Document:

Exhibit 4.42

 

EXECUTION COPY

 

CONFIDENTIAL

 

 

SHARE PURCHASE AGREEMENT

 

dated

 

April 8, 2015

 

among

 

ALIBABA HEALTH INFORMATION TECHNOLOGY LIMITED

 

and

 

ALI JK INVESTMENT HOLDING LIMITED

 

and

 

MR. CHEN WENXIN

 

relating to the sale and purchase

 

of

 

the entire share capital

 

of

 

BEIJING CHUANYUN LOGISTICS INVESTMENT LIMITED

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1
    	
INTERPRETATION
    	
1
    
	
2
    	
SALE OF THE SALE SHARES   AND THE CONSIDERATION
    	
8
    
	
3
    	
CONDITIONS PRECEDENT
    	
9
    
	
4
    	
PRE-COMPLETION VENDORS’   UNDERTAKINGS
    	
10
    
	
5
    	
PRE-COMPLETION   PURCHASER’S UNDERTAKINGS
    	
11
    
	
6
    	
COMPLETION
    	
12
    
	
7
    	
FURTHER UNDERTAKINGS
    	
14
    
	
8
    	
WARRANTIES
    	
16
    
	
9
    	
LIMITATIONS ON CLAIMS
    	
17
    
	
10
    	
ENTIRE AGREEMENT
    	
17
    
	
11
    	
VARIATION
    	
17
    
	
12
    	
ASSIGNMENT
    	
18
    
	
13
    	
ANNOUNCEMENTS
    	
18
    
	
14
    	
FEES AND EXPENSES
    	
18
    
	
15
    	
CONFIDENTIALITY
    	
18
    
	
16
    	
SEVERABILITY
    	
19
    
	
17
    	
COUNTERPARTS
    	
19
    
	
18
    	
WAIVER
    	
19
    
	
19
    	
FURTHER ASSURANCE
    	
19
    
	
20
    	
NOTICES
    	
19
    
	
21
    	
GOVERNING LAW AND   JURISDICTION
    	
20
    

 

i

 

SCHEDULE 1 DETAILS OF THE GROUP

 

SCHEDULE 2 LIMITATIONS ON CLAIMS

 

SCHEDULE 3 THE WARRANTIES

 

SCHEDULE 4 BUSINESS RESTRUCTURING PLAN

 

SCHEDULE 5 FORM OF APPLICATION FOR CONSIDERATION SHARES

 

SCHEDULE 6 FORM OF CONTROL DOCUMENTS

 

SCHEDULE 7 THE PURCHASER’S SHARE CAPITAL

 

SCHEDULE 8 KEY TERMS OF CERTAIN NEW AGREEMENTS

 

SCHEDULE 9 FORM OF NON-COMPETE DEED

 

SCHEDULE 10 KEY TERMS OF CONVERTIBLE BONDS

 

ii

 

THIS AGREEMENT is made on April 8, 2015

 

AMONG

 

(1)                                 ALIBABA HEALTH INFORMATION TECHNOLOGY LIMITED, a company incorporated in Bermuda with limited liability whose registered office is at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda and principal place of business in Hong Kong is at 26/F, Tower One, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong (the “Purchaser”);

 

(2)                                 ALI JK INVESTMENT HOLDING LIMITED, a company incorporated under the laws of the British Virgin Islands whose registered office is at Trident Chambers, P.O. Box 146 Road Town, Tortola, British Virgin Islands (“Vendor 1”); and

 

(3)                                 MR. CHEN WENXIN, a citizen of the People’s Republic of China with PRC ID 210102196810271019 (“Vendor 2”, and together with Vendor 1, the “Vendors”).

 

The Purchaser, Vendor 1 and Vendor 2 are hereinafter referred to individually as a “Party” and collectively as the “Parties.”

 

WHEREAS

 

(A)                               Beijing Chuanyun Logistics Investment Limited (the “Company”) is a company incorporated under the laws of British Virgin Islands whose registered office is at Trident Chambers, P.O. Box 146, Road Town, Tortola, British Virgin Islands. Further details of the Company are set out in Part A of Schedule 1 attached hereto.

 

(B)                               The Vendors propose to sell to the Purchaser, and the Purchaser proposes to purchase from the Vendors, the entire issued share capital of the Company upon the terms and conditions set out in this Agreement.

 

IT IS AGREED as follows:

 

1                                         INTERPRETATION

 

1.1                               In this Agreement, the following expressions shall have the following meanings:

 

“Affiliate” means, (a) with respect to any Person that is an individual, his or her Immediate Family Members, and (b) with respect to any Person that is not an individual, any other Person that directly or indirectly through one or more intermediaries, Controls, or is Controlled by, or is under common Control with, such Person; provided, however, that for purposes of this Agreement, Vendor 1 and its Affiliates (other than the Company and its controlled subsidiaries), on the one hand, and the Company and its controlled subsidiaries, on the other hand, shall not be deemed to be Affiliates of each other;

 

“Business Day” means any day (other than a Saturday or Sunday or public holiday) on which banks in Hong Kong, the PRC, Bermuda and the British Virgin Islands are open for the transaction of normal business;

 

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“Business Restructuring” means the transactions as set out in the Business Restructuring Plan taken as a whole;

 

“Business Restructuring Plan” means the detailed plan for the Business Restructuring agreed among the Parties as set out in Schedule 4;

 

“Circular” means the shareholders’ circular to be dispatched to the shareholders of the Purchaser to provide additional information regarding this Agreement and the transactions contemplated hereunder;

 

“Companies Ordinance” means the Companies Ordinance, Chapter 622 of the Laws of Hong Kong;

 

“Company Material Adverse Effect” means any event or circumstance which would have a material and adverse effect on the financial position, business or properties, results of operations or prospects of the Group taken as a whole;

 

“Company Shares” means ordinary shares of par value US$0.001 per share of the Company;

 

“Completion” means completion of the sale and purchase of the Sale Shares under this Agreement;

 

“Completion Date” means the date that is three (3) Business Days after the date on which the last of the Conditions Precedent is satisfied or waived;

 

“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, which 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 (or similar governing body) of such Person; the term “Controlled” has the meaning correlative to the foregoing;

 

“Control Documents” means the Exclusive Call Option Agreement, Equity Pledge Agreement, Exclusive Technology Service Agreement and Proxy Agreement, in the agreed forms and attached hereto as Schedule 6 subject to revisions to be made pursuant to requirements of relevant regulatory authorities including the Stock Exchange, to be entered into among the OpCo, the WFOE, and/or Hangzhou Ali Venture Capital Co., Ltd. (杭州阿里创业投资有限公司), as sole shareholder of the OpCo, before Completion pursuant to which the Company, through the WFOE, will exercise effective control over the OpCo and consolidate the financial results of the OpCo in the Company’s consolidated financial statements as if the OpCo were a wholly-owned subsidiary of the Company under HKFRS;

 

“Conditions Precedent” means the conditions specified in clause 3.1;

 

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“Consideration Shares” means the Vendor 1 Consideration Shares and the Vendor 2 Consideration Shares;

 

“Conversion Shares” means the Purchaser Shares that are issuable upon the conversion of the Convertible Bonds in accordance with the terms and conditions thereof;

 

“Data Usage Agreement” means a data usage and sharing agreement to be entered into by an applicable Affiliate of the Purchaser on the one hand and an applicable Affiliate of Vendor 1 on the other hand, which shall be in a form to be agreed by the Purchaser and Vendor 1 prior to the Completion and shall provide that, among other things, from and after the Completion, (i) the parties to such agreement and their respective Affiliates shall be entitled to share the data generated by the transactions completed on the online transaction platform of the Purchaser Group, and (ii) Vendor 1 and its Affiliates will only use the proprietary PIATS information to the extent permitted by applicable laws, regulations or contractual obligations of the Purchaser and its Affiliates.

 

“Drug Platform License” means the Internet Drug Transaction Service Qualification Certificate (Third Party Transaction Service Platform) (互联网药品交易服务资格证书(第三方交易服务平台)) issued by the State Food and Drug Administration of the PRC or its local counterparts in the PRC;

 

“Encumbrance” means any claim, charge, mortgage, security, lien, option, equity, power of sale, hypothecation or third party rights, retention of title, right of pre-emption, right of first refusal or security interest of any kind;

 

“Environmental Laws” means any and all supra-national, national, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licences, agreements or other governmental restrictions relating to the protection of the environment (including, without limitation, human, animal and plant life, ambient air, surface water, ground water, or land), the protection of property and proprietary rights or for the compensation of harm to the environment whether by clean-up, remediation, containment or other treatment or the payment of monies to any competent Authority, and occupational or public health and safety;

 

“Existing 95095 Registration Agreement” means the 95095 Medical Platform Services Agreement (95095医药平台服务协议) entered into between each Existing Online Pharmacy and the OpCo;

 

“Existing Group Companies” means the Company, the HK Subsidiary and the OpCo.

 

“Existing Online Pharmacy” means an Online Pharmacy which is party to a Tmall Storefront Display Contract as at the date of this Agreement.  A complete list of the Existing Online Pharmacies has been delivered to the Purchaser prior to the date hereof;

 

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“Existing Software Services Agreement” means the Software Services Agreement between the OpCo and Tmall dated as of January 8, 2015;

 

“Financial Statements” means the unaudited financial statements of the OpCo as of and for each of the three years ended March 31, 2013, 2014 and 2015, respectively;

 

“Group” or “Group Companies” means the Company and the Subsidiaries (including the OpCo, the financial results of which will be consolidated and accounted for as a wholly-owned subsidiary of the Company by virtue of the Control Documents) and “Group Company” shall be construed accordingly;

 

“Group Restructuring” means the Business Restructuring, the establishment of the WFOE by the HK Subsidiary, and the execution of the Control Documents by the parties thereto, taken as a whole;

 

“Governmental Entity” means any foreign, domestic, multinational, federal, territorial, state or local governmental authority, quasi-governmental authority, government owned or government controlled (in whole or in part) enterprise, public international organization, regulatory body, court, tribunal, commission, board, bureau, agency, instrumentality, or any regulatory, administrative or other department, or agency, or any political or other subdivision of any of the foregoing, or any political party or official thereof, or any candidate for political office.

 

“Government Official” means any officer, employee or any other person acting in an official capacity for any foreign, domestic, multinational, federal, territorial, state or local governmental authority, quasi-governmental authority, government-owned or government-controlled (in whole or in part) enterprise, public international organization, regulatory body, court, tribunal, commission, board, bureau, agency, instrumentality, or any regulatory, administrative or other department, or agency, or any political or other subdivision of any of the foregoing, to any political party or official thereof, or to any candidate for political office.

 

“Hong Kong” means the Hong Kong Special Administrative Region of the PRC;

 

“HK$” or “HK dollars” means Hong Kong dollars, the lawful currency of Hong Kong;

 

“HKFRS” means Hong Kong Financial Reporting Standards (which term includes all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards, and Interpretations issued by the Hong Kong Institute of Certified Public Accountants);

 

“HK Subsidiary” means Beijing Chuanyun Logistics Holding Limited (北京傳雲物流控股有限公司), a company duly established and existing under the laws of Hong Kong and wholly-owned by the Company;

 

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“Immediate Family Members” means, with respect to any natural Person, (a) such Person’s spouse, parents, parents-in-law, grandparents, children, grandchildren, siblings and siblings-in-law (in each case whether adoptive or biological), (b) spouses of such Person’s children, grandchildren and siblings (in each case whether adoptive or biological) and (c) estates, trusts, partnerships and other Persons which directly or indirectly through one or more intermediaries are Controlled by the foregoing;

 

“Indebtedness” means any indebtedness in respect of all obligations to repay borrowed money, all indebtedness evidenced by notes, bonds, loan stock, debentures or similar obligations, acceptances or documentary credit facilities, all rental obligations under finance leases, and hire purchase contracts, any other transaction having the commercial effect of a borrowing or raising of money, the net amount of any liability under any swap, hedging or other similar treasury instrument, and all guarantees, sureties, indemnities, counter-indemnities or letters of comfort of obligations of others of the foregoing types;

 

“Intellectual Property Rights” means patents, trademarks, service marks, trade names, design rights, copyright (including rights in computer software),  in know-how and other intellectual property rights, in each case whether registered or unregistered and including applications for the grant of any such rights and all rights or forms of protection having equivalent or similar effect anywhere in the world;

 

“Listing Committee” means the Listing Committee of the Stock Exchange;

 

“Listing Rules” means the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited;

 

“New Online Pharmacy” means an Online Pharmacy that is not party to an Existing 95095 Registration Agreement as at the date of this Agreement;

 

“New 95095 Services Agreement” means the new 95095 Services Agreement to be entered into among each Online Pharmacy, WFOE and the OpCo, the key terms of which shall be as set out in Part A of Schedule 8;

 

“New Technical Services Agreement” means the new Technical Services Agreement to be entered into between WFOE and Tmall, the key terms of which shall be as set out in Part B of Schedule 8;

 

“Non-Compete Deed” means the non-compete deed to be entered into between Alibaba Group Holding Limited and the Purchaser, in substantially the form set out in Schedule 9;

 

“Online Pharmacy” means any Person (for the avoidance of doubt, not including such Person’s parent, subsidiaries or other Affiliates) who possesses an Internet Drug Transaction Service Qualification Certificate (Type C) (互联网药品交易服务资格证书(C类)) and sells products pursuant to such certificate;

 

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“OpCo” means the company whose details are set out in Part B (3) of Schedule 1;

 

“Person” means any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint-stock company, trust, unincorporated organization, government authority or other entity;

 

“PIATS” means product identification, authentication, tracking system;

 

“PIATS Platforms” means the drug PIATS regulatory platform operated through the websites drugadmin.com and moh.95001111.com and the PIATS platform operated through the website 95001111.com;

 

“PRC” means the People’s Republic of China;

 

“PRC GAAP” means the generally accepted accounting principles of the PRC.

 

“Purchaser Group” means the Purchaser and its subsidiaries;

 

“Purchaser Material Adverse Effect” means any event or circumstance which would have a material and adverse effect on the financial position, business or properties, results of operations or prospects of the Purchaser taken as a whole;

 

“Purchaser Shares” means ordinary shares of HK$0.01 each in the capital of the Purchaser;

 

“Purchaser Share Award Scheme” means the share award scheme adopted by the shareholders of the Purchaser at the special general meeting of the Purchaser held on November 24, 2014;

 

“Purchaser Warranties” means the representations and warranties set out in Part B of Schedule 3;

 

“Relevant Governmental Approvals” means the approvals, consents and authorizations from all relevant regulatory authorities in PRC, BVI and Hong Kong which are necessary to effect the transactions contemplated by the Group Restructuring and this Agreement;

 

“Sale Shares” means the Vendor 1 Sale Shares and the Vendor 2 Sale Shares;

 

“Schedules” means Schedules 1, 2, 3, 4, 5, 6, 7, 8, 9 and 10 to this Agreement and Schedule shall be construed accordingly;

 

“SFO” means the Securities and Futures Ordinance (Chapter 571 of Laws of Hong Kong);

 

“Stock Exchange” means The Stock Exchange of Hong Kong Limited;

 

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“Subsidiary” means any of the companies listed in Part B of Schedule 1, including the WFOE, which will form part of the Group after the completion of the Group Restructuring, and “Subsidiaries” means all the Subsidiaries;

 

“Takeovers Code” means the Code on Takeovers and Mergers as published by the Securities and Futures Commission;

 

“Target Business” means the business to be directly or indirectly injected into the Purchaser pursuant to the terms of this Agreement;

 

“Target Business Scope” means the scope of the Target Business, being the operation of an online transaction platform for the sale of products by Online Pharmacies;

 

“Tmall” means Zhejiang Tianmao Technology Co., Ltd. (浙江天猫技术有限公司);

 

“Tmall Storefront Display Contract” means the Tmall Services Agreement entered into between each Online Pharmacy and Tmall;

 

“Vendor 1 Sale Shares” means 9,043,963 Company Shares, which represent approximately 90.44% of the entire issued share capital of the Company;

 

“Vendor 2 Sale Shares” means 956,037 Company Shares, which represent approximately 9.56% of the entire issued share capital of the Company;

 

“Vendor Warranties” means the representations and warranties set out in Part A of Schedule 3;

 

“Warranties” means the Vendor Warranties and the Purchaser Warranties; and

 

“WFOE” means a wholly-owned subsidiary to be established by the HK Subsidiary in the PRC as part of the Group Restructuring.

 

1.2                               In this Agreement, unless the context otherwise requires:

 

(a)                                 references to persons shall include individuals, bodies corporate (wherever incorporated), unincorporated associations and partnerships;

 

(b)                                 the headings are inserted for convenience only and shall not affect the construction of this Agreement;

 

(c)                                  references to one gender include all genders;

 

(d)                                 references to a “subsidiary” or “holding company” shall be to the same as defined in sections 13 and 15 of the Companies Ordinance;

 

7

 

(e)                                  any reference to an enactment or statutory provision is a reference to it as it may have been, or may from time to time be, amended, modified, consolidated or re-enacted; and

 

(f)                                   any reference to a document in the agreed form is to the form of the relevant document agreed between the parties and for the purpose of identification initialled by each of them or on their behalf (in each case with such amendments as may be agreed by or on behalf of each of the Vendors and the Purchaser).

 

1.3                               The Schedules and Exhibit to this Agreement shall form part of this Agreement.

 

2                                         SALE OF THE SALE SHARES AND THE CONSIDERATION

 

2.1                               At Completion, Vendor 1 as legal and beneficial owner of the Vendor 1 Sale Shares shall sell to the Purchaser, and the Purchaser shall purchase from Vendor 1, the Vendor 1 Sale Shares free from all Encumbrances, together with all rights attaching to them.

 

2.2                               The consideration for the purchase of the Vendor 1 Sale Shares shall be HK$17,795,617,261  in the aggregate, which shall be satisfied by (i) the issue of 2,961,291,148 Purchaser Shares (the “Vendor 1 Consideration Shares”) by the Purchaser to Vendor 1 at Completion, reflecting a per share price of HK$5.280 per Purchaser Share, subject to the adjustments set forth in clause 2.5, and (ii) the issue of convertible bonds on the terms and conditions set forth in Schedule 10 hereto (and otherwise in a form to be reasonably agreed by the Purchaser and Vendor 1 as soon as practicable after the date hereof and in any event prior to the Completion) (the “Convertible Bonds”) in an aggregate principal amount of HK$2,160,000,000 by the Purchaser to Vendor 1 at Completion.

 

2.3                               At Completion, Vendor 2 as legal and beneficial owner of the Vendor 2 Sale Shares shall sell to the Purchaser, and the Purchaser shall purchase from Vendor 2, the Vendor 2 Sale Shares free from all Encumbrances, together with all rights attaching to them.

 

2.4                               The consideration for the purchase of the Vendor 2 Sale Shares shall be HK$1,652,840,682 in the aggregate, which shall be satisfied by the issue of 313,038,008 Purchaser Shares (the “Vendor 2 Consideration Shares”) Vendor 2 at Completion, reflecting a per share price of HK$5.280 per Purchaser Share, subject to the adjustments set forth in clause 2.5.

 

2.5                               In the event of a share split, share combination, share dividend or similar events with respect to the capital of the Purchaser prior to Completion, the number of Vendor 1 Consideration Shares and Vendor 2 Consideration Shares shall be adjusted proportionally.

 

2.6                               For the avoidance of doubt, the Purchaser shall not be obliged to complete the purchase of any of the Vendor 1 Sale Shares and the Vendor 2 Sale Shares, and neither Vendor shall be obligated to complete the sale of its portion of the

 

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Sale Shares, unless the purchase and sale of all the Vendor 1 Sale Shares and the Vendor 2 Sale Shares are completed simultaneously.

 

3                                         CONDITIONS PRECEDENT

 

3.1                               Completion of the sale and purchase of the Sale Shares shall be conditional upon the fulfilment of the following conditions:

 

(a)                                 the passing by the shareholders of the Purchaser (other than those who are required by the Listing Rules to abstain from voting) at a duly convened shareholders’ meeting of the Purchaser of resolutions(s) approving this Agreement and the transactions contemplated hereunder, including but not limited to, the issue of the Consideration Shares and the Convertible Bonds (and the Conversion Shares issuable upon the conversion of the Convertible Bonds) pursuant to this Agreement, the increase of the authorised share capital of the Purchaser and the entering into of certain non-exempt continuing connected transactions by the members of the Purchaser Group upon Completion;

 

(b)                                 approval having been obtained from the Listing Committee for the new listing application by the Purchaser in relation to the transactions contemplated under this Agreement and such approval not having been revoked or withdrawn;

 

(c)                                  the granting of the approval of the Stock Exchange for the listing of, and permission to deal in, the Consideration Shares and the Conversion Shares;

 

(d)                                 the completion of the Group Restructuring;

 

(e)                                  each of the Vendors and/or their related companies having obtained all necessary consents and approvals from the relevant governmental or regulatory authorities or other third parties required for the transactions contemplated by the Group Restructuring and the execution and performance of this Agreement by the Vendors and the transactions contemplated thereunder;

 

(f)                                   the Purchaser having obtained all necessary consents and approvals from the relevant governmental or regulatory authorities or other third parties required for the execution and performance of this Agreement by the Purchaser and the transactions contemplated thereunder; and

 

(g)                                  no governmental authority in any relevant jurisdiction having enacted any laws, rules or regulations which might render Completion or the Group Restructuring or any part thereof unlawful or any of the Control Documents unlawful, invalid or unenforceable under the applicable laws and regulations.

 

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3.2                               Each of the Vendors undertakes to use all reasonable endeavours to ensure that the Conditions Precedent set out in clauses 3.1(d) and 3.1(e) are fulfilled as soon as possible. Each of the Vendors undertakes to take such steps, and to provide such information and assistance, in each case as may be reasonably requested by the Purchaser in connection with (i) the preparation by the Purchaser of a circular to its shareholders for the purposes of obtaining the requisite approval under clause 3.1(a), and (ii) any submission required to be made to the Listing Committee and/or to the Stock Exchange for the purposes of obtaining the requisite approvals under clauses 3.1(b) and 3.1(c).

 

3.3                               The Purchaser undertakes to use all reasonable endeavours to ensure that the Conditions Precedent set out in clauses 3.1(a), 3.1(b), 3.1(c) and 3.1(f) are fulfilled as soon as possible.

 

3.4                               The Purchaser shall be entitled in its absolute discretion, by written notice to the Vendors, to waive the Conditions Precedent set out in clauses 3.1(d) and 3.1(e) either in whole or in part.

 

3.5                               Vendor 1 shall be entitled in its absolute discretion, by written notice to the Purchaser, to waive the Conditions Precedent set out in clause 3.1(f) either in whole or in part.

 

3.6                               If any of the Conditions Precedent has not been fulfilled (or waived) on or before December 31, 2015 or such other date as the parties to this Agreement may agree in writing, this Agreement (other than clauses 13, 15, 20 and 21) shall automatically terminate with immediate effect and no party shall have any claim of any nature whatsoever against the other parties under this Agreement (save in respect of its accrued rights arising from any prior breach of this Agreement).

 

4                                         PRE-COMPLETION VENDORS’ UNDERTAKINGS

 

4.1                               Prior to and pending Completion, the Vendors shall ensure that:

 

(a)                                 except as pursuant to the Group Restructuring, each of the Group Companies shall carry on its business only in the ordinary and usual course and shall not (or agree to) make any payment, incur any liability, enter into any contract or incur any other obligation, in each case, in any material respect and other than in the ordinary and usual course of trading;

 

(b)                                 except as pursuant to the Group Restructuring, each of the Group Companies shall take all reasonable steps to preserve and protect its assets;

 

(c)                                  except as pursuant to the Group Restructuring, each of the Group Companies and Tmall shall continue to perform its obligations under each Tmall Storefront Display Contract, each Existing 95095 Registration Agreement and the Existing Software Services Agreement to which it is a party in the ordinary and usual course of business in accordance with their terms; and

 

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(d)                                 the Purchaser’s representatives shall be allowed, upon reasonable notice and during normal business hours, access to the books and records and other information of each of the Group Companies.

 

4.2                               Prior to and pending Completion, the Vendors shall use all reasonable endeavours to procure that the Group Companies and Tmall continue to seek new business opportunities with New Online Pharmacies within the Target Business Scope, and where such new business opportunities do arise, to use all reasonable endeavours to procure that any such New Online Pharmacies enter into a New 95095 Services Agreement.

 

4.3                               The Vendors undertake to the Purchaser to use all commercially reasonable endeavours prior to the Completion Date to (i) ensure that the businesses and operations of the Group Companies (including the businesses and operations that will form part of the Group Companies prior to the Completion) are conducted in compliance with applicable laws and regulations in all material respects, and (ii) remedy any material non-compliance with applicable laws and regulations in businesses and operations of the Group Companies (including the businesses and operations that will form part the Group Companies prior to the Completion).

 

5                                         PRE-COMPLETION PURCHASER’S UNDERTAKINGS

 

5.1                               Pending Completion, the Purchaser undertakes to the Vendors that:

 

(a)                                 it will not, except pursuant to the terms of the Purchaser Share Award Scheme, (i) allot or issue or offer to allot or issue or grant any option, right or warrant to subscribe (either conditionally or unconditionally, or directly or indirectly, or otherwise) any Purchaser Shares or any interests in Purchaser Shares or any securities convertible into or exercisable or exchangeable for or substantially similar to any Purchaser Shares or interest in Purchaser Shares or (ii) agree (conditionally or unconditionally) to enter into or effect any such transaction with the same economic effect as any of the transactions described in (i) above or (iii) announce any intention to enter into or effect any such transaction described in (i) or (ii) above, in each case, without first having obtained the written consent of each of the Vendors; and

 

(b)                                 it will take all reasonable steps to preserve and protect its assets.

 

5.2                               The Purchaser shall, as soon as reasonably practicable:

 

(a)                                 make all appropriate disclosures pursuant to, and will comply in all respects with applicable law, regulation or direction (including without limitation the Listing Rules) in connection with the transactions contemplated under this Agreement;

 

(b)                                 subject to obtaining all necessary approvals from the Listing Committee and the Stock Exchange, dispatch to its shareholders a shareholders’ circular containing details on the transactions

 

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contemplated under this Agreement as required by applicable law, regulation or direction (including without limitation the Listing Rules, the Takeovers Code and the SFO) and convene a shareholders’ meeting to consider and approve the transactions contemplated under this Agreement, the issue of the Consideration Shares and the Convertible Bonds (and the Conversion Shares issuable upon the conversion of the Convertible Bonds) and the increase of authorised share capital of the Company;

 

(c)                                  make all notifications, registrations and filings as may from time to time be required in relation the transactions contemplated under this Agreement, the issue of the Consideration Shares and the Convertible Bonds and the increase of authorised share capital of the Company; and

 

(d)                                 apply to the Stock Exchange for the listing of, and permission to deal in, the Consideration Shares and the Conversion Shares.

 

6                                         COMPLETION

 

6.1                               Completion shall take place at the offices of Simpson Thacher & Bartlett, at 35/F, ICBC Tower, Central, Hong Kong on the Completion Date.

 

6.2                               On Completion, the Vendors shall deliver (or cause to be delivered) to the Purchaser:

 

(a)                                 instruments of transfer (in the form prescribed by the Company) with respect to Sale Shares, duly executed by the Vendors;

 

(b)                                 a copy of the register of members of the Company, dated as of the Completion Date and certified by a director or the registered office provider of the Company, evidencing the Purchaser’s ownership of all of the Sale Shares;

 

(c)                                  a share certificate in the name of the Purchaser, dated as of the Completion Date and duly executed on behalf of the Company, evidencing the ownership by the Purchaser of  all of the Sale Shares;

 

(d)                                 a copy of the register of directors of the Company, dated as of the Completion Date and certified by a director or the registered office provider of the Company, evidencing that the board of directors of the Company consists solely of nominees of the Purchaser, provided, however, that the Purchaser shall have notified the Vendors of the names of such nominees no later than ten Business Days prior to the Completion and each such nominee (to the extent not already a director of the Company) shall have duly executed and delivered to the Company a written consent to act as a director of the Company (in a form acceptable to the Company’s registered office provider) no later than ten Business Days prior to the Completion;

 

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(e)                                  copies of the Control Documents duly executed by the parties thereto;

 

(f)                                   original counterparts of the Non-Compete Deed and the Data Usage Agreement, duly executed by the applicable Affiliates of Vendor 1 party thereto; and

 

(g)                                  an application for their respective number of Consideration Shares in the agreed form set out in Schedule 5.

 

6.3                               On Completion, the Purchaser shall:

 

(a)                                 deliver to the Vendors instruments of transfer (in the form prescribed by the Company) with respect to Sale Shares, duly executed by the Purchaser;

 

(b)                                 in satisfaction of its obligations under clause 2.2, (i) allot and issue, credited as fully paid, the Vendor 1 Consideration Shares to Vendor 1, and procure that Vendor 1 is registered on the branch register of members of the Company in Hong Kong as the registered holders of the Vendor 1 Consideration Shares and deliver to Vendor 1 definitive share certificates for the Vendor 1 Consideration Shares in such denomination as Vendor 1 may request issued in the name of Vendor 1 and in accordance with instructions given in the application to be delivered by Vendor 1, and (ii) issue the Convertible Bonds to Vendor 1 and deliver to Vendor 1 a copy of the Purchaser’s Register of Bondholders, dated as of the Completion Date and certified by a director or the registered office provider of the Purchaser, evidencing that Vendor 1 has been registered as the holder of the Convertible Bonds;

 

(c)                                  in satisfaction of its obligations under clause 2.4, allot and issue, credited as fully paid, the Vendor 2 Consideration Shares to Vendor 2, and procure that Vendor 2 is registered on the branch register of members of the Company in Hong Kong as the registered holders of the Vendor 2 Consideration Shares and deliver to Vendor 2 definitive share certificates for the Vendor 2 Consideration Shares in such denomination as Vendor 2 may request issued in the name of Vendor 2 and in accordance with instructions given in the application to be delivered by Vendor 2;

 

(d)                                 deliver to each of the Vendors a copy of the board minutes of the Purchaser authorising the execution and performance by the Purchaser of its obligations under this Agreement and the resolutions of the shareholders of the Purchaser approving this Agreement and the transactions contemplated hereunder, the issue of the Consideration Shares and the Convertible Bonds and the increase of the authorised share capital of the Purchaser, in each case certified by a duly appointed officer as true and correct; and

 

13

 

(e)                                  deliver to Vendor 1 original counterparts of the Non-Compete Deed and the Data Usage Agreement, duly executed by the Purchaser.

 

6.4                               If any of the Vendors, on the one hand, or the Purchaser, on the other hand, fails or is unable to perform any material obligations required to be performed by it at the Completion, the other Party (or Parties, as applicable) to this Agreement shall not be obliged to complete the sale and purchase of the Sale Shares and may, in its absolute discretion, by written notice to the Vendors or the Purchaser, as applicable:

 

(a)                                 rescind this Agreement without liability on the part of non-breaching Party;

 

(b)                                 elect to complete this Agreement on that date, to the extent that the breaching Party is ready, able and willing to do so, and specify a later date on which the breaching Party shall be obliged to complete its outstanding obligations; or

 

(c)                                  elect to defer the completion of this Agreement by not more than 90 days to such other date as it may specify in such notice, in which event the provisions of this clause 6.4 shall apply, mutatis mutandis, if any Party fails or is unable to perform any such obligations on such other date.

 

7                                         FURTHER UNDERTAKINGS

 

7.1                               The Purchaser undertakes in favour of Vendor 1 to:

 

(a)                                 use all commercially reasonable endeavours to (i) ensure that the businesses and operations of the Purchaser Group are conducted in compliance with applicable laws and regulations in all material respects, and (ii) remedy any material non-compliance with applicable laws and regulations in the businesses and operations of the Purchaser Group; and

 

(b)                                 from and after the Completion, keep sufficient authorised share capital to satisfy the issue of such number of Conversion Shares as would be required to be issued on conversion of the Convertible Bonds.

 

7.2                               The Purchaser undertakes that it and its officers, directors, employees, and agents will not offer, pay, promise to pay, or authorize the payment of, or give, promise to give, or authorize the giving of anything of value to any Government Official, or to any other person under circumstances where the Purchaser or its officers, directors, employees, or agents knew or had reason to know that all or a portion of such money or thing of value would be offered, promised, or given, directly or indirectly, to any Government Official, for the purpose of (i) influencing any act or decision of such Government Official in his or her official capacity; (ii) inducing such Government Official to do, or omit to do, any act in relation to his or her lawful duty; (iii) securing any

 

14

 

improper advantage; or (iv) inducing such Government Official to influence or affect any act or decision of any Governmental Entity, in each case in order to assist the Purchaser or any of its officers, directors, employees, or agents in obtaining or retaining business for or with, or directing business to, any person.

 

7.3                               Without the prior written consent of or otherwise agreed in writing to by Vendor 1, and whether or not Vendor 1 is then a shareholder of the Purchaser or the Company and whether or not the Completion is consummated, each of the Purchaser and Vendor 2 shall not and shall cause its Affiliates and the Group Companies not to:

 

(a)                                 use in advertising, publicity, announcements, or otherwise, the name of Vendor 1 or any Affiliate of Vendor 1, 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”), “一淘” (Chinese equivalent for “eTao”), “聚划算” (Chinese equivalent for “Juhuasuan”), “阿里妈妈” (Chinese equivalent for “Alimama”), “阿里云” (Chinese equivalent for “Aliyun”), “云OS” (Chinese equivalent for “YunOS”), “万网” (Chinese brand for “HiChina”),  “口碑” (Chinese equivalent for “Koubei’), “虾米” (Chinese equivalent for “Xiami”), “蚂蚁金服” (Chinese brand for “Ant Financial”), “支付宝” (Chinese brand for “Alipay”), “小微金服” (Chinese equivalent for “Xiao Wei Jin Fu”), “1688”, “来往” (Chinese equivalent for “Laiwang”), “一达通” (Chinese equivalent for “OneTouch”), “友盟” (Chinese equivalent for “Umeng”), “酷盘” (Chinese equivalent for “Kanbox/ Kupan”), “天天动听” (Chinese equivalent for “TTPOD”), “优视” (Chinese equivalent for “UC / UCWeb”), “高德” (Chinese equivalent for “AutoNavi”), “Alibaba”, Taobao”, “Ali”, “AliExpress”, “Tao”, “Tmall”, “eTao”, “Juhuasuan”, “Alimama”, “Aliyun”, “YunOS”, “HiChina”, “Koubei”, “Xiami”, “Ant Financial”, “Alipay”, “Xiao Wei Jin Fu”, “Laiwang”, “OneTouch”, Umeng”, “Kanbox”, “Kupan”, “TTPOD”, “UCWeb”, “UC”, “AutoNavi”, the associated devices and logos of the above brands (including the smiling face device of Alibaba Group, cow device of Alibaba.com, ant device of Taobao, Tao doll device of Taobao, cat device of Tmall, Juxiaomeng device of Juhuasuan, ant device of Ant Financial, lion device of Alipay and Zhixiaobao device of Alipay), 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 the Purchaser or any of its Affiliates; or

 

15

 

(b)                                 represent, directly or indirectly, that any product or services provided by any Group Company, the Purchaser or Vendor 2 has been approved or endorsed by Vendor 1 or any of its Affiliates.

 

7.4                               Prior to the 18-month anniversary of the Completion Date, Vendor 1 shall not dispose of, nor enter into any agreement to dispose of or otherwise create any options, rights, interests or Encumbrances in respect of (the foregoing, each a “Transfer”), any of the Vendor 1 Consideration Shares without the prior written consent of the Purchaser (such consent not to be unreasonably withheld), provided, however, that the Purchaser’s consent shall not be required if the transferee of such Transfer shall have delivered to the Purchaser a written undertaking to (i) bear a pro rata portion (based on the number of Vendor 1 Consideration Shares so Transferred) of Vendor 1’s liability under this Agreement in respect of any breach by Vendor 1 of the Vendor Warranties, and (ii) be subject to the provisions of this clause 7.4 in respect of any subsequent Transfers by such transferee.

 

7.5                               The Purchaser undertakes to Vendor 1 to use all commercially reasonable endeavours to (i) ensure that the businesses and operations of each member of the Purchaser Group are conducted in compliance with applicable laws and regulations in all material respects, and (ii) remedy any material non-compliance with applicable laws and regulations in businesses and operations of any member of the Purchaser Group.

 

7.6                               Vendor 1 and the Purchaser undertakes to each other that they shall, as soon as practicable after the date hereof and in any event before the Completion Date, use commercially reasonable efforts to prepare and agree on a business plan of the Purchaser for the twelve months immediately following the Completion.

 

8                                         WARRANTIES

 

8.1                               Each of the Vendors represents, warrants and undertakes to the Purchaser that the Vendor Warranties are true and accurate as of the date hereof and as of the Completion Date (following completion of the Group Restructuring and with reference to the facts and circumstances then existing), in each case subject to any matter which is fairly disclosed in writing delivered to the Purchaser prior to the date hereof and any matter expressly provided for under the terms of this Agreement. Each of the Vendors acknowledges that the Purchaser has entered into this Agreement in reliance upon the Vendor Warranties.  Notwithstanding anything herein to the contrary, the representations, warranties and undertakings contained in clauses 1.1, 2, 4, 5 and 23.2 of the Vendor Warranties shall be deemed to have been made by each of the Vendors severally and not jointly, and in each case only with respect to such Vendor or its portion of the Sale Shares, as applicable.

 

8.2                               The Purchaser represents, warrants and undertakes to the Vendors that the Purchaser Warranties are true and accurate as of the date hereof and as of the Completion Date (with reference to the facts and circumstances then existing), in each case subject to any matter which is fairly disclosed in writing delivered to the Vendors no later than the date hereof and any matter expressly provided for under the terms of this Agreement. The Purchaser acknowledges that the

 

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Vendors have entered into this Agreement in reliance upon the Purchaser Warranties.

 

8.3                               Each of the Warranties shall be construed as a separate Warranty and (save as expressly provided to the contrary) shall not be limited or restricted by reference to or inference from the terms of any other Warranty or any other term of this Agreement.

 

8.4                               Each of the Vendors undertakes to notify the Purchaser in writing promptly if prior to Completion it becomes aware of any circumstance arising after the date of this Agreement which would cause any Vendor Warranty (if the Vendor Warranties were repeated with reference to the facts and circumstances then existing) to become untrue or inaccurate or misleading in any material respect.

 

8.5                               The Purchaser undertakes to notify the Vendors in writing promptly if prior to Completion it becomes aware of any circumstance arising after the date of this Agreement which would cause any Purchaser Warranty (if the Purchaser Warranties were repeated with reference to the facts and circumstances then existing) to become untrue or inaccurate or misleading in any material respect.

 

9                                         LIMITATIONS ON CLAIMS

 

The Warranties are subject to the matters set out in Schedule 2 (Limitations on Claims).

 

10                                  ENTIRE AGREEMENT

 

This Agreement constitutes the entire agreement and understanding among the Parties in connection with the sale and purchase of the Sale Shares. This Agreement supersedes all prior agreements or understandings in connection with the subject matter hereof which shall cease to have any further force or effect. No party has entered into this Agreement in reliance upon any representation, warranty or undertaking which is not set out or referred to in this Agreement.

 

11                                  VARIATION

 

11.1                        No variation of this Agreement (or of any of the legally binding agreements referred to in this Agreement) shall be valid unless it is in writing and signed by or on behalf of each of the Parties. The expression “variation” shall include any variation, supplement, deletion or replacement however effected.

 

11.2                        Unless expressly agreed, no variation shall constitute a general waiver of any provisions of this Agreement, nor shall it affect any rights, obligations or liabilities under or pursuant to this Agreement which have already accrued up to the date of variation, and the rights and obligations of the Parties under or pursuant to this Agreement shall remain in full force and effect, except and only to the extent that they are so varied.

 

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12                                  ASSIGNMENT

 

No Party shall be entitled to assign the benefit of any provision of this Agreement without the prior written approval of the other Parties.

 

13                                  ANNOUNCEMENTS

 

13.1                        Except as required by law or by any stock exchange or governmental or other regulatory or supervisory body or authority of competent jurisdiction to whose rules the Party making the announcement or disclosure is subject, whether or not having the force of law, no announcement or circular or disclosure in connection with the existence or subject matter of this Agreement shall be made or issued by or on behalf of any of the Vendors or any member of the Group or any of them without the prior written approval of the Purchaser (such approval not to be unreasonably withheld or delayed), or by or on behalf of the Purchaser without the prior written approval of the Vendors (such approval not to be unreasonably withheld or delayed).

 

13.2                        Where any announcement or disclosure is made in reliance on the exception in clause 13.1, the Party making the announcement or disclosure will so far as practicable consult with the other Parties in advance as to the form, content and timing of the announcement or disclosure.

 

14                                  FEES AND EXPENSES

 

14.1                        Each of the Parties shall bear its own fees and expenses incurred in connection with the negotiation, preparation and completion of this Agreement.

 

15                                  CONFIDENTIALITY

 

15.1                        Each Party undertakes that it shall (and shall procure that its Affiliates shall, and where relevant, undertakes to procure that its officers, employees, agents, investment managers and professional and other advisers and those of any Affiliate (together its “Authorised Persons”) shall) use its best endeavours to keep confidential at all times and not permit or cause the disclosure of any information (other than to its Authorised Persons) which it may have or acquire before or after the date of this Agreement relating to the provisions of, and negotiations leading to, this Agreement and the performance of the obligations thereunder (such information being “Confidential Information”). In performing its obligations under this sub-clause 15.1, each Party shall apply confidentiality standards and procedures at least as stringent as those it applies generally in relation to its own confidential information.

 

15.2                        Each Party shall use its reasonable endeavours to alert the other Party as soon as is reasonably practical after it becomes aware of any request from a third party for disclosure of any Confidential Information.

 

15.3                        The obligation of confidentiality under sub-clause 15.1 does not apply to:

 

(a)                                 information which at the date of disclosure is within the public domain (otherwise than as a result of a breach of this clause 15);

 

18

 

(b)                                 the disclosure of information to the extent required to be disclosed by law, regulation or any court, tribunal or regulatory authority; or

 

(c)                                  any announcement made in accordance with the terms of clause 13.

 

16                                  SEVERABILITY

 

If any provision of this Agreement is held to be invalid or unenforceable, then such provision shall (so far as it is invalid or unenforceable) be given no effect and shall be deemed not to be included in this Agreement but without invalidating any of the remaining provisions of this Agreement. The Parties shall then use all reasonable endeavours to replace the invalid or unenforceable provisions by a valid and enforceable substitute provision the effect of which is as close as possible to the intended effect of the invalid or unenforceable provision.

 

17                                  COUNTERPARTS

 

This Agreement may be executed in any number of counterparts and by the Parties on separate counterparts, each of which is an original but all of which together constitute one and the same instrument.

 

18                                  WAIVER

 

18.1                        No failure or delay by any Party in exercising any right or remedy provided by law under or pursuant to this Agreement shall impair such right or remedy or operate or be construed as a waiver or variation of it or preclude its exercise at any subsequent time and no single or partial exercise of any such right or remedy shall preclude any other or further exercise of it or the exercise of any other right or remedy.

 

18.2                        The rights and remedies of the Parties under or pursuant to this Agreement are cumulative, may be exercised as often as such Party considers appropriate and are in addition to its rights and remedies under general law.

 

19                                  FURTHER ASSURANCE

 

Each of the Parties agrees to perform (or procure the performance of) all further acts and things, and execute and deliver (or procure the execution and delivery of) such further documents, as may be required by law or as the other Parties may reasonably require, whether on or after Completion, to implement and/or give effect to this Agreement and the transaction contemplated by it and for the purpose of vesting in the relevant Parties the full benefit of the assets, rights and benefits to be transferred to such Parties under this Agreement.

 

20                                  NOTICES

 

20.1                        All notices, requests and other communications to any Party hereunder shall be in writing (including facsimile transmission and electronic mail (“e-mail”) transmission, so long as a receipt of such e-mail is requested and received) and shall be given,

 

if to Purchaser, to:

 

19

 

ALIBABA HEALTH INFORMATION TECHNOLOGY LIMITED

26/F Tower One, Times Square, 1 Matheson Street

Causeway Bay, Hong Kong

Attention: Company Secretary

Facsimile No.: +852 2587 1688

E-mail: legalnotice@alijk.com

 

if to Vendor 1, to:

 

ALI JK INVESTMENT HOLDING LIMITED

c/o Taobao China Holding Limited

26/F, Tower 1, Times Square, 1 Matheson Street

Causeway Bay, Hong Kong

Fax: +852-22155200

Attention: Timothy A. Steinert, Esq.

 

if to Vendor 2, to:

 

MR. CHEN WENXIN

Room 22B, Building 4, Anbolijing Apartments

No. 6012, Shennan Avenue, Futian District

Shenzhen City, Guangdong Province, PRC

 

or such other address or facsimile number as such Party may hereafter specify for the purpose by notice to the other parties hereto.  All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5 p.m. local time in the place of receipt and such day is a Business Day in the place of receipt, except with respect to any e-mail that is acknowledged as received on such day.  Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt.

 

20.2                        A Party may notify any other Party to this Agreement of a change to its name, relevant addressee, address, fax number or email address for the purposes of this clause 20, provided that, such notice shall only be effective on:

 

(a)                                 the date specified in the notice as the date on which the change is to take place, or

 

(b)                                 if no date is specified or the date specified is less than five Business Days after the date on which notice is given, the date following five Business Days after notice of any change has been given.

 

21                                  GOVERNING LAW AND JURISDICTION

 

21.1                        This Agreement and the relationship among the Parties shall be governed by, and interpreted in accordance with, the laws of Hong Kong.

 

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21.2                        Any dispute arising out of or in connection with this Agreement shall be settled by arbitration in Hong Kong under the Hong Kong International Arbitration Centre Administered Arbitration Rules in force when the notice of arbitration is submitted in accordance with these Rules. The dispute shall be resolved by one arbitrator appointed by the Parties. If the Parties cannot agree on one arbitrator, the dispute shall be resolved by three arbitrators, one appointed by the Purchaser, one appointed by the Vendors and the third appointed by the first two arbitrators. The arbitration proceedings shall be conducted in English. Any award is final and may be enforced in any court of competent jurisdiction. The award shall apportion the costs of arbitration. The Parties shall duly and punctually perform their obligations hereunder pending issuance of the arbitral award. Nothing contained herein shall preclude any Party from seeking provisional, interim or conservatory measures (including injunctive relief) from any court of competent jurisdiction. The Parties agree that any decision of the arbitral tribunal shall be final and binding on the Parties and shall be non-appealable to a court of law.

 

AS WITNESS this Agreement has been signed on behalf of the Parties the day and year first before written.

 

21

 

SIGNATURE PAGE

 

	
SIGNED for and on behalf of
    	
)
    	
 
    
	
ALIBABA HEALTH INFORMATION 
    	
)
    	
 
    
	
TECHNOLOGY LIMITED
    	
)
    	
 
    
	
by
    	
/s/ MENG Changan
    	
)
    	
 
    
	
Name: MENG Changan
    	
)
    	
 
    
	
Position: Chief Financial Officer
    	
 
    	
 
    
				

 

22

 

SIGNATURE PAGE

 

	
SIGNED for and on behalf of
    	
)
    	
 
    
	
ALI JK INVESTMENT HOLDING   LIMITED
    	
)
    	
 
    
	
By Timothy Alexander STEINERT as
    	
)
    	
 
    
	
authorized signatory
    	
)
    	
/s/ Timothy   Alexander STEINERT
    

 

23

 

SIGNATURE PAGE

 

	
SIGNED by
    	
)
    	
 
    
	
MR. WENXIN CHEN
    	
)
    	
 
    
	
 
    	
)
    	
/s/ MR. WENXIN CHEN
    

 

24EX-10.1

Ex. 10.1

NEITHER THE ISSUANCE AND SALE OF THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE
OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933 OR
(B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144, RULE 144A OR OTHER EXEMPTION UNDER SAID ACT.

THE TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS PROHIBITED EXCEPT IN ACCORDANCE WITH THE
SECURITIES ACT OF 1933, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION.

VIASPACE INC.

SENIOR SECURED CONVERTIBLE PROMISSORY NOTE

$28,000.00 June 25, 2015

FOR VALUE RECEIVED, VIASPACE INC., a Nevada corporation (“Company”), promises to pay to Kevin
Schewe (“Holder”), or its registered assigns, in lawful money of the United States of America the
principal sum of TWENTY EIGHT THOUSAND Dollars ($28,000.00), or such other amount as shall equal
the outstanding principal amount hereof, together with interest from the date of this Note on the
unpaid principal balance at a rate equal to six percent (6.0%) per annum, computed on the basis of
the actual number of days elapsed and a year of 365 days. Unless converted into Common Stock of
Company as set forth in Section 3 and/or Section 8 below, all unpaid principal, together with any
then unpaid and accrued interest, shall be due and payable on the earlier of (i) June 25, 2017 (the
“Maturity Date”), (ii) upon prepayment of all amounts due and payable under this Note in accordance
with the terms hereof, or (iii) when, upon or after the occurrence of an Event of Default (as
defined below), such amounts are declared due and payable by Holder or made automatically due and
payable in accordance with the terms hereof. Immediately prior to the issuance of this Note by
Company, Holder acknowledges that it has delivered to Company the sum of TWENTY EIGHT THOUSAND
Dollars ($28,000.00) reflecting the principal amount under this Note.

This Note is one of a series of notes (the “Notes”) having like tenor and effect (except for
variations necessary to express the name of the holder, the principal amount of each of the Notes
and the date on which each Note is funded) in an aggregate principal amount of up to $1,000,000
issued or to be issued by Company on or about the period from September 2012 to August 2017 (or
such other period as agreed upon by the Company and the Holder) pursuant to the terms of a Loan
Agreement, dated as of September 30, 2012, by and between Company and the Holder (or his designees)
of the Notes (the “Loan Agreement”). The Notes shall rank equally without preference or priority
of any kind over one another, and all payments on account of principal and interest with respect to
any of the Notes shall be applied ratably and proportionately on the outstanding Notes on the basis
of the principal amount of the outstanding indebtedness represented thereby.

The following is a statement of the rights of Holder and the conditions to which this Note is
subject, and to which Company by issuance of this Note, and Holder by the acceptance of this Note,
agree:

1. Definitions. As used in this Note, the following capitalized terms have the
following meanings:

(a) “Common Stock” shall mean the Company’s Common Stock, par value $0.001.

(b) “Collateral” has the meaning given in Section 4 hereof.

(c) “Company” includes the corporation initially executing this Note and any Person which
shall succeed to or assume the obligations of Company under this Note.

(d) “Conversion Notice” has the meaning given in Section 8(e) hereof.

(e) “Conversion Period” shall mean the period from the date of the Note and ending on the
Maturity Date.

(f) “Conversion Price” has the meaning given in Section 8(b) hereof

(g) “Event of Default” has the meaning given in Section 6 hereof.

(h) “Holder” shall mean the Person specified in the introductory paragraph of this Note or any
Person who shall at the time be the registered holder of this Note. “Holders” shall mean the
Persons collectively specified in the introductory paragraph of this Note and the other Notes or
any Persons who shall at the time be the registered holders of this Note and the other Notes.

(i) “Majority Holders” shall mean Holders holding a majority of the aggregate principal amount
of the Notes then outstanding.

(j) “Note” shall mean this Senior Secured Convertible Promissory Note.

(k) “Obligations” shall mean and include all loans, advances, debts, liabilities and
obligations owed by Company to Holder of every kind and description, now existing or hereafter
arising under or pursuant to the terms of this Note including, all interest, fees, charges,
expenses, attorneys’ fees and costs and accountants’ fees and costs chargeable to and payable by
Company hereunder.

(l) “Person” shall mean and include an individual, a partnership, a corporation (including a
business trust), a joint stock company, a limited liability company, an unincorporated association,
a joint venture or other entity or a governmental authority.

(m) “Prepayment Amount” has the meaning given in Section 3 hereof

(n) “Prepayment Notice” has the meaning given in Section 3 hereof.

(o) “Sale Transaction” shall mean a transaction or series of related transactions involving
(i) the consolidation or merger of Company with another Person, (ii) a sale of all or substantially
all of the assets of Company, (iii) a purchase, tender or exchange offer that is accepted by the
holders of more than the 50% of the outstanding shares of capital stock of Company, (iv) the
consummation of a stock purchase agreement or other business combination with another Person
whereby such other Person acquires more than the 50% of the outstanding capital stock of Company.

(p) “Securities Act” has the meaning given in Section 5(b) hereof.

(q) “Loan Agreement” has the meaning in the second introductory paragraph of this Note.

(r) “Successor Entity” has the meaning given in Section 10 hereof.

Capitalized term not otherwise defined shall have the meaning set forth in the Loan Agreement.

2. Interest. Unless converted into Common Stock of Company as set forth in Section 8
below, or unless prepaid or converted as set forth in Section 3 below, accrued interest on this
Note shall be payable on the Maturity Date.

3. Prepayment. During the Conversion Period, Company may, at any time and from time
to time, prepay all or any portion of the principal due under this Note, together with accrued
interest, without penalty. Company shall effect such prepayment by providing Holder twenty (20)
days written notice prior to the date of such prepayment (such notice, a “Prepayment Notice”)
indicating the amount of principal and accrued interest Company desires to prepay (the “Prepayment
Amount”). Notwithstanding the foregoing, Holder shall have 10 days following receipt of such
Prepayment Notice to notify Company in writing of its election to convert the Prepayment Amount
into shares of Common Stock, in which case such Prepayment Amount shall be converted into shares of
Common Stock in accordance with the conversion procedures set forth in Section 8(e) hereof
(provided that, with respect to conversions effected pursuant to this Section 3, any references to
the Conversion Amount in Section 8(e) shall refer to the Prepayment Amount). Should Holder elect
to convert the Prepayment Amount into shares of Common Stock, the number of shares of Common Stock
into which such Prepayment Amount will be converted shall be determined by dividing the Prepayment
Amount by the then applicable Conversion Price.

4. Security Interest. As security for the payment and performance of the Obligations
under this Note and the other Notes, Company hereby grants to the holder of this Note and of the
other Notes a first lien security interest in all of Company’s right, title and interest in, to and
under all of its personal property, wherever located and whether now existing or owned or hereafter
acquired or arising, including all accounts, chattel paper, commercial tort claims, deposit
accounts, documents, equipment (including all fixtures), general intangibles, intellectual property
(including all patents and patent applications, all copyrights and applications for copyright, all
state (including common law), federal and foreign trademarks, service marks and trade names, and
applications for registration of such trademarks, service marks and trade names, and all trade
secrets), instruments, inventory, investment property, letter-of-credit rights, money and all
products, proceeds and supporting obligations of any and all of the foregoing (collectively, the
“Collateral”). Notwithstanding the foregoing, the security interest granted herein shall not
extend to any property, rights or licenses to the extent the granting of a security interest
therein would be contrary to applicable law.

5. Representations and Warranties of Holder. Holder represents and warrants to Company
as follows:

(a) Binding Obligation. Holder has full legal capacity, power and authority to execute
and deliver this Note and to perform his obligations hereunder. This Note is a valid and binding
obligation of Holder, enforceable in accordance with its terms, except as limited by bankruptcy,
insolvency or other laws of general application relating to or affecting the enforcement of
creditors’ rights generally and general principles of equity.

(b) Securities Law Compliance. Holder has been advised that this Note has not been
registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state
securities laws and, therefore, cannot be resold unless they are registered under the Securities
Act and applicable state securities laws or unless an exemption from such registration requirements
is available. Holder is aware that Company is under no obligation to effect any such registration
with respect to this Note, or the Common Stock issuable or issued pursuant to the conversion of
this Note, or to file for or comply with any exemption from registration. Holder has not been
formed solely for the purpose of making this investment and is purchasing this Note for its own
account for investment, not as a nominee or agent, and not with a view to, or for resale in
connection with, the distribution thereof. Holder has such knowledge and experience in financial
and business matters that Holder is capable of evaluating the merits and risks of such investment,
is able to incur a complete loss of such investment and is able to bear the economic risk of such
investment for an indefinite period of time.

(c) Accredited Investor. Holder is an “accredited investor” within the meaning of SEC
Rule 501 of Regulation D of the Securities Act, as presently in effect.

(d) Restricted Securities. Holder understands that this Note is a “restricted
security” under the federal securities laws inasmuch as it is being acquired from Company in a
transaction not involving a public offering and that under such laws and applicable regulations
such Note may be resold without registration under the Securities Act only in certain limited
circumstances. In the absence of an effective registration statement covering the Note or an
available exemption from registration under the Securities Act, the Note must be held indefinitely.
Holder represents that it is familiar with SEC Rule 144, and understands the resale limitations
imposed thereby and by the Securities Act.

(e) Access to Information. Holder acknowledges that Company has given Holder access
to the corporate records and accounts of Company and to all information in its possession relating
to Company, has made its officers and representatives available for interview by Holder, and has
furnished Holder with all documents and other information required for Holder to make an informed
decision with respect to the purchase of this Note.

6. Events of Default. The occurrence of any of the following shall constitute an
“Event of Default” under this Note:

(a) Failure to Pay. Company shall fail to pay (i) when due any principal or interest
payment on the due date hereunder or (ii) any other payment required under the terms of this Note
on the date due, and (in either case) such payment shall not have been made within twenty (20) days
of Company’s receipt of Holder’s written notice to Company of such failure to pay;

(b) Failure to Perform. Company fails to perform any obligation under this Note and
does not cure that failure within twenty (20) days of Company’s receipt of Holder’s written notice
to Company of such failure to perform; or

(c) Voluntary Bankruptcy or Insolvency Proceedings. Company shall (i) apply for or
consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a
substantial part of its property, (ii) be unable, or admit in writing its inability, to pay its
debts generally as they mature, (iii) make a general assignment for the benefit of its or any of
its creditors, (iv) be dissolved or liquidated, (v) become insolvent (as such term may be defined
or interpreted under any applicable statute), (vi) commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such
relief or to the appointment of or taking possession of its property by any official in an
involuntary case or other proceeding commenced against it, or (vii) take any action for the purpose
of effecting any of the foregoing; or

(d) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment
of a receiver, trustee, liquidator or custodian of Company or of all or a substantial part of the
property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization
or other relief with respect to Company or the debts thereof under any bankruptcy, insolvency or
other similar law now or hereafter in effect shall be commenced and an order for relief entered or
such proceeding shall not be dismissed or discharged within thirty (30) days of commencement.

7. Rights of Holder upon Default. Upon the occurrence or existence of any Event of
Default (other than an Event of Default referred to in Sections 6(c) and 6(d)) and at any time
thereafter during the continuance of such Event of Default, the Majority Holders may, by written
notice to Company, declare all outstanding Obligations payable by Company under the Notes to be
immediately due and payable without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived. Upon the occurrence or existence of any Event of Default
described in Sections 6(c) and 6(d), immediately and without notice, all outstanding Obligations
payable by Company under the Notes shall automatically become immediately due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are hereby expressly
waived. In addition to the foregoing remedies, upon the occurrence or existence of any Event of
Default, Holder may exercise any other right power or remedy permitted to him by law, either by
suit in equity or by action at law, or both.

8. Conversion.

(a) Conversion. Holder shall have the right to convert, at any time during the
Conversion Period, all or any portion of the principal amount, together with any unpaid and accrued
interest, then outstanding under this Note into fully paid and non-assessable shares of Common
Stock at a conversion price per share equal to the Conversion Price (as defined below). The number
of shares of Common Stock into which such principal and interest then outstanding under this Note
will be converted shall be determined by dividing the amount of principal, together with all unpaid
and accrued interest, then outstanding under this Note to be converted (the “Conversion Amount”) by
the Conversion Price.

(b) Conversion Price. Subject to Section 8(c), the “Conversion Price” shall be equal
to 50% of the Average Trading Price as reported by the principal trading exchange on which the
Company’s Common Stock is traded for the twenty (20) trading days preceding the date of the Note.

(c) Adjustments to Conversion Price. The Conversion Price shall be subject to
proportional adjustments for stock splits, stock dividends, combinations, consolidations,
reclassifications and the like.

(d) Conversion Procedure. Before Holder shall be entitled to convert the Conversion
Amount then outstanding under this Note into shares of Common Stock, Holder shall surrender this
Note at the office of this Company, and shall give written notice (a form of which is attached to
this Note, the “Conversion Notice”) to Company at its principal corporate office, of the election
to convert the same and shall state therein the total Conversion Amount. Company shall not be
obligated to issue certificates evidencing the shares of Common Stock issuable upon such conversion
unless (i) Holder executes and delivers to Company the Conversion Notice for the converted shares
and (ii) this Note is delivered to Company. Company shall, as soon as practicable after such
delivery, issue and deliver certificates (bearing such legends as are required by applicable state
and federal securities laws in the opinion of counsel to Company and required by this Note and the
Loan Agreement), representing the number of fully paid and non-assessable shares of the Common
Stock into which the Conversion Amount will be converted in accordance with the provisions herein,
and a new promissory note having like tenor as this Note for the principal amount and interest then
outstanding under this Note that are not being so converted. Any conversion pursuant to this
Section 8 shall be deemed to have been made immediately prior to the close of business on the date
of Company’s receipt of the Conversion Notice, so that the rights of Holder under this Note to the
extent of the Conversion Amount shall cease at such time and Holder shall be treated for all
purposes as having become the record holder of such shares of Common Stock at such time.

(e) Fractional Shares; Effect of Conversion. No fractional shares shall be issued
upon conversion of this Note. In lieu of Company issuing any fractional shares to Holder upon the
conversion of this Note, Company shall pay to Holder an amount equal to the product obtained by
multiplying the Conversion Price by the fraction of a share not issued pursuant to the previous
sentence. Upon conversion of this Note in full and the payment of the amounts specified in this
Section 9(f), Company shall be forever released from all its obligations and liabilities under this
Note.

(f) Reservation of Stock Issuable Upon Conversion. Company shall at all times reserve
and keep available out of its authorized but unissued shares of Common Stock solely for the purpose
of effecting the conversion of this Note such number of its shares of Common Stock as shall from
time to time be sufficient to effect the conversion of this Note.

9. Reserved

10. Effect of Sale Transaction. Upon the occurrence of any Sale Transaction, the
Successor Entity (as defined below) shall succeed to, and be substituted for the Company (so that
from and after the date of such Sale Transaction, the provisions of this Note referring to the
“Company” shall refer instead to the Successor Entity), and may exercise every right and power of
the Company and shall assume all of the obligations of the Company under this Note with the same
effect as if such Successor Entity had been named as the Company herein. Upon consummation of the
Sale Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be
issued upon conversion of this Note at any time after the consummation of the Sale Transaction, in
lieu of the shares of the Common Stock purchasable upon the conversion of the Notes prior to such
Sale Transaction, such shares of common stock (or other securities, cash, assets or other property)
of the Successor Entity. The provisions of this Section shall apply similarly and equally to
successive Sale Transactions and shall be applied without regard to any limitations on the
conversion of this Note. As used in this Section 10, “Successor Entity” means the Person, which
may be the Company, formed by, resulting from or surviving any Sale Transaction, or the parent
entity of such Person, as applicable.

11. Successors and Assigns. Subject to the restrictions on transfer described in
Sections 12 and 13 below, the rights and obligations of Company and Holder of this Note shall be
binding upon and benefit the successors, assigns, heirs, administrators and transferees of the
parties.

12. Waiver and Amendment. Any term of this Note may be amended or waived only with
the written consent of Company and the Majority Holders; provided, however, that any such amendment
or modification which by its terms would not apply equally to all holders of the Notes shall not be
applicable to any holder whose rights under the Notes would be adversely affected by such amendment
or modification in a different manner than other holders thereof without such adversely affected
holder’s written consent.

13. Transfer of this Note or Securities Issuable on Conversion Hereof. With respect
to any offer, sale or other disposition of this Note or securities into which such Note may be
converted, Holder will give written notice to Company prior thereto, describing briefly the manner
thereof, together with a written opinion of Holder’s counsel, or other evidence if reasonably
satisfactory to Company, to the effect that such offer, sale or other distribution may be effected
without registration or qualification (under any federal or state law then in effect). Upon
receiving such written notice and reasonably satisfactory opinion, if so requested, or other
evidence, Company, as promptly as practicable, shall notify Holder that Holder may sell or
otherwise dispose of this Note or such securities, all in accordance with the terms of the notice
delivered to Company. If a determination has been made pursuant to this Section 12 that the
opinion of counsel for Holder, or other evidence, is not reasonably satisfactory to Company,
Company shall so notify Holder promptly after such determination has been made. Each Note thus
transferred and each certificate representing the securities thus transferred shall bear a legend
as to the applicable restrictions on transferability in order to ensure compliance with the
Securities Act, unless in the opinion of counsel for Company such legend is not required in order
to ensure compliance with the Securities Act. Company may issue stop transfer instructions to its
transfer agent in connection with such restrictions. Subject to the foregoing, transfers of this
Note shall be registered upon registration books maintained for such purpose by or on behalf of
Company. Prior to presentation of this Note for registration of transfer, Company shall treat the
registered Holder hereof as the owner and Holder of this Note for the purpose of receiving all
payments of principal and interest hereon and for all other purposes whatsoever, whether or not
this Note shall be overdue and Company shall not be affected by notice to the contrary.

14. Notices. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and will be deemed to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one business day after deposit with an overnight
courier service, in each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be to the respective addresses or facsimile
numbers of the parties as set forth in the Loan Agreement, or at such other address or facsimile
number as such parties shall have furnished in writing.

15. Usury. In the event any interest is paid on this Note which is deemed to be in
excess of the then legal maximum rate, then that portion of the interest payment representing an
amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied
against the principal of this Note.

16. Waivers. Company hereby waives notice of default, presentment or demand for
payment, protest or notice of nonpayment or dishonor and all other notices or demands relative to
this instrument.

17. Governing Law and Forum. This Note and all actions arising out of or in
connection with this Note shall be governed by and construed in accordance with the laws of the
State of Colorado, United States of America, without regard to the conflicts of law provisions of
the State of Colorado, or of any other state. All disputes or controversies relating to or arising
from this Note shall be adjudicated in the state and federal courts located in the state of
Colorado. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION
WITH RESPECT TO THIS NOTE AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER. The Convention on Contracts for the International Sale of Goods shall not apply to this
Note.

[Remainder of Page Intentionally Left Blank]

1

IN WITNESS WHEREOF, Company has caused this Note to be issued as of the date first written
above and Holder agrees to the terms and conditions of this Note.

VIASPACE INC.

By: /S/ CARL KUKKONEN

Name: Carl Kukkonen

Its: CEO

KEVIN SCHEWE

/S/ KEVIN SCHEWE

NOTICE OF CONVERSION

(To be executed by the Registered Holder in order to convert the Note)

The undersigned hereby elects to convert $28,000.00 of the principal and $ 0 of the
interest due on the Note issued by VIASPACE Inc. on June 25, 2015 into Shares of Common Stock of
VIASPACE Inc. (the “Borrower”) according to the conditions set forth in such Note, as of the date
written below.

Date of Conversion:       June 25, 2015      

Conversion Price:      $0.0024      

Shares To Be Delivered:      11,666,667      

Signature:      /S/ KEVIN L. SCHEWE—

Print Name:       Kevin L. Schewe—

Address:      400 Indiana St., Suite 220, Golden, CO 80401      

2

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