Document:

Exhibit 4.24

 

EXECUTION VERSION

 

October 26, 2017

 

Deutsche Bank Securities Inc.
 60 Wall Street
 New York, New York 10005

United States

 

as Representative of the several Initial Purchasers
 named in Schedule 1 hereto

 

Ladies and Gentlemen:

 

China Lodging Group, Limited, an exempted company incorporated in the Cayman Islands (the “Company”), proposes to issue and sell to the several purchasers named in Schedule I hereto (the “Initial Purchasers”) $425,000,000 aggregate principal amount of the Company’s 0.375% Convertible Senior Notes due 2022 (the “Firm Notes”) and also proposes to grant to the Initial Purchasers an option to purchase up to $50,000,000 aggregate principal amount of 0.375% Convertible Senior Notes due 2022 (the “Additional Notes”), if requested by the Initial Purchasers as provided in Section 2 hereof.  The Firm Notes and the Additional Notes are herein collectively referred to as the “Notes”. Deutsche Bank Securities Inc. has agreed to act as the representative of the several Initial Purchasers (the “Representative”) in connection with the offering and sale of the Notes.

 

The Notes will be issued pursuant to an indenture, to be dated as of November 3, 2017 (the “Indenture”), between the Company and Wilmington Trust, National Association, as trustee (the “Trustee”).  The American Depositary Shares (“ADSs”) to be issued upon conversion of the Notes are to be issued pursuant to the deposit agreement (together with the note conversion letter agreement to be dated November 3, 2017 between the Company and the Depositary, the “Deposit Agreement”), dated as of March 25, 2010, among the Company, Citibank, N.A., as depositary (the “Depositary”), and all holders from time to time of the American Depositary Receipts (the “ADRs”) issued by the Depositary and evidencing the ADSs. Each ADS will initially represent the right to receive four ordinary shares, par value US$0.0001 per share, of the Company (the “Ordinary Shares”) deposited pursuant to the Deposit Agreement.

 

Concurrently with the issuance of the Notes, the Company is lending to Deutsche Bank AG, London Branch (the “ADS Borrower”), up to 2,606,278 ADSs, pursuant to an ADS lending agreement dated the date hereof between the Company and the ADS Borrower (the “ADS Lending Agreement”). The ADS Borrower is an affiliate of Deutsche Bank Securities Inc. The ADSs are being offered pursuant to a prospectus supplement dated October 26, 2017, to a registration statement (the “ADS Registration Statement”) filed with the Securities and Exchange Commission (the “Commission”) on October 26, 2017, in accordance with an underwriting agreement, dated the date hereof, among the ADS Borrower, Deutsche Bank Securities Inc. and the Company (the “ADS Underwriting Agreement”).

 

 

In connection with the offering of the Notes, the Company is separately entering into capped call transactions with one or more of the Initial Purchasers (or affiliates thereof) (the “Capped Call Counterparties”), in each case pursuant to capped call confirmations (the “Base Capped Call Confirmations”) to be dated the date hereof, and in connection with any issuance of Additional Notes, the Company and the Capped Call Counterparties may enter into additional capped call transactions pursuant to additional capped call confirmations (the “Additional Capped Call Confirmations” and together with the Base Capped Call Confirmations, the “Capped Call Confirmations”).

 

The Company understands that the Initial Purchasers propose to make an offering of the Notes on the terms and in the manner set forth herein and in the Time of Sale Memorandum (as defined herein) and agrees that the Initial Purchasers may resell, subject to the conditions set forth herein, all or a portion of the Notes to purchasers (the “Subsequent Purchasers”) on the terms set forth in the Time of Sale Memorandum (the first time when sales of the Notes are made is referred to as the “Time of Sale”).  The Notes will be offered without being registered under the Securities Act of 1933, as amended (the “Securities Act”), to qualified institutional buyers in compliance with the exemption from registration provided by Rule 144A under the Securities Act (“Rule 144A”) and in offshore transactions in reliance on Regulation S under the Securities Act (“Regulation S”).

 

Pursuant to the Notes and the Indenture, investors who acquire Notes shall be deemed to have agreed that Notes may only be resold or otherwise transferred, after the date hereof, if such Notes are registered for sale under the Securities Act or if an exemption from the registration requirements of the Securities Act is available (including the exemptions afforded by Rule 144A or Regulation S).  The Company hereby confirms that it has authorized the use of the Time of Sale Memorandum, the Final Memorandum (as defined herein) and the Recorded Road Show (as defined herein) in connection with the offer and sale of the Notes by the Initial Purchasers.

 

In connection with the sale of the Notes, the Company has prepared and delivered to each Initial Purchaser copies of a preliminary offering memorandum, dated October 26, 2017 (the “Preliminary Memorandum”), and prepared and delivered to each Initial Purchaser copies of a pricing supplement, dated October 26, 2017 (the “Pricing Supplement”), describing the terms of the Notes, each for use by such Initial Purchaser in connection with its solicitation of offers to purchase the Notes.  For purposes of this Agreement, “Additional Written Offering Communication” means any written communication (as defined in Rule 405 under the Securities Act) that constitutes an offer to sell or a solicitation of an offer to buy the Notes other than the Preliminary Memorandum, the Pricing Supplement or the Final Memorandum; “Time of Sale Memorandum” means the Preliminary Memorandum together with the Pricing Supplement and each Additional Written Offering Communication or other information, if any, each identified in Schedule II hereto under the caption Time of Sale Memorandum; and “General Solicitation” means any offer to sell or solicitation of an offer to buy the Notes by any form of general solicitation or advertising (as those terms are used in Regulation D under the Securities Act (“Regulation D”)).

 

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Promptly after this Agreement is executed and delivered, the Company will prepare and deliver to each Initial Purchaser a final offering memorandum, dated the date hereof (the “Final Memorandum”). As used herein, the terms “Preliminary Memorandum,” “Time of Sale Memorandum” and “Final Memorandum” shall include the documents, if any, incorporated by reference therein on the date hereof.  The terms “supplement”, “amendment” and “amend” as used herein with respect to the Preliminary Memorandum, the Time of Sale Memorandum, the Final Memorandum or any Additional Written Offering Communication shall include all documents incorporated by reference therein.

 

1.          Representations and Warranties.  The Company hereby represents and warrants to, and agrees with each Initial Purchaser that, as of the Time of Sale and as of the Closing Date (as defined herein):

 

(a)   (i) Each document, if any, filed or to be filed pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and incorporated by reference in the Preliminary Memorandum, the Time of Sale Memorandum or the Final Memorandum, including, but not limited to, the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2016 filed with the Commission pursuant to the Exchange Act on April 21, 2017 (the “Annual Report”), complied or will comply when so filed in all material respects with the Exchange Act and the rules and regulations of the Commission thereunder, (ii) the Time of Sale Memorandum as of the Time of Sale does not, and as of the Closing Date will not, contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, (iii) any Additional Written Offering Communication prepared, used or referred to by the Company, when considered together with the Time of Sale Memorandum, at the time of its use did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, (iv) any General Solicitation that is not an Additional Written Offering Communication, made by the Company or by the Initial Purchasers with the consent of the Company, when considered together with the Time of Sale Memorandum, at the time when made or used did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading and (v) the Final Memorandum as of its date and as of the Closing Date will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph do not apply to any statements in or omissions from the Time of Sale Memorandum, the Final Memorandum, Additional Written Offering Communication or General Solicitation based upon information relating to any Initial Purchaser furnished in writing to the Company by such Initial Purchaser through the Representative expressly for use therein;

 

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(b)   Except for the Additional Written Offering Communications, if any, identified in Schedule II hereto, including electronic road shows and furnished to you before first use, the Company has not prepared, used or referred to, and will not, without your prior consent, prepare, use or refer to, any Additional Written Offering Communication;

 

(c)   The interactive data in the eXtensible Business Reporting Language (“XBRL”) incorporated by reference in the Preliminary Memorandum, the Time of Sale Memorandum or the Final Memorandum fairly presents the information called for in all material respects and has been prepared in accordance with the Commission’s rules and guidelines applicable thereto;

 

(d)   The Company does not own or control, directly or indirectly, any corporation, association or entity other than China Lodging Holdings (HK) Limited (“CLHK”), China Lodging Investment Limited (“CL Cayman”), China Lodging Holdings Singapore Pte. Ltd. (“CL Singapore”), City Home Group Limited (“City Home”), Sheen Step Group Limited (“Sheen Step”), CLG Special Investments Limited (“CLG”), HanTing Xingkong (Shanghai) Hotel Management Co., Ltd. (“HanTing Xingkong”), Shanghai HanTing Hotel Management Group, Ltd. (“Shanghai HanTing”), Yiju (Shanghai) Hotel Management Co., Ltd. (“Yiju”), HanTing (Tianjin) Investment Consulting Co., Ltd. (“HanTing Tianjin”), HanTing Technology (Suzhou) Co., Ltd. (“HanTing Technology”), HanTing (Shanghai) Enterprise Management Co., Ltd. (“HanTing Shanghai”), Starway Hotels (Hong Kong) Limited (“Starway Hong Kong”), Starway Hotel Management (Shanghai) Co., Ltd. (“Starway Shanghai”), HuaZhu Hotel Management Co., Ltd. (“HuaZhu”), Mengguang Information Technology (Shanghai) Co., Ltd. (“Mengguang Shanghai”), ACL Greater China Limited (“ACL”), Ibis China Investment Limited (“Ibis”), TAHM Investment Limited (“TAHM”), Yagao Meihua Hotel Management Co., Ltd. (“Yagao”), Crystal Orange Hotel Holdings Limited (“Crystal Orange”), Orange Hotel Hong Kong Limited (“Orange Hotel HK”), Orange Hotel Management (China) Co., Ltd. (“Orange Hotel Management”), Beijing Orange Crystal Hotel Management Consulting Co. Ltd. (“Beijing Orange Crystal Hotel Management”), Beijing Orange Times Software Tech. Co., Ltd. (“Beijing Orange Times Software”), Hangzhou Yilai Chain Hotels Co., Ltd (“Hangzhou Yilai”), Huazhu Investment (SH) Co. Ltd. (“Huazhu Investment”) and their respective subsidiaries. Each such subsidiary is referred to as a “subsidiary” and they are referred to collectively as the “subsidiaries”;

 

(e)   Neither the Company nor any of its subsidiaries has sustained since the date of the latest audited financial statements included in the Time of Sale Memorandum and the Final Memorandum any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Time of Sale Memorandum and the Final Memorandum; and, since the respective dates as of which information is given in the Preliminary Memorandum and Time of Sale

 

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Memorandum, there has not been any material change in the capital stock, short-term debt or long-term debt of the Company or any of its subsidiaries or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, shareholders’ equity or results of operations of the Company and its subsidiaries taken as a whole (a “Material Adverse Effect”), otherwise than as set forth or contemplated in the Time of Sale Memorandum and the Final Memorandum;

 

(f)    Each of the Company and its subsidiaries has good and marketable title to all real property (if any) and all personal property owned by them, in each case free and clear of all liens, encumbrances and defects except such as are described in the Time of Sale Memorandum and the Final Memorandum or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and its subsidiaries; and any real property and buildings held under lease by each of the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its subsidiaries;

 

(g)   The Company and its subsidiaries, and to the Company’s knowledge after due inquiry, the owners of the properties leased and operated or managed by the Company, are insured by insurers with appropriately rated claims paying abilities against such losses and risks and in such amounts as are prudent and customary for the businesses in which they are engaged; all material policies of insurance insuring the Company or any of its subsidiaries, and to the Company’s knowledge after due inquiry, the owners of the properties leased and operated or managed by the Company or their respective assets, are in full force and effect; the Company and its subsidiaries, and to the Company’s knowledge after due inquiry, the owners of the properties leased and operated or managed by the Company, are in compliance with the terms of such policies and instruments in all material respects; and there are no claims by the Company or any of its subsidiaries, or to the Company’s knowledge after due inquiry, the owners of the properties leased and operated or managed by the Company, under any such policy or instrument as to which any insurance company is denying liability or defending under a reservation of rights clause; neither the Company nor any such subsidiary has been refused any insurance coverage sought or applied for; neither the Company nor any such subsidiary has any reason to believe that it, or to the Company’s knowledge after due inquiry, the owners of the properties leased and operated or managed by the Company, will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business; and the Company has obtained or will obtain directors’ and officers’ insurance in such amounts as is customary;

 

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(h)   The Company has been duly incorporated and is validly existing as an exempted company in good standing under the laws of the Cayman Islands, with power and authority (corporate and other) to own, lease and operate its properties and conduct its business as described in the Time of Sale Memorandum and the Final Memorandum, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except where the failure to be so qualified in any such jurisdiction would not, individually or in the aggregate, have a Material Adverse Effect; and each subsidiary of the Company has been duly incorporated or organized and is validly existing as a corporation or organization in good standing under the laws of its jurisdiction of incorporation or organization, with power and authority (corporate and other) to own, lease and operate its properties and conduct its business as described in the Time of Sale Memorandum and Final Memorandum, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except where the failure to be so qualified in any such jurisdiction would not, individually or in the aggregate, have a Material Adverse Effect; and each of the business licenses and articles of association of each of the subsidiaries formed under the laws and regulations of the People’s Republic of China (the “PRC”) is in full force and effect under, and in compliance with PRC law;

 

(i)    Neither the Company nor any of its subsidiaries has sent or received any written communication regarding termination of, or intent not to renew, any of the material contracts or agreements specifically referred to or described in the Time of Sale Memorandum and the Final Memorandum, or specifically referred to or described in, or filed as an exhibit to, the Annual Report, and no such termination or non-renewal has been threatened by the Company, any of its subsidiaries or, to the Company’s knowledge after due inquiry, any other party to any such contract or agreement;

 

(j)    Except as disclosed in the Time of Sale Memorandum and Final Memorandum, each of the Company and its subsidiaries has all the necessary licenses, franchises, concessions, consents, authorizations, approvals, orders, certificates and permits of and from, and has made all declarations and filings with, all governmental agencies to own, lease, license and use its properties, assets and conduct its business in the manner described in the Time of Sale Memorandum and the Final Memorandum, except where the failure to have any such license, franchise, concession, consent, authorization, approval, order, certificate or permit would not have a Material Adverse Effect and such licenses, franchises, concessions, consents, authorizations, approvals, orders, certificates or permits contain no material restrictions or conditions not described in the Time of Sale Memorandum and the Final Memorandum; neither the Company nor any of its subsidiaries is aware that any regulatory body is considering modifying, suspending or revoking any such licenses, consents, authorizations, approvals,

 

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orders, certificates or permits, and the Company and its subsidiaries are in compliance with the provisions of all such licenses, consents, authorizations, approvals, orders, certificates or permits in all material respects;

 

(k)   Except as disclosed in the Time of Sale Memorandum and Final Memorandum, neither the Company nor any of its subsidiaries is (A) in breach of or in default under any laws, regulations, rules, orders, decrees, guidelines or notices of the PRC, the Cayman Islands, Hong Kong S.A.R., British Virgin Islands, Singapore or any other jurisdiction where it was incorporated or operates, (B) in breach of or in default under any approval, consent, waiver, authorization, exemption, permission, endorsement or license granted by any court or governmental agency or body of any stock exchange authorities (“Governmental Agency”) in the PRC, Cayman Islands, Hong Kong S.A.R., British Virgin Islands, Singapore or any other jurisdiction where it was incorporated or operates, (C) in violation of its constitutive or organizational documents or (D) in default in the performance or observance of any obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound, except in the case of (A), (B) and (D) above, where any such breach or default would not, individually or in aggregate, have a Material Adverse Effect;

 

(l)    The Company has the authorized share capital as set forth in the Time of Sale Memorandum and the Final Memorandum and all of the issued shares of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and conform in all material respects to the description thereof contained in the Time of Sale Memorandum and the Final Memorandum; and all of the issued shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, except that the registered capital of each PRC subsidiary of the Company has been or will be validly issued and fully paid with all contributions to such registered capital within the time periods permitted under applicable PRC laws and their constitutive documents; there are no outstanding securities convertible into or exchangeable for, or warrants, rights or options to purchase from the Company, or obligations of the Company to issue, Ordinary Shares, ADSs or any other class of shares or other equity interests of the Company or the subsidiaries except as disclosed in the Time of Sale Memorandum and Final Memorandum; when the Notes are delivered and paid for pursuant to this Agreement on each Closing Date, such Notes will be convertible into Ordinary Shares in accordance with the Indenture; the Ordinary Shares, when issued upon conversion of the Notes, may be freely deposited by the Company with the Depositary against issuance of ADRs evidencing ADSs; the Notes, when issued and delivered against payment therefor, will be freely transferable by the Company to or for the account of the several Initial Purchasers and the initial purchasers thereof; and there are no restrictions on subsequent transfers of the Notes, Ordinary Shares or ADSs under the laws of the PRC, Cayman Islands,

 

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Hong Kong S.A.R., British Virgin Islands, Singapore or United States except as described in the Time of Sale Memorandum and the Final Memorandum;

 

(m)  Except as described in the Time of Sale Memorandum and the Final Memorandum, (A) no person has any preemptive rights, resale rights, rights of first refusal or other rights to purchase (and apart from the Notes there are no other classes or series of shares, options, warrants, rights or other securities convertible, exchangeable or exercisable for) any newly issued Ordinary Shares or ADSs or any other newly issued shares of capital stock of or other equity interests in the Company, CLHK, CL Cayman, CL Singapore, City Home, Sheen Step, CLG, HanTing Xingkong, Shanghai HanTing, Yiju, HanTing Tianjin, HanTing Technology, HanTing Shanghai, Starway Hong Kong, Starway Shanghai, HuaZhu, Mengguang Shanghai, ACL, Ibis, TAHM, Yagao, Crystal Orange, Orange Hotel HK, Orange Hotel Management, Beijing Orange Crystal Hotel Management, Beijing Orange Times Software, Hangzhou Yilai, Huazhu Investment or, to the Company’s knowledge after due inquiry any of its other subsidiaries and (B) no person has the right to act as an underwriter or as a financial advisor to the Company in connection with the offer and sale of the Notes;

 

(n)   Except as described in the Time of Sale Memorandum and the Final Memorandum, apart from the Notes, there are no other classes or series of shares, options, warrants, rights or other securities with special voting rights, veto rights, minority shareholder rights, equity interest holder rights or preemptive rights;

 

(o)   The issuance and allotment of the Ordinary Shares and ADSs to be issued upon conversion of the Notes to be sold by the Company to the Initial Purchasers hereunder have been duly and validly authorized and such Ordinary Shares have been reserved for issuance upon such conversion, and, when issued and delivered upon conversion of the Notes as provided herein, will be validly issued and fully paid and (in the case of Ordinary Shares) non-assessable and will conform in all material respects to the descriptions of the Ordinary Shares and ADSs in the Time of Sale Memorandum and the Final Memorandum and will not be subject to any call for the payment of further capital and will rank pari passu with other Ordinary Shares of the Company including, without limitation, as to entitlement to dividends, subject to and in accordance with the terms of the Indenture and will be free and clear of any security interest, mortgage, pledge, lien, charge, claim or encumbrance of any kind;

 

(p)   The Notes to be sold by the Company to the Initial Purchasers hereunder have been duly and validly authorized and, when executed and authenticated in accordance with the Indenture and issued and delivered against payment therefor as provided herein, will be legal, valid and binding obligations of the Company, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and

 

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equitable principles of general applicability (collectively, the “Enforceability Exceptions”), and will be entitled to the benefits of the Indenture;

 

(q)   The ADS Lending Agreement has been duly authorized, executed and delivered by the Company and, assuming due execution and delivery thereof by the other parties thereto, will constitute a valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions;

 

(r)    The Capped Call Confirmations have been duly authorized, executed and delivered by the Company and, assuming due execution and delivery thereof by the other parties thereto, are valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to the Enforceability Exceptions;

 

(s)    The Indenture has been duly authorized and, on the First Closing Date (as defined herein), will have been duly executed and delivered by the Company, and will constitute a legal, valid and binding agreement of, the Company, enforceable in accordance with its terms, subject to the Enforceability Exceptions;

 

(t)    The Notes to be purchased by the Initial Purchasers from the Company will on the Closing Date be in the form contemplated by the Indenture.  The Notes, the Indenture, the ADS Lending Agreement and the Capped Call Confirmations will conform in all material respects to the descriptions thereof in the Time of Sale Memorandum and the Final Memorandum;

 

(u)   Except as described in the Time of Sale Memorandum and the Final Memorandum, there are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Act with respect to any securities of the Company owned or to be owned by such person or to require the Company to include such securities in the securities registered pursuant to the ADS Registration Statement or in any other registration statement filed by the Company under the Act;

 

(v)   This Agreement has been duly authorized, executed and delivered by the Company;

 

(w)  The Deposit Agreement has been duly authorized, executed and delivered by the Company and, assuming due authorization, execution and delivery by the Depositary, constitutes a valid and legally binding agreement of the Company, enforceable in accordance with its terms, subject to the Enforceability Exceptions, and upon issuance by the Depositary of ADRs evidencing ADSs and the deposit of Ordinary Shares in respect thereof in accordance with the provisions of the Deposit Agreement, such ADRs will be duly and validly issued and the persons in whose names the ADRs are registered

 

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will be entitled to the rights specified therein and in the Deposit Agreement; and the Deposit Agreement and the ADRs conform in all material respects to the descriptions thereof contained in the Final Memorandum;

 

(x)   All dividends and other distributions declared and payable on the Ordinary Shares may under the current laws and regulations of the Cayman Islands be paid to the registered holder of such Ordinary Shares (including the Depositary as the registered holder thereof), and all such dividends and other distributions will not be subject to withholding or other taxes under the laws and regulations of the Cayman Islands and are otherwise free and clear of any other tax, withholding or deduction in the Cayman Islands and without the necessity of obtaining any consents, approvals, authorizations, orders, registrations, clearances or qualifications of or with any court or Governmental Agency having jurisdiction over the Company or any of its subsidiaries or any of their respective properties (hereinafter referred to as “Governmental Authorizations”) in the Cayman Islands;

 

(y)   All dividends and other distributions declared and payable on the share capital of CLHK, Starway Hong Kong, ACL, Ibis, TAHM or Orange Hotel HK, or any other subsidiary incorporated in the Hong Kong S.A.R., may under the current laws and regulations of the Hong Kong S.A.R. be paid to the Company, and all such dividends and other distributions will not be subject to withholding or other taxes under the laws and regulations of the Hong Kong S.A.R. and are otherwise free and clear of any other tax, withholding or deduction in the Hong Kong S.A.R. and without the necessity of obtaining any Governmental Authorization in the Hong Kong S.A.R.;

 

(z)   Except as described in the Time of Sale Memorandum and the Final Memorandum, all dividends and other distributions declared and payable on the share capital of any of HanTing Xingkong, Shanghai HanTing, Yiju, HanTing Tianjin, HanTing Technology, Starway Shanghai, HangTing Shanghai, Yagao, HuaZhu, Mengguang Shanghai, Orange Hotel Management, Beijing Orange Crystal Hotel Management, Beijing Orange Times Software, Hangzhou Yilai, Huazhu Investment and their respective subsidiaries may under the current laws and regulations of the PRC be freely transferred out of the PRC and may be paid in U.S. dollars, and all such dividends and other distributions will not be subject to withholding or other taxes under the laws and regulations of the PRC and are otherwise free and clear of any other tax, withholding or deduction in the PRC, and without the necessity of obtaining any Governmental Authorization in the PRC;

 

(aa) The issue and sale of the Notes, the conversion of the Notes, the issuance of the Ordinary Shares upon conversion of the Notes, the deposit of Ordinary Shares with the Depositary against issuance of ADRs evidencing the ADSs and the compliance by the Company with this Agreement, the Indenture, the Notes, the Deposit Agreement, the ADS Lending Agreement and the Capped Call Confirmations and the consummation of the transactions herein and therein 

 

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contemplated will not (A) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, except where a waiver or consent from the counterparty has been obtained in accordance with the terms of such indenture, mortgage, deed of trust, loan agreement or other agreement or instrument, (B) result in any violation of the provisions of the constitutive or organizational documents of the Company or any subsidiary or (C) result in any violation of any applicable statute or laws or any order, rule or regulation of any Governmental Agency having jurisdiction over the Company or any of its subsidiaries or any of their properties or assets;

 

(bb) No consent, approval, authorization, order, registration or qualification of or with any court or Governmental Agency is required for the issue and sale of the Notes, the conversion of the Notes into Ordinary Shares or ADSs, the deposit of Ordinary Shares with the Depositary against issuance of ADRs evidencing the ADSs to be delivered or the consummation by the Company of the transactions contemplated by this Agreement, the Indenture, the Notes, the Deposit Agreement, the ADS Lending Agreement or the Capped Call Confirmations, except (A) the registration under the Act of the ADSs under the ADS Lending Agreement and the listing of the ADSs on the NASDAQ Global Select Market, (B) such Governmental Authorizations as have been duly obtained and are in full force and effect and copies of which have been furnished to the Representative and (C) such Governmental Authorizations as may be required under state securities or Blue Sky laws or any laws of jurisdictions outside the PRC, Cayman Islands, Hong Kong S.A.R. and United States in connection with the purchase and distribution of the Notes by or for the respective accounts of the several Initial Purchasers;

 

(cc) Except as disclosed in the Time of Sale Memorandum and Final Memorandum, no stamp or other issuance or transfer taxes or duties and no capital gains, income, withholding or other taxes are payable by or on behalf of the Initial Purchasers to the government of the PRC, Cayman Islands or any political subdivision or taxing authority thereof or therein in connection with: (A) the deposit with the Depositary of the Ordinary Shares by the Company against the issuance of ADRs evidencing the ADSs, (B) the issuance, sale and delivery by the Company of the Notes to or for the respective accounts of the several Initial Purchasers or (C) the sale and delivery by the Initial Purchasers of the Notes to the initial purchasers thereof in the manner contemplated by this Agreement;

 

(dd) None of the Company or any of its subsidiaries is engaged in any trading activities involving commodity contracts or other trading contracts which are not currently traded on a securities or commodities exchange and for which the market value cannot be determined;

 

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(ee) Neither the Company nor any of its subsidiaries has taken, directly or indirectly, any action which was designed to or which has constituted or which might reasonably be expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Notes;

 

(ff)  The statements set forth in the Time of Sale Memorandum and the Final Memorandum under the captions “Description of the Notes”, “Description of the Registered ADS Borrow Facility”, “Description of the Concurrent Capped Call Transactions”, “Description of Share Capital” and “Description of American Depositary Shares”, insofar as they purport to constitute a summary of the terms of the Notes, ADS Lending Agreement, Capped Call Confirmations, Ordinary Shares and ADSs, respectively, and under the captions “Taxation” and “Plan of Distribution”, insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate, complete and fair in all material respects;

 

(gg) Other than as set forth in the Time of Sale Memorandum and the Final Memorandum, there are no legal, arbitration or governmental proceedings (including, without limitation, governmental investigations or inquiries) pending to which the Company or any of its subsidiaries or the Company’s directors and executive officers is a party or of which any property of the Company or any of its subsidiaries is the subject (A) that, if determined adversely to the Company or any of its subsidiaries, would have a Material Adverse Effect or (B) that are required to be described in the Annual Report and are not so described; and, to the Company’s knowledge after due inquiry, no such proceedings are threatened or contemplated by governmental authorities or threatened by others;

 

(hh) The Company is not and, after giving effect to the offering and sale of the Notes and the application of the proceeds thereof or the transactions contemplated by the ADS Lending Agreement and Capped Call Transactions, will not be an “investment company”, as such term is defined in the U.S. Investment Company Act of 1940, as amended (the “Investment Company Act”);

 

(ii)   Each of this Agreement, the Indenture, the Notes, the Deposit Agreement, the ADS Lending Agreement and the Capped Call Confirmations is in proper form to be enforceable against the Company in the Cayman Islands in accordance with its terms; to ensure the legality, validity, enforceability or admissibility into evidence in the Cayman Islands of this Agreement, the Indenture, the Notes, the Deposit Agreement, the ADS Lending Agreement or the Capped Call Confirmations, it is not necessary that this Agreement, the Indenture, the Notes, the Deposit Agreement, the ADS Lending Agreement or the Capped Call Confirmations be filed or recorded with any court or other authority in the Cayman Islands or that any stamp or similar tax in the Cayman Islands be paid on or in respect of this Agreement, the Indenture, the Notes, the Deposit Agreement,  the ADS Lending Agreement or the Capped Call Confirmations or any other 

 

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documents to be furnished hereunder, except for nominal stamp duty if the documents are executed in or brought into the Cayman Islands;

 

(jj)   The Preliminary Memorandum, Time of Sale Memorandum, Final Memorandum and any Additional Written Communication and ADS Registration Statement, and the filing of the ADS Registration Statement with the Commission have been duly authorized by and on behalf of the Company, and the ADS Registration Statement has been duly executed pursuant to such authorization by and on behalf of the Company;

 

(kk) There are no contracts or documents which are required to be described in the Annual Report or to be filed as exhibits to the Annual Report that have not been so described and filed as required;

 

(ll)   Except as described in the Time of Sale Memorandum and the Final Memorandum, each of the Company and its subsidiaries owns, possesses, licenses or has other rights to use all patents and patent applications, copyrights, trademarks, service marks, trade names, Internet domain names, technology, and/or know-how (including trade secrets and other unpatented and/or unpatentable proprietary rights) (collectively, “Intellectual Property”) that are necessary or used in any material respect to conduct their business in the manner in which it is being conducted and in the manner in which it is contemplated as set forth in the Time of Sale Memorandum and the Final Memorandum; all material copyrights and patents owned or licensed by the Company (including all material copyrights and patents owned or licensed by the Company’s subsidiaries) are valid, enforceable and not subject to any ongoing or threatened interference, reexamination, judicial or administrative proceeding pertaining to validity, enforceability or scope; neither the Company nor any of its subsidiaries has received any notice alleging infringement, violation or conflict with (and neither the Company nor any of its subsidiaries knows of any basis for alleging infringement, violation or conflict with) the Intellectual Property rights of any third party by the Company, its subsidiaries, or their products; there are no pending or, to the Company’s knowledge after due inquiry, threatened actions, suits, proceedings or claims that allege the Company or any of its subsidiaries is infringing or has infringed any Intellectual Property right of any third party; the discoveries, inventions, products or processes of the Company and its subsidiaries referenced in the Time of Sale Memorandum and the Final Memorandum, to the Company’s knowledge after due inquiry, do not violate or conflict with any Intellectual Property right of any third party including any discovery, invention, product or process that is the subject of a patent application filed by any third party; neither the Company nor any of its subsidiaries is in breach of any material license or other agreement (to which it is a party) related to the Intellectual Property rights of the Company, its subsidiaries or any third party; and except for those contracts and/or documents filed as an exhibit to or described in the Annual Report, there are no other contracts and/or documents related to Intellectual Property required to be filed as an exhibit to or described in the Annual Report;

 

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(mm) The Company does not believe it was a passive foreign investment company within the meaning of Section 1297(a) of the United States Internal Revenue Code of 1986, as amended, for its 2016 taxable year and it does not expect to be one in the foreseeable future;

 

(nn) Except as described in the Time of Sale Memorandum and the Final Memorandum, the Company has not sold, issued or distributed any Notes during the six-month period preceding the date hereof, or any securities that are of the same or a similar class as the Notes, including any sales pursuant to Rule 144A, Regulation D or Regulation S, other than shares issued pursuant to the Company’s existing share incentive plan or other employee benefit or compensation plans;

 

(oo) The Company is a “foreign private issuer” within the meaning of Rule 405 under the Act;

 

(pp) Except as described in the Time of Sale Memorandum and the Final Memorandum, no material indebtedness (actual or contingent) and no material contract or arrangement is outstanding between the Company or any of its subsidiaries and any director or executive officer of the Company or any of its subsidiaries or any person connected with such director or executive officer (including his/her spouse, infant children, any company or undertaking in which he/she holds a controlling interest); and there are no material relationships or transactions between the Company or any of its subsidiaries on the one hand and its affiliates, officers and directors or their shareholders, customers or suppliers on the other hand except as disclosed in the Time of Sale Memorandum and Final Memorandum;

 

(qq) Deloitte Touche Tohmatsu Certified Public Accountants LLP, who have certified certain financial statements of the Company, are independent public accountants as required by the Act and the rules and regulations of the Commission thereunder and are independent in accordance with the requirements of the U.S. Public Company Accounting Oversight Board;

 

(rr)   Ernst & Young LLP, who have certified certain financial statements of Crystal Orange, are independent auditors as required by the Act and the rules and regulations of the Commission thereunder and are independent in accordance with the requirements and standards of the American Institute of Certified Public Accountants;

 

(ss)  The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that: (A) transactions are executed in accordance with management’s general or specific authorizations; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”); (C) access to assets is permitted only in accordance with management’s general or specific authorization; (D) the recorded

 

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accountability for assets is compared with existing assets at reasonable intervals and appropriate actions are taken with respect to any differences; and (E) the Company has made and kept books, records and accounts which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of such entity;

 

(tt)   The Company has established and maintains and evaluates a system of internal control over financial reporting (as such term is defined in Rule 13a-15(f) of the Exchange Act) that complies with the requirements of the Exchange Act and has been designed by the Company’s principal executive officer and principal financial officer, or under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP; such internal control over financial reporting has been designed by the Company’s chief executive officer and chief financial officer, or under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP; all material weaknesses, if any, in internal controls have been identified to the Company’s independent auditors; since the date of the latest audited financial statements included in the Time of Sale Memorandum and the Final Memorandum there has been no change in the Company’s internal control over financial reporting or in other factors that could significantly affect internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses, and, except as described in the Time of Sale Memorandum and the Final Memorandum, the Company’s independent public accountants have not notified the Company of any “reportable conditions” (as that term is defined under standards established by the American Institute of Certified Public Accountants) in the Company’s internal accounting controls, or other weaknesses or deficiencies in the design or operation of the Company’s internal accounting controls, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting, or could adversely affect the Company’s ability to record, process, summarize and report financial data consistent with the assertions of the Company’s management in the financial statements; and the Company has taken all necessary actions to ensure that the Company and its subsidiaries and their respective officers and directors, in their capacities as such, are in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and the rules and regulations promulgated thereunder. The Company has established and maintains and evaluates disclosure controls and procedures (as such term is defined in Rule 13a-15(e) of the Exchange Act) that comply with the requirements of the Exchange Act, such disclosure controls and procedures have been designed to ensure that material information relating to the Company and its subsidiaries is made known to the Company’s principal executive officer and principal financial officer by others within those entities; and such disclosure controls and procedures are effective to perform the functions for which they were established;

 

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(uu) Except as described in the Time of Sale Memorandum and the Final Memorandum, neither the Company nor any of its subsidiaries has any material obligation to provide retirement, healthcare, death or disability benefits to any of the present or past employees of the Company or any of its subsidiaries, or to any other person;

 

(vv) No material labor dispute, work stoppage, slow down or other conflict with the employees of the Company or any of its subsidiaries exists or, to the Company’s knowledge after due inquiry, is threatened or contemplated;

 

(ww) The section entitled “Operating and Financial Review and Prospects — Critical Accounting Policies” in the Annual Report truly, accurately and completely in all material respects describes: (A) accounting policies which the Company believes are the most important in the portrayal of the Company’s financial condition and results of operations and which require management’s most difficult, subjective or complex judgments (“Critical Accounting Policies”); (B) judgments and uncertainties affecting the application of Critical Accounting Policies; and (C) the likelihood that materially different amounts would be reported under different conditions or using different assumptions; and the Company’s Board of Directors and management have reviewed and agreed with the selection, application and disclosure of Critical Accounting Policies and have consulted with its legal counsel and independent public accountants with regard to such disclosure;

 

(xx) Since the date of the latest audited financial statements included in the Time of Sale Memorandum and the Final Memorandum, neither the Company nor any of its subsidiaries has: (A) entered into or assumed any contract, (B) incurred or agreed to incur any liability (including any contingent liability) or other obligation, (C) acquired or disposed of or agreed to acquire or dispose of any business or any other asset or (D) assumed or acquired or agreed to assume or acquire any liabilities (including contingent liabilities), that would, in any of clauses (A) through (D) above, be material to the Company and its subsidiaries and that are not otherwise described in the Time of Sale Memorandum and the Final Memorandum;

 

(yy) The section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Time of Sale Memorandum and the Final Memorandum accurately and fully describes: (A) all material trends, demands, commitments, events, uncertainties and risks, and the potential effects thereof, that the Company believes would materially affect liquidity and are reasonably likely to occur; and (B) all off-balance sheet transactions, arrangements, and obligations, including, without limitation, relationships with unconsolidated entities that are contractually limited to narrow activities that facilitate the transfer of or access to assets by the Company or any of its subsidiaries, such as structured finance entities and special purpose entities (collectively, “off-balance sheet arrangements”) that are reasonably likely to have a material effect on the liquidity of the Company or any of its subsidiaries or

 

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the availability thereof or the requirements of the Company or any of its subsidiaries for capital resources;

 

(zz) Except as disclosed in the Time of Sale Memorandum and Final Memorandum, none of the Company or any of its subsidiaries is engaged in any material transactions with its directors, officers, management, shareholders, or any other affiliate, including any person who formerly held a position as a director, officer and/or shareholder;

 

(aaa) No holder of any of the Notes, Ordinary Shares or ADSs after the consummation of the transactions contemplated by the Indenture, this Agreement, the Notes, the Deposit Agreement, the ADS Lending Agreement or the Capped Call Confirmations is or will be subject to any personal liability in respect of any liability of the Company by virtue only of its holding of any such Notes, Ordinary Shares or ADSs; and except as set forth in the Time of Sale Memorandum and the Final Memorandum, there are no limitations on the rights of holders of the Notes, Ordinary Shares or ADSs to hold, vote or transfer their securities;

 

(bbb) The audited and unaudited consolidated financial statements (and the notes thereto) of the Company and the audited consolidated financial statements (and the notes thereto) of Crystal Orange included in the Preliminary Memorandum, Time of Sale Memorandum and Final Memorandum fairly present in all material respects the consolidated financial position of the Company and Crystal Orange, as applicable, as of the dates specified and the consolidated results of operations and changes in the consolidated financial position of the Company and Crystal Orange, as applicable, for the periods specified, and such financial statements have been prepared in conformity with U.S. GAAP applied on a consistent basis throughout the periods presented (other than as described therein); the summary and selected consolidated financial data included in the Preliminary Memorandum, Time of Sale Memorandum and Final Memorandum present fairly the information shown therein and have been compiled on a basis consistent with that of the audited consolidated financial statements included therein, subject, in the case of the preliminary unaudited financial results, to the fact that such results are subject to completion of the normal period-end closing procedures of the Company and review by the Company’s independent public accountants in accordance with Statement of Auditing Standards No. 4105;

 

(ccc) The pro forma financial information included in the Preliminary Memorandum, Time of Sale Memorandum and Final Memorandum present fairly in all material respects the information shown therein, have been properly compiled on the pro forma bases described therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions or circumstances referred to therein.  The pro forma financial statements included in the Preliminary Memorandum, Time of Sale Memorandum and Final Memorandum shall include adjustments that give effect to events that are (i) directly attributable to the applicable 

 

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transactions, (ii) expected to have a continuing impact on the Company and (iii) factually supportable;

 

(ddd) Under the laws of the Cayman Islands, each holder of ADRs evidencing ADSs issued pursuant to the Deposit Agreement shall be entitled, subject to the Deposit Agreement, to seek enforcement of its rights through the Depositary or its nominee, being the registered holder of the ADS, as representative of the holders of the ADRs in a direct suit, action or proceeding against the Company;

 

(eee) Except as set forth in the Time of Sale Memorandum and the Final Memorandum and this Agreement all amounts payable by the Company to an Initial Purchaser in respect of the Notes, ADRs evidencing the ADSs or the underlying Ordinary Shares shall be made free and clear of and without deduction for or on account of any taxes imposed, assessed or levied by the Cayman Islands or any authority thereof or therein (except such income taxes as may otherwise be imposed by the Cayman Islands on payments hereunder to an Initial Purchaser whose net income is subject to tax by the Cayman Islands or withholding, if any, with respect to any such income tax) nor are any taxes imposed in the Cayman Islands on, or by virtue of the execution or delivery of, such documents provided they remain outside the Cayman Islands;

 

(fff) All returns, reports or filings which ought to have been made by or in respect of the Company and its subsidiaries for taxation purposes as required by the law of the jurisdictions in which the Company and its subsidiaries are incorporated, managed or engage in business have been made and all such returns are correct and on a proper basis in all respects, except where failure to make such return, report or filing, or correctly and properly file any such return, report or filing would not have a Material Adverse Effect; no such returns, reports or filings are the subject of any dispute with the relevant revenue or other appropriate authorities except as may be being contested in good faith and by appropriate proceedings; the provisions included in the audited consolidated financial statements as set out in the Time of Sale Memorandum and the Final Memorandum included appropriate provisions required under U.S. GAAP for all taxation in respect of accounting periods ended on or before the accounting reference date to which such audited accounts relate for which the Company was then or might reasonably be expected thereafter to become or have become liable; and neither the Company nor any of its subsidiaries has received notice of any tax deficiency with respect to the Company or any of its subsidiaries;

 

(ggg) The Company has provided or made available to the Representative true, correct, and complete copies of all documentation pertaining to any extension of credit in the form of a personal loan made, directly or indirectly, by the Company or any of its subsidiaries to any director or executive officer of the Company or any of its subsidiaries; and since September 30, 2009, the Company has not, directly or indirectly, including through any of its  subsidiaries: (A) extended credit, arranged to extend credit, or renewed any

 

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extension of credit, in the form of a personal loan, to or for any director or executive officer of the Company or any of its subsidiaries, or to or for any family member or affiliate of any director or executive officer of the Company or any of its subsidiaries; or (B) made any material modification, including any renewal thereof, to any term of any personal loan to any director or executive officer of the Company or any of its subsidiaries, or any family member or affiliate of any director or executive officer, which loan was outstanding on September 30, 2009, that (x) is outstanding on the date hereof and (y) constitutes a violation of any applicable law or regulation;

 

(hhh)  Any statistical and market-related data included in the Time of Sale Memorandum and Final Memorandum are based on or derived from sources that the Company reasonably believes to be reliable and accurate, and the Company has obtained the written consent for the use of such data from such sources to the extent required;

 

(iii)  The application of the net proceeds from the offering of Notes, as described in the Time of Sale Memorandum and the Final Memorandum, will not (A) contravene any provision of any current and applicable laws or the current constituent documents of the Company or any of its subsidiaries, (B) contravene the terms or provisions of, or constitute a default under, any material indenture, mortgage, deed of trust, loan agreement, note, lease or other agreement or instrument currently binding upon the Company or any of its subsidiaries or (C) contravene or violate the terms or provisions of any Governmental Authorization applicable to any of the Company or any of its subsidiaries;

 

(jjj) There are no contracts, agreements or understandings between the Company and any person that would give rise to a valid claim against the Company or any Initial Purchaser for a brokerage commission, finder’s fee or other like payment in connection with the issuance and sale of the Notes;

 

(kkk)  Under the laws of the Cayman Islands and the Hong Kong S.A.R., the courts of the Cayman Islands and the Hong Kong S.A.R. will recognize and give effect to the choice of law provisions set forth in Section 17 hereof and enforce judgments of U.S. courts obtained against the Company to enforce this Agreement; under the laws of the PRC, the choice of law provisions set forth in Section 17 hereof will be recognized by the courts of the PRC and any judgment obtained in any state or federal court located in the Borough of Manhattan, The City of New York, New York (each, a “New York Court”) arising out of or in relation to the obligations of the Company under this Agreement will be recognized in PRC courts subject to the discretion of the relevant courts and public policies and other principles to be considered by such courts and the other conditions described under the section titled “Enforceability of Civil Liabilities” in the Time of Sale Memorandum and the Final Memorandum;

 

(lll)  None of the Company, any of its subsidiaries, any of the Company’s directors or executive officers, or, to the Company’s knowledge after 

 

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due inquiry, any agent, employee or other person associated with or acting on behalf of the Company or any of its subsidiaries, has taken any action in furtherance of an offer, payment, promise to pay, or authorization or approval of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any “government official” (including any officer or employee of a government or government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office) to influence official action or secure an improper advantage; and the Company and its subsidiaries and affiliates have conducted their businesses in compliance with applicable anti-corruption laws and have instituted and maintain and will continue to maintain policies and procedures designed to promote and achieve compliance with such laws and with the representation and warranty contained herein;

 

(mmm)  The operations of the Company and its subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements, including those of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”); and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator or non-governmental authority involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the Company’s knowledge after due inquiry, threatened;

 

(nnn)  The descriptions of the events and transactions set forth in the Annual Report in the section entitled “History and Development of the Company” are accurate, complete and fair in all material respects; and each of the events and transactions set forth therein has been duly authorized and does not (A) contravene any provision of applicable law or statute, rule or regulation of any Governmental Agency having jurisdiction over the Company or any of its subsidiaries or any of their properties (including but not limited to the Ministry of Commerce, the State Administration of Industry and Commerce and the State Administration of Foreign Exchange of the PRC), (B) contravene the articles of association, business license or other constitutive documents of the Company or any of its subsidiaries, or (C) conflict with or result in a breach of violation of any of the terms or provisions of, or constitute a default under, any license, indenture, mortgage, deed of trust, loan agreement, note, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or  assets of the Company or any of its subsidiaries is subject, except, in the case of 

 

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clauses (A) and (C), as would not, individually or in the aggregate, have a Material Adverse Effect;

 

(ooo)  Each of the Company and its subsidiaries that was incorporated outside of the PRC has taken, or is in the process of taking, reasonable steps to comply with, and to ensure compliance by each of its controlling shareholders, option holders, directors, officers and employees that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen with any applicable rules and regulations of the relevant PRC government agencies (including but not limited to the State Administration of Foreign Exchange) relating to overseas investment by PRC residents and citizens or the repatriation of the proceeds from overseas offering and listing by offshore special purpose vehicles controlled directly or indirectly by PRC companies and individuals, such as the Company (the “PRC Overseas Investment and Listing Regulations”), including without limitation, requesting each controlling shareholder, option holder, director, officer and employee that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen to complete any registration and other procedures required under applicable PRC Overseas Investment and Listing Regulations;

 

(ppp)  (A) None of the Company, its subsidiaries, affiliates, employees, agents, directors or officers in the United States: (i) does any business with or involving the government of, or any person or project located in, any country targeted by any of the economic sanctions promulgated by any Executive Order issued by the President of the United States or administered by the United States Treasury Department’s Office of Foreign Assets Control (the “OFAC”) (collectively, “Sanctions”); or (ii) supports or facilitates any such business or project, in each case other than as permitted under such economic sanctions; (B) the Company is not controlled (within the meaning of the Executive Orders or regulations promulgating such economic sanctions or the laws authorizing such promulgation) by any such government or person; (C) the proceeds from the offering of the Notes contemplated hereby will not be used to fund any operations in, to finance any investments, projects or activities in, or to make any payments to, any country, or to make any payments to, or finance any activities with, any person targeted by any of such economic sanctions; and (D) the Company maintains and has implemented adequate internal controls and procedures to monitor and audit transactions that are reasonably designed to detect and prevent any use of the proceeds from the offering of the Notes contemplated hereby that is inconsistent with any of the Company’s representations and obligations under clause (C) of this paragraph or in the Preliminary Memorandum, Time of Sale Memorandum and Final Memorandum;

 

(qqq)  Except as described in the Time of Sale Memorandum and the Final Memorandum, the Company and its subsidiaries and their respective properties, assets and operations are in compliance with, and the Company and each of its subsidiaries hold all permits, authorizations and approvals required  under Environmental Laws (as defined below); there are no past, present or, to the Company’s knowledge after due inquiry, reasonably anticipated future events, 

 

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conditions, circumstances, activities, practices, actions, omissions or plans that could give rise to any material costs or liabilities to the Company or any subsidiary under, or to interfere with or prevent compliance by the Company or any subsidiary with, Environmental Laws; neither the Company nor any of its subsidiaries (A) is the subject of any investigation, (B) has received any notice or claim, (C) is a party to or affected by any pending or, to the Company’s knowledge after due inquiry, threatened action, suit or proceeding, (D) is bound by any judgment, decree or order or (E) has entered into any agreement, in each case relating to any alleged violation of any Environmental Law or any actual or alleged release or threatened release or cleanup at any location of any Hazardous Materials (as defined below) (as used herein, “Environmental Law” means any national, provincial, municipal or other local or foreign law, statute, ordinance, rule, regulation, order, notice, directive, decree, judgment, injunction, permit, license, authorization or other binding requirement, or common law, relating to health, safety or the protection, cleanup or restoration of the environment or natural resources, including those relating to the distribution, processing, generation, treatment, storage, disposal, transportation, other handling or release or threatened release of Hazardous Materials, and “Hazardous Materials” means any material (including, without limitation, pollutants, contaminants, hazardous or toxic substances or wastes) that is regulated by or may give rise to liability under any Environmental Law);

 

(rrr) The Preliminary Memorandum, Time of Sale Memorandum, Final Memorandum and each Additional Written Offering Communication comply, and any further amendments or supplements thereto will comply, with any applicable laws or regulations of any jurisdiction in which any Preliminary Memorandum, Time of Sale Memorandum, Final Memorandum or any Additional Written Offering Communication is distributed; and no Governmental Authorization, other than those heretofore obtained, is required in connection with the offering of the Notes in any jurisdiction where the Notes are being offered;

 

(sss)  There are no business relationships or related-party transactions involving the Company or any of its subsidiaries or any other person required to be described in the Annual Report which have not been described as required;

 

(ttt) The Company has taken all reasonable steps to comply with, and to ensure compliance by all of the Company’s shareholders and prior holders who are PRC residents or PRC citizens with any applicable rules and regulations of the State Administration of Foreign Exchange (the “SAFE Rules and Regulations”), including without limitation, taking reasonable steps to require each of its shareholders and option holders that is, or is directly or indirectly owned or controlled by, a PRC resident or PRC citizen to complete any registration and other procedures required under applicable SAFE Rules and Regulations;

 

(uuu)  Each “forward-looking statement” (within the meaning of Section 27A of the Act or Section 21E of the Exchange Act) contained in the Preliminary Memorandum, Time of Sale Memorandum, Final Memorandum and each 

 

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Additional Written Offering Communication, if any, has been made or reaffirmed with a reasonable basis and in good faith;

 

(vvv) The Company is, and immediately after the Closing Date will be, Solvent.  As used herein, the term “Solvent” means, with respect to any person on a particular date, that on such date (i) the fair market value of the assets of such person is greater than the total amount of liabilities (including contingent liabilities) of such person, (ii) the present fair salable value of the assets of such person is greater than the amount that will be required to pay the probable liabilities of such person on its debts as they become absolute and matured, (iii) such person is able to realize upon its assets and pay its debts and other liabilities, including contingent obligations, as they mature and (iv) such person does not have unreasonably small capital;

 

(www) None of the Company, any affiliate (as defined in Rule 501(b) of Regulation D, an “Affiliate”), or any person acting on its or their behalf (other than the Initial Purchasers, as to whom the Company makes no representation or warranty) has, directly or indirectly, solicited any offer to buy or offered to sell, or will, directly or indirectly, solicit any offer to buy or offer to sell, in the United States or to any United States citizen or resident, any security which is or would be integrated with the sale of the Notes in a manner that would require the Notes to be registered under the Securities Act.  None of the Company, its Affiliates, or any person acting on its or any of their behalf (other than the Initial Purchasers, as to whom the Company makes no representation or warranty) has made any General Solicitation that is not an Additional Written Offering Communication other than General Solicitations listed on Schedule II hereto or those made with the prior written consent of the Representative.  With respect to those Notes sold in reliance upon Regulation S, (i) none of the Company, its Affiliates or any person acting on its or their behalf (other than the Initial Purchasers, as to whom the Company makes no representation or warranty) has engaged or will engage in any directed selling efforts within the meaning of Regulation S and (ii) each of the Company and its Affiliates and any person acting on its or their behalf (other than the Initial Purchasers, as to whom the Company makes no representation or warranty) has complied and will comply with the offering restrictions set forth in Regulation S;

 

(yyy) Subject to compliance by the Initial Purchasers with the procedures set forth in Section 7 hereof, it is not necessary in connection with the offer, sale and delivery of the Notes to the Initial Purchasers and to each Subsequent Purchaser in the manner contemplated by this Agreement and the Time of Sale Memorandum to register the Notes under the Securities Act or, to qualify the Indenture under the Trust Indenture Act of 1939, including the rules and regulations of the Commission promulgated thereunder;

 

(zzz) The Notes are eligible for resale pursuant to Rule 144A and will not be, at the Closing Date, of the same class as securities listed on a national 

 

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securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated interdealer quotation system;

 

(xxx) The Company is subject to Section 13 or 15(d) of the Exchange Act;

 

(yyy) Neither the Company nor any of its subsidiaries and Affiliates nor any agent thereof acting on their behalf has taken, and none of them will take, any action that might cause this Agreement or the issuance or sale of the Notes to violate Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System; and

 

(zzz) The Company and its subsidiaries and Affiliates and all persons acting on their behalf (other than the Initial Purchasers, as to whom the Company makes no representation) have complied with and will comply with the offering restrictions requirements of Regulation S in connection with the offering of the Notes outside the United States and, in connection therewith, the Time of Sale Memorandum will contain the disclosure required by Rule 902.  The Company is a “reporting issuer” and a “foreign issuer” as defined in Rule 902 under the Securities Act.

 

2.          Agreements to Sell and Purchase.  The Company hereby agrees to issue and sell to the Initial Purchasers, and each Initial Purchaser, upon the basis of the representations and warranties herein contained, but subject to the conditions hereinafter stated, agrees, severally and not jointly, to purchase from the Company the respective principal amount of Firm Notes set forth in Schedule I hereto opposite its name at a purchase price of 98.6% of the principal amount thereof (the “Purchase Price”), plus accrued and unpaid interest, if any, to the Closing Date.

 

On the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, the Company agrees to sell to the Initial Purchasers Additional Notes, and the Initial Purchasers shall have the right to purchase, severally and not jointly, Additional Notes at the Purchase Price, plus accrued and unpaid interest, if any, to the Option Closing Date (as defined below).  The Representative may exercise this right on behalf of the Initial Purchasers in whole or from time to time in part by giving written notice not later than 30 days after the date of this Agreement.  Any exercise notice shall specify the aggregate principal amount of Additional Notes to be purchased by the Initial Purchasers and the date for payment and delivery thereof.  Each purchase date must be at least one business day after the written notice is given and may not be earlier than the closing date for the Firm Notes or later than ten business days after the date of such notice.  Additional Notes may be purchased as provided in Section 4 hereof. On each day, if any, that Additional Notes are to be purchased (an “Option Closing Date”), each Initial Purchaser agrees, severally and not jointly, to purchase the respective principal amount of Additional Notes that bears the same proportion to the aggregate principal amount of Additional Notes to be purchased on such Option Closing Date as the principal amount of Firm Notes set forth in Schedule I hereto opposite the name of such Initial Purchaser bears to the aggregate principal amount of Firm Notes.

 

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3.          Terms of Offering.  You have advised the Company that the Initial Purchasers will make an offering of the Notes purchased by the Initial Purchasers hereunder as soon as practicable after this Agreement is entered into as in your judgment is advisable.

 

4.          Payment and Delivery.  Payment for the Firm Notes shall be made to the Company in federal or other funds immediately available in New York City against delivery of such Notes for the respective accounts of the several Initial Purchasers at 9:00 a.m., New York City time, on, November 3, 2017, or at such other time on the same or such other date, not later than the seventh business day thereafter, as the Initial Purchasers and the Company may agree upon in writing.  The time and date of such payment are hereinafter referred to as the “First Closing Date.” Payment for any Additional Notes shall be made to the Company in federal or other funds immediately available in New York City against delivery of such Additional Notes for the respective accounts of the several Initial Purchasers at 9:00 a.m., New York City time, on the date specified in the corresponding notice described in Section 2 hereof. The First Closing Date and each Option Closing Date, if any, are referred to as the “Closing Date.” Such delivery and payment shall be made at the offices of Latham & Watkins LLP (or such other place as may be agreed to by the Company and the Representative).  The Company hereby acknowledges that the Representative may provide notice to postpone the Closing Date as contemplated by the provisions of Section 10 hereof.

 

The Notes shall be represented by one or more definitive global securities in book-entry form, and registered in such names and in such denominations as the Representative shall request in writing not later than one full business day prior to the Closing Date. The Notes will be deposited by or on behalf of the Company with the Depository Trust Company (“DTC”). The Company will deliver the Notes to the Representative, against payment by the Representative of the Purchase Price by wire transfer in federal (same day) funds, by causing DTC to credit the Notes to the account of the Representative at DTC. The Notes shall be delivered to the Representative on the Closing Date for the respective accounts of the Initial Purchasers, with any transfer taxes payable in connection with the transfer of the Notes to the Initial Purchasers duly paid, against payment of the Purchase Price plus accrued interest, if any, to the date of payment and delivery. Time shall be of the essence, and delivery at the time and place specified in this Agreement is a condition to the obligations of the Initial Purchasers.

 

5.          Conditions to the Initial Purchasers’ Obligations.  The several obligations of the Initial Purchasers to purchase and pay for the Notes as provided herein on the Closing Date are subject to the satisfaction or waiver, as determined by the Representative in its sole discretion of the following conditions precedent on or prior to the Closing Date:

 

(a)   Subsequent to the execution and delivery of this Agreement and prior to the Closing Date, there shall not have occurred any change, or any  development involving a prospective change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Time of Sale 

 

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Memorandum provided to the prospective purchasers of the Notes that, in your judgment, constitutes a Material Adverse Effect and that makes it, in your judgment, impracticable to market the Notes on the terms and in the manner contemplated in the Time of Sale Memorandum.

 

(b)   The representations and warranties of the Company contained in this Agreement shall be true and correct on and as of the Time of Sale and on and as of the Closing Date as if made on and as of the Closing Date; the statements of the Company’s officers made pursuant to any certificate delivered in accordance with the provisions hereof shall be true and correct on and as of the date made and on and as of the Closing Date; the Company shall have performed all covenants and agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date.

 

(c)   The Initial Purchasers shall have received on the Closing Date a certificate, dated the Closing Date and signed by the chief executive officer and the chief financial officer of the Company to the effect set forth in Section 5(a) hereof, and further to the effect that the representations and warranties of the Company contained in this Agreement were true and correct as of the Time of Sale and are true and correct as of the Closing Date; that the Company has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or before the Closing Date.

 

(d)   On the Closing Date, the Company shall have furnished to the Representative a certificate, dated the Closing Date and addressed to the Initial Purchasers, of its chief financial officer with respect to certain financial information contained in the Time of Sale Memorandum and the Final Memorandum, in form and substance reasonably satisfactory to the Representative, to the effect set forth in Exhibit B hereto.

 

(e)   The Initial Purchasers shall have received on the Closing Date an opinion and negative assurance letter of Cleary Gottlieb Steen & Hamilton LLP, United States counsel for the Company, dated the Closing Date, substantially in the form agreed by such counsel and the Initial Purchasers.

 

(f)    The Initial Purchasers shall have received on the Closing Date an opinion of Conyers Dill & Pearman, Cayman Islands and British Virgin Islands counsel for the Company, dated the Closing Date, substantially in the form agreed by such counsel and the Initial Purchasers.

 

(g)   The Initial Purchasers shall have received on the Closing Date an opinion of Jingtian & Gongcheng, PRC counsel for the Company, dated the Closing Date, substantially in the form agreed by such counsel and the Initial Purchasers.

 

(h)   The Initial Purchasers shall have received on the Closing Date an opinion of Cleary Gottlieb Steen & Hamilton (Hong Kong), Hong Kong counsel 

 

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for the Company, dated the Closing Date, substantially in the form agreed by such counsel and the Initial Purchasers.

 

The opinions described in Sections 5(e) through 5(h) above shall be rendered to the Initial Purchasers at the request of the Company, and shall so state therein.

 

(i)    The Initial Purchasers shall have received on the Closing Date an opinion of Latham & Watkins LLP, United States counsel for the Initial Purchasers, dated the Closing Date, in the form and substance satisfactory to the Representative.

 

(j)    The Initial Purchasers shall have received on the Closing Date an opinion of Walkers, Cayman Islands counsel for the Initial Purchasers, dated the Closing Date, in the form and substance satisfactory to the Representative.

 

(k)   The Initial Purchasers shall have received on the Closing Date an opinion of Tian Yuan Law Firm, PRC counsel for the Initial Purchasers, dated the Closing Date, in the form and substance satisfactory to the Representative.

 

(l)    On the date hereof, the Initial Purchasers shall have received from each of Deloitte Touche Tohmatsu Certified Public Accountants LLP, the independent registered public accounting firm for the Company, and Ernst & Young LLP, the independent registered public accounting firm for Crystal Orange, a “comfort letter” dated the date hereof addressed to the Initial Purchasers, in form and substance satisfactory to the Representative, covering the financial information in the Time of Sale Memorandum and other customary matters.  In addition, on the Closing Date, the Initial Purchasers shall have received from each such accountants a “bring-down comfort letter” dated the Closing Date addressed to the Initial Purchasers, in form and substance satisfactory to the Representative, in the form of the “comfort letter” delivered on the date hereof, except that (i) it shall cover the financial information in the Final Memorandum and any amendment or supplement thereto and (ii) procedures shall be brought down to a date no more than three business days prior to the Closing Date.

 

(m)  On or prior to the First Closing Date, the Representative shall have received lock-up letters from each of the directors and executive officers of the Company and any other parties listed on Schedule I to Exhibit A hereto, in each case substantially in the form attached hereto as Exhibit A.

 

(n)   The Company shall have executed and delivered the Indenture, in form and substance reasonably satisfactory to the Initial Purchasers, and the Initial Purchasers shall have received executed copies thereof.

 

(o)   The sale of the Notes shall not have been enjoined (temporarily or permanently) by any federal, state or foreign court on the Closing Date.

 

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(p)   The Company and the Depositary shall have executed an agreement in form and substance satisfactory to the Initial Purchasers (i) providing for the issuance of ADSs in book-entry format but subject to restrictive legends upon conversion of the Notes in the circumstances described under “Transfer Restrictions” in the Preliminary Memorandum as supplemented by the Pricing Supplement and (ii) setting forth the procedures by which the Company will remove such restrictive legends within the applicable time period described under “Transfer Restrictions” in the Preliminary Memorandum as supplemented by the Pricing Supplement.

 

(q)   The ADSs issuable upon conversion of the Securities shall have been listed, subject to notice of issuance, on the Nasdaq Global Select Market, and satisfactory evidence of such actions shall have been provided to the Representative.

 

(r)    The Company shall have executed and delivered the Capped Call Confirmations, in form and substance reasonably satisfactory to the Representative, the Capped Call Confirmations shall be in full force and effect, and the Company shall not be in breach or default thereunder.

 

(s)    The Company shall have executed and delivered the ADS Lending Agreement, in form and substance reasonably satisfactory to the Representative, the ADS Lending Agreement shall be in full force and effect, and the Company shall not be in breach or default thereunder.

 

(t)    All conditions to closing under the ADS Underwriting Agreement shall have been satisfied and the closing of the transactions under the ADS Underwriting Agreement shall have closed concurrently with the transactions under this Agreement.

 

(u)   The Company shall have furnished to the Representative such further information, certificates and documents as the Representative may reasonably request.

 

If any condition specified in this Section 5 is not satisfied when, or has not been waived by the Representative, and as required to be satisfied, this Agreement may be terminated by the Representative by notice to the Company at any time on or prior to the Closing Date, which termination shall be without liability on the part of any party to any other party, except that Sections 6(g), 8, 11 and 17 hereof shall at all times be effective and shall survive such termination.

 

6.          Covenants of the Company.  The Company covenants with each Initial Purchaser as follows:

 

(a)   To furnish to you, without charge, as promptly as practicable following the Time of Sale and in any event not later than the business day following the date hereof and during the period mentioned in Section 6(d) or (e) hereof, as many copies of the Time of Sale Memorandum, the Final

 

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Memorandum, any documents incorporated by reference therein and any supplements and amendments thereto as you may reasonably request.

 

(b)         Before amending or supplementing the Preliminary Memorandum, the Time of Sale Memorandum or the Final Memorandum, to furnish to you a copy of each such proposed amendment or supplement and not to use any such proposed amendment or supplement to which you reasonably object.

 

(c)          To furnish to you a copy of each proposed Additional Written Offering Communication to be prepared by or on behalf of, used by or referred to by the Company and not to use or refer to any proposed Additional Written Offering Communication to which you reasonably object.

 

(d)         If the Time of Sale Memorandum is being used to solicit offers to buy the Notes at a time when the Final Memorandum is not yet available to prospective purchasers and any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Time of Sale Memorandum in order to make the statements therein, in the light of the circumstances under which they are made, not misleading or if, in the judgment of the Representative or counsel for the Initial Purchasers, it is necessary to amend or supplement the Time of Sale Memorandum to comply with applicable law, forthwith to prepare and furnish, at its own expense, to the Initial Purchasers, either amendments or supplements to the Time of Sale Memorandum so that the statements in the Time of Sale Memorandum as so amended or supplemented will not, in the light of the circumstances under which they are made, when delivered to a Subsequent Purchaser, be misleading or so that the Time of Sale Memorandum, as amended or supplemented, will comply with applicable law.

 

(e)          If, during such period after the date hereof and prior to the date on which all of the Notes shall have been sold by the Initial Purchasers, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Final Memorandum in order to make the statements therein, in the light of the circumstances under which they are made, not misleading or if, in the judgment of the Representative or counsel for the Initial Purchasers, it is necessary to amend or supplement the Final Memorandum to comply with applicable law, forthwith to prepare and furnish, at its own expense, to the Initial Purchasers, either amendments or supplements to the Final Memorandum so that the statements in the Final Memorandum as so amended or supplemented will not, in the light of the circumstances under which they are made, when delivered to a Subsequent Purchaser, be misleading or so that the Final Memorandum, as amended or supplemented, will comply with applicable law.

 

(f)           (i) To cooperate with the Representative and counsel for the Initial Purchasers to qualify or register (or to obtain exemptions from qualifying or registering) all or any part of the Notes for offer and sale under the securities laws of the several states of the United States, the provinces of Canada or any other jurisdictions designated by the Initial Purchasers, and to comply with such laws 

 

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and to continue such qualifications, registrations and exemptions in effect so long as required for the distribution of the Notes and (ii) to advise Representative promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Notes for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, to use its best efforts to obtain the withdrawal thereof at the earliest possible moment.  Notwithstanding the foregoing, the Company shall not be required to qualify as a foreign corporation or to take any action that would subject it to general service of process in any such jurisdiction where it is not presently qualified or where it would be subject to taxation as a foreign corporation.

 

(g)          Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, to pay or cause to be paid all expenses incident to the performance of its obligations under this Agreement, including:  (i) the fees, disbursements and expenses of the Company’s counsel and the Company’s accountants and other advisors in connection with the issuance and sale of the Notes and all other fees or expenses in connection with the issuance and sale of the Notes, including, without limitation, in connection with the preparation, printing, filing, shipping and distribution of the Preliminary Memorandum, the Time of Sale Memorandum, the Final Memorandum, any Additional Written Offering Communication and any amendments and supplements to any of the foregoing, this Agreement, the Indenture, the Notes, the Deposit Agreement, the Capped Call Confirmations and ADS Lending Agreement, including all printing costs associated therewith, and the delivering of copies thereof to the Initial Purchasers, (ii) all costs and expenses related to the transfer and delivery of the Notes to the Initial Purchasers, including any transfer or other taxes payable thereon, (iii) the cost of printing or producing any Blue Sky or legal investment memorandum in connection with the offer and sale of the Notes under state securities laws and all expenses in connection with the qualification of the Notes for offer and sale under state securities laws as provided in Section 6(f) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Initial Purchasers in connection with such qualification and in connection with the Blue Sky or legal investment memorandum, (iv) the fees and expenses, if any, incurred in connection with the admission of the Notes for trading in any appropriate market system, (v) the costs and charges of the Trustee and any transfer agent, registrar or depositary, (vi) the cost of the preparation, issuance and delivery of the Notes, (vii) the costs and expenses of the Company relating to investor presentations on any “road show” undertaken in connection with the marketing of the offering of the Notes, including, without limitation, expenses associated with the preparation or dissemination of any electronic road show, expenses associated with production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations with the prior approval of the Company, travel and lodging expenses of the representatives and officers of the Company and any such consultants, and the cost of any aircraft chartered in connection with the road show, (viii) the document production charges and

 

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expenses associated with printing this Agreement and (ix) all other cost and expenses incident to the performance of the obligations of the Company hereunder for which provision is not otherwise made in this Section.  It is understood, however, that except as provided in this Section, Section 8 hereof and the last paragraph of Section 11 hereof, the Initial Purchasers will pay all of their costs and expenses, including fees and disbursements of their counsel and any advertising expenses connected with any offers they may make.

 

(h)         To indemnify and hold harmless the Initial Purchasers against any documentary, stamp or similar issue tax, including any interest and penalties, on the creation, issuance and sale of the Notes to the Initial Purchasers and on the execution and delivery of this Agreement, the Indenture, the Notes, the Deposit Agreement, the Capped Call Confirmations or the ADS Lending Agreement.  All payments to be made by the Company hereunder shall be made without withholding or deduction for or on account of any present or future taxes, duties or governmental charges whatsoever unless the Company is compelled by law to deduct or withhold such taxes, duties or charges.  In that event, the Company shall pay such additional amounts as may be necessary in order that the net amounts received after such withholding or deduction shall equal the amounts that would have been received if no withholding or deduction had been made.

 

(i)             Neither the Company nor any Affiliate will sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Securities Act) which if, as a result of the doctrine of “integration” referred to in Rule 502 under the Securities Act, such offer or sale would render invalid (for the purpose of (i) the sale of the Notes by the Company to the Initial Purchasers, (ii) the resale of the Notes by the Initial Purchasers to the Subsequent Purchasers or (iii) the resale of the Notes by such Subsequent Purchasers to others) the exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) thereof or by Rule 144A or by Regulation S or otherwise.

 

(j)            To furnish you with any proposed General Solicitation to be made by the Company or on its behalf before its use, and not to make or use any proposed General Solicitation without your prior written consent.

 

(k)         (i) As long as any of the Notes remain outstanding, to furnish to the Initial Purchasers copies of all reports and other communications (financial or otherwise) furnished by the Company to the Trustee or to the holders of the Notes other than materials filed by the Company with the Commission; (ii) prior to the Closing Date, to furnish to the Initial Purchasers, as soon as they have been prepared, a copy of any audited annual financial statements or unaudited interim financial statements of the Company for any period subsequent to the period covered by the most recent financial statements appearing in the Time of Sale Memorandum and the Final Memorandum other than financial statements of the Company filed with the Commission; and (iii) while any of the Notes remain outstanding, to make available, upon request, to any holder of such Notes and any prospective purchasers thereof the information specified in Rule 144A(d)(4) 

 

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under the Securities Act, unless at such time the Company shall be subject to Section 13 or 15(d) of the Exchange Act and shall have filed all reports required to be filed pursuant to such Sections and the related rules and regulations of the Commission.

 

(l)             During the period of one year after the Closing Date, the Company will not be, nor will it become, an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the Investment Company Act.

 

(m)     None of the Company, its Affiliates or any person acting on its or their behalf (other than the Initial Purchasers) will engage in any directed selling efforts (as that term is defined in Regulation S) with respect to the Notes, and the Company and its Affiliates and each person acting on its or their behalf (other than the Initial Purchasers) will comply with the offering restrictions requirements of Regulation S.

 

(n)         The Company will not, and will not permit any of its affiliates (as defined in Rule 144 under the Securities Act) to resell any of the Notes that have been acquired by any of them other than pursuant to an effective registration statement or valid exemption under the Securities Act which results in the Notes registered thereon being freely tradable upon sale pursuant to such registration statement or exemption.

 

(o)         Not to take any action prohibited by Regulation M under the Exchange Act in connection with the distribution of the Notes contemplated hereby.

 

(p)         To apply the net proceeds from the sale of the Notes in the manner described under the caption “Use of Proceeds” in the Time of Sale Memorandum and the Final Memorandum.

 

(q)         The Company also agrees that, without the prior written consent of the Representative on behalf of the Initial Purchasers, it will not, during the period ending 90 days after the date of the Final Memorandum or such earlier date that the Representative consent to in writing (the “Restricted Period”), (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any Ordinary Shares or ADSs of the Company or any securities convertible into or exercisable or exchangeable for Ordinary Shares or ADSs of the Company (“Lock-Up Securities”) or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of Lock-Up Securities, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Lock-Up Securities, in cash or otherwise or (3) file any registration statement with the Commission relating to the offering of any Lock-Up Securities, or (4) publicly disclose the intention to make any such 

 

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offer, pledge, sale or disposition, or enter into any such transaction, swap, hedge or other arrangement, or file any such registration statement. The foregoing sentence shall not apply to (a) the sale of the Notes under this Agreement, (b) the entry into, and performance of the obligations under, the transactions under the Capped Call Confirmations, (c) the issuance of Ordinary Shares to the ADS Borrower pursuant to the ADS Lending Agreement, (d) the issuance by the Company of any Lock-Up Securities upon the exercise of an option or warrant or the conversion of the Notes or any other security outstanding on the date hereof of which the Initial Purchasers have been advised in writing, or (e) the grant of incentive shares by the Company to its employees, directors and/or consultants pursuant to the Company’s existing share incentive plans, or the issuance of any Lock-Up Securities upon the exercise of options granted under existing employee share incentive plans.

 

(r)            The Company shall reserve and keep available at all times, free of preemptive rights, Ordinary Shares for the purpose of enabling the Company to satisfy any obligations to issue Ordinary Shares initially issuable upon conversion of the Notes.

 

(s)           (i) Not to attempt to avoid any judgment obtained by it or denied to it in a court of competent jurisdiction outside the Cayman Islands; (ii) following the consummation of the offering of the Notes, to use its best efforts to obtain and maintain all approvals required in the Cayman Islands, British Virgin Islands, Hong Kong, Singapore, the PRC and any other jurisdiction where the Company or any of its subsidiaries was incorporated or operates, to pay and remit all principal of, premium if any, and interest on, and all other amounts payable under the Notes; and (iii) to use its best efforts to obtain and maintain all approvals required in the Cayman Islands, British Virgin Islands, Hong Kong, Singapore, the PRC and any other jurisdiction where the Company or any of its subsidiaries was incorporated or operates, for the Company to acquire sufficient foreign exchange for the payment of all principal of, premium if any, and interest on, and all other amounts payable under the Notes and all other relevant purposes.

 

(t)            To comply with the SAFE Rules and Regulations, and to use its best efforts to cause its shareholders that are, or that are directly or indirectly owned or controlled by, Chinese residents or Chinese citizens, to comply with the SAFE Rules and Regulations applicable to them, including, without limitation, requesting each such shareholder to complete any registration and other procedures required under applicable SAFE Rules and Regulations.

 

(u)         The Company will use its best efforts to procure that each person and entity listed on Schedule I to Exhibit A hereto shall, promptly after the execution hereof and no later than the First Closing Date, execute and deliver to the Representative the lock-up letters referred to in Section 5(m) hereof.

 

7.                             Offering of Securities; Restrictions on Transfer.  (a) Each Initial Purchaser, severally and not jointly, represents and warrants to that it is a qualified institutional 

 

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buyer as defined in Rule 144A (a “QIB”). Each Initial Purchaser, severally and not jointly, agrees with the Company that (i) it will not solicit offers for, or offer or sell, such Notes by any General Solicitation, other than a permitted communication listed on Schedule II hereto, or those made with the prior written consent of the Company, or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act, and it represents and warrants that it has not solicited offers for, or offered or sold, the Notes by any General Solicitation, except in such permitted manner (ii) it will sell such Notes in the United States only to persons that it reasonably believes to be QIBs, and it will take reasonable steps to ensure that the Subsequent Purchaser is aware that such sale is being made in reliance on Rule 144A, and (iii) in the case of offers outside the United States it will solicit offers for such Notes only from, and will offer such Notes only to, persons that it reasonably believes to be persons other than U.S. persons (“foreign purchasers,” which term shall include dealers or other professional fiduciaries in the United States acting on a discretionary basis for foreign beneficial owners (other than an estate or trust)) in reliance upon Regulation S that, in each case, in purchasing such Notes are deemed to have represented and agreed as provided in the Final Memorandum under the caption “Important Notice to Investors”.

 

(b)         Each Initial Purchaser, severally and not jointly, represents, warrants, and agrees with respect to offers and sales outside the United States that:

 

(i)                                such Initial Purchaser understands that no action has been or will be taken in any jurisdiction by the Company that would permit a public offering of the Notes, or possession or distribution of the Preliminary Memorandum, the Time of Sale Memorandum, the Final Memorandum or any other offering or publicity material relating to the Notes, in any country or jurisdiction where action for that purpose is required;

 

(ii)                             such Initial Purchaser will comply with all applicable laws and regulations in each jurisdiction in which it acquires, offers, sells or delivers Notes or has in its possession or distributes the Preliminary Memorandum, the Time of Sale Memorandum, the Final Memorandum or any such other material, in all cases at its own expense;

 

(iii)                          the Notes have not been registered under the Securities Act and may not be sold within the United States or to, or for the account or benefit of, U.S. persons except in accordance with Rule 144A or Regulation S;

 

(iv)                         such Initial Purchaser has offered the Notes and will offer and sell the Notes (A) as part of its distribution at any time and (B) otherwise until 40 days after the later of the commencement of the offering and the Closing Date, only in accordance with Rule 903 of Regulation S or as otherwise permitted in Section 7(a) hereof; accordingly, neither such Initial Purchaser, its Affiliates nor any persons 

 

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acting on its or their behalf have engaged or will engage in any directed selling efforts (within the meaning of Regulation S) with respect to the Notes, and any such Initial Purchaser, its Affiliates and any such persons have complied and will comply with the offering restrictions requirement of Regulation S;

 

(v)                            such Initial Purchaser, in relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State it has not made and will not make an offer of Notes to the public in that Relevant Member State, other than:

 

(A)                          to any legal entity which is a qualified investor as defined in the Prospectus Directive;

 

(B)                          to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the Representative on behalf of the Initial Purchasers for any such offer; or

 

(C)                          in any other circumstances falling within Article 3 of the Prospectus Directive, provided that no such offer of Notes shall require the Company or any Initial Purchaser to publish a prospectus pursuant to Article 3 of the Prospectus Directive.

 

For the purposes of the above, the expression an “offer of Notes to the public” in relation to any Notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe for the Notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in that Member State, and the expression “2010 PD Amending Directive” means Directive 3010/73/EU.

 

(vi)                         Such Initial Purchaser has represented and agreed that it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000) received by it in connection 

 

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with the issue or sale of the Notes in circumstances in which Section 21(1) of such Act does not apply to the Company and it has complied and will comply with all applicable provisions of such Act with respect to anything done by it in relation to any Notes in, from or otherwise involving the United Kingdom;

 

(vii)                      such Initial Purchaser understands that the Notes have not been and will not be registered under the Securities and Exchange Law of Japan, and represents that it has not offered or sold, and agrees not to offer or sell, directly or indirectly, any Notes in Japan or for the account of any resident thereof except pursuant to any exemption from the registration requirements of the Securities and Exchange Law of Japan and otherwise in compliance with applicable provisions of Japanese law; and

 

(viii)                   such Initial Purchaser agrees that, at or prior to confirmation of sales of the Notes, it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Notes from it during the restricted period a confirmation or notice to substantially the following effect:

 

“The Notes covered hereby have not been registered under the U.S. Securities Act of 1933 (the “Securities Act”) and may not be offered and sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering and the Closing Date, except in either case in accordance with Regulation S (or Rule 144A if available) under the Securities Act. Terms used above have the meaning given to them by Regulation S.”

 

Terms used in this Section 7(b) have the meanings given to them by Regulation S.

 

8.                        Indemnity and Contribution.  (a) The Company agrees to indemnify and hold harmless each Initial Purchaser, its directors and officers and each person, if any, who controls any Initial Purchaser within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, and each affiliate of each Initial Purchaser within the meaning of Rule 405 under the Securities Act from and against any and all losses, claims, damages, liabilities and expenses (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim, as such expenses are incurred) caused by any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Memorandum, the Time of Sale Memorandum, any Additional Written Offering Communication prepared by or on behalf of, used by, or referred to by the Company, any General Solicitation made by the Company or the Final Memorandum or any amendment or supplement thereto, or caused by any omission or alleged omission to state therein a material fact necessary to make the statements therein in the light of the 

 

36

 

circumstances under which they were made not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Initial Purchaser furnished to the Company by such Initial Purchaser through the Representative expressly for use in the Preliminary Memorandum, the Pricing Supplement, any Additional Written Offering Communication, General Solicitation or the Final Memorandum (or any amendment or supplement thereto).  The Company hereby acknowledges that the only information that the Initial Purchasers through the Representative have furnished to the Company expressly for use in the Preliminary Memorandum, the Time of Sale Memorandum, any Additional Written Offering Communication set forth in Schedule II hereto, General Solicitation set forth in Schedule II hereto, or the Final Memorandum (or any amendment or supplement thereto) are the following statements: the names of the Initial Purchasers set forth on the cover page and the statements in the thirteenth, fourteenth, fifteenth and sixteenth paragraphs under the caption “Plan of Distribution” in the Preliminary Memorandum and the Final Memorandum. The indemnity agreement set forth in this Section 8(a) shall be in addition to any liabilities that the Company may otherwise have.

 

(b)         Each Initial Purchaser agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to such Initial Purchaser, but only with reference to information relating to such Initial Purchaser furnished to the Company by such Initial Purchaser through the Representative expressly for use in the Preliminary Memorandum, the Pricing Supplement, any Additional Written Offering Communication set forth in Schedule II hereto, General Solicitation set forth in Schedule II hereto or the Final Memorandum (or any amendment or supplement thereto).  The Company hereby acknowledges that the only information that the Initial Purchasers through the Representative have furnished to the Company expressly for use in the Preliminary Memorandum, the Time of Sale Memorandum, any Additional Written Communication set forth in Schedule II hereto, General Solicitation set forth in Schedule II hereto, or the Final Memorandum (or any amendment or supplement thereto) are the following statements: the names of the Initial Purchasers set forth on the cover page and the statements in the thirteenth, fourteenth, fifteenth and sixteenth paragraphs under the caption “Plan of Distribution” in the Preliminary Memorandum and the Final Memorandum.  The indemnity agreement set forth in this Section 8(b) shall be in addition to any liabilities that each Initial Purchaser may otherwise have.

 

(c)          In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) hereof, such person (the “indemnified party”) shall promptly notify the person against whom such indemnity may be sought (the “indemnifying party”) in writing; provided, however, that the failure to so notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party under this Section 8 except to the extent that it 

 

37

 

has been materially prejudiced by such failure (through the forfeiture of substantive rights and defenses) and shall not relieve the indemnifying party from any liability that the indemnifying party may have to an indemnified party other than under this Section 8.  The indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel, (ii) the indemnifying party has failed within a reasonable time to retain counsel reasonably satisfactory to the indemnified party, (iii) the indemnified party shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the indemnifying party, or (iv) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by the Representative, in the case of parties indemnified pursuant to Section 8(a) hereof, and by the Company, in the case of parties indemnified pursuant to Section 8(b) hereof. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss, claim, damage, liability or expense by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement.  No indemnifying party shall, without the prior written consent of the  indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding and does not

 

38

 

include any statements as to or any findings of fault, culpability or failure to act by or on behalf of any indemnified party.

 

(d)         To the extent the indemnification provided for in Section 8(a) or 8(b) hereof is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages, liabilities or expenses referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Initial Purchasers on the other hand from the offering of the Notes or (ii) if the allocation provided by clause 8(d)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 8(d)(i) above but also the relative fault of the Company on the one hand and of the Initial Purchasers on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Initial Purchasers on the other hand in connection with the offering of the Notes shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Notes (before deducting expenses) received by the Company and the total discounts and commissions received by the Initial Purchasers, as provided in this Agreement, bear to the aggregate offering price of the Notes. The relative fault of the Company on the one hand and of the Initial Purchasers on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, or by the Initial Purchasers, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Initial Purchasers’ respective obligations to contribute pursuant to this Section 8 are several in proportion to the respective principal amount of Notes they have purchased hereunder as set forth opposite their names in Schedule I hereto, and not joint.

 

(e)          The Company and the Initial Purchasers agree that it would not be just or equitable if contribution pursuant to Section 8(d) hereof were determined by pro rata allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in Section 8(d) hereof. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in Section 8(d) hereof shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8(e), no Initial Purchaser shall be obligated to make contributions hereunder that in the aggregate exceed the total discounts, commissions and other compensation received by such Initial Purchaser under this Agreement, less the aggregate amount of any damages

 

39

 

that such Initial Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 8 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.

 

(f)           The indemnity and contribution provisions contained in this Section 8 and the representations, warranties and other statements of the Company contained in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Initial Purchaser, any person controlling any Initial Purchaser or any affiliate of any Initial Purchaser or by or on behalf of the Company, its officers or directors or any person controlling the Company and (iii) acceptance of and payment for any of the Notes.

 

9.                             Termination.  The Representative may terminate this Agreement by notice given by you to the Company, if after the execution and delivery of this Agreement and prior to the Closing Date (i) trading generally shall have been suspended or materially limited on, or by, as the case may be, any of the New York Stock Exchange (the “NYSE”), the NYSE MKT, the NASDAQ Global Market, the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade, the Hong Kong Stock Exchange, the London Stock Exchange or other relevant exchanges, (ii) trading of any securities of the Company shall have been suspended on any exchange or in any over the counter market, (iii) a material disruption in securities settlement, payment or clearance services in the United States, the Cayman Islands, Hong Kong, London, the PRC or other relevant jurisdiction shall have occurred, (iv) any moratorium on commercial banking activities shall have been declared by federal or New York State, the Cayman Islands, Hong Kong, London, the PRC or relevant foreign country authorities or (v) there shall have occurred any outbreak or escalation of hostilities, or any change in financial markets, currency exchange rates or controls or any calamity or crisis that, in your judgment, is material and adverse and which, singly or together with any other event specified in this clause (v), makes it, the judgment of the Representative, impracticable or inadvisable to proceed with the offer, sale or delivery of the Notes on the terms and in the manner contemplated in the Time of Sale Memorandum or the Final Memorandum.

 

10.                      Effectiveness; Defaulting Initial Purchasers.  This Agreement shall become effective upon the execution and delivery hereof by the parties hereto.

 

If, on the Closing Date, any one or more of the Initial Purchasers shall fail or refuse to purchase Notes that it or they have agreed to purchase hereunder on such date, and the aggregate principal amount of Notes which such defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused to purchase is not more than one tenth of the aggregate principal amount of Notes to be purchased on such date, the other Initial Purchasers shall be obligated severally in the proportions that the principal amount of 

 

40

 

Notes set forth opposite their respective names in Schedule I hereto bears to the aggregate principal amount of Notes set forth opposite the names of all such non defaulting Initial Purchasers, or in such other proportions as may be specified by the Representative with the consent of the non-defaulting Initial Purchasers, to purchase the Notes which such defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused to purchase on the Closing Date; provided that in no event shall the principal amount of Notes that any Initial Purchaser has agreed to purchase pursuant to this Agreement be increased pursuant to this Section 10 by an amount in excess of one ninth of such principal amount of Notes without the written consent of such Initial Purchaser. If, on the Closing Date any Initial Purchaser or Initial Purchasers shall fail or refuse to purchase Notes which it or they have agreed to purchase hereunder on such date and the aggregate principal amount of Notes with respect to which such default occurs is more than one tenth of the aggregate principal amount of Notes to be purchased on the Closing Date, and arrangements satisfactory to the non-defaulting Initial Purchasers and the Company for the purchase of such Notes are not made within 36 hours after such default, this Agreement shall terminate without liability on the part of any non-defaulting Initial Purchaser or of the Company except that the provisions of Sections 6(g), 8, 11 and 17 hereof shall at all times be effective and shall survive such termination. In any such case either the Representative or the Company shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Time of Sale Memorandum, the Final Memorandum or in any other documents or arrangements may be effected.  As used in this Agreement, the term “Initial Purchaser” shall be deemed to include any person substituted for a defaulting Initial Purchaser under this Section 10.  Any action taken under this paragraph shall not relieve any defaulting Initial Purchaser from liability in respect of any default of such Initial Purchaser under this Agreement.

 

11.                      Reimbursement of the Expenses of the Initial Purchasers.  If this Agreement shall be terminated by the Representative pursuant to Section 9 hereof or because of any failure or refusal on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Company shall be unable to perform its obligations under this Agreement, the Company will reimburse the Initial Purchasers, severally, upon demand for all out of pocket expenses (including the fees and disbursements of their counsel) reasonably incurred by such Initial Purchasers in connection with this Agreement or the offering contemplated hereunder.

 

12.                      Entire Agreement.  (a) This Agreement, together with any contemporaneous written agreements and any prior written agreements (to the extent not superseded by this Agreement) that relate to the offering of the Notes, represents the entire agreement between the Company and the Initial Purchasers with respect to the preparation of the Preliminary Memorandum, the Time of Sale Memorandum, the Final Memorandum, the conduct of the offering, and the purchase and sale of the Notes.

 

(b)                                 This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company and the Initial Purchasers, or any of them, with respect to the subject matter hereof.

 

41

 

(c)                                  The Company acknowledges that in connection with the offering of the Notes: (i) the Initial Purchasers have acted at arm’s length, are not agents of, and owe no fiduciary duties to, the Company or any other person, (ii) the Initial Purchasers owe the Company only those duties and obligations set forth in this Agreement and prior written agreements (to the extent not superseded by this Agreement) if any, (iii) the Initial Purchasers may have interests that differ from those of the Company, and (iv) the Initial Purchasers have not provided any legal, accounting, regulatory or tax advice with respect to the offering contemplated hereby, and the Company has consulted its own legal, accounting, regulatory and tax advisors to the extent it deemed appropriate.  The Company waives to the full extent permitted by applicable law any claims it may have against the Initial Purchasers arising from an alleged breach of fiduciary duty in connection with the offering of the Notes.

 

13.                      Counterparts.  This Agreement may be signed in two or more counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or other electronic transmission (e.g., a “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart thereof.

 

14.                      Successors.  This Agreement will inure to the benefit of and be binding upon the parties hereto, and to the benefit of the indemnified parties referred to in Section 8 hereof, and in each case their respective successors, and no other person will have any right or obligation hereunder.  The term “successors” shall not include any Subsequent Purchaser or other purchaser of the Notes as such from any of the Initial Purchasers merely by reason of such purchase.

 

15.                      Partial Unenforceability.  The invalidity or unenforceability of any section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other section, paragraph or provision hereof.  If any section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.

 

16.                      Authority of the Representative.  Any action by the Initial Purchasers hereunder may be taken by the Representative on behalf of the Initial Purchasers, and any such action taken by the Representative shall be binding upon the Initial Purchasers.

 

17.                      Applicable Law.  This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York.

 

(a)                                 Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby (“Related Proceedings”) may be instituted in the federal courts of the United States located in the City and County of New York or the courts of the State of New York in each case located in the Borough of Manhattan in the City of New York (collectively, the “Specified Courts”), and each party irrevocably submits to the exclusive 

 

42

 

jurisdiction (except for suits, actions, or proceedings instituted in regard to the enforcement of a judgment of any Specified Court in a Related Proceeding (a “Related Judgment”), as to which such jurisdiction is non-exclusive) of the Specified Courts in any Related Proceeding.  Service of any process, summons, notice or document by mail to such party’s address set forth above shall be effective service of process for any Related Proceeding brought in any Specified Court.  The parties irrevocably and unconditionally waive any objection to the laying of venue of any Specified Proceeding in the Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim in any Specified Court that any Related Proceeding brought in any Specified Court has been brought in an inconvenient forum.  The Company irrevocably appoints Cogency Global Inc., 10 E. 40th Street, 10th Floor, New York, New York 10016 (the “Authorized Agent”) as its agent to receive service of process or other legal summons for purposes of any Related Proceeding that may be instituted in any Specified Court.

 

(b)                                 With respect to any Related Proceeding, each party irrevocably waives, to the fullest extent permitted by applicable law, all immunity (whether on the basis of sovereignty or otherwise) from jurisdiction, service of process, attachment (both before and after judgment) and execution to which it might otherwise be entitled in the Specified Courts, and with respect to any Related Judgment, each party waives any such immunity in the Specified Courts or any other court of competent jurisdiction, and will not raise or claim or cause to be pleaded any such immunity at or in respect of any such Related Proceeding or Related Judgment, including, without limitation, any immunity pursuant to the United States Foreign Sovereign Immunities Act of 1976, as amended.

 

(c)                                  If for the purposes of obtaining judgment in any court it is necessary to convert a sum due hereunder into any currency other than U.S. dollars, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Initial Purchasers could purchase U.S. dollars with such other currency in the City of New York on the business day preceding that on which final judgment is given.  The obligations of the Company in respect of any sum due from it to any Initial Purchaser shall, notwithstanding any judgment in any currency other than U.S. dollars, not be discharged until the first business day, following receipt by such Initial Purchaser of any sum adjudged to be so due in such other currency, on which (and only to the extent that) such Initial Purchaser may in accordance with normal banking procedures purchase U.S. dollars with such other currency; if the U.S. dollars so purchased are less than the sum originally due to such Initial Purchaser hereunder, the Company agrees, as a separate obligation and notwithstanding any such judgment, to indemnify such Initial Purchaser against such loss.  If the U.S. dollars so purchased are greater than the sum originally due to such Initial Purchaser hereunder, such Initial Purchaser agrees to pay to the Company an amount equal to the excess of the U.S. dollars so purchased over the sum originally due to such Initial Purchaser hereunder.

 

43

 

18.                      Waiver of Jury Trial.  The Company hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

 

19.                      Headings.  The headings of the sections of this Agreement have been inserted for convenience of reference only and shall not be deemed a part of this Agreement.

 

20.                      Notices.  All communications hereunder shall be in writing and effective only upon receipt and if to the Initial Purchaser shall be delivered, mailed or sent to (i) Deutsche Bank Securities Inc., 60 Wall Street, 2nd Floor, New York, N.Y. 10005, Attention: Equity Capital Markets — Syndicate Desk (Fax: 212-797-9344), with a copy to Deutsche Bank Securities Inc., 60 Wall Street, 36th Floor, New York, N.Y. 10005, Attention: General Counsel (Fax: 212-797-4564); and if to the Company shall be delivered, mailed or sent to 5th Floor, Block 57, No. 461 Hongcao Road, Xuhui District, Shanghai 200233, People’s Republic of China, Attention: Qi Ji.

 

[Signature Pages Follow]

 

44

 

If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to the Company the enclosed copies hereof, whereupon this instrument, along with all counterparts hereof, shall become a binding agreement in accordance with its terms.

 

	
 
    	
Very truly yours, 
    
	
 
    	
 
    
	
 
    	
CHINA LODGING GROUP, LIMITED
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Teo Nee Chuan
    
	
 
    	
 
    	
Name: 
    	
Teo Nee Chuan
    
	
 
    	
 
    	
Title: 
    	
CFO
    

 

Signature Page to Purchase Agreement

 

 

Deutsche Bank Securities Inc.

 

	
By:
    	
/s/ Francis Windels
    	
 
    
	
 
    	
Name: 
    	
Francis Windels
    	
 
    
	
 
    	
Title:
    	
Managing Director
    	
 
    

 

	
By:
    	
/s/ Paul Stowell
    	
 
    
	
 
    	
Name:
    	
Paul Stowell
    	
 
    
	
 
    	
Title:
    	
Managing Director
    	
 
    

 

Acting on behalf of itself and as the Representative of the several Initial Purchasers named in Schedule I hereto.

 

Signature Page to Purchase Agreement

 

 

SCHEDULE I

 

	
Initial Purchaser
    	
 
    	
Principal Amount of
   Notes to be Purchased
    	
 
    
	
Deutsche Bank   Securities Inc.
    	
 
    	
$363,072,000
    	
 
    
	
J.P. Morgan   Securities LLC
    	
 
    	
$43,714,000
    	
 
    
	
Morgan   Stanley & Co. International plc
    	
 
    	
$14,571,000
    	
 
    
	
UBS Securities   LLC
    	
 
    	
$3,643,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Total:
    	
 
    	
$425,000,000
    	
 
    

 

47

 

SCHEDULE II

 

Permitted Communications

 

Time of Sale Memorandum

 

1.                                      Preliminary Memorandum dated October 26, 2017

 

2.                                      Pricing Supplement dated October 26, 2017

 

Permitted Additional Written Offering Communications

 

Each electronic “road show” as defined in Rule 433(h) furnished to the Initial Purchasers prior to use that the Initial Purchasers and Company have agreed may be used in connection with the offering of the Notes

 

Permitted General Solicitations other than Permitted Additional Written Offering Communications set forth above

 

None

 

48

 

EXHIBIT A

 

Form of Lock-Up Agreement

 

	
 
    	
                   , 2017
    

 

Deutsche Bank Securities Inc.
 60 Wall Street
 New York, New York 10005

United States

 

As the Representative of the several Initial Purchasers

named in the Purchase Agreement (the “Representative”)

 

Ladies and Gentlemen:

 

The undersigned understands that Deutsche Bank Securities Inc. proposes to enter into a Purchase Agreement (the “Purchase Agreement”) with China Lodging Group, Limited, an exempted company incorporated in the Cayman Islands (the “Company”), providing for the offering (the “Offering”) by the several initial purchasers as set forth in Schedule I of the Purchase Agreement (the “Initial Purchasers”), of $425 million principal amount of 0.375% Convertible Senior Notes due 2022 of the Company (the “Securities”).  The Securities will be convertible into the American Depositary Shares (“ADSs”), each initially representing the right to receive four ordinary shares, par value US$0.0001 per share, of the Company (the “Ordinary Shares”).

 

To induce the Initial Purchasers that may participate in the Offering to continue their efforts in connection with the Offering, the undersigned hereby agrees that, without the prior written consent of the Representative on behalf of the Initial Purchasers, it will not, during the period commencing on the date hereof and ending 90 days after the date of the final offering memorandum or such earlier date that the Representative consent to in writing (the “Restricted Period”) relating to the Offering (the “Final Memorandum”), (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any Ordinary Shares or ADSs beneficially owned (as such term is used in Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), by the undersigned or any securities so owned convertible into or exercisable or exchangeable for Ordinary Shares or ADSs (collectively, “Lock-Up Securities”) or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Lock-Up Securities, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Lock-Up Securities, in cash or otherwise or (3) publicly disclose the intention to make any such offer, pledge, sale or disposition, or enter into any such transaction, swap, hedge, or other arrangement.

 

The foregoing sentence shall not apply to (a) transactions relating to Lock-Up Securities acquired in open market transactions after the completion of the Offering, provided that no filing under Sections 15 and 16(a) of the Exchange Act shall be required or shall be voluntarily made

 

 

in connection with subsequent sales of Lock-Up Securities acquired in such open market transactions, (b) transfers of Lock-Up Securities as a bona fide gift or gifts, provided that the donee or donees thereof agree to be bound in writing by the restrictions set forth herein, [or] (c) transfers of Lock-up Securities to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth herein, and provided further that any such transfer shall not involve a disposition for value[, or (d) sales of up to 500,000 ADSs by the undersigned, provided that such sales (i) occur at least 45 days following the Closing Date (as defined in the Purchase Agreement), and (ii) do not exceed an aggregate of 30,000 ADSs in any trading day]1.

 

For purposes of this letter, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin. In addition, the undersigned agrees that, without the prior written consent of the Representative on behalf of the Initial Purchasers, it will not, during the Restricted Period, make any demand for or exercise any right with respect to, the registration of any Lock-Up Securities.

 

The undersigned understands that the Company and the Initial Purchasers are relying upon this agreement in proceeding toward consummation of the Offering.  The undersigned further understands that this agreement is irrevocable and shall be binding upon the undersigned’s heirs, legal representatives, successors and assigns.

 

This agreement shall terminate upon the expiration of the Restricted Period or in the event that there is no delivery of, and payment for, the Notes pursuant to the Purchase Agreement, upon three days’ prior written notice of such non-delivery and non-payment given by the undersigned to you.

 

	
 
    	
Yours very truly,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name:
    

 

1 For Mr. Qi Ji / his trust.

 

 

SCHEDULE I to EXHIBIT A

 

List of Lock-Up Signatories

 

Qi Ji

Tong Tong Zhao

John Jiong Wu

Min Fan

Shangzhi Zhang

Jian Shang

Sébastien Bazin

Gaurav Bhushan

Min (Jenny) Zhang

Hui Jin

Teo Nee Chuan

Winner Crown Holdings Limited

East Leader International Limited

 

 

EXHIBIT B

 

CFO CERTIFICATE

 

Dated: November 3, 2017

 

The undersigned, Chief Financial Officer of China Lodging Group, Limited (the “Company”), pursuant to Section 5(d) of the Purchase Agreement, dated October 26, 2017 (the “Purchase Agreement”), between the Company and Deutsche Bank Securities Inc., as representative of the several purchasers named on Schedule I thereto (the “Initial Purchasers”), hereby certifies that:

 

1.              I am providing this certificate to the Initial Purchasers in connection with the Company’s issuance of 0.375% Convertible Senior Notes due 2022 (the “Offering”) as described in the Time of Sale Memorandum and the Final Memorandum.

 

2.              I am responsible for the Company’s accounting matters and I have specific knowledge of the internal accounting records of the Company. The Company’s books and records are prepared by members of my staff under my supervision.

 

3.              I have supervised the compilation of and reviewed the circled information contained on Annex A attached hereto, as disclosed in the Time of Sale Memorandum and the Final Memorandum.  With respect to such information, I have performed the following procedures, which were applied as indicated with respect to the letters explained below:

 

A.                                    I have compared the amount to, or computed the amount from, the Company’s accounting books and records prepared by the Company’s accounting personnel for the periods, or as of the dates, indicated and found such information to be in agreement (giving effect to rounding where applicable), and such information is true, complete and accurate.

 

B.                                    I have compared the amount or percentage to, or computed the amount or percentage from, the corresponding data and other records maintained by the Company for the periods, or as of the dates, indicated and found such information to be in agreement (giving effect to rounding where applicable), and such information is true, complete and accurate.

 

Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Purchase Agreement.  This certificate is to assist the Initial Purchasers in conducting and documenting their investigation of the affairs of the Company in connection with the Offering.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, I have hereunto signed my name as of the date first written above.

 

	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Teo Nee Chuan
    
	
 
    	
Title:
    	
Chief Financial OfficerExhibit 4.25

 

	
 
    	
Deutsche   Bank 
    
	
 
    	
 
    
	
 
    	
Deutsche Bank AG, London Branch
    
	
 
    	
Winchester house
    
	
 
    	
1 Great Winchester St,
    
	
 
    	
London EC2N 2DB
    
	
 
    	
Telephone: 44 20 7545   8000
    
	
 
    	
 
    
	
 
    	
c/o Deutsche Bank   Securities Inc.
    
	
 
    	
60 Wall Street
    
	
 
    	
New York, NY 10005
    
	
 
    	
Telephone: 212-250-2500
    

 

	
DATE:
    	
October 26, 2017
    
	
 
    	
 
    
	
TO:
    	
China Lodging Group,   Limited
    
	
ATTENTION:
    	
Teo Nee Chuan
    
	
TELEPHONE:
    	
+86-21-61952011
    
	
 
    	
 
    
	
FROM:
    	
Deutsche Bank   AG, London Branch
    
	
 
    	
 
    
	
SUBJECT:
    	
Base Capped Call   Transaction
    
	
 
    	
 
    
	
REFERENCE NUMBER(S):
    	
754142
    

 

The purpose of this agreement (this “Confirmation”) is to confirm the terms and conditions of the transaction entered into between Deutsche Bank AG, London Branch (“Dealer”) and China Lodging Group, Limited (“Counterparty”) on the Trade Date specified below (the “Transaction”).  This Confirmation constitutes a “Confirmation” as referred to in the Agreement specified below.  This Confirmation constitutes the entire agreement and understanding of the parties with respect to the subject matter and terms of the Transaction and supersedes all prior or contemporaneous written and oral communications with respect thereto.

 

DEUTSCHE BANK AG, LONDON BRANCH IS NOT REGISTERED AS A BROKER DEALER UNDER THE U.S. SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.  DEUTSCHE BANK SECURITIES INC.  (“DBSI”) HAS ACTED SOLELY AS AGENT IN CONNECTION WITH THE TRANSACTION AND HAS NO OBLIGATION, BY WAY OF ISSUANCE, ENDORSEMENT, GUARANTEE OR OTHERWISE WITH RESPECT TO THE PERFORMANCE OF EITHER PARTY UNDER THE TRANSACTION. AS SUCH, ALL DELIVERY OF FUNDS, ASSETS, NOTICES, DEMANDS AND COMMUNICATIONS OF ANY KIND RELATING TO THIS TRANSACTION BETWEEN DEUTSCHE BANK AG, LONDON BRANCH, AND COUNTERPARTY SHALL BE TRANSMITTED EXCLUSIVELY THROUGH DBSI. DEUTSCHE BANK AG, LONDON BRANCH IS NOT A MEMBER OF THE SECURITIES INVESTOR PROTECTION CORPORATION (SIPC).

 

Chairman of the Supervisory Board: Paul Achleitner.

Management Board: John Cryan (Chairman), Marcus Schenck, Christian Sewing, Kimberly Hammonds, Stuart Lewis, Sylvie Matherat, Nicolas Moreau, Garth Ritchie, Karl von Rohr, Werner Steinmüller.

 

Deutsche Bank AG is authorised under German Banking Law (competent authority: European Central Bank and the BaFin, Germany’s Federal Financial Supervisory Authority) and, in the United Kingdom, by the Prudential Regulation Authority.  It is subject to supervision by the European Central Bank and by BaFin, and is subject to limited regulation in the United Kingdom by the Financial Conduct Authority and the Prudential Regulation Authority.

 

Deutsche Bank AG is a joint stock corporation with limited liability incorporated in the Federal Republic of Germany, Local Court of Frankfurt am Main, HRB No. 30 000; Branch Registration in England and Wales BR000005 and Registered Address: Winchester House, 1 Great Winchester Street, London EC2N 2DB. Deutsche Bank AG, London Branch is a member of the London Stock Exchange. (Details about the extent of our authorisation and regulation by the Prudential Regulation Authority, and regulation by the Financial Conduct Authority, are available on request or from www.db.com/en/content/eu_disclosures.htm)

 

 

The definitions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc., are incorporated into this Confirmation.  In the event of any inconsistency between the Equity Definitions and the terms of this Confirmation, the terms of this Confirmation shall govern, and in the event of any inconsistency between either the Equity Definitions or this Confirmation and the Agreement (as defined below), the Equity Definitions or this Confirmation, as the case may be, shall govern.  For the purposes of the Equity Definitions, each reference herein to a Note Hedging Unit shall be deemed to be a reference to a Call or an Option, as context requires.

 

This Confirmation evidences a complete and binding agreement between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation relates.  This Confirmation shall supplement, form a part of, and be subject to an agreement (the “Agreement”) in the form of the ISDA 2002 Master Agreement as if Dealer and Counterparty had executed an agreement in such form (without any Schedule but with the elections set forth in this Confirmation).  The Transaction shall be the only transaction under the Agreement.

 

The Transaction shall be considered a Share Option Transaction for purposes of the Equity Definitions, and shall have the following terms:

 

	
General:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Trade Date:
    	
 
    	
October 26, 2017.
    
	
 
    	
 
    	
 
    
	
Effective Date:
    	
 
    	
The closing date for the initial issuance of the   Convertible Notes.
    
	
 
    	
 
    	
 
    
	
Option Style:
    	
 
    	
Modified American, as described below under   “Procedure for Exercise”.
    
	
 
    	
 
    	
 
    
	
Option Type:
    	
 
    	
Note Hedging Units.
    
	
 
    	
 
    	
 
    
	
Seller:
    	
 
    	
Dealer.
    
	
 
    	
 
    	
 
    
	
Buyer:
    	
 
    	
Counterparty.
    
	
 
    	
 
    	
 
    
	
Shares:
    	
 
    	
The American Depositary Shares issued under the   Deposit Agreement (as defined below) (Symbol: “HTHT”), each representing as   of the date hereof four Underlying Shares.
    
	
 
    	
 
    	
 
    
	
Underlying Shares:
    	
 
    	
The ordinary shares of Counterparty, nominal value   USD 0.0001 per share.
    
	
 
    	
 
    	
 
    
	
Underlying Shares Issuer:
    	
 
    	
Counterparty
    
	
 
    	
 
    	
 
    
	
Convertible Notes:
    	
 
    	
0.375% Convertible Senior Notes due 2022 of   Counterparty, offered pursuant to an Offering Memorandum to be dated as of   October 26, 2017 (the “Offering Memorandum”)   and issued pursuant to the indenture to be dated on or about November 3,   2017, by and between Counterparty and Wilmington Trust, N.A., as trustee (the   “Indenture”). References herein to the   Indenture refer to the draft of the Indenture most recently reviewed by the   parties at the time of execution of this Confirmation. If any relevant   sections of the Indenture are changed, added or renumbered upon execution of   the Indenture, the parties will amend this Confirmation in good faith to   preserve the economic intent of the parties. Subject to the foregoing,   references herein to the 
    

 

2

 

	
 
    	
 
    	
Indenture shall be to the Indenture as executed,   without giving effect to any amendment, supplement or modification thereto   other than an amendment, supplement or modification that does not constitute   an Amendment Event (as defined below) (a “Permitted   Amendment”), subject to the provision set forth under “Settlement   Amount” below relating to Counterparty Determinations, a Merger Supplemental   Indenture (as defined below). If any amendment or supplement is made to the   Indenture following execution thereof (other than pursuant to a Merger   Supplemental Indenture or a Permitted Amendment) (x) the Calculation   Agent shall determine the relevant Settlement Amount and Settlement Date for   any Note Hedging Unit exercised thereafter in accordance with this Confirmation   by referring to the relevant provisions of the Indenture without giving   effect to such amendment or supplement, and (y) such supplement or   amendment shall be disregarded for all other purposes hereunder. Terms in   quotation marks that are not otherwise defined in this Confirmation shall   have the meanings set forth in the Indenture, unless the context requires   otherwise.
    
	
 
    	
 
    	
 
    
	
Number of Note Hedging Units:
    	
 
    	
425,000, as reduced by any Note Hedging Units   exercised hereunder.
    
	
 
    	
 
    	
 
    
	
Note Hedging Unit Entitlement:
    	
 
    	
5.4869.
    
	
 
    	
 
    	
 
    
	
Strike Price:
    	
 
    	
USD1,000 divided by   the Note Hedging Unit Entitlement, which equals approximately USD182.2523.
    
	
 
    	
 
    	
 
    
	
Cap Price:
    	
 
    	
USD221.3060.
    
	
 
    	
 
    	
 
    
	
Applicable Percentage:
    	
 
    	
20%.
    
	
 
    	
 
    	
 
    
	
Premium:
    	
 
    	
As provided in Annex A to this Confirmation.
    
	
 
    	
 
    	
 
    
	
Premium Payment Date:
    	
 
    	
The Effective Date.
    
	
 
    	
 
    	
 
    
	
Exchange:
    	
 
    	
The NASDAQ Global Select Market.
    
	
 
    	
 
    	
 
    
	
Related Exchanges:
    	
 
    	
All Exchanges.
    
	
 
    	
 
    	
 
    
	
Calculation Agent:
    	
 
    	
Dealer; provided   that, following the occurrence and during the continuance of an Event of   Default of the type described in Section 5(a)(vii) of the Agreement   with respect to Dealer, Counterparty shall have the right to designate a   nationally recognized independent equity derivatives dealer to replace Dealer   as the Calculation Agent, and the parties shall work in good faith to execute   any appropriate documentation required by such replacement Calculation Agent.   Following any determination, adjustment or calculation by the Calculation   Agent hereunder, upon a request by Counterparty, the Calculation Agent shall   promptly (but in any event within three Scheduled Trading Days) provide to   Counterparty by e-mail to the e-mail address provided by Counterparty in such   request a report (in a commonly used file format for the storage and   manipulation of financial
    

 

3

 

	
 
    	
 
    	
data) displaying in reasonable detail the basis for   such determination, adjustment or calculation (including any assumptions used   in making such determination, adjustment or calculation), it being understood   that the Calculation Agent shall not be obligated to disclose any proprietary   or confidential models used by it for such determination, adjustment or   calculation or any information that it may be subject to contractual, legal   or regulatory obligations not to disclose.
    
	
 
    	
 
    	
 
    
	
Procedure for Exercise:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Potential Exercise Dates:
    	
 
    	
Each Conversion Date.
    
	
 
    	
 
    	
 
    
	
Conversion Date:
    	
 
    	
Each “Conversion Date” (other than in respect of an   Early Conversion); provided that,   in respect of any Note Hedging Units not previously exercised, a conversion   and a Conversion Date shall be deemed to have occurred on the last day   permitted under the Indenture.
    
	
 
    	
 
    	
 
    
	
Required Exercise on Conversion Dates:
    	
 
    	
On each Conversion Date (other than any Conversion   Date occurring prior to the 52nd Scheduled Trading Day prior to the Maturity   Date (any such related conversion, an “Early Conversion”),   to which the provisions of clause (b) under “Additional Termination   Events” below shall apply), a number of Note Hedging Units equal to the   number of Convertible Notes in denominations of USD 1,000 principal amount   with respect to which a Conversion Date has occurred shall be exercised   automatically; provided that in no event will   the number of Note Hedging Units exercised or deemed exercised hereunder   exceed the Number of Note Hedging Units.
    
	
 
    	
 
    	
 
    
	
Expiration Date:
    	
 
    	
November 1, 2022.
    
	
 
    	
 
    	
 
    
	
Multiple Exercise:
    	
 
    	
Applicable, as provided under “Required Exercise on   Conversion Dates”.
    
	
 
    	
 
    	
 
    
	
Automatic Exercise:
    	
 
    	
Applicable, as provided under “Required Exercise on   Conversion Dates”.
    
	
 
    	
 
    	
 
    
	
Settlement Terms:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Settlement:
    	
 
    	
In lieu of the obligations set forth in Sections 8.1   and 9.1 of the Equity Definitions, in respect of any validly exercised Note   Hedging Unit, Dealer shall deliver to Counterparty, on the related Settlement   Date, the Settlement Amount.

 

For the avoidance of doubt, to the extent Dealer is   obligated to deliver Shares hereunder, the provisions of Sections 9.8, 9.9,   9.11 and 9.12 of the Equity Definitions shall be applicable to any such   delivery of Shares, except that all references in such provisions to   “Physical Settlement” and “Physically-settled” shall be read as references to   “Share Settlement” and “Share Settled”; provided that   the Representation and Agreement contained in Section 9.11 of the Equity   
    

 

4

 

	
 
    	
 
    	
Definitions shall be modified by excluding any   representations therein relating to restrictions, obligations, limitations or   requirements under applicable securities laws that exist as a result of the   fact that Counterparty is the issuer of the Underlying Shares. “Share Settlement” means settlement of a Note Hedging Unit   pursuant to “Settlement Amount” below, and “Share   Settled” has a meaning correlative thereto.
    
	
 
    	
 
    	
 
    
	
Certificated Shares or Underlying Shares:
    	
 
    	
Notwithstanding anything to the contrary in the   Equity Definitions, Dealer may, in whole or in part, deliver Shares or   Underlying Shares required to be delivered to Counterparty hereunder in   certificated form in lieu of delivery through the Clearance System. With   respect to such certificated Shares or Underlying Shares, the Representation   and Agreement contained in Section 9.11 of the Equity Definitions shall   be modified by deleting the remainder of the provision after the word   “encumbrance” in the fourth line thereof; provided   that, in the event Counterparty uses such certificated Shares or Underlying   Shares to settle its obligations with respect to Convertible Notes, Dealer   shall reimburse Counterparty for any reasonable costs or expenses as they are   incurred.
    
	
 
    	
 
    	
 
    
	
Daily VWAP:
    	
 
    	
For any “Trading Day”, the per Share volume-weighted   average price as displayed under the heading “Bloomberg VWAP” on Bloomberg   page “HTHT <equity> AQR” (or its equivalent successor if such   page is not available) in respect of the period from the scheduled open   of trading until the scheduled close of trading of the regular trading   session on such Trading Day (or if such volume-weighted average price is   unavailable, the market value of one Share on such Trading Day determined,   using a volume-weighted average method, by the Calculation Agent). For the   avoidance of doubt, Daily VWAP will be determined without regard to   after-hours trading or any other trading outside of the regular trading   session trading hours.
    
	
 
    	
 
    	
 
    
	
Settlement Amount:
    	
 
    	
The aggregate of the number of Shares for each   Convertible Note in principal amount of USD 1,000 converted in respect of   such Conversion Date equal to the product of the Applicable Percentage and   the sum, for each of the 50 consecutive “Trading Days” commencing on the 52nd   “Scheduled Trading Day” prior to the “Maturity Date” (such period, the “Deemed Conversion Period”), of (A) the excess, if   any, of (X)  2.0% of the product of the “Conversion Rate” on such   Trading Day and the lesser of (1) the Daily VWAP on such Trading Day and   (2) the Cap Price on such Trading Day over (Y) USD 20, divided by (B) such Daily VWAP.

 

Following the occurrence of any Merger Event in   which the holders of Shares or Underlying Shares receive only cash (a “Cash Merger”), the Settlement Amount in respect of any   Note Hedging Unit exercised thereafter shall consist of an amount of cash   equal to the product of the Applicable Percentage and the excess, if any, of   (i) the product of the “Conversion Rate” (determined without giving   effect to any Fundamental Change Adjustment or any Discretionary Adjustment   as 
    

 

5

 

	
 
    	
 
    	
defined below) and the lesser of (1) the amount   of cash received by a holder of one Share in such Merger Event and   (2) the Cap Price over (ii) USD 1,000, in lieu of any Settlement   Amount determined above.

 

The number of Shares included in the Settlement   Amount shall not take into consideration any rounding pursuant to   Section 14.02(j) of the Indenture. Instead Dealer will deliver cash   in lieu of any fractional Shares based on (i) the Daily VWAP on the last   “Trading Day” of the Deemed Conversion Period and (ii) the aggregate   number of Note Hedging Units exercised on any Exercise Date.

 

In addition, and notwithstanding anything to the   contrary herein:

 

(i) the Settlement   Amount shall be determined by the Calculation Agent excluding any increase to   the “Conversion Rate” pursuant to Section 14.03(a) of the Indenture   (a “Fundamental Change Adjustment”) or   any voluntary adjustment to the “Conversion Rate” pursuant to   Section 14.04(h) of the Indenture (a “Discretionary   Adjustment”); and

 

(ii) if   Counterparty or its board of directors is permitted or required to exercise   discretion under the terms of the Indenture with respect to any   determination, calculation or adjustment (including, without limitation, any   adjustment under Section 14.05 of the Indenture, any adjustment to the   terms of the Convertible Notes following a Merger Event pursuant to   Section 14.07(a) of the Indenture or any determination of the fair   market value of distributed property, the volume weighted average price of   Shares or the value of a “unit of Reference Property”) (any such   determination, calculation or adjustment, a “Counterparty   Determination”), Counterparty shall consult with Dealer with   respect thereto and, if Dealer disagrees in good faith with such   determination, calculation or adjustment, notwithstanding anything herein to   the contrary, the Calculation Agent shall make such determination,   calculation or adjustment for purposes of the Transaction.

 

Section 6.3(a) of the Equity Definitions   is hereby amended by deleting the remainder of clause (ii) thereof   following the words “at any time.”
    
	
 
    	
 
    	
 
    
	
Settlement Date:
    	
 
    	
In respect of an Exercise Date, the date that falls   one Settlement Cycle following the end of the Deemed Conversion Period (or,   following the occurrence of a Cash Merger, the date that falls on the fifth   “Business Day” following the applicable Exercise Date).
    
	
 
    	
 
    	
 
    
	
Settlement Currency:
    	
 
    	
USD.
    
	
 
    	
 
    	
 
    
	
Share Adjustments:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Adjustment Event:
    	
 
    	
Means any occurrence of any event or condition, as   set forth in Section 14.04 or 14.05 of the Indenture, that would result   in an adjustment under the Indenture to the “Conversion Rate” or any other   term of the
    

 

6

 

	
 
    	
 
    	
Convertible Notes; provided   that in no event shall there be any adjustment hereunder as a result of a   Fundamental Change Adjustment or a Discretionary Adjustment.

 

For the avoidance of doubt, Dealer shall not have   any delivery or payment obligation hereunder, and no adjustment shall be made   to the terms of the Transaction, on account of (i) any distribution of cash,   property or securities by Counterparty to holders of the Convertible Notes   (upon conversion or otherwise) or (ii) any other transaction in which holders   of the Convertible Notes are entitled to participate, in each case, in lieu   of an adjustment under the Indenture of the type referred to in the   immediately preceding sentence (including, without limitation, pursuant to   the fourth sentence of Section 14.04(c) of the Indenture or the fourth   sentence of Section 14.04(d) of the Indenture.
    
	
 
    	
 
    	
 
    
	
Method of Adjustment:
    	
 
    	
Calculation Agent Adjustment, which means that,   notwithstanding Section 11.2(c) of the Equity Definitions, which Section   shall not apply for purposes of the Transaction except as expressly provided   herein, upon any Adjustment Event (excluding, for the avoidance of doubt, any   Fundamental Change Adjustment or Discretionary Adjustment), the Calculation   Agent shall make (i) an adjustment corresponding to the adjustment to be made   pursuant to the Indenture to any one or more of the Strike Price, the Note   Hedging Unit Entitlement, the composition of the Shares and any other   variable relevant to the exercise, settlement, payment or other terms of the   Transaction (other than the Number of Note Hedging Units and the Cap Price   and subject to the provisions set forth under “Settlement Amount” above in   respect of any Counterparty Determination); provided   that, notwithstanding the foregoing, if any Adjustment Event occurs during   the Deemed Conversion Period but no adjustment was made to any Convertible   Note under the Indenture because the relevant “Holder” (as such term is   defined in the Indenture) was deemed to be a record owner of the underlying   Shares on the related “Conversion Date,” then the Calculation Agent shall   make an adjustment, as determined by it based on the adjustment that would   have otherwise applied under the Indenture, to the terms hereof in order to   account for such Adjustment Event and (ii) a proportionate adjustment to the   Cap Price to the extent any adjustment is made to the Strike Price pursuant   to clause (i) above; provided   that, upon the occurrence of any Adjustment Event and/or any Potential   Adjustment Event, the Calculation Agent may, but without duplication of any   adjustment pursuant to clause (i) and (ii) above, make any further adjustment   to the Cap Price consistent with the “Calculation Agent Adjustment” set forth   in Section 11.2(c) of the Equity Definitions (as modified hereby) to preserve   the fair value of the Transaction to the parties after taking into account   such Adjustment Event and/or Potential Adjustment Event; provided,   further, that the Cap Price shall not   be adjusted so that it is less than the Strike Price. In addition, if any   Adjustment Event, or the effective date, “expiration date” (as used in the   Indenture) or “Ex-Dividend Date” for such event, occurs during the Deemed   Conversion Period, the Calculation Agent may make such further adjustments as   it determines appropriate to the Settlement Amount for the relevant Note 
    

 

7

 

	
 
    	
 
    	
Hedging Units. Counterparty shall (x) reasonably   promptly, but in any event within two Business Days, after the occurrence of   any Adjustment Event and/or Merger Event, notify the Calculation Agent of   such Adjustment Event and/or Merger Event, (y) give Dealer written notice,   promptly following its determination thereof, of the section or sections of   the Indenture and, if applicable, the formula therein, pursuant to which any   adjustment is expected to be made to the Convertible Securities in connection   with any Adjustment Event or Merger Event and (z) once the adjustments to be   made to the terms of the Indenture and the Convertible Securities in respect   of such Merger Event and/or Adjustment Event have been determined, reasonably   promptly, but in any event with two Business Days, notify the Calculation   Agent in writing of the details of such adjustments.

 

In connection with any Adjustment Event as a result   of an event or condition set forth in Section 14.04(b) of the Indenture or   Section 14.04(c) of the Indenture where, in either case, the period for   determining “Y” (as such term is used in Section 14.04(b) of the Indenture)   or “SP0”   (as such term is used in Section 14.04(c) of the Indenture), as the case may   be, begins before Counterparty has publicly announced the event or condition   giving rise to such Adjustment Event, then the Calculation Agent shall have   the right to adjust the Cap Price (but in no event to a number lower than the   Strike Price) as appropriate to reflect the reasonable costs (including, but   not limited to, hedging mismatches and market losses) and reasonable expenses   incurred by Dealer in connection with its hedging activities as a result of   such event or condition not having been publicly announced prior to the beginning   of such period.

 

If any Adjustment Event is declared and (a) the   event or condition giving rise to such Adjustment Event is subsequently   amended, modified, cancelled or abandoned after the period during which the   formula for adjusting the “Conversion Rate” has commenced calculation or (b)   the “Conversion Rate” (as defined in the Indenture) is adjusted as a result   of such Adjustment Event and subsequently re-adjusted pursuant to Sections   14.04(a), 14.04(b) or 14.04(c) of the Indenture (each of clauses (a) and (b),   an “Adjustment Event Change”) then, in   each case, the Calculation Agent shall have the right to adjust the Cap Price   (but in no event to a number lower than the Strike Price) as appropriate to   reflect the reasonable costs (including, but not limited to, hedging   mismatches and market losses) and reasonable expenses incurred by Dealer in   connection with its hedging activities as a result of such Adjustment Event   Change.
    
	
 
    	
 
    	
 
    
	
Extraordinary Events:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Merger Events:
    	
 
    	
Notwithstanding Section 12.1(b) of the Equity   Definitions, except for purposes of the provisions set forth under   “Consequences of Announcement Event” and “Announcement Event” below, a   “Merger Event” means the occurrence of any event or condition set forth in   Section 14.07(a) of the Indenture.
    

 

8

 

	
Notice of Merger Consideration:
    	
 
    	
In respect of any Merger Event, Counterparty shall   notify the Calculation Agent of, if applicable, the weighted average of the   kind and amounts of consideration to be received by the holders of Shares and   Underlying Shares in any Merger Event who affirmatively make such an   election, reasonably promptly, but in any event within two Business Days,   upon determination thereof (and in any event prior to the effective date of   the Merger Event), and Counterparty shall deliver to Dealer a copy of any   supplemental indenture effecting such adjustments (a “Merger   Supplemental Indenture”) as reasonably as practicable prior to   execution thereof.
    
	
 
    	
 
    	
 
    
	
Consequences of Merger Events:
    	
 
    	
Notwithstanding Section 12.2 of the Equity   Definitions, upon the occurrence of a Merger Event, the Calculation Agent   shall make the corresponding adjustment in respect of any adjustment under   the Indenture to any one or more of the nature of the Shares, the Strike   Price, the Note Hedging Unit Entitlement, the Settlement Date and any other   variable relevant to the exercise, settlement or payment or other terms of   the Transaction (other than the Number of Note Hedging Units and subject to   the provisions set forth under “Settlement Amount” above in respect of any   Counterparty Determination); provided that such adjustment shall be made   without regard to any Fundamental Change Adjustment or any Discretionary   Adjustment; provided further that if, with   respect to a Merger Event, (i) the consideration for the Shares or Underlying   Shares includes (or, at the option of a holder of Underlying Shares, may   include) shares (or depositary receipts with respect to shares) of an entity   or person that is not a corporation or entity that is treated as a   corporation for U.S. federal income tax purposes organized under the laws of   (1) the United States, any State thereof, the District of Columbia or the   Cayman Islands or, (2) to the extent having the Underlying Shares Issuer   organized under the laws of the jurisdictions in this clause (2) would not   have a material adverse effect on Dealer’s rights and obligations hereunder,   Dealer’s hedging activities or the costs of engaging in the foregoing and, provided   that Counterparty negotiates in good faith with Dealer all the necessary and   appropriate amendments to this Confirmation related to the foregoing in this   clause (2), including, without limitation, causing its counsel to deliver   written legal opinions reasonably requested by Dealer and will reimburse   Dealer all of its out-of-pocket costs (including costs of its counsel)   reasonably incurred by Dealer, the British Virgin Islands, Bermuda, Hong Kong   or the United Kingdom (the jurisdictions listed in (1) and, to the extent the   requirements listed in (2) are satisfied, the jurisdictions listed in (2), “Permitted Merger Jurisdictions”); or (ii) Counterparty   following such Merger Event (A) will not be a corporation or entity that is   treated as a corporation for U.S. federal income tax purposes organized under   the laws of a Permitted Merger Jurisdiction or (B) will not be the Underlying   Shares Issuer or a subsidiary of the Underlying Shares Issuer following such   Merger Event, Cancellation and Payment (Calculation Agent Determination) may   apply at Dealer’s good faith, commercially reasonable election.
    
	
 
    	
 
    	
 
    
	
Consequences of Announcement Events:
    	
 
    	
If an Announcement Event occurs, the Calculation   Agent will determine
    

 

9

 

	
 
    	
 
    	
the cumulative economic effect of the Announcement   Event on the theoretical value of the Transaction (i) on a date occurring a   commercially reasonable period of time after the date of announcement of the   relevant Announcement Event and (ii) on the Valuation Date or any earlier   date of termination or cancellation for the Transaction (in each case, which   may include, without limitation, any actual or expected change in volatility,   dividends, correlation, stock loan rate or liquidity relevant to the Shares   or Underlying Shares or to the Transaction whether prior to or after the   Announcement Event or for any reasonable period of time), and if, in the case   of clause (i) or (ii), such economic effect is material and Dealer so elects   in its sole discretion, the Calculation Agent will (x) adjust the Cap Price   (but in no event to a number lower than the Strike Price) to reflect such   economic effect and (y) determine the effective date of such adjustment; provided that, notwithstanding the foregoing, if the   related Merger Date or Tender Offer Date, as the case may be, or any   subsequent related Announcement Event, occurs on or prior to the effective   date of such adjustment, any further adjustment to the terms of the   Transaction with respect to such Merger Date, Tender Offer Date or   Announcement Event pursuant to this Confirmation and/or the Equity   Definitions shall take such earlier adjustment into account (and, for the   avoidance of doubt, where Cancellation and Payment is applicable, the Determining   Party shall take into account such adjustment in determining the Cancellation   Amount); provided further that in no event   shall the Cap Price be less than the Strike Price.
    
	
 
    	
 
    	
 
    
	
Announcement Event:
    	
 
    	
(i) The public statement or announcement by any   person or entity of (x) any transaction or event that, if completed, would   constitute a Merger Event or Tender Offer, (y) any acquisition by Underlying   Shares Issuer or any of its subsidiaries where the aggregate consideration   exceeds 25% of the market capitalization of the Underlying Shares Issuer as   of the date of such announcement (an “Acquisition Transaction”)   or (z) the firm intention to enter into a Merger Event or Tender Offer or an   Acquisition Transaction, (ii) the public statement or announcement by the   Underlying Shares Issuer of an intention to solicit or enter into, or to   explore strategic alternatives or other similar undertakings that may   include, a Merger Event or Tender Offer or an Acquisition Transaction or   (iii) any subsequent public statement or announcement by any person or entity   of a withdrawal, discontinuation, termination or other change to a   transaction or intention that is the subject of an announcement of the type   described in clause (i) or (ii) of this sentence; provided   that, for the avoidance of doubt, the occurrence of an Announcement Event   with respect to any transaction or intention shall not preclude the   occurrence of a later Announcement Event described in clause (iii) above with   respect to such transaction or intention. For purposes of this definition of   “Announcement Event,” (A) “Merger Event” shall mean such term as defined   under Section 12.1(b) of the Equity Definitions (but, for the avoidance of   doubt, the remainder of the definition of “Merger Event” in Section 12.1(b)   of the Equity Definitions following the definition of “Reverse Merger”   therein shall be disregarded) and (B) “Tender Offer” shall mean such term as   defined under Section 12.1(d) of the Equity 
    

 

10

 

	
 
    	
 
    	
Definitions.
    
	
 
    	
 
    	
 
    
	
Nationalization, Insolvency and Delisting:
    	
 
    	
Cancellation and Payment (Calculation Agent   Determination); provided that in addition to   the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall   also constitute a Delisting if the Exchange is located in the United States   and the Shares are not immediately re-listed, re-traded or re-quoted on any   of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ   Global Market (or their respective successors); if the Shares are immediately   re-listed, re-traded or re-quoted on any such exchange or quotation system,   such exchange or quotation system shall thereafter be deemed to be the   Exchange.

 

Section 12.6(a)(ii) of the Equity Definitions is   hereby amended by (1) deleting from the fourth line thereof the word “or”   after the word “official” and inserting a comma therefor and (2) inserting at   the end of subsection (B) thereof the following wording, “or, under the laws   of the jurisdiction of organization of the Underlying Shares Issuer, any   other impediment to or restriction on the transferability of any Share arises   or becomes applicable including, without limitation, where (x) any transfer   of a Share or alteration of the status of the members of the Issuer would be   void unless a court of the Cayman Islands or any other such jurisdiction   orders otherwise or (y) any transfer of a Share not being a transfer with the   sanction of a liquidator, and any alteration in the status of the Issuer’s   members, would be void.”
    
	
 
    	
 
    	
 
    
	
Additional Disruption Events:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Change in Law:
    	
 
    	
Applicable; provided   that Section 12.9(a)(ii) of the Equity Definitions is hereby amended (i) by   inserting the parenthetical “(including, for the avoidance of doubt and   without limitation, the effectiveness, adoption or promulgation of new   regulations authorized or mandated by existing statute)” at the end of clause   (A) thereof, (ii) by the replacement of the word “Shares” with “Hedge   Positions” in clause (X) thereof; (iii) by replacing in the third line   thereof the phrase “the interpretation” with “or the announcement of the formal   or informal interpretation” and (iv) immediately following the word   “Transaction” in clause (X) thereof, adding the phrase “in the manner   contemplated by the Hedging Party on the Trade Date”.
    
	
 
    	
 
    	
 
    
	
Failure to Deliver:
    	
 
    	
Applicable.
    
	
 
    	
 
    	
 
    
	
Insolvency Filing:
    	
 
    	
Applicable.
    
	
 
    	
 
    	
 
    
	
Hedging Disruption:
    	
 
    	
Applicable; provided that:

 

(i)                                     Section   12.9(a)(v) of the Equity Definitions is hereby amended by (a) inserting the   following words at the end of clause (A) thereof: “in the manner contemplated   by the Hedging Party on the Trade Date” and (b) inserting the following two   phrases at the end of such Section:
    

 

11

 

	
 
    	
 
    	
“For the avoidance of   doubt, the term “equity price risk” shall be deemed to include, but shall not   be limited to, stock price and volatility risk. And, for the further   avoidance of doubt, any such transactions or assets referred to in phrases   (A) or (B) above must be available on commercially reasonable pricing terms.   Any inability of the Hedging Party referred to in phrases (A) and (B) above   that is solely attributable to the deterioration of the creditworthiness of   the Hedging Party relative to comparable financial institutions shall not be   deemed a Hedging Disruption”; and

 

(ii)                                  Section   12.9(b)(iii) of the Equity Definitions is hereby amended by inserting in the   third line thereof, after the words “to terminate the Transaction”, the words   “or a portion of the Transaction affected by such Hedging Disruption”.
    
	
 
    	
 
    	
 
    
	
Hedging Party:
    	
 
    	
Dealer for all applicable Additional Disruption   Events; provided that, when making any   determination or calculation as “Hedging Party,” Dealer shall be bound by the   same obligations relating to required acts of the Calculation Agent as set   forth in Section 1.40 of the Equity Definitions and this Confirmation as if   the Hedging Party were the Calculation Agent. The parties agree that they   will comply with the provisions set forth in the second sentence under   “Calculation Agent” above, as if the Hedging Party were the Calculation Agent   for purposes thereof.
    
	
 
    	
 
    	
 
    
	
Determining Party:
    	
 
    	
Dealer for all applicable Extraordinary Events; provided that, when making any determination or   calculation as “Determining Party,” Dealer shall be bound by the same   obligations relating to required acts of the Calculation Agent as set forth   in Section 1.40 of the Equity Definitions and this Confirmation as if the   Determining Party were the Calculation Agent. The parties agree that they   will comply with the provisions set forth in the second sentence under   “Calculation Agent” above, as if the Determining Party were the Calculation   Agent for purposes thereof.
    
	
 
    	
 
    	
 
    
	
Acknowledgements:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Non-Reliance:
    	
 
    	
Applicable.
    
	
 
    	
 
    	
 
    
	
Agreements and Acknowledgements
    	
 
    	
 
    
	
Regarding Hedging Activities:
    	
 
    	
Applicable.
    
	
 
    	
 
    	
 
    
	
Additional Acknowledgements:
    	
 
    	
Applicable.
    

 

Mutual Representations: Each of Dealer and Counterparty represents and warrants to, and agrees with, the other party that:

 

(i)                                     Tax Disclosure. Notwithstanding anything to the contrary herein, in the Equity Definitions or in the Agreement, and notwithstanding any express or implied claims of exclusivity or proprietary rights, the 

 

12

 

parties (and each of their employees, representatives or other agents) are authorized to disclose to any and all persons, beginning immediately upon commencement of their discussions and without limitation of any kind, the tax treatment and tax structure of the Transaction, and all materials of any kind (including opinions or other tax analyses) that are provided by either party to the other relating to such tax treatment and tax structure.

 

(ii)                                  Commodity Exchange Act. It is an “eligible contract participant” within the meaning of the U.S. Commodity Exchange Act, as amended (the “CEA”). The Transaction has been subject to individual negotiation by the parties. The Transaction has not been executed or traded on a “trading facility” as defined in the CEA.

 

(iii)                               Securities Act. It is an “accredited investor” within the meaning of the U.S. Securities Act of 1933, as amended (the “Securities Act”).

 

Counterparty Representations: In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Counterparty represents, warrants, acknowledges and covenants, as applicable, that:

 

(i)                                     Counterparty as of and immediately after the Trade Date and the Premium Payment Date (x) is not, and shall not be after giving effect to the transactions contemplated hereby, “insolvent” (as such term is defined in Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”)), (y) would be able to purchase 2,606,278 Shares and the Underlying Shares represented by such number of Shares in compliance with the laws of the jurisdiction of Counterparty’s incorporation or organization, and (z), for the purposes of Cayman Islands law, is able to pay its debts.

 

(ii)                                  Counterparty shall promptly provide written notice to Dealer upon obtaining knowledge of the occurrence of any event that constitutes an Event of Default, a Potential Event of Default, an Adjustment Event or a Potential Adjustment Event; provided, however, that should Counterparty be in possession of material non-public information regarding Counterparty, the Underlying Shares or the Shares, Counterparty shall not communicate such information to Dealer in connection with the Transaction until such information no longer constitutes material non-public information.

 

(iii)                               Counterparty’s financial condition is such that it has no need for liquidity with respect to its investment in the Transaction and no need to dispose of any portion thereof to satisfy any existing or contemplated undertaking or indebtedness.

 

(iv)                              Counterparty’s investments in and liabilities in respect of the Transaction, which it understands are not readily marketable, are not disproportionate to its net worth, and Counterparty is able to bear any loss in connection with the Transaction, including the loss of its entire investment in the Transaction.

 

(v)                                 Counterparty understands, agrees and acknowledges that Dealer has no obligation or intention to register the Transaction under the Securities Act, any state securities law or other applicable federal securities law.

 

(vi)                              Counterparty is not, and after giving effect to the transactions contemplated hereby will not be, required to be registered as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

 

(vii)                           Counterparty understands, agrees and acknowledges that no obligations of Dealer to it hereunder shall be entitled to the benefit of deposit insurance and that such obligations shall not be guaranteed by any affiliate of Dealer or any governmental agency.

 

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(viii)                        (A) Counterparty is acting for its own account, and it has made its own independent decisions to enter into the Transaction and as to whether the Transaction is appropriate or proper for it (including as to any legal, regulatory, tax, accounting or economic consequences arising from the Transaction) based upon its own judgment and upon advice from such advisers as it has deemed necessary (including legal, financial and accounting advisors), (B) Counterparty is not relying on any communication (written or oral) of Dealer or any of its affiliates as investment advice or as a recommendation to enter into the Transaction (it being understood that information and explanations related to the terms and conditions of the Transaction shall not be considered investment advice or a recommendation to enter into the Transaction) and (C) no communication (written or oral) received from Dealer or any of its affiliates shall be deemed to be an assurance or guarantee as to the expected results of the Transaction.

 

(ix)                              Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that Dealer is not making any representations or warranties with respect to the treatment of the Transaction under ASC Topic 260, Earnings Per Share, ASC Topic 815, Derivatives and Hedging, ASC Topic 480, Distinguishing Liabilities from Equity and ASC Topic 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity (or any successor issue statements), or under any other accounting guidance.

 

(x)                                 Counterparty is not entering into the Transaction and will not make any election hereunder for the purpose of (i) creating actual or apparent trading activity in the Shares or Underlying Shares (or any security convertible into or exchangeable for the Shares or Underlying Shares) or (ii) raising or depressing or otherwise manipulating the price of the Shares or Underlying Shares (or any security convertible into or exchangeable for the Shares or Underlying Shares), in either case in violation of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

(xi)                              Counterparty’s filings under the Exchange Act that are required to be filed have been filed and, as of the respective dates thereof and as of the date of this representation, such filings when considered as a whole (with the more recent such filings deemed to amend inconsistent statements contained in any earlier such filings) do not contain any misstatement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

 

(xii)                           The Transaction, and any repurchase of the Shares and/or Underlying Shares by Counterparty in connection with the Transaction, has been approved by Counterparty’s board of directors and any such repurchase has been, or shall when so required be, publicly disclosed in its periodic filings under the Exchange Act and its financial statements and notes thereto.

 

(xiii)                      To Counterparty’s knowledge, no state or local (including non-U.S. jurisdictions) or non-U.S. federal law, rule, regulation or regulatory order applicable to the Shares or the Issuer would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates having the power to vote, owning or holding (however defined) Shares; provided that Counterparty makes no representation or warranty regarding any such requirement that is applicable generally to the ownership of equity securities by Dealer solely as a result of it being a financial institution or broker-dealer.

 

(xiv)                       Counterparty shall deliver to Dealer (A) on the Effective Date a customary opinion of Hong Kong counsel that the Transaction does not contravene the Facilities Agreement between Counterparty and Deutsche Bank AG, Hong Kong Branch, as Agent, dated as of May 18, 2017, (B) a customary opinion of Cayman counsel, dated as of such date and reasonably acceptable to Dealer in form and substance, with respect to the matters set forth in Section 3(a)(i)-(iv) of the Agreement and such other matters as Dealer may reasonably request prior to the Trade Date, (C) a resolution of the Counterparty’s board of directors (the “Board”) 

 

14

 

authorizing the Transaction and (D) on or before the Premium Payment Date, a solvency certificate with respect to Counterparty signed by a member of the Board, the chief executive officer or the chief financial officer of the Counterparty certifying the solvency of Counterparty as of and immediately after the Premium Payment Date (after giving effect to Counterparty’s payment of amounts required to be paid by Counterparty on such date under the Transaction and the other transactions described under “Use of Proceeds” in the Offering Memorandum related to the offering of the Convertible Notes), which solvency certificate is reasonably satisfactory to Dealer.

 

(xv)                          Counterparty (A) is capable of evaluating investment risks independently, both in general and with regard to the Transaction; (B) will exercise independent judgment in evaluating the recommendations of any broker-dealer or its associated persons, unless it has otherwise notified the broker-dealer in writing; and (C) has total assets of at least USD50 million.

 

(xvi)                       All of the issued Underlying Shares have been duly and validly authorized and issued and are fully paid and non-assessable and none of the outstanding Underlying Shares have been issued in violation of any pre-emptive or similar rights of any security holder.

Miscellaneous:

 

No Set-Off. Neither party shall have the right to set off any obligation that it may have to the other party under the Transaction against any obligation such other party may have to it, whether arising under the Agreement, this Confirmation or any other agreement between the parties hereto, by operation of law or otherwise.

 

Qualified Financial Contracts. It is the intention of the parties that, in respect of Counterparty, (a) the Transaction shall constitute a “qualified financial contract” within the meaning of 12 U.S.C. Section 1821(e)(8)(D)(i) and (b) a Non-defaulting Party’s rights under Sections 5 and 6 of the Agreement constitute rights of the kind referred to in 12 U.S.C. Section 1821(e)(8)(A).

 

Method of Delivery. Whenever delivery of funds or other assets is required hereunder by or to Counterparty, such delivery shall be effected through DBSI. In addition, all notices, demands and communications of any kind relating to the Transaction between Dealer and Counterparty shall be transmitted exclusively through DBSI.

 

Staggered Settlement. Dealer may, by notice to Counterparty on or prior to any Settlement Date on which Dealer would be required to deliver Shares hereunder (a “Nominal Settlement Date”) if Dealer reasonably determines that it would not be advisable to deliver, or to acquire Shares to deliver, any or all of the Shares to be delivered by Dealer on any Settlement Date for the Transaction, elect to deliver such Shares on two or more dates (each, a “Staggered Settlement Date”) or at two or more times on the Nominal Settlement Date, in each case only to the extent reasonably necessary, as determined by Dealer in good faith, to avoid an Excess Ownership Position (as defined below), as follows: (i) in such notice, Dealer will specify to Counterparty the related Staggered Settlement Dates (each of which will be on or prior to such Nominal Settlement Date, but not prior to the beginning of the Deemed Conversion Period) or delivery times and how it will allocate the Shares it is required to deliver under “Settlement” above among the Staggered Settlement Dates or delivery times; and (ii) the aggregate number of Shares that Dealer will deliver to Counterparty hereunder on all such Staggered Settlement Dates and delivery times will equal the number of Shares that Dealer would otherwise be required to deliver on such Nominal Settlement Date.

 

15

 

Additional Termination Events.

(a)                                 The occurrence of (i) an “Event of Default” with respect to Counterparty under the terms of the Convertible Notes as set forth in Section 6.01 of the Indenture, and such event of default results in the Convertible Notes becoming or being declared due and payable pursuant to the Indenture or (ii) an Amendment Event shall be an Additional Termination Event, in each case with the Transaction as the sole Affected Transaction and Counterparty as the sole Affected Party and Dealer as the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement (which Early Termination Date shall occur as promptly as commercially reasonably practicable but no later than the settlement date under the Indenture for such acceleration in the case of clause (i)). For the avoidance of doubt, the relevant Early Termination Amount in respect of an Amendment Event shall be calculated without giving effect to the relevant amendment.

 

“Amendment Event” means that Counterparty amends, modifies, supplements, waives or obtains a waiver with respect to any term of the Indenture or the Convertible Notes governing the principal amount, coupon, maturity, repurchase obligation of Counterparty, any redemption right of Counterparty, any term relating to conversion of the Convertible Notes (including, without limitation, changes to the conversion rate, conversion settlement dates, conversion rate adjustment provisions or conversion conditions), any term relating to required cancellation of the Convertible Notes or any term that would require consent of the holders of not less than 100% of the principal amount of the Convertible Notes to amend, in each case without the consent of Dealer (such consent not to be unreasonably withheld or delayed); provided that entry into a Merger Supplemental Indenture or an amendment pursuant to Section 10.01(h) of the Indenture shall not constitute an Amendment Event.

(b)                                 Upon any Early Conversion:

(A)                               Counterparty shall, within thirty Scheduled Trading Days of the Conversion Date for such Early Conversion, provide written notice (an “Early Conversion Notice”) to Dealer specifying the number of Convertible Notes surrendered for conversion on the related Conversion Date (such Convertible Notes, the “Affected Convertible Notes”), and the giving of such Early Conversion Notice shall constitute an Additional Termination Event as provided in this clause (b);

(B)                               following receipt of any such Early Conversion Notice, Dealer shall designate an Exchange Business Day as an Early Termination Date (which Exchange Business Day shall be on or as promptly as commercially reasonably practicable following the Conversion Date for such Early Conversion) with respect to the portion of the Transaction corresponding to a number of Note Hedging Units (the “Affected Number of Note Hedging Units”) equal to the lesser of (x) the number of Affected Convertible Notes and (y) the Number of Note Hedging Units as of the Conversion Date for such Early Conversion;

(C)                               any payment hereunder with respect to such termination shall be a payment calculated pursuant to Section 6 of the Agreement as if (x) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Note Hedging Units equal to the Affected Number of Note Hedging Units, (y) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (z) the terminated portion of the Transaction were the sole Affected Transaction.

(D)                               for the avoidance of doubt, in determining the amount payable in respect of such Affected Transaction pursuant to Section 6 of the Agreement, Dealer shall assume that (x) the relevant Early Conversion and any conversions, adjustments, agreements, payments, deliveries or acquisitions by or on behalf of Counterparty leading thereto had not occurred, (y) no adjustments to the Conversion Rate have occurred pursuant to any Fundamental Change Adjustment or Discretionary Adjustment and (z) the corresponding Convertible Notes remain outstanding; and

 

16

 

(E)                               the Transaction shall remain in full force and effect, except that, as of the Conversion Date for such Early Conversion, the Number of Note Hedging Units shall be reduced by the Affected Number of Note Hedging Units.

 

(c)                                 Promptly (but in any event within five Scheduled Trading Days) following any Repurchase Event (as defined below), Counterparty shall notify Dealer of such Repurchase Event and the aggregate principal amount of Convertible Notes subject to such Repurchase Event (any such notice, a “Convertible Notes Repurchase Notice”); provided that any such Convertible Notes Repurchase Notice shall contain an acknowledgment by Counterparty of its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act and the rules and regulations thereunder, in respect of such Repurchase Event and the delivery of such Convertible Notes Repurchase Notice; and further provided that, if Counterparty provides such notice later than five Scheduled Trading Days following such Repurchase Event and before the date that is 45 Scheduled Trading Days following such Repurchase Event and such delay is due to administrative error or any oversight in good faith, Counterparty shall be deemed to have fulfilled such notice obligation as determined by the Calculation Agent in its commercially reasonable discretion. The receipt by Dealer from Counterparty of any Convertible Notes Repurchase Notice shall constitute an Additional Termination Event as provided in this Section. Upon receipt of any such Convertible Notes Repurchase Notice, Dealer shall designate an Exchange Business Day following receipt of such Convertible Notes Repurchase Notice (which Exchange Business Day shall be on or as promptly as commercially reasonably practicable after the related settlement date for the relevant Repurchase Event) as an Early Termination Date with respect to the portion of the Transaction corresponding to a number of Note Hedging Units (the “Repurchase Note Hedging Units”) equal to the lesser of (A) the aggregate principal amount of such Convertible Notes specified in such Convertible Notes Repurchase Notice, divided by USD 1,000 and (B) the Number of Note Hedging Units as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Note Hedging Units shall be reduced by the number of Repurchase Note Hedging Units. Any payment hereunder with respect to such termination (the “Repurchase Unwind Payment”) shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Note Hedging Units equal to the number of Repurchase Note Hedging Units, (2) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (3) the terminated portion of the Transaction were the sole Affected Transaction (and, for the avoidance of doubt, (1) the provisions of the Section entitled “Alternative Calculations and Dealer Payment on Early Termination and on Certain Extraordinary Events” shall apply to any amount that is payable by Dealer to Counterparty pursuant to this clause (c) as if Counterparty was not the Affected Party and (2) in determining the amount payable in respect of such Affected Transaction pursuant to Section 6 of the Agreement, Dealer shall assume that (x) the relevant Repurchase Event and any conversions, adjustments, agreements, payments, deliveries or acquisitions by or on behalf of Counterparty leading thereto had not occurred, (y) no adjustments to the Conversion Rate have occurred pursuant to any Fundamental Change Adjustment or Discretionary Adjustment and (z) the corresponding Convertible Notes remain outstanding).  “Repurchase Event” means that (i) any Convertible Notes are repurchased (whether pursuant to Section 15.01 or Section 15.02 of the Indenture or otherwise) by Counterparty or any of its subsidiaries, (ii) any Convertible Notes are delivered to Counterparty in exchange for delivery of any property or assets of Counterparty or any of its subsidiaries (howsoever described), (iii) any principal of any of the Convertible Notes is repaid prior to the final maturity date of the Convertible Notes (other than upon acceleration of the Convertible Notes described in clause (a) of this Section), or (iv) any Convertible Notes are exchanged by or for the benefit of the holders thereof for any other securities of Counterparty or any of its affiliates (or any other property, or any combination thereof) pursuant to any exchange offer or similar transaction; provided that any conversion of Convertible Notes pursuant to the terms of the Indenture shall not constitute a Repurchase Event.

 

Amendments and Additions to Equity Definitions. (i) For the purposes of this Confirmation the following definitions will apply:

 

“Depositary” means, in relation to the Shares, Citibank, N.A., or any successor thereto from 

 

17

 

time to time.

 

“Deposit Agreement” means, (i) that certain Deposit Agreement by and among Underlying Shares Issuer, Depositary and the holders and beneficial owners of the Shares and (ii) the other agreements or other instruments constituting the Shares, as from time to time amended or supplemented in accordance with their terms.

 

“DS Amendment” means, where specified as applicable to a definition or provision, that the following changes shall be made to such definition or provision: (a) all references to “Shares” shall be deleted and replaced with the words “Shares and/or the Underlying Shares, as appropriate”; and (b) all references to “Issuer” shall be deleted and replaced with the words “Issuer or Underlying Shares Issuer, as appropriate”.

 

“Replacement DSs” means depositary shares or receipts, other than the Shares, over the same Underlying Shares.

 

(ii) The following amendments shall be made to the Equity Definitions:

 

(A)                               The definition of Potential Adjustment Event in Section 11.2(e) of the Equity Definitions shall be amended as follows:

 

(i)                                     the DS Amendment shall be applicable, provided that an event under Section 11.2(e)(i) to (vii) of the Equity Definitions in respect of the Underlying Shares shall not constitute a Potential Adjustment Event unless, in the opinion of the Calculation Agent, such event has a material effect on the theoretical value of the Shares; and

 

(ii)                                  (A)                               ‘or’ shall be deleted where it appears at the end of subsection (vi);

 

(B)                               ‘.’ shall be deleted where it appears at the end of subsection (vii) and replaced with ‘;’;

 

(C)                               the following shall be inserted as subsection (viii): “(viii) the making of any amendment or supplement to the terms of the Deposit Agreement; or”; and

 

(D)                               the following shall be inserted as provision (ix): “(ix) any other event as a result of an action by the Depositary outside of the control of Counterparty and as a result of which (1) the Shares represent fewer or more Underlying Shares than, and/or any property or assets in addition to, or as a whole or partial replacement of, in each case, the number of Underlying Shares represented by the Shares prior to such event and (2) there is no corresponding adjustment to the Convertible Notes.”

 

(B)                               In making any adjustment following any Potential Adjustment Event, the Calculation Agent may, but is not required to, have reference to (among other factors) any adjustment made by the Depositary under the Deposit Agreement, any fees and/or expenses of the Depositary and any withholding or deduction of taxes, in each case, in connection with any Potential Adjustment Event.

 

(C)                               If a Potential Adjustment Event occurs under Section 11.2(e)(viii) of the Equity Definitions (as amended by this Confirmation), then the following further amendments shall be deemed to be made to Section 11.2(c) of the Equity Definitions in respect of such Potential Adjustment Event:

 

(i)                                     the words “the Calculation Agent will determine whether such Potential Adjustment Event has a material effect on the theoretical value of the relevant Shares, options on 

 

18

 

the Shares or the Transaction” shall be deleted and replaced with the words “the Calculation Agent will determine whether such Potential Adjustment Event has an economic effect on such Transaction”; and

 

(ii)                                  the words “as the Calculation Agent determines appropriate to account for that material effect” shall be deleted and replaced with the words “as the Calculation Agent determines appropriate to account for such economic effect on such Transaction”.

 

(D)                               The definitions of “Merger Event”, “Announcement Date”, “Share-for-Share”, “Share-for-Other” and “Share-for-Combined” in Section 12.1 of the Equity Definitions shall be amended in accordance with the DS Amendment.

 

(E)                                In making any adjustment in respect of a Merger Event or Announcement Event in relation to the Underlying Shares, the Calculation Agent may, but is not required to, in determining any adjustment pursuant to Modified Calculation Adjustment, have reference to (amongst other factors) any adjustment made by the Depositary under the Deposit Agreement, any fees and/or expenses of the Depositary and any withholding or deduction of taxes in each case in connection with any Merger Event or Announcement Event.

 

(F)                                 The definitions of Nationalization and Insolvency in Section 12.6 of the Equity Definitions shall be amended in accordance with the DS Amendment.

 

(G)                               The consequence of a Nationalization or Insolvency in respect of the Depositary shall be Cancellation and Payment.

 

(H)                              If a Delisting of the Shares occurs or the Depositary announces that the Deposit Agreement is (or will be) terminated, then:

 

(i)                                     Cancellation and Payment will apply as provided in this Confirmation; provided that, if the Convertible Notes remain outstanding with respect to Replacement DSs, the Calculation Agent shall determine whether a replacement of the Shares with Replacement DSs or the Underlying Shares should take place and that one or more terms of the Transaction should be amended to preserve the fair value of the Transaction to the parties and if the Calculation Agent so determines, then Cancellation and Payment shall not apply in respect of such Delisting or termination of the Deposit Agreement, as applicable, and references to Shares herein shall be replaced by references to such Replacement DSs or the Underlying Shares, as applicable, with such amendments as shall be determined by the Calculation Agent; and

 

(ii)                                  where Cancellation and Payment applies under (H)(i) above in respect of a termination of the Deposit Agreement, the Equity Definitions shall be interpreted as follows: (i) such termination shall be deemed to be an “Extraordinary Event”; (ii) Cancellation and Payment shall apply as defined in Section 12.6(c)(ii) of the Equity Definitions; and (iii) the definition of “Announcement Date” in Section 12.1(l) of the Equity Definitions shall include the following additional clause (vii) at the end of the first sentence thereof: “(vii) in the case of a termination of the Deposit Agreement, the date of the first public announcement by the Depository that the Deposit Agreement is (or will be) terminated”.

 

(I)                                   The definition of “Hedging Disruption” in the Equity Definitions shall be amended as follows:

 

(i)                                     the words “any transaction(s) or asset(s) it deems necessary to hedge the equity price risk of entering into and performing its obligations with respect to the relevant Transaction” shall be deleted and replaced with the words “(x) any Share(s) or any 

 

19

 

transaction(s) referencing any Share(s), that, in each case, it deems necessary to hedge the equity price risk and/or, (y) to the extent the Underlying Shares are listed on an exchange outside of the U.S., any transaction(s) or asset(s) it deems necessary to hedge the foreign exchange risk with respect to such Underlying Shares, in each case, of entering into and performing its obligations with respect to the relevant Transaction.”

 

(J)                                   The definition of “Insolvency Filing” in Section 12.9(a)(iv) of the Equity Definitions shall be amended in accordance with the DS Amendment.

 

(K)                               For the avoidance of doubt, where a provision is amended by this Section in accordance with the DS Amendment, if the event described in such provision occurs in respect of the Underlying Shares or Underlying Shares Issuer, then the consequence of such event shall be interpreted consistently with the DS Amendment and such event.

 

(L)                                Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the words “a material” and adding the phrase “or the Note Hedging Units” at the end of the sentence.

 

Status of Claims in Bankruptcy.  Dealer acknowledges and agrees that this Confirmation is not intended to convey to Dealer rights with respect to the Transaction that are senior to the claims of common or ordinary shareholders in any bankruptcy proceedings of Counterparty; provided that nothing herein shall limit or shall be deemed to limit Dealer’s right to pursue remedies in the event of a breach by Counterparty of its obligations and agreements with respect to the Transaction other than during Counterparty’s bankruptcy; provided, further, that nothing herein shall limit or shall be deemed to limit Dealer’s rights in respect of any transactions other than the Transaction.

 

No Collateral.  Notwithstanding any provision of this Confirmation, the Agreement, Equity Definitions, or any other agreement between the parties to the contrary, the obligations of Counterparty under the Transaction are not secured by any collateral.

 

Securities Contract; Swap Agreement.  The parties hereto agree and acknowledge that Dealer is a “financial institution,” “swap participant” and “financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of the Bankruptcy Code.  The parties hereto further agree and acknowledge (A) that this Confirmation is (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment” or a “transfer” within the meaning of Section 546 of the Bankruptcy Code, and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” a “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer” within the meaning of Section 546 of the Bankruptcy Code, and (B) that Dealer is entitled to the protections afforded by, among other sections, Section 362(b)(6), 362(b)(17), 362(b)(27), 362(o), 546(e), 546(g), 546(j), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.

 

Repurchase Notices.  Counterparty shall, on any day on which Counterparty effects any repurchase of Shares or Underlying Shares, provide Dealer with a written notice of such repurchase (a “Repurchase Notice”) on such day if, following such repurchase, the Unit Equity Percentage as determined on such day is (a) equal to or greater than 8% and (b) greater by 0.5 % or more than the Unit Equity Percentage included in the immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice, greater by 0.5% or more than the Unit Equity Percentage as of the date hereof).  The “Unit Equity Percentage” as of any day is the fraction, expressed as a percentage, (i) the numerator of which is the sum of (A) the product of the number of Note Hedging Units and the Note Hedging Unit Entitlement and (B) the number of Underlying Shares underlying any other call option transaction between Dealer as seller and Counterparty as buyer, and (ii) the denominator of which is the number of Underlying Shares outstanding on such day.  Counterparty agrees that if Counterparty ceases to qualify as a “foreign private issuer” as defined in Rule 3b-4 under the Exchange Act, Counterparty will (to the fullest extent 

 

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permitted by applicable law) indemnify and hold harmless Dealer and its affiliates and their respective officers, directors, employees, advisors, agents and controlling persons (each, a “Section 16 Indemnified Person”) from and against any and all losses (including losses relating to Dealer’s hedging activities as a consequence of becoming, or of the risk of becoming, a Section 16 “insider”, including without limitation, any forbearance from hedging activities or cessation of hedging activities and any losses in connection therewith with respect to the Transaction), claims, damages, judgments, liabilities and expenses (including reasonable attorney’s fees), joint or several, to which a Section 16 Indemnified Person may become subject, as a result of Counterparty’s failure to provide Dealer with a Repurchase Notice on the day and in the manner specified in this paragraph, and to reimburse, within 30 days upon written request, each of such Section 16 Indemnified Persons for any reasonable and documented out-of-pocket legal or other expenses incurred in connection with investigating, preparing for, providing testimony or other evidence in connection with or defending any of the foregoing. If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against the Section 16 Indemnified Person in respect of the foregoing, such Section 16 Indemnified Person shall promptly notify Counterparty in writing, and Counterparty, upon request of the Section 16 Indemnified Person, shall retain counsel reasonably satisfactory to the Section 16 Indemnified Person to represent the Section 16 Indemnified Person and any others Counterparty may designate in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding. Counterparty shall not be liable for any settlement of any proceeding contemplated by this paragraph that is effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, Counterparty agrees to indemnify any Section 16 Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Counterparty shall not, without the prior written consent of the Section 16 Indemnified Person, effect any settlement of any pending or threatened proceeding contemplated by this paragraph that is in respect of which any Section 16 Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Section 16 Indemnified Person, unless such settlement includes an unconditional release of such Section 16 Indemnified Person from all liability on claims that are the subject matter of such proceeding on terms reasonably satisfactory to such Section 16 Indemnified Person. If the indemnification provided for in this paragraph is unavailable to a Section 16 Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then Counterparty, in lieu of indemnifying such Section 16 Indemnified Person thereunder, shall contribute to the amount paid or payable by such Section 16 Indemnified Person as a result of such losses, claims, damages or liabilities. The remedies provided for in this paragraph are not exclusive and shall not limit any rights or remedies that may otherwise be available to any Section 16 Indemnified Person at law or in equity. The indemnity and contribution agreements contained in this paragraph shall remain operative and in full force and effect regardless of the termination of the Transaction.

 

Alternative Calculations and Dealer Payment on Early Termination and on Certain Extraordinary Events.  If Dealer owes Counterparty any amount in connection with the Transaction pursuant to Sections 12.2 (and “Consequences of Merger Events” above), 12.6, 12.7 or 12.9 of the Equity Definitions (in each case, except in the case of an Extraordinary Event (x) that is within Counterparty’s control or (y) as a result of which the Shares or Underlying Shares have changed or will be changed into solely cash) or pursuant to Section 6(d)(ii) of the Agreement (in each case, except in the case of an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party, other than an Event of Default or a Termination Event that resulted from an event or events outside Counterparty’s control, an Early Conversion or a Repurchase Event) (a “Dealer Payment Obligation”), Dealer shall satisfy any such Dealer Payment Obligation by delivery of Termination Delivery Units (as defined below), unless Counterparty (A) gives irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, between the hours of 9:00 a.m. and 4:00 p.m. New York time on the Early Termination Date or other date the Transaction is terminated, as applicable, that such Dealer Payment Obligation should be satisfied by delivery of cash and (B) remakes the representation set forth under “No Material Non-Public Information” below on the date of such notice.  If Dealer shall deliver Termination Delivery Units as set forth herein, within a commercially reasonable period of time following the determination by Dealer of the number of Termination Delivery Units, Dealer shall deliver to Counterparty such number of Termination Delivery Units, and the provisions of Sections 9.8, 9.9, 9.11 (in each case, modified as described above) and 9.12 of the Equity Definitions shall be applicable, except that all references to “Shares” shall be read as references to “Termination Delivery Units”.  The number of Termination Delivery Units shall be determined by Dealer as the amount of the Dealer Payment Obligation that would have been otherwise due in USD divided by the value of one Termination Delivery Unit, as determined by Dealer in its discretion by commercially reasonable means, including the purchase price paid in connection with the purchase 

 

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of any such Termination Delivery Unit (such value, the “Termination Delivery Unit Price”).  The Calculation Agent shall adjust the Termination Delivery Units by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security as determined by the Calculation Agent based on the values used to calculate the Termination Delivery Unit Price.

 

“Termination Delivery Unit” means one Share or, if the Shares or Underlying Shares have changed into cash or any other property or the right to receive cash or any other property as the result of an Insolvency, Nationalization or Merger Event, a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization or Merger Event, as determined by the Calculation Agent.    If such Insolvency, Nationalization or Merger Event involves a choice of consideration to be received by holders, the Calculation Agent shall determine the composition of such consideration in a commercially reasonable manner.

 

Regulation M.  Counterparty is not on the date hereof engaged in a distribution, as such term is used in Regulation M under the Exchange Act, of any securities of Counterparty (for the avoidance of doubt including Shares and Underlying Shares) other than a distribution meeting the requirements of the exception set forth in Sections 101(b)(10) and 102(b)(7) of Regulation M under the Exchange Act.  Counterparty shall not, until the second Scheduled Trading Day immediately following the Effective Date, engage in any such distribution.

 

No Material Non-Public Information.  Counterparty represents and warrants to Dealer that it is not aware of any material nonpublic information concerning itself, the Shares or the Underlying Shares.

 

Right to Extend.  Dealer may postpone any potential Exercise Date or Settlement Date or postpone or extend any other date of valuation or delivery with respect to some or all of the relevant Note Hedging Units (in which event the Calculation Agent shall make appropriate adjustments to the Settlement Amount for such Note Hedging Units), if Dealer determines, in its commercially reasonable discretion and, in the case of clause (a), based on the advice of counsel, that (a) a Regulatory Disruption has occurred or (b) such extension is reasonably necessary or appropriate to (i) preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions (but only if there is a material decrease in liquidity relative to Dealer’s expectations on the Trade Date) or (ii) enable Dealer to effect transactions with respect to the Shares or Underlying Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were the Issuer or an affiliated purchaser of the Issuer, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures adopted in good faith by Dealer (so long as such policies and procedures would generally be applicable to counterparties similar to Counterparty and transactions similar to the Transaction); provided that no such Exercise Date, Settlement Date or other date of valuation or delivery shall be extended more than 50 Trading Days after the original such date.  “Regulatory Disruption” shall mean any event that Dealer reasonably determines, based on advice of counsel, makes it appropriate with regard to any legal, regulatory or self-regulatory requirements or related policies and procedures (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer), for Dealer to refrain from or decrease any market activity in connection with the Transaction; provided that Dealer shall use its commercially reasonable best efforts to avoid a Regulatory Disruption that is solely within its control.

 

Transfer or Assignment.  Either party may transfer or assign any of its rights or obligations under the Transaction with the prior written consent of the non-transferring party, such consent not to be unreasonably withheld or delayed.  For the avoidance of doubt, Dealer may condition its consent on any of the following, without limitation: (i) the receipt by Dealer of opinions and documentation reasonably satisfactory to Dealer in connection with such transfer, (ii) such transfer being effected on terms reasonably satisfactory to Dealer with respect to any legal and regulatory requirements relevant to Dealer, (iii) that, in Dealer’s reasonable determination, Dealer will not be required, as a result of such transfer, to pay the transferee an amount under Section 2(d)(i)(4) of the Agreement greater than the amount, if any, that Dealer would have been required to pay to Counterparty in the absence of such transfer, (iv) that, in Dealer’s reasonable determination, no Event of Default, Potential Event of Default or Termination Event will occur as a result of such transfer and (v) that Counterparty will continue to be obligated to provide notices hereunder relating to the Convertible Notes and will continue to be obligated under the provisions set forth under “Repurchase Notices” herein. Notwithstanding the foregoing, Dealer may, without Counterparty’s consent, transfer or assign all of its rights and obligations under 

 

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the Transaction to Deutsche Bank AG, Frankfurt Branch (“Permitted Transferee”) so long as (1) the Permitted Transferee and Dealer are treated as a single entity for purposes of their long-term credit rating or the Permitted Transferee has a separate long-term credit rating that is equal to or better than Dealer’s long-term credit rating at the time of such transfer or assignment; (2)an Event of Default, Potential Event of Default or Termination Event will not occur as a result of such transfer or assignment; and (3) (x) Counterparty will not be required, as a result of such transfer or assignment, to pay the Permitted Transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement greater than the amount, if any, that Counterparty would have been required to pay Dealer in the absence of such transfer or assignment and (y) Dealer shall cause the Permitted Transferee to make such Payee Tax Representations and to provide such tax documentation as may be reasonably requested by Counterparty to permit Counterparty to determine that events described in sub-clause (x) of this clause (3) will not occur upon or after such transfer or assignment.  Dealer shall be responsible for all reasonable costs and expenses, including reasonable counsel fees, incurred by Counterparty in connection with such transfer or assignment.

 

If, (a) at any time (1) the Equity Percentage exceeds 9% or (2) Dealer, Dealer Group (as defined below) or any person whose ownership position would be aggregated with that of Dealer or Dealer Group (Dealer, Dealer Group or any such person, a “Dealer Person”) under any federal, state or local (including non-U.S.) laws, rules, regulations or regulatory orders, or any organizational documents or contracts of Counterparty that are, in each case, applicable to ownership of Shares or Underlying Shares (excluding those arising under Sections 13 or 16 of the Exchange Act, “Applicable Restrictions”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership in connection with a transaction with Counterparty in excess of a number of Shares and/or Underlying Shares, as applicable equal to (x) the number of Shares or Underlying Shares, as applicable that would give rise to reporting, registration, filing or notification obligations or other requirements (including obtaining prior approval by a state, federal or non-U.S. regulator) of a Dealer Person, in each case that is reasonably likely to result in an adverse effect on a Dealer Person, under Applicable Restrictions, as reasonably determined by Dealer, and with respect to which such requirements have not been met or the relevant approval has not been received minus (y) 1% of the number of Shares or Underlying Shares, as applicable, outstanding on the date of determination (either such condition described in clause (1) or (2), an “Excess Ownership Position”), and (b) Dealer is unable, after commercially reasonable efforts, to effect a transfer or assignment on pricing and terms and within a time period reasonably acceptable to it of all or a portion of the Transaction pursuant to the preceding paragraph such that an Excess Ownership Position no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “Terminated Portion”) of the Transaction, such that an Excess Ownership Position no longer exists following such partial termination.  In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment shall be made pursuant to Section 6 of the Agreement as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Note Hedging Units equal to the Terminated Portion, (ii) Counterparty shall be the sole Affected Party with respect to such partial termination and (iii) such Transaction shall be the only Terminated Transaction (and, for the avoidance of doubt, the provisions set forth under the caption “Alternative Calculations and Dealer Payment on Early Termination and on Certain Extraordinary Events” shall apply to any amount that is payable by Dealer to Counterparty pursuant to this sentence).  The “Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Underlying Shares that Dealer and any of its affiliates subject to aggregation with Dealer for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act and all persons who may form a “group” (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) with Dealer (collectively, “Dealer Group”) “beneficially own” (within the meaning of Section 13 of the Exchange Act) in connection with a transaction with Counterparty without duplication on such day (or to the extent that the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a higher number, such number) and (B) the denominator of which is the number of Underlying Shares outstanding on such day.

 

Designation by Dealer.  Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Counterparty, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations.  Dealer shall be discharged of its obligations to Counterparty solely to the extent of any such performance; provided that Dealer’s obligations shall be reinstated, as though such performance had not 

 

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been rendered by such affiliate, in the event and to the extent Counterparty is required to repay or reimburse the amount of value of any payment or other performance by such affiliate on the grounds of the insolvency or other legal, regulatory or contractual constraint on the affiliate’s payment or performance of such obligation.]

 

Service of Process.  Counterparty hereby appoints Cogency Global Inc., 10 E. 40th Street, 10th Floor, New York, New York 10016, United States of America to receive, for it and on its behalf, service of process in any Proceedings.

 

Severability; Illegality.  Notwithstanding anything to the contrary in the Agreement, if compliance by either party with any provision of the Transaction would be unenforceable or illegal, (a) the parties shall negotiate in good faith to resolve such unenforceability or illegality in a manner that preserves the economic benefits of the transactions contemplated hereby and (b) the other provisions of the Transaction shall not be invalidated, but shall remain in full force and effect.

 

Waiver of Jury Trial.   EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING RELATING TO THE TRANSACTION.  EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF SUCH A SUIT, ACTION OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THE TRANSACTION, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS PROVIDED HEREIN.

 

Agreements and Acknowledgements Regarding Hedging. Counterparty understands, acknowledges and agrees that: (A) at any time on and prior to the Expiration Date, Dealer and its affiliates may buy or sell Shares, Underlying Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the Transaction; (B) Dealer and its affiliates also may be active in the market for Shares or Underlying Shares other than in connection with hedging activities in relation to the Transaction; (C) Dealer shall make its own determination as to whether, when or in what manner any hedging or market activities in securities of Issuer shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Daily VWAP; and (D) any market activities of Dealer and its affiliates with respect to Shares or Underlying Shares may affect the market price and volatility of Shares or Underlying Shares, as well as the Daily VWAP, each in a manner that may be adverse to Counterparty.

 

Early Unwind.  In the event the sale of the “Firm Notes” (as defined in the Purchase Agreement) is not consummated with the initial purchasers thereof for any reason by the close of business in New York on November 3, 2017 (or such later date as agreed upon by the parties) (November 3, 2017 or such later date as agreed upon being the “Early Unwind Date”), the Transaction shall automatically terminate (the “Early Unwind”) on the Early Unwind Date and (a) the Transaction and all of the respective rights and obligations of Dealer and Counterparty under the Transaction shall be cancelled and terminated and (b) each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of the other party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date; provided that, if such an Early Unwind is solely due to an event within Counterparty’s control, Counterparty shall purchase from Dealer on the Early Unwind Date all Shares and Underlying Shares purchased by Dealer or one or more of its affiliates, and assume, or reimburse the cost of, derivatives and other hedging activities entered into by Dealer or one or more of its affiliates, in each case, in connection with hedging of the Transaction and the unwind of such hedging activities.  The amount payable by Counterparty shall be Dealer’s (or its affiliates) actual cost of such Shares and Underlying Shares and unwind cost of such derivatives and other hedging activities as Dealer informs Counterparty and shall be paid in immediately available funds on the Early Unwind Date.  Dealer and Counterparty represent and acknowledge to the other that, subject to the proviso included in the second preceding sentence, upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.

 

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Payment by Counterparty. In the event that, following payment of the Premium, (i) an Early Termination Date occurs or is designated with respect to the Transaction as a result of a Termination Event or an Event of Default (other than an Event of Default arising under Section 5(a)(ii) or 5(a)(iv) of the Agreement) and, as a result, Counterparty owes to Dealer an amount calculated under Section 6(e) of the Agreement, or (ii) Counterparty owes to Dealer pursuant to Section 12.7 or 12.9 of the Equity Definitions or this Confirmation, an amount calculated under Section 12.8 of the Equity Definitions), such amount shall be deemed to be zero.

 

Other Adjustments Pursuant to the Equity Definitions.  Notwithstanding anything to the contrary in this Confirmation, solely for the purpose of adjusting the Cap Price, the term “Merger Event” shall have the meaning assigned to such term in the Equity Definitions (as amended above), and upon the occurrence of a Merger Date, as such term is defined in the Equity Definitions, the Calculation Agent may adjust the Cap Price to preserve the fair value of the Note Hedging Units to Dealer; provided that in no event shall the Cap Price be less than the Strike Price; provided, further, that any adjustment to the Cap Price made pursuant to this Section shall be made without duplication of any other adjustment or determination hereunder (including, for the avoidance of doubt, adjustments or determinations made in accordance with “Method of Adjustment,” “Consequences of Merger Events” and “Consequences of Announcement Events” above).

 

2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol. The parties agree that the terms of the 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol published by ISDA on July 19, 2013 (“Protocol”) apply to the Agreement as if the parties had adhered to the Protocol without amendment.  In respect of the Attachment to the Protocol, (i) the definition of “Adherence Letter” shall be deemed to be deleted and references to “Adherence Letter” shall be deemed to be to this section (and references to “such party’s Adherence Letter” and “its Adherence Letter” shall be read accordingly), (ii) references to “adheres to the Protocol” shall be deemed to be “enters into this Agreement”, (iii) references to “Protocol Covered Agreement” shall be deemed to be references to this Agreement (and each “Protocol Covered Agreement” shall be read accordingly), and (iv) references to “Implementation Date” shall be deemed to be references to the date of this Agreement.  For the purposes of this section:

 

(a)                                 Dealer is a Portfolio Data Sending Entity and Counterparty is a Portfolio Data Receiving Entity;

 

(b)                                 Dealer and Counterparty may use a Third Party Service Provider, and each of Dealer and Counterparty consents to such use including the communication of the relevant data in relation to Dealer and Counterparty to such Third Party Service Provider for the purposes of the reconciliation services provided by such entity.

 

(c)                                  The Local Business Days for such purposes in relation to Dealer are New York, London, Frankfurt, Tokyo and Singapore and in relation to Counterparty are Shanghai, Singapore and Hong Kong;

 

(d)                                 The provisions in this paragraph shall survive the termination of this Transaction.

 

(e)                                  The following are the applicable email addresses.

 

	
Portfolio Data:
    	
Dealer:   collateral.disputes@db.com
    
	
 
    	
 
    
	
 
    	
Counterparty:
    	
teoneechuan@huazhu.com
    
	
 
    	
 
    	
Wunengjiao002@huazhu.com
    
	
 
    	
 
    
	
Notice of discrepancy:
    	
Dealer: collateral.disputes@db.com
    
	
 
    	
 
    
	
 
    	
Counterparty:
    	
teoneechuan@huazhu.com
    
	
 
    	
 
    	
Wunengjiao002@huazhu.com
    
	
 
    	
 
    
	
Dispute Notice:
    	
Dealer: collateral.disputes@db.com
    
	
 
    	
 
    
	
 
    	
Counterparty:
    	
teoneechuan@huazhu.com
    
	
 
    	
 
    	
Wunengjiao002@huazhu.com
    

 

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NFC Representation Protocol. The parties agree that the provisions set out in the Attachment to the ISDA 2013 EMIR NFC Representation Protocol published by ISDA on March 8, 2013 (the “NFC Representation Protocol”) shall apply to the Agreement as if each party were an Adhering Party under the terms of the NFC Representation Protocol.  In respect of the Attachment to the Protocol, (i) the definition of “Adherence Letter” shall be deemed to be deleted and references to “Adherence Letter” shall be deemed to be to this section (and references to “the relevant Adherence Letter” and “its Adherence Letter” shall be read accordingly), (ii) references to “adheres to the Protocol” shall be deemed to be “enters into this Agreement”, (iii) references to “Covered Master Agreement” shall be deemed to be references to this Agreement (and each “Covered Master Agreement” shall be read accordingly), and (iv) references to “Implementation Date” shall be deemed to be references to the date of this Agreement. Counterparty confirms that it enters into this Agreement as a party making the NFC Representation (as such term is defined in the NFC Representation Protocol).  Counterparty shall promptly notify Dealer of any change to its status as a party making the NFC Representation.

 

Transaction Reporting - Consent for Disclosure of Information.  Notwithstanding anything to the contrary herein or in the Agreement or any non-disclosure, confidentiality or other agreements entered into between the parties from time to time, each party hereby consents to the Disclosure of information (the “Reporting Consent”):

 

(a)                                 to the extent required by, or necessary in order to comply with, any applicable law, rule or regulation which mandates Disclosure of transaction and similar information or to the extent required by, or necessary in order to comply with, any order, request or directive regarding Disclosure of transaction and similar information issued by any relevant authority or body or agency (“Reporting Requirements”); or

 

(b)                                 to and between the other party’s head office, branches or affiliates; to any person, agent, third party or entity who provides services to such other party or its head office, branches or affiliates; to a Market; or to any trade data repository or any systems or services operated by any trade repository or Market, in each case, in connection with such Reporting Requirements.

 

“Disclosure” means disclosure, reporting, retention, or any action similar or analogous to any of the aforementioned.

 

“Market” means any exchange, regulated market, clearing house, central clearing counterparty or multilateral trading facility.

 

Disclosures made pursuant to this Reporting Consent may include, without limitation, Disclosure of information relating to disputes over transactions between the parties, a party’s identity, and certain transaction and pricing data and may result in such information becoming available to the public or recipients in a jurisdiction which may have a different level of protection for personal data from that of the relevant party’s home jurisdiction.

 

This Reporting Consent shall be deemed to constitute an agreement between the parties with respect to Disclosure in general and shall survive the termination of this Confirmation. No amendment to or termination of this Reporting Consent shall be effective unless such amendment or termination is made in writing between the parties and specifically refers to this Reporting Consent.

 

Taxes, Foreign Account Tax Compliance Act and HIRE Act.  Counterparty is classified as a corporation for the U.S. federal income tax purposes. No income received or to be received under this Agreement will be effectively connected with the conduct of a trade or business by Counterparty in the United States. Counterparty is a “non-U.S. branch of a foreign person” as that term is used in Section 1.1441-4(a)(3)(ii) of the United States Treasury Regulations (the “Regulations”), and it is a “foreign person” as that term is used in Section 1.6041-4(a)(4) of the Regulations. The term “Indemnifiable Tax” as defined in Section 14 of this Agreement shall not include any U.S. federal withholding tax imposed or collected pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in

 

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connection with the implementation of such Sections of the Code (a “FATCA Withholding Tax”). For the avoidance of doubt, a FATCA Withholding Tax is a Tax the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of this Agreement. The parties agree that the definitions and provisions contained in the ISDA 2015 Section 871(m) Protocol, as published by the International Swaps and Derivatives Association, Inc. and as may be amended, supplemented, replaced or superseded from time to time (the “871(m) Protocol”) shall apply to this Agreement as if the parties had adhered to the 871(m) Protocol as of the effective date of this Agreement. If there is any inconsistency between this provision and a provision in any other agreement executed between the parties, this provision shall prevail unless such other agreement expressly overrides the provisions of the 871(m) Protocol. Each of Dealer and Counterparty shall provide to the other party tax forms and documents required to be delivered pursuant to Sections 1471(b) or Section 1472(b)(1) of the Code promptly upon request by the other party and any other tax forms and documents they are legally able to provide that are reasonably requested by the other party.

 

U.S. Tax Forms.  Without limiting the generality of the foregoing, Counterparty will provide a US Tax Form W-8BEN-E upon the execution of this Agreement and promptly upon reasonable demand by Dealer.

 

Governing Law; Jurisdiction.  THIS CONFIRMATION AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.  THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.

 

Resolution Stay Protocol.  Subject to the below, the provisions set out in the Attachment to the ISDA 2015 Universal Resolution Stay Protocol as published by the International Swaps and Derivatives Association on 4 November 2015 (“Protocol”), and any additional Country Annex that has been published from time to time and to which Counterparty has adhered  are, mutadis mutandis, incorporated by reference, into this Agreement as though such provisions and definitions were set out in full herein, with any such conforming changes as are necessary to deal with what would otherwise be inappropriate or incorrect cross-references. References in the Protocol:

 

(a)                                 the “Adhering Party” shall be deemed to be references to the parties to this Agreement;

 

(b)                                 the “Adherence Letter” shall be deemed to be references to this Agreement;

 

(c)                                  the “Implementation Date” shall be deemed to be references to the date of this Agreement; and

 

(d)                                 this Agreement shall be deemed a “Covered Agreement.”

 

Contact information. For purposes of the Agreement (unless otherwise specified in the Agreement), all notices to the parties shall be delivered by electronic mail with a copy to follow by overnight courier, addressed as follows:

 

(a) Counterparty

 

China Lodging Group, Limited

No. 2266 Hongqiao Road

Shanghai, 200336, PRC

Attention: Teo Nee Chuan

 

(b) Dealer

 

Deutsche Bank AG, London Branch

c/o Deutsche Bank Securities Inc.

60 Wall Street 

New York, NY 10005

Attention:                                         Andrew Yaeger

 

27

 

                                                                                                Paul Stowell

                                                                                                Keyvan Zolfaghari

Telephone:                                   (212) 250-2717

Email:                                                            Andrew.Yaeger@db.com

                                                                                                paul.stowell@db.com

                                                                                                keyvan.zolfaghari@db.com

 

with a copy to:

 

Deutsche Bank AG, London Branch

c/o Deutsche Bank Securities Inc.

60 Wall Street

New York, New York 10005

Attention:                                         Equity Derivatives Trading

 

28

 

This Confirmation may be executed in several counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

 

Please confirm that the foregoing correctly sets forth the terms of our agreement by sending to us a letter, telex or other electronic transmission substantially similar to this facsimile, which letter, telex or other electronic transmission sets forth the material terms of the Transaction to which this Confirmation relates and indicates your agreement to those terms. Dealer will make the time of execution of the Transaction available upon request.

 

Dealer is authorised for the conduct of certain activities by the Prudential Regulation Authority.  It is subject to limited regulation by the Financial Conduct Authority and by the Prudential Regulation Authority.

 

We are very pleased to have executed the Transaction with you and we look forward to completing other transactions with you in the near future.

 

Very truly yours,

 

DEUTSCHE BANK AG, LONDON BRANCH

 

	
By:
    	
/s/ Paul Stowell
    	
 
    
	
 
    	
Name:
    	
Paul Stowell
    	
 
    
	
 
    	
Title:
    	
Attorney in Fact
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Lars Kestner
    	
 
    
	
 
    	
Name:
    	
Lars Kestner
    	
 
    
	
 
    	
Title:
    	
Managing Director
    	
 
    

 

DEUTSCHE BANK SECURITIES INC.,

acting solely as Agent in connection with the Transaction

 

	
By:
    	
/s/ Francis Windels
    	
 
    
	
 
    	
Name:
    	
Francis Windels
    	
 
    
	
 
    	
Title:
    	
Managing Director
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Paul Stowell
    	
 
    
	
 
    	
Name:
    	
Paul Stowell
    	
 
    
	
 
    	
Title:
    	
Managing Director
    	
 
    
	
 
    

 

[Signature Page to Base Capped Call Confirmation]

 

 

Counterparty hereby agrees to, accepts and confirms the terms of the foregoing as of the Trade Date.

 

CHINA LODGING GROUP, LIMITED

 

	
By:
    	

    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[Signature Page to Base Capped Call Confirmation]

 

 

ANNEX A

 

The Premium for the Transaction is set forth below.

 

Premium:                                                                                           USD4,794,000

 

A-1

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