Document:

Exhibit 10.6
Certain information marked as [****] has been excluded from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
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MANUFACTURING AND SUPPLY AGREEMENT
This Manufacturing and Supply Agreement (“Agreement”) is entered into as of the 3rd  September 2020 (the “Effective Date”) between:
(i)          Glenmark Life Sciences Limited, a company incorporated under the laws of India and having its registered office at Plot No 170-172, Chandramouli Industrial Estate, Mohol Bazarpeth Solapur-413 213, MH, India and having its corporate office at Glenmark House, B. D. Sawant Marg, Chakala, Andheri East, Mumbai 400099, India, (“Glenmark”); and
(ii)         Napo Pharmaceuticals, Inc., a wholly-owned subsidiary of Jaguar Health, Inc. (“Jaguar”), a Delaware corporation with its registered office at 201 Mission Street, Suite 2375, San Francisco, California 94105, USA (Napo Pharmaceuticals, Inc. and Jaguar are collectively referred to as “Napo”).
 “Glenmark” and “Napo may be referred to herein from time to time individually as a “Party,” and collectively as the “Parties”.
RECITALS
WHEREAS, subject to the terms and conditions set forth in this Agreement, Napo wishes to have Glenmark manufacture and supply to Napo and its Affiliates Crofelemer Final (as defined below) for the continued marketing of Napo’s FDA-approved product, Mytesi®, and for any other Crofelemer-based product manufactured by NAPO or its Affiliates or any third party as appointed by NAPO for human use and/or veterinary use, and Napo has approached Glenmark for the manufacturing and fulfillment of Napo’s needs for Crofelemer Final; and
WHEREAS, Glenmark, itself or through one of its Affiliates, is willing to manufacture and supply Crofelemer Final for Napo from the Facility (as defined below), on the terms and conditions set forth below.
NOW THEREFORE, in consideration of the mutual promises and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1        “AAA” has the meaning set forth in Section 9.11C.
1.2        “Actual Cost” is defined in Appendix 1.2
1.3        “Adulterated” is defined in under Section 501 of the FD&C Act.
1.4        “Affiliate” of a Party shall mean any Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such Party, as the case may be, but for only so long as such control exists. As used in this Section 1.4, "control" shall mean (a) direct or indirect beneficial ownership of at least 50% (or such lesser percentage which is the maximum allowed to
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be owned by a foreign corporation in a particular jurisdiction) of the voting share capital or other equity interest in such Person or (b) the power to direct the management of such Person by contract or otherwise.
1.5        “Agreement” has the meaning set forth in the preamble hereto.
1.6        “Applicable Law” shall mean the applicable and then-effective provisions of any and all national, supranational, regional, state and local laws, treaties, statutes, rules, regulations, administrative codes, guidance, ordinances, judgments, decrees, directives, injunctions, orders, permits of or from any court, arbitrator, Regulatory Authority or Governmental Authority or other agency having jurisdiction over or related to subject matter of this Agreement.
1.7        [INTENTIONALLY LEFT BLANK]
1.8        “Business Day” means a day other than a Saturday or Sunday or any public holiday in San Francisco, California, USA or in Ankleshwar, Gujrat, India. For the avoidance of doubt, references in this Agreement to "days" shall mean calendar days.
1.9        “cGMPs” means the then-current good manufacturing practices required by the FDA, as set forth in the FD&C Act and in regulations promulgated at 21 C.F.R. Parts 210 and 211, and in other applicable FDA and other regulatory guidance and policy documents.
1.10      “Chronicity” means chronic failure to supply Crofelemer Final, in accordance with the terms of this Agreement, [****].
1.11      “Confidentiality Agreement” means the Confidentiality Agreement referenced in Section 6.1.
1.12      “Crofelemer-Based Product” means any therapeutic drug product developed, manufactured, marketed, or distributed by Napo or its Affiliates, for human or animal use, for the purposes of clinical study or commercial sale, containing Crofelemer as an active ingredient, including, for example, Mytesi.
1.13      “Crofelemer Final” means [****] of varying chain lengths with an average molecular weight of [****], as per the then current Specifications.
1.14      “CPL” means [****] that meets the Specification as mutually agreed by both Parties as per the Quality Agreement.
1.15      [INTENTIONALLY LEFT BLANK]
1.16      “DAP” means ”Delivered At Place” as defined in the Incoterms 2010, published by the International Chamber of Commerce, to provide standardization of shipping terms and the responsibilities of buyers and sellers.
1.17      “Delivery Readiness Date” has the meaning set forth in Section 2.3E.
1.18      “Dispute” has the meaning set forth in Section 9.11.
1.19      “Effective Date” has the meaning set forth in the preamble hereto.
1.20      “Ex-Works” means ex-works, as defined in the Incoterms 2010, published by the International Chamber of Commerce, to provide standardization of shipping terms and the responsibilities of buyers and sellers.
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1.21      “Facility” means [****].
1.22      “Force Majeure” has the meaning set forth in Section 9.4.
1.23      [INTENTIONALLY LEFT BLANK]
1.24      “FDA” shall mean the U.S. Food and Drug Administration or the equivalent Indian or other global regulatory authorities.
1.25      “FD&C Act” shall mean the United States Food, Drug and Cosmetic Act, as amended, and any regulations promulgated thereunder.
1.26      “Financial Year” means each successive period of twelve (12) consecutive calendar months commencing on April 1 and ending on March 31.
1.27      “Glenmark Indemnitees” has the meaning set forth in Section 7.2.
1.28      “Glenmark Intellectual Property” shall have the meaning set out in Section 3.6F(ii).
1.29      “Governmental Authority” shall mean any court, agency, department, authority or other instrumentality of any national, supranational state, county, city or other political subdivision.
1.30      “Indemnified Party” has the meaning set forth in Section 7.3A.
1.31      “Indemnifying Party” has the meaning set forth in Section 7.3A.
1.32      “Invention” means any discovery, improvement, process, formula, data, invention, know-how, trade secret, technique, procedure, device, or other intellectual property, whether or not patentable, including any enhancement in the manufacture, formulation, ingredients, preparation, presentation, means of delivery, dosage or packaging of Crofelemer Final or any Crofelemer-Based Product or any discovery or development of a new indication for Crofelemer Final or any Crofelemer-Based Product.
1.33      [INTENTIONALLY LEFT BLANK]
1.34      “Losses” has the meaning set forth in Section 7.1.
1.35      “Manufacture” or “Manufactured” or “Manufacturing”, as the context requires, shall mean to process, manufacture, package, label, hold and/or store, warehouse, quality control testing and quality control analysis, release of the Crofelemer Final by Glenmark or by any of its Affiliates on behalf of Glenmark.
1.36      “Manufacturing Instructions” means those documents describing (i) the processing of CPL into Crofelemer Final and (ii) the testing of the materials, intermediates, and products of such processing.
1.37      “Napo Indemnitees” has the meaning set forth in Section 7.1.
1.38      “Napo Intellectual Property” means intellectual property (except Glenmark Intellectual Property) including (i) the Manufacturing IP, all Transferred Information, Transferred Regulatory Documents, and Batch Records (as those terms are defined in the Transfer Agreement), (ii) all Inventions, occurring before or after the Effective Date, that were not included in the Transferred Information and (iii) any other patents, trade secrets, copyrights and other technical information and know-how (whether or not patentable), including without limitation methods, processes, practices, formulae, instructions, skills, techniques, procedures, technical assistance, designs, assembly procedures, specifications, test methods, analytical
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methods, and other material or information that: (i) relates to the development and/or Manufacturing of products containing Crofelemer Final, and (ii) is owned in whole or in part by Napo or its Affiliates.
1.39      “Napo-Supplied CPL” means the CPL supplied by Napo to Glenmark hereunder and used by Glenmark to Manufacture Crofelemer Final.
1.40      [INTENTIONALLY LEFT BLANK]
1.41      “Person” shall mean any individual, corporation, partnership, limited liability company, trust, governmental entity, or other legal entity of any nature whatsoever.
1.42      “Policies” means the insurance policies of both Parties described in Section 5.7C.
1.43      “Purchase Price” has the meaning set forth in Section 4.1A.
1.44      "Purchase Order" means with respect to Crofelemer Final, a written purchase order as set out in Section 2.3.
1.45      “Quality Agreement” means the Quality Agreement by and between Napo and Glenmark attached hereto as Exhibit 1.45 and incorporated herein by this reference, including any subsequent amendments or modifications that shall be mutually agreed to between the Parties from time to time (the “Quality Agreement”).
1.46      “Recall” means, with respect to any product containing Crofelemer Final, any voluntary or involuntary recalls, market withdrawals, whole shipment returns, stop sales, field corrections or other related actions.
1.47      “Record of Analysis” has the meaning set forth in the Quality Agreement.
1.48      “Regulatory Authority” shall mean any international, national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity (a) whose review and/or approval is necessary (i) for the manufacture, packaging, labeling, use, storage, import, export, distribution, promotion, marketing, offer for sale and sale of Crofelemer Final and/or (ii) for reviewing regulatory filings for Crofelemer Final; and/or (b) having authority to review and enforce cGMPs and/or other Applicable Laws relating to Crofelemer Final or the manufacture, development, commercialization, use or sale thereof.
1.49      “Regulatory Requirements” shall mean (a) all specifications, methods of Manufacture, and other information in one or more regulatory submissions related in any way to Crofelemer Final, and (b) all laws, rules, regulations, applicable regulatory guidance documents, and other requirements of any Regulatory Authority that govern Crofelemer Final, including customs requirements and delivery.
1.50      “Specifications” shall mean, with respect to Crofelemer Final, those Crofelemer Final-related specifications, as provided to Glenmark by Napo and with respect to CPL, those CPL­related specifications, as provided to Glenmark by Napo, all of which shall be set forth in the Quality Agreement.
1.51      “Term” has the meaning set forth in Section 8.1.
1.52      “Third Party” shall mean any Person other than Glenmark, Napo and their respective Affiliates.
1.53      “Transfer Agreement” means that certain Termination, Asset Transfer and Transition Agreement dated September 22, 2017 by and between Napo and Glenmark, a copy of which is attached hereto as
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Exhibit 1.53.  The Transfer Agreement remains a standalone agreement and is not to be merged into this Agreement nor are any of the Transfer Agreement’s obligations terminated by this Agreement.
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1.54      “U.S.” or “United States” means the United States of America.
ARTICLE 2
SUPPLY AND PURCHASE OF CROFELEMER FINAL
2.1       Manufacture and Supply of Crofelemer Final.    Subject to the terms of this Agreement, during the Term and any renewal term, Glenmark shall Manufacture Crofelemer Final in accordance with the Manufacturing Instructions as approved by Napo and contained in the Specifications, and supply Crofelemer Final exclusively to Napo and its Affiliates. In consideration of Glenmark providing exclusivity to NAPO pursuant to Section 3.1B, Napo shall purchase from Glenmark no less than 300 kgs. of Crofelemer Final per Financial Year (pro-rated for that portion of the Financial Year during which this Agreement is in effect) during the Term pursuant to, and in accordance with, Section 2.3 (the “Minimum Purchase Quantity”).  Subject to Section 8.3, if NAPO fails to purchase the Minimum Purchase Quantity in any Financial Year during the Term, (as such Minimum Purchase Quantity may be adjusted pursuant to Sections 2.1, 2.3G, 2.3H and 3.5D, NAPO shall pay an amount equal to a) the Purchase Price minus the cost of the CPL, multiplied by b) the adjusted Minimum Purchase Quantity for such Financial Year, as and by way of compensation to Glenmark for the exclusivity.
2.2        [INTENTIONALLY LEFT BLANK]
2.3        Purchase Orders for Crofelemer Final.
A.          Subject to Section 2.3B, in [****]during the Term, [****], Napo shall provide Glenmark with a binding Purchase Order for the quantity of Crofelemer Final to be purchased during each such Financial Year, each Purchase Order for Crofelemer Final shall specify:
i.     the quantity of Crofelemer Final to be ordered in the Purchase Order during the Financial Year for such Purchase Order (the quantity ordered shall be: aa) [****]; bb) in multiples of [****] (i.e., validated, milled and blended lots) of Crofelemer Final; and cc) no more than [****];
ii.    the Purchase Price for the quantity of Crofelemer Final being purchased pursuant to such Purchase Order, which, except as set forth in this Agreement, including, without limitation, Section 2.3G, Section 2.3H, Section 3.5D, and Section 3.6E, will be non-changeable during the life of the Purchase Order;
iii.   the required delivery date(s), the port of departure and terminal for Ex-works (the Facility) delivery as specified in Section 3.5 (Napo shall specify no more than four (4) delivery dates per year in a given Purchase Order); and
iv.   any invoicing information and/or special instructions.
Provided, however, Napo shall have no obligation to provide Glenmark with a Purchase Order for a given Financial Year until after Glenmark has provided Napo with the Purchase Price for such given Financial Year.  Further, if the Purchase Price [****], Glenmark will share the Actual Cost data with Napo and the Parties will use commercially reasonable efforts to reduce the Actual Costs.
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In the event of any contradiction in the terms of any Purchase Order and this Agreement, the Parties agree that the terms of this Agreement shall prevail, unless otherwise specifically agreed by the Parties in writing.
B.          Notwithstanding Section 2.3A, Napo shall be under no obligation to provide Glenmark with a new Purchase Order Pursuant to Section 2.3A until the Purchase Order for the immediately preceding Financial Year has been terminated either by agreement of the Parties or pursuant to Section 2.3G.
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C.          Glenmark shall submit each Purchase Order, within [****] of receipt thereof, to the appropriate Indian authority to obtain an export license for the full amount of Crofelemer Final stated on such Purchase Order.
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D.          Glenmark shall accept or reject, in writing within [****], each Purchase Order from Napo made in accordance with this Agreement and with Appendix 2.3D.  If Glenmark does not communicate acceptance or rejection of a Purchase Order within such fifteen [****], then the Purchase Order shall be deemed accepted. Once a Purchase Order is placed, Napo shall not amend or cancel such Purchase Order without Glenmark’s prior consent. Such consent shall not be unreasonably withheld.
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E.          Subject to the terms of this Agreement, Glenmark shall then be obligated to deliver to Napo or its Affiliates, by the required delivery dates and pursuant to the delivery instructions as are set forth in each Purchase Order.  Glenmark shall deliver not less than [****] nor more than [****] of the quantities specified in the Purchase Order applicable to each such delivery date.  Each such delivery must be in accordance with any special instructions and/or invoicing information stated in the Purchase Order. Collection of the Crofelemer Final from the Facility shall be made by Napo within a period of [****] from the date of written notification by Glenmark to Napo that the Crofelemer Final is ready for delivery (“Delivery Readiness Date”). In no event will the Delivery Readiness Date be prior to the delivery date specified in any given Purchase Order for such Crofelemer Final.  Except in case of Force Majeure event, in the event that Napo fails to collect the Crofelemer Final from the Facility on the Delivery Readiness Date and such failure to collect is for reasons directly attributable to Napo, Napo shall be liable to pay customary and reasonable warehousing charges starting from the Delivery Readiness Date and going until such time as the Crofelemer Final is collected by Napo. Glenmark shall have the right to store the Crofelemer Final with a third party or in its own warehouse if not collected within [****] from the Delivery Readiness Date.  Subject to the quantity variations set forth in this Section 2.3E, each failure of Glenmark to have a Delivery Readiness Date for the quantities of Crofelemer Final ordered pursuant to a Purchase Order within [****] of the required delivery date as set forth in the Purchase Order shall be regarded hereunder as a failure to deliver for purposes of establishing Chronicity; provided, however this will not excuse NAPO from taking delivery of the Crofelemer Final that is ready for delivery (subject to all other terms and conditions of this Agreement related to delivery and acceptance of Crofelemer Final by Napo).
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F.          Napo shall be obligated to purchase and take delivery of such quantities of Crofelemer Final as are set forth in each accepted Purchase Order, provided (i) such Crofelemer Final is delivered within the specified schedule as set forth therein and subject to the terms of Section 2.3E, and (ii) such fulfillment is in accordance with any special instructions or invoicing information stated in the Purchase Order.  Each time Glenmark fails to deliver the Crofelemer Final ordered pursuant to a Purchase Order in a timely fashion, such failure shall be used for purposes of establishing Chronicity as per Section 2.3E.
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G.          Each Purchase Order shall terminate as of the later of the date of the last shipment therein or March 31 of the Financial Year for which such Purchase Order was submitted to and accepted by Glenmark pursuant to the terms stated in this Section 2.3. Napo will have no further obligation to purchase any Crofelemer Final on a given Purchase Order once the Purchase Order has terminated.
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H.          Notwithstanding anything to the contrary, unless the reasons are attributable to Napo, Napo shall not be required to pay for any Crofelemer Final pursuant to a given Purchase Order (i) for which Napo has not received a timely Delivery Readiness Notice, (ii) that has not been physically delivered to Napo by Glenmark, or (iii) acceptance was rejected by Napo pursuant to Section 3.5 and not replaced in a timely manner by Glenmark.  The quantity of Crofelemer Final in a given Purchase Order shall be reduced by the quantity of Crofelemer Final that Glenmark is unable to deliver to Napo for the reasons set forth in this Section 2.3H.
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2.4        Napo-Supplied CPL
A.          By the 5th day of the first month of every calendar quarter, Glenmark will send to Napo a written statement of Glenmark’s then-current inventory of Napo-Supplied CPL, which statement will include, among other items, (i) the number of kilograms available for processing as of that date, (ii) the number of kilograms delivered to Glenmark during the immediately preceding quarter and (iii) the number of kilograms consumed in processing during the immediately preceding quarter.
B.          Absent an actual Force Majeure event, Napo, in accordance with each binding Purchase Order for Crofelemer Final, will use commercially reasonable efforts to provide sufficient quantities of Napo-Supplied CPL in a timely manner to allow Glenmark to maintain an inventory of Napo-Supplied CPL. Napo will provide Napo-Supplied CPL (upon written notice to Glenmark of the shipment readiness) which is collectively sufficient to [****] of the Crofelemer Final indicated in any Napo Purchase Order for any given quarter. Glenmark shall use the Napo-Supplied CPL only for purposes of Manufacturing Crofelemer Final for Napo and its Affiliates, and for no other purpose.  Glenmark cannot use Napo-Supplied CPL to produce Crofelemer Final or Crofelemer-Based Product for its own use or for sale to a third-party.  This Section 2.4B shall survive the expiration or early termination of this Agreement.
C.          Napo shall submit an invoice for each shipment of Napo-Supplied CPL according to the terms defined in Appendix 2.4C.
D.          Napo will ship DAP (port of arrival, India) (Incoterms 2010) the Napo-Supplied CPL to Glenmark. Thus, Glenmark’s obligations with respect to Napo-Supplied CPL shall be (i) responsibility for risk of loss upon Napo-Supplied CPL being customs cleared at port of entry into India, (ii)  taking delivery of the Napo-Supplied CPL upon arrival at the port of entry into India, (iii) paying import taxes and duties applied to each Napo-Supplied CPL shipment, (iv) fulfilling all other steps necessary to ensure successful customs clearance and (v) paying shipment costs for Napo-Supplied CPL from the port of entry to Glenmark’s Facility. Ownership title and risk of loss for the Napo-Supplied CPL will transfer to Glenmark upon customs clearance at the port of entry in India and Glenmark shall retain ownership of the Napo-Supplied CPL through all processing steps to Crofelemer Final.
E.          Notwithstanding any other provisions hereinabove, Glenmark shall have no liability hereunder to the extent any such liability is attributable to failure of Napo-Supplied CPL to conform to applicable Specifications upon testing (per mutually agreed and accepted test methods) at the Facility.  Glenmark shall test the Napo-Supplied CPL as soon as practicable and will notify Napo within five (5) Business Days of any Napo-Supplied CPL that does not meet the release Specifications set forth in the Quality Agreement.
F.          In the event Napo fails to deliver Napo-Supplied CPL, which meets the release Specifications in the Quality Agreement, and in the quantities necessary for Glenmark to Manufacture Crofelemer Final in accordance with any given Purchase Order, such failure shall excuse Glenmark's obligation to supply the quantity of Crofelemer Final specified in that Purchase Order, within the timeframe requested.  However, once a sufficient amount of Napo-Supplied CPL has been provided to and accepted (having met release Specifications) by Glenmark, Glenmark will use commercially reasonable efforts to supply Napo with the previously Ordered quantity of Crofelemer Final.
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2.5        Manufacturing IP Licensed to Glenmark; Exclusivity. This Agreement is a contract manufacturing and supply agreement only.  Nothing contained in this Agreement shall be interpreted or construed, in any way, to prohibit Napo from purchasing Crofelemer Final from other pharmaceutical manufacturers.  Glenmark hereby represents that [****]. [****][****].
ARTICLE 3
MANUFACTURING
3.1        Manufacture of Crofelemer Final.
A.          Instructions and Requirements.  Glenmark shall Manufacture Crofelemer Final according to the applicable Manufacturing Instructions, to meet the applicable Specifications, and in accordance with both applicable Regulatory Requirements and Applicable Laws, as then in effect. Amendments to the Specifications will be handled in accordance with Section 3.6.
B.          Facility. As of the Effective Date, Glenmark shall use Building [****] at the Facility exclusively for the Manufacture of Crofelemer Final for Napo.  The Parties will work together to plan an orderly expansion of the Facility in order to increase manufacturing capacity to meet Napo’s needs on a timely basis.  The Parties agree to execute an addendum to this Agreement at a future date, for the purposes of capacity expansion at the Facility, on the terms and conditions as may be mutually agreed upon between the Parties.  Glenmark shall not unreasonably withhold its consent for the Manufacturing capacity expansion described in this Section 3.1B. The Parties will work out the terms of the cost allocation for such expansion as part of a separate business development agreement.
3.2        Quality Agreement. Not later than three (3) months after the Effective Date of this Agreement, Glenmark and Napo shall either a) amend the Quality Agreement or b) enter into a new reasonable and customary quality agreement which sets forth the quality assurance arrangements, responsibilities and procedures with respect to the Manufacturing of Crofelemer Final, quality testing, the conducting of timely investigations and the resolution of any issues that may arise from time to time, with respect to Crofelemer Final.  Attached hereto as Exhibit 1.45 is the Quality Agreement that shall be in place until such revised Quality Agreement has been negotiated and executed by the Parties.  A material violation of the Quality Agreement will be considered an event for purposes of Chronicity.
3.3        Quality Control. Glenmark shall be responsible for all quality control analyses of Crofelemer Final and all Crofelemer Final shall be released by Glenmark, in each case in accordance with the terms of the Quality Agreement.
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3.4        Regulatory Inspections. Glenmark shall cooperate with any inspection of its facilities by the FDA relating to this Agreement and, if applicable, by any other Regulatory Authority that has any jurisdiction over the Manufacturing of Crofelemer Final.
3.5        Delivery and Acceptance.
A.          Delivery. Subject to the terms and conditions of this Agreement, Glenmark shall deliver all Crofelemer Final ordered by Napo within the timeframe stated in the applicable Purchase Order in accordance with Section 2.3 and Appendix 2.3D. All Crofelemer Final shall be labeled by Glenmark and packed for shipping in accordance with packing instructions provided by Napo. In a situation where Glenmark delivers less, or in excess of the quantity ordered by Napo, invoices shall be based on the actual delivered quantity.
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B.          Napo’s Responsibility. Glenmark shall ship Ex-works (Glenmark Facility) (Incoterms 2010) the Crofelemer Final from India specified in the applicable Purchase Order. It is the Parties’ intention that the risk of loss for each shipment of Crofelemer Final transfer from Glenmark to Napo at the Facility. Thus, Napo’s obligations with respect to each shipment of Crofelemer Final shall be (i) to assume any risk of loss for each shipment of Crofelemer Final upon pick up of Crofelemer Final from the Facility in India, (ii) to purchase any excess insurance desired by Napo to cover each shipment, (iii) taking delivery of the Crofelemer Final from Glenmark at the Facility, (iv) paying import taxes and duties applied to each Crofelemer Final shipment, and (v) paying shipment costs for Crofelemer Final from the Facility. Ownership/title to the Crofelemer Final shall not pass to Napo until Napo or Napo’s shipping agent has taken physical possession thereof.
C.          Record of Analysis; Batch Record Certificate. Each delivery of Crofelemer Final, shall be accompanied by a (i) Record of Analysis; (ii) Batch Record Certificate, (iii) such other documents as may be required pursuant to the Quality Agreement and (iv) all documentation necessary for the sale and/or import of Crofelemer Final.
D.          Acceptance upon Delivery. Napo shall be under no obligation to accept any shipment of Crofelemer Final for which Glenmark has not provided a Record of Analysis or a Batch Record Certificate, as applicable. The receiving agent at the contract formulation facility (the consignee) shall inspect all shipments of Crofelemer Final promptly upon receipt, and Napo may reject any shipment of Crofelemer Final which is nonconforming to the Specifications for Crofelemer Final. To reject delivery of a shipment of Crofelemer Final, Napo must give written notice to Glenmark of Napo's rejection of any delivery within [****] after receipt of such delivery. If no such notice of rejection is received, Napo shall be deemed to have accepted such Crofelemer Final on the [****] after delivery, subject to Section 3.7C.
(i)          Glenmark shall use commercially reasonable efforts to replace such rejected Crofelemer Final with Crofelemer Final conforming to the Specifications. The replacement Crofelemer Final and the delivery of such replacement Crofelemer Final shall be at no additional cost to Napo or its Affiliates.
(ii)         Napo will, at Napo’s sole discretion, either (a) dispose of the rejected Crofelemer Final at Napo’s expense and will provide Glenmark with a copy of the certificate of destruction, or (b) use such rejected Crofelemer Final for research and development purposes.
If the Parties fail to agree whether Crofelemer Final conforms with the terms of this Agreement, including without limitation to the Quality Agreement, or are defective or not such matter shall be finally settled by an independent testing laboratory as agreed upon by the Parties and the decision of the independent testing laboratory shall be final and binding on the Parties. The said independent testing laboratory shall act as an expert and not as an arbitrator and the fees of the independent testing laboratory shall be borne by the losing Party.
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Glenmark shall be responsible to pay Napo for the cost of any CPL associated with Crofelemer Final that has been rejected pursuant to this Section 3.5D.
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For the avoidance of doubt, this shall constitute Napo’s sole remedy for the late delivery of Crofelemer Final due to the Crofelemer Final not being accepted by Napo pursuant to this Section 3.5 and all other rights or remedies available under statute, common law or otherwise are hereby expressly excluded by the Parties.  Notwithstanding the foregoing, if any such delivery is rejected due to a non-acceptance by Napo (pursuant to this Section 3.5) and such non-acceptance is caused by any event solely due to any act or omission of Glenmark and Glenmark cannot replace such Crofelemer Final before the end of the Financial Year, such quantity of Crofelemer Final will be used to reduce the quantity of Crofelemer Final that Napo is obligated to purchase under the Purchase Order for the Financial Year related to such delivery and if not promptly remediated by the end of the Financial Year shall be considered an event for purposes of Chronicity.
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3.6        Change in Specifications; Other Modifications.
A.          No Changes to Specifications By Glenmark. Glenmark shall not, in any respect, amend, modify or supplement the Specifications, the Manufacturing process, the location of the Manufacturing, or the test methods for Crofelemer Final or any Napo-Supplied CPL or sources of CPL used in connection with Manufacturing Crofelemer Final without the prior written consent of Napo
B.          Changes in Specifications, Process, or Test Methods. If an amendment to the Specifications, the Manufacturing process, or the test methods for Crofelemer Final is (i) required by any Regulatory Authority in writing, or (ii) requested by Napo, Napo promptly shall provide Glenmark with appropriate documentation relating to any such changes to the Specifications or Manufacturing process to the extent that such changes affect Glenmark's Manufacturing and release of Crofelemer Final hereunder. If the requested changes can be made without modification to the existing process capability, Glenmark shall implement such changes in accordance with the change control procedures applicable under cGMPs and per agreement between the Parties regarding the timing of the changes. The Parties will meet and confer on whether or not the requested changes to the Specifications can be made without modification to the existing process capability. If the requested changes can be made without modification to the existing process capability, then Glenmark will make such changes without any additional cost to Napo. If the Parties determine that the requested changes cannot be made without modification to the existing process capability, then Glenmark will advise Napo of the cost to Napo to effect such changes; and, the Parties will decide whether or not to proceed with the changes to the Specifications, test methods, or Manufacturing process unless those changes are mandated by a Regulatory Authority.
C.          Costs to be Absorbed By Napo. Except as set forth in Section 3.6D, Napo shall be solely responsible for any additional costs incurred to implement changes to the Specifications or the Manufacturing process as required by Napo or by any Regulatory Authority, including costs of capital equipment and process upgrades, obsolescence (e.g., disposal, disposition or removal) of non-conforming Napo-Supplied CPL and any Crofelemer Final inventory or any intermediate stage.
D.          Costs to be Absorbed By Glenmark. Glenmark shall be solely responsible for any and all increased costs or expenses incurred by it as a result of any amendment of the Specifications or the Manufacturing process for Crofelemer Final (aa) requested by Glenmark and consented to by Napo or (bb) required by Napo as a result of Glenmark's failure to Manufacture Crofelemer Final in conformity with the Specifications; provided however, that such failure is not as a result of Napo-Supplied CPL or change in the Specifications and/or test methods of either the Napo-Supplied CPL or Crofelemer Final or any other intermediate stage.
E.          Cost Reductions. In the event of a reduction in Actual Costs or a change to the Specifications, Manufacturing process, or test methods results in a reduction in Actual Costs, the Parties shall meet to determine the revised Actual Cost such that [****] of the improvement is reflected in a reduced Purchase Price to Napo.  The lowered Purchase Price will be made available to Napo starting in the first full month following the month of the implementation of the cost saving changes to the Manufacturing process or test methods, if any.  The Parties agree to amend the then outstanding Purchase Order to reflect such new Purchase Price for the remainder of the Financial Year for which the Purchase Order is open.
F.          Intellectual Property.
(i)          Napo shall own all right, title and interest in and to the Specifications and the Napo Intellectual Property. As stated in Section 2.5 above and in the Transfer Agreement, Glenmark shall have the right to use, during the Term, the Specifications and the Manufacturing IP for the limited purposes set forth herein. Glenmark shall promptly disclose
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in writing to Napo the discovery, development, making, conception or reduction to practice of any Invention arising out of use of the Specifications and the Manufacturing IP and shall and does hereby assign to Napo any and all right, title or interest Glenmark may have in, or to, any such Invention. Glenmark shall execute any documents and perform such other acts as may be reasonably requested by Napo in order to secure, perfect, confirm, exercise or enforce Napo’s foregoing rights.
(ii)         If Glenmark uses any scientific methods, techniques, trade secrets and/or know-how that are not Napo Intellectual Property (“Glenmark Intellectual Property”), in the process of Manufacturing Crofelemer Final, then Glenmark does, hereby, grant to Napo during the Term of this Agreement a non-exclusive, worldwide, royalty-free,  and sub-licensable license to such scientific methods, techniques, trade secrets and/or know-how.
(iii)         Without limiting the provisions of the Confidentiality Agreement, Glenmark shall use the Specifications and Napo Intellectual Property solely for purposes of performing its obligations hereunder.  Glenmark shall not share with or sublicense to any of Glenmark’s Affiliates any of the Specifications or Napo Intellectual Property.
(iv)        Napo shall have sole discretion and responsibility to prepare, file, prosecute, and maintain all patent applications and patents covering Inventions, and shall have the sole discretion and responsibility to enforce any such patent. Napo shall also be responsible for any related interference and opposition proceedings.
G.  This Section 3.6 shall survive the termination of this Agreement.
3.7        Failure or Inability to Supply Crofelemer Final
A.          Shortages. In the event that, absent an actual Force Majeure event and provided that there is timely supply of Napo-Supplied CPL in accordance with Specifications and accepted by Glenmark, if Glenmark, shall have reason to believe that it will be unable to supply Napo with the full quantity of Crofelemer Final actually ordered by Napo under a Purchase Order in a timely manner and in conformity with the warranties set forth in Section 5.2, Glenmark shall promptly notify Napo thereof.  Thus, promptly upon receiving such notice, the Parties shall meet to discuss how Napo shall obtain such full quantity of conforming Crofelemer Final.  Compliance by Glenmark with this Section 3.7A shall not relieve Glenmark of any other obligation or liability under this Agreement, including any obligation or liability under Sections 3.7B or 3.7C. Unless promptly remediated by the Parties to Napo’s satisfaction, any such shortage [****]shall be regarded hereunder as a failure to supply for purposes of establishing Chronicity.
B.          Delays. Absent an actual Force Majeure event and provided there is timely supply of Napo-Supplied CPL in accordance with Specifications and accepted by Glenmark, or any shortage as set out in 3.7A above, if Glenmark shall have reason to believe that it will be unable to supply Napo, in a timely manner, with the Crofelemer Final ordered by Napo, Glenmark shall promptly notify Napo of the delay. If the anticipated delay is to be [****] or more after the specified delivery date in a given Purchase Order, then Napo shall accept late delivery of the Crofelemer Final specified in the original Purchase Order. Promptly upon Napo receiving such notice (in no event later than [****], the Parties shall meet to discuss how to mitigate the delay in supply of Crofelemer Final. Unless there is a plan to remediate the delay by the Parties to Napo’s satisfaction within 30 days of such notice to Napo, any such delay shall be regarded hereunder as a failure to supply for purposes of establishing Chronicity.
C.          Latent Defects. In the event that Napo discovers a non-conformity that could not reasonably have been detected by a customary inspection (including chemical analysis of the Crofelemer Final) upon delivery, but in no event more than [****] after delivery of Crofelemer Final by Glenmark (“Latent Defect”), Napo shall give Glenmark notice thereof (including a sample of such
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Crofelemer Final, if applicable) within [****] of such discovery. If Glenmark accepts NAPO’s claim, Glenmark shall, as promptly as possible, supply Napo with a conforming quantity of Crofelemer Final at Glenmark’s expense to replace the Crofelemer Final that is the subject of the Latent Defect. Glenmark shall be responsible to pay Napo for the cost of any CPL associated with Crofelemer Final that has been agreed by Glenmark to have a Latent Defect.  Latent Defects shall not include any claim in relation to Crofelemer Final specifications.
If the Parties fail to agree whether Crofelemer Final conforms with the terms of this Agreement, including without limitation to the Quality Agreement, or are defective or not and such matter can be determined by an independent testing laboratory, then such matter shall be settled by an independent testing laboratory as agreed upon by the Parties and the decision of the independent testing laboratory shall be final and binding on the Parties. The said independent testing laboratory shall act as expert and not as arbitrator and the fees of the independent testing laboratory shall be borne by the losing Party. If the independent laboratory decides in favour of Glenmark, Glenmark shall have no liability whatsoever towards the claim of Latent Defect by NAPO however if decided against Glenmark, Glenmark shall do the needful as stated above as if Glenmark has agreed with the claim of NAPO.
3.8        Stability. Glenmark shall, during the Term, take such quantities of quality control stability samples, from batches of Crofelemer Final intended for delivery to Napo, as set forth in the Quality Agreement , and as are required by cGMPs and applicable Regulatory Requirements to establish appropriate stability studies as described in the most recent version of the ICH guidelines: Stability Testing Of New Drug Substances And Products, in each case to support the claimed expiration dating for the Crofelemer Final delivered to Napo.
3.9        Legislative Changes. Each Party shall immediately advise the other if it becomes aware of any legislation or Applicable Laws (including, all health and safety, environmental, custom, trade, tariff or other import laws, approvals process or vigilance reporting requirements) which is in effect or which may come into effect after the Effective Date and which affects the obligations of the Parties hereunder.
ARTICLE 4
PURCHASE PRICE AND PAYMENT
4.1        Purchase Price for Crofelemer
A.          Glenmark shall Manufacture and supply Crofelemer Final at the purchase price for each Purchase Order, as specified in Appendix 1.43, (“Purchase Price”).  Along with Glenmark’s acceptance of each Purchase Order pursuant to Section 2.3, Glenmark shall also confirm the accuracy of the Purchase Price stated on such Purchase Order.
B.          The Purchase Price is derived from the Actual Cost, which shall be calculated [****] after the end of each [****] during the Term; at which point, Glenmark shall provide Napo in writing with the Purchase Price for the new Financial Year.  In the event of any increase in the Purchase Price, Glenmark shall inform Napo after calculation of the Purchase Price for the next Financial Year. Further, upon receipt of request from Napo, Glenmark will provide the reasons causing an increase in the Purchase Price.
C.          Except as set forth in 3.6E, the Purchase Price for each Purchase Order is guaranteed for the life of the Purchase Order.
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4.2        Payment Terms for Purchases.
A.          Invoicing and Payment for Crofelemer Final. For each delivery of Crofelemer Final, Glenmark shall send a commercial invoice to Napo as soon as practicable after the product has been ordered and Napo shall pay the invoice on or no later than the Delivery Readiness Date.  Upon receipt of full payment from Napo, Glenmark will be obligated to deliver the Crofelemer Final to Napo or its Affiliates under the respective Purchase Order subject to the terms of Section 2.3E hereof. In the event of any delay in payment by Napo beyond the Delivery Readiness Date, Glenmark shall be entitled to withhold delivery of such Crofelemer Final as set forth in Section 2.3E and [****].
B.          Invoicing, Payment and Annual Reconciliation for CPL.  [****]
C.          Currency. All references to "Dollars" or ''$" shall mean the legal currency of the United States. All payments to be made under this Agreement shall be made in US Dollars, unless expressly specified to the contrary herein.
D.          Taxes. Napo shall be responsible hereunder for payments of all applicable taxes on the payment of invoice amount to Glenmark and shall pay any and all taxes lawfully imposed by any government authority on the purchase of Crofelemer Final. The Purchase Price is exclusive of amounts in respect of value added tax and/or goods and services tax. Napo shall, on receipt of valid value added tax invoice from Glenmark, pay to Glenmark such additional amounts in respect of value added tax as are chargeable on a supply of Crofelemer Final.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1        Mutual Representations and Warranties. Each Party hereby represents and warrants to the other Party as of the Effective Date as follows:
A.          The execution, delivery, and performance of this Agreement have been duly authorized by all necessary corporate actions;
B.          This Agreement constitutes a valid obligation of such Party and is binding and enforceable against such Party in accordance with the terms hereof; and
C.          Such Party has the corporate power and authority and the legal right to enter into this Agreement and to perform its obligations hereunder, and there is no contractual restriction or obligation binding on such Party which would be materially contravened by execution and delivery of this Agreement or by the performance or observance of its terms.
5.2        Crofelemer Final Warranties. Glenmark represents and warrants:
A.          that the Crofelemer Final supplied to Napo:
(i) complies with the Specifications in the Quality Agreement and the then-current Manufacturing Instructions;
(ii)      has been Manufactured at the Facility and those portions of the Facility used in the Manufacture of Crofelemer Final are in compliance with all Applicable Laws at the time of such Manufacture (including, without limitation, applicable cGMPs and inspection requirements of FDA and other Regulatory Authorities);
(iii)     has been packaged, labeled and stored in compliance with the Specifications;
(iv)     has not been Adulterated at the time of shipment by Glenmark from the Facility; and
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(v)      assuming payment in full by Napo, is free and clear of all security interests, liens         and other encumbrances of any kind or character.
B.          that, with respect to the Facility and the Manufacturing
(i)  neither Glenmark nor any of its Affiliates has been debarred or is subject to debarment pursuant to Section 306 of the FD&C Act; and
(ii) neither Glenmark nor any of its Affiliates will use in any capacity, in connection with the services to be performed under this Agreement, any Person who has been debarred pursuant to Section 306 of the FD&C Act or any similar law in India, or who is the subject of a conviction described in such section. Glenmark shall inform Napo in writing immediately if it or, to its knowledge, any Person who is performing services hereunder is debarred or is the subject of a conviction described in Section 306 of the FD&C Act or any similar law in India.
5.3        Napo represents and warrants that:
(i)       It shall at all times commercialize, handle and store Crofelemer Final in compliance with all Applicable Laws;
(ii)      The Manufacturing of Crofelemer Final by Glenmark as per the terms of this Agreement shall not violate Applicable Law or any rights of third parties;
(iii)     The Intellectual Property rights licensed to Glenmark under this Agreement do not infringe any third party intellectual property rights;
(iv)     The CPL supplied to Glenmark shall comply with the Specifications and it’s use by Glenmark shall not infringe Applicable Law or any rights of the third parties; and
(v)      Except as set forth in Section 2.3C, Napo has obtained and ensures to maintain any and all government authorization, consent, approval, license, exemption of or filing or registration with any country or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, under any Applicable Laws currently in effect, is or will be necessary for, or in connection with, the transactions contemplated by this Agreement or any other agreement or instrument executed in connection herewith, or for the performance by it of its obligations under this Agreement and such other agreements.
5.4            Both Parties Represent and Warrant.  The Parties shall conduct their repective activities in connection with this Agreement in accordance with Applicable Law. Each Party further acknowledges and agrees that they and their respective Affiliates, sub-licensees and agents may be subject to anti-corruption laws including the US Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010 and any other Applicable Laws and Regulations for the prevention of fraud, corruption, racketeering, money laundering and terrorism. Such laws and regulations generally prohibit the direct, or indirect, offering, promising, or giving of any advantage, or thing of value, to a person (including private individuals or government employee or official) for the purposes of obtaining or retaining business, or to intend to induce, or induce, any improper act or decision. Each Party agrees to refrain from, and to use all reasonable endeavors to procure that their respective Affiliates and agents refrain from, any activity in the performance of their obligations and duties under this Agreement that would constitute a violation of applicable anti-corruption laws. Each Party has and will maintain throughout the duration of this Agreement policies and procedures to ensure compliance with applicable anti-corruption laws (which must constitute "adequate procedures" for the purposes of the UK Bribery Act 2010), and enforce their policies and procedures where appropriate. Neither Party nor, to its respective knowledge, any of its directors, officers, agents, employees or Affiliates is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of the U.S. Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the "FCPA"), including, without limitation, making use of the mails or any means or instrumentality of U.S. interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of 
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value to any "foreign official" (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA; and Napo and its Affiliates have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith;
5.5        Limitation on Liability.
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TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, NEITHER PARTY NOR ANY OF THEIR RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS SHALL HAVE ANY LIABILITY OF ANY TYPE (INCLUDING, BUT NOT LIMITED TO, CLAIMS IN CONTRACT, NEGLIGENCE AND TORT LIABILITY) FOR ANY SPECIAL, INCIDENTAL, INDIRECT, PUNITIVE OR CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO, THE LOSS OF OPPORTUNITY, LOSS OF USE OR LOSS OF REVENUE OR PROFIT IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, EVEN IF SUCH DAMAGES MAY HAVE BEEN FORESEEABLE. THE FOREGOING SHALL NOT LIMIT EITHER PARTY’S INDEMNIFICATION OBLIGATIONS UNDER ARTICLE 7 NOR SHALL IT APPLY TO DAMAGES ARISING FROM EITHER PARTY’S BREACH OF ITS OBLIGATIONS UNDER ARTICLE 6. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, THE TOTAL LIABILITY OF GLENMARK UNDER THIS AGREEMENT SHALL NOT EXCEED THE PURCHASE PRICE OF THE BATCH(ES) OF CROFELEMER FINAL GIVING RISE TO SUCH LIABLITY.
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5.6        Recalls and Withdrawals.  All costs for recalls, market withdrawals and returns and destruction of Crofelemer-Based Products shall be the responsibility of Napo for any recalls, market withdrawals and returns and destruction of Crofelemer-Based Product attributable to the failure of Napo-supplied CPL to conform to applicable Specifications as of the time of its delivery to Glenmark hereunder or other reasons attributable to Napo. If any recall or withdrawal is initiated due to reasons solely attributable to Glenmark, Glenmark shall be liable to reimburse the cost, if any, incurred towards such recall provided, however, in no event will Glenmark’s total liability exceed the Purchase Price received by Glenmark for the batch(es) giving rise to such liability.
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5.7        Insurance.
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A.          Napo shall maintain (i) comprehensive general liability insurance written on an occurrence basis with a combined single limit for bodily injury and property damage of not less than [****] and (ii) product liability /completed operations coverage with a per claim limit of not less than [****].
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B.          Glenmark shall maintain (i) comprehensive general liability insurance in the amount of [****]  and (ii) public liability insurance in the amount of [****].
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C.          The insurance policies referenced in Sections 5.7A and B above ("Policies") shall (i) be provided by an insurance carrier(s) acceptable to the other Party and (ii) show the other Party as additional named insured and loss payee, as its interests may appear. Certificates of insurance for the Policies shall be furnished to the other Party within [****] after the Effective Date. The Policies shall remain in effect throughout the Term of this Agreement and shall not be canceled or subject to a reduction of coverage or any other modification without the prior written authorization of the other Party.
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D.          It is understood that such insurance shall not be construed to create a limit of either Party's liability with respect to its indemnification obligations under Article 7.
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5.8        Disclaimer of Other Warranties. THE WARRANTIES, LIMITATIONS AND DISCLAIMERS EXPRESSLY SET FORTH IN THIS ARTICLE 5 SUPERSEDE ANY OTHER WARRANTY LIMITATIONS AND DISCLAIMERS GIVEN BY EITHER PARTY, WHETHER WRITTEN OR ORAL. EXCEPT FOR THE EXPRESS WARRANTIES IN THIS ARTICLE 5, NEITHER PARTY MAKES ANY WARRANTY OF ANY KIND WITH RESPECT TO THE CPL OR
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CROFELEMER, WHETHER EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OF FITNESS FOR A PARTICULAR PURPOSE.
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ARTICLE 6
CONFIDENTIALITY
6.1        Confidentiality Agreement. “Confidentiality Agreement” means the Confidentiality Agreement by and between Napo and Glenmark attached hereto as Exhibit 6.1 and incorporated herein by this reference, including any subsequent amendments or modifications that shall be mutually agreed to between the Parties from time to time.
6.2        Notification. Upon a Party's discovery of loss or compromise of the other Party's Confidential Information, the Party discovering the loss shall notify the other Party immediately and cooperate as reasonably requested.
6.3        Remedies. Each Party agrees that the unauthorized use or disclosure of Confidential Information in violation of the Confidentiality Agreement will cause severe and irreparable damage. In the event of any violation of the Confidentiality Agreement, the Parties agree that the Party whose Confidential Information has been disclosed shall, in addition to any other relief permitted by Applicable Law or in the Confidentiality Agreement, be authorized and entitled to obtain from any court of competent jurisdiction injunctive relief, whether preliminary or permanent, without the necessity of proving irreparable harm or showing actual damages, and without posting any bond. The Party sought to be enjoined agrees to waive any requirement that the Party seeking the injunctive relief post bond as a condition for obtaining any such relief.
6.4        Use of Names. Neither Party shall mention or otherwise use the name, insignia, symbol trademark, trade name or logotype of the other Party (or any abbreviation or adaptation thereof) in any publication, press release, promotional material or other form of publicity without the prior written approval of such other Party in each instance. The restrictions imposed by this Section 6.4 shall not prohibit either Party from making any disclosure identifying the other Party that is required by Applicable Law, including, without limitation, filings with the stock exchange authorities such as United States Securities and Exchange Commission, which may include filing a copy of this Agreement; provided, however, that reasonable measures shall be taken to assure confidential treatment of such information.
6.5        Press Releases. Neither Party shall make a press release or other public announcement regarding this Agreement, the terms hereof or the transactions contemplated hereby without the prior written approval of the other Party. Each Party shall provide the other with the proposed text of any such press release or public announcement for review and approval which approval shall not be unreasonably withheld, conditioned or delayed, as early as possible, but in no event less than four (4) Business Days in advance of the publication, communication or dissemination thereof; provided, however, that the receiving Party shall notify the proposing Party in writing of any objections to such press release or public announcement within three (3) Business Days after receipt by the receiving Party of the text of such public announcement. Notwithstanding the foregoing, but consistent with Section 6.4 above, this Section 6.5 shall not be applicable to filings and disclosures required by Applicable Law.
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ARTICLE 7
INDEMNIFICATION
7.1        Indemnification by Glenmark. Glenmark shall indemnify, defend and hold Napo and its Affiliates and their respective officers, directors, employees and agents (“Napo Indemnitees”) harmless from and against any and all losses, damages, liabilities, assessments, costs, charges, or claims ("Losses") arising out of or resulting from any Third Party claims made or suits brought against Napo which arise or result from: (i) the breach of any of Glenmark's representations and warranties set forth
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in this Agreement; (ii) Glenmark's negligence or willful misconduct in the performance of this Agreement, or (iii) Glenmark’s material breach of this Agreement; except in each case of clauses (i) through (iii), if, and to the extent, Napo has an obligation to indemnify the Glenmark Indemnitees, or any one of them, pursuant to Section 7.2.  Notwithstanding the foregoing, in no event will the entire liability of Glenmark under this Agreement exceed the Purchase Price received by Glenmark in connection with the batch(es) of Crofelemer Final giving rise to such liability.
7.2        Indemnification by Napo. Napo shall indemnify, defend and hold Glenmark and their respective officers, directors, employees and agents ("Glenmark Indemnitees") harmless from and against any and all Losses arising out of or resulting from any Third Party claims made or suits brought against Glenmark which arise or result from: (i) the breach of any of Napo's representations and warranties set forth in this Agreement; (ii) a claim by a Third Party that the Manufacturing/supply of Crofelemer Final by Glenmark in accordance with Napo’s Manufacturing Instructions or, marketing and sale of any finished Crofelemer-Based Product by Napo or its Affiliates infringes such Third Party's intellectual property rights or (iii) Napo's negligence or willful misconduct in the performance of this Agreement, or (iv) Napo’s material breach of this Agreement; except in each case of clauses (i) through (iv) if, and to the extent Glenmark has an obligation to indemnify the Napo Indemnitees, or any one of them, pursuant to Section 7.1. Notwithstanding the foregoing, in no event, save and except the eventuality covered in Section 7.2(ii) above, the entire liability of Napo under this Agreement shall exceed the value of the Purchase Order of Crofelemer Final (excluding that portion of the Purchase Price that is for CPL) giving rise to such liability.
7.3        Procedures.
A.          A Party making a claim for indemnity under this Article 7 hereinafter is referred to as an “Indemnified Party” and the Party against whom such claim is asserted is hereinafter referred to as the “Indemnifying Party.” All claims by any Indemnified Party under this Section shall be asserted and resolved in accordance with the following provisions. If any claim or demand for which an Indemnifying Party would be liable to an Indemnified Party is asserted against or sought to be collected from such Indemnified Party by a Third Party, said Indemnified Party shall with reasonable promptness notify in writing the Indemnifying Party of such claim or demand stating with reasonable specificity the circumstances of the Indemnified Party's claim for indemnification; provided, however, that any failure to give such written notice will not waive any rights of the Indemnified Party except to the extent the rights of the Indemnifying Party are actually prejudiced by such delay. After receipt by the Indemnifying Party of such notice, then upon reasonable notice from the Indemnifying Party to the Indemnified Party, or upon the written request of the Indemnified Party, the Indemnifying Party shall defend, manage and conduct any proceedings, negotiations or communications involving any claimant whose claim is the subject of the Indemnified Party's notice to the Indemnifying Party as set forth above, and shall take all actions necessary, including the posting of such bond or other security as may be required by any governmental authority, so as to enable the claim to be defended against or resolved without expense or other action by the Indemnified Party.
B.          In any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the sole expense of such Indemnified Party.
C.          Upon written request of the Indemnifying Party, the Indemnified Party shall to the extent it may legally do so and to the extent that it is compensated in advance by the Indemnifying Party for any costs and expenses thereby incurred, (i) take such action as the Indemnifying Party may reasonably request in connection with such action, (ii) allow the Indemnifying Party to dispute such action in the name of the Indemnified Party and to conduct a defense to such action on behalf of the Indemnified Party, or (iii) render to the Indemnifying Party all such assistance as the Indemnifying Party may reasonably request in connection with such dispute and defense.
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D.          The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent, or if there be a final judgment for the plaintiff, the Indemnifying Party shall indemnify and hold harmless such Indemnified Parties from and against any Losses (to the extent stated above) by reason of such settlement or judgment. Without the prior written consent of the Indemnified Party, no Indemnifying Party shall effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability arising out of such proceeding.
ARTICLE 8
TERM
8.1        Term. This Agreement shall become effective upon the Effective Date and shall remain in full force and effect until March 31, 2023, unless sooner terminated pursuant to Section 8.2 below (the "Term").  At the end of the Term, the Parties may extend this Agreement for successive renewal terms of minimum of two (2) years by mutual agreement of the Parties in a written instrument, signed by both Parties and specifically referencing this Agreement.
8.2        Termination. In addition to any other provision of this Agreement expressly providing for termination of this Agreement, this Agreement may be terminated as follows:
A.          Napo may terminate this Agreement:
(i)          Immediately upon notice to Glenmark in the event that Regulatory Authorities cause the withdrawal of Crofelemer Final or any Crofelemer-Based Product from the market for safety and/or non-compliance reasons; or
(ii)         [INTENTIONALLY LEFT BLANK]
(iii)         Upon 30 days’ notice to Glenmark on the occurrence of Chronicity.
B.          Either Party may terminate this Agreement:
(i)          immediately upon written notice if the other Party shall (a) file in any court or agency pursuant to any statute or regulation of any state, country or jurisdiction a petition in bankruptcy or insolvency or for reorganization or for arrangement or for the appointment of a receiver or trustee of that Party or of its assets, (b) be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition shall not be dismissed within sixty (60) days after the filing thereof, (c) propose or be a party to any dissolution or liquidation, (d) make an assignment for the benefit of its creditors, or (e) admit in writing its inability generally to pay its debts as they fall due in the general course; or
(ii)         immediately upon written notice in the event of any material breach by the other Party in the performance of any of its obligations herein contained that has not been cured by the defaulting Party within ninety (90) days after receiving written notice thereof from the non-breaching Party; or
(iii)         immediately upon written notice in the event that, as a result of an order of government or any other official authority or change in Applicable Law, the continued operation of this Agreement in its entirety or in substantial part is prevented or delayed for an unspecified and indeterminate period.
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C.                        Either Party may terminate this Agreement for any reason with twelve (12) months prior written notice to the other Party.  If the termination date pursuant to this Section 8.2.C does not align with the last day of a Financial Year, the Minimum Quantity for the final year of this Agreement shall be pro-rated for the number of months for which this Agreement will be in effect during such final Financial Year.
8.3        Effect of Expiration or Termination.
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A.          Survival. The expiration or earlier termination of this Agreement shall be without prejudice to any rights or obligations of the Parties that may have accrued prior to such termination or expiration, and the provisions of Articles 1 (Definitions), 3.5D (Acceptance Upon Delivery), 3.7 (Failure or Inability to Supply Crofelemer Final), 4 (Payment), 5 (Representations and Warranties), 6 (Confidentiality), 7 (Indemnification), 8 (Term), and 9 (Miscellaneous) along with any other provision that would survive due to its nature or specifically designated herein to survive shall survive the expiration or termination of this Agreement. Except as otherwise expressly provided herein, termination of this Agreement in accordance with the provisions hereof shall not limit remedies that may otherwise be available at law or in equity. Upon the expiry or earlier termination of the Agreement, unless the conduct of the Parties is otherwise, the Intellectual Property License granted by NAPO to Glenmark shall terminate where after save and except for any remaining material, Glenmark shall cease the use of any and all Napo Intellectual Property.
B.          Return of Confidential Information and Materials. Upon expiration or earlier termination of this Agreement, each Party, at the request of the other, shall return all data, files, records and other materials in its possession or control containing or comprising the other Party's Confidential Information except that the legal department of each Party may retain one copy for archival purposes.
C.          Actions Upon Termination.
(i)       Upon termination of the Agreement by NAPO pursuant to Section 8.2.A(i) or 8.2.B(iii), NAPO shall take the delivery of the Crofelemer Final ready for delivery, if legally permissible, and make the payment of the Purchase Price therefor as well as for any work in progress at the Actual Cost, excluding the value attributable to the CPL,  in which event GLS shall not be liable to pay cost for CPL, therefor, with no markup.  Glenmark promptly shall return any remaining Napo-Supplied CPL to Napo or its designee at Napo's expense and the Purchase Order will be cancelled without payment for the deficit in the Minimum Quantity.
(ii)      Upon termination of the Agreement by NAPO pursuant to Section 8.2.A(iii) or 8.2B(i) or (ii), NAPO shall take the delivery of the Crofelemer Final ready for delivery, including Glenmark’s completion of any work in progress when such is converted into Crofelemer Final, if legally permissible, and make the payment therefor. Glenmark promptly shall return any remaining Napo-Supplied CPL to Napo or its designee at Napo's expense and the Purchase Order will be cancelled without payment for the deficit in the Minimum Quantity.
(iii)     Upon termination of the Agreement by Glenmark pursuant to Section 8.2.B(i) or (ii), NAPO will have to take the delivery of the Crofelemer Final ready for delivery, including Glenmark’s completion of any work in progress when such is converted into Crofelemer Final, if legally permissible, and make the payment therefor as well as for any deficit in the adjusted Minimum Purchase Quantity of that Financial Year as described in Section 2.1, if any. The Purchase Price used to calculate the deficit in the Minimum Purchase Quantity shall exclude the cost of CPL, and accordingly GLS shall not be liable to pay for cost of CPL.  Glenmark promptly shall return any remaining Napo-Supplied CPL to Napo or its designee at Napo's expense.
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(iv)     Upon termination of this Agreement for any reason other than as set forth in Section 8.2 and subject to full payment of any amount due to Glenmark and/or to Napo, as of the termination date (a) Glenmark immediately shall cease all Manufacturing of Crofelemer Final, (b) all submitted but unfilled Purchase Orders automatically shall be cancelled, (c) NAPO will take the delivery of the Crofelemer Final ready for delivery, including Glenmark’s completion of any work in progress when such is converted into Crofelemer Final, if legally permissible, and make the payment therefor, and (d) Glenmark promptly shall return any remaining Napo-Supplied CPL to Napo or its designee at Napo's expense. Further, there shall be no payment due for a deficit Minimum Purchase Quantity, if any.
(v)      The Parties shall be permitted to exercise their respective rights in accordance with the terms of the Transfer Agreement.
D.          Cumulative Remedies. Except as expressly stated otherwise herein, remedies hereunder are cumulative, and nothing in this Agreement shall prevent either Party, in the case of a breach, from not terminating this Agreement and seeking to enforce its rights hereunder.
E.           Accrued Obligations. Except as set forth herein, any termination or expiration of this Agreement shall not relieve either Party of any obligation which has accrued prior to the effective date of such termination or expiration, which obligations shall remain in full force and effect for the period provided therein. However, to the extent cancellable or revocable, both Parties will make commercially reasonable efforts to cancel or revoke, and thereby limit the amount of any accrued obligations. Neither Party shall be liable for any amount that could have been avoided if cancelled or revoked by the other Party upon written notice of termination.
F.           No Release. The termination or expiration of this Agreement, as the case may be, shall not act as a waiver of any breach of this Agreement and shall not act as a release of either Party from any liability or obligation incurred under this Agreement through the date of such termination or expiration.
ARTICLE 9
MISCELLANEOUS
9.1        Notices. Any notice, request, demand, waiver, consent, approval or other communication which is required or permitted to be given to either Party shall be in writing and shall be deemed given only if delivered to the Party personally or sent to the Party by registered mail, return receipt requested, postage prepaid, or sent by an internationally recognized courier service guaranteeing next-day or second-day delivery, charges prepaid, addressed to the Party at its address set forth below, or sent by electronic mail (email transmission to the email address set forth below if acknowledged by the Party in an email reply, with the understanding that a reply email may, in fact, be directed to someone other than the original individual at the sending Party), or at such other address or fax number as such Party may from time to time specify by notice given in the manner provided herein to the Party entitled to receive notice hereunder:
​
	For Glenmark: Glenmark Life Sciences Ltd.,
	​

	​
	​

	Glenmark House,
	​

	B. D. Sawant Marg, Chakala, Andheri East, Mumbai 400099,
	​

	India
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	Attention: Gautam Arora
	​

	[****]
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	20|Page

​

​
	For Napo:
	Napo Pharmaceuticals, Inc.
	​

	​
	​

	​
	​

	201 Mission Street, Suite 2375,
	​

	San Francisco, CA 94105
	​

	USA
	​

	​
	​

	Attention: Chief Executive Officer
	​

	[****]
	​

	With a copy to:
	​

	​
	​

	Napo Pharmaceuticals, Inc.
	​

	201 Mission Street, Suite 2375
	​

	San Francisco, CA 941054
	​

	USA
	​

​
Attention: Jonathan Wolin, Chief Compliance Officer and Corporate Counsel
9.2        Entire Agreement and Inconsistency. Subject to Section 2.5, this Agreement which includes all Appendices, exhibits and schedules attached hereto, together with the Quality Agreement and the Transfer Agreement, constitutes the entire agreement between the Parties with respect to the subject matter hereof, and no oral or written statement may be used to interpret or vary the meaning of the terms and conditions hereof. In the event of a conflict or inconsistency between the provisions of this Agreement and the provisions of the Quality Agreement, this Agreement will prevail. In the event of a conflict or inconsistency between the provisions of this Agreement and any legal or regulatory requirements, amendments to this Agreement shall be considered promptly in good faith in order to satisfy such requirements.
9.3        Assignment. Neither Party may assign or otherwise transfer this Agreement without the prior written consent of the other Party; provided, however, that either Party may assign this Agreement without the consent of the other Party to any Affiliate or in connection with the acquisition of such Party or the sale of all or substantially all of the business or assets of the assigning Party relating to the subject matter of this Agreement, whether by merger, acquisition or otherwise. Subject to the foregoing, this Agreement shall inure to the benefit of each Party, its successors and permitted assigns. Any assignment of this Agreement in violation of this Section shall be null and void.
9.4        Force Majeure. Except for either Party’s payment obligations, failure of any Party to perform its obligations under this Agreement shall not subject such Party to any liability to the other Party, or place them in breach of any term or condition of this Agreement if, and solely to the extent, such failure is caused by Force Majeure. The corresponding obligations of the other Party will be suspended to the same extent. "Force Majeure" shall mean any unanticipated event, reason or cause beyond the reasonable control of a Party (including fire, flood, embargo, power shortage or failure, acts of war, insurrection, riot, terrorism, strike, lockout or other labor disturbance, epidemic, failure or default of public utilities or common carriers, destruction of production facilities or materials by fire, earthquake, or storm or like catastrophe, acts of God or any acts, omissions or delays in acting of the other Party); provided, however, that the Party affected shall, within five (5) days of its occurrence, notify the other Party, stating the nature of the condition constituting Force Majeure as defined herein, its anticipated duration and any action being taken to avoid or minimize its effect. Then, such Party shall exert commercially reasonable efforts to eliminate, cure and overcome any such causes and to resume performance of its obligations with all possible speed. If a condition constituting Force Majeure as defined herein prevents, or would likely prevent, a Party from performing its obligations under this Agreement for more than sixty (60) days, the Parties shall meet to negotiate a mutually satisfactory solution to the problem, if practicable, including the use of a Third Party to fulfill the obligations hereunder of the Party invoking the Force Majeure.
9.5        Headings. The descriptive headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of the Agreement.
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	21|Page

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9.6        Independent Contractor. Each Party shall be acting as an independent contractor in performing under this Agreement and shall not be considered or deemed to be an agent, employee, joint venture or partner of the other Party. Neither Party to this Agreement shall have any express or implied right or authority to assume or create any obligations on behalf of, or in the name of, the other Party, or to bind the other Party to any contract, agreement or undertaking with any Third Party.
9.7        Severability. In the event any provision of this Agreement should be held invalid, illegal or unenforceable in any jurisdiction, the Parties shall negotiate in good faith and enter into a valid, legal and enforceable substitute provision that most nearly reflects the original intent of the Parties. All other provisions of this Agreement shall remain in full force and effect in such jurisdiction. Such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of such provision in any other jurisdiction.
9.8        No Third-Party Beneficiaries. Nothing in this Agreement, either express or implied, is intended to or shall confer upon any other Third Party (other than Jaguar Health, Inc.) any legal or equitable right, benefit or remedy of any nature whatsoever under, or by reason of, this Agreement.
9.9        Amendment. This Agreement may not be amended or modified except by an instrument in writing signed by authorized representatives of Napo and Glenmark, and specifically referencing this Agreement.
9.10      Governing Law. This Agreement and all questions regarding the existence, validity, interpretation, breach or performance of this Agreement, shall be governed by, and construed and enforced in accordance with, the laws of State of New York, without reference to its conflicts of law principles.
9.11      Dispute Resolution.
A.          In the event of any dispute, controversy or claim arising out of or relating to this Agreement or the breach, termination or validity thereof (hereinafter referred to as "Dispute”), between the Parties that relates to interpretation of a Party's rights and/or obligations hereunder or any alleged breach of this Agreement, such dispute shall be resolved in accordance with this Section. Notwithstanding the provisions of this Section, however, nothing herein contained shall preclude a party from seeking equitable remedies in any court of competent jurisdiction.
B.          Any Dispute shall be referred for decision forthwith to a senior executive of each Party not involved in the Dispute. If no agreement is reached within thirty (30) days of the request by one Party to the other to refer the same to such senior executive, then the Parties agree to attempt to settle such Dispute through good faith non-binding mediation efforts. If after a period of thirty (30) days, the Parties have not settled the Dispute by non-binding mediation, then any such Dispute which does not involve a claim for equitable relief shall be settled by Arbitration according to the provisions of Section 9.11C.
C.          Any Dispute that is not resolved in accordance with Section 9.11B shall be decided by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association ("AAA"); such arbitration to be held in the Borough of Manhattan, New York, New York on an expedited basis. Each Party hereby expressly waives any right to object to such jurisdiction on the basis of venue or forum non-convenience. Any arbitration shall be conducted by three arbitrators. One arbitrator shall be selected by Napo, one arbitrator shall be selected by Glenmark and the third arbitrator shall be selected by the two arbitrators so selected. The arbitrators shall have no power to change the provisions of this Agreement nor to make an award of reformation. The award rendered by the arbitrators shall be final and binding upon the Parties hereto, and judgment upon the award rendered may be entered by either Party in any court that has jurisdiction over the Parties or the subject matter of the controversy or claim.
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	22|Page

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​
The expense of such arbitration, including attorneys' fees, shall be allocated between the Parties as the arbitrators shall decide. The arbitration panel shall prepare and deliver to the Parties a written, reasoned opinion conferring its decision. Both Parties, solely for the purpose of collection of a judgment against them, consent to jurisdiction and venue in New York, New York, USA.
9.12      No Waiver. The failure of either Party to enforce at any time for any period the provisions of, or any rights deriving from this Agreement shall not be construed to be a waiver of such provisions or rights, or the right of such Party thereafter to enforce such provisions.
9.13      Counterparts. This Agreement may be executed in one or more counterparts, and by the respective Parties in separate counterparts, each of which when executed shall be deemed to be an original, and both of which taken together shall constitute one and the same Agreement. Delivery of an executed counterpart of a signature page of this Agreement (and each amendment, modification and waiver in respect of it) by facsimile or other electronic transmission, if identified and complete, will be regarded as an original signature and shall be as effective as delivery of a manually executed original counterpart of each such instrument.
9.14      Further Assurances. Each Party shall duly execute and deliver, or cause to be duly executed and delivered, such further instruments and do and cause to be done such further acts and things, including the filing of such assignments, the execution and delivery of such agreements, documents and instruments as may be necessary, or as the other Party may reasonably request, in connection with the Parties’ respective performances or obligations under this Agreement, or to carry out more effectively the provisions and purposes hereof, or to better assure and confirm unto such other Party its rights and remedies under this Agreement.
9.15      Export Control. This Agreement is made subject to any restrictions concerning the export of products or technical information from the United States or other countries that may be imposed on the Parties from time to time. Each Party agrees that it will not export, directly or indirectly, any technical information acquired from the other Party under this Agreement or any products using such technical information to a location or in a manner that at the time of export requires an export license or other governmental approval, without first obtaining the written consent to do so from the appropriate agency or other governmental entity in accordance with Applicable Law.
9.16      Construction. Unless the context of this Agreement otherwise requires: (i) words of any gender include each other gender; (ii) words using the singular or plural number also include the plural or singular number, respectively; (iii) the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement; (iv) the terms “Article,” “Section,” ”Appendix”, “Schedule,” “Exhibit” or “clause” refer to the specified Article, Section, Appendix, Schedule, Exhibit or clause of this Agreement; (v) the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or”; (vi) the term “including” or “includes” means “including without limitation” or “includes without limitation”; and (vii) references to any agreement, instrument or other document in this Agreement refer to such agreement, instrument or other document as originally executed or, if subsequently amended, replaced or supplemented from time to time, as so amended, replaced or supplemented and in effect at the relevant time of reference thereto. Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. The headings and captions of this Agreement are for convenience of reference only and in no way define, describe, extend, or limit the scope or intent of this Agreement or the intent of any provision contained in this Agreement. Finally, in every instance throughout this Agreement, where one Party is to give the other Party a communication in writing, it is the Parties’ intention that email shall suffice as a written instrument, so long as the Party receiving such email acknowledges receipt by replying to the sending Party (with the understanding that a reply email may, in fact, be directed to someone other than the original individual at the sending Party).
9.17      English Language and Mutual Drafting. This Agreement shall be written and executed in, and all other communications under or in connection with this Agreement shall be in, the English language. Any translation into any other language shall not be an official version thereof, and in the event of any conflict
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	23|Page

​

in interpretation between the English version and such translation, the English version shall control. This Agreement is the mutual product of the parties hereto, and each provision hereof has been subject to the mutual consultation, negotiation, and agreement of each of the parties, and shall not be construed for or against any party hereto.
[SIGNATURES ON NEXT PAGE]
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	24|Page

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SIGNATURE PAGE
Manufacturing and Supply Agreement
IN WITNESS WHEREOF, each Party hereto has executed, or caused this Agreement to be executed on its behalf, by a duly authorized signatory, as of the Effective Date.
GLENMARK LIFE SCIENCES, LTD.
​
	/s/ Sumeet Wadhwani
	​

	Signature
	​

	​
	​

	​
	​

	Sumeet Wadhwani
	​

	Print Name
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	​
	​

	​
	​

	Head Legal
	​

	Print Title
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	​
	​

	​
	​

	Date: September 3, 2020
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	​
	​

	​
	​

	​
	​

	​
	​

​
​
	NAPO PHARMACEUTICALS, INC.
	​

	​
	​

	​
	​

	/s/ Lisa A. Conte
	​

	Signature
	​

	​
	​

	​
	​

	Lisa A. Conte
	​

	Print Name
	​

	​
	​

	​
	​

	President and CEO
	​

	Print Title
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	​
	​

	​
	​

	Date: September 2, 2020
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​
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	25|Page

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APPENDIX 1.2
COMPONENTS OF THE ACTUAL COST
·   [****]
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	26|Page

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APPENDIX 1.43
PRICING TERM SHEET
·   [****]
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	27|Page

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APPENDIX 2.3D
SHIPPING AND BILLING PROCEDURES FOR CROFELEMER FINAL
​
1.          Napo will issue a formal shipping request to Glenmark designating specific lots of Crofelemer to be shipped from the Facility to a given consignee.  This request shall include the lot numbers to be shipped, the net weight of each lot, the ship-by date, and any other information needed for shipment to take place.
2.          Glenmark will create a pro forma invoice and will send it to Napo for review.  The pro forma invoice will include:
A. Designation of specific Lots (by Lot numbers) to be shipped and aggregate net weight in kilograms
B. Name and address of the consignee to which said lots are to be delivered
C. Ports of loading and discharge (departure)
D. The Purchase Price of the Crofelemer Final to be shipped
3.          Napo will review the pro forma invoice for accuracy, and if no changes are necessary, Napo will, pay the invoice amount to Glenmark as detailed in the body of this Agreement.
4.          Napo, or its designee, will provide Glenmark with any other necessary documents, such as disposition certificate, etc.
5.          Within 24-hours of receipt of Napo’s payment, Glenmark will provide the final invoice to NAPO.
 6.         Upon receipt of the payment from NAPO, Glenmark will deliver the Crofelemer Final on Ex-works Glenmark Facility, Incoterms 2010, to an express carrier designated by Napo.  Glenmark will arrange to have the freight charges billed to Napo’s account with the carrier. NAPO may elect to itself arrange shipment with an express carrier or freight forwarder to deliver the Crofelemer Final to the final destination under Ex-works (Glenmark Facility), Incoterms 2010.
7.          Glenmark’s clearing and forwarding agent will effect and ensure the export clearance in India.
8.          Prior to pick-up of the shipment, Glenmark will issue a commercial invoice to Napo, with the invoice date being the date of delivery at the Facility.
9.          Risk of loss, and responsibility for onward transit, will transfer to Napo at the time of pick up at Glenmark Facility.  Napo will arrange for delivery of the Crofelemer Final from the point of pick-up to its final destination.  Napo will arrange for customs clearance in the receiving country.
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	28|Page

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APPENDIX 2.4C
SHIPPING AND BILLING PROCEDURES FOR CPL
​
1.    When one or more lots of CPL are to be available for shipment to Glenmark, Napo will notify Glenmark in writing (email will suffice) providing:
​
a.    Number of drums to be shipped
b.    Estimated weight in kilograms
c.    Expected ship date
d.    Purchase Price of CPL
e.    Estimated freight and insurance charges for delivery to port in India
​
It will not be necessary for Glenmark to issue a purchase order for CPL in order for Napo to ship a consignment of CPL.
​
2.    Napo, or its designee, will provide Glenmark the documents that are necessary for customs clearance and receipt of the CPL by Glenmark, including (but not limited to):
​
a.    Certificate of Analysis
b.    Certificate of Origin
c.    Commercial Invoice
d.    Packing List
e.    Bills of Lading
f.     Any other documents which Glenmark deems necessary for the purpose of the clearance of CPL
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3.    Glenmark will be responsible for (i) clearance through customs in India, (ii) payment of duties and taxes, and (iii) delivery of the CPL to the appropriate Facility for processing.
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	29|Page

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EXHIBIT 1.45
QUALITY AGREEMENT
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	30|Page

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EXHIBIT 1.53
TRANSFER AGREEMENT
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	31|Page

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EXHIBIT 6.1
CONFIDENTIALITY AGREEMENT

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	32|Page

​Exhibit 4.3

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

	
 
    	
 
    	
 
    

 

 

KE HOLDINGS INC.

 

AND

 

THE BANK OF NEW YORK MELLON

 

                                             As Depositary

 

AND

 

OWNERS AND HOLDERS OF AMERICAN DEPOSITARY SHARES

 

Deposit Agreement

 

August 12, 2020

 

 

	
 
    	
 
    	
 
    

 

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

TABLE OF CONTENTS

 

	
ARTICLE 1.                                                   DEFINITIONS
    	
1
    
	
SECTION 1.1.
    	
American Depositary   Shares
    	
1
    
	
SECTION 1.2.
    	
Commission
    	
2
    
	
SECTION 1.3.
    	
Company
    	
2
    
	
SECTION 1.4.
    	
Custodian
    	
2
    
	
SECTION 1.5.
    	
Deliver; Surrender
    	
2
    
	
SECTION 1.6.
    	
Deposit Agreement
    	
3
    
	
SECTION 1.7.
    	
Depositary;   Depositary’s Office
    	
3
    
	
SECTION 1.8.
    	
Deposited Securities
    	
3
    
	
SECTION 1.9.
    	
Disseminate
    	
3
    
	
SECTION 1.10.
    	
Dollars
    	
3
    
	
SECTION 1.11.
    	
DTC
    	
4
    
	
SECTION 1.12.
    	
Foreign Registrar
    	
4
    
	
SECTION 1.13.
    	
Holder
    	
4
    
	
SECTION 1.14.
    	
Owner
    	
4
    
	
SECTION 1.15.
    	
Receipts
    	
4
    
	
SECTION 1.16.
    	
Registrar
    	
4
    
	
SECTION 1.17.
    	
Replacement
    	
4
    
	
SECTION 1.18.
    	
Restricted Securities
    	
5
    
	
SECTION 1.19.
    	
Securities Act of 1933
    	
5
    
	
SECTION 1.20.
    	
Shares
    	
5
    
	
SECTION 1.21.
    	
SWIFT
    	
5
    
	
SECTION 1.22.
    	
Termination Option   Event
    	
5
    
	
 
    	
 
    
	
ARTICLE 2.                                                   FORM OF   RECEIPTS, DEPOSIT OF SHARES, DELIVERY, TRANSFER AND SURRENDER OF AMERICAN   DEPOSITARY SHARES
    	
6
    
	
SECTION 2.1.
    	
Form of Receipts;   Registration and Transferability of American Depositary Shares
    	
6
    
	
SECTION 2.2.
    	
Deposit of Shares
    	
7
    
	
SECTION 2.3.
    	
Delivery of American   Depositary Shares
    	
8
    
	
SECTION 2.4.
    	
Registration of   Transfer of American Depositary Shares; Combination and Split-up of Receipts;   Interchange of Certificated and Uncertificated American Depositary Shares
    	
8
    
	
SECTION 2.5.
    	
Surrender of American   Depositary Shares and Withdrawal of Deposited Securities
    	
9
    
	
SECTION 2.6.
    	
Limitations on   Delivery, Registration of Transfer and Surrender of American Depositary   Shares
    	
10
    
	
SECTION 2.7.
    	
Lost Receipts, etc.
    	
11
    

 

i

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

	
SECTION 2.8.
    	
Cancellation and   Destruction of Surrendered Receipts
    	
11
    
	
SECTION 2.9.
    	
DTC Direct Registration   System and Profile Modification System
    	
11
    
	
 
    	
 
    	
 
    
	
ARTICLE 3.                                                   CERTAIN   OBLIGATIONS OF OWNERS AND HOLDERS OF AMERICAN DEPOSITARY SHARES
    	
12
    
	
SECTION 3.1.
    	
Filing Proofs,   Certificates and Other Information
    	
12
    
	
SECTION 3.2.
    	
Liability of Owner for   Taxes
    	
12
    
	
SECTION 3.3.
    	
Warranties on Deposit   of Shares
    	
13
    
	
SECTION 3.4.
    	
Disclosure of Interests
    	
13
    
	
 
    	
 
    	
 
    
	
ARTICLE 4.                                                   THE   DEPOSITED SECURITIES
    	
14
    
	
SECTION 4.1.
    	
Cash Distributions
    	
15
    
	
SECTION 4.2.
    	
Distributions Other   Than Cash, Shares or Rights
    	
16
    
	
SECTION 4.3.
    	
Distributions in Shares
    	
16
    
	
SECTION 4.4.
    	
Rights
    	
16
    
	
SECTION 4.5.
    	
Conversion of Foreign   Currency
    	
18
    
	
SECTION 4.6.
    	
Fixing of Record Date
    	
19
    
	
SECTION 4.7.
    	
Voting of Deposited   Shares
    	
20
    
	
SECTION 4.8.
    	
Tender and Exchange   Offers; Redemption, Replacement or Cancellation of Deposited Securities
    	
21
    
	
SECTION 4.9.
    	
Reports
    	
23
    
	
SECTION 4.10.
    	
Lists of Owners
    	
23
    
	
SECTION 4.11.
    	
Withholding
    	
23
    
	
 
    	
 
    	
 
    
	
ARTICLE 5.                                                   THE   DEPOSITARY, THE CUSTODIANS AND THE COMPANY
    	
24
    
	
SECTION 5.1.
    	
Maintenance of Office   and Register by the Depositary
    	
24
    
	
SECTION 5.2.
    	
Prevention or Delay of   Performance by the Company or the Depositary
    	
24
    
	
SECTION 5.3.
    	
Obligations of the   Depositary and the Company
    	
25
    
	
SECTION 5.4.
    	
Resignation and Removal   of the Depositary
    	
26
    
	
SECTION 5.5.
    	
The Custodians
    	
27
    
	
SECTION 5.6.
    	
Notices and Reports
    	
28
    
	
SECTION 5.7.
    	
Distribution of   Additional Shares, Rights, etc.
    	
28
    
	
SECTION 5.8.
    	
Indemnification
    	
29
    
	
SECTION 5.9.
    	
Charges of Depositary
    	
30
    
	
SECTION 5.10.
    	
Retention of Depositary   Documents
    	
30
    
	
SECTION 5.11.
    	
Exclusivity
    	
31
    
	
SECTION 5.12.
    	
Information for Regulatory   Compliance
    	
31
    

 

ii

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

	
ARTICLE 6.                                                   AMENDMENT   AND TERMINATION
    	
31
    
	
SECTION 6.1.
    	
Amendment
    	
31
    
	
SECTION 6.2.
    	
Termination
    	
32
    
	
 
    	
 
    	
 
    
	
ARTICLE 7.                                                   MISCELLANEOUS
    	
33
    
	
SECTION 7.1.
    	
Counterparts;   Signatures; Delivery
    	
33
    
	
SECTION 7.2.
    	
No Third Party   Beneficiaries
    	
33
    
	
SECTION 7.3.
    	
Severability
    	
33
    
	
SECTION 7.4.
    	
Owners and Holders as   Parties; Binding Effect
    	
33
    
	
SECTION 7.5.
    	
Notices
    	
34
    
	
SECTION 7.6.
    	
Arbitration; Settlement   of Disputes
    	
34
    
	
SECTION 7.7.
    	
Appointment of Agent   for Service of Process; Submission to Jurisdiction; Jury Trial Waiver
    	
35
    
	
SECTION 7.8.
    	
Waiver of Immunities
    	
36
    
	
SECTION 7.9.
    	
Governing Law
    	
36
    

 

iii

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

DEPOSIT AGREEMENT

 

DEPOSIT AGREEMENT dated as of August 12, 2020 among KE HOLDINGS INC., a company incorporated under the laws of the Cayman Islands (herein called the Company), THE BANK OF NEW YORK MELLON, a New York banking corporation (herein called the Depositary), and all Owners and Holders (each as hereinafter defined) from time to time of American Depositary Shares issued hereunder.

 

W I T N E S S E T H :

 

WHEREAS, the Company desires to provide, as set forth in this Deposit Agreement, for the deposit of Shares (as hereinafter defined) of the Company from time to time with the Depositary or with the Custodian (as hereinafter defined) under this Deposit Agreement, for the creation of American Depositary Shares representing the Shares so deposited and for the execution and delivery of American Depositary Receipts evidencing the American Depositary Shares; and

 

WHEREAS, the American Depositary Receipts are to be substantially in the form of Exhibit A annexed to this Deposit Agreement, with appropriate insertions, modifications and omissions, as set forth in this Deposit Agreement;

 

NOW, THEREFORE, in consideration of the premises, it is agreed by and between the parties hereto as follows:

 

ARTICLE 1.               DEFINITIONS

 

The following definitions shall for all purposes, unless otherwise clearly indicated, apply to the respective terms used in this Deposit Agreement:

 

SECTION 1.1.                  American Depositary Shares.

 

The term “American Depositary Shares” shall mean the securities created under this Deposit Agreement representing rights with respect to the Deposited Securities. American Depositary Shares may be certificated securities evidenced by Receipts or uncertificated securities. The form of Receipt annexed as Exhibit A to this Deposit Agreement shall be the prospectus required under the Securities Act of 1933 for sales of both certificated and uncertificated American Depositary Shares. Except for those provisions of this Deposit Agreement that refer specifically to Receipts, all the provisions of this Deposit Agreement shall apply to both certificated and uncertificated American Depositary Shares.

 

Each American Depositary Share shall represent the number of Shares specified in Exhibit A to this Deposit Agreement, except that, if there is a distribution upon Deposited Securities covered by Section 4.3, a change in Deposited Securities covered by Section 4.8 with respect to which additional American Depositary Shares are not delivered or a sale of Deposited Securities under Section 3.2 or 4.8, each American Depositary Share shall thereafter represent the amount of Shares or other Deposited Securities that are then on deposit per American Depositary Share after giving effect to that distribution, change or sale.

 

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Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

SECTION 1.2.                  Commission.

 

The term “Commission” shall mean the Securities and Exchange Commission of the United States or any successor governmental agency in the United States.

 

SECTION 1.3.                  Company.

 

The term “Company” shall mean KE Holdings Inc., a company incorporated under the laws of the Cayman Islands, and its successors.

 

SECTION 1.4.                  Custodian.

 

The term “Custodian” shall mean The Hongkong and Shanghai Banking Corporation Limited, as custodian for the Depositary in Hong Kong for the purposes of this Deposit Agreement, and any other firm or corporation the Depositary appoints under Section 5.5 as a substitute or additional custodian under this Deposit Agreement, and shall also mean all of them collectively.

 

SECTION 1.5.                  Deliver; Surrender.

 

(a)           The term “deliver”, or its noun form, when used with respect to Shares or other Deposited Securities, shall mean (i) book-entry transfer of those Shares or other Deposited Securities to an account maintained by an institution authorized under applicable law to effect transfers of such securities designated by the person entitled to that delivery or (ii) physical transfer of certificates evidencing those Shares or other Deposited Securities registered in the name of, or duly endorsed or accompanied by proper instruments of transfer to, the person entitled to that delivery.

 

(b)           The term “deliver”, or its noun form, when used with respect to American Depositary Shares, shall mean (i) registration of those American Depositary Shares in the name of DTC or its nominee and book-entry transfer of those American Depositary Shares to an account at DTC designated by the person entitled to that delivery, (ii) registration of those American Depositary Shares not evidenced by a Receipt on the books of the Depositary in the name requested by the person entitled to that delivery and mailing to that person of a statement confirming that registration or (iii) if requested by the person entitled to that delivery, execution and delivery at the Depositary’s Office to the person entitled to that delivery of one or more Receipts evidencing those American Depositary Shares registered in the name requested by that person.

 

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Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

(c)           The term “surrender”, when used with respect to American Depositary Shares, shall mean (i) one or more book-entry transfers of American Depositary Shares to the DTC account of the Depositary, (ii) delivery to the Depositary at its Office of an instruction to surrender American Depositary Shares not evidenced by a Receipt or (iii) surrender to the Depositary at its Office of one or more Receipts evidencing American Depositary Shares.

 

SECTION 1.6.                  Deposit Agreement.

 

The term “Deposit Agreement” shall mean this Deposit Agreement, as it may be amended from time to time in accordance with the provisions of this Deposit Agreement.

 

SECTION 1.7.                  Depositary; Depositary’s Office.

 

The term “Depositary” shall mean The Bank of New York Mellon, a New York banking corporation, and any successor as depositary under this Deposit Agreement. The term “Office”, when used with respect to the Depositary, shall mean the office at which its depositary receipts business is administered, which, at the date of this Deposit Agreement, is located at 240 Greenwich Street, New York, New York 10286.

 

SECTION 1.8.                  Deposited Securities.

 

The term “Deposited Securities” as of any time shall mean Shares at such time deposited or deemed to be deposited under this Deposit Agreement, including without limitation, Shares that have not been successfully delivered upon surrender of American Depositary Shares, and any and all other securities, property and cash received by the Depositary or the Custodian in respect of Deposited Securities and at that time held under this Deposit Agreement.

 

SECTION 1.9.                  Disseminate.

 

The term “Disseminate,” when referring to a notice or other information to be sent by the Depositary to Owners, shall mean (i) sending that information to Owners in paper form by mail or another means or (ii) with the consent of Owners, another procedure that has the effect of making the information available to Owners, which may include (A) sending the information by electronic mail or electronic messaging or (B) sending in paper form or by electronic mail or messaging a statement that the information is available and may be accessed by the Owner on an Internet website and that it will be sent in paper form upon request by the Owner, when that information is so available and is sent in paper form as promptly as practicable upon request.

 

SECTION 1.10.           Dollars.

 

The term “Dollars” shall mean United States dollars.

 

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Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

SECTION 1.11.           DTC.

 

The term “DTC” shall mean The Depository Trust Company or its successor.

 

SECTION 1.12.           Foreign Registrar.

 

The term “Foreign Registrar” shall mean the entity that carries out the duties of registrar for the Shares and any other agent of the Company for the transfer and registration of Shares, including, without limitation, any securities depository for the Shares.

 

SECTION 1.13.           Holder.

 

The term “Holder” shall mean any person holding a Receipt or a security entitlement or other interest in American Depositary Shares, whether for its own account or for the account of another person, but that is not the Owner of that Receipt or those American Depositary Shares.

 

SECTION 1.14.           Owner.

 

The term “Owner” shall mean the person in whose name American Depositary Shares are registered on the books of the Depositary maintained for that purpose.

 

SECTION 1.15.           Receipts.

 

The term “Receipts” shall mean the American Depositary Receipts issued under this Deposit Agreement evidencing certificated American Depositary Shares, as the same may be amended from time to time in accordance with the provisions of this Deposit Agreement.

 

SECTION 1.16.           Registrar.

 

The term “Registrar” shall mean any corporation or other entity that is appointed by the Depositary to register American Depositary Shares and transfers of American Depositary Shares as provided in this Deposit Agreement.

 

SECTION 1.17.           Replacement.

 

The term “Replacement” shall have the meaning assigned to it in Section 4.8.

 

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Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

SECTION 1.18.           Restricted Securities.

 

The term “Restricted Securities” shall mean Shares that (i) are “restricted securities,” as defined in Rule 144 under the Securities Act of 1933, except for Shares that could be resold in reliance on Rule 144 without any conditions, (ii) are beneficially owned by an officer, director (or person performing similar functions) or other affiliate of the Company, (iii) otherwise would require registration under the Securities Act of 1933 in connection with the public offer and sale thereof in the United States or (iv) are subject to other restrictions on sale or deposit under the laws of the Cayman Islands, a shareholder agreement or the articles of association or similar document of the Company.

 

SECTION 1.19.           Securities Act of 1933.

 

The term “Securities Act of 1933” shall mean the United States Securities Act of 1933, as from time to time amended.

 

SECTION 1.20.           Shares.

 

The term “Shares” shall mean class A ordinary shares of the Company that are validly issued and outstanding, fully paid and nonassessable and that were not issued in violation of any pre-emptive or similar rights of the holders of outstanding securities of the Company; provided, however, that, if there shall occur any change in nominal or par value, a split-up or consolidation or any other reclassification or, upon the occurrence of an event described in Section 4.8, an exchange or conversion in respect of the Shares of the Company, the term “Shares” shall thereafter also mean the successor securities resulting from such change in nominal value, split-up or consolidation or such other reclassification or such exchange or conversion.

 

SECTION 1.21.           SWIFT.

 

The term “SWIFT” shall mean the financial messaging network operated by the Society for Worldwide Interbank Financial Telecommunication, or its successor.

 

SECTION 1.22.           Termination Option Event.

 

The term “Termination Option Event” shall mean any of the following events or conditions:

 

(i)            the Company institutes proceedings to be adjudicated as bankrupt or insolvent, consents to the institution of bankruptcy or insolvency proceedings against it, files a petition or answer or consent seeking reorganization or relief under any applicable law in respect of bankruptcy or insolvency, consents to the filing of any petition of that kind or to the appointment of a receiver, liquidator, assignee, trustee, custodian or sequestrator (or other similar official) of it or any substantial part of its property or makes an assignment for the benefit of creditors, or if information becomes publicly available indicating that unsecured claims against the Company are not expected to be paid;

 

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Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

(ii)           the American Depositary Shares are delisted from a stock exchange in the United States on which the American Depositary Shares were listed and, 30 days after that delisting, the American Depositary Shares have not been listed on another stock exchange in the United States, nor is there a symbol available for over-the-counter trading of the American Depositary Shares in the United States;

 

(iii)          an event or condition that is defined as a Termination Option Event in Section 4.1, 4.2 or 4.8.

 

ARTICLE 2.                           FORM OF RECEIPTS, DEPOSIT OF SHARES, DELIVERY, TRANSFER AND SURRENDER OF AMERICAN DEPOSITARY SHARES

 

SECTION 2.1.                  Form of Receipts; Registration and Transferability of American Depositary Shares.

 

Definitive Receipts shall be substantially in the form set forth in Exhibit A to this Deposit Agreement, with appropriate insertions, modifications and omissions, as permitted under this Deposit Agreement. No Receipt shall be entitled to any benefits under this Deposit Agreement or be valid or obligatory for any purpose, unless that Receipt has been (i) executed by the Depositary by the manual signature of a duly authorized officer of the Depositary or (ii) executed by the facsimile signature of a duly authorized officer of the Depositary and countersigned by the manual signature of a duly authorized signatory of the Depositary or the Registrar or a co-registrar. The Depositary shall maintain books on which (x) each Receipt so executed and delivered as provided in this Deposit Agreement and each transfer of that Receipt and (y) all American Depositary Shares delivered as provided in this Deposit Agreement and all registrations of transfer of American Depositary Shares, shall be registered. A Receipt bearing the facsimile signature of a person that was at any time a proper officer of the Depositary shall, subject to the other provisions of this paragraph, bind the Depositary, even if that person was not a proper officer of the Depositary on the date of issuance of that Receipt.

 

The Receipts and statements confirming registration of American Depositary Shares may have incorporated in or attached to them such legends or recitals or modifications not inconsistent with the provisions of this Deposit Agreement as may be required by the Depositary or required to comply with any applicable law or regulations thereunder or with the rules and regulations of any securities exchange upon which American Depositary Shares may be listed or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Receipts and American Depositary Shares are subject by reason of the date of issuance of the underlying Deposited Securities or otherwise.

 

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Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

American Depositary Shares evidenced by a Receipt, when the Receipt is properly endorsed or accompanied by proper instruments of transfer, shall be transferable as certificated registered securities under the laws of the State of New York. American Depositary Shares not evidenced by Receipts shall be transferable as uncertificated registered securities under the laws of the State of New York. The Depositary, notwithstanding any notice to the contrary, may treat the Owner of American Depositary Shares as the absolute owner thereof for the purpose of determining the person entitled to distribution of dividends or other distributions or to any notice provided for in this Deposit Agreement and for all other purposes, and neither the Depositary nor the Company shall have any obligation or be subject to any liability under this Deposit Agreement to any Holder of American Depositary Shares (but only to the Owner of those American Depositary Shares).

 

SECTION 2.2.                  Deposit of Shares.

 

Subject to the terms and conditions of this Deposit Agreement, Shares or evidence of rights to receive Shares may be deposited under this Deposit Agreement by delivery thereof to any Custodian, accompanied by any appropriate instruments or instructions for transfer, or endorsement, in form satisfactory to the Custodian.

 

As conditions of accepting Shares for deposit, the Depositary may require (i) any certification required by the Depositary or the Custodian in accordance with the provisions of this Deposit Agreement, (ii) a written order directing the Depositary to deliver to, or upon the written order of, the person or persons stated in that order American Depositary Shares representing those deposited Shares, (iii) evidence satisfactory to the Depositary that those Shares have been re-registered in the books of the Company or the Foreign Registrar in the name of the Depositary, a Custodian or a nominee of the Depositary or a Custodian, (iv) evidence satisfactory to the Depositary that any necessary approval for the transfer or deposit has been granted by any governmental body in each applicable jurisdiction and (v) an agreement or assignment, or other instrument satisfactory to the Depositary, that provides for the prompt transfer to the Custodian of any dividend, or right to subscribe for additional Shares or to receive other property, that any person in whose name those Shares are or have been recorded may thereafter receive upon or in respect of those Shares, or, in lieu thereof, such agreement of indemnity or other agreement as shall be satisfactory to the Depositary.

 

The Depositary shall refuse, and shall instruct the Custodian to refuse, to accept Shares for deposit if the Depositary has received a written notice from the Company that the Company has restricted transfer of those Shares under the Company’s articles of association or any applicable laws or that the deposit would result in any violation of the Company’s articles of association or any applicable laws.

 

At the request and risk and expense of a person proposing to deposit Shares, and for the account of that person, the Depositary may receive certificates for Shares to be deposited, together with the other instruments specified in this Section, for the purpose of forwarding those Share certificates to the Custodian for deposit under this Deposit Agreement.

 

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Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

The Depositary shall instruct each Custodian that, upon each delivery to a Custodian of a certificate or certificates for Shares to be deposited under this Deposit Agreement, together with the other documents specified in this Section, that Custodian shall, as soon as transfer and recordation can be accomplished, present that certificate or those certificates to the Company or the Foreign Registrar, if applicable, for transfer and recordation of the Shares being deposited in the name of the Depositary or its nominee or that Custodian or its nominee.

 

Deposited Securities shall be held by the Depositary or by a Custodian for the account and to the order of the Depositary or at such other place or places as the Depositary shall determine.

 

SECTION 2.3.                  Delivery of American Depositary Shares.

 

The Depositary shall instruct each Custodian that, upon receipt by that Custodian of any deposit pursuant to Section 2.2, together with the other documents or evidence required under that Section, that Custodian shall notify the Depositary of that deposit and the person or persons to whom or upon whose written order American Depositary Shares are deliverable in respect thereof. Upon receiving a notice of a deposit from a Custodian, or upon the receipt of Shares or evidence of the right to receive Shares by the Depositary, the Depositary, subject to the terms and conditions of this Deposit Agreement, shall deliver, to or upon the order of the person or persons entitled thereto, the number of American Depositary Shares issuable in respect of that deposit, but only upon payment to the Depositary of the fees and expenses of the Depositary for the delivery of those American Depositary Shares as provided in Section 5.9, and of all taxes and governmental charges and fees payable in connection with that deposit and the transfer of the deposited Shares. However, the Depositary shall deliver only whole numbers of American Depositary Shares.

 

SECTION 2.4.      Registration of Transfer of American Depositary Shares; Combination and Split-up of Receipts; Interchange of Certificated and Uncertificated American Depositary Shares.

 

The Depositary, subject to the terms and conditions of this Deposit Agreement, shall register a transfer of American Depositary Shares on its transfer books upon (i) in the case of certificated American Depositary Shares, surrender of the Receipt evidencing those American Depositary Shares, by the Owner or by a duly authorized attorney, properly endorsed or accompanied by proper instruments of transfer or (ii) in the case of uncertificated American Depositary Shares, receipt from the Owner of a proper instruction (including, for the avoidance of doubt, instructions through DRS and Profile as provided in Section 2.9), and, in either case, duly stamped as may be required by the laws of the State of New York and of the United States of America. Upon registration of a transfer, the Depositary shall deliver the transferred American Depositary Shares to or upon the order of the person entitled thereto.

 

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Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

The Depositary, subject to the terms and conditions of this Deposit Agreement, shall upon surrender of a Receipt or Receipts for the purpose of effecting a split-up or combination of such Receipt or Receipts, execute and deliver a new Receipt or Receipts for any authorized number of American Depositary Shares requested, evidencing the same aggregate number of American Depositary Shares as the Receipt or Receipts surrendered.

 

The Depositary, upon surrender of certificated American Depositary Shares for the purpose of exchanging for uncertificated American Depositary Shares, shall cancel the Receipt evidencing those certificated American Depositary Shares and send the Owner a statement confirming that the Owner is the owner of the same number of uncertificated American Depositary Shares. The Depositary, upon receipt of a proper instruction (including, for the avoidance of doubt, instructions through DRS and Profile as provided in Section 2.9) from the Owner of uncertificated American Depositary Shares for the purpose of exchanging for certificated American Depositary Shares, shall cancel those uncertificated American Depositary Shares and register and deliver to the Owner a Receipt evidencing the same number of certificated American Depositary Shares.

 

The Depositary may appoint one or more co-transfer agents for the purpose of effecting registration of transfers of American Depositary Shares and combinations and split-ups of Receipts at designated transfer offices on behalf of the Depositary. In carrying out its functions, a co-transfer agent may require evidence of authority and compliance with applicable laws and other requirements by Owners or persons entitled to American Depositary Shares and will be entitled to protection and indemnity to the same extent as the Depositary.

 

SECTION 2.5.                  Surrender of American Depositary Shares and Withdrawal of Deposited Securities.

 

Upon surrender of American Depositary Shares for the purpose of withdrawal of the Deposited Securities represented thereby and payment of the fee of the Depositary for the surrender of American Depositary Shares as provided in Section 5.9 and payment of all taxes and governmental charges payable in connection with that surrender and withdrawal of the Deposited Securities, and subject to the terms and conditions of this Deposit Agreement, the Owner of those American Depositary Shares shall be entitled to delivery (to the extent delivery can then be lawfully and practicably made), to or as instructed by that Owner, of the amount of Deposited Securities at the time represented by those American Depositary Shares, but not any money or other property as to which a record date for distribution to Owners has passed (since money or other property of that kind will be delivered or paid on the scheduled payment date to the Owner as of that record date), and except that the Depositary shall not be required to accept surrender of American Depositary Shares for the purpose of withdrawal to the extent it would require delivery of a fraction of a Deposited Security. That delivery shall be made, as provided in this Section, without unreasonable delay.

 

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Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

As a condition of accepting a surrender of American Depositary Shares for the purpose of withdrawal of Deposited Securities, the Depositary may require (i) that each surrendered Receipt be properly endorsed in blank or accompanied by proper instruments of transfer in blank and (ii) that the surrendering Owner execute and deliver to the Depositary a written order directing the Depositary to cause the Deposited Securities being withdrawn to be delivered to or upon the written order of a person or persons designated in that order.

 

Thereupon, the Depositary shall direct the Custodian to deliver, subject to Sections 2.6, 3.1 and 3.2, the other terms and conditions of this Deposit Agreement and local market rules and practices, to the surrendering Owner or to or upon the written order of the person or persons designated in the order delivered to the Depositary as above provided, the amount of Deposited Securities represented by the surrendered American Depositary Shares, and the Depositary may charge the surrendering Owner a fee and its expenses for giving that direction by cable (including SWIFT) or facsimile transmission.

 

If Deposited Securities are delivered physically upon surrender of American Depositary Shares for the purpose of withdrawal, that delivery will be made at the Custodian’s office, except that, at the request, risk and expense of an Owner surrendering American Depositary Shares for withdrawal of Deposited Securities, and for the account of that Owner, the Depositary shall direct the Custodian to forward any cash or other property comprising, and forward a certificate or certificates, if applicable, and other proper documents of title, if any, for, the Deposited Securities represented by the surrendered American Depositary Shares to the Depositary for delivery at the Depositary’s Office or to another address specified in the order received from the surrendering Owner.

 

SECTION 2.6.                  Limitations on Delivery, Registration of Transfer and Surrender of American Depositary Shares.

 

As a condition precedent to the delivery, registration of transfer or surrender of any American Depositary Shares or split-up or combination of any Receipt or withdrawal of any Deposited Securities, the Depositary, Custodian or Registrar may require payment from the depositor of Shares or the presenter of the Receipt or instruction for registration of transfer or surrender of American Depositary Shares not evidenced by a Receipt of a sum sufficient to reimburse it for any tax or other governmental charge and any stock transfer or registration fee with respect thereto (including any such tax or charge and fee with respect to Shares being deposited or withdrawn) and payment of any applicable fees as provided in this Deposit Agreement, may require the production of proof satisfactory to it as to the identity and genuineness of any signature and may also require compliance with any regulations the Depositary may establish consistent with the provisions of this Deposit Agreement, including, without limitation, this Section 2.6.

 

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Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

The Depositary may refuse to accept deposits of Shares for delivery of American Depositary Shares or to register transfers of American Depositary Shares in particular instances, or may suspend deposits of Shares or registration of transfer generally, whenever it or the Company considers it necessary or advisable to do so. The Depositary may refuse surrenders of American Depositary Shares for the purpose of withdrawal of Deposited Securities in particular instances, or may suspend surrenders for the purpose of withdrawal generally, but, notwithstanding anything to the contrary in this Deposit Agreement, only for (i) temporary delays caused by closing of the Depositary’s register or the register of holders of Shares maintained by the Company or the Foreign Registrar, or the deposit of Shares, in connection with voting at a shareholders’ meeting or the payment of dividends, (ii) the payment of fees, taxes and similar charges, (iii) compliance with any U.S. or foreign laws or governmental regulations relating to the American Depositary Shares or to the withdrawal of the Deposited Securities or (iv) any other reason that, at the time, is permitted under paragraph I(A)(1) of the General Instructions to Form F-6 under the Securities Act of 1993 or any successor to that provision.

 

The Depositary shall not knowingly accept for deposit under this Deposit Agreement any Shares that, at the time of deposit, are Restricted Securities.

 

SECTION 2.7.                  Lost Receipts, etc.

 

If a Receipt is mutilated, destroyed, lost or stolen, the Depositary shall deliver to the Owner the American Depositary Shares evidenced by that Receipt in uncertificated form or, if requested by the Owner, execute and deliver a new Receipt of like tenor in exchange and substitution for such mutilated Receipt, upon surrender and cancellation of that mutilated Receipt, or in lieu of and in substitution for that destroyed, lost or stolen Receipt. However, before the Depositary will deliver American Depositary Shares in uncertificated form or execute and deliver a new Receipt, in substitution for a destroyed, lost or stolen Receipt, the Owner must (a) file with the Depositary (i) a request for that replacement before the Depositary has notice that the Receipt has been acquired by a bona fide purchaser and (ii) a sufficient indemnity bond and (b) satisfy any other reasonable requirements imposed by the Depositary.

 

SECTION 2.8.                  Cancellation and Destruction of Surrendered Receipts.

 

The Depositary shall cancel all Receipts surrendered to it and is authorized to destroy Receipts so cancelled.

 

SECTION 2.9.                  DTC Direct Registration System and Profile Modification System.

 

(a)           Notwithstanding the provisions of Section 2.4, the parties acknowledge that DTC’s Direct Registration System (“DRS”) and Profile Modification System (“Profile”) apply to the American Depositary Shares upon acceptance thereof to DRS by DTC. DRS is the system administered by DTC that facilitates interchange between registered holding of uncertificated securities and holding of security entitlements in those securities through DTC and a DTC participant. Profile is a required feature of DRS that allows a DTC participant, claiming to act on behalf of an Owner of American Depositary Shares, to direct the Depositary to register a transfer of those American Depositary Shares to DTC or its nominee and to deliver those American Depositary Shares to the DTC account of that DTC participant without receipt by the Depositary of prior authorization from the Owner to register that transfer.

 

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Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

(b)           In connection with DRS/Profile, the parties acknowledge that the Depositary will not determine whether the DTC participant that is claiming to be acting on behalf of an Owner in requesting a registration of transfer and delivery as described in paragraph (a) above has the actual authority to act on behalf of that Owner (notwithstanding any requirements under the Uniform Commercial Code). For the avoidance of doubt, the provisions of Sections 5.3 and 5.8 apply to the matters arising from the use of the DRS/Profile. The parties agree that the Depositary’s reliance on and compliance with instructions received by the Depositary through the DRS/Profile system and otherwise in accordance with this Deposit Agreement shall not constitute negligence or bad faith on the part of the Depositary.

 

ARTICLE 3.                           CERTAIN OBLIGATIONS OF OWNERS AND HOLDERS OF AMERICAN DEPOSITARY SHARES

 

SECTION 3.1.                  Filing Proofs, Certificates and Other Information.

 

Any person presenting Shares for deposit or any Owner or Holder may be required from time to time to file with the Depositary or the Custodian such proof of citizenship or residence, exchange control approval, or such information relating to the registration on the books of the Company or the Foreign Registrar, if applicable, to execute such certificates and to make such representations and warranties, as the Depositary may deem necessary or proper, or as the Company may reasonably require by written request to the Depositary. The Depositary may withhold the delivery or registration of transfer of American Depositary Shares, the distribution of any dividend or other distribution or of the proceeds thereof or the delivery of any Deposited Securities until that proof or other information is filed or those certificates are executed or those representations and warranties are made. The Depositary shall provide the Company, upon the Company’s written request and at the Company’s expense, as promptly as practicable, with copies of any information or other materials that it receives pursuant to this Section 3.1, to the extent that disclosure is permitted under applicable law.

 

SECTION 3.2.                  Liability of Owner for Taxes.

 

If any tax or other governmental charge shall become payable by the Custodian or the Depositary with respect to or in connection with any American Depositary Shares or any Deposited Securities represented by any American Depositary Shares or in connection with a transaction to which Section 4.8 applies, that tax or other governmental charge shall be payable by the Owner of those American Depositary Shares to the Depositary. The Depositary may refuse to register any transfer of those American Depositary Shares or any withdrawal of Deposited Securities represented by those American Depositary Shares until that payment is made, and may withhold any dividends or other distributions or the proceeds thereof, or may sell for the account of the Owner any part or all of the Deposited Securities represented by those American Depositary Shares and apply those dividends or other distributions or the net proceeds of any sale of that kind in payment of that tax or other governmental charge but, even after a sale of that kind, the Owner of those American Depositary Shares shall remain liable for any deficiency. The Depositary shall distribute any net proceeds of a sale made under this Section that are not used to pay taxes or governmental charges to the Owners entitled to them in accordance with Section 4.1. If the number of Shares represented by each American Depositary Share decreases as a result of a sale of Deposited Securities under this Section, the Depositary may call for surrender of the American Depositary Shares to be exchanged on a mandatory basis for a lesser number of American Depositary Shares and may sell American Depositary Shares to the extent necessary to avoid distributing fractions of American Depositary Shares in that exchange and distribute the net proceeds of that sale to the Owners entitled to them.

 

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Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

SECTION 3.3.                  Warranties on Deposit of Shares.

 

Every person depositing Shares under this Deposit Agreement shall be deemed thereby to represent and warrant that those Shares and each certificate therefor, if applicable, are validly issued, fully paid and nonassessable and were not issued in violation of any preemptive or similar rights of the holders of outstanding securities of the Company and that the person making that deposit is duly authorized so to do. Every depositing person shall also be deemed to represent that the Shares, at the time of deposit, are not Restricted Securities. All representations and warranties deemed made under this Section shall survive the deposit of Shares and delivery of American Depositary Shares.

 

SECTION 3.4.                  Disclosure of Interests.

 

When required in order to comply with applicable laws and regulations or the articles of association or similar document of the Company, the Company may from time to time request each Owner and Holder to provide to the Depositary information relating to: (a) the capacity in which it holds American Depositary Shares, (b) the identity of any Holders or other persons or entities then or previously interested in those American Depositary Shares and the nature of those interests and (c) any other matter where disclosure of such matter is required for that compliance. Each Owner and Holder agrees to provide all information known to it in response to a request made pursuant to this Section. Each Holder consents to the disclosure by the Depositary and the Owner or any other Holder through which it holds American Depositary Shares, directly or indirectly, of all information responsive to a request made pursuant to this Section relating to that Holder that is known to that Owner or other Holder. The Depositary agrees to use reasonable efforts to comply with written instructions requesting that the Depositary forward any request authorized under this Section to the Owners and to forward to the Company any responses it receives in response to that request. The Depositary may charge the Company a fee and its expenses for complying with requests under this Section 3.4.

 

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Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

ARTICLE 4.         THE DEPOSITED SECURITIES

 

SECTION 4.1.                  Cash Distributions.

 

Whenever the Depositary receives any cash dividend or other cash distribution on Deposited Securities, the Depositary shall, subject to the provisions of Section 4.5, convert that dividend or other distribution into Dollars and distribute the amount thus received (net of the fees and expenses of the Depositary as provided in Section 5.9) to the Owners entitled thereto, in proportion to the number of American Depositary Shares representing those Deposited Securities held by them respectively; provided, however, that if the Custodian or the Depositary shall be required to withhold and does withhold from that cash dividend or other cash distribution an amount on account of taxes or other governmental charges, the amount distributed to the Owners of the American Depositary Shares representing those Deposited Securities shall be reduced accordingly. However, the Depositary will not pay any Owner a fraction of one cent, but will round each Owner’s entitlement to the nearest whole cent.

 

The Company or its agent will remit to the appropriate governmental agency in each applicable jurisdiction all amounts withheld and owing to such agency.

 

If a cash distribution would represent a return of all or substantially all the value of the Deposited Securities underlying American Depositary Shares, the Depositary may:

 

(i)            require payment of or deduct the fee for surrender of American Depositary Shares (whether or not it is also requiring surrender of American Depositary Shares) as a condition of making that cash distribution; or

 

(ii)           sell all Deposited Securities other than the subject cash distribution and add any net cash proceeds of that sale to the cash distribution, call for surrender of all those American Depositary Shares and require that surrender as a condition of making that cash distribution.

 

If the Depositary acts under this paragraph, that action shall also be a Termination Option Event.

 

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Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

SECTION 4.2.                  Distributions Other Than Cash, Shares or Rights.

 

Subject to the provisions of Sections 4.11 and 5.9, whenever the Depositary receives any distribution other than a distribution described in Section 4.1, 4.3 or 4.4 on Deposited Securities (but not in exchange for or in conversion or in lieu of Deposited Securities), the Depositary shall cause the securities or property received by it to be distributed to the Owners entitled thereto, after deduction or upon payment of any fees and expenses of the Depositary and any taxes or other governmental charges, in proportion to the number of American Depositary Shares representing such Deposited Securities held by them respectively, in any manner that the Depositary deems equitable and practicable for accomplishing that distribution (which may be a distribution of depositary shares representing the securities received); provided, however, that if in the opinion of the Depositary such distribution cannot be made proportionately among the Owners entitled thereto, or if for any other reason (including, but not limited to, any requirement that the Company or the Depositary withhold an amount on account of taxes or other governmental charges or that securities received must be registered under the Securities Act of 1933 in order to be distributed to Owners or Holders) the Depositary deems such distribution not to be lawful and feasible, the Depositary after consultation with the Company to the extent practicable, may adopt such other method as it may deem equitable and practicable for the purpose of effecting such distribution, including, but not limited to, the public or private sale of the securities or property thus received, or any part thereof, and distribution of the net proceeds of any such sale (net of the fees and expenses of the Depositary as provided in Section 5.9) to the Owners entitled thereto, all in the manner and subject to the conditions set forth in Section 4.1. The Depositary may withhold any distribution of securities under this Section 4.2 if it has not received satisfactory assurances from the Company that the distribution does not require registration under the Securities Act of 1933. The Depositary may sell, by public or private sale, an amount of securities or other property it would otherwise distribute under this Section 4.2 that is sufficient to pay its fees and expenses in respect of that distribution.

 

If a distribution to be made under this Section 4.2 would represent a return of all or substantially all the value of the Deposited Securities underlying American Depositary Shares, the Depositary may:

 

(i)            require payment of or deduct the fee for surrender of American Depositary Shares (whether or not it is also requiring surrender of American Depositary Shares) as a condition of making that distribution; or

 

(ii)           sell all Deposited Securities other than the subject distribution and add any net cash proceeds of that sale to the distribution, call for surrender of all those American Depositary Shares and require that surrender as a condition of making that distribution.

 

If the Depositary acts under this paragraph, that action shall also be a Termination Option Event.

 

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Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

SECTION 4.3.                  Distributions in Shares.

 

Whenever the Depositary receives any distribution on Deposited Securities consisting of a dividend in, or free distribution of, Shares, the Depositary may deliver to the Owners entitled thereto, in proportion to the number of American Depositary Shares representing those Deposited Securities held by them respectively, an aggregate number of American Depositary Shares representing the amount of Shares received as that dividend or free distribution, subject to the terms and conditions of this Deposit Agreement with respect to the deposit of Shares and issuance of American Depositary Shares, including withholding of any tax or governmental charge as provided in Section 4.11 and payment of the fees and expenses of the Depositary as provided in Section 5.9 (and the Depositary may sell, by public or private sale, an amount of the Shares received (or American Depositary Shares representing those Shares) sufficient to pay its fees and expenses in respect of that distribution). In lieu of delivering fractional American Depositary Shares, the Depositary may sell the amount of Shares represented by the aggregate of those fractions (or American Depositary Shares representing those Shares) and distribute the net proceeds, all in the manner and subject to the conditions described in Section 4.1. If and to the extent that additional American Depositary Shares are not delivered and Shares or American Depositary Shares are not sold, each American Depositary Share shall thenceforth also represent the additional Shares distributed on the Deposited Securities represented thereby.

 

If the Company declares a distribution in which holders of Deposited Securities have a right to elect whether to receive cash, Shares or other securities or a combination of those things, or a right to elect to have a distribution sold on their behalf, the Depositary may, after consultation with the Company, make that right of election available for exercise by Owners in any manner the Depositary considers to be lawful and practical. As a condition of making a distribution election right available to Owners, the Depositary may require satisfactory assurances from the Company that doing so does not require registration of any securities under the Securities Act of 1933 that has not been effected.

 

SECTION 4.4.                  Rights.

 

(a)           If rights are granted to the Depositary in respect of deposited Shares to purchase additional Shares or other securities, the Company and the Depositary shall endeavor to consult as to the actions, if any, the Depositary should take in connection with that grant of rights. The Depositary may, to the extent deemed by it to be lawful and practical (i) if requested in writing by the Company, grant to all or certain Owners rights to instruct the Depositary to purchase the securities to which the rights relate and deliver those securities or American Depositary Shares representing those securities to Owners, (ii) if requested in writing by the Company, deliver the rights to or to the order of certain Owners, or (iii) sell the rights to the extent practicable and distribute the net proceeds of that sale to Owners entitled to those proceeds. To the extent rights are not exercised, delivered or disposed of under (i), (ii) or (iii) above, the Depositary shall permit the rights to lapse unexercised.

 

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Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

(b)                                 If the Depositary will act under (a)(i) above, the Company and the Depositary will enter into a separate agreement setting forth the conditions and procedures applicable to the particular offering. Upon instruction from an applicable Owner in the form the Depositary specified and upon payment by that Owner to the Depositary of an amount equal to the purchase price of the securities to be received upon the exercise of the rights, the Depositary shall, on behalf of that Owner, exercise the rights and purchase the securities. The purchased securities shall be delivered to, or as instructed by, the Depositary. The Depositary shall (i) deposit the purchased Shares under this Deposit Agreement and deliver American Depositary Shares representing those Shares to that Owner or (ii) deliver or cause the purchased Shares or other securities to be delivered to or to the order of that Owner. The Depositary will not act under (a)(i) above unless the offer and sale of the securities to which the rights relate are registered under the Securities Act of 1933 or the Depositary has received an opinion of United States counsel that is satisfactory to it to the effect that those securities may be sold and delivered to the applicable Owners without registration under the Securities Act of 1933. For the avoidance of doubt, nothing in this Deposit Agreement shall create any obligation on the part of the Company to file a registration statement with respect to rights or the underlying securities or to endeavor to have such a registration statement declared effective.

 

(c)                                  If the Depositary will act under (a)(ii) above, the Company and the Depositary will enter into a separate agreement setting forth the conditions and procedures applicable to the particular offering. Upon (i) the request of an applicable Owner to deliver the rights allocable to the American Depositary Shares of that Owner to an account specified by that Owner to which the rights can be delivered and (ii) receipt of such documents as the Company and the Depositary agreed to require to comply with applicable law, the Depositary will deliver those rights as requested by that Owner.

 

(d)                                 If the Depositary will act under (a)(iii) above, the Depositary will use reasonable efforts to sell the rights in proportion to the number of American Depositary Shares held by the applicable Owners and pay the net proceeds to the Owners otherwise entitled to the rights that were sold, upon an averaged or other practical basis without regard to any distinctions among such Owners because of exchange restrictions or the date of delivery of any American Depositary Shares or otherwise.

 

(e)                                  Payment or deduction of the fees of the Depositary as provided in Section 5.9 and payment or deduction of the expenses of the Depositary and any applicable taxes or other governmental charges shall be conditions of any delivery of securities or payment of cash proceeds under this Section 4.4.

 

(f)                                   The Depositary shall not be responsible for any failure to determine that it may be lawful or feasible to make rights available to or exercise rights on behalf of Owners in general or any Owner in particular, or to sell rights.

 

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Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

SECTION 4.5.                  Conversion of Foreign Currency.

 

Whenever the Depositary or the Custodian receives foreign currency, by way of dividends or other distributions or the net proceeds from the sale of securities, property or rights, and if at the time of the receipt thereof the foreign currency so received can in the judgment of the Depositary be converted on a reasonable basis into Dollars and the resulting Dollars transferred to the United States, the Depositary or one of its agents or affiliates or the Custodian shall convert or cause to be converted by sale or in any other manner that it may determine that foreign currency into Dollars, and those Dollars shall be distributed to the Owners entitled thereto. A cash distribution may be made upon an averaged or other practicable basis without regard to any distinctions among Owners based on exchange restrictions, the date of delivery of any American Depositary Shares or otherwise and shall be net of any expenses of conversion into Dollars incurred by the Depositary as provided in Section 5.9.

 

If a conversion of foreign currency or the repatriation or distribution of Dollars can be effected only with the approval or license of any government or agency thereof, the Depositary may, but will not be required to, file an application for that approval or license.

 

If the Depositary determines that in its judgment any foreign currency received by the Depositary or the Custodian is not convertible on a reasonable basis into Dollars transferable to the United States, or if any approval or license of any government or agency thereof that is required for such conversion is not filed or sought by the Depositary or is not obtained within a reasonable period as determined by the Depositary, the Depositary may distribute the foreign currency received by the Depositary to, or in its discretion may hold such foreign currency uninvested and without liability for interest thereon for the respective accounts of, the Owners entitled to receive the same.

 

If any conversion of foreign currency, in whole or in part, cannot be effected for distribution to some of the Owners entitled thereto, the Depositary may in its discretion make that conversion and distribution in Dollars to the extent practicable and permissible to the Owners entitled thereto and may distribute the balance of the foreign currency received by the Depositary to, or hold that balance uninvested and without liability for interest thereon for the account of, the Owners entitled thereto.

 

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Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

The Depositary may convert currency itself or through any of its affiliates, or the Custodian or the Company may convert currency and pay Dollars to the Depositary. Where the Depositary converts currency itself or through any of its affiliates, the Depositary acts as principal for its own account and not as agent, advisor, broker or fiduciary on behalf of any other person and earns revenue, including, without limitation, transaction spreads, that it will retain for its own account. The revenue is based on, among other things, the difference between the exchange rate assigned to the currency conversion made under this Deposit Agreement and the rate that the Depositary or its affiliate receives when buying or selling foreign currency for its own account. The Depositary makes no  representation that the exchange rate used or obtained by it or its affiliate in any currency conversion under this Deposit Agreement will be the most favorable rate that could be obtained at the time or that the method by which that rate will be determined will be the most favorable to Owners, subject to the Depositary’s obligations under Section 5.3. The methodology used to determine exchange rates used in currency conversions made by the Depositary is available upon request. Where the Custodian converts currency, the Custodian has no obligation to obtain the most favorable rate that could be obtained at the time or to ensure that the method by which that rate will be determined will be the most favorable to Owners, and the Depositary makes no representation that the rate is the most favorable rate and will not be liable for any direct or indirect losses associated with the rate. In certain instances, the Depositary may receive dividends or other distributions from the Company in Dollars that represent the proceeds of a conversion of foreign currency or translation from foreign currency at a rate that was obtained or determined by or on behalf of the Company and, in such cases, the Depositary will not engage in, or be responsible for, any foreign currency transactions and neither it nor the Company makes any representation that the rate obtained or determined by the Company is the most favorable rate and neither it nor the Company will be liable for any direct or indirect losses associated with the rate.

 

SECTION 4.6.                  Fixing of Record Date.

 

Whenever a cash dividend, cash distribution or any other distribution is made on Deposited Securities or rights to purchase Shares or other securities are issued with respect to Deposited Securities (which rights will be delivered to or exercised or sold on behalf of Owners in accordance with Section 4.4) or the Depositary receives notice that a distribution or issuance of that kind will be made, or whenever the Depositary receives notice that a meeting of holders of Shares will be held in respect of which the Company has requested the Depositary to send a notice under Section 4.7, or whenever the Depositary will assess a fee or charge against the Owners, or whenever the Depositary causes a change in the number of Shares that are represented by each American Depositary Share, or whenever the Depositary otherwise finds it necessary or convenient, the Depositary shall fix a record date, which shall be the same as, or as near as practicable to, any corresponding record date set by the Company with respect to Shares, (a) for the determination of the Owners (i) who shall be entitled to receive the benefit of that dividend or other distribution or those rights, (ii) who shall be entitled to give instructions for the exercise of voting rights at that meeting, (iii) who shall be responsible for that fee or charge or (iv) for any other purpose for which the record date was set, or (b) on or after which each American Depositary Share will represent the changed number of Shares. Subject to the provisions of Sections 4.1 through 4.5 and to the other terms and conditions of this Deposit Agreement, the Owners on a record date fixed by the Depositary shall be entitled to receive the amount distributable by the Depositary with respect to that dividend or other distribution or those rights or the net proceeds of sale thereof in proportion to the number of American Depositary Shares held by them respectively, to give voting instructions or to  act in respect of the other matter for which that record date was fixed, or be responsible for that fee or charge, as the case may be.

 

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Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

SECTION 4.7.                  Voting of Deposited Shares.

 

(a)                                 Upon receipt of notice of any meeting of holders of Shares at which holders of Shares will be entitled to vote, if requested in writing by the Company, the Depositary shall, as soon as practicable thereafter, Disseminate to the Owners a notice, the form of which shall be in the sole discretion of the Depositary, that shall contain (i) the information contained in the notice of meeting received by the Depositary, (ii) a statement that the Owners as of the close of business on a specified record date will be entitled, subject to any applicable provision of Cayman Islands law and of the articles of association or similar documents of the Company, to instruct the Depositary as to the exercise of the voting rights pertaining to the amount of Shares represented by their respective American Depositary Shares, (iii) a statement as to the manner in which those instructions may be given, including an express indication that instructions may be deemed given in accordance with the last sentence of paragraph (b) below, if no instruction is received, to the Depositary to give a discretionary proxy to a person designated by the Company and (iv) the last date on which the Depositary will accept instructions (the “Instruction Cutoff Date”).

 

(b)                                 Upon the written request of an Owner of American Depositary Shares, as of the date of the request or, if a record date was specified by the Depositary, as of that record date, received on or before any Instruction Cutoff Date established by the Depositary, the Depositary may, and if the Depositary sent a notice under the preceding paragraph shall, endeavor, in so far as practicable, to vote or cause to be voted the amount of deposited Shares represented by those American Depositary Shares in accordance with the instructions set forth in that request. The Depositary shall not vote or attempt to exercise the right to vote that attaches to the deposited Shares other than in accordance with instructions given by Owners and received by the Depositary or as provided in the following sentence. If

 

(i) the Company instructed the Depositary to Disseminate a notice under paragraph (a) above and complied with the paragraph (d) below,

 

(ii) no instructions are received by the Depositary from an Owner with respect to a matter and an amount of American Depositary Shares of that Owner on or before the Instruction Cutoff Date and

 

(iii) the Depositary has received from the Company, by the business day following the Instruction Cutoff Date, a written confirmation that, as of the Instruction Cutoff Date, (x) the Company wishes a proxy to be given under this sentence, (y) the Company reasonably does not know of any substantial opposition to the matters and (z) the matters are not materially adverse to the interests of shareholders,

 

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then, the Depositary shall deem that Owner to have instructed the Depositary to give a discretionary proxy to a person designated by the Company with respect to that matter and the amount of deposited Shares represented by that amount of American Depositary Shares and the Depositary shall give a discretionary proxy to a person designated by the Company to vote that amount of deposited Shares as to that matter.

 

(c)                                  There can be no assurance that Owners generally or any Owner in particular will receive the notice described in paragraph (a) above in time to enable Owners to give instructions to the Depositary prior to the Instruction Cutoff Date.

 

(d)                                 In order to give Owners a reasonable opportunity to instruct the Depositary as to the exercise of voting rights relating to Shares, if the Company will request the Depositary to Disseminate a notice under paragraph (a) above, the Company shall give the Depositary notice of the meeting, details concerning the matters to be voted upon and copies of materials to be made available to holders of Shares in connection with the meeting not less than 40 days prior to the meeting date.

 

SECTION 4.8.                  Tender and Exchange Offers; Redemption, Replacement or Cancellation of Deposited Securities.

 

(a)                                 The Depositary shall not tender any Deposited Securities in response to any voluntary cash tender offer, exchange offer or similar offer made to holders of Deposited Securities (a “Voluntary Offer”), except when instructed in writing to do so by an Owner surrendering American Depositary Shares and subject to any conditions or procedures the Depositary may require.

 

(b)                                 If the Depositary receives a written notice that Deposited Securities have been redeemed for cash or otherwise purchased for cash in a transaction that is mandatory and binding on the Depositary as a holder of those Deposited Securities (a “Redemption”), the Depositary, at the expense of the Company, shall (i) if required, surrender Deposited Securities that have been redeemed to the issuer of those securities or its agent on the redemption date, (ii) Disseminate a notice to Owners (A) notifying them of that Redemption, (B) calling for surrender of a corresponding number of American Depositary Shares and (C) notifying them that the called American Depositary Shares have been converted into a right only to receive the money received by the Depositary upon that Redemption and those net proceeds shall be the Deposited Securities to which Owners of those converted American Depositary Shares shall be entitled upon surrenders of those American Depositary Shares in accordance with Section 2.5 or 6.2 and (iii) distribute the money received upon that Redemption to the Owners entitled to it upon surrender by them of called American Depositary Shares in accordance with Section 2.5 (and, for the avoidance of doubt, Owners shall not be entitled to receive that money under Section 4.1). If the Redemption affects less than all the Deposited Securities, the Depositary shall call for surrender a corresponding portion of the outstanding American Depositary Shares and only those American Depositary Shares will automatically be converted into a right to receive the net proceeds of the Redemption. The Depositary shall allocate the American Depositary Shares converted under the preceding sentence among the Owners pro-rata to their respective holdings of American Depositary Shares immediately prior to the Redemption, except that the allocations may be adjusted so that no fraction of a converted American Depositary Share is allocated to any Owner. A Redemption of all or substantially all of the Deposited Securities shall be a Termination Option Event.

 

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(c)                                  If the Depositary is notified of or there occurs any change in nominal value or any subdivision, combination or any other reclassification of the Deposited Securities or any recapitalization, reorganization, sale of assets substantially as an entirety, merger or consolidation affecting the issuer of the Deposited Securities or to which it is a party that is mandatory and binding on the Depositary as a holder of Deposited Securities and, as a result, securities or other property have been or will be delivered in exchange, conversion, replacement or in lieu of, Deposited Securities (a “Replacement”), the Depositary shall, if required, surrender the old Deposited Securities affected by that Replacement of Shares and hold, as new Deposited Securities under this Deposit Agreement, the new securities or other property delivered to it in that Replacement. However, the Depositary may elect to sell those new Deposited Securities if in the opinion of the Depositary it is not lawful or not practical for it to hold those new Deposited Securities under this Deposit Agreement because those new Deposited Securities may not be distributed to Owners without registration under the Securities Act of 1933 or for any other reason, at public or private sale, at such places and on such terms as it deems proper and proceed as if those new Deposited Securities had been Redeemed under paragraph (b) above. A Replacement shall be a Termination Option Event.

 

(d)                                 In the case of a Replacement where the new Deposited Securities will continue to be held under this Deposit Agreement, the Depositary may call for the surrender of outstanding Receipts to be exchanged for new Receipts specifically describing the new Deposited Securities and the number of those new Deposited Securities represented by each American Depositary Share. If the number of Shares represented by each American Depositary Share decreases as a result of a Replacement, the Depositary may call for surrender of the American Depositary Shares to be exchanged on a mandatory basis for a lesser number of American Depositary Shares and may sell American Depositary Shares to the extent necessary to avoid distributing fractions of American Depositary Shares in that exchange and distribute the net proceeds of that sale to the Owners entitled to them.

 

(e)                                  If there are no Deposited Securities with respect to American Depositary Shares, including if the Deposited Securities are cancelled, or the Deposited Securities with respect to American Depositary Shares have become apparently worthless, the Depositary may call for surrender of those American Depositary Shares or may cancel those American Depositary Shares, upon notice to Owners, and that condition shall be a Termination Option Event.

 

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SECTION 4.9.                  Reports.

 

The Depositary shall make available for inspection by Owners at its Office any reports and communications, including any proxy solicitation material, received from the Company which are both (a) received by the Depositary as the holder of the Deposited Securities and (b) made generally available to the holders of those Deposited Securities by the Company. The Company shall furnish reports and communications, including any proxy soliciting material to which this Section applies, to the Depositary in English, to the extent those materials are required to be translated into English pursuant to any regulations of the Commission.

 

SECTION 4.10.           Lists of Owners.

 

Upon written request by the Company, the Depositary shall, at the expense of the Company, furnish to it a list, as of a recent date, of the names, addresses and American Depositary Share holdings of all Owners.

 

SECTION 4.11.           Withholding.

 

If the Depositary determines that any distribution received or to be made by the Depositary (including Shares and rights to subscribe therefor) is subject to any tax or other governmental charge that the Depositary is obligated to withhold, the Depositary may sell, by public or private sale, all or a portion of the distributed property (including Shares and rights to subscribe therefor) in the amounts and manner the Depositary deems necessary and practicable to pay those taxes or charges, and the Depositary shall distribute the net proceeds of that sale, after deduction of those taxes or charges, to the Owners entitled thereto in proportion to the number of American Depositary Shares held by them respectively.

 

Services for Owners and Holders that may permit them to obtain reduced rates of tax withholding at source or reclaim excess tax withheld, and the fees and costs associated with using services of that kind, are not provided under, and are outside the scope of, this Deposit Agreement.

 

Each Owner and Holder agrees to indemnify the Company, the Depositary, the Custodian and their respective directors, employees, agents and affiliates for, and hold each of them harmless against, any claim by any governmental authority with respect to taxes, additions to tax, penalties or interest arising out of any refund of taxes, reduced withholding at source or other tax benefit received by it.

 

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ARTICLE 5.                           THE DEPOSITARY, THE CUSTODIANS AND THE COMPANY

 

SECTION 5.1.                  Maintenance of Office and Register by the Depositary.

 

Until termination of this Deposit Agreement in accordance with its terms, the Depositary shall maintain facilities for the delivery, registration of transfers and surrender of American Depositary Shares in accordance with the provisions of this Deposit Agreement.

 

The Depositary shall keep a register of all Owners and all outstanding American Depositary Shares, which shall be open for inspection by the Owners at the Depositary’s Office during regular business hours, but only for the purpose of communicating with Owners regarding the business of the Company or a matter related to this Deposit Agreement or the American Depositary Shares.

 

The Depositary may close the register for delivery, registration of transfer or surrender for the purpose of withdrawal from time to time as provided in Section 2.6.

 

If any American Depositary Shares are listed on one or more stock exchanges, the Depositary shall act as Registrar or appoint a Registrar or one or more co-registrars for registration of those American Depositary Shares in accordance with any requirements of that exchange or those exchanges.

 

The Company shall have the right, at all reasonable times, upon written request, to inspect transfer and registration records of the Depositary, the Registrar and any co-transfer agents or co-registrars and to require them to supply, at the Company’s expense (unless otherwise agreed in writing between the Company and the Depositary) copies of such portions of their records as the Company may reasonably request.

 

SECTION 5.2.                  Prevention or Delay of Performance by the Company or the Depositary.

 

Neither the Depositary nor the Company nor any of their respective directors, employees, agents or affiliates shall incur any liability to any Owner or Holder:

 

(i) if by reason of (A) any provision of any present or future law or regulation or other act of the government of the United States, any State of the United States or any other state or jurisdiction, or of any governmental or regulatory authority or stock exchange; (B) (in the case of the Depositary only) any provision, present or future, of the articles of association or similar document of the Company, or any provision of any securities issued or distributed by the Company, or any offering or distribution thereof; or (C) any event or circumstance, whether natural or caused by a person or persons, that is beyond the ability of the Depositary or the Company, as the case may be, to prevent or counteract by reasonable care or effort (including, but not limited to, earthquakes, floods, severe storms, fires, explosions, war, terrorism, civil unrest, labor disputes, criminal acts  or outbreaks of infection disease; interruptions or malfunctions of utility services, Internet or other communications lines or systems; unauthorized access to or attacks on computer systems or websites; or other failures or malfunctions of computer hardware or software or other systems or equipment), the Depositary or the Company is, directly or indirectly, prevented from, forbidden to or delayed in, or could be subject to any civil or criminal penalty on account of doing or performing and therefore does not do or perform, any act or thing that, by the terms of this Deposit Agreement or the Deposited Securities, it is provided shall be done or performed;

 

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Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

(ii) for any exercise of, or failure to exercise, any discretion provided for in this Deposit Agreement (including any determination by the Depositary to take, or not take, any action that this Deposit Agreement provides the Depositary may take);

 

(iii) for the inability of any Owner or Holder to benefit from any distribution, offering, right or other benefit that is made available to holders of Deposited Securities but is not, under the terms of this Deposit Agreement, made available to Owners or Holders; or

 

(iv) for any special, consequential or punitive damages for any breach of the terms of this Deposit Agreement.

 

Where, by the terms of a distribution to which Section 4.1, 4.2 or 4.3 applies, or an offering to which Section 4.4 applies, or for any other reason, that distribution or offering may not be made available to Owners, and the Depositary may not dispose of that distribution or offering on behalf of Owners and make the net proceeds available to Owners, then the Depositary shall not make that distribution or offering available to Owners, and shall allow any rights, if applicable, to lapse.

 

SECTION 5.3.                  Obligations of the Depositary and the Company.

 

The Company assumes no obligation nor shall it be subject to any liability under this Deposit Agreement to any Owner or Holder, except that the Company agrees to perform its obligations specifically set forth in this Deposit Agreement without negligence or bad faith.

 

The Depositary assumes no obligation nor shall it be subject to any liability under this Deposit Agreement to any Owner or Holder (including, without limitation, liability with respect to the validity or worth of the Deposited Securities), except that the Depositary agrees to perform its obligations specifically set forth in this Deposit Agreement without negligence or bad faith, and the Depositary shall not be a fiduciary or have any fiduciary duty to Owners or Holders.

 

Neither the Depositary nor the Company shall be under any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any  Deposited Securities or in respect of the American Depositary Shares on behalf of any Owner or Holder or any other person.

 

25

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

Each of the Depositary and the Company may rely, and shall be protected in relying upon, any written notice, request, direction or other document believed by it to be genuine and to have been signed or presented by the proper party or parties.

 

Neither the Depositary nor the Company shall be liable for any action or non-action by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting Shares for deposit, any Owner or any other person believed by it in good faith to be competent to give such advice or information.

 

The Depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the Depositary or in connection with any matter arising wholly after the removal or resignation of the Depositary, provided that in connection with the issue out of which such potential liability arises the Depositary performed its obligations without negligence or bad faith while it acted as Depositary.

 

The Depositary shall not be liable for the acts or omissions of any securities depository, clearing agency or settlement system in connection with or arising out of bookentry settlement of American Depositary Shares or Deposited Securities or otherwise.

 

In the absence of bad faith on its part, the Depositary shall not be responsible for any failure to carry out any instructions to vote any of the Deposited Securities, or for the manner in which any such vote is cast or the effect of any such vote.

 

The Depositary shall have no duty to make any determination or provide any information as to the tax status of the Company or any liability for any tax consequences that may be incurred by Owners or Holders as a result of owning or holding American Depositary Shares. The Depositary shall not be liable for the inability or failure of an Owner or Holder to obtain the benefit of a foreign tax credit, reduced rate of withholding or refund of amounts withheld in respect of tax or any other tax benefit.

 

No disclaimer of liability under the United States federal securities laws is intended by any provision of this Deposit Agreement.

 

SECTION 5.4.                  Resignation and Removal of the Depositary.

 

The Depositary may at any time resign as Depositary hereunder by written notice of its election so to do delivered to the Company, to become effective upon the appointment of a successor depositary and its acceptance of that appointment as provided in this Section. The effect of resignation if a successor depositary is not appointed is provided for in Section 6.2.

 

26

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

The Depositary may at any time be removed by the Company by 90 days’ prior written notice of that removal, to become effective upon the later of (i) the 90th day after delivery of the notice to the Depositary and (ii) the appointment of a successor depositary and its acceptance of its appointment as provided in this Section.

 

If the Depositary resigns or is removed, the Company shall use its best efforts to appoint a successor depositary, which shall be a bank or trust company having an office in the Borough of Manhattan, The City of New York. Every successor depositary shall execute and deliver to the Company an instrument in writing accepting its appointment under this Deposit Agreement. If the Depositary receives notice from the Company that a successor depositary has been appointed following its resignation or removal, the Depositary, upon payment of all sums due it from the Company, shall deliver to its successor a register listing all the Owners and their respective holdings of outstanding American Depositary Shares and shall deliver the Deposited Securities to or to the order of its successor. When the Depositary has taken the actions specified in the preceding sentence (i) the successor shall become the Depositary and shall have all the rights and shall assume all the duties of the Depositary under this Deposit Agreement and (ii) the predecessor depositary shall cease to be the Depositary and shall be discharged and released from all obligations under this Deposit Agreement, except for its duties under Section 5.8 with respect to the time before that discharge. A successor Depositary shall notify the Owners of its appointment as soon as practical after assuming the duties of Depositary.

 

Any corporation or other entity into or with which the Depositary may be merged or consolidated shall be the successor of the Depositary without the execution or filing of any document or any further act.

 

SECTION 5.5.                  The Custodians.

 

The Custodian shall be subject at all times and in all respects to the directions of the Depositary and shall be responsible solely to it. The Depositary in its discretion may at any time appoint a substitute or additional custodian or custodians, each of which shall thereafter be one of the Custodians under this Deposit Agreement. If the Depositary receives notice that a Custodian is resigning and, upon the effectiveness of that resignation there would be no Custodian acting under this Deposit Agreement, the Depositary shall, as promptly as practicable after receiving that notice, appoint a substitute custodian or custodians, each of which shall thereafter be a Custodian under this Deposit Agreement. The Depositary shall notify the Company of the appointment of a substitute or additional Custodian as promptly as practicable. The Depositary shall require any Custodian that resigns or is removed to deliver all Deposited Securities held by it to another Custodian.

 

27

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

SECTION 5.6.                  Notices and Reports.

 

If the Company takes or decides to take any corporate action of a kind that is addressed in Sections 4.1 to 4.4, or 4.6 to 4.8, or that effects or will effect a change of the name or legal structure of the Company, or that effects or will effect a change to the Shares, the Company shall notify the Depositary and the Custodian of that action or decision as soon as it is lawful and practical to give that notice. The notice shall be in English and shall include all details that the Company is required to include in any notice to any governmental or regulatory authority or securities exchange or is required to make available generally to holders of Shares by publication or otherwise.

 

The Company will arrange for the translation into English, if not already in English, to the extent required pursuant to any regulations of the Commission, and the prompt transmittal by the Company to the Depositary and the Custodian of all notices and any other reports and communications which are made generally available by the Company to holders of its Shares. If requested in writing by the Company, the Depositary will Disseminate, at the Company’s expense, those notices, reports and communications to all Owners or otherwise make them available to Owners in a manner that the Company specifies as substantially equivalent to the manner in which those communications are made available to holders of Shares and compliant with the requirements of any securities exchange on which the American Depositary Shares are listed. The Company will timely provide the Depositary with the quantity of such notices, reports, and communications, as requested by the Depositary from time to time, in order for the Depositary to effect that Dissemination.

 

The Company represents, continuously, that the statements in Article 11 of the form of Receipt appearing as Exhibit A to this Deposit Agreement or, if applicable, most recently filed with the Commission pursuant to Rule 424(b) under the Securities Act with respect to the Company’s obligation to file periodic reports under the United States Securities Exchange Act of 1934, as amended, or its qualification for exemption from registration under that Act pursuant to Rule 12g3-2(b) under that Act, as the case may be, are true and correct. The Company agrees to promptly notify the Depositary upon becoming aware of any change in the truth of any of those statements or if there is any change in the Company’s status regarding those reporting obligations or that qualification.

 

SECTION 5.7.                  Distribution of Additional Shares, Rights, etc.

 

If the Company or any affiliate of the Company determines to make any issuance or distribution of (1) additional Shares, (2) rights to subscribe for Shares, (3) securities convertible into Shares, or (4) rights to subscribe for such securities (each a “Distribution”), the Company shall notify the Depositary in writing in English as promptly as practicable and in any event before the Distribution starts and, if requested in writing by the Depositary, the Company shall promptly furnish to the Depositary either (i) evidence satisfactory to the Depositary that the Distribution is registered under the Securities Act of 1933 or (ii) a written opinion from U.S. counsel that is reasonably satisfactory to the  Depositary, stating that the Distribution does not require, or, if made in the United States, would not require, registration under the Securities Act of 1933.

 

28

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

The Company agrees with the Depositary that neither the Company nor any company controlled by, controlling or under common control with the Company will at any time deposit any Shares that, at the time of deposit, are Restricted Securities.

 

SECTION 5.8.                  Indemnification.

 

The Company agrees to indemnify the Depositary, its directors, employees, agents and affiliates and each Custodian against, and hold each of them harmless from, any liability or expense (including, but not limited to any fees and expenses incurred in seeking, enforcing or collecting such indemnity and the reasonable fees and expenses of counsel) that may arise out of or in connection with (a) any registration with the Commission of American Depositary Shares or Deposited Securities or the offer or sale thereof or (b) acts performed or omitted, pursuant to the provisions of or in connection with this Deposit Agreement and the American Depositary Shares, as the same may be amended, modified or supplemented from time to time, (i) by either the Depositary or a Custodian or their respective directors, employees, agents and affiliates, except for any liability or expense arising out of the negligence or bad faith of either of them, or (ii) by the Company or any of its directors, employees, agents and affiliates.

 

The indemnities contained in the preceding paragraph shall not extend to any losses arising out of information relating to the Depositary or any Custodian, as the case may be, furnished in writing by the Depositary to the Company expressly for use in any registration statement, proxy statement, prospectus or preliminary prospectus or any other offering documents relating to the American Depositary Shares, the Shares or any other Deposited Securities (it being acknowledged that, as of the date of this Deposit Agreement, the Depositary has not furnished any information of that kind).

 

The Depositary agrees to indemnify the Company, its directors, employees, agents and affiliates and hold them harmless from any liability or expense (including but not limited to any fees and expenses incurred in seeking, enforcing or collecting such indemnity and the reasonable fees and expenses of counsel) that may arise out of acts performed or omitted by the Depositary or any Custodian or their respective directors, employees, agents and affiliates due to their negligence or bad faith.

 

29

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

SECTION 5.9.                  Charges of Depositary.

 

The following charges shall be incurred by any party depositing or withdrawing Shares or by any party surrendering American Depositary Shares or to whom American Depositary Shares are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by the Company or an exchange of stock regarding the American Depositary Shares or Deposited Securities or a delivery of American Depositary Shares pursuant to Section 4.3), or by Owners, as applicable: (1)  taxes and other governmental charges, (2) such registration fees as may from time to time be in effect for the registration of transfers of Shares generally on the Share register of the Company or Foreign Registrar and applicable to transfers of Shares to or from the name of the Depositary or its nominee or the Custodian or its nominee on the making of deposits or withdrawals hereunder, (3) such cable (including SWIFT) and facsimile transmission fees and expenses as are expressly provided in this Deposit Agreement, (4) such expenses as are incurred by the Depositary in the conversion of foreign currency pursuant to Section 4.5, (5) a fee of $5.00 or less per 100 American Depositary Shares (or portion thereof) for the delivery of American Depositary Shares pursuant to Section 2.3, 4.3 or 4.4 and the surrender of American Depositary Shares pursuant to Section 2.5 or 6.2, (6) a fee of $.05 or less per American Depositary Share (or portion thereof) for any cash distribution made pursuant to this Deposit Agreement, including, but not limited to Sections 4.1 through 4.4 and Section 4.8, (7) a fee for the distribution of securities pursuant to Section 4.2 or of rights pursuant to Section 4.4 (where the Depositary will not exercise or sell those rights on behalf of Owners), such fee being in an amount equal to the fee for the execution and delivery of American Depositary Shares referred to above which would have been charged as a result of the deposit of such securities under this Deposit Agreement (for purposes of this item 7 treating all such securities as if they were Shares) but which securities are instead distributed by the Depositary to Owners, (8) in addition to any fee charged under item 6 above, a fee of $.05 or less per American Depositary Share (or portion thereof) per annum for depositary services, which will be payable as provided in item 9 below, and (9) any other charges payable by the Depositary or the Custodian, any of the Depositary’s or Custodian’s agents or the agents of the Depositary’s or Custodian’s agents, in connection with the servicing of Shares or other Deposited Securities (which charges shall be assessed against Owners as of the date or dates set by the Depositary in accordance with Section 4.6 and shall be payable at the sole discretion of the Depositary by billing those Owners for those charges or by deducting those charges from one or more cash dividends or other cash distributions).

 

The Depositary may collect any of its fees by deduction from any cash distribution payable, or by selling a portion of any securities to be distributed, to Owners that are obligated to pay those fees.

 

In performing its duties under this Deposit Agreement, the Depositary may use brokers, dealers, foreign currency dealers or other service providers that are owned by or affiliated with the Depositary and that may earn or share fees, spreads or commissions.

 

The Depositary may own and deal in any class of securities of the Company and its affiliates and in American Depositary Shares.

 

SECTION 5.10.           Retention of Depositary Documents.

 

The Depositary is authorized to destroy those documents, records, bills and other data compiled during the term of this Deposit Agreement at the times permitted by the laws or regulations governing the Depositary, unless the Company requests in writing,  sufficiently prior to any such destruction, that those papers be retained for a longer period or turned over to the Company, at the Company’s expense.

 

30

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

SECTION 5.11.           Exclusivity.

 

Without prejudice to the Company’s rights under Section 5.4, the Company agrees not to appoint any other depositary for issuance of depositary shares, depositary receipts or any similar securities or instruments so long as The Bank of New York Mellon is acting as Depositary under this Deposit Agreement.

 

SECTION 5.12.           Information for Regulatory Compliance.

 

Each of the Company and the Depositary shall provide to the other, as promptly as practicable, information from its records or otherwise available to it that is reasonably requested by the other to permit the other to comply with applicable law or requirements of governmental or regulatory authorities.

 

ARTICLE 6.                           AMENDMENT AND TERMINATION

 

SECTION 6.1.                  Amendment.

 

The form of the Receipts and any provisions of this Deposit Agreement may at any time and from time to time be amended by agreement between the Company and the Depositary without the consent of Owners or Holders in any respect that they may deem necessary or desirable. Any amendment that would impose or increase any fees or charges (other than taxes and other governmental charges, registration fees, cable (including SWIFT) or facsimile transmission costs, delivery costs or other such expenses), or that would otherwise prejudice any substantial existing right of Owners, shall, however, not become effective as to outstanding American Depositary Shares until the expiration of 30 days after notice of that amendment has been Disseminated to the Owners of outstanding American Depositary Shares. Every Owner and Holder, at the time any amendment so becomes effective, shall be deemed, by continuing to hold American Depositary Shares or any interest therein, to consent and agree to that amendment and to be bound by this Deposit Agreement as amended thereby. Upon the effectiveness of an amendment to the form of Receipt, including a change in the number of Shares represented by each American Depositary Share, the Depositary may call for surrender of Receipts to be replaced with new Receipts in the amended form or call for surrender of American Depositary Shares to effect that change of ratio. In no event shall any amendment impair the right of the Owner to surrender American Depositary Shares and receive delivery of the Deposited Securities represented thereby, except in order to comply with mandatory provisions of applicable law.

 

31

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

SECTION 6.2.                  Termination.

 

(a)           The Company may initiate termination of this Deposit Agreement by notice to the Depositary. The Depositary may initiate termination of this Deposit Agreement if (i) at any time 90 days shall have expired after the Depositary delivered to the Company a written resignation notice and a successor depositary has not been appointed and accepted its appointment as provided in Section 5.4 or (ii) a Termination Option Event has occurred or will occur. If termination of this Deposit Agreement is initiated, the Depositary shall Disseminate a notice of termination to the Owners of all American Depositary Shares then outstanding setting a date for termination (the “Termination Date”), which shall be at least 90 days after the date of that notice, and this Deposit Agreement shall terminate on that Termination Date.

 

(b)           After the Termination Date, the Company shall be discharged from all obligations under this Deposit Agreement except for its obligations to the Depositary under Sections 5.8 and 5.9.

 

(c)           At any time after the Termination Date, the Depositary may sell the Deposited Securities then held under this Deposit Agreement and may thereafter hold uninvested the net proceeds of any such sale, together with any other cash then held by it hereunder, unsegregated and without liability for interest, for the pro rata benefit of the Owners of American Depositary Shares that remain outstanding, and those Owners will be general creditors of the Depositary with respect to those net proceeds and that other cash. After making that sale, the Depositary shall be discharged from all obligations under this Deposit Agreement, except (i) to account for the net proceeds and other cash (after deducting, in each case, the fee of the Depositary for the surrender of American Depositary Shares, any expenses for the account of the Owner of such American Depositary Shares in accordance with the terms and conditions of this Deposit Agreement and any applicable taxes or governmental charges) and (ii) for its obligations under Section 5.8 and (iii) to act as provided in paragraph (d) below.

 

(d)           After the Termination Date, the Depositary shall continue to receive dividends and other distributions pertaining to Deposited Securities (that have not been sold), may sell rights and other property as provided in this Deposit Agreement and shall deliver Deposited Securities (or sale proceeds) upon surrender of American Depositary Shares (after payment or upon deduction, in each case, of the fee of the Depositary for the surrender of American Depositary Shares, any expenses for the account of the Owner of those American Depositary Shares in accordance with the terms and conditions of this Deposit Agreement and any applicable taxes or governmental charges). After the Termination Date, the Depositary shall not accept deposits of Shares or deliver American Depositary Shares. After the Termination Date, (i) the Depositary may refuse to accept surrenders of American Depositary Shares for the purpose of withdrawal of Deposited Securities (that have not been sold) or reverse previously accepted surrenders of that kind that have not settled if in its judgment the requested withdrawal would interfere with its efforts to sell the Deposited Securities, (ii) the Depositary will not be required to deliver cash proceeds of the sale of Deposited Securities until all Deposited Securities have been sold and (iii) the Depositary may discontinue the registration of transfers of American Depositary Shares and suspend the distribution of dividends and other distributions on Deposited Securities to the Owners and need not give any further notices or perform any further acts under this Deposit Agreement except as provided in this Section.

 

32

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

ARTICLE 7.                           MISCELLANEOUS

 

SECTION 7.1.                  Counterparts; Signatures; Delivery.

 

This Deposit Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of those counterparts shall constitute one and the same instrument. Copies of this Deposit Agreement shall be filed with the Depositary and the Custodians and shall be open to inspection by any Owner or Holder during regular business hours.

 

The exchange of copies of this Deposit Agreement and manually-signed signature pages by facsimile, or email attaching a pdf or similar bit-mapped image, shall constitute effective execution and delivery of this Deposit Agreement as to the parties to it; copies and signature pages so exchanged may be used in lieu of the original Deposit Agreement and signature pages for all purposes and shall have the same validity, legal effect and admissibility in evidence as an original manual signature; the parties to this Deposit Agreement hereby agree not to argue to the contrary.

 

SECTION 7.2.                  No Third Party Beneficiaries.

 

This Deposit Agreement is for the exclusive benefit of the Company, the Depositary, the Owners and the Holders and their respective successors and shall not be deemed to give any legal or equitable right, remedy or claim whatsoever to any other person.

 

SECTION 7.3.                  Severability.

 

In case any one or more of the provisions contained in this Deposit Agreement or in a Receipt should be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained in this Deposit Agreement or that Receipt shall in no way be affected, prejudiced or disturbed thereby.

 

SECTION 7.4.                  Owners and Holders as Parties; Binding Effect.

 

The Owners and Holders from time to time shall be parties to this Deposit Agreement and shall be bound by all of the terms and conditions of this Deposit Agreement and of the Receipts by acceptance of American Depositary Shares or any interest therein.

 

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Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

SECTION 7.5.                  Notices.

 

Any and all notices to be given to the Company shall be in writing and shall be deemed to have been duly given if personally delivered or sent by domestic first class or international air mail or air courier or sent by facsimile transmission or email attaching a pdf or similar bit-mapped image of a signed writing, addressed to KE Holdings Inc., Building Fudao, No.11 Kaituo Road, Haidian District, Beijing, People’s Republic of China, Attention : XU Tao, or any other place to which the Company may have transferred its principal office with notice to the Depositary.

 

Any and all notices to be given to the Depositary shall be in writing and shall be deemed to have been duly given if in English and personally delivered or sent by first class domestic or international air mail or air courier or sent by facsimile transmission or email attaching a pdf or similar bit-mapped image of a signed writing, addressed to The Bank of New York Mellon, 240 Greenwich Street, New York, New York 10286, Attention: Depositary Receipt Administration, or any other place to which the Depositary may have transferred its Office with notice to the Company.

 

Delivery of a notice to the Company or Depositary by mail or air courier shall be deemed effected when deposited, postage prepaid, in a post-office letter box or received by an air courier service. Delivery of a notice to the Company or Depositary sent by facsimile transmission or email shall be deemed effected when the recipient acknowledges receipt of that notice.

 

A notice to be given to an Owner shall be deemed to have been duly given when Disseminated to that Owner. Dissemination in paper form will be effective when personally delivered or sent by first class domestic or international air mail or air courier, addressed to that Owner at the address of that Owner as it appears on the transfer books for American Depositary Shares of the Depositary, or, if that Owner has filed with the Depositary a written request that notices intended for that Owner be mailed to some other address, at the address designated in that request. Dissemination in electronic form will be effective when sent in the manner consented to by the Owner to the electronic address most recently provided by the Owner for that purpose.

 

SECTION 7.6.                  Arbitration; Settlement of Disputes.

 

Any controversy, claim or cause of action brought by any party hereto against the Company arising out of or relating to the Shares or other Deposited Securities, the American Depositary Shares, the Receipts or this Deposit Agreement, or the breach hereof or thereof, if so elected by the claimant, shall be settled by arbitration in accordance with the International Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof.

 

34

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

The place of the arbitration shall be The City of New York, State of New York, United States of America, and the language of the arbitration shall be English.

 

The number of arbitrators shall be three, each of whom shall be disinterested in the dispute or controversy, shall have no connection with any party thereto, and shall be an attorney experienced in international securities transactions. Each party shall appoint one arbitrator and the two arbitrators shall select a third arbitrator who shall serve as chairperson of the tribunal. If a dispute, controversy or cause of action shall involve more than two parties, the parties shall attempt to align themselves in two sides (i.e., claimant(s) and respondent(s)), each of which shall appoint one arbitrator as if there were only two parties to such dispute, controversy or cause of action. If such alignment and appointment shall not have occurred within thirty (30) calendar days after the initiating party serves the arbitration demand, the American Arbitration Association shall appoint the three arbitrators, each of whom shall have the qualifications described above. The parties and the American Arbitration Association may appoint from among the nationals of any country, whether or not a party is a national of that country.

 

The arbitral tribunal shall have no authority to award any consequential, special or punitive damages or other damages not measured by the prevailing party’s actual damages and may not, in any event, make any ruling, finding or award that does not conform to the terms and conditions of this Deposit Agreement.

 

SECTION 7.7.                  Appointment of Agent for Service of Process; Submission to Jurisdiction; Jury Trial Waiver.

 

The Company hereby (i) designates and appoints the person named in Exhibit A to this Deposit Agreement as the Company’s authorized agent in the United States upon which process may be served in any suit or proceeding (including any arbitration proceeding) arising out of or relating to the Shares or Deposited Securities, the American Depositary Shares, the Receipts or this Deposit Agreement (a “Proceeding”), (ii) consents and submits to the jurisdiction of any state or federal court in the State of New York in which any Proceeding may be instituted and (iii) agrees that service of process upon said authorized agent shall be deemed in every respect effective service of process upon the Company in any Proceeding. The Company agrees to deliver to the Depositary, upon the execution and delivery of this Deposit Agreement, a written acceptance by the agent named in Exhibit A to this Deposit Agreement of its appointment as process agent. The Company further agrees to take any and all action, including the filing of any and all such documents and instruments, as may be necessary to continue that designation and appointment in full force and effect, or to appoint and maintain the appointment of another process agent located in the United States as required above, and to deliver to the Depositary a written acceptance by that agent of that appointment, for so long as any American Depositary Shares or Receipts remain outstanding or this Deposit Agreement remains in force. In the event the Company fails to maintain the designation and appointment of a process agent in the United States in full force and effect, the Company hereby waives personal service of process upon it and consents that a service of process in connection with a Proceeding may be made by certified or registered mail, return receipt requested, directed to the Company at its address last specified for notices under this Deposit Agreement, and service so made shall be deemed completed five (5) days after the same shall have been so mailed.

 

35

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

EACH PARTY TO THIS DEPOSIT AGREEMENT (INCLUDING, FOR AVOIDANCE OF DOUBT, EACH OWNER AND HOLDER) HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING AGAINST THE COMPANY AND/OR THE DEPOSITARY DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THE SHARES OR OTHER DEPOSITED SECURITIES, THE AMERICAN DEPOSITARY SHARES OR THE RECEIPTS, THIS DEPOSIT AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREIN OR THEREIN, OR THE BREACH HEREOF OR THEREOF, INCLUDING, WITHOUT LIMITATION, ANY QUESTION REGARDING EXISTENCE, VALIDITY OR TERMINATION (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).

 

SECTION 7.8.                  Waiver of Immunities.

 

To the extent that the Company or any of its properties, assets or revenues may have or may hereafter become entitled to, or have attributed to it, any right of immunity, on the grounds of sovereignty or otherwise, from any legal action, suit or proceeding, from the giving of any relief in any respect thereof, from setoff or counterclaim, from the jurisdiction of any court, from service of process, from attachment upon or prior to judgment, from attachment in aid of execution or judgment, or from execution of judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of any judgment, in any jurisdiction in which proceedings may at any time be commenced, with respect to its obligations, liabilities or any other matter under or arising out of or in connection with the Shares or Deposited Securities, the American Depositary Shares, the Receipts or this Deposit Agreement, the Company, to the fullest extent permitted by law, hereby irrevocably and unconditionally waives, and agrees not to plead or claim, any immunity of that kind and consents to relief and enforcement as provided above.

 

SECTION 7.9.                  Governing Law.

 

This Deposit Agreement and the Receipts shall be interpreted in accordance with and all rights hereunder and thereunder and provisions hereof and thereof shall be governed by the laws of the State of New York.

 

36

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

IN WITNESS WHEREOF, KE HOLDINGS INC. and THE BANK OF NEW YORK MELLON have duly executed this Deposit Agreement as of the day and year first set forth above and all Owners and Holders shall become parties hereto upon acceptance by them of American Depositary Shares or any interest therein.

 

	
 
    	
 
    	
KE HOLDINGS INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ XU Tao
    
	
 
    	
 
    	
 
    	
Name:
    	
XU Tao
    
	
 
    	
 
    	
 
    	
Title:
    	
Executive Director and   Chief
    
	
 
    	
 
    	
 
    	
 
    	
Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
THE BANK OF NEW YORK   MELLON,
    
	
 
    	
 
    	
as   Depositary
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    

 

[Signature Page to Deposit Agreement]

 

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

IN WITNESS WHEREOF, KE HOLDINGS INC. and THE BANK OF NEW YORK MELLON have duly executed this Deposit Agreement as of the day and year first set forth above and all Owners and Holders shall become parties hereto upon acceptance by them of American Depositary Shares or any interest therein.

 

	
 
    	
 
    	
KE HOLDINGS INC.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
THE BANK OF NEW YORK   MELLON,
    
	
 
    	
 
    	
as   Depositary
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Robert W. Goad
    
	
 
    	
 
    	
 
    	
Name:
    	
Robert W. Goad
    
	
 
    	
 
    	
 
    	
Title:
    	
Managing Director
    

 

 

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

EXHIBIT A

 

AMERICAN DEPOSITARY SHARES
  (Each American Depositary Share represents
 three deposited Shares)

 

THE BANK OF NEW YORK MELLON

AMERICAN DEPOSITARY RECEIPT

FOR CLASS A ORDINARY SHARES OF

KE HOLDINGS INC.

(INCORPORATED UNDER THE LAWS OF THE CAYMAN ISLANDS)

 

The Bank of New York Mellon, as depositary (hereinafter called the “Depositary”), hereby certifies that                                                                                                                 , or registered assigns IS THE OWNER OF                                                                                  

 

AMERICAN DEPOSITARY SHARES

 

representing deposited class A ordinary shares (herein called “Shares”) of KE Holdings Inc., incorporated under the laws of the Cayman Islands (herein called the “Company”). At the date hereof, each American Depositary Share represents three Shares deposited or subject to deposit under the Deposit Agreement (as such term is hereinafter defined) with a custodian for the Depositary (herein called the “Custodian”) that, as of the date of the Deposit Agreement, was The Hongkong and Shanghai Banking Corporation Limited located in Hong Kong. The Depositary’s Office and its principal executive office are located at 240 Greenwich Street, New York, N.Y. 10286.

 

THE DEPOSITARY’S OFFICE ADDRESS IS

240 GREENWICH STREET, NEW YORK, N.Y. 10286

 

A-1

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

1.             THE DEPOSIT AGREEMENT.

 

This American Depositary Receipt is one of an issue (herein called “Receipts”), all issued and to be issued upon the terms and conditions set forth in the Deposit Agreement dated as of August 12, 2020 (herein called the “Deposit Agreement”) among the Company, the Depositary, and all Owners and Holders from time to time of American Depositary Shares issued thereunder, each of whom by accepting American Depositary Shares agrees to become a party thereto and become bound by all the terms and conditions thereof. The Deposit Agreement sets forth the rights of Owners and Holders and the rights and duties of the Depositary in respect of the Shares deposited thereunder and any and all other securities, property and cash from time to time received in respect of those Shares and held thereunder (those Shares, securities, property, and cash are herein called “Deposited Securities”). Copies of the Deposit Agreement are on file at the Depositary’s Office in New York City and at the office of the Custodian.

 

The statements made on the face and reverse of this Receipt are summaries of certain provisions of the Deposit Agreement and are qualified by and subject to the detailed provisions of the Deposit Agreement, to which reference is hereby made. Capitalized terms defined in the Deposit Agreement and not defined herein shall have the meanings set forth in the Deposit Agreement.

 

2.                                      SURRENDER OF AMERICAN DEPOSITARY SHARES AND WITHDRAWAL OF SHARES.

 

Upon surrender of American Depositary Shares for the purpose of withdrawal of the Deposited Securities represented thereby and payment of the fee of the Depositary for the surrender of American Depositary Shares as provided in Section 5.9 of the Deposit Agreement and payment of all taxes and governmental charges payable in connection with that surrender and withdrawal of the Deposited Securities, and subject to the terms and conditions of the Deposit Agreement, the Owner of those American Depositary Shares shall be entitled to delivery (to the extent delivery can then be lawfully and practicably made), to or as instructed by that Owner, of the amount of Deposited Securities at the time represented by those American Depositary Shares, but not any money or other property as to which a record date for distribution to Owners has passed (since money or other property of that kind will be delivered or paid on the scheduled payment date to the Owner as of that record date), and except that the Depositary shall not be required to accept surrender of American Depositary Shares for the purpose of withdrawal to the extent it would require delivery of a fraction of a Deposited Security. The Depositary shall direct the Custodian with respect to delivery of Deposited Securities and may charge the surrendering Owner a fee and its expenses for giving that direction by cable (including SWIFT) or facsimile transmission. If Deposited Securities are delivered physically upon surrender of American Depositary Shares for the purpose of withdrawal, that delivery will be made at the Custodian’s office, except that, at the request, risk and expense of the surrendering Owner, and for the account of that Owner, the Depositary shall direct the Custodian to forward any cash or other property comprising, and forward a certificate or certificates, if applicable, and other proper documents of title, if any, for, the Deposited Securities represented by the surrendered American Depositary Shares to the Depositary for delivery at the Depositary’s Office or to another address specified in the order received from the surrendering Owner.

 

A-2

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

3.                                      REGISTRATION OF TRANSFER OF AMERICAN DEPOSITARY SHARES; COMBINATION AND SPLIT-UP OF RECEIPTS; INTERCHANGE OF CERTIFICATED AND UNCERTIFICATED AMERICAN DEPOSITARY SHARES.

 

The Depositary, subject to the terms and conditions of the Deposit Agreement, shall register a transfer of American Depositary Shares on its transfer books upon (i) in the case of certificated American Depositary Shares, surrender of the Receipt evidencing those American Depositary Shares, by the Owner or by a duly authorized attorney, properly endorsed or accompanied by proper instruments of transfer or (ii) in the case of uncertificated American Depositary Shares, receipt from the Owner of a proper instruction (including, for the avoidance of doubt, instructions through DRS and Profile as provided in Section 2.9 of that Agreement), and, in either case, duly stamped as may be required by the laws of the State of New York and of the United States of America. Upon registration of a transfer, the Depositary shall deliver the transferred American Depositary Shares to or upon the order of the person entitled thereto.

 

The Depositary, subject to the terms and conditions of the Deposit Agreement, shall upon surrender of a Receipt or Receipts for the purpose of effecting a split-up or combination of such Receipt or Receipts, execute and deliver a new Receipt or Receipts for any authorized number of American Depositary Shares requested, evidencing the same aggregate number of American Depositary Shares as the Receipt or Receipts surrendered.

 

The Depositary, upon surrender of certificated American Depositary Shares for the purpose of exchanging for uncertificated American Depositary Shares, shall cancel the Receipt evidencing those certificated American Depositary Shares and send the Owner a statement confirming that the Owner is the owner of the same number of uncertificated American Depositary Shares. The Depositary, upon receipt of a proper instruction (including, for the avoidance of doubt, instructions through DRS and Profile as provided in Section 2.9 of the Deposit Agreement) from the Owner of uncertificated American Depositary Shares for the purpose of exchanging for certificated American Depositary Shares, shall cancel those uncertificated American Depositary Shares and register and deliver to the Owner a Receipt evidencing the same number of certificated American Depositary Shares.

 

As a condition precedent to the delivery, registration of transfer, or surrender of any American Depositary Shares or split-up or combination of any Receipt or withdrawal of any Deposited Securities, the Depositary, the Custodian, or Registrar may require payment from the depositor of the Shares or the presenter of the Receipt or instruction for registration of transfer or surrender of American Depositary Shares not evidenced by a Receipt of a sum sufficient to reimburse it for any tax or other governmental charge and any stock transfer or registration fee with respect thereto (including any such tax or charge and fee with respect to Shares being deposited or withdrawn) and payment of any applicable fees as provided in the Deposit Agreement, may require the production of proof satisfactory to it as to the identity and genuineness of any signature and may also require compliance with any regulations the Depositary may establish consistent with the provisions of the Deposit Agreement.

 

A-3

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

The Depositary may refuse to accept deposits of Shares for delivery of American Depositary Shares or to register transfers of American Depositary Shares in particular instances, or may suspend deposits of Shares or registration of transfer generally, whenever it or the Company considers it necessary or advisable to do so. The Depositary may refuse surrenders of American Depositary Shares for the purpose of withdrawal of Deposited Securities in particular instances, or may suspend surrenders for the purpose of withdrawal generally, but, notwithstanding anything to the contrary in the Deposit Agreement, only for (i) temporary delays caused by closing of the Depositary’s register or the register of holders of Shares maintained by the Company or the Foreign Registrar, or the deposit of Shares, in connection with voting at a shareholders’ meeting or the payment of dividends, (ii) the payment of fees, taxes and similar charges, (iii) compliance with any U.S. or foreign laws or governmental regulations relating to the American Depositary Shares or to the withdrawal of the Deposited Securities or (iv) any other reason that, at the time, is permitted under paragraph I(A)(1) of the General Instructions to Form F-6 under the Securities Act of 1993 or any successor to that provision.

 

The Depositary shall not knowingly accept for deposit under the Deposit Agreement any Shares that, at the time of deposit, are Restricted Securities.

 

4.                                      LIABILITY OF OWNER FOR TAXES.

 

If any tax or other governmental charge shall become payable by the Custodian or the Depositary with respect to or in connection with any American Depositary Shares or any Deposited Securities represented by any American Depositary Shares or in connection with a transaction to which Section 4.8 of the Deposit Agreement applies, that tax or other governmental charge shall be payable by the Owner of those American Depositary Shares to the Depositary. The Depositary may refuse to register any transfer of those American Depositary Shares or any withdrawal of Deposited Securities represented by those American Depositary Shares until that payment is made, and may withhold any dividends or other distributions or the proceeds thereof, or may sell for the account of the Owner any part or all of the Deposited Securities represented by those American Depositary Shares, and may apply those dividends or other distributions or the net proceeds of any sale of that kind in payment of that tax or other governmental charge but, even after a sale of that kind, the Owner shall remain liable for any deficiency. The Depositary shall distribute any net proceeds of a sale made under Section 3.2 of the Deposit Agreement that are not used to pay taxes or governmental charges to the Owners entitled to them in accordance with Section 4.1 of the Deposit Agreement. If the number of Shares represented by each American Depositary Share decreases as a result of a sale of Deposited Securities under Section 3.2 of the Deposit Agreement, the Depositary may call for surrender of the American Depositary Shares to be exchanged on a mandatory basis for a lesser number of American Depositary Shares and may sell American Depositary Shares to the extent necessary to avoid distributing fractions of American Depositary Shares in that exchange and distribute the net proceeds of that sale to the Owners entitled to them.

 

A-4

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

5.                                      WARRANTIES ON DEPOSIT OF SHARES.

 

Every person depositing Shares under the Deposit Agreement shall be deemed thereby to represent and warrant that those Shares and each certificate therefor, if applicable, are validly issued, fully paid and nonassessable and were not issued in violation of any preemptive or similar rights of the holders of outstanding securities of the Company and that the person making that deposit is duly authorized so to do. Every depositing person shall also be deemed to represent that the Shares, at the time of deposit, are not Restricted Securities. All representations and warranties deemed made under Section 3.3 of the Deposit Agreement shall survive the deposit of Shares and delivery of American Depositary Shares.

 

6.                                      FILING PROOFS, CERTIFICATES, AND OTHER INFORMATION.

 

Any person presenting Shares for deposit or any Owner or Holder may be required from time to time to file with the Depositary or the Custodian such proof of citizenship or residence, exchange control approval, or such information relating to the registration on the books of the Company or the Foreign Registrar, if applicable, to execute such certificates and to make such representations and warranties, as the Depositary may deem necessary or proper. The Depositary may withhold the delivery or registration of transfer of any American Depositary Shares, the distribution of any dividend or other distribution or of the proceeds thereof or the delivery of any Deposited Securities until that proof or other information is filed or those certificates are executed or those representations and warranties are made. As conditions of accepting Shares for deposit, the Depositary may require (i) any certification required by the Depositary or the Custodian in accordance with the provisions of the Deposit Agreement, (ii) a written order directing the Depositary to deliver to, or upon the written order of, the person or persons stated in that order, the number of American Depositary Shares representing those Deposited Shares, (iii) evidence satisfactory to the Depositary that those Shares have been re-registered in the books of the Company or the Foreign Registrar in the name of the Depositary, a Custodian or a nominee of the Depositary or a Custodian, (iv) evidence satisfactory to the Depositary that any necessary approval has been granted by any governmental body in each applicable jurisdiction and (v) an agreement or assignment, or other instrument satisfactory to the Depositary, that provides for the prompt transfer to the Custodian of any dividend, or right to subscribe for additional Shares or to receive other property, that any person in whose name those Shares are or have been recorded may thereafter receive upon or in respect of those Shares, or, in lieu thereof, such agreement of indemnity or other agreement as shall be satisfactory to the Depositary.

 

A-5

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

7.                                      CHARGES OF DEPOSITARY.

 

The following charges shall be incurred by any party depositing or withdrawing Shares or by any party surrendering American Depositary Shares or to whom American Depositary Shares are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by the Company or an exchange of stock regarding the American Depositary Shares or Deposited Securities or a delivery of American Depositary Shares pursuant to Section 4.3 of the Deposit Agreement), or by Owners, as applicable: (1) taxes and other governmental charges, (2) such registration fees as may from time to time be in effect for the registration of transfers of Shares generally on the Share register of the Company or Foreign Registrar and applicable to transfers of Shares to or from the name of the Depositary or its nominee or the Custodian or its nominee on the making of deposits or withdrawals hereunder, (3) such cable (including SWIFT) and facsimile transmission fees and expenses as are expressly provided in the Deposit Agreement, (4) such expenses as are incurred by the Depositary in the conversion of foreign currency pursuant to Section 4.5 of the Deposit Agreement, (5) a fee of $5.00 or less per 100 American Depositary Shares (or portion thereof) for the delivery of American Depositary Shares pursuant to Section 2.3, 4.3 or 4.4 of the Deposit Agreement and the surrender of American Depositary Shares pursuant to Section 2.5 or 6.2 of the Deposit Agreement, (6) a fee of $.05 or less per American Depositary Share (or portion thereof) for any cash distribution made pursuant to the Deposit Agreement, including, but not limited to Sections 4.1 through 4.4 and 4.8 of the Deposit Agreement, (7) a fee for the distribution of securities pursuant to Section 4.2 of the Deposit Agreement or of rights pursuant to Section 4.4 of that Agreement (where the Depositary will not exercise or sell those rights on behalf of Owners), such fee being in an amount equal to the fee for the execution and delivery of American Depositary Shares referred to above which would have been charged as a result of the deposit of such securities under the Deposit Agreement (for purposes of this item 7 treating all such securities as if they were Shares) but which securities are instead distributed by the Depositary to Owners, (8) in addition to any fee charged under item 6, a fee of $.05 or less per American Depositary Share (or portion thereof) per annum for depositary services, which will be payable as provided in item 9 below, and (9) any other charges payable by the Depositary or the Custodian, any of the Depositary’s or Custodian’s agents or the agents of the Depositary’s or Custodian’s agents, in connection with the servicing of Shares or other Deposited Securities (which charges shall be assessed against Owners as of the date or dates set by the Depositary in accordance with Section 4.6 of the Deposit Agreement and shall be payable at the sole discretion of the Depositary by billing those Owners for those charges or by deducting those charges from one or more cash dividends or other cash distributions).

 

A-6

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

The Depositary may collect any of its fees by deduction from any cash distribution payable, or by selling a portion of any securities to be distributed, to Owners that are obligated to pay those fees.

 

The Depositary may own and deal in any class of securities of the Company and its affiliates and in American Depositary Shares.

 

From time to time, the Depositary may make payments to the Company to reimburse the Company for costs and expenses generally arising out of establishment and maintenance of the American Depositary Shares program, waive fees and expenses for services provided by the Depositary or share revenue from the fees collected from Owners or Holders. In performing its duties under the Deposit Agreement, the Depositary may use brokers, dealers, foreign currency dealers or other service providers that are owned by or affiliated with the Depositary and that may earn or share fees, spreads or commissions.

 

8.                                      DISCLOSURE OF INTERESTS.

 

When required in order to comply with applicable laws and regulations or the articles of association or similar document of the Company, the Company may from time to time request each Owner and Holder to provide to the Depositary information relating to: (a) the capacity in which it holds American Depositary Shares, (b) the identity of any Holders or other persons or entities then or previously interested in those American Depositary Shares and the nature of those interests and (c) any other matter where disclosure of such matter is required for that compliance. Each Owner and Holder agrees to provide all information known to it in response to a request made pursuant to Section 3.4 of the Deposit Agreement. Each Holder consents to the disclosure by the Depositary and the Owner or other Holder through which it holds American Depositary Shares, directly or indirectly, of all information responsive to a request made pursuant to that Section relating to that Holder that is known to that Owner or other Holder.

 

9.                                      TITLE TO AMERICAN DEPOSITARY SHARES.

 

It is a condition of the American Depositary Shares, and every successive Owner and Holder of American Depositary Shares, by accepting or holding the same, consents and agrees that American Depositary Shares evidenced by a Receipt, when the Receipt is properly endorsed or accompanied by proper instruments of transfer, shall be transferable as certificated registered securities under the laws of the State of New York, and that American Depositary Shares not evidenced by Receipts shall be transferable as uncertificated registered securities under the laws of the State of New York. The Depositary, notwithstanding any notice to the contrary, may treat the Owner of American Depositary Shares as the absolute owner thereof for the purpose of determining the person entitled to distribution of dividends or other distributions or to any notice provided for in the Deposit Agreement and for all other purposes, and neither the Depositary nor the Company shall have any obligation or be subject to any liability under the Deposit Agreement to any Holder of American Depositary Shares, but only to the Owner.

 

A-7

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

10.                               VALIDITY OF RECEIPT.

 

This Receipt shall not be entitled to any benefits under the Deposit Agreement or be valid or obligatory for any purpose, unless this Receipt shall have been (i) executed by the Depositary by the manual signature of a duly authorized officer of the Depositary or (ii) executed by the facsimile signature of a duly authorized officer of the Depositary and countersigned by the manual signature of a duly authorized signatory of the Depositary or the Registrar or a co-registrar.

 

11.                               REPORTS; INSPECTION OF TRANSFER BOOKS.

 

The Company is subject to the periodic reporting requirements of the Securities Exchange Act of 1934 and, accordingly, files certain reports with the Securities and Exchange Commission. Those reports will be available for inspection and copying through the Commission’s EDGAR system or at public reference facilities maintained by the Commission in Washington, D.C.

 

The Depositary will make available for inspection by Owners at its Office any reports, notices and other communications, including any proxy soliciting material, received from the Company which are both (a) received by the Depositary as the holder of the Deposited Securities and (b) made generally available to the holders of those Deposited Securities by the Company. The Company shall furnish reports and communications, including any proxy soliciting material to which Section 4.9 of the Deposit Agreement applies, to the Depositary in English, to the extent such materials are required to be translated into English pursuant to any regulations of the Commission.

 

The Depositary will maintain a register of American Depositary Shares and transfers of American Depositary Shares, which shall be open for inspection by the Owners at the Depositary’s Office during regular business hours, but only for the purpose of communicating with Owners regarding the business of the Company or a matter related to this Deposit Agreement or the American Depositary Shares.

 

12.                               DIVIDENDS AND DISTRIBUTIONS.

 

Whenever the Depositary receives any cash dividend or other cash distribution on Deposited Securities, the Depositary will, if at the time of receipt thereof any amounts received in a foreign currency can in the judgment of the Depositary be converted on a reasonable basis into Dollars transferable to the United States, and subject to the Deposit Agreement, convert that dividend or other cash distribution into Dollars and distribute the amount thus received (net of the fees and expenses of the Depositary as provided in Article 7 hereof and Section 5.9 of the Deposit Agreement) to the Owners entitled thereto; provided, however, that if the Custodian or the Depositary is required to withhold and does withhold from that cash dividend or other cash distribution an amount on account of taxes or other governmental charges, the amount distributed to the Owners of the American Depositary Shares representing those Deposited Securities shall be reduced accordingly.

 

A-8

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

If a cash distribution would represent a return of all or substantially all the value of the Deposited Securities underlying American Depositary Shares, the Depositary may:

 

(i)                                     require payment of or deduct the fee for surrender of American Depositary Shares (whether or not it is also requiring surrender of American Depositary Shares) as a condition of making that cash distribution; or

 

(ii)                                  sell all Deposited Securities other than the subject cash distribution and add any net cash proceeds of that sale to the cash distribution, call for surrender of all those American Depositary Shares and require that surrender as a condition of making that cash distribution.

 

If the Depositary acts under this paragraph, that action shall also be a Termination Option Event.

 

Subject to the provisions of Section 4.11 and 5.9 of the Deposit Agreement, whenever the Depositary receives any distribution other than a distribution described in Section 4.1, 4.3 or 4.4 of the Deposit Agreement on Deposited Securities (but not in exchange for or in conversion or in lieu of Deposited Securities), the Depositary will cause the securities or property received by it to be distributed to the Owners entitled thereto, after deduction or upon payment of any fees and expenses of the Depositary and any taxes or other governmental charges, in any manner that the Depositary deems equitable and practicable for accomplishing that distribution (which may be a distribution of depositary shares representing the securities received); provided, however, that if in the opinion of the Depositary such distribution cannot be made proportionately among the Owners entitled thereto, or if for any other reason the Depositary deems such distribution not to be lawful and feasible, the Depositary may adopt such other method as it may deem equitable and practicable for the purpose of effecting such distribution, including, but not limited to, the public or private sale of the securities or property thus received, or any part thereof, and distribution of the net proceeds of any such sale (net of the fees and expenses of the Depositary as provided in Article 7 hereof and Section 5.9 of the Deposit Agreement) to the Owners entitled thereto all in the manner and subject to the conditions set forth in Section 4.1 of the Deposit Agreement. The Depositary may withhold any distribution of securities under Section 4.2 of the Deposit Agreement if it has not received satisfactory assurances from the Company that the distribution does not require registration under the Securities Act of 1933. The Depositary may sell, by public or private sale, an amount of securities or other property it would otherwise distribute under this Article that is sufficient to pay its fees and expenses in respect of that distribution.

 

If a distribution to be made under Section 4.2 of the Deposit Agreement would represent a return of all or substantially all the value of the Deposited Securities underlying American Depositary Shares, the Depositary may:

 

A-9

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

(i)                                     require payment of or deduct the fee for surrender of American Depositary Shares (whether or not it is also requiring surrender of American Depositary Shares) as a condition of making that distribution; or

 

(ii)                                  sell all Deposited Securities other than the subject distribution and add any net cash proceeds of that sale to the distribution, call for surrender of all those American Depositary Shares and require that surrender as a condition of making that distribution.

 

If the Depositary acts under this paragraph, that action shall also be a Termination Option Event.

 

Whenever the Depositary receives any distribution consisting of a dividend in, or free distribution of, Shares, the Depositary may deliver to the Owners entitled thereto, an aggregate number of American Depositary Shares representing the amount of Shares received as that dividend or free distribution, subject to the terms and conditions of the Deposit Agreement with respect to the deposit of Shares and issuance of American Depositary Shares, including the withholding of any tax or other governmental charge as provided in Section 4.11 of the Deposit Agreement and the payment of the fees and expenses of the Depositary as provided in Article 7 hereof and Section 5.9 of the Deposit Agreement (and the Depositary may sell, by public or private sale, an amount of Shares received (or American Depositary Shares representing those Shares) sufficient to pay its fees and expenses in respect of that distribution). In lieu of delivering fractional American Depositary Shares, the Depositary may sell the amount of Shares represented by the aggregate of those fractions (or American Depositary Shares representing those Shares) and distribute the net proceeds, all in the manner and subject to the conditions described in Section 4.1of the Deposit Agreement. If and to the extent that additional American Depositary Shares are not delivered and Shares or American Depositary Shares are not sold, each American Depositary Share shall thenceforth also represent the additional Shares distributed on the Deposited Securities represented thereby.

 

If the Company declares a distribution in which holders of Deposited Securities have a right to elect whether to receive cash, Shares or other securities or a combination of those things, or a right to elect to have a distribution sold on their behalf, the Depositary may, after consultation with the Company, make that right of election available for exercise by Owners in any manner the Depositary considers to be lawful and practical. As a condition of making a distribution election right available to Owners, the Depositary may require satisfactory assurances from the Company that doing so does not require registration of any securities under the Securities Act of 1933 that has not been effected.

 

If the Depositary determines that any distribution received or to be made by the Depositary (including Shares and rights to subscribe therefor) is subject to any tax or other governmental charge that the Depositary is obligated to withhold, the Depositary may sell, by public or private sale, all or a portion of the distributed property (including Shares and rights to subscribe therefor) in the amounts and manner the Depositary deems necessary and practicable to pay those taxes or charges, and the Depositary shall distribute the net proceeds of that sale, after deduction of those taxes or charges, to the Owners entitled thereto in proportion to the number of American Depositary Shares held by them respectively.

 

A-10

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

Each Owner and Holder agrees to indemnify the Company, the Depositary, the Custodian and their respective directors, employees, agents and affiliates for, and hold each of them harmless against, any claim by any governmental authority with respect to taxes, additions to tax, penalties or interest arising out of any refund of taxes, reduced withholding at source or other tax benefit received by it. Services for Owners and Holders that may permit them to obtain reduced rates of tax withholding at source or reclaim excess tax withheld, and the fees and costs associated with using services of that kind, are not provided under, and are outside the scope of, the Deposit Agreement.

 

13.                               RIGHTS.

 

(a)                                 If rights are granted to the Depositary in respect of deposited Shares to purchase additional Shares or other securities, the Company and the Depositary shall endeavor to consult as to the actions, if any, the Depositary should take in connection with that grant of rights. The Depositary may, to the extent deemed by it to be lawful and practical (i) if requested in writing by the Company, grant to all or certain Owners rights to instruct the Depositary to purchase the securities to which the rights relate and deliver those securities or American Depositary Shares representing those securities to Owners, (ii) if requested in writing by the Company, deliver the rights to or to the order of certain Owners, or (iii) sell the rights to the extent practicable and distribute the net proceeds of that sale to Owners entitled to those proceeds. To the extent rights are not exercised, delivered or disposed of under (i), (ii) or (iii) above, the Depositary shall permit the rights to lapse unexercised.

 

(b)                                 If the Depositary will act under (a)(i) above, the Company and the Depositary will enter into a separate agreement setting forth the conditions and procedures applicable to the particular offering. Upon instruction from an applicable Owner in the form the Depositary specified and upon payment by that Owner to the Depositary of an amount equal to the purchase price of the securities to be received upon the exercise of the rights, the Depositary shall, on behalf of that Owner, exercise the rights and purchase the securities. The purchased securities shall be delivered to, or as instructed by, the Depositary. The Depositary shall (i) deposit the purchased Shares under the Deposit Agreement and deliver American Depositary Shares representing those Shares to that Owner or (ii) deliver or cause the purchased Shares or other securities to be delivered to or to the order of that Owner. The Depositary will not act under (a)(i) above unless the offer and sale of the securities to which the rights relate are registered under the Securities Act of 1933 or the Depositary has received an opinion of United States counsel that is satisfactory to it to the effect that those securities may be sold and delivered to the applicable Owners without registration under the Securities Act of 1933.

 

A-11

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

(c)                                  If the Depositary will act under (a)(ii) above, the Company and the Depositary will enter into a separate agreement setting forth the conditions and procedures applicable to the particular offering. Upon (i) the request of an applicable Owner to deliver the rights allocable to the American Depositary Shares of that Owner to an account specified by that Owner to which the rights can be delivered and (ii) receipt of such documents as the Company and the Depositary agreed to require to comply with applicable law, the Depositary will deliver those rights as requested by that Owner.

 

(d)                                 If the Depositary will act under (a)(iii) above, the Depositary will use reasonable efforts to sell the rights in proportion to the number of American Depositary Shares held by the applicable Owners and pay the net proceeds to the Owners otherwise entitled to the rights that were sold, upon an averaged or other practical basis without regard to any distinctions among such Owners because of exchange restrictions or the date of delivery of any American Depositary Shares or otherwise.

 

(e)                                  Payment or deduction of the fees of the Depositary as provided in Section 5.9 of the Deposit Agreement and payment or deduction of the expenses of the Depositary and any applicable taxes or other governmental charges shall be conditions of any delivery of securities or payment of cash proceeds under Section 4.4 of that Agreement.

 

(f)                                   The Depositary shall not be responsible for any failure to determine that it may be lawful or feasible to make rights available to or exercise rights on behalf of Owners in general or any Owner in particular , or to sell rights.

 

14.                               CONVERSION OF FOREIGN CURRENCY.

 

Whenever the Depositary or the Custodian receives foreign currency, by way of dividends or other distributions or the net proceeds from the sale of securities, property or rights, and if at the time of the receipt thereof the foreign currency so received can in the judgment of the Depositary be converted on a reasonable basis into Dollars and the resulting Dollars transferred to the United States, the Depositary or one of its agents or affiliates or the Custodian shall convert or cause to be converted by sale or in any other manner that it may determine that foreign currency into Dollars, and those Dollars shall be distributed to the Owners entitled thereto. A cash distribution may be made upon an averaged or other practicable basis without regard to any distinctions among Owners based on exchange restrictions, the date of delivery of any American Depositary Shares or otherwise and shall be net of any expenses of conversion into Dollars incurred by the Depositary as provided in Section 5.9 of the Deposit Agreement.

 

If a conversion of foreign currency or the repatriation or distribution of Dollars can be effected only with the approval or license of any government or agency thereof, the Depositary may, but will not be required to, file an application for that approval or license.

 

A-12

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

If the Depositary determines that in its judgment any foreign currency received by the Depositary or the Custodian is not convertible on a reasonable basis into Dollars transferable to the United States, or if any approval or license of any government or agency thereof that is required for such conversion is not filed or sought by the Depositary or is not obtained within a reasonable period as determined by the Depositary, the Depositary may distribute the foreign currency received by the Depositary to, or in its discretion may hold such foreign currency uninvested and without liability for interest thereon for the respective accounts of, the Owners entitled to receive the same.

 

If any conversion of foreign currency, in whole or in part, cannot be effected for distribution to some of the Owners entitled thereto, the Depositary may in its discretion make that conversion and distribution in Dollars to the extent practicable and permissible to the Owners entitled thereto and may distribute the balance of the foreign currency received by the Depositary to, or hold that balance uninvested and without liability for interest thereon for the account of, the Owners entitled thereto.

 

The Depositary may convert currency itself or through any of its affiliates, or the Custodian or the Company may convert currency and pay Dollars to the Depositary. Where the Depositary converts currency itself or through any of its affiliates, the Depositary acts as principal for its own account and not as agent, advisor, broker or fiduciary on behalf of any other person and earns revenue, including, without limitation, transaction spreads, that it will retain for its own account. The revenue is based on, among other things, the difference between the exchange rate assigned to the currency conversion made under the Deposit Agreement and the rate that the Depositary or its affiliate receives when buying or selling foreign currency for its own account. The Depositary makes no representation that the exchange rate used or obtained by it or its affiliate in any currency conversion under the Deposit Agreement will be the most favorable rate that could be obtained at the time or that the method by which that rate will be determined will be the most favorable to Owners, subject to the Depositary’s obligations under Section 5.3 of that Agreement. The methodology used to determine exchange rates used in currency conversions made by the Depositary is available upon request. Where the Custodian converts currency, the Custodian has no obligation to obtain the most favorable rate that could be obtained at the time or to ensure that the method by which that rate will be determined will be the most favorable to Owners, and the Depositary makes no representation that the rate is the most favorable rate and will not be liable for any direct or indirect losses associated with the rate. In certain instances, the Depositary may receive dividends or other distributions from the Company in Dollars that represent the proceeds of a conversion of foreign currency or translation from foreign currency at a rate that was obtained or determined by or on behalf of the Company and, in such cases, the Depositary will not engage in, or be responsible for, any foreign currency transactions and neither it nor the Company makes any representation that the rate obtained or determined by the Company is the most favorable rate and neither it nor the Company will be liable for any direct or indirect losses associated with the rate.

 

A-13

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

15.                               RECORD DATES.

 

Whenever a cash dividend, cash distribution or any other distribution is made on Deposited Securities or rights to purchase Shares or other securities are issued with respect to Deposited Securities (which rights will be delivered to or exercised or sold on behalf of Owners in accordance with Section 4.4 of the Deposit Agreement) or the Depositary receives notice that a distribution or issuance of that kind will be made, or whenever the Depositary receives notice that a meeting of holders of Shares will be held in respect of which the Company has requested the Depositary to send a notice under Section 4.7 of the Deposit Agreement, or whenever the Depositary will assess a fee or charge against the Owners, or whenever the Depositary causes a change in the number of Shares that are represented by each American Depositary Share, or whenever the Depositary otherwise finds it necessary or convenient, the Depositary shall fix a record date, which shall be the same as, or as near as practicable to, any corresponding record date set by the Company with respect to Shares, (a) for the determination of the Owners (i) who shall be entitled to receive the benefit of that dividend or other distribution or those rights, (ii) who shall be entitled to give instructions for the exercise of voting rights at that meeting, (iii) who shall be responsible for that fee or charge or (iv) for any other purpose for which the record date was set, or (b) on or after which each American Depositary Share will represent the changed number of Shares. Subject to the provisions of Sections 4.1 through 4.5 of the Deposit Agreement and to the other terms and conditions of the Deposit Agreement, the Owners on a record date fixed by the Depositary shall be entitled to receive the amount distributable by the Depositary with respect to that dividend or other distribution or those rights or the net proceeds of sale thereof in proportion to the number of American Depositary Shares held by them respectively, to give voting instructions or to act in respect of the other matter for which that record date was fixed, or be responsible for that fee or charge, as the case may be.

 

16.                               VOTING OF DEPOSITED SHARES.

 

(a)                                 Upon receipt of notice of any meeting of holders of Shares at which holders of Shares will be entitled to vote, if requested in writing by the Company, the Depositary shall, as soon as practicable thereafter, Disseminate to the Owners a notice, the form of which shall be in the sole discretion of the Depositary, that shall contain (i) the information contained in the notice of meeting received by the Depositary, (ii) a statement that the Owners as of the close of business on a specified record date will be entitled, subject to any applicable provision of Cayman Island law and of the articles of association or similar documents of the Company, to instruct the Depositary as to the exercise of the voting rights pertaining to the amount of Shares represented by their respective American Depositary Shares, (iii) a statement as to the manner in which those instructions may be given, including an express indication that instructions may be deemed given in accordance with the last sentence of paragraph (b) below, if no instruction is received, to the Depositary to give a discretionary proxy to a person designated by the Company and (iv) the last date on which the Depositary will accept instructions (the “Instruction Cutoff Date”).

 

A-14

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

(b)                                 Upon the written request of an Owner of American Depositary Shares, as of the date of the request or, if a record date was specified by the Depositary, as of that record date, received on or before any Instruction Cutoff Date established by the Depositary, the Depositary may, and if the Depositary sent a notice under the preceding paragraph shall, endeavor, in so far as practicable, to vote or cause to be voted the amount of deposited Shares represented by those American Depositary Shares in accordance with the instructions set forth in that request. The Depositary shall not vote or attempt to exercise the right to vote that attaches to the deposited Shares other than in accordance with instructions given by Owners and received by the Depositary or as provided in the following sentence. If

 

(i) the Company instructed the Depositary to Disseminate a notice under paragraph (a) above and complied with the paragraph (d) below,

 

(ii) no instructions are received by the Depositary from an Owner with respect to a matter and an amount of American Depositary Shares of that Owner on or before the Instruction Cutoff Date and

 

(iii) the Depositary has received from the Company, by the business day following the Instruction Cutoff Date, a written confirmation that, as of the Instruction Cutoff Date, (x) the Company wishes a proxy to be given under this sentence, (y) the Company reasonably does not know of any substantial opposition to the matter and (z) the matter is not materially adverse to the interests of shareholders,

 

then, the Depositary shall deem that Owner to have instructed the Depositary to give a discretionary proxy to a person designated by the Company with respect to that matter and the amount of deposited Shares represented by that amount of American Depositary Shares and the Depositary shall give a discretionary proxy to a person designated by the Company to vote that amount of deposited Shares as to that matter.

 

(c)                                  There can be no assurance that Owners generally or any Owner in particular will receive the notice described in paragraph (a) above in time to enable Owners to give instructions to the Depositary prior to the Instruction Cutoff Date.

 

(d)                                 In order to give Owners a reasonable opportunity to instruct the Depositary as to the exercise of voting rights relating to Shares, if the Company will request the Depositary to Disseminate a notice under paragraph (a) above, the Company shall give the Depositary notice of the meeting, details concerning the matters to be voted upon and copies of materials to be made available to holders of Shares in connection with the meeting not less than 40 days prior to the meeting date.

 

A-15

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

17.                               TENDER AND EXCHANGE OFFERS; REDEMPTION, REPLACEMENT OR CANCELLATION OF DEPOSITED SECURITIES.

 

(a)                                 The Depositary shall not tender any Deposited Securities in response to any voluntary cash tender offer, exchange offer or similar offer made to holders of Deposited Securities (a “Voluntary Offer”), except when instructed in writing to do so by an Owner surrendering American Depositary Shares and subject to any conditions or procedures the Depositary may require.

 

(b)                                 If the Depositary receives a written notice that Deposited Securities have been redeemed for cash or otherwise purchased for cash in a transaction that is mandatory and binding on the Depositary as a holder of those Deposited Securities (a “Redemption”), the Depositary, at the expense of the Company, shall (i) if required, surrender Deposited Securities that have been redeemed to the issuer of those securities or its agent on the redemption date, (ii) Disseminate a notice to Owners (A) notifying them of that Redemption, (B) calling for surrender of a corresponding number of American Depositary Shares and (C) notifying them that the called American Depositary Shares have been converted into a right only to receive the money received by the Depositary upon that Redemption and those net proceeds shall be the Deposited Securities to which Owners of those converted American Depositary Shares shall be entitled upon surrenders of those American Depositary Shares in accordance with Section 2.5 or 6.2 of the Deposit Agreement and (iii) distribute the money received upon that Redemption to the Owners entitled to it upon surrender by them of called American Depositary Shares in accordance with Section 2.5 of that Agreement (and, for the avoidance of doubt, Owners shall not be entitled to receive that money under Section 4.1 of that Agreement). If the Redemption affects less than all the Deposited Securities, the Depositary shall call for surrender a corresponding portion of the outstanding American Depositary Shares and only those American Depositary Shares will automatically be converted into a right to receive the net proceeds of the Redemption. The Depositary shall allocate the American Depositary Shares converted under the preceding sentence among the Owners pro-rata to their respective holdings of American Depositary Shares immediately prior to the Redemption, except that the allocations may be adjusted so that no fraction of a converted American Depositary Share is allocated to any Owner. A Redemption of all or substantially all of the Deposited Securities shall be a Termination Option Event.

 

(c)                                  If the Depositary is notified of or there occurs any change in nominal value or any subdivision, combination or any other reclassification of the Deposited Securities or any recapitalization, reorganization, sale of assets substantially as an entirety, merger or consolidation affecting the issuer of the Deposited Securities or to which it is a party that is mandatory and binding on the Depositary as a holder of Deposited Securities and, as a result, securities or other property have been or will be delivered in exchange, conversion, replacement or in lieu of, Deposited Securities (a “Replacement”), the Depositary shall, if required, surrender the old Deposited Securities affected by that Replacement of Shares and hold, as new Deposited Securities under the Deposit Agreement, the new securities or other property delivered to it in that Replacement. However, the Depositary may elect to sell those new Deposited Securities if in the opinion of the Depositary it is not lawful or not practical for it to hold those new Deposited Securities under the Deposit Agreement because those new Deposited Securities may not be distributed to Owners without registration under the Securities Act of 1933 or for any other reason, at public or private sale, at such places and on such terms as it deems proper and proceed as if those new Deposited Securities had been Redeemed under paragraph (b) above. A Replacement shall be a Termination Option Event.

 

A-16

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

(d)                                 In the case of a Replacement where the new Deposited Securities will continue to be held under the Deposit Agreement, the Depositary may call for the surrender of outstanding Receipts to be exchanged for new Receipts specifically describing the new Deposited Securities and the number of those new Deposited Securities represented by each American Depositary Share. If the number of Shares represented by each American Depositary Share decreases as a result of a Replacement, the Depositary may call for surrender of the American Depositary Shares to be exchanged on a mandatory basis for a lesser number of American Depositary Shares and may sell American Depositary Shares to the extent necessary to avoid distributing fractions of American Depositary Shares in that exchange and distribute the net proceeds of that sale to the Owners entitled to them.

 

(e)                                  If there are no Deposited Securities with respect to American Depositary Shares, including if the Deposited Securities are cancelled, or the Deposited Securities with respect to American Depositary Shares become apparently worthless, the Depositary may call for surrender of those American Depositary Shares or may cancel those American Depositary Shares, upon notice to Owners, and that condition shall be a Termination Option Event.

 

18.                               LIABILITY OF THE COMPANY AND DEPOSITARY.

 

Neither the Depositary nor the Company nor any of their respective directors, employees, agents or affiliates shall incur any liability to any Owner or Holder:

 

(i) if by reason of (A) any provision of any present or future law or regulation or other act of the government of the United States, any State of the United States or any other state or jurisdiction, or of any governmental or regulatory authority or stock exchange; (B) (in the case of the Depositary only) any provision, present or future, of the articles of association or similar document of the Company, or by reason of any provision of any securities issued or distributed by the Company, or any offering or distribution thereof; or (C) any event or circumstance, whether natural or caused by a person or persons, that is beyond the ability of the Depositary or the Company, as the case may be, to prevent or counteract by reasonable care or effort (including, but not limited to earthquakes, floods, severe storms, fires, explosions, war, terrorism, civil unrest, labor disputes, criminal acts or outbreaks of infectious disease; interruptions or malfunctions of utility services, Internet or other communications lines or systems; unauthorized access to or attacks on computer systems or websites; or other failures or malfunctions of computer hardware or software or other systems or equipment), the Depositary or the Company is, directly or indirectly, prevented from, forbidden to or delayed in, or could be subject to any civil or criminal penalty on account of doing or performing and therefore does not do or perform, any act or thing that, by the terms of the Deposit Agreement or the Deposited Securities, it is provided shall be done or performed;

 

A-17

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

(ii) for any exercise of, or failure to exercise, any discretion provided for in the Deposit Agreement (including any determination by the Depositary to take, or not take, any action that the Deposit Agreement provides the Depositary may take);

 

(iii) for the inability of any Owner or Holder to benefit from any distribution, offering, right or other benefit that is made available to holders of Deposited Securities but is not, under the terms of the Deposit Agreement, made available to Owners or Holders; or

 

(iv) for any special, consequential or punitive damages for any breach of the terms of the Deposit Agreement.

 

Where, by the terms of a distribution to which Section 4.1, 4.2 or 4.3 of the Deposit Agreement applies, or an offering to which Section 4.4 of that Agreement applies, or for any other reason, that distribution or offering may not be made available to Owners, and the Depositary may not dispose of that distribution or offering on behalf of Owners and make the net proceeds available to Owners, then the Depositary shall not make that distribution or offering available to Owners, and shall allow any rights, if applicable, to lapse.

 

Neither the Company nor the Depositary assumes any obligation or shall be subject to any liability under the Deposit Agreement to Owners or Holders, except that they agree to perform their obligations specifically set forth in the Deposit Agreement without negligence or bad faith. The Depositary shall not be a fiduciary or have any fiduciary duty to Owners or Holders. The Depositary shall not be subject to any liability with respect to the validity or worth of the Deposited Securities. Neither the Depositary nor the Company shall be under any obligation to appear in, prosecute or defend any action, suit, or other proceeding in respect of any Deposited Securities or in respect of the American Depositary Shares, on behalf of any Owner or Holder or other person. Neither the Depositary nor the Company shall be liable for any action or non-action by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting Shares for deposit, any Owner or Holder, or any other person believed by it in good faith to be competent to give such advice or information. Each of the Depositary and the Company may rely, and shall be protected in relying upon, any written notice, request, direction or other document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the Depositary or in connection with a matter arising wholly after the removal or resignation of the Depositary, provided that in connection with the issue out of which such potential liability arises, the Depositary performed its obligations without negligence or bad faith while it acted as Depositary. The Depositary shall not be liable for the acts or omissions of any securities depository, clearing agency or settlement system in connection with or arising out of book-entry settlement of American Depositary Shares or Deposited Securities or otherwise. In the absence of bad faith on its part, the Depositary shall not be responsible for any failure to carry out any instructions to vote any of the Deposited Securities or for the manner in which any such vote is cast or the effect of any such vote. The Depositary shall have no duty to make any determination or provide any information as to the tax status of the Company or any liability for any tax consequences that may be incurred by Owners or Holders as a result of owning or holding American Depositary Shares. The Depositary shall not be liable for the inability or failure of an Owner or Holder to obtain the benefit of a foreign tax credit, reduced rate of withholding or refund of amounts withheld in respect of tax or any other tax benefit. No disclaimer of liability under the United States federal securities laws is intended by any provision of the Deposit Agreement.

 

A-18

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

19.                               RESIGNATION AND REMOVAL OF THE DEPOSITARY; APPOINTMENT OF SUCCESSOR CUSTODIAN.

 

The Depositary may at any time resign as Depositary under the Deposit Agreement by written notice of its election so to do delivered to the Company, to become effective upon the appointment of a successor depositary and its acceptance of such appointment as provided in the Deposit Agreement. The Depositary may at any time be removed by the Company by 90 days’ prior written notice of that removal, to become effective upon the later of (i) the 90th day after delivery of the notice to the Depositary and (ii) the appointment of a successor depositary and its acceptance of its appointment as provided in the Deposit Agreement. The Depositary in its discretion may at any time appoint a substitute or additional custodian or custodians.

 

20.                               AMENDMENT.

 

The form of the Receipts and any provisions of the Deposit Agreement may at any time and from time to time be amended by agreement between the Company and the Depositary without the consent of Owners or Holders in any respect which they may deem necessary or desirable. Any amendment that would impose or increase any fees or charges (other than taxes and other governmental charges, registration fees, cable (including SWIFT) or facsimile transmission costs, delivery costs or other such expenses), or that would otherwise prejudice any substantial existing right of Owners, shall, however, not become effective as to outstanding American Depositary Shares until the expiration of 30 days after notice of that amendment has been Disseminated to the Owners of outstanding American Depositary Shares. Every Owner and Holder, at the time any amendment so becomes effective, shall be deemed, by continuing to hold American Depositary Shares or any interest therein, to consent and agree to that amendment and to be bound by the Deposit Agreement as amended thereby. Upon the effectiveness of an amendment to the form of Receipt, including a change in the number of Shares represented by each American Depositary Share, the Depositary may call for surrender of Receipts to be replaced with new Receipts in the amended form or call for surrender of American Depositary Shares to effect that change of ratio. In no event shall any amendment impair the right of the Owner to surrender American Depositary Shares and receive delivery of the Deposited Securities represented thereby, except in order to comply with mandatory provisions of applicable law.

 

A-19

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

21.                               TERMINATION OF DEPOSIT AGREEMENT.

 

(a)                                 The Company may initiate termination of the Deposit Agreement by notice to the Depositary. The Depositary may initiate termination of the Deposit Agreement if (i) at any time 60 days shall have expired after the Depositary delivered to the Company a written resignation notice and a successor depositary has not been appointed and accepted its appointment as provided in Section 5.4 of that Agreement or (ii) a Termination Option Event has occurred. If termination of the Deposit Agreement is initiated, the Depositary shall Disseminate a notice of termination to the Owners of all American Depositary Shares then outstanding setting a date for termination (the “Termination Date”), which shall be at least 90 days after the date of that notice, and the Deposit Agreement shall terminate on that Termination Date.

 

(b)                                 After the Termination Date, the Company shall be discharged from all obligations under the Deposit Agreement except for its obligations to the Depositary under Sections 5.8 and 5.9 of that Agreement.

 

(c)                                  At any time after the Termination Date, the Depositary may sell the Deposited Securities then held under the Deposit Agreement and may thereafter hold uninvested the net proceeds of any such sale, together with any other cash then held by it hereunder, unsegregated and without liability for interest, for the pro rata benefit of the Owners of American Depositary Shares that remain outstanding, and those Owners will be general creditors of the Depositary with respect to those net proceeds and that other cash. After making that sale, the Depositary shall be discharged from all obligations under the Deposit Agreement, except (i) to account for the net proceeds and other cash (after deducting, in each case, the fee of the Depositary for the surrender of American Depositary Shares, any expenses for the account of the Owner of such American Depositary Shares in accordance with the terms and conditions of the Deposit Agreement and any applicable taxes or governmental charges) and (ii) for its obligations under Section 5.8 of that Agreement and (iii) to act as provided in paragraph (d) below.

 

(d)                                 After the Termination Date, the Depositary shall continue to receive dividends and other distributions pertaining to Deposited Securities (that have not been sold), may sell rights and other property as provided in the Deposit Agreement and shall deliver Deposited Securities (or sale proceeds) upon surrender of American Depositary Shares (after payment or upon deduction, in each case, of the fee of the Depositary for the surrender of American Depositary Shares, any expenses for the account of the Owner of those American Depositary Shares in accordance with the terms and conditions of the Deposit Agreement and any applicable taxes or governmental charges). After the Termination Date, the Depositary shall not accept deposits of Shares or deliver American Depositary Shares. After the Termination Date, (i) the Depositary may refuse to accept surrenders of American Depositary Shares for the purpose of withdrawal of Deposited Securities (that have not been sold) or reverse previously accepted surrenders of that kind that have not settled if in its judgment the requested withdrawal would interfere with its efforts to sell the Deposited Securities, (ii) the Depositary will not be required to deliver cash proceeds of the sale of Deposited Securities until all Deposited Securities have been sold and (iii) the Depositary may discontinue the registration of transfers of American Depositary Shares and suspend the distribution of dividends and other distributions on Deposited Securities to the Owners and need not give any further notices or perform any further acts under the Deposit Agreement except as provided in Section 6.2 of that Agreement.

 

A-20

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

22.                               DTC DIRECT REGISTRATION SYSTEM AND PROFILE MODIFICATION SYSTEM.

 

(a)                                 Notwithstanding the provisions of Section 2.4 of the Deposit Agreement, the parties acknowledge that DTC’s Direct Registration System (“DRS”) and Profile Modification System (“Profile”) apply to the American Depositary Shares upon acceptance thereof to DRS by DTC. DRS is the system administered by DTC that facilitates interchange between registered holding of uncertificated securities and holding of security entitlements in those securities through DTC and a DTC participant. Profile is a required feature of DRS that allows a DTC participant, claiming to act on behalf of an Owner of American Depositary Shares, to direct the Depositary to register a transfer of those American Depositary Shares to DTC or its nominee and to deliver those American Depositary Shares to the DTC account of that DTC participant without receipt by the Depositary of prior authorization from the Owner to register that transfer.

 

(b)                                 In connection with DRS/Profile, the parties acknowledge that the Depositary will not determine whether the DTC participant that is claiming to be acting on behalf of an Owner in requesting registration of transfer and delivery as described in paragraph (a) above has the actual authority to act on behalf of that Owner (notwithstanding any requirements under the Uniform Commercial Code). For the avoidance of doubt, the provisions of Sections 5.3 and 5.8 of the Deposit Agreement apply to the matters arising from the use of the DRS/Profile. The parties agree that the Depositary’s reliance on and compliance with instructions received by the Depositary through the DRS/Profile system and otherwise in accordance with the Deposit Agreement, shall not constitute negligence or bad faith on the part of the Depositary.

 

23.                               ARBITRATION; SETTLEMENT OF DISPUTES.

 

Any controversy, claim or cause of action brought by any party hereto against the Company arising out of or relating to the Shares or other Deposited Securities, the American Depositary Shares, the Receipts or the Deposit Agreement, or the breach hereof or thereof, if so elected by the claimant, shall be settled by arbitration in accordance with the International Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof.

 

A-21

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

The place of the arbitration shall be The City of New York, State of New York, United States of America, and the language of the arbitration shall be English.

 

The number of arbitrators shall be three, each of whom shall be disinterested in the dispute or controversy, shall have no connection with any party thereto, and shall be an attorney experienced in international securities transactions. Each party shall appoint one arbitrator and the two arbitrators shall select a third arbitrator who shall serve as chairperson of the tribunal. If a dispute, controversy or cause of action shall involve more than two parties, the parties shall attempt to align themselves in two sides (i.e., claimant(s) and respondent(s)), each of which shall appoint one arbitrator as if there were only two parties to such dispute, controversy or cause of action. If such alignment and appointment shall not have occurred within thirty (30) calendar days after the initiating party serves the arbitration demand, the American Arbitration Association shall appoint the three arbitrators, each of whom shall have the qualifications described above. The parties and the American Arbitration Association may appoint from among the nationals of any country, whether or not a party is a national of that country.

 

The arbitral tribunal shall have no authority to award any consequential, special or punitive damages or other damages not measured by the prevailing party’s actual damages and may not, in any event, make any ruling, finding or award that does not conform to the terms and conditions of the Deposit Agreement.

 

24.                               APPOINTMENT OF AGENT FOR SERVICE OF PROCESS; SUBMISSION TO JURISDICTION; JURY TRIAL WAIVER; WAIVER OF IMMUNITIES.

 

The Company has (i) appointed Cogency Global Inc., 122 East 42nd Street, 18th Floor, New York, NY as the Company’s authorized agent in the United States upon which process may be served in any suit or proceeding (including any arbitration proceeding) arising out of or relating to the Shares or Deposited Securities, the American Depositary Shares, the Receipts or this Agreement, (ii) consented and submitted to the jurisdiction of any state or federal court in the State of New York in which any such suit or proceeding may be instituted, and (iii) agreed that service of process upon said authorized agent shall be deemed in every respect effective service of process upon the Company in any such suit or proceeding.

 

A-22

 

Confidential Treatment Requested by KE Holdings Inc. Pursuant to 17 C.F.R. Section 200.83

 

EACH PARTY TO THE DEPOSIT AGREEMENT (INCLUDING, FOR AVOIDANCE OF DOUBT, EACH OWNER AND HOLDER) THEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING AGAINST THE COMPANY AND/OR THE DEPOSITARY DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THE SHARES OR OTHER DEPOSITED SECURITIES, THE AMERICAN DEPOSITARY SHARES OR THE RECEIPTS, THE DEPOSIT AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREIN OR THEREIN, OR THE BREACH HEREOF OR THEREOF, INCLUDING, WITHOUT LIMITATION, ANY QUESTION REGARDING EXISTENCE, VALIDITY OR TERMINATION (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).

 

To the extent that the Company or any of its properties, assets or revenues may have or hereafter become entitled to, or have attributed to it, any right of immunity, on the grounds of sovereignty or otherwise, from any legal action, suit or proceeding, from the giving of any relief in any respect thereof, from setoff or counterclaim, from the jurisdiction of any court, from service of process, from attachment upon or prior to judgment, from attachment in aid of execution or judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of any judgment, in any jurisdiction in which proceedings may at any time be commenced, with respect to its obligations, liabilities or any other matter under or arising out of or in connection with the Shares or Deposited Securities, the American Depositary Shares, the Receipts or the Deposit Agreement, the Company, to the fullest extent permitted by law, hereby irrevocably and unconditionally waives, and agrees not to plead or claim, any such immunity and consents to such relief and enforcement.

 

A-23

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