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 September 17, 2017)

 

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”) is hereby amended and restated by this Plan and all rights and interests under the Onshore 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.

 

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(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.

 

(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.

 

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(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.

 

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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.

 

(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.

 

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(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.

 

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(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 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.

 

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(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.

 

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(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.

 

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

 

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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  288,599,939 Shares.

 

(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.

 

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(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 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;

 

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(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.

 

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(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.

 

(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.

 

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(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).

 

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(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, 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.

 

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(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:

 

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

 

(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.

 

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(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 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.

 

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(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.

 

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(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.

 

(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.

 

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(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.

 

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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, (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.

 

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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 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.

 

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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.

 

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(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.

 

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

 

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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 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.

 

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(c)                                  Change in Control.  In the event of a Change in Control, unless the Option Agreement or Restricted Share Purchase Agreement or any other agreement between the Company and the Optionee provides otherwise, each outstanding Option shall be assumed or an equivalent option shall be substituted by, and each right of the Company to repurchase, redeem or reacquire Shares upon termination of a Purchaser’s relationship as a Service Provider shall be assigned to, the successor corporation or a Parent or Subsidiary of the successor corporation.  If, in the event of a Change in Control, the Option is not assumed or substituted, or the repurchase, redemption or reacquisition or similar right is not assigned, in the case of an outstanding Option, the Option shall fully vest immediately and the Awardee shall have the right to exercise the Option as to all of the Optioned Shares, including Shares as to which it would not otherwise be vested or exercisable, and, in the case of Restricted Shares, the Company’s repurchase, redemption or reacquisition or similar right shall lapse immediately and all of the Restricted Shares subject to the repurchase, redemption or reacquisition or similar right shall become vested.  If an Option becomes fully vested and exercisable, in lieu of assumption or substitution in the event of a Change in Control, the Administrator shall notify the Optionee in writing or electronically that the Option shall be fully exercisable for a period of fifteen (15) days from the date of such notice, and the Option shall terminate upon the expiration of such period.  For purposes of this Section 12(c), an Option shall be considered assumed, and Restricted Shares will be considered assigned if, following the Change in Control, the Award confers the right to purchase or receive, for each covered Share immediately prior to the Change in Control, the consideration (whether shares, cash, or other securities or property) received in connection with the Change in Control by holders of Shares for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if the consideration received in the Change in Control is not solely ordinary stock or ordinary shares of the successor corporation or its Parent or Subsidiary, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option or vesting of the Restricted Shares, for each covered Share, to be solely ordinary stock or ordinary shares of the successor corporation or its Parent or Subsidiary equal in Fair Market Value to the per Share consideration received by holders of Shares in the Change in Control.

 

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(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 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.

 

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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.

 

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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.

 

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.

 

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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]

 

33Exhibit 10.4

 

[English Translation]

 

Exclusive Purchase Right Agreement

 

This Exclusive Purchase Right Agreement (“Agreement”) is entered into by and among the following parties on September 17, 2017:

 

1.                                               Shareholders of Shanghai OneSmart Education and Training Co., Ltd. listed in Schedule 1 (“Existing Shareholders”)

 

2.                                               Shanghai Jing Xue Rui Information and Technology Co., Ltd. (“WFOE”)

 

Registered Address:

 

Legal Representative: Meng Xiaoqiang

 

3.                                               Shanghai OneSmart Education and Training Co., Ltd. (“Company”)

 

Registered Address:

 

Legal Representative: Fan Yaozu

 

(In this Agreement, each a “Party”, collectively the “Parties”.)

 

WHEREAS:

 

(1)                                          The Existing Shareholders are the shareholders on record of the Company, aggregately holding 100% of the equity interests in the Company. Upon the execution date of this Agreement, their capital contributions to the registered capital of the Company and proportions of shareholding are set out in Schedule 1 to this Agreement.

 

(2)                                          To the extent not in contravention of the PRC Laws, the Existing Shareholders intend to transfer their entire equity interests in the Company to the WFOE and/or any other entity or individual designated by it, and the WFOE intends to accept such transfer.

 

(3)                                          To the extent not in contravention of the PRC Laws, the Company intends to transfer its assets to the WFOE and/or any other entity or individual designated by it, and the WFOE intends to accept such transfer.

 

(4)                                          For realization of the above equity transfer, the Existing Shareholders and the Company agree to grant, on an exclusive basis, to the WFOE an irrevocable option of equity transfer and an irrevocable option of asset purchase. In accordance with such options of equity transfer and asset purchase and to the extent permitted by the PRC Laws, the Existing Shareholders or the Company shall, at the request of the WFOE, transfer the Option Equity Interests (as defined below) or the Company Assets (as defined below) to the WFOE and/or any other entity or individual designated by it in accordance with this Agreement.

 

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THEREFORE, upon mutual discussions, the Parties agree as follows:

 

1.                                               Definitions

 

1.1                                        Unless otherwise required by the context, the following terms shall have the following meanings in this Agreement:

 

“PRC Laws” means the then effective laws, administrative regulations, administrative rules, local regulations, judicial interpretations and other binding regulatory documents of the People’s Republic of China (for the purpose of this Agreement, excluding Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan).

 

“Equity Transfer Option” means the option granted to the WFOE by the Existing Shareholders in accordance with the terms and conditions of this Agreement to request the acquisition of the equity interests in the Company.

 

“Asset Purchase Option” means the option granted to the WFOE by the Company in accordance with the terms and conditions of this Agreement to request the acquisition of any assets of the Company.

 

“Option Equity Interests” means, as to the Existing Shareholders, their equity interests aggregately representing 100% of the Registered Capital of the Company (as defined below).

 

“Registered Capital of the Company” means, as of the execution date of this Agreement, the registered capital of the Company in the amount of RMB5876.252800 million, including any augmentation thereof arising out of any form of capital increase during the term of the Agreement.

 

“Target Equity Interests” means the equity interests in the Company which the WFOE shall be entitled to request the Existing Shareholders to transfer to it or its designated entity or individual upon exercise of its Equity Transfer Option and in accordance with Section 3 of this Agreement. The Target Equity Interests can be either the whole or a part of the Option Equity Interests, the specific number of which will be determined by the WFOE at its sole discretion in light of the then PRC Laws and its own business considerations.

 

“Transferrable Assets” means the assets of the Company which the WFOE shall be entitled to request the Company to transfer to it or its designated entity or individual upon exercise of its Asset Purchase Option and in accordance with Section 3 of this Agreement. The Transferrable Assets can be either the whole or a part of the Company Assets, which will be specifically determined by the WFOE at its sole discretion in light of the then PRC Laws and its own business considerations.

 

“Exercise of Option” means the exercise by the WFOE of its Equity Transfer Option or its Asset Purchase Option.

 

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“Transfer Price” means, upon each Exercise of Option, the aggregate consideration payable by the WFOE or its designated entity or individual to the Existing Shareholders or the Company for the acquisition of the Target Equity Interests or the Transferrable Assets.

 

“Operation Permits” means any approval, permit, filing, registration or the like required to be held by the Company for its lawful and valid operation of all of its business, including without limitation the Enterprise Legal Person Business License, Tax Registration Certificate, Educational Permit and other relevant permits and licenses as may then be required by the PRC Laws.

 

“Company Assets” means all tangible and intangible assets owned or disposable by the Company during the term of this Agreement, including without limitation any immovable property, movable property, intellectual property such as trademarks, copyrights, patents, know-hows, domain names, software use rights and the like, and any investment rights and interests.

 

“Material Agreement” means any agreement to which the Company is a party having a material effect on the business or assets of the Company, including without limitation the Exclusive Technology and Consultation Service Agreement executed by and between the Company and the WFOE on the date of this Agreement, and other material agreements regarding the business of the Company.

 

“Exercise Notice” has the meaning ascribed to it in Section 3.8 of this Agreement.

 

“Confidential Information” has the meaning ascribed to it in Section 7.1 of this Agreement.

 

“Defaulting Party” has the meaning ascribed to it in Section 10.1 of this Agreement.

 

“Default” has the meaning ascribed to it in Section 10.1 of this Agreement.

 

“Such Rights” has the meaning ascribed to it in Section 11.5 of this Agreement.

 

1.2                                        In this Agreement, any reference to any PRC Laws shall be deemed to include:

 

(a)                                          a reference to such PRC Laws as modified, amended, supplemented or reenacted, effective before or after the date of this Agreement; and

 

(b)                                          a reference to any other decisions, circulars or rules made pursuant to such PRC Laws or effective as a result of such PRC Laws.

 

1.3                                        Unless otherwise stated in the context of this Agreement, a reference to a provision, clause, section or paragraph shall refer to a corresponding provision, clause, section or paragraph of this Agreement.

 

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2.                                               Granting of Equity Transfer Option

 

2.1                                        The Existing Shareholders hereby agree to irrevocably, unconditionally and exclusively grant the WFOE an Equity Transfer Option whereby the WFOE shall be entitled to request, to the extent permitted by the PRC Laws and in accordance with the terms and conditions of this Agreement, the Existing Shareholders to transfer the Option Equity Interests to the WFOE or its designated entity or individual. The WFOE also agrees to accept such Equity Transfer Option. The Existing Shareholders hereby waive their respective rights of first refusal regarding the equity interests in the Company under the articles of association of the Company and the PRC Laws, and hereby irrevocably agree that any shareholder of the Company can transfer the Option Equity Interests to the WFOE or its designated entity or individual.

 

2.2                                        The Company hereby agrees that the Existing Shareholders can grant such Equity Transfer Option to the WFOE pursuant to Section 2.1 above and other provisions of this Agreement.

 

2.3                                        The Company hereby agrees to irrevocably, unconditionally and exclusively grant the WFOE an Asset Purchase Option whereby the WFOE shall be entitled to request, to the extent permitted by the PRC Laws and in accordance with the terms and conditions of this Agreement, the Company to transfer any and part of the Company Assets to the WFOE or its designated entity or individual. The WFOE also agrees to accept such Asset Purchase Option.

 

2.4                                        The Existing Shareholders hereby severally and jointly agree that the Company can grant such Asset Purchase Option to the WFOE pursuant to Section 2.3 above and other provisions of this Agreement.

 

3.                                               Method of Exercise of Option

 

3.1                                        Subject to the terms and conditions of this Agreement, to the extent permitted by the PRC Laws, the WFOE is entitled to determine the specific timing, method and number of times of its Exercise of Option at its absolute discretion.

 

3.2                                        Subject to the terms and conditions of this Agreement, to the extent not in contravention of the then PRC Laws, the WFOE shall be entitled to request at any time the acquisition of all or part of the equity interests in the Company from the Existing Shareholders by itself or through other entity or individual designated by it.

 

3.3                                        Subject to the terms and conditions of this Agreement, to the extent not in contravention of the then PRC Laws, the WFOE shall be entitled to request at any time the acquisition of all or part of the Company’s assets from the Company by itself or through other entity or individual designated by it.

 

3.4                                        As for the Equity Transfer Option, upon each Exercise of Option, the WFOE shall be entitled to determine at its sole discretion the number of the equity interests to be transferred by the Existing Shareholders to the WFOE and/or other entity or individual designated by it during such Exercise of Option. The Existing Shareholders shall transfer to the WFOE and/or other entity or individual designated by it the Target Equity Interests in such number as requested by the WFOE. The WFOE and/or other entity or individual designated by it shall pay the Transfer Price regarding the Target Equity Interests acquired during each Exercise of Option to the Existing Shareholders transferring the Target Equity Interests.

 

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3.5                                        As for the Equity Transfer Option, upon each Exercise of Option, the WFOE may acquire the Target Equity Interests by itself or designate any third party to acquire all or part of such Target Equity Interests.

 

3.6                                        As for the Asset Purchase Option, upon each Exercise of Option, the WFOE shall be entitled to determine the specific Company Assets to be transferred by the Company to the WFOE and/or other entity or individual designated by it during such Exercise of Option. The Company shall transfer to the WFOE and/or other entity or individual designated by it such Transferrable Assets as requested by the WFOE. The WFOE and/or other entity or individual designated by it shall pay the Transfer Price regarding the Transferrable Assets acquired during each Exercise of Option to the Company.

 

3.7                                        As for the Asset Purchase Option, upon each Exercise of Option, the WFOE may acquire the Transferrable Assets by itself or designate at its discretion any qualified third party to acquire all or part of such Transferrable Assets.

 

3.8                                        Each time the WFOE decides to carry out its Exercise of Option, it shall give an Equity Transfer Option exercise notice to the Existing Shareholders or an Asset Purchase Option exercise notice to the Company (collectively “Exercise Notice”, the forms of which are set out in Schedules 3 and 4 to this Agreement). Upon receipt of an Exercise Notice, the Existing Shareholders or the Company shall, based on the Exercise Notice and in the way prescribed in Section 3.4 (applicable to the Equity Transfer Option) or Section 3.6 (applicable to the Asset Purchase Option) of this Agreement, immediately transfer all the Target Equity Interests or the Transferrable Assets to the WFOE and/or other entity or individual designated by it in the number prescribed in the Exercise Notice on a one-off basis.

 

4.                                               Transfer Price

 

4.1                                        As for the Equity Transfer Option, upon each Exercise of Option by the WFOE, the WFOE or its designated entity or individual shall pay to the Existing Shareholders the corresponding Transfer Price in accordance with the proportions of equity interests in the Company in respect of each such Exercise of Option and based on the minimum price permitted by the PRC Laws and regulations upon the Exercise of Option before requiring the Existing Shareholders to handle the registration with the industry and commerce administration related to the equity transfer. The Existing Shareholders agree that upon receipt of such Transfer Price, they shall, pursuant to the specific instructions of the WFOE, (i) repay the loans under the Loan Agreement executed by the Existing Shareholders and the WFOE on the same date of this Agreement (including any amendment, supplement or restatement thereto from time to time) with such Transfer Price, and/or (ii) return such Transfer Price to the WFOE or its designated person in a lawful manner.

 

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4.2                                        As for the Asset Purchase Option, upon each Exercise of Option by the WFOE, the WFOE or its designated entity or individual shall pay RMB1 (one) to the Company. If the minimum price permitted by the then PRC Laws is higher than the aforesaid price, the minimum price permitted by the PRC Laws shall prevail. The Company agrees that upon receipt of such Transfer Price, it shall, pursuant to the specific instructions of the WFOE, return such Transfer Price to the WFOE or its designated person in a lawful manner.

 

5.                                               Representations and Warranties

 

5.1                                        The Existing Shareholders and the Company hereby represent and warrant that (unless otherwise required in the context of this Agreement, such representations and warranties shall continue to be effective):

 

5.1.1                              They are natural persons with full civil capacity or a limited liability company lawfully incorporated and existing; they have full and independent legal status and legal capacity and the capacity to execute, deliver and perform this Agreement, and have been duly authorized to execute, deliver and perform this Agreement, and may sue or be sued as an independent party.

 

5.1.2                              They have the full power and authority to execute, deliver and perform this Agreement and all other documents to be executed by them in connection with the transactions contemplated in this Agreement as well as full power and authority to consummate the transactions contemplated in this Agreement. The execution and performance by them of this Agreement do not violate or conflict with any law applicable to them in effect, any agreement to which they are a party or by which their assets are bound, any court judgment, any arbitral award, or any decision of any administrative authority.

 

5.1.3                              This Agreement is lawfully and duly executed and delivered by them, and constitutes lawful and binding obligations enforceable against them in accordance with the terms of this Agreement.

 

5.1.4                              The Existing Shareholders are the lawful owners of the Option Equity Interests on record as of the date of this Agreement, other than the pledge created under the Equity Pledge Agreement (including any amendment, supplement or restatement thereto from time to time) executed by and among the WFOE and the Existing Shareholders on the same date of this Agreement and the proxy rights created under the Shareholders’ Voting Rights Agreement (including any amendment, supplement or restatement thereto from time to time) executed by and among the WFOE and the Existing Shareholders on the same date of this Agreement, the Option Equity Interests are free from any lien, pledge, claims and other security interests and third party rights. Pursuant to this Agreement, after the Exercise of Option, the WFOE and/or other entity or individual designated by it can obtain good title to the Target Equity Interests free from any lien, pledge, claims and other security interests or third party rights.

 

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5.1.5                              The Company Assets are free from any lien, pledge, claims and other security interests and third party rights. Pursuant to this Agreement, after the Exercise of Option, the WFOE and/or other entity or individual designated by it can obtain good title to the Company Assets free from any lien, pledge, claims and other security interests or third party rights.

 

5.1.6                              Unless under compulsory requirements of the PRC Laws and with prior written consent of the WFOE, the Existing Shareholders are not entitled to require the Company to declare distributions or actually effect distributions of any distributable profits, bonuses or dividends; if the Existing Shareholders gain any profits, bonuses or dividends from the Company after the execution of this Agreement, they shall timely grant them (after deduction of relevant taxes) to the WFOE or other qualified entity or individual designated by it to the extent permitted by the PRC Laws.

 

5.2                                        The WFOE hereby represents and warrants that:

 

5.2.1                              The WFOE is a wholly foreign-owned enterprise duly registered and lawfully existing under the PRC Laws with independent legal personality. The WFOE has full and independent legal status and legal capacity to execute, deliver and perform this Agreement, and has been duly authorized to execute, deliver and perform this Agreement, and may sue or be sued as an independent party.

 

5.2.2                              The WFOE has full internal corporate power and authority to execute, deliver and perform this Agreement and all other documents to be executed by it in connection with the transactions contemplated in this Agreement as well as full power and authority to consummate the transactions contemplated in this Agreement. This Agreement is lawfully and duly executed and delivered by it. The execution and performance by it of this Agreement do not violate or conflict with any law applicable to it in effect, any agreement to which it is a party or by which its asset is bound, any court judgment, any arbitral award, or any decision of any administrative authority. This Agreement constitutes legal and binding obligations enforceable against it in accordance with the terms of this Agreement.

 

6.                                               Undertakings by the Existing Shareholders

 

The Existing Shareholders hereby undertake that:

 

6.1                                        During the term of this Agreement:

 

6.1.1                              Without prior written consent of the WFOE, they shall not sell, transfer, pledge or otherwise dispose of, or permit to create any encumbrances on (including direct or indirect sale, transfer, pledge or disposal in any manner of the equity interests in the Company or relevant rights and interests thereof (and if the Existing Shareholders indirectly hold equity interests in the Company via intermediary holding companies, they shall not sell, transfer, pledge in any manner or otherwise dispose of their equity interests and rights and interests thereof in such intermediary holding company, and shall ensure such intermediary holding company will not issue equity interests to any third party)) any lawful or beneficial rights and interests of their equity interests in the Company at any time from the execution date of this Agreement, other than the pledge created on the equity interests in the Company under the Equity Pledge Agreement (including any amendment, supplement or restatement thereto from time to time) executed by and among relevant parties on the same date of this Agreement and the proxy rights created on the equity interests in the Company under the Shareholders’ Voting Rights Agreement (including any amendment, supplement or restatement thereto from time to time) executed by and among relevant parties on the same date of this Agreement;

 

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6.1.2                              Without prior written consent of the WFOE, they shall not, during the shareholders’ meeting of the Company, vote in favor of, support or execute any shareholders’ resolution to approve the sale, transfer, pledge or disposal in any manner of, or permit to create any encumbrances on, any lawful or beneficial rights and interests of any equity interests or assets, except those made to the WFOE or its designated entity or individual;

 

6.1.3                              Without prior written consent of the WFOE, they shall not in any manner agree, support or approve merger or consolidation of the Company with any other entity, merger or acquisition of the Company by any other entity, or investment by the Company in any entity, or split-up of the Company, change in the registered capital or the form of the Company;

 

6.1.4                              At the request of the WFOE, they shall immediately inform the WFOE of any actual or potential litigation, arbitration or administrative proceedings regarding their equity interests;

 

6.1.5                              Prior to the transfer of all Option Equity Interests to the WFOE, they shall execute all necessary or proper documents, take all necessary or proper actions, raise all necessary or proper claims of right, or raise all necessary or proper claims against claims of compensation so as to maintain the ownership of their equity interests;

 

6.1.6                              At the request of the WFOE, they shall appoint or engage the persons designated by the WFOE as directors and senior management of the Company;

 

6.1.7                              Without prior written consent of the WFOE, they shall not and shall not cause the management of the Company to dispose of any material Company Assets (other than that incurred in the ordinary course of business), or create any security interest or other third party rights on the material assets;

 

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6.1.8                              Without prior written consent of the WFOE, they shall not and shall not cause the management of the Company to terminate any Material Agreements entered into by the Company or enter into any other agreements in conflict with such existing Material Agreements;

 

6.1.9                              Without prior written consent of the WFOE, they shall not appoint or remove any directors, supervisors or other management members of the Company who shall be appointed and removed by the Existing Shareholders;

 

6.1.10                       Without prior written consent of the WFOE, they shall not cause the Company to declare distributions or actually effect distributions of any distributable profits, bonuses or dividends;

 

6.1.11                       They shall ensure that the Company will maintain its valid existence and will not be terminated, liquidated or dissolved without prior written consent of the WFOE;

 

6.1.12                       Without prior written consent of the WFOE, they shall not cause or agree that the Company makes amendments to its articles of association;

 

6.1.13                       Without prior written consent of the WFOE, they shall not cause or agree that the Company materially changes its business scope or terminates or suspends any current business;

 

6.1.14                       Without prior written consent of the WFOE, they shall ensure that the Company will not lend or borrow money (other than that required in the ordinary course of business), provide guarantee or any other form of security, or assume any substantial obligations beyond its ordinary course of business;

 

6.1.15                       Without prior written consent of the WFOE, they shall not cause or agree that the Company conducts any related party transaction with its direct or indirect shareholders, directors, supervisors, management or their respective related parties;

 

6.1.16                       Without prior written consent of the WFOE, they shall not conduct any action or non-action that will cause a conflict of interest between them and the Company or the WFOE;

 

6.1.17                       Without prior written consent of the WFOE, they shall not conduct any action or non-action which is likely to impair the assets or goodwill of the Company or affect the validity of the Operation Permits of the Company;

 

6.1.18                       They shall timely inform the WFOE of any circumstances to their knowledge which are likely to have a material adverse effect on the existence, business operation, financial conditions, assets or goodwill of the Company and shall timely take all measures acknowledged by the WFOE to eliminate such adverse circumstances or take effective remedies for such adverse circumstances;

 

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6.1.19                       Without prior written consent of the WFOE, they shall not cause or agree that the Company makes any material amendment to its accounting policy or changes its accountants;

 

6.1.20                       They shall strictly comply with all the provisions in this Agreement and other agreements jointly or separately executed by relevant parties, solidly perform all obligations under such agreements, and shall not conduct any action or non-action that will sufficiently affect the validity and enforceability of such agreements.

 

For the purpose of this Section 6.1, “Company” shall refer to the Company and all its subsidiaries (unless otherwise required by the context).

 

6.2                                        Upon the issuance of an Exercise Notice (subject to the circumstances under which the WFOE exercises its Equity Transfer Option or Asset Purchase Option) by the WFOE:

 

6.2.1                              The Existing Shareholders shall immediately take all necessary actions so as to (i) cause the Existing Shareholders to transfer all Target Equity Interests to the WFOE and/or other entity or individual designated by it at the Transfer Price and to waive any of their rights of first refusal (if any); or (ii) approve the transfer by the Company of all Transferrable Assets to the WFOE and/or other entity or individual designated by it at the Transfer Price;

 

6.2.2                              The Existing Shareholders shall (i) immediately execute equity transfer agreements with the WFOE and/or other entity or individual designated by it whereby they shall transfer all the Target Equity Interests to the WFOE and/or other entity or individual designated by it at the Transfer Price, and shall, in accordance with the request of the WFOE and the requirements of laws and regulations, provide the WFOE with necessary support (including causing the Company to hold a shareholders’ meeting to adopt a shareholders’ meeting resolution on such equity transfer and to provide and execute all relevant legal documents, to perform all governmental approval and registration formalities and assume all relevant obligations) so that the WFOE and/or other entity or individual designated by it can acquire all Target Equity Interests free from any legal defects and any security interest, third party restrictions created by the Existing Shareholders or any other restrictions, and the Existing Shareholders shall cooperate in and cause the completion of relevant registration with the industry and commerce administration and the update of shareholders’ register within thirty (30) days after the issuance of the Exercise Notice by the WFOE; or (ii) cause the Company to execute asset transfer agreements with the WFOE and/or other entity or individual designated by it whereby the Company shall transfer all the Transferrable Assets to the WFOE and/or other entity or individual designated by it at the Transfer Price, and shall, in accordance with the request of the WFOE and the requirements of laws and regulations, cause the shareholders to provide the WFOE with necessary support (including providing and executing all relevant legal documents, performing all governmental approval and registration formalities and assuming all relevant obligations) so that the WFOE and/or other entity or individual designated by it can acquire all the Transferrable Assets free from any legal defects and any security interest, third party restrictions or any other restrictions on the Company Assets.

 

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6.3                                        If the aggregate Transfer Price received by any of the Existing Shareholders in respect of his transferred equity interests exceeds his capital contributions to the Company, or if any of the Existing Shareholders receives profit distributions, dividends or bonuses in any form from the Company, such Existing Shareholder agrees to compensate the WFOE with the full amount of the Transfer Price obtained from such transferred equity interests and any received profit distributions, dividends or bonuses. Otherwise the Existing Shareholders shall compensate the WFOE and/or other entity or individual then designated by it for the losses thereby incurred.

 

7.                                               Undertakings by the Company

 

The Company hereby undertakes that:

 

7.1                                        During the term of this Agreement:

 

7.1.1                              Without prior written consent of the WFOE, it shall not conduct or permit the Existing Shareholders’ sale, transfer, pledge or disposal in other manner of, or permit the Existing Shareholders to create any encumbrances on any lawful or beneficial rights and interests of the equity interests in the Company, other than the pledge created on the equity interests of the Company under the Equity Pledge Agreement (including any amendment, supplement or restatement thereto from time to time) executed by and among relevant parties on the same date of this Agreement and the proxy rights created on the equity interests of the Company under the Shareholders’ Voting Rights Proxy Agreement (including any amendment, supplement or restatement thereto from time to time) executed by and among relevant parties on the same date of this Agreement;

 

7.1.2                              Without prior written consent of the WFOE, it shall not execute any shareholders’ resolution to approve the sale, transfer, pledge or disposal in any manner of any lawful or beneficial interests of the equity interests or assets owned by the Company, or permit to create any encumbrances on any equity interests or assets in the Company, except those made to the WFOE or its designated entity or individual;

 

7.1.3                              Without prior written consent of the WFOE, it shall not merge or consolidate with any other entity, be merged or acquired by any other entity, make investment in any other entity, be demerged, or make change to the registered capital or the form of the Company;

 

7.1.4                              It shall immediately inform the WFOE of any actual or potential litigation, arbitration or administrative proceedings regarding the equity interests of the Existing Shareholders;

 

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7.1.5                              Prior to the transfer of all Option Equity to the WFOE by the Existing Shareholders, it shall cooperate to execute all necessary or proper documents, to take all necessary or proper actions, to raise all necessary or proper claims of right, or to raise all necessary or proper claims against claims of compensation so as to maintain the Existing Shareholders’ ownership of their equity interests;

 

7.1.6                              At the request of the WFOE, it shall approve the Existing Shareholders’ appointment or engagement of the persons designated by the WFOE as directors and senior management of the Company;

 

7.1.7                              Without prior written consent of the WFOE, it shall not and shall not cause the management of the Company to dispose of any material Company Assets (other than that incurred in the ordinary course of business), or create any security interest or other third party rights on any Company Assets;

 

7.1.8                              Without prior written consent of the WFOE, it shall not and shall not cause the management of the Company to terminate any Material Agreement entered into by the Company or enter into any other agreements in conflict with such existing Material Agreements;

 

7.1.9                              Without prior written consent of the WFOE, it shall not cause the Company to declare distributions or actually effect distribution of any distributable profits, bonuses or dividends;

 

7.1.10                       It shall ensure that the Company will maintain its valid existence and will not be terminated, liquidated or dissolved without prior written consent of the WFOE;

 

7.1.11                       Without prior written consent of the WFOE, it shall not amend its articles of association;

 

7.1.12                       Without prior written consent of the WFOE, it shall not materially change its business scope or terminate or suspend any current business;

 

7.1.13                       Without prior written consent of the WFOE, it shall not lend or borrow money (other than that required in the ordinary course of business), provide guarantee or any other form of security, or assume any material obligations beyond its ordinary course of business;

 

7.1.14                       Without prior written consent of the WFOE, it shall not cause or agree that the Company conducts any related party transaction with its direct or indirect shareholders, directors, supervisors, management or their respective related parties;

 

7.1.15                       Without prior written consent of the WFOE, it shall not conduct any action or non-action that will cause an conflict of interest between it and the WFOE;

 

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7.1.16                       Without prior written consent of the WFOE, it shall not conduct any action or non-action which is likely to impair the assets or goodwill of the Company or affect the validity of the Operation Permits of the Company;

 

7.1.17                       It shall timely inform the WFOE of any circumstances to its knowledge which are likely to have a material adverse effect on the existence, business operation, financial condition, assets or goodwill of the Company and shall timely take all measures acknowledged by the WFOE to eliminate such adverse circumstances or take effective remedies for such adverse circumstances;

 

7.1.18                       Without prior written consent of the WFOE, it shall not make any material amendment to its accounting policy or change its accountants;

 

7.1.19                       Without prior written consent of the WFOE, it shall not conduct or permit to be conducted any act or action which is likely to have an adverse effect on the interests of the WFOE under this Agreement, including without limitation any act or action restricted by Section 6.1;

 

7.1.20                       It shall strictly comply with all the provisions in this Agreement and other agreements jointly or separately executed by relevant parties, solidly perform all obligations under such agreements, and shall not conduct any action or non-action that will sufficiently affect the validity and enforceability of such agreements.

 

For the purpose of this Section 7.1, “Company” shall refer to the Company and all its subsidiaries (unless otherwise required by the context).

 

7.2                                        If the execution and performance of this Agreement and the granting of the Equity Transfer Option or Asset Purchase Option under this Agreement require any third party consent, permit, waiver, authorization, or any governmental approval, permit, exemption, or any registration or filing formalities with any governmental authority (if required by law), the Company shall exert every effort to assist in the satisfaction of the above conditions.

 

7.3                                        Upon the issuance of an Exercise Notice (subject to the circumstances under which the WFOE exercises its Equity Transfer Option or Asset Purchase Option) by the WFOE:

 

7.3.1                              The Company shall and shall cause the Existing Shareholders to immediately take all necessary actions, (i) to cause the Existing Shareholders to transfer all Target Equity Interests to the WFOE and/or other entity or individual designated by it at the Transfer Price and to waive any of their rights of first refusal (if any); or (ii) to enable the Company to transfer all Transferrable Assets to the WFOE and/or other entity or individual designated by it at the Transfer Price;

 

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7.3.2                              The Company shall (i) and shall cause the Existing Shareholders to immediately execute equity transfer agreements with the WFOE and/or other entity or individual designated by it whereby they shall transfer all the Target Equity Interests to the WFOE and/or other entity or individual designated by it at the Transfer Price, and they shall, in accordance with the request of the WFOE and the requirements of laws and regulations, provide the WFOE with necessary support (including causing the Company to hold a shareholders’ meeting to adopt a shareholders’ meeting resolution on such equity transfer and to provide and execute all relevant legal documents, to perform all governmental approval and registration formalities and assume of all relevant obligations) so that the WFOE and/or other entity or individual designated by it can acquire all Target Equity Interests free from any legal defects and any security interest, third party restrictions created by the Existing Shareholders or any other restrictions, and the Company shall and shall cause the Existing Shareholders to cooperate in and cause the completion of relevant registration with the industry and commerce administration and the update of shareholders’ register within thirty (30) days after the issuance of the Exercise Notice by the WFOE; or (ii) execute asset transfer agreements with the WFOE and/or other entity or individual designated by it whereby the Company shall transfer all the Transferrable Assets to the WFOE and/or other entity or individual designated by it at the Transfer Price, and shall, in accordance with the request of the WFOE and the requirements of laws and regulations, cause the shareholders to provide the WFOE with necessary support (including providing and executing all relevant legal documents, performing all governmental approval and registration formalities and assuming all relevant obligations) so that the WFOE and/or other entity or individual designated by it can acquire all the Transferrable Assets free from any legal defects and any security interest, third party restrictions or any other restrictions on the Company Assets.

 

8.                                               Confidentiality Obligations

 

8.1                                        During the term of this Agreement and after the termination of this Agreement, the Parties shall maintain in strict confidence the business secrets, exclusive information, customer information and any other information with confidential nature regarding other Parties obtained during the entry into and performance of this Agreement (“Confidential Information”). Except where prior written consent has been obtained from the Party disclosing the Confidential Information or where disclosure to a third party is mandated by relevant laws or regulations or by the requirements of the listing place of a Party’s affiliate, or where the disclosure is made during the proceedings of any suit, arbitration or other legal proceedings or made, in relation to the aforesaid legal proceedings, to the courts, arbitration institutions, or relevant implementation or regulatory authorities, the Party receiving the Confidential Information shall not disclose any Confidential Information to any other third party; the Party receiving the Confidential Information shall not directly or indirectly use any Confidential Information other than for the purpose of performing this Agreement.

 

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8.2                                        The following information shall not constitute Confidential Information:

 

(a)                                          any information that has already been previously obtained by the receiving Party in a lawful manner as proved by written records; or

 

(b)                                          any information that enters the public domain not due to the fault of the receiving Party; or

 

(c)                                           any information lawfully acquired by the receiving Party from other sources after the receipt of relevant information.

 

8.3                                        A receiving Party may disclose the Confidential Information to its or its related parties’ relevant employees, agents, lenders or potential lenders (including the agents or trustees of the lenders), financing arrangers or potential financing arrangers or its appointed professionals, provided that such receiving Party shall execute confidentiality agreements or relevant commitment letters with the aforesaid persons to ensure that such persons shall comply with relevant terms and conditions of this Agreement or (as for any lenders (including the agents or trustees of the lenders) or the financing arrangers) the terms and conditions of the separately executed confidentiality agreements, and the receiving Party shall assume any liability arising out of the breach by the aforesaid persons of such relevant terms and conditions.

 

8.4                                        Notwithstanding any other provisions of this Agreement, the validity of this section shall not be affected by any termination of this Agreement.

 

9.                                               Term of Agreement

 

9.1                                        This Agreement shall become effective after being executed/sealed by the Parties to this Agreement or their authorized representatives. This Agreement shall be terminated after all the Option Equity Interests and the Company Assets have been transferred to the WFOE and/or other entity or individual designated by it in accordance with relevant laws and pursuant to this Agreement unless otherwise agreed by the Parties.

 

10.                                        Notice

 

10.1                                 Any notice, request, demand and other correspondences required by or made pursuant to this Agreement shall be made in writing and delivered to the relevant Parties.

 

10.2                                 Notices under this Agreement shall be delivered in person, by facsimile or by registered post to the following addresses unless changed by written notifications. The delivery date of the notice shall be the receiving date on the receipt if delivered by registered post, or the date of delivering to the recipient if delivered in person or by facsimile. If delivered by facsimile, the original notice should be immediately sent to the addresses listed in Schedule  2 in person or by registered post after such delivery.

 

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11.                                        Liability for Default

 

11.1                                 The Parties agree and acknowledge that if any Party (“Defaulting Party”) breaches any provision of this Agreement, or fails to perform or delays in performing any obligation under this Agreement, it shall constitute a default under this Agreement (“Default”) and the non-defaulting party shall be entitled to request the Defaulting Party to cure such Default or take remedies within a reasonable time period. If the Defaulting Party fails to cure such Default or take remedies within such reasonable time period or within ten (10) days after the Non-Defaulting Party notifies the Defaulting Party in writing and requests it to cure such Default, then the non-defaulting party is entitled to decide at its discretion:

 

11.1.1                       If the Existing Shareholders are the Defaulting Party, the WFOE shall be entitled to terminate this Agreement and request the Defaulting Party to indemnify for damages, or to request the Defaulting Party to continue to perform its obligations under this Agreement and to request the Defaulting Party to indemnify for all the damages;

 

11.1.2                       If the WFOE is the Defaulting Party, the non-defaulting Party shall be entitled to request the Defaulting Party to indemnify for damages, unless otherwise stipulated by laws or agreed by the Parties, the non-defaulting Party shall not be entitled to terminate or cancel this Agreement under any circumstances.

 

11.2                                 Notwithstanding any other provisions of this Agreement, the validity of this section shall not be affected by any termination of this Agreement.

 

12.                                        Miscellaneous

 

12.1                                 Any approval, instruction, demand, notice, exercise or waiver of any right, or other action of the WFOE shall be made in writing and attached with the resolutions of relevant shareholders’ meeting, board of directors or similar decision-making body of such company’s offshore indirect holding company (ONESMART EDUCATION GROUP LIMITED) to internally approve such issue (if such issue is among those requiring the approval of shareholders, board of directors or other similar decision-making body according to the articles of association of ONESMART EDUCATION GROUP LIMITED).

 

12.2                                 This Agreement is made in Chinese in fourteen (14) originals and each Party to this Agreement shall hold one (1) copy.

 

12.3                                 The entry into, effectiveness, performance, amendment, interpretation and termination of this Agreement shall be governed by the PRC Laws.

 

12.4                                 Any dispute arising out of and in connection with this Agreement shall be settled by the Parties through consultations and shall, in the absence of an agreement being reached by the Parties within thirty (30) days from its occurrence, be submitted by any Party to China International Economic and Trade Arbitration Commission (“CIETAC”) for arbitration in accordance with the then effective arbitration rules of CIETAC. The place of arbitration shall be Beijing and the language for arbitration shall be Chinese. The arbitration award shall be final and binding on the Parties to this Agreement.

 

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12.5                                 No rights, power or remedies granted to each Party by any provision of this Agreement shall preclude any other rights, power or remedies enjoyed by such Party in accordance with the laws or any other provisions under this Agreement and no exercise by a Party of any of its rights, powers and remedies shall preclude its exercise of its other rights, power and remedies.

 

12.6                                 No failure or delay by a Party in exercising any rights, power or remedies pursuant to this Agreement or any laws (“Such Rights”) shall result in a waiver of Such Rights; and no single or partial waiver of Such Rights shall preclude such Party from exercising Such Rights in any other manner or from exercising other Such Rights.

 

12.7                                 All the schedules listed in this Agreement constitute an integral part of this Agreement and have equal legal effect as the body text of this Agreement.

 

12.8                                 The section headings in this Agreement are for convenience of reference only and shall in no event be used in or affect the interpretation of the provisions of this Agreement.

 

12.9                                 Each provision contained in this Agreement shall be severable and independent from any other provisions of this Agreement, and if at any time any one or more provisions of this Agreement become invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby.

 

12.10                          This Agreement shall replace upon its execution any other legal documents on the same subject previously executed by the Parties. Any amendments or supplements to this Agreement shall be made in writing, and shall take effect only if duly signed/sealed by the Parties to this Agreement. Notwithstanding as otherwise agreed in this Agreement, without prior written consent of the WFOE, the Existing Shareholders and the Company shall not revoke the Equity Transfer Option or Asset Purchase Option under this Agreement or terminate this Agreement. Notwithstanding the aforesaid, the WFOE can at any time terminate this Agreement by sending a written notice to the Existing Shareholders and the Company thirty (30) days in advance.

 

12.11                          Without prior written consent of the WFOE, the Existing Shareholders or the Company shall not transfer any of their rights and/or obligations under this Agreement to any third party. The Shareholders and the Company hereby agree that the WFOE is entitled to transfer any of its rights and/or obligations under this Agreement to any third party without prior notice to or consent of relevant shareholders or the Company.

 

12.12                          This Agreement shall be binding upon the lawful transferees or successors of the Parties.

 

[Intentionally left blank below]

 

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IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized representatives of the Parties as of the date first above written.

 

WFOE: Shanghai Jing Xue Rui Information and Technology Co., Ltd. (seal)

 

	
Signature: 
    	
/s/ Meng Xiaoqiang
    	
 
    
	
 
    	
 
    	
 
    
	
Name: 
    	
Meng Xiaoqiang
    	
 
    

 

Company: Shanghai OneSmart Education and Training Co., Ltd. (seal)

 

	
 
    
	
Signature: 
    	
/s/ Zhang Xi
    	
 
    
	
 
    	
 
    	
 
    
	
Name: 
    	
Zhang Xi
    	
 
    
	
 
    	
 
    	
 
    
	
Position:
    	
 
    	
 
    
	
 
    	
 
    
	
Existing Shareholder:
    	
 
    
	
 
    	
 
    
	
Zhang   Xi
    	
 
    
	
 
    	
 
    
	
Signature: 
    	
/s/ Zhang Xi
    	
 
    

 

Signature Page to Exclusive Purchase Right Agreement

 

 

IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized representatives of the Parties as of the date first above written.

 

Existing Shareholder:

 

Shanghai Ruidao Investment Center (Limited Partnership) (Seal)

 

	
Signature of   authorized representative: 
    	
/s/ Shen Tianhao
    

 

Signature Page to Exclusive Purchase Right Agreement

 

 

IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized representatives of the Parties as of the date first above written.

 

Existing Shareholder:

 

Shanghai Yuming Investment Center (Limited Partnership) (Seal)

 

	
Signature of   authorized representative: 
    	
/s/ Cao Shaojun
    

 

Signature Page to Exclusive Purchase Right Agreement

 

 

IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized representatives of the Parties as of the date first above written.

 

Existing Shareholder:

 

Shanghai Shaojun Investment Center (Limited Partnership) (Seal)

 

	
Signature of   authorized representative: 
    	
/s/ Cao Shaojun
    

 

Signature Page to Exclusive Purchase Right Agreement

 

 

IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized representatives of the Parties as of the date first above written.

 

Existing Shareholder:

 

Shanghai Ruici Investment Center (Limited Partnership) (Seal)

 

	
Signature of   authorized representative: 
    	
/s/ Meng Xiaoqiang
    

 

Signature Page to Exclusive Purchase Right Agreement

 

 

IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized representatives of the Parties as of the date first above written.

 

Existing Shareholder:

 

Shanghai Ruiqiang Investment Center (Limited Partnership) (Seal)

 

	
Signature of   authorized representative: 
    	
/s/ Meng Xiaoqiang
    

 

Signature Page to Exclusive Purchase Right Agreement

 

 

IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized representatives of the Parties as of the date first above written.

 

Existing Shareholder:

 

Hu Guozhi

 

	
Signature: 
    	
/s/ Hu Guozhi
    	
 
    

 

Signature Page to Exclusive Purchase Right Agreement

 

 

IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized representatives of the Parties as of the date first above written.

 

Existing Shareholder:

 

Zheng Lina

 

	
Signature: 
    	
/s/ Zheng Lina
    	
 
    

 

Signature Page to Exclusive Purchase Right Agreement

 

 

IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized representatives of the Parties as of the date first above written.

 

	
Existing Shareholder:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Wang Dongdong
    	
 
    	
Geng Xiaofei
    
	
 
    	
 
    	
 
    	
 
    
	
Signature:
    	
/s/ Wang Dongdong
    	
 
    	
Signature:
    	
/s/ Geng Xiaofei
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Wu Junbao
    	
 
    	
Li Ye
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Signature:
    	
/s/ Wu Junbao
    	
 
    	
Signature:
    	
/s/ Li Ye
    
	
 
    	
 
    	
 
    	
 
    
	
Bian   Jin
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Signature:
    	
/s/ Bian Jin
    	
 
    	
 
    

 

Signature Page to Exclusive Purchase Right Agreement

 

 

IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized representatives of the Parties as of the date first above written.

 

Existing Shareholder:

 

Chen Guohe

 

	
Signature: 
    	
/s/ Chen Guohe
    	
 
    

 

Signature Page to Exclusive Purchase Right Agreement

 

 

IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized representatives of the Parties as of the date first above written.

 

Existing Shareholder:

 

Chen Gang

 

	
Signature: 
    	
/s/ Chen Gang
    	
 
    

 

Signature Page to Exclusive Purchase Right Agreement

 

 

IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized representatives of the Parties as of the date first above written.

 

Existing Shareholder:

 

Feng Juan

 

	
Signature: 
    	
/s/ Feng Juan
    	
 
    

 

Signature Page to Exclusive Purchase Right Agreement

 

 

IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized representatives of the Parties as of the date first above written.

 

Existing Shareholder:

 

Sha Ye

 

	
Signature: 
    	
/s/ Sha Ye
    	
 
    

 

Signature Page to Exclusive Purchase Right Agreement

 

 

Schedule 1 Basic Information of the Company

 

Company Name: Shanghai OneSmart Education and Training Co., Ltd.

 

Shareholding Structure:

 

	
Name of the Shareholder
    	
Amount of Capital
   Contribution
   (RMB/Yuan)
    	
Shareholding
   Percentage
    	
 
    
	
Zhang Xi
    	
17,000,000
    	
28.9300%
    	
 
    
	
Hu Guozhi
    	
1,968,645
    	
3.3500%
    	
 
    
	
Chen Gang
    	
5,303,689
    	
9.0256%
    	
 
    
	
Chen Guohe
    	
2,416,794
    	
4.1128%
    	
 
    
	
Feng Juan
    	
235,049
    	
0.4000%
    	
 
    
	
Geng Xiaofei
    	
7,381,291
    	
12.5612%
    	
 
    
	
Wang Dongdong
    	
2,372,287
    	
4.0371%
    	
 
    
	
Wu Junbao
    	
2,372,287
    	
4.0371%
    	
 
    
	
Li Ye
    	
527,100
    	
0.8970%
    	
 
    
	
Bian Jin
    	
527,100
    	
0.8970%
    	
 
    
	
Zheng Lina
    	
13,180,065
    	
22.4294%
    	
 
    
	
Sha Ye
    	
2,651,844
    	
4.5128%
    	
 
    
	
Shanghai Yuming   Investment Center (Limited Partnership)
    	
645,558
    	
1.0986%
    	
 
    
	
Shanghai Shaojun   Investment Center (Limited Partnership)
    	
450,000
    	
0.7658%
    	
 
    
	
Shanghai Ruidao   Investment Center (Limited Partnership)
    	
350,000
    	
0.5956%
    	
 
    
	
Shanghai Ruici   Investment Center (Limited Partnership)
    	
1,175,251
    	
2.0000%
    	
 
    
	
Shanghai   Ruiqiang Investment Center (Limited Partnership)
    	
205,668
    	
0.3500%
    	
 
    
	
Total
    	
58,762,528
    	
100%
    	
 
    

 

Schedule 1 to Exclusive Purchase Right Agreement

 

 

Schedule 2 Notice

 

Shanghai Jing Xue Rui Information and Technology Co., Ltd.

Registered Address:

Tel:

Recipient: Zhang Xi

 

The Company and the Existing Shareholders Zhang Xi, Shanghai Yuming Investment Center (Limited Partnership), Shanghai Shaojun Investment Center (Limited Partnership), Shanghai Ruidao Investment Center (Limited Partnership), Shanghai Ruici Investment Center (Limited Partnership), and Shanghai Ruiqiang Investment Center (Limited Partnership)

 

Domicile:

Tel:

Recipient: Zhang Xi

 

Existing Shareholder: Hu Guozhi

Domicile:

Recipient: Hu Guozhi

 

Existing Shareholder: Geng Xiaofei

Domicile:

Tel:

Recipient: Geng Xiaofei

 

Existing Shareholder: Wang Dongdong

Domicile:

Tel:

Recipient: Wang Dongdong

 

Existing Shareholder: Wu Junbao

Domicile:

Tel:

Recipient: Wu Junbao

 

Existing Shareholder: Li Ye

Domicile:

Tel:

Recipient: Li Ye

 

Schedule 2 to Exclusive Purchase Right Agreement

 

 

Existing Shareholder: Bian Jin

Domicile:

Tel:

Recipient: Bian Danyang

 

Existing Shareholder: Zheng Lina

Domicile:

Recipient: Zheng Lina

 

Existing Shareholder: Chen Gang

Domicile:

Tel:

Recipient: Chen Gang

 

Existing Shareholder: Chen Guohe

Domicile:

Tel:

Recipient: Chen Guohe

 

Existing Shareholder: Feng Juan

Domicile:

Recipient: Feng Juan

 

Existing Shareholder: Sha Ye

Domicile:

Recipient: Sha Ye

 

Schedule 2 to Exclusive Purchase Right Agreement

 

 

Schedule 3:

 

Form of Exercise Notice of Equity Transfer Option

 

To: [Name of the Existing Shareholder]

 

WHEREAS, pursuant to the Exclusive Purchase Right Agreement (“Option Agreement”) dated [ ] [ ], 2017 by and among us, you and Shanghai OneSmart Education and Training Co., Ltd. (“Company”), to the extent permitted by PRC laws and regulations, you shall, at our request, transfer your equity interests in the Company to us or any third party designated by us.

 

NOW, THEREFORE, we hereby notify you of the following:

 

We hereby offer to exercise our Equity Transfer Option under the Option Agreement whereby we or [name of entity or individual] designated by us shall acquire your [ ] % equity interests in the Company (“Subject Equity Interests”). You are kindly required to transfer all of the Subject Equity Interests to us or [name of designated entity or individual] and complete the necessary registration with the industry and commerce administration or other formalities in accordance with the Option Agreement immediately upon receipt of this notice.

 

Sincerely yours,

 

Shanghai Jing Xue Rui Information and Technology Co., Ltd.

 

	
Authorized   Representative: 
    	
 
    	
 
    

 

Date:

 

Schedule 3 to Exclusive Purchase Right Agreement

 

 

Schedule 4:

 

Form of Exercise Notice of Asset Purchase Option

 

To: Shanghai OneSmart Education and Training Co., Ltd.

 

WHEREAS, pursuant to the Exclusive Purchase Right Agreement (“Option Agreement”) dated [ ] [], 2017 by and among us, you and Zhang Xi, Hu Guozhi, Chen Gang, Chen Guohe, Feng Juan, Geng Xiaofei, Wang Dongdong, Wu Junbao, Li Ye, Bian Jin, Zheng Lina, Sha Ye, Shanghai Yuming Investment Center (Limited Partnership), Shanghai Shaojun Investment Center (Limited Partnership), Shanghai Ruidao Investment Center (Limited Partnership), Shanghai Ruici Investment Center (Limited Partnership), Shanghai Ruiqiang Investment Center (Limited Partnership), to the extent permitted by PRC laws and regulations, you shall, at our request, transfer your assets to us or any third party designated by us.

 

NOW, THEREFORE, we hereby notify you of the following:

 

We hereby offer to exercise our Asset Purchase Option under the Option Agreement whereby we or [name of entity or individual] designated by us shall acquire from you all the assets as separately set out in the list attached to this Agreement (“Subject Assets”). You are kindly required to transfer all the Subject Assets to us or [name of entity or individual] designated by us and complete the necessary registration or other formalities (if any) in accordance with the provisions of the Option Agreement immediately upon receipt of this notice.

 

Sincerely yours,

 

Shanghai Jing Xue Rui Information and Technology Co., Ltd.

 

	
Authorized   Representative:
    	
 
    	
 
    

 

Date:

 

Schedule 4 to Exclusive Purchase Right Agreement

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