Document:

Exhibit 10.1

 

ONE SMART EDUCATION GROUP LIMITED

 

AMENDED AND RESTATED 2015 SHARE INCENTIVE PLAN

 

(Adopted by the Board of Directors of One Smart Education Group Limited (the “Company”) on February 5, 2018)

 

1.             Purposes of the Plan.  The purpose of this Plan is to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentives to selected Employees, Directors, and Consultants and to promote the success of the Company’s business by offering these individuals an opportunity to acquire a proprietary interest in the success of the Company or to increase this interest, by permitting them to acquire Shares of the Company or granting Options to purchase Shares of the Company.  The Plan provides both for the direct award or sale of Shares and for the grant of Options to purchase Shares. Options granted under the Plan may be Incentive Stock Options or Non-statutory Stock Options, as determined by the Administrator at the time of grant. In connection with the restructuring of the Company so that the entire outstanding share capital of Shanghai One Smart Education and Training Co. Ltd (“Shanghai One Smart”) will be replicated in the offshore shareholding structure of the Company, the share incentive plan promulgated by Shanghai One Smart in 2015 (the “Onshore Share Incentive Plan”) was amended and restated in April 2017 and is hereby amended and restated by this Plan and all rights and interests under the Amended and Restated 2015 Share Incentive Plan will therefore be acknowledged and replaced by the grants to be made hereunder.

 

2.             Definitions.  For the purposes of this Plan, the following terms shall have the following meanings:

 

(a)           “Acquisition Date” means, with respect to Shares, the respective dates on which the Shares are issued under the Plan pursuant to the exercise of an Option or in accordance with the Restricted Share Purchase Agreement.

 

(b)           “Administrator” means the Board or any of its Committees as shall be administering the Plan in accordance with Section 4 hereof.

 

(c)           “Applicable Law” means any applicable legal requirements relating to the administration of and the issuance of securities under equity securities-based compensation plans, including, without limitation, the requirements of laws of the state securities laws, U.S. federal law, the Code, and the requirements of any stock exchange or quotation system upon which the Shares may then be listed or quoted and the applicable laws of any other country or jurisdiction where Awards are granted under the Plan.  For all purposes of this Plan, references to statutes and regulations shall be deemed to include any successor statutes or regulations, to the extent reasonably appropriate as determined by the Administrator.

 

(d)           “Award” means an Option or a Restricted Share Purchase Right or other types of award approved by the Administrator and granted to an Awardee pursuant to this Plan.

 

(e)           “Awardee” means a recipient of an Award.

 

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(f)            “Board” means the Board of Directors of the Company.

 

(g)           “Cause” means, as determined by the Board and unless otherwise provided in an applicable agreement with the Company or a Subsidiary, the Service Provider (i) is proved to be incompetent during the probationary period, (ii) is in material breach of the rules and regulations of the Group Companies (including without limitation labor discipline) (for avoidance of doubt, commercial bribery and bribery shall be regarded as material breaches of rules and regulations in any event), (iii) commits serious dereliction of duty or malpractice, which causes material damages to the Group Companies, (iv) comes into employment relationship with other employer at the same time, which has material negative effects on the completion of his/her work at the Group Companies, or refuses to make correction as required by the Group Companies; (v) uses such means as fraud, coercion or taking advantage of the unfavorable position of the Group Companies to have the Group Companies execute or modify the employment contract against its true intention, which renders such employment contract invalid, or (vi) is prosecuted.

 

(h)           “Change in Control” means the occurrence of any of the following events:

 

(i)            any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities; or

 

(ii)           the consummation of the sale, lease, or disposition by the Company of all or substantially all of the Company’s assets; or

 

(iii)          the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

 

Anything in the foregoing to the contrary notwithstanding, a transaction shall not constitute a Change in Control if its sole purpose is to change the legal jurisdiction of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.  In addition, a sale by the Company of its securities in a transaction, the primary purpose of which is to raise capital for the Company’s operations and business activities including, without limitation, an initial public offering of Shares under the Securities Act or other Applicable Law, shall not constitute a Change in Control.

 

(i)            “Code” means the U.S. Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

 

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(j)            “Committee” means a committee of Directors appointed by the Board in accordance with Section 4 hereof.

 

(k)           “Company” means One Smart Education Group Limited, a company organized under the laws of the Cayman Islands, or any successor corporation thereto.

 

(l)            “Consultant” means any natural person who is engaged by the Company, or any Parent, Subsidiary or variable interest entity whose financial statements are intended to be consolidated with the Company, any Parent or Subsidiary to render consulting or advisory services to such entity and who is compensated for the services; provided that the term “Consultant,” does not include (i) Employees or (ii) securities promoters.

 

(m)          “Date of Grant” means the date an Award is granted to an Awardee in accordance with Section 13 hereof.

 

(n)           “Director” means a member of the Board.

 

(o)           “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code.

 

(p)           “Employee” means any person, including officers and Directors, employed by the Company or any Parent or Subsidiary.  A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or any Parent or Subsidiary, including sick leave, military leave, or any other personal leave, or (ii) transfers between locations of the Company or between the Company or any Parent or Subsidiary, or any successor.  For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract.  If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3) months following the 91st day of such leave, any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Non-statutory Stock Option.  Neither service as a Director nor payment of a director’s fee by the Company or any Parent or Subsidiary shall be sufficient to constitute “employment” by the Company or any Parent or Subsidiary.

 

(q)           “Exercise Price” means the amount for which one Share may be purchased upon exercise of an Option, as specified by the Administrator in the applicable Option Agreement in accordance with Section 6(d) hereof.

 

(r)            “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

(s)            “Fair Market Value” means, as of any date, the value of the Shares determined as follows:

 

(i)            if the Shares are listed on any established stock exchange or a national market system, including, without limitation, The New York Stock Exchange, The Nasdaq Global Market or The Nasdaq Capital Market of The Nasdaq Stock Market, Hong Kong Stock Exchange and the London Stock Exchange (Main Listing or Alternative Investment

 

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Market), the Fair Market Value shall be the closing sales price for the Shares (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

 

(ii)           if the Shares are regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value shall be the mean of the high bid and low asked prices for the Shares on the day of determination, as reported in The Wall Street Journal or any other source as the Administrator deems reliable; or

 

(iii)          in the absence of an established market for the Shares, the Fair Market Value thereof shall be determined in good faith by the Administrator in accordance with Applicable Law.

 

(t)            “Group Companies” means the Company, Shanghai One Smart Education and Training Co. Ltd., and / or any of their Subsidiary.

 

(u)           “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code, as designated in the applicable Option Agreement.

 

(v)           “Market Stand-Off Period”  shall mean period of the longer term of the following: (i) a year since the consummation of initial public offering of Shares, (ii) the applicable lock-up period for the Optioned Shares as stipulated by the Applicable Laws of the place of the initial public offering of Shares.

 

(w)          “Non-statutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option, as designated in the applicable Option Agreement, or an Incentive Stock Option that does not so qualify.

 

(x)           “Option” means an option to purchase Shares that is granted pursuant to the Plan in accordance with Section 6 hereof.

 

(y)           “Option Agreement” means a written or electronic agreement between the Company and an Optionee, the form(s) of which shall be approved from time to time by the Administrator, evidencing the terms and conditions of an individual Option granted under the Plan, and includes any documents attached to or incorporated into the Option Agreement, including, but not limited to, a notice of option grant and a form of exercise notice.  The Option Agreement shall be subject to the terms and conditions of the Plan.

 

(z)           “Optioned Shares” means the Shares subject to an Option.

 

(aa)         “Optionee” means the holder of an outstanding Option granted under the Plan.

 

(bb)         “Parent” means a “parent corporation” with respect to the Company, whether now or hereafter existing, as defined in Section 424(e) of the Code.

 

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(cc)         “Plan” means this Amended and Restated 2015 Share Incentive Plan, as amended from time to time.

 

(dd)         “PRC” means the People’s Republic of China, which, for the purpose of this Plan, shall exclude Hong Kong Special Administrative Region of the PRC,  Macau Special Administrative Region of the PRC and Taiwan.

 

(ee)         “Purchase Price” means the amount of consideration for which one Share may be acquired pursuant to a Restricted Share Purchase Right, as specified by the Administrator in the applicable Restricted Share Purchase Agreement in accordance with Section 7(c) hereof.

 

(ff)          “Purchaser” means the holder of Shares purchased pursuant to the exercise of a Restricted Share Purchase Right.

 

(gg)         “Qualified Former Employee” means any former employee of the Company or any Parent or Subsidiary who is eligible for the grant of Awards as approved by the Board.

 

(hh)         “Restricted Share Purchase Agreement” means a written or electronic agreement between the Company and a Purchaser, the form(s) of which shall be approved from time to time by the Administrator, evidencing the terms and conditions of an individual Restricted Share Purchase Right, and includes any documents attached to or incorporated into the Restricted Share Purchase Agreement.  The Restricted Share Purchase Agreement shall be subject to the terms and conditions of the Plan.

 

(ii)           “Restricted Shares” means Shares acquired pursuant to a Restricted Share Purchase Right (if subject to rights of redemption, repurchase or forfeiture).

 

(jj)           “Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

(kk)         “Service Provider” means an Employee, Director, or Consultant.

 

(ll)           “Share” means an Ordinary Class A Share of the Company, as adjusted in accordance with Section 12 hereof.

 

(mm)      “Shareholders Agreement” means any agreement between an Awardee and the Company or members of the Company or both.

 

(nn)         “Restricted Share Purchase Right” means a right to purchase Restricted Shares pursuant to Section 7 hereof.

 

(oo)         “Subsidiary” means a “subsidiary corporation” with respect to the Company, whether now or hereafter existing, as defined in Section 424(f) of the Code.

 

(pp)         “Ten Percent Owner” means a Service Provider who owns more than 10% of the total combined voting power of all classes of outstanding securities of the Company or any Parent or Subsidiary.

 

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(qq)         “United States” means the United States of America, its territories and possessions, any State of the United States, and the District of Columbia.

 

3.             Shares Subject to the Plan.

 

(a)           Basic Limitation.  Subject to the provisions of Section 12 hereof, the maximum aggregate number of Shares that may be issued under the Plan shall be 336,642,439 Class A ordinary shares, plus an annual 2.0% increase of the total number of ordinary shares outstanding on August 31 of the preceding calendar year of the Company on the first day of each the following nine fiscal years commencing on September 1, 2018.

 

(b)           Additional Shares.  If an Award expires, becomes unexercisable, or is cancelled, forfeited, or otherwise terminated without having been exercised or settled in full, as the case may be, the Shares allocable to the unexercised portion of the Award shall again become available for future grant or sale under the Plan (unless the Plan has terminated).  Shares that actually have been issued under the Plan, upon exercise of an Option or delivery under a Restricted Share Purchase Right, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that in the event that Shares issued under the Plan are reacquired by the Company pursuant to any forfeiture provision, right of repurchase or redemption, or are retained by the Company upon the exercise of or purchase of Shares under an Award in order to satisfy the Exercise Price or Purchase Price for the Award or any withholding taxes due with respect to the exercise or purchase, such Shares shall again become available for future grant under the Plan.

 

4.             Administration of the Plan.

 

(a)           Administrator.  The Plan shall be administered by the Board or a Committee appointed by the Board.  Any Committee of the Board shall be constituted to comply with Applicable Law.

 

(b)           Powers of the Administrator.  Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion:

 

(i)            to determine the Fair Market Value, in accordance with Section 2(s) hereof;

 

(ii)           to select the Awardees to whom Awards may from time to time be granted hereunder;

 

(iii)          to determine the number of Shares to be covered by each Award granted hereunder;

 

(iv)          to approve the form(s) of agreement for use under the Plan;

 

(v)           to determine the terms and conditions of any Award granted hereunder including, but not limited to, the Exercise Price, the Purchase Price, the time or times

 

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when Options may be exercised (which may be based on performance criteria), the time or times when repurchase or redemption rights shall lapse, any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

 

(vi)          to implement a program where (A) outstanding Awards are surrendered or cancelled in exchange for Awards of the same type (which may have lower Exercise/Purchase Prices and different terms), Awards of a different type, or cash, or (B) the Exercise/Purchase Price of an outstanding Award is reduced, based in each case on terms and conditions determined by the Administrator in its sole discretion;

 

(vii)         to prescribe, amend, and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable laws of jurisdictions other than the United States;

 

(viii)        to allow Awardees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued under an Award that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld.  The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined.  All elections by Awardees to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable;

 

(ix)          to modify or amend each Award (subject to Section 17 hereof and Awardee’s consent if the modification or amendment is to the Awardee’s detriment);

 

(x)           to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan; and

 

(xi)          to make any other determination and take any other action that the Administrator deems necessary or desirable for the administration of the Plan.

 

(c)           Delegation of Authority to Officers.  Subject to Applicable Law, the Administrator may delegate limited authority to specified officers of the Company to execute on behalf of the Company any instrument required to effect an Award previously granted by the Administrator.

 

(d)           Effect of Administrator’s Decision.  All decisions, determinations, and interpretations of the Administrator shall be final and binding on all Awardees.

 

5.             Eligibility.

 

(a)           General Rule.  Only Service Providers, or trusts or companies established in connection with any employee benefit plan of the Company (including the Plan) for the benefit of a Service Provider, or Qualified Former Employees, shall be eligible for the grant of Awards.  Incentive Stock Options may be granted to Employees only.

 

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(b)           Members with Ten-Percent Holdings.  A Ten Percent Owner shall not be eligible for the grant of an Incentive Stock Option unless (i) the Exercise Price is at least 110% of the Fair Market Value on the Date of Grant, and (ii) the Incentive Stock Option by its terms is not exercisable after the expiration of five (5) years from the Date of Grant.  For purposes of this Section 5(b), in determining ownership of securities, the attribution rules of Section 424(d) of the Code shall apply.

 

6.             Terms and Conditions of Options.

 

(a)           Option Agreement.  Each grant of an Option under the Plan shall be evidenced by an Option Agreement between the Optionee and the Company.  Each Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions that are not inconsistent with the Plan and that the Administrator deems appropriate for inclusion in an Option Agreement.  The provisions of the various Option Agreements entered into under the Plan need not be identical.

 

(b)           Type of Option.  Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Non-statutory Stock Option.  However, notwithstanding a designation of an Option as an Incentive Stock Option, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by an Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds US$100,000, such Options shall be treated as Non-statutory Stock Options.  For purposes of this Section 6(b), Incentive Stock Options shall be taken into account in the order in which they were granted.  The Fair Market Value of the Shares shall be determined as of the Date of Grant.

 

(c)           Number of Shares.  Each Option Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 12 hereof.

 

(d)           Exercise Price.  Each Option Agreement shall specify the Exercise Price.  The Exercise Price of an Incentive Stock Option shall not be less than 100% of the Fair Market Value on the Date of Grant, and a higher percentage may be required by Section 5(b) hereof.  Subject to the preceding sentence, the Exercise Price of any Option shall be determined by the Administrator in its sole discretion.  For the avoidance of doubt, to the extent not prohibited by applicable laws or any exchange rule, a downward adjustment of the exercise prices of Options mentioned in the preceding sentence shall be effective without the approval of the Company’s shareholders or the approval of the affected Awardees.  The Exercise Price shall be payable in accordance with Section 9 hereof and the applicable Option Agreement.  Notwithstanding anything to the contrary in the foregoing or in Section 5(b), in the event of a transaction described in Section 424(a) of the Code, then, consistent with Section 424(a) of the Code, Incentive Stock Options may be issued at an Exercise Price other than as required by the foregoing and Section 5(b).

 

(e)           Term of Option.  The Option Agreement shall specify the term of the Option; provided, however, that the term shall not exceed ten (10) years from the Date of Grant,

 

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and a shorter term may be required by Section 5(b) hereof.  Subject to the preceding sentence, the Administrator in its sole discretion shall determine when an Option is to expire.

 

(f)            Exercisability.  Each Option Agreement shall specify the date when all or any installment of the Option is to become exercisable.  The exercisability provisions of any Option Agreement shall be determined by the Administrator in its sole discretion.  Unless otherwise set forth in the Option Agreement or as determined by the Administrator, no Option shall become exercisable unless and until (i) such Option has been fully vested according to the vesting terms provided under the Option Agreement, (ii) the Company has consummated the initial public offering of Shares, and (iii) all applicable legal requirements with respect to the exercise of Options, including without limitation the filing requirements of the State Administration of Foreign Exchange of the PRC, shall have been fully performed and complied with by the applicable Awardee.

 

(g)           Exercise Procedure.  Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under such conditions as may be determined by the Administrator and as set forth in the Option Agreement; provided, however, that an Option shall not be exercised for a fraction of a Share.

 

(i)            An Option shall be deemed exercised when the Company receives (A) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, (B) full payment for the Shares with respect to which the Option is exercised, and (C) all representations, indemnifications, and documents reasonably requested by the Administrator including, without limitation, any Shareholders Agreement.  Full payment may consist of any consideration and method of payment authorized by the Administrator in accordance with Section 9 hereof and permitted by the Option Agreement.

 

(ii)           Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse.  Subject to the provisions of Sections 8, 9, 14, and 15, the Company shall issue (or cause to be issued) certificates evidencing the issued Shares promptly after the Option is exercised.  Notwithstanding the foregoing, the Administrator in its discretion may require the Company to retain possession of any certificate evidencing Shares acquired upon the exercise of an Option, if those Shares remain subject to repurchase or redemption under the provisions of the Option Agreement, any Shareholders Agreement, or any other agreement between the Company and the Awardee, or if those Shares are collateral for a loan or obligation due to the Company.

 

(iii)          For purpose of the Plan  (in accordance with Section 3(b), exercise of an Option in any manner shall result in a decrease in the number of Shares thereafter available, by the number of Shares as to which the Option is exercised.

 

(h)           Termination of Service (other than by death).

 

(i)            If an Optionee ceases to be a Service Provider for any reason other than because of death, then the Optionee’s Options shall expire on the earliest of the following occasions:

 

(A)          The expiration date determined by Section 6(e) hereof;

 

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(B)          The day on which the Optionee’s relationship as a Service Provider is terminated for Cause;

 

(C)          The date of termination of the Optionee’s relationship as a Service Provider for the following reasons other than for Cause.

 

(1) The resignation of the Optionee with the consent of the Group Companies results in the termination of his/her employment contract, (2) the Optionee does not apply to renew his/her employment contract and leaves the Group Companies upon the expiration of his/her employment contract, (3) the employment contract of the Optionee is rescinded by the Group Companies for any of the following circumstances on the part of the Optionee (i.e., the circumstances stipulated in Article 40 of the Labor Contract Law of the People’s Republic of China): (x) the Optionee is sick or suffers from work-related injury and is unable to resume his/her original work or engage in other work otherwise arranged by the Group Companies upon the completion of the specified medical treatment period, (y) the Optionee is incompetent in his/her work and fails to be competent in his/her work even after training or an adjustment of post, and (z) the objective conditions based on which the employment contract was signed between the Optionee and the Group Companies have undergone material changes, which results in the impossibility to perform such employment contract, and the parties fail to reach an agreement in respect of modification to such labor contract through negotiation.

 

(ii)           Following the termination of the Optionee’s relationship as a Service Provider for reasons set forth in Section 6(h)(i), such Optionee  may (a) exercise all or part of such Optionee’s Option at any time before the expiration of the Option as set forth in Section 6(h)(i) hereof, but only to the extent that the Option was vested and exercisable as of the date of termination of such Optionee’s relationship as a Service Provider (or became vested and exercisable as a result of the termination), and subject to the provisions under Section 6(f); and (b) the balance of the Shares subject to the Option shall be forfeited on the date of termination of the Optionee’s relationship as a Service Provider, in the event such Optionee has prepaid any Exercise Price for such Optioned Shares, the Company shall or shall designate any other Group Company to repay to such Optionee such Exercise Price.

 

(iii)          For the avoidance of any doubt, Sections 6(h)(i) and 6(h)(ii) shall not apply to Qualified Former Employees.

 

(i)            Leave of Absence.  Unless otherwise determined by the Administrator, for purposes of this Section 6, the service of an Optionee as a Service Provider shall be deemed to continue while the Optionee is on a bona fide leave of absence, if such leave was approved by the Company in writing.  Unless otherwise determined by the Administrator and subject to Applicable Law, vesting of an Option shall be suspended during any unpaid leave of absence.

 

(j)            Death of Optionee.

 

(i)            If an Optionee dies or was declared dead, then the Optionee’s Option shall expire on the expiration date determined by Section 6(e) hereof

 

(ii)           If an Optionee dies or was declared dead, all or part of the Optionee’s Option may be exercised at any time before the expiration of the Option as set forth

 

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in Section 6(j)(i) hereof by the executors or administrators of the Optionee’s estate or by any person who has acquired the Option directly from the Optionee by beneficiary designation, bequest, or inheritance, but only to the extent that the Option was vested and exercisable as of the date of the Optionee’s death or had become vested and exercisable as a result of the death.  The balance of the Shares subject to the Option shall be forfeited upon the Optionee’s death.  Any Optioned Shares subject to the portion of the Option that are vested as of the Optionee’s death but that are not purchased prior to the expiration of the Option pursuant to this Section 6(j) shall be forfeited immediately following the Option’s expiration.

 

(k)           Special Adjustment

 

(i)            If the Optionee or his/her affiliate violates the non-compete obligation with the Group Companies (including that the Optionee or his/her affiliate engages in business competing with the Group Companies through the enterprise he/she invests in), then (A) the unexercised Option held by the Optionee (including the Option that has been or has not been vested) shall expire upon receipt of a written notice from the Group Companies. If the Optionee has prepaid the Exercise Price for such expired Option, the Company shall by itself or cause other Group Companies to repay such prepaid Exercise Price; (B) if the Optionee holds any Optioned Shares at the time, the Optionee shall, within ten (10) business days upon his/her receipt of the written notice from the Company, sell the Optioned shares to the Company or a third party designated by the Company at the Exercise Price of such Optioned Shares. For the purpose of this Section, “affiliate” means the spouse and lineal descendants (whether with blood relationship or adoptive relationship) of a natural person and any trust created and maintained solely for the benefits of such person, his/her spouse, parents or children. In addition, the Optionee shall pay the Group Companies or the designated person of the Group Companies liquidated damages if he/she breaches the non-compete obligation, which liquidated damages shall be calculated as follows: the compensation for non-compete already paid to such Optionee by the Group Companies × 2 + the annual income of such Optionee for the year immediately prior to his/her resignation (before tax) × 10. If the Optionee signs a separate non-compete agreement with the Group Companies, and the liquidated damages for breach of non-compete obligation agreed therein is higher than those of this clause, then the liquidated damages payable by the Optionee to the Group Companies shall be subject to those provided by such non-compete agreement.

 

(ii)           If the Optionee discloses the trade secrets of the Group Companies, or conducts related party transactions with the Group Companies and damages the benefits of the Group Companies, then (A) the unexercised Option held by the Optionee (including the Option that has been or has not been vested) shall expire upon receipt of the written notice from the Group Companies. If the Optionee has prepaid the Exercise Price for such expired Option, the Company shall by itself or cause other Group Companies to repay such prepaid Exercise Price; (B) if the Optionee holds any Optioned Shares at the time, the Optionee shall, within ten (10) business days upon his/her receipt of the written notice from the Company, sell the Optioned shares to the Company or a third party designated by the Company at the Exercise Price of such Optioned Shares. In respect of any loss caused due to the disclosure of the trade secrets of the Group Companies by the Optionee or the conduct of related party transactions by the Optionee with the Group Companies, the Optionee shall make compensation to the Group Companies.

 

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(iii)          Default.    Under any circumstance provided in Section 6(k)(i) or Section 6(k)(ii), the Optionee shall cooperate with the Company to complete the repurchase of his/her Optioned Shares in accordance with Section 6(k)(i) or Section 6(k)(ii), as the case may be, by the Company.  If the repurchase is not completed within the stipulated time limit for the reason of the Optionee, the Optionee shall be deemed in material breach and shall pay the Company or any other Group Company designated by the Company liquidated damages equivalent to 0.05% of Fair Market Value of the Optioned Shares held by such Optionee on the date of repurchase notice for each day of delay.

 

(iv)          Special Adjustment during Market Stand-Off  If any circumstance under Section 6(k)(i) or Section 6(k)(ii) happens within the Market Stand-Off Period, as a result of which the Company is unable to repurchase the Optioned Shares of such Optionee according to Applicable Laws, such Optionee may still hold such Optioned Shares, provided that the Optionee shall compensate the Group Companies at the Fair Market Value of the Optioned Shares at the date of claim made by the Group Companies against the Optionee if no objection is raised, or at the date of determination of related facts by the court or arbitral tribunal if any objection is raised. (The formula shall be as follows: the per Share Fair Market Value × the number of Optioned Shares held by the Optionee). The amount of compensation to be made by the Optionee to the Group Companies arising out of breach of  non-compete obligation or damage of the Company’s interests by the Optionee shall be calculated separately.

 

(v)           For the avoidance of any doubt, Sections 6(k)(i) to 6(k)(iv) shall not apply to Qualified Former Employees.

 

(l)            Market Stand-Off Period.    Optionee agrees that unless otherwise with a written consent of the Company, Optionee shall not directly or indirectly sell or transfer any Optioned Shares acquired under the Option Agreement during the Market Stand-Off Period.

 

(m)          Restrictions on Transfer of Shares.  Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase or redemption, rights of first refusal, and other transfer restrictions as the Administrator may determine.  The restrictions described in the preceding sentence shall be set forth in the applicable Option Agreement and shall apply in addition to any restrictions that may apply to holders of Shares generally.

 

7.             Terms and Conditions of Restricted Share Purchase Rights.

 

(a)           Restricted Share Purchase Agreement.  Each Restricted Share Purchase Right under the Plan shall be evidenced by a Restricted Share Purchase Agreement, respectively, between the Purchaser and the Company.  Each Restricted Share Purchase Right  shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions that are not inconsistent with the Plan and that the Administrator deems appropriate for inclusion in a Restricted Share Purchase Agreement, including without limitation, (i) the number of Shares subject to such Restricted Share Purchase Agreement, as applicable, or a formula for determining such number, (ii) the purchase price of the Shares, if any, and the means of payment for the Shares, (iii) the performance criteria, if any, and level of achievement versus these criteria that shall determine the number of Shares granted, issued, retainable and/or vested,

 

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(iv) such terms and conditions on the grant, issuance, vesting, settlement and/or forfeiture of the Shares as may be determined from time to time by the Administrator and (v) restrictions on the transferability of the Award.  The provisions of the various Restricted Share Purchase Agreements entered into under the Plan need not be identical.

 

(b)           Duration of Offers of Restricted Share Purchase Rights.  Any Restricted Share Purchase Rights granted under the Plan shall automatically expire if not exercised by the Purchaser within such time as is specified in the Restricted Share Purchase Agreement.

 

(c)           Purchase Price.  The Purchase Price, if any, shall be determined by the Administrator in its sole discretion.  The Purchase Price, if any, shall be payable in a form described in Section 9 hereof.

 

(d)           Restrictions on Transfer of Shares.  Any Shares awarded or sold pursuant to Restricted Share Purchase Rights shall be subject to such special forfeiture conditions, rights of repurchase or redemption, rights of first refusal, market stand-offs, and other transfer restrictions as the Administrator may determine.  The restrictions described in the preceding sentence shall be set forth in the applicable Restricted Share Purchase Agreement, as applicable, and shall apply in addition to any restrictions that may apply to holders of Shares generally.  Unless otherwise determined by the Administrator and subject to Applicable Law, vesting of Shares acquired pursuant to a Restricted Share Purchase Agreement shall be suspended during any unpaid leave of absence.

 

8.             Withholding Taxes.  As a condition to the exercise of an Option or purchase of Restricted Shares, the Awardee (or in the case of the Awardee’s death or in the event of a permissible transfer of Awards hereunder, the person exercising the Option or purchasing Restricted Shares) shall make such arrangements as the Administrator may require for the satisfaction of any applicable withholding taxes arising in connection with the exercise of an Option or purchase of Restricted Shares under the laws of any applicable jurisdiction including the Cayman Islands, the PRC, the U.S., Hong Kong and any other jurisdiction.  The Awardee (or in the case of the Awardee’s death or in the event of a permissible transfer of Awards hereunder, the person exercising the Option or purchasing Restricted Shares) also shall make such arrangements as the Administrator may require for the satisfaction of any applicable British Virgin  Islands, PRC, Hong Kong, U.S., or non-Cayman Islands, non-PRC, non-Hong Kong and non-U.S. withholding tax obligations that may arise in connection with the disposition of Shares acquired by exercising an Option or purchasing Restricted Shares.  The Company shall not be required to issue any Shares under the Plan until the foregoing obligations are satisfied.  Without limiting the generality of the foregoing, upon the exercise of the Option or delivery of Restricted Shares or Share or Award, the Company shall have the right to withhold taxes from any compensation or other amounts that the Company may owe to the Awardee, or to require the Awardee to pay to the Company the amount of any taxes that the Company may be required to withhold with respect to the Shares issued to the Awardee.  Without limiting the generality of the foregoing, the Administrator in its discretion may authorize the Awardee to satisfy all or part of any withholding tax liability by (i) having the Company withhold from the Shares that would otherwise be issued upon the exercise of an Option or purchase of Restricted Shares that number of Shares having a Fair Market Value, as of the date the withholding tax liability arises, equal to the portion of the Company’s withholding tax liability to be so satisfied or (ii) by delivering to

 

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the Company previously owned and unencumbered Shares having a Fair Market Value, as of the date the withholding tax liability arises, equal to the amount of the Company’s withholding tax liability to be so satisfied.

 

9.             Payment for Shares.  The consideration to be paid for the Shares to be issued under the Plan, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined on the Date of Grant), subject to the provisions in this Section 9.

 

(a)           General Rule.  The entire Purchase Price or Exercise Price (as the case may be) for Shares issued under the Plan shall be payable in cash or cash equivalents at the time when the Shares are purchased, except as otherwise provided in this Section 9.

 

(b)           Surrender of Shares.  To the extent that an Option Agreement or a Restricted Share Purchase Agreement so provides, all or any part of the Exercise Price or Purchase Price (as the case may be) may be paid by surrendering, or attesting to the ownership of, Shares that are already owned by the Awardee.  These Shares shall be surrendered to the Company in good form for transfer and shall be valued at their Fair Market Value on the date the Option is exercised or Restricted Shares are purchased.  The Awardee shall not surrender, or attest to the ownership of, Shares in payment of the Exercise Price or Purchase Price (as the case may be) if this action would subject the Company to adverse accounting consequences and is objected by the Company, as determined by the Administrator.

 

(c)           Services Rendered.  At the discretion of the Administrator and to the extent so provided in the agreements, Shares may be awarded under the Plan in consideration of services rendered to the Company or any Parent or Subsidiary prior to the Award.

 

(d)           Exercise/Sale.  At the discretion of the Administrator and to the extent an Option Agreement so provides, and if the Shares are publicly traded, payment may be made all or in part by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes.

 

(e)           Exercise/Pledge.  At the discretion of the Administrator and to the extent an Option Agreement so provides, and if the Shares are publicly traded, payment may be made all or in part by the delivery (on a form prescribed by the Company) of an irrevocable direction to pledge Shares to a securities broker or lender approved by the Company, as security for a loan, and to deliver all or part of the loan proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes.

 

(f)            Other Forms of Consideration.  At the discretion of the Administrator and to the extent an Option Agreement or a Restricted Share Purchase Agreement so provides, all or a portion of the Exercise Price or Purchase Price may be paid by any other form of consideration and method of payment to the extent permitted by Applicable Law.

 

10.          Non-transferability of Awards. Unless otherwise determined by the Administrator and so provided in this Plan, the applicable Option Agreement or Restricted Share

 

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Purchase Agreement (or be amended to provide), no Award shall be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner (whether by operation of law or otherwise) other than (i) by inheritance or distribution by will or (except in the case of an Incentive Stock Option) pursuant to an effective civil judgment or ruling or (ii) by trusts or companies established in connection with any employee benefit plan of the Company (including the Plan) for the benefit of a Service Provider or Service Providers, in each case of (i) and (ii), subject to Applicable Law, and shall not be subject to execution, attachment, or similar process.  In the event the Administrator in its sole discretion makes an Award transferable, only a Non-statutory Stock Option, Restricted Share Purchase Right may be transferred provided such Award is transferred without payment of consideration to members of the Awardee’s immediate family (as such term is defined in Rule 16a-1(e) of the Exchange Act) or to trusts or partnerships established exclusively for the benefit of the Awardee and the members of the Awardee’s immediate family, all as permitted by Applicable Law.  Upon any attempt to pledge, assign, hypothecate, transfer, or otherwise dispose of any Award or of any right or privilege conferred by this Plan contrary to the provisions hereof, or upon the sale, levy or attachment or similar process upon the rights and privileges conferred by this Plan, such Award shall thereupon terminate and become null and void.  Incentive Stock Options may be exercised during the lifetime of the Awardee only by the Awardee.

 

11.          Rights as a Member.  Before the consummation of the initial public offering of the Shares of the Company, Shares issued pursuant to the exercise of Options or Restricted Shares issued under the Restricted Share Purchase Agreements shall not carry any voting right. Until the Shares actually are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to receive dividends or any other rights as a member shall exist with respect to the Shares, notwithstanding the exercise of the Award.  No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 12 of the Plan.

 

12.          Adjustment of Shares.

 

(a)           Changes in Capitalization.  Subject to any required action by the members of the Company in accordance with Applicable Law, the class(es) and number and type of Shares that have been authorized for issuance under the Plan but as to which no Awards have yet been granted or that have been returned to the Plan upon cancellation or expiration of an Award, and the class(es), number, and type of Shares covered by each outstanding Award, as well as the price per Share covered by each outstanding Award, shall be proportionately adjusted for any increase, decrease, or change in the number or type of outstanding Shares or other securities of the Company or exchange of outstanding Shares or other securities of the Company into or for a different number or type of shares or other securities of the Company or successor entity, or for other property (including, without limitation, cash) or other change to the Shares resulting from a share split, reverse share split, share dividend, dividend in property other than cash, combination of shares, exchange of shares, consolidation, recapitalization, reincorporation, reorganization, change in corporate structure, reclassification, or other distribution of the Shares effected without receipt of consideration by the Company; provided, however, that the conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.”  The adjustment contemplated in this Section 12(a) shall be made by the

 

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Board, whose determination shall be final, binding and conclusive.  Except as expressly provided herein, no issuance by the Company of equity securities of the Company of any class, or securities convertible into equity securities of the Company of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number, type, or price of Shares subject to an Award.  Where an adjustment under this Section 12(a) is made to an Incentive Stock Option, the adjustment shall be made in a manner that will not be considered a “modification” under the provisions of Section 424(h)(3) of the Code.

 

(b)           Dissolution or Liquidation.  In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Awardee as soon as practicable prior to the effective date of such proposed transaction.  The Administrator in its discretion may provide for an Optionee to have the right to exercise his or her Option until fifteen (15) days prior to the proposed dissolution or liquidation as to all of the Optioned Shares covered thereby, including Shares as to which the Option would not otherwise be exercisable.  In addition, the Administrator may provide that any Company repurchase or redemption option applicable to any Shares purchased upon exercise of an Option or Restricted Shares purchased under a Restricted Share Purchase Right shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated.  To the extent an Option has not been previously exercised and all Restricted Shares covered by a Restricted Share Purchase Right have not been purchased, the Award will terminate immediately prior to the consummation of such proposed action.

 

(c)           Change in Control.  Except as may otherwise be provided in any Option Agreement or Restricted Share Purchase Agreement or any other written agreement entered into by and between the Company and an Awardee, if the Administrator anticipates the occurrence, or upon the occurrence, of a Change of Control transaction, the Administrator may, in its sole discretion, provide for (i) any and all Awards outstanding hereunder to terminate at a specific time in the future and shall give each Awardee the right to exercise the vested portion of such Awards during a period of time as the Administrator shall determine, or (ii) the purchase of any Award for an amount of cash equal to the amount that could have been attained upon the exercise of such Award (and, for the avoidance of doubt, if as of such date the Committee determines in good faith that no amount would have been attained upon the exercise of such Award, then such Award may be terminated by the Company without payment), or (iii) the replacement of such Award with other rights or property selected by the Administrator in its sole discretion or the assumption of or substitution of such Award by the successor or surviving corporation, or a Parent or Subsidiary thereof, with appropriate adjustments as to the number and kind of Shares and prices, or (iv) payment of such Award in cash based on the value of Shares on the date of the Change of Control transaction plus reasonable interest on the Award through the date as determined by the Administratr when such Award would otherwise be vested or have been paid in accordance with its original terms, if necessary to comply with Section 409A of the Code.

 

(d)           Reservation of Rights.  Except as provided in this Section 12 and in the applicable Option Agreement or Restricted Share Purchase Agreement, an Awardee shall have no rights by reason of (i) any subdivision or consolidation of Shares or other securities of any class, (ii) the payment of any dividend, or (iii) any other increase or decrease in the number of Shares or other securities of any class.  Any issuance by the Company of equity securities of any

 

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class, or securities convertible into equity securities of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of Optioned Shares.  The grant of an Option, Restricted Share Purchase Right shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell, or transfer all or any part of its business or assets.

 

13.          Date of Grant.  The Date of Grant of an Award shall, for all purposes, be the date on which the applicable Option Agreement or Restricted Share Purchase Agreement is duly executed and delivered by the Company and the applicable Awardee, or such other later date as is determined by the Administrator; provided, however, that the Date of Grant of an Incentive Stock Option shall be no earlier than the date on which the Service Provider becomes an Employee.

 

14.          Securities Law Requirements.

 

(a)           Legal Compliance.  Notwithstanding any other provision of the Plan or any agreement entered into by the Company pursuant to the Plan, the Company shall not be obligated, and nor shall it have any liability for failure to deliver any Shares under the Plan unless the issuance and delivery of Shares comply with (or are exempt from) all Applicable Law, including, without limitation, the applicable securities laws in the PRC, Hong Kong and the Cayman Islands, Securities Act, U.S. state securities laws and regulations, and the regulations of any stock exchange or other securities market on which the Company’s securities may then be traded, and shall be further subject to the approval of counsel for the Company with respect to such compliance.

 

(b)           Investment Representations.  Shares delivered under the Plan shall be subject to transfer restrictions, and the person acquiring the Shares shall, as a condition to the exercise of an Option or the purchase or acquisition of Restricted Shares if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with Applicable Law, including, without limitation, the representation and warranty at the time of acquisition of Shares that the Shares are being acquired only for investment purposes and without any present intention to sell, transfer, or distribute the Shares.

 

15.          Inability to Obtain Authority.  The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

 

16.          Approval by Board.  The Plan shall be subject to approval by the Board.  Such Board’s approval shall be obtained in the degree and manner required under Applicable Law.

 

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17.          Duration and Amendment.

 

(a)           Term of Plan.  The Plan shall become effective upon approval by the Board as described in Section 16 hereof.  Unless sooner terminated under Section 17(b) hereof, the Plan shall continue in effect for a term of ten (10) years.

 

(b)           Amendment and Termination.  The Board may at any time amend, alter, suspend, or terminate the Plan.

 

(c)           Approval by Members.  The Board shall obtain approval of the members of this Plan or any Plan amendment to the extent necessary and desirable to comply with Applicable Law.

 

(d)           Effect of Amendment or Termination.  No amendment, alteration, suspension, or termination of the Plan shall materially and adversely impair the rights of any Awardee with respect to an outstanding Award, unless mutually agreed otherwise between the Awardee and the Administrator, which agreement must be in writing and signed by the Awardee and the Company.  Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.  No Shares shall be issued or sold under the Plan after the termination thereof, except upon exercise of an Award granted prior to the termination of the Plan.

 

18.          Legending Share Certificates.  In order to enforce any restrictions imposed upon Shares issued upon the exercise of Options or the acquisition of Restricted Shares, including, without limitations, the restrictions described in Sections 6(l), 6(m), 7(d), and 14(b) hereof, the Administrator may cause a legend or legends to be placed on any share certificates representing the Shares, which legend or legends shall make appropriate reference to the restrictions, including, without limitation, a restriction against sale of the Shares for any period as may be required by Applicable Law.

 

19.          No Retention Rights.  Neither the Plan nor any Award shall confer upon any Awardee any right to continue his or her relationship as a Service Provider with the Company for any period of specific duration or interfere in any way with his or her right or the right of the Company (or any Parent or Subsidiary employing or retaining the Awardee), which rights are hereby expressly reserved by each, to terminate this relationship at any time, with or without cause, and with or without notice.

 

20.          No Registration Rights.  The Company may, but shall not be obligated to, register or qualify the sale of Shares under the Securities Act or any other Applicable Law.  The Company shall not be obligated to take any affirmative action in order to cause the sale of Shares under this Plan to comply with any law.

 

21.          No Trust or Fund Created.  Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Parent or Subsidiary and an Awardee or any other person.  To the extent that any Awardee acquires a right to receive payments from the Company or any Parent or Subsidiary pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company, a Parent, or any Subsidiary.

 

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22.          No Rights to Awards.  No Awardee, eligible Service Provider, or other person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of a Service Provider, Awardee, or holders or beneficiaries of Awards under the Plan.  The terms and conditions of Awards need not be the same with respect to any Awardee or with respect to different Awardees.

 

23.          Language. This document is prepared in English. The Chinese language translation is provided for reference only.  In the event there is any discrepancy between the two versions, the English version shall prevail.

 

[Remainder of Page Intentionally Left Blank]

 

19Exhibit 10.17

 

Execution Version

 

ONESMART EDUCATION GROUP LIMITED

 

SHARE PURCHASE AGREEMENT

 

THIS SHARE PURCHASE AGREEMENT (the “Agreement”) is made and entered into on October 27, 2017 (the “Effective Date”) by and among:

 

(1)                       ONESMART EDUCATION GROUP LIMITED (previously known as “One Smart Education Group Limited”), an exempted company incorporated and existing under the Laws of the Cayman Islands with registered number 320611 (the “Company”);

 

(2)                       ZHANG Xi (张熙), a PRC citizen, whose PRC Identity Card number is                                    (the “Selling Founder”);

 

(3)                       Happy Edu Inc., a company incorporated and existing under the Laws of the British Virgin Islands (the “Selling Ordinary Shareholder” or the “Seller”);

 

(4)                       Angus Holdings Limited, a limited company duly incorporated and validly existing under the laws of the British Virgin Islands (“VKC” or the “Purchaser”).

 

Each of the parties to this Agreement is referred to herein individually as a “Party” and collectively as the “Parties”.

 

RECITALS

 

(A)                     The Company, the Selling Founder, the Selling Ordinary Shareholder and the relevant parties thereto entered into a restructuring agreement (重组协议契据) on April 21, 2017 (the “Restructuring Agreement”), pursuant to which, among other things, (x) the Company holds 100% of the issued and outstanding shares of ONESMART EDU INC. (previously known as “Great Edu. Inc.”), a company incorporated and existing under the Laws of the British Virgin Islands with registered number 1916296 (the “BVI Company”), and the BVI Company holds 100% of the share capital of ONESMART EDU (HK) LIMITED (previously known as “Great Edu (HK) Limited”), a company incorporated and existing under the Laws of Hong Kong with company number of 2401253 (the “HK Company”), (y) the HK Company owns 100% of the registered capital of Shanghai Jingxuerui Information Technology Co., Ltd. (上海精学锐信息科技有限公司) (a company incorporated and existing under the PRC Laws, the “WFOE”), (z) the WFOE Controls Shanghai One Smart Education and Training Co., Ltd. (上海精锐教育培训有限公司), a limited liability company incorporated and existing under the Laws of the PRC (the “PRC Company”) through a series of controlling documents, the WFOE will Control Shanghai Rui Si Science and Technology Information Consulting Co., Ltd. (上海锐思科技信息咨询有限公司), a limited liability company incorporated and existing under the Laws of the PRC (“Shanghai Rui Si”) through a series of controlling

 

 

documents, and the PRC Company owns 100% of the share capital of Shanghai Jing Yu Investment Co., Ltd. (上海精育投资有限公司).

 

(B)                    The Company has reserved certain shares of Class A Ordinary Shares for issuance to current or previous officers, directors, employees or consultants of the Group Companies pursuant to the existing incentive plan of the Company (the “ESOP”).

 

(C)                     The Selling Ordinary Shareholder desires to sell to VKC, and VKC desires to purchase from the Selling Ordinary Shareholder that certain number of Class B Ordinary Shares, which shall be reclassified as such number of Series A-1 Preferred Shares concurrently upon Closing on the terms and subject to the conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements and covenants hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:

 

1.                     DEFINITIONS

 

1.1                              Certain Defined Terms.  For purposes of this Agreement, capitalized terms used in this Agreement (including the recitals) shall have the following meanings:

 

“Accounting Standards” means generally accepted accounting principles in the United States.

 

“Affiliate” means, with respect to a Person, (i) in the case of an individual, such Person’s spouse and lineal descendants (whether natural or adopted), brother, sister, parent, or any trust formed and maintained solely for the benefit of such Person or such Person’s spouse, lineal descendants, brother, sister and/or parent, or trust, or any entity or company Controlled by any of the aforesaid Person, (ii) in the case of any Person other than an individual, any other Person that, directly or indirectly, Controls, is Controlled by or is under common Control with such Person. In the case of VKC, in addition to the Persons specified in item (ii) above, the term “Affiliate” also includes (v) any of its direct or indirect shareholders, (w) any of its or its shareholder’s general partners or limited partners, (x) the fund manager managing it or such shareholder (and general partners, limited partners and officers thereof) and other funds managed by such fund manager or such fund manager’s Affiliates, (y) trusts Controlled by or for the benefit of any such Person referred to in (v), (w) or (x), and (z) any fund or holding company formed for investment purposes that is promoted, sponsored, managed, advised or serviced by it or any of its Affiliates.

 

“Affiliate Nominee” means an Affiliate designated in writing by VKC.

 

“Assets” means all assets, rights and privileges of any nature and all goodwill associated therewith, including all rights in respect of

 

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Contracts, all Intellectual Property Rights, equipment, vehicles and other tangible assets, and any share or equity ownership.

 

“Board” or “Board of Directors” means the board of directors of the Company.

 

“Business Day” means any day that is not a Saturday, Sunday, legal holiday or other day on which commercial banks are required or authorized by Law to be closed in the Cayman Islands, the PRC, Hong Kong, London or New York, as the case may be, or on which a tropical cyclone warning no. 8 or above or a “black” rainstorm warning signal is hoisted in Hong Kong at any time between 9:00 a.m. and 5:00 p.m. Hong Kong time.

 

“Charter Documents” means, as to a Person, such Person’s certificate of incorporation, formation or registration (including, if relevant, certificates of change of name), memorandum of association, articles of association or incorporation, charter, by-laws, trust deed, trust instrument, joint venture or shareholders’ agreement or equivalent documents, and business license, in each case as amended; and means, as to PRC limited liability companies, the business license, articles of association, shareholders’ agreement or equivalent documents.

 

“Class A Ordinary Shares” means the Class A ordinary shares of the Company with a par value of US$0.000001 per share, with the rights and privileges as set forth in the Amended M&AA and the Shareholders Agreement.

 

“Class B Ordinary Shares” means the Class B ordinary shares of the Company with a par value of US$0.000001 per share, with the rights and privileges as set forth in the Amended M&AA and the Shareholders Agreement.

 

“Contract” means, as to any Person, any contract, agreement, undertaking, understanding, indenture, note, bond, loan, instrument, lease, mortgage, deed of trust, franchise, or license to which such Person is a party or by which such Person or any of its property is bound, whether oral or written.

 

“Control” of a given Person means the power or authority, whether exercised or not, to direct or cause the direction of the business, management and policies (with respect to operational or financial control or otherwise) of such Person, directly or indirectly, whether through the ownership of voting securities, by Contract or otherwise, which power or authority shall conclusively be presumed to exist upon possession of beneficial ownership or power to direct the vote of more than fifty percent (50%) of the votes entitled to be cast at a meeting of the members or shareholders of such Person or power to control the composition of more than fifty percent (50%) of the board of directors of such Person; the terms “Controlled” and “Controlling” have meanings correlative to the foregoing.

 

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“Equity Securities” means, with respect to a Person, any shares, share capital, registered capital, ownership interest, equity interest, or other securities of such Person, and any option, warrant, or right to subscribe for, acquire or purchase any of the foregoing, or any other securities or instrument convertible into or exercisable or exchangeable for any of the foregoing, or any equity appreciation, phantom equity, equity plans or similar rights with respect to such Person, or any Contract of any kind for the purchase or acquisition from such Person of any of the foregoing, either directly or indirectly.

 

“Governmental Authority” means any nation or government, or any federation, province or state or any other political subdivision thereof; any entity, authority or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any government authority, agency, department, board, commission or instrumentality of the PRC, the Cayman Islands, or any other country, or any political subdivision thereof, any court, tribunal or arbitrator, or any self-regulatory organization, stock exchange, securities commission or other securities regulators.

 

“Governmental Order” means any applicable order, ruling, decision, verdict, decree, writ, subpoena, mandate, precept, command, directive, consent, approval, award, judgment, injunction or other similar determination or finding by, before or under the supervision of any Governmental Authority.

 

“Group Companies” means the Company, the BVI Company, the HK Company, the WFOE, the PRC Company and Shanghai Jing Yu Investment Co., Ltd. (上海精育投资有限公司), together with all other direct or indirect, current and future Subsidiaries and branches of any of the foregoing, and “Group Company” means any of them.

 

“Hong Kong” means the Hong Kong Special Administrative Region of the People’s Republic of China.

 

“Indemnifiable Loss” or “Loss” means, with respect to any Person, any action, proceeding, claim, cost, damage, expense, Liability, loss, deficiency, debt, interest, diminution in value, obligation or penalty imposed on or otherwise incurred or suffered by such Person, whether in law or in equity, including reasonable legal, accounting and other professional fees and expenses, court costs, amounts paid in settlement and other expenses incurred in the investigation, collection, prosecution and defense of claims.

 

“Intellectual Property Rights” means all intellectual property and other proprietary rights, including any and all foreign and domestic trade name, trademark, service mark, registered design, domain name, utility model, copyright, invention, moral rights, trade secret, mask work, brand name, database right, business name, patent and any similar rights, and all associated rights, compositions of matter, formulas, designs, inventions, and any and all registrations, applications, renewals,

 

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extensions and continuations (in whole or in part) of any of the foregoing, together with all goodwill associated therewith and all rights and causes of action for infringement, misappropriation, misuse, dilution, unfair trade practice or otherwise associated therewith.

 

“Law” or “Laws” means any and all provisions of any applicable constitution, treaty, statute, law, regulation, ordinance, code, rule (including listing rules and regulations), or rule of common law, any governmental approval, concession, grant, franchise, license, agreement, directive, requirement, or other governmental restriction or any similar form of decision of, or determination by, or any formally issued written interpretation or administration of any of the foregoing by, any Governmental Authority, in each case as amended or re-enacted, and any and all applicable Governmental Orders.

 

“Lien” means (i) any mortgage, pledge, security interest, encumbrance, title defect, lien, charge, easement, or other restriction or limitation of similar kind; (ii) any adverse claim as to title, possession or use, and includes any Contract or arrangement for any of the same, whether imposed by Contract, understanding, Law, equity or otherwise.

 

“Ordinary Shares” means Class A Ordinary Shares and Class B Ordinary Shares collectively.

 

“Person” shall be construed as broadly as possible and shall include any individual, corporation, partnership, limited partnership, proprietorship, association, limited liability company, firm, trust, estate or other enterprise or entity, including Governmental Authorities.

 

“PRC” means the People’s Republic of China but solely for purposes of this Agreement, does not include Hong Kong, the Special Administrative Region of Macau and the territory of Taiwan.

 

“Qualified IPO” has the meaning ascribed to them in the Shareholders Agreement.

 

“RMB” means Renminbi, the lawful currency of the PRC.

 

“SAFE” means the State Administration of Foreign Exchange of the PRC and its local counterparts, and/or an authorized bank, as the case may be.

 

“SAFE Regulations” means the Circular 37, issued by SAFE on July 4, 2014, titled “Relevant Issues concerning Foreign Exchange Administration of Overseas Investment and Financing and Inbound Investment through Special Purpose Companies by PRC Residents” (《国家外汇管理局关于境内居民通过特殊目的公司境外投融资及返程投资外汇管理有关问题的通知》(汇发[2014]37号), as amended and/or implemented by SAFE, and any successor rule or regulation under the PRC Laws, including but not limited to any rule or regulation interpreting or setting forth provisions for implementation of any of the

 

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foregoing and any other applicable SAFE rules and regulations.

 

“Securities Act” means the U.S. Securities Act of 1933, as amended.

 

“Series A Preferred Share(s)” means the series A redeemable and convertible preferred shares of the Company with a par value of US$0.000001 per share, with the rights and privileges as set forth in the Amended M&AA and the Shareholders Agreement.

 

“Series A-1 Preferred Share(s)” means the series A-1 redeemable and convertible preferred shares of the Company with a par value of US$0.000001 per share, with the rights and privileges as set forth in the Amended M&AA and the Shareholders Agreement.

 

“Subsidiary” means, with respect to a specific entity, (i) any entity (x) more than fifty percent (50%) of whose shares or other interests entitled to vote in the election of directors or (y) more than a fifty percent (50%) of whose interests in the profits or capital of such entity are owned or Controlled directly or indirectly by the subject entity or through one (1) or more Subsidiaries of the subject entity; (ii) any entity whose profit and loss and net earnings are consolidated with the profit and loss and net earnings of the subject entity and are recorded on the books of the subject entity for financial reporting purposes in accordance with the Accounting Standards; and (iii) any entity with respect to which the subject entity has the power to otherwise direct the business, management and policies (with respect to operational or financial control or otherwise) of that entity directly or indirectly through another Subsidiary, any contractual arrangement or otherwise (for the avoidance of doubt, the PRC Company, all the direct and indirect Subsidiaries of the PRC Company, 上海精睿商务咨询有限公司、上海精锐信息科技有限公司,上海精学锐信息科技有限公司and 上海精育投资有限公司, and their Subsidiaries, shall be regarded as Subsidiaries of the Company).

 

“Tax” means any national, provincial or local income, sales and use, excise, franchise, real and personal property, gross receipt, capital stock, capital gain, production, business and occupation, disability, employment, payroll, severance or withholding tax or any other type of tax, levy, assessment, custom duty or charge imposed by any Governmental Authority, any interest and penalties (civil or criminal) related thereto or to the non-payment thereof, and any loss or tax liability incurred in connection with the determination, settlement or litigation of any liability arising therefrom.

 

“Transaction Documents” means this Agreement, the Deed of Accession or the Shareholders Agreement (as the case may be), the Amended M&AA and the exhibits attached to any of the foregoing.

 

“US$” or “$” means the lawful currency of the United States of America.

 

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“Warrantors” means, collectively, the Selling Founder and the Selling Ordinary Shareholder.

 

1.2                              Definitions. The following terms have the meanings in the Sections set forth below:

 

	
Term
    	
 
    	
Location
    
	
Agreement
    	
 
    	
Preamble.
    
	
Amended M&AA
    	
 
    	
Section 2.2.
    
	
Arbitration Rules
    	
 
    	
Section 9.14.
    
	
BVI Company
    	
 
    	
Recitals.
    
	
Circular 698 and Bulletin 7
    	
 
    	
Section 6.4.
    
	
Closing
    	
 
    	
Section 2.3(a).
    
	
Closing Date
    	
 
    	
Section 2.3(a).
    
	
Company
    	
 
    	
Preamble.
    
	
Confidential Information
    	
 
    	
Section 9.9(a).
    
	
Deed of Accession
    	
 
    	
Recitals.
    
	
Effective Date
    	
 
    	
Preamble.
    
	
ESOP
    	
 
    	
Recitals.
    
	
HKIAC
    	
 
    	
Section 9.14.
    
	
HK Company
    	
 
    	
Recitals.
    
	
Indemnification Threshold
    	
 
    	
Section 6.3(c).
    
	
Indemnitee
    	
 
    	
Section 6.3(a).
    
	
Indemnitee Claims
    	
 
    	
Section 6.3(c).
    
	
Indemnitor
    	
 
    	
Section 6.3(a).
    
	
New Series A-1 Preferred Shares
    	
 
    	
Section 2.2.
    
	
Outside Date
    	
 
    	
Section 9.17(a).
    
	
Party/Parties
    	
 
    	
Preamble.
    
	
PRC Company
    	
 
    	
Recitals.
    
	
Purchase Price
    	
 
    	
Section 2.1.
    
	
Purchaser
    	
 
    	
Preamble.
    
	
Restructuring Agreement
    	
 
    	
Recitals.
    
	
Sale Shares
    	
 
    	
Section 2.1.
    
	
SAT
    	
 
    	
Section 6.4.
    
	
Seller
    	
 
    	
Preamble.
    
	
Selling Founder
    	
 
    	
Preamble.
    
	
Selling Ordinary Shareholder
    	
 
    	
Preamble.
    
	
Shanghai Rui Si
    	
 
    	
Recitals.
    
	
Shareholders Agreement
    	
 
    	
Section 8.5.
    
	
WFOE
    	
 
    	
Recitals.
    

 

1.3                              Interpretation and Rules of Construction.

 

In this Agreement, except to the extent otherwise provided or that the context otherwise requires:

 

(a)              when a reference is made in this Agreement to an Article, Section, Exhibit or Schedule, unless otherwise specified herein, such reference is to an Article or Section of, or an Exhibit or Schedule to, this Agreement;

 

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(b)              the headings for this Agreement are for reference purposes only and do not affect in any way the meaning or interpretation of this Agreement;

 

(c)               whenever the words “include,” “includes” or “including” are used in this Agreement, they are deemed to be followed by the words “without limitation”;

 

(d)              the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement;

 

(e)               all terms defined in this Agreement have the defined meanings when used in any certificate or other document made or delivered pursuant hereto, unless otherwise defined therein;

 

(f)                the definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms;

 

(g)               pronouns of either gender or neuter shall include, as appropriate, the other pronoun forms;

 

(h)              references in this Agreement to a “Party” or any other Person are also to its successors and permitted assigns and transferees;

 

(i)                  any reference in this Agreement to any Contract or document is a reference to that Contract or document as amended, supplemented or novated from time to time;

 

(j)                 references to Laws include any such Law modifying, re-enacting, extending or made pursuant to the same or which is modified, re-enacted, or extended by the same or pursuant to which the same is made;

 

(k)              the phrase “directly or indirectly” means directly, or indirectly through one or more intermediate Persons or through contractual or other arrangements, and “direct or indirect” has the correlative meaning;

 

(l)                  references to writing and written include any mode of reproducing words in a legible and non-transitory form including emails and faxes;

 

(m)          in calculations of share or registered capital amounts, references to a “fully-diluted basis” mean that the calculation is to be made assuming that all outstanding options, warrants and other Equity Securities convertible into or exercisable or exchangeable for such shares or registered capital, as applicable (whether or not by their terms then currently convertible, exercisable or exchangeable), have been so converted, exercised or exchanged and all Equity Securities reserved for issuance under the ESOP as issued and outstanding; and

 

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2.                     PURCHASE AND SALE OF SHARES

 

2.1                     Purchase and Sale of Class B Ordinary Shares.

 

Subject to the terms and conditions hereof, at the Closing, the Selling Ordinary Shareholder agrees to sell to VKC (or its Affiliate Nominee), and VKC (or its Affiliate Nominee) hereby agrees to purchase from the Selling Ordinary Shareholder, 142,642,550 Class B Ordinary Shares (the “Sale Shares”), at the price of US$0.173458 per Class B Ordinary Share, amounting to an aggregate purchase price of US$ 24,742,424.24 (the “Purchase Price”).

 

2.2                     Reclassification of Sale Shares.

 

Concurrently upon Closing, the Company shall reclassify each Sale Share as a Series A-1 Preferred  Share (collectively, the “New Series A-1 Preferred Shares”), which shall have the rights, preferences, privileges and restrictions set forth in the Fourth Amended and Restated Memorandum of Association and Articles of Association of the Company in the form attached hereto as Exhibit A (as amended and restated from time to time after the Closing, the “Amended M&AA”) and the Shareholders Agreement.

 

2.3                     Closing.

 

(a)                      Subject to Section 2.3(b), the consummation of the sale and purchase of the Sale Shares pursuant to Section 2.1 (the “Closing”, and the date of the Closing, the “Closing Date”) shall take place remotely via the exchange of documents and signatures as soon as practicable, but in no event later than the later of (i) seven (7) Business Day after all closing conditions specified in Section 7 and Section 8 have been waived or satisfied (other than those conditions which, by their terms, are intended to be satisfied at the Closing, but subject to the satisfaction or waiver thereof at the Closing) and (ii) four (4) weeks after the Effective Date, or at such other time and place as the Company and VKC shall mutually agree in writing.

 

(b)                       The consummation of the sale and purchase of the Sale Shares pursuant to Section 2.1 and the consummation of the reclassification of the Sale Shares pursuant to Section 2.2 shall take place simultaneously.

 

(c)                        The capitalization tables of the Company as of the Effective Date and immediately after the Closing are shown on Schedule I attached hereto.

 

2.4                     Deliverables.

 

(a)                      At the Closing, the Company shall deliver or cause to be delivered the following items to VKC (or its Affiliate Nominee),

 

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simultaneously with the payment of the relevant amount of the Purchase Price by VKC (or its Affiliate Nominee) at the Closing pursuant to Section 2.1:

 

(i)                           a copy of the updated register of members of the Company as of the Closing Date, certified by the registered office provider of the Company, reflecting the sale of the Sale Shares from the Selling Ordinary Shareholder to VKC (or its Affiliate Nominee) pursuant to Section 2.1 and the reclassification of the Sale Shares into the New Series A-1 Preferred Shares pursuant to Section 2.2;

 

(ii)                        a copy of a share certificate issued in the name of VKC (or its Affiliate Nominee), certified by the registered office provider of the Company, representing the relevant number of New Series A-1 Preferred Shares (and within five (5) Business Days following the Closing, the Company shall deliver to VKC (or its Affiliate Nominee) the original copy of such share certificate duly executed in accordance with the Amended M&AA);

 

(iii)                     a certificate, dated the Closing Date and signed by an authorized officer or director of the Company, certifying that the conditions set forth in Section 7 have been satisfied; and

 

(iv)                    scanned copies of the Board resolutions and the shareholders’ resolutions of the Company duly passed, approving (1) the adoption of the Amended M&AA, (2) the execution, delivery and performance of the Transaction Documents, (3) the sale and purchase of the Sale Shares, and (4) the reclassification of the Sale Shares into the New Series A-1 Preferred Shares.

 

(b)                      At the Closing, the Seller shall surrender the share certificates (if any) evidencing the Sale Shares to the Company for cancelation.

 

(c)                       At the Closing, subject to the terms and conditions of this Agreement, VKC shall deposit, or cause to be deposited, the relevant amount of the Purchase Price by wire transfer in immediately available funds in U.S. dollars to the bank account as designated by the Seller by written notice given to VKC at least two (2) Business Days prior to the payment date.

 

3.                     REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company hereby represents and warrants to VKC that the statements set forth on Schedule II are true, correct, complete and not misleading as of the date of this Agreement and as of the Closing Date (except in either case for those representations and warranties that address matters only as of a particular date, which representations and warranties will have been true, correct, complete and not misleading as of such particular date).

 

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4.                     REPRESENTATIONS AND WARRANTIES OF THE WARRANTORS

 

Each Warrantor hereby jointly and severally represents and warrants to VKC that the statements set forth on Schedule III attached hereto are true, correct, complete and not misleading as of the date of this Agreement and as of the Closing Date (except in either case for those representations and warranties that address matters only as of a particular date, which representations and warranties will have been true, correct, complete and not misleading as of such particular date).

 

5.                     REPRESENTATIONS AND WARRANTIES OF VKC

 

VKC hereby represents and warrants to the Company and the Warrantors that the statements set forth on Schedule IV are true, correct, complete and not misleading as of the date of this Agreement and as of the Closing Date (except in either case for those representations and warranties that address matters only as of a particular date, which representations and warranties will have been true, correct, complete and not misleading as of such particular date).

 

6.                     COVENANTS

 

6.1                     Facilitating the Closing.

 

Each Party shall use its commercially best efforts to cause the satisfaction of all the conditions precedent applicable to it as set forth in Section 7 and Section 8.

 

6.2                     Executory Period Covenants.

 

At all times during the period commencing from the Effective Date and continuing until the earlier to occur of the termination of this Agreement and the Closing Date, the Company shall permit VKC, or any representative thereof, to (i) visit and inspect the properties of the Group Companies, (ii) inspect the books of account, records, ledgers, and other documents and data of the Group Companies, (iii) discuss the business, affairs, finances and accounts of the Group Companies with officers and employees of the Group Companies, and (iv) review such other information as VKC may reasonably request, in such a manner so as not to unreasonably interfere with the Group Companies’ normal operations.

 

6.3                     Indemnification.

 

(a)                      Each Party (each, an “Indemnitor”) hereby agrees to indemnify and hold harmless each other Party, its Affiliates and its and their respective officers, directors, employees, partners, equity holders, counsel, financial advisors, auditors and other representatives and their respective successors and assigns, to the fullest extent permitted by applicable Law (each, an “Indemnitee”), from and against any and all Indemnifiable Losses (but excluding any consequential, speculative or punitive damages) suffered by such Indemnitee as a result of, or based upon or arising from any

 

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inaccuracy in or breach or non-performance of any of the representations, warranties, covenants or agreements made by any Indemnitor in or pursuant to this Agreement.

 

(b)                      The rights contained in this Section 6.3 shall not be deemed to preclude or otherwise limit in any way the exercise of any other rights or pursuit of other remedies for the breach of this Agreement or with respect to any misrepresentation.

 

(c)                        No information relating to any Group Company of which VKC has knowledge (actual or constructive), and no investigation by or on behalf of VKC shall prejudice any claim made by VKC under the indemnity contained in this Section 6.3, or operate to reduce any amount recoverable thereunder.  It shall not be a defense to any claim against the Company or a Warrantor that VKC knew or ought to have known or had constructive knowledge of any information relating to the circumstances giving rise to such claim.

 

(d)                       Limitations on Liability.

 

(i)                           Notwithstanding anything in this Agreement to the contrary, the maximum liability of (A) the Company and the Warrantors, taken as a whole, to VKC and (B) VKC for any claims in respect of the representations and warranties in this Agreement (“Indemnitee Claims”) shall be limited to an amount equal to the Purchase Price.

 

(ii)                        No indemnitor shall be obliged to indemnify an Indemnitee in respect of an Indemnitee Claim unless the aggregate amount of that Indemnitee Claim exceeds RMB1,000,000 (or its equivalent in foreign currency) (the “Indemnification Threshold”), in which event such indemnification shall be required to the full extent of the Indemnifiable Loss of the Indemnitee.

 

(iii)                     No liability will arise and no Indemnitee Claim may be made to the extent that the matter giving rise to such Indemnitee Claim is remediable and has not actually given rise to any quantifiable monetary loss sustained by any Indemnitee, unless such matter shall not have been remedied to the reasonable satisfaction of the Indemnitee within thirty (30) Business Days following the date of service of notice by the Indemnitee to the Company requiring the matter to be remedied.

 

(iv)                    Notwithstanding anything to the contrary contained herein, in no event shall an Indemnitee be entitled to any duplicative payment, adjustment or indemnification with respect to the same matter.

 

(v)                       Unless otherwise required by Law, any payment made

 

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pursuant to this Section 6.3 shall be treated as an adjustment to the Purchase Price.

 

6.4                              Circular 698 and Bulletin 7.

 

(a)                                 The Seller shall comply with all applicable Laws relating to Tax and shall be responsible for and pay all of the Taxes, duties, fees, expenses and government levies imposed in connection with the transactions contemplated under this Agreement as required under all applicable Laws, including filing and payment obligations under the Notice on Strengthening the Management of Enterprise Income Tax Collection of Proceeds from Equity Transfers by Non-resident Enterprises (Guoshuihan [2009] 698) (《国家税务总局关于加强非居民企业股权转让所得企业所得税管理的通知》(国税函〔2009〕698号) issued by the State Administration of Taxation (“SAT”) on December 10, 2009, as amended by the Bulletin on Several Issues Concerning Enterprise Income Tax on Proceeds from Indirect Transfers of Assets by Non-resident Enterprises (Bulletin of SAT [2015] No.7) (《国家税务总局关于非居民企业间接转让财产企业所得税若干问题的公告》(国家税务总局公告2015年第7号) issued by the SAT on February 3, 2015 (collectively, the “Circular 698 and Bulletin 7”).

 

(b)                                 The Seller shall indemnify and hold harmless VKC against any Indemnifiable Losses incurred as a result of the Seller’s failure to timely pay any Taxes it is required to pay pursuant to Circular 698 and Bulletin 7 in respect of the transactions contemplated by this Agreement.

 

7.                     CONDITIONS TO VKC’S OBLIGATIONS AT THE CLOSING

 

The obligations of VKC to purchase the Sale Shares at the Closing under Section 2.1 are subject to the fulfilment or waiver by VKC of each of the following conditions at or prior to the Closing:

 

7.1                     Representations and Warranties.

 

The representations and warranties made by the Company in Schedule II and by the Warrantors in Schedule III, in all material respects, shall be true, correct, complete and not misleading when made, and shall be true, correct, complete and not misleading as of the Closing Date with the same force and effect as if they had been made on and as of such date, or as of another date if any representations and warranties are made with respect to such other date.

 

7.2                     Performance of Obligations.

 

Each of the Company and the Warrantors shall have performed and complied with all covenants, agreements, obligations and conditions contained in the Transaction Documents that are required to be

 

13

 

performed or complied with by it at or before the Closing in all material respects.

 

7.3                     No Legal Prohibition.

 

No Governmental Authority of competent jurisdiction shall have enacted, issued or promulgated any Law or granted any Governmental Order that is in effect and has the effect of making the transactions contemplated by this Agreement illegal in any jurisdiction in which the Group Companies have material business or operations or in which a Group Company is incorporated or which has the effect of prohibiting or otherwise preventing the consummation of any of such transactions in any jurisdiction in which the Group Companies have material business or operations.

 

7.4                     No Proceedings.

 

No Governmental Authority or any other Person shall have instituted or threatened any legal, arbitral or administrative proceedings or inquiry to restrain, prohibit or otherwise challenge any transaction contemplated by this Agreement.

 

7.5                     Required Consents, Waivers.

 

All consents, approvals and waivers of, notices to and filings or registrations with any Governmental Authority or any other Person required pursuant to any applicable Laws or regulation of any Governmental Authority, or pursuant to any Contract binding on the Company, to consummate the transactions contemplated under this Agreement and the other Transaction Documents (to the extent that such transactions are to be completed on or prior to the Closing Date) shall have been received.

 

7.6                     Execution of Transaction Documents.

 

The Transaction Documents shall have been duly executed by the Company, the Warrantors and all other parties thereto (except for VKC).

 

7.7                     Amended M&AA.

 

The Amended M&AA shall have been duly adopted by the special resolution of the Company’s shareholders, and shall have been submitted for filing with the Registrar of Companies of the Cayman Islands.

 

7.8                     Company Deliveries.

 

The Company shall have delivered or caused to be delivered to VKC the items set forth in Section 2.4(a).

 

8.                     CONDITIONS TO COMPANY AND SELLER’S OBLIGATIONS AT THE CLOSING

 

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The obligations of the Seller to sell the Sale Shares under Section 2.1, and the obligations of the Company to reclassify the Sale Shares into the New Series A-1 Preferred Shares at the Closing under Section 2.2 are subject to the fulfilment of the following conditions at the Closing:

 

8.1                     Representations and Warranties.

 

The representations and warranties made by VKC in Schedule IV, in all material respects, shall be true, correct, complete and not misleading when made, and shall be true, correct, complete and not misleading as of the Closing Date with the same force and effect as if they had been made on and as of such date, or as of another date if any representations and warranties are made with respect to such other date.

 

8.2                     Performance of Obligations.

 

VKC shall have performed and complied with all covenants, agreements, obligations and conditions contained in the Transaction Documents to which it is a party, that are required to be performed or complied with by it at or before the Closing in all material respects.

 

8.3                     No Legal Prohibition.

 

No Governmental Authority of competent jurisdiction shall have enacted, issued or promulgated any Law or granted any Governmental Order that is in effect and has the effect of making the transactions contemplated by this Agreement illegal in any jurisdiction in which the Group Companies have material business or operations or in which a Group Company is incorporated or which has the effect of prohibiting or otherwise preventing the consummation of any of such transactions in any jurisdiction in which the Group Companies have material business or operations.

 

8.4                     No Proceedings.

 

No Governmental Authority or any other Person shall have instituted or threatened any legal, arbitral or administrative proceedings or inquiry to restrain, prohibit or otherwise challenge any transaction contemplated by this Agreement.

 

8.5                     Execution of Transaction Documents.

 

VKC shall have executed and delivered to the Company the Transaction Documents to which it is a party (including, at the sole election of the Company, (x) the deed of accession (the “Deed of Accession”) in the form attached hereto as Exhibit B, whereby VKC shall join in and be bound by the shareholders agreement entered into by and among the Company, the Selling Ordinary Shareholders and certain other parties thereto on April 21, 2017 or (y) the amended and restated shareholders agreement in a form satisfactory to the parties thereto (the effective shareholders agreement as of the Closing Date, the “Shareholders

 

15

 

Agreement”)).

 

9.                     MISCELLANEOUS

 

9.1                              Survival.

 

The representations and warranties made by the Parties shall survive until the earlier of the following: (1) the consummation of a Qualified IPO; or (2) eighteen (18) months after the Closing Date; and (y) the representations and warranties contained in clause 4 (Valid Issuance and Transfer of Shares) in Schedule II shall survive until the expiration of the applicable statute of limitations (taking in account any tolling period or other extension).

 

9.2                              Successors and Assigns.

 

Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the Parties whose rights or obligations hereunder are affected by such terms and conditions. This Agreement, and the rights and obligations hereunder, shall not be assigned without the mutual written consent of the Parties, provided that VKC may, without the consent of the Parties, assign and/or transfer all or any portion of its rights and obligations to (i) an Affiliate Nominee of VKC; provided that, notwithstanding anything herein to the contrary, (A) such Affiliate Nominee shall not be a Competitor (as defined in the Shareholders Agreement) or an Affiliate of any Competitor, and (B) such Affiliate Nominee shall execute and deliver a deed of accession to join in and be bound by the terms of the Shareholders Agreement and be bound by the terms of the Amended M&AA as the “Investor” (if not already a Party thereto); or (ii) a transferee of the shares acquired by VKC hereunder, provided that in the case of (ii), the relevant transfer of shares shall be conducted in accordance with the Shareholders Agreement. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the Parties or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

9.3                              Entire Agreement.

 

This Agreement, the other Transaction Documents and the schedules and exhibits hereto and thereto, which are hereby expressly incorporated herein by this reference, constitute the entire understanding and agreement between the Parties with regard to the subjects hereof and thereof, and supersede all other agreements between or among all of the Parties with respect to the subject matter hereof and thereof, and no Party shall be liable or bound to any other Party in any manner by any warranties, representations, or covenants except as specifically set forth herein or therein.

 

9.4                              Notices.

 

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Except as may be otherwise provided herein, all notices, requests, waivers and other communications made pursuant to this Agreement shall be in writing and shall be conclusively deemed to have been duly given (a) when hand delivered to any other Party at the address set forth in the Schedule of Notice, at the time of delivery; (b) when sent by courier to any other Party at the address set forth in the Schedule of Notice with next-Business-Day delivery guaranteed, three (3) Business Days after deposit with an overnight delivery service, postage prepaid, addressed to the relevant Party, provided that the sending Party receives a confirmation of delivery from the delivery service provider; (c) when sent by fax to any other Party at the number set forth in the Schedule of Notice attached hereto, on the Business Day immediately after the date of transmission, provided that the transmitting device generates a report of successful transmission; (d) when sent by electronic mail to any other Party at the address set forth in the Schedule of Notice, on the Business Day immediately after the date of transmission, provided that receipt shall not occur if the sending Party an automated message that the electronic mail has not been delivered to the intended recipient; (e) when sent to any other Party by mail at the address set forth in the Schedule of Notice, seven (7) Business Days after deposit in the mail as air mail or certified mail, receipt requested, postage prepaid and addressed to the relevant Party.  A Party may change or supplement the mailing addresses, fax number, electronic mail address given in the Schedule of Notice, or designate additional mailing addresses, fax number or electronic mail address for purposes of this Section 9.4 by giving, the other Parties written notice of the new mailing address, fax number or electronic mail address in the manner set forth above. Notwithstanding the foregoing, to the extent a “with a copy to” address is designated, notice must also be given to such address in the manner above for such notice, request, consent or other communication hereunder to be effective.

 

9.5                              Amendments and Waivers.

 

Any term of this Agreement may be amended, only with the written consent of each of the Parties. Any amendment effected in accordance with this paragraph shall be binding upon each of the Parties and their respective permitted transferees, assignees and successors in interest. Notwithstanding the foregoing, the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Party against whom such waiver is sought.

 

9.6                              Delays or Omissions; No Waiver.

 

No delay or omission to exercise any right, power or remedy accruing to any Party, upon any breach or default of any other Party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting Party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of

 

17

 

any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Party of any breach or default under this Agreement, or any waiver on the part of any Party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing.

 

Failure to insist upon strict compliance with any of the terms, covenants, or conditions hereof will not be deemed a waiver of such term, covenant, or condition, nor will any waiver or relinquishment of, or failure to insist upon strict compliance with, any right, power or remedy power hereunder at any one or more times be deemed a waiver or relinquishment of such right, power or remedy at any other time or times.

 

9.7                              Counterparts.

 

This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. Facsimile and e-mailed copies of signatures shall be deemed to be originals for purposes of the effectiveness of this Agreement.

 

9.8                              Severability.

 

If any provision of this Agreement is found to be invalid or unenforceable, then such provision shall be construed, to the extent feasible, so as to render the provision enforceable and to provide for the consummation of the transactions contemplated hereby on substantially the same terms as originally set forth herein, and if no feasible interpretation would save such provision, it shall be severed from the remainder of this Agreement, which shall remain in full force and effect unless the severed provision is essential to the rights or benefits intended by the Parties.  In such event, the Parties shall use best efforts to negotiate, in good faith, a substitute, valid and enforceable provision or agreement which most closely effectuates the Parties’ intent in entering into this Agreement.

 

9.9                              Confidentiality and Non-Disclosure.

 

(a)                       Confidential Information.  The terms and conditions of the Transaction Documents and all exhibits, restatements and amendments hereto and thereto, including their existence and any proprietary information (including financial statements) of the Group Companies (collectively, the “Confidential Information”), shall be considered confidential information and shall not be disclosed by any of the Parties to any other Person except as permitted in accordance with the provisions set forth below. The obligations under this Section 9.9 shall survive the termination of this Agreement.

 

18

 

(b)                       Permitted Disclosure.  Notwithstanding the foregoing, (i) the Company may disclose the existence or content of any of the Confidential Information to its current or bona fide prospective investors, directors, officers, employees, shareholders, investment bankers, lenders, hedge counterparties, agents, trustees, arrangers, accountants, auditors, insurers, business or financial advisors, and attorneys, in each case only where such Persons are under appropriate nondisclosure obligations imposed by professional ethics, law or otherwise; (ii) VKC (and its fund manager) may, without disclosing the identities of the other shareholders or the financing terms of their respective investments in the Company without such other shareholder’s or the Company’s consent, disclose VKC’s investment in the Company to other Persons or to the public at its sole discretion and in relation thereto may use the Company’s logo and trademark (without requiring the Company’s further consent), and if it does so, the other Parties shall have the right to disclose to other Persons any such information disclosed in a press release or other public announcement by VKC; (iii) VKC may disclose the existence or content of any of the Confidential Information to its  current or bona fide prospective partners, co-investors and financing sources or transferees, Affiliates and its and their respective employees, officers, directors, bankers, lenders, accountants, legal counsels, business partners or representatives or advisors who need to know such information as VKC deems appropriate and in each case only where such Persons are under appropriate nondisclosure obligations imposed by professional ethics, law or otherwise; (iv) VKC may disclose the existence or content of any of the financing terms for fund and inter-fund reporting purposes and any information contained in press releases or public announcements of the Company pursuant to Section 9.9(b); and (v) any Party may disclose the Confidential Information to any Person to which disclosure is approved in writing by the Party providing the Confidential Information. Any Party may also provide disclosure in order to comply with applicable Laws, as set forth in Section 9.9(c) below.

 

(c)                        Legally Compelled Disclosure.  If any Party is requested or becomes legally compelled (including, pursuant to any applicable tax, securities, or other Laws of any jurisdiction or by subpoena or any requirement by governmental, judicial or regulatory body or any stock exchange), civil investigative demand (or similar process) in connection with any judicial or administrative proceeding (including, in response to oral questions, interrogatories or requests for information or documents) or any other Governmental Order to disclose the existence or content of any of the Confidential Information in contravention of the provisions of this Section 9.9, such Party shall, to the extent legally permissible and without compromising any privileges, promptly provide the other Parties with written notice of that fact so that such other Parties may seek a protective order, confidential

 

19

 

treatment or other appropriate remedy and in any event shall furnish only that portion of the information that is legally required and shall exercise reasonable efforts to obtain reliable assurance that confidential treatment will be accorded such information.

 

(d)                       Other Exceptions.   The confidentiality obligations of the Parties set out in this Section 9.9 shall not apply to (i) information which was in the public domain or otherwise known to the relevant Party before it was furnished to it by another Party hereto or, after it was furnished to that Party, entered the public domain otherwise than as a result of (x) a breach by that Party of this Section 9.9. or (y) a breach of a confidentiality obligation by a third party discloser, where the breach was actually known to that relevant Party; (ii) information which was independently developed by the relevant Party without using or making reference to any Confidential Information, (iii) information disclosed by any director or the Board or observer of the Company to its appointer or any of its Affiliates or to any Person to whom disclosure would be permitted in accordance with the foregoing provisions of this Section 9.9.

 

9.10                       Press Releases; Promotion.

 

None of the Parties shall issue a press release or make any public announcement or other public disclosure with respect to any of the transactions contemplated herein without obtaining in each instance the prior written consent of each of the other Parties.

 

9.11                       Use of Logo.

 

The Company shall grant VKC and its Affiliates permission to use the Company’s name and logo in its or its Affiliate’s marketing materials and bid documentation in relation to potential transactions.

 

9.12                       Further Assurances.

 

Each Party shall from time to time and at all times hereafter use its reasonable best efforts to make, do, execute, or cause to be made, done and executed such further acts, deeds, conveyances, consents and assurances without further consideration, which may reasonably be required to effect the transactions contemplated by this Agreement.

 

9.13                       Governing Law.

 

This Agreement shall be governed by and construed under the Laws of Hong Kong, without regard to principles of conflict of laws thereunder.

 

9.14                       Dispute Resolution.

 

Each of the Parties irrevocably (i) agrees that any dispute or controversy arising out of, relating to, or concerning any interpretation, construction, performance or breach of this Agreement, shall be settled by arbitration to be held in Hong Kong which shall be administered by the Hong Kong

 

20

 

International Arbitration Centre (“HKIAC”) in accordance with the HKIAC Procedures for the Administration of International Arbitration in force at the time of the commencement of the arbitration (the “Arbitration Rules”), (ii) waives, to the fullest extent it may effectively do so, any objection which it may now or hereafter have to the laying of venue of any such arbitration.  There shall be three arbitrators, selected in accordance with the Arbitration Rules. The arbitration shall be conducted in Chinese and English.  The decision of the arbitration tribunal shall be final, conclusive and binding on the parties to the arbitration.  Judgment may be entered on the arbitration tribunal’s decision in any court having jurisdiction.  The parties to the arbitration shall each pay an equal share of the costs and expenses of such arbitration, and each party shall separately pay for its respective counsel fees and expenses; provided, however, that the prevailing party in any such arbitration shall be entitled to recover from the non-prevailing party its reasonable costs and attorney fees. The Parties acknowledge and agree that, in addition to contract damages, the arbitrators may award provisional and final equitable relief, including injunctions and specific performance.

 

9.15                       Third Party Rights.

 

The Parties do not intend that any term of this Agreement, apart from Section 6.3, should be enforceable, by virtue of the Contracts (Rights of Third Parties) Ordinance (Cap. 623 of the Laws of Hong Kong), by any person who is not a party to this Agreement.

 

9.16                       Taxes; Expenses.

 

Except as otherwise provided in this Agreement, each Party shall be responsible for paying any and all Taxes assessed against itself, arising from, or in connection with, the transactions contemplated by this Agreement and other Transaction Documents pursuant to the applicable Laws. Each Party shall pay all of its own costs and expenses incurred in connection with the negotiation, execution, delivery and performance of this Agreement and other Transaction Documents and the transactions contemplated hereby and thereby.

 

9.17                       Termination of this Agreement.

 

This Agreement may be terminated:

 

(a)                       at any time prior to the Closing, (i) by the mutual written consent of the Seller and VKC, or (ii) by either the Seller or VKC if the Closing shall not have occurred on or prior to December 1, 2017 (the “Outside Date”) or upon the termination of the Restructuring Agreement in accordance with its terms prior to the Outside Date; provided that the right to terminate this Agreement pursuant to this Section 9.17(a) shall not be available to any Party whose actions or omissions have been a cause of, or resulted in, the failure of the Closing to occur on or before such date or the termination of the

 

21

 

Restructuring Agreement, as the case may be;

 

(b)                       by VKC, at any time prior to the Closing, (i) if any of the representations and warranties made by any Warrantor or the Company contained in this Agreement or any other Transaction Documents fails to be true and correct in all material respects, without giving effect to any materiality qualifiers or references to materiality therein, or (ii) if any Warrantor or the Company shall have breached or failed to comply with any of its material obligations under this Agreement or any other Transaction Document and, such failure or breach with respect to any such representation, warranty or obligation cannot be cured or, if curable, shall continue unremedied for a period of thirty (30) days after the Company or the Warrantors (as the case may be) has received written notice from VKC of the occurrence of such failure or breach (provided that in no event shall such thirty (30) day period extend beyond the Outside Date);

 

(c)                        by the Seller on behalf of the Company and all the Warrantors, at any time prior to the Closing, (i) if any of the representations and warranties made by VKC contained in this Agreement or any other Transaction Document to which it is a party fails to be true and correct in all material respects, without giving effect to any materiality qualifiers or references to materiality therein, or (ii) if VKC shall have breached or failed to comply with any of its material obligations under this Agreement or any other Transaction Documents to which it is a party, and such failure or breach with respect to any such representation, warranty or obligation cannot be cured or, if curable, shall continue unremedied for a period of thirty (30) days after VKC has received written notice from the Company of the occurrence of such failure or breach (provided that in no event shall such thirty (30) day period extend beyond the Outside Date; and

 

(d)                       by the written mutual consent of the Parties prior to the Closing.

 

Upon termination of this Agreement under this Section 9.17, this Agreement shall forthwith become wholly void and of no effect with respect to the applicable Parties and the applicable Parties shall be released from all future obligations hereunder, except as otherwise expressly provided herein; provided that nothing herein shall relieve any Party from liability for any breach of this Agreement occurring prior to such termination.

 

9.18                       No Fiduciary Duty.

 

The Parties acknowledge and agree that nothing in the Transaction Documents to which VKC is a party shall create a fiduciary duty of VKC or its Affiliates to the Company or the shareholders of the Company.

 

9.19                       Specific Performance etc.

 

22

 

The Parties unconditionally and irrevocably acknowledge, agree and declare that it is impossible to measure in money the damages that would be suffered by a Party by reason of the failure by any other Party to perform any of the obligations under this Agreement or other Transaction Documents.  Therefore, if any Party shall institute any action or proceeding to enforce the provisions hereof or thereof (including seeking protective orders, injunctive relief, specific performance and other remedies available at law or in equity), any Party against whom such action or proceeding is brought hereby waives any claim or defense therein that the other Parties have an adequate remedy at law.

 

9.20                       No Presumption.

 

The Parties acknowledge that any applicable Laws that would require interpretation of any claimed ambiguities in this Agreement against the Party that drafted it have no application and are expressly waived. If any claim is made by a Party relating to any conflict, omission or ambiguity in the provisions of this Agreement, no presumption or burden of proof or persuasion will be implied because this Agreement was prepared by or at the request of any Party or its counsel.

 

9.21                       Adjustments for Share Splits, Etc.

 

Wherever in this Agreement there is a reference to a specific number of Series A-1 Preferred Shares, Series A Preferred Shares or Ordinary Shares of the Company, then, upon the occurrence of any subdivision, combination or share dividend of the Series A-1 Preferred Shares, Series A Preferred Shares or Ordinary Shares, the specific number of shares so referenced in this Agreement shall automatically be proportionally adjusted to reflect the effect on the outstanding shares of such class or series of shares by such subdivision, combination or share dividend.

 

9.22                       Rights Cumulative.

 

Each and all of the various rights, powers and remedies of a Party will be considered to be cumulative with and in addition to any other rights, powers and remedies which such Party may have at law or in equity in the event of the breach of any of the terms of this Agreement. The exercise or partial exercise of any right, power or remedy will neither constitute the exclusive election thereof nor the waiver of any other right, power or remedy available to such Party.

 

[The remainder of this page has been intentionally left blank.]

 

23

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Agreement on the date and year first above written.

 

Company:

 

	
ONESMART EDUCATION GROUP LIMITED
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Zhang Xi
    	
 
    
	
Name:
    	
ZHANG Xi (张熙)
    	
 
    
	
Title:
    	
Director
    	
 
    

 

SIGNATURE PAGE TO

SHARE PURCHASE AGREEMENT

 

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Agreement on the date and year first above written.

 

Selling Founder:

 

	
ZHANG Xi (张熙)
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Zhang Xi
    	
 
    
			

 

 

Selling Ordinary Shareholder:

 

	
Happy Edu Inc.
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Zhang Xi
    	
 
    
	
Name:
    	
ZHANG Xi (张熙)
    	
 
    
	
Title:
    	
Director
    	
 
    

 

SIGNATURE PAGE TO

SHARE PURCHASE AGREEMENT

 

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Agreement on the date and year first above written.

 

Purchaser:

 

Angus Holdings Limited

 

	
By:
    	
/s/ Authorized   Signatory
    	
 
    
	
Name:
    	
 
    
	
Title: Authorized Signatory
    	
 
    

 

SIGNATURE PAGE TO

SHARE PURCHASE AGREEMENT

 

 

SCHEDULE I

 

Part A

 

CAPITALIZATION TABLE AS OF THE EFFECTIVE DATE

 

	
Shareholders
    	
 
    	
Class of Shares
    	
 
    	
Number of
   Shares
    	
 
    	
Approx.
   Percentages
   (fully diluted
   and as
   converted
   basis)
    	
 
    
	
Happy Edu Inc.
    	
 
    	
Class B Ordinary   Shares
    	
 
    	
1,891,800,066
    	
 
    	
36.0962%
    	
 
    
	
ESOP
    	
 
    	
Class A Ordinary   Shares
    	
 
    	
288,599,939
    	
 
    	
5.5066%
    	
 
    
	
Subtotal
    	
 
    	
Ordinary   Shares
    	
 
    	
2,180,400,005
    	
 
    	
41.6028%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Juniperbridge Capital Limited
    	
 
    	
Series A Preferred   Shares
    	
 
    	
386,627,266
    	
 
    	
7.3770%
    	
 
    
	
Jiia Hong Limited
    	
 
    	
Series A Preferred   Shares
    	
 
    	
200,101,339
    	
 
    	
3.8180%
    	
 
    
	
Vicentsight Limited
    	
 
    	
Series A Preferred   Shares
    	
 
    	
64,310,946
    	
 
    	
1.2271%
    	
 
    
	
XINHUA GROUP INVESTMENT LIMITED
    	
 
    	
Series A Preferred   Shares
    	
 
    	
64,310,946
    	
 
    	
1.2271%
    	
 
    
	
Li Yeah Limited
    	
 
    	
Series A Preferred   Shares
    	
 
    	
14,289,291
    	
 
    	
0.2726%
    	
 
    
	
Brilight Limited
    	
 
    	
Series A Preferred   Shares
    	
 
    	
103,614,744
    	
 
    	
1.9770%
    	
 
    
	
Teakbridge Capital Limited
    	
 
    	
Series A Preferred   Shares
    	
 
    	
34,193,735
    	
 
    	
0.6524%
    	
 
    
	
CW One Smart Limited
    	
 
    	
Series A Preferred   Shares
    	
 
    	
316,858,851
    	
 
    	
6.0458%
    	
 
    
	
Subtotal
    	
 
    	
Series A   Preferred Shares
    	
 
    	
1,184,307,118
    	
 
    	
22.5970%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Stonebridge 2017 (Singapore) Pte. Ltd.
    	
 
    	
Series A-1   Preferred Shares
    	
 
    	
69,000,000
    	
 
    	
1.3165%
    	
 
    
	
Goldman Sachs Asia Strategic Pte. Ltd.
    	
 
    	
Series A-1 Preferred   Shares
    	
 
    	
603,750,000
    	
 
    	
11.5198%
    	
 
    
	
FPCI  Sino-French  (Mid Cap)  Fund
    	
 
    	
Series A-1   Preferred Shares
    	
 
    	
241,500,000
    	
 
    	
4.6079%
    	
 
    
	
Origin Investment Holdings Limited
    	
 
    	
Series A-1   Preferred Shares
    	
 
    	
926,285,677
    	
 
    	
17.6738%
    	
 
    
	
CW One Smart Limited
    	
 
    	
Series A-1 Preferred   Shares
    	
 
    	
34,496,500
    	
 
    	
0.6582%
    	
 
    
	
Supar Inc.
    	
 
    	
Series A-1   Preferred Shares
    	
 
    	
1,260,700
    	
 
    	
0.0240%
    	
 
    

 

SCHEDULE I

 

 

	
Subtotal
    	
 
    	
Series A-1   Preferred Shares
    	
 
    	
1,876,292,877
    	
 
    	
35.8002%
    	
 
    
	
Total
    	
 
    	
 
    	
 
    	
5,241,000,000
    	
 
    	
100.00%
    	
 
    

 

SCHEDULE I

 

 

SCHEDULE I

 

Part B

 

CAPITALIZATION TABLE IMMEDIATELY AFTER THE CLOSING

(assuming the share issuance under the Share Purchase Agreement to be entered into on or after the Effective Date by and among the Company, Happy Edu Inc. and the other parties thereto and the share transfer from Juniperbridge Capital Limited to Brilight Limited under the Share Transfer Agreement (股份转让协议) to be entered into on or after the Effective Date have been completed prior to the Closing)

 

	
Shareholders
    	
 
    	
Class of Shares
    	
 
    	
Number of
   Shares
    	
 
    	
Approx.
   Percentages
   (fully diluted
   and as
   converted
   basis)
    	
 
    
	
Happy Edu Inc.
    	
 
    	
Class B Ordinary   Shares
    	
 
    	
2,296,842,016
    	
 
    	
37.0348%
    	
 
    
	
ESOP
    	
 
    	
Class A Ordinary   Shares
    	
 
    	
336,642,439
    	
 
    	
5.4281%
    	
 
    
	
Subtotal
    	
 
    	
Ordinary   Shares
    	
 
    	
2,633,484,455
    	
 
    	
42.4629%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Juniperbridge Capital Limited
    	
 
    	
Series A Preferred   Shares
    	
 
    	
481,838,766
    	
 
    	
7.7692%
    	
 
    
	
Jiia Hong Limited
    	
 
    	
Series A Preferred   Shares
    	
 
    	
281,893,929
    	
 
    	
4.5453%
    	
 
    
	
Vicentsight Limited
    	
 
    	
Series A Preferred   Shares
    	
 
    	
90,598,420
    	
 
    	
1.4608%
    	
 
    
	
XINHUA GROUP INVESTMENT LIMITED
    	
 
    	
Series A Preferred   Shares
    	
 
    	
90,598,420
    	
 
    	
1.4608%
    	
 
    
	
Li Yeah Limited
    	
 
    	
Series A Preferred   Shares
    	
 
    	
20,130,122
    	
 
    	
0.3246%
    	
 
    
	
Brilight Limited
    	
 
    	
Series A Preferred   Shares
    	
 
    	
145,967,875
    	
 
    	
2.3536%
    	
 
    
	
Brilight Limited or any other entity designated by   Brilight Limited
    	
 
    	
Series A Preferred   Shares
    	
 
    	
87,350,000
    	
 
    	
1.4085%
    	
 
    
	
Teakbridge Capital Limited
    	
 
    	
Series A Preferred   Shares
    	
 
    	
34,193,735
    	
 
    	
0.5514%
    	
 
    
	
CW One Smart Limited
    	
 
    	
Series A Preferred   Shares
    	
 
    	
316,858,851
    	
 
    	
5.1091%
    	
 
    
	
Subtotal
    	
 
    	
Series A   Preferred Shares
    	
 
    	
1,549,430,118
    	
 
    	
24.9833%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Stonebridge 2017 (Singapore) Pte. Ltd.
    	
 
    	
Series A-1   Preferred Shares
    	
 
    	
69,000,000
    	
 
    	
1.1126%
    	
 
    

 

SCHEDULE I

 

 

	
Goldman Sachs Asia Strategic Pte. Ltd.
    	
 
    	
Series A-1   Preferred Shares
    	
 
    	
603,750,000
    	
 
    	
9.7350%
    	
 
    
	
FPCI  Sino-French  (Mid Cap)  Fund
    	
 
    	
Series A-1   Preferred Shares
    	
 
    	
241,500,000
    	
 
    	
3.8940%
    	
 
    
	
Origin Investment Holdings Limited
    	
 
    	
Series A-1 Preferred   Shares
    	
 
    	
926,285,677
    	
 
    	
14.9357%
    	
 
    
	
CW One Smart Limited
    	
 
    	
Series A-1   Preferred Shares
    	
 
    	
34,496,500
    	
 
    	
0.5562%
    	
 
    
	
Supar Inc.
    	
 
    	
Series A-1   Preferred Shares
    	
 
    	
1,260,700
    	
 
    	
0.0203%
    	
 
    
	
Angus Holdings Limited
    	
 
    	
Series A-1   Preferred Shares
    	
 
    	
142,642,550
    	
 
    	
2.3000%
    	
 
    
	
Subtotal
    	
 
    	
Series A-1   Preferred Shares
    	
 
    	
2,018,935,427
    	
 
    	
32.5538%
    	
 
    
	
Total
    	
 
    	
 
    	
 
    	
6,201,850,000
    	
 
    	
100.00%
    	
 
    

 

SCHEDULE I

 

 

SCHEDULE II

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

1.              Organization, Good Standing and Qualification.

 

The Company is duly incorporated and organized, validly existing and in good standing (to the extent such concept exists in the relevant jurisdiction of incorporation) and in compliance with all registration and approval requirements, in all material respects, under, and by virtue of, the Laws of its jurisdiction of incorporation or organization and has all requisite power and authority to own and operate its properties and Assets and to carry on its business as now conducted and as currently proposed to be conducted.

 

2.              Due Authorization.

 

The Company has all requisite power and authority to execute and deliver the Transaction Documents to which it is a party and to carry out and perform its obligations hereunder and thereunder. All actions on the part of the Company necessary for the authorization, execution and delivery of the Transaction Documents, the performance of all obligations hereunder and thereunder, have been taken or will be taken prior to the Closing. Each Transaction Document to which the Company is a party has been or will be on or prior to the Closing, duly executed and delivered by the Company and when executed and delivered by all parties thereto, constitutes valid and legally binding obligations of the Company, enforceable against the Company in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other Laws of general application affecting enforcement of creditors’ rights generally, and (ii) as limited by applicable Laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

 

3.              No Conflicts.

 

The execution, delivery and performance of each Transaction Document by the Company to which it is a party do not, and the consummation by the Company of the transactions contemplated hereby and thereby will not, with or without notice or lapse of time or both, (i) result in any violation of, be in conflict with, or constitute a default under any provision of any Charter Document of the Company, (ii) result in a breach of, or constitute a default under, or termination of, any Contract to which the Company is a party or by which the Company or its property or Assets is bound or result in the acceleration of any obligation of the Company (whether to make payment or otherwise) to any Person, or (iii) result in any violation of, be in conflict with, or constitute a default under, in any material respect, any Governmental Order or any applicable Laws.

 

4.              Valid Issuance and Transfer of Shares.

 

The New Series A-1 Preferred Shares, when re-designated and paid for in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid and non-assessable, free from any Liens (except for any Lien under applicable Laws and under the Shareholders

 

SCHEDULE II

 

 

Agreement and the Amended M&AA). The purchase of Sale Shares and the reclassification of Sale Shares into New Series A-1 Preferred Shares are not subject to any pre-emptive rights or rights of first refusal, or if any such pre-emptive rights or rights of first refusal exist, waiver of such rights has been obtained or will be obtained prior to the Closing from the holders thereof.

 

5.              Consents and Approvals.

 

All consents, approvals, orders or authorizations of, or registrations, qualifications, designations, declarations or filings with, any Governmental Authority or any other Person (including the board of directors (or other governing body) and shareholders (if required by applicable Laws) of the Company required in connection with the execution, delivery and performance by the Company of the Transaction Documents or the consummation of the transactions contemplated hereby or thereby have been obtained or made or will be obtained or made prior to the Closing, other than those that would not reasonably be expected to have an adverse effect on the ability of the Company to perform its obligations under any Transaction Documents in any material respect.

 

SCHEDULE II

 

 

SCHEDULE III

 

REPRESENTATIONS AND WARRANTIES OF THE WARRANTORS

 

1.              Organization, Good Standing and Qualification.

 

Such Warrantor that is not an individual is duly incorporated and organized, validly existing and in good standing (to the extent such concept exists in the relevant jurisdiction of incorporation) and in compliance with all registration and approval requirements, in all material respects, under, and by virtue of, the Laws of its jurisdiction of incorporation or organization and has all requisite power and authority to own and operate its properties and Assets and to carry on its business as now conducted and as currently proposed to be conducted.

 

2.              Due Authorization.

 

Such Warrantor has all requisite capacity, power and authority to execute and deliver the Transaction Documents to which it/he is a party and to carry out and perform its/his obligations hereunder and thereunder. All actions on the part of such Warrantor necessary for the authorization, execution and delivery of the Transaction Documents, the performance of all obligations hereunder and thereunder, have been taken or will be taken prior to the Closing. Each Transaction Document to which such Warrantor is a party has been or will be on or prior to the Closing, duly executed and delivered by such Warrantor and when executed and delivered by all parties thereto, constitutes valid and legally binding obligations of such Warrantor, enforceable against such Warrantor in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other Laws of general application affecting enforcement of creditors’ rights generally, and (ii) as limited by applicable Laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

 

3.              No Conflicts.

 

The execution, delivery and performance of each Transaction Document by such Warrantor to which it/he is a party do not, and the consummation by such Warrantor of the transactions contemplated hereby and thereby will not, with or without notice or lapse of time or both, (i) result in any violation of, be in conflict with, or constitute a default under any provision of any Charter Document of such Warrantor, (ii) result in a breach of, or constitute a default under, or termination of, any Contract to which such Warrantor is a party or by which such Warrantor or its property or Assets is bound or result in the acceleration of any obligation of such Warrantor (whether to make payment or otherwise) to any Person, or (iii) result in any violation of, be in conflict with, or constitute a default under, in any material respect, any Governmental Order or any applicable Laws.

 

4.              Valid Title.

 

The Seller is the sole record and beneficial holder of the Sale Shares, which is duly and validly issued, fully paid and non-assessable, free from any Liens

 

SCHEDULE III

 

 

(except for any Lien under applicable Laws and under the Transaction Documents).

 

5.              Compliance with SAFE Regulations.

 

As of the Closing Date, such Warrantor who is subject to any of the registration or reporting requirements of the SAFE Regulations, has complied with such reporting and/or registration requirements under the SAFE Regulations in connection with the transactions contemplated hereunder and the other Transaction Documents.

 

SCHEDULE III

 

 

SCHEDULE IV

 

REPRESENTATIONS AND WARRANTIES OF VKC

 

1.              Organization, Good Standing and Qualification.

 

VKC is duly incorporated and organized, validly existing and in good standing (to the extent such concept exists in the relevant jurisdiction of incorporation) and in compliance with all registration and approval requirements, in all material respects, under, and by virtue of, the Laws of its jurisdiction of incorporation or organization and has all requisite power and authority to own and operate its properties and Assets and to carry on its business as now conducted and as currently proposed to be conducted.

 

2.              Due Authorization.

 

VKC has all requisite capacity, power and authority to execute and deliver the Transaction Documents to which it is a party and to carry out and perform its obligations hereunder and thereunder. All actions and internal approvals on the part of VKC necessary for the authorization, execution and delivery of the Transaction Documents, the performance of all obligations hereunder and thereunder, have been taken or will be taken prior to the Closing. Each Transaction Document to which VKC is a party has been or will be on or prior to the Closing, duly executed and delivered by VKC and when executed and delivered by all parties thereto, constitutes valid and legally binding obligations of VKC, enforceable against VKC in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other Laws of general application affecting enforcement of creditors’ rights generally, and (ii) as limited by applicable Laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

 

3.              No Conflicts.

 

The execution, delivery and performance of each Transaction Document by VKC to which it is a party do not, and the consummation by VKC of the transactions contemplated hereby and thereby will not, with or without notice or lapse of time or both, (i) result in any violation of, be in conflict with, or constitute a default under any provision of any Charter Document of VKC, (ii) result in a breach of, or constitute a default under, or termination of, any Contract to which VKC is a party or by which VKC or its property or Assets is bound or result in the acceleration of any obligation of VKC (whether to make payment or otherwise) to any Person, or (iii) result in any violation of, be in conflict with, or constitute a default under, in any material respect, any Governmental Order or any applicable Laws.

 

4.              Purchase for Own Account.

 

The New Series A-1 Preferred Shares will be acquired for VKC’s own account, not as a nominee or agent, and not with a view to or in connection with the sale or distribution of any part thereof.

 

 

5.              Status of VKC.

 

VKC is an Accredited Investor within the definition set forth in Rule 501(a) under Regulation D of the Securities Act.

 

6.              Restricted Securities.

 

VKC understands that the New Series A-1 Preferred Shares will not be registered under the Securities Act or registered or listed publicly pursuant to any other applicable securities Laws, on the ground that the sale provided for in this Agreement is exempt from registration under the Securities Act or the registration or listing requirements of any other applicable securities Laws, and that the reliance of the Company on such exemption is predicated in part on VKC’s representations set forth in this Agreement.  VKC understands that the New Series A-1 Preferred Shares are restricted securities within the meaning of Rule 144 under the Securities Act; that the New Series A-1 Preferred Shares are not registered or listed publicly and may need to be held indefinitely unless they are subsequently registered or listed publicly or an exemption from such registration or listing is available for resale of such New Series A-1 Preferred Shares.

 

 

Schedule OF NOTICE

 

For the purpose of the notice provisions contained in this Agreement, the following are the initial addresses of each Party:

 

If to the Warrantors and the Company:

Attention: Zhang Xi (张熙)

Address:  

Email: 

 

If to VKC:

Attention: Jim He

Address:  

Phone Number: 

Email: 

 

Schedule of Notice

 

 

EXHIBIT A

 

FOURTH AMENDED AND RESTATED MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION

 

EXHIBIT A

 

 

EXHIBIT B

 

DEED OF ACCESSION

 

EXHIBIT B

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