Document:

Exhibit 4.37

 

EXECUTION VERSION

 

DATED 20 NOVEMBER 2017

 

KOFU INTERNATIONAL LIMITED

 

and

 

TAOBAO CHINA HOLDING LIMITED

 

 

SHARE PURCHASE AGREEMENT

relating to the sale and purchase of

shares in Sun Art Retail Group Limited

 

 

 

CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1.
    	
Interpretation
    	
1
    
	
 
    	
 
    	
 
    
	
2.
    	
Sale and purchase
    	
14
    
	
 
    	
 
    	
 
    
	
3.
    	
Conditions
    	
14
    
	
 
    	
 
    	
 
    
	
4.
    	
Conduct of business   before First Completion
    	
17
    
	
 
    	
 
    	
 
    
	
5.
    	
Consideration
    	
17
    
	
 
    	
 
    	
 
    
	
6.
    	
First Completion
    	
18
    
	
 
    	
 
    	
 
    
	
7.
    	
Second Completion
    	
20
    
	
 
    	
 
    	
 
    
	
8.
    	
Warranties
    	
21
    
	
 
    	
 
    	
 
    
	
9.
    	
Purchaser’s remedies
    	
24
    
	
 
    	
 
    	
 
    
	
10.
    	
Effect of Completion
    	
26
    
	
 
    	
 
    	
 
    
	
11.
    	
Remedies and waivers
    	
26
    
	
 
    	
 
    	
 
    
	
12.
    	
Assignment
    	
26
    
	
 
    	
 
    	
 
    
	
13.
    	
Further assurance
    	
26
    
	
 
    	
 
    	
 
    
	
14.
    	
Entire agreement
    	
27
    
	
 
    	
 
    	
 
    
	
15.
    	
Notices
    	
27
    
	
 
    	
 
    	
 
    
	
16.
    	
Announcements
    	
28
    
	
 
    	
 
    	
 
    
	
17.
    	
Confidentiality
    	
29
    
	
 
    	
 
    	
 
    
	
18.
    	
Costs and expenses
    	
30
    
	
 
    	
 
    	
 
    
	
19.
    	
Counterparts
    	
31
    
	
 
    	
 
    	
 
    
	
20.
    	
Invalidity
    	
31
    
	
 
    	
 
    	
 
    
	
21.
    	
Contracts (Rights of   Third Parties) Ordinance
    	
31
    
	
 
    	
 
    	
 
    
	
22.
    	
Choice of governing law
    	
31
    
	
 
    	
 
    	
 
    
	
23.
    	
Jurisdiction
    	
32
    
	
 
    	
 
    	
 
    
	
24.
    	
Agent for service
    	
32
    
	
 
    	
 
    	
 
    
	
25.
    	
Language
    	
32
    

 

 

SCHEDULES

 

	
Schedule 1 (Conditions   to First Completion)
    	
33
    
	
 
    	
 
    
	
Schedule 2A (First   Completion arrangements)
    	
35
    
	
 
    	
 
    
	
Schedule 2B (Second   Completion arrangements)
    	
37
    
	
 
    	
 
    
	
Schedule 3 (Seller   Warranties)
    	
38
    
	
 
    	
 
    
	
Schedule 4 (Conduct of   business before First Completion)
    	
48
    
	
 
    	
 
    
	
Schedule 5 (Limitation   on Seller’s liability)
    	
51
    
	
 
    	
 
    
	
Schedule 6 (PRC Tax   reporting)
    	
53
    
	
 
    	
 
    
	
Schedule 7 (Key   Employees)
    	
59
    

 

ENCLOSURES

 

	
Enclosure A
    	
(Seller Share Exchange and Transfer Agreement)
    
	
 
    	
 
    
	
Enclosure B
    	
(CGC Share Exchange and Transfer Agreement)
    
	
 
    	
 
    
	
Enclosure C
    	
(New Shareholders Agreement)
    
	
 
    	
 
    
	
Enclosure D
    	
(Business Cooperation Agreement)
    
	
 
    	
 
    
	
Enclosure E
    	
(Deed of Release)
    
	
 
    	
 
    
	
Enclosure F
    	
(Legal opinion)
    
	
 
    	
 
    
	
Enclosure G
    	
(Confidentiality and Non-compete Agreement)
    

 

 

THIS AGREEMENT is made the 20th day of November, 2017

 

PARTIES:

 

1.             KOFU INTERNATIONAL LIMITED, a company incorporated in the British Virgin Islands under registration number 306919, whose registered office is at Palm Grove House, PO Box 438, Road Town, Tortola, British Virgin Islands (the “Seller”); and

 

2.             TAOBAO CHINA HOLDING LIMITED, a company incorporated in Hong Kong under registration number 842504, whose registered office is at 26/F, Tower One, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong (the “Purchaser”).

 

BACKGROUND:

 

(A)          As at the date hereof, the Company is held by A-RT, CGC, the Seller and Auchan as to approximately 51.00, 8.46%, 7.84% and 9.71% respectively.

 

(B)          As at the date hereof, A-RT is held by CGC, the Seller, Auchan and Monicole as to approximately 25.42%, 23.58%, 36.70% and 14.30% respectively.

 

(C)          Pursuant to the Share Exchange and Transfer Agreements:

 

(i)            CGC and the Seller have conditionally agreed to sell, and Auchan has conditionally agreed to purchase, an aggregate of 35,631,491 ordinary shares in A-RT (representing approximately 19.04% of the issued share capital of A-RT), in consideration of the transfer of an aggregate of 926,418,766 Shares (representing approximately 9.71% of the issued share capital of the Company) by Auchan to CGC and the Seller; and

 

(ii)           CGC and the Seller have conditionally agreed to sell, and Monicole has conditionally agreed to purchase, an aggregate of 1,684,156 ordinary shares in A-RT (representing approximately 0.90% of the issued share capital of A-RT) at an aggregate consideration of HK$284,622,364.

 

(D)          Immediately following the completion of the Share Exchange and Transfer Agreements, the Company will be held by A-RT, CGC and the Seller as to approximately 51.00%, 13.50% and 12.52% respectively, and Auchan will have no direct shareholding in the Company.

 

(E)           Immediately following the completion of the Share Exchange and Transfer Agreements, A-RT will be held by CGC, the Seller, Auchan and Monicole as to approximately 15.08%, 13.98%, 55.74% and 15.20% respectively.

 

(F)           The Seller has agreed to sell and the Purchaser has agreed to purchase the Sale Shares on the terms and subject to the conditions of this Agreement.

 

THE PARTIES AGREE as follows:

 

1.             Interpretation

 

1.1          In this Agreement, the Schedules and the Attachments to it:

 

 

	
“2010 Shareholders Agreement”
    	
means the Share   Restructuring Agreement and Shareholders Agreement in relation to Sun   Holdings Greater China Limited dated 12 December 2010 between Auchan   (formerly Auchanhyper SAS), Monicole (formerly Monicole BV), CGC and the   Seller;
    
	
 
    	
 
    
	
“2013 Shareholders Agreement”
    	
means the   Shareholders Agreement in relation to A-RT Retail Holdings Limited and Sun   Art Retail Group Limited dated 14 August 2013 between Auchan (formerly   Auchanhyper SAS), Monicole (formerly Monicole BV), CGC and the Seller;
    
	
 
    	
 
    
	
“AC Group Company”
    	
means any Group   Company that is not an RTM Group Company;
    
	
 
    	
 
    
	
“Accounts”
    	
means the   Audited Accounts and Unaudited Accounts;
    
	
 
    	
 
    
	
“Aggregate Purchase Price”
    	
means an amount   equal to the sum of the First Completion Purchase Price and the Second   Completion Purchase Price;
    
	
 
    	
 
    
	
“Agreed Exchange Rate”
    	
means, in   relation to the First Completion Purchase Price and the Second Completion   Purchase Price, the USD/HKD spot fixing rate, as observed on Bloomberg   page “USDHKD” currency with code “BFIX” at 11 a.m. (Hong Kong time)   on the Business Day that is two Business Days prior to the First Completion   Date or the Second Completion Date, as applicable;
    
	
 
    	
 
    
	
“Agreed Tax Period”
    	
has the meaning   ascribed thereto in Schedule 6 (PRC Tax reporting);
    
	
 
    	
 
    
	
“A-RT”
    	
means A-RT   Retail Holdings Limited, a company incorporated in Hong Kong with limited liability;
    
	
 
    	
 
    
	
“A-RT SPA”
    	
means the share   purchase agreement entered or to be entered into on the date hereof between   the Seller and the Purchaser in respect of shares in the Company;
    
	
 
    	
 
    
	
“Auchan”
    	
Auchan Retail   International S.A., a company incorporated in France with limited liability;
    
	
 
    	
 
    
	
“Audited Accounts”
    	
means the   audited consolidated financial statements of the Group (including the notes   thereto) in respect of the three financial years ended 31 December 2014,   2015 and 2016 as set out in the Company’s annual reports for those financial   years published on the website of the Stock Exchange;
    

 

2

 

	
“Bulletin No. 7”
    	
means Bulletin   No. 7 issued by the PRC State Administration of Taxation on   February 3, 2015, titled “Bulletin on Certain Questions relating to the   Enterprise Income Tax of Indirect Transfers of Assets by Non-Resident   Enterprises (关于非居民企业间接转让财产企业所得税若干问题的公告)”   , and any amendment, implementing rules, or official interpretation thereof   or any replacement, successor or alternative legislation having the same   subject matter thereof;
    
	
 
    	
 
    
	
“Business Cooperation Agreement”
    	
means the   business cooperation agreement entered or to be entered into between 杭州阿里巴巴泽泰信息技术有限公司   (Hangzhou Alibaba Zetai Information Technology Company Limited), Sunny, 欧尚 ( 中国 ) 投资有限公司   (Auchan (China) Investment Co., Ltd.) and 康成投资 ( 中国 ) 有限公司 (Concord Investment   (China) Co., Ltd.), the agreed form of which is set out in Enclosure   D;
    
	
 
    	
 
    
	
“Business Day”
    	
means a day   (other than a Saturday or a Sunday) on which banks are open for general   business in Hong Kong, the British Virgin Islands, France, the PRC and   Taiwan;
    
	
 
    	
 
    
	
“Business Information”
    	
means all   information (in whatever form held) including (without limitation) all:
    
	
 
    	
 
    
	
 
    	
(i)
    	
formulas,   designs, specifications, drawings, know-how, manuals and instructions;
    
	
 
    	
 
    	
 
    
	
 
    	
(ii)
    	
customer lists,   sales, marketing and promotional information;
    
	
 
    	
 
    	
 
    
	
 
    	
(iii)
    	
business plans   and forecasts;
    
	
 
    	
 
    	
 
    
	
 
    	
(iv)
    	
technical or other   expertise; and
    
	
 
    	
 
    	
 
    
	
 
    	
(v)
    	
all accounting   and tax records, correspondence, orders and inquiries;
    
	
 
    	
 
    
	
“CGC”
    	
means Concord   Greater China Limited, a company incorporated in the British Virgin Islands   with limited liability;
    

 

3

 

	
“CGC A-RT SPA”
    	
means the share   purchase agreement entered or to be entered into on the date hereof between   CGC and the Purchaser in respect of shares in A-RT;
    
	
 
    	
 
    
	
“CGC Share Exchange and Transfer Agreement”
    	
means the share   exchange and transfer agreement entered or to be entered into on the date   hereof between Auchan, Monicole and CGC in respect of certain Shares and   shares in A-RT, the agreed form of which is set out in Enclosure B;
    
	
 
    	
 
    
	
“CGC SPA”
    	
means the share   purchase agreement entered or to be entered into on the date hereof between   CGC and the Purchaser in respect of shares in the Company;
    
	
 
    	
 
    
	
“Circular 698”
    	
means the   Circular regarding strengthening the Administration of Enterprise Income Tax   on Equity Transfers by Non-Resident Enterprises issued by the State   Administration of Taxation of the PRC on 10 December 2009 (Guoshuihan   [2009] No. 698), and any amendment, implementing rules, or official   interpretation thereof or any replacement, successor or alternative   legislation having the same subject matter thereof;
    
	
 
    	
 
    
	
“Company”
    	
means Sun Art   Retail Group Limited, a company incorporated in Hong Kong with limited   liability, the shares of which are listed on the Stock Exchange (Stock Code:   6808);
    
	
 
    	
 
    
	
“Completion Dates”
    	
means the First   Completion Date and the Second Completion Date and “Completion Date” means any of them;
    
	
 
    	
 
    
	
“Completions”
    	
means the First   Completion and the Second Completion and “Completion”   means any of them;
    
	
 
    	
 
    
	
“Confidentiality and Non-compete Agreements”
    	
means the   confidentiality and non-compete agreements between a Group Company, on the   one hand, and each of the Key Employees, on the other hand, in each case   substantially in the form set out in Enclosure G;
    
	
 
    	
 
    
	
“Deed of Release”
    	
means the deed   of release to be executed by Mega in favour of the Seller, the agreed form of   which is set out in Enclosure E;
    
	
 
    	
 
    
	
“Disclosure Letter”
    	
means the letter   of the same date as this Agreement written by the Seller to the Purchaser for   the purposes of sub-clause 9.1 (Purchaser’s remedies) and delivered to   the Purchaser’s Solicitors on behalf of the Purchaser before the execution of   this Agreement;
    

 

4

 

	
“Due Diligence Materials”
    	
means all of the   documents provided by the Seller to the Purchaser in connection with the   transactions contemplated under this Agreement, and delivered by or on behalf   of the Seller to the Purchaser’s Solicitors on behalf of the Purchaser in a   USB drive before the execution of this Agreement;
    
	
 
    	
 
    
	
“Encumbrance”
    	
means any   mortgage, charge, pledge, lien (otherwise than arising by statute or   operation of law), hypothecation or other encumbrance, priority or security   interest, deferred purchase, title retention, leasing, sale-and-repurchase or   sale-and-leaseback arrangement whatsoever over or in any property, assets or   rights of whatsoever nature and includes any agreement for any of the same;
    
	
 
    	
 
    
	
“Final Tax Amount”
    	
has the meaning   ascribed thereto in Schedule 6 (PRC Tax reporting);
    
	
 
    	
 
    
	
“Final Tax Event”
    	
has the meaning   ascribed thereto in Schedule 6 (PRC Tax reporting);
    
	
 
    	
 
    
	
“First Completion”
    	
means completion   of the sale and purchase of the First Completion Sale Shares under this   Agreement;
    
	
 
    	
 
    
	
“First Completion Date”
    	
means the 15th Business Day following the day on which the   last in time of the conditions listed in Schedule 1 (Conditions to   First Completion) (other than the conditions listed in paragraphs 7   and 8 of Schedule 1 (Conditions to First Completion)) shall   have been satisfied or waived in accordance with this Agreement or such other   date as the parties may agree;
    
	
 
    	
 
    
	
“First Completion Purchase Price”
    	
has the meaning   ascribed thereto in sub-clause 5.1 (Consideration);
    
	
 
    	
 
    
	
“First Completion Sale Shares”
    	
means the   962,991,992 Shares to be held and beneficially owned by the Seller immediately   prior to First Completion;
    
	
 
    	
 
    
	
“Fundamental Seller Warranties”
    	
means the Seller   Warranties set out in paragraphs 1 (Ownership and status of the Sale   Shares) and 2 (Capacity) of Part 1 of Schedule 3   and paragraphs 1 (Incorporation, capacity and authorisation), 3   (Group structure) and 4 (No outstanding securities) of Part 2   of Schedule 3;
    

 

5

 

	
“Group”
    	
means the   Company and its subsidiaries from time to time, and “Group Company” means any of them;
    
	
 
    	
 
    
	
“HKFRSs”
    	
means Hong Kong   Financial Reporting Standards;
    
	
 
    	
 
    
	
“Hong Kong”
    	
means the Hong   Kong Special Administrative Region of the PRC;
    
	
 
    	
 
    
	
“Hong Kong Dollars” or “HKD” or “HK$”
    	
means the lawful   currency of Hong Kong;
    
	
 
    	
 
    
	
“Intellectual Property”
    	
means patents,   trade marks, rights in designs, copyrights, database rights (whether or not   any of these is registered and including applications for registration of any   such thing), domain names and all rights or forms of protection of a similar   nature or having equivalent or similar effect to any of these which may subsist   anywhere in the world;
    
	
 
    	
 
    
	
“Joint Instruction”
    	
has the meaning   ascribed thereto in Schedule 6 (PRC Tax reporting);
    
	
 
    	
 
    
	
“Key Employees”
    	
means each of   the individuals listed in Schedule 7  (Key Employees);
    
	
 
    	
 
    
	
“Listing Rules”
    	
means the   Rules Governing the Listing of Securities on The Stock Exchange of Hong   Kong Limited;
    
	
 
    	
 
    
	
“Long Stop Date”
    	
means the day   falling three months after the date of this Agreement;
    
	
 
    	
 
    
	
“Mandatory General Offer”
    	
means a possible   mandatory general offer to be made on behalf of the Purchaser to acquire all   the issued Shares not already owned or agreed to be acquired by the Purchaser   and parties acting in concert with it in accordance with the Code on   Takeovers and Mergers issued by the SFC;
    
	
 
    	
 
    
	
“Material Adverse Effect”
    	
means a material   adverse effect on or a material adverse change in:
    
	
 
    	
 
    
	
 
    	
(i)
    	
the condition   (financial or otherwise), assets, operations, prospects or business of the   Company or any RTM Group Company, or the consolidated condition (financial or   otherwise), assets, operations, prospects or business of the Group taken as a   whole;
    

 

6

 

	
 
    	
(ii)
    	
the ability of   the Seller to perform and comply with its obligations under the Share   Purchase Documents to which it is a party; or
    
	
 
    	
 
    	
 
    
	
 
    	
(iii)
    	
the validity or   enforceability of, or the rights or remedies of the Purchaser under any of   the Share Purchase Documents;
    
	
 
    	
 
    
	
 
    	
and excluding   the effect of (a) any change in financial markets; (b) any change   in major supply and customer markets generally unless such change adversely   affects the Group in a materially disproportionate manner; and (c) any   event or condition arising solely out of an act or omission committed by any   Group Company upon the written consent or written direction of the Purchaser   or by the Purchaser itself;
    
	
 
    	
 
    
	
“Mega”
    	
means Mega   International Commercial Bank Co., Ltd., a banking institution   incorporated under the laws of the Republic of China;
    
	
 
    	
 
    
	
“Monicole”
    	
means Monicole   Exploitatie Maatschappij BV, a company incorporated in the Netherlands with   limited liability;
    
	
 
    	
 
    
	
“New Shareholders Agreement”
    	
means the   shareholders agreement entered or to be entered into between the Purchaser,   Auchan, Monicole, CGC, the Seller and A-RT, the agreed form of which is set   out in Enclosure C;
    
	
 
    	
 
    
	
“Postponed Long Stop Date”
    	
means the Long   Stop Date as postponed in accordance with sub-clause 3.5 (Conditions);
    
	
 
    	
 
    
	
“PRC”
    	
means the   People’s Republic of China excluding, for the purpose of this Agreement, Hong   Kong, the Macao Special Administrative Region and Taiwan;
    
	
 
    	
 
    
	
“Proceedings”
    	
means any   proceeding, suit or action arising out of or in connection with this   Agreement or the negotiation, existence, validity or enforceability of this   Agreement, whether contractual or non-contractual;
    

 

7

 

	
“Process Agent”
    	
means The Law   Debenture Corporation (H.K.) Limited of Suite 413, Hutchinson House, 10   Harcourt Road, Central, Hong Kong;
    
	
 
    	
 
    
	
“Purchaser Indemnity Release Instruction”
    	
has the meaning   ascribed thereto in Schedule 6 (PRC Tax reporting);
    
	
 
    	
 
    
	
“Purchaser Release Instructions”
    	
has the meaning   ascribed thereto in Schedule 6 (PRC Tax reporting) and “Purchaser Release Instruction” shall be   construed accordingly;
    
	
 
    	
 
    
	
“Purchaser Tax Release Instruction”
    	
has the meaning   ascribed thereto in Schedule 6 (PRC Tax reporting);
    
	
 
    	
 
    
	
“Purchaser Warranties”
    	
means the   warranties set out in Clause 8.1 (Purchaser Warranties) given by the   Purchaser and any other warranties made by or on behalf of the Purchaser in   this Agreement and “Purchaser Warranty”   shall be construed accordingly;
    
	
 
    	
 
    
	
“Purchaser’s Designee(s)”
    	
means any   fund(s) whose general partner is a wholly-owned subsidiary of Alibaba   Group Holding Limited;
    
	
 
    	
 
    
	
“Purchaser’s Group”
    	
means the   Purchaser, its subsidiaries and subsidiary undertakings, any holding company   of the Purchaser and all other subsidiaries and subsidiary undertakings of   any such holding company from time to time;
    
	
 
    	
 
    
	
“Purchaser’s Solicitors”
    	
means Slaughter   and May of 47/F, Jardine House, One Connaught Place, Central, Hong Kong;
    
	
 
    	
 
    
	
“Regulatory Authority”
    	
means any   federal, state, national, provincial, local or other governmental or   regulatory authority, agency or body, court, arbitrator or self-regulatory   organisation of applicable jurisdictions;
    
	
 
    	
 
    
	
“Relevant PRC Tax Authority”
    	
has the meaning   ascribed thereto in Schedule 6 (PRC Tax reporting);
    
	
 
    	
 
    
	
“Reporting Agent”
    	
has the meaning   ascribed thereto in Schedule 6 (PRC Tax reporting);
    
	
 
    	
 
    
	
“Reporting Transactions”
    	
has the meaning   ascribed thereto in Schedule 6 (PRC Tax reporting);
    
	
 
    	
 
    
	
“Retained Group”
    	
means the   Seller, its subsidiaries and subsidiary undertakings from time to time, any   holding company of the Seller and all other subsidiaries or subsidiary   undertakings of any such holding company (except members of the Group);
    

 

8

 

	
“RMB”
    	
means the lawful   currency of the PRC;
    
	
 
    	
 
    
	
“RTM Group Company”
    	
means any Group   Company of which a majority of the board of directors are appointed by or on   behalf of the Seller and/or CGC and, for the avoidance of doubt, includes   (prior to First Completion) Concord Champion International Ltd., RT-Mart   Holdings Limited and Concord Investment (China) Limited;
    
	
 
    	
 
    
	
“Sale Shares”
    	
means the First   Completion Sale Shares and the Second Completion Sale Shares;
    
	
 
    	
 
    
	
“Second Completion”
    	
means completion   of the sale and purchase of the Second Completion Sale Shares under this   Agreement;
    
	
 
    	
 
    
	
“Second Completion Date”
    	
means the date   specified by the Purchaser in the Second Completion Notice or, if none is so   specified, the 15th Business Day following (i) the Long Stop Date or   (ii) the Postponed Long Stop Date, as the case may be;
    
	
 
    	
 
    
	
“Second Completion Notice”
    	
has the meaning   ascribed thereto in sub-clause 7.1 (Second Completion);
    
	
 
    	
 
    
	
“Second Completion Purchase Price”
    	
has the meaning   ascribed thereto in sub-clause 5.2 (Consideration);
    
	
 
    	
 
    
	
“Second Completion Sale Shares”
    	
means the   231,128,286 Shares to be held and beneficially owned by the Seller immediately   prior to Second Completion;
    
	
 
    	
 
    
	
“Security”
    	
means the share   charge over 748,376,538 Shares granted by the Seller in favour of Mega on 18 May 2015;
    
	
 
    	
 
    
	
“Seller No-Tax Release Instruction”
    	
has the meaning   ascribed thereto in Schedule 6 (PRC Tax reporting);
    
	
 
    	
 
    
	
“Seller Release Instructions”
    	
has the meaning   ascribed thereto in Schedule 6 (PRC Tax reporting) and “Seller Release Instruction” shall be   construed accordingly;
    
	
 
    	
 
    
	
“Seller Share Exchange and Transfer Agreement”
    	
means the share   exchange and transfer agreement entered or to be entered into on the date   hereof between Auchan, Monicole and the Seller in respect of certain Shares   and shares in A-RT, the agreed form of which is set out in Enclosure A;
    

 

9

 

	
“Seller Tax Release Instruction”
    	
has the meaning   ascribed thereto in Schedule 6 (PRC Tax reporting);
    
	
 
    	
 
    
	
“Seller Warranties”
    	
means the   warranties set out in Schedule 3 (Seller Warranties) given by the   Seller and any other warranties made by or on behalf of the Seller in this   Agreement and “Seller Warranty”   shall be construed accordingly;
    
	
 
    	
 
    
	
“Seller’s Designated Account”
    	
means the   following bank account:
    
	
 
    	
 
    
	
 
    	
Correspondent Bank:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Beneficiary Bank:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Account Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Account Number:
    	
 
    
	
 
    	
 
    
	
“Seller’s Solicitors”
    	
means Clifford   Chance LLP;
    
	
 
    	
 
    
	
“Selling Taxes”
    	
has the meaning   ascribed thereto in Schedule 6 (PRC Tax reporting);
    
	
 
    	
 
    
	
“Service Document”
    	
means a claim   form, application notice, order or judgment;
    
	
 
    	
 
    
	
“SFC”
    	
means the   Securities and Futures Commission of Hong Kong;
    
	
 
    	
 
    
	
“SFO”
    	
means the   Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong);
    
	
 
    	
 
    
	
“Share Exchange and Transfer Agreements”
    	
means the Seller   Share Exchange and Transfer Agreement and the CGC Share Exchange and Transfer   Agreement;
    

 

10

 

	
“Share Purchase Documents”
    	
means this Agreement, the Disclosure Letter, the Share Exchange and Transfer   Agreements, the A-RT SPA, the CGC SPA, the CGC A-RT SPA, the New Shareholders   Agreement, the Business Cooperation Agreement and any other documents entered   into pursuant to any of them;
    
	
 
    	
 
    
	
“Shareholder(s)”
    	
means holder(s) of the Shares;
    
	
 
    	
 
    
	
“Shareholders Agreements”
    	
means the 2010 Shareholders Agreement and the 2013   Shareholders Agreement;
    
	
 
    	
 
    
	
“Shares”
    	
means ordinary shares in the capital of the Company;
    
	
 
    	
 
    
	
“Stock Exchange”
    	
means the Main Board of The Stock Exchange of Hong   Kong Limited;
    
	
 
    	
 
    
	
“Tax”
    	
means (a) in the PRC: (i) any national,   provincial, municipal, or local taxes, charges, fees, levies, or other   assessments in the nature of tax, including, without limitation, all net   income (including enterprise income tax and individual income withholding   tax), turnover (including value-added tax, business tax, and consumption   tax), resource (including urban and township land use tax), special purpose   (including land value-added tax, urban maintenance and construction tax, and   additional education fees), property (including urban real estate tax and   land use fees), documentation (including stamp duty and deed tax), filing,   recording, social insurance (including pension, medical, unemployment,   housing, and other social insurance withholding), tariffs (including import   duty and import value-added tax), and estimated and provisional taxes, charges,   fees, levies, or other assessments of any kind whatsoever in the nature of   tax, (ii) all interest, penalties (administrative, civil or criminal),   or additional amounts imposed by any Regulatory Authority in connection with   any item described in clause (i) above, and (iii) any form of   transferor liability imposed by any Regulatory Authority in connection with   any item described in clauses (i) and (ii) above, and (b) in   any jurisdiction other than the PRC: all similar liabilities as described in   clause (a) above;
    
	
 
    	
 
    
	
“Tax Escrow Agreement”
    	
means the escrow agreement to be entered into   between the Seller, CGC, the Purchaser and Mega on the First Completion Date   on the terms set out in Schedule 6 (PRC Tax reporting);
    

 

11

 

	
“Tax Escrow Amount”
    	
has the meaning   ascribed thereto in Schedule 6 (PRC Tax reporting);
    
	
 
    	
 
    
	
“Tax Payment Receipt”
    	
has the meaning   ascribed thereto in Schedule 6 (PRC Tax reporting);
    
	
 
    	
 
    
	
“US Dollars” or “USD” or “US$”
    	
the lawful   currency of the United States of America;
    
	
 
    	
 
    
	
“Warranties”
    	
means the   Purchaser Warranties and the Seller Warranties; and
    
	
 
    	
 
    
	
“Working Hours”
    	
means 9.00   a.m. to 6.00 p.m. on a Business Day.
    

 

1.2                               In this Agreement, unless otherwise specified:

 

(A)                               references to clauses, sub-clauses, paragraphs, sub-paragraphs, Schedules and Attachments are to clauses, sub-clauses, paragraphs and sub-paragraphs of and Schedules and Attachments to, this Agreement;

 

(B)                               references to any document in the “agreed form” means that document in a form agreed by the parties;

 

(C)                               use of any gender includes the other genders;

 

(D)                               a reference to any statute or statutory provision shall be construed as a reference to the same as it may have been, or may from time to time be, amended, modified or re-enacted and shall include any subordinate legislation made from time to time under that statute or statutory provision;

 

(E)                                references to a “company” shall be construed so as to include any corporation or other body corporate, wherever and however incorporated or established;

 

(F)                                 references to a “person” shall be construed so as to include any individual, firm, company, corporation, body corporate, government, state or agency of a state, local or municipal authority or government body or any joint venture, association or partnership (whether or not having separate legal personality);

 

(G)                               the expressions “accounting reference date”, “accounting reference period”, “body corporate”, “holding company”, “subsidiary” and “subsidiary undertaking” shall have the meaning given in the Companies Ordinance (Cap. 622 of the Laws of Hong Kong);

 

(H)                              references to “indemnify” and “indemnifying” any person against any circumstance include indemnifying and keeping him harmless on an after-Tax basis from all actions, claims and proceedings from time to time made against that person and all loss or damage and all payments, costs or expenses made or incurred by that person as a consequence of or which would not have arisen but for that circumstance;

 

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(I)                                   any reference to a “day” (including the phrase “Business Day”) shall mean a period of 24 hours running from midnight to midnight;

 

(J)                                   references to times are to Hong Kong time;

 

(K)                               any indemnity or obligation to pay (the “Payment Obligation”) being given or assumed on an “after-Tax basis” or expressed to be “calculated on an after-Tax basis” means that the amount payable pursuant to such Payment Obligation (the “Payment”) shall be calculated in such a manner as will ensure that, after taking into account:

 

(i)                                     any Tax required to be deducted or withheld from the Payment;

 

(ii)                                  the amount and timing of any additional Tax which becomes payable as a result of the Payment’s being subject to Tax; and

 

(iii)                               the amount and timing of any Tax benefit which is obtained by the recipient of the Payment, to the extent that such Tax benefit is attributable to the matter giving rise to the Payment Obligation,

 

the recipient of the Payment is in the same position as that in which it would have been if the matter giving rise to the Payment Obligation had not occurred (or, in the case of a Payment Obligation arising by reference to a matter affecting a person other than the recipient of the Payment, the recipient of the Payment and that other person are, taken together, in the same position as that in which they would have been had the matter giving rise to the Payment Obligation not occurred), provided that the amount of the Payment shall not exceed that which it would have been if it had been regarded for all Tax purposes as received solely by the recipient and not any other person;

 

(L)                                references to writing shall include any modes of reproducing words in a legible and non-transitory form and whether sent or supplied by electronic mail;

 

(M)                            references to the knowledge of the Seller shall be treated as including any knowledge which each director appointed by the Seller and/or CGC to the board of any Group Company would have if such director made all usual and reasonable enquiries;

 

(N)                               references to any Hong Kong legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official, or any legal concept or thing shall in respect of any jurisdiction other than Hong Kong be deemed to include what most nearly approximates in that jurisdiction to the Hong Kong legal term;

 

(O)                               (i)                                     the rule known as the ejusdem generis rule shall not apply and accordingly general words introduced by the word “other” shall not be given a restrictive meaning by reason of the fact that they are preceded by words indicating a particular class of acts, matters or things; and

 

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(ii)                                  general words shall not be given a restrictive meaning by reason of the fact that they are followed by particular examples intended to be embraced by the general words;

 

(P)                                 all headings and titles are inserted for convenience only and are to be ignored in the interpretation of this Agreement; and

 

(Q)                               the Schedules and Attachments form part of this Agreement and shall have the same force and effect as if expressly set out in the body of this Agreement, and any reference to this Agreement shall include the Schedules and Attachments.

 

2.                                      Sale and purchase

 

2.1                               The Seller shall sell, or procure the sale of, and the Purchaser shall purchase, the First Completion Sale Shares with all rights attached or accruing to them at First Completion.

 

2.2                               The Seller shall sell, or procure the sale of, and the Purchaser shall purchase, the Second Completion Sale Shares with all rights attached or accruing to them at Second Completion.

 

2.3                               Save for the Security, the release of which the Seller shall procure pursuant to its obligations under sub-clause 6.2 (First Completion) and paragraph 4 of Part A of Schedule 2A (First Completion arrangements), the Seller has the right to transfer legal and beneficial title to the Sale Shares.

 

2.4                               The First Completion Sale Shares shall as at First Completion, and the Second Completion Sale Shares shall as at Second Completion, be free from all charges and encumbrances and from all other rights exercisable by or claims by third parties.

 

2.5                               The Purchaser shall be entitled to exercise all rights attached or accruing to the First Completion Sale Shares and the Second Completion Sale Shares including, without limitation, the right to receive all dividends, distributions or any return of capital declared, paid or made by the Company on or after the First Completion Date and Second Completion Date, respectively.

 

2.6                               The Seller waives all rights of pre-emption over any of the Shares conferred upon it by the articles of association of the Company or in any other way and undertakes to take all steps necessary to ensure that any rights of pre-emption over any of the Shares are waived prior to each Completion.

 

3.                                      Conditions

 

3.1                               The sale and purchase of the Sale Shares pursuant to this Agreement is in all respects conditional upon those matters listed in Schedule 1 (Conditions to First Completion).

 

3.2                               (A)                               The Seller will use all reasonable endeavours to fulfil or procure the fulfilment of the conditions listed in paragraphs 1, 3 and 9 of Schedule 1 (Conditions to First Completion) as soon as possible and in any event before the Long Stop Date and will notify the Purchaser in writing, as soon as reasonably practicable, of the satisfaction of each such condition.

 

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(B)                               The Purchaser will use all reasonable endeavours to fulfil or procure the fulfilment of the condition listed in paragraph 8 of Schedule 1 (Conditions to First Completion) as soon as possible and in any event by 5.00 p.m. on the First Completion Date and will notify the Seller in writing, as soon as reasonably practicable, of the satisfaction of each such condition.

 

(C)                               Each of the Seller and the Purchaser will use all reasonable endeavours to fulfil or procure the fulfilment of the conditions listed in paragraphs 4 to 7 (inclusive) of Schedule 1 (Conditions to First Completion) as soon as possible and in any event (in respect of paragraphs 4 to 6 (inclusive) of Schedule 1 (Conditions to First Completion)) before the Long Stop Date and (in respect of paragraph 7 of Schedule 1 (Conditions to First Completion) by 5.00 p.m. on the First Completion Date and will notify the other in writing, as soon as reasonably practicable after it becomes aware of the satisfaction of each such condition.

 

3.3                               The Purchaser may waive in writing in whole or in part all or any of the conditions listed in paragraphs 1, 2, 7, 8 and 9 of Schedule 1 (Conditions to First Completion). The condition set out in paragraphs 3 to 6 (inclusive) of Schedule 1 (Conditions to First Completion) may not be waived, in whole or in part, by any party.

 

3.4                               Each of the Seller and the Purchaser undertakes to disclose in writing to the other anything which will or may prevent any of the conditions set out in Schedule 1 (Conditions to First Completion) from being satisfied on or prior to the Long Stop Date (or subsequently) immediately after it comes to their attention. Without prejudice to the generality of the foregoing, this includes disclosure of any indication that any Regulatory Authority may intend to withhold its approval of, or raise an objection to, or withdraw any licence or authorisation following, or impose a condition on or following, the sale and purchase of the Sale Shares pursuant to this Agreement.

 

3.5                               If any of the conditions set out in Schedule 1 (Conditions to First Completion) (other than the conditions set out in paragraphs 7 and 8 of Schedule 1 (Conditions to First Completion)) is not fulfilled or waived by the Purchaser or the Seller, as the case may be, by midnight on the Long Stop Date then:

 

(A)                               if it was the obligation of the Seller to satisfy the relevant condition (or conditions) then the Purchaser may, in its absolute discretion, postpone the Long Stop Date by up to 10 Business Days; or

 

(B)                               if it was the obligation of the Purchaser to satisfy the relevant condition (or conditions) then the Seller may, in its absolute discretion, postpone the Long Stop Date by up to 10 Business Days; or

 

(C)                               if responsibility for satisfaction of the relevant condition or conditions falls either:

 

(i)                                     upon each of the Seller and the Purchaser; or

 

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(ii)                                  upon neither the Seller nor the Purchaser,

 

then the parties may postpone the Long Stop Date by agreement between them,

 

(the Long Stop Date, as so postponed, being the “Postponed Long Stop Date”).

 

3.6                               If, in the circumstances set out in sub-clause 3.5, either:

 

(A)                               the Long Stop Date is not postponed; or

 

(B)                               any of the conditions remains to be fulfilled or waived, by midnight on the Postponed Long Stop Date, 

 

subject to sub-clause 3.9, this Agreement shall be capable of termination by either the Purchaser or the Seller forthwith on written notice to the other provided that the party proposing to terminate has complied with its obligations under this clause 3 (Conditions).

 

3.7                               If any of the conditions set out in paragraphs 7 and 8 of Schedule 1 (Conditions to First Completion) is not fulfilled or waived by the Purchaser or the Seller, as the case may be, by 5.00 p.m. on the First Completion Date then:

 

(A)                               if it was the obligation of the Seller to satisfy the relevant condition (or conditions) then the Purchaser may defer First Completion by up to 10 Business Days (so that the provisions of clause 6 (First Completion) shall apply to First Completion as so deferred); or

 

(B)                               if it was the obligation of the Purchaser to satisfy the relevant condition (or conditions) then the Seller may defer First Completion by up to 10 Business Days (so that the provisions of clause 6 (First Completion) shall apply to First Completion as so deferred); or

 

(C)                               if responsibility for satisfaction of the relevant condition or conditions falls either:

 

(i)                                     upon each of the Seller and the Purchaser; or

 

(ii)                                  upon neither the Seller nor the Purchaser,

 

then the parties may defer First Completion by agreement between them.

 

3.8                               If, in the circumstances set out in sub-clause 3.7, either:

 

(A)                               First Completion is not deferred; or

 

(B)                               any of the conditions remains to be fulfilled or waived, by 5.00 p.m. of the date of the First Completion as so deferred,

 

subject to sub-clause 3.9, this Agreement shall be capable of termination by either the Purchaser or the Seller forthwith on written notice to the other provided that the party proposing to terminate has complied with its obligations under this clause 3 (Conditions).

 

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3.9                               If this Agreement terminates in accordance with sub-clause 3.6 or 3.8 and without limiting the Purchaser’s or the Seller’s (as the case may be) right to any right, power or remedy provided by law or under this Agreement:

 

(A)                               and if the Seller has not as at the relevant time fulfilled its obligation to satisfy any condition set out in Schedule 1 (Conditions to First Completion), the Seller will indemnify the Purchaser on demand on an after-Tax basis for all reasonable costs and expenses incurred by the Purchaser in accordance with sub-clause 18.2 (Costs and expenses); and

 

(B)                               all obligations of the parties under this Agreement shall end except for those expressly stated to continue without limit in time but (for the avoidance of doubt) all rights and liabilities of the parties which have accrued before termination shall continue to exist.

 

4.                                      Conduct of business before First Completion

 

4.1                               The Seller shall procure that, between the date of this Agreement and First Completion, each RTM Group Company shall, and shall use all reasonable endeavours to procure that, between the date of this Agreement and First Completion, each AC Group Company shall, carry on its business in the ordinary and usual course in the same manner as carried on during the six months preceding the date of this Agreement.

 

4.2                               Without prejudice to the generality of sub-clause 4.1, the Seller shall procure that no RTM Group Company will, and shall use all reasonable endeavours to procure that no AC Group Company will, between the date of this Agreement and First Completion, undertake any of the acts or matters listed in Schedule 4 (Conduct of Business before First Completion) without the consent in writing of the Purchaser (not to be unreasonably withheld or delayed) save to the extent contemplated under the Share Purchase Documents.

 

4.3                               Subject to applicable law, as from the date of this Agreement, the Seller shall procure (in respect of the RTM Group Companies), and shall use all reasonable endeavours to procure (in respect of the AC Group Companies) the provision of reasonable access in favour of the Purchaser and any persons authorised by it to the premises and all the books and records and title deeds of such Group Companies and the directors appointed by the Seller and/or CGC and employees of the RTM Group Companies and each RTM Group Company will be instructed to give promptly all information and explanations to the Purchaser or any such persons as they may request, provided that the Purchaser and such persons authorised by it shall be bound by clause 17 (Confidentiality) in relation to any information received or obtained pursuant to this sub-clause 4.3.

 

5.                                      Consideration

 

5.1                               The total consideration for the sale of the First Completion Sale Shares shall be the payment by the Purchaser of an amount in US Dollars being the equivalent of HK$6,259,447,948 as converted at the Agreed Exchange Rate (the “First Completion Purchase Price”) payable in accordance with clause 6 (First Completion).

 

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5.2                               The total consideration for the sale of the Second Completion Sale Shares shall be the payment by the Purchaser of an amount in US Dollars being the equivalent of HK$1,502,333,859 as converted at the Agreed Exchange Rate (the “Second Completion Purchase Price”) payable in accordance with clause 7 (Second Completion).

 

5.3                               Any payment made by the Seller to the Purchaser under this Agreement shall (so far as possible) be treated as a reduction of the consideration for the Sale Shares to the extent of the payment.

 

6.                                      First Completion

 

6.1                               First Completion shall take place on the First Completion Date at the offices of the Purchaser’s Solicitors at 47/F, Jardine House, One Connaught Place, Central, Hong Kong.

 

6.2                               At First Completion the Seller shall do those things listed in paragraphs 1, 2, 4 and 5 of Part A (Parties’ obligations) of Schedule 2A (First Completion arrangements) and the Purchaser shall do those things listed in paragraph 3 of Part A (Parties’ obligations) of Schedule 2A (First Completion arrangements). First Completion shall take place in accordance with Part B (General) of Schedule 2A (First Completion arrangements).

 

6.3                               The Purchaser shall not be obliged to complete the sale and purchase of the First Completion Sale Shares unless the Seller complies with the requirements of sub-clause 6.2 and paragraphs 1, 2, 4 and 5 of Part A (Parties’ obligations) of Schedule 2A (First Completion arrangements). The Seller shall not be obliged to complete the sale and purchase of the First Completion Sale Shares unless the Purchaser complies with the requirements of paragraph 3 of Part A (Parties’ obligations) of Schedule 2A (First Completion arrangements).

 

6.4                               Neither party shall be obliged to complete the sale and purchase of any of the First Completion Sale Shares unless:

 

(A)                               the sale and purchase of all the First Completion Sale Shares is completed simultaneously; and

 

(B)                               this Agreement (save for the Second Completion), the A-RT SPA, the CGC SPA (save for the Second Completion (as defined under the CGC SPA)) and the CGC A-RT SPA are completed substantially contemporaneously.

 

6.5                               If the obligations of the Seller under sub-clause 6.2 and paragraphs 1, 2, 4 and 5 of Part A (Parties’ obligations) of Schedule 2A (First Completion arrangements) are not complied with on the First Completion Date, the Purchaser may, and if the obligations of the Purchaser under sub-clause 6.2 and paragraph 3 of Part A (Parties’ obligations) of Schedule 2A (First Completion arrangements) are not complied with on the First Completion Date, the Seller may:

 

(A)                               defer First Completion (so that the provisions of this clause 6 shall apply to First Completion as so deferred);

 

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(B)                               proceed to First Completion as far as practicable (without limiting its rights under this Agreement); or

 

(C)                               terminate this Agreement by notice in writing to the Seller or the Purchaser, as the case may be.

 

6.6                               If this Agreement is terminated by the Purchaser in accordance with sub-clause 6.5 and without limiting either party’s right to any right, power or remedy provided by law or under this Agreement:

 

(A)                               the Seller will indemnify the Purchaser on demand on an after-Tax basis for all reasonable costs and expenses incurred by the Purchaser in accordance with sub-clause 18.2 (Costs and expenses); and

 

(B)                               all obligations of the parties under this Agreement shall end except for those expressly stated to continue without limit in time but (for the avoidance of doubt) all rights and liabilities of the parties which have accrued before termination shall continue to exist.

 

6.7                               The Seller undertakes to indemnify the Purchaser against any loss, expense or damage which it may suffer as a result of any document delivered to it pursuant to this clause being unauthorised, invalid or for any other reason ineffective for its purpose.

 

6.8                               The Seller shall procure that:

 

(A)                               HUANG Ming-Tuan and CHENG Chuan-Tai tender their written resignation from their respective offices as directors of the Company with effect from First Completion (or, in the event that, prior to First Completion, the Purchaser announces any firm intention to make a Mandatory General Offer, the day immediately after close of the Mandatory General Offer); and

 

(B)                               the board of directors of the Company approve the appointment of such persons nominated by the Purchaser as directors of the Company with effect from First Completion (or, in the event that, prior to First Completion, the Purchaser announces any firm intention to make a Mandatory General Offer, the day immediately after the despatch of the offer document or composite document).

 

6.9                               The Seller covenants with the Purchaser to pay to the Purchaser an amount calculated on an after-Tax basis equal to the value of any and all claims which may be made against any member of the Group by any of HUANG Ming-Tuan and CHENG Chuan-Tai, because of their resignation from office or of their employment being terminated and an amount equal to all costs, charges and expenses incurred by any member of the Group which are incidental to any such claim.

 

6.10                        Payment by or on behalf of the Purchaser for the amount stated in sub-clause 5.1 (Consideration) in accordance with paragraph 3 of Part A (Parties’ obligations) of Schedule 2A (First Completion arrangements) shall constitute payment of the consideration for the First Completion Sale Shares and shall fully discharge the obligations of the Purchaser under sub-clause 2.1 (Sale and purchase).

 

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7.                                      Second Completion

 

7.1                               The Purchaser may, at any time after the execution of this Agreement, specify the Second Completion Date by notice to the Seller (the “Second Completion Notice”), provided that the Second Completion Date so specified shall be: (a) on or after the First Completion Date; (b) no later than the 15th Business Day following (i) the Long Stop Date or (ii) Postponed Long Stop Date, as the case may be; and (c) on or after the 5th Business Day following the date of the Second Completion Notice.

 

7.2                               Subject to the First Completion having taken place, the Second Completion shall take place on the Second Completion Date at the offices of the Purchaser’s Solicitors at 47/F, Jardine House, One Connaught Place, Central, Hong Kong.

 

7.3                               At Second Completion the Seller shall do those things listed in Part A (Seller’s obligations) of Schedule 2B (Second Completion arrangements) and the Purchaser shall do those things listed in Part B (Purchaser’s obligations) of Schedule 2B (Second Completion arrangements). Second Completion shall take place in accordance with Part C (General) of Schedule 2B (Second Completion arrangements).

 

7.4                               The Purchaser shall not be obliged to complete the sale and purchase of the Second Completion Sale Shares unless the Seller complies with the requirements of sub-clause 7.3 and Part A (Seller’s obligations) of Schedule 2B (Second Completion arrangements). The Seller shall not be obliged to complete the sale and purchase of the Second Completion Sale Shares unless the Purchaser complies with the requirements of sub-clause 7.3 and Part B (Purchaser’s obligations) of Schedule 2B (Second Completion arrangements).

 

7.5                               Neither party shall be obliged to complete the sale and purchase of any of the Second Completion Sale Shares unless:

 

(A)                               the sale and purchase of all the Second Completion Sale Shares is completed simultaneously; and

 

(B)                               the Second Completion under this Agreement and the Second Completion (as defined under the CGC SPA) occur substantially contemporaneously.

 

7.6                               If the obligations of the Seller under sub-clause 7.3 and Part A (Seller’s obligations) of Schedule 2B (Second Completion arrangements) are not complied with on the Second Completion Date the Purchaser may, and if the obligations of the Purchaser under sub-clause 7.3 and Part B (Purchaser’s obligations) of Schedule 2B (Second Completion arrangements) are not complied with on the Second Completion Date the Seller may:

 

(A)                               defer Second Completion (so that the provisions of this clause 7 shall apply to Second Completion as so deferred);

 

(B)                               proceed to Second Completion as far as practicable (without limiting its rights under this Agreement); or

 

(C)                               elect not to proceed to Second Completion.

 

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7.7                               If the Purchaser elects not to proceed to Second Completion in accordance with sub-clause 7.6 and without limiting either party’s right to any right, power or remedy provided by law or under this Agreement:

 

(A)                               the Seller will indemnify the Purchaser on demand on an after-Tax basis for all reasonable costs and expenses incurred by the Purchaser (including, but not limited to, the fees of all external legal advisers and their disbursements and out of pocket expenses) in connection with the Second Completion or the preparation thereof; and

 

(B)                               all warranties, undertakings and obligations of the parties relating to the Second Completion shall end.

 

7.8                               The Seller undertakes to indemnify the Purchaser against any loss, expense or damage which it may suffer as a result of any document delivered to it pursuant to this clause being unauthorised, invalid or for any other reason ineffective for its purpose.

 

7.9                               Payment by or on behalf of the Purchaser for the amount stated in sub-clause 5.2 (Consideration) in accordance with Part B (Purchaser’s obligations) of Schedule 2B (Second Completion arrangements) shall constitute payment of the consideration for the Second Completion Sale Shares and shall fully discharge the obligations of the Purchaser under sub-clause 2.2 (Sale and purchase).

 

8.                                      Warranties

 

Purchaser Warranties

 

8.1                               The Purchaser warrants to the Seller, at the date of this Agreement, the First Completion Date and the Second Completion Date as if repeated immediately before the First Completion and Second Completion Date by reference to the facts and circumstances subsisting at the First Completion Date or the Second Completion Date, as the case may be, on the basis that any reference in the Purchaser Warranties, whether express or implied, to the date of this Agreement is substituted by a reference to the First Completion Date or the Second Completion Date, as the case may be, that:

 

(A)                               the Purchaser is validly incorporated, in existence and duly registered and has the requisite capacity, power and authority to enter into and perform this Agreement and to execute, deliver and perform any obligations it may have under each document to be delivered by the Purchaser at each Completion;

 

(B)                               the obligations of the Purchaser under this Agreement constitute, and the obligations of the Purchaser at each Completion will when delivered constitute, binding obligations of the Purchaser in accordance with their respective terms;

 

(C)                               the execution and delivery of, and the performance by the Purchaser of its obligations under, this Agreement will not:

 

(i)                                     result in a breach of any provision of the memorandum or articles of association of the Purchaser; or

 

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(ii)                                  result in a breach of, or constitute a default under, any instrument by which the Purchaser is bound; or

 

(iii)                               result in a material breach of any statute, law, rule, regulation, order, judgment or decree of any court or governmental agency by which the Purchaser is bound; or

 

(iv)                              require the consent or approval of the shareholders of the Purchaser or of any other person; and

 

(D)                               the Purchaser, together with the Purchaser’s Designee(s) (if applicable), will have at each Completion immediately available on an unconditional basis (subject only to the relevant Completion) the necessary cash resources outside of mainland PRC to meet its obligations under this Agreement.

 

8.2                               The Purchaser acknowledges and agrees that the Seller is a person connected with the Company (such expression shall be construed in accordance with section 287 of the SFO) and the Seller may possess inside information (as defined under the SFO) relating to the Group.

 

Seller Warranties

 

8.3                               The Seller warrants to the Purchaser that each of the Seller Warranties is accurate and not misleading at the date of this Agreement and will be accurate and not misleading at:

 

(A)                               the First Completion Date as if repeated immediately before the First Completion by reference to the facts and circumstances subsisting at the First Completion Date on the basis that any reference in the Seller Warranties, whether express or implied, to the date of this Agreement is substituted by a reference to the First Completion Date; and

 

(B)                               the Second Completion Date as if repeated immediately before the Second Completion by reference to the facts and circumstances subsisting:

 

(i)                                     in respect of the Seller Warranties set out in Part 1 of Schedule 3, at the Second Completion Date on the basis that any reference in the Seller Warranties, whether express or implied, to the date of this Agreement is substituted by a reference to the Second Completion Date; and

 

(ii)                                  in respect of the Seller Warranties set out in Part 2 of Schedule 3, at the First Completion Date on the basis that any reference in the Seller Warranties, whether express or implied, to the date of this Agreement is substituted by a reference to the First Completion Date.

 

8.4                               The Seller shall procure that no act shall be performed or omission allowed in the period between the date of this Agreement and Second Completion, either by itself or any member of the Retained Group or any RTM Group Company, which would result in any of the Seller Warranties being breached or misleading at the time of each Completion. The Seller shall further use all reasonable endeavours to procure that no act shall be performed or omission allowed in the period between the date of this Agreement and Second Completion by any AC Group Company which would result in any of the Seller Warranties given by it being breached or misleading at the time of each Completion.

 

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8.5                               The Seller undertakes to disclose in writing to the Purchaser anything which is or may constitute a breach of or be inconsistent with any of the Seller Warranties promptly after it comes to its notice before or at the time of each Completion.

 

8.6                               The Seller undertakes (in the absence of fraud) that if any claim is made against it in connection with the sale of the Sale Shares to the Purchaser, no member of the Retained Group or the Group will make any claim against any member of the Group or any director, employee, agent or adviser of any member of the Group on whom it may have relied before agreeing to any term of this Agreement or authorising any statement in the Disclosure Letter.

 

8.7                               Each of the Warranties shall be construed as being separate and independent and (except where expressly provided to the contrary) shall not be limited or restricted by reference to or inference from the terms of any other Warranty.

 

8.8                               Without restricting the rights of the Purchaser or its ability to claim damages on any basis, in the event that any of the Seller Warranties is breached or is untrue or misleading, the Seller covenants with the Purchaser that the Seller will pay to the Purchaser or to such person as the Purchaser may direct an amount calculated on an after-Tax basis equal to the aggregate of:

 

(A)                               the amount equal to any and all losses and damages suffered or incurred by the Purchaser in connection with value of any asset or the amount of any liability of any member of the Group being or becoming respectively less than or greater than it would have been if the Seller Warranties had not been breached or not been untrue or misleading; and

 

(B)                               the amount equal to any and all losses and damages suffered or incurred by the Purchaser in connection with the profits or losses of any member of the Group being respectively less than or greater than would have been the case if the Seller Warranties had not been breached or not been untrue or misleading; and

 

(C)                               an amount equal to any reasonable costs and expenses incurred directly or indirectly as a result of or in connection with a claim pursuant to sub-paragraphs (A) or (B).

 

8.9                               If in respect of or in connection with any breach of any of the Seller Warranties or any facts or matters warranted not being true and being misleading any amount payable by the Seller (whether under this clause 8 or otherwise) is subject to Tax in the hands of the recipient or the person beneficially entitled to such payment (the “Recipient”), the Seller shall pay such additional amounts so as to ensure that the net amount received by the Recipient is equal to the full amount payable by the Seller under this Agreement.

 

8.10                        The Seller undertakes to indemnify the Purchaser on an after-Tax basis against all costs (including legal costs on an indemnity basis as defined in Rule 28(4A) of The Rules of the High Court (Cap. 4A of the Laws of Hong Kong) and expenses or other liabilities which the Purchaser may reasonably incur either before or after the commencement of any action in connection with:

 

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(A)                               the settlement of any claim that any of the Seller Warranties are untrue or misleading or have been breached or that any sum is payable under sub-clause 8.8;

 

(B)                               any legal proceedings in which the Purchaser claims that any of the Seller Warranties are untrue or misleading or have been breached or that any sum is payable under sub-clause 8.8 and in which judgment is given for the Purchaser; or

 

(C)                               the enforcement of any such settlement or judgment.

 

8.11                        If the Seller or the Purchaser (as the case may be) defaults in the payment when due of any sum payable under this Agreement (whether determined by agreement or pursuant to an order of a court or otherwise), the liability of the Seller or the Purchaser (as the case may be) shall be increased to include interest on the balance of such sum outstanding from time to time from the date when such payment is due until the date of actual payment (after as well as before judgment) at a rate per annum of two per cent. above the 12-month Hong Kong Interbank Offered Rate as at the date when such payment is due. Such interest shall accrue from day to day, shall be compounded monthly and shall be payable on demand by the Purchaser or the Seller (as the case may be).

 

8.12                        The Seller undertakes to comply with the obligations set out in Schedule 6 (PRC Tax reporting).

 

9.                                      Purchaser’s remedies

 

9.1                               The Purchaser shall not be entitled to claim that any fact, matter or circumstance causes any of the Seller Warranties to be breached or renders any of the Seller Warranties misleading if it has been fairly disclosed in the Share Purchase Documents, the Disclosure Letter or the Accounts in the absence of any fraud or dishonesty on the part of the Seller or its agents or advisers and only those matters so disclosed in the Share Purchase Documents, the Disclosure Letter or the Accounts shall qualify the Seller Warranties.

 

9.2                               No liability shall attach to the Seller in respect of claims under the Seller Warranties if and to the extent that the limitations referred to in sub-clause 9.1 apply, in the absence of any fraud or dishonesty on the part of the Seller or its agents or advisers.

 

9.3                               The Seller’s liability for any claims under this Agreement shall be limited or excluded, as the case may be, as set out in Schedule 5 (Limitations on Seller’s Liability).

 

9.4                               (A)                               If, between the execution of this Agreement and First Completion, the Purchaser becomes aware (whether it does so by reason of any disclosure made under clause 8.3 (Seller Warranties) or not) that any of the Seller Warranties is or was inaccurate or misleading or that there has been any breach or breaches of any of the Seller Warranties or any other term of this Agreement, in each case having a Material Adverse Effect, the Purchaser may terminate this Agreement by notice in writing to the Seller.

 

24

 

(B)                               If this Agreement is terminated in accordance with sub-clause 9.4(A) (and without limiting the Purchaser’s right to claim damages):

 

(i)                                     the Seller will indemnify the Purchaser on demand on an after-Tax basis for all reasonable costs and expenses incurred by the Purchaser in accordance with sub-clause 18.2 (Costs and expenses); and

 

(ii)                                  all obligations of the Purchaser under this Agreement shall end (except for the provisions of clauses 16 (Announcements) and 17 (Confidentiality)),

 

but (for the avoidance of doubt) all rights and liabilities of the parties which have accrued before termination for breach of this Agreement shall continue to exist.

 

(C)                               (For the avoidance of doubt but without limiting clause 11 (Remedies and waivers)), the Purchaser’s right to terminate this Agreement in accordance with sub-clause 9.4(A) is not exclusive of any rights, powers and remedies provided by law.

 

9.5                               (A)                               If, between First Completion and Second Completion, the Purchaser becomes aware (whether it does so by reason of any disclosure made under clause 8.3 (Seller Warranties) or not) that any of the Seller Warranties is or was inaccurate or misleading or that there has been any breach or breaches of any of the Seller Warranties or any other term of this Agreement, in each case having a Material Adverse Effect, the Purchaser may elect not to proceed to Second Completion by notice in writing to the Seller.

 

(B)                               If the Purchaser elects not to proceed to Second Completion in accordance with sub-clause 9.5(A) (and without limiting the Purchaser’s right to claim damages):

 

(i)                                     the Seller will indemnify the Purchaser on demand on an after-Tax basis for all reasonable costs and expenses incurred by the Purchaser (including, but not limited to, the fees of all external legal advisers and their disbursements and out of pocket expenses) in connection with the Second Completion or the preparation thereof; and

 

(ii)                                  all obligations of the parties under clause 7 (Second Completion) shall end.

 

9.6                               If, following Second Completion, the Purchaser becomes aware that there has been any breach of the Seller Warranties or any other term of this Agreement, the Purchaser shall not be entitled to terminate this Agreement but shall be entitled to claim damages or exercise any other right, power or remedy under this Agreement or as otherwise provided by law.

 

25

 

10.                               Effect of Completion

 

Any provision of this Agreement and any other documents referred to in it which is capable of being performed after but which has not been performed at or before either Completion and all Warranties, indemnities, covenants and other undertakings and obligations contained in or entered into pursuant to this Agreement shall remain in full force and effect notwithstanding either Completion.

 

11.                               Remedies and waivers

 

11.1                        No delay or omission by any party to this Agreement in exercising any right, power or remedy provided by law or under this Agreement or any other documents referred to in it shall:

 

(A)                               affect that right, power or remedy; or

 

(B)                               operate as a waiver of it.

 

11.2                        The single or partial exercise of any right, power or remedy provided by law or under this Agreement shall not preclude any other or further exercise of it or the exercise of any other right, power or remedy.

 

11.3                        The rights, powers and remedies provided in this Agreement are cumulative and not exclusive of any rights, powers and remedies provided by law.

 

12.                               Assignment

 

No party shall without the prior written consent of the other party:

 

(A)                               assign, or purport to assign, all or any part of the benefit of, or its rights or benefits under, this Agreement or any other Share Purchase Document (together with any causes of action arising in connection with any of them);

 

(B)                               make a declaration of trust in respect of or enter into any arrangement whereby it agrees to hold in trust for any other person all or any part of the benefit of, or its rights or benefits under, this Agreement or any other Share Purchase Document; or

 

(C)                               sub-contract or enter into any arrangement whereby another person is to perform any or all of its obligations under this Agreement or any other Share Purchase Document.

 

13.                               Further assurance

 

The Seller shall at its own cost, from time to time on request of the Purchaser, now or at any time in the future, do or procure the doing of all acts and/or execute or procure the execution of all documents in a form satisfactory to the Purchaser which the Purchaser may consider necessary for giving full effect to the Share Purchase Documents and securing to the Purchaser the full benefit of the rights, powers and remedies conferred upon the Purchaser in the Share Purchase Documents.

 

26

 

14.                               Entire agreement

 

14.1                        The Share Purchase Documents constitute the whole and only agreement between the parties relating to the sale and purchase of the Sale Shares.

 

14.2                        Except in the case of fraud, each party acknowledges that it is entering into the Share Purchase Documents in reliance upon only the Share Purchase Documents and that it is not relying upon any other pre-contractual statement.

 

14.3                        For the purposes of this clause, “pre-contractual statement” means any draft, agreement, undertaking, representation, warranty, promise, assurance or arrangement of any nature whatsoever, whether or not in writing, relating to the subject matter of the Share Purchase Documents made or given by any person at any time prior to this Agreement becoming legally binding.

 

14.4                        This Agreement may only be varied in writing signed by each of the parties.

 

15.                               Notices

 

15.1                        A notice under this Agreement shall only be effective if it is in writing. E-mail is permitted.

 

15.2                        Notices under this Agreement shall be sent to a party at its address or number and for the attention of the individual or department set out below:

 

	
Party
    	
 
    	
Address
    	
 
    	
Facsimile no.
    	
 
    	
E-mail address
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Seller
    	
 
    	
c/o Concord Greater China Limited
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
c/o Kofu International Limited
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
2nd Floor, Jonsim Place
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
228 Queen’s Road East, Wanchai
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Hong Kong
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention: Regine Luk
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
with a copy (which shall not
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
constitute notice) to:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Clifford Chance LLP
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
33rd Floor, China World Tower One
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
1 Jianguomenwai Street
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Beijing 100004
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
People’s Republic of China
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention: Terence Foo
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Purchaser
    	
 
    	
c/o Alibaba Group Services Limited
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
26th Floor, Tower One, Times Square
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
1 Matheson Street, Causeway Bay
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Hong Kong
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention: General Counsel
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
with a copy (which shall not
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
constitute notice nor impose any duty
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
to notify Alibaba of such notice or any
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
change in the details below) to:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Slaughter and May
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
47/F, Jardine House
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
One Connaught Place, Central
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Hong Kong
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention: Benita Yu
    	
 
    	
 
    	
 
    	
 
    

 

27

 

Provided that a party may change its notice details on giving notice to the other party of the change in accordance with this clause 15. That notice shall only be effective on the day falling five clear Business Days after the notification has been received or such later date as may be specified in the notice.

 

15.3                        Any notice given under this Agreement shall, in the absence of earlier receipt, be deemed to have been duly given as follows:

 

(A)                               if delivered personally, on delivery;

 

(B)                               if sent by airmail, six clear Business Days after the date of posting;

 

(C)                               if sent by facsimile, at the expiration of 48 hours after the time it was sent; and

 

(D)                               if sent by e-mail, upon confirmation (electronic or otherwise) of delivery receipt of such e-mail.

 

15.4                        Any notice given under this Agreement outside Working Hours in the place to which it is addressed shall be deemed not to have been given until the start of the next period of Working Hours in such place.

 

15.5                        The provisions of this clause 15 shall not apply in relation to the service of Service Documents.

 

16.                               Announcements

 

16.1                        Neither party shall, and each party shall procure that each of its Relevant Persons shall not, make any announcement concerning the transaction contemplated under this Agreement or any Share Purchase Document or any ancillary matter without the prior written approval of the other party. This sub-clause does not apply in the circumstances described in sub-clause 16.2. For the purpose of this clause 16, a “Relevant Person”, in relation to the Seller, means any member of the Retained Group and, in relation to the Purchaser, means any member of the Purchaser’s Group.

 

28

 

16.2                        Either party, after consultation with the other party, may, and shall not be required to procure that any Relevant Person shall not, make an announcement concerning the transaction contemplated under this Agreement or any Share Purchase Agreement or any ancillary matter if required by:

 

(A)                               law;

 

(B)                               existing contractual obligations; or

 

(C)                               any securities exchange or Regulatory Authority to which that party or Relevant Person (as the case may be) is subject, wherever situated, whether or not the requirement has the force of law,

 

in which case the first-mentioned party shall take all such steps as may be reasonable and practicable in the circumstances to agree the contents of the announcement with the other party before making the announcement.

 

16.3                        The restrictions contained in this clause 16 shall continue to apply after each Completion or the termination of this Agreement without limit in time.

 

17.                               Confidentiality

 

17.1                        Subject to clause 16 (Announcements) and sub-clause 17.2:

 

(A)                               each party shall treat as confidential and not disclose or use any information received or obtained as a result of entering into or performing the Share Purchase Documents which relates to:

 

(i)                                     the provisions of the Share Purchase Documents; or

 

(ii)                                  the negotiations relating to the Share Purchase Documents;

 

(B)                               the Purchaser shall treat, and shall procure that each member of the Purchaser’s Group shall treat, as confidential and not disclose or use any information concerning any member of the Retained Group and (prior to First Completion) the Group obtained or received as a result of the negotiation and entering into of the Share Purchase Documents; and

 

(C)                               the Seller shall treat, and shall procure that each member of the Retained Group shall treat, as confidential and not disclose or use any information concerning any member of the Purchaser’s Group obtained or received as a result of the negotiation and entering into of the Share Purchase Documents.

 

17.2                        Notwithstanding the provisions of sub-clause 17.1, a party may disclose or use any such confidential information if and to the extent:

 

(A)                               required by applicable law of any relevant jurisdiction or for the purposes of any Proceedings;

 

29

 

(B)                               required by any securities exchange or Regulatory Authority to which that party is subject, wherever situated, whether or not the requirement for information has the force of law;

 

(C)                               required to vest the full benefit of any Share Purchase Document in that party;

 

(D)                               the disclosure is made to the professional advisers, auditors and bankers of that party on a need to know basis and provided they have a duty to keep such information confidential;

 

(E)                                the information has come into the public domain through no fault of that party; or

 

(F)                                 the other party has given prior written consent to the disclosure.

 

Provided that any such information disclosed pursuant to sub-clause 17.2(A) or (B) shall be disclosed only after notice has been given to the other party of such requirement with a view to providing the other party with the opportunity to contest such disclosure or use or otherwise agreeing the content and timing of such disclosure.

 

17.3                        The restrictions contained in this clause 17 shall continue to apply after either Completion or the termination of this Agreement without limit in time.

 

18.                               Costs and expenses

 

18.1                        Except as otherwise stated in sub-clauses 18.2 and 18.3 and any other provision of this Agreement or the other Share Purchase Documents, each party shall pay its own costs and expenses in relation to the negotiations leading up to the sale and purchase of the Sale Shares and the preparation, execution and carrying into effect of this Agreement, the other Share Purchase Documents and all other documents referred to in this Agreement and the Seller confirms that no expense of whatever nature relating to the sale and purchase of the Sale Shares has been or is to be borne by any member of the Group.

 

18.2                        The Seller shall indemnify the Purchaser on demand on an after-Tax basis (and the amount payable under the indemnity may, without limiting the Purchaser’s rights, be claimed as a debt or liquidated demand) in respect of all reasonable costs and expenses incurred by the Purchaser (including, but not limited to, the fees of all external legal advisers and their disbursements and out of pocket expenses):

 

(A)                               in connection with investigating the affairs of the Group;

 

(B)                               in connection with the negotiation, preparation, execution and carrying into effect of the Share Purchase Documents and all other documents forming part of the sale and purchase of the Sale Shares; and

 

(C)                               in enforcing, perfecting, protecting or preserving or seeking to enforce, perfect, protect or preserve any of the Purchaser’s rights, or in suing for or recovering any sum due from the Seller under this Agreement if the Purchaser exercises its right to terminate or rescind this Agreement or not to proceed to First Completion pursuant to sub-clauses 3.6 or 3.8 (Conditions), sub-clause 6.5 (First Completion), or exercises its right to terminate this Agreement under sub-clause 9.4 (Purchaser’s remedies) or any other provision of this Agreement or any document referred to in it.

 

30

 

18.3        Any stamp duty payable on the sale and purchase of the Sale Shares shall be borne equally by the Seller and the Purchaser.

 

19.          Counterparts

 

19.1        This Agreement may be executed in any number of counterparts, and by the parties on separate counterparts, but shall not be effective until each party has executed at least one counterpart.

 

19.2        Each counterpart shall constitute an original of this Agreement, but all the counterparts shall together constitute but one and the same instrument.

 

20.          Invalidity

 

If at any time any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, that shall not affect or impair:

 

(A)          the legality, validity or enforceability in that jurisdiction of any other provision of this Agreement; or

 

(B)          the legality, validity or enforceability under the law of any other jurisdiction of that or any other provision of this Agreement.

 

21.          Contracts (Rights of Third Parties) Ordinance

 

The parties do not intend that any term of this Agreement should be enforceable, by virtue of the Contracts (Rights of Third Parties) Ordinance (Cap. 623 of the Laws of Hong Kong), by any person who is not a party to this agreement, save that, in the event that any Sale Shares have been acquired by any Purchaser’s Designee(s), such right, power, remedy or benefit as would be exercisable by, or would accrue to, the Purchaser pursuant to any term of this Agreement had it acquired such Sale Shares shall also be exercisable by, or shall also accrue to, such Purchaser’s Designee(s).

 

22.          Choice of governing law

 

This Agreement is to be governed by and construed in accordance with Hong Kong law. Any matter, claim or dispute arising out of or in connection with this Agreement, whether contractual or non-contractual, is to be governed by and determined in accordance with Hong Kong law.

 

31

 

23.          Jurisdiction

 

23.1        The courts of Hong Kong are to have jurisdiction to settle any dispute, whether contractual or non-contractual, arising out of or in connection with this Agreement. Any Proceedings may be brought in the Hong Kong courts.

 

23.2        Each party waives (and agrees not to raise) any objection, on the ground of forum non conveniens or on any other ground, to the taking of Proceedings by the other party in any court in accordance with this clause. Each party also agrees that a judgment against it in Proceedings brought in any jurisdiction in accordance with this clause shall be conclusive and binding upon it and may be enforced in any other jurisdiction.

 

23.3        Each party irrevocably submits and agrees to submit to the jurisdiction of the Hong Kong courts and of any other court in which Proceedings may be brought.

 

24.          Agent for service

 

24.1        The Seller irrevocably appoints the Process Agent (Attn: The Service Process Team) to be its agent for the receipt of Service Documents. It agrees that any Service Document may be effectively served on it in connection with Proceedings in Hong Kong by service on its agent effected in any manner permitted by Hong Kong law.

 

24.2        If the agent of the Seller at any time ceases for any reason to act as such, the Seller shall appoint a replacement agent having an address for service in Hong Kong and shall notify the Purchaser of the name and address of the replacement agent. Failing such appointment and notification, the Purchaser shall be entitled by notice to the Seller to appoint a replacement agent to act on behalf of the Seller. The provisions of this clause applying to service on an agent apply equally to service on a replacement agent.

 

24.3        A copy of any Service Document served on an agent of a party shall be sent by post to that party. Failure or delay in so doing shall not prejudice the effectiveness of service of the Service Document.

 

25.          Language

 

25.1        Each notice, demand, request, statement, instrument, certificate, or other communication under or in connection with this Agreement shall be:

 

(A)          in English; or

 

(B)          if not in English, accompanied by an English translation which is certified by an officer of the party giving the communication to be true and accurate.

 

25.2        The receiving party or its agent (as appropriate) shall be entitled to assume the accuracy of and rely upon any English translation of any document provided pursuant to sub-clause 25.1(B).

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date first before written.

 

	
KOFU INTERNATIONAL LIMITED
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Yin Chung-Yao
    	
 
    
	
 
    	
Name:
    	
Yin Chung-Yao
    	
 
    
	
 
    	
Title:
    	
Authorised Signatory
    	
 
    

 

[Signatory Page to Kofu Sunny SPA]

 

 

	
TAOBAO CHINA HOLDING LIMITED
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Timothy Alexander STEINERT
    	
 
    
	
 
    	
Name:
    	
Timothy Alexander STEINERT
    	
 
    
	
 
    	
Title:
    	
Director
    	
 
    

 

[Signatory page to Kofu Listco SPA]Exhibit 4.38

 

Execution Version

 

	
 
    

 

SHARE PURCHASE AGREEMENT

 

by and among

 

ALI PANINI INVESTMENT LIMITED,

 

each of the individuals and their respective holding companies listed on Schedule I attached

hereto,

 

each of the Selling Shareholders (as defined herein) listed on Schedule II attached hereto,

 

ALI PANINI INVESTMENT HOLDING LIMITED,

 

and

 

RAJAX HOLDING

 

Dated as of April 2, 2018

 

	
 
    

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE I
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
DEFINED TERMS   AND INTERPRETATION
    	
 
    
	
 
    	
 
    	
 
    
	
SECTION 1.01
    	
Defined Terms
    	
2
    
	
SECTION 1.02
    	
Other Defined Terms
    	
14
    
	
SECTION 1.03
    	
Interpretations
    	
17
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE II
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
PURCHASE AND   SALE
    	
 
    
	
 
    	
 
    	
 
    
	
SECTION 2.01
    	
Purchase and Sale of   Shares
    	
17
    
	
SECTION 2.02
    	
Closing; Closing Date
    	
18
    
	
SECTION 2.03
    	
Closing Deliverables
    	
18
    
	
SECTION 2.04
    	
Escrow Arrangements
    	
21
    
	
SECTION 2.05
    	
Post-Closing Audit   Adjustment
    	
21
    
	
SECTION 2.06
    	
Company Share Awards
    	
23
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE III
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
REPRESENTATIONS   AND WARRANTIES OF THE COMPANY
    	
 
    
	
 
    	
 
    	
 
    
	
SECTION 3.01
    	
Organization, Good   Standing and Qualification
    	
25
    
	
SECTION 3.02
    	
Capitalization and   Voting Rights
    	
25
    
	
SECTION 3.03
    	
Corporate Structure;   Subsidiaries
    	
28
    
	
SECTION 3.04
    	
Authorization
    	
28
    
	
SECTION 3.05
    	
SAFE Rules and Regulations;   Consents; No Conflicts
    	
29
    
	
SECTION 3.06
    	
Compliance with Laws;   Consents
    	
29
    
	
SECTION 3.07
    	
Tax Matters
    	
30
    
	
SECTION 3.08
    	
Charter Documents;   Books and Records
    	
33
    
	
SECTION 3.09
    	
Financial Statements
    	
34
    
	
SECTION 3.10
    	
Changes
    	
34
    
	
SECTION 3.11
    	
Actions
    	
36
    
	
SECTION 3.12
    	
Liabilities
    	
36
    
	
SECTION 3.13
    	
Commitments
    	
36
    
	
SECTION 3.14
    	
Anti-Bribery,   Anti-Corruption, Anti-Money Laundering and Sanctions; Absence of Government   Interests
    	
38
    
	
SECTION 3.15
    	
Title Properties
    	
39
    
	
SECTION 3.16
    	
Related Party   Transactions
    	
39
    
	
SECTION 3.17
    	
Intellectual Property   Rights
    	
40
    
	
SECTION 3.18
    	
Labor and Employment   Matters
    	
41
    
	
SECTION 3.19
    	
Internal Controls
    	
43
    

 

i

 

	
SECTION 3.20
    	
Insolvency
    	
43
    
	
SECTION 3.21
    	
Disclosure
    	
43
    
	
SECTION 3.22
    	
Insurance
    	
43
    
	
SECTION 3.23
    	
Employee-Related   Companies
    	
43
    
	
SECTION 3.24
    	
Business Contracts of   the Domestic Company
    	
44
    
	
SECTION 3.25
    	
Certain Operating   Metrics
    	
44
    
	
SECTION 3.26
    	
Registered Address of   the Domestic Company and the WFOE
    	
44
    
	
SECTION 3.27
    	
Third Parties Providing   Catering Services
    	
44
    
	
SECTION 3.28
    	
Series G-1   Post-Closing Covenants
    	
44
    
	
SECTION 3.29
    	
Anti-Takeover   Provisions
    	
44
    
	
SECTION 3.30
    	
Brokers
    	
44
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE IV
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
REPRESENTATIONS   AND WARRANTIES OF PURCHASER
    	
 
    
	
 
    	
 
    	
 
    
	
SECTION 4.01
    	
Corporate Organization
    	
44
    
	
SECTION 4.02
    	
Purchaser Ownership
    	
45
    
	
SECTION 4.03
    	
Authority Relative to   This Agreement
    	
45
    
	
SECTION 4.04
    	
Consents
    	
45
    
	
SECTION 4.05
    	
Sufficient Funds
    	
45
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE V
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
REPRESENTATIONS   AND WARRANTIES OF EACH SHAREHOLDER
    	
 
    
	
 
    	
 
    	
 
    
	
SECTION 5.01
    	
Corporate Organization
    	
46
    
	
SECTION 5.02
    	
Title
    	
46
    
	
SECTION 5.03
    	
Authority Relative to   This Agreement
    	
46
    
	
SECTION 5.04
    	
Consents
    	
46
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE VI
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CONDUCT OF   BUSINESS PENDING THE CLOSING
    	
 
    
	
 
    	
 
    	
 
    
	
SECTION 6.01
    	
Conduct of Business by   the Company Pending the Closing
    	
47
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE VII
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ADDITIONAL   AGREEMENTS
    	
 
    
	
 
    	
 
    	
 
    
	
SECTION 7.01
    	
Access to Information
    	
51
    
	
SECTION 7.02
    	
No Solicitation of   Transactions
    	
52
    
	
SECTION 7.03
    	
Notification of Certain   Matters
    	
52
    
	
SECTION 7.04
    	
Participation in   Litigation
    	
53
    
	
SECTION 7.05
    	
Resignations
    	
53
    
	
SECTION 7.06
    	
Confidentiality; Public   Announcements
    	
53
    
	
SECTION 7.07
    	
SAFE Registration
    	
53
    

 

ii

 

	
SECTION 7.08
    	
Tax Filings and Payments
    	
54
    
	
SECTION 7.09
    	
Domestic Company Equity   Transfers
    	
55
    
	
SECTION 7.10
    	
Registration of Share   Pledge
    	
55
    
	
SECTION 7.11
    	
Replacement of   Management
    	
56
    
	
SECTION 7.12
    	
Permits and Licenses   Amendment
    	
56
    
	
SECTION 7.13
    	
Further Assurances;   Filings
    	
56
    
	
SECTION 7.14
    	
Audited 2017 Financial   Statements
    	
56
    
	
SECTION 7.15
    	
Release of Claims
    	
57
    
	
SECTION 7.16
    	
Compliance with   Anti-Corruption Laws
    	
57
    
	
SECTION 7.17
    	
Approved Sale
    	
57
    
	
SECTION 7.18
    	
Shareholders   Representative
    	
58
    
	
SECTION 7.19
    	
Release of Share Charge
    	
58
    
	
SECTION 7.20
    	
Integration Committee
    	
59
    
	
SECTION 7.21
    	
Termination of Certain   Agreements
    	
59
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE VIII
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CONDITIONS TO   THE CLOSING
    	
 
    
	
 
    	
 
    	
 
    
	
SECTION 8.01
    	
Conditions to the   Obligations of Each Party
    	
59
    
	
SECTION 8.02
    	
Conditions to the   Obligations of Purchaser
    	
59
    
	
SECTION 8.03
    	
Conditions to the   Obligations of the Selling Shareholders
    	
61
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE IX
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
TERMINATION AND   INDEMNIFICATION
    	
 
    
	
 
    	
 
    	
 
    
	
SECTION 9.01
    	
Termination
    	
62
    
	
SECTION 9.02
    	
Effect of Termination
    	
63
    
	
SECTION 9.03
    	
Indemnity
    	
63
    
	
SECTION 9.04
    	
Indemnification   Procedures
    	
64
    
	
SECTION 9.05
    	
Limitations on   Indemnity
    	
65
    
	
SECTION 9.06
    	
Tax Treatment of   Indemnification Payments
    	
67
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE X
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
GENERAL   PROVISIONS
    	
 
    
	
 
    	
 
    	
 
    
	
SECTION 10.01
    	
Successors and Assigns
    	
67
    
	
SECTION 10.02
    	
Governing Law
    	
67
    
	
SECTION 10.03
    	
Dispute Resolution
    	
67
    
	
SECTION 10.04
    	
Notices
    	
68
    
	
SECTION 10.05
    	
Rights Cumulative;   Specific Performance
    	
68
    
	
SECTION 10.06
    	
Fees and Expenses
    	
69
    
	
SECTION 10.07
    	
Restriction on the Use   of Name
    	
69
    
	
SECTION 10.08
    	
Finder’s Fee
    	
70
    
	
SECTION 10.09
    	
Severability
    	
70
    

 

iii

 

	
SECTION 10.10
    	
Amendments and Waivers
    	
70
    
	
SECTION 10.11
    	
No Waiver
    	
71
    
	
SECTION 10.12
    	
Delays or Omissions
    	
71
    
	
SECTION 10.13
    	
No Presumption
    	
71
    
	
SECTION 10.14
    	
Counterparts
    	
71
    
	
SECTION 10.15
    	
Entire Agreement
    	
71
    
	
 
    	
 
    
	
SCHEDULE I
    	
Principals and   Principal Holdcos
    
	
SCHEDULE II
    	
Selling Shareholders
    
	
SCHEDULE III
    	
Capitalization Table
    
	
SCHEDULE IV
    	
Certain Group Companies
    
	
SCHEDULE V
    	
Notices
    
	
SCHEDULE VI
    	
Key Employees
    
	
SCHEDULE VII
    	
Company Disclosure   Schedule
    
	
SCHEDULE VIII
    	
Selling Shareholders   Disclosure Schedule
    
	
 
    	
 
    
	
EXHIBIT A-1
    	
Form of Deed of   Transfer for Selling Shareholders
    
	
EXHIBIT A-2
    	
Form of Deed of   Transfer for the Rollover Shareholder
    
	
EXHIBIT B
    	
Form of Cayman Islands   Legal Opinion
    
	
EXHIBIT C
    	
Benchmark Date Net Debt   Calculation Principles
    

 

iv

 

THIS SHARE PURCHASE AGREEMENT (this “Agreement”) is made and entered into on April 2, 2018 by and among:

 

1.              Ali Panini Investment Limited, a company organized under the Laws of the Cayman Islands (“Purchaser”),

 

2.              each of the individuals and their respective holding companies listed on Schedule I attached hereto (each such individual, a “Principal” and collectively, the “Principals”, and each such holding company, a “Principal Holdco” and collectively, the “Principal Holdcos”),

 

3.              each of the Persons (as defined herein) listed on Column 1 of Schedule II attached hereto (including each of the Former Company Share Award Holders (as defined herein) listed in Appendix A thereto, as may be updated and delivered by the Company to Purchaser prior to the Closing) (each such Person, a “Selling Shareholder” and collectively, the “Selling Shareholders”),

 

4.              Ali Panini Investment Holding Limited, a business company incorporated under the Laws of Hong Kong (the “Rollover Shareholder”), and

 

5.              Rajax Holding, a company organized under the Laws of the Cayman Islands (the “Company”).

 

Each of the parties to this Agreement as of the date hereof, and each Exercising Company Share Award Holder (as defined herein) and Rollover Option Holder (as defined herein) who becomes a party to this Agreement prior to the Closing in accordance with the terms hereof, is referred to herein individually as a “Party” and collectively as the “Parties”.

 

RECITALS

 

WHEREAS, the Selling Shareholders and the Rollover Shareholder collectively own all of the issued and outstanding Ordinary Shares (as defined herein) and Preferred Shares (as defined herein) of the Company (collectively, the “Shares”);

 

WHEREAS, each Selling Shareholder desires to sell to Purchaser, and Purchaser desires to purchase from each Selling Shareholder, for cash such type and number of Shares as set forth opposite such Selling Shareholder’s name under Columns 2 and 3 of Schedule II attached hereto upon the terms and subject to the conditions set forth in this Agreement;

 

WHEREAS, the Rollover Shareholder and Purchaser desire that the Rollover Shareholder will roll over and exchange all of its Shares for newly issued shares of Purchaser; and

 

WHEREAS, this Agreement and the transactions contemplated hereby have been duly (i) approved by the Board (as defined herein) and (ii) approved in writing by each of the “Drag Holders” under the ROFR Agreement (as defined herein), and are being implemented as an “Approved Sale” under the ROFR Agreement and the Memorandum and Articles (as defined herein).

 

1

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, each of the Parties hereby agrees as follows:

 

ARTICLE I

 

DEFINED TERMS AND INTERPRETATION

 

SECTION 1.01              Defined Terms. For purposes of this Agreement:

 

“Accounting Standards” means, with respect to any of the Group Companies which is established in the PRC, PRC GAAP, applied on a consistent basis; and with respect to other Group Companies not established in the PRC or the consolidated financial statements of the Group Companies, the generally accepted accounting principles in the United States, applied on a consistent basis.

 

“Action” means any charge, claim, action, complaint, petition, investigation, appeal, suit, litigation, grievance, inquiry or other proceeding, whether administrative, civil, regulatory or criminal, whether at law or in equity, or otherwise under any applicable Law, and whether or not before any mediator, arbitrator or Governmental Authority.

 

“Affiliate” means, with respect to a Person, any other Person that, directly or indirectly, Controls, is Controlled by or is under common Control with such Person. Solely for the purpose of this Agreement and notwithstanding the foregoing, (i) “Affiliate” of Purchaser means Alibaba Group Holding Limited and its Controlled Affiliates, and (ii) the Person that owns the tradename of “蚂蚁金服” or domain name www.antfin.com and the Internet Content Provider License for the operation of such domain name (currently known as “浙江蚂蚁小微金融服务集团股份有限公司”) or, the ultimate holding entity that Controls such Person and the Controlled Affiliates of such ultimate holding entity shall be deemed to be Affiliates of Purchaser.

 

“Aggregate Selling Shareholders Percentage” means a percentage equal to (i) the number of Aggregate Sale Shares divided by (ii) the sum of the number of Aggregate Sale Shares plus the aggregate number of Rollover Shares.

 

“Agreement” has the meaning set forth in the Preamble, which shall, for the avoidance of doubt, include all exhibits and schedules hereto.

 

“Alibaba Business Cooperation Agreement” means the Business Cooperation Agreement, dated as of February 8, 2016, by and among the Rajax WFOE, the Rajax Domestic Company, certain Affiliates of the Rollover Shareholder and certain other parties thereto, as amended and supplemented from time to time.

 

“Alibaba Director” has the meaning set forth in the Shareholders Agreement.

 

“Associate” means, with respect to any Person, (i) a corporation or organization (other than the Group Companies) of which such Person is a senior management personnel or partner or is, directly or indirectly, the record or beneficial owner of five (5) percent or more of any class of Equity Securities of such corporation or organization, (ii) any trust or other estate in which such Person has a substantial beneficial interest or as to which such Person serves as trustee or in a similar capacity, or (iii) any relative or spouse of such Person, or any relative of such spouse.

 

2

 

“Baidu Agreements” means the following contracts collectively: (i) Business Cooperation Agreement I (业务合作协议 (一) ) dated August 24, 2017 by and among Baidu Wangxun Technology Co., Ltd. (北京百度网讯科技有限公司, “Baidu Wangxun”), Baidu (Hong Kong) Limited, Xiaodu Shenghuo, Rajax Holding, Rajax WFOE and Rajax Domestic Company; (ii) Business Cooperation Agreement II (业务合作协议(二) ) dated August 24, 2017 by and among Baidu Wangxun, Xiaodu Shenghuo, Rajax WFOE and Rajax Domestic Company; (iii) Trademark Transfer Agreement (商标转让协议) dated August 24, 2017 by and among Baidu Wangxun, Xiaodu WFOE and Xinchi; and (iv) License Agreement (许可协议) dated August 24, 2017 by and among Baidu Wangxun, Baidu Online Network Technology (Beijing) Co., Ltd. (百度在线网络技术(北京)有限公司)and Xiaodu WFOE.

 

“Benchmark Date” means February 28, 2018.

 

“Benchmark Date Net Debt” means, as of 11:59 p.m. (Hong Kong time) on the Benchmark Date, an amount in USD equal to: (i) the sum of the amounts attributable to each of the line items under the heading “Indebtedness” in Exhibit C as of such time, minus (ii) the sum of the amounts attributable to each of the line items under the heading “Cash and Cash Equivalents” in Exhibit C as of such time, calculated in accordance with the Calculation Principles.

 

“Benefit Plan” means any employment Contract, deferred compensation Contract, bonus plan, incentive plan, profit sharing plan, retirement Contract or other employment compensation Contract or any other plan which provides or provided benefits for any past or present employee, officer, consultant, and/or director of a Person or with respect to which contributions are or have been made on account of any past or present employee, officer, consultant, and/or director of such a Person.

 

“Big Four Accounting Firm” means one of the four largest international accounting firms and their respective Affiliates, which are commonly referred to by the respective brand names of Deloitte, PricewaterhouseCoopers, Ernst & Young and KPMG.

 

“Board” or “Board of Directors” means the board of directors of the Company.

 

“Business Day” means any day that is not a Saturday, Sunday, legal holiday or other day on which commercial banks are required or authorized by Law to be closed in the PRC or Hong Kong.

 

“Calculation Principles” means the calculation principles and procedures with respect to Benchmark Date Net Debt set forth on Exhibit C hereto, the component items of which shall be determined on a basis consistent with the Accounting Principles.

 

3

 

“Captive Structure” means the structure under which the WFOEs Controls the Domestic Companies through the Control Documents and Supplemental Control Documents.

 

“Cash and Cash Equivalents” means all cash and cash equivalents held by the Group Companies at such time, determined in accordance with the Accounting Standards.

 

“CFC” means a controlled foreign corporation as defined in Section 957(a) of the Code.

 

“Charter Documents” means, with respect to a particular legal entity, the articles of incorporation, certificate of incorporation, formation or registration (including, if applicable, certificates of change of name), memorandum of association, articles of association, bylaws, articles of organization, limited liability company agreement, trust deed, trust instrument, operating agreement, joint venture agreement, business license, or similar or other constitutive, governing, or charter documents, or equivalent documents, of such entity.

 

“Circular 13” means the Circular of the State Administration of Foreign Exchange on Further Simplifying and Improving the Foreign Exchange Administration Policies for Direct Investment (Huifa (2015) No. 13) issued by SAFE with effect from June 1, 2015, as amended.

 

“Circular 37” means the Circular of the State Administration of Foreign Exchange on Relevant Issues concerning Foreign Exchange Administration of Offshore Investment and Financing and Round Trip Investment through Offshore Special Purpose Companies by PRC Residents (Huifa (2014) No. 37) issued by SAFE on July 14, 2014, as amended.

 

“Circular 7” means the Notice of the State Administration of Foreign Exchange on Issues concerning the Foreign Exchange Administration of Domestic Individuals’ Participation in Equity Incentive Plans of Overseas Listed Companies (Huifa (2012) No. 7) issued by SAFE on February 15, 2012, as amended.

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

 

“CITICPE” means collectively, CE Takeout Limited and CE Takeout II Limited.

 

“Company Option” means each option award issued by the Company pursuant to the ESOP that entitles the holder thereof to purchase one (1) Ordinary Share upon the vesting of such award.

 

“Company Owned IP” means all Intellectual Property owned by, purported to be owned by, or exclusively licensed to, the Group Companies.

 

“Company Parties” means, collectively, the Group Companies, the Principals and the Principal Holdcos.

 

4

 

“Company Registered IP” means all Intellectual Property for which registrations are owned by or held in the name of, or for which applications have been made in the name of, any Group Company.

 

“Company Share Award” means each Company Option and each RSU.

 

“Competing Proposal” means any proposal or offer relating to any of the following (other than the Transactions or such other transaction involving only the Rollover Shareholder, Purchaser and/or their Affiliates): (a) any merger, reorganization, consolidation, share exchange, business combination scheme of arrangement, amalgamation, recapitalization, liquidation, dissolution, joint venture or other similar transaction involving the Company or any of the other Group Companies, (b) any direct or indirect sale, assignment, exchange, transfer, pledge, encumbrance or disposal of in any way, or grant of any interest or right with respect to the disposition of (any of the foregoing, a “Transfer”), lease or license of any assets of the Company or any of the other Group Companies, (c) any direct or indirect Transfer of any equity securities of the Company or any of the other Group Companies to any Person, (d) any Company Change of Control (as defined in the Memorandum and Articles) and (e) any other transaction which would hinder or impede the execution, implementation or consummation of the Transactions or such other transaction involving only Rollover Shareholder Purchaser, and/or their Affiliates.

 

“Consent” means any consent, approval, authorization, release, waiver, permit, grant, franchise, concession, agreement, license, exemption or order of, registration, certificate, declaration or filing with, or report or notice to, any Person, including any Governmental Authority.

 

“Contract” means, a contract, agreement, understanding, indenture, note, bond, loan, instrument, lease, mortgage, franchise, license, commitment, purchase order, and other legally binding arrangement, whether written or oral.

 

“Control” of a given Person means the power or authority, whether exercised or not, to direct the business, management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by Contract or otherwise; provided, that such power or authority shall conclusively be presumed to exist upon possession of beneficial ownership or power to direct the vote of more than fifty percent (50%) of the votes entitled to be cast at a meeting of the members or shareholders of such Person or power to control the composition of a majority of the board of directors of such Person. The terms “Controlled” and “Controlling” have meanings correlative to the foregoing.

 

“Control Documents” means the contracts set out in Section 1.01(a) to the Company Disclosure Schedule.

 

“Data Protection Laws” means Laws in respect of online data protection, including without limitation, Provisions on Protecting the Personal Information of Telecommunications and Internet Users (电信和互联网用户个人信息保护规定), Decision of the Standing Committee of National People’s Congress on Strengthening Information Protection on Networks (全国人大常委关于加强网络信息保护的决定) and Interpretation by the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues concerning the Application of Law in respect of the Handling of Criminal Cases of Infringing on Citizens’ Personal Information (最高人民法院、最高人民检察院关于办理侵犯公民个人信息刑事案件适用法律若干问题的解释).

 

5

 

“Domestic Companies” means, collectively, the Rajax Domestic Company, Xiaodu Shenghuo, Xunda and Xinchi.

 

“Employee-Related Companies” means Shanghai Taizhou Network & Technology Co., Ltd. (上海泰舟网络科技有限公司) (“Taizhou”) and Shanghai Yuchuan Network & Technology Co., Ltd. (上海育川网络科技有限公司) (“Yuchuan”).

 

“Equity Securities” means, with respect to any Person that is a legal entity, any and all shares of capital stock, membership interests, units, profits interests, phantom interests, ownership interests, equity interests, registered capital, and other equity securities of such Person, and any right, warrant, option, call, commitment, conversion privilege, preemptive right or other right to acquire any of the foregoing, or security convertible into, exchangeable or exercisable for any of the foregoing, or any Contract providing for the acquisition of any of the foregoing.

 

“ESOP” means the Rajax Holding Share Incentive Plan, adopted by the Board and the shareholders of the Company on May 7, 2014, as amended from time to time in accordance with the terms thereof and the Shareholders Agreement effective at that time.

 

“Exercise Price” means, with respect to any Company Option, the exercise price per Share underlying such Company Option.

 

“Exercising Company Share Award Holders” means the holders of Company Options as of the date of this Agreement who exercise such Company Options and are issued Shares in respect thereof at any time prior to the Closing, a true and accurate list of whom shall be delivered by the Company to Purchaser prior to the Closing.

 

“FCPA” means Foreign Corrupt Practices Act of 1977, as amended.

 

“Food Safety Laws” means Laws in respect of catering services provided through online orders, including without limitation, Food Safety Law of the PRC (中华人民共和国食品安全法), Measures for the Investigation and Handling of Illegalities of Online Food Safety (网络食品安全违法行为查处办法), Measures for the Supervision and Administration of Food Safety of Online Catering Services (网络餐饮服务食品安全监督管理办法), Shanghai Supervision Regulation on Online Catering Service (上海市网络餐饮服务监督管理办法) and Beijing Interim Supervision Measures of Online Food Business (北京市网络食品经营监督管理办法(暂行).

 

“Former Company Share Award Holders” means the Selling Shareholders listed in Appendix A of Schedule II attached hereto and, if any, the Exercising Company Share Award Holders who shall each be treated as a Selling Shareholder listed in an updated Appendix A of Schedule II to be delivered by the Company to Purchaser prior to the Closing. For the avoidance of doubt, “Former Company Share Award Holders” shall not include any financial or strategic investors of the Company.

 

6

 

“Fundamental Warranties” means each of the representations and warranties set forth in Section 3.01, Section 3.02, Section 3.03, and Section 3.04.

 

“Governmental Authority” means (i) any government of any nation, federation, province or state or any other political subdivision thereof, (ii) any entity, authority or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any government authority, agency, department, board, commission or instrumentality of the PRC or any other country, or any political subdivision thereof, (iii) any court, tribunal or arbitrator, (iv) any self-regulatory organization, (v) any public international organization, such as the United Nations or the World Bank and (vi) any securities exchange.

 

“Governmental Order” means any applicable order, ruling, decision, verdict, decree, writ, subpoena, mandate, precept, command, directive, consent, approval, award, judgment, injunction or other similar determination or finding by, before or under the supervision of any Governmental Authority.

 

“Group Company” means each of the Company and the entities set forth in Schedule IV hereto and each Subsidiary of any of the foregoing, and “Group” refers to all of Group Companies collectively.

 

“Indebtedness” of any Person means, without duplication, each of the following of such Person: (i) all indebtedness for borrowed money; (ii) any other indebtedness that is evidenced by a note, bond, debenture or similar instrument; (iii) all reimbursement and other obligations with respect to banker’s acceptances, letters of credit, surety bonds and similar obligations; (iv) all payment obligations under any interest rate, foreign exchange or other swaps, options, derivatives and other hedging agreements or arrangements that will be payable upon termination thereof (assuming they were terminated on the date of determination); (v) amounts owing as deferred purchase price for property or services, including all seller notes and “earn out” payments, whether or not matured; (vi) indebtedness secured by a Lien on assets or properties, (vii) obligations or commitments to repay deposits or other amounts advanced by and owing to third parties, (viii) all obligations under capitalized leases, (ix) all obligations to purchase, redeem, retire, defease or otherwise acquire for value any capital stock or any warrants, rights or options to acquire such capital stock, valued, in the case of redeemable preferred stock, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (x) all obligations pursuant to securitization or factoring program or arrangement, (xi) all obligations or undertakings to maintain or cause to be maintained the financial position or covenants of others or to purchase the obligations or property of others, (xii) all direct or indirect guarantees or sureties for indebtedness, obligations, claim or liability of the type referred to in clauses (i) through (xi) above, (xiii) all reserves for litigation, (xiv) all deferred revenues, (xv) any other debt like items, including unsettled payables (other than trade account payables) to any Selling Shareholder or any Subsidiary of such Selling Shareholder and shortfall in contributions to any Benefit Plan (xvi) with respect to any indebtedness, obligation, claim or liability of the type referred to in clauses (i) through (xiv) above, all accrued and unpaid interest, premiums, penalties, breakage costs, unwind costs, fees, termination costs, redemption costs, expenses and other charges with respect thereto, (xvii) Taxes with respect to any taxable period (or any portion thereof) ending on or before the Closing Date that were not previously paid by any Group Company, and (xviii) any net payable owning to Baidu, Inc. and its Subsidiaries.

 

7

 

“Indemnifiable Loss” means, with respect to any Person, any action, claim, cost, damage, deficiency, diminution in value, disbursement, expense, liability, loss, obligation, penalty or settlement of any kind or nature imposed on or otherwise incurred or suffered by such Person, including without limitation, interest, penalties, reasonable legal, accounting and other professional fees and expenses incurred in the investigation, collection, prosecution and defense of claims and amounts paid in settlement and Taxes payable by such Person by reason of the indemnification.

 

“Injunction” means, as of any date, any final, non-appealable judgment, restraining order or permanent injunction, which is in effect as of such date that prohibits the consummation of the Transactions and has been issued by any Governmental Authority in any jurisdiction that is material to the business of Purchaser, the Company and/or their respective Affiliates.

 

“Intellectual Property” means any and all (i) patents, patent rights and applications therefor and reissues, reexaminations, continuations, continuations-in-part, divisions, and patent term extensions thereof, (ii) inventions (whether patentable or not), discoveries, improvements, concepts, innovations and industrial models, (iii) registered and unregistered copyrights, copyright registrations and applications, mask works and registrations and applications therefor, author’s rights and works of authorship (including artwork, Software, computer programs, source code, object code and executable code, firmware, development tools, files, records and data, and related documentation), (iv) URLs, web sites, web pages and any part thereof, (v) technical information, know-how, trade secrets, drawings, designs, design protocols, specifications, proprietary data, customer lists, databases, proprietary processes, technology, formulae, and algorithms and other intellectual property, (vi) trade names, trade dress, trademarks, domain names, service marks, logos, business names, and registrations and applications therefor, and (vii) the goodwill symbolized or represented by the foregoing.

 

“JD Agreements” means, collectively, (i) the O2O Platform Cooperation Agreement (O2O 平台合作协议), dated as of April 8, 2015, between Jiangsu Jingdong Information Technology Co., Ltd. (江苏京东信息技术有限公司) and the Rajax WFOE; (ii) the Supplemental Agreement (补充协议书), dated as of October 9, 2015, between Jiangsu Jingdong Information Technology Co., Ltd. and the Rajax WFOE; and (iii) Promotion Cooperation Agreement (推广合作协议), dated April 8, 2015, between Jiangsu Jingdong Information Technology Co., Ltd. and the Rajax WFOE.

 

“Key Employee” means all employees of the Group Companies with positions of president, chief executive officer, chief financial officer, chief operating officer, chief technical officer, chief sales and marketing officer, general manager, any other managers reporting directly to any Group Company’s Board of Directors, president or chief executive officer, and any other employee with the title of “vice president” or higher.

 

8

 

“Knowledge” means, with respect to the Company Parties, the actual knowledge of any of the Principals, and that knowledge which should have been acquired by each such individual after making such due inquiry and exercising such due diligence as a prudent business person would have made or exercised in the management of his or her business affairs, including but not limited to due inquiry of all officers, directors, employees, consultants and professional advisers (including attorneys, accountants and auditors) of the Group and of its Affiliates who could reasonably be expected to have knowledge of the matters in question.

 

“Law” or “Laws” means any and all publicly announced provisions of any applicable constitution, treaty, statute, law, regulation, ordinance, code, rule, or rule of common law, any governmental approval, concession, grant, franchise, license, agreement, directive, requirement, or other governmental restriction or any similar form of decision of, or determination by, or any interpretation or administration of any of the foregoing by, any Governmental Authority, in each case as amended, and any and all applicable Governmental Orders.

 

“Liabilities” means, with respect to any Person, all liabilities, obligations and commitments of such Person of any nature, whether accrued, absolute, contingent or otherwise, and whether due or to become due.

 

“Lien” means any claim, charge, easement, encumbrance, lease, covenant, security interest, lien, option, pledge, rights of others, or restriction (whether on voting, sale, transfer, disposition or otherwise), whether imposed by Contract, understanding, law, equity or otherwise.

 

“Majority Ordinary Holders” has the meaning given to such term in the Memorandum and Articles.

 

“Majority Preferred Holders” has the meaning given to such term in the Memorandum and Articles.

 

“Material Adverse Effect” means any (i) event, occurrence, fact, condition, change or development that has had, has, or would have, individually or together with other events, occurrences, facts, conditions, changes or developments, a material adverse effect on the business, properties, assets, employees, operations, results of operations, condition (financial or otherwise), prospects, assets or liabilities of the Group taken as a whole, provided that any reduction in the Group Companies’ cash flow or working capital amount occurring from conducting their businesses in the ordinary course of business consistent with past practice shall not by itself constitute a “Material Adverse Effect” (but the event, occurrence, fact, condition, change or development underlying such reduction may be considered in determining whether a Material Adverse Effect has occurred), (ii) material impairment of the ability of any Party (other than Purchaser and/or the Rollover Shareholder) to perform the material obligations of such party under any Transaction Documents, any Control Documents or any Supplemental Control Documents, or (iii) material impairment of the validity or enforceability of this Agreement or any other Transaction Document, any Control Documents, or any Supplemental Control Documents against any Party hereto or thereto (other than Purchaser and/or the Rollover Shareholder).

 

9

 

“Memorandum and Articles” means, collectively, the Twelfth Amended and Restated Memorandum of Association and the Twelfth Amended and Restated Articles of Association of the Company, adopted on August 22, 2017 and effective on August 24, 2017.

 

“MOFCOM” means the Ministry of Commerce of the PRC or, with respect to any matter to be submitted for examination and approval by the Ministry of Commerce, any Governmental Authority which is similarly competent to examine and approve such matter under the laws of the PRC.

 

“Order No. 10” means the Rules for Mergers with and Acquisitions of Domestic Enterprises by Foreign Investors (关于外国投资者并购境内企业的规定) jointly issued by the MOFCOM, the State-owned Assets Supervision and Administration Commission, the State Administration of Taxation, the SAIC, the China Securities Regulatory Commission and the SAFE initially on August 8, 2006, as amended.

 

“Ordinary Shares” means ordinary shares, par value US$0.0000125 per share, of the Company.

 

“Paying Agent” means JPMorgan Chase Bank, N.A., or another internationally recognized bank or trust company selected by Purchaser.

 

“Permitted Liens” means (i) Liens for Taxes not yet delinquent or the validity of which are being contested in good faith and for which there are adequate reserves on the applicable financial statements, (ii) Liens incurred in the ordinary course of business, which (x) do not individually or in the aggregate materially detract from the value, use, or transferability of the assets that are subject to such Liens, and (y) were not incurred in connection with the borrowing of money, and (iii) Liens contemplated under the Captive Structure.

 

“Person” means any individual, corporation, partnership, limited partnership, proprietorship, association, limited liability company, firm, trust, estate or other enterprise or entity.

 

“PFIC” means a passive foreign investment company as defined in Section 1297(a) of the Code.

 

“PRC” means the People’s Republic of China, but solely for the purposes of this Agreement and the other Transaction Documents, excluding the Hong Kong Special Administrative Region, the Macau Special Administrative Region and the islands of Taiwan.

 

“PRC Anti-Unfair Competition Law” means the Anti-Unfair Competition Law of the PRC (中华人民共和国反不正当竞争法) promulgated by the Standing Committee of the National People’s Congress of the PRC and effective on September 2, 1993, as amended from time to time.

 

“PRC GAAP” means PRC generally accepted accounting principles.

 

10

 

“PRC Group Companies” means, collectively, each of the Group Companies incorporated under the Laws of the PRC, including but not limited to the Rajax PRC Companies and the Xiaodu PRC Companies.

 

“Preferred Shares” means, collectively, the series A preferred shares, par value US$0.0000125 per share, of the Company (the “Series A Preferred Shares”), the series B preferred shares, par value US$0.0000125 per share, of the Company (the “Series B Preferred Shares”), the series C preferred shares, par value US$0.0000125 per share, of the Company (the “Series C Preferred Shares”), the series D preferred shares, par value US$0.0000125 per share, of the Company (the “Series D Preferred Shares”), the series E preferred shares, par value US$0.0000125 per share, of the Company (the “Series E Preferred Shares”), the series F preferred shares, par value US$0.0000125 per share, of the Company (the “Series F Preferred Shares”), the series F-1 preferred shares, par value US$0.0000125 per share, of the Company (the “Series F-1 Preferred Shares”), the series G preferred shares, par value US$0.0000125 per share, of the Company (the “Series G Preferred Shares”), and the series G-1 preferred shares, par value US$0.0000125 per share, of the Company (the “Series G-1 Preferred Shares”).

 

“Prohibited Person” means any Person that is (i) a national or resident of any U.S. embargoed or restricted country, (ii) included on, or Affiliated with any Person on, the United States Commerce Department’s Denied Parties List, Entities and Unverified Lists; the U.S. Department of Treasury’s Specially Designated Nationals, Specially Designated Narcotics Traffickers or Specially Designated Terrorists, or the Annex to Executive Order No. 13224; the Department of State’s Debarred List; UN Sanctions, or (iii) a Person with whom business transactions, including exports and re-exports, are restricted by a U.S. Governmental Authority, including, in each clause above, any updates or revisions to the foregoing and any newly published rules.

 

“Public Official” means any executive, official, or employee of a Governmental Authority, political party or member of a political party, political candidate; executive, employee or officer of a public international organization; or director, officer or employee or agent of a wholly or partially state-owned, or partially state-owned, state-Controlled, or state-operated enterprise, including a PRC state-owned, state-Controlled, or state-operated enterprise.

 

“Purchaser Parties” means collectively, Purchaser and the Rollover Shareholder.

 

“Qualified Tax Advisor” means such Big Four Accounting Firms approved by Purchaser in writing, or such other professional tax advisor as may be agreed in writing between Shareholders Representative and Purchaser, for the purposes of carrying out the actions set forth in Section 7.08.

 

“Rajax PRC Companies” means the Rajax WFOE, the Rajax Domestic Company, the Rajax WFOE Subsidiary, Hongyi, Pengxun, Zhiguan and Fengniao.

 

“Related Party” means any Affiliate, senior management, director, supervisory board member, or holder of any Equity Security of any Group Company, and any Affiliate or Associate of any of the foregoing.

 

11

 

“Restrictive Provisions” means any provisions in the Contracts to which a Group Company is a party that restricts the ability of any Group Company or any other Person to conduct or engage in any business or activity with Alibaba or any of its Affiliates.

 

“ROFR Agreement” means the Tenth Amended and Restated Right of First Refusal & Co-Sale Agreement entered into by and among the parties named therein on August 24, 2017.

 

“Rollover Employee Options” means certain Company Options issued and outstanding as of, or issued after, the date of this Agreement which remain unexercised as of the Closing and which are listed in the Rollover Employee Option Confirmation Letter.

 

“Rollover Employee Shares” means the Ordinary Shares listed as “Rollover Employee Shares” in Column 2 of Appendix A to Schedule II which were issued upon the exercise of Company Options on or after February 28, 2018 and prior to the Closing.

 

“RSU” means the restricted share units, pursuant to which certain number of Ordinary Shares have been reserved for issuance to the Principals and/or Principal Holdcos.

 

“SAFE” means the State Administration of Foreign Exchange of the PRC.

 

“SAFE Rules and Regulations” means collectively, Circular 7, Circular 13, Circular 37 and any other applicable SAFE rules and regulations.

 

“SAIC” means the State Administration for Industry and Commerce of the PRC or, with respect to the issuance of any business license or filing or registration to be effected by or with the State Administration of Industry and Commerce, any Governmental Authority which is similarly competent to issue such business license or accept such filing or registration under the Laws of the PRC.

 

“Seller Pro Rata Share” shall mean, with respect to a Selling Shareholder, a fraction, the numerator of which is the total number of Sale Shares of such Selling Shareholder and the denominator of which is the total number of Aggregate Sale Shares.

 

“Sequoia” shall mean, collectively, Sequoia Capital CV IV Holdco, Ltd. and Sequoia Capital China GF Holdco III-A, Ltd.

 

“Share Restriction Agreements” means, collectively, the Share Restriction Agreements, each dated August 24, 2015, executed by the Company, the Principals and the Principal Holdcos and certain other parties thereto.

 

“Shareholder Pro Rata Share” shall mean, (a) with respect to a Selling Shareholder, a fraction, the numerator of which is the total number of Sale Shares of such Selling Shareholder and the denominator of which is the sum of (i) the total number of Aggregate Sale Shares and (ii) the total number of Rollover Shares, and (b) with respect to the Rollover Shareholder, a fraction, the numerator of which is the total number of Rollover Shares and the denominator of which is the sum of (i) the total number of Aggregate Sale Shares and (ii) the total number of Rollover Shares.

 

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“Shareholders Agreement” means the Tenth Amended and Restated Shareholders Agreement entered into by and among the parties named therein on August 24, 2017.

 

“Social Insurance” means any form of social insurance required under applicable Laws, including without limitation, the PRC national and local contributions for pensions, medical insurance, unemployment insurance, work-related injury insurance, pregnancy benefits, and housing accumulation funds.

 

“Software” means any and all (i) computer programs, including any and all software implementations of algorithms, models and methodologies, including all source code and executable code, whether embodied in software, firmware or otherwise, documentation, development tools, designs, files, verilog files, RTL files, HDL, VHDL, net lists, records, data and mask works; and (ii) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise, and all rights therein.

 

“Specified Laws” means the PRC Anti-Unfair Competition Law, Data Protection Laws, Food Safety Laws, Telecommunication Regulation of the PRC (中华人民共和国电信条例), Content of Categories of Telecommunication Business (2015) (电信业务分类目录(2015年版) ) and Notice of Ministry of Industry and Information Technology on Removing the Restrictions on Foreign Equity Ratios in Online Data Processing (Operating E-commerce) Business (工业和信息化部关于放开在线数据处理与交易处理业务 (经营类电子商务) 外资股比限制的通告).

 

“Stores” means the stores owned by the Rajax WFOE Subsidiary from time to time.

 

“Subsidiary” means, with respect to any given Person, any other Person that is Controlled directly or indirectly by such given Person.

 

“Supplemental Control Documents” means the following documents collectively: (i) the Proxy Agreement (授权委托协议) entered into by and between the Rajax WFOE and each of the Principals respectively; (ii) the Intellectual Property Exclusive Option Agreement (知识产权独家认购协议) entered into by and between the Rajax WFOE and the Rajax Domestic Company; (iii) the Domain Transfer Agreements (域名转让协议) entered into by and between the Rajax WFOE and the Rajax Domestic Company; (iv) the Domain Transfer Agreement (域名转让协议) entered into by and between the Rajax Domestic Company and Xuhao Zhang; (v) the Patent Application Right Transfer Agreement (专利申请权转让协议) entered into by and between the Rajax WFOE and the Rajax Domestic Company, all of which were dated August 27, 2012; and (vi) the spousal consent letters executed by each of          ,          ,          , and           (as the spouse of each equity holder of the Rajax Domestic Company) on 5 March 2016.

 

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“Taxes” means (i) in the PRC: (a) any national, provincial, municipal, or local taxes, charges, fees, levies, or other assessments, including, without limitation, all net income (including enterprise income tax and individual income withholding tax), turnover (including value-added tax, business tax, and consumption tax), resource (including urban and township land use tax), special purpose (including land value-added tax, urban maintenance and construction tax, and additional education fees), property (including urban real estate tax and land use fees), documentation (including stamp duty and deed tax), filing, recording, social insurance (including pension, medical, unemployment, housing, and other social insurance withholding), tariffs (including import duty and import value-added tax), and estimated and provisional taxes, charges, fees, levies, or other assessments of any kind whatsoever, (b) all interest, penalties (administrative, civil or criminal), or additional amounts imposed by any Governmental Authority in connection with any item described in clause (a) above, and (c) any form of transferee liability imposed by any Governmental Authority in connection with any item described in clauses (a) and (b) above, and (ii) in any jurisdiction other than the PRC: all similar Liabilities as described in clause (i)(a) and (i)(b) above.

 

“Tax Return” means any return, report or statement showing Taxes, used to pay Taxes, or required to be filed with respect to any Tax (including any elections, declarations, schedules or attachments thereto, and any amendment thereof), including any information return, claim for refund, amended return or declaration of estimated or provisional Tax.

 

“Transaction Documents” means collectively, this Agreement, the Escrow Agreement, and each of the other agreements and documents otherwise required in connection with implementing the transactions contemplated by any of the foregoing.

 

“U.S. Real Property Holding Corporation” has the meaning as defined in Section 897(c)(2) of the Code.

 

“Warrantors” means, collectively, the Principals and the Principal Holdcos.

 

“WFOEs” means, collectively, the Rajax WFOE and the Xiaodu WFOE.

 

“Xiaodu Group” means, collectively, the Xiaodu Cayman Company, the Xiaodu HK Company, the Xiaodu PRC Companies and each Subsidiary of any of the foregoing.

 

“Xiaodu PRC Companies” means, collectively, the Xiaodu WFOE, Xiaodu Shenghuo, Xunda, Xinchi and Zhenxuan.

 

SECTION 1.02              Other Defined Terms. The following terms shall have the meanings defined for such terms in the Sections set forth below:

 

	
Defined Term
    	
 
    	
Location of Definition
    
	
Accounting Firm
    	
 
    	
Section 2.05(b)
    
	
Accounting Firm Determination
    	
 
    	
Section 2.05(b)
    
	
Aggregate Purchase Price
    	
 
    	
Section 2.01(a)
    
	
Aggregate Sale Shares
    	
 
    	
Section 2.01(a)
    
	
Arbitration Notice
    	
 
    	
Section 10.03(a)
    
	
Asserted Action
    	
 
    	
Section 9.04(a)
    
	
Asserted Liability
    	
 
    	
Section 9.04(a)
    
	
Audit and Indemnity Escrow Account
    	
 
    	
Section 2.04(b)
    
	
Audit and Indemnity Escrow Amount
    	
 
    	
Section 2.04(b)
    

 

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Audit and Indemnity Escrow Fees
    	
 
    	
Section 2.04(b)
    
	
Audit Difference
    	
 
    	
Section 2.05(a)
    
	
Audited 2017 Financial Statements
    	
 
    	
Section 7.14
    
	
Closing
    	
 
    	
Section 2.02
    
	
Closing Audit
    	
 
    	
Section 2.05(b)
    
	
Closing Date
    	
 
    	
Section 2.02
    
	
Company
    	
 
    	
Preamble
    
	
Company Disclosure Schedule
    	
 
    	
Article III
    
	
Company IP
    	
 
    	
Section 3.17(a)
    
	
Compliance Laws
    	
 
    	
Section 3.14(a)
    
	
Deferred Payment Agreement
    	
 
    	
Section 2.06(b)
    
	
Dispute
    	
 
    	
Section 10.03(a)
    
	
Escrow Agent
    	
 
    	
Section 2.04(a)
    
	
Escrow Agreement
    	
 
    	
Section 2.04(a)
    
	
Fengniao
    	
 
    	
Schedule IV
    
	
Financial Statements
    	
 
    	
Section 3.09
    
	
Grace Period
    	
 
    	
Section 9.05(a)
    
	
HKIAC
    	
 
    	
Section 10.03(b)
    
	
HKIAC Rules
    	
 
    	
Section 10.03(b)
    
	
Hong Kong
    	
 
    	
Section 10.02
    
	
Hongyi
    	
 
    	
Schedule IV
    
	
Indemnifying Parties
    	
 
    	
Section 9.03(a)
    
	
Indemnifying Party
    	
 
    	
Section 9.03(a)
    
	
Integration Committee
    	
 
    	
Section 7.20
    
	
Key Employees
    	
 
    	
Section 3.18(d)
    
	
Lease
    	
 
    	
Section 3.15(b)
    
	
Material Contracts
    	
 
    	
Section 3.13(a)
    
	
Maximum Net Debt Amount
    	
 
    	
Section 2.05(a)
    
	
New Business License
    	
 
    	
Section 7.09
    
	
New Control Documents
    	
 
    	
Section 8.02(j)
    
	
Onshore Equity Transfer
    	
 
    	
Section 7.09
    
	
Parties
    	
 
    	
Preamble
    
	
Party
    	
 
    	
Preamble
    
	
Payment Fund
    	
 
    	
Section 2.03(c)(i)
    
	
Pengxun
    	
 
    	
Schedule IV
    
	
Per Share Purchase Price
    	
 
    	
Section 2.01(a)
    
	
Principal
    	
 
    	
Preamble
    
	
Principal Holdco
    	
 
    	
Preamble
    
	
Principal Holdcos
    	
 
    	
Preamble
    
	
Principals
    	
 
    	
Preamble
    
	
Pro Rata Audit Difference
    	
 
    	
Section 2.05(e)
    
	
Pro Rata Indemnity Amount
    	
 
    	
Section 9.04(b)
    
	
Purchase Price
    	
 
    	
Section 2.01(a)
    
	
Purchaser
    	
 
    	
Preamble
    
	
Purchaser Indemnified Parties
    	
 
    	
Section 9.03(a)
    
	
Purchaser Share
    	
 
    	
Section 2.01(b)
    

 

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Rajax Domestic Company
    	
 
    	
Schedule IV
    
	
Rajax HK Subsidiary
    	
 
    	
Schedule IV
    
	
Rajax WFOE
    	
 
    	
Schedule IV
    
	
Rajax WFOE Subsidiary
    	
 
    	
Schedule IV
    
	
Relevant Obligations
    	
 
    	
Section 2.06(c)
    
	
Relevant PRC Tax Authority
    	
 
    	
Section 7.08(b)
    
	
Representatives
    	
 
    	
Section 3.14(a)
    
	
Required Governmental Consents
    	
 
    	
Section 3.06(b)
    
	
Rollover Employee Option Confirmation Letter
    	
 
    	
Section 2.06(b)
    
	
Rollover Option Holder
    	
 
    	
Section 2.06(b)
    
	
Rollover Option Holders
    	
 
    	
Section 2.06(b)
    
	
Rollover Purchase Price
    	
 
    	
Section 2.06(b)
    
	
Rollover Share
    	
 
    	
Section 2.01(b)
    
	
Rollover Shareholder
    	
 
    	
Preamble
    
	
Rollover Shares
    	
 
    	
Section 2.01(b)
    
	
Sale Shares
    	
 
    	
Section 2.01(a)
    
	
Selling Shareholder
    	
 
    	
Preamble
    
	
Selling Shareholders
    	
 
    	
Preamble
    
	
Selling Tax
    	
 
    	
Section 7.08(a)
    
	
Share Purchases
    	
 
    	
Section 2.01(a)
    
	
Share Rollover
    	
 
    	
Section 2.01(b)
    
	
Shareholders Disclosure Schedule
    	
 
    	
Article V
    
	
Shareholders Representative
    	
 
    	
Section 7.18
    
	
Shares
    	
 
    	
Recitals
    
	
Statement Date
    	
 
    	
Section 3.09
    
	
Survival Period
    	
 
    	
Section 9.05(b)
    
	
Takeover Statute
    	
 
    	
Section 3.29
    
	
Tax Escrow Account
    	
 
    	
Section 2.04(a)
    
	
Tax Escrow Amount
    	
 
    	
Section 2.04(a)
    
	
Tax Escrow Fees
    	
 
    	
Section 2.04(a)
    
	
Termination Date
    	
 
    	
Section 9.01(b)(i)
    
	
Transactions
    	
 
    	
Section 2.01(b)
    
	
Undisputed Indemnity Amount
    	
 
    	
Section 9.04(c)
    
	
Xiaodu Cayman Company
    	
 
    	
Schedule IV
    
	
Xiaodu HK Company
    	
 
    	
Schedule IV
    
	
Xiaodu Shenghuo
    	
 
    	
Schedule IV
    
	
Xiaodu WFOE
    	
 
    	
Schedule IV
    
	
Xinchi
    	
 
    	
Schedule IV
    
	
Xunda
    	
 
    	
Schedule IV
    
	
Zhenxuan
    	
 
    	
Schedule IV
    
	
Zhiguan
    	
 
    	
Schedule IV
    

 

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SECTION 1.03              Interpretations. For all purposes of this Agreement, except as otherwise expressly herein provided, (i) the terms defined in Article I shall have the meanings assigned to them in this Article I and include the plural as well as the singular, (ii) all accounting terms not otherwise defined herein have the meanings assigned under the Accounting Standards, (iii) all references in this Agreement to designated “Sections” and other subdivisions are to the designated Sections and other subdivisions of the body of this Agreement, (iv) pronouns of either gender or neuter shall include, as appropriate, the other pronoun forms, (v) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision, (vi) all references in this Agreement to designated Schedules and Exhibits are to the Schedules and Exhibits attached to this Agreement, (vii) references to this Agreement, any other Transaction Documents and any other document shall be construed as references to such document as the same may be amended, supplemented or novated from time to time, (viii) the term “or” is not exclusive, (ix) the term “including” will be deemed to be followed by “, but not limited to,” (x) the terms “shall,” “will,” and “agrees” are mandatory, and the term “may” is permissive, (xi) the phrase “directly or indirectly” means directly, or indirectly through one or more intermediate Persons or through contractual or other arrangements, and “direct or indirect” has the correlative meaning, (xii) the term “voting power” refers to the number of votes attributable to the shares (on an as-converted basis) in accordance with the terms of the Memorandum and Articles, (xiii) the headings used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement, (xiv) references to Laws include any such Law modifying, re-enacting, extending or made pursuant to the same or which is modified, re-enacted, or extended by the same or pursuant to which the same is made, and (xv) all references to U.S. dollars or to “US$” are to currency of the United States of America, all references to RMB are to currency of the PRC and all references to “HK$” are to currency of Hong Kong (and each shall be deemed to include reference to the equivalent amount in other currencies).

 

ARTICLE II

 

PURCHASE AND SALE

 

SECTION 2.01              Purchase and Sale of Shares.

 

(a)                                 Share Purchases. Upon the terms and subject to the conditions contained herein, at the Closing, each Selling Shareholder shall, severally but not jointly, sell and transfer to Purchaser, and Purchaser shall purchase and acquire from each Selling Shareholder (the “Share Purchases”), the entire legal and beneficial ownership (together with all rights now or hereafter attaching to them, including all rights to any dividend or other distribution declared, made or paid after the date of this Agreement) of all of such Selling Shareholder’s Shares, which type and number of Shares is set forth opposite such Selling Shareholder’s name under Columns 2 and 3 of Schedule II hereto (including Appendix A thereto) (the “Sale Shares” of such Selling Shareholder, and the aggregate of all Sale Shares of the Selling Shareholders to be purchased by Purchaser hereunder, the “Aggregate Sale Shares”), free and clear of all Liens, in exchange for an aggregate purchase price in cash in U.S. Dollars in the amount set forth opposite such Selling Shareholder’s name under Column 4 of Schedule II hereto (including Appendix A thereto) (the “Purchase Price” payable to such Selling Shareholder, and the aggregate of all Purchase Prices to be paid by Purchaser to the Selling Shareholders pursuant to this Section 2.01, the “Aggregate Purchase Price”). The Aggregate Purchase Price (and the Purchase Price payable to each Selling Shareholder by Purchaser) reflects a per share purchase price of US$0.6517400968, inclusive of all applicable Selling Tax (the “Per Share Purchase Price”).

 

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(b)                                 Restructuring. Upon the terms and subject to the conditions contained herein, at the Closing, each of the Shares held by the Rollover Shareholder immediately prior to the Closing (each, a “Rollover Share”, and collectively, the “Rollover Shares”) shall be rolled over and exchanged for 5,200,953,827 validly issued, fully paid and non-assessable ordinary shares, par value US$0.0001 per share, of Purchaser (the “Purchaser Shares”), with no cash consideration to be paid by Purchaser to the Rollover Shareholder (the “Share Rollover”, and together with the Share Purchases, the “Transactions”).

 

SECTION 2.02              Closing; Closing Date. Upon the terms and subject to the conditions contained herein, the closing of the Transactions (the “Closing”) shall take place at 9:00 p.m. (Hong Kong time) on a date no later than ten (10) Business Days after the satisfaction or waiver of the conditions set forth in Article VIII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions), which date shall be no later than twenty (20) Business Days after the date of this Agreement, or any other date or time agreed in writing by Purchaser and the Shareholders Representative (the “Closing Date”) at the offices of Simpson Thacher & Bartlett, 35/F ICBC Tower, 3 Garden Road, Central, Hong Kong, or at another place agreed in writing by Purchaser and the Shareholders Representative.

 

SECTION 2.03              Closing Deliverables.

 

(a)                                 Closing Deliverables by the Selling Shareholders and the Rollover Shareholder. At the Closing:

 

(i)                                     each Selling Shareholder shall, severally but not jointly, deliver or cause to be delivered to Purchaser a deed of transfer, in the form of Exhibit A-1 hereto and duly executed by such Selling Shareholder or a Director of the Company on behalf of such Selling Shareholder, dated as of the Closing Date, with respect to the sale and transfer of all of such Selling Shareholder’s Sale Shares to Purchaser;

 

(ii)                                  (A) each Selling Shareholder shall, severally but not jointly, deliver to Purchaser, the original share certificate(s) representing all of such Selling Shareholder’s Sale Shares or, if such original share certificate(s) could not be located and delivered to Purchaser at the Closing, then such relevant Selling Shareholder shall deliver to Purchaser an affidavit and indemnity for the lost share certificate(s) in form and substance acceptable to Purchaser and the registered office provider of the Company in respect of such Selling Shareholders’ Sale Shares, or (B) the Shareholders Representative shall deliver to Purchaser a written confirmation from the Company’s registered office that such share certificate(s) will be cancelled at the Closing;

 

(iii)                               the Rollover Shareholder shall deliver or cause to be delivered to Purchaser a deed of transfer, in the form of Exhibit A-2 hereto and duly executed by the Rollover Shareholder, dated as of the Closing Date, with respect to the rollover and exchange of all of the Rollover Shareholder’s Rollover Shares for the Purchaser Shares;

 

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(iv)                              the Rollover Shareholder shall deliver to Purchaser, the original share certificate(s) representing all of the Rollover Shareholder’s Rollover Shares or, if such original share certificate(s) could not be located and delivered to Purchaser at the Closing, an affidavit and indemnity for the lost share certificate(s) in form and substance acceptable to Purchaser and the registered office provider of the Company in respect of the Rollover Shareholder’s Rollover Shares; and

 

(v)                                 each of the Principals and Principal Holdcos, CITICPE, and Sequoia shall deliver to Purchaser the resignation letter of its respective appointee serving as a Director prior to the Closing, effective as of the Closing, and the Principals and Principal Holdcos shall deliver to Purchaser the resignation letter of the Mr. Wei CHENG (from his directorship) prior to the Closing, effective as of the Closing.

 

(b)                                 Closing Deliverables by the Company. At the Closing, the Company shall, and the Principals and the Principal Holdcos shall cause the Company to, deliver or cause to be delivered to Purchaser:

 

(i)                                     the register of members, dated as of the Closing and certified by the registered office provider of the Company, updated to reflect the Transactions and Purchaser’s ownership of the Aggregate Sale Shares and Rollover Shares, free and clear of all Liens;

 

(ii)                                  one or more share certificates in the name of Purchaser (and/or its designee), dated as at the Closing Date and duly executed on behalf of the Company, collectively evidencing the ownership by Purchaser (and/or its designee) of the Aggregate Sale Shares and Rollover Shares;

 

(iii)                               the shareholders’ registry of the Rajax Domestic Company, Xiaodu Shenghuo, Xunda and Xinchi, each of which certified to be a true and correct copy by the Company, where the Purchaser’s designated individual is, as of the Closing Date, recorded as the holder of 100% of the equity interest of such Group Companies;

 

(iv)                              the original (or if the original is not available, copy) of each of the current version of the constitutional documents (including the articles of association, shareholders agreement, limited partnership agreement and all amendments thereto) of each Group Company;

 

(v)                                 the official chop, financial chop and contract chop of each Group Company and all other chops capable of representing any Group Company (if any), the books and accounts of each Group Company;

 

(vi)                              the originals and all duplicates of the current business license of each PRC Group Company;

 

(vii)                           the originals of the IC card foreign exchange registration certificate (IC 卡外汇登记证), the permits for opening bank accounts (银行开户许可证), the bank account signature cards (银行印鉴卡), and the USB Keys (U 盾) to operate all existing bank accounts of each PRC Group Company (if applicable); and

 

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(viii)                        the originals of all the forms and documents required by the relevant banks to effect the change of authorized signatures to all bank accounts of each Group Company, duly affixed with the company chop of such Group Company.

 

(c)                                  Closing Deliverables by Purchaser. At the Closing, subject to the terms and conditions hereunder, Purchaser shall, subject to the receipt by Purchaser or its representative of each of the documents required to be delivered by each of the Selling Shareholders, the Rollover Option Holders and the Rollover Shareholder, as applicable, pursuant to Section 2.03(a) and the Company pursuant to Section 2.03(b):

 

(i)                                     pay or cause to be paid to the Paying Agent cash in an amount equal to (A) the sum of (x) the Aggregate Purchase Price payable to all Selling Shareholders (other than the Former Company Share Award Holders), (y) the relevant portion of the Aggregate Purchase Price payable in cash to all Former Company Share Award Holders, and (z) the relevant portion of the aggregate Rollover Purchase Prices payable in cash to all Rollover Option Holders, in each case of (y) and (z), in accordance with Section 2.06 and the Deferred Payment Agreements except as otherwise provided in, and subject to the terms of, the Deferred Payment Agreements, minus (B) the sum of (x) the Tax Escrow Amount, (y) the Audit and Indemnity Escrow Amount and (z) the aggregate amounts payable in cash to all Former Company Share Award Holders and Rollover Option Holders after the Closing pursuant to the Deferred Payment Agreements (such cash being hereinafter referred to as the “Payment Fund”); provided that Purchaser shall remain liable for payment of Purchase Price to each Selling Shareholder, and Rollover Purchase Price to each Rollover Option Holder, following the Closing subject to and in accordance with the terms and conditions of this Agreement and, in the case of the Former Company Share Award Holders and Rollover Option Holders, the relevant Deferred Payment Agreements;

 

(ii)                                  pay or cause to be paid to the Escrow Agent, in accordance with the Escrow Agreement, an amount equal to the sum of the Tax Escrow Amount and the Audit and Indemnity Escrow Amount, by wire transfer of immediately available funds to the Tax Escrow Account and the Audit and Indemnity Escrow Account, respectively; and

 

(iii)                               issue a share certificate in the name of the Rollover Shareholder, dated as of the Closing Date and duly executed by Purchaser, evidencing the ownership by the Rollover Shareholder of the Purchaser Shares.

 

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SECTION 2.04              Escrow Arrangements.

 

(a)                                 The Parties agree that an aggregate amount equal to ten percent (10%) of the Aggregate Purchase Price, as apportioned among the Selling Shareholders as set out in Column 5 of Schedule II (including Appendix A thereto) (the “Tax Escrow Amount”), shall be deducted from the Aggregate Purchase Price payable at Closing and deposited in an escrow account (the “Tax Escrow Account”) at the Closing pursuant to an escrow agreement (the “Escrow Agreement”) to be entered into among JPMorgan Chase Bank, N.A. (the “Escrow Agent”), Purchaser and the Shareholders Representative. Purchaser and the Shareholders Representative shall enter into the Escrow Agreement with the Escrow Agent as promptly as practicable following the date hereof. Any administrative fees and expenses of the Escrow Agent (“Tax Escrow Fees”) will be paid using funds distributed from the Tax Escrow Account (for the avoidance of doubt, each Selling Shareholders’ obligation to the Tax Escrow Fees shall be several but not joint). The Tax Escrow Fees will be allocated among each of the Selling Shareholders in accordance with its Seller Pro Rata Share thereof. After a Selling Shareholder (or Purchaser, on behalf of such Selling Shareholder) has filed the Tax Returns in accordance with Section 7.08, the relevant Tax Escrow Amount allocated to such Selling Shareholder (net of such Selling Shareholder’s allocated portion of the Tax Escrow Fees) shall be (and Purchaser shall deliver written instructions to instruct the Escrow Agent to cause the relevant Tax Escrow Amount to be): (i) released and paid to the Relevant PRC Tax Authority to settle any Selling Tax of such Selling Shareholder directly from the Tax Escrow Account pursuant to written instruction by Purchaser to the Escrow Agent, subject to the prior written consent of such Selling Shareholder or the Shareholders Representative, within five (5) Business Days after Purchaser has received an explanation letter prepared by the Qualified Tax Advisor together the account details of the tax collection account of such Relevant PRC Tax Authority, with any balance remaining out of such relevant portion of the Tax Escrow Amount to be concurrently released and distributed to such Selling Shareholder within ten (10) Business Days thereafter, (ii) released and distributed to such Selling Shareholder within ten (10) Business Days after Purchaser has received the tax payment receipt (“税收缴款书” in Chinese) or such other adequate evidence to its reasonable satisfaction that such Selling Shareholder has fully paid the relevant Selling Tax, or (iii) released and distributed to such Selling Shareholder within ten (10) Business Days after Purchaser has received adequate evidence to its reasonable satisfaction that no such Taxes are required to be paid by such Selling Shareholder in connection with the Transactions.

 

(b)                                 The Parties further agree that an aggregate amount equal to nine percent (9%) of the Aggregate Purchase Price, as apportioned among each Selling Shareholder as set out in Column 6 of Schedule II (including Appendix A thereto) (the “Audit and Indemnity Escrow Amount”), shall be deducted from the Aggregate Purchase Price payable at Closing and deposited in an escrow account (the “Audit and Indemnity Escrow Account”) at the Closing pursuant to the Escrow Agreement. Any administrative fees and expenses of the Escrow Agent (“Audit and Indemnity Escrow Fees”) will be paid using funds distributed from the Audit and Indemnity Escrow Account (for the avoidance of doubt, each Selling Shareholders’ obligation to the Audit and Indemnity Escrow Fees shall be several but not joint). The Audit and Indemnity Escrow Fees will be allocated among each of the Selling Shareholders in accordance with its Seller Pro Rata Share thereof. The Escrow Agent shall make disbursements from the Audit and Indemnity Escrow Account pursuant to written instruction by Purchaser to the Escrow Agent in accordance with Section 2.05 and Section 9.04.

 

SECTION 2.05              Post-Closing Audit Adjustment.

 

(a)                                 The Per Share Purchase Price is based on the enterprise valuation of the Group Companies as of 11:59 p.m. (Hong Kong time) on the Benchmark Date being equal to US$9,500,000,000. The Aggregate Purchase Price is subject to the Benchmark Date Net Debt being not greater than US$446,245,236 (the “Maximum Net Debt Amount”). In the event that the Benchmark Date Net Debt is greater than the sum of (i) the Maximum Net Debt Amount and (ii) US$10,000,000 (such excess amount, the “Audit Difference”), the Aggregate Purchase Price shall be reduced by the entire amount of the Audit Difference (such reduction to be effected in respect of the Purchase Price payable to each Selling Shareholder through a reduction in the Audit and Indemnity Escrow Amount allocated to each Selling Shareholder) in accordance with the terms of this Section 2.05.

 

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(b)                                 After the Closing Date, Purchaser shall engage PricewaterhouseCoopers and/or its PRC domestic affiliates (the “Accounting Firm”) to audit the consolidated balance sheet, statement of income and statement of cash flows of the Group as of and for the period beginning on January 1, 2018 and ending as of the Closing Date in conformity with the Accounting Standards (the “Closing Audit”). Purchaser shall direct the Accounting Firm to deliver to Purchaser and the Shareholders Representative, as soon as practicable following the Closing Date but in any event within sixty (60) days after the Closing Date, a statement based on the results of the Closing Audit (the “Accounting Firm Determination”) setting forth the Accounting Firm’s calculation of (i) the Benchmark Date Net Debt calculated in accordance with the Calculation Principles and (ii) the Audit Difference, if any. For the avoidance of doubt, in the event that the Benchmark Date Net Debt set forth in the Accounting Firm Determination is equal to or less than the sum of (i) the Maximum Net Debt Amount and (ii) US$10,000,000, there shall be no Audit Difference.

 

(c)                                  The Company shall, and Purchaser, the Company, the Principals and the Principal Holdcos shall cause each Group Company to, provide the Accounting Firm with reasonable access to all relevant books and records and other documents, personnel and representatives of the Group Companies and other items reasonably requested by the Accounting Firm in connection with the Closing Audit or for purposes of delivering the Accounting Firm Determination, and such Parties shall otherwise reasonably cooperate with the Accounting Firm in connection therewith. Notwithstanding anything to the contrary contained in this Agreement, the fees and expenses of the Accounting Firm shall be borne by each of the Selling Shareholders and the Rollover Shareholder, severally but not jointly, based on their respective Shareholder Pro Rata Shares.

 

(d)                                 The Parties agree that (i) the Accounting Firm Determination shall be deemed to be final, conclusive, binding and non-appealable, absent fraud or manifest error, (ii) the procedures set forth in this Section 2.05 shall be the sole and exclusive remedy with respect to the determination as to whether there is an Audit Difference and (iii) the Accounting Firm Determination shall be enforceable as an arbitral award, and judgment may be entered thereupon in any court having jurisdiction over the Party against which such determination is to be enforced.

 

(e)                                  In the event that an Audit Difference is determined pursuant to this Section 2.05, Purchaser shall deliver written instructions to the Escrow Agent instructing the Escrow Agent to deliver to Purchaser an aggregate amount equal to (i) the Audit Difference multiplied by (ii) the Aggregate Selling Shareholders Percentage (the “Audit Difference Payment”). The Audit and Indemnity Escrow Amount allocated to each Selling Shareholder shall be reduced by an amount equal to its Seller Pro Rata Share of the Audit Difference Payment (the “Pro Rata Audit Difference”). After any disbursements required to be made to Purchaser pursuant to this Section 2.05(e) have been made, any remaining Audit and Indemnity Escrow Amount allocated to each Selling Shareholder shall remain in the Audit and Indemnity Escrow Amount for purposes of satisfying such Selling Shareholder’s indemnification obligations pursuant to Section 9.03 and Section 9.04.

 

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(f)                                   On the date immediately following the second (2nd) year anniversary of the Closing, but subject to any disbursements required to be made to Purchaser pursuant to (i) Section 2.05(e) and (ii) Section 9.03 and Section 9.04 with respect to any Undisputed Indemnity Amount of any pending claims thereunder, Purchaser shall deliver written instructions to the Escrow Agent instructing the Escrow Agent to deliver to each Selling Shareholder any then remaining Audit and Indemnity Escrow Amount allocated to such Selling Shareholder, less the amount of any then pending but unresolved claims which are supported by reasonable evidence of such claimed amount under Section 9.03 which shall be held in the Audit and Indemnity Escrow Account until resolved in accordance with Section 9.04 and distributed accordingly.

 

SECTION 2.06              Company Share Awards; ESOP.

 

(a)                                 As soon as practicable following the date hereof, the Board or the compensation committee of the Board, as applicable, shall (i) terminate the ESOP and any relevant award agreements applicable to the ESOP, as of the Closing, (ii) cancel each Company Share Award that is outstanding and unexercised (including the Rollover Employee Options, subject to Section 2.06(b)), whether or not vested or exercisable, as of the Closing, and (iii) otherwise effectuate the provisions of this Section 2.06. From and after the Closing, neither Purchaser nor the Company shall be required to issue any Ordinary Shares, other share capital of the Company or any other consideration (other than as required pursuant to the Deferred Payment Agreements referenced in this Section 2.06) to any Person pursuant to or in settlement of any Company Share Award.

 

(b)                                 Prior to the Closing, Purchaser and the Company shall agree with each other and enter into a written confirmation letter (the “Rollover Employee Option Confirmation Letter”), setting forth (i) a list of each holder of Rollover Employee Options (each such holder, a “Rollover Option Holder” and collectively, the “Rollover Option Holders”), (ii) the number of Rollover Employee Options held by such Rollover Option Holder, (iii) the number of Ordinary Shares underlying such Rollover Employee Options, (iv) the aggregate purchase price in U.S. Dollars payable to such Rollover Option Holder (which reflects a purchase price per Ordinary Share underlying such Rollover Employee Options equal to the Per Share Purchase Price) (the “Rollover Purchase Price”), (v) the relevant Tax Escrow Amount allocated to such Rollover Option Holder, and (vi) the relevant Audit and Indemnity Escrow Amount allocated to such Rollover Option Holder, in each case of clauses (v) and (vi) determined in accordance with the Relevant Obligations, subject to Section 2.06(c). In exchange for the cancellation of each Rollover Option Holder’s Rollover Employee Options, such Rollover Option Holder shall have the right to (i) receive a cash payment of all or a portion of the Rollover Purchase Price payable to such Rollover Option Holder at the Closing (subject to further reduction and deferral of a portion of such cash payment in accordance with the applicable Deferred Payment Agreement) and/or, (ii) in lieu of receiving a cash payment of a portion of such Rollover Purchase Price, roll over and exchange all or a portion of their Rollover Employee Options into Equity Securities of an Affiliate of Purchaser, in each case subject to the terms and conditions of this Agreement and a Deferred Payment Agreement to be executed and delivered by such Rollover Option Holder and Purchaser in accordance with the terms hereof.

 

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(c)                                  Notwithstanding anything to the contrary contained herein and without prejudice to the express obligations of the Rollover Option Holders hereunder, and subject to the applicable Deferred Payment Agreement of each Rollover Option Holder, the obligations of and provisions binding on each Selling Shareholder pursuant to Section 2.04, Section 2.05, Section 7.08, Section 7.15, Section 7.17, Section 7.18, Section 9.03, Section 9.04, Section 9.05 and Section 9.06 (collectively, the “Relevant Obligations”) shall apply, mutatis mutandis, to each Rollover Option Holder as if references therein (i) to the Selling Shareholders, individually or collectively, were to Rollover Option Holders, individually or collectively, as applicable, (ii) to the Sale Shares of a Selling Shareholder and the Aggregate Sale Shares of all Selling Shareholders were to the Ordinary Shares underlying the Rollover Employee Options held by a Rollover Option Holder and the aggregate Ordinary Shares underlying the Rollover Employee Options held by all Rollover Option Holders, respectively, for purposes of determining the Aggregate Selling Shareholders Percentage, Seller Pro Rata Share and Shareholder Pro Rata Share in the Relevant Obligations, (iii) to the Purchase Price payable to a Selling Shareholder and the Aggregate Purchase Price payable to all Selling Shareholders were to the Rollover Purchase Price payable to each Rollover Option Holder and the aggregate Rollover Purchase Prices payable to all Rollover Option Holders, respectively, solely for purposes of Section 2.04, Section 2.05 and Section 9.06, and (iv) to any information under Schedule II were to the relevant information under the Rollover Employee Option Confirmation Letter, and references to each other defined term as used therein shall be construed accordingly. For the avoidance of doubt, with respect to the Sections providing for the Relevant Obligations and any defined term used therein, (i) each Rollover Option Holder shall be deemed a “Selling Shareholders” for the purposes thereof, (ii) the Ordinary Shares underlying the Rollover Employee Options shall be deemed “Sale Shares”, and shall be counted towards the “Aggregate Sale Shares”, for the purposes of determining the Aggregate Selling Shareholders Percentage, Seller Pro Rata Share and Shareholder Pro Rata Share in the Relevant Obligations; and (iii) the Rollover Purchase Price payable to each Rollover Option Holder shall be deemed “Purchase Price” and shall be counted towards the “Aggregate Purchase Price”, solely for purposes of Section 2.04, Section 2.05 and Section 9.06. Each Rollover Option Holder agrees to be bound by each of the Relevant Obligations.

 

(d)                                 As soon as practicable following the date hereof and prior to the Closing, each of the Former Company Share Award Holders and Rollover Option Holders, on the one hand, and Purchaser, on the other hand, shall enter into one or more agreements in a form agreed between Purchaser and the Company (each, a “Deferred Payment Agreement”), pursuant to which such Former Company Share Award Holder or Rollover Option Holder, as applicable, will agree to (i) defer its receipt in cash of a portion of the Purchase Price or Rollover Purchase Price, as applicable, payable to such Person for specified periods of time and be subject to certain restrictions and conditions to the receipt of such deferred portion of the Purchase Price or Rollover Purchase Price, as applicable, and/or (ii) in lieu of receiving a cash payment of a portion of such Purchase Price or Rollover Purchase Price, as applicable, roll over and exchange all or a portion of its Rollover Employee Shares or Rollover Employee Options, as applicable, into Equity Securities of an Affiliate of Purchaser and be subject to certain restrictions and conditions applicable thereto. As soon as practicable after Purchaser and the Company have agreed on the form of the Deferred Payment Agreements and prior to the Closing, the Company shall (A) prepare and distribute to each Former Company Share Award Holder and Rollover Option Holder the applicable Deferred Payment Agreement, (B) cause each Former Company Share Award Holder and holder of Rollover Employee Options to execute the applicable Deferred Payment Agreement prior to the Closing, and (C) deliver all such executed Deferred Payment Agreements to Purchaser. Prior to the Closing, Purchaser shall execute each of the Deferred Payment Agreements which has been duly executed by the Former Company Share Award Holders and holders of Rollover Employee Options, as applicable, and delivered by the Company to Purchaser. As soon as practicable following the date hereof and in any event prior to the Closing, the Company shall cause each Exercising Company Share Award Holder and Rollover Option Holder to deliver to Purchaser and the Shareholders Representative a counterpart, duly executed by such Person, to this Agreement.

 

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ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Subject to such exceptions as may be specifically set forth in the Company Disclosure Schedule delivered by the Company Parties to Purchaser as of the date hereof and attached to this Agreement as Schedule VII (the “Company Disclosure Schedule”), each of the Warrantors jointly and severally represents and warrants to Purchaser that the following representations and warranties are true and correct as of the date hereof and as of the Closing Date:

 

SECTION 3.01              Organization, Good Standing and Qualification. Each Group Company is duly organized, validly existing and in good standing (or equivalent status in the relevant jurisdiction) under, and by virtue of, the Laws of the place of its incorporation or establishment and has all requisite power and authority to own its properties and assets and to carry on its business as now conducted and as proposed to be conducted, and to perform each of its obligations under each of the Transaction Documents, the Control Documents and the Supplemental Control Documents to which it is a party. Except as set forth in Section 3.01 of the Company Disclosure Schedule, each Group Company is qualified to do business in the manner presently conducted and is in good standing (or equivalent status in the relevant jurisdiction) in each jurisdiction where failure to be so qualified would be a Material Adverse Effect. Except as disclosed in Section 3.01 of the Company Disclosure Schedule, each Group Company that is a PRC entity has a valid business license issued by the SAIC or its local branch or other relevant Governmental Authorities, and has, since its establishment, carried on its business in compliance with the business scope set forth in its business license.

 

SECTION 3.02              Capitalization and Voting Rights.

 

(a)                                 Company. Immediately prior to the Closing, the authorized share capital of the Company shall be US$500,000 divided into (a) a total of 26,962,943,820 authorized Ordinary Shares, 2,079,515,800 (subject to any change due to any exercise of Company Options prior to the Closing) of which are issued and outstanding and 13,037,056,180 of which have been reserved for issuance upon conversion of the Preferred Shares, (b) a total of 13,037,056,180 authorized Preferred Shares, 449,999,920 of which are designated as Series A Preferred Shares, all of which are issued and outstanding; 350,000,000 of which are designated as Series B Preferred Shares, all of which are issued and outstanding; 555,555,520 of which are designated as Series C Preferred Shares, all of which are issued and outstanding; 592,074,960 of which are designated as Series D Preferred Shares, all of which are issued and outstanding; 1,833,333,278 of which are designated as Series E Preferred Shares, all of which are issued and outstanding; 1,528,943,088 of which are designated as Series F Preferred Shares, all of which are issued and outstanding; 2,974,476,361 of which are designated as Series F-1 Preferred Shares, all of which are issued and outstanding; 1,865,592,383 of which are designated as Series G Preferred Shares, 782,937,131 of which are issued and outstanding, and 2,887,080,670 of which are designated as Series G-1 Preferred Shares, 2,314,175,599 of which are issued and outstanding immediately prior to the Closing. Section 3.02(a) of the Company Disclosure Schedule sets forth the capitalization table of each Group Company (other than the Company) as of immediately prior to the Closing, reflecting all then outstanding and authorized Equity Securities of such Group Company, the record and beneficial holders thereof, the issuance date, and the terms of any vesting applicable thereto. Schedule III of this Agreement sets forth the capitalization table of the Company, on a fully-diluted and as-converted basis immediately before the Closing.

 

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(b)                                 Xiaodu Cayman Company. The authorized share capital of the Xiaodu Cayman Company is, as of the date of this Agreement, US$50,000, divided into 5,000,000,000 shares of US$ 0.00001 each, 1 of which is issued and outstanding and held by the Company.

 

(c)                                  Rajax HK Subsidiary. The authorized share capital of the Rajax HK Subsidiary is, as of the date of this Agreement, HK$1,000, divided into 10,000,000 shares, all of which is issued and outstanding and held by the Company.

 

(d)                                 Xiaodu HK Company. The authorized share capital of the Xiaodu HK Company is, as of the date of this Agreement, HK$1, divided into 1 share, all of which is issued and outstanding and held by the Xiaodu Cayman Company.

 

(e)                                  WFOE. The registered capital of each WFOE is set forth opposite its name on Section 3.02(e) of the Company Disclosure Schedule, together with an accurate list of the record and beneficial owners of such registered capital.

 

(f)                                   Rajax WFOE Subsidiary. The registered capital of the Rajax WFOE Subsidiary is set forth opposite its name on Section 3.02(f) of the Company Disclosure Schedule, together with an accurate list of the record and beneficial owners of such registered capital.

 

(g)                                  Domestic Company. The registered capital of each Domestic Company is set forth opposite its name on Section 3.02(g) of the Company Disclosure Schedule, together with an accurate list of the record and SAIC registered owners of such registered capital.

 

(h)                                 No Other Securities. Except as set forth in Section 3.02(h) of the Company Disclosure Schedule and for (i) the conversion privileges of the Preferred Shares provided in the Charter Documents of the Company as currently in effect, (ii) certain rights expressly provided in the Charter Documents of the Company as currently in effect, and (iii) certain rights expressly provided in this Agreement, the Memorandum and Articles, the Shareholders Agreement, the ROFR Agreement, the Share Restriction Agreements, the Control Documents and the Supplemental Control Documents, as of the date of this Agreement and at the Closing, (x) there are no other authorized or outstanding Equity Securities of any Group Company; (y) no Equity Securities of any Group Company are subject to any preemptive rights, rights of first refusal (except to the extent provided by applicable PRC Laws) or other rights to purchase such Equity Securities or any other rights with respect to such Equity Securities, and (z) no Group Company is a party or subject to any Contract that affects or relates to the voting or giving of written consents with respect to, or the right to cause the redemption, or repurchase of, any Equity Security of such Group Company. Except as set forth in the Shareholders Agreement, the Company has not granted any registration rights or information rights to any other Person (except to the extent provided by applicable PRC Laws), nor is the Company obliged to list any of the Equity Securities of any Group Companies on any securities exchange. Except as contemplated under the Transaction Documents, the Control Documents and the Supplemental Control Documents, there are no voting or similar agreements which relate to the share capital or registered capital of any Group Company. Other than the ESOP, no Group Company is bound by any equity incentive plan. There are no commitments or agreements of any character to which any Group Company is bound obligating any Group Company to accelerate or otherwise alter the vesting of any Company Share Award as a result of the Transactions, and each Company Share Award may, by its terms, be treated at the Closing as set forth in Section 2.06.

 

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(i)                                     Issuance and Status. All presently outstanding Equity Securities of each Group Company were duly and validly issued (or subscribed for) in compliance with all applicable Laws, preemptive rights of any Person, and applicable Contracts. Except for those disclosed in Section 3.02(i) of the Company Disclosure Schedule, all share capital or registered capital, as the case may be, of each Group Company have been duly and validly issued, are fully paid (or subscribed for) and non-assessable, and are and as of the Closing shall be free of any and all Liens (except for any restrictions on transfer under the Control Documents, the Shareholders Agreement, the ROFR Agreement, the Memorandum and Articles and applicable Laws). Except as contemplated under the Transaction Documents, the Control Documents, the Supplemental Control Documents and set forth in Section 3.02(i) of the Company Disclosure Schedule, there are no (i) resolutions pending to increase the share capital or registered capital of any Group Company or cause the liquidation, winding up, or dissolution of any Group Company, nor has any distress, execution or other process been levied against any Group Company, (ii) dividends which have accrued or been declared but are unpaid by any Group Company, (iii) obligations, contingent or otherwise, of any Group Company to repurchase, redeem, or otherwise acquire any Equity Securities, or (iv) outstanding or authorized equity appreciation, phantom equity, equity plans or similar rights with respect to any Group Company.

 

(j)                                    Title. Except disclosed Section 3.02(j) of the Company Disclosure Schedule, the Shares held by the Principal Holdcos are free and clear of all Liens of any kind other than those arising under applicable Law or as set forth in the Transaction Documents, Control Documents, the Supplemental Control Documents or the Memorandum and Articles.

 

(k)                                 Company Share Awards. Section 3.02(k) of the Company Disclosure Schedule sets forth the following information with respect to each Company Share Award outstanding as of the date hereof: (i) the name of the Company Share Award recipient; (ii) the particular ESOP or RSU tranche pursuant to which such Company Share Award was granted and the type of such Company Share Award; (iii) the number and type of Ordinary Shares subject to such Company Share Award; (iv) the exercise or purchase price of such Company Share Award; (v) the date on which such Company Share Award was granted; (vi) the vesting schedule or other vesting conditions, if any, of each such Company Share Award; and (vii) the date on which such Company Share Award expires. The Company has made available to the Purchaser Parties accurate and complete copies of (x) the ESOP and the agreements documenting the RSU tranches pursuant to which the Company has granted the Company Share Awards that are currently outstanding, (y) the form of all award agreements evidencing such Company Share Awards and (z) any award agreements evidencing any Company Share Award with terms that are materially different from those set forth in the form of award agreement.

 

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SECTION 3.03              Corporate Structure; Subsidiaries. Section 3.03 of the Company Disclosure Schedule sets forth a complete structure chart showing the Group Companies, and indicating the ownership and Control relationships among all Group Companies, the nature of the legal entity which each Group Company constitutes, the jurisdiction in which each Group Company was organized, and each jurisdiction in which each Group Company is required to be qualified or licensed to do business as a foreign Person. No Group Company owns or Controls, or has ever owned or Controlled, directly or indirectly, any Equity Security, interest or share in any other Person or is or was a participant in any joint venture, partnership or similar arrangement. No Group Company is obligated to make any investment in or capital contribution in or on behalf of any other Person. The Company was formed solely to acquire and hold the equity interests in the Rajax HK Subsidiary and Xiaodu Cayman Company. The Rajax HK Subsidiary was formed solely to acquire and hold the equity interests in the Rajax WFOE. The Xiaodu Cayman Company was formed solely to acquire and hold the equity interests in the Xiaodu HK Company. The Xiaodu HK Company was formed solely to acquire and hold the equity interests in the Xiaodu WFOE. Except for those disclosed in Section 3.03 of the Company Disclosure Schedule, neither the Company nor the Rajax HK Subsidiary, the Xiaodu Cayman Company, the Xiaodu HK Company has engaged in any other business and has not incurred any Liability since its formation. Each of the PRC Group Companies is engaged in the Business (as defined in the Shareholders Agreement) and has no other business. Except for those disclosed in Section 3.03 of the Company Disclosure Schedule, no Principal and no Person owned or Controlled by any Principal (other than a Group Company), is engaged in the Business or has any assets in relation to the Business or any Contract with any Group Company. All the historical changes to the share capital of each of the Group Companies and historical transfers of equity interest in each of the Group Companies were made in compliance with the applicable Laws and applicable Contracts, and there are no outstanding Liabilities in connection with such historical changes or historical transfers. Except for the Principal Holdcos, the Group Companies or otherwise as disclosed in Section 3.03 of the Company Disclosure Schedule, none of the Principals owns, directly or indirectly, legally or beneficially, any equity or other ownership interest in any Person (excluding companies whose shares are publicly traded on a recognized securities exchange).

 

SECTION 3.04              Authorization. Except as otherwise disclosed in Section 3.04 of the Company Disclosure Schedule, each Warrantor has all requisite power and authority to execute and deliver the Transaction Documents to which it is a party and to carry out and perform its obligations thereunder. All action on the part of each party to the Transaction Documents (other than the Purchaser Parties) (and, as applicable, its officers, directors and shareholders) necessary for the authorization, execution and delivery of the Transaction Documents and the performance of all obligations of each such party (including approval of the Transaction Documents and the Transactions, as applicable, by the Board, Rollover Shareholder, the Majority Ordinary Holders and the Majority Preferred Holders, in each case, in accordance with the Memorandum and Articles, the Shareholders Agreement and the ROFR Agreement) has been taken or will be taken prior to the Closing. Each of the Transaction Documents has been, or will be on or prior to the Closing, duly executed and delivered by each party thereto (other than the Purchaser Parties) and constitutes valid and legally binding obligations of such party, enforceable against such party in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other Laws of general application affecting enforcement of creditors’ rights generally, and (ii) as limited by Laws relating to the availability of specific performance, injunctive relief, or other equitable remedies; and for (iii) where applicable, the recognition and enforcement of arbitral award being subject to relevant Laws.

 

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SECTION 3.05              SAFE Rules and Regulations; Consents; No Conflicts. Except for those disclosed in Section 3.05 of the Company Disclosure Schedule, all SAFE Rules and Regulations have been fully complied with and all requisite approvals or registration certificates required under the SAFE Rules and Regulations in relation thereto have been duly and lawfully obtained and are in full force and effect, and to the Knowledge of the Company Parties, there exist no grounds on which any such approval or registration certificate may be cancelled or revoked or the PRC Group Companies or their respective legal representative may be subject to liability or penalties for misrepresentations or failures to disclose information to the issuing SAFE. None of the Company Parties has received any oral or written inquiries, notifications, orders or any other forms of official correspondence from SAFE with respect to any actual or alleged non-compliance with the SAFE Rules and Regulations. Except as set forth in Section 3.05 of the Company Disclosure Schedule, all Consents from or with any Governmental Authority or any other Person required in connection with the valid execution, delivery and performance of the Transaction Documents, and the consummation of the transactions contemplated by the Transaction Documents, in any case on the part of any party thereto (other than the Purchaser Parties), have been duly obtained or completed (as applicable) and are in full force and effect. Except as set forth in Section 3.05 of the Company Disclosure Schedule, the execution, delivery and performance of each Transaction Document by each party thereto (other than the Purchaser Parties), and the consummation by such party of the transactions contemplated thereby, do not and will not, (i) result in any violation of, be in conflict with, or constitute a default under, require any Consent under, or give any Person rights of termination, amendment, acceleration or cancellation under, with or without the passage of time or the giving of notice, any Governmental Order, any provision of the Charter Documents of any Group Company, the Shareholders Agreement, the ROFR Agreement, any applicable Laws (including without limitation, Order No. 10 and the SAFE Rules and Regulations), or any Material Contract, (ii) result in any termination, modification, cancellation, or suspension of any material right of, or any augmentation or acceleration of any material obligation of, any Group Company (including without limitation, any indebtedness of such Group Company), or (iii) result in the creation of any Lien upon any of the material properties or assets of any Group Company other than Permitted Liens.

 

SECTION 3.06              Compliance with Laws; Consents.

 

(a)                                 Except as disclosed in the Section 3.06(a) of the Company Disclosure Schedule, each Group Company is in compliance in all material respects with all applicable Laws, including without limitation, the Specified Laws. The business of each Group Company as now conducted and as presently planned to be conducted are in compliance in all material respects with all applicable Laws, including without limitation, the Specified Laws. No event has occurred and no circumstance exists that (with or without notice or lapse of time) (a) may constitute or result in a material violation by any Group Company of, or a failure on the part of such entity to comply with, any applicable Laws, including without limitation, any Specified Laws, in any material respect, or (b) may give rise to any material obligation on the part of any Group Company to undertake, or to bear all or any portion of the cost of, any remedial action of any nature. None of the Group Companies has received any notice from any Governmental Authority regarding any of the foregoing. To the Knowledge of the Company Parties, no Group Company is under investigation with respect to a material violation of any Law.

 

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(b)                                 Except as set forth in Section 3.06(b) of the Company Disclosure Schedule, all Consents from or with the relevant Governmental Authority required in respect of the due and proper establishment and operations of each Group Company as now conducted (collectively, the “Required Governmental Consents”), have been duly obtained or completed in accordance with all applicable Laws. Section 3.06(b) of the Company Disclosure Schedule sets forth a complete list of such Required Governmental Consents (or, with respect to the Stores, such material Required Governmental Consents) which each of the Group Companies has obtained, together with, except in the case of the Stores, the name of the entity issuing each such Required Governmental Consent. Without limiting the generality of the foregoing, each Store that has commenced operations at any time prior to the applicable Closing has duly obtained both the business license (营业执照) and the food operation license (食品经营许可证) from the relevant Governmental Authorities and has completed its respective environmental assessment (if applicable).

 

(c)                                  Except as set forth in the Company Disclosure Schedule, no Required Governmental Consent contains any materially burdensome restrictions or conditions, and each Required Governmental Consent is in full force and effect and will remain in full force and effect upon the consummation of the transactions contemplated hereby. None of the Group Companies is in material default under any Required Governmental Consent. To the Knowledge of the Company Parties, there is no reason to believe that any Required Governmental Consent which is subject to periodic renewal will not be granted or renewed. No Group Company has received any letter or other written communication from any Governmental Authority threatening or providing notice of revocation of any Required Governmental Consent issued to any Group Company or the need for compliance or remedial actions in respect of the activities carried out directly or indirectly by any Group Company.

 

SECTION 3.07              Tax Matters. Except as disclosed in the applicable subsection of Section 3.07 of the Company Disclosure Schedule:

 

(a)                                 All Tax Returns required to be filed on or prior to the date hereof with respect to each Group Company has been duly and timely filed (taking into account any extension of time to file granted or obtained) by such Group Company in accordance with the applicable Laws and all such Tax Returns are true, correct and complete in all material respects and were prepared in compliance with all applicable Laws. Each Group Company has paid in full all Taxes (whether or not shown on any Tax Return) required to be paid by it, except such Taxes, if any, as are being contested in good faith and as to which adequate reserve (determined in accordance with the Accounting Standards) have been provided in the Financial Statements. No deficiencies for any Taxes with respect to any Tax Returns have been asserted in writing by, and no notice of any pending action with respect to such Tax Returns has been received from, any Tax authority, and no dispute relating to any Tax Returns with any such Tax authority is outstanding or contemplated. Each Group Company has paid all Taxes owed by it which are due and payable (whether or not shown on any Tax Return) and withheld and timely remitted to the appropriate Governmental Authority all Taxes which it is obligated to withhold and remit from amounts owing to any employee, creditor, customer or any other Person.

 

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(b)                                 The provisions for Taxes in the Financial Statements fully reflect all unpaid Taxes of each Group Company (as determined in accordance with the Accounting Standards and the applicable Tax Laws), whether or not assessed or disputed as of the date of the applicable Financial Statements. The unpaid Taxes of any Group Company (i) did not, as of the date of the applicable Financial Statements, exceed the reserve for Tax liability (which shall not include any reserve established for deferred Taxes to reflect timing differences between book and Tax income) set forth on the face of the applicable Financial Statements (rather than in any notes thereto) and (ii) do not exceed that reserve as adjusted for the passage of time through the date of the Closing in accordance with the past custom and practice of each Group Company in filing its Tax Returns.

 

(c)                                  No tax audits or administrative or judicial Tax proceedings by any Governmental Authority with respect to any Group Company is currently in progress, nor has any Group Company received any written notice issued by any Governmental Authority threatening the commencement of such foregoing proceedings. No assessment of Tax has been proposed in writing against any Group Company or any of their assets or properties. No Group Company has received from any Governmental Authority (including jurisdictions where such Group Company has not filed Tax Returns) any (i) notice indicating an intent to open audit or other review, (ii) request for information related to Tax matters, or (iii) notice of deficiency or proposed adjustment for any amount of Tax proposed, asserted, or assessed by any Governmental Authority against such Group Company. No Group Company is subject to any waivers or extensions of applicable statutes of limitations with respect to Taxes for any year. Except for extensions applied for and granted in the ordinary practice of the applicable jurisdiction, no Group Company currently is the beneficiary of any extension of time within which to file any Tax Return.

 

(d)                                 No Group Company is being the subject of any examination or investigation by any Tax authority relating to the conduct of its business or the payment or withholding of Taxes that has not been resolved or has received any written notices of any threatened examination or investigation by any Tax authority relating to the conduct of its business or the payment or withholding of Taxes. No Group Company is responsible for the Taxes of any other Person by reason of contract, successor liability, operation of Law or otherwise.

 

(e)                                  Since the Statement Date, no Group Company has incurred any material Taxes other than in the ordinary course of business consistent with past custom and practice. No Group Company has received any written claim from any Governmental Authority in a jurisdiction where such Group Company does not file Tax Returns that such Group Company is or may be subject to taxation by that jurisdiction. No Group Company is treated as a resident for Tax purposes of, or is otherwise subject to income Tax in, or has branch, permanent establishment, agency of other taxable presence in, any jurisdiction other than the jurisdiction in which it has been established. The Group Companies have fulfilled all the material terms, requirements and criteria for the continuance of all applicable Tax incentives, Tax holidays and Tax rulings, including concessional Tax rate, Tax relief, Tax exemption, Tax refund, Tax credit, and other Tax reduction agreement or order available under any applicable Law. Each such Tax incentives, Tax holidays, Tax rulings and other Tax reduction agreement or order is expected to remain in full effect throughout the current effective period thereof after the Closing and is not subject to reduction, revocation, cancellation or any other changes (including retroactive changes) in the future, and no Group Company has received any notice to the contrary or is aware of any event that may result in repeal, cancellation, revocation, or return of such entitlements. All exemptions, reductions and rebates of material Taxes granted to any Group Company by a Governmental Authority are in full force and effect and have not been terminated. No Group Company will be required to include material amounts in income, or exclude material items of deduction, or qualification for Tax exemption, Tax holiday, Tax credit, Tax incentive or Tax refund, in any taxable period beginning after the date of the Closing as a result of (i) a change in method of accounting occurring on or prior to the date of the Closing, (ii) agreement with any Governmental Authority executed on or prior to the date of the Closing, (iii) installment sale or open transaction disposition made on or prior to the date of the Closing, or (iv) prepaid amount received on or prior to the date of the Closing. The transactions contemplated under this Agreement and the other Transaction Documents to which any Group Company is a party are not in violation of any applicable Law regarding Tax, and will not result in any Tax exemption, Tax holiday, Tax credit, Tax incentive, Tax refund being revoked, cancelled or terminated or trigger any Tax liability for any Group Company. There are no Liens for Taxes (other than Permitted Liens) on any assets of any Group Company.

 

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(f)                                   The Group Companies are in compliance with all applicable transfer pricing Laws, including the execution and maintenance of contemporaneous documentation substantiating the transfer pricing practices and methodology of the Group Companies. All of the transactions between any Group Company and any other Related Party have been effected on an arm’s length basis. There are no circumstances which have caused or could cause any Governmental Authority to make any transfer pricing adjustment to the profits of any Group Company, or require any such adjustment to be made to the terms on which any such transaction is treated as taking place, and no such adjustment has been made or threatened.

 

(g)                                  No Group Company is a party to, involved with, bound by or otherwise subject to any Tax sharing, indemnity or allocation agreement or other similar arrangement with any Person (other than a commercial agreement entered into in the ordinary course of business and the principal purpose of which is not the sharing or allocation of Taxes) with respect to Taxes nor does any Group Company owe any amount under any such agreement. No Group Company is a member of an affiliated or combined taxation group with any Person other than the other Group Companies. No Group Company has any Liability for the Taxes of any Person (other than any other Group Company) as a result of such Group Company being part of or owned by, or ceasing to be part of or owned by, an affiliated, combined, consolidated, unitary or other similar group prior to the Closing, as a transferee or successor, by contract or otherwise. 

 

(h)                                 No Group Company has entered into: (i) any transaction the sole or main purpose of which was the avoidance or deferral or reduction of Tax by any Group Company or any associated Person; or (ii) any transaction the objective of which was the exclusion or reduction of the amount of any income, profits, gains, sales, supplies or imports made or enjoyed by any Group Company or any associated Person for any Tax purpose, or the creation or increase of the amount of any deduction, loss, allowance or credit claimed or intended to be claimed by any Group Company or any associated Person for any Tax purpose, that may be challenged, disallowed or investigated by any Governmental Authority.

 

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(i)            Each Group Company has complied with all statutory provisions rules, regulations, orders and directions in respect of any value added or similar Tax on consumption, has promptly submitted accurate returns, maintains full and accurate records, and has never been subject to any interest, forfeiture, surcharge or penalty and is not a member of a group or consolidation with any other company for the purposes of value added Tax.

 

(j)            No Group Company has entered into any concession, agreements (including agreements for the deferred payment of any Tax liability) or other formal or informal arrangement with any Governmental Authority relating to the Group Companies.

 

(k)           The Company will not be required to pay any Taxes under PRC Law with respect to the transactions contemplated by this Agreement and the other Transaction Documents.

 

(l)            The Company is treated as a corporation for U.S. federal income tax purposes. No Group Company has filed any U.S. Tax election, including any entity classification election pursuant to any applicable U.S. Treasury Regulations. No Group Company is a PFIC, CFC or a U.S. Real Property Holding Corporation. No Group Company anticipates that it will become a PFIC, CFC or a U. S. Real Property Holding Corporation in the foreseeable future. No Group Company owns a less than twenty-five percent (25%) equity interest (by value) in any other entity.

 

SECTION 3.08     Charter Documents; Books and Records. The Charter Documents of each Group Company are in the form made available to the Purchaser Parties. Each Group Company has been in compliance in all material respects with its Charter Documents, and none of the Group Companies has violated or breached any of their respective Charter Documents in any material respect. Each Group Company maintains its books of accounts and records in the usual, regular and ordinary manner, on a basis consistent with prior practice, and which permits its Financial Statements to be prepared in accordance with the Accounting Standards. The register of members and directors (if applicable) of each Group Company is correct, there has been no notice of any proceedings to rectify any such register, and to the Knowledge of the Company Parties there are no circumstances which might lead to any application for its rectification. All documents requiring to be filed by each Group Company with the applicable Governmental Authority in respect of the relevant jurisdiction in which the relevant Group Companies is being incorporated have been properly made up and filed.

 

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SECTION 3.09     Financial Statements. Section 3.09 of the Company Disclosure Schedule sets forth (a)(i) the audited consolidated balance sheet, statement of income and statement of cash flows for the Group (excluding the Xiaodu Group Companies) as of and for the fiscal year ended December 31, 2016 (the “Statement Date”) and (ii) the audited consolidated balance sheet, statement of income and statement of cash flows for the Xiaodu Group as of and for the fiscal year ended on the Statement Date, (b) the unaudited consolidated balance sheet, statement of income and statement of cash flows for the Group as of and for the twelve (12) months ended December 31, 2017 (the “Unaudited 2017 Financial Statements”), and (c) the unaudited consolidated balance sheet, statement of income and statement of cash flows for the Group as of and for the one month ended January 31, 2018 ((a), (b) and (c) collectively, the “Financial Statements”). When delivered pursuant to Section 7.14, the Audited 2017 Financial Statements shall be deemed to be included in the definition of “Financial Statements”. Except as otherwise disclosed in Section 3.09 of the Company Disclosure Schedule, the Financial Statements (i) have been prepared in accordance with the books and records of the Group, (ii) fairly present in all material respects the consolidated financial position, results of operations and cash flows of the Group as of the dates and for the periods presented therein, and (iii) were prepared in accordance with the Accounting Standards applied on a consistent basis throughout the periods presented. All of the accounts receivable owing to any of the Group Companies, including without limitation all accounts receivable set forth on the Financial Statements, constitute valid and enforceable claims and are current and collectible in the ordinary course of business in all material respects, net of any reserves shown on the Financial Statements (which reserves are adequate). There are no material contingent or asserted claims, refusals to pay, or other rights of set-off with respect to any accounts receivable of any Group Company.

 

SECTION 3.10     Changes. Since the Statement Date, each Group Company (i) has operated its business in the ordinary course consistent with its past practice, (ii) used its reasonable best efforts to preserve its business, (iii) collected receivables and paid payables and similar obligations in the ordinary course of business consistent with past practice, and (iv) not engaged in any new line of business or entered into any agreement, transaction or activity or made any commitment except those in the ordinary course of business consistent with past practice. Since the Statement Date, no Material Adverse Effect has occurred. Except for those disclosed in Section 3.10 of the Company Disclosure Schedule or as expressly provided in the Transaction Documents, since the Statement Date, there has not been:

 

(a)           any purchase, acquisition, sale, lease, disposal of or other transfer of any assets that are individually or in the aggregate material to its business, whether tangible or intangible, other than the purchase or sale of inventory in the ordinary course of business consistent with its past practice;

 

(b)           any acquisition (by merger, consolidation or other combination, or acquisition of stock or assets, or otherwise) of any business or other Person or division thereof, or any sale or disposition of any business or division thereof;

 

(c)           any sale, assignment, exclusive license, or transfer of any Intellectual Property of any Group Company (other than a transfer to the Company or a wholly-owned Group Company);

 

(d)           any waiver, termination, cancellation, settlement or compromise of a valuable right, debt or claim;

 

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(e)           any incurrence, creation, assumption, repayment, satisfaction, or discharge of (A) any material Lien (other than Permitted Liens) or (B) any Indebtedness (other than Indebtedness incurred, created, assumed, repaid, satisfied or discharged in the ordinary course of business provided that such Indebtedness in the ordinary course of business of all of the Group Companies does not exceed US$5,000,000 in the aggregate) or guarantee, or the making of any loan or advance (other than reasonable and normal advances to employees for bona fide expenses that are incurred in the ordinary course of business consistent with its past practice), or the making of any investment or capital contribution;

 

(f)            any amendment to or termination of any Material Contract, any entering of any new Contract that would have been a Material Contract if in effect on the date hereof, or any amendment to or waiver under any Charter Document;

 

(g)           any change in any compensation arrangement or Contract with any employee of any Group Company, or adoption of any new Benefit Plan, or made any material change in any existing Benefit Plan;

 

(h)           any declaration, setting aside or payment or other distribution in respect of any Equity Securities of any Group Company, or any issuance, transfer, redemption, purchase or acquisition of any Equity Securities by any Group Company;

 

(i)            any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the assets, properties, financial condition, operation or business of any Group Company;

 

(j)            any material change in accounting principles, methods or practices or any revaluation of any of its assets;

 

(k)           except in the ordinary course of business consistent with its past practice, settlement of any claim or assessment in respect of any material Taxes, entry or change of any material Tax election, change of any method of accounting resulting in a material amount of additional Tax or filing of any material amended Tax Return;

 

(l)            any commencement or settlement of any material Action;

 

(m)          any authorization, sale, issuance, transfer, pledge or other disposition of any Equity Securities of any Group Company;

 

(n)           any resignation or termination of any Key Employee of any Group Company or any material group of employees of any Group Company;

 

(o)           any transaction with any Related Party; or

 

(p)           any agreement or commitment to do any of the things described in this Section 3.10.

 

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SECTION 3.11     Actions. Except for those disclosed in Section 3.11 of the Company Disclosure Schedule, there is no Action pending or, to the Knowledge of the Company Parties, adversely affecting any Group Company or any of the Principals or any of the Principal Holdcos with respect to its businesses and there is no judgment or award unsatisfied against any Group Company, nor is there any Governmental Order in effect and binding on any Group Company or their respective assets or properties. There is no Action pending by any Group Company against any third party nor does any Group Company intend to commence any such Action. No Governmental Authority has at any time challenged or questioned in writing the legal right of any Group Company to conduct its business as presently being conducted.

 

SECTION 3.12     Liabilities. Except as disclosed in Section 3.12 of the Company Disclosure Schedule, no Group Company has any Liabilities of the type required to be disclosed on a balance sheet except for (i) Liabilities set forth in the balance sheet that have not been satisfied since the Statement Date, and (ii) current Liabilities incurred since the Statement Date in the ordinary course of the Group’s business consistent with its past practices and which do not exceed US$500,000 in the aggregate. Except as disclosed in Section 3.12 of the Company Disclosure Schedule and for Indebtedness incurred in the ordinary course of business, none of the Group Companies has any Indebtedness that it has directly or indirectly created, incurred, assumed, or guaranteed, or with respect to which the Group Company has otherwise become directly or indirectly liable. None of the Group Companies is a guarantor or indemnitor of any Liabilities of any other Person (other than a Group Company).

 

SECTION 3.13     Commitments.

 

(a)           Except for the Transaction Documents, the Control Documents and the Supplemental Control Documents, Section 3.13(a) of the Company Disclosure Schedule contains a complete and accurate list of all Material Contracts. “Material Contracts” means, collectively, any Contract to which a Group Company or any of its properties or assets is bound or subject to that (a) involves obligations (contingent or otherwise) or payments in excess of RMB2,000,000 or has an unexpired term in excess of one year, (b) involves Intellectual Property that is material to a Group Company (other than generally-available “off-the-shelf” shrink-wrap Software licenses obtained by the Group on non-exclusive and non-negotiated terms), including without limitation, the licenses, (c) restricts the ability of a Group Company to compete or to conduct or engage in any business or activity or in any territory (including any Contracts containing Restrictive Provisions), (d) relates to the sale, issuance, grant, exercise, award, purchase, repurchase or redemption of any Equity Securities, (e) involves any provisions providing for exclusivity, non-compete, “change in control”, “most favored nations”, rights of first refusal or first negotiation or similar rights against any Group Company, or grants a power of attorney, agency or similar authority by any Group Company, (f) is with a Related Party, (g) involves Indebtedness, an extension of credit, a guaranty, deed of trust, or the grant of a Lien (other than trade Indebtedness and credits in the ordinary course of business), (h) involves the lease, license or use of assets with an obligation of payment by any Group Company more than RMB150,000 per year, or the disposition or acquisition of a material amount of assets or of a business, (i) involves the waiver, compromise, or settlement of any material dispute, claim, litigation or arbitration, (j) involves the ownership or lease of, title to, use of, or any leasehold or other interest in, any real or personal property (except for personal property leases in the ordinary course of business and involving payments of less than RMB500,000 and real property leases in the ordinary course of business and involving rental payments of less than RMB150,000 per year), including without limitation, the Leases, (k) involves (i) the establishment, contribution to, or operation of a partnership, joint venture, alliance or similar entity, (ii) a sharing of profits or losses (including joint development and joint marketing Contracts), or (iii) any investment in, loan to or acquisition or sale of the securities, equity interests or assets of any Person which is material to the business of a Group Company, (l) is between any of the Domestic Company and another Group Company, (m) is with a Governmental Authority, state-owned enterprise, or sole-source supplier of any material product or service (other than utilities), (n) is a Benefit Plan, or a collective bargaining agreement or is with any labor union or other representatives of the employees, (o) is a brokerage or finder’s agreement, or material sales agency, marketing or distributorship Contract, (p) is with the application platforms (including without limitation, the AppStore of Apple Inc. and the Android Market of Google Inc.), (q) relates to business cooperation with any shareholder of the Company or any Affiliate of such shareholder (including but not limited to the Baidu Agreements and the Alibaba Business Cooperation Agreement), or (r) is otherwise material to a Group Company or is one on which a Group Company is substantially dependent.

 

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(b)           A true, fully-executed copy of each Material Contract including all amendments and supplements thereto has been delivered or otherwise made available to the Purchaser Parties. Except for those disclosed in Section 3.13(b) of the Company Disclosure Schedule, each Material Contract is a valid and binding agreement of the Group Company that is a party thereto, the performance of which does not and will not violate, in any material respects, any applicable Law or Governmental Order, and is in full force and effect and enforceable against the parties thereto, except (x) as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other Laws of general application affecting enforcement of creditors’ rights generally, and (y) as may be limited by Laws relating to the availability of specific performance, injunctive relief or other remedies in the nature of equitable remedies, and for (z) where applicable, the recognition and enforcement of arbitral award being subject to relevant Laws. Each Group Company has duly performed all of its obligations in all material respects under each Material Contract to the extent that such obligations to perform have accrued, and no material breach or default, alleged material breach or alleged default, or event which would (with the passage of time, notice or both) constitute a material breach or default thereunder by such Group Company or, to the Knowledge of the Company Parties, any other party or obligor with respect thereto, has occurred, or as a result of the execution, delivery, and performance of the Transaction Documents will occur. No Group Company has given notice (whether or not written) that it intends to terminate a Material Contract or that any other party thereto has breached, violated or defaulted under any Material Contract. No Group Company has received any notice (whether written or not) that it has breached, violated or defaulted under any Material Contract or that any other party thereto intends to terminate such Material Contract.

 

(c)           Each of the JD Agreements has been duly terminated in accordance with its terms (including any provisions therein that purport to survive the termination thereof), and there are no continuing obligations or liabilities under any JD Agreement on the part of any Group Company or other party thereto. No Group Company is a party to any Contract with Jiangsu Jingdong Information Technology Co., Ltd. or any of its Affiliates.

 

(d)           There is no material breach of any covenant or agreement contained in the Alibaba Business Cooperation Agreement by any Warrantor.

 

(e)           No Group Company or any of its properties or assets is bound or subject to any Contract containing Restrictive Provisions.

 

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SECTION 3.14     Anti-Bribery, Anti-Corruption, Anti-Money Laundering and Sanctions; Absence of Government Interests.

 

(a)           Each Group Company and their respective directors, officers, employees and other persons acting on their behalf (collectively, “Representatives”) are and have been in compliance with all applicable Laws relating to anti-bribery, anti-corruption, anti-money laundering, record keeping and internal controls (collectively, the “Compliance Laws”), including the FCPA. Furthermore, except for those disclosed in Section 3.14 of the Company Disclosure Schedule, no Public Official (x) holds an ownership or other economic interest, direct or indirect, in any of the Group Companies or in the contractual relationship formed by this Agreement, or (y) serves as an officer, director or employee of any Group Company. Without limiting the foregoing, neither any Group Company nor any Representative has, directly or indirectly, offered, promised, given, authorized or paid any money or anything of value to any Public Official or to any person under circumstances where any Group Company or Representative knew or ought to have known that all or a portion of such money or thing of value would be offered, given, paid or promised, directly or indirectly, to a Person:

 

(i)            for the purpose of influencing any act or decision of a Public Official in their official capacity; inducing a Public Official to act or omit to act in violation of lawful duties; securing any improper advantage; inducing a Public Official to influence or affect any act or decision of any Governmental Authority; or assisting any Group Company or any Representative in obtaining or retaining business for or with, or directing business to, any Person; or

 

(ii)           in a manner that would constitute a breach of any Compliance Laws.

 

(b)           Each Group Company has maintained complete and accurate books and records, and no assets of any Group Company have been used for the establishment of any unlawful or unrecorded fund of monies or other assets, or for the making of any unlawful or undisclosed payment.

 

(c)           No Group Company or any of its Representatives has ever been found by a Governmental Authority to have violated any criminal or securities Law or is subject to any indictment or any government investigation for bribery. Except for those disclosed in Section 3.14 of the Company Disclosure Schedule, none of the beneficial owners of any Equity Securities or other interest in any Group Company or the current or former Representatives of any Group Company are or were Public Officials.

 

(d)           No Group Company or any of its Representatives is a Prohibited Person, and no Prohibited Person will be given an offer to become an employee, officer, consultant or director of any Group Company. No Group Company has conducted or agreed to conduct any business, or entered into or agreed to enter into any transaction with a Prohibited Person.

 

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SECTION 3.15     Title Properties.

 

(a)           Title; Personal Property. Each Group Company has good and valid title to all of its respective assets, whether tangible or intangible (including those reflected in the balance sheet, together with all assets acquired thereby since the Statement Date, but excluding those that have been disposed of since the Statement Date), in each case free and clear of all Liens, other than Permitted Liens. The foregoing assets collectively represent in all material respects all assets (including all rights and properties) necessary for the conduct of the business of each Group Company as presently conducted. Except for leased or licensed assets, no Person other than a Group Company owns any interest in any such assets. Except for those disclosed in Section 3.15(a) of the Company Disclosure Schedule, all leases of real or personal property to which a Group Company is a party are fully effective and afford the Group Company valid leasehold possession of the real or personal property that is the subject of the lease.

 

(b)           Real Property. No Group Company owns or has legal or equitable title or other right or interest in any real property other than as held pursuant to Leases. Section 3.15(b) of the Company Disclosure Schedule sets forth each leasehold interest involving payment of rental of no less than RMB150,000 per year pursuant to which any Group Company holds any real property (a “Lease”), indicating the parties to such Lease, the address of the property demised under the Lease, the rent payable under the Lease and the term of the Lease. The particulars of the Leases as set forth in Section 3.15(b) of the Company Disclosure Schedule are true and complete. To the Knowledge of the Company Parties, the lessor under each Lease is qualified and has obtained all Consents necessary to enter into such Lease. Except for those disclosed in Section 3.15(i) and Section 3.15(b) of the Company Disclosure Schedule, each Lease is in compliance in all material respects with applicable Laws, including with respect to the ownership and operation of property and conduct of business as now conducted by the applicable Group Company which is a party to such Lease.

 

SECTION 3.16     Related Party Transactions. Except for those disclosed in Section 3.16 of the Company Disclosure Schedule, (i) no Principal or his Affiliates, nor, to the Knowledge of the Company Parties, any other Related Party has any Contract, understanding, or proposed transaction with, or is indebted to, any Group Company or has any direct or indirect interest in any Group Company other than as set forth in Section 3.02 of the Company Disclosure Schedule, nor is any Group Company indebted (or committed to make loans or extend or guarantee credit) to any Related Party (other than for accrued salaries, for the current pay period, reimbursable expenses or other standard employee benefits); (ii) no Principal or his Affiliates, nor, to the Knowledge of the Company Parties, any other Related Party has any direct or indirect interest in any Person with which a Group Company is affiliated or with which a Group Company has a material business relationship (including any Person which purchases from or sells, licenses or furnishes to a Group Company any goods, intellectual or other property rights or services), or in any Contract to which a Group Company is a party or by which it may be bound or affected, and no Related Party directly or indirectly competes with, or has any interest in any Person that directly or indirectly competes with, any Group Company (other than ownership of less than one percent (1%) of the stock of publicly traded companies). Except for those disclosed in Section 3.16 of the Company Disclosure Schedule, no Group Company has made any loans or extended any credit to any Principal, Principal Holdco or any other officer of any Group Company, which remain outstanding as of the date hereof.

 

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SECTION 3.17     Intellectual Property Rights.

 

(a)           Company IP. Except as disclosed in Section 3.17(a) of the Company Disclosure Schedule, each Group Company owns or otherwise has sufficient rights (including but not limited to the rights of development, maintenance, licensing and sale) to all Intellectual Property necessary and sufficient to conduct its business as currently conducted by such Group Company (“Company IP”) without any conflict with or infringement of the rights of any other Person. Section 3.17(a) of the Company Disclosure Schedule sets forth a complete and accurate list of all Company Registered IP for each Group Company, including for each the relevant name or description, registration/certification or application number, and filing, registration or issue date.

 

(b)           IP Ownership. Except for those disclosed in Section 3.17(b) of the Company Disclosure Schedule, all Company Registered IP is owned by and registered or applied for in the name of a Group Company, is valid and subsisting and has not been abandoned, and all necessary registration, maintenance and renewal fees with respect thereto and currently due have been satisfied. No Group Company or any of its employees, officers or directors has taken any actions or failed to take any actions that would cause any Company Owned IP to be invalid, unenforceable or not subsisting. No Group Company has entered into any agreement with a Governmental Authority or a university, college, other educational institution, start-up incubator or entities with similar nature, or research center which would grant such entities a legal basis to claim the interests or ownership in and to any Company Owned IP. No material Company Owned IP is the subject of any Lien, license or other Contract granting rights therein to any other Person. No Group Company is or has been a member or promoter of, or contributor to, any industry standards bodies, patent pooling organizations or similar organizations that could require or obligate a Group Company to grant or offer to any Person any license or right to any material Company Owned IP. Except for those disclosed in Section 3.17(b) of the Company Disclosure Schedule, no Company Owned IP is subject to any proceeding or outstanding Governmental Order or settlement agreement or stipulation that (a) restricts in any manner the use, transfer or licensing thereof, or the making, using, sale, or offering for sale of any Group Company’s products or services, by any Group Company, or (b) may affect the validity, use or enforceability of such Company Owned IP. Each Principal has assigned and transferred to a Group Company any and all of his Intellectual Property related to the Business. No Group Company has (a) transferred or assigned any material Company IP; (b) authorized the joint ownership of, any material Company IP; or (c) permitted the rights of any Group Company in any material Company IP to lapse or enter the public domain.

 

(c)           Infringement, Misappropriation and Claims. To the Knowledge of the Company Parties, except as disclosed in Section 3.17(c) of the Company Disclosure Schedule, no Group Company has violated, infringed or misappropriated in any material respect any Intellectual Property of any other Person, nor has any Group Company received any written notice alleging any of the foregoing. To the Knowledge of the Company Parties, except as disclosed in Section 3.17(c) of the Company Disclosure Schedule, no Person has violated, infringed or misappropriated any material Company IP of any Group Company, and no Group Company has given any written notice to any other Person alleging any of the foregoing. Except as disclosed in Section 3.17(c) of the Company Disclosure Schedule, no Person has challenged the ownership or use of any material Company IP by a Group Company. Except as disclosed in Section 3.17(c) of the Company Disclosure Schedule, no Group Company has agreed to indemnify any Person for any infringement, violation or misappropriation of any Intellectual Property by such Person.

 

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(d)           Assignments and Prior IP. All material inventions and material know-how conceived by the Principals related to the business of such Group Company are currently owned exclusively by a Group Company. All employees, contractors, agents and consultants of a Group Company who are or were specifically employed or engaged in the creation of any Intellectual Property for such Group Company as well as all directors of each Group Company (but not including the Alibaba Director) have executed an assignment of inventions agreement that vests in a Group Company exclusive ownership of all right, title and interest in and to such Intellectual Property, to the extent not already provided by Law. All employee inventors of Company Owned IP have received reasonable reward and remuneration from a Group Company for his/her service inventions or service technology achievements in accordance with the applicable PRC Laws. To the Knowledge of the Company Parties and except for those disclosed in Section 3.17(d) of the Company Disclosure Schedule, it will not be necessary to utilize any Intellectual Property of any such Persons made prior to their employment by a Group Company, except for those that are exclusively owned by a Group Company, and none of such Intellectual Property has been utilized by any Group Company. To the Knowledge of the Company Parties, none of the employees, consultants or independent contractors, currently or previously employed or otherwise engaged by any Group Company, (a) is in violation of any current or prior confidentiality, non-competition or non-solicitation obligations to such Group Company or to any other Persons (including but not limited to former employers, if any), or (b) is obligated under any Contract, or subject to any Governmental Order, that would interfere with the use of his or her best efforts to promote the interests of the Group Companies or that would conflict with the business of such Group Company as presently conducted.

 

(e)           Protection of IP. Each Group Company has taken reasonable and appropriate steps to protect, maintain and safeguard material Company IP and made all applicable filings, registrations and payments of fees in connection with the foregoing. To the extent that any Company IP has been developed or created independently or jointly by an independent contractor or other third party entrusted by any Group Company, such Group Company has a written agreement with such independent contractor or third party and has thereby obtained ownership of, and is the exclusive owner of all such independent contractor’s or third party’s Intellectual Property in such work, material or invention by operation of law or valid assignment.

 

SECTION 3.18     Labor and Employment Matters.

 

(a)           Except for those disclosed in Section 3.18(a) of the Company Disclosure Schedule, each Group Company has complied in all material respects with all applicable Laws related to labor or employment, including provisions thereof relating to wages, hours, working conditions, benefits, retirement, social welfare, equal opportunity and collective bargaining. There is not pending or to the Knowledge of the Company Parties threatened, and there has not been since the incorporation of each Group Company, any Action relating to the violation or alleged violation of any applicable Laws by such Group Company related to labor or employment, including any charge or complaint filed by an employee with any Governmental Authority or any Group Company.

 

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(b)           Except for those disclosed in Section 3.18(b) of the Company Disclosure Schedule, no Liability has been or is expected to be incurred by any Group Companies under or pursuant to any applicable Laws relating to any Benefit Plan or individual employment compensation agreement, and, to the Knowledge of the Company Parties, no event, transaction or condition has occurred or exists that would result in any such Liability to any Group Companies. Each of the Benefit Plans listed in Section 3.18(b) of the Company Disclosure Schedule is and has at all times been in compliance in material respects with all applicable Laws (including without limitation, SAFE Rules and Regulations, if applicable), and all contributions to, and payments for each such Benefit Plan have been timely made. There are no pending or, to the Knowledge of the Company Parties, threatened Actions involving any Benefit Plan listed in Section 3.18(b) of the Company Disclosure Schedule (except for claims for benefits payable in the normal operation of any Benefit Plan). Each Group Company maintains, and has fully funded, each Benefit Plan and any other labor-related plans if it is required by Law or by Contract to maintain and fully fund such Benefit Plan or other labor-related plan. Except for those disclosed in Section 3.18(b) of the Company Disclosure Schedule, each Group Company is in compliance in all material respects with all Laws and Contracts relating to its provision of any form of Social Insurance, and has paid, or made provision for the payment of, all Social Insurance contributions required under applicable Laws and Contracts.

 

(c)           There has not been, and there is not now pending or, to the Knowledge of the Company Parties, threatened, any strike, union organization activity, lockout, slowdown, picketing, or work stoppage or any unfair labor practice charge against any Group Company. No Group Companies is bound by or subject to (and none of their assets or properties is bound by or subject to) any written or oral Contract, commitment or arrangement with any labor union or any collective bargaining agreements.

 

(d)           Schedule VI hereto sets forth the names and titles of all of the key employees (the “Key Employees”) of the Company as of the date hereof. Each Key Employee is currently devoting all of his or her business time to the conduct of the business of the applicable Group Company. No Principal is subject to any covenant restricting him/her from working for any Group Company, and to the Knowledge of the Company Parties, no Key Employee (other than the Principals) is subject to any covenant restricting him/her from working for any Group Company. No Principal is prohibited by any Contract or any Governmental Order from being employed by, or contracting with, such Group Company, and to the Knowledge of the Company Parties, no Key Employee (other than the Principals), is prohibited by any Contract or any Governmental Order from being employed by, or contracting with, such Group Company. No Group Company has received any notice alleging that any such violation has occurred. No Key Employee is currently working or, to the Knowledge of the Company Parties, plans to work for any other Person that competes with any Group Company, whether or not such individual is or will be compensated by such Person. No Key Employee or any group of employees of any Group Company has given any notice of an intent to terminate their employment with any Group Company, nor does any Group Company have a present intention to terminate the employment of any Key Employee or any group of employees.

 

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SECTION 3.19     Internal Controls. Each Group Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions by it are executed in accordance with management’s general or specific authorization, (ii) transactions by it are recorded as necessary to permit preparation of financial statements in conformity with the Accounting Standards and to maintain asset accountability, (iii) access to assets of it is permitted only in accordance with management’s general or specific authorization, (iv) the recorded inventory of assets is compared with the existing tangible assets at reasonable intervals and appropriate action is taken with respect to any material differences, (v) segregating duties for cash deposits, cash reconciliation, cash payment, proper approval is established, and (vi) no personal assets or bank accounts of the employees, directors, officers are mingled with the corporate assets or corporate bank account, and no Group Company uses any personal bank accounts of any employees, directors, officers thereof during the operation of the business.

 

SECTION 3.20     Insolvency. As of the date of this Agreement, (i) the aggregate assets, at a fair valuation, of each Group Company will exceed the aggregate debt of each such entity, as the debt becomes absolute and matures; and (ii) each Group Company will not have incurred or intended to incur debt beyond its ability to pay such debt as such debt becomes absolute and matures. There has not been commenced against any Group Company an involuntary case under any applicable national, provincial, city, local or foreign bankruptcy, insolvency, receivership or similar laws now or hereafter in effect, or any case, proceeding or other action for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of such person or for any substantial part of its property or for the winding up or liquidation of its affairs.

 

SECTION 3.21     Disclosure. Each Warrantor has provided the Purchaser Parties with all the information regarding the Group as agreed in this Agreement or otherwise requested by the Purchaser Parties in writing for deciding whether to consummate the Transactions. No representation or warranty by the Warrantors in this Agreement and no information or materials provided by the Company Parties to the Purchaser Parties in connection with the negotiation or execution of this Agreement or any agreement contemplated hereby contains any untrue statement of a material fact, or omits to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances in which they are made, not misleading. Except as set forth in this Agreement or the Company Disclosure Schedule, there is no fact that the Company Parties have not disclosed to the Purchaser Parties in response to the Purchaser Parties’ enquiry and of which any of its officers, directors or executive employees has Knowledge and that has had or would reasonably be expected to have a Material Adverse Effect.

 

SECTION 3.22     Insurance. Expect as for those disclosed in Section 3.22 of the Company Disclosure Schedule, none of any Group Company purchases or maintains any insurance or bond with respect to its operation of the Business..

 

SECTION 3.23     Employee-Related Companies. The Employee-Related Companies have not engaged in any operation or business. Yuchuan has (a) completed the transfer of all legally available funds in its accounts to a Group Company, (b) fully repaid all debts owed by it or any of its shareholders to a Group Company, and (c) has been duly de-registered in accordance with applicable Law. The Company is in effective Control over Taizhou. Except for the trademark set forth in Section 3.23 of the Company Disclosure Schedule, Taizhou does not hold any material assets owned or used by the Group Companies.

 

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SECTION 3.24     Business Contracts of the Domestic Company. From and after September 1, 2016, the Rajax Domestic Company and Xiaodu Shenghuo have been the sole provider of value-added telecommunication services under any Contract to which the WFOEs and/or the Domestic Companies is a party and pursuant to which the WFOEs and/or the Domestic Companies have agreed to provide value-added telecommunication services.

 

SECTION 3.25     Certain Operating Metrics. The results of operation of the Group Companies as measured by certain operating metrics set forth in in the letter regarding such operating metrics, which was delivered by the Warrantors to Purchaser prior to the date of this Agreement, are true and accurate in all respects as of the relevant dates.

 

SECTION 3.26     Registered Address of the Domestic Company and the WFOE. Each of the Domestic Companies and the WFOEs has (i) updated its registered address to be consistent with its actual premises at which it conducts its operation and (ii) updated all of its permits and licenses to the extent necessary and required by the competent Governmental Authorities.

 

SECTION 3.27     Third Parties Providing Catering Services. Except as for those set forth in Section 3.27 of the Company Disclosure Schedule, no Person is providing catering services for the Rajax WFOE Subsidiary as agents and/or partners (联营门店合作方).

 

SECTION 3.28     Series G-1 Post-Closing Covenants. Except as set forth in Section 3.28 of the Company Disclosure Schedule, each Company Party is in compliance with its obligations under Section 7.1(ix), Section 7.1(x), Section 7.1(xi), Section 7.1(xii) and Section 7.1(xiii) of the Alibaba Series G-1 SPA (as defined in the Shareholders Agreement).

 

SECTION 3.29     Anti-Takeover Provisions. The Company is not party to a shareholder rights agreement, “poison pill” or similar agreement or plan. The Board of Directors has taken all necessary action so that any takeover, anti-takeover, moratorium, “fair price”, “control share” or other similar Laws enacted under any Laws applicable to the Company (each, a “Takeover Statute”) does not, and will not, apply to this Agreement or the Transactions other than the CICL.

 

SECTION 3.30     Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of the Company.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Purchaser hereby represents and warrants to the Company and the Selling Shareholders that:

 

SECTION 4.01     Corporate Organization. Purchaser is duly organized, validly existing and in good standing under the laws of the Cayman Islands and has the requisite corporate or similar power and authority to own, lease and operate its properties and assets to carry on its business as it is now being conducted.

 

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SECTION 4.02     Purchaser Ownership. All of the issued and outstanding share capital of Purchaser is, and at the Closing will be, solely owned by Rollover Shareholder. Purchaser was formed solely for the purpose of engaging in the Transactions, and it has not conducted any business prior to the date hereof and has no, and prior to the Closing will have no, assets, liabilities or obligations of any nature other than in connection with those incident to its formation and capitalization pursuant to this Agreement and the Transactions.

 

SECTION 4.03     Authority Relative to This Agreement. Each of the Purchaser Parties has all requisite power and authority to execute and deliver the Transaction Documents to which it is a party, to carry out and perform its obligations thereunder and to consummate the Transactions. All action on the part of each of the Purchaser Parties necessary for the authorization, execution and delivery of the Transaction Documents to which it is a party, and the performance of all obligations of the Purchaser Parties thereunder, has been taken or will be taken prior to the Closing. Each Transaction Document to which a Purchaser Party is a party has been, or will be on or prior to the Closing, duly executed and delivered by such Purchaser Party, enforceable against such Purchaser Party in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other Laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by Laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, and (iii) where applicable, the recognition and enforcement of arbitral awards being subject to relevant Laws

 

SECTION 4.04     Consents. All Consents from or with any Governmental Authority or any other Person required in connection with the valid execution, delivery and performance of the Transaction Documents, and the consummation of the transactions contemplated by the Transaction Documents, in any case on the part of the Purchaser Parties, have been duly obtained or completed (as applicable) and are in full force and effect. The execution, delivery and performance of each Transaction Document by each Purchaser Party, and the consummation by the such Purchaser Party of the transactions contemplated thereby, do not and will not, (i) result in any violation of, be in conflict with, or constitute a default under, require any Consent under, or give any Person rights of termination, amendment, acceleration or cancellation under, with or without the passage of time or the giving of notice, any Governmental Order, any provision of the Charter Documents of such Purchaser Party, any applicable Laws, or any material contract to which such Purchaser Party is a party, (ii) result in any termination, modification, cancellation, or suspension of any material right of, or any augmentation or acceleration of any material obligation of, such Purchaser Party (including without limitation, any indebtedness of such Purchaser Party), or (iii) result in the creation of any Lien upon any of the material properties or assets of such Purchaser Party other than Permitted Liens.

 

SECTION 4.05     Sufficient Funds. At the Closing, Purchaser will have available sufficient funds to pay the Aggregate Purchase Price in accordance with and subject to the terms and conditions of this Agreement.

 

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ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF EACH SHAREHOLDER

 

Subject to such exceptions as may be specifically set forth in the disclosure schedule delivered by the Selling Shareholders and the Rollover Shareholder to Purchaser, as of the date hereof and attached to this Agreement as Schedule VIII (the “Selling Shareholders Disclosure Schedule”), each Selling Shareholder and the Rollover Shareholder hereby, severally but not jointly, represents and warrants to Purchaser (but only with respect to itself and its Shares) that:

 

SECTION 5.01     Corporate Organization. Such Selling Shareholder or the Rollover Shareholder, as applicable, is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has the requisite corporate or similar power and authority to own, lease and operate its properties and assets to carry on its business as it is now being conducted.

 

SECTION 5.02     Title. Such Selling Shareholder is the beneficial and record owner of the Sale Shares of such Selling Shareholder free and clear of all Liens (other than any Liens created under the Memorandum and Articles, the Shareholders Agreement and the ROFR Agreement), and the Rollover Shareholder is the beneficial and record owner of the Rollover Shares and clear of all Liens (other than any Liens created under the Memorandum and Articles, the Shareholders Agreement and the ROFR Agreement). The Sale Shares of such Selling Shareholder and the Rollover Shares of the Rollover Shareholder, as applicable, are duly authorized, validly issued, fully paid and non-assessable. Upon the update of the register of members of the Company at the Closing, Purchaser will have valid title to the Sale Shares of such Selling Shareholder and the Rollover Shares of the Rollover Shareholder, as applicable, free and clear of all Liens.

 

SECTION 5.03     Authority Relative to This Agreement. Such Selling Shareholder or the Rollover Shareholder, as applicable, has all requisite power and authority to execute and deliver the Transaction Documents to which it is a party, to carry out and perform its obligations thereunder and to consummate the Transactions. All action on the part of such Selling Shareholder or the Rollover Shareholder, as applicable, necessary for the authorization, execution and delivery of the Transaction Documents to which it is a party, and the performance of all obligations of such Selling Shareholder or the Rollover Shareholder, as applicable, thereunder, has been taken or will be taken prior to the Closing. Each Transaction Document to which such Selling Shareholder or the Rollover Shareholder, as applicable, is a party has been, or will be on or prior to the Closing, duly executed and delivered by such Selling Shareholder or the Rollover Shareholder, as applicable, enforceable against such Selling Shareholder or the Rollover Shareholder, as applicable, in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other Laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by Laws relating to the availability of specific performance, injunctive relief, or other equitable remedies and (iii) for, where applicable, the recognition and enforcement of arbitral awards being subject to relevant Laws.

 

SECTION 5.04     Consents. Except as set forth in Section 5.04 of the Selling Shareholders Disclosure Schedule, all Consents from or with any Governmental Authority or any other Person required in connection with the valid execution, delivery and performance of the Transaction Documents, and the consummation of the transactions contemplated by the Transaction Documents, in any case on the part such Selling Shareholder or the Rollover Shareholder, as applicable, have been duly obtained or completed (as applicable) and are in full force and effect. Except as set forth in Section 5.04 of the Selling Shareholders Disclosure Schedule, the execution, delivery and performance of each Transaction Document by such Selling Shareholder or the Rollover Shareholder, as applicable, and the consummation by such party of the transactions contemplated thereby, do not and will not, (i) result in any violation of, be in conflict with, or constitute a default under, require any Consent under, or give any Person rights of termination, amendment, acceleration or cancellation under, with or without the passage of time or the giving of notice, any Governmental Order, any provision of the Charter Documents of such Selling Shareholder or the Rollover Shareholder, as applicable, any applicable Laws, or any material contract to which such Selling Shareholder or the Rollover Shareholder, as applicable, is a party, (ii) result in any termination, modification, cancellation, or suspension of any material right of, or any augmentation or acceleration of any material obligation of, such Selling Shareholder or the Rollover Shareholder, as applicable, (including without limitation, any indebtedness of such Selling Shareholder or the Rollover Shareholder, as applicable), or (iii) result in the creation of any Lien upon any of the material properties or assets of such Selling Shareholder or the Rollover Shareholder, as applicable, other than Permitted Liens.

 

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ARTICLE VI

 

CONDUCT OF BUSINESS PENDING THE CLOSING

 

SECTION 6.01     Conduct of Business by the Company Pending the Closing.

 

(a)           Each of the Company, the Principals and the Principal Holdcos agrees that, between the date of this Agreement and the Closing, except as required by applicable Law or as set forth in Section 6.01 of the Company Disclosure Schedule, unless Purchaser shall otherwise provide its prior written consent:

 

(i)            the businesses of the Group Companies shall be conducted only in, and no Group Company shall take any action except in, a lawfully permitted manner in the ordinary course of business consistent with past practice (subject to each of the Company, the Principal and the Principal Holdcos acting in a prudent and professional manner taking into account the Group Companies’ cash flow and liquidity);

 

(ii)           the Company shall use its reasonable best efforts to preserve substantially intact the business organization of the Group Companies, maintain in effect all Required Governmental Consents, keep available the services of the current officers, Key Employees, and key consultants and contractors of the Group Companies and preserve the current material relationships and goodwill of the Group Companies with Governmental Authorities, key customers and suppliers, and any other persons with which any Group Company has material business relations; and

 

(iii)          (A) the business of the Company shall be restricted to the holding of shares or equity interest in the Rajax HK Subsidiary and the Xiaodu Cayman Company, (B) the business of the Rajax HK Subsidiary shall be restricted to the holding of shares or equity interest in the Rajax WFOE, (C) the business of the Xiaodu Cayman Company shall be restricted to the holding of shares or equity interest in the Xiaodu HK Company, and (D) the business of the Xiaodu HK Company shall be restricted to the holding of shares or equity interest in the Xiaodu WFOE.

 

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(b)           In furtherance and without limitation of Section 6.01(a), except as set forth in Section 6.01(b) of the Company Disclosure Schedule, or as required by applicable Law, the Company will not (and the Principals and the Principal Holdcos will ensure that no Group Company will) and will not permit any other Group Company to between the date of this Agreement and the Closing, directly or indirectly, do, or propose to do, any of the following without the prior written consent of Purchaser:

 

(i)            amend or otherwise change the Charter Documents of the Company or make any material amendments to the Charter Documents of any other Group Company;

 

(ii)           issue, sell, transfer, lease, sublease, license, pledge, dispose of, grant or encumber, or authorize the issuance, sale, transfer, lease, sublease, license, pledge, disposition, grant or encumbrance of, (A) any shares of any class of any Group Company, or any options, warrants, convertible securities or other rights of any kind (including any Company Share Award) to acquire any shares, or any other ownership interest (including, without limitation, any phantom interest), of any Group Company (other than in connection with the exercise or settlement of any Company Share Awards outstanding on the date hereof in accordance with the applicable ESOP or RSU tranche and applicable award agreement), or (B) any material property or assets (whether real, personal or mixed, and including leasehold interests, intangible property and Intellectual Property) of the Group Companies (other than sale of such property or assets, in each case, in the ordinary course of business and consistent with past practice);

 

(iii)          declare, set aside, make or pay any dividend or other distribution, payable in cash, shares, property or otherwise, with respect to any of its shares, other than dividends or other distributions from any Group Company to the Company or another Group Company which is wholly-owned by the Company;

 

(iv)          reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its shares, or any options, warrants, convertible securities or other rights exchangeable into or convertible or exercisable for any of its share capital, in each case other than in connection with the settlement of any Company Share Awards in accordance with the applicable ESOP or RSU tranche and this Agreement;

 

(v)           (A) effect or commence any liquidation, dissolution, scheme of arrangement, merger, consolidation, amalgamation, recapitalization, restructuring, reorganization or similar transaction involving any Group Company (other than the Transactions or any merger or consolidation among wholly-owned Subsidiaries of the Company), or (B) create any new Subsidiaries;

 

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(vi)          (A) acquire (including, without limitation, by merger, consolidation, scheme of arrangement, amalgamation or acquisition of stock or assets or any other business combination) or make any capital contribution or investment in any corporation, partnership, other business organization or any division thereof (other than a wholly-owned Subsidiary of the Company), or (B) acquire any assets (other than (x) in the ordinary course of business consistent with past practice or (y) assets of a wholly-owned Subsidiary of the Company);

 

(vii)         (A) incur, assume, alter, amend or modify any Indebtedness, guarantee any Indebtedness, or issue any debt securities, in each case, in excess of US$200,000 individually or US$1,000,000 in the aggregate, or (B) make (x) any loans or advances to any director or executive officer of the Company or (y) any loans or advances in excess of US$50,000 individually or US$1,000,000 in the aggregate to any other person, in each case, other than (i) Indebtedness receivable or payable solely between or among the Group Companies and (ii) Indebtedness incurred in the ordinary course of business of the relevant Group Company, provided that such Indebtedness incurred in the ordinary course of business of all of the Group Companies does not exceed US$5,000,000 in the aggregate;

 

(viii)        create or grant any Lien on any material assets (including material Intellectual Property) of any Group Company other than in the ordinary course of business consistent with past practice;

 

(ix)          (A) authorize, or make any commitment with respect to, any single capital expenditure committed by any Group Company after the date of this Agreement which is in excess of US$500,000, unless included in the Company’s current budget and operating plan approved by the Board of Director, or (B) authorize or make any commitment with respect to capital expenditures committed by any Group Company after the date of this Agreement which are, in the aggregate (including capital expenditures included in the Company’s budget and operating plan), in excess of US$500,000 for the Group Companies taken as a whole, in each case other than ordinary course expenditures necessary to maintain existing assets in good repair; or

 

(x)           guarantee the performance or other obligations of any person (other than guarantees in connection with any Indebtedness as permitted by the foregoing clause (vii));

 

(xi)          except as otherwise required by Law or pursuant to any Benefit Plan in existence as of the date hereof, (A) enter into any new employment or compensatory agreements in connection with employment or service (including the renewal of any such agreements), or terminate or amend any such agreements, with any director or officer of any Group Company or any other employee or individual service provider of any Group Company who has an annual base salary in excess of US$100,000, (B) grant or provide any severance or termination payments or benefits to any director, officer, employee or individual service provider of any Group Company other than pursuant to any agreement executed prior to the date hereof which is listed in Section 3.18(b) of the Company Disclosure Schedule, (C) increase the compensation, bonus or pension, welfare, severance or other benefits of, pay any bonus to, or grant, issue or make any new equity awards to any director, officer, employee or individual service provider of any Group Company, except annual base salary increases to non-officer employees of any Group Company made in the ordinary course consistent with past practice, (D) establish, adopt, amend or terminate any Benefit Plan or any plan, agreement, program, policy, trust, fund or other arrangement that would be a Benefit Plan if it were in existence as of the date of this Agreement or amend the terms of any outstanding Company Share Awards, save as contemplated under this Agreement or the Deferred Payment Agreements, (E) take any action to accelerate or otherwise alter the vesting or payment, or fund or in any other way secure the payment, of compensation or benefits under the Benefit Plans, to the extent not already required in any such plan, including voluntarily accelerating the vesting of any Company Share Award in connection with the Transactions, save as contemplated under this Agreement or the Deferred Payment Agreements, or (F) change any actuarial or other assumptions used to calculate funding obligations with respect to any Benefit Plan or to change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by applicable Law;

 

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(xii)         make any material changes with respect to any method of financial accounting, or financial accounting policies or procedures, except as required by changes in applicable Law;

 

(xiii)        enter into, or materially amend or modify, or consent to the termination of any Material Contract (or any Contract that would be a Material Contract if such Contract had been entered into prior to the date hereof), or amend, waive, modify or consent to the termination of any Group Company’s material rights thereunder, in each case, other than such actions taken in the ordinary course of business of the relevant Group Company with respect to the categories of Material Contract set forth in items (h) and (j) of the definition of “Material Contracts”;

 

(xiv)        enter into any Contract between any of the Group Companies, on the one hand, and any of their respective directors or officers, on the other hand (except as permitted under Section 6.01(b)(xi) or otherwise as contemplated under this Agreement or the Deferred Payment Agreements);

 

(xv)         terminate or cancel, let lapse, or amend or modify in any material respect, other than renewals in the ordinary course of business, any material insurance policies maintained by it which is not promptly replaced by a comparable amount of insurance coverage with reputable independent insurance companies or underwriters;

 

(xvi)        commence any material Action (other than in respect of collection of amounts owed in the ordinary course of business) or settle any Action other than any settlement involving only the payment of monetary damages not in excess of US$500,000 not relating to this Agreement or the Transactions;

 

(xvii)       engage in the conduct of any new line of business material to the Group Companies, taken as a whole;

 

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(xviii)      permit any item of material Intellectual Property to lapse or to be abandoned, dedicated, or disclaimed, other than (i) with respect to such Intellectual Property that is no longer used or useful in any of the Group Companies’ businesses and (ii) as required pursuant to Contracts in effect prior to the date hereof which have been provided or otherwise made available to the Purchaser Parties, fail to perform or make any applicable filings, recordings or other similar actions or filings with respect to material Intellectual Property, or fail to pay all required fees and taxes required or advisable to maintain and protect its interest in material Intellectual Property;

 

(xix)        make or change any material Tax election, amend any material Tax Return, enter into any material closing agreement with respect to Taxes, surrender any right to claim a material refund of Taxes, settle or finally resolve any material controversy with respect to Taxes, consent to any extension or waiver of the statute of limitations applicable to any Tax claim or assessment relating to the Group Companies, or change any method of Tax accounting;

 

(xx)         make any material changes with respect to key operational strategies of any Group Company, including any material changes to such Group Company’s strategy on provision of subsidies and policies regarding such Group Company’s merchants;

 

(xxi)        dismiss or give notice of dismissal to, more than fifty (50) employees of the Group in the aggregate; or

 

(xxii)       authorize or agree to take any of the foregoing actions, or enter into any letter of intent (binding or nonbinding) or similar written agreement or arrangement with respect to any of the foregoing.

 

ARTICLE VII

 

ADDITIONAL AGREEMENTS

 

SECTION 7.01     Access to Information. Prior to the Closing, the Company, the Principals and the Principal Holdcos shall allow Purchaser to conduct a full independent investigation, review and analysis of the business, operations, assets, liabilities, results of operations, financial condition and prospects of the Group, and the Company, the Principals and the Principal Holdcos shall cause Purchaser and its Representatives to be promptly provided all due diligence materials and information requested by Purchaser or its Representatives (including financial and operating data and making available any auditor reports and work papers) and sufficient access to the personnel, properties, facilities, books and records of the Group Companies for such purpose.

 

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SECTION 7.02     No Solicitation of Transactions. The Company, the Principals and the Principal Holdcos shall ensure that no Group Company and none of the directors or officers of any Group Company shall, and each Representative of the Company (including, without limitation, any investment banker, attorney or accountant retained by it or any Group Company), shall be directed not to, and each Selling Shareholder shall not, in each case, directly or indirectly, (i) solicit, initiate or encourage (including by way of furnishing information in a manner designed to encourage), or take any other action to facilitate, any inquiries or discussions (including with any of the Company’s shareholders) or the making of any Competing Proposal (including, without limitation, any proposal or offer to its shareholders) that constitutes, or would reasonably be expected to lead to, any Competing Proposal, or (ii) enter into, maintain or continue discussions or negotiations with, or provide any nonpublic information relating to any Group Company or the Transactions to, any person or entity in connection with, or in order to obtain, an Competing Proposal, or (iii) agree to, approve, adopt, endorse or recommend (or publicly propose to agree to approve, adopt, endorse or recommend) any Competing Proposal, or enter into any letter of intent, confidentiality agreement, term sheet, Contract, commitment, obligation, arrangement or understanding contemplating or otherwise relating to, or consummate, any Competing Proposal, or (iv) authorize or permit any of the officers, directors or Representatives of any Group Company to take any action set forth in clauses (i) through (iii) above. The Company shall notify Purchaser in writing as promptly as practicable (and in any event within twenty-four (24) hours after the Company has knowledge thereof), of any proposal or offer, or any request for information or other inquiry or request, that could reasonably be expected to lead to an Competing Proposal, specifying (x) the material terms and conditions thereof (including material amendments or proposed material amendments) and providing, if applicable, copies of any written requests, proposals or offers, including proposed agreements, (y) the identity of the party making such proposal or offer or inquiry or contact, and (z) whether the Company has determined to provide confidential information to such person in violation of this Section 7.02.

 

SECTION 7.03     Notification of Certain Matters. Each of the Company, the Principals, the Principal Holdcos and the Selling Shareholders shall promptly notify Purchaser, and Purchaser shall promptly notify the Shareholders Representative, in writing of:

 

(a)           any written notice or other written communication from any person alleging that the consent of such person is or may be required in connection with the Transactions;

 

(b)           any written notice or other written communication from any Governmental Authority in connection with the Transactions;

 

(c)           any Actions commenced or, to the knowledge of the Company, the Principals, the Principal Holdcos or such Selling Shareholder, on the one hand, or the knowledge of Purchaser, on the other hand, threatened against any Group Company or Purchaser or any of its Subsidiaries, as the case may be, that, if pending on the date of this Agreement, would have been required to have been disclosed by such Party pursuant to any of such Party’s representations and warranties contained herein, or that relate to such Party’s ability to consummate the Transactions; and

 

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(d)           if a breach of any representation or warranty or failure to perform any covenant or agreement on the part of such Party set forth in this Agreement shall have occurred that would cause the conditions set forth in Section 8.01, Section 8.02, or Section 8.03 not to be satisfied; together, in each case, with a copy of any such notice, communication or Action; provided, that the delivery of any notice pursuant to this Section 7.03 shall not (A) cure any breach of, or non-compliance with, any other provision of this Agreement, (B) be deemed to amend or supplement the Company Disclosure Schedule, or (C) limit or otherwise affect the remedies available hereunder to the Party receiving such notice; provided that, in the event that Purchaser elects to consummate the Closing regardless of such notice, none of the Purchaser Indemnified Parties shall have the right to make any claim for indemnification under Section 9.03 to the extent that the Indemnifiable Losses sought in such claim, directly or indirectly, result from, are as a result of or relate to such events, facts or changes which occurred after the date of this Agreement and constituted a Material Adverse Effect, as disclosed in any notice pursuant to this Section 7.03.

 

SECTION 7.04     Participation in Litigation. Prior to the Closing, (a) each of Purchaser, on the one hand, and the Company, the Principals and the Principal Holdcos, on the other hand, shall give prompt notice to the other of any Actions by shareholders of the Company commenced or, to the knowledge of Purchaser, on the one hand, or the Company, the Principals and the Principal Holdcos, on the other hand, as the case may be, threatened, against any Group Company and/or its directors which relate to this Agreement or the Transactions, and (b) the Company, the Principals and the Principal Holdcos shall give Purchaser the opportunity to, at Purchaser’s cost, participate in the defense or settlement of any such shareholder Action against such Group Company and/or its directors relating to this Agreement or the Transactions, and no such Action shall be settled or compromised, and none of the Company, the Principal or the Principal Holdcos shall take any action to adversely affect or prejudice any such Action, without Purchaser’s prior written consent.

 

SECTION 7.05     Resignations. On the Closing Date, each of the Principals and Principal Holdcos, CITICPE, and Sequoia shall deliver to Purchaser the resignation letter of its respective appointee serving as a Director prior to the Closing, effective as of the Closing, and the Principals and Principal Holdcos shall deliver to Purchaser the resignation letter of the Mr. Wei CHENG (from his directorship) prior to the Closing, effective as of the Closing.

 

SECTION 7.06     Confidentiality; Public Announcements. Each of the Parties (other than Purchaser) agrees that it will not, and will ensure that the Company and its Representatives will not, directly or indirectly, without Purchaser’s prior written consent, make any disclosure of or announce the existence and terms of this Agreement, Purchaser’s identity or any information pertaining to or provided by Purchaser or its Representatives in connection therewith or otherwise relating to the transactions contemplated hereunder, to any other Person. Except as may be required by applicable Law, the press release announcing the execution of this Agreement shall be issued only in such form as agreed upon by Purchaser. Thereafter, each Party hereto (other than Purchaser) shall consult with Purchaser before issuing any press release, having any communication with the press (whether or not for attribution), making any other public statement or scheduling any press conference with respect to this Agreement or the Transactions and shall not, without the prior written consent of Purchaser, issue any such press release, have any such communication, make any such other public statement or schedule any such press conference prior to such consultation.

 

SECTION 7.07     SAFE Registration. After the Closing, if requested or required by SAFE or the applicable bank, each of the Principals and Principal Holdcos shall take all reasonable actions at the request of the Purchaser to facilitate the WFOEs in making outbound payments to offshore Affiliates thereof, including by submitting application to the SAFE for amending or cancelling the existing SAFE registration of such Principal or Principal Holdco in light of the change of his or its (indirect) equity interest in the Company; provided that such obligations of the Principals and Principal Holdcos shall cease upon the cancellation pursuant to the applicable SAFE Rules and Regulations by the Principals of their existing SAFE registration which was made in accordance with Circular 37 prior to the Closing in respect of their outbound investment in their respective Principal Holdcos. For the purpose of the this Section 7.07, SAFE shall include all of its local branches, where applicable.

 

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SECTION 7.08     Tax Filings and Payments.

 

(a)           The Parties hereby acknowledge, covenant and agree that (i) none of Purchaser, the Company or any of their respective Affiliates (including any Group Company) shall have any obligation to pay any Tax of any nature that is required by applicable Law to be paid by any Selling Shareholder or its Affiliates or their respective direct and indirect partners, members and shareholders arising out of the transactions contemplated by this Agreement and the other Transaction Documents (the “Selling Tax” of such Selling Shareholder); and (ii) each Selling Shareholder agrees to bear and pay, severally but not jointly, any and all Selling Taxes with respect to such Selling Shareholder’s Sale Shares.

 

(b)           The Selling Shareholders shall, acting through the Shareholders Representative, as soon as possible after the date hereof, jointly engage and authorize the Qualified Tax Advisor to, as soon as possible after the date hereof, and in any event, within thirty (30) days after the date hereof, duly and properly make with the applicable PRC Tax Government Authority (being the PRC Tax Government Authority to which such filings are to be made pursuant to applicable Law) (the “Relevant PRC Tax Authority”) the relevant Tax filings and disclosures that are required by applicable Law (including Circular 7) in connection with the Transactions, and each Selling Shareholder shall (i) permit Purchaser to, (A) in its sole discretion, make a joint filing with such Selling Shareholder in respect of the Transactions, or (B) with the consent of the Shareholders Representative, make such filing on behalf of such Selling Shareholder if Purchaser so elects and (ii) provide, or cause the Qualified Tax Advisor to provide, Purchaser with adequate evidence (as specified below in this Section 7.08) that such Tax filings have been made in accordance with applicable Law as soon as reasonably practicable. Each Selling Shareholder agrees to cooperate with the Qualified Tax Advisor and provide all necessary documents for such Tax filings. The Company shall bear the fees payable to the Qualified Tax Advisor in connection with the preparation of the joint tax filing and disclosure of the transaction under this Section 7.08(b), and each Selling Shareholder shall, severally but not jointly, bear any and all other fees payable to the Qualified Tax Advisor in connection with such Selling Shareholder’s Sale Shares (including but not limited to, for the avoidance of doubt, any fees payable in connection with any Tax filings to settle the tax liability, tax treaty relief application and other tax services made with respect to such Selling Shareholder’s Sale Shares). Each Selling Shareholder agrees to use its reasonable best efforts to, after such Tax filing, promptly submit, or cause the Qualified Tax Advisor to submit, all documents supplementally requested by the Relevant PRC Tax Authority in connection with such Tax filing with a copy delivered to Purchaser simultaneously therewith, and provide, or cause the Qualified Tax Advisor to provide, updates to Purchaser upon Purchaser’s reasonable request as to the determination (and delivers to Purchaser assessment notices issued by the Relevant PRC Tax Authority in connection with such determination) and payment status of any Taxes assessed by the Relevant PRC Tax Authority in respect of such Selling Shareholder in connection with the Transactions. For purposes of this Section 7.08, the following shall be adequate evidence that a Tax filing has been made in respect of Selling Shareholder:

 

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(i)            (x) an acknowledgement or receipt in respect of the filing by or on behalf of such Selling Shareholder issued by the Relevant PRC Tax Authority or (y) the original signature of an official of the Relevant PRC Tax Authority on the duplicate of the filing documents submitted by or on behalf of such Selling Shareholder; or

 

(ii)           an explanation letter or email prepared by the Qualified Tax Advisor, attaching a copy of the filing made and confirming that they have submitted the filing on behalf of such Selling Shareholder with the Relevant PRC Tax Authority in accordance with this Section 7.08, and confirming that the Relevant PRC Tax Authority does not issue, and has not issued, any acknowledgement or receipt in respect of the filing.

 

(c)           Such Selling Shareholder shall, or shall cause the Qualified Tax Advisor to, on a monthly basis follow up with the Relevant PRC Tax Authority on any assessment of the Tax filings of such Selling Shareholder, promptly respond to any requests by the Relevant PRC Tax Authorities for additional information or materials, and give updates to Purchaser upon Purchaser’s reasonable request (and in any event not less frequently than monthly in the absence of such requests) as to any development in the assessment of any Taxes by the Relevant PRC Tax Authority and the payment of any such Taxes so assessed. Without prejudice to the foregoing, if such Selling Shareholder or any of its Affiliates receives any notice or demand from any PRC Tax Authority in respect of the Transactions, such Selling Shareholder shall as soon as reasonably practicable provide, or cause the Qualified Tax Advisor to provide, a true and complete copy of such notice or demand to Purchaser.

 

(d)           Each Selling Shareholder shall, severally but not jointly, indemnify and hold harmless, on an after-tax basis, the Purchaser Indemnified Parties forthwith on demand from and against all Selling Taxes and Indemnifiable Losses (which, for the avoidance of doubt, shall include any loss of cost basis) incurred or suffered by such Purchaser Indemnified Party arising or resulting from or in connection with any breach such Selling Shareholder of any of their obligations under this Section 7.08.

 

SECTION 7.09     Domestic Company Equity Transfers. The Principals shall, as soon as legally and practically possible, and in any event within three (3) months after the Closing, duly transfer, or cause to be transferred, all of the Equity Securities in each Domestic Company to persons that are PRC Persons designated by Purchaser, such that such persons in the aggregate will hold 100% of the Equity Securities in such Domestic Company (the “Onshore Equity Transfer”), and where applicable, obtain, or cause to be obtained, a new business license issued by SAIC reflecting such share transfer (the “New Business License”).

 

SECTION 7.10     Registration of Share Pledge. The Principals shall, as soon as legally and practically possible, and in any event within three (3) months after the Closing, cause each Domestic Company to complete the termination of the existing share pledge registration with relevant authorities under the Control Documents.

 

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SECTION 7.11     Replacement of Management. The Principals shall, (a) as soon as legally and practically possible, and in any event within three (3) months after the Closing, (i) cause each PRC Group Company to complete with the relevant SAIC, the change of the legal representative, directors, management and officers of such PRC Group Company and (ii) deliver to Purchaser the receipts issued by such SAIC in connection with such change; and (b) at the request of Purchaser and where applicable, and in any event within twelve (12) months after the Closing, cause any person designated by a PRC Group Company as the representative (including as chief representative, director, supervisor or legal representative) of such PRC Group Company, a branch of such PRC Group Company or an investee company (including the branch (if applicable) of such investee company) in which such PRC Group Company holds any equity interests, to sign any document that is required by the competent local authority for the change of such representative to the person as designated by Purchaser.

 

SECTION 7.12     Permits and Licenses Amendment. The Principals shall use their commercially reasonable efforts to (i) cause the Rajax Domestic Company and Xiaodu Shenghuo to, as soon as practicable but in no event later than six (6) months after the Closing, complete the amendment of its Telecommunication and Information Services Operation License (电信与信息服务业务经营许可证) to reflect the transfer of equity interests in the Rajax Domestic Company and Xiaodu Shenghuo to Persons designated by Purchaser, and (ii) cause Xiaodu Shenghuo to, as soon as practicable, but in no event later than six (6) months after the Closing, complete the amendment of its Internet Drug Information Service Qualification Certificate (互联网药品信息服务资格证书) to reflect the transfer of equity interests in Xiaodu Shenghuo to such Persons designated by Purchaser.

 

SECTION 7.13     Further Assurances; Filings. Upon the terms and subject to the conditions herein, (i) each of the Parties hereto agrees to use its reasonable best efforts to take or cause to be taken all action, to do or cause to be done, to execute such further instruments, and to assist and cooperate with the other Parties hereto in doing, all things necessary, proper or advisable under applicable Laws or otherwise to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by the Transaction Documents, and (ii) the Principals hereto agree to cause the legal representatives, directors, supervisors and officers of each PRC Group Company to take or cause to be taken all action, to do or cause to be done, to execute such further instruments, and to assist and cooperate with the other Parties hereto in doing, all things necessary, proper or advisable under applicable Laws or otherwise to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by the Transaction Documents; provided, in each case, that except as expressly provided herein, no Person shall be obligated to grant any waiver of any condition or other waiver hereunder.

 

SECTION 7.14     Audited 2017 Financial Statements. The Company shall, and the Principals and the Principal Holdcos shall cause the Company to, prepare, or cause to be prepared and deliver to Purchaser as soon as practicable after the date hereof, the audited consolidated balance sheet, statement of income and statement of cash flows for the Group as of and for the fiscal year ended December 31, 2017 (the “Audited 2017 Financial Statements”), together with the auditors report thereon.

 

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SECTION 7.15     Release of Claims. With automatic effect upon the Closing, each Selling Shareholder, on behalf of itself and on behalf of its shareholders or members, as applicable, assigns and beneficiaries and, to the extent acting in a representative capacity, its creditors, directors, officers, managers, employees, investors, Affiliates, representatives, successors and assigns of any of them, agrees to release each of the Group Companies and their respective directors, shareholders, officers and employees, including the Principals and/or the Principal Holdcos, from any and all actions, causes of action, suits, debts, accounts, bonds, bills, covenants, contracts, controversies, obligations, claims, counterclaims, demands, damages, costs, expenses, compensation or liabilities of every kind and any nature whatsoever, in each case whether absolute or contingent, liquidated or unliquidated, known or unknown, direct or derivative (“Claims”), such Selling Shareholder may bring, which Claims arise from, relate to, or are in connection with, such Selling Shareholder’s ownership of Shares, the Transactions, any and all documents, contracts, agreements, instrument and deeds entered into in connection with the Transactions, and all procedures conducted and all documentation executed or adopted (including notices and authorization documentation) for purposes of facilitating or consummating the Transactions, other than any Claims for breach of this Agreement.

 

SECTION 7.16     Compliance with Anti-Corruption Laws. Up to the Closing, no Principal, Principal Holdco or Group Company shall, or shall permit any of their Subsidiaries or Affiliates or any of their respective directors, officers, managers, employees, independent contractors, representatives or agents to offer, promise, authorize or make any payment to, or otherwise contribute any item of value to, directly or indirectly, to any third party, including any Public Official, which in each case, would constitute a violation of any Compliance Laws. Up to the Closing, the Principals, the Principal Holdcos and the Group shall, and shall cause each of their Subsidiaries and Affiliates to cease all of their respective activities, as well as remediate any actions taken by any Principal, Principal Holdco, Group Company, their Subsidiaries or Affiliates, or any of their respective directors, officers, managers, employees, independent contractors, representatives or agents that would constitute a violation of any Compliance Laws. Up to the Closing, the Principals, Principal Holdcos and the Group Companies shall, and shall cause each of their Subsidiaries and Affiliates to maintain complete and accurate books and records and systems of internal controls (including, but not limited to, accounting systems, purchasing systems and billing systems) consistent with the requirements of the Compliance Laws.

 

SECTION 7.17     Approved Sale. In connection with the Transactions which constitute an “Approved Sale” for purposes of the Memorandum and Articles and the ROFR Agreement, each of the Selling Shareholders shall comply with its obligations under Articles 123, 124 and 125 of the Memorandum and Articles and Sections 5.1, 5.2 and 5.3 of the ROFR Agreement. The Company, the Principals and the Principal Holdcos shall facilitate each of the Directors designated by the Board in exercising, and direct each such Director to exercise, in full the irrevocable power of attorney and proxy granted pursuant to Article 124 of the Memorandum and Articles and Section 5.3 of the ROFR Agreement to take all necessary actions and execute and deliver all documents reasonably necessary to effectuate the terms of this Agreement and the Transactions.

 

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SECTION 7.18     Shareholders Representative. Each of the Selling Shareholders (including the Former Company Share Award Holders), by virtue of its, his or her execution and delivery of this Agreement (directly, by proxy or pursuant to a power of attorney), hereby irrevocably constitutes and appoints Xuhao Zhang, a Principal and the Chief Executive Officer of the Company as of the date of this Agreement (the “Shareholders Representative”), to be such Selling Shareholder’s true and lawful representative, agent and attorney-in-fact to act on such Selling Shareholder’s behalf with respect to any actions permitted to be taken by such Selling Shareholder, or any of them, after the date of this Agreement in connection with this Agreement and the other Transaction Documents and the transactions contemplated hereby and thereby, in accordance with the terms and conditions of the Transaction Documents. In such representative capacity, the Shareholders Representative shall take or refrain from taking, and the Selling Shareholders each agree that the Shareholders Representatives may take or refrain from taking, any and all actions which the Shareholders Representative reasonably believes, acting in good faith, to be necessary or appropriate under this Agreement and the other Transaction Documents (except as provided above) for and on behalf of the Selling Shareholders, as fully and effectively as if the Selling Shareholders were acting on their own behalf. Each reference in this Agreement or any other Transaction Document to an action to be taken by the Selling Shareholders shall, with respect to the Selling Shareholders, be taken by the Shareholders Representative on their behalf pursuant to this Section 7.18. Each Selling Shareholder hereby ratifies and confirms, and agrees to ratify and confirm in the future upon the request of the Shareholders Representative, any action taken by the Shareholders Representative in the exercise of the agency and power of attorney granted to the Shareholders Representative pursuant to this Section 7.18, which agency and power of attorney, being coupled with an interest, is irrevocable and a durable agency and power of attorney and shall survive the death, incapacity or incompetence of such Selling Shareholder. Each of Purchaser and the Escrow Agent shall be entitled to conclusively rely upon the directions, instructions and notice of the Shareholders Representative, when it is acting in their capacity as such under this Section 7.18, without being required to undertake any independent investigation or verification, and any notice provided in accordance with this Agreement to or from the Shareholders Representative in its capacity as such shall be conclusively deemed to have been provided to or from each of the Selling Shareholders, as applicable. The Shareholders Representative shall not have any liability to any of the Selling Shareholders arising out of or relating to any action taken or omission made in good faith by the Shareholders Representative (in its capacity as such) pursuant to this Agreement, and each Selling Shareholder shall, severally but not jointly, indemnify, defend and hold harmless the Shareholders Representative with respect to all actions so taken or omissions made on behalf of such Selling Shareholder up to the net proceeds received by such Selling Shareholder in connection with the Transactions.

 

SECTION 7.19     Release of Share Charge. The Rollover Shareholder shall, and Purchaser shall cause the Rollover Shareholder to, execute and deliver to the Principals a deed of release and all other documents necessary for discharging and releasing the security interests created on certain Ordinary Shares owned by the Principal Holdcos under that certain equity mortgage over shares dated January 30, 2018 by and between the Principals, the Principal Holdcos and the Rollover Shareholder, prior to the sale and transfer of such Ordinary Shares by the Principals to Purchaser at the Closing.

 

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SECTION 7.20              Integration Committee. Promptly after signing, the Company, Principals, Principal Holdcos and Purchaser shall establish a transition planning team (the “Integration Committee”), comprised of individuals appointed by Purchaser and the Chief Executive Officer of the Company. Subject to applicable Law, the Integration Committee shall be responsible for facilitating a transition and integration planning process to ensure the successful transition of management of the operations of the Group Companies to Purchaser after the Closing, which may include the inclusion of various employees of Purchaser and its Affiliates into certain operational and management roles within the Group at the direction of the Integration Committee. Subject to applicable Law, the Integration Committee shall be responsible for developing, and monitoring the development of, an action plan for the integration of the Group into the business of Purchaser and its Affiliates, and between the date hereof and the Closing, shall be responsible for overseeing and directing the ongoing operations and management of the Company.

 

SECTION 7.21              Termination of Certain Agreements. Each of the Parties hereto hereby acknowledges and agrees that the Shareholders Agreement and the ROFR Agreement automatically terminate upon the Closing.

 

ARTICLE VIII

 

CONDITIONS TO THE CLOSING

 

SECTION 8.01              Conditions to the Obligations of Each Party. The obligations of Purchaser, each Selling Shareholder, each Rollover Option Holder, the Rollover Shareholder and the Company to consummate the Transactions are subject to the satisfaction or waiver (where permissible) of the following conditions:

 

(a)                                 No Injunction. No Governmental Authority of competent jurisdiction shall have issued any injunction, restraining order or judgment which is then in effect that prohibits the consummation of the Transactions.

 

(b)                                 Escrow Agreement. The Escrow Agreement shall have been duly entered by the parties thereto.

 

SECTION 8.02              Conditions to the Obligations of Purchaser. The obligations of Purchaser to consummate the Transactions are subject to the satisfaction or waiver (where permissible) of the following additional conditions:

 

(a)                                 Representations and Warranties of the Warrantors. (i) The Fundamental Warranties shall have been true and complete in all respects when made and shall be true and complete in all respects on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the Closing Date, except in each case for those representations and warranties that address matters only as of a particular date, which representations will have been true and complete in all respects as of such particular date, and (ii) each of the representations and warranties of the Warrantors contained in Article III (other than the Fundamental Warranties) shall have been true and complete in all material respects when made and shall be true and complete in all material respects on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the Closing Date, except in each case for those representations and warranties that address matters only as of a particular date, which representations will have been true and complete in all material respects as of such particular date.

 

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(b)                                 Agreements and Covenants of the Company Parties. Each Company Party shall have performed and complied with, in all material respects, all covenants, obligations and conditions contained in the Transaction Documents that are required to be performed or complied with by such Company Party on or before the Closing.

 

(c)                                  Closing Certificate. The Warrantors shall have executed and delivered to Purchaser a certificate dated as of the Closing Date (i) stating that each of the relevant conditions specified in Section 8.01 and Section 8.02 (but not including Section 8.02(d) and Section 8.02(e)) have been fulfilled as of the Closing, and (ii) attaching thereto (A) the Charter Documents of the Group Companies (other than the Stores) as then in effect and (B) copies of all resolutions approved by the shareholders and boards of directors of each Group Company that is a party to a Transaction Document related to the transactions contemplated hereby, and (C) the good standing certificate with respect to the Company and the certificate of continuing registration with respect to each of the Rajax HK Subsidiary and Xiaodu HK Company dated no more than ten (10) Business Days prior to such Closing, and with respect to the Group Companies which are incorporated under the Laws of the PRC, the business licenses of such entity (other than the Stores).

 

(d)                                 Representations and Warranties of the Selling Shareholders. Each of the representations and warranties of the Selling Shareholders contained in Article V shall have been true and complete when made and shall be true and complete on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the Closing Date, except in each case for those representations and warranties that address matters only as of a particular date, which representations will have been true and complete as of such particular date.

 

(e)                                  Agreements and Covenants of the Selling Shareholders and Rollover Option Holders. Each Exercising Company Share Award Holder and Rollover Option Holder shall have become a party to this Agreement by delivering to Purchaser and the Shareholders Representative a counterpart, duly executed by such Person, to this Agreement. Each Selling Shareholder (other than the Company Parties) and each Rollover Option Holder shall have performed and complied with all covenants, obligations and conditions contained in the Transaction Documents that are required to be performed or complied with by them, on or before the Closing.

 

(f)                                   Cayman Islands Legal Opinion. Purchaser shall have received from the Cayman Islands counsel to the Company, a legal opinion in the form attached as Exhibit B hereto, dated as of the Closing, regarding the validity of the Transactions under Cayman Islands law.

 

(g)                                  PRC Legal Opinion. Purchaser shall have received from the PRC counsel to the Company, a legal opinion in a form to be agreed between the Company and Purchaser prior to the Closing, dated as of the Closing (which shall cover substantially, among other matters, the matters set forth in the legal opinions delivered in connection with the issuance of the Series G-1 Preferred Shares to the Rollover Shareholder, but revised to cover the Xiaodu PRC Companies).

 

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(h)                                 Audited 2017 Financial Statements. Purchaser shall have received the Audited 2017 Financial Statements, together with the auditors report thereon, and none of the net assets, revenue or net profit/loss line items set forth in such Audited 2017 Financial Statements shall be less than 90% of the corresponding line items set forth in Unaudited 2017 Financial Statements, which amounts shall be calculated without taking into account any difference arising from (i) Tax assets or liabilities; (ii) interest accrued on related party transactions between Group Companies; (iii) stock-based compensation of any Group Company; (iv) potential inventory loss; (v) impairment, amortization and depreciation of long-term assets (including intangible assets and goodwill); (vi) accounting adjustment to the promissory note and accrued interest thereon owed to Koubei; (vii) accounting adjustment relating to the Preferred Shares; and (viii) changes arising solely as a result of calculating and recognizing revenue in accordance with PRC GAAP instead of the Accounting Standards utilized in the Unaudited 2017 Financial Statements.

 

(i)                                     Application Forms for Domestic Company Equity Transfer. All application forms and relevant materials necessary for the Onshore Equity Transfer shall have been duly signed by all necessary parties and delivered to Purchaser in form and substance agreed by Purchaser.

 

(j)                                    Control Documents. The Control Documents of each Domestic Company shall have been amended and restated (in form and substance reasonably satisfactory to Purchaser) to reflect the Onshore Equity Transfer (such amended and restated Control Documents, collectively, the “New Control Documents”);

 

(k)                                 Application Forms for Registration of Share Pledges. All application forms and relevant materials necessary for the termination of the existing share pledge registration with relevant authorities under the Control Documents shall have been duly signed by all necessary parties and delivered to Purchaser in form and substance agreed by Purchaser;

 

(l)                                     Application Forms for Replacement of Legal Representatives. All application forms and relevant materials necessary for the replacement of the legal representative, directors, management and officers of each PRC Group Company as requested by Purchaser shall have been duly signed by all necessary parties and delivered to Purchaser in form and substance agreed by Purchaser; and

 

(m)                             Material Adverse Effect. Since the date of this Agreement, there shall not have occurred and be continuing a Material Adverse Effect.

 

SECTION 8.03              Conditions to the Obligations of the Selling Shareholders. The obligations of the Selling Shareholders to consummate the Transactions are subject to the satisfaction or waiver (where permissible) of the following additional conditions:

 

(a)                                 Representations and Warranties of Purchaser. The representations and warranties of Purchaser contained in Article IV shall have been true and complete when made and shall be true and complete on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the date of the Closing, except in either case for those representations and warranties that address matters only as of a particular date, which representations will have been true and complete as of such particular date.

 

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(b)                                 Agreements and Covenants of Purchaser. Purchaser shall have performed and complied with all covenants, obligations and conditions contained in this Agreement that are required to be performed or complied with by Purchaser on or before the Closing.

 

ARTICLE IX

 

TERMINATION AND INDEMNIFICATION

 

SECTION 9.01              Termination. This Agreement may be terminated and the Transactions may be abandoned at any time prior to the Closing, as follows:

 

(a)                                 by mutual written consent of Purchaser and the Shareholders Representative;

 

(b)                                 by any of Purchaser or Shareholders Representative if:

 

(i)                                     the Closing shall not have occurred on or before the date that is ninety (90) days after the date of this Agreement (such date as may be extended in accordance with this Section 9.01(b)(i), the “Termination Date”), provided that the right to terminate this Agreement pursuant to this Section 9.01(b)(i) shall not be available to Purchaser or the Shareholders Representative, as applicable, if the circumstances described in this Section 9.01(b)(i) are primarily caused by a failure by Purchaser or any Selling Shareholder (including the Shareholders Representative) or Rollover Option Holder, as applicable, to comply with its obligations under this Agreement; or

 

(ii)                                  an Injunction shall have been issued;

 

(c)                                  by Purchaser:

 

(i)                                     if there shall have been a breach of any representation, warranty, covenant or agreement on the part of any Company Party set forth in this Agreement (including a failure by any such Company Party to complete the Closing subject to and in accordance with Article II), or if any representation or warranty of the Company shall have become untrue, in either case such that the condition set forth in Section 8.02(a) or the condition set forth in Section 8.02(b) would not be satisfied; and

 

(ii)                                  solely with respect to the Share Purchase related to a specific Selling Shareholder’s Sale Shares, if there shall have been a breach of any representation, warranty, covenant or agreement by such Selling Shareholder set forth in this Agreement (including a failure by any such Selling Shareholder to complete the Closing subject to and in accordance with Article II), or if any representation or warranty of such Selling Shareholder shall have become untrue, in either case such that the condition set forth in Section 8.02(d) or the condition set forth in Section 8.02(e) would not be satisfied; provided, however, that, in each case, Purchaser shall not have the right to terminate this Agreement pursuant to this Section 9.01(c)(i) if Purchaser is then in material breach of any of its representations, warranties, covenants or other agreements hereunder; or

 

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(d)                                 by the Shareholders Representative if there shall have been a breach of any representation, warranty, covenant or agreement on the part of Purchaser set forth in this Agreement, or if any representation or warranty of Purchaser shall have become untrue, in either case such that the condition set forth Section 8.03(a) or the condition set forth in Section 8.03(b) would not be satisfied; provided, however, that Shareholders Representative shall not have the right to terminate this Agreement pursuant to this Section 9.01(d) if any Selling Shareholder (including the Shareholders Representative) or Rollover Option Holder is then in material breach of any of its representations, warranties, covenants or other agreements hereunder.

 

SECTION 9.02              Effect of Termination. In the event of the termination of this Agreement pursuant to Section 9.01, this Agreement shall forthwith become void, and there shall be no liability under this Agreement on the part of any party hereto (or any Representatives of any party hereto) other than for breaches of this Agreement prior to the date of such termination; provided, however, that the terms of Section 7.06, this Article IX and Article X shall survive any termination of this Agreement.

 

SECTION 9.03              Indemnity.

 

(a)                                 Subject to the limitations on indemnities set forth in Section 9.05, from and after the Closing, each of the Selling Shareholders (such Selling Shareholders, for purposes of this Section 9.03(a), and each Selling Shareholder for purposes of Section 9.03(b), each an “Indemnifying Party” and collectively, the “Indemnifying Parties”) shall, severally but not jointly, on a pro rata basis in accordance with Section 9.04(b), indemnify and hold harmless Purchaser, its Affiliates, the directors, employees, agents and representatives of Purchaser or any of its Affiliates, and the successors and assigns of Purchaser and its Affiliates (collectively, the “Purchaser Indemnified Parties”) from and against an amount equal to (x) the Aggregate Selling Shareholders Percentage multiplied by (y) any and all Indemnifiable Losses, including any reduction in value of the Company’s or the Group Companies’ assets, any increase in their liabilities, any dilution of Purchaser’s interests in the Group Companies or any diminution in the value of Purchaser’s interests in the Group Companies, directly or indirectly, resulting from or relating to (i) any breach of any representation or warranty made by the Warrantors in Article III, or (ii) any breach of the agreements and covenants of the Company, the Principals, and the Principal Holdcos in Section 6.01.

 

(b)                                 Subject to the limitations on indemnities set forth in Section 9.05, from and after the Closing, each Selling Shareholder shall, severally but not jointly, indemnify and hold harmless the Purchaser Indemnified Parties from and against any and all Indemnifiable Losses, directly or indirectly, resulting from or relating to any breach of any representation or warranty made by such Selling Shareholder as to itself in Article V.

 

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SECTION 9.04              Indemnification Procedures.

 

(a)                                 If any Purchaser Indemnified Party believes that it has a claim that may give rise to an indemnity obligation hereunder (the “Asserted Liability”), such Purchaser Indemnified Party shall give prompt written notice to (i) in the case of a claim made pursuant to Section 9.03(a), the Shareholders Representative, and (ii) in the case of a claim made pursuant to Section 9.03(b), the relevant Selling Shareholder, of the assertion of any claim or the commencement of any suit, action or proceeding by a third party in respect of which indemnity may be sought by such Purchaser Indemnified Party under Section 9.03 (an “Asserted Action”), which notice shall set forth the basis on which such claim is being made, the material facts related thereto, and the amount of the claim asserted; provided that the failure to promptly provide such notice shall not affect the Purchaser Indemnified Parties’ rights under Section 9.03 unless such notice is not provided to Shareholders Representative or the relevant Selling Shareholder, as applicable, within the applicable Survival Period or except to the extent such failure is actually materially prejudicial to the rights and obligations of the relevant Indemnifying Parties in connection with such claim. In the event that such notice of a claim is so given within the applicable Survival Period, the right to pursue such claim will survive such Survival Period until such claim is finally resolved and any obligations with respect to such claim has been fully satisfied. The relevant Indemnifying Party shall be entitled to, at its cost and by counsel of its own choosing (which shall be reasonably acceptable to the relevant Purchaser Indemnified Party), assume and control the defense of an Asserted Action brought by a third party against such Purchaser Indemnified Party if it provides written notice of such election to such Purchaser Indemnified Party within ten (10) Business Days of notice of such Asserted Action which includes an acknowledgement of such Indemnifying Party’s indemnification obligations in respect of such Asserted Action. If the relevant Indemnifying Party validly elects to assume and control the defense of such Asserted Action in accordance with this Section 9.04(a), (i) the Purchaser Indemnified Party shall cooperate fully (at the cost of the Indemnifying Party) with the Indemnifying Party and its counsel in the investigation, defense and settlement thereof, and (ii) no such Asserted Action shall be settled or compromised, and no Purchaser Indemnified Party shall take any action to adversely affect or prejudice any such Asserted Action without the Indemnifying Party’s prior written consent (not to be unreasonably withheld or delayed). If the relevant Indemnifying Party does not validly elect to assume and control the defense of such Asserted Action in accordance with this Section 9.04(a), the relevant Purchaser Indemnified Party shall have the right to assume and control the defense of such Asserted Action and all reasonable costs and expenses in connection therewith shall constitute Indemnifiable Losses.

 

(b)                                 Each Indemnifying Party’s indemnification obligations pursuant to Section 9.03(a) shall be satisfied from the funds remaining in the Audit and Indemnity Escrow Account at any given time, and such funds shall be the sole source of recovery with respect to any Indemnifiable Losses pursuant to Section 9.03(a). Each Indemnifying Party’s indemnification obligations pursuant to Section 9.03(b) shall be satisfied, first, from the funds remaining in the Audit and Indemnity Escrow Account at any given time which are allocated to the applicable Selling Shareholder and, thereafter, by such applicable Selling Shareholder. Each Selling Shareholder shall bear, severally but not jointly, (i) its Seller Pro Rata Share of any indemnification obligation of the Indemnifying Parties pursuant to Section 9.03(a), subject to the limitation set forth in the first sentence of this Section 9.04(b) (the “Pro Rata Indemnity Amount”) and (ii) the full amount of any indemnification obligation of such Selling Shareholder in its capacity as an Indemnifying Party pursuant to Section 9.03(b).

 

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(c)                                  In the event that any indemnification obligation has become payable by any Indemnifying Party pursuant to Section 9.03 (and, if such indemnification obligation has been disputed by the applicable Indemnifying Party, such indemnification obligation is ultimately agreed by such Indemnifying Party or has been determined by an arbitral award in accordance with Section 10.03) (the “Undisputed Indemnity Amount”), Purchaser and Shareholders Representative shall deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to deliver to Purchaser from the Audit and Indemnity Escrow Amount allocated to such Indemnifying Party (i) in the case of a claim made pursuant to Section 9.03(a), such Selling Shareholder’s Pro Rata Indemnity Amount with respect to the Undisputed Indemnity Amount and (ii) in the case of a claim made pursuant to Section 9.03(b), the full amount of such Undisputed Indemnity Amount of such Selling Shareholder in its capacity as an Indemnifying Party thereunder.

 

(d)                                 If any Indemnifying Party is required to deduct or withhold any amounts from any indemnification obligation payable to the Purchaser Indemnified Parties under Section 9.03, the amount of such Indemnifying Party’s indemnification obligation shall be increased such that the net payment received by the Purchaser Indemnified Parties, after any such deduction or withholding, equals the amount of the Indemnifying Party’s indemnification obligation under Section 9.03.

 

SECTION 9.05              Limitations on Indemnity.

 

(a)                                 The Indemnifying Parties and Purchaser acknowledge that the indemnities under Section 9.03 shall be subject to the following provisions: (i) the Purchaser Indemnified Parties shall not bring any indemnity claim under Section 9.03(a)(i) against the Indemnifying Parties for breach of representations or warranties set forth under Article III, to the extent that relevant exceptions have been fairly disclosed in the Company Disclosure Schedule; (ii) the total liability of each Indemnifying Party in respect of all relevant indemnification claims under Section 9.03(a) brought by the Purchaser Indemnified Parties is limited to the Audit and Indemnity Escrow Amount allocated to the applicable Selling Shareholder, except for fraud or willful misconduct of the Warrantors, the Company and/or such Selling Shareholder; (iii) without prejudice to Section 9.05(a)(ii), the total liability of each Selling Shareholder in respect of any and all indemnification claims or other claims under this Article IX or otherwise in law or in equity brought by the Purchaser Indemnified Parties shall not exceed the net proceeds received by, including the amounts held in the Audit and Indemnity Escrow Account and Tax Escrow Account on behalf of, such Selling Shareholder in connection with the Transactions, except for fraud or willful misconduct of such Selling Shareholder; (iv) the Indemnifying Parties are not liable to indemnify any Purchaser Indemnified Party in respect of any claims under this Agreement to the extent that such claims would not have arisen but for a change in any law, regulation or government decrees promulgated after the Closing; (v) the Indemnifying Parties shall not be liable for any claim made pursuant to Section 9.03 if (A) the alleged breach which is the subject of the claim is remediable and has been remedied by the relevant Indemnifying Party without cost or liability to the Group, to the reasonable satisfaction of Purchaser, within thirty (30) Business Days after the date on which the notice of such claim is received by Shareholders Representative or the relevant Selling Shareholder, as applicable (the “Grace Period”), and (B) no Indemnifiable Loss is incurred by any Purchaser Indemnified Party seeking indemnification after the completion of such remedial actions conducted within the Grace Period, and (vi) no claims arising out of this Agreement may be made against any of the Principals and no Liabilities in connection with such claims shall be borne by any of the Principals (other than indirectly through their ownership of the Principal Holdcos). In addition, the Indemnifying Parties and Purchaser acknowledge that the Indemnifying Parties shall not be obligated to indemnify any Indemnified Party under Section 9.03(a) unless the aggregate Indemnifiable Losses incurred by the Indemnified Parties in connection with any claims brought under Section 9.03(a), cumulatively and in the aggregate, exceed US$2,000,000, in which case, the Indemnifying Parties shall be liable for all such Indemnifiable Losses from the first dollar.

 

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(b)                                 The representations and warranties of the Warrantors in Article III shall survive the Closing until the second (2nd) anniversary of the Closing, provided that (i) the Fundamental Warranties shall survive the Closing indefinitely and (ii) the survival period for any indemnification obligation relating to any claim of liability for Taxes attributable to any breach of any representation or warranty made in Section 3.07 shall survive the Closing until the earlier of the tenth (10th) anniversary of the Closing and the expiration of the applicable statute of limitations under applicable Laws. The representations and warranties of each Selling Shareholder in Article V shall survive the Closing indefinitely. The applicable survival periods set forth in this Section 9.05(b) shall be referred to as the “Survival Period”. The right of the Purchaser Indemnified Parties to make a claim under Section 9.03 shall be subject to the Purchaser Indemnified Parties making a claim pursuant to Section 9.03 prior to the expiration of the applicable Survival Period.

 

(c)                                  In no event shall any Party be liable under this Agreement for any punitive, exemplary, or special damages of any kind or nature. Where one and the same set of facts qualifies under more than one provision entitling a party to a claim or remedy under this Agreement, there shall be only one claim or remedy. In calculating amounts payable to a Purchaser Indemnified Party, the amount of Indemnifiable Losses shall be determined without duplication of any other Indemnifiable Losses for which an indemnification claim has been made or could be made with respect to any other representation, warranty, obligation or agreement and shall be computed net of (i) any amounts actually recovered by the Purchaser Indemnified Party under any insurance policy with respect to such Indemnifiable Losses and (ii) any amounts actually recovered by the Purchaser Indemnified Party from any other third party with respect to such Indemnifiable Losses, in each case, net of any costs and expenses of any Purchaser Indemnified Party in connection with such recovered amounts.

 

(d)                                 The amount of any indemnity payments made pursuant to this Agreement shall be reduced (but not below zero) by the amount of any actual net reduction in cash payments for Taxes actually realized by any Purchaser Indemnified Party, in the year of the claim, as a result of the Indemnifiable Losses giving rise to such indemnity claim.

 

(e)                                  Notwithstanding anything to the contrary contained in this Agreement, in no event shall any Purchaser Indemnified Party be entitled to indemnification to the extent any Indemnifiable Losses were attributable to such Purchaser Indemnified Party’s own fraud or willful misconduct.

 

(f)                                   Notwithstanding anything to the contrary contained herein and without prejudice to Section 10.05 with respect to non-monetary damages and related equitable remedies, except in the case of fraud or willful misconduct, Section 9.03 shall be the exclusive remedy after the Closing for monetary damages against any Selling Shareholder by any Purchaser Indemnified Party in connection with any Transaction Document.

 

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SECTION 9.06              Tax Treatment of Indemnification Payments. All indemnification payments made under Section 9.03 shall be treated as adjustments to the Aggregate Purchase Price and the Purchase Price for the applicable Selling Shareholder for Tax purposes, unless otherwise required by applicable Law.

 

ARTICLE X

 

GENERAL PROVISIONS

 

SECTION 10.01       Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the Parties hereto whose rights or obligations hereunder are affected by such terms and conditions. This Agreement and the rights and obligations therein may not be assigned by any Warrantor without the prior written consent of Purchaser, and this Agreement and the rights and obligations therein may not be assigned by Purchaser except to an Affiliate thereof. Nothing in this Agreement, express or implied, is intended to confer upon any Party other than the Parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

SECTION 10.02       Governing Law. This Agreement shall be governed by and construed under the Laws of the Hong Kong Special Administrative Region of the PRC (“Hong Kong”), without regard to principles of conflict of Laws thereunder.

 

SECTION 10.03       Dispute Resolution.

 

(a)                                 Any dispute, controversy or claim arising out of or relating to this Agreement, or the interpretation, breach, termination, validity or invalidity thereof (each, a “Dispute”), shall be referred to arbitration upon the demand of either party to the Dispute with notice (the “Arbitration Notice”) to the other.

 

(b)                                 The Dispute shall be settled by arbitration in Hong Kong by the Hong Kong International Arbitration Centre (the “HKIAC”) in accordance with the Hong Kong International Arbitration Centre Administered Arbitration Rules (the “HKIAC Rules”) in force when the Arbitration Notice is submitted in accordance with the HKIAC Rules. There shall be three (3) arbitrators. The HKIAC shall select the arbitrators, who shall be qualified to practice law in Hong Kong.

 

(c)                                  The arbitral proceedings shall be conducted in English. To the extent that the HKIAC Rules are in conflict with the provisions of this Section, including the provisions concerning the appointment of the arbitrators, the provisions of this Section shall prevail.

 

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

 

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

 

(f)                                   The arbitral tribunal shall decide any Dispute submitted by the parties to the arbitration strictly in accordance with the substantive Laws of Hong Kong (without regard to principles of conflict of Laws thereunder) and shall not apply any other substantive Law.

 

(g)                                  Any party to the Dispute shall be entitled to seek preliminary injunctive relief, if possible, from any court of competent jurisdiction pending the constitution of the arbitral tribunal.

 

(h)                                 During the course of the arbitral tribunal’s adjudication of the Dispute, this Agreement shall continue to be performed except with respect to the part in dispute and under adjudication.

 

SECTION 10.04       Notices. Any notice required or permitted pursuant to this Agreement shall be given in writing and shall be given either personally or by sending it by next-day or second-day courier service, fax, electronic mail or similar means to the address of the relevant Party as shown on Schedule V (or at such other address as such Party may designate by fifteen (15) days’ advance written notice to the other Parties to this Agreement given in accordance with this Section). Where a notice is sent by next-day or second-day courier service, service of the notice shall be deemed to be effected by properly addressing, pre-paying and sending by next-day or second-day service through an internationally-recognized courier a letter containing the notice, with a written confirmation of delivery, and to have been effected at the earlier of (i) delivery (or when delivery is refused) and (ii) expiration of two (2) Business Days after the letter containing the same is sent as aforesaid. Where a notice is sent by fax or electronic mail, service of the notice shall be deemed to be effected by properly addressing, and sending such notice through a transmitting organization, with a written confirmation of delivery, and to have been effected on the day the same is sent as aforesaid, if such day is a Business Day and if sent during normal business hours of the recipient, otherwise the next Business Day. Notwithstanding the foregoing, to the extent a “with a copy to” address is designated, notice must also be given to such address in the manner above for such notice, request, consent or other communication hereunder to be effective.

 

SECTION 10.05       Rights Cumulative; Specific Performance. Subject to express limitations of liability of a Party under this Agreement, each and all of the various rights, powers and remedies of a party hereto will be considered to be cumulative with and in addition to any other rights, powers and remedies which such Party may have at Law or in equity in the event of the breach of any of the terms of this Agreement. The exercise or partial exercise of any right, power or remedy will neither constitute the exclusive election thereof nor the waiver of any other right, power or remedy available to such Party. Without limiting the foregoing, the Parties hereto acknowledge and agree irreparable harm may occur for which money damages would not be an adequate remedy in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to injunction to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement (including the other parties’ obligation to consummate the Transactions, subject in each case to the terms and conditions of this Agreement), in addition to any other remedy at law or equity. Each Party hereby waives (i) any defenses in any action for specific performance, including the defense that a remedy at law would be adequate, and (ii) any requirement under any Law to post a bond or other security as a prerequisite to obtaining equitable relief.

 

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SECTION 10.06       Fees and Expenses. Each Party shall bear its own legal, accounting and other out-of-pocket costs and expenses incurred by such Party in connection with the negotiation, execution, delivery and performance of this Agreement and other Transaction Documents and the transactions contemplated hereby and thereby.

 

SECTION 10.07       Restriction on the Use of Name. Without the prior written consent of Alibaba, none of the Group Companies and the Parties hereto (other than Alibaba) shall, and each foregoing Person shall cause its Affiliates not to, (i) use in advertising, publicity, announcements, or otherwise, the name of Alibaba or any Affiliate of Alibaba, either alone or in combination of, including “阿里巴巴” (Chinese equivalent for “Alibaba”), “淘宝” (Chinese equivalent for “Taobao”), “阿里” (Chinese equivalent for “Ali”), “全球速卖通” (Chinese brand for “AliExpress”), “淘” (Chinese equivalent for “Tao”), “天猫” (Chinese equivalent for “Tmall”), “聚划算”(Chinese equivalent for “Juhuasuan”), “飞猪” (Chinese equivalent for “Fliggy”), “阿里妈妈” (Chinese equivalent for “Alimama”), “阿里云” (Chinese equivalent for “Alibaba Cloud”), “口碑” (Chinese equivalent for “Koubei’), “虾米”(Chinese equivalent for “Xiami”), “蚂蚁金服” (Chinese brand for “Ant Financial”), “蚂蚁”(Chinese equivalent for “Ant”), “蚂蚁财富” (Chinese equivalent for “Ant Fortune”), “支付宝” (Chinese brand for “Alipay”), “1688”, “一达通” (Chinese brand for “OneTouch”), “友盟” (Chinese equivalent for “Umeng”), “阿里音乐”(Chinese equivalent for “Alibaba Music”), “阿里星球” (Chinese equivalent for “Alibaba Planet”), “优视”(Chinese equivalent for “UC/UCWeb”), “高德地图” (Chinese brand for “AMAP”), “钉钉” (Chinese brand for “DingTalk”), “余额宝” (Chinese equivalent for “Yu’e Bao”), “招财宝” (Chinese equivalent for “Zhaocaibao”), “芝麻信用” (Chinese equivalent for “Zhima Credit”), “网商银行” (Chinese brand for “MYbank”), “阿里通信” (Chinese equivalent for “AliTelecom”), “优酷” (Chinese equivalent for “YOUKU”), “Alibaba”, “Taobao”, “Ali”, “AliExpress”, “Tao”, “Tmall”, “Juhuasuan”, “Fliggy”, “Alimama”, “Alibaba Cloud”, “YunOS”, “Koubei”, “Xiami”, “Ant Financial”, “Ant”, “Ant Fortune”, “Alipay”, “OneTouch”, “Umeng”, “Alibaba Music”, “Alibaba Planet”, “UCWeb”, “UC”, “AMAP”, “DingTalk”, “Yu’e Bao”, “Zhaocaibao”, “Zhima Credit”, “MYbank”, “AliTelecom”, “YOUKU”, the associated devices and logos of the above brands (including but not limited to the smiling face device of Alibaba Group, the cow device of Alibaba.com, the ant device of Taobao, the Tao doll device of Taobao, the cat device of Tmall, the Ju doll device of Juhuasuan, the bracket device of Alibaba Cloud, the cloud device of YunOS, the pig device of Fliggy, the wing device of Dingtalk, the ant device of Ant Financial, the lion device and the Zhixiaobao device of Alipay, the ingot device of Zhaocaibao, the sesame device of Zhima Credit together with the Gaoxiaode device and the paper aeroplane device of AutoNavi), or any company name, trade name, trademark, service mark, domain name, device, design, symbol or any abbreviation, contraction or simulation thereof owned or used by Alibaba or any of its Affiliates, or (ii) represent, directly or indirectly, that any product or services provided by any Group Company has been approved or endorsed by Alibaba or any of its Affiliates.

 

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SECTION 10.08       Finder’s Fee. Purchaser agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finders’ fee (and the costs and expenses of defending against such liability or asserted liability) for which Purchaser or any of its officers, partners, employees or representatives is responsible in connection with the transaction contemplated herein. The Company agrees to indemnify and hold harmless Purchaser from any liability for any commission or compensation in the nature of a finders’ fee (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible in connection with the transaction contemplated herein.

 

SECTION 10.09       Severability. In case any provision of the Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. If, however, any provision of this Agreement shall be invalid, illegal, or unenforceable under any such applicable Law in any jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform to the minimum requirements of such Law, or, if for any reason it is not deemed so modified, it shall be invalid, illegal, or unenforceable only to the extent of such invalidity, illegality, or limitation on enforceability without affecting the remaining provisions of this Agreement, or the validity, legality, or enforceability of such provision in any other jurisdiction. Without limitation of the foregoing, notwithstanding any claim or determination regarding the validity, legality, enforceability or binding nature of this Agreement with respect to any individual Party, this Agreement shall be valid, binding and enforceable with respect to each other Party, and nothing herein and no such claim or determination shall in any way limit Purchaser’s right to treat the agreements herein with each Party as a separate, severable agreements, enforce this Agreement with respect to an individual Party and separately consummate the transactions hereunder with respect to an individual Party.

 

SECTION 10.10       Amendments and Waivers. Any term of this Agreement may be amended, only with the written consent of each of (i) the Company, (ii) the holders of a majority of the voting power of the Ordinary Shares held by the Principals (through their Principal Holdcos) who are then employees of the Company, (iii) the Shareholders Representative, and (iv) Purchaser; provided however that no amendment or waiver shall be effective or enforceable in respect of any Selling Shareholder if such amendment or waiver affects such Selling Shareholder in a materially adverse and materially disproportionate manner from the other Selling Shareholders. Any amendment effected in accordance with this paragraph shall be binding upon each of the Parties hereto. Notwithstanding the foregoing, the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Party against whom such waiver is sought. For the avoidance of doubt, Purchaser may, in its sole discretion, waive any of the conditions set forth in Section 8.01(b) or Section 8.02 with respect to any one or more Selling Shareholders and to consummate individual Share Purchases with respect to any one or more Selling Shareholders; provided that Purchaser shall deliver a written notice of any such individual Share Purchase to the Shareholders Representative on the date of such individual consummation of such individual Share Purchase.

 

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SECTION 10.11       No Waiver. Failure to insist upon strict compliance with any of the terms, covenants, or conditions hereof will not be deemed a waiver of such term, covenant, or condition, nor will any waiver or relinquishment of, or failure to insist upon strict compliance with, any right, power or remedy power hereunder at any one or more times be deemed a waiver or relinquishment of such right, power or remedy at any other time or times.

 

SECTION 10.12       Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any Party under this Agreement, upon any breach or default of any other Party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting Party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Party of any breach or default under this Agreement, or any waiver on the part of any Party 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.

 

SECTION 10.13       No Presumption. The Parties acknowledge that any applicable Law that would require interpretation of any claimed ambiguities in this Agreement against the Party that drafted it has no application and is expressly waived. If any claim is made by a Party relating to any conflict, omission or ambiguity in the provisions of this Agreement, no presumption or burden of proof or persuasion will be implied because this Agreement was prepared by or at the request of any Party or its counsel.

 

SECTION 10.14       Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Facsimile, PDF and e-mailed copies of signatures shall be deemed to be originals for purposes of the effectiveness of this Agreement.

 

SECTION 10.15       Entire Agreement. This Agreement (including the Exhibits and Schedules hereto) and the other Transaction Documents together with all schedules and exhibits hereto and thereto, constitute the full and entire understanding and agreement among the Parties with regard to the subjects hereof and thereof, and supersede all other agreements between or among any of the Parties with respect to the subject matters hereof and thereof.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers or authorized representatives thereunto duly authorized.

 

PURCHASER:

 

	
 
    	
ALI PANINI   INVESTMENT LIMITED
    
	
 
    	
 
    
	
 
    	
By  
    	
/s/ Timothy Alexander Steinert
    
	
 
    	
Name: 
    	
Timothy   Alexander Steinert
    
	
 
    	
Title: 
    	
Authorized   Signatory
    

 

[Panini IV — Signature Page to Share Purchase Agreement]

 

 

PRINCIPALS:

 

	
 
    	
/s/ Xuhao Zhang
    
	
 
    	
Xuhao   Zhang (张旭豪)
    
	
 
    	
 
    
	
 
    	
/s/ Yuan Wang
    
	
 
    	
Yuan   Wang (汪渊)
    
	
 
    	
 
    
	
 
    	
/s/ Jia Kang
    
	
 
    	
Jia   Kang (康嘉)
    
	
 
    	
 
    
	
 
    	
/s/ Gaochao Deng
    
	
 
    	
Gaochao   Deng (邓高潮)
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

PRINCIPAL HOLDCOS:

 

	
 
    	
Mark   X Taurus Investment Holdings Inc.
    
	
 
    	
 

 
    
	
 
    	
By:
    	
/s/ Xuhao Zhang
    
	
 
    	
Name:
    	
Xuhao Zhang (张旭豪)
    
	
 
    	
Title:
    	
Director
    
	
 
    	
 
    
	
 
    	
Three   Body Technology Inc.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Yuan Wang
    
	
 
    	
Name:
    	
Yuan Wang (汪渊)
    
	
 
    	
Title:
    	
Director
    
	
 
    	
 
    
	
 
    	
King   Jack Investment Inc.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jia Kang
    
	
 
    	
Name:
    	
Jia Kang (康嘉)
    
	
 
    	
Title:
    	
Director
    
	
 
    	
 
    
	
 
    	
Three   Stone Investment Inc.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Gaochao Deng
    
	
 
    	
Name:
    	
Gaochao Deng (邓高潮)
    
	
 
    	
Title:
    	
Director
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
Legend   Giant Group Limited
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Chen Hao
    
	
 
    	
Name:
    	
Chen Hao
    
	
 
    	
Title:
    	
Authorized   Signatory
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
MATRIX   PARTNERS CHINA II HONG
    
	
 
    	
KONG   LIMITED
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Yibo SHAO
    
	
 
    	
Name:
    	
Yibo SHAO
    
	
 
    	
Title:
    	
Authorized   Signatory
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
Sequoia   Capital CV IV Holdco, Ltd.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Ip Siu Wai   Eva
    
	
 
    	
Name:
    	
Ip Siu Wai Eva
    
	
 
    	
Title:
    	
Authorized   Signatory
    
	
 
    	
 
    
	
 
    	
Sequoia   Capital China GF Holdco III-A, Ltd.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Ip Siu Wai   Eva
    
	
 
    	
Name:
    	
Ip Siu Wai Eva
    
	
 
    	
Title:
    	
Authorized   Signatory
    

 

[Panini — Signature Page to Share Purchase Agreement - Rajax Holding]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
Sevva   Investment Limited
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Cheung Wing   Hong Shannon
    
	
 
    	
Name: 
    	
Cheung Wing Hong   Shannon
    
	
 
    	
Title: 
    	
Director
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
Tactic   Smart Limited
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Wen Quan
    
	
 
    	
Name: 
    	
Wen Quan
    
	
 
    	
Title: 
    	
Authorized   Signatory
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
CE   Takeout Limited
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Wu Jingyang
    
	
 
    	
Name:
    	
Wu Jingyang
    
	
 
    	
Title:
    	
Authorized   Signatory
    
	
 
    	
 
    
	
 
    	
CE   Takeout II Limited
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Wu Jingyang
    
	
 
    	
Name:
    	
Wu Jingyang
    
	
 
    	
Title:
    	
Authorized   Signatory
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
CMC   Element Investment Limited
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ CHEN Xian
    
	
 
    	
Name:
    	
CHEN Xian
    
	
 
    	
Title:
    	
Authorized   Signatory
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
GOPHER   HARVEST FUND LP
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Yin Zhe
    
	
 
    	
Name:
    	
Yin Zhe
    
	
 
    	
Title:
    	
Authorized Signatory
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	

    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	

    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	

    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
GSR   Ventures III, L.P.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Richard Lim
    
	
 
    	
Name:
    	
Richard Lim
    
	
 
    	
Title:
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Banean   Holdings Ltd
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Waiping   Leong
    
	
 
    	
Name:
    	
Waiping Leong
    
	
 
    	
Title:
    	
Authorized   Signatory
    

 

GSR Ventures Seal. Notwithstanding any of the provisions in this Agreement, this Agreement shall not be effective until the signature page(s) of GSR Ventures III, L.P. are accompanied by a seal or chop of such fund or its general partner.

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	

    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	

    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
JD.com   E-Commerce (Investment) Hong Kong Corporation 
    
	
 
    	
Limited
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ WANG Nani
    
	
 
    	
Name:
    	
WANG Nani
    
	
 
    	
Title:
    	
Authorized Signatory
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	

    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
Baidu   (Hong Kong) Limited
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Xuhao Zhang
    
	
 
    	
Name:
    	
Xuhao Zhang (张旭豪)
    
	
 
    	
Title:
    	
Authorized Signatory   under Power of Attorney and Proxy
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
CICC   ALPHA Active Investment Limited
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Xuhao Zhang
    
	
 
    	
Name:
    	
Xuhao Zhang (张旭豪)
    
	
 
    	
Title:
    	
Authorized Signatory   under Power of Attorney and Proxy
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
DianPing   Holdings Ltd.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Xuhao Zhang
    
	
 
    	
Name:
    	
Xuhao Zhang (张旭豪)
    
	
 
    	
Title:
    	
Authorized   Signatory under Power of Attorney and Proxy
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
High   Mark Enterprise Development Limited
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Xuhao Zhang
    
	
 
    	
Name:
    	
Xuhao Zhang (张旭豪)
    
	
 
    	
Title:
    	
Authorized   Signatory under Power of Attorney and Proxy
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
Hina   Group Fund II, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Xuhao Zhang
    
	
 
    	
Name:
    	
Xuhao Zhang (张旭豪)
    
	
 
    	
Title:
    	
Authorized   Signatory under Power of Attorney and Proxy
    
	
 
    	
 
    	
 
    
	
 
    	
Hina   Group Fund III, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Xuhao Zhang
    
	
 
    	
Name:
    	
Xuhao Zhang (张旭豪)
    
	
 
    	
Title:
    	
Authorized   Signatory under Power of Attorney and Proxy
    
	
 
    	
 
    	
 
    
	
 
    	
Hina   Hanking I Investment L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Xuhao Zhang
    
	
 
    	
Name:
    	
Xuhao Zhang (张旭豪)
    
	
 
    	
Title:
    	
Authorized   Signatory under Power of Attorney and Proxy
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
Horizon   Thrive International Limited
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Xuhao Zhang
    
	
 
    	
Name:
    	
Xuhao Zhang (张旭豪)
    
	
 
    	
Title:
    	
Authorized   Signatory under Power of Attorney and Proxy
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
HUA   XIN 1 PTE. LTD.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Xuhao Zhang
    
	
 
    	
Name:
    	
Xuhao Zhang (张旭豪)
    
	
 
    	
Title:
    	
Authorized Signatory   under Power of Attorney and Proxy
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
HUA   XIN 2 PTE. LTD.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Xuhao Zhang
    
	
 
    	
Name:
    	
Xuhao Zhang (张旭豪)
    
	
 
    	
Title:
    	
Authorized   Signatory under Power of Attorney and Proxy
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
HUA   XIN 3  PTE. LTD.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Xuhao Zhang
    
	
 
    	
Name:
    	
Xuhao Zhang (张旭豪)
    
	
 
    	
Title:
    	
Authorized   Signatory under Power of Attorney and Proxy
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
Slender   West Lake Investment Limited
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Xuhao Zhang
    
	
 
    	
Name:
    	
Xuhao Zhang (张旭豪)
    
	
 
    	
Title:
    	
Authorized   Signatory under Power of Attorney and Proxy
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
Rosebook   Holding Limited
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Xuhao Zhang
    
	
 
    	
Name:
    	
Xuhao Zhang (张旭豪)
    
	
 
    	
Title:
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
Three   Body Technology Inc.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Yuan Wang
    
	
 
    	
Name:
    	
Yuan Wang (汪渊)
    
	
 
    	
Title:
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
King   Jack Investment Inc.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jia Kang
    
	
 
    	
Name:
    	
Jia Kang (康嘉)
    
	
 
    	
Title:
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
The   Kunpen Limited
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Gaochao Deng
    
	
 
    	
Name:
    	
Gaochao Deng (邓高潮)
    
	
 
    	
Title:
    	
Authorized   Signatory
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
Worldwide   Access Investment Limited
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Ge Xu
    
	
 
    	
Name:
    	
Ge Xu
    
	
 
    	
Title:
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
Dragon   Universe Investment Inc.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Yulong Luo
    
	
 
    	
Name:
    	
Yulong Luo
    
	
 
    	
Title:
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
Qinyang   Technology Limited
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Xuefeng   Zhang
    
	
 
    	
Name:
    	
Xuefeng Zhang
    
	
 
    	
Title:
    	
Authorized   Signatory
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
/s/ Zhou   Zhengchuan
    
	
 
    	
ZHOU   Zhengchuan
    
	
 
    	
 
    
	
 
    	
/s/ CHEN Yulong
    
	
 
    	
CHEN   Yulong
    
	
 
    	
 
    
	
 
    	
/s/ XU Ge
    
	
 
    	
XU Ge
    
	
 
    	
 
    
	
 
    	
/s/ CHEN Qi
    
	
 
    	
CHEN Qi
    
	
 
    	
 
    
	
 
    	
/s/ CHEN Yuming
    
	
 
    	
CHEN   Yuming
    
	
 
    	
 
    
	
 
    	
/s/ DAI Zhenkai
    
	
 
    	
DAI   Zhenkai
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
FAN   Xiaofeng
    
	
 
    	
 
    
	
 
    	
/s/ Gao Guobin
    
	
 
    	
GAO   Guobin
    
	
 
    	
 
    
	
 
    	
/s/ GAO Wei
    
	
 
    	
GAO Wei
    
	
 
    	
 
    
	
 
    	
/s/ Guo Haochuan
    
	
 
    	
GUO   Haochuan
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
 
    
	
 
    	
ZHOU   Zhengchuan
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CHEN   Yulong
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
XU   Ge
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CHEN   Qi
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CHEN   Yuming
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
DAI   Zhenkai
    
	
 
    	
 
    
	
 
    	
/s/ Fan Xiaofeng
    
	
 
    	
FAN   Xiaofeng
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
GAO   Guobin
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
GAO   Wei
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
GUO   Haochuan
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
/s/ HAN Donghua
    
	
 
    	
HAN   Donghua
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
HU   Jian
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
HUANG   Nian
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
HUANG   Ping
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
JIANG   Xinwei
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
JIN   Qianchen
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
JIN   Xin
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
LAN   Jiangang
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
LI   Baoxin
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
LI   Haiyan
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
 
    
	
 
    	
HAN   Donghua
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
HU Jian
    
	
 
    	
 
    
	
 
    	
/s/ HUANG Nian
    
	
 
    	
HUANG   Nian
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
HUANG   Ping
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
JIANG   Xinwei
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
JIN   Qianchen
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
JIN Xin
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
LAN   Jiangang
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
LI   Baoxin
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
LI   Haiyan
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
 
    
	
 
    	
HAN   Donghua
    
	
 
    	
 
    
	
 
    	
/s/ HU Jian
    
	
 
    	
HU Jian
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
HUANG   Nian
    
	
 
    	
 
    
	
 
    	
/s/ HUANG Ping
    
	
 
    	
HUANG   Ping
    
	
 
    	
 
    
	
 
    	
/s/ JIANG Xinwei
    
	
 
    	
JIANG   Xinwei
    
	
 
    	
 
    
	
 
    	
/s/ JIN Qianchen
    
	
 
    	
JIN   Qianchen
    
	
 
    	
 
    
	
 
    	
/s/ JIN Xin
    
	
 
    	
JIN Xin
    
	
 
    	
 
    
	
 
    	
/s/ LAN Jiangang
    
	
 
    	
LAN   Jiangang
    
	
 
    	
 
    
	
 
    	
/s/ LI Baoxin
    
	
 
    	
LI   Baoxin
    
	
 
    	
 
    
	
 
    	
/s/ LI Haiyan
    
	
 
    	
LI   Haiyan
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
/s/ LI Lei
    
	
 
    	
LI Lei
    
	
 
    	
 
    
	
 
    	
/s/ LI Lixun
    
	
 
    	
LI   Lixun
    
	
 
    	
 
    
	
 
    	
/s/ LI Ming
    
	
 
    	
LI Ming
    
	
 
    	
 
    
	
 
    	
/s/ LI Yan
    
	
 
    	
LI Yan
    
	
 
    	
 
    
	
 
    	
/s/ MAO Ruizhe
    
	
 
    	
MAO   Ruizhe
    
	
 
    	
 
    
	
 
    	
/s/ MAO   Pengcheng
    
	
 
    	
MAO   Pengcheng
    
	
 
    	
 
    
	
 
    	
/s/ Min Jie
    
	
 
    	
Min Jie
    
	
 
    	
 
    
	
 
    	
/s/ PAN Yuan
    
	
 
    	
PAN   Yuan
    
	
 
    	
 
    
	
 
    	
/s/ PU Zhihua
    
	
 
    	
PU Zhihua
    
	
 
    	
 
    
	
 
    	
/s/ SHI Jianing
    
	
 
    	
SHI   Jianing
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
/s/ TANG Lei
    
	
 
    	
TANG   Lei
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TU   Yanping
    
	
 
    	
 
    
	
 
    	
/s/ WAN Jiabao
    
	
 
    	
WAN   Jiabao
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WANG   Qiuxiao
    
	
 
    	
 
    
	
 
    	
/s/ WANG Taizhou
    
	
 
    	
WANG   Taizhou
    
	
 
    	
 
    
	
 
    	
/s/ WANG Yong
    
	
 
    	
WANG   Yong
    
	
 
    	
 
    
	
 
    	
/s/ WEI Hai
    
	
 
    	
WEI Hai
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
XIA   Liebo
    
	
 
    	
 
    
	
 
    	
/s/ XIN Jingbo
    
	
 
    	
XIN   Jingbo
    
	
 
    	
 
    
	
 
    	
/s/ XING Juan
    
	
 
    	
XING Juan
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
 
    
	
 
    	
TANG   Lei
    
	
 
    	
 
    
	
 
    	
/s/ Tu Yanping
    
	
 
    	
TU   Yanping
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WAN   Jiabao
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WANG   Qiuxiao
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WANG   Taizhou
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WANG   Yong
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WEI Hai
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
XIA   Liebo
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
XIN   Jingbo
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
XING   Juan
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
 
    
	
 
    	
TANG   Lei
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TU   Yanping
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WAN   Jiabao
    
	
 
    	
 
    
	
 
    	
/s/ WANG Qiuxiao
    
	
 
    	
WANG   Qiuxiao
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WANG Taizhou
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WANG   Yong
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WEI Hai
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
XIA   Liebo
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
XIN   Jingbo
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
XING   Juan
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
 
    
	
 
    	
TANG   Lei
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TU   Yanping
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WAN   Jiabao
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WANG   Qiuxiao
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WANG   Taizhou
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WANG   Yong
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WEI Hai
    
	
 
    	
 
    
	
 
    	
/s/ XIA Liebo
    
	
 
    	
XIA   Liebo
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
XIN   Jingbo
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
XING   Juan
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

SELLING SHAREHOLDERS:

 

	
 
    	
/s/ XU Mengyun
    
	
 
    	
XU   Mengyun
    
	
 
    	
 
    
	
 
    	
/s/ YANG   Gengsheng
    
	
 
    	
YANG   Gengsheng
    
	
 
    	
 
    
	
 
    	
/s/ YAO Zhen
    
	
 
    	
YAO   Zhen
    
	
 
    	
 
    
	
 
    	
/s/ YU Lixin
    
	
 
    	
YU   Lixin
    
	
 
    	
 
    
	
 
    	
/s/ ZANG Yunfei
    
	
 
    	
ZANG Yunfei
    
	
 
    	
 
    
	
 
    	
/s/ ZHANG Hao
    
	
 
    	
ZHANG   Hao
    
	
 
    	
 
    
	
 
    	
/s/ ZHANG Yi
    
	
 
    	
ZHANG   Yi
    

 

[Panini — Signature Page to Share Purchase Agreement]

 

 

ROLLOVER SHAREHOLDER:

 

	
 
    	
Ali   Panini Investment Holding Limited
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Timothy   Alexander Steinert
    
	
 
    	
Name:
    	
Timothy   Alexander Steinert
    
	
 
    	
Title:
    	
Authorized   Signatory
    

 

[Panini IV — Signature Page to Share Purchase Agreement]

 

 

COMPANY:

 

	
 
    	
Rajax   Holding
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Xuhao Zhang
    
	
 
    	
Name:
    	
Xuhao Zhang (张旭豪)
    
	
 
    	
Title:
    	
Director
    

 

[Panini — Signature Page to Share Purchase Agreement]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00285-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00285-of-00352.parquet"}]]