Document:

Exhibit 10.9

 

OFFICE LEASE

between

 

MJH NORTHBROOK LLC (Landlord) and

 

CLARUS THERAPEUTICS, INC. (Tenant)

 

COMBINED CENTRE

 

555 Skokie Boulevard

Northbrook, IL 60062

 

 

TABLE OF CONTENTS

 

	
ARTICLE
    	
 
    	
PAGE
    
	
ARTICLE 1.  BASIC LEASE INFORMATION
    	
 
    	
1
    
	
1.1
    	
Basic   Lease Information
    	
 
    	
1
    
	
1.2
    	
Exhibits
    	
 
    	
2
    
	
ARTICLE 2.  AGREEMENT
    	
 
    	
3
    
	
ARTICLE 3.  DELIVERY OF PREMISES
    	
 
    	
3
    
	
3.1
    	
Delivery   of Possession
    	
 
    	
3
    
	
ARTICLE 4.  BASE RENT
    	
 
    	
3
    
	
ARTICLE 5.  OPERATING EXPENSES AND   TAXES
    	
 
    	
4
    
	
5.1
    	
General
    	
 
    	
4
    
	
5.2
    	
Estimated   Payments
    	
 
    	
5
    
	
5.3
    	
Annual   Settlement
    	
 
    	
5
    
	
5.4
    	
Final   Proration
    	
 
    	
6
    
	
5.5
    	
Occupancy   Variance
    	
 
    	
6
    
	
5.6
    	
Other   Taxes
    	
 
    	
6
    
	
5.7
    	
Additional   Rent
    	
 
    	
6
    
	
ARTICLE 6.  INSURANCE
    	
 
    	
6
    
	
6.1
    	
Landlord’s   Insurance
    	
 
    	
6
    
	
6.2
    	
Tenant’s   Insurance
    	
 
    	
7
    
	
6.3
    	
Forms   of Policies
    	
 
    	
7
    
	
6.4
    	
Waiver   of Claims and Subrogation
    	
 
    	
8
    
	
6.5
    	
Adequacy   of Coverage
    	
 
    	
8
    
	
6.6
    	
Certain   Insurance Risks
    	
 
    	
8
    
	
ARTICLE 7.  USE
    	
 
    	
8
    
	
ARTICLE 8.  COMPLIANCE WITH LAWS
    	
 
    	
8
    
	
ARTICLE 9.  HAZARDOUS MATERIALS
    	
 
    	
9
    
	
ARTICLE 10.  ASSIGNMENT AND   SUBLETTING
    	
 
    	
9
    
	
10.1
    	
General
    	
 
    	
9
    
	
10.2
    	
Recapture
    	
 
    	
10
    
	
10.3
    	
Submission   of Information
    	
 
    	
11
    
	
10.4
    	
Payments   to Landlord
    	
 
    	
11
    
	
10.5
    	
Deemed   Transfers
    	
 
    	
11
    
	
10.6
    	
Permitted   Transfer
    	
 
    	
11
    
	
10.7
    	
Condition
    	
 
    	
11
    
	
10.8
    	
Remedies
    	
 
    	
12
    
	
ARTICLE 11.  RULES AND REGULATIONS
    	
 
    	
12
    
	
ARTICLE 12.  COMMON AREAS
    	
 
    	
12
    
	
ARTICLE 13.  LANDLORD’S SERVICES
    	
 
    	
12
    
	
13.1
    	
Landlord’s   Repair and Maintenance
    	
 
    	
12
    
	
13.2
    	
Landlord’s   Other Services
    	
 
    	
13
    
	
13.3
    	
Tenant’s   Costs
    	
 
    	
14
    
	
13.4
    	
Limitation   on Liability
    	
 
    	
14
    
	
ARTICLE 14.  TENANT’S CARE OF THE   PREMISE
    	
 
    	
14
    
	
ARTICLE 15.  ALTERATIONS
    	
 
    	
15
    
	
15.1
    	
General
    	
 
    	
15
    
	
15.2
    	
Free-Standing   Partitions
    	
 
    	
15
    
	
15.3
    	
Removal
    	
 
    	
15
    
	
15.4
    	
ADA   Compliance
    	
 
    	
16
    
	
ARTICLE 16.  MECHANICS’ LIENS
    	
 
    	
16
    
	
ARTICLE 17.  END OF TERM
    	
 
    	
16
    
	
ARTICLE 18.  EMINENT DOMAIN
    	
 
    	
17
    
	
ARTICLE 19.  DAMAGE AND DESTRUCTION
    	
 
    	
17
    
	
ARTICLE 20.  SUBORDINATION
    	
 
    	
18
    
	
20.1
    	
General
    	
 
    	
18
    
	
ARTICLE 21.  ENTRY BY LANDLORD
    	
 
    	
18
    
	
ARTICLE 22.  INDEMNIFICATION,   WAIVER AND RELEASE
    	
 
    	
19
    
	
22.1
    	
Tenant’s   Indemnification
    	
 
    	
19
    
	
22.2
    	
Waiver   and Release
    	
 
    	
19
    

 

i

 

	
ARTICLE 23.  QUIET ENJOYMENT
    	
 
    	
20
    
	
ARTICLE 24.  EFFECT OF SALE
    	
 
    	
20
    
	
ARTICLE 25.  DEFAULT
    	
 
    	
20
    
	
25.1
    	
Events   of Default by Tenant
    	
 
    	
20
    
	
25.2
    	
Landlord’s   Remedies
    	
 
    	
20
    
	
25.3
    	
Damages;   no Termination
    	
 
    	
21
    
	
25.4
    	
Damages   upon Termination
    	
 
    	
21
    
	
25.5
    	
Cumulative   Remedies
    	
 
    	
22
    
	
25.6
    	
Mitigation
    	
 
    	
22
    
	
ARTICLE 26.  Intentionally Deleted
    	
 
    	
22
    
	
ARTICLE 27.  PARKING
    	
 
    	
22
    
	
ARTICLE 28.  MISCELLANEOUS
    	
 
    	
23
    
	
28.1
    	
Substitution   of Premises
    	
 
    	
23
    
	
28.2
    	
Security   Deposit
    	
 
    	
23
    
	
28.3
    	
Signs
    	
 
    	
23
    
	
28.4
    	
No   Offer
    	
 
    	
24
    
	
28.5
    	
Joint   and Several Liability
    	
 
    	
24
    
	
28.6
    	
No   Construction Against Drafting Party
    	
 
    	
24
    
	
28.7
    	
Time   of the Essence
    	
 
    	
24
    
	
28.8
    	
No   Recordation
    	
 
    	
24
    
	
28.9
    	
No   Waiver
    	
 
    	
24
    
	
28.10
    	
  Limitation   on Recourse
    	
 
    	
24
    
	
28.11
    	
  Estoppel   Certificates
    	
 
    	
25
    
	
28.12
    	
  Waiver   of Jury Trial
    	
 
    	
25
    
	
28.13
    	
  No   Merger
    	
 
    	
25
    
	
28.14
    	
  Holding   Over
    	
 
    	
25
    
	
28.15
    	
  Notices
    	
 
    	
25
    
	
28.16
    	
  Severability
    	
 
    	
26
    
	
28.17
    	
  Written   Amendment Required
    	
 
    	
26
    
	
28.18
    	
  Captions
    	
 
    	
26
    
	
28.19
    	
  Authority
    	
 
    	
26
    
	
28.20
    	
  Brokers
    	
 
    	
26
    
	
28.21
    	
  Governing   Law
    	
 
    	
26
    
	
28.22
    	
  No   Easements for Air or Light
    	
 
    	
26
    
	
28.23
    	
  Tax   Credits
    	
 
    	
26
    
	
28.24
    	
  Landlord’s   Fees
    	
 
    	
27
    
	
28.25
    	
  Non-waiver
    	
 
    	
27
    
	
28.26
    	
  Presumption
    	
 
    	
27
    
	
28.27
    	
  Waiver   of Technical Defects in Notices
    	
 
    	
27
    
	
28.28
    	
  No   Right to Terminate
    	
 
    	
27
    
	
28.29
    	
  No   Liability for Crimes
    	
 
    	
27
    
	
28.30
    	
  Binding   Effect
    	
 
    	
27
    
	
28.31
    	
  Confidentiality
    	
 
    	
27
    
	
28.32
    	
  Force   Majeure
    	
 
    	
28
    
	
28.33
    	
  Interest   and Late Charges
    	
 
    	
28
    
	
28.34
    	
  Entire   Agreement
    	
 
    	
28
    
	
28.35
    	
  Counterparts
    	
 
    	
28
    
	
28.36
    	
  OFAC   Certification
    	
 
    	
28
    
	
28.37
    	
  Telecommunications
    	
 
    	
29
    

 

Exhibits

Exhibit A - Layout Of The Premises

Exhibit B - Rules and Regulations

Exhibit C - Tenant Estoppel Certificate

 

ii

 

OFFICE LEASE

between

MJH NORTHBROOK LLC (“Landlord”) and

 

CLARUS THERAPEUTICS, INC. (“Tenant”)

 

THIS OFFICE LEASE (“Lease”) is entered into by Landlord and Tenant on the date set forth in the following Basic Lease Information. Landlord and Tenant hereby agree as follows:

 

ARTICLE 1. BASIC LEASE INFORMATION.

 

1.1  Basic Lease Information.

 

In addition to the Terms that are defined elsewhere in this Lease, the following terms shall have the following meaning as set forth in this Lease:

 

(a)                                 Lease Date: July         , 2011

 

(b)                                 Landlord: MJH Northbrook LLC, a Delaware limited liability company

 

(c)                                  Landlord’s Address for receipt of notice:

 

MJH Northbrook LLC

c/o Fulcrum Operating Company, LLC

8725 W. Higgins Road, Suite 805

Chicago, IL 60631

Attention: Mr. Peter J. Broccolo

 

With a copy to:

Jones Lang LaSalle Americas, Inc.

555 Skokie Boulevard, Suite 370

Northbrook, Illinois 60062

Attn: General Manager

(Fax: 847-272-5324)

 

(d)                                 Tenant: CLARUS THERAPEUTICS, INC., a Delaware corporation

 

(e)                                  Tenant’s Address for receipt of notice: the Premises:

Attn:   Steven Bourne

Fax:    847-562-4306

 

(f)                                   Land: The parcel of land located at the Building Address upon which the Building is situated.

 

(g)                                  Project: The development commonly known as Combined Centre consisting of the Land and all Improvements built on the Land, including without limitation, the Building, Common Areas, other buildings, parking lot or parking structure, if any, walkways, driveways, fences and landscaping.

 

(h)                                 Building: The building located on the Land of which the Premises are a part.

 

(i)                                     Building Address: 555 Skokie Boulevard, Northbrook, Illinois 60062.

 

(j)                                    Premises: The Premises located at Suite 340 on the third floor of the Building, as further

 

1

 

shown on Exhibit A to this Lease.

 

(k)                                 Rentable Square Feet (“RSF”) of the Premises: approximately 2,728 RSF, which Landlord and Tenant hereby conclusively agree shall be the RSF of the Premises for all purposes of this Lease. Unless otherwise expressly provided herein, any statement of RSF set forth in this Lease, or that may have been used in calculating rental, is an approximation which Landlord and Tenant agree is reasonable and the rental based thereon is not subject to revision whether or not the actual RSF is more or less.

 

(l)                                     Term: One year, beginning on the Commencement Date and ending on the Expiration Date.

 

(m)                             Commencement Date: September 1, 2011

 

(n)                                 Expiration Date: August 31, 2012.

 

(o)                                 Security Deposit: $6,670.00 (approx. one month’s gross Rent)

 

(p)                                 Base Rent: See Section 4

 

(q)                                 Additional Rent: Any amounts that this Lease requires Tenant to pay in addition to Base Rent.

 

(r)                                    Rent: Collectively, the Base Rent and Additional Rent.

 

(s)                                   Tenant’s Proportionate Share: 4.261%, which is the ratio of the RSF of the Premises to the RSF of the Building (64,016 RSF).

 

(t)                                    Landlord’s Broker: Jones Lang LaSalle Americas (Illinois), L.P.

 

(u)                                 Tenant’s Broker: Tenant Advisors

 

(v)                                 Prime Rate: The rate of interest from time to time published in the “Money Rates” section of the Wall Street Journal on the date such calculation is to be made or if not published on such date, the date of publication immediately preceding such calculation date.

 

(w)                               Use: The permitted use of the Premises shall be general office use.

 

(x)                                 Lease Year: A period of 12 consecutive calendar months with the first full Lease Year commencing on the Commencement Date (unless the Commencement Date is not the first day of a calendar month, in which case the first Lease Year will commence on the first day of the calendar month following the Commencement Date) and each succeeding Lease Year commencing on the anniversary of the commencement of the first Lease Year. For the purpose of calculating the amounts due from Tenant as Rent, the first Lease Year shall include the period of time beginning on the Commencement Date (if not the first day of a calendar month) to the first day of the calendar month following the Commencement Date.

 

(y)                                 Calendar Year: Each year in which any part of the Term falls, including the years in which the Term commences and expires.

 

If any other provision of this Lease conflicts with anything set forth in this Article 1.1, such other provision will prevail.

 

2

 

1.2  Exhibits.

 

The following exhibits are attached to this Lease and are made part hereof:

 

Exhibit A - Layout Of The Premises

Exhibit B - Rules and Regulations

Exhibit C - Tenant Estoppel Certificate

 

ARTICLE 2. AGREEMENT.

 

Landlord leases the Premises to Tenant, and Tenant leases the Premises from Landlord, pursuant to the terms and conditions of this Lease. The duration of this Lease shall be the Term. The Term shall commence on the Commencement Date and shall expire on the Expiration Date, except as may be otherwise set forth in this Lease.

 

Landlord also grants to Tenant the rights under this Lease to use in common with Landlord and other tenants, occupants and visitors to the Building, the Common Areas (as defined in Article 12), including the common walkways and sidewalks of the Property, the Building lobby (but not for advertising or promotional purposes), entrances, stairs and elevators, and, if the Premises include less than an entire floor of the Building, the common lobbies, hallways and toilets and other common facilities of such floor. Landlord reserves the right to increase, reduce or change the size, height, layout or location of the Building and the Common Areas and facilities (as long as access to the Premises is not materially impaired). No easement, license or other right to light, air or view is created by this Lease.

 

ARTICLE 3. DELIVERY OF PREMISES.

 

3.1  Delivery of Possession.

 

Tenant accepts the Premises AS IS, WHERE IS, with all faults. Landlord is not required to perform or pay for, or provide Tenant with an allowance for, any work or improvements on the Premises. No agreement or promise of Landlord, the property manager, or their respective agents or employees to alter, remodel, decorate, clean, or improve the Premises or Building (or to provide Tenant with any credit or allowance for the same), and no representation regarding the condition of the Premises or Building, has been made to or relied upon by Tenant. Tenant acknowledges that it is currently in possession of the Premises as a subtenant of the tenant whose lease is expiring on the day before the Commencement Date of this Lease. Accordingly, Tenant is fully familiar with, and hereby accepts, the condition of the Premises. Tenant acknowledges that neither Landlord nor its agents or employees have made any representations or warranties as to the suitability or fitness of the Premises for the conduct of Tenant’s business or for any other purpose.

 

ARTICLE 4. BASE RENT.

 

Throughout the Term, Tenant shall pay Base Rent to Landlord in the amounts and for the time periods described as follows:

 

	
Lease Year
    	
 
    	
Base Rent /RSF)
    	
 
    	
Annual Base Rent
    	
 
    	
Monthly Installments of
   Base Rent
    	
 
    
	
1
    	
 
    	
$
    	
15.00
    	
 
    	
$
    	
40,920.00
    	
 
    	
$
    	
3,410.00
    	
 
    
											

 

Rent shall be paid in advance on or before the first day of each calendar month of the Term, and shall be accompanied by any applicable rent, sales, use or other tax which is based on the amount and/or payment of Rent payable pursuant to this Lease. If the Term commences on a day other than the first day of a calendar month or ends on a day other than the last day of a calendar month, then Base Rent will be appropriately prorated based on the actual number of calendar days in such month. Base Rent shall be paid to Landlord, without written notice or demand and without deduction or offset, as an independent covenant of Tenant, in lawful money of the United States of America at Landlord’s address set forth in Article 1.1 herein or to such other address as Landlord may from time to time designate in writing. After the service of more than one notice on Tenant for overdue Rent or if more than one check is returned unpaid during any Lease Year, Rent for the remainder of that Lease Year shall be paid by cashier’s check.

 

3

 

ARTICLE 5. OPERATING EXPENSES AND TAXES.

 

5.1  General.

 

(a)                                 In addition to Base Rent, beginning on the Commencement Date, Tenant shall pay Tenant’s Proportionate Share of (i) the actual Operating Expenses paid, payable or incurred by Landlord for any calendar year or partial calendar year of the Term, and (ii) the actual Taxes paid, payable or incurred by Landlord for any calendar year or partial calendar year of the Term. If Operating Expenses or Taxes are calculated for a partial calendar year, an appropriate proration shall be made.

 

(b)                                 As used in this Lease, the term “Operating Expenses” means:

 

(1)                                 All costs of management, operation, and maintenance of the Project, including without limitation; wages, salaries, and compensation of employees consulting, accounting, legal, janitorial, maintenance, guard, and other services; management fees and costs (charged by Landlord, any affiliate of Landlord, or any other entity managing the Project and determined at a rate consistent with prevailing market rates for comparable services and Projects); that part of office rent or rental value of space in the Project used or furnished by Landlord to enhance, manage, operate, and maintain the Project; electricity, water, waste disposal, and other utilities; materials and supplies; maintenance and repairs; insurance obtained with respect to the Project; depreciation on personal property and equipment, except as set forth in Article 5.1(c), below, which is or should be capitalized on the books of Landlord; and any other costs, charges, and expenses that under generally accepted accounting principles would be regarded as management, maintenance, and/or Operating Expenses; the Building’s allocable share of any operating expenses that are shared with other parts of the Project; and

 

(2)                                 The cost (amortized on a straight line basis over the reasonable useful life as determined by Landlord) together with interest at the greater of the Prime Rate plus two percent (2%) or Landlord’s borrowing rate for such capital improvements, including the rental of equipment which would be a substitute for a capital expense that the Landlord would otherwise incur, on the unamortized balance of any capital improvements that are made to the Project by Landlord (i) for the purpose of reducing Operating Expenses or reducing the increases thereof, or (ii) required under any law or regulation that was not applicable to the Project at or prior to the date the Project was developed.

 

(c)                                  The Operating Expenses will not include:

 

(1)                                  depreciation on the Project (other than depreciation on personal property, equipment, window coverings on exterior windows provided by Landlord and carpeting and wall covering in public corridors and Common Areas);

 

(2)                                 advertising costs, finders’ fees and real estate brokers’ commissions;

 

(3)                                 ground lease or mortgage payments;

 

(4)                                  costs of replacements to personal property and equipment for which depreciation costs are included as an operating expense;

 

(5)                                 the cost of repairs due to casualty or condemnation that are reimbursed by third parties;

 

(6)                                  attorneys’ fees incurred in connection with the negotiation of leases with tenants of the Building or disputes with such tenants unrelated to the operation or maintenance of the Property;

 

(7)                                  any expenditures for which Landlord is reimbursed by tenants (other than by payment of their shares of Operating Expenses) or by third parties

 

(8)                                 salaries and benefits of executive employees above the grade of General Manager;

 

(9)                                 fines imposed on Landlord for violation of governmental requirements;

 

(10)                           costs incurred in connection with the sale, financing or refinancing of the Property or any portion thereof;

 

(11)                           organizational expenses associated with the creation and operation of the entity which constitutes Landlord; and

 

(12)                          Taxes (as defined below).

 

4

 

(d)                                 As used in this Lease, the term “Taxes” means all real and personal property taxes and assessments (and any tax levied in whole or in part in lieu of or in addition to such taxes) levied or assessed against the Project. Taxes include, without limitation, real estate taxes, personal property taxes, sewer rents, water rents, assessments (special or otherwise) and transit taxes, whether any such taxes are imposed by the United States, the State of Illinois, the county in which the Project is located or any local governmental municipality, authority or agency, or any other political subdivision of any thereof. For the purpose of determining Taxes for any given fiscal year the amount to be included for such year (i) from special assessments payable in installments shall be the amount of the installments (and any interest) due and payable during such fiscal year, (ii) from all other Taxes shall, at Landlord’s option, be either the amount due and payable during such fiscal year or the amount accrued, assessed or otherwise imposed for such fiscal year, and (iii) from any adjustment to any Taxes by the taxing authority, when such adjustment has resulted in a corresponding adjustment payment by or to Landlord, shall constitute an adjustment to Taxes for the fiscal year during which such adjustment is paid or received by Landlord, as the case may be.

 

5.2  Estimated Payments.

 

During each calendar year or partial calendar year in the Term beginning as of the Commencement Date, in addition to Base Rent, Tenant shall pay to Landlord on the first day of each month an amount equal to 1/12 of the product of Tenant’s Proportionate Share multiplied by the Estimated Operating Expenses, defined below, for such calendar year and 1/12 of the product of Tenant’s Proportionate Share multiplied by the Estimated Taxes, defined below, for such calendar year. Estimated Operating Expenses for any calendar year means the Landlord’s reasonable estimate of Operating Expenses for such calendar year, and will be subject to revision according to the further provisions of this Article 5.2 and Article 5.3. Estimated Taxes for any calendar year means Landlord’s reasonable estimate of Taxes for such calendar year, and will be subject to revision according to the further provisions of this Article 5.2 and Article 5.3. During any partial calendar year during the Term, Estimated Operating Expenses and Estimated Taxes will be estimated on a full-year basis. During each December during the Term, or as soon after each December as practicable, Landlord will give Tenant written notice of Estimated Operating Expenses and Estimated Taxes for the ensuing calendar year. On or before the first day of each month during the ensuing calendar year (or each month of the Term, if a partial calendar year), Tenant shall pay to Landlord 1/12 of the product of Tenant’s Proportionate Share multiplied by the Estimated Operating Expenses for such calendar year and 1/12 of the product of Tenant’s Proportionate Share multiplied by the Estimated Taxes for such calendar year; however, if such written notice is not given in December, Tenant shall continue to make monthly payments on the basis of the prior year’s Estimated Operating Expenses and Estimated Taxes until the month after such written notice is given, at which time Tenant shall commence making monthly payments based upon the revised Estimated Operating Expenses and the revised Estimated Taxes. In the month Tenant first makes a payment based upon the revised Estimated Operating Expenses and the revised Estimated Taxes, Tenant shall pay to Landlord for each month which has elapsed since December the difference between the amount payable based upon the revised Estimated Operating Expenses and the revised Estimated Taxes and the amount payable based upon the prior year’s Estimated Operating Expenses and Estimated Taxes, respectively. If at any time or times it reasonably appears to Landlord that the actual Operating Expenses or the actual Taxes for any calendar year will vary from the Estimated Operating Expenses or Estimated Taxes, respectively for such calendar year, Landlord may, by written notice to Tenant, revise the Estimated Operating Expenses or the Estimated Taxes, as the case may be, for such calendar year, and subsequent payments by Tenant in such calendar year will be based upon such revised Estimated Operating Expenses or revised Estimated Taxes.

 

5.3  Annual Settlement.

 

Within 120 days after the end of each calendar year during the Term or as soon after such 120-day period as practicable, Landlord shall deliver to Tenant a statement of amounts payable under Article 5.1 for such calendar year prepared and certified by Landlord or its agents. Such certified statement shall be final and binding upon Tenant unless Tenant objects to it in writing to Landlord within 45 days after it is given to Tenant. If such statement shows an amount owing by Tenant that is less than the estimated payments previously made by Tenant for such calendar year, the excess shall, at Landlord’s option, be refunded to Tenant within 30 days or be held by Landlord and credited against the next payment of Rent; however, if the Term has ended and Tenant was not in default at its end, Landlord shall refund the excess to Tenant. If such statement shows an amount owing by Tenant that is more than the estimated payments previously made by Tenant for such calendar year, Tenant shall pay the deficiency to Landlord within 30 days after the delivery of such statement. Provided no Event of Default exists under this Lease,

 

5

 

Tenant shall have 90 days after receipt of the statement to have an independent certified public accountant which is either (i) a nationally or regionally recognized public accounting firm or (ii) not working for Tenant on a contingency fee basis, complete an audit of Landlord’s books and records on Operating Expenses and/or Taxes, during normal business hours upon reasonable advance written notice at Landlord’s local office. Tenant shall deliver to Landlord a copy of the results of such audit within 10 days of receipt by Tenant. If any dispute is resolved in favor of Tenant, Landlord shall promptly credit or refund to Tenant any amount agreed or determined to have been overpaid.

 

5.4  Final Proration.

 

If the Term ends on a day other than the last day of a calendar year, the amount of increase (if any) in the Operating Expenses and Taxes payable by Tenant applicable to the calendar year in which this Lease ends shall be calculated on the basis of the number of days of the Term falling within such calendar year, and Tenant’s obligation to pay any increase, or Landlord’s obligation to refund any overage, shall survive the expiration or other termination of this Lease.

 

5.5  Occupancy Variance.

 

Operating Expenses which vary with occupancy and are attributable to any part of the Term in which less than 100% of the rentable area of the Building is occupied by tenants shall be adjusted by Landlord to the amount that Landlord reasonably believes they would have been if 100% of the rentable area of the Building had been occupied.

 

5.6  Other Taxes.

 

(a)                                 Tenant shall reimburse Landlord upon demand for any and all taxes payable by Landlord (other than as set forth in Article 5.6(b) below), whether or not now customary or within the contemplation of Landlord and Tenant:

 

(1)                                  upon or measured by Rent under this Lease, including without limitation, any gross revenue tax, excise tax, or value added tax levied by the federal government or any other governmental body with respect to the receipt of rent; provided, further, in no event shall Tenant be obligated to pay for any year any greater amount by way of such tax than would have been payable by Tenant had the rentals paid to Landlord under this Lease been the sole taxable income of Landlord for the year in question; and

 

(2)                                  upon this transaction or any document to which Tenant is a party creating or transferring an interest or an estate in the Premises.

 

(b)                                 Tenant will not be obligated to pay, and Operating Expenses and Taxes will not include, any inheritance tax, gift tax, transfer tax, franchise tax, income tax (based on net income), profit tax, or capital levy imposed upon Landlord; provided, however, that Tenant shall pay any tax or excise on Rent or other amounts payable by Tenant to Landlord levied or assessed against Landlord on account of Rent.

 

(c)                                  Tenant shall pay promptly when due all personal property taxes on Tenant’s personal property in the Premises and any other taxes payable by Tenant that if not paid might give rise to a lien on the Premises or Tenant’s interest in the Premises.

 

5.7  Additional Rent.

 

Amounts payable by Tenant pursuant to this Article 5 shall be payable as Rent, without deduction or offset. If Tenant fails to pay any amounts due according to this Article 5, Landlord shall have all the rights and remedies available to it under this Lease and/or applicable law.

 

6

 

ARTICLE 6. INSURANCE.

 

6.1  Landlord’s Insurance.

 

At all times during the Term, Landlord shall procure and keep in full force and effect the following insurance:

 

(a)                                 All-risk Property Insurance insuring the Building, its equipment, common area furnishings, and leasehold improvements in the Premises, all in such amounts and with such deductibles as Landlord considers appropriate;

 

(b)                                 Commercial General Liability Insurance insuring its interest in the Project;

 

(c)                                  Such other insurance as Landlord reasonably determines from time to time.

 

6.2  Tenant’s Insurance.

 

Tenant shall, at its sole cost and expense, keep in full force and effect the following insurance:

 

(i)                                      All-Risk Property Insurance on “Tenant’s Property” for the full replacement value. Such policy shall contain an Agreed Amount endorsement in lieu of a coinsurance clause. “Tenant’s Property” is defined to be all improvements, betterments and personal property of Tenant located in or on the Premises, Common Areas or Building, excluding that which is insured by Landlord’s all-risk Property Insurance, as set forth in Article 6.1(a) herein.

 

(ii)                                   Commercial General Liability Insurance insuring Tenant against any liability arising out of its use, occupancy or maintenance of the Premises or the business operated by Tenant pursuant to the Lease. Such insurance shall be in the amount of at least $3,000,000 per occurrence. Such insurance shall be broad form and include, but not be limited to, contractual liability, products and completed operations liability, and personal injury liability.

 

(iii)                               Workers’ Compensation insurance as required by state law.

 

(iv)                              Any other form or forms of insurance or increased amounts of insurance as Landlord or any Mortgagees of Landlord may reasonably require from time to time.

 

All such policies shall be written in a form and with an insurance company satisfactory to Landlord and any mortgagees of Landlord. Policies described in clause (ii) above shall include the following as additional insureds, including their members, managers, officers, directors and employees. A GL-2010 Endorsement shall be utilized for the policy(ies) described above. Please note that the spelling of these parties must be exactly correct or Tenant will not be allowed to take possession or occupancy of the Premises:

 

1.                                      MJH Northbrook LLC

2.                                      Property Manager (currently Jones Lang LaSalle Americas (Illinois), L.P.)

3.                                      Asset Manager (currently Fulcrum Operating Company, LLC)

 

Prior to or at the time that Tenant takes possession of the Premises, Tenant shall deliver to Landlord copies of policies or certificates evidencing the existence of the amounts and forms of coverage satisfactory to Landlord. Tenant shall, within ten (10) days prior to the expiration of such policies, furnish Landlord with renewals or “binders” thereof, or Landlord may order such insurance and charge the cost thereof to Tenant as Additional Rent.

 

6.3  Forms of Policies.

 

All policies will be written by companies licensed to do business in the State of Illinois and which have a rating by Best’s Key Rating Guide not less than A-/XII. All Commercial General Liability and All-Risk property policies maintained by Tenant shall be written as primary policies, not contributing with and not supplemental to the coverage that Landlord may carry. Certificate(s) of insurance relating to policies required under this Agreement shall contain the following words verbatim:

 

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“It is agreed that this insurance will not be canceled, not renewed or the limits of coverage in any way reduced without at least thirty (30) day’s advance written notice [ten (10) days for non-payment of premium] sent by certified mail, return receipt requested to the management office (currently Jones Lang LaSalle, 555 Skokie Boulevard, Suite 370, Northbrook, Illinois 60062), Attn: General Manager — Insurance.”

 

In addition, the language set forth in this Section 6.3 shall also be added to each policy in the form of an endorsement. Certificate Holder shall be named as follows: MJH Northbrook LLC, at the management office (currently 555 Skokie Boulevard, Suite 370, Northbrook, Illinois 60062).

 

6.4  Waiver of Claims and Subrogation.

 

Notwithstanding that any loss or damage may be due to or result from the negligence of either of the parties hereto, Landlord and Tenant, for themselves and their respective insurers, each waive any and all rights to recover against the other, against any subsidiary or joint venture of such other party or against any other occupant of the Project, or against the officers, directors, shareholders, partners, joint ventures, employees, agents, customers, invitees, or business visitors of such other party or of such other tenant or occupant of the Project, for any loss or damage to the property of such waiving party arising from any cause, if and to the extent that such damage is covered by the waiving party’s property insurance, or would have been so covered if the waiving party had carried the property insurance that it is required to carry under this Article 6.

 

6.5  Adequacy of Coverage.

 

Landlord, its agents and employees make no representation that the limits of liability specified to be carried by Tenant pursuant to this Article 6, are adequate to protect Tenant. If Tenant believes that any of such insurance coverage is inadequate, Tenant will obtain such additional insurance coverage as Tenant deems adequate, at Tenant’s sole expense.

 

6.6  Certain Insurance Risks.

 

Tenant shall not do or permit to be done any act or thing upon the Premises or the Project which would (a) jeopardize or be in conflict with fire insurance policies covering the Project or fixtures and property in the Project; (b) increase the rate of fire insurance applicable to the Project to an amount higher than it otherwise would be for general office use of the Project; or (c) subject Landlord to any liability or responsibility for injury to any person or persons or to property by reason of any business or operation being carried on upon the Premises.

 

ARTICLE 7. USE.

 

The Premises shall be used only for the purposes designated in Article 1.1(w) and purposes incidental to that use, and for no other purpose without the prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed. Tenant shall use the Premises in a careful, safe, and proper manner. Tenant shall not use or permit the Premises to be used or occupied for any purpose or in any manner prohibited by any applicable laws, for the use or purposes of demonstrations or picketing, or for any improper, immoral, unlawful, pornographic, sexually explicit, or objectionable use or purpose. Tenant shall not cause, maintain, or permit any nuisance in, on, or about the Premises. Tenant shall not commit waste or suffer or permit waste to be committed in, on, or about the Premises. Tenant shall conduct its business and control its employees, and agents in such a manner as not to create any nuisance or interfere with, annoy, or disturb any other Tenant or occupant of the Project or Landlord in its operation of the Project.

 

ARTICLE 8. COMPLIANCE WITH LAWS.

 

Tenant, at its sole cost and expense, shall promptly comply with all laws, including building and zoning laws, the ADA, statutes, ordinances, and governmental rules and regulations with respect, related or applicable to Tenant’s use or occupancy of the Premises. Tenant shall also comply with the requirements of any board of fire

 

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underwriters or other similar body constituted after the Lease Date, with any direction or occupancy certificate issued pursuant to any law by any public officer or officers, and with the provisions of all recorded documents affecting the Premises, insofar as they relate to the condition, use, or occupancy of the Premises, or improvements or alterations made by or for the Tenant after the Lease Date, excluding requirements of structural changes to the Premises or the Building, unless required by negligence or willful acts of the Tenant or by the unique nature of Tenant’s use or occupancy of the Premises.

 

ARTICLE 9. HAZARDOUS MATERIALS.

 

(a)                                 For purposes of this Lease, “hazardous materials” means any explosives, radioactive materials, petroleum products, hazardous wastes, or hazardous substances, including without limitation substances defined as “hazardous substances” in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601-9657; the Hazardous Materials Transportation Act of 1975, 49 U.S.C. Section 1801-1812; the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901-6987; or any other federal, state, or local statute, law, ordinance, code, rule, regulation, order, or decree regulating, relating to, or imposing liability or standards of conduct concerning hazardous materials, waste, or substances now or at any time hereafter in effect (collectively, “hazardous materials laws”).

 

(b)                                 Tenant shall not cause or permit the storage, use, generation, or disposition of any hazardous materials in, on, or about the Premises or the Project by Tenant, its agents, employees, or contractors or invitees. Tenant shall not permit the Premises to be used or operated in a manner that may cause the Premises or the Project to be contaminated by any hazardous materials in violation of any hazardous materials laws or result in the diminution of the value of the Building or Project or degradation of structural materials of the Premises. Tenant shall immediately advise Landlord in writing of (1) any and all enforcement, cleanup, remedial, removal, or other governmental or regulatory actions instituted, completed, or threatened pursuant to any hazardous materials laws relating to any hazardous materials affecting the Premises; and (2) all claims made or threatened by any third party against Tenant, Landlord, or the Premises relating to damage, contribution, cost recovery, compensation, loss, or injury resulting from any hazardous materials on or about the Premises. Without Landlord’s prior written consent, Tenant shall not take any remedial action or enter into any agreements or settlements in response to the presence of any hazardous materials in, on, or about the Premises.

 

(c)                                  Tenant shall be solely responsible for and will defend, indemnify and hold Landlord, its agents, and employees harmless from and against all claims, costs, and liabilities, including attorneys’ fees and costs, arising out of or in connection with Tenant’s breach of its obligations in this Article 9. Tenant will be solely responsible for and will defend, indemnify, and hold Landlord, its agents, and employees harmless from and against any and all claims, costs, and liabilities, including attorneys’ fees and costs, arising out of or in connection with the removal, cleanup, and restoration work and materials necessary to return the Premises and any other property of whatever nature located on the Project to their condition existing prior to the default. Tenant’s obligations under this Article 9 will survive the expiration or other termination of this Lease.

 

ARTICLE 10. ASSIGNMENT AND SUBLETTING.

 

10.1  General.

 

Tenant, for itself, its heirs, distributees, executors, administrators, legal representatives, successors, and assigns, covenants that it shall not assign, mortgage, or encumber this Lease, nor sublease, nor permit the Premises or any part of the Premises to be used or occupied by others, without the prior written consent of Landlord in each instance, which consent shall not be unreasonably withheld or delayed (except for any extension or expansion options or any rights of first refusal or first offer for which consent may be arbitrarily withheld), provided Tenant requests the same in writing and provided (i) at the time thereof Tenant is not in default under this Lease, (ii) Landlord, in its sole discretion reasonably exercised, determines that the proposed use of the Premises, and the reputation, business, and financial responsibility of the proposed assignee or sublessee, are satisfactory to Landlord, (iii) any assignee or sublessee expressly assumes all the obligations of this Lease on Tenant’s part to be performed, (iv) a consent to one assignment or subletting will not be deemed to be a consent to any subsequent assignment or subletting, (v) the proposed assignee or sublessee is not a tenant in the Project or the subtenant or assignee of any such tenant, (vi) the proposed assignee or sublessee is not a person or entity with whom Landlord or its agent is then

 

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negotiating or to or from whom Landlord or its agent has given or received any written or oral proposal within the past 12 months regarding a lease of space in the Project, (vii) the proposed sublessee or assignee is not a government entity; and (viii) that it will be reasonable for Landlord to refuse to consent to a assignment or sublease if the proposed assignee or sublessee or its business is subject to compliance with additional requirements of the ADA, including related regulations, beyond those requirements which are applicable to Tenant unless Tenant, its assignee or subtenant at Landlord’s request agree to make such alterations to the Premises and the Project that may be necessary in order to comply with the ADA as it applies to the use, occupancy, or alteration of the Premises, and to deposit with Landlord 100% of Landlord’s reasonable estimate of the cost of such alterations.

 

Any assignment or sublease in violation of this Article 10 will be void. If this Lease is assigned, or if the Premises or any part of the Premises are subleased or occupied by anyone other than Tenant, Landlord may, after default by Tenant, collect rent from the assignee, subtenant, or occupant, and apply the net amount collected to Rent. No assignment, sublease, occupancy, or collection shall be deemed (a) a waiver of the provisions of this Article 10; (b) the acceptance of the assignee, subtenant, or occupant as Tenant; or (c) a release of Tenant from the further performance by Tenant of covenants on the part of Tenant contained in this Lease including, without limitation, the covenant to pay Rent. The consent by Landlord to an assignment or sublease will not relieve Tenant from obtaining Landlord’s prior written consent in writing to any further assignment or sublease. No assignment or subletting shall relieve Tenant from its obligations hereunder, and Tenant shall continue to be liable as a principal and not as a guarantor or surety to the same extent as though no assignment or sublease has been made. No permitted subtenant may assign or encumber its sublease or further sublease all or any portion of its subleased space, or otherwise permit the subleased space or any part of its subleased space to be used or occupied by others, without Landlord’s prior written consent in each instance. Notwithstanding anything to the contrary contained herein, Landlord may withhold consent to a sublease or assignment unless Landlord is provided with waivers from any brokers involved in such subleasing or assignment of all lien rights of any such brokers under Illinois law, including but not limited to the Commercial Real Estate Broker Lien Act. Notwithstanding anything in this Lease to the contrary, Tenant shall not assign this Lease or sublet all or any part of the Premises to a proposed assignee or sublessee whose use, occupancy, or tenancy of the Premises is prohibited by the terms of a lease between Landlord and any other tenant in: (i) the Building or (ii) any other building owned, developed, or constructed by or at the direction of Landlord on land adjacent to the Project. (“Prohibited Tenant”).

 

10.2  Recapture.

 

Landlord shall have the additional right to terminate this Lease as to that portion of the Premises which the Tenant seeks to assign, or in the case of a sublease, to suspend this Lease as to that portion of the Premises and for that portion of the Term which the Tenant seeks to sublet. The Landlord may exercise such right to terminate or suspend by giving written notice to Tenant at any time on or before the date by which the Landlord notifies Tenant whether it consents to a proposed assignment or sublease. If the Landlord exercises such right to terminate or suspend, such termination or suspension shall become effective on the date set forth in the Landlord’s written notice, which shall in no event be sooner than fifteen (15) days prior to, or later than fifteen (15) days following, the effective date of the proposed assignment or sublease as set forth in the Tenant’s request for the Landlord’s consent; provided that if the Tenant has failed to request such consent, then the effective date of any termination or suspension by the Landlord pursuant to this Article 10.2 shall be on any date specified by the Landlord which is reasonably determined to be the date which would have been necessary to get the space ready for possession by the Tenant’s proposed subtenant or assignee. Upon any termination of this Lease pursuant to this Article 10.2, whether with respect to all or any portion of the Premises, Tenant shall have no further obligation under this Lease with respect to all or such portion of the Premises, as the case may be, for the period following the termination; provided that the Tenant shall remain liable to the Landlord for obligations which arose prior to the termination. Upon any suspension of this Lease pursuant to this Article 10.2, whether with respect to all or any portion of the Premises, Tenant shall have no obligations to Landlord with respect to all or such portion of the Premises, as the case may be, for the period of such suspension but shall remain liable for all obligations which arose prior to the effective date of the suspension, and shall again become liable for all obligations arising after the expiration of the suspension. Notwithstanding the foregoing, if Landlord shall exercise its right to terminate or suspend this Lease by giving written notice pursuant to this Article 10.2, the Tenant may rescind its request for an assignment, or subletting, by giving the Landlord written notice of such decision within fifteen (15) days of the Landlord’s written notice of termination or suspension, and upon such rescission the termination or suspension of this Lease by the Landlord shall be null and void.

 

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10.3  Submission of Information.

 

If Tenant requests Landlord’s consent to a specific assignment or subletting, Tenant shall submit in writing to Landlord at least thirty (30) days prior to the effective date of the proposed assignment or sublease (a) the name and address of the proposed assignee or subtenant; (b) the business terms of the proposed assignment or sublease; (c) reasonably satisfactory information as to the nature and character of the business of the proposed assignee or subtenant, and as to the nature of its proposed use of the space; (d) banking, financial, or other credit information reasonably sufficient to enable Landlord to determine the financial responsibility and character of the proposed assignee or subtenant; (e) the proposed form of assignment or sublease for Landlord’s reasonable approval and any other information which Landlord may reasonably deem relevant.

 

10.4  Payments to Landlord.

 

If Landlord consents to a proposed assignment or sublease, then Tenant shall pay to Landlord: (a) 50% of any rent or other consideration paid to Tenant by any proposed transferee that (after deducting the costs of Tenant, if any, in effecting the assignment or sublease, including reasonable alterations costs, commissions and legal fees) is in excess of the Rent allocable to the transferred space then being paid by Tenant to Landlord pursuant to this Lease; and (b) any other profit or gain (after deducting any necessary expenses incurred) realized by Tenant from any such sublease or assignment. All such sums payable will be payable to Landlord at the time the next payment of Base Rent is due. In addition, Tenant shall pay to Landlord, on demand, Landlord’s attorneys’ fees and other out-of-pocket expenses (not to exceed $1,200.00) incurred in connection with reviewing and processing any request by Tenant for Landlord’s consent to an assignment or sublease, whether or not such consent is granted.

 

10.5  Deemed Transfers.

 

The transfer of all or a majority of the voting or controlling equity in Tenant (other than shares of capital stock of a corporate Tenant whose stock is publicly traded), or the merger, consolidation, reorganization, or liquidation of Tenant, or the sale of all or substantially all of the assets of Tenant, however accomplished, and whether in a single transaction or in a series of related or unrelated transactions, will be deemed an assignment of this Lease or of such sublease requiring Landlord’s consent in each instance.

 

10.6  Permitted Transfer.

 

Notwithstanding anything to the contrary contained in this Article, Landlord’s consent shall not be required for an assignment or other transfer of Tenant’s interest under this Lease or a sublease of the entire Premises to an affiliate of Tenant provided that (i) Tenant shall notify Landlord in writing of the proposed transaction and the identity of the proposed assignee or sublessee, (ii) at the time of such proposed assignment, transfer or sublease, Tenant shall not be in default of any of the terms of this Lease, (iii) any proposed assignee or transferee shall agree in a writing reasonably acceptable to Landlord that it will assume and be bound by the terms of this Lease, (iv) there shall be no change in use of the Premises, (v) any proposed assignee or transferee shall have a net worth no less than the net worth of Tenant as of the date of execution of this Lease, and (vi) that Tenant agrees to make such alterations to the Premises and the Project that may be necessary in order to comply with the ADA as it applies to the use, occupancy, or alteration of the Premises by the assignee or subtenant. As used herein, an “affiliate” shall mean an entity which directly or indirectly controls or is controlled by or is under common control with Tenant, or which becomes Tenant’s successor through merger, consolidation, reorganization, or the sale of all or substantially all of the assets of Tenant, however accomplished. “Controls,” “controlled by” or “under common control” means with regard to a corporation ownership of at least 50% of the issued and outstanding stock or with regard to a corporation and any other entity, ownership of at least 50% of the equity, interests, voting or other decision making power.

 

10.7  Condition.

 

It is an express condition of any permitted assignment or sublease that Tenant not be in default of any of the terms of this Lease at the time Tenant provides Landlord its request for written consent to such assignment or sublease.

 

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10.8  Remedies.

 

If Tenant believes that Landlord has unreasonably withheld or delayed its consent pursuant to this Article 10, Tenant’s sole remedy will be to seek a declaratory judgment that Landlord has unreasonably withheld or delayed its consent or an order of specific performance or mandatory injunction of the Landlord’s agreement to not unreasonably withhold or delay its consent.

 

ARTICLE 11. RULES AND REGULATIONS.

 

Tenant and its employees, agents, licensees, and visitors shall at all times observe faithfully, and comply strictly with, the Rules and Regulations set forth in Exhibit B. Landlord may from time to time reasonably amend, delete, or modify existing rules and regulations, or adopt reasonable new rules and regulations for the use, safety, cleanliness, and care of the Premises, the Building, and the Project, and the comfort, quiet, and convenience of occupants of the Project. Modifications or additions to the Rules and Regulations will be effective upon thirty (30) days’ prior written notice to Tenant from Landlord. In the event of any breach of any of the Rules or Regulations or any amendments or additions thereto, Landlord shall have all remedies that this Lease provides for default by Tenant, and shall in addition have any remedies available at law or in equity, including the right to enjoin any breach of such Rules and Regulations. Landlord shall make reasonable efforts to enforce such rules and regulations in a non-discriminatory manner, but Landlord shall not be liable to Tenant for violation of such Rules and Regulations by any other person. In the event of any conflict between the provisions of this Lease and the Rules and Regulations, the provisions of this Lease shall govern.

 

ARTICLE 12. COMMON AREAS.

 

As used in this Lease, the term “Common Areas” means, without limitation, the above ground parking area, hallways, entryways, stairs, elevators, driveways, walkways, terraces, docks, loading areas, restrooms, trash facilities, and all other areas and facilities in the Project that are provided and designated from time to time by Landlord for the general nonexclusive use and convenience of Tenant with Landlord and their guests, invitees, employees, licensees, or visitors. Without advance written notice to Tenant, except with respect to matters covered by Article 12(a) below, and without any liability to Tenant in any respect, provided Landlord will take no action permitted under Article 12(a) in such a manner as to materially impair or adversely affect Tenant’s substantial benefit and enjoyment of the Premises, Landlord will have the right to:

 

(a)                                  Close off any of the Common Areas to whatever extent required in the reasonable opinion of Landlord to prevent a dedication of any of the Common Areas or the accrual of any rights by any person or the public to the Common Areas;

 

(b)                                 Temporarily close any of the Common Areas for maintenance, alteration, or improvement purposes; and

 

(c)                                   Change the size, use, shape, or nature of any such Common Areas, including erecting additional Buildings on the Common Areas, expanding the Building or other Buildings to cover a portion of the Common Areas, converting Common Areas to a portion of the Building or other Buildings, altering the Common Areas in order to comply with the ADA, or converting any portion of the Building (excluding the Premises) or other Buildings to Common Areas. Upon erection of any additional Buildings or change in Common Areas, the portion of the Project upon which Buildings or structures have been erected shall no longer be deemed to be a part of the Common Areas.

 

ARTICLE 13. LANDLORD’S SERVICES.

 

13.1  Landlord’s Repair and Maintenance.

 

Landlord shall maintain and repair the Common Areas of the Project, including lobbies, stairs, elevators, corridors, and restrooms, the windows in the Building, the mechanical, plumbing and electrical equipment serving the Building, and the structural elements of the Building in reasonably good order and condition, the cost of which is included in Operating Expenses.

 

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13.2  Landlord’s Other Services.

 

(a)                                 Landlord shall furnish the Premises with those services customarily provided in comparable office buildings in the vicinity of the Project, including without limitation (1) heat and air conditioning reasonably required for the comfortable occupation of the Premises during business hours; (2) access and elevator service; (3) lighting replacement during business hours (for Building standard lights, but not for any special Tenant lights, which will be replaced at Tenant’s sole cost and expense), the cost of which shall, at Landlord’s option, either be included in Operating Expenses for all tenants in the Building or separately billed to each tenant in the Building; (4) restroom supplies; (5) window washing with reasonable frequency, as determined by Landlord; and (6) cleaning service 5 days per week. Landlord may, but will not be obligated to provide, any such services (except access and elevator service) on holidays.

 

(b)                                 If the Premises are separately metered for electricity, Landlord shall not provide electricity for lighting, receptacles and outlets or incidental uses in the Premises; and Tenant, at its sole cost and expense, shall make all necessary arrangements with the utility company for metering and shall pay for electric current furnished by it to Tenant and Tenant shall pay for all charges for electric current consumed on the Premises during Tenant’s occupancy thereof. If the Premises are not separately metered, then, subject to the provisions of this Article 13.2, Landlord will also provide facilities to provide electrical current required by Tenant in its use and occupancy of the Premises, and the charges for such electricity will be included in Operating Expenses. Tenant’s use of electrical services must not exceed, either in voltage, rated capacity, or overall load or usage, that which Landlord deems to be Building Standard. The Building Standard overall load is deemed to be 4.0 watts per rentable square foot. If Tenant requests that it be allowed to consume electrical services in excess of that deemed by Landlord to be Building Standard, Landlord may refuse to consent to usage or may consent upon such conditions as Landlord elects (including the requirement that submeters be installed at Tenant’s expense) and Tenant will pay all costs and expenses thereby incurred, including but not limited to the cost of electricity. In addition, if the Premises are not separately metered for electricity, Landlord reserves the right to cause meters to be installed (at Landlord’s expense) if Landlord reasonably determines that Tenant’s use of electrical services furnished by Landlord exceeds that which is customary in the Building (due to excessive use outside of Normal Building Hours, or otherwise), in which case Tenant will also pay for such electrical usage as Landlord reasonably determines to be in excess of that which is customary for tenants in the Building. Landlord has selected a utility company (“Electric Service Provider”) to provide electricity service for the Building, and will have the right at any time and from time to time during the Lease Term to either contract for service from a different company or companies providing electricity service (each such company hereinafter being referred to as an (“Alternate Service Provider”) or continue to contract service from the Electric Service Provider. Tenant will cooperate with Landlord, the Electric Service Provider and any Alternate Service Provider at all times and, as reasonably necessary, will allow Landlord, Electric Service Provider, and any Alternate Service Provider reasonable access to the Building’s electric lines, feeders, risers, wiring, and any other machinery within the Premises. If the Premises are not separately metered for electricity, then Tenant will obtain all of its electricity for the Premises from Landlord or, if the Premises are separately metered, from the Electric Service Provider or Alternate Service Provider or such other reputable electric utility company selected by Tenant and reasonably approved by Landlord. Landlord will not be liable or responsible for any loss, damage, or expense that Tenant sustains or incurs by reason of any change, failure, interference, disruption, or defect in the supply or character of the electric energy furnished to the Premises, or if the supply or character of the electrical energy supplied by the Electric Service Provider or any Alternate Service Provider (or by the electric utility company selected by Tenant, if the Premises are separately metered) is no longer available or suitable for Tenant’s requirements, and no such change, failure, defect, unavailability, or unsuitability will constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of rent, or relieve Tenant from any of its obligations under the Lease.

 

(c)                                  Tenant will have the right to purchase for use during business hours and non-business hours the services described in Article 13.2(a)(1) and (2) in excess of the amounts Landlord has agreed to furnish so long as (1) Tenant gives Landlord reasonable prior written notice of its desire to do so; (2) the excess services are reasonably available to Landlord and to the Premises; and (3) Tenant pays as Additional Rent (at the time the next payment of Base Rent is due) the cost of such excess service from time to time charged by Landlord; subject to the procedures established by Landlord from time to time for providing such additional or excess services.

 

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(d)           The term “business hours” means 8:00 a.m. to 6:00 p.m. on Monday through Friday, except holidays (as that term is defined below), and 8:00 a.m. to 2:00 p.m. on Saturdays, except holidays. The term “holidays” means New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.

 

13.3  Tenant’s Costs.

 

Whenever equipment or lighting (other than building standard lights) is used in the Premises by Tenant and such equipment or lighting adversely affects the temperature otherwise normally maintained by the design of the Building’s air conditioning system, Landlord shall have the right, after prior written notice to Tenant, to install supplementary air conditioning facilities in the Premises or otherwise modify the ventilating and air conditioning system serving the Premises; and the cost of such facilities, modifications, and additional service shall be paid by Tenant as Additional Rent within thirty (30) days of receipt of an invoice. Should Tenant desire any additional service beyond that described in Article 13.2 hereof, Landlord may, at Landlord’s option upon reasonable advance notice from Tenant to Landlord, (i) refuse to consent to such services or (ii) consent to such services upon such conditions as Landlord elects (including the requirement that submeters be installed at Tenant’s expense, that Tenant pay directly to the provider of such service (in the case of sub-metered services) or to Landlord, as Additional Rent within thirty (30) days of receipt of an invoice, Landlord’s additional expenses resulting therefrom, and that Tenant pay the cost of all alterations or additions made to accommodate such excess use, including the cost of a submeter and installation of the same.)

 

13.4  Limitation on Liability.

 

Landlord shall not be in default under this Lease or be liable to Tenant or any other person for direct or consequential damage, or otherwise, for any failure to supply any heat, air conditioning, elevator, cleaning, lighting, security; for surges or interruptions of electricity; or for other services which Landlord has agreed to supply during any period provided that Landlord uses commercially reasonable diligence to supply such services. Landlord will use commercially reasonable efforts to diligently remedy any interruption in the furnishing of such services. Landlord reserves the right temporarily to discontinue such services at such times as may be necessary by reason of accident, repairs, alterations or improvements, strikes, lockouts, riots, acts of God, governmental preemption in connection with a national or local emergency, any rule, order, or regulation of any governmental agency, conditions of supply and demand that make any product unavailable, Landlord’s compliance with any mandatory governmental energy conservation or environmental protection program, or any voluntary governmental energy conservation program at the request of or with consent or acquiescence of Tenant, mandatory or prohibitive injunction issued in connection with the enforcement of the ADA, or any other event or condition beyond the control of Landlord. Landlord shall not be liable to Tenant or any other person or entity for direct or consequential damages resulting from the admission to or exclusion from the Building or Project of any person. In the event of invasion, mob, riot, public excitement, strikes, lockouts, or other circumstances rendering such action advisable in Landlord’s sole opinion, Landlord shall have the right to prevent access to the Building or Project during the continuance of the same by such means as Landlord, in its sole discretion, may deem appropriate, including without limitation locking doors and closing parking areas and other Common Areas. Landlord shall not be liable for damages to person or property or for injury to, or interruption of, business for any discontinuance permitted under this Article 13, nor will such discontinuance in any way be construed as an eviction of Tenant or cause an abatement of Rent or operate to release Tenant from any of Tenant’s obligations under this Lease.

 

Notwithstanding the foregoing, if the Premises are made untenantable for a period in excess of five (5) consecutive business days as a result of a failure to provide utilities or services that was within the reasonable control of Landlord to prevent (other than an interruption due to a fire or other casualty, or an act, neglect, fault, or omission by Tenant or its agents, servants, employees or invitees), then Tenant, as its sole remedy, shall be entitled to receive an abatement of Rent payable hereunder during the period beginning on the sixth (6th) consecutive business day of such failure and ending on the day the service has been restored. If the entire Premises have not been rendered untenantable by such failure, the amount of abatement shall be equitably prorated.

 

ARTICLE 14. TENANT’S CARE OF THE PREMISES.

 

Tenant shall maintain the Premises (including Tenant’s equipment, personal property, and trade fixtures

 

 

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located in the Premises) in the same condition as at the time they were delivered to Tenant, reasonable wear and tear and damage by casualty excluded. Tenant shall immediately advise Landlord of any damage to the Premises, Building or the Project. All damage or injury to the Premises, Building or the Project, or the fixtures, appurtenances, and equipment therein that is caused by Tenant, its agents, employees, or invitees may be repaired, restored, or replaced by Landlord, at the expense of Tenant (provided, however, that Landlord shall first give Tenant a reasonable opportunity after notice from Landlord to make non-emergency repairs to the Premises). Such expense (plus fifteen percent (15%) of such expense for Landlord’s overhead) will be collectible as Additional Rent and will be paid by Tenant within ten (10) days after delivery of a statement for such expense.

 

ARTICLE 15. ALTERATIONS.

 

15.1  General.

 

(a)                                 Tenant shall not make or allow to be made any alterations, additions, or improvements to or of the Premises, the Building or the Project or any part thereof, or attach any fixtures or equipment thereto after the Lease Date, without first obtaining Landlord’s prior written consent, which consent shall not be unreasonably withheld or delayed; provided however that Landlord may withhold its consent, in its sole and absolute discretion, to any alteration, addition or improvement to the structural portions or the HVAC, plumbing or electrical systems of the Building. All such alterations, additions, and improvements consented to by Landlord, and capital improvements that are required to be made to the Project as a result of the nature of Tenant’s use of the Premises:

 

(1)                                  Shall be performed by contractors approved by Landlord and subject to reasonable conditions specified by Landlord (which may include requiring the posting of a mechanic’s or materialmen’s lien bond); and

(2)                                 At Landlord’s option, will be made by Landlord for Tenant’s account, and Tenant will reimburse Landlord for their cost (including ten percent (10%) for Landlord’s overhead) within ten (10) days after receipt of a statement of such cost.

 

(b)                                 Subject to Tenant’s rights in Article 17 herein, all alterations, additions, fixtures, and improvements, whether temporary or permanent in character, made in or upon the Premises either by Tenant or Landlord, shall immediately become Landlord’s property, and at the end of the Term shall remain on the Premises without compensation to Tenant, unless when consenting to such alterations, additions, fixtures, or improvements, Landlord has advised Tenant in writing that such alterations, additions, fixtures, or improvements must be removed at the expiration or other termination of this Lease.

 

(c)                                  Notwithstanding the above, Tenant’s employees may hang light-weight pictures, art, and similar small decorative items in the Premises without Landlord’s approval, and without the resulting nail holes being deemed to constitute damage to the Premises.

 

15.2  Free-Standing Partitions.

 

Tenant shall have the right to install free-standing work station partitions, without Landlord’s prior written consent, so long as no building or other governmental permit is required for their installation or relocation; however, if a permit is required, Landlord shall not unreasonably withhold its consent to such relocation or installation. The free-standing work station partitions for which Tenant pays shall be part of Tenant’s trade fixtures for all purposes under this Lease. All other partitions installed in the Premises are and shall be Landlord’s property for all purposes under this Lease.

 

15.3  Removal.

 

If Landlord has required Tenant to remove any or all alterations, additions, fixtures, and improvements that are made in or upon the Premises pursuant to this Article 15 prior to the Expiration Date, Tenant shall remove such alterations, additions, fixtures, and improvements at Tenant’s sole cost and shall restore the Premises to the condition in which they were before such alterations, additions, fixtures, improvements, and additions were made, reasonable wear and tear excepted.

 

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15.4  ADA Compliance.

 

Except as otherwise provided in this Article or in this Lease, Landlord shall be responsible for compliance with ADA Requirements, defined below, with respect to the Common Areas. Tenant, with respect to the Premises, at Tenant’s sole cost and expense (but subject to Landlord’s prior written approval, which approval shall not be unreasonably withheld or delayed), shall comply with the requirements imposed by the Americans with Disabilities Act (42 U.S.C. Article 12101 et seq.) and any regulations promulgated pursuant thereto effective from time to time during the Term (“ADA Requirements”) if:

 

(a)                                 the requirement for such alteration or addition arises as a result of:

 

(1)                                 Any alteration or addition by Tenant after the Lease Date;

(2)                                 Any violation by Tenant of any ADA Requirements;

(3)                                 A special use of the Premises or any part thereof by Tenant or any assignee or subtenant of Tenant (including but not limited to use for a facility which constitutes, or if open to the public generally would constitute, a “place of public accommodation” under the ADA Requirements);

(4)                                 The special needs of the employee(s) of Tenant or any assignee or subtenant of Tenant; or

 

(b)                                 The ADA Requirements would otherwise make Tenant rather than Landlord primarily responsible for making such alteration or addition.

 

ARTICLE 16. MECHANICS’ LIENS.

 

Tenant shall pay or cause to be paid all costs and charges for work (a) done by Tenant or caused to be done by Tenant, in or to the Premises, and (b) for all materials furnished for or in connection with such work. Tenant shall indemnify Landlord against and hold Landlord, the Premises, and the Project free, clear, and harmless of and from all mechanics’ liens and claims of liens, and all other liabilities, liens, claims, and demands on account of such work by or on behalf of Tenant, other than work performed by Landlord pursuant to this Lease. If any such lien, at any time, is filed against the Premises or any part of the Project, Tenant shall cause such lien to be discharged of record within ten (10) days after the filing of such lien, except that if Tenant desires to contest such lien, it shall deliver to Landlord, within such 10-day period, at least one hundred fifty percent (150%) of the amount of the claim, plus estimated costs and interest, by cashier’s check or certified funds which shall be held by Landlord as security to insure payment of the lien and to prevent any sale of the Project by foreclosure or otherwise by reason of such lien. If a final judgment establishing the validity or existence of a lien for any amount is entered, Tenant shall pay and satisfy the same at once. If Tenant fails to pay any charge, cost or expense for which a mechanics’ lien has been filed, and has not given Landlord security as described above, Landlord may, at its option, pay such charge and related costs and interest, and the amount so paid, together with reasonable attorneys’ fees incurred in connection with such lien, shall be immediately due from Tenant to Landlord as Additional Rent. Nothing contained in this Lease will be deemed the consent or agreement of Landlord to subject Landlord’s interest in the Project to liability under any mechanics’ or other lien law. If Tenant receives written notice that a lien has been or is about to be filed against the Premises or the Project, or that any action affecting title to the Project has been commenced on account of work done by or for or materials furnished to or for Tenant, it shall immediately give Landlord written notice of such notice. At least fifteen (15) days prior to the commencement of any work (including but not limited to any maintenance, repairs, alterations, additions, improvements, or installations) in or to the Premises, by or for Tenant, Tenant shall give Landlord (i) written notice of the proposed work and the names and addresses of the persons supplying labor and materials for the proposed work and (ii) two copies of Tenant’s plans and specifications for such work.

 

ARTICLE 17. END OF TERM.

 

On the Expiration Date or earlier termination of this Lease, Tenant shall promptly quit and surrender the Premises broom-clean, in good order and repair, ordinary wear and tear and damage from casualty or condemnation excepted. Tenant shall remove from the Premises any trade fixtures, equipment, and movable furniture placed in the Premises by Tenant, whether or not such trade fixtures or equipment are fastened to the Building, except that Tenant

 

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shall not remove trade fixtures or equipment without Landlord’s prior written consent if such fixtures or equipment are used in the operation of the Building, or if the removal of such fixtures or equipment may impair the structural strength of the Building. Tenant also shall remove such alterations, additions, improvements, trade fixtures, equipment, and furniture as Landlord has requested in accordance with Article 15, and telecommunications cabling in accordance with Article 28.37. Tenant shall fully repair any damage occasioned by the removal of any trade fixtures, equipment, furniture, alterations, additions, and improvements. All trade fixtures, equipment, furniture, inventory, effects, alterations, additions, and improvements on the Premises after the end of the Term shall be deemed conclusively to have been abandoned and may be appropriated, sold, stored, destroyed, or otherwise disposed of by Landlord without written notice to Tenant or any other person and without obligation to account for them. Tenant shall pay Landlord for all expenses incurred in connection with the removal of such property, including but not limited to the cost of repairing any damage to the Building or Premises caused by the removal of such property. Tenant’s obligation to observe and perform this covenant will survive the expiration or other termination of this Lease.

 

ARTICLE 18. EMINENT DOMAIN.

 

If all of the Premises are taken by exercise of the power of eminent domain (or conveyed by Landlord in lieu of such exercise) this Lease shall terminate on a date (the “Termination Date”) which is the earlier of the date upon which the condemning authority takes possession of the Premises or the date on which title to the Premises is vested in the condemning authority. If more than twenty-five percent (25%) of the rentable square feet of the Premises is so taken, Tenant will have the right to cancel this Lease by written notice to Landlord given within twenty (20) days after the termination date. If less than twenty-five percent ( 25%) of the rentable square feet of the Premises is so taken, or if the Tenant does not cancel this Lease according to the preceding sentence, the Base Rent shall be abated in the proportion of the rentable area of the Premises so taken to the rentable area of the Premises immediately before such taking, and Tenant’s Proportionate Share shall be appropriately recalculated. If twenty-five percent (25%) or more of the Building or the Project is so taken, Landlord may cancel this Lease by written notice to Tenant given within thirty (30) days after the termination date. In the event of any such taking, the entire award shall be paid to Landlord and Tenant will have no right or claim to any part of such award; however, Tenant shall have the right to assert a claim against the condemning authority in a separate action, so long as Landlord’s award is not otherwise reduced, for Tenant’s moving expenses and leasehold improvements owned by Tenant.

 

ARTICLE 19. DAMAGE AND DESTRUCTION.

 

(a)                                 If the Premises or the Building are damaged by fire or other insured casualty, Landlord shall give Tenant written notice of the time which will be needed to repair such damage, as determined by Landlord in its reasonable discretion, and the election (if any) which Landlord has made according to this Article 19. Such notice will be given before the thirtieth (30th) day (the “notice date”) after the fire or other insured casualty.

 

(b)                                 If the Premises or the Building are damaged by fire or other insured casualty to an extent which may be repaired within two hundred ten (210) days after the notice date, as reasonably determined by Landlord, Landlord shall promptly begin to repair the damage after the notice date and will diligently pursue the completion of such repair. In that event this Lease will continue in full force and effect except that Base Rent shall be abated on a pro rata basis from the date of the damage until the date of the completion of such repairs (the “repair period”) based on the proportion of the rentable area of the Premises Tenant is unable to use during the repair period.

 

(c)                                  If the Premises or the Building are damaged by fire or other insured casualty to an extent that may not be repaired within two hundred ten (210) days after the notice date, as reasonably determined by Landlord, then (1) Landlord may cancel this Lease as of the date of such damage by written notice given to Tenant on or before the notice date or (2) Tenant may cancel this Lease as of the date of such damage by written notice given to Landlord within ten (10) days after Landlord’s delivery of a written notice that the repairs cannot be made within such two hundred ten (210) day period. If neither Landlord nor Tenant so elects to cancel this Lease, Landlord shall diligently proceed to repair the Building and Premises and Base Rent shall be abated on a pro rata basis during the repair period based on the proportion of the rentable area of the Premises Tenant is unable to use during the repair period.

 

(d)                                 Notwithstanding the provisions of Article 19(a), (b), and (c) above, if the Premises or the Building

 

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are damaged by uninsured casualty, or if the proceeds of insurance are insufficient to pay for the repair of any damage to the Premises or the Building, Landlord shall have the option to repair such damage or cancel this Lease as of the date of such casualty by written notice to Tenant on or before the notice date.

 

(e)                                  If any such damage by fire or other casualty is the result of the willful conduct or negligence or failure to act of Tenant, its agents, contractors, employees, or invitees, there will be no abatement of Base Rent as otherwise provided for in this Article 19. Tenant shall have no rights to terminate this Lease on account of any damage to the Premises, the Building, or the Project except as specifically set forth herein, Tenant hereby waiving any such right which exists at law or in equity to the extent Tenant is not in violation of any laws.

 

ARTICLE 20. SUBORDINATION.

 

20.1  General.

 

This Lease and Tenant’s rights under this Lease are subject and subordinate to any ground or underlying lease, mortgage, indenture, deed of trust, or other lien encumbrance (each a “superior lien”), together with any renewals, extensions, modifications, consolidations, and replacements of such superior lien, now or after the date affecting or placed, charged, or enforced against the Land, the Building, or all or any portion of the Project or any interest of Landlord in them or Landlord’s interest in this Lease and the leasehold estate created by this Lease (except to the extent any such instrument expressly provides that this Lease is superior to such instrument). This provision shall be automatic and self-operative and no further instrument shall be required in order to effect it. Notwithstanding the foregoing, Tenant shall execute, acknowledge, and deliver to Landlord, within ten (10) business days after written demand by Landlord, such documents as may be reasonably requested by Landlord or the holder of any superior lien to confirm or effect any such subordination.

 

20.2  Attornment.

 

Tenant agrees that in the event that any holder of a superior lien succeeds to Landlord’s interest in the Premises, Tenant shall pay to such holder all Rent subsequently payable under this Lease. Further, Tenant agrees that in the event of the enforcement by the holder of a superior lien of the remedies provided for by law or by such superior lien, Tenant shall, upon request of any person or party succeeding to the interest of Landlord as a result of such enforcement, automatically become the Tenant of and attorn to such successor in interest without change in the terms or provisions of this Lease. So long as the Lease is then in full force and effect and Tenant is not in Default under this Lease, such successor shall continue the Lease in full force and effect as a direct lease between such successor and Tenant, upon and subject to all of the terms, covenants and conditions of the Lease, for the balance of the Term. Such successor in interest, however, shall not be bound by:

 

(a)                                 Any payment of rent for more than one month in advance, except prepayments in the nature of security for the performance by Tenant of its obligations under this Lease;

(b)                                 Any amendment or modification of this Lease made without the written consent of such successor in interest (if such consent was required under the terms of such superior lien);

(c)                                  Any claim against Landlord arising prior to the date on which such successor in interest succeeded to Landlord’s interest; or

(d)                                 Any claim or offset of Rent against the Landlord arising prior to the date on which such successor in interest succeeded to Landlord’s interest.

 

Upon request by such successor in interest and without cost to Landlord or such successor in interest, Tenant shall, within ten (10) business days after written demand, execute, acknowledge, and deliver an instrument or instruments confirming the attornment, so long as such instrument provides that such successor in interest will not disturb Tenant in its use of the Premises in accordance with this Lease.

 

ARTICLE 21. ENTRY BY LANDLORD.

 

Landlord, its agents, employees, and contractors may enter the Premises at any time in response to an emergency and otherwise at reasonable hours with reasonable notice to Tenant (which may be verbal or emailed) to:

 

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(a)                                 Inspect the Premises;

(b)                                 Exhibit the Premises to prospective purchasers and lenders; and exhibit the Premises during the last nine (9) months of the Term to prospective tenants;

(c)                                  Determine whether Tenant is complying with all its obligations in this Lease;

(d)                                 Supply cleaning service and any other service to be provided by Landlord to Tenant according to this Lease;

(e)                                  Post written notices of non-responsibility or similar notices; or

(f)                                   Make repairs required of Landlord under the terms of this Lease or make repairs to any adjoining space or utility services or make repairs, alterations, or improvements to any other portion of the Building; however, all such work shall be done as promptly as reasonably possible and so as to cause as little interference to Tenant as reasonably possible.

 

Tenant, pursuant to this Article 21, waives any claim against Landlord, its agents, employees, or contractors for damages for any injury or inconvenience to or interference with Tenant’s business, any loss of occupancy or quiet enjoyment of the Premises, or any other loss occasioned by any entry in accordance with this Article 21. Landlord shall at all times have and retain a key with which to unlock all of the doors in, on, or about the Premises (excluding Tenant’s vaults, safes, and similar areas designated in writing by Tenant in advance). Landlord shall have the right to use any and all means Landlord may deem proper to open doors in and to the Premises in an emergency in order to obtain entry to the Premises, provided that Landlord will promptly repair any damages caused by any forced entry. Any entry to the Premises by Landlord in accordance with this Article 21 will not be construed or deemed to be a forcible or unlawful entry into or a detainer of the Premises or an eviction, actual or constructive, of Tenant from the Premises or any portion of the Premises, nor shall any such entry entitle Tenant to damages or an abatement of Base Rent, Additional Rent, or other charges that this Lease requires Tenant to pay.

 

ARTICLE 22. INDEMNIFICATION, WAIVER AND RELEASE.

 

22.1  Tenant’s Indemnification.

 

Except for any injury to persons or damage to property on the Premises that is proximately caused by or results proximately from the negligence or deliberate act of Landlord, its employees or agents, and subject to the provisions of Article 6.4 herein, Tenant shall indemnify and hold Landlord, Landlord’s wholly owned subsidiaries and the employees and agents of Landlord and Landlord’s wholly owned subsidiaries, (hereinafter collectively referred to as the “Indemnified Parties” and individually as an “Indemnified Party”), their employees and agents harmless from and against, any and all demands, claims, causes of action, fines, penalties, damages, liabilities, judgments, and expenses (including, without limitation, reasonable attorney’s fees) incurred in connection with or arising from:

 

(a)                                  the use or occupancy or manner of use or occupancy of the Premises by Tenant or any person claiming under Tenant;

(b)                                 any activity, work, or thing done or permitted by Tenant in or about the Premises, the Building, or the Project;

(c)                                  any breach by Tenant or its employees, agents, contractors, or invitees of this Lease;

(d)                                   any injury or damage to the person, property, or business of Tenant, its employees, agents, contractors, or invitees entering upon the Premises under the express or implied invitation of Tenant; and

(e)                                  any alleged violation by Tenant of any statutes, laws, rules, regulations, including, without limitation, the ADA.

 

If any action or proceeding is brought against an Indemnified Party by reason of any such claim for which Tenant has indemnified the Indemnified Parties, Tenant, upon written notice from such Indemnified Party, shall defend the same at Tenant’s expense, with counsel reasonably satisfactory to Landlord.

 

22.2  Waiver and Release.

 

Tenant, as a material part of the consideration to Landlord for this Lease, by this Article 22.2 waives and releases all claims against Landlord, Landlord’s wholly owned subsidiaries, and their employees and agents with

 

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respect to all matters for which Landlord has disclaimed liability pursuant to the provisions of this Lease, except to the extent such claims are the result of the gross negligence or willful misconduct of Landlord, its employees, or its property manager.

 

ARTICLE 23. QUIET ENJOYMENT.

 

Landlord covenants and agrees with Tenant that, so long as no uncured Event of Default by Tenant exists, Tenant may peaceably and quietly possess the Premises against all persons claiming by, through, or under Landlord, subject to the terms and conditions of this Lease.

 

ARTICLE 24. EFFECT OF SALE.

 

A sale, conveyance, or assignment of the Building or the Project shall operate to release Landlord from liability from and after the effective date of such sale, conveyance, or assignment upon all of the covenants, terms, and conditions of this Lease, express or implied, except those liabilities that arose prior to such effective date, and, after the effective date of such sale, conveyance, or assignment, Tenant shall look solely to Landlord’s successor in interest in and to this Lease. This Lease shall not be affected by any such sale, conveyance, or assignment, and Tenant shall attorn to Landlord’s successor in interest to this Lease, so long as such successor in interest assumes Landlord’s obligations under the Lease from and after such effective date.

 

ARTICLE 25. DEFAULT.

 

25.1  Events of Default by Tenant.

 

Following events are referred to, collectively, as “Events of Default” or, individually, as an “Event of Default”:

 

(a)                                  Tenant fails to pay Rent when due, and such failure continues for five (5) business days after written notice from Landlord;

(b)                                  Tenant breaches any of the other agreements, terms, covenants, or conditions that this Lease requires Tenant to perform, and such breach continues for a period of thirty (30) days after written notice from Landlord to Tenant or, if such breach cannot be cured reasonably within such thirty (30) day period, if Tenant fails to diligently commence to cure such breach within thirty (30) days after written notice from Landlord and to complete such cure within a reasonable time thereafter, not to exceed an additional sixty (60) days.

(c)                                   This Lease or the Premises or any part of the Premises are taken upon execution or by other process of law directed against Tenant, or are taken upon or subject to any attachment by any creditor of Tenant or claimant against Tenant, and said attachment is not discharged or disposed of within sixty (60) days after its levy;

(d)                                   Tenant files a petition in bankruptcy or insolvency or for reorganization or arrangement under the bankruptcy laws of the United States or under any insolvency act of any state, or admits the material allegations of any such petition by answer or otherwise, or is dissolved or makes an assignment for the benefit of creditors;

(e)                                    Involuntary proceedings under any such bankruptcy law or insolvency act or for the dissolution of Tenant are instituted against Tenant, or a receiver or trustee is appointed for all or substantially all of the property of Tenant, and such proceeding is not dismissed or such receivership or trusteeship vacated within sixty (60) days after such institution or appointment;

(f)                                   Tenant shall repeatedly default in the timely payment of Rent or any other charges required to be paid, or shall repeatedly default in keeping, observing or performing any other covenant, agreement, condition or provision of this Lease, beyond any applicable notice and cure periods, whether or not Tenant ultimately cures any such payment or other default. For the purposes of this Article 25.1, the occurrence of similar defaults two (2) times during any Lease Year shall constitute a repeated default.

 

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25.2  Landlord’s Remedies.

 

If any one or more events of default set forth in Article 25.1 occurs then Landlord has the right, at its election:

 

(a)                                  To give Tenant written notice of Landlord’s intention to terminate this Lease on the earliest date permitted by law or on any later date specified in such notice, in which case Tenant’s right to possession of the Premises shall cease and this Lease shall be terminated, except as to Tenant’s liability, on the date specified by Landlord;

 

(b)                                   Without further demand or notice, to reenter and take possession of the Premises or any part of the Premises, repossess the same, expel Tenant and those claiming through or under Tenant, and remove the effects of both or either, using any lawful means for such purposes, without being liable for prosecution, without being deemed guilty of any manner of trespass, and without prejudice to any remedies for arrears of Base Rent or other amounts payable under this Lease or as a result of any preceding breach of covenants or conditions; or

 

(c)                                   Without further demand or notice to cure any Event of Default and to charge Tenant for the cost of effecting such cure, including without limitation reasonable attorneys’ fees and interest on the amount so advanced at the rate set forth in Article 28.33, provided that Landlord will have no obligation to cure any such Event of Default of Tenant.

 

Should Landlord elect to reenter as provided in Article 25.2(b), or should Landlord take possession pursuant to legal proceedings or pursuant to any notice provided by law, Landlord may, from time to time, without terminating this Lease, relet the Premises or any part of the Premises in Landlord’s or Tenant’s name, but for the account of Tenant, for such term or terms (which may be greater or less than the period which would otherwise have constituted the balance of the Term) and on such conditions and upon such other terms (which may include concessions of free rent and alteration and repair of the Premises) as Landlord, in its reasonable discretion, may determine, and Landlord may collect and receive the Rent. Landlord will in no way be responsible or liable for any failure to relet the Premises, or any part of the Premises, or for any failure to collect any Rent due upon such reletting. No such reentry or taking possession of the Premises by Landlord will be construed as an election on Landlord’s part to terminate this Lease unless a written notice of such intention is given to Tenant. No written notice from Landlord under this Article or under a forcible or unlawful entry and detainer statute or similar law will constitute an election by Landlord to terminate this Lease unless such notice specifically so states. Landlord reserves the right following any such reentry or reletting to exercise its right to terminate this Lease by giving Tenant such written notice, in which event this Lease will terminate as specified in such notice.

 

25.3  Damages; no Termination.

 

In the event that Landlord does not elect to terminate this Lease as permitted in Article 25.2(a), but on the contrary elects to take possession as provided in Article 25.2(b), Tenant shall pay to Landlord Base Rent and other sums as provided in this Lease that would be payable under this Lease if such repossession had not occurred, less the net proceeds, if any, of any reletting of the Premises after deducting all of Landlord’s reasonable expenses in connection with such reletting, including without limitation all repossession costs, brokerage commissions, attorneys’ fees, expenses of employees, alteration and repair costs, and expenses of preparation for such reletting. If, in connection with any reletting, the new lease term extends beyond the Term, or the Premises covered by such new lease includes other premises not part of the Premises, a fair apportionment of the Rent received from such reletting and the expenses incurred in connection with such reletting as provided in this Article 25.3 will be made in determining the net proceeds from such reletting, and any Rent concessions will be equally apportioned over the term of the new lease. Tenant will pay such rent and other sums to Landlord monthly on the day on which the Base Rent would have been payable under this Lease if possession had not been retaken, and Landlord shall be entitled to receive such rent and other sums from Tenant on each such day.

 

25.4  Damages upon Termination.

 

(i) If this Lease is terminated on account of the occurrence of an Event of Default, Tenant shall remain liable to Landlord for damages in an amount equal to Base Rent and other amounts that would have been owing by Tenant for the balance of the Term, had this Lease not been terminated, less the net proceeds, if any, of any reletting

 

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of the Premises by Landlord subsequent to such termination, after deducting all of Landlord’s expenses in connection with such reletting, including without limitation the expenses enumerated in Article 25.3. Landlord shall be entitled to collect such damages from Tenant monthly on the day on which Base Rent and other amounts would have been payable under this Lease if this Lease had not been terminated, and Landlord shall be entitled to receive such Base Rent and other amounts from Tenant on each such day.

 

(ii) Alternatively, at the option of Landlord, in the event this Lease is so terminated, Landlord shall be entitled, upon written notice to Tenant at any time after such termination, to declare the present cash value (as of the date of such default) of the entire balance of Rent for the remainder of the Term to be due and payable, less the amount of such rental loss that Tenant proves should have been reasonably avoided, and to collect such balance in addition to any additional amounts due prior to such termination in any manner not inconsistent with applicable law. For the purpose of this Article 25.4, the “present cash value” shall be computed by adding interest at the per annum interest rate described in Article 28.33 herein from the date on which this Lease is terminated to the date Landlord obtains a court judgment against Tenant for the amount due and discounting the entire balance due to Landlord at the Discount Rate charged by the Federal Reserve Banks as published in the “Money Rates” section of the Wall Street Journal on the day the Lease is terminated or if not published on such date, the publication date immediately prior to the termination date, plus two percent (2%).

 

25.5  Cumulative Remedies.

 

Any suit or suits for the recovery of the amounts and damages set forth in Articles 25.3 and 25.4 may be brought by Landlord, from time to time, at Landlord’s election, and nothing in this Lease will be deemed to require Landlord to await the date upon which this Lease or the Term would have expired had there occurred no Event of Default. Tenant agrees that Landlord may file suit to recover any sums due to Landlord under this Lease from time to time and that such suit or recovery of any amount due Landlord hereunder shall not be any defense to any subsequent action brought for any amount not previously reduced to judgment in favor of Landlord. Each right and remedy provided for in this Lease is cumulative and is in addition to every other right or remedy provided for in this Lease or now or after the Lease date existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by Landlord of any one or more of the rights or remedies provided for in this Lease or now or after the Lease Date existing at law or in equity or by statute or otherwise will not preclude the simultaneous or later exercise by Landlord of any or all other rights or remedies provided for in this Lease or now or after the Lease Date existing at law or in equity or by statute or otherwise. All costs incurred by Landlord in collecting any amounts and damages owing by Tenant pursuant to the provisions of this Lease or to enforce any provision of this Lease, including reasonable attorneys’ fees from the date any such matter is turned over to an attorney, whether or not one or more actions are commenced by Landlord, will also be recoverable by Landlord from Tenant.

 

25.6  Mitigation.

 

If Landlord has not terminated Tenant’s right to possession, Landlord will have no obligation to mitigate Landlord’s damages. If an Event of Default occurs by Tenant and Landlord terminates Tenant’s right to possession but does not terminate this Lease, Landlord will use reasonable efforts to mitigate its damages as follows: (i) Landlord will be required to use only reasonable efforts to mitigate, which will not exceed such efforts as Landlord generally uses to lease other space in the Building; (ii) Landlord will not be deemed to have failed to mitigate if Landlord leases any other portion of the Building before reletting all or any portion of the Premises. In recognition that the value of the Building depends on the rental rates and terms of leases therein, Landlord’s rejection of a prospective replacement tenant based on an offer of rentals below Landlord’s published rates for new leases of comparable space in the Building at the time in question, or at Landlord’s option, below the rates provided in this Lease, or containing terms less favorable than those contained herein, will not give rise to a claim by Tenant that Landlord failed to mitigate damages. Tenant shall bear the burden of proving Landlord failed to take such reasonable measures to mitigate damages in any lawsuit filed in connection with this Lease.

 

ARTICLE 26. Intentionally Deleted.

 

ARTICLE 27. PARKING.

 

27.1                        Tenant shall be entitled to use, without charge and in common with the other tenants of the

 

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Project, the non-reserved parking spaces serving the Building (together with the reserved space(s), the “Parking”). The Parking shall be subject to rules and regulations for the use thereof as prescribed from time to time by Landlord. Landlord will not be responsible for money, jewelry, automobiles or other personal property lost in or stolen from the Parking areas, or for vandalism to automobiles occurring in the Parking areas, it being agreed that, to the fullest extent permitted by law, the use of the Parking will be at the sole risk of Tenant and its employees. Landlord will have the right to temporarily close the Parking areas to perform necessary repairs, maintenance and improvements.

 

27.2                        Tenant agrees not to overburden the Parking and agrees to cooperate with Landlord and other tenants in the use of the Parking. Landlord reserves the right in its sole but reasonable discretion to determine whether the Parking is becoming crowded and, in such event, to allocate specific parking spaces among Tenant and other tenants or to take other steps to correct such condition, including but not limited to policing and towing, and if Tenant, its agents, officers, employees, contractors, licensees or invitees are reasonably deemed by Landlord to be contributing to such condition, to charge to Tenant as Rent that portion of the cost thereof which Landlord reasonably determines to be caused thereby. Landlord may, in its sole discretion, change the location and nature of the Parking spaces available to Tenant, provided that after such change, there shall be available to Tenant approximately the same number of spaces as available before such change.

 

ARTICLE 28. MISCELLANEOUS.

 

28.1                        Substitution of Premises.

 

Upon not less than 45 days’ prior written notice, Landlord may require Tenant to move to another location of comparable size and tenant improvement finish in the Building (“Substitute Premises”) in order to permit Landlord to consolidate the Premises with other space leased or to be leased by another tenant in the Building. In the event of such relocation, Landlord will pay all expenses of preparing and decorating the Substitute Premises, of moving Tenant’s furniture and equipment to the Substitute Premises, and of replacing door lettering and reasonable quantities of new stationery. Landlord shall not be responsible, and Tenant shall not make any claim against Landlord, for damages, abatement of rent, lost profits or otherwise as a result of the relocation. Following the effective date of such relocation, the Substitute Premises shall be deemed to be the Premises or all purposes hereunder and Tenant shall have no further right, title or interest to the original Premises. The parties shall execute and deliver an amendment to this Lease to evidence the relocation. Base Rent and Tenant’s Proportionate Share shall not be increased by more than 5% as a result of the relocation, even if Tenant’s Substitute Premises are more than 5% larger than the original Premises.

 

28.2                        Security Deposit.

 

As of the Lease Date, Tenant has deposited the Security Deposit referred to in Article 1 of this Lease with Landlord as security for the full, faithful, and timely performance of every provision of this Lease to be performed by Tenant. If an Event of Default occurs with respect to any provision of this Lease, including but not limited to the provisions relating to the payment of Rent, Landlord may use, apply, or retain all or any part of the Security Deposit for the payment of any Rent, or any other sum in default, or for the payment of any other amount Landlord may spend or become obligated to spend by reason of Tenant’s default, or to compensate Landlord for any other loss or damage Landlord may suffer by reason of Tenant’s default. If any portion of the Security Deposit is so used, applied, or retained, Tenant shall, within five (5) days after written demand, deposit cash with Landlord in an amount sufficient to restore the Security Deposit to its original amount. Landlord will not be required to keep the Security Deposit separate from its general funds, and Tenant will not be entitled to interest on the Security Deposit. The Security Deposit shall not be deemed a limitation on Landlord’s damages or a payment of liquidated damages or a payment of the Base Rent due for the last month of the Term. The Security Deposit, or any balance of the Security Deposit after application or retention as described herein, will be returned to Tenant within 45 days after the expiration of the Term. Landlord may deliver the funds deposited under this Lease by Tenant to the purchaser of the Building in the event the Building is sold, and after such time Landlord will have no further liability to Tenant with respect to the Security Deposit.

 

28.3                        Signs.

 

Except for signs that are located inside the Premises and are not visible outside the Building, no signs will

 

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be placed in the Premises, Building or Project without the prior written consent of Landlord as to size, design, color, location, content, illumination, composition, material, and mobility, which consent may be withheld for any reason in the sole discretion of Landlord. Tenant shall remove all signs at the end of the Term or duly exercised Renewal Term and shall repair and restore any damage caused by their installation or removal. Landlord shall place Tenant’s name in the Building directory; any changes to such listing shall be at Tenant’s expense.

 

28.4        No Offer.

 

This Lease is submitted to Tenant on the understanding that it will not be considered an offer and will not bind Landlord in any way until Tenant has duly executed and delivered duplicate originals to Landlord and Landlord has executed and delivered one of such originals to Tenant. However, Tenant’s execution and delivery of this Lease to Landlord or its agents shall constitute an irrevocable offer by Tenant to lease the Premises on the terms and conditions herein contained, which offer may not be revoked for 15 days after such delivery

 

28.5        Joint and Several Liability.

 

If Tenant is composed of more than one signatory to this Lease, each signatory will be jointly and severally liable with each other signatory for payment and performance according to this Lease. The act of, written notice to, written notice from, refund to, or signature of any signatory to this Lease (including without limitation modifications of this Lease made by fewer than all such signatories) will bind every other signatory as though every other signatory had so acted, or received or given the written notice or refund, or signed.

 

28.6        No Construction Against Drafting Party.

 

Landlord and Tenant acknowledge that each of them and their counsel have had an opportunity to review this Lease and that this Lease will not be construed against Landlord merely because Landlord has prepared it.

 

28.7        Time of the Essence.

 

Time is of the essence of each and every provision of this Lease.

 

28.8        No Recordation.

 

Tenant shall not record this Lease or any memorandum or short form thereof; any such recording by Tenant will be void and a default under this Lease.

 

28.9        No Waiver.

 

The waiver by Landlord of any agreement, condition, or provision contained in this Lease will not be deemed to be a waiver of any subsequent breach of the same or any other agreement, condition, or provision contained in this Lease, nor will any custom or practice that may grow up between the parties in the administration of the Terms of this Lease be construed to waive or to lessen the right of Landlord to insist upon the performance by Tenant in strict accordance with the Terms of this Lease. The subsequent acceptance of rent by Landlord will not be deemed to be a waiver of any preceding breach by Tenant of any agreement, condition, or provision of this Lease, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord’s knowledge of such preceding breach at the time of acceptance of such rent.

 

28.10      Limitation on Recourse.

 

It is expressly understood and agreed by Tenant that none of Landlord’s covenants, undertaking or agreements contained in this Lease are made or intended as personal covenants, undertaking or agreements by Landlord or its partners. Tenant specifically agrees to look solely to Landlord’s interest in the Building for the recovery of any judgments from Landlord. It is agreed that Landlord (and its shareholders, venturers, and partners, and their shareholders, venturers, and partners and all of their officers, directors, and employees) shall not be personally liable for any such judgments. The provisions contained in the preceding sentences are not intended to and will not limit any right that Tenant might otherwise have to obtain injunctive relief against Landlord or relief in

 

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any suit or action in connection with enforcement or collection of amounts that may become owing or payable under or on account of insurance maintained by Landlord.

 

28.11      Estoppel Certificates.

 

At any time and from time to time but within 10 days after written request by Landlord, Tenant shall execute, acknowledge, and deliver to Landlord a certificate in the form attached hereto as Exhibit C, or such other form as is then in use by Landlord or an existing or prospective purchaser or lender, certifying as to the matters set forth therein. Any such certificate may be relied upon by any existing or prospective purchaser or lender or mortgagee or beneficiary under any deed of trust of the Building or any part of the Project. Tenant’s failure to deliver such a certificate within such time shall be conclusive evidence of the matters set forth in it.

 

28.12      Waiver of Jury Trial.

 

Landlord and Tenant, by this Article 28.12, waive trial by jury in any action, proceeding, or counterclaim brought by either of the parties to this Lease against the other on any matters whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, Tenant’s use or occupancy of the Premises, or any other claims (except claims for personal injury or property damage), and any emergency statutory or any other statutory remedy.

 

28.13      No Merger.

 

The voluntary or other surrender of this Lease by Tenant or the cancellation of this Lease by mutual agreement of Tenant and Landlord or the termination of this Lease on account of Tenant’s default shall not work a merger, and shall, at Landlord’s option, (a) terminate all or any subleases and subtenancies or (b) operate as an assignment to Landlord of all or any subleases or subtenancies. Landlord’s option under this Article 28.13 shall be exercised by written notice to Tenant and all known sublessees or subtenants in the Premises or any part of the Premises.

 

28.14      Holding Over.

 

Tenant shall have no right to remain in possession of all or any part of the Premises after the expiration of the Term. If Tenant retains possession of the Premises or any part thereof after the expiration or termination of the Term or Tenant’s right to possession of the Premises, Tenant shall pay Rent during such holding over in an amount equal to 150% (increasing to 200% of the Holding Over lasts for more than 60 days) of all Rent due (based on the Base Rent, estimated Operating Expenses and estimated Taxes, and Additional Rent payable for the last month of the Lease Term), computed on a monthly basis for each month or partial month that Tenant remains in possession. Tenant shall also pay, indemnify and defend Landlord from and against all claims and damages, consequential as well as direct, sustained by reason of Tenant’s holding over, including without limitation damages associated with Landlord’s inability to deliver the Premises to or prepare them for a new tenant. The provisions of this paragraph do not waive Landlord’s right of re-entry or right to regain possession by actions at law or in equity, or any other rights hereunder, and any receipt of payment by Landlord shall not be deemed a consent by Landlord to Tenant’s remaining in possession or be construed as creating or renewing any lease or right of tenancy between Landlord and Tenant.

 

28.15      Notices.

 

Any notice, request, demand, consent, approval, or other communication required or permitted under this Lease must be in writing and shall be deemed to have been given when (a) hand-delivered, effective upon receipt, (b) sent by United States Express Mail or by private overnight courier, effective upon receipt, or (c) sent by certified mail, return receipt requested, addressed to the party for whom it is intended at its address set forth in Article 1.1, or deposited in the United States Mail, with postage thereon fully prepaid, effective on the day of actual delivery as shown by the addressee’s return receipt or the expiration of three (3) business days after the date of mailing, whichever is earlier, or (d) sent by facsimile transmission, effective upon receipt provided that a hard copy is delivered by one of the methods outlined in clauses (a) through (c) above within three (3) days thereafter. Either Landlord or Tenant may add additional addresses or change its address for purposes of receipt of any such

 

25

 

communication by giving ten (10) days’ prior written notice of such change to the other party in the manner prescribed in this Article 28.15.

 

28.16      Severability.

 

If any provision of this Lease proves to be illegal, invalid, or unenforceable, the remainder of this Lease will not be affected by such finding, and in lieu of each provision of this Lease that is illegal, invalid, or unenforceable a provision will be added as a part of this Lease as similar in terms to such illegal, invalid, or unenforceable provision as may be possible and be legal, valid, and enforceable.

 

28.17      Written Amendment Required.

 

No amendment, alteration, modification of, or addition to the Lease shall be valid or binding unless expressed in writing and signed by Landlord and Tenant. Tenant agrees to make any modifications of the Terms and provisions of this Lease required or requested by any lending institution providing financing for the Building, or Project, as the case may be, provided that no such modifications will materially adversely affect Tenant’s rights and obligations under this Lease.

 

28.18      Captions.

 

The captions of the various articles of this Lease are for convenience only and do not necessarily define, limit, describe, or construe the contents of such articles.

 

28.19      Authority.

 

Tenant represents to Landlord that the party executing this Lease on behalf of Tenant is authorized to do so by requisite action of the board of directors or partners, as the case may be, and agrees, upon execution of this Lease, to deliver to Landlord a resolution or similar document to that effect.

 

28.20      Brokers.

 

Tenant warrants and represents to Landlord that it has not dealt with any real estate broker except for the Brokers, if any, listed in Article 1.1 (Basic Lease Information) with respect to this Lease, and that to its knowledge no other broker initiated or participated in the negotiation of this Lease, submitted or showed the Premises to Tenant or is entitled to any commission in connection with this Lease. Tenant agrees to indemnify and hold Landlord harmless from all claims from any other broker for commission or fees in connection with the Premises based on dealings with Tenant. Tenant’s obligations under this Section 28.20 will survive termination of this Lease. Landlord will pay a commission to the Brokers according to a separate agreement.

 

28.21      Governing Law.

 

This Lease shall be governed by and construed pursuant to the internal laws of the state of Illinois.

 

28.22      No Easements for Air or Light.

 

Any diminution or shutting off of light, air, or view by any structure that may be erected on lands adjacent to the Building shall in no way affect this Lease or impose any liability on Landlord.

 

28.23      Tax Credits.

 

Landlord is entitled to claim all tax credits and depreciation attributable to leasehold improvements in the Premises. Promptly after Landlord’s demand, Landlord and Tenant shall prepare a detailed list of the leasehold improvements and fixtures and their respective costs for which Landlord or Tenant has paid. Landlord shall be entitled to all credits and depreciation for those items for which Landlord has paid by means of any Tenant finish allowance or otherwise. Tenant shall be entitled to any tax credits and depreciation for all items for which Tenant has paid with funds not provided or reimbursed by Landlord.

 

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28.24      Landlord’s Fees.

 

Whenever Tenant requests Landlord to take any action or give any consent required or permitted under this Lease, Tenant shall reimburse Landlord for all of Landlord’s reasonable costs incurred in reviewing the proposed action or consent, including without limitation reasonable attorneys’, engineers’ or architects’ fees, within 10 days after Landlord’s delivery to Tenant of a statement of such costs. Tenant shall be obligated to make such reimbursement without regard to whether Landlord consents to any such proposed action.

 

28.25      Non-waiver.

 

Any default in the payment of Base Rent or Additional Rent or other charges, or any failure of Landlord to enforce the provisions of this Lease upon any default by the Tenant shall not be construed as creating a custom of deferring payment or as modifying in any way the Terms of this Lease or as a waiver of Landlord’s right to terminate this Lease as herein provided, or otherwise, to enforce the provisions hereof for any prior or subsequent default.

 

28.26      Presumption.

 

In all cases hereunder, and in any suit, action or proceeding of any kind between the parties, it shall be presumptive evidence of the fact a charge being due, if Landlord shall produce a bill, notice or certificate to the effect that such charge appears of record on the books in Landlord’s office or appears as an open charge on the books, records or official bills of municipal authorities, and has not been paid.

 

28.27      Waiver of Technical Defects in Notices.

 

In lieu of Landlord or Tenant waiving the right to receive any notices, both parties hereby waives any technical defects as to form, substance and delivery in the giving of any notices required by this Lease and Illinois Compiled Statutes so long as the notice reasonably apprises the appropriate party of the general nature of the reason for the giving of the notice and affords such party a reasonable opportunity to cure, if applicable.

 

28.28      No Right to Terminate.

 

Tenant hereby waives the remedies of termination and rescission and hereby agrees that Tenant’s sole remedies for Landlord’s default hereunder and for breach of any promise or inducement shall be limited to a suit for damages and/or injunction-specific performance.

 

28.29      No Liability for Crimes.

 

Landlord makes no representations or warranties with respect to crime in the area, undertakes no duty to protect against criminal acts and shall not be liable for any injury, wrongful death or property damage arising from any criminal acts. The Landlord may, from time to time, employ or caused to be employed security personnel and equipment, however, such personnel and equipment are only for the protection of Landlord’s property. Landlord reserves the right, in its sole and absolute discretion, to start, alter or terminate any such security services without notice. Tenant is urged to provide security for its invitees, its own personnel, and property as it deems necessary. Tenant is urged to obtain insurance to protect against criminal acts.

 

28.30      Binding Effect.

 

The covenants, conditions, and agreements contained in this Lease will bind and inure to the benefit of Landlord and Tenant and their respective heirs, distributees, executors, administrators, successors, and, except as otherwise provided in this Lease, their assigns.

 

28.31      Confidentiality.

 

Tenant acknowledges that the terms and conditions of this Lease are to remain confidential for the

 

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Landlord’s benefit, and shall not be disclosed by Tenant to anyone, by any manner or means, directly or indirectly, without Landlord’s prior written consent; provided, however, Tenant may disclose such terms or conditions to affiliates of Tenant and prospective subtenants and assignee for the sole purpose of evaluating a potential sublease or assignment so long as such affiliates and prospective subtenants and assignees agree to abide by the terms of this Article 28.31. The consent by Landlord to any disclosures shall not be deemed to be a waiver on the part of Landlord of any prohibition against any future disclosure.

 

28.32      Force Majeure.

 

Landlord shall have no liability to Tenant, nor will Tenant have any right to terminate this Lease or abate Rent or assert a claim of partial or total actual or constructive eviction, because of Landlord’s failure to perform any of its obligations in the Lease if the failure is due to reasons beyond Landlord’s reasonable control, including without limitation strikes or other labor difficulties; inability to obtain necessary governmental permits and approvals (including building permits or certificates of occupancy); unavailability or scarcity of materials; war; riot; civil insurrection; accidents; acts of God; and governmental preemption in connection with a national emergency. If Landlord fails to perform its obligations because of any reasons beyond Landlord’s reasonable control (including those enumerated above), the period for Landlord’s performance will be extended day for day for the duration of the cause of Landlord’s failure.

 

28.33      Interest and Late Charges.

 

All Rent and other sums due under this Lease which are not paid when due shall accrue interest at the lesser of the Prime Rate plus six percent (6%) per annum, or the highest rate allowed by law. If Tenant fails to pay any Rent when due, the unpaid amounts also will be subject to a late payment charge equal to three percent (3%) of the unpaid amounts. This late payment charge is intended to compensate Landlord for its additional administrative costs resulting from Tenant’s failure, and has been agreed upon by Landlord and Tenant as a reasonable estimate of the additional administrative costs that will be incurred by Landlord as a result of Tenant’s failure. The actual cost in each instance is extremely difficult, if not impossible, to determine. This late payment charge will constitute liquidated damages and will be paid to Landlord together with such unpaid amounts and interest as set forth above. The payment of this late payment charge will not constitute a waiver by Landlord of any default by Tenant under this Lease.

 

28.34      Entire Agreement.

 

This Lease, the exhibits and addenda, if any, contain the entire agreement between Landlord and Tenant. No promises or representations, except as contained in this Lease, have been made to Tenant respecting the condition or the manner of operating the Premises, the Building, or the Project.

 

28.35      Counterparts.

 

This Lease may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument, except that in the event of variation or discrepancy between counterparts, the counterpart held by Landlord shall control. Landlord shall have the unilateral right to insert the Lease Date on page 1 hereof.

 

28.36      OFAC Certification.

 

Tenant hereby represents and certifies to Landlord as follows: (i) Tenant is not acting, directly or indirectly, for or on behalf of any person, group, entity or nation named by any Executive Order, including without limitation Executive Order 13224, or the United States Treasury Department as a terrorist, “Specially Designated National and Blocked Person,” or other banned or blocked person, entity, nation or transaction pursuant to any law, order, rule or regulation that is enacted, enforced or administered by the Office of Foreign Assets Control; and (ii) Tenant is not engaged in this transaction, directly or indirectly, for or on behalf of, or instigating or facilitating this transaction, directly or indirectly on behalf of, any such person, group, entity or nation. Notwithstanding anything in this Lease to the contrary, Tenant hereby agrees to defend, indemnify and hold harmless Landlord from and against any and all claims, damages, losses, risks, liabilities, fines, penalties, forfeitures and expenses (including without

 

28

 

limitation costs and attorneys’ fees) arising from or related to any breach of the foregoing certification.

 

28.37      Telecommunications.

 

There are installed in the Building telephone riser cables (collectively the “riser cables”) from the outside of the Building to the terminal block on each floor in the Building. Subject to Landlord’s supervision and approval, Tenant shall have the right to use the riser cables by installing telecommunication lines from the Premises to the terminal block on the floor or floors on which the Premises are located (such lines, and any other voice/data cables, lines or wires used or installed by or for Tenant and serving the Premises are referred to as the “telecommunication lines”). Landlord, however, makes no representations or warranties with respect to the capacity, suitability or design of the riser cables or terminal blocks. If there is more than one tenant on a floor, Landlord will allocate hook-ups to the terminal block based on the proportion of rentable square feet that each tenant occupies on the floor. The installation and hook-up of telecommunication lines by Tenant will be subject to all of the terms and conditions of this Lease, including, without limitation, Article 15 of this Lease. Tenant will have no rights or interest in the riser cables and terminal blocks in the Building therein except as set forth herein. Under no circumstances will Landlord or its agents or employees be liable for, and Tenant and each of its subtenants waives all claims with respect to, any damages or losses sustained by it or any occupant of the Premises, including any property or consequential damages, resulting from operating or maintenance of the riser cables and terminal blocks. Without limiting the generality of the foregoing, in no event shall Landlord be liable for: (a) any damage to Tenant’s or its subtenants’ telephone lines, telephones or other equipment connected to the telecommunication lines, (b) interruption or failure of, or interference with, telephone or other service coming through the telecommunication lines to the Premises, or (c) unauthorized eavesdropping or wiretapping. All telephone and telecommunications desired by Tenant must be ordered and utilized at the sole expense of Tenant. All of Tenant’s telecommunications equipment must be and remain solely in the Premises, in accordance with this Lease and with the rules and regulations adopted by Landlord from time to time.

 

Any and all telecommunications lines and equipment installed in the Premises or elsewhere in the Building by or on behalf of Tenant must be removed before the expiration or earlier termination of this Lease, by Tenant at its sole cost or, at Landlord’s election, by Landlord at Tenant’s sole cost, with such cost to be paid as additional rent. However, Landlord will have the right, upon written notice to Tenant given no later than 30 days before the expiration or earlier termination of this Lease, to require Tenant to abandon and leave in place, without additional payment to Tenant or credit against rent, any and all telecommunication lines and related infrastructure, or selected components thereof, whether located in the Premises or elsewhere in the Project. Tenant covenants and agrees that at the termination or expiration of this Lease, Tenant will be the sole owner of such telecommunication lines and related equipment and infrastructure, such that if Landlord elects to require such telecommunication lines and related equipment and infrastructure to remain in place, Landlord will become the sole owner thereof upon expiration or termination of this Lease; Tenant further covenants that such telecommunication lines and related equipment and infrastructure will be free of all liens and encumbrances, and that such telecommunication lines will be in good condition, working order, and properly labeled at each end and in each telecommunications/electrical closet and junction box. The provisions of this grammatical paragraph will survive expiration or termination of this Lease.

 

If Tenant wishes at any time to utilize the services of a telecommunications provider whose equipment is not then servicing the Building, no such provider will be permitted to install its lines or other equipment within the Building or on the Project without first securing the prior written consent of Landlord, which consent may be withheld in Landlord’s sole discretion. If telecommunications equipment, wiring, and facilities installed by or at the request of Tenant within the Premises, or elsewhere within or on the Building or Project causes interference to equipment used by another party, Tenant will (i) assume all liability related to such interference, and will indemnify and hold Landlord harmless from any liabilities and claims against Landlord resulting from such interference, (ii) use reasonable efforts, and cooperate with Landlord and other parties, to promptly eliminate such interference, (iii) if Tenant is unable to promptly eliminate such interference, substitute alternative equipment which remedies the situation, and (iv) if such interference persists, discontinue the use of the equipment causing such interference and, at Landlord’s discretion, remove such equipment.

 

[Remainder of page intentionally left blank; signature page follows]

 

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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the Lease Date.

 

LANDLORD

 

MJH NORTHBROOK LLC, a Delaware limited liability company

 

	
By: 
    	
JONES LANG LASALLE AMERICAS (ILLINOIS), L. P.,
    
	
 
    	
Property Manager and   Authorized Agent
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Barbara A. Liebers 
    	
 
    
	
Name: 
    	
Barbara A. Liebers 
    	
 
    
	
Its: 
    	
Senior Vice President 
    	
 
    

 

 

TENANT

 

CLARUS THERAPEUTICS, INC., a Delaware corporation

 

	
By:
    	
/s/ Steven A. Bourne
    	
 
    
	
Name: 
    	
Steven A. Bourne
    	
 
    
	
Its: 
    	
CFO
    	
 
    

 

30

 

EXHIBIT A

 

LAYOUT OF THE PREMISES

 

	
 
    	
 
    	
 
    	
Updated 08/29/2011
    
	

    	
JONES LANG

LASALLE.

 
    	
555 COMBINED CENTRE

3RD FLOOR

 
    	
 
    

 

 

1

 

EXHIBIT B

 

RULES AND REGULATIONS

 

1.                                      Landlord may from time to time adopt appropriate systems and procedures for the security or safety of the Building, or any equipment, furnishings, or contents of the Building, and Tenant will comply with Landlord’s reasonable requirements relative to such systems and procedures.

 

2.                                      The sidewalks, halls, passages, exits, entrances, elevators, and stairways of the Building shall not be obstructed by Tenant or used by Tenant for any purpose other than for ingress to and egress from the Premises. The halls, passages, exits, entrances, elevators, escalators, and stairways are not for the general public, and Landlord shall in all cases retain the right to control and prevent access to such halls, passages, exits, entrances, elevators, and stairways of all persons whose presence in the judgment of Landlord would be prejudicial to the safety, character, reputation, and interests of the Building, provided that nothing contained in these Rules and Regulations shall be construed to prevent such access to persons with whom any Tenant normally deals in the ordinary course of its business, unless such persons are engaged in illegal activities. Neither Tenant nor any employee or invitee of Tenant shall go upon the roof of the Building. Tenant shall not be permitted to place or install any object (including without limitation radio and television antennas, loudspeakers, sound amplifiers, microwave dishes, solar devices, or similar devices) on the exterior of the Building or on the roof of the Building without having a license agreement in place executed by Tenant and Landlord governing the same. Neither Tenant nor Tenant’s agents or contractors may perform maintenance, repairs or alterations on any base building lighting, plumbing or mechanical system or fixture.

 

3.                                      Other than draperies expressly permitted by Landlord and building standard mini-blinds, material visible from outside the building shall not be permitted. In the event of the violation of this rule by Tenant, Landlord may remove the violating items without any liability, and may charge the expense incurred by such removal to the Tenant.

 

4.                                      No cooking shall be done or permitted by Tenant on the Premises, except in areas of the Premises which are specially constructed for cooking and except that use by the Tenant of microwave ovens and Underwriters’ Laboratory approved equipment for brewing coffee, tea, hot chocolate, and similar beverages shall be permitted, provided that such use is in accordance with all applicable federal, state, and city laws, codes, ordinances, rules, and regulations.

 

5.                                      Tenant shall not employ any person or persons other than the cleaning service of Landlord for the purpose of cleaning the Premises, unless otherwise agreed to by Landlord in writing. Except with the written consent of Landlord, no person or persons other than those approved by Landlord shall be permitted to enter the Building for the purpose of cleaning it. No Tenant shall cause any unnecessary labor by reason of Tenant’s carelessness or indifference in the preservation of good order and cleanliness. Should Tenant’s actions result in any increased expense for any required cleaning, Landlord reserves the right to assess Tenant for such expenses.

 

6.                                      The toilet rooms, toilets, urinals, wash bowls and other plumbing fixtures shall not be used for any purposes other than those for which they were constructed, and no sweepings, rubbish, rags, or other foreign substances shall be thrown in such plumbing fixtures. All damages resulting from any misuse of the fixtures shall be borne by the Tenant who, or whose servants, employees, agents, visitors, or licensees, caused the same.

 

7.                                      Tenant shall not in any way deface any part of the Premises or the Building of which they form a part. In those portions of the Premises where carpet has been provided directly or indirectly by Landlord, Tenant shall at its own expense install and maintain pads to protect the carpet under all furniture having casters other than carpet casters.

 

8.                                      Tenant shall not alter, change, replace, or rekey any lock or install a new lock or a knocker on any door of the Premises. Landlord, its agents, or employees shall retain a pass (master) key to all door locks on the Premises. Any new door locks required by Tenant or any change in keying of existing locks shall be installed or changed by Landlord following Tenant’s written request to Landlord and shall be at Tenant’s expense. All new locks and rekeyed locks shall remain operable by Landlord’s pass (master) key. Tenant, upon termination of its tenancy, shall deliver to Landlord all keys and access cards for the Premises and Building that have been furnished

 

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to Tenant.

 

9.                                      The elevator designated for freight by Landlord shall be available for use by Tenant during the hours and pursuant to such procedures as Landlord may determine from time to time. The persons employed to move Tenant’s equipment, material, furniture, or other property in or out of the Building must be acceptable to Landlord. The moving company must be a locally recognized professional mover, whose primary business is the performing of relocation services, and must be bonded and fully insured. A certificate or other verification of such insurance must be received and approved by Landlord prior to the start of any moving operations. Insurance must be sufficient, in Landlord’s sole opinion, to cover all personal liability, theft or damage to the Project, including but not limited to floor coverings, doors, walls, elevators, stairs, foliage, and landscaping. Special care must be taken to prevent damage to foliage and landscaping during adverse weather. All moving operations shall be conducted at such times and in such a manner as Landlord shall direct, and all moving shall take place during non-business hours unless Landlord agrees in writing otherwise. Tenant shall be responsible for the provision of Building security during all moving operations, and shall be liable for all losses and damages sustained by any party as a result of the failure to supply adequate security. Landlord shall have the right to prescribe the weight, size, and position of all equipment, materials, furniture, or other property brought into the Building. Heavy objects shall, if considered necessary by Landlord, stand on wood strips of such thickness as is necessary to properly distribute the weight. Landlord shall not be responsible for loss of or damage to any such property from any cause, and all damage done to the Building by moving or maintaining such property shall be repaired at the expense of Tenant. Landlord reserves the right to inspect all such property to be brought into the Building and to exclude from the Building all such property which violates any of these Rules and Regulations or the Lease of which these Rules and Regulations are a part. Supplies, goods, materials, packages, furniture, and all other items of every kind delivered to or taken from the Premises shall be delivered or removed through the entrance and route designated by Landlord, and Landlord shall not be responsible for the loss or damage of any such property unless such loss or damage results from the negligence of Landlord, its agents, or employees.

 

10.                               Tenant shall not use or keep in the Premises or the Building any kerosene, gasoline, or any flammable, combustible or explosive fluid or material or chemical substance other than cleaning fluids and solvents required in Tenant’s normal operations in the Premises. Without Landlord’s prior written approval, Tenant shall not use any method of heating or air conditioning other than that supplied by Landlord. Tenant shall not use or keep or permit to be used or kept any foul or noxious gas or substance in the Premises.

 

11.                               Landlord shall have the right, exercisable upon written notice and without liability to Tenant, to change the name and street address of the Building.

 

12.                               Landlord shall have the right to prohibit any advertising by Tenant mentioning the Building that, in Landlord’s reasonable opinion, tends to impair the reputation of the Building or its desirability as a Building for offices, and upon written notice from Landlord, Tenant shall refrain from or discontinue such advertising.

 

13.                               Tenant shall not bring any animals (except Service Animals as defined by the ADA) or birds into the Building, and shall not permit bicycles or other vehicles inside or on the sidewalks outside the Building except in areas designated from time to time by Landlord for such purposes.

 

14.                               All persons entering or leaving the Building between the hours of 6 p.m. and 8 a.m. Monday through Friday, and at all hours on Saturdays, Sundays, and holidays shall comply with such off-hour regulations as Landlord may establish and modify from time to time.

 

15.                               Tenant shall store all its trash and garbage within its Premises. No material shall be placed in the trash boxes or receptacles if such material is of such nature that it may not be disposed of in the ordinary and customary manner of removing and disposing of trash and garbage without being in violation of any law or ordinance governing such disposal. All garbage and refuse disposal shall be made only through entryways and elevators provided for such purposes and at such times as Landlord designates. Removal of any furniture or furnishings, large equipment, packing crates, packing materials, and boxes shall be the responsibility of each Tenant and such items may not be disposed of in the Building trash receptacles nor shall they be removed by the Building’s janitorial service, except at Landlord’s sole option and at the Tenant’s expense. No furniture, appliances, equipment, or flammable products of any type may be disposed of in the Building trash receptacles.

 

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16.                               Canvassing, peddling, soliciting, and distributing handbills or any other written materials in the Building are prohibited, and Tenant shall cooperate to prevent the same.

 

17.                               The requirements of the Tenant shall be attended to only upon application by written, personal, or telephone notice at the office of the Building. Employees of Landlord shall not perform any work or do anything outside of their regular duties unless under special instructions from Landlord.

 

18.                               Tenant shall see that the doors of the Premises are closed and locked and that all water faucets, water apparatus, and utilities are shut off before Tenant or Tenant’s employees leave the Premises, so as to prevent waste or damage, and for any default or carelessness in this regard Tenant shall make good all injuries sustained by other Tenants or occupants of the Building or Landlord.

 

19.                               Tenant shall not conduct itself in any manner that is inconsistent with the character of the Building as a first quality Building.

 

20.                               Neither Landlord nor any operator of the parking areas within the Project wherein the parking is located, as the same are designated and modified by Landlord, in its sole discretion, from time to time (sometimes collectively the “parking areas”) shall be liable for loss of or damage to any vehicle or any contents of such vehicle or accessories to any such vehicle, or any property left in any of the parking areas, resulting from fire, theft, vandalism, accident, conduct of other users of the parking areas and other persons, or any other casualty or cause. Further, Tenant understands and agrees that: (a) Landlord shall not be obligated to provide any traffic control, security protection or operator for the parking areas; (b) Tenant uses the parking areas at its own risk; and (c) Landlord shall not be liable for personal injury or death, or theft, loss of, or damage to property. Tenant waives and releases Landlord from any and all liability arising out of the use of the parking areas by Tenant, its employees, agents, invitees, and visitors, whether brought by any of such persons or any other person.

 

21.                               Tenant and its employees, agents, invitees, and visitors shall use the parking described in Paragraph 27 of the Lease solely for the purpose of parking passenger cars, small vans, and small trucks and shall comply in all respects with any rules and regulations that may be promulgated by Landlord from time to time with respect thereto. Tenant shall ensure that any vehicle parked in any of the parking spaces shall be kept in proper repair, good operating condition, currently licensed, and shall not leak excessive amounts of oil or grease or any amount of gasoline. If any of the parking is at any time used (a) for any purpose other than parking as provided above; (b) in any way or manner reasonably objectionable to Landlord; or (c) by Tenant after default by Tenant under the Lease, Landlord, in addition to any other rights otherwise available to Landlord, including, at the Tenant’s expense, the right to tow or boot the offending vehicle, may consider such default an Event of Default under the Lease.

 

22.                               Tenant’s right to use the parking shall be in common with other parties permitted by Landlord to use the parking areas. Landlord shall not be liable to Tenant for any unavailability of parking nor shall any unavailability entitle Tenant to any refund, deduction, or allowance.

 

23.                               If the parking areas are damaged or destroyed, or if the use of the parking areas is limited or prohibited by any governmental authority, or the use or operation of the parking areas is limited or prevented by strikes or other labor difficulties or other causes beyond Landlord’s control, Tenant’s inability to use the parking areas shall not subject Landlord or any operator of the parking areas to any liability to Tenant and shall not relieve Tenant of any of its obligations under the Lease and the Lease shall remain in full force and effect.

 

24.                               Tenant has no right to assign, sublease or sublicense, as the case may be, any of its rights in the parking, except as part of a permitted assignment or sublease of the Lease. However, Tenant may allocate the parking among its employees.

 

25.                               No act or thing done or omitted to be done by Landlord or Landlord’s agent during the Term of the Lease in connection with the enforcement of these Rules and Regulations shall constitute an eviction by Landlord of any Tenant nor shall it be deemed an acceptance of surrender of the Premises by any Tenant, and no agreement to accept such termination or surrender shall be valid unless in a writing signed by Landlord. The

 

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delivery of keys to any employee or agent of Landlord shall not operate as a termination of the Lease or a surrender of the Premises unless such delivery of keys is done in connection with a written instrument executed by Landlord approving the Termination or surrender.

 

26.                               As used in these Rules and Regulations, the word “Tenant” includes the employees, agents, invitees, and licensees of Tenant and others permitted by Tenant to use or occupy the Premises.

 

27.                               Landlord shall have the right to designate all or any portion of the Building and/or Project as a non-smoking facility at any time during the Term.

 

28.                               These rules and regulations are in addition to, and shall not be construed to modify or amend, in whole or in part, the terms, covenants, agreements, and conditions of the Lease.

 

4

 

EXHIBIT C

 

TENANT ESTOPPEL CERTIFICATE

 

RE:                           Lease dated               (“Lease”) between MJH Northbrook LLC (“Landlord”) and (“Tenant”) for Suite       (“Premises”) in a building located at                    and commonly known as                           (“Building”).

 

The Tenant hereby certifies to Landlord, and to                           , a                       (“                            ”) that the following information with respect to the Lease is true and correct:

 

1.                                      The Lease is in full force and effect and has not been modified or amended except as specifically set forth in Paragraph 4. below. There are no other agreements, understandings, contracts or commitments of any kind with respect to the Lease or the Premises except as expressly provided in the Lease or in any amendment or supplement thereto set forth in Paragraph 4., below.

 

2.                                      Tenant asserts no claim of default, offset or defense against rent or other charges payable by the Tenant under the Lease. To the best of Tenant’s knowledge and belief, there is no default by Landlord under the Lease and all commitments made by Landlord to Tenant to induce Tenant to enter into the Lease have been satisfied.

 

3.                                      All rent due under the Lease has been paid to the end of the current calendar month, which is         ,       , and no rent due under the Lease has been paid more than one month in advance of its due date.

 

4.                                      Dates of any Lease amendments or modifications:                                   .

 

5.                                      Current monthly Base Rental:                                        .

 

6.                                      Lease Commencement Date:                                                  .

 

7.                                      Lease Expiration Date:                                                        .

 

8.                                      The Lease contains no options to renew, first rights of refusal, options to expand, or options to terminate, except as follows:                               .

 

9.                                      The Tenant has not assigned, or otherwise transferred its interest under the Lease, except as follows:                                      .

 

10.                               Tenant is using the Premises only for those purposes specifically permitted under the Lease, which is                                     .

 

11.                               Landlord is holding Tenant’s security deposit of $                        .

 

12.                                Neither Landlord nor Tenant is in default under the Lease and there are no conditions or events which have occurred or which, with the passage of time or the giving of notice or both, would constitute a default or breach. Tenant is current in the payment of all taxes, utilities, common area maintenance payments, and other charges required to be paid by the Tenant pursuant to the Lease, and there exists no dispute relative to any such amounts.

 

13.                               The improvements and space required to be furnished according to the Lease have been duly delivered by the Landlord and accepted by the Tenant.

 

1

 

14.                             The undersigned has all requisite authority to execute this Estoppel Certificate on behalf of Tenant.

 

	
Dated:             ,        .
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Its:
    	
 
    

 

2

 

FIRST AMENDMENT TO OFFICE LEASE

 

THIS FIRST AMENDMENT TO OFFICE LEASE (“Amendment”) is made and entered into as of the 29th day of June, 2012, between MJH  NORTHBROOK LLC,  a Delaware limited liability company (“Landlord”), and CLARUS THERAPEUTICS, INC.,  a Delaware corporation (“Tenant”).

 

Recitals

 

·                                          Landlord and Tenant entered into a certain Office Lease dated August 18, 2011 (the “Lease”). Under the terms of the Lease, Landlord leases to Tenant approximately 2,728 rentable square feet (“RSF”) situated in Suite 340 (the “Premises”) of the building located at 555 Skokie Boulevard, Northbrook, Illinois 60062 (the “Building”).

 

·                                          Landlord and Tenant desire to extend the Term of the Lease and otherwise amend the Lease as provided herein.

 

Terms

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein (which by incorporation are deemed to include the foregoing Recitals as if fully restated below) and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby amend the Lease as follows:

 

1.             Capitalized Terms. All capitalized terms which are not specifically defined in this Amendment and which are defined in the Lease will have the same meaning for purposes of this Amendment as they have in the Lease.

 

2.             Integration of Amendment and Lease. This Amendment and the Lease shall be deemed to be, for all purposes, one instrument. In the event of any conflict between the terms and provisions of this Amendment and the terms and provisions of the Lease, the terms and provisions of this Amendment shall, in all instances, control and prevail.

 

3.             Extension of Term. The Term of the Lease is hereby extended for a period (the “Extension Term”) of one (1) year, commencing on September 1, 2012, and continuing to and including August 31, 2013 (the revised “Expiration Date”).

 

4.             Base Rent. During the Extension Term, Tenant shall pay Base Rent in the following amount:

 

	
Base Rent /RSF)
    	
 
    	
Annual Base Rent
    	
 
    	
Monthly Installments of 
   Base Rent
    	
 
    
	
$
    	
15.50
    	
 
    	
$
    	
42,284.00
    	
 
    	
$
    	
3,523.67
    	
 
    
									

 

5.           Operating Expenses, Taxes. During the Extension Term, Tenant shall continue to pay Tenant’s Proportionate Share of Operating Expenses and Taxes, as set forth in the Lease.

 

6.           Condition of Premises. Tenant accepts the Premises AS IS, WHERE IS, with all faults, and acknowledges that Landlord has completed and paid for all prior work and allowances required of Landlord under the Lease. Landlord is not required to perform, pay for, or provide Tenant with an allowance for, any work or improvements on the Premises. No agreement or promise of Landlord, the property manager, or their respective agents or employees to alter, remodel, decorate, clean, or improve the

 

1

 

Premises or Building (or to provide Tenant with any credit or allowance for the same), and no representation regarding the condition of the Premises or Building, has been made to or relied upon by Tenant.

 

7.             Authority: OFAC. Landlord and Tenant each represents and warrants to the other that this Amendment has been duly authorized, executed and delivered by and on behalf of each party hereto and constitutes the valid and binding agreement of Landlord and Tenant in accordance with the terms hereof. Tenant hereby confirms and re-makes its certification, representations, and agreements as set forth in Section 28.36 of the Lease.

 

8.             Broker. Tenant represents to Landlord that Tenant has not dealt with any broker in connection with this Amendment other than Landlord’s broker, Jones Lang LaSalle America (Illinois), L.P., and Tenant’s broker, Tenant Advisors. Tenant agrees to indemnify, defend and hold Landlord and Landlord’s agents harmless from all damages, liability and expense (including reasonable attorneys’ fees) arising from any claims or demands of any other brokers or finders for any commission alleged to be due such brokers or finders in connection with their participation in the negotiation with Tenant of this Amendment.

 

9.             Options. Tenant has no option to renew, extend, expand, terminate, or cancel; no right of first offer, first refusal, or purchase; and no similar rights or options. If Tenant notifies Landlord that it requires additional space during the Extension Term, Landlord will work in good faith to accommodate Tenant’s needs by offering such space on market terms (as determined by Landlord) in the Combined Centre Project.

 

10.          Counterparts. This Amendment may be executed in any number of counterparts with the same effect as if all parties executed the same document. All such counterparts shall constitute one agreement. Landlord shall have the unilateral right to insert the date of this Amendment on page 1 hereof.

 

11.          No Offer. Submission of this instrument for examination or negotiation will not bind Landlord, and no obligation on the part of Landlord will arise until this Amendment is executed and delivered by Landlord.

 

12.          Entire Agreement. This Amendment and the Lease contain all the terms, covenants, conditions and agreements between Landlord and Tenant relating to the matters provided for in this instrument. No prior or other agreement or understanding pertaining to such matters (other than the Lease) will be valid or of any force or effect.

 

13.          Lease in Full Force and Effect. Except as expressly provided herein, all of the terms and provisions of the Lease shall remain in full force and effect. Any liability of Landlord under the Lease and this Amendment shall be limited solely to its interest in the Building, and in no event shall any personal liability be asserted against Landlord in connection with the Lease or Amendment, nor shall any recourse be had to any other property or assets of Landlord.

 

[Remainder of page intentionally left blank; signature page follows]

 

2

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment in manner sufficient to bind them as of the day and year first above written.

 

	
 
    	
LANDLORD
    
	
 
    	
 
    
	
 
    	
MJH NORTHBROOK LLC, a Delaware   limited 
   liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
JONES LANG LASALLE   AMERICAS 
    
	
 
    	
 
    	
(ILLINOIS), L. P., Property   Manager and
    
	
 
    	
 
    	
Authorized Agent
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By: 
    	
/s/ Barbara A. Liebers
    
	
 
    	
 
    	
Name:
    	
Barbara A. Liebers
    
	
 
    	
 
    	
Its:
    	
Senior Vice President
    
	
 
    	
 
    
	
 
    	
TENANT

 
    
	
 
    	
CLARUS THERAPEUTICS, INC., a Delaware   
    
	
 
    	
corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Steven A. Bourne
    
	
 
    	
Name:
    	
Steven A. Bourne
    
	
 
    	
Its:
    	
CFO
    

 

3

 

SECOND AMENDMENT TO OFFICE LEASE

 

THIS SECOND AMENDMENT TO OFFICE LEASE (“Amendment”)  is made and entered into as of the 20th day of June, 2013, between MJH NORTHBROOK LLC, a Delaware limited liability company (“Landlord”), and CLARUS THERAPEUTICS, INC.,  a Delaware corporation (“Tenant”).

 

Recitals

 

·                                          Landlord and Tenant entered into a certain Office Lease dated August 18, 2011, as amended by First Amendment to Office Lease dated as of June 29, 2012 (collectively, the “Lease”).  Under the terms of the Lease, Landlord leases to Tenant approximately 2,728 rentable square feet (“RSF”)  situated in Suite 340 (the “Premises”)  of the building located at 555 Skokie Boulevard, Northbrook, Illinois 60062 (the “Building”).

 

·                                          Landlord and Tenant desire to further extend the Term of the Lease and otherwise amend the Lease as provided herein.

 

Terms

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein (which by incorporation are deemed to include the foregoing Recitals as if fully restated below) and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby amend the Lease as follows:

 

1.                                      Capitalized Terms. All capitalized terms which are not specifically defined in this Amendment and which are defined in the Lease will have the same meaning for purposes of this Amendment as they have in the Lease.

 

2.                                      Integration of Amendment and Lease. This Amendment and the Lease shall be deemed to be, for all purposes, one instrument. In the event of any conflict between the terms and provisions of this Amendment and the terms and provisions of the Lease, the terms and provisions of this Amendment shall, in all instances, control and prevail.

 

3.                                      Extension of Term. The Term of the Lease is hereby extended for a period (the “Extension Term”)  of one (1) year, commencing on September 1, 2013, and continuing to and including August 31, 2014 (the revised “Expiration Date”).

 

4.                                      Base Rent. During the Extension Term, Tenant shall pay Base Rent in the following amount:

 

	
Base Rent /RSF)
    	
 
    	
Annual Base Rent
    	
 
    	
Monthly Installments of
   Base Rent
    	
 
    
	
$
    	
15.50
    	
 
    	
$
    	
42,284.00
    	
 
    	
$
    	
3,523.67
    	
 
    
									

 

5.                                 Operating Expenses, Taxes. During the Extension Term, Tenant shall continue to pay Tenant’s Proportionate Share of Operating Expenses and Taxes, as set forth in the Lease.

 

6.                                 Condition of Premises. Tenant accepts the Premises AS IS, WHERE IS, with all faults, and acknowledges that Landlord has completed and paid for all prior work and allowances required of Landlord under the Lease. Landlord is not required to perform, pay for, or provide Tenant with an allowance for, any work or improvements on the Premises. No agreement or promise of Landlord, the property manager, or their respective agents or employees to alter, remodel, decorate, clean, or improve the

 

1

 

Premises or Building (or to provide Tenant with any credit or allowance for the same), and no representation regarding the condition of the Premises or Building, has been made to or relied upon by Tenant.

 

7.                                      Authority; OFAC. Landlord and Tenant each represents and warrants to the other that this Amendment has been duly authorized, executed and delivered by and on behalf of each party hereto and constitutes the valid and binding agreement of Landlord and Tenant in accordance with the terms hereof. Tenant hereby confirms and re-makes its certification, representations, and agreements as set forth in Section 28.36 of the Lease.

 

8.                                      Broker. Tenant represents to Landlord that Tenant has not dealt with any broker in connection with this Amendment other than Landlord’s broker, Jones Lang LaSalle America (Illinois), L.P. , and Tenant’s broker, Tenant Advisors. Tenant agrees to indemnify, defend and hold Landlord and Landlord’s agents harmless from all damages, liability and expense (including reasonable attorneys’ fees) arising from any claims or demands of any other brokers or finders for any commission alleged to be due such brokers or finders in connection with their participation in the negotiation with Tenant of this Amendment..

 

9.                                      Options. Tenant has no option to renew, extend, expand, terminate, or cancel; no right of first offer, first refusal, or purchase; and no similar rights or options, except as follows:

 

Right of First Offer. Subject to the provisions hereinafter set forth, any rights previously granted to other tenants, and Landlord’s right to renew or extend the lease term of any existing tenant; and provided there is not then an Event of Default by Tenant and Tenant has not subleased or assigned its rights hereunder (other than to an Affiliate), Tenant shall have a Right of First Offer (“ROFO”) with respect to Suite 360 in the Building, containing approximately 472 RSF (the “ROFO Space”). Tenant acknowledges that Landlord shall have the sole discretion to determine whether to market Suite 360 by itself or in combination with other contiguous suites. Tenant’s ROFO shall commence upon execution of this Amendment, and shall remain in effect until December 31, 2013, at which time it shall expire.

 

(i)                                     Landlord shall give Tenant written notice (“Landlord’s Notice”) of the Major Business Terms (as hereinafter defined) upon which Landlord is planning to market the ROFO Space. “Major Business Terms” means the lease term, base rental rate, operating expense and tax adjustments, tenant improvement allowance, rent commencement date, and number of RSF. During the five (5) business days after Tenant’s receipt of a Landlord’s Notice, Tenant may lease the ROFO Space by advising Landlord in writing (“Acceptance Notice”) that it wishes to lease the ROFO Space, in which event Landlord and Tenant shall enter into a lease amendment within the following twenty (20) days containing the Major Business Terms specified in Landlord’s Notice (including the lease term specified in Landlord’s Notice, it being understood that such lease term probably will extend beyond the revised Expiration Date applicable to the Premises), and otherwise containing provisions equivalent to those in this Lease.

 

(ii)                                  If Tenant does not provide a timely Acceptance Notice, or timely execute the lease amendment, then the ROFO shall terminate and Landlord may lease the ROFO Space to any third person on substantially the same Major Business Terms (i.e., within 7.5% (or more advantageous to Landlord)) without further notice to Tenant.

 

10.                               Counterparts. This Amendment may be executed in any number of counterparts with the same effect as if all parties executed the same document. All such counterparts shall constitute one agreement. Landlord shall have the unilateral right to insert the date of this Amendment on page 1 hereof.

 

2

 

11.                          No Offer. Submission of this instrument for examination or negotiation will not bind Landlord, and no obligation on the part of Landlord will arise until this Amendment is executed and delivered by Landlord.

 

12.                          Entire Agreement. This Amendment and the Lease contain all the terms, covenants, conditions and agreements between Landlord and Tenant relating to the matters provided for in this instrument. No prior or other agreement or understanding pertaining to such matters (other than the Lease) will be valid or of any force or effect.

 

13.                          Lease in Full Force and Effect. Except as expressly provided herein, all of the terms and provisions of the Lease shall remain in full force and effect. Any liability of Landlord under the Lease and this Amendment shall be limited solely to its interest in the Building, and in no event shall any personal liability be asserted against Landlord in connection with the Lease or Amendment, nor shall any recourse be had to any other property or assets of Landlord.

 

[Remainder of page intentionally left blank; signature page follows]

 

3

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment in manner sufficient to bind them as of the day and year first above written.

 

	
 
    	
LANDLORD
    
	
 
    	
 
    
	
 
    	
MJH NORTHBROOK LLC, a Delaware   limited liability company
    
	
 
    	
 
    
	
 
    	
By: 
    	
JONES LANG LASALLE AMERICAS (ILLINOIS), L. P., Property Manager and   Authorized Agent
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Barbara A. Liebers
    
	
 
    	
 
    	
Name:
    	
Barbara A. Liebers
    
	
 
    	
 
    	
Its:
    	
Senior Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TENANT
    
	
 
    	
 
    	
 
    
	
 
    	
CLARUS THERAPEUTICS, INC., a Delaware   corporation
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Steven A. Bourne
    
	
 
    	
Name:
    	
Steven A. Bourne
    
	
 
    	
Its:
    	
Chief Financial Officer
    

 

4Exhibit 4.4

 

Execution Version

 

XUNLEI LIMITED

 

SIXTH AMENDED AND RESTATED SHAREHOLDERS AGREEMENT

 

THIS SIXTH AMENDED AND RESTATED SHAREHOLDERS AGREEMENT (this “Agreement”) is made and entered into as of March 5, 2014 by and among:

 

(i)                                                             Xunlei Limited (formerly known as Giganology Limited), an exempted limited liability company organized under the laws of the Cayman Islands (the “Company”),

 

(ii)                                                          Xunlei Network Technologies Limited, a company organized under the laws of the British Virgin Islands (the “BVI Subsidiary”),

 

(iii)                                                       Xunlei Network Technologies Limited, a company organized under the laws of Hong Kong (the “HK Subsidiary”),

 

(iv)                                                      the entities listed in Schedule A hereto (such entities, together with the BVI Subsidiary, the HK Subsidiary, and all existing and future entities directly or indirectly owned or controlled by the Company, collectively, the “Subsidiaries”),

 

(v)                                                         the individuals and their respective solely owned companies set forth in Schedule B (each such individual, a “Founder”, and collectively, the “Founders”; each such entity, a “Founder Holdco”, and collectively, the “Founder Holdcos”),

 

(vi)                                                      Leading Advice Holdings Limited (the “RS Holdco”),

 

(vii)                                                   the persons listed in Exhibit A hereto (collectively, the “Series A Investors” and each, a “Series A Investor”),

 

(viii)                                                the person(s) listed in Exhibit B hereto (the “Series A-1 Investor”, and together with the Series A Investors, the “2005 Investors”),

 

(ix)                                                      the persons listed in Exhibit C hereto (collectively, the “Series B Investors” and each, a “Series B Investor”),

 

(x)                                                         the persons listed in Exhibit D hereto (collectively, the “Series C Investors” and each, a “Series C Investor”),

 

(xi)                                                      the person(s) listed in Exhibit E hereto (the “Series D Investor”), and

 

(xii)                                                   the person(s) listed in Exhibit F hereto (the “Series E Investor”).

 

The Series A Investors, Series A-1 Investor, the Series B Investors, the Series C Investors, the Series D Investor and the Series E Investor shall collectively be referred to as the “Investors” and individually be referred to as an “Investor”. The Subsidiaries and the Company 

 

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shall collectively be referred to as the “Group Companies” and individually be referred to as a “Group Company”.

 

For the avoidance of doubt, (i) Skyline Global Company Holdings Limited shall be deemed as a Common Holder only with respect to the Common Shares held by it, and shall be deemed as a Series A Investor only with respect to the Series A Shares held by it, and shall be deemed as a Series A-1 Investor only with respect to the Series A-1 Shares held by it, and shall be deemed as a Series B Investor only with respect to the Series B Shares held by it, and shall be deemed as a Series D Investor only with respect to the Series D Shares held by it, provided, however, that notwithstanding the foregoing, for the purposes of this Agreement, references to all or a portion of the Shares held or purchased by any Series D Investor or Series D Holder (and similar references to the shareholding of any Series D Investor or Series D Holder in the Company without specific reference to any class or series of Shares) shall be deemed to refer to all or a portion of the share capital of the Company, regardless of class or series, held or purchased, as applicable, by such Series D Investor or Series D Holder (other than, solely in connection with Section 10.2, any Series E Shares held or purchased by such Series D Investor or Series D Holder as a result of an exercise of the Primavera New Warrant (as defined in the Share Purchase Agreement)), and references to all or a portion of the Conversion Shares or Co-Sale Shares held by any Series D Investor or Series D Holder (and similar references) shall be construed accordingly; (ii) Morningside Technology Investments Limited shall be deemed as a Series A-1 Investor only with respect to the Series A-1 Shares held by it, and shall be deemed as Series B Investor only with respect to the Series B Shares held by it; (iii) IDG Technology Investment III, L.P. shall be deemed as a Series A Investor only with respect to the Series A Shares held by it, and shall be deemed as Series B Investor only with respect to the Series B Shares held by it.  For purposes of this Agreement, unless expressly provided otherwise, a holder of a particular class or series of Shares shall only be deemed as a holder of such class or series of Shares with respect to such class or series of Shares held by it.

 

RECITALS

 

A.                                    Pursuant to a Fifth Amended and Restated Shareholders Agreement dated February 6, 2012 by and among the Company, the Founders, the Series A Investor, the Series A-1 Investor, the Series B Investors, the Series C Investors, and the Series D Investor, the parties thereto set forth certain rights of the holders of the Series A-1 Preferred Shares, par value US$0.00025 per share (the “Series A-1 Shares”), the Series A Preferred Shares, par value US$0.00025 per share (collectively, the “Series A Shares”), the Series B Preferred Shares, par value US$0.00025 per share (the “Series B Shares”), the Series C Preferred Shares, par value US$0.00025 per share (the “Series C Shares”), and the Series D Preferred Shares, par value US$0.00025 per share (the “Series D Shares”), with respect to, inter alia, certain consent rights, rights of first refusal, co-sale rights and other matters regarding shareholder rights and the Company (the “Fifth Restated Shareholders Agreement”).

 

B.                                    The Company entered into a Share Purchase Agreement dated February 13, 2014 with the Series E Investor (the “Share Purchase Agreement”), pursuant to which the Series E Investor has subscribed for (i) an aggregate of 70,975,491 Series E Preferred Shares, par value US$0.00025 per share (the “Series E Shares”, and collectively with the Series D Shares, Series C Shares, Series B Shares, Series A-1 Shares and Series A Shares, the “Preferred Shares”; and 

 

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the Preferred Shares together with the common shares of the Company, par value US$0.00025 per share “Common Shares”, collectively the “Shares”), and (ii) certain warrants exercisable to subscribe for certain Series E Shares pursuant to the terms and conditions set forth therein.

 

C.                                    The parties hereto desire to enter into this Agreement to amend, restate, supersede and replace in its entirety the Fifth Restated Shareholders Agreement.

 

D.                                    Pursuant to the Fifth Restated Shareholders Agreement, any amendment thereto requires written consent of the Company, the holders of a majority of the Preferred Shares and certain other parties thereto affected by such amendment, and the undersigned parties together satisfy such requirements.

 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

1.                                      INFORMATION RIGHTS; RIGHTS OF FIRST NOTICE; BOARD REPRESENTATION; SHAREHOLDER MEETINGS.

 

1.1                               Information and Inspection Rights.

 

(a)                                 Information Rights. The Company covenants and agrees that, commencing on the date of this Agreement, for so long as an Investor continues to hold five (5) per cent or more of the Shares (as defined below) in issue on an as converted basis, except as otherwise provided in Sections 1.1(b) and (c) below, the Company will deliver to each such Investor (other than Bright Access International Limited):

 

(i)                                      audited annual consolidated financial statements, as soon as practicable but in any event within ninety (90) days after the end of each fiscal year, and audited by a “Big 4” accounting firm chosen by the Company (unless another accounting firm is chosen by the Company in compliance with this Agreement, including with the consent of the holders of at least 75% of Series E Shares);

 

(ii)                                   unaudited quarterly consolidated and unconsolidated financial statements, as soon as practicable but in any event within forty-five (45) days of the end of each fiscal quarter; and

 

(iii)                                an annual comprehensive operating budget, including but not limited to, a forecast of the Company’s revenues, expenses, and cash position on a month-to-month basis for the following fiscal year, within thirty (30) days prior to the end of each fiscal year;

 

provided that for as long as any Investor or any of its Affiliates is a Competitor (as defined below), the Company shall only be obliged to provide the information described in subsection (i) and (ii) above directly to a duly authorized officer within such Investor’s finance department, subject to such Investor’s undertaking (which shall be deemed to have been given hereunder) that any information received will not be accessed by any person outside such Investor’s financial department and will only be accessed by members of such Investor’s finance

 

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department on a “need to know” basis for the sole purpose of preparing such Investor’s own financial statements and related disclosures and notes.

 

All financial statements to be provided to the Investors pursuant to this Section 1.1 shall include an income statement, a balance sheet and a cash flow statement for the relevant period as well as for the fiscal year to-date and shall be prepared in conformance with the generally accepted accounting principles of the United States of America (“US GAAP”) and shall be provided to the Investors contemporaneously with delivery of such financial statements to the Board.

 

In addition, the Company covenants and agrees that, commencing on the date of this Agreement, the Company will deliver to (i) the Series E Investor, selected key monthly financial and operating data of the Group Companies and such other financial materials requested by the Series E Investor to the extent such financial materials are available; provided that the Company shall no longer deliver such data or materials to the Series E Investor if the Series E Investor or any of its Affiliates becomes a Competitor, and (ii) the Series D Investor, selected key monthly financial and operating data of the Group Companies, provided that the Company shall no longer deliver such data to the Series D Investor if the Series D Director holds at least 3% equity interests in, or serves on the board of, a Competing Company. For purposes of this Agreement, a “Competing Company” means a Person that is directly or indirectly engaged in the business of providing downloading or online video services, or downloading, online video and storage services provided through cloud technology, and is not an Affiliate of any Group Company, and for the avoidance of doubt, a Person shall not be deemed a Competing Company solely because it is engaged in the business of content resale services or provision of online game services.  For purposes of this Agreement, a “Person” means an individual, firm, corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company, or other entity of any kind.  For purposes of this Agreement, the “Information Rights” means the rights set forth in this paragraph and the rights set forth in subsections (a), (b) and (c) of this Section 1.1.

 

(b)                                 Google’s Information Rights. Notwithstanding subsection (a) above, for as long as Google Inc. (“Google”) holds any Shares, (i) if Google or any Affiliate of Google is not a Competitor, the Company will deliver to Google the financial statements of the Company described in subsections (a)(i) and (a)(ii) above (collectively, the “Financial Statements”) within the respective time periods described therein; and (ii) if Google or any of its Affiliates is a Competitor, the Company will provide the Financial Statements directly to a duly authorized officer within Google’s finance department, subject to Google’s undertaking (which shall be deemed to have been given hereunder) that any information received by Google will not be accessed by any person outside Google’s financial department and will only be accessed by members of Google’s finance department on a “need to know” basis for the sole purpose of preparing Google’s own financial statements and related disclosures and notes. For the purpose of this Agreement, a “Competitor” shall, (A) with respect to any Investor other than Google and Series E Investor, means, in the good faith determination made by the Board of the Directors: (i) any person (either individual, firm, corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company, or other entity of any kind) that is directly or indirectly engaged in the business or undertaking of providing VOD/download-centric services in China in competition with the business of the 

 

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Group Companies or any other activity in competition with the Company in China and is not an Affiliate of any Group Company, and (ii) any shareholder of such persons except for a shareholder holding less than 3% of the outstanding shares of such person; (B) with respect to Google, mean any Person that offers a product or service consisting of a client software tool which uses P2SP (Peer to Servers and Peers) technology, including P2MS (Peer to Multi-Servers) technology and enables users to download multi-media files from third party websites; and (C) with respect to the Series E Investor, mean any Person that offers the core business of (i) the provision of P2SP (Peer to Servers and Peers) or P2P (Peer to Peer) accelerator services, or (ii) online video services on personal computer; provided that such Person shall not be deemed a Competitor if its fair market pre-money valuation is lower than US$100,000,000 or it is a publicly listed company. For greater certainty, (x) none of the products or services currently being offered by Google (or any of its wholly owned subsidiaries, including YouTube, Inc.) or made available on its, or its wholly owned subsidiaries’, websites shall cause Google to be considered a Competitor pursuant to the provisions set forth above; and (y) none of the products or services currently being offered by the Series E Investor or its Affiliates shall cause the Series E Investor or any of its Affiliates to be considered a Competitor pursuant to the provisions set forth above.

 

(c)                                  Series C Investor’s Information Rights. Notwithstanding anything to the contrary, each Series C Investor, for as long as it holds any Shares, shall be entitled to the Information Rights set forth in subsections (a)(i), (a)(ii) and (a)(iii) of this Section 1.1 unless and until such Series C Investor holds more than 3% of capital stock calculated on a fully-diluted basis of any company unaffiliated with the Company which, in the good faith reasonable opinion of the Board (as defined below), competes with the Company in the VOD/downloading business in China or any other activity in competition with the Company in China, in which case such Series C Investor shall lose, except as required by law, rights to non-public information of the Company.

 

(d)                                 Inspection Rights. The Company further covenants and agrees that, commencing on the date of this Agreement, for so long as a Series A-1 Investor or a Series B Investor or the Series D Investor or the Series E Investor continues to hold five per cent (5%) or more of the Shares in issue on an as converted basis, such Investor shall have the right (at its expense) to reasonably inspect facilities, records and books of the Company and any of its Subsidiaries (including without limitation, each WFOE as defined in Schedule A hereof) at any time during regular working hours on reasonable prior notice to the Company or such Subsidiary, and the right to discuss the business, operation and conditions of the Company and any of its Subsidiaries (including each WFOE) with their respective directors, officers, employees, accountants, legal counsels and investment bankers (the “Inspection Rights”); provided, however, that a Group Company shall not be obligated pursuant to this Section 1.1(d) to provide access to any information which it reasonably considers to be a trade secret or similar confidential information (unless covered by an enforceable confidentiality agreement, in form and substance reasonably acceptable to the Company), or would adversely affect the attorney-client privilege between such Group Company and its counsel; provided further, that the Inspection Rights of such Investor under this Section 1.1(d) shall terminate if such Investor or any of its Affiliates becomes a Competitor.

 

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(e)                                  Termination of Rights.  The Information Rights pursuant to this Section (including those under subsections (a), (b) and (c)) and Inspection Rights (unless terminated earlier pursuant to subsection (d)) shall terminate upon the earlier of:

 

(i)                                      the consummation of an initial public offering of the Company, provided that for a period of three (3) years following the consummation of an initial public offering of the Company, the Company shall deliver to each Investor (other than Bright Access International Limited), promptly after filing, copies of the Company’s annual reports, interim reports and/or quarterly reports and all other filings required to be made with the United States Securities and Exchange Commission (“SEC”) or other relevant securities exchange, regulatory authority or governmental agency;

 

(ii)                                   a Trade Sale (as defined below); or

 

(iii)                                a Liquidation Event or Deemed Liquidation Event, as such terms are defined in the Sixth Amended and Restated Memorandum of Association and Fifth Amended and Restated Articles of Association of the Company (the “Restated Articles”).

 

1.2                               Rights of First Notice.

 

(a)                                 Definitions.

 

(i)                                      “Corporate Event” shall mean any of the following, whether accomplished through one or a series of related transactions (a) a sale, lease, transfer or other disposition of all or substantially all of the assets of the Company, (b) a transfer or an exclusive licensing of all or substantially all of the intellectual property of the Company, (c) a sale, transfer or other disposition of a majority of the issued and outstanding share capital of the Company or a majority of the voting power of the Company, or (d) a merger, consolidation or other business combination of the Company with or into any other business entity in which the shareholders of the Company immediately prior to such merger, consolidation or business combination hold shares representing less than a majority of the voting power of the outstanding share capital of the surviving business entity immediately thereafter.

 

(ii)                                   An “Unsolicited Offer” means (a) any bona fide offer in writing for a proposed Corporate Event received from a third party in the absence of any act taken by any employee, agent, officer or director of the Company with the intent of soliciting such offer, and (b) any proposal or offer by the Company to such third party or from such third party for a proposed Corporate Event arising from negotiations that followed the receipt of an offer described in clause (a) above. Any bona fide offer for a proposed Corporate Event in writing that is not an Unsolicited Offer shall be deemed a “Solicited Offer”.

 

(b)                                 Solicitation of Offers for Corporate Event.

 

(i)                                      Solicitation Notice. The Company agrees that prior to soliciting any offers for a proposed Corporate Event (a “Proposed Event”), the Company will provide Google with five (5) Business Days prior written notice of such intent to solicit offers (a “Solicitation Notice”), specifying the terms and conditions of the Proposed Event, including the proposed selling price for the Company or its assets or proposed licensing price or terms in the event of a 

 

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license of intellectual property of the Company, the proposed structure of the transaction, a list of the persons from whom the Company in good faith intends to solicit such offers, when the Proposed Event involves an acquisition or license of assets, a description of the assets to be sold or licensed, and the other material terms and conditions of the Proposed Event.

 

(ii)                                   Additional Parties Notice. The Company agrees that prior to soliciting any offers for the consummation of the Proposed Event described in the Solicitation Notice from any parties that were not listed in the Solicitation Notice (“Additional Parties”), the Company will provide Google with written notice of such intent to solicit such offers from such Additional Parties.

 

(iii)                                Different Terms and Conditions. In the event that the Company proposes to accept or approve a Solicited Offer for the consummation of a Proposed Event on terms and conditions that are not substantially the same as the terms and conditions specified in the last Solicitation Notice, the Company agrees to provide Google with a new Solicitation Notice at least three (3) Business Days prior to accepting or approving such Solicited Offer, which includes the information set forth in Section 1.2(b)(i). Without limiting the generality of the foregoing, a purchase price that is ninety-five percent (95%) or less of the purchase price in the last Solicitation Notice received by Google shall be deemed not to be substantially the same terms and conditions as specified in the last Solicitation Notice.

 

(c)                                  Unsolicited Offers for Corporate Event.

 

(i)                                      If the Company receives an Unsolicited Offer from a third party for a proposed Corporate Event (an “Offered Event”), the Company agrees that it will provide Google, within three (3) Business Days of receiving such Unsolicited Offer, with detailed written notice of the Offered Event specifying the terms and conditions of the Offered Event including the name of such third party, the proposed purchase price for the Company or the assets of the Company or proposed licensing price or terms in the event of a license of intellectual property of the Company, the proposed structure of the Offered Event, when the Offered Event involves an acquisition of assets, a description of the assets to be sold or licensed, and the other material terms and conditions of the Offered Event.

 

(ii)                                   Notwithstanding anything to the contrary herein, if the Company receives an unwritten unsolicited offer from a third party for an Offered Event and a meeting of the Company’s Board of Directors is called to consider such unwritten unsolicited offer, the Company agrees that it will provide Google, at least three (3) Business Days prior to such meeting, with detailed written notice of the Offered Event, which includes the information set forth in Section 1.2(c)(i).

 

(iii)                                The Company shall not, without providing Google with prior written notice at least five (5) Business Days in advance, accept or approve the Offered Event or recommend that its shareholders approve the Offered Event.

 

(d)                                 Termination of Rights. The rights set forth in Sections 1.2(b) and 1.2(c) shall terminate upon the earlier of:

 

(i)                                      closing of an initial public offering; or

 

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(ii)                                   a Liquidation Event or Deemed Liquidation Event, as such terms are defined in the Restated Articles.

 

1.3                               Board Representation of the Company.

 

(a)                                 Number of Directors. The Restated Articles shall provide that the Company’s Board of Directors (the “Board”) shall consist of up to eight (8) members, which number of members shall not be changed except pursuant to an amendment to the Restated Articles.  Except as set forth in this Section 1.3, the Company shall not increase the size of the Board or grant any rights to appoint observers without the prior written consent of the Investors.

 

(b)                                 Election of Directors. The Company shall take all action necessary to elect the following candidates as directors:

 

(i)                                      For as long as the Series E Investor continues to hold any Series E Share in issue, the Series E Investor shall be entitled to appoint and remove two (2) voting Directors of the Board (the “Series E Directors”, and each, a “Series E Director”). For as long as the Series E Investor continues to hold any Series E Share in issue, the number of Directors to be appointed by the Series E Investor shall not fall below two (2), and the Series E Investor shall have the exclusive right to remove and replace any Series E Director by notice in writing to the Company.

 

(ii)                                   Prior to the completion of the Company’s initial public offering and for as long as the Series D Threshold is met, Primavera shall be entitled to appoint and remove one (1) voting Directors of the Board (the “Series D Director”). The number of Directors to be appointed by Primavera shall not fall below one (1), and Primavera shall have the exclusive right to remove and replace the Series D Director by notice in writing to the Company, for as long as the Series D Threshold is met, and shall be obligated to replace the Series D Director if the individual serving as the Series D Director beneficially owns, in the personal investments of such Series D Director, at least 3% equity interests in, or simultaneously serves on the board of, a Competing Company.  The Company, the Founders and Primavera shall in good faith explore and enter into potential arrangements that will enable Primavera to nominate a Director to the Board after an initial public offering of the Company and to remove and replace the Director so appointed.  For purposes of this Agreement, the “Series D Threshold” is met if the fraction, the numerator of which is the aggregate number of Shares Primavera has Transferred (excluding any Transfers to its Permitted Transferees) after the date hereof less the aggregate number of Shares Primavera acquires (whether by subscribing for new Shares through exercise of warrants or otherwise, excluding any Transfers from its Permitted Transferees) after the date hereof, and the denominator of which is 15,616,764, is less than or equal to 36.3%. For purposes of this Agreement, “Primavera” means Skyline Global Company Holdings Limited.

 

(iii)                                For as long as the Series A-1 Investor continues to hold twelve percent (12%) or more of the Shares in issue, the Series A-1 Investor shall be entitled to appoint and remove one (1) voting Directors of the Board (the “Series A-1 Director”), who shall initially be Mr. Liu Qin. For as long as the Series A-1 Investor continues to hold twelve percent (12%) or more of the Shares in issue the number of Directors to be appointed by the Series A-1 Investor shall not fall below one (1), and the Series A-1 Investor shall have the exclusive right to remove and replace any Series A-1 Director by notice in writing to the Company. For as long as the 

 

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Series A-1 Investor continues to hold twelve percent (12%) or more of the Shares in issue, the Series A-1 Investor shall have the right to appoint and remove one (1) observer of the Board, who may participate in discussions of matters brought before the Board, but shall in all other respects be a nonvoting observer.

 

(iv)                               For so long as the Founders together continue to directly or indirectly hold five (5) per cent or more of the Shares in issue, Mr. Zou Shenglong shall be entitled to appoint and remove two (2) voting Directors of the Board (the “Chair Directors”) and Mr. Cheng Hao shall be entitled to appoint and remove one (1) voting Directors of the Board (together with the Chair Directors, the “Founder Directors”), and each Founder shall have the exclusive right to remove and replace any Founder Directors he so appointed by notice in writing to the Company.

 

(v)                                  For as long as the Series A Investors continue to hold ten percent (10%) or more of the Shares in issue, the holders of a majority of the Series A Shares shall be entitled to appoint and remove one (1) voting Directors of the Board (the “Series A Director”), who shall initially be Mr. Zhou Quan. For as long as the Series A Investors continues to hold ten percent (10%) or more of the Shares in issue the number of Directors to be appointed by the Series A Investor shall not fall below one (1), and the Series A Investor shall have the exclusive right to remove and replace any Series A Director by notice in writing to the Company.

 

provided that, if any Director (“Defaulting Director”) appointed pursuant to Section 1.3(b)(ii), Section 1.3(b)(iii) or Section 1.3(b)(v) carries on, engages in or is concerned or interested in, directly or indirectly, either as principal or agent or as a shareholder, partner, consultant, advisor, director, officer or employee, or in any other capacity, any activities of any Competitors, or seeks, attempts or threatens to do any of the foregoing, a majority of the holders of the Preferred Shares other than the holders appointing such Defaulting Director shall be entitled to request in writing the Board to, and upon receipt of such request, the Board shall, remove such Defaulting Director by action of the majority of the rest of the Directors appointed to the Board in accordance with the terms of this Section 1.3. The holders of Preferred Shares appointing the Defaulting Director and the Defaulting Director shall abstain from voting on any proposal to remove the Defaulting Director pursuant to the foregoing provision of this Section 1.3;

 

provided further that, if any Series E Director appointed pursuant to Section 1.3(b)(i) carries on, engages in or is concerned or interested in, directly or indirectly, either as principal or agent or as a shareholder, partner, consultant, advisor, director, officer or employee, or in any other capacity, any activities of any Competitors (as defined with respect to the Series E Investor), or seeks, attempts or threatens to do any of the foregoing, such Series E Director may be excluded from, shall be deemed to abstain from voting on any proposal at, any meeting of the Board for the purpose of discussing any business of any Group Company that may compete with such Competitor.

 

(c)                                  Quorum. Subject to the provisions in the Restated Articles, a quorum of the Board shall consist of five (5) directors, which shall include at least one (1) Series E Director, the Series D Director and at least one (1) Founder Director.

 

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(d)                                 Board Meetings. The Board shall meet at least once every six (6) months, unless otherwise agreed by a vote of a majority of the Board, including the votes of one (1) Series E Director, the Series D Director, the Series A-1 Director and one (1) Founder Director.

 

(e)                                  Expenses and Insurance. The Company shall reimburse the directors appointed by the holders of Preferred Shares for all reasonable expenses relating to all Board activities, including, without limitation, expenses or fees incurred in relation to attending the Board meetings.  The Company shall purchase and at all times maintain director’s and officer’s indemnity insurance policies for the benefit of the Directors on terms and in amounts approved by the Board.

 

(f)                                   Indemnity of Directors and Legal Representative. The Company shall indemnify each Director and the Legal Representative of the Group Companies to the greatest extent permissible by applicable law in respect of any liabilities incurred in such capacity as a Director or Legal Representative of the relevant Group Company apart from those arising from gross negligence and willful misconduct. The Company shall enter into an indemnification agreement with each Director and the Legal Representative of each Subsidiary in the form attached hereto as Exhibit H.

 

1.4                               Board Representation of the Subsidiaries.

 

(a)                                 The board of directors of each WFOE shall have the same number of directors as the Board, and the Founders and holders of Preferred Shares shall be entitled to appoint the same number of directors to each WFOE as they are entitled to appoint to the Company as provided in Section 1.3 above.

 

(b)                                 As of the Closing, the Series E Investor shall have the right to appoint and remove the same number of directors to the HK Subsidiary, each WFOE and Shenzhen Xunlei as that to the Board.

 

(c)                                  Upon the request of the holders of at least 75% of Series E Shares, each other Subsidiary shall, and the Company and the Founders shall cause each other Subsidiary to, (i) have a board of directors or similar governing body (the “Subsidiary Board”), (ii) maintain the authorized size of each Subsidiary Board at all times same as the authorized size of the Board, and (iii) ensure each Subsidiary Board at all times is composed of the same persons as directors as those then on the Board.

 

1.5                               Board Representation of Shenzhen Xunlei. Primavera shall be entitled to appoint one (1) director to the board of directors of Shenzhen Xunlei for so long as Primavera is entitled to appoint the Series D Director.

 

1.6                               Board Management. Except as specifically provided herein or by applicable laws, the management and control of the Company and each other Group Company shall be exercised by the Board and the board of directors of the applicable Subsidiary, and the Board shall be responsible for the determination of the Group Companies’ overall policies and objects. To the extent that any Subsidiary Board does not consist of the same persons as directors as those then on the Board, the Founders shall procure that each such Subsidiary Board shall be operated solely at the authorization and instruction of the Board.

 

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1.7                               Shareholder Meetings.

 

(a)                                 The Board shall give not less than seven (7) Business Days’ (as defined below) notice of meetings of holders of Shares of the Company (the “Shareholders”) to those persons whose names on the date the notice is given appear as Shareholders in the register of members of the Company and are entitled to vote at the meeting.

 

(b)                                 The parties hereto agree that no meeting of Shareholders of the Company shall be a quorum unless there are present at a meeting of Shareholders (in person or by proxy) (i) representatives of a minimum of five (5) Shareholders, (ii) a representative of the holders of a majority of the Common Shares held by the Founders, (iii) a representative of the holders of a majority of the Series A-1 Shares, (iv) a representative of the holders of a majority of the Series B Shares, (v) a representative of the holders of a majority of the Series D Shares, (vi) representative(s) of the holders of at least 75% of the Series E Shares, and (vii) the holders of Shares representing not less than fifty (50) per cent of the voting rights at such meeting; provided that any meeting of Shareholders of the Company shall be carried out in accordance with the provisions set forth in the Restated Articles.

 

(c)                                  In a meeting of Shareholders of the Company, each Preferred Share shall carry such number of votes as is equal to the number of votes then issuable upon the conversion of such Preferred Shares into Common Shares. Each holder of Common Shares shall have one (1) vote for each Common Share held by such holder. The holders of Preferred Shares and the holders of Common Shares shall vote together and not as a separate class, except as otherwise required by this Agreement or the Restated Articles.

 

(d)                                 Termination of Rights. The rights set forth in Sections 1.3, 1.4, 1.5, 1.6 and 1.7 shall terminate upon the earlier of:

 

(i)                                      closing of an initial public offering of the Company; or

 

(ii)                                   a Liquidation Event or Deemed Liquidation Event, as such terms are defined in the Restated Articles.

 

2.                                      REGISTRATION RIGHTS.

 

2.1                               Applicability of Rights. The Company covenants and agrees that the Holders (as defined below) shall be entitled to the following rights with respect to any potential public offering of the Company’s Shares in the United States and shall be entitled to reasonably analogous or equivalent rights with respect to any other offering of the Company’s securities in any other jurisdiction in which the Company undertakes to publicly offer or list such securities for trading on a recognized securities exchange.

 

2.2                               Definitions. For purposes of this Section 2 and to the extent applicable under this Agreement:

 

(a)                                 Registration. The terms “register,” “registered,” and “registration” refer to a registration effected by filing a registration statement which is in a form which complies with, and is declared effective by the SEC (as defined below) in accordance with, the Securities Act.

 

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(b)                                 Registrable Securities. The term “Registrable Securities” shall mean: (i) any Common Shares of the Company issued or issuable upon conversion of any shares of the Preferred Shares (the “Conversion Shares”) issued under that certain Subscription Agreement dated as of September 16, 2005 between the Company, the Founders and the 2005 Investors (the “Series A Subscription Agreement”), the Subscription Agreement dated as of November 15, 2006 between the Group Companies, the Founders and the Series B Investors (other than Fidelity Asia Ventures Fund L.P. and Fidelity Asia Principals Fund L.P. (collectively, “Fidelity”) and Google) (the “Series B Subscription Agreement”), certain Applications for Shares signed by Google on December 9, 2006 and by Fidelity on December 21, 2006, the Subscription Agreement dated as of April 14, 2011 between the Group Companies, the Founders and the Series C Investors (the “Series C Subscription Agreement”), the Share Purchase Agreement dated as of January 31, 2012 between the Group Companies, the Founders and the Series D Investor (the “Series D Share Purchase Agreement”), and the Share Purchase Agreement respectively, (ii) any Shares issued to the Investors pursuant to the Right of Participation (defined in Section 3 hereof), and (iii) any Common Shares of the Company issued (or issuable upon the conversion or exercise of any warrant, right or other security which is issued) as a dividend or other distribution with respect to, or in exchange for or in replacement of, any Preferred Shares or Common Shares described in clause (i) of this subsection (b); provided that, with respect to any provision under the Section 2.3 below, the “Registrable Securities” shall exclude the Common Shares of the Company issued or issuable upon conversion of the Series C Shares.  Notwithstanding the foregoing, “Registrable Securities” shall exclude any Registrable Securities sold by a person in a transaction in which rights under this Section 2 are not assigned in accordance with this Agreement, and any Registrable Securities which are sold in a registered public offering under the Securities Act or analogous statute of another jurisdiction, or sold pursuant to Rule 144 promulgated under the Securities Act or analogous rule of another jurisdiction.

 

(c)                                  Registrable Securities Then Outstanding. The number of shares of “Registrable Securities then outstanding” shall mean the number of Common Shares of the Company that are Registrable Securities and are then issued and outstanding, issuable upon conversion of Preferred Shares then issued and outstanding or issuable upon conversion or exercise of any warrant, right or other security then outstanding.

 

(d)                                 Holder. For purposes of this Section 2, the term “Holder” shall mean any person or persons owning or having the rights to acquire Registrable Securities or any permitted assignee of record of such Registrable Securities to whom rights under this Section 2 have been duly assigned in accordance with this Agreement, however provided that with respect to Section 2.3, the “Holders” shall exclude the holders of any Common Shares of the Company issued or issuable upon conversion of any shares of the Preferred Shares under the Series C Subscription Agreement.

 

(e)                                  Form F-3. The term “Form F-3” shall mean such respective form under the Securities Act as is in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.

 

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(f)                                   SEC. The term “SEC” or “Commission” shall mean (i) with respect to any offering of securities in the United States, the U.S. Securities and Exchange Commission or any other federal agency at the time administering the Securities Act and (ii) with respect to any offering of securities in a jurisdiction other than the United States, the regulatory body of the jurisdiction with authority to supervise and regulate the sale of securities in that jurisdiction.

 

(g)                                  Registration Expenses. The term “Registration Expenses” shall mean all expenses incurred by the Company in complying with Sections 2.3, 2.4 and 2.5 hereof, including, without limitation, all registration and filing fees, printing expenses, fees, and disbursements of counsel for the Company, reasonable fees and disbursements of one counsel for the Holders, Blue Sky fees and expenses and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company).

 

(h)                                 Selling Expenses. The term “Selling Expenses” shall mean all underwriting discounts and selling commissions applicable to the sale of Registrable Securities pursuant to Sections 2.3, 2.4 and 2.5 hereof.

 

(i)                                     Exchange Act. The term “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and any successor statute.

 

(j)                                    For purposes of this Agreement, reference to registration of securities under the Securities Act and the Exchange Act shall also be deemed to mean the equivalent registration in a jurisdiction other than the United States as designated by such Holders, it being understood and agreed that in each such case all references in this Agreement to the Securities Act, the Exchange Act and rules, forms of registration statements and registration of securities thereunder, U.S. law and the SEC, shall be deemed to refer, to the equivalent statutes, rules, forms of registration statements, registration of securities and laws of and equivalent government authority in the applicable non-U.S. jurisdiction.

 

(k)                                 Business Days. The term “Business Day” means any day (excluding Saturdays, Sundays and public holidays in Hong Kong and New York) on which banks generally are open for business in Hong Kong and New York.

 

2.3                               Demand Registration.

 

(a)                                 Request by Holders. If at any time after the earlier of (i) the fourth anniversary of the date hereof, or (ii) the closing of the Company’s first firm commitment underwritten public offering the Company shall receive a written request from the Holders of at least thirty percent (30%) of the Registrable Securities to file a registration statement under the Securities Act covering the registration of Registrable Securities pursuant to this Section 2.3, the Company shall, within ten (10) Business Days of the receipt of such written request, give written notice of such request (the “Request Notice”) to all Holders, and use its best efforts to effect, as soon as practicable, the registration under the Securities Act of all Registrable Securities that the Holders request to be registered and included in such registration by written notice given by such Holders to the Company within twenty (20) days after receipt of the Request Notice, subject only to the 

 

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limitations of this Section 2.3; provided that the Company shall not be obligated to effect, or to take any action to effect, any such registration if:

 

(i)                                      In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification, or compliance, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

 

(ii)                                   After the Company has initiated three (3) such registrations pursuant to this Section 2.3 (counting for these purposes only registrations which have been declared or ordered effective);

 

(iii)                                During the period starting with the date sixty (60) days prior to the Company’s good faith estimate of the date of filing of, and ending on a date one hundred eighty (180) days after the effective date of, a Company-initiated registration; provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective;

 

(iv)                               If the Initiating Holders (defined below) propose to dispose of Registrable Securities which may be immediately registered on Form F-3 pursuant to a request made under Section 4 hereof;

 

(v)                                  If the Initiating Holders (defined below) do not request that such offering be firmly underwritten by underwriters selected by the Initiating Holders (subject to the consent of the Company, which consent will not be unreasonably withheld); or

 

(vi)                               If the Company and the Initiating Holders (defined below) are unable to obtain the commitment of the underwriter described in clause (v) above to firmly underwrite the offer.

 

(b)                                 Underwriting. If the Holders initiating the registration request under this Section 2.3 (the “Initiating Holders”) intend to distribute the Registrable Securities covered by their request by means of an underwriting, then they shall so advise the Company as a part of their request made pursuant to this Section 2.3 and the Company shall include such information in the Request Notice. In such event, the right of any Holder to include its Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder) to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the managing underwriter or underwriters selected for such underwriting by the Holders of a majority of the Registrable Securities being registered and reasonably acceptable to the Company. Notwithstanding any other provision of this Section 2.3, if the underwriter(s) advise(s) the Company in writing that marketing factors require a limitation of the number of securities to be underwritten, then the Company shall so advise all Holders which would otherwise be registered and underwritten pursuant hereto, and the number of Registrable Securities that may be included in the underwriting shall be reduced as required by the underwriter(s) and allocated among the 

 

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Holders on a pro rata basis according to the number of Registrable Securities then outstanding held by each Holder requesting registration (including the Initiating Holders); provided, however, that the number of shares of Registrable Securities held by holder(s) of the Series A Shares, the Series A-1 Shares, the Series B Shares, the Series D Shares and the Series E Shares to be included in such underwriting and registration shall not be reduced unless all other securities are first entirely excluded from the underwriting and registration including, without limitation, all shares that are not Registrable Securities and are held by any other person, including, without limitation, any person who is an employee, consultant, officer or director of the Company or any subsidiary of the Company; provided further that at least twenty-five (25%) of shares of Registrable Securities requested by the Holders to be included in such underwriting and registration shall be so included. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter(s), delivered at least ten (10) Business Days prior to the effective date of the registration statement. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration.

 

(c)                                  Maximum Number of Demand Registrations. The Company shall not be obligated to effect more than three (3) such demand registrations pursuant to this Section 2.3.

 

(d)                                 Deferral. Notwithstanding the foregoing, if the Company shall furnish to Holders requesting registration pursuant to this Section 2.3, a certificate signed by the President or Chief Executive Officer of the Company stating that in the good faith judgment of the Board, it would be materially detrimental to the Company and its shareholders for such registration statement to be filed at such time, then the Company shall have the right to defer such filing for a period of not more than one hundred and twenty (120) days after receipt of the request of the Initiating Holders; provided, however, that the Company may not utilize this right more than once in any twelve (12) month period; provided further, that the Company shall not register any other of its shares during such twelve (12) month period. A demand right shall not be deemed to have been exercised until such deferred registration shall have been effected.

 

(e)                                  Other Securities Laws in Demand Registration. In the event of any registration pursuant to this Section 2.3, the Company shall register and qualify the securities covered by the registration statement under the securities laws of any other jurisdictions outside of the United States or in Hong Kong or elsewhere as shall be appropriate for the distribution of the securities; provided, however, that (i) the Company shall not be required to do business or to file a general consent to service of process in any such state or jurisdiction, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act, and (ii) notwithstanding anything in this Agreement to the contrary, in the event any jurisdiction in which the securities shall be qualified imposes a non-waivable requirement that expenses incurred in connection with the qualification of the securities be borne by selling shareholders, the expenses shall be payable pro rata by the selling shareholders.

 

2.4                               Piggyback Registrations.

 

(a)                                 The Company shall notify all Holders in writing at least thirty (30) days prior to filing any registration statement under the Securities Act for purposes of effecting a public offering of securities of the Company (including, but not limited to, registration statements 

 

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relating to secondary offerings of securities of the Company, but excluding registration statements relating to any registration under Section 2.3 or Section 2.5 of this Agreement or to any employee benefit plan or a corporate reorganization or other Rule 145 transaction, an offer and sale of debt securities, or a registration on any registration form that does not permit secondary sales, or the Company’s initial public offering of its common shares), and shall afford each such Holder an opportunity to include in such registration statement all or any part of the Registrable Securities then held by such Holder. Each Holder desiring to include in any such registration statement all or any part of the Registrable Securities held by it shall within twenty (20) days after receipt of the above-described notice from the Company, so notify the Company in writing, and in such notice shall inform the Company of the number of Registrable Securities such Holder wishes to include in such registration statement. If a Holder decides not to include all of its Registrable Securities in any registration statement thereafter filed by the Company, such Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statements as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein.

 

(b)                                 Underwriting. If a registration statement for which the Company gives notice under this Section 2.4 is for an underwritten offering, then the Company shall so advise the Holders. In such event, the right of any such Holder’s Registrable Securities to be included in a registration pursuant to this Section 2.4 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the managing underwriter or underwriters selected for such underwriting. Notwithstanding any other provision of this Agreement but subject to Section 2.12, if the managing underwriter(s) determine(s) in good faith that marketing factors require a limitation of the number of shares to be underwritten, then the managing underwriter(s) may exclude Registrable Securities requested to be registered from the registration and the underwriting, and the number of Registrable Securities that may be included in the registration and the underwriting shall be allocated, first, to the Company, second, to the holders of the Series E Shares, Series D Shares, Series C Shares, Series B Shares and Series A-1 Shares holding the Registrable Securities on a pro rata basis, third, to each of the remaining Holders requesting inclusion of their Registrable Securities in such registration statement on a pro rata basis, in each case based on the total number of shares of Registrable Securities then held by each such Holder , and fourth to holders of other securities of the Company; provided, however, that the right of the underwriter(s) to exclude shares (including Registrable Securities) from the registration and underwriting as described above shall be restricted so that (i) the number of Registrable Securities held by holder(s) of the Series E Shares, Series D Shares, Series C Shares, Series B Shares and Series A-1 Shares included in any such registration is not reduced below twenty-five percent (25%) of the aggregate number of shares of Registrable Securities for which inclusion has been requested; and (ii) all shares of Registrable Securities held by holder(s) of the Series A Shares or all other shares that are not Registrable Securities and are held by any other person, including, without limitation, any person who is an employee, consultant, officer or director of the Company (or any subsidiary of the Company) shall first be excluded from such registration and underwriting before any Registrable Securities held by holder(s) of the Series E Shares, Series D Shares, Series C Shares and Series B Shares are so excluded. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter(s), 

 

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delivered at least ten (10) Business Days prior to the effective date of the registration statement. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration.

 

(c)                                  Not Demand Registration. Registration pursuant to this Section 2.4 shall not be deemed to be a demand registration as described in Section 2.3 above. There shall be no limit on the number of times the Holders may request registration of Registrable Securities under this Section 2.4.

 

2.5                               Form F-3 Registration. In case the Company shall receive from any Holder or Holders of at least thirty percent (30%) of the Registrable Securities then outstanding a written request or requests that the Company effects a registration on Form F-3 (or an equivalent registration in a jurisdiction outside of the United States) and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holder or Holders, then the Company will:

 

(a)                                 Notice. Promptly give written notice of the proposed registration and the Holder’s or Holders’ request therefor, and any related qualification or compliance, to all other Holders; and

 

(b)                                 Registration. As soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holder’s or Holders’ Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holder or Holders joining in such request as are specified in a written request given within twenty (20) days after the Company provides the notice contemplated by Section 2.5(a); provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 2.5:

 

(i)                                      if Form F-3 is not available for such offering by the Holders;

 

(ii)                                   if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public of less than US$1,000,000;

 

(iii)                                if the Company shall furnish to the Holders a certificate signed by the President or Chief Executive Officer of the Company stating that in the good faith judgment of the Board, it would be materially detrimental to the Company and its shareholders for such Form F-3 registration to be effected at such time, in which event the Company shall have the right to defer the filing of the Form F-3 registration statement no more than once during any twelve (12) month period for a period of not more than ninety (90) days after receipt of the request of the Holder or Holders under Section 2.5(a); provided that the Company shall not register any of its other shares during such ninety (90) day period;

 

(iv)                               if the Company has, within the six (6) month period preceding the date of such request, already effected a registration under the Securities Act other than a registration from which the Registrable Securities of Holders have been excluded (with respect to all or any 

 

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portion of the Registrable Securities the Holders requested be included in such registration) pursuant to the provisions of Sections 2.3(b) and 2.4(b); or

 

(v)                                  in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance, unless the Company is already subject to service of process in such jurisdiction; or

 

(vi)                               if such registration is to be effected more than five (5) years after the Company’s initial public offering.

 

(c)                                  Not Demand Registration. Form F-3 registrations shall not be deemed to be demand registrations as described in Section 2.3 above. Except as otherwise provided herein, there shall be no limit on the number of times the Holders may request registration of Registrable Securities under this Section 2.5.

 

(d)                                 Underwriting. If the Holders requesting registration under this Section 2.5 intend to distribute the Registrable Securities covered by their request by means of an underwriting, the provisions of Section 2.3(b) shall apply to such registration.

 

2.6                               Expenses. All Registration Expenses incurred in connection with any registration pursuant to Section 2.3, 2.4 or 2.5 (but excluding Selling Expenses) shall be borne by the Company. Each Holder participating in a registration pursuant to Section 2.3, 2.4 or 2.5 shall bear such Holder’s proportionate share (based on the total number of shares sold in such registration other than for the account of the Company) of all Selling Expenses or other amounts payable to underwriter(s) or brokers, in connection with such sale by the Holders. Notwithstanding the foregoing, the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2.3 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered, unless the Holders of a majority of the Registrable Securities then outstanding agree that such registration constitutes the use by the Holders of one (1) demand registration pursuant to Section 2.3 (in which case such registration shall also constitute the use by all Holders of one (1) such demand registration); provided further, however, that if at the time of such withdrawal, the Holders have learned of a material adverse change in the condition, business, or prospects of the Company not known to the Holders at the time of their request for such registration and have withdrawn their request for registration with reasonable promptness after learning of such material adverse change, then the Holders shall not be required to pay any of such expenses and such registration shall not constitute the use of a demand registration pursuant to Section 2.3.

 

2.7                               Obligations of the Company. Whenever required to effect the registration of any Registrable Securities under this Agreement, the Company shall, as expeditiously as reasonably possible:

 

(i)                                      Registration Statement. Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of 

 

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the Registrable Securities registered thereunder, keep such registration statement effective for a period of up to ninety (90) days; provided, however, that (i) such ninety (90) day period shall be extended for a period of time equal to the period any Holder refrains from selling any securities included in such registration at the request of the underwriter(s), and (ii) in the case of any registration of Registrable Securities on Form F-3 which are intended to be offered on a continuous or delayed basis, such ninety (90) day period shall be extended, if necessary, to keep the registration statement effective until all such Registrable Securities are sold.

 

(ii)                                   Amendments and Supplements. Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement.

 

(iii)                                Prospectuses. Furnish to the Holders such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of the Registrable Securities owned by them that are included in such registration.

 

(iv)                               Blue Sky. Use its best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction or except as may be required by the Securities Act.

 

(v)                                  Underwriting. In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement in usual and customary form, with the managing underwriter(s) of such offering.

 

(vi)                               Notification. Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of (i) the issuance of any stop order by the SEC in respect of such registration statement, or (ii) the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.

 

(vii)                            Opinion and Comfort Letter. Furnish, at the request of any Holder requesting registration of Registrable Securities, on the date that such Registrable Securities are delivered to the underwriter(s) for sale, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the Holders requesting registration, addressed to the underwriters, if any, and to the Holders requesting registration of the Registrable Securities 

 

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and (ii) letters dated as of (x) the effective date of the registration statement covering such Registrable Securities and (y) the closing date of the offering from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the Holders requesting registration, addressed to the underwriters, if any, and to the Holders requesting registration of the Registrable Securities.

 

2.8                               Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 2.3, 2.4 or 2.5 that the selling Holders shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be required to timely effect the registration of their Registrable Securities.

 

2.9                               Indemnification. In the event any Registrable Securities are included in a registration statement under Section 2.3, 2.4 or 2.5:

 

(a)                                 By the Company. To the extent permitted by law, the Company will indemnify and hold harmless each Holder, its partners, officers, directors, legal counsel, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act, or other United States federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a “Violation”):

 

(i)                                      any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus, final prospectus or free-writing prospectus contained therein or any amendments or supplements thereto;

 

(ii)                                   any omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or

 

(iii)                                any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any United States federal or state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any United States federal or state securities law in connection with the offering covered by such registration statement; 

 

the Company will reimburse each such Holder, its partner, officer, director, legal counsel, underwriter or controlling person for any legal or other expenses reasonably incurred by them, as incurred, in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this subsection (a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the written consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for

 

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use in connection with such registration by such Holder, partner, officer, director, legal counsel, underwriter or controlling person of such Holder.

 

(b)                                 By Selling Holders. To the extent permitted by law, each selling Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration qualifications or compliance is being effected, indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement, its legal counsel, each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter and any other Holder selling securities under such registration statement or any of such other Holder’s partners, directors, officers, legal counsel or any person who controls such Holder within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages or liabilities (joint or several) to which the Company or any such director, officer, legal counsel, controlling person, underwriter or other such Holder, partner, director, officer, legal counsel or controlling person of such other Holder may become subject under the Securities Act, the Exchange Act or other United States federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, legal counsel, controlling person, underwriter or other Holder, partner, officer, director, legal counsel or controlling person of such other Holder in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 2.9(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the written consent of such Holder, which consent shall not be unreasonably withheld; and provided, further, that in no event shall any indemnity under this Section 2.9(b) exceed the net proceeds actually received by such Holder in the registered offering out of which the applicable Violation arises.

 

(c)                                  Notice. Promptly after receipt by an indemnified party under this Section 2.9 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.9, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential conflict of interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of liability to the indemnified party under this Section 2.9 to the extent the indemnifying party is materially prejudiced as a result thereof, but the omission to so deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.9.

 

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(d)                                 Contribution. In order to provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any indemnified party makes a claim for indemnification pursuant to this Section 2.9 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 2.9 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any indemnified party in circumstances for which indemnification is provided under this Section 2.9; then, and in each such case, the indemnified party and the indemnifying party will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion to reflect the relative fault of the indemnifying party, on the one hand, and the indemnified party, on the other hand, in connection with the Violation that resulted in such losses, claims, damages or liabilities so that a Holder at such fault (together with its related persons) is responsible for the portion represented by the percentage that the public offering price of its Registrable Securities offered by and sold under the registration statement bears to the public offering price of all securities offered by and sold under such registration statement, and the Company and other selling Holders at such fault are responsible for the remaining portion. The relative fault of the indemnifying party and of the indemnified party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case: (A) no Holder will be required to contribute any amount in excess of the net proceeds to such Holder from the sale of all such Registrable Securities offered and sold by such Holder pursuant to such registration statement; and (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

 

(e)                                  Survival; Consents to Judgments and Settlements. The obligations of the Company and Holders under this Section 2.9 shall survive the completion of any offering of Registrable Securities in a registration statement, regardless of the expiration of any statutes of limitation or extensions of such statutes. No indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of each indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.

 

2.10                        Termination of the Company’s Obligations. The Company’s obligations under Sections 2.3, 2.4 and 2.5 with respect to any Registrable Securities proposed to be sold by a Holder in a registration pursuant to Section 2.3, 2.4 or 2.5 shall terminate on the fifth (5th) anniversary of an initial public offering, or, if, in the opinion of counsel to the Company, all such Registrable Securities proposed to be sold by a Holder (and any Affiliate of the Holder with whom such Holder must aggregate its sales under Rule 144) may then be sold without restrictions pursuant to Rule 144 promulgated under the Securities Act.

 

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2.11                        No Registration Rights to Third Parties. Without the prior written consent of the holders of a majority of the Series A-1 Shares then outstanding, the holders of a majority of Series B Shares then outstanding, the holders of a majority of the Series C Shares then outstanding, the holders of a majority of the Series D Shares then outstanding, and the holders of at least 75% of the Series E Shares then outstanding, in each case voting together as a separate class, the Company covenants and agrees that it shall not grant, or cause or permit to be created, for the benefit of any person or entity any registration rights of any kind (whether similar to the demand, “piggyback” or Form F-3 registration rights described in this Section 2, or otherwise) relating to any securities of the Company.

 

2.12                        Market Stand-Off.  Each holder of the Common Shares and each Holder agree that, so long as it holds any voting securities of the Company, upon request by the Company or the underwriters managing the initial public offering of the Company’s securities, it will not sell or otherwise transfer or dispose of any securities of the Company (other than those permitted to be included in the registration and other transfers to Affiliates permitted by law or to other Affiliates who agree to be similarly bound) without the prior written consent of the Company or such underwriters, as the case may be, for a period of time specified by the representative of the underwriters not to exceed one hundred and eighty (180) days from the effective date of the registration statement covering such initial public offering or the pricing date of such offering as may be requested by the underwriters (whichever is later). The foregoing provision of this Section 2.12 shall only apply to the Company’s initial public offering and shall not apply to the sale of any securities of the Company to an underwriter pursuant to any underwriting agreement, and shall only be applicable to the Holders if all officers, directors and holders of one percent (1%) or more of the Company’s outstanding share capital on a fully-diluted basis enter into similar agreements with same terms and conditions as described in this Section 2.12, and if the Company or any underwriter releases, at any time during the market stand-off time period, any officer, director or holder of one percent (1%) or more of the Company’s outstanding share capital on a fully-diluted basis from his, her or its sale restrictions so undertaken, then each Holder shall be notified prior to such release and shall itself be simultaneously released to the same proportional extent of such Holder’s Shares originally subject to the market-standoff restrictions. The Company shall require all future acquirers of the Company’s securities holding at least one percent (1%) of the then outstanding share capital of the Company on a fully-diluted basis to execute, prior to any public offering of the Company’s securities, a market stand-off agreement containing substantially similar provisions as those contained in this Section 2.12.

 

2.13                        Rule 144 Reporting. With a view to making available to the Holders the benefits of certain rules and regulations of the SEC which may at any time permit the sale of the Registrable Securities to the public without registration or pursuant to a registration on Form F-3, after such time as a public market exists for the Common Shares, the Company agrees to:

 

(a)                                 Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date of the first registration under the Securities Act filed by the Company for an offering of its securities to the general public;

 

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(b)                                 File with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); and

 

(c)                                  So long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon request (i) a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time after ninety (90) days after the effective date of the Company’s initial public offering), the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), or its qualification as a registrant whose securities may be resold pursuant to Form F-3 (at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company, and (iii) such other reports and documents of the Company as a Holder may reasonably request in availing itself of any rule or regulation of the SEC that permits the selling of any such securities without registration or pursuant to Form F-3.

 

3.                                      RIGHT OF FIRST OFFER.

 

3.1                               General. Each Investor and its permitted assignees to whom such Investor’s rights under this Section 3 have been duly assigned in accordance with Section 6.1 (such Investor, and each such assignee hereinafter each referred to as a “Participation Rights Holder”) shall have the right of first offer, but not an obligation, to purchase such Participation Rights Holder’s Pro Rata Share (as defined below) of all (or any part) of any New Securities (as defined in Section 3.3) that the Company may from time to time issue after the date of this Agreement (the “Right of Participation”).

 

3.2                               Pro Rata Share. A Participation Rights Holder’s “Pro Rata Share” for purposes of the Right of Participation is the ratio of (a) the number of Common Shares (calculated on a fully-diluted and as-converted basis) then held by such Participation Rights Holder to (b) the total number of Common Shares (calculated on a fully-diluted and as-converted basis) then held by all Participation Rights Holders immediately prior to the issuance of New Securities giving rise to the Right of Participation.

 

3.3                               New Securities. “New Securities” shall mean any class of shares or securities of the Company, including but not limited to the Preferred Shares, Common Shares or other shares of the Company, whether now authorized or not, and rights, options or warrants to purchase such Preferred Shares, Common Shares and securities of any type whatsoever that are, or may become, convertible or exchangeable into the Preferred Shares, Common Shares or other shares, without regard to the differences in voting rights; provided, however, that the term “New Securities” shall not include (the issuances pursuant to the subsections below collectively referred to as the “Permitted Issuances”):

 

(i)                                      any of the Common Shares, options or warrants issued to employees, officers, directors, contractors, advisors or consultants of the Company for up to 26,822,828 Common Shares pursuant to the Company’s 2010 share incentive plan (the “2010 ESOP”) and 9,073,732 Common Shares to the RS Holdco for distributions in the form of restricted shares pursuant to the Company’s 2013 share incentive plan (the “2013 RS Plan”; together with the 2010 ESOP, collectively the “ESOP”) approved by the Board;

 

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(ii)                                   any securities issued in connection with any share split, share dividend, subdivision, combination, reclassification or other similar event in which all Participation Rights Holders are entitled to participate on a pro rata basis, as approved by the Board;

 

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

 

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

 

(v)                                  any Conversion Shares; or

 

(vi)                               any securities issued in connection with a strategic partnership or joint venture entered into by the Company, which shall not be a private equity, venture capital or other similar financing and shall be approved by the Board (including at least the affirmative vote of one (1) Series E Director, the Series D Director, Series A-1 Director and Series A Director).

 

3.4                               Procedures.

 

(a)                                 First Participation Notice. In the event that the Company proposes to undertake an issuance of New Securities (in a single transaction or a series of related transactions), it shall give to each Participation Rights Holder written notice of its intention to issue New Securities (the “First Participation Notice”), describing the amount and type of New Securities, the price and the general terms upon which the Company proposes to issue such New Securities. Each Participation Rights Holder shall have fourteen (14) Business Days from the date of receipt of any such First Participation Notice to agree in writing to purchase such Participation Rights Holder’s Pro Rata Share of such New Securities (or any part thereof) for the price and upon the terms and conditions specified in the First Participation Notice by giving written notice to the Company and stating therein the quantity of New Securities to be purchased (not to exceed such Participation Rights Holder’s Pro Rata Share). If any Participation Rights Holder fails to so agree in writing within such fourteen (14) Business Day period, then such Participation Rights Holder shall be deemed to have forfeited the right hereunder to purchase that part of its Pro Rata Share of such New Securities that it did not agree to purchase.

 

(b)                                 Second Participation Notice; Oversubscription. If any Participation Rights Holder fails or declines to fully exercise its Right of Participation in accordance with subsection (a) above, the Company shall promptly give notice (the “Second Participation Notice”) to the other Participation Rights Holders who fully exercised their Right of Participation (the “Right Participants”) in accordance with subsection (a) above. Each Right Participant shall have five (5) Business Days from the date of receipt of the Second Participation Notice (the “Second Participation Period”) to notify the Company of its desire to purchase more than its Pro Rata Share of the New Securities, stating the number of the additional New Securities it proposes to buy (the “Additional Number”). Such notice may be made by telephone if confirmed in writing within two (2) Business Days. If, as a result thereof, such oversubscription exceeds the total 

 

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number of the remaining New Securities available for purchase, each oversubscribing Right Participant will be cut back by the Company with respect to its oversubscription to that number of remaining New Securities equal to the lesser of (x) the Additional Number and (y) the product obtained by multiplying (i) the number of the remaining New Securities available for subscription by (ii) a fraction, the numerator of which is the number of Common Shares (calculated on a fully-diluted and as-converted basis) held by such oversubscribing Right Participant and the denominator of which is the total number of Common Shares (calculated on a fully-diluted and as-converted basis) held by all the oversubscribing Right Participants. Each Right Participant shall be obligated to buy such number of New Securities as determined by the Company pursuant to this Section 3.4(b) and the Company shall so notify the Right Participants within fourteen (14) Business Days following the date of the Second Participation Notice.

 

(c)                                  Failure to Exercise. Upon the expiration of the Second Participation Period and to the extent that not all New Securities have been subscribed for by the Participation Rights Holders, or in the event no Participation Rights Holder exercises the Right of Participation within fourteen (14) days following the issuance of the First Participation Notice, the Company shall have 60 days thereafter to sell the New Securities described in the First Participation Notice (the portion to which the Right of Participation hereunder were not exercised) at the same or higher price and upon non-price terms not materially more favorable to the purchasers thereof than specified in the First Participation Notice. In the event that the Company has not issued and sold such New Securities within such 60 day period, then the Company shall not thereafter issue or sell any New Securities without again first offering such New Securities to the Participation Rights Holders pursuant to this Section 3.

 

3.5                               Termination. The Right of Participation for each Participation Rights Holder shall not terminate so long as any Investors and its Affiliates collectively hold any Series A-1 Shares, Series A Shares, Series B Shares, Series C Shares, Series D Shares, Series E Shares or Common Shares; provided, however, that the Right of Participation shall terminate upon the earlier of the closing of the initial public offering of the Company, a Liquidation Event or a Deemed Liquidation Event, or a Trade Sale.

 

4.                                      TRANSFER RESTRICTIONS.

 

4.1                               Certain Definitions. For purposes of this Section 4, “Common Shares” means (i) the Company’s outstanding Common Shares, (ii) the Common Shares issuable upon exercise of outstanding options or warrants, and (iii) the Common Shares issuable upon conversion of any outstanding convertible securities other than Conversion Shares; “Preferred Holder” means an Investor and its permitted assignees to whom its rights under this Section 4 have been duly assigned in accordance with this Agreement; “Common Holders” means the holders of any Common Shares; and “Restricted Shares” means any of the Company’s securities including, without limitation, the Common Shares, any Preferred Shares, or securities convertible into or exercisable for Common Shares.

 

4.2                               Restriction on Sale. During the Restricted Period (as defined below), each holder of any class or series of Restricted Shares (such holder for the purposes of this Section 4, the “Restricted Shareholders”) agrees not to, directly or indirectly, transfer, sell or pledge or otherwise dispose of or permit the transfer, sale, pledge, or other disposition of, any Restricted 

 

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Shares except in compliance with this Section 4. In the event of an involuntary transfer of Restricted Shares during the Restricted Period pursuant to divorce, legal separation, bankruptcy or insolvency, such involuntary transfer shall be conducted in accordance with the applicable provisions of this Section 4. Each Restricted Shareholder (if applicable) shall procure that restrictions set forth in this Section 4 shall not be avoided by the direct or indirect transfer, sale, pledge, or other disposition of any shares (or other interest) in such Restricted Shareholder or of any other entity having control over such Restricted Shareholder.

 

4.3                               Right of First Refusal and Right of Co-Sale.

 

(a)                                 Transfer Notice. If (i) a Restricted Shareholder proposes to, directly or indirectly, transfer, sell or pledge or otherwise dispose of or permit the transfer, sale, pledge, or other disposition of, any Restricted Shares held by him to one or more third parties or (ii) at any time any Restricted Shares held by such Restricted Shareholder are transferred involuntarily pursuant to divorce, legal separation, bankruptcy or other proceedings, death or any other involuntary transfer (each such disposition referenced in this Section 4, a “Transfer”), then such Restricted Shareholder (or, in the event of an involuntary transfer, the person to whom the Offered Shares (as defined below) are to be transferred) (such Restricted Shareholder or person, a “Selling Shareholder”) shall give the Company and each Preferred Holder written notice of such Selling Shareholder’s intention to make such Transfer (the “Transfer Notice”), which Transfer Notice shall include (i) a description of the Restricted Shares to be transferred (the “Offered Shares”), (ii) the identity of the prospective transferee(s) and (iii) the consideration and the material terms and conditions upon which the proposed Transfer is to be made. The Transfer Notice shall certify that such Selling Shareholder has received a firm offer from the prospective transferee(s) and in good faith believes a binding agreement for the Transfer is obtainable on the terms set forth in the Transfer Notice. The Transfer Notice shall also include a copy of any written proposal, term sheet or letter of intent or other agreement relating to the proposed Transfer. The Transfer Notice shall constitute an irrevocable offer by the Selling Shareholder to sell the Offered Shares to the other Shareholders in the following order: firstly, to each holder of the Series E Shares (the “Series E Holder”), the Series D Shares (the “Series D Holder”), the Series C Shares (the “Series C Holder”) and the Series B Shares (the “Series B Holder”) on a pro rata and as converted basis, and for any remaining Offered Shares not purchased by the Series E Holders, Series D Holders, Series C Holders and the Series B Holders, to the holders of the Series A-1 Shares (the “Series A-1 Holder”), and for any remaining Offered Shares not purchased by the Series A-1 Holders, to the holders of the Series A Shares (the “Series A Holder”), and for any remaining Offered Shares not purchased by the Series A Holders, to the Common Holders.

 

(b)                                 Option of Series E Holders, Series D Holders, Series C Holders and Series B Holders to Purchase.

 

(i)                                      Each of the Series B Holders, the Series C Holders, the Series D Holders and the Series E Holders who notifies such Selling Shareholder in writing within ten (10) Business Days after receipt of the Transfer Notice (the “Series B/C/D/E Purchase Period”) referred to in Section 4.3(a) (each a “Purchasing B/C/D/E Holder”) shall have the right, exercisable upon such written notice to the Selling Shareholder (the “Purchase and Co-Sale Notice”), to purchase up to its pro rata share of the Offered Shares plus up to its pro rata share of any Offered Shares not purchased by any other Series B Holder, Series C Holder, Series D 

 

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Holder or Series E Holder (the “Remaining Shares”) on the same terms and conditions as set forth in the Transfer Notice, subject to Section 4.3(f)(i) below. The Purchase and Co-Sale Notice shall state (A) whether the Series E Holder, the Series D Holder, the Series C Holder or the Series B Holder desires to purchase up to its pro rata share of the Offered Shares, (B) whether the Series E Holder, the Series D Holder, the Series C Holder or the Series B Holder desires to purchase the maximum amount of its pro rata share of the Remaining Shares, and (C) whether the Series E Holder, the Series D Holder, the Series C Holder or the Series B Holder elects not to purchase any of the Offered Shares but wishes to sell a portion of the securities held by such Series E Holder, Series D Holder, Series C Holder or Series B Holder pursuant to Section 4.3(g) of this Agreement and the number of securities to be sold (subject to Section 4.3(g)(ii)). A Series E Holder, Series D Holder, Series C Holder or Series B Holder has option either to purchase or to sell under this Section 4 and such right shall not be construed as an option to both purchase and sell with respect to the same Transfer.  A Series E Holder, Series D Holder, Series C Holder or Series B Holder who either does not deliver a Purchase and Co-Sale Notice or indicates in the Purchase and Co-Sale Notice that such Series E Holder, Series D Holder, Series C Holder or Series B Holder elected not to purchase any of the Offered Shares shall be referred to herein as a “Non-Purchasing Holder”.

 

(ii)                                   Each Purchasing B/C/D/E Holder who sets forth in the Purchase and Co-Sale Notice a desire to purchase the maximum amount of Offered Shares available shall be entitled to purchase its pro rata share of the Remaining Shares.

 

(iii)                                Each Purchasing B/C/D/E Holder’s pro rata share shall be equal to a fraction, the numerator of which is the number of Conversion Shares held by such Purchasing B/C/D/E Holder and the denominator of which is the total number of Conversion Shares held by all Series B Holders, all Series C Holders, all Series D Holders and all Series E Holders calculated immediately prior to the time of the purchase hereunder from the Selling Shareholder, provided, however, that with respect to the Remaining Shares, the denominator shall be total number of Conversion Shares held by the Purchasing B/C/D/E Holders that are purchasing the Remaining Shares. Upon expiration of the Series B/C/D/E Purchase Period, the Selling Shareholder will provide notice to all Series B Holders, all Series C Holders, all Series D Holders and all Series E Holders as to whether or not the Right of First Refusal has been exercised by the Series B Holders, the Series C Holders, the Series D Holders and the Series E Holders (the “Series B/C/D/E Expiration Notice”).

 

(c)                                  Series A-1 Holders’ Option to Purchase.

 

(i)                                      Series A-1 Transfer Notice. If any of the Offered Shares proposed in the Transfer Notice to be transferred are not purchased by the Series B Holders, the Series C Holders, the Series D Holders and the Series E Holders (the “Series A-1 Remaining Offered Shares”), then after the issue of the Series B/C/D/E Expiration Notice and subject to the co-sale rights set forth in this Agreement, the Selling Shareholder shall give the Series A-1 Holder an additional Transfer Notice (the “Series A-1 Transfer Notice”) which shall include an offer to sell the Series A-1 Remaining Offered Shares and all of the information and certifications required in a Transfer Notice.

 

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(ii)                                   Each Series A-1 Holder who notifies such Selling Shareholder in writing within ten (10) Business Days after receipt of the Series A-1 Transfer Notice (the “Series A-1 Purchase Period”) referred to above (each a “Purchasing A-1 Holder”) shall have the right, exercisable upon such written notice to the Selling Shareholder in a Purchase and Co-Sale Notice, to purchase up to its pro rata share of the Series A-1 Remaining Offered Shares plus up to its pro rata share of any Series A-1 Remaining Offered Shares not purchased by any other Series A-1 Holder (the “Remaining A-1 Shares”) on the same terms and conditions as set forth in the Series A-1 Transfer Notice, subject to Section 4.3(f)(i) below. The Purchase and Co-Sale Notice shall state (A) whether the Series A-1 Holder desires to purchase up to its pro rata share of the Series A-1 Remaining Offered Shares, (B) whether the Series A-1 Holder desires to purchase the maximum amount of its pro rata share of the Remaining A-1 Shares, and (C) whether the Series A-1 Holder elects not to purchase any of the Series A-1 Remaining Offered Shares but wishes to sell a portion of the securities held by such Series A-1 Holder pursuant to Section 4.3(g) of this Agreement and the number of securities to be sold (subject to Section 4.3(g)(ii)). A Series A-1 Holder has option either to purchase or to sell under this Section 4 and such right shall not be construed as an option to both purchase and sell with respect to the same Transfer.

 

(iii)                                Each Purchasing A-1 Holder who sets forth in the Purchase and Co-Sale Notice a desire to purchase the maximum amount of the Series A-1 Remaining Offered Shares available shall be entitled to purchase its pro rata share of the Remaining A-1 Shares.

 

(iv)                               Each Purchasing A-1 Holder’s pro rata share shall be equal to a fraction, the numerator of which is the number of Conversion Shares held by such Purchasing A-1 Holder and the denominator of which is the total number of Conversion Shares held by all Series A-1 Holders calculated immediately prior to the time of the purchase hereunder from the Selling Shareholder, provided, however, that with respect to the Remaining A-1 Shares, the denominator shall be total number of Conversion Shares held by the Purchasing A-1 Holders that are purchasing the Remaining A-1 Shares. Upon expiration of the Series A-1 Purchase Period, the Selling Shareholder will provide notice to all Series A-1 Holders as to whether or not the Right of First Refusal has been exercised by the Series A-1 Holders (the “Series A-1 Expiration Notice”).

 

(d)                                 Series A Holders’ Option to Purchase.

 

(i)                                      Series A Transfer Notice. If any of the Offered Shares proposed in the Transfer Notice to be transferred are not purchased by the Series A-1 Holders (the “Series A Remaining Offered Shares”), then after the issue of the Series A-1 Expiration Notice and subject to the co-sale rights set forth in this Agreement, the Selling Shareholder shall give each holder of Series A Shares (the “Series A Holders”) an additional Transfer Notice (the “Series A Transfer Notice”) which shall include an offer to sell the Series A Remaining Offered Shares and all of the information and certifications required in a Transfer Notice.

 

(ii)                                   Each Series A Holder who notifies such Selling Shareholder in writing within ten (10) Business Days after receipt of the Series A Transfer Notice (the “Series A Purchase Period”) referred to above (each a “Purchasing A Holder”) shall have the right, exercisable upon such written notice to the Selling Shareholder in a Purchase and Co-Sale Notice, to purchase up to its pro rata share of the Series A Remaining Offered Shares plus up to its pro 

 

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rata share of any Series A Remaining Offered Shares not purchased by any other Series A Holder (the “Remaining A Shares”) on the same terms and conditions as set forth in the Series A Transfer Notice, subject to Section 4.3(f)(i) below. The Purchase and Co-Sale Notice shall state (A) whether the Series A Holder desires to purchase up to its pro rata share of the Series A Remaining Offered Shares, (B) whether the Series A Holder desires to purchase the maximum amount of its pro rata share of the Remaining A Shares, and (C) whether the Series A Holder elects not to purchase any of the Offered Shares but wishes to sell a portion of the securities held by such Series A Holder pursuant to Section 4.3(g) of this Agreement and the number of securities to be sold (subject to Section 4.3(g)(ii)). A Series A Holder has option either to purchase or to sell under this Section 4 and such right shall not be construed as an option to both purchase and sell with respect to the same Transfer.

 

(iii)                                Each Purchasing A Holder who sets forth in the Purchase and Co-Sale Notice a desire to purchase the maximum amount of the Series A Remaining Offered Shares available shall be entitled to purchase its pro rata share of the Remaining A Shares.

 

(iv)                               Each Purchasing A Holder’s pro rata share shall be equal to a fraction, the numerator of which is the number of Conversion Shares held by such Purchasing A Holder and the denominator of which is the total number of Conversion Shares held by all Series A Holders calculated immediately prior to the time of the purchase hereunder from the Selling Shareholder, provided, however, that with respect to the Remaining A Shares, the denominator shall be total number of Conversion Shares held by the Purchasing A Holders that are purchasing the Remaining A Shares. Upon expiration of the Series A Purchase Period, the Selling Shareholder will provide notice to all Series A Holders as to whether or not the Right of First Refusal has been exercised by the Series A Holders (the “Series A Expiration Notice”).

 

(e)                                  Common Holders’ Option to Purchase.

 

(i)                                      Common Transfer Notice.  If any of the Offered Shares proposed in the Transfer Notice to be transferred are not purchased by the Series A Holders (the “Common Remaining Offered Shares”), then after the issue of the Series A Expiration Notice and subject to the co-sale rights set forth in this Agreement, the Selling Shareholder shall give each Common Holder an additional Transfer Notice (the “Common Transfer Notice”) which shall include an offer to sell the Common Remaining Offered Shares and all of the information and certifications required in a Transfer Notice.

 

(ii)                                   Each Common Holder who notifies such Selling Shareholder in writing within ten (10) Business Days after receipt of the Common Transfer Notice (the “Common Purchase Period”) referred to above (each a “Purchasing Common Holder”) shall have the right, exercisable upon such written notice to the Selling Shareholder in a Purchase and Co-Sale Notice, to purchase up to its pro rata share of the Common Remaining Offered Shares plus up to its pro rata share of any Common Remaining Offered Shares not purchased by any other Common Holder (the “Remaining Common Shares”) on the same terms and conditions as set forth in the Common Transfer Notice, subject to Section 4.3(f)(i) below. The Purchase and Co-Sale Notice shall state (A) whether the Common Holder desires to purchase up to its pro rata share of the Common Remaining Offered Shares, (B) whether the Common Holder desires to purchase the maximum amount of its pro rata share of the Remaining Common Shares, and (C)

 

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whether the Common Holder elects not to purchase any of the Offered Shares but wishes to sell a portion of the securities held by such Common Holder pursuant to Section 4.3(g) of this Agreement and the number of securities to be sold (subject to Section 4.3(g)(ii)). A Common Holder has option either to purchase or to sell under this Section 4 and such right shall not be construed as an option to both purchase and sell with respect to the same Transfer.

 

(iii)                                Each Purchasing Common Holder who sets forth in the Purchase and Co-Sale Notice a desire to purchase the maximum amount of the Common Remaining Offered Shares available shall be entitled to purchase its pro rata share of the Remaining Common Shares.

 

(iv)                               Each Purchasing Common Holder’s pro rata share shall be equal to a fraction, the numerator of which is the number of Common Shares held by such Purchasing Common Holder and the denominator of which is the total number of Common Shares held by all Common Holders calculated immediately prior to the time of the purchase hereunder from the Selling Shareholder, provided, however, that with respect to the Remaining Common Shares, the denominator shall be total number of Common Shares held by the Purchasing Common Holders that are purchasing the Remaining Common Shares. Upon expiration of the Common Purchase Period, the Selling Shareholder will provide notice to all Common Holders as to whether or not the Right of First Refusal has been exercised by the Common Holders (the “Common Expiration Notice”).

 

(f)                                   Involuntary Transfers; Non-Cash Consideration.

 

(i)                                      In the event that the Transfer in question is by operation of law or another involuntary Transfer (including a Transfer incident to death, divorce, legal separation or bankruptcy), the price per share shall be the greater of (A) the original purchase price paid by Selling Shareholder for such Offered Shares (adjusted for share splits, share dividends, combinations and the like) or (B) the fair market value of such Offered Shares, which shall be a price set by the Board that will reflect the current value of the Offered Shares in terms of present earnings and future prospects of the Company, determined within thirty (30) days after receipt by the Shareholders of the Transfer Notice. In the event that the Selling Shareholder or the Selling Shareholder’s executor disagrees with such valuation as determined by the Board, the Selling Shareholder or the Selling Shareholder’s executor shall be entitled to have the valuation determined by an independent appraiser to be mutually agreed upon by the Purchasing Shareholders and the Selling Shareholder or the Selling Shareholder’s executor, the fees of which appraiser shall be borne equally by the Purchasing Shareholders and the Selling Shareholder or the Selling Shareholder’s estate.

 

(ii)                                   In the event the consideration for the Offered Shares specified in a Transfer Notice is payable in property other than cash and the Shareholders who wish to purchase the Offered Shares under Section 4.3(b) (acting together), as the case may be, cannot agree on the cash value of such property within ten (10) days after such Shareholders’ receipt of the Transfer Notice, as the case may be, the value of such property shall be determined by an appraiser of recognized standing selected jointly by the Selling Shareholder and such Shareholders (acting together), as the case may be. If they cannot agree on an appraiser within twenty (20) days after receipt of the Transfer Notice by such Preferred Holders, as the case may 

 

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be, within a further five(5)-day period, the Selling Shareholder and such Shareholders (acting together), as the case may be, shall each select an appraiser of recognized standing and the two appraisers shall designate a third appraiser of recognized standing to determine the value of such property. The value of such property shall be determined by the appraiser selected pursuant to this Section 4.3(f)(ii) within one (1) month from its appointment, and such determination shall be final and binding on the Selling Shareholder and such Shareholders, as the case may be. The cost of such appraisal shall be shared equally by the Selling Shareholder, on the one hand, and such Shareholders, as the case may be, on the other hand (each such Shareholder shall pay its pro rata portion of such costs based on the number of Offered Shares acquired by each such Shareholder). If the ten (10) day period as specified in Section 4.3 has expired but for the determination of the value of the consideration for the Offered Shares offered by the Selling Shareholder, then such ten (10) day period shall be extended to the fifth Business Day after such valuation shall have been determined to be final and binding pursuant to this Section 4.3(f)(ii).

 

(g)                                  Right of Co-Sale.

 

(i)                                      Following the expiration of the right of first refusal and purchase rights described in Sections 4.3(b), (c), (d) and (e), each Preferred Holder who previously notified the Selling Shareholder in the Purchase and Co-Sale Notice of such Preferred Holder’s desire to sell a portion of its shares with the Selling Shareholder (such Preferred Holder, a “Co-Sale Participant”) shall have the right to participate in the sale of any Offered Shares that were not purchased by the Shareholders pursuant to Sections 4.3(b), (c), (d) and (e), on the same terms and conditions as specified in the Transfer Notice; provided, however, that (a) holders of Series A-1 Shares shall not be entitled to participate under this Section 4.3(g)(i) and shall not be deemed as a Co-Sale  Participant as provided in Section 4.3(g)(ii) unless all Co-Sale Participants holding Series B Shares, Series C Shares, Series D Shares and Series E Shares have first exercised or declined to exercise their right of co-sale under this Section 4.3(g); (b) holders of Series A Shares shall not be entitled to participate under this Section 4.3(g)(i) and shall not be deemed as a Co-Sale Participant as provided in Section 4.3(g)(ii) unless all Co-Sale Participants holding Series A-1 Shares have first exercised or declined to exercise their right of co-sale under this Section 4.3(g); and (c) no Preferred Holders shall be entitled under this Section 4.3(g) to participate in Transfers of Restricted Shares by a Selling Shareholder incident to divorce, legal separation, bankruptcy or other proceedings, or death or in any other involuntary Transfers of Restricted Shares by a Selling Shareholder. To the extent one or more Preferred Holders exercise such right of co-sale in accordance with the terms and conditions set forth below, the number of Restricted Shares that the Selling Shareholder may sell in the Transfer shall be correspondingly reduced. Shareholders shall not have any right of first refusal to purchase the Shares to be sold by the Co-Sale Participants pursuant to this Section 4.3(g).

 

(ii)                                   Each Co-Sale Participant may sell all or any part of that number of Conversion Shares equal to the product obtained by multiplying (A) the Offered Shares, less (x) any Offered Shares purchased pursuant to Sections 4.3(b), (c), (d) and (e), (y) when holders of Series A-1 Shares shall be deemed Co-Sale Participants, any Conversion Shares that holders of Series B Shares, Series C Shares, Series D Shares and Series E Shares shall have elected to co-sell under this 

 

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Section 4.3(g), and (z) when holders of Series A Shares shall be deemed Co-Sale Participants, any Conversion Shares that holders of Series A-1 Shares, Series B Shares, Series C Shares, Series D Shares and Series E Shares shall have elected to co-sell under this Section 4.3(g), by (B) a fraction, the numerator of which shall be the number of Co-Sale Shares (as defined below) owned by such Co-Sale Participant and the denominator of which shall be the total number of Co-Sale Shares held by all Co-Sale Participants and the Common Shares (assuming full conversion of outstanding Preferred Shares) held by the Selling Shareholder, calculated immediately prior to the time of the Transfer. For the purpose of this Section 4.3(g)(ii), “Co-Sale Shares” means (A) any Common Shares issued or issuable upon conversion of the Series B, Series C Shares, Series D Shares or Series E Shares if the Co-Sale Participants are the holders of Series B, Series C Shares, Series D Shares and Series E Shares, (B) any Common Shares issued or issuable upon conversion of the Series A-1 Shares if the Co-Sale Participants are the holders of Series A-1 Shares, and (C) any Common Shares issued or issuable upon conversion of the Series A Shares if the Co-Sale Participants are the holders of Series A Shares.

 

(h)                                 Transferred Shares. Each Co-Sale Participant shall effect its participation in the sale by promptly delivering to the Selling Shareholder for transfer to the prospective purchaser a duly executed instrument of transfer and one or more certificates, which represent:

 

(i)                                      the series and number of securities of the Company which such Co-Sale Participant elects to sell;

 

(ii)                                   that number of Common Shares, or that number of Preferred Shares which are at such time convertible into the number of Common Shares, which such Co-Sale Participant elects to sell; provided, however, that if the prospective third-party purchaser objects to the delivery of Preferred Shares in lieu of Common Shares, such Co-Sale Participant shall first convert such Preferred Shares into Common Shares and transfer the Common Shares as provided in this  Section 4.3(h). The Company agrees to make any such conversion concurrently with the actual transfer of such shares to the purchaser and contingent upon such Transfer; or

 

(iii)                                a combination of the above.

 

(iv)                               Payment. The share certificate or certificates that the Co-Sale Participant delivers to such Selling Shareholder pursuant to Section 4.3(h) shall be returned to the Company for cancellation in consummation of the sale of the Offered Shares pursuant to the terms and conditions specified in the Transfer Notice, and such Selling Shareholder shall concurrently therewith remit to such Co-Sale Participant that portion of the sale proceeds to which such Co-Sale Participant is entitled by reason of its participation in such sale. To the extent that any prospective purchaser or purchasers prohibit(s) such assignment or otherwise refuse(s) to purchase shares or other securities from a Co-Sale Participant exercising its rights of co-sale hereunder, such Selling Shareholder shall not sell to such prospective purchaser or purchasers any Restricted Shares unless and until, simultaneously with such sale, such Selling Shareholder shall purchase such shares or other securities from such Co-Sale Participant for the same consideration and on the same terms and conditions as the proposed Transfer described in the Transfer Notice. The Company shall, upon receiving the relevant instruments of transfer duly executed by the Co-Sale Participant and the surrendering by the Co-Sale Participant or the Selling Shareholder of the certificates for the Preferred Shares or Common Shares being transferred as provided above, make proper entries in the register of members of the Company and cancel the surrendered certificates and issue any new certificates in the name of the prospective purchaser or the Selling Shareholder, as the case may be, as necessary to 

 

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consummate the transactions in connection with the exercise by the Co-Sale Participant of their co-sale rights under this Section 4.3.

 

4.4                               Non-Exercise of Rights. To the extent that the Shareholders have not exercised their rights to purchase all of a Selling Shareholder’s Offered Shares, such Selling Shareholder together with any Co-Sale Participant shall have a period of sixty (60) days from the expiration of such rights to sell any remaining Offered Shares, upon terms and conditions (including the purchase price) no more favorable to the purchaser than those specified in the Transfer Notice, to the third-party transferee(s) identified in the Transfer Notice. The third-party transferee(s) shall, as a condition to the effectiveness of Transfer of the Offered Shares, furnish the Company and the Shareholders with a written agreement to be bound by and comply with this Agreement, including without limitation all provisions of this Section 4, as if such transferee(s) were a Selling Shareholder hereunder, as well as the terms of the agreement pursuant to which such Restricted Shares were issued. In the event a Selling Shareholder does not consummate the sale or disposition of the Offered Shares within the sixty (60)-day period from the expiration of these rights, the Shareholders’ first refusal rights hereunder shall continue to be applicable to any subsequent disposition of the Restricted Shares by such Selling Shareholder. Furthermore, the exercise or non-exercise by the Shareholders to purchase Restricted Shares from such Selling Shareholder shall not adversely affect the Shareholders’ rights to make subsequent purchases from any Selling Shareholder of Restricted Shares. Any proposed Transfer on terms and conditions different from those described in the Transfer Notice, as well as any subsequent proposed Transfer of any of the Selling Shareholders’ Restricted Shares shall again be subject to the right of the Shareholders under this Section 4 and shall require compliance by the relevant Selling Shareholder with the procedures described in this Section 4.

 

4.5                               Exempt Transfers. Notwithstanding anything to the contrary contained herein, any right or restriction as provided in this Section 4 shall not apply to (a) any repurchase of Shares by the Company pursuant to any right of repurchase in the event of a termination of employment or consulting relationship or pursuant to the terms of the ESOP, (b) any transfer to (x) the immediate family member of the Selling Shareholder or any entity that is wholly owned by the Selling Shareholder, if the Selling Shareholder is a Founder or Founder Holdco, or (y) an Affiliate of the Selling Shareholder, if the Selling Shareholder is a shareholder of the Company other than any Founder or Founder Holdco, provided that the transferee so transferred shall not be a Competitor of any of the Group Companies, (c) in the case of a Transferor that is a natural person, transfers by the Transferor upon his or her death by will or intestacy to his or her siblings, children, grandchildren, spouse or any other relatives approved by unanimous consent of the Board, or any transfer to the parents, children or spouse, or to trusts for the exclusive benefit of such persons, of any Common Holder for bona fide tax and/or estate planning purposes, (d) any transfer by a Founder or a Partner to any Person not exceeding, when aggregated with all of the Shares previously transferred by such Founder or Partner, ten per cent (10%) of all Shares held by him on the date hereof (for the purpose of this Agreement, “Partners” mean collectively Huang Peng, a PRC citizen whose ID number is ***, and Wang Xiaoming, a PRC citizen whose ID number is ***; and “Partner” means any of them), and (e) without limiting the foregoing subsection (a), any transfer by Fidelity to any Fidelity Persons or charitable organization, provided that the transferee so transferred shall not be a Competitor of any of the Group Companies (each transferee pursuant to the foregoing subsections (b), (c), (d) and (e), a “Permitted Transferee”); provided that adequate documentation therefor is provided to the 

 

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Investors to their satisfaction and that any such Permitted Transferee agrees in writing to be bound by this Agreement in place of the relevant transferor; provided, further, that such transferor shall remain liable for any breach by such Permitted Transferee of any provision hereunder. Each Shareholder (other than the Selling Shareholder) hereby waives its right of first refusal and right of co-sale under this Section 4 in respect of such transfer of Restricted Shares to any Permitted Transferee. For the purpose of this Agreement, “Fidelity Persons” means (1) Fidelity International Limited (“FIL”), a company incorporated in Bermuda, and any subsidiary undertaking of FIL from time to time (FIL and its subsidiary undertakings being the “FIL Group”); (2) FMR Corp. (“FMR”), a Delaware corporation, and any subsidiary undertaking of FMR from time to time (FMR and its subsidiary undertakings being the “FMR Group”); (3) any director, officer, employee or shareholder of the FIL Group and/or the FMR Group or members of his family and any company, trust, partnership or other entity (“Fidelity Entities”) formed for his or any of their benefit from time to time (any or all of such individuals and Fidelity Entities being the “Closely Related Shareholders”); (4) any Fidelity Entity controlled by Closely Related Shareholders where “control” shall mean the power to direct the management and policies or appoint or remove members of the board of directors or other governing body of the Fidelity Entity, directly or indirectly, whether through the ownership of voting securities, contract or otherwise, and “controlled” shall be construed accordingly; and (5) any affiliate of any member of the FIL Group and/or the FMR Group (where “affiliate” means any Fidelity Entity controlled by any combination of any Closely Related Shareholders and any member of the FIL Group and/or the FMR Group, and includes the officers, partners and directors of any affiliate). For the purpose of this Agreement, “Affiliate” means (a) in relation to any individual other than a Founder, the immediate family of such individual or any entity controlled by such individual, (b) in relation to a Founder or Founder Holdco, the immediate family of such Founder or any entity wholly owned by such Founder or Founder Holdco (whether by himself or  together with other Founders), and (c) in relation to any legal person, any other person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the specified person; provided that, for the purpose of this Section 4, the “Affiliate” of any Selling Shareholder other than any Founder or Founder Holdco shall mean (x) any person in which such Selling Shareholder directly or indirectly owns the voting of more than 75% of the total outstanding equity interest, (y) any person which directly or indirectly owns the voting of more than 75% of the total outstanding equity interest in such Selling Shareholder, or (z) any person which is under the common control with the Selling Shareholder by any other person which directly or indirectly owns the voting of more than 75% of the total equity interest in both such person and such Selling Shareholder. For purposes of this definition and notwithstanding the definition with respect to Fidelity Entities in clause (3) above, a person shall be deemed to be “controlled by” another person if the other possesses, directly or indirectly, power either (i) to vote fifty percent (50%) or more of the securities having voting power for the election of directors of such person, or (ii) to direct or cause the direction of the management and policies of such person whether by contract or otherwise.

 

4.6                               Prohibited Transfers.

 

(a)                                 In the event a Selling Shareholder should sell any Restricted Shares in contravention of the transfer restrictions in this Section 4 or such Selling Shareholder fails to procure that its transferee (whether a third party transferee, an affiliate or otherwise) agree in writing to be bound by and comply with the rights and obligations of such Selling Shareholder 

 

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under this Agreement, including, without limitation, all provisions of this Section 4 (each, a “Prohibited Transfer”), the Preferred Holders, in addition to such other remedies as may be available at law, in equity or hereunder, shall have the put option provided below and such Selling Shareholder shall be bound by the applicable provisions of such option.

 

(b)                                 In the event of a Prohibited Transfer, each Preferred Holder shall have the right to sell to such Selling Shareholder the type and number of shares of Common Shares, Conversion Shares or Preferred Shares equal to the number of shares each Preferred Holder would have been entitled to transfer to the third-party transferee(s) under Section 4.3(g) hereof had the Prohibited Transfer been effected pursuant to and in compliance with the terms hereof (assuming the Company had not exercised its right of first refusal and no Preferred Holder had elected to become Purchasing Holders). Such sale shall be made on the following terms and conditions:

 

(i)                                      The price per share at which the shares are to be sold to such Selling Shareholder shall be equal to the price per share paid by the third-party transferee(s) to such Selling Shareholder in the Prohibited Transfer. The Selling Shareholder shall also reimburse each Preferred Holder for any and all fees and expenses, including legal fees and expenses, incurred pursuant to the exercise or the attempted exercise of the Preferred Holder’s rights under this Section 4.

 

(ii)                                   Within thirty (30) days after the later of the dates on which the Preferred Holder (A) received notice of the Prohibited Transfer or (B) otherwise became aware of the Prohibited Transfer, each Preferred Holder shall, if exercising the option created hereby, deliver to such Selling Shareholder a duly executed instrument of transfer and the certificate or certificates representing shares to be sold.

 

(iii)                                The Selling Shareholder shall, upon receipt of the certificate or certificates for the shares to be sold by a Preferred Holder, pursuant to this Section 4.6, pay the aggregate purchase price therefor and the amount of reimbursable fees and expenses, as specified in Section 4.6(b)(i), in cash or by other means acceptable to the Preferred Holder.

 

(iv)                               Notwithstanding the foregoing, any attempt by such Selling Shareholder to transfer Restricted Shares in violation of this Section 4 hereof shall be null and void and the Company agrees it will not affect such a Transfer nor will it treat any alleged transferee(s) as the holder of such shares without the written consent of the holders of a majority of the then outstanding Series A Shares, the holders of a majority of the then outstanding Series B Shares, the holders of a majority of the then outstanding Series C Shares, the holders of a majority of the then outstanding Series D Shares, and the holders of at least 75% of the then outstanding Series E Shares, each voting together as a separate class.

 

4.7                               Definition of Trade Sale.  For purposes of this Agreement, a “Trade Sale” shall mean (a) a sale, lease, transfer or other disposition of all or substantially all of the assets of the Company, (b) a transfer or an exclusive licensing of all or substantially all of the intellectual property of the Group Companies, (c) a sale, transfer or other disposition of a majority of the issued and outstanding share capital of the Company or a majority of the voting power of the Company; or (d) a merger, consolidation or other business combination of the Company with or into any other business entity in which the shareholders of the Company immediately after such 

 

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merger, consolidation or business combination hold shares representing less than a majority of the voting power of the outstanding share capital of the surviving business entity.

 

4.8                               Legend.

 

(a)                                 Each certificate representing the Restricted Shares shall be endorsed with the following legend:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY FOREIGN JURISDICTION. THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE AND FOREIGN SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.

 

THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR OTHER DISPOSITION (EACH A “TRANSFER”) AND VOTING OF ANY OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE TERMS OF THE SIXTH AMENDED AND RESTATED SHAREHOLDERS AGREEMENT, DATED [*], 2014 BY AND AMONG THE COMPANY, ITS SUBSIDIARIES AND THE SHAREHOLDERS NAMED THEREIN, A COPY OF WHICH MAY BE INSPECTED AT THE COMPANY’S PRINCIPAL OFFICE. THE COMPANY WILL NOT REGISTER THE TRANSFER OF SUCH SECURITIES ON THE BOOKS OF THE COMPANY UNLESS AND UNTIL THE TRANSFER HAS BEEN MADE IN COMPLIANCE WITH THE TERMS OF SUCH SHAREHOLDERS AGREEMENT.”

 

(b)                                 Each party agrees that the Company may instruct its transfer agent to impose transfer restrictions on the shares represented by certificates bearing the legend referred to in Section 4.8(a) above to enforce the provisions of this Agreement and the Company agrees to promptly do so. The legend shall be removed upon termination of the provisions of this Section 4.

 

4.9                               Restriction on Indirect Transfers.  Notwithstanding anything to the contrary contained herein, without the prior written approval of the holders of a majority of the then outstanding Preferred Shares (including holders of at least 75% of the then outstanding Series E Shares), voting together on an as converted basis (the “Majority Preferred”):

 

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(a)                                 Each of the Founders shall not, and shall cause any other shareholder of each Founder Holdco not to, directly or indirectly, sell, assign, transfer, pledge, hypothecate, mortgage, encumber or otherwise dispose through one or a series of transactions any equity interest held, directly or indirectly, by the Founders or any other shareholder in each Founder Holdco to any person, and each Founder Holdco hereby agrees it will not affect a transfer in violation of the foregoing sentence nor will it treat any alleged transferee as the holder of such shares.

 

(b)                                 Each Founder Holdco shall not, and each Founder shall cause each Founder Holdco not to, issue to any person any equity securities of any Founder Holdco or any options or warrants for, or any other securities exchangeable for or convertible into, such equity securities of any Founder Holdco.

 

(c)                                  Each of the Founders shall not, and shall cause any other person not to, directly or indirectly, sell, assign, transfer, pledge, hypothecate, mortgage, encumber or otherwise dispose through one or a series of transactions any equity interest held or controlled by him in the Domestic Companies (as defined in Schedule A) to any person.  Any transfer in violation of this Section 4.9(c) shall be void and each Domestic Company hereby agrees it will not effect such a transfer nor will it treat any alleged transferee as the holder of such equity interest.

 

(d)                                 The Domestic Companies shall not, and each of the Founders shall cause the Domestic Companies not to, issue to any person any equity securities of the Domestic Companies, or any options or warrants for, or any other securities exchangeable for or convertible into, such equity securities of the Domestic Companies.

 

4.10                        Term.  The provisions under Section 4.1 through Section 4.9 shall terminate upon the earlier to occur of:

 

(a)                                 the closing of an initial public offering of the Company; and

 

(b)                                 a Trade Sale (as defined above).

 

The period from the date hereof to such termination date is defined as the “Restricted Period”.

 

4.11                        Series E Investor’s Consent Right.

 

(a)                                 Notwithstanding anything to the contrary herein and in addition to such restrictions set forth under Section 4.1 through Section 4.9, except for transfers by the Selling Shareholders to Permitted Transferees as provided in Section 4.5 above, without the prior written consent of the holders of at least 75% of the Series E Shares:

 

(i)                                     none of Zou Shenglong and his Permitted Transferee shall, directly or indirectly, sell, assign, transfer, pledge, hypothecate, mortgage, encumber or otherwise dispose of through one or a series of transactions any Restricted Shares held by them to any person during the period commencing from the date hereof to the later of (x) the fifth (5th) anniversary of the date hereof, or (y) the fourth (4th) anniversary of the closing of an initial public offering of the Company; and

 

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(ii)                                  none of the Founders (except for Zou Shenglong), the Partners, and their respective Permitted Transferees shall, directly or indirectly, sell, assign, transfer, pledge, hypothecate, mortgage, encumber or otherwise dispose of through one or a series of transactions any Restricted Shares held by them to any person for the period of four (4) years commencing from the date hereof; and

 

(iii)                               none of the holders of Common Shares which are issued or granted pursuant to the ESOP (but excluding the Partners) and their respective Permitted Transferees shall, directly or indirectly, sell, assign, transfer, pledge, hypothecate, mortgage, encumber or otherwise dispose of through one or a series of transactions any Restricted Shares held by them to any person on or before the earlier of (x) the completion of an initial public offering of the Company, and (y) the fourth (4th) anniversary of the date hereof, except carried out in strict accordance with the ESOP duly adopted by the Company.

 

(b)                                 Any attempt to transfer any Restricted Shares in violation of this Section 4.11 shall be void and the Company hereby agrees it will not effect such a transfer nor will it treat any alleged transferee as the holder of such Restricted Shares without the prior written consent of the holders of at least 75% of the Series E Shares.

 

4.12                        Restrictions on RS Holdco.  Notwithstanding anything to the contrary contained herein, except carried out in strict accordance with the ESOP duly adopted by the Company, without the prior written approval of the Majority Preferred:

 

(a)                                 Each of the Founders shall not, and shall cause any other shareholder of the RS Holdco not to, directly or indirectly, sell, assign, transfer, pledge, hypothecate, mortgage, encumber or otherwise dispose through one or a series of transactions any equity interest held, directly or indirectly, by the Founders or any other shareholder in the RS Holdco to any person, and the RS Holdco hereby agrees it will not effect a transfer in violation of the foregoing sentence nor will it treat any alleged transferee as the holder of such shares.

 

(b)                                 The RS Holdco shall not, and each Founder shall cause the RS Holdco not to, issue to any person any equity securities of the RS Holdco or any options or warrants for, or any other securities exchangeable for or convertible into, such equity securities of the RS Holdco.

 

5.                                      DRAG-ALONG RIGHTS.

 

5.1                               Drag-Along Rights.  Notwithstanding anything herein to the contrary, but subject to Sections 5.2(a) and 5.6, (i) at any time after the third (3rd) anniversary of the date hereof, if the holders of at least a majority of Common Shares held by the Founder Holdcos and the holders of at least 75% of Series E Shares, approve a Transfer of all Shares held by them or approve a proposed Trade Sale, in each case to a bona fide third party purchaser and based on a total equity value of the Company of no less than US$1,300,000,000, or (ii) ninety-seven (97%) or more of all voting power of the Company, voting together as a single class on an as-converted basis, approve a Transfer of all Shares held by them to a purchaser, or approve a proposed Trade Sale without any requirement in terms of a total consideration, then, in any such event, upon written notice from such Drag-Along Shareholders (as defined below) requesting them to do so, each of the other shareholders of the Company (the “Dragged Shareholders”) shall (i) vote, or 

 

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give its written consent with respect to, all Shares held by them in favor of such proposed Drag-Along Sale and in opposition of any proposal that could reasonably be expected to delay or impair the consummation of any such proposed Drag-Along Sale; (ii) transfer all of their Shares in such Drag-Along Sale to such purchaser; (iii) refrain from exercising any dissenters’ rights (including without limitation those set forth in Section 8) or rights of appraisal under applicable law at any time with respect to or in connection with such proposed Drag-Along Sale; and (iv) take all actions reasonably necessary to consummate the proposed Drag-Along Sale, including without limitation amending the then existing Restated Articles. All proceeds derived from a Dragged-Along Sale shall be distributed among the holders of Preferred Shares and holders of Common Shares in accordance with the Restated Articles.  Notwithstanding any provision to the contrary, the share transfer restrictions of Section 4 of this Agreement shall not apply to any transfers made pursuant to this Section 5, provided that there shall be no Drag-Along Sale in the event that the Preferred Holders other than the Drag-Along Shareholders (the “Minority”) shall agree to purchase all Shares proposed to be sold by the Drag-Along Shareholders on the same terms as the proposed Drag-Along Sale within 10 Business Days after receipt by the Minority of the Drag Along Notice (as defined below) (the “Minority Purchase Right”), in which case all proceeds derived from such sale shall be distributed among the holders of Preferred Shares (other than the Minority exercising the Minority Purchase Right) and holders of Common Shares in accordance with the Restated Articles. The Minority Purchase Right shall be exercised by the Minority in the manner set forth in Sections 5.6 and 5.7 below.  For the purpose of this Section 5, as required by the context, (i) the shareholders who have the right to approve a Transfer of Shares or a proposed Trade Sale as set forth above are collectively referred to as the “Drag-Along Shareholders” and such Transfer of all Shares or a proposed Trade Sale each is referred as a “Drag-Along Sale”; and (ii) the purchaser in a Drag-Along Sale shall not be deemed a bona fide third party purchaser if (x) the Series E Investor, individually or in the aggregate, directly or indirectly owns or controls the voting of more than 30% of the total outstanding equity interest in such purchaser, (y) such purchaser directly or indirectly owns or controls the voting of more than 30% of the total outstanding equity interest in any Series E Holder, or (z) there exists a Person that directly or indirectly owns or controls the voting of more than 30% of the total equity interest in both such purchaser and any Series E Holder.

 

5.2                               Representation and Undertaking.

 

(a)                                 Any such sale or disposition by the Dragged Shareholders shall be on the terms and conditions as the proposed Drag-Along Sale by the Drag-Along Shareholders.  Subject to Section 5.3, such Dragged Shareholders shall be required to make customary and usual representations and warranties in connection with the Drag-Along Sale, including, without limitation, those as to their ownership and authority to sell, free of all liens, claims and encumbrances of any kind other than customary permitted liens, the Shares proposed to be transferred or sold by such persons or entities; and such sale or transfer not constituting a violation or breach of or default under (with or without the giving of notice or the lapse of time or both) any law or regulation applicable to such Dragged Shareholders or any material contract to which such Dragged Shareholders is a party or by which they are bound, and shall, severally and not jointly, indemnify and hold harmless the purchasers against all costs, damages, expenses, losses, judgments or liabilities for any breach or alleged breach of any representation or warranty made by such Dragged Shareholders under the terms of the agreements relating to such Drag-Along Sale, which indemnification shall be limited, in the aggregate, to each such Dragged

 

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Shareholder’s pro rata share of the indemnification amount and in no event exceed the amount of consideration actually paid to such Dragged Shareholder in connection with such Drag-Along Sale.

 

(b)           Subject to Section 5.3 hereof, each of the Dragged Shareholders undertakes to obtain all consents, permits, approvals, orders, authorizations or registrations, qualifications, designations, declarations or filings with any governmental authority or any third party (the “Consents”), which are required to be obtained or made in connection with the Drag-Along Sale; provided, that such Consents should be obtained or made without significant expenses. Each of the Drag-Along Shareholders and the Dragged Shareholders further undertakes to pay its pro rata share of costs and expenses arising out of or in connection with the Drag-Along Sale.

 

5.3          Drag-Along Notice. Prior to making any Drag-Along Sale in which the Drag-Along Shareholders wish to exercise their rights under this Section 5, the Drag-Along Shareholders shall provide the Company and the Dragged Shareholders with written notice (the “Drag-Along Notice”) not less than thirty (30) days prior to the proposed date of closing of the Drag-Along Sale (the “Drag-Along Sale Date”). The Drag-Along Notice shall set forth: (a) the name and address of the purchasers; (b) the proposed amount and form of consideration to be paid, and the terms and conditions of payment offered by each of the purchasers; (c) the Drag-Along Sale Date; (d) the number of shares held of record by the Drag-Along Shareholders on the date of the Drag-Along Notice which form the subject to be transferred, sold or otherwise disposed of by the Drag-Along Shareholders; and (e) the number of Shares of the Dragged Shareholders to be included in the Drag-Along Sale, as applicable.  In the event that the Drag-Along Sale Date does not occur within ninety (90) days after the date of the Drag-Along Notice, the shareholders of the Company shall have no obligations to sell their Shares unless they receive a new Drag-Along Notice or otherwise agree with the purchaser(s) in writing.

 

5.4          Transfer Certificate.  In the event that the Drag-Along Sale is structured as sale of Shares, on the Drag-Along Sale Date, each of Drag-Along Shareholders and the Dragged Shareholders shall each deliver or cause to be delivered an instrument of transfer and a certificate or certificates evidencing its Shares to be included in the Drag-Along Sale, duly endorsed for transfer with signatures guaranteed, to such third party purchasers in the manner and at the address  indicated in the Drag-Along Notice.

 

5.5          Payment. In the event that the Drag-Along Sale is structured as sale of Shares, the consideration per share to be paid to the Dragged Shareholders and the Drag-Along Shareholders pursuant to the proposed Drag-Along Sale shall be determined with reference to Article 65(2) of the Restated Articles.  If the Drag-Along Shareholders or the Dragged Shareholders receive the purchase price for their Shares or such purchase price is made available to them as part of a Drag-Along Sale and, in either case they fail to deliver the relevant signed instruments of transfer and the certificates evidencing their Shares as described in this Section 5, they shall for all purposes be deemed to have agreed to a transfer of their Shares to the purchaser (and the register of members of the Company shall be updated to reflect such status), shall have no voting rights, shall not be entitled to any dividends or other distributions with respect to any Shares held by them, shall have no other rights or privileges as a shareholder of the Company and, in the event of liquidation of the Company, their rights with respect to any consideration they would have 

 

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received if they had complied with this Section 5, if any, shall be subordinate to the rights of any equity holder.  In addition, the Company shall stop any subsequent transfer of any such shares held by such shareholders.

 

5.6          Minority Purchase Right. The Minority shall deliver a written notice (the “Minority Notice”) to the Drag-Along Shareholders and the Company within 10 Business Days after receipt by the Minority of the Drag Along Notice stating that the Minority intend to purchase such number of Common Shares or Conversion Shares held by the Drag-Along Shareholders on the same terms as proposed by the prospective purchaser in the Drag-Along Sale, including, the purchase price and terms of payment associated with such sale and the proposed closing date of such sale.

 

5.7          Closing of Minority Purchase.  At the closing of the transaction to be entered into pursuant to the Minority Purchase Right, the Minority shall remit to each of the Drag-Along Shareholders the same per share consideration (the cash portion of which shall be paid by delivery of a certified check or wire transfer of immediately available funds to an account designated by each Drag-Along Shareholder) for each Share purchased by the Minority pursuant to the Minority Purchase Right against delivery by each of the Drag-Along Shareholders of certificates for all Shares to be sold by the Drag-Along Shareholders, duly endorsed or with duly executed stock powers.

 

5.8          Term. The provisions under this Section 5 shall terminate upon the earlier to occur of:

 

(a)           the closing of an initial public offering of the Company; and

 

(b)           a Trade Sale (as defined above).

 

6.                                      ASSIGNMENT AND AMENDMENT.

 

6.1          Assignment. Notwithstanding anything herein to the contrary:

 

(a)           Information and Inspection Rights; Registration Rights. The rights of the Investors under Section 1.1 may be assigned to any holder of Preferred Shares, and the registration rights of  the Holders under Section 2 may be assigned to any Holder or to any person acquiring Registrable Securities in a permitted transfer provided that no party may assign any of such registration rights to any entity that is organized or domiciled in the PRC; and provided further, that in either case no party may be assigned any of the foregoing rights unless the Company is given written notice by the assigning party stating the name and address of the assignee and identifying the securities of the Company as to which the rights in question are being assigned; and provided, further, that any such assignee shall receive such assigned rights subject to all the terms and conditions of this Agreement, including without limitation the provisions of this Section 6.

 

(b)           Rights of First Offer; Right of First Refusal; Co-Sale Rights; Drag-Along Rights. The rights of each Investor or each holder of Preferred Shares under Sections 3, 4 and 5 are fully assignable in connection with a permitted transfer of Shares of the Company by such Investor or such holder of Preferred Shares, as the case may be; provided, however, that no party may be 

 

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assigned any of the foregoing rights unless the Company is given written notice by such assigning party at the time of such assignment, stating the name and address of the assignee and identifying the securities of the Company as to which the rights in question are being assigned; and provided, further, that any such assignee shall receive such assigned rights subject to all the terms and conditions of this Agreement, including without limitation the provisions of this Section 6.

 

6.2          Amendment of Rights. Any term of this Agreement may be amended only with the written consent of the Company, the holders of a majority of the Preferred Shares, provided, however, that any amendments to any rights of the Founders, other holders of Common Shares, the holders of Series A-1 Shares, the holders of Series B Shares, the holders of Series C Shares, the holders of Series D Shares, or the holders of Series E Shares, as the case may be, shall require the prior written approval of the Founders, the holders of at least a majority of then outstanding Common Shares, the holders of a majority of then outstanding Series A-1 Shares, the holders of a majority of then outstanding Series B Shares, the holders of a majority of then outstanding Series C Shares, the holders of a majority of then outstanding Series D Shares, or the holders of at least 75% of then outstanding Series E Shares, as the case may be, each voting together as a separate class; provided, further, that any parties hereto may waive any of its rights hereunder without obtaining the consent of any other party. Any amendment or waiver effected in accordance with this Section 6.2 shall be binding upon the parties hereto and their respective assigns.

 

7.                                      CONFIDENTIALITY, NON-DISCLOSURE AND NON-COMPETE.

 

7.1          Disclosure of Terms. The terms and conditions of this Agreement, the Series A Subscription Agreement, the Series B Subscription Agreement, the Series C Subscription Agreement, the Series D Share Purchase Agreement, the Share Purchase Agreement and all exhibits and schedules attached to such agreements, including their existence, and the record and beneficial ownership of the Series C Investors (collectively, the “Financing Terms”) shall be considered confidential information and shall not be disclosed by any party hereto to any third party except in accordance with the provisions set forth below; provided that such confidential information shall not include any information that is in the public domain other than caused by the breach of the confidentiality obligations hereunder.

 

7.2          Press Releases. Any press release issued by the Company shall not disclose any of the Financing Terms and the final form of such press release shall be approved in advance in  writing by all of the Investors, which approval shall not be unreasonably withheld. No other announcement regarding any of the Financing Terms in a press release, conference, advertisement, announcement, professional or trade publication, mass marketing materials or otherwise to the general public may be made without the Investors’ prior written consent.

 

7.3          Permitted Disclosures. Notwithstanding the foregoing, any party may disclose any of the Financing Terms or confidential information obtained from the Company to its current or bona fide prospective investors, employees, investment bankers, lenders, partners, accountants and attorneys on a need-to-know basis, in each case only where such persons or entities are under appropriate nondisclosure obligations (the “Permitted Disclosures”). Without limiting the generality of the foregoing, the Investors and any Group Company’s directors designated by the 

 

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holders of Preferred Shares shall be entitled to disclose the Financing Terms and other information related to the Company or any Subsidiary for the purposes of fund reporting or inter-fund reporting or to their fund manager, other funds managed by their fund manager and their respective auditors, counsel, directors, officers, employees, shareholders or investors, or as required by law, government authorities, exchanges and/or regulatory bodies, including the SEC (or the equivalent in other jurisdictions).

 

7.4          Legally Compelled Disclosure. In the event that any party is requested or becomes legally compelled (including without limitation, pursuant to securities laws and regulations) to disclose the existence of this Agreement, the Series A Subscription Agreement, the Series B Subscription Agreement, the Series C Subscription Agreement, the Series D Share Purchase Agreement, the Share Purchase Agreement and any of the exhibits and schedules attached to such agreements, or any of the Financing Terms hereof in contravention of the provisions of this Section 7, such party (the “Disclosing Party”) shall provide the other parties (the “Non-Disclosing Parties”) with prompt written notice of that fact and use all reasonable efforts to seek (with the cooperation and reasonable efforts of the other parties) a protective order, confidential treatment or other appropriate remedy. In such event, the Disclosing Party shall furnish only that portion of the information which is legally required to be disclosed and shall exercise reasonable efforts to keep confidential such information to the extent reasonably requested by any Non-Disclosing Party.

 

7.5          Company Confidential Information. Each of the Investors agrees that it will keep confidential and will not disclose, divulge or use for any purpose, other than (i) to monitor its investment in the Company and (ii), with respect to the Series E Investor, subject to any confidentiality obligation as provided in the business cooperation agreement executed or to be executed by the Series E Investor or its Affiliate and the applicable Group Company, to conduct any business cooperation with the Group Companies under such agreement, any confidential information obtained from any Group Company pursuant to Section 1 of this Agreement, unless such confidential information (i) is known or becomes known to the public in general (other than as a result of a breach of this Section 7), (ii) is or has been independently developed or conceived by such Investor without use of any Group Company’s confidential information or (iii) is or has been made known or disclosed to such Investor by a third party without a breach of any obligation of confidentiality such third party may have to the Company or any other Group Company; provided, however, that such Investor may disclose confidential information (a) pursuant to Permitted Disclosures as defined in Section 7.5, or (b) to any associate, partner, member, shareholder or wholly owned subsidiary of such Investor in the ordinary course of business, or (c)  as may otherwise be required by law, provided that such Investor has taken reasonable steps to minimize the extent of any such required disclosure.

 

7.6          Investors’ Non-Compete.  If any Investor (other than the Series E Investor) or any of its Affiliates becomes a Competitor (as such term is applicable to such Investor or Affiliates), (A) the right of such Investor to appoint its Director or observer of the Company or any Subsidiary pursuant to Section 1.3(b)(ii), Section 1.3(b)(iii) or Section 1.3(b)(v) of this Agreement shall terminate, as the case may be, (B) the Board of Directors of the Company is entitled to remove the Director or observer so appointed by such Investor in accordance with the terms of this Agreement and the Restated Articles, (C) except as required by law and subject to 

 

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Section 1.1(a), the right of such Investor to any other non-public information of any Group Company shall terminate.

 

7.7          Founders’ Non-Compete.  Each Founder hereby covenants and undertakes that he shall devote substantially one hundred percent (100%) of his working time and attention to the business of the Group Companies, and use his best efforts to develop the business and care for the interests of the Group Companies.  Each Founder hereby further covenants and undertakes that, during the period when he holds any direct or indirect equity interest in any Group Company and for a further period of twenty four (24) months thereafter, without the prior written consent of the holders of at least 75% of Series E Shares and a majority of the Series D Holders, he shall not, and shall ensure that the companies that such Founder directly or indirectly controls or holds at least three percent (3%) equity interests in (other than the Company and its direct and indirect subsidiaries) do not, directly or indirectly, (i) compete with the business of any Group Company, (ii) induce or attempt to induce any client, customer, supplier, licensee or other business relation of any Group Company to do business with it (other than for the sole benefit of the Group Companies) or to reduce or cease doing business with any Group Company (such business includes providing downloading or online video services, or downloading, online video and storage services provided through cloud technology, or online games, but excludes content resale), or in any way interfere with the relationship between any such client, customer, supplier, licensee or business relation, on the one hand, and any Group Company, on the other hand or (iii) induce or attempt to induce any employee, salesperson or representative of any Group Company to leave the employment of any Group Company, or in any way interfere with the relationship between any Group Company, on the one hand, and any employee, salesperson or representative thereof, on the other hand, unless, in each case of (i), (ii) and (iii), the approval of at least six (6) affirmative votes of the Board, including the affirmative vote of one (1) Series E Director and at least three (3) affirmative votes of any of the Series D Director, the Series A-1 Director or the Series A Director, has been obtained by such Founder, provided that, affirmative votes by Directors appointed by such Founder shall not be counted towards the number of affirmative votes of the Board so required.

 

7.8          Other Information. The provisions of this Section 7 shall be in addition to, and not in substitution for, the provisions of any separate nondisclosure agreement executed by any of the parties with respect to the transactions contemplated hereby

 

7.9          Notices. All notices required under this Section 7 shall be made pursuant to Section 11 of this Agreement.

 

8.             PROTECTIVE PROVISIONS.

 

8.1          Acts Requiring Majority Approval of Series E Shares.  In addition to such other limitations as may be provided under applicable laws and in the Restated Articles, so long as the Series E Holders continue to hold at least ten percent (10%) of the Company’s total Shares on an as converted basis, none of the following actions shall be carried out by the Company or any Group Company, except with the prior written consent of the holders of at least 75% of the then outstanding Series E Shares, voting together as a single class, whether by amendment, merger, amalgamation, consolidation, scheme of arrangement or otherwise (for the purposes of this 

 

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Section 8, the term “Company” means, unless where wholly inapplicable, the Company and the Subsidiaries):

 

(a)           any amendment or change of the rights, preferences, privileges or powers of, or the restrictions provided for the benefit of the Series E Shares;

 

(b)           any action that authorizes, creates or issues any class of the Company securities including without limitation those having rights, preferences or privileges superior to or on a parity with any Series E Shares;

 

(c)           any action that increases or decreases the authorized number of the Series E Shares or any increase or decrease in the authorized share capital of the Series E Shares;

 

(d)           any action that reclassifies any outstanding shares into shares having preferences or priority as to dividends or assets senior to or on a parity with the preference of the Series E Shares;

 

(e)           any increase, decrease or change of the share capital of the Company, except for purpose of the implementation of the ESOP;

 

(f)            cease to conduct or carry on the principal business of any Group Company substantially as currently conducted;

 

(g)           sell, lease or dispose of all or a substantial part of the undertaking, goodwill or assets of any Group Company;

 

(h)           increase, reduce or cancel the authorized or issued share capital of any Group Company or issue, allot, purchase or redeem any shares or securities convertible into or carrying a right of subscription in respect of shares or any share warrants or grant or issue any options rights or warrants or which may require the issue of shares in the future or do any act which has the effect of diluting or reducing the effective shareholding of the Series E Investor in the Company, except for purpose of the implementation of the ESOP;

 

(i)            settle, adopt or alter the terms of any profit sharing scheme or any employee share option or share participation schemes (including the ESOP);

 

(j)            amend the accounting policies currently adopted by the Company or change the fiscal year of the Company;

 

(k)           appoint or change the auditors of any Group Company;

 

(l)            borrow any money or obtain any financial facilities except pursuant to trade facilities obtained from banks or other financial institutions in the ordinary course of business;

 

(m)          create, allow to arise or issue any debenture constituting a pledge, lien or charge (whether by way of fixed or floating charge, mortgage encumbrance or other security) on all or any of the undertaking, assets or rights of the Company and/or any Subsidiary except for the purpose of securing borrowings from banks or other financial institutions in the ordinary course 

 

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of business not exceeding RMB500,000 (or its equivalent in other currency or currencies) in a single transaction or not exceeding RMB2,000,000 in the aggregate in any financial year;

 

(n)           sell, transfer, license, charge, encumber or otherwise dispose of any trademarks, patents or other intellectual property owned by any Group Company that are material or critical to the business of the Group Companies;

 

(o)           pass any resolution for the winding up of any Group Company or undertake any merger, reconstruction or liquidation exercise concerning any Group Company except for those that are solely in connection with restructuring for tax purposes which would not have adverse impact on the condition of the Group Companies (business, financial or otherwise) and the benefits and interests of the Series E Investor;

 

(p)           approve or make adjustments or modifications to terms of any transaction or series of transactions between any Group Company on one hand and any of its shareholder, director, senior manager at the VP (or the higher) level or any of their affiliates or any shareholder, director, senior manager at the VP (or the higher) level of such affiliates on the other hand, including but not limited to the making of any loans or advances, whether directly or indirectly, or the provision of any guarantee, indemnity or security for or in connection with any indebtedness of liabilities of any director or shareholder of the Company/and/or its subsidiaries;

 

(q)           dispose of or dilute the Company’s equity interests, directly or indirectly, in any other Group Company;

 

(r)            any material change to the five-year business plan and forecast of the Company provided to the Series E Investor prior to the date hereof as attached hereto as Exhibit I, and any material change to the budget of the Company provided to the Series E Investor; and any transaction outside or in divergence of such business plan, forecast or budget;

 

(s)            initiate or settle any material suit, arbitration or similar proceeding in relation to any Group Company;

 

(t)            any increase of compensation by more than 20% for any of the five most-highly paid employees of the Company; or

 

(u)           any activity out of the ordinary course of business of any Group Company.

 

8.2          Acts Requiring Majority Approval of Series D Shares.  In addition to such other limitations as may be provided under applicable laws and in the Restated Articles, so long as the Series D Threshold (as defined in Section 1.3(b)(ii) above) is met, none of the following actions shall be carried out by the Company or any Group Company, except with the prior written consent  of the holders of at least a majority (51%) of the then outstanding Series D Shares, voting together as a single class, whether by amendment, merger, amalgamation, consolidation, scheme of arrangement or otherwise:

 

(a)           any amendment or change of the rights, preferences, privileges or powers of, or the restrictions provided for the benefit of the Series D Shares;

 

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(b)           any action that authorizes, creates or issues any class of the Company securities having rights, preferences or privileges superior to or on a parity with any Series D Shares or any other securities of the Company;

 

(c)           any action that increases or decreases the authorized number of the Series D Shares or any increase or decrease in the authorized share capital of the Series D Shares;

 

(d)           any action that reclassifies any outstanding shares into shares having preferences or priority as to dividends or assets senior to or on a parity with the preference of any of the Series D Shares; and

 

(e)           the appointment of an accounting firm not one of the “Big 4” accounting firms to be the auditor of any Group Company;

 

provided that none of the Company or any Group Company shall carry out any of the following without the prior consent of the holders of at least a majority (51%) of the outstanding Series D Shares, voting together as a single class:

 

(i)             an initial public offering of any Group Company, unless the offering is a Qualified IPO; and

 

(ii)            any (w) sale, lease, transfer or other disposition of all or substantially all of the assets of the Company; (x) transfer or an exclusive licensing of all or substantially all of the intellectual property of the Company; (y) sale, transfer or other disposition of a majority of the issued and outstanding share capital of the Company or a majority of the voting power of the Company; or (z) merger, consolidation or other business combination of the Company with or into any other business entity in which the shareholders of the Company immediately after such merger, consolidation or business combination hold shares representing less than a majority of the voting power of the outstanding share capital of the surviving business entity, in each case, with a total consideration value (“Trade Sale Consideration Value”) of less than US$1,300,000,000, provided that if the counterparty in any transaction under (i) or (ii) above has assumed less than all of the liabilities of the Company, then the value of the remaining liabilities of the Company shall be subtracted from the total consideration value of such transaction for purposes of determining whether the Trade Sale Consideration Value of such transaction is less than US$1,300,000,000 pursuant to this Section 8.2.

 

8.3          Acts Requiring Majority Approval of Series C Shares. In addition to such other limitations as may be provided under applicable laws and in the Restated Articles, for as long as the Series C Holders continue to hold at least ten percent (10%) of the Company’s total Shares on an as converted basis, none of the following actions shall be carried out by the Company or any Group Company, except with the prior written consent of the holders of at least a majority (51%)  of the then outstanding Series C Shares, voting together as a single class, whether by amendment, merger, amalgamation, consolidation, scheme of arrangement or otherwise:

 

(a)           any amendment or change of the rights, preferences, privileges or powers of, or the restrictions provided for the benefit of, the Series C Shares;

 

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(b)           any action that authorizes, creates or issues any class of the Company securities having rights, preferences or privileges superior to or on a parity with any Series C Shares or any other securities of the Company;

 

(c)           any action that increases or decreases the authorized number of the Series C Shares or any increase or decrease in the authorized share capital of the Series C Shares; and

 

(d)           any action that reclassifies any outstanding shares into shares having preferences or priority as to dividends or assets senior to or on a parity with the preference of any of the Series C Shares.

 

8.4          Acts Requiring Majority Approval of Series B Shares. In addition to such other limitations as may be provided under applicable laws and in the Restated Articles, for as long as the Series B Holders continue to hold at least ten percent (10%) of the Company’s total Shares on an as converted basis, the following acts of the Company shall require the prior written approval of the holder(s) of at least a majority (51%) of the outstanding Series B Shares, voting together as a single class:

 

(a)           any amendment or change of the rights, preferences, privileges or powers of, or the restrictions provided for the benefit of, Series B Shares;

 

(b)           any action that authorizes, creates or issues any class of the Company securities having rights, preferences or privileges superior to or on a parity with any class of Series B Shares or any other securities of the Company;

 

(c)           any action that increases the authorized number of the Series B Shares, or any increase or decrease in the authorized share capital of the Company;

 

(d)           any consolidation or merger with or into any other business entity or the sale, lease, transfer or other disposition of all or substantially all the assets of the Company or the license out of all or substantially all of the Company’s intellectual property rights, in each case in transactions with a total consideration value less than US$100,000,000; and

 

(e)           any action that reclassifies any outstanding shares into shares having preferences or priority as to dividends or assets senior to or on a parity with the preference of any of the Series B Shares.

 

8.5          Acts Requiring Majority Approval of Series A-1 Shares. In addition to such other limitations as may be provided under applicable laws and in the Restated Articles, for as long as the Series A-1 Holders continue to hold at least ten percent (10%) of the Company’s total Shares on an as converted basis, the following acts of the Company shall require the prior written approval of the holder(s) of at least a majority (51%) of the outstanding Series A-1 Shares, voting together as a  single class, which consent shall not be unreasonably withheld, provided however that in no event shall the dividend, voting, liquidation and conversion rights of the Series A-1 Shares as set forth in the Restated Articles be altered without the prior written approval of the holders of a majority of the Series A-1 Shares:

 

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(a)           any amendment or change of the rights, preferences, privileges or powers of, or the restrictions provided for the benefit of, Series A-1 Shares;

 

(b)           any action that authorizes, creates or issues any class of the Company securities having rights, preferences or privileges superior to or on a parity with any class of Series A-1 Shares or any other securities of the Company;

 

(c)           any action that increases the authorized number of the Series A-1 Shares, or any increase or decrease in the authorized share capital of the Company;

 

(d)           any consolidation or merger with or into any other business entity or the sale, lease, transfer or other disposition of all or substantially all the assets of the Company or the license out of all or substantially all of the Company’s intellectual property rights, in each case in transactions with a total consideration value less than US$100,000,000; and

 

(e)           any action that reclassifies any outstanding shares into shares having preferences or priority as to dividends or assets senior to or on a parity with the preference of any of the Series A-1 Shares.

 

8.6          Acts Requiring Requisite Consent of Series E, Series D, Series B and Series A-1 Shares.  In addition to such other limitations as may be provided under applicable laws and in the Restated Articles, for as long as each of the Series B Holders and the Series A-1 Holders continue to hold at least ten percent (10%) of the Company’s total Shares on an as converted basis, the following acts of the Company shall require the prior written approval of both the holder(s) of at least a majority (51%) of the outstanding Series B Shares, and the holder(s) of at least a majority (51%) of the outstanding Series A-1 Shares, each voting separately as a single class. (If either the Series B Holders or the Series A-1 Holders do not hold at least ten percent (10%) of the Company’s total Shares, such acts will only require the requisite consent of the class of Series B or Series A-1 holders, as the case may be, which continue to hold such 10% of the total Shares on an as converted basis.) In addition, for as long as the Series D Holders continue to meet the Series D Threshold, the following acts of the Company shall require the prior written approval of the holder(s) of at least a majority (51%) of the outstanding Series D Shares. In addition, for as long as the Series E Holders continue to hold at least ten percent (10%) of the Company’s total Shares on an as converted basis, the following acts of the Company shall require the prior written approval of the holder(s) of at least 75% of the outstanding Series E Shares:

 

(a)           any action that repurchases, redeems or retires any of the Company’s voting securities other than pursuant to any redemption rights provided in the Restated Articles, or contractual rights to repurchase Common Shares from employees, directors or consultants of the Company or its subsidiaries at the lower of (i) the original purchase price paid by such employees, directors or consultants for such Common Shares or (ii) the fair market value of such Common Shares, which shall be a price set by the Board upon termination of their employment or services or  pursuant to the terms of the ESOP or pursuant to the exercise of a contractual right of first refusal held by the Company, or the Company’s Transfer, repurchase and cancellation of the Treasury Shares;

 

(b)           any amendment of the Restated Articles or other constitutional documents;

 

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(c)                                  the dissolution, liquidation or winding up, the initiation of bankruptcy proceedings, or application for appointment of a receiver, judicial manager or the like;

 

(d)                                 the declaration or payment of any dividend on any Shares of any Group Company or the decision not to declare the distributable profits of any Group Company as dividends;

 

(e)                                  any change in the number of directors of the Company; and

 

(f)                                   any initial public offering or public offering of any debt or equity securities of any Group Company, unless the offering is a Qualified IPO or is otherwise approved by at least five (5) members of the Board, including one (1) Series E Director and the Series D Director.

 

8.7                               Acts Requiring Super-majority Approval of the Board. In addition to such other limitations as may be provided under applicable laws and in the Restated Articles and subject to Section 8.1, any of the following acts of the Company shall require at least five (5) affirmative votes of the Board, including the affirmative vote of at least three (3) affirmative votes of any of the Series E Directors, the Series D Director, the Series A-1 Director or the Series A Director:

 

(a)                                 extension of any loan or advance to, or ownership of any stock or other securities of, any subsidiary or other corporation, partnership, or other entity in excess of US$800,000 unless such entity is wholly owned by a Group Company or such loan is used to increase the registered capital of a Group Company;

 

(b)                                 extension of any loan or advance to any person, including, without limitation, any employee or director of the Company, except such temporary advances and similar expenditures below US$50,000 as are incurred in the ordinary course of business or under the terms of the ESOP;

 

(c)                                  directly or indirectly guarantee any indebtedness for any person other than affiliates of the Company, and except for trade accounts of any of the Group Companies arising in the ordinary course of business;

 

(d)                                 incurrence of any indebtedness in excess of US$2,000,000 individually or in the aggregate in a series of related transactions during any fiscal year that is not included in the budget approved by the Board, other than trade credit or working capital loans incurred in the ordinary course of business;

 

(e)                                  the repayment, termination or cancellation of any indebtedness from proceeds to the Company of the sale of Series B Shares pursuant to the Series B Subscription Agreement;

 

(f)                                   any transaction or series of transactions between the Company and any shareholder, director, officer or employee of the Company or their Affiliates;

 

(g)                                  any incurrence of any security interest (other than equipment leases or bank line of credit), lien or other encumbrance on any assets of the Company;

 

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(h)                                 any material change in the Company’s business plan, change of the principal business of the Company, entry into new lines of business, or exit of the current line of business of any Group Company;

 

(i)                                     the approval or amendment of the Company’s annual budget;

 

(j)                                    the appointment or removal of the auditors of any Group Company and the determination of their fees, remuneration or other compensation;

 

(k)                                 any initial public offering or public offering of any debt or equity securities of any Group Company;

 

(l)                                     determination of the compensation of the Founders, the CEO and the CFO of the Company, provided that, with respect to the determination of the compensation of a Founder, affirmative votes by Directors appointed by such Founder shall not be counted towards the number of affirmative votes of the Board required for such action;

 

(m)                             appointment and removal of the CFO of the Company;

 

(n)                                 the acquisition or leasing of any real estate by the Company, other than commercial office, manufacturing or warehouse space used in the ordinary course of business;

 

(o)                                 any action that repurchases, redeems or retires any of the Company’s voting securities other than pursuant to any redemption rights provided in the Restated Articles or contractual rights to repurchase Common Shares from employees, directors or consultants of the Company or its subsidiaries at the lower of (i) the original purchase price paid by such employees, directors or consultants for such Common Shares or (ii) the fair market value of such Common Shares, which shall be a price set by the Board upon termination of their employment or services or pursuant to the terms of the ESOP or pursuant to the exercise of a contractual right of first refusal held by the Company, or the Company’s Transfer, repurchase and cancellation of the Treasury Shares;

 

(p)                                 sale, transfer, license, pledge of or creation of encumbrance over technology or intellectual property of the Company, other than licenses granted in the ordinary course of business; and

 

(q)                                 consolidation or merger with or into any other business entity or the sale, lease, transfer or other disposition of all or substantially all the assets of the Company or the license out of all or substantially all of the Company’s intellectual property rights.

 

8.8                               Approval of M&A Matters. In addition to such other limitations as may be provided under applicable laws and in the Restated Articles and subject to Section 8.1, any merger or acquisition transaction of the Company with a total consideration value of more than US$10,000,000 shall require at least six (6) affirmative votes of the Board, including at least three  (3) affirmative votes of any of the Series E Directors, the Series D Director, the Series A-1 Director or the Series A Director.

 

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8.9                               Acts Requiring Special Approval of the Board. In addition to such other limitations as may be provided under applicable laws and in the Restated Articles and subject to Section 8.1, any of the following acts of the Company shall require at least five (5) affirmative votes of the Board, provided that any Director with a conflict of interest shall be required to abstain from voting in any Board decisions relating to the actions in which such Director has a conflict of interest:

 

(a)                                 any investment or incurrence of any commitment to invest in excess of US$5,000,000 at any time in respect of any single transaction or in excess of US$20,000,000 at any time through a series of related transactions in any fiscal year of any Group Company, other than investments in prime commercial paper, money market funds, certificates of deposit in any international bank having a net worth in excess of US$100,000,000 or obligations issued or guaranteed by the United States or other sovereign government, in each case having a maturity not exceeding two (2) years (if any such investments are proposed to be made in any person or entity in which any of the Investors is a shareholder, the Director appointed by such Investor shall be deemed to have a conflict of interest for purposes of this Section 8.9(a) and shall abstain from voting in any Board discussion or action regarding such investments);

 

(b)                                 the adoption or amendment of the ESOP or any other employee equity incentive plans (if any such proposed adoption or amendment of the ESOP or employee equity incentive plans would affect the equity ownership of a Founder in the Group Companies or otherwise relates to a Founder, such Founder Directors shall be deemed to have a conflict of interest for purposes of this Section 8.9(b) and shall abstain from voting in any Board discussion or action regarding actions described in this Section 8.9(b);

 

(c)                                  appointment and removal of the CEO of the Company (Zou Shenglong shall not be deemed to have a conflict of interest for purposes of this Section 8.9(c) and shall be entitled to vote in any Board discussion or action regarding such appointment or removal); and

 

(d)                                 the establishment of any other brands for companies other than current brands of the Group Companies.

 

8.10                        Senior Management Appointment. The Investors and the Company agree that the power to appoint, remove, dismiss and/or terminate the employment of the Chief Executive Officer (“CEO”) and the Chief Financial Officer of each Group Company shall vest with the Board, requiring consent of five (5) directors, including one Series E Director, the Series D Director and at least two of the Founder Directors.  The CEO so appointed by the Board shall have power to appoint, remove, dismiss and/or terminate the employment of the Managing Director, Chief Operating Officer, Chief Technical Officer and Vice Presidents, or their equivalents (all such officers, the “Senior Management Personnel”) and other officers and other employees of any Group Company, other than the Chief Financial Officer (who shall be appointed, removed and/or terminated by the Board), and provided, however, that the remuneration of such Senior Management Personnel shall be subject to the approval of the Board.

 

8.11                        Termination of Rights. The rights set forth in this Section 8 shall terminate upon the earlier of:

 

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(i)                                      closing of an initial public offering of the Company; or

 

(ii)                                   a Liquidation Event or Deemed Liquidation Event, as such terms are defined in the Restated Articles.

 

9.                                      EMPLOYEE OPTIONS.

 

9.1                               The Board shall have power to grant incentive awards, including options, restricted shares, restricted share units and any other types of incentive awards (such awards, the “2010 Options”) to full-time employees, directors (other than the Founder Directors and the Founders), officers and consultants of any Group Company in accordance with 2010 ESOP; provided that:

 

(a)                                 the total number of Shares issued pursuant to such 2010 Options and the total number of Shares for the time being subject to such 2010 Options pursuant to the 2010 ESOP shall not in aggregate exceed 26,822,828 Shares (as proportionally adjusted for any combination, consolidation, sub-division or split up of any Common Shares or any new issue of Preferred Shares).

 

(b)                                 each such grant under the 2010 ESOP shall be on such terms (including as to conditions of vesting and exercise and exercise price) as shall be approved by the Board, but in any event the Board shall not allow any option to be exercised prior to an initial public offering or Trade Sale. Subject to these restrictions, 2010 Options shall vest over not less than a four-year period with the first 25% of such shares vesting after twelve (12) months of continued employment or services, and the remaining shares vesting in equal monthly installments over the following thirty-six (36) months. Each of the parties hereto (with the exception of the Company) hereby waives any right of pre-emption which it may have or acquire in respect of any grant of employee share 2010 Options or issue of Shares on exercise pursuant to such option scheme up to the maximum number of Shares;

 

(c)                                  all 2010 Options granted under the 2010 ESOP vested but not exercised by the holder thereof shall lapse automatically at the expiration of one (1) month after the date of termination of employment, directorship or service, as the case may be, with the Group Companies (the Group Companies may however make other reasonable arrangements with the service providers who provide services to the Group on an assignment, case-by-case or job basis and are not officers or employees of the Company or subject to any contract of continuous services); and

 

(d)                                 the Company shall retain a “right of first refusal” on transfers by any employee of Shares issued upon exercise of 2010 Options until an initial public offering or Trade Sale and the right to repurchase any such Shares obtained through exercise of 2010 Options held by the employees, directors and consultants granted under this Section 9.1, at a fair price as determined by the auditors of the Company upon termination of employment, directorship or service prior to an initial public offering or Trade Sale.

 

9.2                               The Board shall have power to grant restricted shares to the senior management, counsels or consultant of the Company in accordance with the 2013 RS Plan, pursuant to which the total number of Shares issued pursuant to such plan and the total number of Shares for the

 

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time being subject to such plan shall not in aggregate exceed 9,073,732 Shares (as proportionally adjusted for any combination, consolidation, sub-division or split up of any Common Shares or any new issue of Preferred Shares).

 

10.                               ADDITIONAL AGREEMENTS.

 

10.1                        Qualified IPO.  No later than February 6, 2017, the Company shall use its best efforts to complete a Qualified IPO. A “Qualified IPO” shall mean a firm commitment underwritten initial public offering by the Company of its Common Shares on the NASDAQ Global Market, the New York Stock Exchange, Hong Kong Stock Exchange (main board), Shenzhen Stock Exchange or Shanghai Stock Exchange.

 

10.2                        Redemption Right.

 

(a)                                 If a Qualified IPO has not occurred by February 28, 2017, the Series D Holders shall have the right (the “Series D Redemption Right”), at any time after February 28, 2017 but not later than February 28, 2018, to request the Company to purchase all Shares then held by the Series D Holders (the “Series D Redemption”), at a per share price which shall be equal to the aggregate amount of (x) the price paid per such Share pursuant to the Series D Share Purchase Agreement (as appropriately adjusted for any share split, share division, share combination, share dividend or similar events), plus (y) all declared but unpaid dividends and distributions on each such Share calculated up to and including the date of redemption plus interest of eight (8) percent per annum compounded annually from the date of the actual purchase of the Shares by the Series D Holders up to and including the date of redemption (the “Series D Redemption Price”).

 

(b)                                 At any time after March 1, 2018 but not later than March 1, 2019, the Series E Holders shall have the right (the “Series E Redemption Right”) to request the Company to purchase all or any portion of the Series E Shares then held by the demanding Series E Holders (the “Series E Redemption”), at a per share price which shall be equal to the aggregate amount of (x) the Original Issue Price (as defined in the Restated Articles) applicable to each Series E Share (as appropriately adjusted for any share split, share division, share combination, share dividend or similar events), plus (y) interest on the Original Issue Price applicable to each Series E Share at a rate of fifteen percent (15%) per annum, compounded annually, from the actual issuance date of such Series E Share up to and including the date of redemption, plus (z) all declared but unpaid dividends and distributions on such Series E Share (the “Series E Redemption Price”).

 

(c)                                  Redemption Priority.  In the event that any Series D Holder has elected to exercise its Series D Redemption Right pursuant to Section 10.2(a) and, prior to the payment by the Company of the aggregate Series D Redemption Price in full, any Series E Holder has elected to exercise its Series E Redemption Right pursuant to Section 10.2(b), (i) the Company shall first redeem all of the Shares requested by such Series D Holder to be redeemed and pay to such Series D Holder the full amount of the aggregate Series D Redemption Price, and (ii) the Company may not redeem, and no Series E Holder may cause the Company to redeem, any Series E Shares unless and until payment has been made in full in respect of the aggregate Series D Redemption Price.

 

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10.3                        Additional Series E Investors.  All parties hereto agree to extend the benefits of this Agreement to any Person who, in addition to the Series E Investor, also acquires Series E Shares in the transactions contemplated by the Share Purchase Agreement and has delivered a deed of accession to the Company whereby such Person undertakes to be bound by the provisions of this Agreement.  From and after the date such deed of accession is delivered, such Person shall be deemed a Series E Investor and a party to this Agreement for all purposes of this Agreement.

 

10.4                        Anti-Dilution Adjustment.

 

(a)                                 All parties hereto acknowledge that (i) the anti-dilution right of the Series C Investors (the “Series C Anti-dilution Right”) pursuant to Article 66(3)(a)(iv) of the Third Amended and Restated Articles of Association of the Company, adopted as of April 14, 2011, was triggered as a result of the Company’s issuance of Series D Shares to the Series D Investor pursuant to the Series D Share Purchase Agreement, and (ii) the then effective Series C Conversion Price was adjusted by the Company to be US$4.14 as per Article 66(3)(a)(iv) of the Third Amended and Restated Articles of Association of the Company, in lieu of issuance of additional Shares to the Series C Investors, to fully satisfy the Series C Anti-dilution Right of the Series C Investors.  Each Series C Investor hereby acknowledges and confirms that its Series C Anti-dilution Right has been fully and sufficiently compensated by the Company’s such adjustment of the then effective Series C Conversion Price, and it will not further request to exercise any Series C Anti-dilution Right in connection with the issuance of the Series D Shares.

 

(b)                                 All parties hereto acknowledge that (i) the anti-dilution right of Series C Shares held by CRP Holding Limited (“CRP Holding”) and Series D Shares (the “Series C/D Anti-dilution Right”) pursuant to Article 66(3)(a)(iv) of the Fourth Amended and Restated Articles of Association of the Company, dated February 6, 2012 and amended on January 29, 2014, was triggered as the result of the Company’s issuance of Series E Shares to the Series E Investor pursuant to the Share Purchase Agreement, and (ii) the then effective applicable Conversion Prices with respect to Series C Shares and Series D Shares was adjusted by the Company to be US$3.64141727 (with respect to Series C Shares held by CRP Holding), and US$2.86129657 (with respect to Series D Shares) respectively, as per Article 66(3)(a)(iv) of the Fourth Amended and Restated Articles of Association of the Company, in lieu of issuance of additional Shares to CRP Holding and the Series D Investor, to fully satisfy the Series C/D Anti-dilution Right of CRP Holding and the Series D Investor (the “Agreed Adjustment”).  Each of CRP Holding and the Series D Investor hereby acknowledges and confirms that its Series C/D Anti-dilution Right has been fully and sufficiently compensated by the Company’s such adjustment of the applicable Conversion Prices, and it will not further request to exercise any Series C/D Anti-dilution Right in connection with the issuance of the Series E Shares pursuant to the Share Purchase Agreement (but excluding, for the avoidance of doubt, any issuance of Series E Shares pursuant to the warrants relating thereto).

 

It is noted, however, that the applicable Conversion Price with respect to Series C Shares held by CRP Holding and Series D Shares, as adjusted above, is based on the closing of the sale and issuance of the Series E Shares by the Company at a per share purchase price of US$2.81787412 for an aggregate consideration (before deducting any commission, fee or expense payable in connection therewith) of US$300 million (the “Series E Consideration”) in two separate deals,

 

56

 

with the first deal of US$200 million and the Subsequent Sale (as defined in the Share Purchase  Agreement) of US$100 million pursuant to the Share Purchase Agreement. The Company, CRP Holding and the Series D Investor agree that if the Subsequent Sale fails to close,

 

(i)                                     the Conversion Price for Series C Shares held by CRP Holding pursuant to the Agreed Adjustment shall be adjusted to and calculated as follows: the Conversion Price for Series C Shares held by CRP Holding shall equal to the product obtained by multiplying US$4.14 (the applicable conversion price for Series C Shares held by CPR Holdings immediately before the date hereof) multiplied by a fraction, the numerator of which shall be the number of Common Shares (including Common Shares issuable upon conversion of the Preferred Shares, at the prevailing Conversion Price, however, excluding those number of Shares held by the Series D Investor to be repurchased by the Company from the Series D Investor pursuant to Section 10.6 hereof) issued and outstanding immediately prior to the Closing (as defined in the Share Purchase Agreement), plus the number of Shares that US$200 million would purchase at US$4.14 (the applicable conversion price for Series C Preferred Shares held by CPR Holdings immediately before the date hereof), and the denominator of which shall be the number of Common Shares issued and outstanding (including Common Shares issuable upon conversion of the Preferred Shares, at the prevailing Conversion Price, however, excluding those number of Shares held by the Series D Investor to be repurchased by the Company from the Series D Investor pursuant to Section 10.6 hereof) immediately prior to such Closing plus the number of Series E Shares actually issued by the Company under the Share Purchase Agreement (excluding those Series E Shares to be repurchased by the Company from the Series E Investor pursuant to Section 10.5 hereof, if applicable); and

 

(ii)                                  the Conversion Price for Series D Shares pursuant to the Agreed Adjustment shall be adjusted to and calculated using the same methodology as was used in calculating the Agreed Adjustment relating to the Series D Shares, except that (i) US$200 million shall be substituted for US$300 million as the Series E Consideration, (ii) the number of Series E Shares shall be accordingly updated after the repurchase by the Company from the Series E Investor pursuant to Section 10.5 hereof, and (iii) the number of Series D Shares held by the Series D Investor shall exclude those number of Series D Shares to be repurchased by the Company from the Series D Investor pursuant to Section 10.6 hereof, wherever applicable in such adjustment and calculation.

 

10.5                        Repurchase of Series E Shares. Only if and to the extent the Subsequent Sale fails to close, the Company has an exclusive right to elect to repurchase at par value per Series E Share, by written notice to the Series E Investor, 22,698 Series E Shares (adjusted for any share dividends, sub-division, consolidation and recapitalization) held by the Series E Investor.

 

10.6                        Repurchase of Shares held by Primavera.  All parties hereto agree that the Company shall repurchase from Primavera 469,225 Common Shares, 27,180 Series A Shares, 591,451 Series A-1 Shares, 725,237 Series B Shares and 3,808,943 Series D Shares with a total consideration of US$24,275,665.3 on or before April 1, 2014.  An interest rate of 15% per annum, compounded annually, shall apply to any such consideration not paid to Primavera on or before April 15, 2014, and Primavera shall deliver duly executed counterparts of the instrument(s) of transfer in respect of all of the repurchased Shares to the Company against the full payment of the repurchase consideration by the Company.

 

57

 

10.7                        Issuance of Primavera Warrant.  It is acknowledged and agreed that the Company shall, on the date hereof, issue to Primavera a warrant to purchase Series E Shares on the terms and conditions set forth in the Primavera New Warrant (as defined in the Share Purchase Agreement).

 

10.8                        Dual Class Voting Structure. In the event that the Company shall implement a dual class voting structure (the “Dual Class Structure”) immediately prior to (and effective subject to) the completion of the Company’s initial public offering where the existing Common Shares and Common Shares issued or issuable upon conversion of the Preferred Shares will be re-designated into two (2) different classes of common shares carrying different voting rights, then the Common Shares held by the Founder Holdcos and Common Shares issued or issuable upon conversion of the Series E Preferred Shares shall be converted and re-designated into that class of common shares carrying greater voting rights.

 

11.                               GENERAL PROVISIONS.

 

11.1                        Notices. Except as may be otherwise provided herein, all notices, requests, waivers and other communications made pursuant to this Agreement shall be in writing and shall be conclusively deemed to have been duly given (a) when hand delivered to the other party, upon delivery; (b) when sent by facsimile at the number set forth in Exhibit G hereto, upon receipt of confirmation of error-free transmission; (c) seven (7) Business Days after deposit in the mail as air mail or certified mail, receipt requested, postage prepaid and addressed to the other party as set forth in Exhibit G; or (d) three (3) Business Days after deposit with an international overnight delivery service, postage prepaid, addressed to the parties as set forth in Exhibit G with next Business Day delivery guaranteed, provided that the sending party receives a confirmation of delivery from the delivery service provider. Each person making a communication hereunder by facsimile shall promptly confirm by telephone to the person to whom such communication was addressed each communication made by it by facsimile pursuant hereto but the absence of such confirmation shall not affect the validity of any such communication. A party may change or supplement the addresses given above, or designate additional addresses, for purposes of this Section 11.1 by giving the other party written notice of the new address in the manner set forth above.

 

11.2                        Entire Agreement. This Agreement, the Share Purchase Agreement and any Transaction Agreements (as defined in the Share Purchase Agreement), together with all the exhibits hereto and thereto, constitute and contain the entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes any and all prior negotiations, correspondence, agreements, understandings, duties or obligations between the parties respecting the subject matter hereof. Without limiting the generality of the foregoing, this Agreement supersedes, in its entirety, the Fifth Restated Shareholders Agreement, which shall terminate and have no further force or effect whatsoever as of the date of this Agreement, and the parties hereto hereby irrevocably waive any and all rights that they may have against any other party under the Fifth Restated Shareholders Agreement in exchange for their rights hereunder.

 

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

 

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

 

11.5                        Third Parties. Nothing in this Agreement, express or implied, is intended to confer upon any person, other than the parties hereto and their permitted successors and assigns any rights or remedies under or by reason of this Agreement.

 

11.6                        Successors and Assigns. Subject to the provisions of Section 6.1, the provisions of this Agreement shall inure to the benefit of, and shall be binding upon, the successors and permitted assigns of the parties hereto.

 

11.7                        Interpretation; Captions. This Agreement shall be construed according to its fair language. The rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in interpreting this Agreement. The captions to sections of this Agreement have been inserted for identification and reference purposes only and shall not be used to construe or interpret this Agreement. Unless otherwise expressly provided herein, all references to Sections and Exhibits herein are to Sections and Exhibits of this Agreement.

 

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

 

11.9                        Adjustments for Share Splits, Etc. Wherever in this Agreement there is a reference to a specific number of shares of Series A-1 Shares, Series A Shares, Series B Shares, Series C Shares, Series D Shares, Series E Shares or Common Shares of the Company, then, upon the occurrence of any subdivision, combination or share dividend of the Series A-1 Shares, Series A Shares, Series B Shares, Series C Shares, Series D Shares, Series E Shares or Common Shares, the specific number of shares so referenced in this Agreement shall automatically be proportionally adjusted to reflect the effect on the outstanding shares of such class or series of shares by such subdivision, combination or share dividend.

 

11.10                 Future Significant Common Holders. Except with the written consent of the holders of at least 75% of then outstanding Series E Shares, the holders of at least a majority of then outstanding Series D Shares, the holders of at least a majority of the then outstanding Series C Shares and the holders of at least a majority of then outstanding Series B Shares, each voting together as a separate class, the Company covenants that, until the completion of the initial public offering of the Company’s securities, it will cause each Partner (to the extent such Partner directly holds any Common Shares) and all future holders of the Common Shares to join this Agreement as a party. The parties hereby agree that such future holders may become parties to this Agreement by executing an instrument of accession to this Agreement in a standard and

 

59

 

customary form  reasonably satisfactory to the Company, without any amendment of this Agreement, pursuant to this Section 11.10.

 

11.11                 Shareholders Agreement to Control. If and to the extent that there are inconsistencies between the provisions of this Agreement and those of the Restated Articles, the terms of this Agreement shall control with respect to each of the shareholders of the Company only. If appropriate, the parties agree to take all actions necessary or advisable, as promptly as practicable after the discovery of such inconsistency, to amend the Restated Articles so as to eliminate such inconsistency to the fullest extent permissible by law. Each Founder shall cause his respective holding company as set forth on Schedule B attached hereto (each, a “Holding Company”), which holds of record the Common Shares, to comply with the provisions of this Agreement applicable to such Holding Company as a holder of Common Shares.

 

11.12                 Aggregation of Shares. All Series A-1 Shares, Series A Shares, Series B Shares, Series C Shares, Series D Shares, Series E Shares or Common Shares held or acquired by entities or persons which are Affiliates (as defined in Rule 405 under the Securities Act) shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.

 

11.13                 Dispute Resolution.

 

(a)                                 In the event of any dispute arising out of or in connection with this Agreement, including any question regarding its breach, existence, validity, or termination (“Dispute”), the parties shall in good faith attempt to resolve such Dispute as soon as practicable after the complaining party provides notice of such Dispute. In the event that the Dispute is not resolved between the parties within five (5) business days after receipt of such notice, on the request of the party raising the Dispute, the Dispute shall be referred to and finally resolved by arbitration under the Rules of Arbitration of the International Chamber of Commerce (“ICC”) then in effect. There shall be three arbitrators, one nominated by the initiating party and the second nominated by the other party, each within fifteen (15) days of receipt of the request for arbitration; the third, who shall act as the chair of the arbitral tribunal, shall be nominated by the two selected arbitrators within twenty (20) days of the confirmation of the second arbitrator. If any arbitrators are not nominated within these time periods, the ICC International Court of Arbitration shall make the appointment(s). The place of arbitration shall be Hong Kong. The language of the arbitral proceedings shall be English. The arbitral tribunal shall apply the International Bar Association Rules on the Taking of Evidence in International Arbitration (2010). The arbitrators may award any relief permitted under this Agreement and applicable law; however they may not award punitive, exemplary or multiple damages. The award shall be rendered within eight (8) months from the selection of the chair of the arbitral tribunal, unless the parties agree to extend this time limit or the arbitral tribunal determines that the interest of justice so requires. The award shall be final and binding upon the parties as from the date rendered, and shall be the sole and exclusive remedy between the parties regarding any claims, counterclaims, issues, or accounting presented to the arbitral tribunal. This Agreement and the rights and obligations of the parties shall remain in full force and effect pending the award in any arbitration proceeding hereunder. The parties agree that any party to this Agreement shall have the right to have recourse to and shall be bound by the Pre-arbitral Referee Procedure of the ICC in accordance with its Rules for a Pre-Arbitral Referee Procedure.

 

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(b)                                 The parties hereto shall initially split the costs of arbitration evenly. The prevailing party in arbitration shall be entitled to recover from the other party all costs, including of arbitration, and attorneys’ fees incurred in connection with the arbitration.

 

11.14                 Delays or Omissions.  No delay or omission to exercise any right, power or remedy accruing to any party hereto, upon any breach or default of any other party hereto under this Agreement, shall impair any such right, power or remedy of such former party, nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of any similar breach of default thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party hereto of any breach of default under this Agreement or any waiver on the part of any party hereto of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, or by law or otherwise afforded to the parties hereto, shall be cumulative and not alternative.

 

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IN WITNESS WHEREOF, the parties have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written.

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
XUNLEI LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Shenglong Zou
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Shenglong Zou
    
	
 
    	
Title:
    	
 
    

 

 

IN WITNESS WHEREOF, the parties have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written.

 

	
 
    	
BVI   SUBSIDIARY:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
XUNLEI NETWORK   TECHNOLOGIES LIMITED
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Shenglong Zou
    
	
 
    	
Name:
    	
Shenglong Zou
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
HK   SUBSIDIARY:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
XUNLEI NETWORK   TECHNOLOGIES LIMITED
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Shenglong Zou
    
	
 
    	
Name:
    	
Shenglong Zou
    
	
 
    	
Title:
    	
 
    

 

 

IN WITNESS WHEREOF, the parties have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written.

 

	
 
    	
PRC SUBSIDIARIES:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
XUNLEI   COMPUTER (SHENZHEN) COMPANY LIMITED
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Shenglong Zou /s/   Corporate seal
    
	
 
    	
Name:
    	
Shenglong Zou
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
GIGANOLOGY   (SHENZHEN) CO., LTD.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Shenglong Zou /s/   Corporate seal
    
	
 
    	
Name:
    	
Shenglong Zou
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
SHENZHEN XUNLEI NETWORKING   TECHNOLOGIES CO., LTD.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Shenglong Zou /s/   Corporate seal
    
	
 
    	
Name:
    	
Shenglong Zou
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
XUNLEI GAMES DEVELOPMENT (SHENZHEN)   CO., LTD.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/      /s/   Corporate seal
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
SHENZHEN XUNLEI KANKAN   INFORMATION TECHNOLOGIES CO., LTD.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Wei Liu /s/   Corporate seal
    
	
 
    	
Name:
    	
Wei Liu
    
	
 
    	
Title:
    	
 
    

 

 

	
 
    	
XUNLEI NETWORKING (BEIJING)   CO., LTD.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/      /s/   Corporate seal
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
SHENZHEN FENGDONG NETWORKING TECHNOLOGIES   CO., LTD.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/      /s/   Corporate seal
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
XUNLEI SOFTWARE (SHENZHEN)   CO., LTD.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Wei Liu /s/   Corporate seal
    
	
 
    	
Name:
    	
Wei Liu
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
SHENZHEN WANGXIN TECHNOLOGIES   CO., LTD.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/      /s/   Corporate seal
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

IN WITNESS WHEREOF, the parties have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written.

 

	
 
    	
FOUNDERS:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Shenglong Zou
    
	
 
    	
ZOU SHENGLONG
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Hao Cheng
    
	
 
    	
CHENG HAO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
FOUNDER HOLDCOS:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
VANTAGE POINT GLOBAL LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Shenglong Zou
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ALDEN & JASMINE LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Hao Cheng
    
	
 
    	
Name: Hao Cheng
    
	
 
    	
Title:
    

 

 

IN WITNESS WHEREOF, the parties have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written.

 

	
 
    	
RS HOLDCO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
LEADING ADVICE HOLDINGS LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Shenglong Zou
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Shenglong Zou
    
	
 
    	
Title:
    	
 
    

 

 

IN WITNESS WHEREOF, the parties have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written.

 

	
 
    	
SERIES E   INVESTOR
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
XIAOMI VENTURES LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Kong Kat Wong
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Kong Kat Wong
    
	
 
    	
Title:
    	
Director
    

 

 

IN WITNESS WHEREOF, the parties have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written.

 

	
 
    	
SERIES D INVESTOR
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SKYLINE GLOBAL COMPANY HOLDINGS LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

IN WITNESS WHEREOF, the parties have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written.

 

	
 
    	
SERIES C INVESTORS
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CRP HOLDINGS LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
KING MARKET INVESTMENT LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Peixin Xu
    
	
 
    	
Name:
    	
Peixin Xu
    
	
 
    	
Title:
    	
Director
    

 

 

IN WITNESS WHEREOF, the parties have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written.

 

	
 
    	
SERIES B INVESTORS:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CEYUAN VENTURES I, L.P.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CEYUAN VENTURES ADVISORS FUND, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

 

IN WITNESS WHEREOF, the parties have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written.

 

 

	
 
    	
SERIES B INVESTORS:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
For and on behalf of
    
	
 
    	
MORNINGSIDE TECHNOLOGY
    
	
 
    	
INVESTMENTS LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Louise   Mary Garbarino /s/ Jill Marie Franklin
    
	
 
    	
Name:
    	
Louise Mary   Garbarino /Jill Marie Franklin
    
	
 
    	
Title:
    	
Authorize   Signatures
    

 

 

IN WITNESS WHEREOF, the parties have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written.

 

 

	
 
    	
SERIES A-1 INVESTORS:
    
	
 
    	
 
    
	
 
    	
For and on behalf of
    
	
 
    	
MORNINGSIDE TECHNOLOGY
    
	
 
    	
INVESTMENTS LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Louise   Mary Garbarino /s/ Jill Marie Franklin
    
	
 
    	
Name:
    	
Louise Mary   Garbarino /Jill Marie Franklin
    
	
 
    	
Title:
    	
Authorize   Signatures
    

 

 

IN WITNESS WHEREOF, the parties have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written.

 

 

	
 
    	
SERIES A INVESTORS:
    
	
 
    	
 
    
	
 
    	
IDG TECHNOLOGY VENTURE INVESTMENT III, L.P.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Chi Sing   Ho
    
	
 
    	
Name:
    	
Chi Sing Ho
    
	
 
    	
Title:
    	
Authorized   Signatory
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
JOINWAY INVESTMENTS LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
BRIGHT ACCESS   INTERNATIONAL LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

 

	
 
    	
SERIES B INVESTORS:
    
	
 
    	
 
    
	
 
    	
IDG Technology Venture Investment III, L.P.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Chi Sing   Ho
    
	
 
    	
Name:
    	
Chi Sing Ho
    
	
 
    	
Title:
    	
Authorized   Signatory
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
IDG Technology Venture Investment IV, L.P.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Chi Sing   Ho
    
	
 
    	
Name:
    	
Chi Sing Ho
    
	
 
    	
Title:
    	
Authorized   Signatory
    

 

 

IN WITNESS WHEREOF, the parties have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written.

 

 

	
 
    	
SERIES B INVESTORS:
    
	
 
    	
 
    
	
 
    	
GOOGLE INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Donald   Harrison
    
	
 
    	
Name:
    	
Donald   Harrison
    
	
 
    	
Title:
    	
Authorized   Signatory
    

 

 

IN WITNESS WHEREOF, the parties have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written.

 

	
 
    	
SERIES B INVESTORS:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
FIDELITY ASIA VENTURES FUND L.P.
    
	
 
    	
By: Fidelity Asia Partners, L.P., its General Partner By: FIL Asia   Ventures Limited, its General Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ ALLAN PELUANG
    
	
 
    	
Name:
    	
ALLAN PELUANG
    
	
 
    	
Title:
    	
Director
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
FIDELITY ASIA PRINCIPALS FUND L.P.
    
	
 
    	
By: Fidelity Asia Partners, L.P., its General Partner By: FIL Asia   Ventures Limited, its General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ ALLAN PELUANG
    
	
 
    	
Name:
    	
ALLAN PELUANG
    
	
 
    	
Title:
    	
Director
    

 

 

IN WITNESS WHEREOF, the parties have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written.

 

	
 
    	
SERIES B INVESTORS:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SKYLINE GLOBAL COMPANY HOLDINGS LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/
    
	
 
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

 

IN WITNESS WHEREOF, the parties have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written.

 

	
 
    	
SERIES A-1 INVESTORS:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SKYLINE GLOBAL COMPANY   HOLDINGS LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

 

IN WITNESS WHEREOF, the parties have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written.

 

	
 
    	
SERIES A INVESTORS:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SKYLINE GLOBAL COMPANY HOLDINGS LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

 

IN WITNESS WHEREOF, the parties have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written.

 

	
 
    	
COMMON SHARE INVESTORS:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SKYLINE GLOBAL COMPANY HOLDINGS LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

 

SCHEDULE A

 

PRC SUBSIDIARIES

 

1.              Thunder Computer (Shenzhen) Limited, a wholly foreign-owned enterprise incorporated under the laws of the People’s Republic of China (“Xunlei Computer”).

 

2.              Giganology (Shenzhen) Limited, a wholly foreign-owned enterprise incorporated under the laws of the People’s Republic of China (“Giganology Shenzhen”, together with Xunlei Computer, each, a “WFOE”).

 

3.              Shenzhen Xunlei Networking Technologies Ltd., a limited liability company organized under the laws of the PRC (“Shenzhen Xunlei”).

 

4.              Xunlei Software (Shenzhen) Co., Ltd., a limited liability company organized under the laws of the PRC.

 

5.              Xunlei Games Development (Shenzhen) Co., Ltd., a limited liability company organized under the laws of the PRC.

 

6.              Shenzhen Xunlei Kankan Information Technologies Co., Ltd., a limited liability company organized under the laws of the PRC.

 

7.              Shenzhen Fengdong Networking Technologies Co., Ltd., a limited liability company organized under the laws of the PRC.

 

8.              Xunlei Networking (Beijing) Co., Ltd., a limited liability company organized under the laws of the PRC.

 

9.              Shenzhen Wangxin Science and Technology Co., Ltd., a limited liability company organized under the laws of the PRC (the companies referenced in item (3) through (10), collectively the “Domestic Companies”; and each, a “Domestic Company”).

 

 

SCHEDULE B

 

FOUNDERS’ HOLDINGS

 

	
Founder
    	
 
    	
PRC ID
   Number
    	
 
    	
Founder Holdco
    	
 
    	
Founder’s
   Ownership
   Percentage in
   Common Holder
    	
 
    
	
Sean Shenglong Zou
    	
 
    	
***
    	
 
    	
Vantage Point Global   Limited (a British Virgin Islands company)
    	
 
    	
100
    	
%
    
	
Hao Cheng
    	
 
    	
***
    	
 
    	
Aiden &   Jasmine Limited (a British Virgin Islands company)
    	
 
    	
100
    	
%
    

 

 

EXHIBIT A

 

Schedule of Series A Investors

 

IDG Technology Venture Investment III, L.P.

 

Joinway Investments Limited

 

Bright Access International Limited

 

Skyline Global Company Holdings Limited

 

 

EXHIBIT B

 

Schedule of Series A-1 Investors

 

Morningside Technology Investments Limited

 

Skyline Global Company Holdings Limited

 

 

EXHIBIT C

 

Schedule of Series B Investors

 

Ceyuan Ventures I, L.P.

 

Ceyuan Ventures Advisors Fund, LLC

 

Morningside Technology Investments Limited

 

IDG Technology Venture Investment III, L.P.

 

IDG Technology Venture Investment IV, L.P.

 

Google Inc.

 

FIDELITY ASIA VENTURES FUND L.P.

 

FIDELITY ASIA PRINCIPALS FUND L.P.

 

 Skyline Global Company Holdings Limited

 

 

EXHIBIT D

 

Schedule of Series C Investors

 

King Market Investment Limited

 

CRP Holdings Limited

 

 

EXHIBIT E

 

Schedule of Series D Investor

 

Skyline Global Company Holdings Limited

 

 

EXHIBIT F

 

Schedule of Series E Investor

 

Xiaomi Ventures Limited

 

 

EXHIBIT G

 

Notices

 

TO THE GROUP COMPANIES:

 

4/F, Hans Innovation Mansion

North Ring Road, No. 9018 High-Tech Park, Nanshan District

Shenzhen, the PRC

Fax: (86 755) 3391 2909

Attention: Mr. Zou Shenglong

 

TO IDG TECHNOLOGY VENTURE INVESTMENT III, L.P. and IDG TECHNOLOGY VENTURE INVESTMENT IV, L.P.:

 

c/o Suite 2815

Wuyang Xingcheng Square, No. 111-115,

Shi You Xing Ma Road,

Guangzhou, the PRC

Fax: (86 20)8700 7035

Attention: YAN Fei

 

TO JOINWAY INVESTMENTS LIMITED:

c/o Ms Grace Young Rm 3713, The Center

99 Queen’s Road Central Hong Kong

Fax: (852) 2523 9382

Attention: Ms Grace Young

 

TO BRIGHT ACCESS INTERNATIONAL LIMITED:

Suite 301, Block 22, Fulian Garden, Shenzhen, the PRC

Fax : (86 755) 2699 3074

Attention: Wang Fang

 

TO MORNINGSIDE TECHNOLOGY INVESTMENTS LIMITED:

c/o MTI Secretarial Services Limited,

22nd Floor, Hang Lung Centre, 2-20 Paterson Street,

Causeway Bay, Hong Kong

Fax: (852) 2577 3509 Attention: George Chang

 

TO CEYUAN VENTURES I, L.P. and CEYUAN VENTURES ADVISORS FUND, LLC:

Maples Corporate Services Limited,

Ugland House,

P.O. Box 309,

Grand Cayman, KY1-1104, Cayman Islands

 

With a copy to:

 

 

No. 1 Exhibition Hall, 2F of Lobby, Poly Plaza,

14 Dongzhimen South Avenue, Dongcheng District,

Beijing, 100027, the P.R.C.

Telephone: 86-10-8402-8800

Fax: 86-10-8402-0999

Attention: Ms. Yuan Chen

 

TO GOOGLE INC.:

1600 Amphitheatre Parkway

Mountain View, California 94043,

USA Fax: +1 (650) 618-1806

Attention: General Counsel

 

with a copy to:

 

Google Inc.

1600 Amphitheatre Parkway

Mountain View, California 94043, USA

Fax: +1 (650) 649-1920

Attention: Donald Harrison, Senior Counsel

 

TO FIDELITY ASIA VENTURES FUND L.P. and FIDELITY ASIA PRINCIPALS FUND L.P.:

 

FIL Capital Management (Hong Kong) Limited

Suite 2201, Level 22, Two Pacific Place

88 Queensway, Admiralty

Hong Kong

 

TO King Market Investment Limited:

 

The address, telephone, fax, and email that is on file with the Company, as such information may be amended from time to time by such investor

 

TO CRP Holdings Limited:

 

The address, telephone, fax, and email that is on file with the Company, as such information may be amended from time to time by such investor

 

TO SKYLINE GLOBAL COMPANY HOLDINGS LIMITED:

Suite 5801, Two International Finance Centre

8 Finance Street, Central, Hong Kong

Fax: +852 3767 5001

Attention: Stephen Zhang

 

 

TO XIAOMI VENTURES LIMITED:

 

68 Qinghe Middle Street WuCaiCheng Office Building, 12th floor,

Haidian District, Beijing, China

Fax: +86 (10) 6060 6666-1101

Attention: ZHANG Jinling

 

TO THE FOUNDERS AND FOUNDER HOLDCOS:

 

do Shenzhen Xunlei Networking Technologies Co Ltd

4/F, Hans Innovation Mansion

North Ring Road, No.9018 High-Tech Park, Nanshan District

Shenzhen, the PRC

Fax: (86 755) 3391 2909

 

TO RS HOLDCO:

 

c/o Shenzhen Xunlei Networking Technologies Co Ltd

4/F, Hans Innovation Mansion

North Ring Road, No.9018 High-Tech Park, Nanshan District

Shenzhen, the PRC

Fax: (86 755) 3391 2909

 

 

EXHIBIT H

 

FORM OF INDEMNIFICATION AGREEMENT

 

 

EXHIBIT I

 

FIVE-YEAR BUSINESS PLAN AND FORECAST

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