Document:

Exhibit 4.54

 

OPERATING AGREEMENT

 

This Operating Agreement (this “Agreement”) is entered into among the following parties in Beijing as of September 26, 2016:

 

Party A:                                                NetEase Youdao Information Technology (Beijing) Co., Ltd

Address:                                               1/F, Tower C, Building No. 7, West Zone Zhongguancun Software Park (Phase II) No. 10 Xibeiwang East Road, Haidian District

 

Party B:                                                Beijing NetEase Youdao Computer System Co., Ltd.

Address:                                               2/F, Tower A, Building No. 7, West Zone Zhongguancun Software Park (Phase II) No. 10 Xibeiwang East Road, Haidian District

 

Party C:                                                William Lei Ding

Address:                                               Room 6-401, A90, Shuguang Road, Jiangdong District, Ningbo, Zhejiang Province

 

In this Agreement, Party A, Party B and Party C are called collectively as the “Parties” and each of them is a “Party.”

 

WHEREAS:

 

1.                                      Party A is a Wholly foreign owned enterprise duly incorporated and validly existing under the laws of the People’s Republic of China (the “PRC”);

 

2.                                      Party B is a limited liability company duly incorporated and validly existing under PRC law, which is registered in Beijing, to carry out the business;

 

3.                                      Party C is the shareholder of Party B, in which Party C owns 71.073% of the equity interest;

 

4.                                      Party A has established a business relationship with Party B by entering into a Cooperation Agreement (the “Cooperation Agreement”) and other agreements; and

 

5.                                      Pursuant to the above-mentioned agreements between Party A and Party B, Party B shall pay certain sums of money to Party A. The daily operations of Party B will have a material effect on Party B’s ability to pay such account payable to Party A;

 

NOW, THEREFORE, through negotiations, all parties to this Agreement hereby agree as follows:

 

1.                                      Party A agrees, subject to the satisfaction of the relevant provisions herein by Party B and subject to the other provisions in this Agreement, to be the guarantor of Party B in the contracts, agreements or transactions entered into between Party B and any third party in connection with Party B’s business and operations, to provide full guarantees for the performance of such contracts, agreements or transactions by Party B. As counter-guarantee, Party B agrees to pledge the accounts receivable in its operations and all of its assets to Party A. According to the aforesaid guarantee arrangement, Party A, when necessary, is willing to enter into written guarantee contracts with Party B’s counterparties to assume the guarantor’s liabilities. Party B and Party C shall take all necessary actions (including, but not limited to, executing the relevant documents and filing the relevant registrations) to carry out the counter-guarantee arrangement with Party A.

 

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2.                                      In consideration of the requirements of Article 1 hereof and to ensure the performance of the various business agreements between Party A and Party B and the payment by Party B of the amounts payable to Party A thereunder, Party B, together with its shareholder Party C, hereby jointly agree that, without Party A’s prior written consent, Party B shall not engage in any transaction that may materially affect its assets, liabilities, rights or operations (except that Party B may, in the ordinary course of its business, enter into business contracts or agreements, sell or purchase assets and create liens in favor of relevant counter parties as required by law), including, but not limited to, the following:

 

2.1                               To declare any dividend or distribution to any shareholder;

 

2.2                               To borrow money from any third party or assume any debt;

 

2.3                               To sell to or acquire from any third party any asset or rights, including, but not limited to, any intellectual property rights;

 

2.4                               To provide a guarantee for any third party using its assets or intellectual property rights as collateral;

 

2.5                               To assign to any third party its business contracts;

 

2.6                               To engage in any activity beyond its normal business scope;

 

2.7                               To change or dismiss any of its directors or remove and replace any of its officers;

 

2.8                               To amend its articles of association or change its business scope;

 

2.9                               To change its normal business procedures or amend any of its important rules and regulations; or

 

2.10                        To transfer its rights and obligations under this Agreement to any third party.

 

3.                                      In order to ensure the performance of the various business agreements between Party A and Party B and the payment by Party B of the amounts payable to Party A thereunder, Party B, together with its shareholder Party C, hereby jointly agree to accept and comply in all respects with advice and guidance provided by Party A from time to time relating to its corporate policies on matters such as employment and dismissal of employees, daily operations and management, and financial management.

 

4.                                      Party B, together with its shareholder Party C, hereby jointly agree that Party C shall appoint candidates recommended by Party A as directors of Party B, and Party B shall appoint Party A’s senior executive officers recommended by Party A as its president, chief financial officer and other senior executive officers. If any of the above-mentioned senior executive officers of Party A leaves Party A, whether voluntarily or as a result of dismissal by Party A, he or she shall also lose his/her right to hold any position at Party B, and Party B shall appoint other senior executive officers of Party A recommended by Party A to fill such a position. The persons recommended by Party A in accordance with this Article 4 shall comply with the legal requirements regarding the qualifications of directors, presidents, chief financial officers, and other senior executive officers.

 

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5.                                      Party B, together with its shareholder Party C, hereby jointly agree and confirm that Party B shall first seek a guarantee from Party A if Party B needs any guarantee for its performance of any of its contracts or for any borrowing for working capital purposes in the course of its operations. In such cases, Party A shall have the right, but not the obligation, to provide the appropriate guarantee to Party B at Party A’s sole discretion. If Party A decides not to provide such a guarantee, Party A shall immediately issue a written notice to Party B and Party B may seek a guarantee from third parties.

 

6.                                      In the event that any of the agreements between Party A and Party B terminates or expires, Party A shall have the right, but not the obligation, to terminate all agreements between Party A and Party B including, but not limited to, the Cooperation Agreement.

 

7.                                      Any amendment or supplement to this Agreement shall be made in writing. The amendment or supplement duly executed by all Parties shall form an integral part of this Agreement and shall have the same legal effect as this Agreement.

 

8.                                      Should any provision of this Agreement be held invalid or unenforceable because of inconsistency with applicable laws, such provision shall be invalid or unenforceable only to the extent of such applicable laws without affecting the validity or enforceability of the remainder of this Agreement.

 

9.                                      Party B shall not assign its rights and obligations under this Agreement to any third party without the prior written consent of Party A. Party B hereby agrees that Party A may assign its rights and obligations under this Agreement as Party A sees fit, in which case Party A only needs to give a written notice to Party B and no further consent of Party B is required.

 

10.                               All Parties acknowledge and confirm that any oral or written materials exchanged pursuant to this Agreement are confidential. Each Party shall keep confidential all such materials and not disclose any such materials to any third Party without the prior written consent from the other Parties except in the following situations: (a) such materials are or will become known by the public (through no fault of the receiving Party); (b) any materials as required to be disclosed by the applicable laws or rules of any stock exchange or governmental entity; and (c) any materials disclosed by each Party to its legal or financial advisors relating to the transactions contemplated by this Agreement, and such legal or financial advisors shall comply with the confidentiality provisions set forth in this Article 10. Any disclosure of confidential information by the personnel of any Party or by the institutions engaged by such Party shall be deemed as a disclosure by such Party, and such Party shall be liable for the breach under this Agreement. Both Parties agree that this Article 10 shall survive the invalidity, cancellation, termination or unenforceability of this Agreement.

 

11.                               The formation, validity, interpretation and performance of and settlement of disputes under this Agreement shall be governed by the laws of the PRC.

 

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12.                               Any dispute, conflict, or claim arising in connection with the interpretation and performance of the provisions of this Agreement (including any issue relating to the existence, validity, and termination of this Agreement) shall be resolved by the Parties in good faith through negotiations. In case no resolution can be reached by the Parties within thirty (30) days after a Party makes a request for dispute resolution through negotiations, any Party may refer such dispute to a competent court having legal jurisdiction over the registration place of Party A.  The Parties agree to submit to the jurisdiction of such court.  The Parties agree that the dispute and any court proceedings shall be kept confidential and that the existence of the proceedings and any element of it (including but not limited to any pleadings, briefs or other documents submitted or exchanged, any testimony or other oral submissions, and any awards) shall not be disclosed beyond the court, the Parties, their counsels and any person necessary to the conduct of the proceeding, except as may be lawfully required in judicial proceedings or as required by the rules of the U.S. Securities and Exchange Commission, the NASDAQ stock market rules or the rules of any other quotation system or exchange on which the securities of the disclosing Parties or their affiliates are listed or as otherwise required by applicable law.  The Parties further agree to request that the court conduct any proceedings in closed session and to keep the existence of the proceedings and any element of it, including the decision of the court, confidential and refrain from publishing or otherwise disclosing any of the foregoing information to the public, except as may be lawfully required in judicial proceedings or as otherwise required by applicable law.

 

13.                               This Agreement shall be executed by a duly authorized representative of each Party and become effective as of the date first written above.

 

14.                               Notwithstanding Article 13 hereof, once effective, this Agreement shall constitute the entire agreement of the Parties hereto with respect to the subject matters hereof and supersede all prior oral and/or written agreements and understandings by the Parties with respect to the subject matters hereof.

 

15.                               The term of this Agreement is twenty (20) years unless terminated earlier in accordance with the provisions of this Agreement or related agreements entered into by the Parties. This Agreement may be extended only with the written consent of Party A before its expiration. The term of the extension shall be decided by the Parties through negotiation. If the duration of operation (including any extension thereof) of Party A or Party B is expired or terminated for other reasons within the aforesaid term of this Agreement, this Agreement shall be terminated simultaneously, unless such Party has already assigned its rights and obligations hereunder in accordance with Article 9 hereof.

 

16.                               This Agreement will terminate on the expiration date unless it is renewed in accordance with the relevant provision herein. During the term of this Agreement, Party B shall not terminate this Agreement. Notwithstanding the above stipulation, Party A shall have the right to terminate this Agreement at any time by issuing a thirty (30) days’ prior written notice to Party B.

 

[Signature page follows]

 

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IN WITNESS THEREOF, each Party hereto has caused this Agreement to be duly executed by himself/herself or a duly authorized representative on its behalf as of the date first written above.

 

	
Party A: NetEase Youdao   Information Technology (Beijing) Co., Ltd
    
	
 
    	
 
    
	
(Seal)
    	
 
    
	
 
    	
 
    
	
Party B: Beijing NetEase   Youdao Computer System Co., Ltd.
    	
 
    
	
 
    	
 
    
	
(Seal)
    	
 
    
	
 
    	
 
    
	
Party C: William Lei Ding
    	
 
    
	
 
    	
 
    
	
Signature: 
    	
/s/ William Lei   Ding
    	
 
    
			

 

5Exhibit 4.55

 

COOPERATION AGREEMENT

 

Party A:                        Youdao Computer System Co., Ltd.

 

Address:                        Room 207, Building 3, Court No.1 East Zhongguancun Road, Haidian District, Beijing Municipality

 

Party B:                       NetEase Youdao Information Technology (Beijing) Co., Ltd.

 

Address:                      Room 206, 6/F, Building 3, Tsinghua Science Park, No.1 Zhongguancun Road, Haidian District, Beijing Municipality

 

Whereas,

 

1.                  Party A is a company incorporated in Beijing under the laws of the PRC, mainly engaging in, among others, internet information service businesses and acting as advertisement agency or publisher for domestic and foreign companies’ advertisements in China.

 

2.                  Party B is a company incorporated in Beijing under the laws of the PRC, mainly engaging in the development and manufacturing of computer software, hardware and system integration products, the provision of technology consultation, technical trainings and technology services, and the sale of related products and other services.

 

Accordingly, Party A and Party B agree as follows:

 

1.                  Scope of Cooperation

 

1)          Scope of Cooperation Provided by Party A

 

Party A is a company which may engage in advertisement design, production, agency, publication services in accordance with law as approved by Beijing Administration for Industry and Commerce and meanwhile, is a collaborative partner of Youdao website with respect to advertising business by accepting orders from clients and arranging the publication of advertisements on the Youdao website;

 

2)          Scope of Cooperation Provided by Party B

 

Party B shall provide Party A with the following services according to this Agreement, including but not limited to:

 

(1)         R&D of computer software (including but not limited to internet advertisement production, publication and management of software) and the provision of technical support and maintenance services for the operation of computer software;

 

(2)         R&D of advertisement publication software and developing, updating and upgrading platforms for advertisement publication;

 

(3)         internet technology services, including but not limited to maintenance of servers, developing, updating and upgrading application software of servers and other related applications.

 

2.                  Manner of Joint Service

 

1)          Party A and Party B agree that separate technology service agreements may be executed during the term of this Agreement with regard to detailed contents of other technology services, which shall include, among others, a detailed description, manner, related personnel and fees for each of such technology services. Each of the above technology service agreements shall be deemed as an annex to and form an integral part of this Agreement, and shall have the same legal effects as this Agreement.

 

 

2)          Besides the services stipulated in Article 1, Party B shall also utilize its own resources to promote and advertise the services provided to clients under this Agreement, and shall bear the relevant promotional and production expenses incurred thereby. Meanwhile, Party B shall pay the costs for the services rendered pursuant to this Article 1, including, without limitation, the remuneration for R&D personnel, leasing expense for equipment, PR expenses, etc.

 

3)          Party A and Party B agree that Party A shall acquire service revenues from clients and shall share the same according to Article 3 hereunder.

 

4)          Party B agrees that Party A may cooperate with any third party it may select to provide services to the internet online advertisement clients of the Youdao website jointly and may share the distributable revenues set forth in Article 3 hereof with other cooperating parties.

 

3.                  Share of the Cooperative Service Revenue and Payment Method

 

Both Parties agree to divide the service revenue generated hereunder in accordance with the following calculation method:

 

1)                   Calculation of the Distributable Revenue

 

Both Parties agree that, the internet advertising service revenues acquired by Party A from clients every month, after deducting the turnover tax and fee payable for the above service revenues (such as business tax, etc., hereinafter referred to as “Turnover Tax Payable”), the actual expenses incurred by Party A for operating the internet advertising services (excluding the expenses of the revenue share distributed to Party B and other companies in cooperation with the Group), and the remainder of Party A’s retainable profits shall be deemed as the distributable revenue, which shall be the basis for the revenue shared among Party A, Party B and any other companies in cooperation with the Group.

 

Both Parties agree that, if the turnover tax and fee payable by Party A for such aforementioned service revenue is changed due to the adjustment of government policies, both Parties may determine a new revenue-sharing method by a supplemental agreement in writing.

 

Formula for the Calculation of the Distributable Revenue:

 

Distributable Revenue = Service Revenue - Turnover Tax Payable - Actual Expenses Incurred by Party A for Operating the Internet Advertising Services - Party A’s Retainable Profits

 

2)                   Party A’s Retainable Profits

 

Both Parties agree that, Party A’s retainable profits shall be calculated according to the following formula:

 

Party A’s Retainable Profits = 5% of the Total Actual Expenses Incurred by Party A for Operating the Internet Advertising Services (excluding the expenses of the revenue share distributed to Party B and other companies in cooperation with the  Group and turnover tax payable (such as business tax))

 

3)                   Calculation of Party B’s Share in Revenue Party B’s Share in Revenue = Distributable Revenue * [Party B’s Expenses / (Party B’s Expenses + Expenses of Other Companies in Cooperation with the Group)]

 

 

4)                   Calculation of Share in Revenue of Other Companies in Cooperation with the Group

 

Share in Revenue of Other Companies in Cooperation with the Group = Distributable Revenue * [Expenses of Other Companies in Cooperation with the Group / (Party B’s Expenses + Expenses of Other Companies in Cooperation with the Group)]

 

5)                   Payment Method

 

For Party B’s share in the revenue of the previous month, Party A shall wire transfer such amount to the following account of Party B within one month after each settlement.

 

Party B’s Bank Account Information:

 

Bank:

 

Name:

 

Account No.:

 

The bank account information of other companies in cooperation with the Group shall be notified separately.

 

4.                  Intellectual Property and Confidential Provisions

 

4.1                   Party B shall have sole and exclusive rights for any rights, ownership, interest, including, without limitation, any copyright, patent, proprietary rights, trade secrets, etc., over all and any intellectual property arising from the performance of this Agreement.

 

4.2                   With the written consent of the right owner, Party A may accept the transfer of any rights, ownership, interests of all and any intellectual property arising from Party B’s performance of this Agreement, with the transfer method to be otherwise determined between both Parties.

 

4.3                   Party B agrees to use its best reasonable efforts to protect or keep confidential all information marked with “confidential” or all or part of the information of Party A known to Party B (“Confidential Information”). Without the prior written consent of Party A, Party B shall not disclose, provide or transfer such Confidential Information to any third party. Upon termination or expiration of this Agreement, Party B shall return any document, material or software containing such Confidential Information to its respective owner as requested by Party A, or shall destroy the same on its own, and delete any Confidential Information stored in all of Party B’s electronic devices and stop using the same.

 

4.4                   Articles 4.1, 4.2, and 4.3 hereof shall survive the termination or expiration of this Agreement.

 

5.                  Representations and Warranties

 

5.1       Party A hereby represents and warrants that:

 

5.1.1               Party A is a corporation legally registered and validly existing in Beijing under the laws of PRC.

 

5.1.2               Party A has all the rights, powers, authorities and capabilities, and all the consents and approvals necessary for the execution, delivery and performance of this Agreement.

 

5.1.3               This Agreement will be legal, effective and binding on Party A upon execution, and may be enforced against Party A according to its provisions.

 

 

5.2       Party B hereby represents and warrants that:

 

5.2.1               Party B is a corporation legally registered and validly existing in Beijing according the laws of PRC.

 

5.2.2               Party B has all the rights, powers, authorities and capabilities, and all the consents and approvals necessary for the execution, delivery and performance of this Agreement.

 

5.2.3               This Agreement will be legal, effective and binding on Party B upon execution, and may be enforced against Party B according to its provisions.

 

6.                  Effectuation and Term of Cooperation

 

This Agreement will become effective on July 1, 2015. Except for early termination pursuant to the provisions herein, this Agreement shall remain effective.

 

7.                  Termination

 

7.1       If either Party breaches this Agreement materially and fails to make rectification within thirty (30) days after receiving the notice from the non-breaching Party regarding the occurrence and existence of such breach, without prejudice to the rights and remedies of such non-breaching Party under law or otherwise, the non-breaching Party may immediately terminate this Agreement upon prior written notice to the other Party. During the term of this Agreement, either Party may terminate this Agreement upon a thirty (30) prior written notice to the other Party.

 

7.2       Article 4 shall survive the termination or expiration of this Agreement.

 

8.                  Force Majeure

 

8.1       “Force Majeure” refers to any matter that is out of the reasonable control of a Party, which is unavoidable even with reasonable attention of the Party being affected, including, without limitation, acts of governments, acts of nature, fire, explosion, storm, flood, earthquake, tide, thunder or war. However, any shortage of credit, capital or finance shall not be regarded as an event of force majeure. The Party affected by Force Majeure and seeking for the exemption from performing its obligations hereunder shall notify the other Party of such event as soon as possible.

 

8.2       In the event that the affected party is delayed in or prevented from performing its obligations hereunder by Force Majeure, only within the scope of such delay or prevention, neither Party shall be liable for any loss, increased expense, or damage caused thereby under this Agreement, while such failure or delay of performance shall not be deemed as a breach of contract. However, the Party claiming to be affected by Force Majeure shall use its best reasonable efforts to minimize or remove the effects of Force Majeure. Upon the elimination of Force Majeure event, both Parties agree to resume the performance of this Agreement with their best efforts.

 

9.                  Applicable Laws

 

The validity, interpretation and performance of this Agreement shall be governed by the laws of PRC.

 

 

10.           Notices

 

Any notice or other communication sent by any Party hereunder shall be written in Chinese and English, and shall be delivered to the following addresses of the recipient(s) by hand, registered airmail, airmail with postage prepaid, recognized courier service or fax (followed by a mailed copy of the documents sent for confirmation).

 

Party A: Youdao Computer System Co., Ltd.

Room 207, Building 3, Court No.1 East Zhongguancun Road, Haidian District, Beijing Municipality

 

Party B: NetEase Youdao Information Technology (Beijing) Co., Ltd.

Room 206, 6/F, Building 3, Tsinghua Science Park, No.1 Zhongguancun Road, Haidian District, Beijing Municipality

 

11.           Transfer

 

11.1          Without prior written consent of the other Party, neither Party shall transfer any of its rights or obligations hereunder to any third party.

 

11.2          Party A hereby agrees that, Party B may transfer its rights and obligations hereunder to any third party at its own discretion. With regard to such transfer, Party A only needs to send a written notice to Party B and does not need to obtain any consent from Party B.

 

12.           Severability

 

If any provision herein becomes invalid, illegal or un-enforceable because of any laws, such provision shall only be invalid in the corresponding jurisdiction. The invalid provision shall not affect the legal effects of the remaining provisions of this Agreement in such jurisdiction, and shall not cause such provision to be invalid, illegal or unenforceable in any other jurisdictions.

 

13.           Modifications and Supplements

 

Both Parties may make modifications and supplements to this Agreement in writing. Upon proper execution by the both Parties, the relevant modifications and supplemental agreements shall become an integral part of this Agreement with the same force and effects.

 

14.           Supplementary Provisions

 

This Agreement is made in four counterparts. Each Party shall hold two counterparts.

 

[Remainder of page is intentionally left blank.]

 

 

Party A:                                 Youdao Computer System Co., Ltd.

(Seal)

 

Party B:                                 NetEase Youdao Information Technology (Beijing) Co., Ltd.

(Seal)

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