Document:

Exhibit 10.2

 

XUNLEI LIMITED

 

2013 SHARE INCENTIVE PLAN

 

ARTICLE 1

 

PURPOSE

 

The purpose of the Xunlei Limited 2013 Share Incentive Plan (the “Plan”) is to promote the success and enhance the value of Xunlei Limited, an exempted company incorporated under the laws of the Cayman Islands (the “Company”) by linking the personal interests of the senior management of the Company to those of the Company’s shareholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to the Company’s shareholders.  The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of members of the senior management of the Company upon whose judgment, interest, and special effort the successful conduct of the Company’s operation is largely dependent.

 

ARTICLE 2

 

DEFINITIONS AND CONSTRUCTION

 

Wherever the following terms are used in the Plan or an Award Agreement, they shall have the meanings specified below, unless the context clearly indicates otherwise.  The singular pronoun shall include the plural where the context so indicates.

 

2.1  “Administrator” means the administrator of the Plan as described in Article 8.

 

2.2  “Applicable Laws” means the legal requirements relating to the Plan and the Awards under applicable corporate, securities, tax and other laws, rules, regulations and government orders, and the rules of any applicable stock exchange or national market system.

 

2.3  “Award” means a Restricted Share granted to a Participant pursuant to the Plan.

 

2.4  “Award Agreement” means any written agreement, contract, or other instrument or document evidencing an Award, including through electronic medium.

 

2.5  “Board” means the Board of Directors of the Company.

 

 

2.6  “Code”  means the Internal Revenue Code of 1986  of the United States,  as amended.

 

2.7  “Corporate Transaction”, unless otherwise defined in an Award Agreement, means any of the following transactions, provided, however, that the Administrator shall determine under (d) and (e) whether multiple transactions are related, and its determination shall be final, binding and conclusive:

 

(a)         an amalgamation, arrangement or consolidation or scheme of arrangement (i) in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the jurisdiction in which the Company is incorporated or (ii) following which the holders of the voting securities of the Company do not continue to hold more than 50% of the combined voting power of the voting securities of the surviving entity;

 

(b)         the sale, transfer or other disposition of all or substantially all of the assets of the Company;

 

(c)         the complete liquidation or dissolution of the Company;

 

(d)         any reverse takeover or series of related transactions culminating in a reverse takeover (including, but not limited to, a tender offer followed by a reverse takeover) in which the Company is the surviving entity but (A) the Company’s equity securities outstanding immediately prior to such takeover are converted or exchanged by virtue of the takeover into other property, whether in the form of securities, cash or otherwise, or (B) in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such takeover or the initial transaction culminating in such takeover, but excluding any such transaction or series of related transactions that the Administrator determines shall not be a Corporate Transaction;

 

(e)         acquisition in a single or series of related transactions by any person or related group of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities but excluding any such transaction or series of related transactions that the Administrator determines shall not be a Corporate Transaction; or

 

(f)         the individuals who, as of the Effective Date, are members of the Board (the “Incumbent Board”), cease for any reason to constitute at least fifty percent (50%) of the Board; provided that if the election, or nomination for election by the Company’s shareholders, of any new member of the Board is approved by the Incumbent Board pursuant to the then effective Articles of Association of the Company, such new member of the Board shall be considered as a member of the Incumbent Board.

 

2.8  “Disability”, unless otherwise defined in an Award Agreement, means that the Participant qualifies to receive long-term disability payments under the Service Recipient’s long-term disability insurance program, as it may be amended from time to time, to which the Participant provides services regardless of whether the Participant is covered by such policy.

 

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If the Service Recipient to which the Participant provides service does not have a long-term disability plan in place, “Disability” means that a Participant is unable to carry out the responsibilities and functions of the position held by the Participant by reason of any medically determinable physical or mental impairment for a period of not less than ninety (90) consecutive days.  A Participant will not be considered to have incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the Administrator in its discretion.

 

2.9  “Effective Date” shall have the meaning set forth in Section 9.1.

 

2.10  “Employee” means any person, including an officer or a member of the Board of the Company or any Parent or Subsidiary of the Company, who is in the employment of a Service Recipient, subject to the control and direction of the Service Recipient as to both the work to be performed and the manner and method of performance.  The payment of a director’s fee by a Service Recipient shall not be sufficient to constitute “employment” by the Service Recipient.

 

2.11  “Exchange Act” means the Securities Exchange Act of 1934 of the United States, as amended.

 

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

 

(a)         If the Shares are listed on one or more established stock exchanges or national market systems, including without limitation, The New York Stock Exchange and The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such Shares (or the closing bid, if no sales were reported) as quoted on the principal exchange or system on which the Shares are listed (as determined by the Administrator) on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such closing sales price or closing bid was reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

 

(b)         If the Shares are regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized securities dealer, its Fair Market Value shall be the closing sales price for such shares as quoted on such system or by such securities dealer on the date of determination, but if selling prices are not reported, the Fair Market Value of a Share shall be the mean between the high bid and low asked prices for the Shares on the date of determination (or, if no such prices were reported on that date, on the last date such prices were reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

 

(c)         In the absence of an established market for the Shares of the type described in (a) and (b), above, the Fair Market Value thereof shall be determined by the Administrator in good faith and in its discretion by reference to (i) the placing price of the latest private placement of the Shares and the development of the Company’s business operations and the general economic and market conditions since such latest private placement, (ii) other third party transactions involving the Shares and the development of the Company’s business

 

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operation and the general economic and market conditions since such sale, (iii) an independent valuation of the Shares, or (iv) such other methodologies or information as the Administrator determines to be indicative of Fair Market Value and relevant.

 

2.13  “Participant” means a person who, as a member of the senior management of the Company, or as counsel or consultant to the Company, has been granted an Award by the Administrator pursuant to the Plan.

 

2.14  “Parent” means a parent corporation under Section 424(e) of the Code.

 

2.15  “Plan”  means this Xunlei Limited 2013  Share Incentive Plan, as it may be amended from time to time.

 

2.16  “Qualified IPO” has the definition assigned to it in Section 10  of the Fifth Amended Restated Shareholders Agreement dated February 6, 2012 (as may be further amended and restated from time to time) among the Company,  its subsidiaries and consolidated affiliated entity, Messrs. Zou Shenglong and Cheng Hao, and various investors of the Company.

 

2.17  “Related Entity” means any business, corporation, partnership, limited liability company or other entity in which the Company, a Parent or Subsidiary of the Company holds a substantial ownership interest, directly or indirectly, but which is not a Subsidiary and which the Board designates as a Related Entity for purposes of the Plan.

 

2.18  “Restricted Share” means a Share awarded to a Participant pursuant to Article 5 that is subject to certain restrictions and may be subject to risk of forfeiture.

 

2.19  “Securities Act”  means the Securities Act of 1933 of the United States, as amended.

 

2.20  “Service Recipient”  means the Company, any Parent or Subsidiary of the Company and any Related Entity to which a Participant provides services as an Employee, a Consultant or a Director.

 

2.21  “Share” means common shares, par value US$0.00025 per share, of the Company, and such other securities of the Company that may be substituted for Shares pursuant to Article 10. When referenced in the context of listings on a stock exchange or quotations on an automated quotation system, “Shares” may also refer to American depositary shares or other securities representing the common shares.

 

2.22  “Subsidiary” means any corporation or other entity of which a majority of the outstanding voting shares or voting power is beneficially owned directly or indirectly by the Company.  For purposes of this Plan, Subsidiary shall also include any consolidated variable interest entity of the Company.

 

2.23  “Trade Sale”  means (a)  a sale, lease, transfer or other disposition of all or substantially all of the assets of the Company, (b) a transfer or an exclusive licensing of all or substantially all of the intellectual property of the Company, (c) a sale, transfer or other

 

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disposition of a majority of the issued and outstanding share capital of the Company or a majority of the voting power of the Company or (d) a merger, consolidation or other business combination of the Company with or into any other business entity in which the shareholders of the Company immediately after such merger, consolidation or business combination hold shares representing less than a majority of the voting power of the outstanding share capital of the surviving business entity, in each case prior to a Qualified IPO.

 

2.24  “Trading Date” means the closing of the first sale to the general public of the Shares pursuant to a registration statement filed with and declared effective by the U.S. Securities and Exchange Commission under the Securities Act.

 

ARTICLE 3

 

SHARES SUBJECT TO THE PLAN

 

3.1  Number of Shares.

 

(a)           Subject to the provisions of Article 10 and Section 3.1(b), the maximum aggregate number of Shares which may be issued pursuant to all Awards is 9,073,732.

 

(b)           To the extent that an Award terminates, expires, or lapses for any reason, any Shares subject to the Award shall again be available for the grant of an Award pursuant to the Plan. Shares delivered by the Participant or withheld by the Company upon the vesting of any Award under the Plan, in payment of the tax withholding thereon, may again be optioned, granted or awarded hereunder, subject to the limitations of Section 3.1(a).  If any Restricted Shares are forfeited by the Participant or repurchased by the Company, such Shares may again be optioned, granted or awarded hereunder, subject to the limitations of Section 3.1(a).

 

3.2  Shares Distributed.  In the discretion of the Administrator, American Depositary Shares in an amount equal to the number of Shares which otherwise would be distributed pursuant to an Award may be distributed in lieu of Shares in settlement of any Award.  If the number of Shares represented by an American Depositary Share is other than on a one-to-one basis, the limitations of Section 3.1(a) shall be adjusted proportionally, in accordance with the Shares to American Depositary Share ratio, to reflect the distribution of American Depositary Shares in lieu of Shares.

 

ARTICLE 4

 

ELIGIBILITY AND PARTICIPATION

 

4.1  Eligibility. Persons eligible to participate in this Plan include members of senior management of the Company, or counsel or consultants to the Company, as determined by the Administrator.

 

4.2  Participation.  Subject to the provisions of the Plan, the Administrator may, from time to time, select from among all eligible individuals, those to whom Awards shall be granted and shall determine the nature and amount of each Award.  No individual shall have any automatic right to be granted an Award pursuant to this Plan.

 

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4.3  Jurisdictions.  In order to assure the viability of Awards granted to Participants employed in various jurisdictions, the Administrator may provide for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy, or custom applicable in the jurisdiction in which the Participant resides or is employed. Moreover, the Administrator may approve such supplements to, or amendments, restatements, or alternative versions of, the Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of the Plan as in effect for any other purpose; provided, however, that no such supplements, amendments, restatements, or alternative versions shall increase the share limitations contained in Section 3.1 of the Plan. Notwithstanding the foregoing, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate any Applicable Laws.

 

ARTICLE 5

 

RESTRICTED SHARES

 

5.1  Grant of Restricted Shares.  The Administrator, at any time and from time to time, may grant Restricted Shares to Participants as the Administrator, in its sole discretion, shall determine.  The Administrator, in its sole discretion, shall determine the number of Restricted Shares to be granted to each Participant.

 

5.2  Restricted Shares Award Agreement.  Each Award of Restricted Shares shall be evidenced by an Award Agreement that shall specify the period of restriction, the number of Restricted Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, shall determine.  Unless the Administrator determines otherwise, Restricted Shares shall be held by the Administrator as escrow agent until the restrictions on such Restricted Shares have lapsed.

 

5.3  Issuance and Restrictions.  Restricted Shares shall be subject to such restrictions on transferability and other restrictions as the Administrator may impose (including, without limitation, limitations on the right to vote or the right to receive dividends on the Restricted Shares).  These restrictions may lapse separately or in combination at such times, pursuant to such circumstances, in such installments, or otherwise, as the Administrator determines at the time of the grant of the Award or thereafter.

 

5.4  Forfeiture/Repurchase.  Except as otherwise determined by the Administrator at the time of the grant of the Award or thereafter, upon termination of employment or service during the applicable restriction period, Restricted Shares that are at that time subject to restrictions shall be forfeited or repurchased in accordance with the Award Agreement; provided, however, the Administrator may (a) provide in any Restricted Share Award Agreement that restrictions or forfeiture and repurchase conditions relating to Restricted Shares will be waived in whole or in part in the event of terminations resulting from specified causes, and (b)  in other cases waive in whole or in part restrictions or forfeiture and repurchase conditions relating to Restricted Shares.

 

5.5  Certificates for Restricted Shares.  Restricted Shares granted pursuant to the Plan may be evidenced in such manner as the Administrator shall determine.

 

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5.6  Removal of Restrictions.  Except as otherwise provided in this Article 5 or any Restricted Shares Award Agreement,  Restricted Shares granted under the Plan shall be released from escrow as soon as practicable after the last day of the period of restriction. The Administrator, in its discretion, may accelerate the time at which any restrictions shall lapse or be removed.  The Administrator, in its discretion, may establish procedures regarding the release of Shares from escrow as necessary or appropriate to minimize administrative burdens on the Company.

 

ARTICLE 6

 

PROVISIONS APPLICABLE TO AWARDS

 

6.1  Award Agreement.  Awards under the Plan shall be evidenced by Award Agreements that set forth the terms, conditions and limitations for each Award which may include the term of an Award, the provisions applicable in the event the Participant’s employment or service terminates, and the Company’s authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an Award.

 

6.2  Limits on Transfer.  No right or interest of a Participant in any Award may be pledged, encumbered, or hypothecated to or in favor of any party other than the Company or a Subsidiary, or shall be subject to any lien, obligation, or liability of such Participant to any other party other than the Company or a Subsidiary.  Except as otherwise provided by the Administrator, no Award shall be assigned, transferred, or otherwise disposed of by a Participant other than by will or the laws of descent and distribution.  The Administrator by express provision in the Award or an amendment thereto may permit an Award to be transferred to and paid to certain persons or entities related to the Participant, including but not limited to members of the Participant’s family, charitable institutions, or trusts or other entities whose beneficiaries or beneficial owners are members of the Participant’s family and/or charitable institutions, or to such other persons or entities as may be expressly approved by the Administrator, pursuant to such conditions and procedures as the Administrator may establish.  Any permitted transfer shall be subject to the condition that the Administrator receive evidence satisfactory to it that the transfer is being made for estate and/or tax planning purposes (or to a “blind trust” in connection with the Participant’s termination of employment or service with the Company or a Subsidiary to assume a position with a governmental, charitable, educational or similar non-profit institution) and on a basis consistent with the Company’s lawful issue of securities.

 

6.3  Beneficiaries.  Notwithstanding Section 6.2, a Participant may, in the manner determined and consented to by the Administrator, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant’s death.  A beneficiary, legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to the Participant, except to the extent the Plan and Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Administrator.  If the Participant is married and resides in a community property state, a designation of a person other than the Participant’s spouse as his or her beneficiary with respect to more than 50% of the Participant’s interest in the Award shall not

 

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be effective without the prior written consent of the Participant’s spouse.  If no beneficiary has been designated or survives the Participant, payment shall be made to the person entitled thereto pursuant to the Participant’s will or the laws of descent and distribution.  Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time provided the change or revocation is filed with the Administrator.

 

6.4          Share Certificates.  Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates evidencing the Shares pursuant to the vesting of any Award, unless and until the Administrator has determined, with advice of counsel, that the issuance and delivery of such certificates is in compliance with all Applicable Laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the Shares are listed or traded.  All Share certificates delivered pursuant to the Plan are subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with all Applicable Laws, and the rules of any national securities exchange or automated quotation system on which the Shares are listed, quoted, or traded.  In addition to the terms and conditions provided herein, the Administrator may require that a Participant make such reasonable covenants, agreements, and representations as the Administrator, in its discretion, deems advisable in order to comply with any such laws, regulations, or requirements. The Administrator shall have the right to require any Participant to comply with any timing or other restrictions with respect to the settlement of any Award, including a window-period limitation, as may be imposed in the discretion of the Administrator.

 

6.5          Paperless Administration.  Subject to Applicable Laws, the Administrator may make Awards, provide applicable disclosure and procedures for vesting of Awards by an Internet website or interactive voice response system for the paperless administration of Awards.

 

ARTICLE 7

 

CHANGES IN CAPITAL STRUCTURE

 

7.1          Adjustments.  In the event of any share dividend, share split, combination or exchange of Shares, amalgamation, arrangement or consolidation, spin-off, recapitalization or other distribution (other than normal cash dividends) of Company assets to its shareholders, or any other change affecting the Shares or the price of a Share, the Administrator shall make such proportionate adjustments, if any, as the Administrator in its discretion may deem appropriate to reflect such change with respect to (a) the aggregate number and type of shares that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Section 3.1); (b) the terms and conditions of any outstanding Awards (including, without limitation, any applicable performance targets or criteria with respect thereto); and (c) the grant price per share for any outstanding Awards under the Plan.

 

7.2          Corporate Transactions.  Except as may otherwise be provided in any Award Agreement or any other written agreement entered into by and between the Company and a Participant, if the Administrator anticipates the occurrence, or upon the occurrence, of a Corporate Transaction, the Administrator may, in its sole discretion, provide for (i) accelerate

 

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the vesting of such Awards as the Administrator shall determine, or (ii) the purchase of any Award for an amount of cash equal to the amount that could have been attained upon the vesting of such Award, or (iii) the replacement of such Award with other rights or property selected by the Administrator in its sole discretion or the assumption of or substitution of such Award by the successor or surviving corporation, or a Parent or Subsidiary thereof, with appropriate adjustments as to the number and kind of Shares and prices, or (iv) payment of Award in cash based on the value of Shares on the date of the Corporate Transaction plus reasonable interest on the Award through the date when such Award would otherwise be vested or have been paid in accordance with its original terms, if necessary to comply with Section 409A of the Code.

 

7.3          Outstanding Awards — Other Changes.  In the event of any other change in the capitalization of the Company or corporate change other than those specifically referred to in this Article 10, the Administrator may, in its absolute discretion, make such adjustments in the number and class of shares subject to Awards outstanding on the date on which such change occurs and in the per share grant price of each Award as the Administrator may consider appropriate to prevent dilution or enlargement of rights.

 

7.4          No Other Rights.  Except as expressly provided in the Plan, no Participant shall have any rights by reason of any subdivision or consolidation of Shares of any class, the payment of any dividend, any increase or decrease in the number of shares of any class or any dissolution, liquidation, merger, or consolidation of the Company or any other corporation. Except as expressly provided in the Plan or pursuant to action of the Administrator under the Plan, no issuance by the Company of shares of any class, or securities convertible into shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of shares subject to an Award or the grant price of any Award.

 

ARTICLE 8

 

ADMINISTRATION

 

8.1          Administrator.  Before the Shares are listed on a stock exchange, the Plan shall be administered by Leading Advice Holdings Limited (the “Administrator”). After the Shares are listed on a stock exchange, the Plan shall be administered by the Board or the Compensation Committee of the Board (or a similar body) formed in accordance with applicable exchange rules, and the term “Administrator” shall refer to Leading Advice Holdings Limited or such Compensation Committee, as applicable. The Administrator may delegate to a person or committee of its designation the authority to grant or amend Awards to Participants.

 

8.2          Registered Holder.  Leading Advice Holdings Limited or its designee shall be registered in the Register of Members of the Company as the holder of the underlying Shares of any Awards.

 

8.3          Reports.  The Administrator is entitled to, in good faith, rely or act upon any report or other information furnished to it by any officer or other employee of the Company or any Subsidiary, the Company’s independent certified public accountants, or any executive

 

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compensation consultant or other professional retained by the Company to assist in the administration of the Plan.

 

8.4          Authority of the Administrator.        Subject to any specific designation in the Plan, the Administrator has the exclusive power, authority and discretion to:

 

(a)           Designate Participants to receive Awards;

 

(b)           Determine the number of Awards to be granted and the number of Shares to which an Award will relate;

 

(c)           Determine the terms and conditions of any Award granted pursuant to the Plan,  including,  but not limited to,  the grant price or purchase price,  any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of an Award,  and accelerations or waivers thereof,  any provisions related to non-competition and recapture of gain on an Award, based in each case on such considerations as the Administrator in its sole discretion determines;

 

(d)           Determine whether, to what extent, and pursuant to what circumstances an Award may be settled in, or an Award may be canceled, forfeited, or surrendered;

 

(e)           Prescribe the form of each Award Agreement, which need not be identical for each Participant;

 

(f)            Decide all other matters that must be determined in connection with an Award;

 

(g)           Establish,  adopt,  or revise any rules and regulations as it may deem necessary or advisable to administer the Plan;

 

(h)           Interpret the terms of, and any matter arising pursuant to, the Plan or any Award Agreement; and

 

(i)            Make all other decisions and determinations that may be required pursuant to the Plan or as the Administrator deems necessary or advisable to administer the Plan.

 

8.5          Decisions Binding.  The Administrator’s interpretation of the Plan, any Awards granted pursuant to the Plan, any Award Agreement and all decisions and determinations by the Administrator with respect to the Plan are final, binding, and conclusive on all parties.

 

ARTICLE 9

 

EFFECTIVE AND EXPIRATION DATE

 

9.1          Effective Date.  The Plan is effective as of the date it is adopted and approved by the Board (the “Effective Date”).  The Plan shall be ratified by the shareholders of the Company by unanimous written resolutions or at a meeting duly held in accordance with the applicable provisions of the Company’s Articles of Association within 12 months of the

 

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Effective Date.

 

9.2          Expiration Date.  The Plan will expire on, and no Award may be granted pursuant to the Plan after,  the tenth anniversary of the Effective Date.  Any Awards that are outstanding on the tenth anniversary of the Effective Date shall remain in force according to the terms of the Plan and the applicable Award Agreement.

 

ARTICLE 10

 

AMENDMENT, MODIFICATION, AND TERMINATION

 

10.1        Amendment, Modification and Termination.  With the approval of the Board, at any time and from time to time, the Administrator may terminate, amend or modify the Plan; provided, however, that (a) to the extent necessary and desirable to comply with Applicable Laws, the Company shall obtain shareholder approval of any Plan amendment in such a manner and to such a degree as required, unless the Company decides to follow home country practice, and (b) unless the Company decides to follow home country practice, shareholder approval is required for any amendment to the Plan that (i) increases the number of Shares available under the Plan (other than any adjustment as provided by Article 10), (ii) permits the Administrator to extend the term of the Plan, or (iii) results in a material increase in benefits or a change in eligibility requirements.

 

10.2        Awards Previously Granted.  Except with respect to amendments made pursuant to Section 11.15, no termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted pursuant to the Plan without the prior written consent of the Participant.

 

ARTICLE 11

 

GENERAL PROVISIONS

 

11.1        No Rights to Awards.  No Participant, employee, or other person shall have any claim to be granted any Award pursuant to the Plan, and neither the Company nor the Administrator is obligated to treat Participants, employees, and other persons uniformly.

 

11.2        No Shareholders Rights.  Participants will not be entitled to any of the rights of a Shareholder of the Company (including to dividends) on unvested portions of Awards. Participants will be entitled to dividends on the vested portions of Awards. The Administrator will hold all vested portions of Awards for the Participant’s benefit and exercise the voting rights with respect to those Shares.

 

11.3        Taxes.  No Shares shall be delivered under the Plan to any Participant until such Participant has made arrangements acceptable to the Administrator for the satisfaction of any income and employment tax withholding obligations under Applicable Laws.  The Company or any Subsidiary shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy all applicable taxes (including the Participant’s payroll tax obligations) required or permitted by Applicable Laws to be withheld with respect to any taxable event concerning a Participant arising as a result of

 

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this Plan.  The Administrator may in its discretion and in satisfaction of the foregoing requirement allow a Participant to elect to have the Company withhold Shares otherwise issuable under an Award (or allow the return of Shares) having a Fair Market Value equal to the sums required to be withheld.  Notwithstanding any other provision of the Plan, the number of Shares which may be withheld with respect to the issuance, vesting or payment of any Award (or which may be repurchased from the Participant of such Award after such Shares were acquired by the Participant from the Company) in order to satisfy any income and payroll tax liabilities applicable to the Participant with respect to the issuance, vesting or payment of the Award shall, unless specifically approved by the Administrator, be limited to the number of Shares which have a Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such liabilities based on the minimum statutory withholding rates for the applicable income and payroll tax purposes that are applicable to such supplemental taxable income.

 

11.4        No Right to Employment or Services.  Nothing in the Plan or any Award Agreement shall interfere with or limit in any way the right of the Service Recipient to terminate any Participant’s employment or services at any time, nor confer upon any Participant any right to continue in the employment or services of any Service Recipient.

 

11.5        Unfunded Status of Awards.  The Plan is intended to be an “unfunded” plan for incentive compensation.  With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the Participant any rights that are greater than those of a general creditor of the Company or any Subsidiary.

 

11.6        Indemnification.  To the extent allowable pursuant to Applicable Laws, each member of the Administrator or of the Board shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her; provided he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf.  The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled pursuant to the Company’s Memorandum of Association and Articles of Association, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

 

11.7        Relationship to other Benefits.  No payment pursuant to the Plan shall be taken into account in determining any benefits pursuant to any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.

 

11.8        Expenses.  The expenses of administering the Plan shall be borne by the Company and its Subsidiaries.

 

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11.9        Titles and Headings.  The titles and headings of the Sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.

 

11.10      Fractional Shares.  No fractional Shares shall be issued and the Administrator shall determine,  in its discretion,  whether cash shall be given in lieu of fractional Shares or whether such fractional Shares shall be eliminated by rounding up or down as appropriate.

 

11.11      Limitations Applicable to Section 16 Persons.  Notwithstanding any other provision of the Plan, the Plan, and any Award granted or awarded to any Participant who is then subject to Section 16 of the Exchange Act, shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule.  To the extent permitted by the Applicable Laws, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

 

11.12      Government and Other Regulations.  The obligation of the Company to make payment of awards in Shares or otherwise shall be subject to all Applicable Laws, and to such approvals by government agencies as may be required.  The Company shall be under no obligation to register any of the Shares paid pursuant to the Plan under the Securities Act or any other similar law in any applicable jurisdiction.  If the Shares paid pursuant to the Plan may in certain circumstances be exempt from registration pursuant to the Securities Act or other Applicable Laws, the Company may restrict the transfer of such Shares in such manner as it deems advisable to ensure the availability of any such exemption.

 

11.13      Governing Law.  The Plan and all Award Agreements shall be construed in accordance with and governed by the laws of the Cayman Islands.

 

11.14      Section 409A.  To the extent that the Administrator determines that any Award granted under the Plan is or may become subject to Section 409A of the Code, the Award Agreement evidencing such Award shall incorporate the terms and conditions required by Section 409A of the Code.  To the extent applicable, the Plan and the Award Agreements shall be interpreted in accordance with Section 409A of the Code and the U.S. Department of Treasury regulations and other interpretative guidance issued thereunder, including without limitation any such regulation or other guidance that may be issued after the Effective Date. Notwithstanding any provision of the Plan to the contrary, in the event that following the Effective Date the Administrator determines that any Award may be subject to Section 409A of the Code and related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the Effective Date), the Administrator may adopt such amendments to the Plan and the applicable Award agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Administrator determines are necessary or appropriate to (a) exempt the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (b) comply with the requirements of Section 409A of the Code and related U.S. Department of Treasury guidance.

 

13

 

11.15      Appendices.  The Administrator may approve such supplements, amendments or appendices to the Plan as it may consider necessary or appropriate for purposes of compliance with Applicable Laws or otherwise and such supplements, amendments or appendices shall be considered a part of the Plan; provided, however, that no such supplements shall increase the share limitation contained in Section 3.1 of the Plan without the approval of the Board.

 

*    *    *    *    *

 

I hereby certify that the foregoing Plan was duly adopted by the Board of Directors of Xunlei Limited on                                , 2013.

 

I hereby certify that the foregoing Plan was approved by the shareholders of Xunlei Limited on                                , 2013.

 

Executed on this              day of                 , 2013.

 

 

	
 
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    	
Director
    

 

14Exhibit 10.20

 

Form of Investor Warrant

 

THE WARRANT REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NEITHER SUCH WARRANT NOR THE PREFERRED SHARES ISSUABLE UPON ITS EXERCISE (COLLECTIVELY, THE “SECURITIES”) HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.  THE SECURITIES MAY NOT BE TRANSFERRED, SOLD OR OFFERED FOR SALE IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.  COPIES OF THE AGREEMENTS COVERING THE PURCHASE OF THE SECURITIES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED FREE OF CHARGE BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE.

 

Warrant No. 7

 

	
 
    	
Warrant to purchase 17,743,873 shares of
    
	
 
    	
Series E Preferred Shares
    
	
 
    	
(subject to adjustment)
    
	
 
    
	
 
    	
[ ],   2014
    
			

 

XUNLEI LIMITED

 

SERIES E PREFERRED SHARES PURCHASE WARRANT

 

THIS CERTIFIES THAT, Xiaomi Ventures Limited (the “Initial Holder”), and/or such other Person(s) it designates, are entitled to purchase, for due and valuable consideration received, and subject to the terms and provisions set forth herein, in aggregate 17,743,873 Series E Preferred Shares of the Company (the “Warrant Shares”), as adjusted in the manner described in Section 6 below.

 

Section 1.                   Definitions.  As used herein, the following terms shall have the following meanings:

 

(a)                                 “Affiliate” shall mean any Person that directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with the Initial Holder or is designated as an Affiliate thereby.

 

 

(b)                                 “beneficial owner” shall have the meaning assigned to such term in Rule 13d-3 promulgated under the Exchange Act.

 

(c)                                  “Commission” shall mean the Securities and Exchange Commission, or any other federal agency at the time administering the Securities Act.

 

(d)                                 “Company” shall mean Xunlei Limited, a Cayman Islands company.

 

(e)                                  “Change of Control” shall mean any of the following transactions, (i) any merger or consolidation of the Company with or into any other entity or any other similar transaction, whether in a single transaction or series of related transactions, where the shareholders of the Company immediately prior to such transaction in the aggregate cease to own at least fifty percent (50%) of the voting securities of the entity surviving or resulting from such transaction (or the ultimate parent thereof); (ii) an initial public offering of the Company’s Common Shares or American depositary shares representing Common Shares; (iii) any transaction or series of related transactions in which in excess of fifty percent (50%) of the Company’s voting power is transferred to any Person; and (iv) the sale, transfer, lease, assignment, conveyance, exchange, mortgage or other disposition of all or substantially all of the assets of the Company and its Subsidiaries on a consolidated basis.

 

(f)                                   “control” (including the terms “controlled by” and “under common control with”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly or as trustee, personal representative or executor, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee, personal representative or executor, by contract, credit arrangement or otherwise.

 

(g)                                  “Current Holder” shall mean the Initial Holder or any person who shall at the time be the registered holder of this Warrant.

 

(h)                                 “Date of Grant” shall mean             , 2014.

 

(i)                                     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, or any successor federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

 

(j)                                    “Exercise Date” shall mean the effective date of the delivery of the Notice of Exercise pursuant to Sections 4 and 12 below.

 

 

(k)                                 “Group” shall have the meaning assigned to such term in Section 13(d)(3) of the Exchange Act.

 

(l)                                     “Common Shares” shall mean the common shares, par value $0.00025 per share, of the Company.

 

(m)                             “Person” shall mean any individual, corporation, limited liability company, limited or general partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or agency or political subdivision thereof or any Group comprised of two or more of the foregoing.

 

(n)                                 “Preferred Shares” shall have the same meaning as that set forth in the Purchase Agreement.

 

(o)                                 “Purchase Agreement” shall mean that certain Share Purchase Agreement dated as of February 13, 2014 by and among the Company, the Initial Holder and certain parties thereto.

 

(p)                                 “Securities Act” shall mean the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

 

(q)                                 “Series E Preferred Shares” shall mean Series E Preferred Shares, each of a par value of US$0.00025, in the authorized share capital of the Company.

 

(r)                                    “Subsidiary” shall mean any entity as to which the Company owns, directly or indirectly, fifty percent (50%) or more of such entity’s voting securities, or any entity otherwise controlled, by ownership or by contract or otherwise, directly or indirectly by the Company.

 

Section 2.                   Issuance of Warrant.  Subject to the terms and conditions hereinafter set forth, the Initial Holder is entitled to, pursuant to the terms hereof, to purchase, and/or designate such other Person(s) to purchase, in aggregate, up to 17,743,873 Series E Preferred Shares, at the price of US$2.81787412 per share (as adjusted pursuant to Section 6 hereof, the “Exercise Price”).

 

Section 3.                   Term.  This Warrant is exercisable at the option of the Current Holder, at any time and from time to time, on or after January 1, 2015 and no later than March 1, 2015; unless that the Company has completed the initial public offering of its Common Shares or American depositary shares representing Common Shares in the United States by December 31, 2014.

 

 

Section 4.                   Method of Exercise.

 

(a)                                 Method of Exercise.  Subject to Section 3 above and in compliance with all applicable securities laws, the purchase right represented by this Warrant may be exercised, in whole or in part and from time to time, by the Current Holder by, (i) surrender of this Warrant and delivery of a duly executed Notices of Exercise in the form attached hereto as Exhibit A (the “Notice of Exercise”) at the principal office of the Company; and (ii) payment of the Exercise Price then in effect in U.S. dollars in immediately available fund, by wire transfer to a bank account designated by the Company.

 

(b)                                 Delivery of Certificates.  The certificates for the Warrant Shares so purchased shall be delivered to the Current Holder and/or such other Person(s) designated by the Current Holder on the day of any exercise of the purchase right represented by this Warrant and the Company shall make relevant entries to the register of members of the Company to record and give effect to the issue of the Warrant Shares to the Current Holder upon exercise of the purchase right represented by this Warrant, and, unless this Warrant has been fully exercised, a new warrant representing the portion of the Warrant Shares with respect to which this Warrant has not been exercised by then shall also be concurrently issued.

 

(c)                                  No Fractional Shares.  No fractional shares shall be issued in connection with any exercise hereunder, but in lieu of such fractional shares the Company shall make a cash payment therefor based upon the fair market value per Warrant Share.

 

Section 5.                   Representations and Warranties of the Company.

 

(a)                                 Due Authorization and Valid Issuance.  All of the Warrant Shares that may be issued upon the exercise of the purchase right represented by this Warrant, and all Common Shares issuable upon conversion of such Warrant Shares shall, upon issuance, be duly authorized, validly issued, fully paid and nonassessable, and free of any and all liens and encumbrances other than restrictions on transfer under applicable federal and state securities laws.  Unless this Warrant has been fully exercised, the Company shall at all times have authorized and reserved a sufficient number of Warrant Shares for the issuance upon the exercise of the purchase right represented by this Warrant, and a sufficient number of Common Shares for the issuance upon the conversion of such Warrant Shares.

 

(b)                                 Binding Obligation.  This Warrant has been duly authorized and executed by the Company and is a valid and binding obligation of the Company enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting the enforcement of creditors’ rights.

 

(c)                                  No Violation.  The execution and delivery of this Warrant are not, and the issuance of the Warrant Shares upon exercise of this Warrant in accordance with the terms hereof will not be inconsistent with the Company’s Amended and Restated Memorandum and Articles of Association adopted on February [      ], 2014 (the “Articles”), do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and do not and will not conflict with, or constitute a material default under, any material indenture, mortgage, contract or other instrument to which the 

 

 

Company is a party or by which it is bound, or require the registration or filing with or the taking of any action in respect of or by, any government authority or agency (other than such consents, approvals, notices, actions and filings as have already been obtained or made, as the case may be).

 

(d)                                 Representations and Warranties in the Purchase Agreement.  Upon exercise of the purchase right represented by this Warrant in accordance with the terms and conditions set forth herein, the representations and warranties set forth in Section 3 of the Purchase Agreement shall be deemed to be made by the Warrantors (as defined in the Purchase Agreement) to the party purchasing the Warrant Shares upon exercise of this Warrant, and Section 6 of the Purchase Agreement shall apply mutatis mutandis to and for the benefit of such purchasing party(ies).

 

Section 6. Adjustment of Exercise Price and Number of Shares.  The Exercise Price of this Warrant shall be subject to adjustment from time to time as follows:

 

(a)                                 Special Definitions.  For purposes of this Section 6, the following terms shall have the following definitions:

 

(1)                                 “Additional Common Shares” shall mean all Common Shares issued (or deemed to be issued pursuant to Section 6(c) below) by the Company after the Date of Grant, other than (x) the ESOP Shares, and (y) any Common Share issued or issuable:

 

(i)             as a dividend or distribution on the Preferred Shares or Common Shares;

 

(ii)          upon conversion of any Preferred Shares;

 

(iii) pursuant to any public offering (including, without limitation, an initial public offering) of the Company;

 

(iv)      pursuant to the acquisition of another corporation or entity by the Company by consolidation, merger, purchase of assets, or other reorganization in which the Company acquires, in a single transaction or series of related transactions, all or substantially all assets of such other corporation or entity, or fifty percent (50%) or more of the equity ownership or voting power of such other corporation or entity; and

 

(v)         pursuant to the exercise of this Warrant.

 

(2)                                 “Convertible Securities” shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into Common Shares.

 

 

(3)                                 “Options” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Shares or Convertible Securities, excluding the ESOP Shares.

 

(4)                                 “ESOP Shares” shall mean up to 26,822,828 Common Shares, or options or warrants therefore, issued or issuable to employees, officers, directors, contractors, advisors or consultants of the Company pursuant to the Company’s 2010 ESOP Plan (as defined in the Purchase Agreement), and 9,073,732 Common Shares issued to Leading Advice Holdings Limited pursuant to the Company’s 2013 RS Plan (as defined in the Purchase Agreement).

 

(5)                                 “Rights” shall mean all rights issued by the Company to acquire Common Shares whether by exercise of warrants, options or similar calls, or conversion of any existing instruments, in each case for consideration fixed, in amount or by formula, as of the date of issuance.

 

(b)                                 No Adjustment of Exercise Price.  No adjustment in the number of Warrant Shares issuable upon exercise of this Warrant shall, by adjustment to the Exercise Price hereunder, be made unless the Fair Market Value of the consideration per share (determined pursuant to Section 6(e) below) received by the Company for an Additional Common Share issued or deemed to be issued by the Company is less than the Fair Market Value per Common Share on the date of and immediately prior to the issuance of such additional shares.

 

(c)                                  Issue of Securities and Deemed Issue of Additional Common Shares.  If the Company at any time or from time to time after the Date of Grant issues any Options, Convertible Securities or Rights, then the maximum number of Common Shares (as set forth in the instrument relating thereto without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise, conversion or exchange of such Options, Convertible Securities or Rights shall be deemed to be Additional Common Shares issued as of the time of such issuance; provided that Additional Common Shares shall not be deemed to have been issued unless the Fair Market Value of the consideration per share (determined pursuant to Section 6(e) below) received by the Company for such Additional Common Shares would be less than the Fair Market Value per Common Share on the date of and immediately prior to such issuance, or such record date, as the case may be, and provided, further, that in any such case:

 

(1)                                 no further adjustment in the Exercise Price shall be made upon the subsequent issue of Common Shares upon the exercise, conversion or exchange of such Options, Convertible Securities or Rights;

 

(2)                                 upon the expiration or termination of any unexercised Options, Convertible Securities or Rights, the Exercise Price shall be adjusted immediately to reflect the applicable Exercise Price which would have been in effect had such Options, Convertible Securities or Rights (to the extent outstanding immediately prior to such expiration or termination) never been issued; and

 

 

(3)                                 in the event of any change in the number of Common Shares issuable upon the exercise, conversion or exchange of any Options, Convertible Securities or Rights, including but not limited to a change resulting from the anti-dilution provisions thereof, the then-effective Exercise Price shall forthwith be readjusted to such Exercise Price as would have applied had the Exercise Price adjustment that was originally made upon the issuance of such Options, Convertible Securities or Rights which were not exercised, converted or exchanged prior to such change been made upon the basis of such change, but no further adjustment shall be made for the actual issuance of Common Shares upon the exercise, conversion or exchange of such Options, Convertible Securities or Rights.

 

(d)                                 Adjustment of Exercise Price upon Issuance of Additional Common Shares.  If the Company shall at any time after the Date of Grant issue Additional Common Shares (including Additional Common Shares deemed to be issued pursuant to Section 6(c) above, but excluding shares issued upon a share split or combination as provided in Section 6(f) below or as a dividend or distribution as provided in Section 6(g) below), without consideration or for a consideration per share less than the Fair Market Value per Common Share on the date of and immediately prior to such issuance, then and in such event the Exercise Price shall be reduced, concurrently with such issuance, to a price (calculated to the nearest US$0.01) determined by multiplying such Exercise Price by a fraction, the numerator of which shall be the sum of (A) the number of Common Shares outstanding, on a fully diluted basis, immediately prior to such issuance plus (B) the number of Common Shares that the aggregate consideration received by the Company for the total number of Additional Common Shares so issued would purchase at the Fair Market Value per Common Share and the denominator of which shall be the sum of (X) the number of Common Shares outstanding immediately prior to such issuance plus (Y) the number of such Additional Common Shares so issued.  Notwithstanding the foregoing, the applicable Exercise Price shall not be reduced if the amount of such reduction would be an amount less than US$0.01, but any such amount shall be carried forward and reduction with respect thereto made at the time of and together with any subsequent reduction which, together with such amount and any other amount or amounts so carried forward, shall aggregate US$0.01 or more.  The “Fair Market Value” per Common Share shall be determined by the Company and the Current Holder in good faith, provided however, if the Company on one hand, and the Current Holder on the other hand, cannot mutually agree on such value, such value shall be determined by a qualified, recognized appraiser of international standing (such as, by way of example only, the valuation group of an international accounting firm or a global investment bank with substantial experience in valuing companies) approved in good faith by the Company and the Holder.

 

(e)                                  Determination of Consideration.  For purposes of this Section 6, the consideration received by the Company for the issuance of any Additional Common Shares shall be computed as follows:

 

(1)         Securities.  The Fair Market Value of securities (other than Options, Convertible Securities and Rights, the value of which shall be determined in accordance with Section 6(e)(3) below) shall be determined as follows:

 

 

(i)                                     for securities not subject to investment letter or other similar restrictions on free marketability provided in subsection (ii) below: (A) if traded on a securities exchange or through the Nasdaq National Market, the value shall be deemed to be the average of the closing prices of the securities on such exchange or quotation system over the thirty (30) day period ending the three (3) days prior to the closing of the issuance of such Additional Common Shares; (B) if actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the thirty (30) day period ending three (3) days prior to the closing of the issuance of such Additional Common Shares; and (C) if there is no active public market, the value shall be fair market value thereof, as mutually determined in good faith by the Board of Directors of the Company and the Current Holder;

 

(ii)                                  the method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a shareholder’s status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as above in (i)(A), (i)(B) or (i)(C) to reflect the approximate fair market value thereof, as mutually determined in good faith by the Board of Directors and the Current Holder.

 

(2)         Cash, Property and Securities.  Such consideration shall:

 

(i)                                     insofar as it consists of cash, be computed at the net amount of cash received by the Company, excluding amounts paid or payable for accrued interest or accrued dividends;

 

(ii)                                  insofar as it consists of property other than cash, be computed at the fair market value thereof, as mutually determined in good faith by the Board of Directors and the Current Holder;

 

(iii)                               insofar as it consists of securities (other than Options, Convertible Securities and Rights, the value of which shall be determined in accordance with Section 6(e)(3) below), be computed at the fair market value thereof, as determined in accordance with Section 6(e)(1) above; and

 

(iv)                              in the event Additional Common Shares are issued together with other securities or other assets (including cash) of the Company for consideration which covers a combination of the foregoing, be the proportion of such consideration so received, computed as provided in clauses (i), (ii) and (iii) above.

 

(3)         Options, Convertible Securities and Rights.  The consideration per share received by the Company for Additional Common Shares deemed to have been issued pursuant to Section 6(c) above, relating to Options, Convertible Securities and Rights, shall be determined by dividing:

 

 

(i)                                     the total amount, if any, received or receivable by the Company as consideration for the issuance of such Options, Convertible Securities or Rights, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon the exercise, conversion or exchange of such Options, Convertible Securities or Rights, by

 

(ii)                                  the maximum number of Common Shares (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise, conversion or exchange of such Options, Convertible Securities or Rights.

 

(f)                                   Adjustment for Share Splits and Combinations.  If the Company shall at any time or from time to time after the Date of Grant effect a subdivision of the outstanding Common Shares, the Exercise Price in effect immediately before that subdivision shall be proportionately decreased.  If the Company shall at any time or from time to time after the Date of Grant combine the outstanding Common Shares, the Exercise Price in effect immediately before the combination shall be proportionately increased.  Any adjustment under this Section 6(f) shall become effective immediately following the close of business on the date the subdivision or combination becomes effective.

 

(g)                                  Adjustment for Certain Dividends and Distributions.  In the event the Company at any time or from time to time after the Date of Grant shall make or issue a dividend or other distribution payable in Additional Common Shares, then and in each such event the Exercise Price shall be decreased as of the time of such issuance, by multiplying such Exercise Price by a fraction (A) the numerator of which shall be the total number of Common Shares outstanding, on a fully diluted basis, immediately prior to such issuance and (B) the denominator of which shall be the total number of Common Shares outstanding immediately prior to such issuance plus the number of such Additional Common Shares issuable in payment of such dividend or distribution.

 

(h)                                 Adjustments for Other Dividends and Distributions.  In the event the Company at any time, or from time to time after the Date of Grant shall make or issue, a dividend or other distribution payable in securities of the Company other than Common Shares or other assets or properties, then and in each such event provision shall be made so that the holder of this Warrant shall receive upon exercise hereof in addition to the number of Warrant Shares receivable thereupon, the amount of securities of the Company or other assets or properties that such holder would have received had this Warrant been exercised on the date of such event and had thereafter, during the period from the date of such event to and including the Exercise Date, retained such securities receivable by such holder as aforesaid during such period giving application to all adjustments called for during such period, under this paragraph with respect to the rights of the holder of this Warrant.

 

(i)                                     Adjustment for Reclassification, Exchange or Substitution.  If the Warrant Shares issuable upon the exercise of this Warrant shall be changed into the same or a different number of shares of any class or classes of shares, whether by capital reorganization, 

 

 

reclassification, or otherwise (other than a subdivision or combination of shares, share dividend or reorganization, reclassification, merger, consolidation, scheme of arrangement or asset sale provided for elsewhere in this Section 6), then and in each such event the holder of this Warrant shall have the right thereafter to exercise this Warrant for the kind and amount of shares or other securities and property receivable upon such reorganization, reclassification, or other change as if such holder had exercised this Warrant immediately prior to such reorganization, reclassification, or change, all subject to further adjustment as provided herein or with respect to such other securities or property by the terms thereof.

 

(j)                                    Reorganizations, Mergers, Consolidations, Scheme of Arrangement or Asset Sales.  If at any time after the Date of Grant there is a merger, consolidation, scheme of arrangement, recapitalization, sale of all or substantially all of the Company’s assets or reorganization involving the Preferred Shares or Common Shares (collectively, a “Capital Reorganization”) (other than a merger, consolidation, scheme of arrangement, sale of assets, recapitalization, subdivision, combination, reclassification, exchange or substitution of shares provided for elsewhere in this Section 6), as part of such Capital Reorganization, provision shall be made so that the holder of this Warrant will thereafter be entitled to receive upon the exercise of this Warrant the number of shares or other securities or property of the Company to which a holder of the number of Warrant Shares deliverable upon exercise of this Warrant would have been entitled as a result of such Capital Reorganization, subject to adjustment in respect to such shares or securities by the terms thereof.  In any such case, appropriate adjustment will be made in the application of the provisions of this Section 6 with respect to the rights the holder of this Warrant after the Capital Reorganization to the end that the provisions of this Section 6 (including adjustment of the then-effective Exercise Price and the number of Warrant Shares issuable upon exercise of this Warrant) will be applicable after that event and be as nearly equivalent as practicable.  In the event that the Company is not the surviving entity of any such Capital Reorganization, this Warrant shall become a warrant of such surviving entity, with the same powers, rights and preferences as provided herein.

 

(k)                                 No Impairment.  The Company shall not, by amendment of its Articles or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by the Company under this Warrant, but will at all times in good faith assist in the carrying out of all of the provisions of this Section 6 and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the holders of this Warrants against impairment to the extent required hereunder.

 

(l)                                     Certificate as to Adjustments.  Upon the occurrence of each adjustment or readjustment of the Exercise Price pursuant to this Section 6, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to the holder of this Warrant a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based and shall file a copy of such certificate with its corporate records.  The Company shall, upon the reasonable written request of the holder of this Warrant, furnish or cause to be furnished to such holder a similar certificate setting forth (i) such adjustments and

 

 

readjustments, (ii) the then-effective Exercise Price and (iii) the number of Warrant Shares and the amount, if any, of other property which would then be received upon the exercise of this Warrant.  Despite such adjustment or readjustment, the form of this Warrant need not be changed to reflect any adjustments or readjustments to the Exercise Price in order for the adjustments or readjustments to be valid in accordance with the provisions of this Warrant, which shall control.

 

(m)                             Notice of Record Date.  In the event:

 

(A)                               that the Company declares a dividend (or any other distribution) on its Preferred Shares or Common Shares payable in Common Shares or other securities of the Company;

 

(B)                               that the Company subdivides or combines any of its outstanding Preferred Shares or Common Shares;

 

(C)                               of any reclassification of the Preferred Shares or Common Shares;

 

(D)                               of any Capital Reorganization; or

 

(E)                                of a dissolution, liquidation or winding up of the Company (whether voluntary or involuntary);

 

then the Company shall cause to be sent to the holder of this Warrant at such holder’s last addresses as shown on the records of the Company at least thirty (30) days prior to the record date specified in (1) or (2) below, a notice stating:

 

(1)                                 the record date of such dividend, distribution, subdivision or combination, or, if a record is not to be taken, the date as of which the holders of Preferred Shares or Common Shares of record to be entitled to such dividend, distribution, subdivision or combination are to be determined; or

 

(2)                                 the date on which such reclassification, Capital Reorganization, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Preferred Shares or Common Shares of record shall be entitled to exchange their Preferred Shares or Common Shares for securities or other property deliverable upon such reclassification, Capital Reorganization, dissolution or winding up.

 

(n)                                 Payment of Taxes.  The Company shall pay all taxes (other than taxes based on income) and other governmental charges that may be imposed with respect to the issue or delivery of the Warrant Shares upon the exercise of this Warrant, excluding any tax or other charge imposed in connection with any transfer involved in the issue and delivery of the Warrant Shares in a name other than that in which this Warrant was registered.

 

(o)                                 Reservation of Shares.  The Company shall at all times reserve and keep available out of its authorized but unissued Series E Preferred Shares, for the purpose of 

 

 

effecting the exercise of this Warrant, the full number of Warrant Shares issuable upon the exercise of this Warrant.

 

Section 7.                   Notice Certain Events.  In the event (i) the Company shall set a record date for the holders of any class of securities for the purpose of determining the holders thereof being entitled to receive any dividend or other distribution, or to receive any right to acquire any securities issued by the Company (a “Distribution”), (ii) of capital reorganization or reclassification of the stated capital of the Company (a “Capital Reorganization”), (iii) of Change of Control or the execution by the Company or any Subsidiary of any agreement committing the Company or such Subsidiary to engage in a Change of Control, or (iv) of liquidation, dissolution or winding up (whether voluntary or involuntary) of the Company (a “Liquidation Event”), the Company will mail or cause to be mailed to the Current Holder, at least thirty (30) days prior to the date therein specified, a notice specifying:

 

(a)                                 the date of any such Distribution and stating the amount and character of such Distribution;

 

(b)                                 the date on which any such Capital Reorganization, Change of Control or Liquidation is expected to become effective and stating the material terms and conditions of such Capital Reorganization, Change of Control or Liquidation; and

 

(c)                                  the date, if any, that the holders of record of the Company’s securities shall be entitled to exchange such securities for securities or other property deliverable as a result of any Distribution, Capital Reorganization, Change of Control or Liquidation.

 

Section 8.                   Compliance with the Securities Act; Transferability and Negotiability of Warrant; Disposition of Shares.

 

(a)                                 Compliance with the Securities Act.  The Current Holder, by acceptance hereof, agrees that (i) this Warrant and the Warrant Shares to be issued upon the exercise hereof are being acquired solely for its own account (or a trust account if the Current Holder is a trust) and not as a nominee for any other party and not with a view toward the resale or distribution hereof or thereof, and (ii) it will not offer, sell or otherwise dispose of this Warrant or any Warrant Shares to be issued upon the exercise hereof under any circumstances that would result in a violation of the Securities Act.  Upon the exercise of this Warrant, the Current Holder shall confirm in writing, in a form satisfactory to the Company, that the Warrant Shares so issued are being acquired solely for its own account (or a trust account if the Current Holder is a trust) and not as a nominee for any other party and not with a view toward resale or distribution thereof.  Any Warrant Shares issued upon the exercise hereof (unless registered under the Securities Act) shall, in addition to any other legends required by applicable state securities laws, be imprinted with a legend substantially similar to the following:

 

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND HAVE NOT BEEN 

 

 

REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE IN THE UNITED STATES.  THE SHARES MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.  COPIES OF THE AGREEMENTS COVERING THE PURCHASE OF THE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED FREE OF CHARGE BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY.

 

(b)                                 Transfer of Warrant.  The purchase right represented by this Warrant may be transferred, in whole or in part, by the Initial Holder in its sole discretion, either to its Affiliate or to one or more strategic investors selected by the Initial Holder.  The Company shall act promptly to record transfers of this Warrant on its books.

 

(c)                                  Disposition of Shares.  With respect to any offer, sale, transfer or other disposition of any Warrant Shares acquired pursuant to the exercise of this Warrant, prior to the registration of such Warrant Shares and except with respect to any offer, sale, transfer or other disposition of any Warrant Shares by the Current Holder to an Affiliate, the Current Holder agrees to give (i) written notice to the Company prior to such offer, sale, transfer or other disposition, describing briefly the manner thereof, and, (ii) if such transfer is not effected pursuant to Rule 144 promulgated under the Securities Act (“Rule 144”), upon the request by the Company, a written opinion of legal counsel for the Current Holder to the effect that such offer, sale or other disposition may be effected without registration or qualification (under the Securities Act or any other federal or state securities laws) of such Warrant Shares and indicating whether or not under the Securities Act certificates for such Warrant Shares to be sold or otherwise disposed of require any restrictive legend as to the applicable restrictions on transferability in order to ensure compliance with the Securities Act, which shall be reasonably satisfactory to the Company and its legal counsel.  Promptly upon receiving such written notice and reasonably satisfactory opinion, if so requested, the Company, as promptly as practicable, shall notify the Current Holder that the Current Holder may sell or otherwise dispose of such Warrant Shares, all in accordance with the terms of the notice delivered to the Company.  If a determination has been made pursuant to this Section 8(c) that the opinion of legal counsel for the Current Holder is not reasonably satisfactory to the Company and its legal counsel, the Company shall so notify the Current Holder promptly after such determination has been made.  Notwithstanding the foregoing, such Warrant Shares may be offered, sold or otherwise disposed of in accordance with Rule 144; provided that the Company shall have been furnished with such information as the Company may reasonably request to provide a reasonable assurance that the provisions of Rule 144 have been satisfied.  Each certificate representing the Warrant Shares thus transferred (except in the case of transfers pursuant to subsection (k) of Rule 144) shall bear a restrictive legend as to the applicable restrictions on transferability in order to insure compliance with the Securities Act, unless the aforesaid opinion of legal counsel for the Current Holder states that such legend is not required in order 

 

 

to comply with the Securities Act.  The Company may issue stop transfer instructions to its transfer agent in connection with the restrictions set forth in this Section 8(c).

 

Section 9.                   Rights of Shareholders.  No Current Holder shall be entitled to vote or receive dividends on, or for any purpose be deemed the holder of, the Warrant Shares issuable upon the exercise of this Warrant solely by reason of such Current Holder’s ownership of this Warrant, nor shall anything contained herein be construed to confer upon the Current Holder, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any annual or special meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of shares, reclassification of shares, consolidation, merger, scheme of arrangement, transfer of assets or otherwise) or, except as expressly required herein, to receive notice of meetings, or to receive dividends or subscription rights until this Warrant shall have been exercised and the Warrant Shares issuable upon exercise hereof shall have become deliverable and the name of the Current Holder shall have been entered in the register of members of the Company as the registered holder of the Warrant Shares, as provided herein.

 

Section 10.            Replacement of Warrants. On receipt of documentation delivered to the Company by the Current Holder certifying as to the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver to the Current Holder, in lieu of this Warrant, a new warrant of like tenor.

 

Section 11.            Exchange of Warrant.  Subject to the other provisions of this Warrant, on surrender of this Warrant for exchange, properly endorsed and subject to the provisions of this Warrant with respect to compliance with the Securities Act, the Company at its expense shall issue to or on the order of the Current Holder a new warrant or warrants of like tenor, in the name of the Current Holder or as the Current Holder may direct, for the number of Warrant Shares issuable upon exercise thereof.

 

Section 12.            Notices.  Any notice, demand, offer, request or other communication required or permitted to be given by the Company to the Current Holder, or vice versa, shall be in writing and shall be deemed to be given upon the earliest to occur of:

 

(a)                                 the date actually received;

 

(b)                                 one (1) business day after being delivered by facsimile (with receipt of appropriate confirmation);

 

(c)                                  three (3) business day after being deposited with a nationally recognized overnight courier service; or

 

(d)                                 five (5) business days after being properly addressed and deposited in the mail (first class with postage prepaid and return receipt requested).

 

 

Section 13.            Amendment or Waiver.  This Warrant and any term hereof may be amended, waived, or terminated upon written consent of the Company and the Current Holder.

 

Section 14.            Governing Law.

 

(a)                                 This Warrant shall be governed by, and construed and enforced in accordance with, the laws of New York.

 

(b)                                 The arbitration shall be conducted in Hong Kong under the auspices of the Hong Kong International Arbitration Centre (the “HKIAC”).  There shall be three arbitrators.  Each opposing party to a dispute shall be entitled to appoint one arbitrator, and the third arbitrator shall be jointly appointed by the disputing parties or, failing such agreement by 30 days after the appointment by each party of its arbitrator, the HKIAC shall appoint the third arbitrator.

 

(c)                                  The arbitration proceedings shall be conducted in English.  The arbitration tribunal shall apply the UNCITRAL Arbitration Rules as administered by the HKIAC at the time of the arbitration.

 

(d)                                 Each party hereto shall cooperate with the other in making full disclosure of and providing complete access to all information and documents requested by the others in connection with such arbitration proceedings, subject only to any confidentiality obligations binding on such party.

 

(e)                                  The award of the arbitration tribunal shall be final and binding upon the disputing parties, and the prevailing party or parties may apply to a court of competent jurisdiction for enforcement of such award.

 

(f)                                   The parties to the arbitration shall each pay an equal share of the costs and expenses of such arbitration, and each party shall separately pay for its respective counsel fees and expenses, provided, however, that the prevailing party in any such arbitration shall be entitled to recover from the non-prevailing party its reasonable costs and attorney fees.

 

Section 15.            Headings and Subheadings.  The headings and subheadings of the sections, paragraphs, subparagraphs, clauses and subclauses of this Warrant are for convenience of reference only and shall not define, limit or otherwise affect any of the provisions hereof.

 

 

	
Dated:                     ,   2014
    	
 
    	
XUNLEI LIMITED
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
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WITNESS:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Address:
    

 

 

EXHIBIT A

 

NOTICE OF EXERCISE

 

TO:                           XUNLEI LIMITED

 

1.                                      The undersigned, [                                    ], being the Current Holder of the attached original, executed Series E Preferred Shares Purchase Warrant hereby irrevocably elects to exercise its purchase right under such Warrant with respect to                  Series E Preferred Shares, as defined in the Warrant, of Xunlei Limited.

 

2.                                      Please issue a share certificate or certificates representing the appropriate number of Series E Preferred Shares in the name of the undersigned and/or in such other names as is specified below and make entries in the register of members of Xunlei Limited to record and give effect to such issue of Series E Preferred Shares accordingly.

 

	
Name
    	
 
    	
Address
    	
 
    	
No. of Series E Preferred
   Shares
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

EXECUTED ON BEHALF OF THE CURRENT HOLDER BY:

 

 

	
By:
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    

 

 

AND DATED:                           , 20

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