consideration
    	
 
    	
2.01(a)
    
	
Plan of Merger
    	
 
    	
1.03
    
	
PRC
    	
 
    	
3.06(d)
    
	
Proxy Statement
    	
 
    	
6.01(a)
    
	
RCA
    	
 
    	
2.02(c)
    
	
Record ADS Holders
    	
 
    	
6.02(b)
    
	
Registered Intellectual Property
    	
 
    	
Section 3.12(a)
    
	
Requisite Company Vote
    	
 
    	
3.04(a)
    
	
SAFE
    	
 
    	
3.06(d)
    
	
Sanctions
    	
 
    	
Section 3.06(h)
    
	
SEC
    	
 
    	
3.05(b)
    
	
Securities Act
    	
 
    	
3.07(a)
    
	
Share Certificates
    	
 
    	
2.04(b)
    
	
Shareholders’ Meeting
    	
 
    	
6.02(b)
    
	
Special Committee
    	
 
    	
Recitals
    
	
Specified Filings
    	
 
    	
6.07(a)
    
	
Surviving Company
    	
 
    	
1.01
    
	
Takeover Statute
    	
 
    	
3.20
    
	
Termination Date
    	
 
    	
8.01(b)(i)
    
	
Transactions
    	
 
    	
Recitals
    
	
Uncertificated Shares
    	
 
    	
2.04(b)
    


 

(c)                                  When a reference is made in this Agreement to a Section, Article or Exhibit such reference shall be to a Section, Article or Exhibit of this Agreement unless otherwise indicated.  The table of contents and headings contained in this Agreement or in any Exhibit are for convenience of reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  All words used in this Agreement will be construed to be of such gender or number as the circumstances require.  Any capitalized terms used in any Exhibit but not otherwise defined therein shall have the meaning set forth in this Agreement.  All Exhibits annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth herein.  The word “including” and words of similar import when used in this Agreement will mean “including, without limitation,” unless otherwise specified.

 

SECTION 9.04                                      Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Transactions is not affected in any manner adverse to any party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the Transactions be consummated as originally contemplated to the fullest extent possible.

 

59











 

SECTION 9.05                                      Entire Agreement; Assignment.  This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof.  This Agreement shall not be assigned (whether pursuant to a merger, by operation of law or otherwise), except that Parent and Merger Sub may assign all or any of their rights and obligations hereunder to any affiliate of Parent, provided that no such assignment shall relieve the assigning party of its obligations hereunder if such assignee does not perform such obligations.

 

SECTION 9.06                                      Parties in Interest.  This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, other than Sections 6.05 and 8.04 (which are intended to be for the benefit of the persons covered thereby and may be enforced by such persons).  For the avoidance of doubt, in no event shall any holders of Ordinary Shares (including Ordinary Shares represented by ADSs) or holders of Company Share Awards, in each case in their capacity as such, have any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

SECTION 9.07                                      Specific Performance.  The parties hereto agree that irreparable damage would occur in the event that any provision of this Agreement were not performed in accordance with the terms hereof and that, subject to Section 8.04, each party shall be entitled to specific performance of the terms hereof (including the other parties’ obligation to consummate the Transactions, subject in each case to the terms and conditions of this Agreement), including an injunction or injunctions to prevent breaches of this Agreement, in addition to any other remedy at law or equity.  Each party hereby waives (i) subject to Section 8.04, any defenses in any action for specific performance, including the defense that a remedy at law would be adequate, and (ii) any requirement under any Law to post a bond or other security as a prerequisite to obtaining equitable relief.

 

SECTION 9.08                                      Guarantee.  AIL hereby unconditionally and irrevocably guarantees to the Company the due and punctual performance and payment of all obligations and liabilities of Parent and Merger Sub under this Agreement without offset or deduction.  The guarantee by AIL hereunder is a guarantee of payment, performance and compliance when due, and is not conditional or contingent upon any event, contingency or circumstance except as may be set forth in this Agreement.  This Section 9.08 shall terminate immediately after the Closing or payment of the Parent Termination Fee (if any).

 

SECTION 9.09                                      Governing Law; Jurisdiction.  This Agreement shall be interpreted, construed and governed by and in accordance with the Laws of the State of New York without regard to the conflicts of law principles thereof.  Notwithstanding the foregoing, the following matters arising out of or relating to this Agreement shall be construed, performed and enforced in accordance with the Laws of the Cayman Islands in respect of which the parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of the courts of the Cayman Islands:  the Merger, the vesting of the rights, property, choses in action, business, undertaking, goodwill, benefits, immunities and privileges, contracts, obligations, claims, debts and liabilities of the Merger Sub in the Company, the cancellation of the Ordinary Shares, the rights provided in Section 238 of the CICL, the fiduciary or other duties of the Company Board and the board of directors of Merger Sub and the internal corporate affairs of the Company and Merger Sub.  All Actions arising under the laws of the State of New York out of or relating to this Agreement shall be

 

60









 

heard and determined exclusively in any New York federal court sitting in the Borough of Manhattan of The City of New York; provided, however, that if such federal court does not have jurisdiction over such Action, such Action shall be heard and determined exclusively in any New York state court sitting in the Borough of Manhattan of The City of New York.  Consistent with the preceding sentence, the parties hereto hereby (a) submit to the exclusive jurisdiction of any federal or state court sitting in the Borough of Manhattan of The City of New York for the purpose of any Action arising under the laws of the State of New York out of or relating to this Agreement brought by any party hereto and (b) irrevocably waive, and agree not to assert by way of motion, defense, or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the Action is brought in an inconvenient forum, that the venue of the Action is improper, or that this Agreement or the transactions contemplated by this Agreement may not be enforced in or by any of the above-named courts.

 

SECTION 9.10                                      Waiver of Jury Trial.  EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.  EACH OF THE PARTIES HERETO HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.10.

 

SECTION 9.11                                      Headings.  The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.

 

SECTION 9.12                                      Counterparts.  This Agreement may be executed and delivered (including by electronic or facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

 

61











 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

 

	
 
    	
ALI YK INVESTMENT HOLDING   LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
/s/ Timothy A. Steinert
    
	
 
    	
Name: Timothy A. Steinert
    
	
 
    	
Title: Authorized Signatory
    
	
 
    	
 
    
	
 
    	
ALI YK SUBSIDIARY HOLDING   LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
/s/ Timothy A. Steinert
    
	
 
    	
Name: Timothy A. Steinert
    
	
 
    	
Title: Authorized Signatory
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Solely for purposes of   Section 9.08, Section 9.09 and Section 9.10 hereof:
    
	
 
    	
 
    
	
 
    	
ALIBABA INVESTMENT LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
/s/ Timothy A. Steinert
    
	
 
    	
Name: Timothy A. Steinert
    
	
 
    	
Title: Authorized Signatory
    


 

[SIGNATURE PAGE — MERGER AGREEMENT]

 











 

	
 
    	
YOUKU TUDOU INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
/s/ Victor Wing Cheung Koo
    
	
 
    	
Name: Victor Wing Cheung Koo
    
	
 
    	
Title: Chairman of Board of   Directors and Chief Executive Officer
    
	
 
    	
 
    


[SIGNATURE PAGE — MERGER AGREEMENT]

 











 

ANNEX A

 

FORM OF PLAN OF MERGER

 

THIS PLAN OF MERGER is made on [date].

 

BETWEEN

 

(1)                                 Ali YK Subsidiary Holding Limited, an exempted company incorporated under the Laws of the Cayman Islands on November 3, 2015, with its registered office situated at the offices of Trident Trust Company (Cayman) Limited, Fourth Floor, One Capital Place, P.O. Box 847, Grand Cayman, KY1-1103, Cayman Islands (“Merging Sub”); and

 

(2)                                 Youku Tudou Inc., an exempted company incorporated under the Laws of the Cayman Islands on 20 September 2005, with its registered office situated at the offices of c/o Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands (the “Company” or the “Surviving Corporation” and together with Merging Sub, the “Constituent Companies”).

 

WHEREAS

 

(a)                                 Merging Sub and the Company have agreed to merge (the “Merger”) on the terms and conditions contained or referred to in an Agreement and Plan of Merger (the “Agreement”) dated as of November 6, 2015 among the Merging Sub, the Company and other parties thereto, a copy of which is attached as Appendix I to this Plan of Merger and under the provisions of Part XVI of the Companies Law Cap.22 (Law 3 of 1961, as consolidated and revised) (the “Companies Law”), pursuant to which the Merging Sub will merge with and into the Company and cease to exist and the Surviving Corporation will continue as the surviving company in the Merger.

 

(b)                                 This Plan of Merger is made in accordance with section 233 of the Companies Law.

 

(c)                                  Terms used in this Plan of Merger and not otherwise defined in this Plan of Merger shall have the meanings given to them in the Agreement.

 

WITNESSETH

 

CONSTITUENT COMPANIES

 

1.                                      The constituent companies (as defined in the Companies Law) to the Merger are the Merging Sub and the Company.

 

NAME OF THE SURVIVING CORPORATION

 

2.                                      The name of the surviving company (as defined in the Companies Law) shall be Youku Tudou Inc.

 

REGISTERED OFFICE

 











 

3.                                      The Surviving Corporation shall have its registered office at the offices of c/o Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

 

AUTHORISED AND ISSUED SHARE CAPITAL

 

4.                                      Immediately prior to the Effective Time (as defined below) the authorized share capital of Merging Sub was US$50,000.00 divided into 50,000 shares with a par value of US$1.00 each, of which one share has been issued and fully paid.

 

5.                                      Immediately prior to the Effective Time the authorized share capital of the Company was US$100,000 divided into 9,340,238,793 Class A Ordinary Shares of a par value US$0.00001 per share (“Class A Ordinary Shares”) and 659,761,207 Class B Ordinary Shares of a par value $0.00001 per share (“Class B Ordinary Shares”, together with Class A Ordinary Shares, “Ordinary Shares”), of which 2,880,578,665 Class A Ordinary Shares and 645,691,903 Class B Ordinary Shares have been issued and fully paid, respectively.

 

6.                                      The authorized share capital of the Surviving Corporation shall be US$50,000.00 divided into 50,000 shares with a par value of US$1.00 each.

 

7.                                      At the Effective Time, and in accordance with the terms and conditions of the Agreement:

 

(a)                                 Each share in the Merging Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one validly issued and fully paid share with a par value of US$1.00 each in the share capital of the Surviving Company.

 

(b)                                 Each Ordinary Share in the Company issued and outstanding immediately prior to the Effective Time, other than the Excluded Shares, shall be cancelled and cease to exist in exchange for the right to receive the Per Share Merger Consideration, being one-eighteenth of US$27.60 in cash per Ordinary Share without interest.

 

(c)                                  Each of the Excluded Shares (other than the Dissenting Shares) issued and outstanding immediately prior to the Effective Time shall be cancelled and cease to exist without payment of any consideration or distribution therefor.

 

(d)                                 Each of the Dissenting Shares of persons who have validly exercised and not withdrawn or lost their right to dissent from the Merger pursuant to Section 238 of the Companies Law shall be cancelled in exchange for a payment resulting from the procedure in section 238 of the Companies Law of the fair value of such shares.

 

8.                                      At the Effective Time, the rights and restrictions attaching to the shares of the Surviving Corporation are set out in the Amended and Restated Memorandum of Association and Articles of Association of the Surviving Corporation in the form attached as Appendix II to this Plan of Merger.

 

EFFECTIVE TIME

 

9.                                      The Merger shall take effect on [date] (the “Effective Time”).

 

PROPERTY

 











 

10.                               At the Effective Time, the rights, property of every description including choses in action, and the business, undertaking, goodwill, benefits, immunities and privileges of each of the Constituent Companies shall immediately vest in the Surviving Corporation which shall be liable for and subject, in the same manner as the Constituent Companies, to all mortgages, charges, or security interests and all contracts, obligations, claims, debts and liabilities of each of the Constituent Companies.

 

MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION

 

11.                               The Memorandum of Association and Articles of Association of the Surviving Corporation shall be amended and restated in the form attached as Appendix II to this Plan of Merger at the Effective Time.

 

DIRECTORS BENEFITS

 

12.                               There are no amounts or benefits payable to the directors of the Constituent Companies on the Merger becoming effective.

 

DIRECTORS OF THE SURVIVING CORPORATION

 

13.                               The names and addresses of the directors of the Surviving Corporation are as follows:

 

	
NAME
    	
 
    	
ADDRESS
    
	
 
    	
 
    	
 
    
	
[name]
    	
 
    	
[address]
    


 

SECURED CREDITORS

 

14.                               (a)the Merging Sub has no secured creditors and has granted no fixed or floating security interests that are outstanding as at the date of this Plan of Merger, and

 

(b) the Company has no secured creditors and has granted no fixed or floating security interests that are outstanding as at the date of this Plan of Merger.

 

RIGHT OF TERMINATION

 

15.                               This Plan of Merger may be terminated pursuant to the terms and conditions of the Agreement at any time prior to the Effective Time.

 

APPROVAL AND AUTHORIZATION

 











 

16.                               This Plan of Merger has been approved by the board of directors of each of the Merging Sub and the Company pursuant to section 233(3) of the Companies Law.

 

17.                               This Plan of Merger has been authorised by the shareholders of each of the Merging Sub and the Company pursuant to section 233(6) of the Companies Law.

 

COUNTERPARTS

 

18.                               This Plan of Merger may be executed by facsimile and in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

 

GOVERNING LAW

 

19.                               This Plan of Merger shall be governed by and construed in accordance with the Laws of the Cayman Islands.

 











 

In witness whereof the parties hereto have caused this Plan of Merger to be executed on the day and year first above written.

 

Duly authorized for and on behalf of Ali YK Subsidiary Holding Limited:

 

	
 
    	
 
    	
 
    
	
[name]
    	
 
    
	
Director
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Duly authorized   for and on behalf of Youku Tudou Inc.:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
[name]
    	
 
    
	
Director
    	
 
    


 











 

Appendix I

 

(The Agreement)

 











 

Appendix II

 

(Amended and Restated Memorandum and Articles of Surviving Corporation)