ZMENY Zhangmen Education Inc (PK)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of July 2023

 

Commission File Number: 001-40455

 

Zhangmen Education Inc.

 

No.1666 North Sichuan Road, Hongkou District, Shanghai

People’s Republic of China

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F  ☒               Form 40-F  ☐

 

  

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	Zhangmen Education Inc.
	By:	/s/ Yi Zhang
	Name:	Yi Zhang
	Title:	Chairman of the Board of Directors and Chief Executive Officer

 

Date: July 28, 2023

 

 

EXHIBIT INDEX

 

Exhibit No.		Description
99.1		Press Release
99.2		Agreement and Plan of Merger, dated July 28, 2023 by and among the registrant, Ultimate Vitor II Holdings Limited and Summit Lustre Limited
99.3		Support Agreement, dated July 28, 2023 by and among the registrant, Ultimate Vitor II Holdings Limited, Summit Lustre Limited, Mr. Yi Zhang and Ultimate Vitor Family Trust

 

 

2

 

Exhibit 99.1

 

Zhangmen Education Inc. Enters into Definitive Merger Agreement for Going Private Transaction

 

SHANGHAI, China – July 28, 2023 – Zhangmen Education Inc. (the “Company”) (OTCMKTS: ZMENY), an online education company in China, today announced that it has entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”) with Ultimate Vitor II Holdings Limited (“Parent”) and Summit Lustre Limited (“Merger Sub”), a wholly owned subsidiary of Parent, pursuant to which, and subject to the terms and conditions thereof, Merger Sub will merge with and into the Company, with the Company continuing as the surviving entity and becoming a wholly owned subsidiary of Parent (the “Merger”), in a transaction in which the Company will be acquired by Mr. Yi Zhang, founder, chairman of the Board, chief executive officer and interim principal financial and accounting officer of the Company (the “Buyer”).

 

Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”), all Class A ordinary shares, par value of US$0.00001, of the Company (each a “Class A Share”, together with each Class B ordinary share, par value $0.00001 per share, of the Company, each a “Share”) issued, outstanding and not represented by American depositary shares (each an “ADS”, each representing seventy-two (72) Class A Shares) immediately prior to the Effective Time, other than the Excluded Shares and the Dissenting Shares (each as defined in the Merger Agreement), will be cancelled and converted into the right to receive $0.0077778 per Share in cash without interest (representing $0.56 divided by seventy-two), and each outstanding ADS, other than ADSs representing the Excluded Shares, together with each Class A Share represented by such ADSs, will be cancelled and converted into the right to receive $0.56 per ADS in cash without interest (the “Merger Consideration”).

 

The Merger Consideration represents a premium of approximately 115% and approximately 56% to the volume-weighted average price of the ADSs during the last 30 and 90 trading days, respectively, prior to the Company’s receipt of a “going-private” proposal from the Buyer on May 26, 2023.

 

Concurrently with the execution of the Merger Agreement, Parent, Merger Sub, the Company and certain persons listed therein (such persons, collectively the “Founder Parties”) entered into a support agreement, pursuant to which Parent and the Founder Parties have committed, subject to the terms and conditions therein, to vote all the Shares of the Company beneficially owned by them in favor of the approval of the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement.

 

As of the date of this press release, the Buyer beneficially own approximately 13.5% of all issued and outstanding Shares of the Company, which represent approximately 82.4% of the aggregate voting power of the Company.

 

The Merger will be funded through a combination of (1) cash contributions from the Buyer pursuant to, and subject to the terms and conditions set forth in, an equity commitment letter, dated as of the date of the Merger Agreement, and (2) available cash of the Company. The Founder Parties agree to, at the Effective Time, cancel all the Founder Shares (as defined in the Support Agreement, including those represented by ADSs) automatically for no consideration pursuant to, and subject to the terms and conditions set forth in, the Support Agreement.

 

The Company’s board of directors (the “Board”), acting upon the unanimous recommendation of a special committee of independent directors established by the Board (the “Special Committee”), approved, among other things, the Merger Agreement and the Merger, and resolved to recommend the Company’s shareholders vote to authorize and approve the Merger Agreement and the transactions contemplated thereby including the Merger. The Special Committee negotiated the terms of the Merger Agreement with the assistance of its financial and legal advisors.

 

The Merger, which is currently expected to close during the second half of 2023, is subject to customary closing conditions, including an affirmative vote of shareholders representing at least two-thirds of the voting power of the Shares present and voting in person or by proxy at an extraordinary general meeting of the Company’s shareholders. If completed, the Merger will result in the Company becoming a privately held company, and its ADS program will be terminated.

 

Kroll Securities, LLC and Kroll, LLC (operating through its Duff& Phelps Opinions Practice) are serving as the financial advisor to the Special Committee. Linklaters is serving as U.S. legal counsel to the Special Committee. Maples and Calder (Hong Kong) LLP is serving as Cayman Islands legal counsel to the Special Committee.

 

Davis Polk & Wardwell LLP is serving as U.S. legal counsel to the Buyer.

 

 

Additional Information About the Merger

 

The Company will furnish to the U.S. Securities and Exchange Commission (the “SEC”) a current report on Form 6-K regarding the Merger, which will include as an exhibit thereto the Merger Agreement as an exhibit. Shareholders and others wishing to obtain additional information regarding the Merger Agreement and the Merger are urged to review these documents, which will be available at the SEC’s website (http://www.sec.gov).

 

In connection with the Merger, the Company and the Buyer will file with the SEC a Schedule 13E-3 transaction statement (the “Schedule 13E-3”), which will include as an exhibit a preliminary proxy statement (the “Proxy Statement”). The Company will distribute the Proxy Statement to the Company’s shareholders after it is finalized. Investors and shareholders are urged to read carefully and in their entirety the Schedule 13E-3, and in particular the Proxy Statement, and other materials filed with or furnished to the SEC when they become available, as they will contain important information about the Company, the Merger Agreement, the Merger, and related matters. In addition to receiving the Proxy Statement by mail, shareholders also will be able to obtain the full Schedule 13E-3 and the exhibits thereto, as well as other filings containing information about the Company, the Merger Agreement, the Merger, and related matters, without charge, from the SEC’s website (http://www.sec.gov), or at the SEC’s public reference room at 100 F Street, NE, Room 1580, Washington, D.C. 20549.

 

The Company and certain of its directors, executive officers, and other members of management and employees may, under SEC rules, be deemed to be “participants” in the solicitation of proxies from the Company’s shareholders with respect to the Merger. Information regarding the persons who may be considered “participants” in the solicitation of proxies will be set forth in the Proxy Statement.

 

This announcement is not a solicitation of a proxy, an offer to purchase, or a solicitation of an offer to sell any securities and it is not a substitute for the Schedule 13E-3, including the Proxy Statement, or other filings that may be made with the SEC in connection with the Merger Agreement and the Merger.

 

About Zhangmen Education Inc.

 

Zhangmen Education Inc. (OTCMKTS: ZMENY) is an online education company in China providing quality-oriented education to students. For more information, please visit ir.zhangmenedu.com.

 

Safe Harbor Statement

 

This announcement contains statements that may constitute “forward-looking” statements which are made pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “likely to,” and similar statements. Statements that are not historical facts, including statements about the Company’s beliefs, plans, and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. Further information regarding these and other risks is included in the Company’s filings with the SEC. All information provided in this announcement is as of the date of this announcement, and the Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

 

For investor and media inquiries, please contact:

 

In China:

 

Zhangmen Education Inc.

Investor Relations

E-mail: ir@zhangmen.com

 

The Piacente Group, Inc.

Emilie Wu

Tel: +86-21-6039-8363

E-mail: zhangmen@thepiacentegroup.com

 

In the United States:

The Piacente Group, Inc.

Brandi Piacente

Tel: +1-212-481-2050

E-mail: zhangmen@thepiacentegroup.com 

 

 

 

 

 

 

Exhibit 99.2

 

Execution Version

 

 

 

 

 

 

 

 

AGREEMENT AND PLAN OF MERGER

 

Among

 

ULTIMATE VITOR II HOLDINGS LIMITED,

 

SUMMIT LUSTRE LIMITED

 

and

 

ZHANGMEN EDUCATION INC.

 

Dated as of July 28, 2023

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

		Page
Article I	THE MERGER	2
Section 1.1	The Merger	2
Section 1.2	Closing	2
Section 1.3	Effective Time	2
Section 1.4	Effect of the Merger	3
Section 1.5	Company Memorandum and Articles of Association	3
Section 1.6	Directors and Officers	3
Article II	EFFECT OF MERGER ON ISSUED SHARE CAPITAL; MERGER CONSIDERATION; EXCHANGE OF CERTIFICATES	3
Section 2.1	Effect on Share Capital	3
Section 2.2	Treatment of Company Equity Awards	5
Section 2.3	Exchange of Share Certificates, etc.	6
Section 2.4	No Transfers	10
Section 2.5	Termination of Deposit Agreement	10
Section 2.6	Dissenting Shares	10
Article III	REPRESENTATIONS AND WARRANTIES OF THE COMPANY	10
Section 3.1	Organization and Qualification; Subsidiaries	11
Section 3.2	Memorandum and Articles of Association	11
Section 3.3	Capitalization	11
Section 3.4	Authority	13
Section 3.5	No Conflict; Required Filings and Consents	13
Section 3.6	Compliance	14
Section 3.7	SEC Filings; Financial Statements; Undisclosed Liabilities	16
Section 3.8	Security	17
Section 3.9	Contracts	17
Section 3.10	Absence of Certain Changes or Events	20
Section 3.11	Absence of Litigation	20
Section 3.12	Labor and Employment Matters	20
Section 3.13	Insurance	21
Section 3.14	Properties	21
Section 3.15	Tax Matters	23
Section 3.16	Schedule 13E-3; Proxy Statement	24
Section 3.17	Intellectual Property	24
Section 3.18	Environmental Matters	26
Section 3.19	Opinion of Financial Advisor	26
Section 3.20	Brokers	27
Section 3.21	Anti-takeover Provisions	27
Section 3.22	No Other Representations or Warranties	27
Article IV	REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB	27
Section 4.1	Organization	27
Section 4.2	Authority	28
Section 4.3	No Conflict; Required Filings and Consents	28
Section 4.4	Absence of Litigation	29
Section 4.5	Capitalization and Operations	29
Section 4.6	Brokers	29
Section 4.7	Certain Arrangements	29
Section 4.8	Financing	29
Section 4.9	Limited Guarantee	30
Section 4.10	Ownership of Shares	30
Section 4.11	Solvency	30
Section 4.12	No Other Contracts	31
Section 4.13	Schedule 13E-3; Proxy Statement	31
Section 4.14	Non-Reliance on Company Estimates	31
Section 4.15	Independent Investigation	31
Section 4.16	No Other Representations or Warranties	32

 

 

Article V	CONDUCT OF BUSINESS PENDING THE MERGER	32
Section 5.1	Conduct of Business of the Company Pending the Merger	32
Section 5.2	Conduct of Business of Parent and Merger Sub Pending the Merger	35
Section 5.3	No Control of Other Party’s Business	35
Article VI	ADDITIONAL AGREEMENTS	35
Section 6.1	Schedule 13E-3; Proxy Statement	35
Section 6.2	Shareholders’ Meeting; Board Recommendation	37
Section 6.3	No Solicitation of Transactions	38
Section 6.4	Further Action; Efforts	43
Section 6.5	Notification of Certain Matters	44
Section 6.6	Access to Information; Confidentiality	45
Section 6.7	Stock Deregistration	45
Section 6.8	Publicity	45
Section 6.9	Directors’ and Officers’ Indemnification	46
Section 6.10	Parent Financing	47
Section 6.11	Takeover Statutes	48
Section 6.12	Transaction Litigation	48
Section 6.13	Resignation of Directors	48
Section 6.14	Obligations of Merger Sub; Obligations of Subsidiaries	49
Section 6.15	Actions Taken at Direction of Parent, Merger Sub or Founder Shareholder	49
Article VII	CONDITIONS OF MERGER	49
Section 7.1	Conditions to Obligation of Each Party to Effect the Merger	49
Section 7.2	Conditions to Obligations of Parent and Merger Sub	49
Section 7.3	Conditions to Obligations of the Company	50
Article VIII	TERMINATION	50
Section 8.1	Termination	50
Section 8.2	Effect of Termination	51
Section 8.3	Expenses	53
Article IX	GENERAL PROVISIONS	53
Section 9.1	Non-Survival of Representations, Warranties, Covenants and Agreements	53
Section 9.2	Modification or Amendment	53
Section 9.3	Waiver	53
Section 9.4	Notices	53
Section 9.5	Certain Definitions	54
Section 9.6	Severability	62
Section 9.7	Entire Agreement; Assignment	62
Section 9.8	Parties in Interest	62
Section 9.9	Governing Law	62
Section 9.10	Headings	63
Section 9.11	Counterparts	63
Section 9.12	Specific Performance	63
Section 9.13	Jurisdiction	63
Section 9.14	WAIVER OF JURY TRIAL	64
Section 9.15	Interpretation	64
Exhibits:
Exhibit A	Plan of Merger

 

 

AGREEMENT AND PLAN OF MERGER

 

This AGREEMENT AND PLAN OF MERGER, dated as of July 28, 2023 (this “Agreement”), is entered into by and among Ultimate Vitor II Holdings Limited, a business company incorporated under the Laws of the British Virgin Islands (“Parent”), Summit Lustre Limited, an exempted company with limited liability incorporated under the Laws of the Cayman Islands and a wholly owned subsidiary of Parent (“Merger Sub”), and Zhangmen Education Inc., an exempted company with limited liability incorporated under the Laws of the Cayman Islands (the “Company”). Parent, Merger Sub and the Company are each sometimes referred to herein as a “Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, upon the terms and subject to the conditions of this Agreement and in accordance with the Companies Act (As Revised) of the Cayman Islands (the “Cayman Islands Companies Law”), it is proposed that Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as the surviving company (as defined in the Cayman Islands Companies Law) and becoming a wholly owned subsidiary of Parent as a result of the Merger;

 

WHEREAS, the board of directors of the Company (the “Board of Directors”), acting upon the unanimous recommendation and approval of a special committee of the Board of Directors consisting of independent directors of the Company (the “Special Committee”), has by unanimous resolution of the Special Committee (a) determined and approved that it is in the best interests of the Company and its shareholders (other than the holders of Excluded Shares) and declared it advisable, to enter into this Agreement, (b) approved the entry into, execution, delivery and performance by the Company of this Agreement and the consummation of the Merger and the other transactions contemplated hereby, and (c) resolved to recommend the approval and authorization of this Agreement, the Merger and the other transactions contemplated hereby by the shareholders of the Company at the Shareholders’ Meeting;

 

WHEREAS, the respective boards of directors of Parent and Merger Sub have (a) approved the entry into, execution, delivery and performance by Parent and Merger Sub, as the case may be, of this Agreement and the consummation of the Merger and the other transactions contemplated hereby and (b) resolved to approve and authorize Parent and Merger Sub, as the case may be, to enter into this Agreement, the Merger and the other transactions contemplated hereby;

 

WHEREAS, as a condition and material inducement to Parent’s and Merger Sub’s willingness to enter into this Agreement, concurrently with the execution and delivery of this Agreement, Parent, Merger Sub, the Company and the Founder Shareholder (as defined below) and certain other parties named therein have entered into a support agreement, dated as of the date hereof, in the form executed and delivered to the Company simultaneously with the execution of this Agreement (the “Support Agreement”) pursuant to which each of the Founder Shareholder and Parent has agreed, among other things, (a) subject to the terms and conditions of the Support Agreement, to vote the Founder Shares, together with any other Ordinary Shares (including Ordinary Shares represented by ADSs) acquired (whether beneficially or of record) by the Founder Shareholder after the date hereof and prior to the earlier of the Effective Time and the termination of the Founder Shareholder’s obligations under the Support Agreement, in favor of the approval of this Agreement, the Merger and the other transactions contemplated hereby, and to take certain other actions in furtherance of the transactions contemplated by this Agreement; and (b) subject to the terms and conditions of the Support Agreement, to receive no cash consideration for the cancellation and surrender of the Company Securities beneficially owned by the Parent immediately prior to the Effective Time (the “Founder Shares”) in accordance with this Agreement;

 

 

WHEREAS, as a condition and material inducement to the Company’s willingness to enter into this Agreement, concurrently with the execution and delivery of this Agreement, Yi Zhang (the “Founder Shareholder”) has executed and delivered a limited guarantee in favor of the Company, dated as of the date hereof, guaranteeing certain of Parent’s and Merger Sub’s obligations under this Agreement (the “Limited Guarantee”); and

 

WHEREAS, the Company, Parent and Merger Sub desire to make certain representations, warranties, covenants and agreements in connection with this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing premises, and of the representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, the Parties agree as follows:

 

Article I

 

THE MERGER

 

Section 1.1 The Merger. Upon the terms and subject to the satisfaction or written waiver (where permissible) of the conditions set forth in ‎Article VII, and in accordance with the applicable provisions of the Cayman Islands Companies Law, Merger Sub shall be merged with and into the Company at the Effective Time. As a result of the Merger, Merger Sub shall cease to exist and will be struck off the register by the Registrar of Companies (as defined below) in the Cayman Islands and the Company shall continue as the surviving company of the Merger (the “Surviving Company”).

 

Section 1.2 Closing. Subject to the terms and conditions of this Agreement, the closing of the Merger (the “Closing”) shall take place at (a) the offices of the Hong Kong Club Building, 3A Chater Road, Hong Kong, China, at 10:00 a.m., Hong Kong Time, on the third Business Day following the date on which the conditions set forth in ‎Article VII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions at the Closing) have been satisfied or waived in accordance with this Agreement, or (b) at such other time and place as the Company and Parent may agree in writing. The date on which the Closing occurs is referred to herein as the “Closing Date.” For the avoidance of doubt, a condition set forth in ‎Article VII may only be waived in writing by the Party or Parties entitled to such condition under this Agreement.

 

Section 1.3 Effective Time. Upon the terms and subject to the conditions set forth in this Agreement, on the Closing Date, Parent, Merger Sub and the Company shall cause the Merger to be consummated under the Cayman Islands Companies Law by executing and filing the Plan of Merger substantially in the form attached hereto as Exhibit A (the “Plan of Merger”) with the Registrar of Companies of the Cayman Islands (the “Registrar of Companies”), together with such other appropriate documents, in such forms as are required by, and executed in accordance with, the applicable provisions of the Cayman Islands Companies Law (the time of filing of the Plan of Merger by the Registrar of Companies, or such later time as may be agreed in writing by Parent, Merger Sub and the Company and specified in the Plan of Merger in accordance with the applicable provisions of the Cayman Islands Companies Law, being referred to herein as the “Effective Time”).

 

 

Section 1.4 Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in this Agreement, the Plan of Merger and in the applicable provisions of the Cayman Islands Companies Law. Without limiting the generality of the foregoing, at the Effective Time, all the rights, the property of every description including choses in action, and the business, undertaking, goodwill, benefits, immunities and privileges of the Company and Merger Sub shall immediately vest in the Surviving Company, and the Surviving Company shall be liable for and subject, in the same manner as the Company and Merger Sub, all mortgages, charges or security interests, and all contracts, obligations, claims, debts, and liabilities of the Company and Merger Sub in accordance with the provisions of the Cayman Islands Companies Law.

 

Section 1.5 Company Memorandum and Articles of Association. At the Effective Time, the memorandum and articles of association of Merger Sub, as in effect immediately prior to the Effective Time, shall become the memorandum and articles of association of the Surviving Company, save and except that (a) all references to the name “Summit Lustre Limited” shall be amended to “Zhangmen Education Inc.”; (b) all references to the share capital and registered office of the Surviving Company shall be amended to refer to the correct authorized share capital and registered office of the Surviving Company consistent with the Plan of Merger, until thereafter amended in accordance with the applicable provisions of the Cayman Islands Companies Law and such memorandum and articles of association; and (c) such memorandum and articles of association shall include such indemnification provisions as required by ‎Section 6.9(c).

 

Section 1.6 Directors and Officers.

 

(a) The sole director of Merger Sub immediately prior to the Effective Time shall, from and after the Effective Time, be the initial director of the Surviving Company, unless otherwise determined by Parent prior to the Effective Time, to hold office in accordance with the memorandum and articles of association of the Surviving Company until their respective successors are duly elected and qualified or until such director’s earlier death, resignation or removal in accordance with the memorandum and articles of association of the Surviving Company.

 

(b) The officers of the Company immediately prior to the Effective Time shall be the initial officers of the Surviving Company, unless otherwise determined by Parent prior to the Effective Time, each to hold office in accordance with the memorandum and articles of association of the Surviving Company until their respective successors are duly elected and qualified or until such officer’s earlier death, resignation or removal in accordance with the memorandum and articles of association of the Surviving Company.

 

Article II

 

EFFECT OF MERGER ON ISSUED SHARE CAPITAL; MERGER CONSIDERATION; EXCHANGE OF CERTIFICATES

 

Section 2.1 Effect on Share Capital. At the Effective Time, by virtue of the Merger and without any action on the part of the Company, Parent, Merger Sub or the holders of any of the following securities:

 

(a) Per Share Merger Consideration. Each Class A ordinary share, par value $0.00001 per share (each a “Class A Share”, or collectively, “Class A Shares”), and Class B ordinary share, par value $0.00001 per share (each a “Class B Share”, or collectively, “Class B Shares”) (Class A Shares together with Class B Shares, collectively, “Ordinary Shares”), issued and outstanding immediately prior to the Effective Time (other than the Excluded Shares, (subject to Section 2.1‎(d) in the case of) the Dissenting Shares and the Ordinary Shares represented by ADSs) shall be cancelled and converted in accordance with the provisions of the Cayman Islands Companies Law into the right to receive $0.0077778 (representing $0.56 divided by seventy-two) per Ordinary Share in cash without interest (the “Per Share Merger Consideration”). At the Effective Time, all of the Ordinary Shares that have been converted into a right to receive the Per Share Merger Consideration as provided in this ‎Section 2.1(a) shall no longer be outstanding, shall be cancelled and extinguished in accordance with the provisions of the Cayman Islands Companies Law and shall cease to exist, and each former holder of Ordinary Shares (other than the Excluded Shares, (subject to Section 2.1‎(d) in the case of) the Dissenting Shares and the Ordinary Shares represented by ADSs) that were outstanding immediately prior to the Effective Time will cease to have any rights with respect to such Ordinary Shares, except for the right to receive the Per Share Merger Consideration without interest, to be paid in consideration therefor in accordance with this ‎Article II.

 

 

(b) Per ADS Merger Consideration. Each American Depositary Share, representing seventy-two (72) Ordinary Shares (each, an “ADS” or collectively, “ADSs”) issued and outstanding immediately prior to the Effective Time (other than the ADSs representing the Excluded Shares), together with each Ordinary Share represented by such ADSs, shall be cancelled and converted into the right to receive $0.56 per ADS in cash without interest (the “Per ADS Merger Consideration”) pursuant to the terms and conditions set forth in this Agreement and the Deposit Agreement; provided that in the event of any conflict between this Agreement and the Deposit Agreement, provisions in this Agreement shall apply. At the Effective Time, all of the ADSs, together with each Ordinary Share represented by such ADSs, that have been converted into a right to receive the Per ADS Merger Consideration as provided in this ‎Section 2.1(b) shall no longer be outstanding, shall be cancelled and extinguished and shall cease to exist, and each former holder of ADSs (other than the ADSs representing the Excluded Shares) that were outstanding immediately prior to the Effective Time will cease to have any rights with respect to such ADSs, except for the right to receive the Per ADS Merger Consideration without interest, to be paid in consideration therefor in accordance with this ‎Article II.

 

(c) Cancellation of Certain Shares. Each Ordinary Share (including Ordinary Shares represented by ADSs) owned by the Company as a treasury share, the Parent, or any direct or indirect subsidiary of the Company or the Parent immediately before the Effective Time, including, for the avoidance of doubt, the Founder Shares and any Ordinary Shares (including ADSs corresponding to such Ordinary Shares) held by entities set forth on Section 2.1(c) of the Parent Disclosure Letter (collectively, the “Cancelled Shares”), shall be cancelled and surrendered automatically in accordance with the provisions of the Cayman Islands Companies Law and shall cease to exist, and no consideration shall be paid for the Cancelled Shares.

 

(d) Dissenting Shares. Any Ordinary Shares that are issued and outstanding immediately prior to the Effective Time and are held by a holder of Ordinary Shares (each, a “Dissenting Shareholder”) who has validly exercised and not withdrawn or lost its right to dissent from the Merger (“Dissenter Rights”) pursuant to Section 238 of the Cayman Islands Companies Law (collectively, the “Dissenting Shares”) shall be cancelled and cease to exist in accordance with the provisions of the Cayman Islands Companies Law, but shall not be converted into or exchangeable for or represent the right to receive the Per Share Merger Consideration without interest (except as provided in this ‎Section 2.1‎(d)), and each such Dissenting Shareholder shall instead be entitled only to payment of the fair value of such Dissenting Shares in accordance with Section 238 of the Cayman Islands Companies Law. If any Dissenting Shareholder has effectively withdrawn in accordance with the Cayman Islands Companies Law or lost the right to dissent, then in each case, as of the later of the Effective Time or the occurrence of such event, the Dissenting Shareholder shall, in respect of its Dissenting Shares cancelled and having ceased to exist in accordance with the provisions of the Cayman Islands Companies Law at the Effective Time, be entitled to receive the Per Share Merger Consideration without interest, pursuant to this ‎Section 2.1(d).

 

 

(e) Share Capital of Merger Sub. Immediately following the cancellation of Ordinary Shares (including Ordinary Shares represented by ADSs) pursuant to the terms and conditions set out in ‎Section 2.1(a) to ‎Section 2.1(d) above, each ordinary share, par value $0.0001 per share, of Merger Sub, issued and outstanding immediately prior to the Effective Time, shall be converted into and become one validly issued, fully paid and non-assessable ordinary share, par value $0.00001 per share, of the Surviving Company in accordance with the provisions of the Cayman Islands Companies Law and shall constitute the only issued and outstanding share capital of the Surviving Company, which shall be reflected in the register of members of the Surviving Company.

 

Section 2.2 Treatment of Company Equity Awards.

 

(a) Corporate Actions. At or prior to the Effective Time, the Company, the Board of Directors or the compensation committee thereof, or the Special Committee, as applicable, shall adopt any resolutions and take any other actions necessary or appropriate to cause the Company Options and the Company Restricted Share Awards to be treated in accordance with ‎Section 2.2(b) below.

 

(b) Treatment of Company Options and Company Restricted Share Awards.

 

(i) Treatment of Vested Company Options. Each Company Option that is outstanding, unexercised, vested and not yet expired as of immediately prior to the Effective Time (each, “Vested Company Option”), will immediately prior to the Effective Time, except as otherwise agreed to between a holder of such Vested Company Options and Parent, by virtue of the Merger and without other action by Parent, the Company, or the holder of such Vested Company Option, be cancelled and thereafter be converted into the right to receive, at or promptly after the Effective Time, in full satisfaction of the rights of such holder with respect thereto, an amount in cash, without interest, equal to the excess of (A) Per Share Merger Consideration over (B) the exercise price of such Vested Company Option, multiplied by the number of Ordinary Shares underlying such Vested Company Option, less applicable Taxes required to be withheld with respect to such payment pursuant to Section 2.3(i) (if any); provided that any Vested Company Option that has an exercise price per Ordinary Share that is greater than or equal to the Per Share Merger Consideration shall cease to be outstanding, be cancelled and cease to exist and the holder of any such Vested Company Option shall not be entitled to payment of any consideration therefore.

 

 

(ii) Treatment of Vested Company Restricted Share Awards. Each Ordinary Share, that is outstanding and vested as of immediately prior to the Effective Time and subject to a Company Restricted Share Award (each, “Vested Company Restricted Share Awards”) will, except as otherwise agreed to between a holder of a Company Restricted Share Award and Parent, by virtue of the Merger and without other action by Parent, the Company, or holder of such Vested Company Restricted Share Awards, be cancelled and thereafter be converted into the right to receive, at or promptly after the Effective Time, in full satisfaction of the rights of such holder with respect thereto, an amount in cash, without interest, equal to Per Share Merger Consideration multiplied by the number of Ordinary Shares underlying such Vested Company Restricted Share Awards, less applicable Taxes required to be withheld with respect to such payment pursuant to ‎Section 2.3(i) (if any).

 

(iii) Treatment of Unvested Company Options(iv). Each Company Option that is outstanding and unvested (an “Unvested Company Option”) immediately prior to the Effective Time shall be cancelled as of the Effective Time, automatically and without action by the holder of such Unvested Company Option.

 

(v) Treatment of Unvested Company Restricted Share Awards(vi). Each Company Restricted Share Awards that is outstanding and unvested (an “Unvested Company Restricted Share Awards”) immediately prior to the Effective Time shall be cancelled as of the Effective Time, automatically and without action by the holder of such Unvested Company Restricted Share Awards.

 

(vii) Payment Procedures. Prior to the Effective Time, Parent will deposit (or cause to be deposited) with the Company, by wire transfer of immediately available funds, the aggregate amount payable to holders of Vested Company Options and Vested Company Restricted Share Awards (after giving effect to any required Tax withholdings as provided in ‎Section 2.3(i)). As promptly as reasonably practicable following the Effective Time, the applicable holders of Vested Company Options and Vested Company Restricted Share Awards shall receive a payment from the Company or the Surviving Company of all amounts required to be paid to such holders in respect of Vested Company Options and Vested Company Restricted Share Awards (as applicable) that are cancelled and converted pursuant to Section 2.2(b) (after giving effect to any required Tax withholdings as provided in ‎Section 2.3(i)).

 

(viii) As promptly as practicable following the date hereof and in any event prior to the Effective Time, the Company, the Board of Directors or the compensation committee of the Board of Directors, as applicable, shall pass any resolutions and take any actions which are reasonably necessary to effectuate the provisions of this ‎Section 2.2. The Company shall take all reasonable actions necessary to ensure that from and after the Effective Time, neither Parent nor the Surviving Company will be required to issue Ordinary Shares or other share capital of the Company or the Surviving Company to any person pursuant to the Company Share Plans or in settlement of any Company Option or Company Restricted Share Awards.

 

Section 2.3 Exchange of Share Certificates, etc.

 

(a) Paying Agent. Prior to the Effective Time, Parent shall appoint an entity selected by Parent to act as paying agent (the “Paying Agent”) for all payments required to be made pursuant to ‎Section 2.1(a), ‎Section 2.1(b) and ‎Section 2.1(d) (in the case of ‎Section 2.1(d), when ascertained) (collectively, the “Merger Consideration”). Prior to the Effective Time, or in the case of payments pursuant to ‎Section 2.1(d), when ascertained, Parent shall deposit, or cause to be deposited, with the Paying Agent, for the benefit of the holders of Ordinary Shares (including Ordinary Shares represented by ADSs) (other than Excluded Shares), cash in an amount sufficient to pay the Merger Consideration (such cash being hereinafter referred to as the “Exchange Fund”).

 

 

(b) Exchange Procedures. Promptly after the Effective Time (and in any event within three (3) Business Days thereafter), the Surviving Company shall cause the Paying Agent to mail to each person who was, at the Effective Time, a registered holder of Ordinary Shares (other than the Excluded Shares, (subject to Section 2.1(d) in the case of) the Dissenting Shares, and the Ordinary Shares represented by ADSs) entitled to receive the Per Share Merger Consideration pursuant to ‎Section 2.1(a): (i) a letter of transmittal (which shall be in customary form for a company incorporated in the Cayman Islands, and shall specify the manner in which the delivery of the Exchange Fund to registered holders of such Ordinary Shares shall be effected); and (ii) instructions for use in effecting the surrender of any issued share certificates representing such Ordinary Shares (the “Share Certificates”) (or affidavits and indemnities of loss in lieu of the Share Certificates as provided in ‎Section 2.3(c)) or non-certificated Ordinary Shares represented by book entry (“Uncertificated Shares”) and/or such other documents as may be required in exchange for the Per Share Merger Consideration. Upon surrender of, if applicable, a Share Certificate (or affidavit and indemnity of loss in lieu of the Share Certificate as provided in ‎Section 2.3(c)) or Uncertificated Shares and/or such other documents as may be required pursuant to such instructions to the Paying Agent in accordance with the terms of such letter of transmittal, duly executed in accordance with the instructions thereto, each registered holder of Ordinary Shares represented by such Share Certificate (or affidavits and indemnities of loss in lieu of the Share Certificates as provided in ‎Section 2.3(c)) and each registered holder of Uncertificated Shares shall be entitled to receive in exchange therefor cash in immediately available funds, in the amount equal to (x) the number of Ordinary Shares represented by such Share Certificate (or affidavit and indemnity of loss in lieu of the Share Certificate as provided in ‎Section 2.3(c)) or the number of Uncertificated Shares multiplied by (y) the Per Share Merger Consideration, subject to applicable withholding in accordance with ‎Section 2.3(i), and any Share Certificate so surrendered shall forthwith be marked as cancelled. Prior to the Effective Time, Parent and the Company shall establish procedures with the Paying Agent and the Depositary to ensure that (A) the Paying Agent will transmit to the Depositary as promptly as reasonably practicable following the Effective Time an amount in cash in immediately available funds equal to the product of (x) the number of ADSs issued and outstanding immediately prior to the Effective Time (other than ADSs representing Excluded Shares) and (y) the Per ADS Merger Consideration, and (B) the Depositary will distribute the Per ADS Merger Consideration to holders of ADSs pro rata to their holdings of ADSs (other than ADSs representing Excluded Shares) upon surrender by them of the ADSs. Pursuant to the terms of the Deposit Agreement, the ADS holders will pay any applicable fees, charges and expenses of the Depositary, share, stock transfer or other Taxes and other government charges due to or incurred by the Depositary in connection with the cancellation of their ADSs. The Surviving Company will pay any applicable fees, charges and expenses of the Depositary and government charges (other than withholding Taxes, if any, which shall be withheld by the Depositary in accordance with ‎Section 2.3(i)) due to or incurred by the Depositary in connection with distribution of the Per ADS Merger Consideration to holders of ADSs and the cancellation of ADSs (excluding any fees, including ADS cancellation or termination fees, payable by holders of ADSs in accordance with the Deposit Agreement). No interest shall be paid or will accrue on any amount payable in respect of the Ordinary Shares or ADSs pursuant to the provisions of this ‎Article II.

 

 

(c) Lost Certificates. If any Share Certificate has been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Share Certificate to be lost, stolen or destroyed and, if required by the Surviving Company or the Paying Agent, the posting by such person of a bond, in such reasonable amount as the Surviving Company or the Paying Agent may direct, as indemnity against any claim that may be made against it with respect to such Share Certificate, the Paying Agent will pay in respect of such lost, stolen or destroyed Share Certificate an amount equal to the Per Share Merger Consideration (or in the case of Dissenting Shares, the amount payable per Share under Section 2.1(d)) multiplied by the number of Ordinary Shares (other than Excluded Shares) represented by such Share Certificate to which the holder thereof is entitled pursuant to ‎Section 2.1(a).

 

(d) Untraceable Shareholders. Remittances for the Per Share Merger Consideration or the Per ADS Merger Consideration, as the case may be, shall not be sent to holders of Ordinary Shares or ADSs who are untraceable unless and until, except as provided below, they notify the Paying Agent or the Depositary, as applicable, of their current contact details. A holder of Ordinary Shares or ADSs will be deemed to be untraceable if (i) such person has no registered address in the register of members maintained by the Company or the Depositary, as applicable, or (ii) on the last two (2) consecutive occasions on which a dividend has been paid by the Company a check payable to such person either (x) has been sent to such person and has been returned undelivered or has not been cashed, or (y) has not been sent to such person because on an earlier occasion a check for a dividend so payable has been returned undelivered, and in any such case no valid claim in respect thereof has been communicated in writing to the Company or the Depositary, as applicable, (iii) notice of the Shareholders’ Meeting convened to vote on the Merger has been sent to such person and has been returned undelivered. Monies due to shareholders of the Company (including holders of ADSs) who are untraceable shall be returned to the Surviving Company on demand and held in a non-interest bearing bank account for the benefit of shareholders of the Company (including holders of ADSs) who are untraceable. Monies unclaimed after a period of six (6) years from the Closing Date shall be forfeited and shall revert to the Surviving Company or (iv) otherwise in accordance with the provisions of the memorandum and articles of association of the Surviving Company.

 

(e) Adjustments to Merger Consideration. The Per Share Merger Consideration and the Per ADS Merger Consideration shall be equitably adjusted to reflect appropriately the effect of any share split, reverse share split, share dividend (including any dividend or distribution of securities convertible into Ordinary Shares), extraordinary cash dividends, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to Ordinary Shares or ADSs occurring on or after the date hereof and prior to the Effective Time and to provide to the holders of Ordinary Shares (including Ordinary Shares represented by ADSs), Company Options and Company Restricted Share Awards the same economic effect as contemplated by this Agreement prior to such action.

 

(f)   Deposit or Investment of Exchange Fund. The Exchange Fund, pending its disbursement to the holders of Ordinary Shares and ADSs, shall be deposited or invested by the Paying Agent as directed by Parent or, after the Effective Time, the Surviving Company; provided that (i) in case of a deposit of the Exchange Fund, such deposit shall be held in an internationally recognized financial institution (including, but not limited to, Citibank N.A. Hong Kong), and (ii) in case of an investment of the Exchange Fund, no such investment or losses shall affect the amounts payable to such holders and Parent or the Surviving Company, as applicable, shall promptly replace or cause to be replaced any funds deposited with the Paying Agent that are lost through any investment to the extent necessary to ensure that the Exchange Fund is at all times maintained at a level sufficient for the Paying Agent to pay the Merger Consideration as contemplated hereby. Earnings from deposits and investments shall be the sole and exclusive property of Parent and the Surviving Company. Except as contemplated by ‎Section 2.3(b), this ‎Section 2.3(f) and ‎Section 2.3(g), the Exchange Fund shall not be used for any other purpose.

 

 

(g) Termination of Exchange Fund. Any portion of the Exchange Fund that remains unclaimed by the holders of Ordinary Shares or ADSs for six (6) months after the Effective Time (or in the case of the Dissenting Shareholders, after the amount payable to it is ascertained) shall be delivered to the Surviving Company upon demand, and any holders of Ordinary Shares and ADSs (other than Excluded Shares) who have not theretofore complied with this ‎Article II shall thereafter look only to the Surviving Company for the cash to which they are entitled pursuant to ‎Section 2.1(a) and ‎Section 2.1(b).

 

(h) No Liability. None of the Paying Agent, the Founder Shareholder, Parent, the Surviving Company or the Depositary, or any of their Affiliates, shall be liable to any former holder of Ordinary Shares for any such Ordinary Shares (including Ordinary Shares represented by ADSs) (or dividends or distributions with respect thereto), or cash properly delivered to a public official pursuant to any applicable abandoned property, bona vacantia, escheat or similar Law. Any amounts remaining unclaimed by such former holders at such time at which such amounts would otherwise escheat to or become property of any Governmental Entity shall become, to the extent permitted by applicable Laws, the property of the Surviving Company or its designee, free and clear of all claims or interest of any person previously entitled thereto.

 

(i) Withholding Rights. Each of Parent, the Surviving Company, the Paying Agent, Merger Sub, the Company and the Depositary shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Ordinary Shares, ADSs, Company Options or Company Restricted Share Awards such amounts as it is required to deduct and withhold with respect to the making of such payment under any provision of applicable Tax Law. To the extent that amounts are so withheld by Parent, the Surviving Company, the Company, the Paying Agent, Merger Sub or the Depositary, as the case may be, such withheld amounts shall be (i) remitted by Parent, the Surviving Company, the Company, the Paying Agent, Merger Sub or the Depositary, as applicable, to the applicable Governmental Entity and (ii) to the extent so remitted, treated for all purposes of this Agreement as having been paid to the holder of the Ordinary Shares, ADSs, Company Options or Company Restricted Share Awards in respect of which such deduction and withholding was made by Parent, the Surviving Company, the Company, the Paying Agent, Merger Sub or the Depositary, as the case may be. In the event that Parent, Merger Sub, the Surviving Company, the Paying Agent, or the Depositary (or any other Person that has a withholding obligation pursuant to this Agreement) determines prior to the Closing that any such deduction or withholding is required to be made from any consideration payable pursuant to this Agreement, such Person shall promptly inform the Special Committee and the other Parties hereto of such determination and provide them with a reasonably detailed explanation of such determination and the Parties hereto shall consult with each other in good faith regarding such determination.

 

 

Section 2.4 No Transfers. From and after the Effective Time, (a) the register of members of the Company shall be closed, and there shall be no registrations of transfers in the register of members of the Surviving Company of the Ordinary Shares (including Ordinary Shares represented by ADSs) that were outstanding immediately prior to the Effective Time, and (b) the holders of Ordinary Shares (including Ordinary Shares represented by ADSs) issued and outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Ordinary Shares, except as otherwise provided in this Agreement or by Law. On or after the Effective Time, any Share Certificates presented to the Paying Agent, Parent or Surviving Company for transfer or any other reason shall be cancelled, in exchange for the right to receive the cash consideration to which the holders thereof are entitled under this ‎Article II in the case of Ordinary Shares (other than the Excluded Shares and Dissenting Shares), and for no consideration in the case of Excluded Shares and only in accordance with ‎Section 2.1(d) and ‎Section 2.6 in the case of the Dissenting Shares.

 

Section 2.5 Termination of Deposit Agreement. As soon as reasonably practicable after the Effective Time, the Surviving Company shall provide notice to the Depositary to terminate the deposit agreement dated June 10, 2021, entered into by and among the Company, the Depositary and the holders and beneficial owners of ADSs issued thereunder (as amended from time to time, the “Deposit Agreement”) in accordance with its terms.

 

Section 2.6 Dissenting Shares. The Company shall give Parent (i) prompt notice of any written notice of exercise of Dissenter Rights, any attempted withdrawals of such Dissenter Rights, and any other instruments or communications served pursuant to Section 238 of the Cayman Islands Companies Law and received by the Company relating to its shareholders’ exercise of Dissenter Rights, and (ii) the opportunity to direct all negotiations and proceedings with respect to any exercise of Dissenter Rights under the Cayman Islands Companies Law. The Company shall not, except with the prior written consent of Parent, make any payment with respect to any exercise of Dissenter Rights or any demands for appraisal or offer to settle or settle any such Dissenter Rights or any demands or approve any withdrawal of any such Dissenter Rights or demands.

 

Article III

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company hereby represents and warrants to Parent and Merger Sub that, except (i) as disclosed in the SEC Reports filed with, or furnished to, the SEC on or after January 1, 2021 (the “Applicable Date”) and not less than two (2) Business Days prior to the date of this Agreement (without giving effect to any amendment to any such SEC Report filed on or after the date hereof and excluding any disclosures set forth in the SEC Reports (A) under the captions “Risk Factors” or “Forward-Looking Statements” (unless stated otherwise in the Company Disclosure Letter (as defined below)) and (B) in any other section relating to forward-looking statements, in each case, to the extent they are cautionary, predictive or forward-looking in nature) but only to the extent that the relevance of such disclosure to the relevant subject matter is reasonably apparent, or (ii) as set forth on the corresponding sections or subsections of the disclosure letter delivered to Parent by the Company concurrently with entering into this Agreement (the “Company Disclosure Letter”), it being acknowledged and agreed that disclosure of any item in any section or subsection of the Company Disclosure Letter shall also be deemed disclosure with respect to any other section or subsection of this Agreement to which the relevance of such item is reasonably apparent on the face of such disclosure.

 

 

Section 3.1 Organization and Qualification; Subsidiaries. Each of the Company and its subsidiaries is a legal entity duly incorporated, organized, validly existing and, to the extent such concept is applicable, in good standing under the Laws of its respective jurisdiction of organization and has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and, to the extent such concept is applicable, is in good standing as a foreign corporation or other legal entity in each jurisdiction where the ownership, leasing or operation of its assets or properties or present conduct of its business requires such qualification, except in each case where the failure to be so organized, existing, qualified or, to the extent such concept is applicable, in good standing, or to have such power or authority, would not, individually or in the aggregate, reasonably be expected to (a) have a Material Adverse Effect or (b) prevent, delay or impede the consummation by the Company of the Merger and the other transactions contemplated by this Agreement or the ability of the Company to fully perform its covenants and obligations pursuant to this Agreement. ‎Section 3.1 of the Company Disclosure Letter sets forth (i) each of the Company’s subsidiaries and the ownership interest of the Company in each such subsidiary, and (ii) the jurisdiction of organization of each such subsidiary. Except as set forth on ‎Section 3.1 of the Company Disclosure Letter and except for securities held by the Company in connection with its ordinary course treasury investment activities, neither the Company nor any of its subsidiaries owns, directly or indirectly, any capital stock, shares or voting securities of, or other equity interests in, or has any direct or indirect equity participation or similar interest in, or any interest convertible into or exchangeable or exercisable for, any capital stock, shares or voting securities of, or other equity interests in, any other Person.

 

Section 3.2 Memorandum and Articles of Association. The Company has furnished or otherwise made available to Parent, prior to the date hereof, a correct and complete copy of the memorandum and articles of association, as amended to date (the “Memorandum of Association”), of the Company as currently in effect, and equivalent memorandum and articles of association, organizational or governing documents, as amended to date, of each of the Company’s material subsidiaries, and each of the foregoing documents is in full force and effect.

 

Section 3.3 Capitalization. The authorized share capital of the Company is $80,000 divided into 7,000,000,000 Class A Shares, 500,000,000 Class B Shares and 500,000,000 shares, par value $0.00001 per share, each of such class or classes (however designated) as the Board of Directors may determine in accordance with the Company’s Memorandum of Association.

 

(a) As of the date of this Agreement:

 

(i) 1,213,302,170 Class A Shares (other than Class A Shares subject to Company Restricted Share Awards) are issued and outstanding;

 

(ii) 194,878,011 Class B Shares (other than Class B Shares subject to Company Restricted Share Awards) are issued and outstanding;

 

(iii) 38,000,001 Class A Shares are available for issuance pursuant to the Company Share Plans (and for the avoidance of doubt are not included in the number of issued and outstanding Class A Shares set forth in clause (i));

 

 

(iv)   No preferred shares are issued and outstanding;

 

(v) 17,318,640 Class A Shares issued and outstanding pursuant to Company Restricted Share Awards (and for the avoidance of doubt are not included in the number of issued and outstanding Class A Shares set forth in clause (i)); and

 

(vi)   Company Options to acquire 14,884,056 Class A Shares are issued and outstanding (and for the avoidance of doubt are not included in the number of issued and outstanding Class A Shares set forth in clause (i)).

 

(b) Each outstanding Company Equity Award (i) was granted in compliance with all applicable Laws and all of the terms and conditions of the Company Share Plans under which it was issued, and (ii) has not triggered and, is not reasonably expected to trigger, any liability for the holder thereof under Section 409A of the Code. All grants of Company Options and Company Restricted Share Awards were made in accordance with the terms of the Company Share Plans and the Company’s form of option award agreement and restricted share award agreement provided to Parent prior to the date hereof, as applicable.

 

(c) Except as set forth in ‎Section 3.3(a) hereof, and except for this Agreement and the transactions contemplated hereunder, as of the date of this Agreement, (i) there are not outstanding or authorized any (A) shares or other voting securities of the Company or its subsidiaries, (B) securities of the Company or its subsidiaries convertible into, exercisable for, or exchangeable for shares, voting securities or equity interests of the Company or its subsidiaries, (C) subscriptions, options, warrants, convertible debts, convertible instruments, calls, phantom stock or other similar rights, agreements, arrangements, understandings or commitments of any character to acquire from the Company or its subsidiaries, or obligations of the Company or its subsidiaries to issue or sell, any issued or unissued shares, voting securities, equity interests or securities convertible into, exercisable for, or exchangeable for, or giving any Person a right to subscribe for or acquire, any shares, voting securities or equity interests of the Company or its subsidiaries, (D) bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into, exercisable for, or exchangeable for shares, voting securities or equity interests of the Company or any of its subsidiaries having the right to vote) on any matters on which shareholders of the Company may vote, or (E) securities or rights issued by the Company or its subsidiaries, in each case, that are derivative of, or provide economic benefit based on the value of, shares, voting securities or equity interests of the Company or its subsidiaries (the foregoing securities in clauses (A) through (E), the “Company Securities”) and (ii) there are no outstanding contractual obligations of the Company or any of its subsidiaries to (x) repurchase, redeem or otherwise acquire any Company Securities or (y) grant, extend or enter into any subscription, option, warrant, call, convertible securities or other similar right, agreement, arrangement, understanding or commitment with respect to Company Securities. Except as set forth in Section 3.3‎(a) hereof, as of the date of this Agreement, all issued, outstanding Ordinary Shares are duly authorized, validly issued, fully paid and non-assessable, and are not subject to and were not issued in violation of any pre-emptive rights, purchase options, call or right of first refusal or similar rights. Each of the issued, outstanding shares or other equity interests of each of the Company’s subsidiaries is duly authorized, validly issued, fully paid and non-assessable and all such shares or other equity interests are owned by the Company or a subsidiary of the Company and are owned free and clear of all Liens, agreements, transfer restrictions, limitations in voting rights, charges or other encumbrances of any nature whatsoever (except for Permitted Liens), except for such transfer restrictions of general applicability arising under the Securities Act.

 

 

Section 3.4 Authority. The Company has all requisite corporate power and authority, and has taken all corporate action necessary, to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Merger and the other transactions contemplated hereby, subject only to the approval of the Company’s shareholders by way of a shareholders’ special resolution of this Agreement, the Plan of Merger and other transactions contemplated hereby by the affirmative vote of holders of Ordinary Shares representing at least two-thirds of the voting power of the Ordinary Shares present and voting in person or by proxy as a single class at the Shareholders’ Meeting (the “Company Requisite Vote”) and the filing of the Plan of Merger with the Registrar of Companies pursuant to the Cayman Islands Companies Law. This Agreement has been duly and validly entered into, executed and delivered by the Company and, assuming the due authorization, execution and delivery hereof by Parent and Merger Sub, constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to the effects of applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and any implied covenant of good faith and fair dealing (the “Bankruptcy and Equity Exception”). The Board of Directors, at a duly called, constituted and held meeting, upon the unanimous recommendation of the Special Committee, has (i) determined that it is in the best interests of the Company and its shareholders (other than the holders of Excluded Shares) and declared it advisable and approved, to enter into this Agreement, (ii) approved the execution, delivery and performance by the Company of this Agreement and the consummation of the Merger and the other transactions contemplated hereby, (iii) resolved to recommend the approval of this Agreement, the Merger and the other transactions contemplated hereby by the shareholders of the Company at the Shareholders’ Meeting (the “Recommendation”) and (iv) directed and approved that this Agreement, the Merger and the other transactions contemplated hereby be submitted to the shareholders of the Company at the Shareholders’ Meeting for their approval. The only vote or approval of the holders of any class or series of capital stock of the Company or any of its subsidiaries which is required to adopt and approve this Agreement and the transactions contemplated hereby is the Company Requisite Vote.

 

Section 3.5 No Conflict; Required Filings and Consents.

 

(a) The execution, delivery and performance of this Agreement by the Company and the consummation of the Merger and the other transactions contemplated hereby do not and will not (i) assuming that the Company Requisite Vote has been obtained, breach, violate or conflict with the Memorandum of Association or other equivalent organizational or governing documents of the Company or any of its subsidiaries, (ii) assuming that all consents, approvals and authorizations contemplated by clauses (i) through (iii) of subsection (b) below have been obtained, all filings described in such clauses have been made and the Company Requisite Vote has been obtained, conflict with, breach or violate any License or any Law, rule, regulation, order, judgment or decree applicable to the Company or any of its subsidiaries or by which its or any of their respective properties or assets are bound including in accordance with the provisions of the Cayman Islands Companies Law or (iii) result in any breach or violation of or constitute a default (or an event which with or without notice or lapse of time or both would become a default), require a consent or result in the loss of a benefit under, or give rise to any right of termination, cancellation, amendment or acceleration of, or result in the creation of a Lien (except a Permitted Lien) on any of the material assets of the Company or any of its subsidiaries pursuant to, any Contract, except, in the case of clauses (ii) and (iii), for any such conflict, violation, breach, default, loss, right or other occurrence which would not, individually or in the aggregate, reasonably be expected to (x) have a Material Adverse Effect or (y) prevent, materially delay or materially impede the consummation by the Company of the Merger or the other transactions contemplated by this Agreement or the ability of the Company to fully perform its covenants and obligations pursuant to this Agreement.

 

 

(b) The entry into, execution, delivery and performance of this Agreement by the Company and the consummation of the Merger and the other transactions contemplated hereby by the Company do not and will not require any consent, approval, authorization or permit of, action by, filing with or notification to, any governmental, quasi-governmental or regulatory (including stock exchange) authority, agency, court, arbitral body (public or private), commission or other governmental body, whether foreign or domestic, of any country, nation, republic, federation or similar entity or any state, county, parish or municipality, jurisdiction or other political subdivision thereof (each, a “Governmental Entity”), except for (i) compliance with the applicable requirements of the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules and regulations promulgated thereunder, and state securities, takeover and “blue sky” laws, including the joining of the Company in the filing of the Rule 13E-3 Transaction Statement on Schedule 13E-3 (including any amendments or supplements thereto, the “Schedule 13E-3”) with the Proxy Statement as an exhibit thereto, and the filing of one or more amendments to the Schedule 13E-3 (with the Proxy Statement as an exhibit thereto) to respond to comments of the SEC, if any, (ii) the filing of the Plan of Merger with the Registrar of Companies pursuant to the Cayman Islands Companies Law and (iii) any such consent, approval, authorization, permit, action, filing or notification the failure of which to make or obtain would not, individually or in the aggregate, reasonably be expected to (A) prevent, materially delay or materially impede the consummation by the Company of the Merger and the other transactions contemplated by this Agreement or the ability of the Company to fully perform its covenants and obligations pursuant to this Agreement or (B) have a Material Adverse Effect.

 

Section 3.6 Compliance.

 

(a) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the Company and its subsidiaries are not, and since the Applicable Date have not been, in violation in any material respect of and are, and since the Applicable Date have been, in compliance in all material respects with, each Law applicable to the Company or any of its subsidiaries or any of its or their respective assets, businesses or properties. The Company and its subsidiaries have all permits, licenses, authorizations, exemptions, orders, consents, approvals and franchises from Governmental Entities required to conduct their respective businesses and own, lease and operate their respective assets and properties as being conducted, owned, leased or operated (“Licenses”), and all Licenses are effective and passed their respective annual inspection (as applicable) in accordance with applicable Laws and no suspension or cancellation of any of the Licenses is pending or, to the knowledge of the Company, threatened. All approvals of, and filings and registrations and other requisite formalities with, Governmental Entities in the PRC that are required to be obtained or made in respect of the Company and its subsidiaries incorporated in the PRC with respect to its capital structure and operations as now being conducted as of the date hereof and immediately before the Effective Time, have been duly completed in all material respect in accordance with applicable PRC Laws. None of the Company and its subsidiaries is in default, breach or violation of any Law applicable to it, or by which any of its properties or assets is bound in any material respect. None of the Company and its subsidiaries has received any written notice or communication from any Governmental Entity or stock exchange of any non-compliance with any applicable Laws that has not been cured, except for such investigations, charges, assertions, reviews or notifications of violations the outcome of which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

 

(b) Except as would not be individually or in the aggregate material since the Applicable Date, none of the Company or any of its subsidiaries, or, to the knowledge of the Company any officer or director of any of the foregoing, agent, employee or other Person acting on behalf of any of the foregoing, has been in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977 (as amended), the UK Bribery Act of 2010, any applicable anti-corruption Laws of the PRC (including the Criminal Law of the PRC passed by the National People’s Congress on July 1, 1979 (as amended), the Law of the PRC for Countering Unfair Competition passed by the National People’s Congress on September 2, 1993 (as amended) and the Interim Provisions Prevention of Commercial Bribery passed by the State Administration for Industry and Commerce of the PRC on November 15, 1996), the Prevention of Bribery Ordinance of Hong Kong, the Banking Ordinance of Hong Kong and the Independent Commission Against Corruption Ordinance of Hong Kong, or any other similar applicable Law that prohibits corruption or bribery and regulate record keeping and internal controls (collectively, “Anti-Corruption Laws”). The Company has instituted and maintains policies and procedures reasonably designed to ensure compliance in all material aspects with the Anti-Corruption Laws by the Company and its subsidiaries. Since the Applicable Date to the date hereof, neither the Company nor any of its subsidiaries has, in connection with or relating to the business of the Company or any of its subsidiaries, (1) received from any Governmental Entity any written notice, citation or inquiry, (2) made any voluntary, directed, or involuntary disclosure to a Governmental Entity for any actual or potential non-compliance with any applicable Anti-Corruption Laws, or (3) is aware of any internal or Governmental Entity-led investigation regarding any non-compliance with any applicable Anti-Corruption Laws.

 

(c) To the knowledge of the Company, none of the Company’s directors or officers is a Government Official.

 

(d) Neither the Company nor any of its subsidiaries, nor any of their respective officers or directors, nor to the knowledge of the Company, any employee, agent or other Person acting on behalf of the Company or any of its subsidiaries, is currently, or has been since the Applicable Date: (A) a Sanctioned Person, (B) organized, resident or located in a Sanctioned Country, (C) engaging in any dealings or transactions with any Sanctioned Person or in any Sanctioned Country, to the extent such activities violate applicable Sanctions Laws or Ex-Im Laws, or (D) otherwise in violation of Sanctions Laws, Ex-Im Laws, or U.S. anti-boycott Laws (collectively, “Trade Control Laws”).

 

(e) Since the Applicable Date to the date hereof, neither the Company nor any of its subsidiaries has, in connection with or relating to the business of the Company or any of its subsidiaries, received from any Governmental Entity or any other Person any notice, inquiry, or internal or external allegation, made any voluntary or involuntary disclosure to a Governmental Entity or conducted any internal investigation or audit concerning any material violation or wrongdoing related to Trade Control Laws.

 

 

Section 3.7 SEC Filings; Financial Statements; Undisclosed Liabilities.

 

(a) The Company has filed or furnished, on a timely basis, all forms, reports, statements, certifications and other documents (including all exhibits and other information incorporated therein, amendments and supplements thereto) in each case required to be filed by it with, or furnished by it to, the U.S. Securities and Exchange Commission (the “SEC”) since the Applicable Date (all such forms, reports, statements, certificates and other documents filed since the Applicable Date, including all exhibits and other information incorporated therein, amendments and supplements thereto, collectively, the “SEC Reports”). As of their respective SEC filing dates, or, if amended or superseded by a subsequent filing made prior to the date of this Agreement, as of the date of the last such amendment or superseding filing prior to the date of this Agreement, the SEC Reports complied in all material respects with the applicable requirements of the Securities Act of 1933 (the “Securities Act”), the Exchange Act and the Sarbanes-Oxley Act of 2002, as the case may be, and the applicable rules and regulations promulgated thereunder, each as in effect on the date of any such filing. As of the time of filing with the SEC (or, if amended prior to the date of this Agreement, as of the date of such amendment), none of the SEC Reports so filed contained, when filed, any untrue statement of a material fact or omitted to state any material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except to the extent that the information in such SEC Reports has been amended or superseded by a later SEC Report filed prior to the date of this Agreement. As of the date hereof, (i) there are no material outstanding or unresolved comments in comment letters received from the SEC or its staff and (ii) none of the subsidiaries of the Company is subject to the reporting requirements of Section 13a or 15d of the Exchange Act since the Applicable Date.

 

(b) The audited consolidated financial statements of the Company (including all notes thereto) included in each of the Company’s Annual Reports on Form 20-F filed with the SEC since the Applicable Date complied as to form at the time they were filed in all material respects with the applicable accounting requirements and the rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its subsidiaries at the respective dates thereof (taking into account the notes thereto) and the consolidated statements of operations, statements of comprehensive (loss) income and statements of cash flows for the periods indicated. The unaudited consolidated financial statements of the Company and its subsidiaries (including any related notes thereto) for all interim periods included in the SEC Reports complied as to form at the time they were filed in all material respects with the applicable accounting requirements and the rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto and except for the absence of footnote disclosures and normal year-end adjustments as permitted by GAAP) and fairly present in all material respects the consolidated financial position of the Company and its subsidiaries at of the respective dates thereof (taking into account the notes thereto) and the consolidated statements of operations for the periods indicated (subject to normal year-end adjustments as permitted by GAAP). There are no unconsolidated subsidiaries of the Company within the meaning of GAAP.

 

(c) The Company has established and maintains, and at all times since the Applicable Date has maintained, disclosure controls and procedures and internal controls over financial reporting (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rules 13a-15 and 15d-15 of the Exchange Act. Such disclosure controls and procedures are reasonably designed to ensure that material information required to be disclosed by the Company is recorded and reported on a timely basis to the individuals responsible for the preparation of the Company’s filings with the SEC and other public disclosure documents. Since the Applicable Date, based on the Company’s management’s most recently completed evaluation of the Company’s internal control over financial reporting, there has not been (i) any “material weakness” and “significant deficiency” (as defined by the Public Company Accounting Oversight Board) in the design or operation of its internal control over financial reporting or (ii) any fraud or allegation of fraud whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

 

 

(d) Except for (i) liabilities or obligations incurred in the ordinary course of business since December 31, 2022, (ii) liabilities or obligations which have been discharged or paid in full prior to the date of this Agreement, (iii) liabilities or obligations incurred in connection with this Agreement and the transactions contemplated hereunder and (iv) liabilities or obligations that would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect, neither the Company nor any of its subsidiaries has any liabilities or obligations of a nature required by GAAP to be reflected in a consolidated balance sheet or disclosed in the notes thereto. Neither the Company nor any of its subsidiaries is a party to, or has any commitment to become a party to, any “off balance sheet arrangement” within the meaning of Item 303 of Regulation S-K promulgated under the Securities Act.

 

Section 3.8 Security. Neither the Company nor any of its subsidiaries has any secured creditors holding fixed or floating security interests with respect to any securities or assets of the Company or any of its subsidiaries.

 

Section 3.9 Contracts.

 

(a) Except (i) for this Agreement, (ii) for the Company Share Plans and (iii) as set forth in Section 3.9(a) of the Company Disclosure Letter, neither the Company nor any of its subsidiaries is party to or bound by any note, bond, mortgage, indenture, contract, agreement, lease, license, permit or other instrument (each, a “Contract”) that:

 

(i) would, individually or in the aggregate, prevent, materially delay or materially impede the consummation by the Company of the Merger and other transactions contemplated by this Agreement or the ability of the Company to fully perform its covenants and obligations pursuant to this Agreement;

 

(ii) contains covenants that materially limit or purport to materially limit the ability of the Company or any of its subsidiaries, or that, upon the consummation of the Merger would materially limit or purport to materially limit the ability of Parent or any subsidiary of Parent, to compete with any Person, in any line of business or sell, supply or distribute any product or service, in each case, in any geographic area, during any period of time;

 

(iii) other than with respect to any partnership that is wholly owned by the Company or any of its wholly owned subsidiaries, is a joint venture, partnership, limited liability company or other similar agreement or arrangement relating to the formation, creation, operation, management or control of any partnership, joint venture or other similar arrangement, in each case, that is material to the business of the Company and its subsidiaries, taken as a whole;

 

 

(iv)   is an indenture, credit agreement, loan agreement, security agreement, guarantee, bond, mortgage or similar Contract pursuant to which any indebtedness of the Company or any of its subsidiaries, in each case in excess of $1,000,000, is outstanding or secured, other than any such Contract between or among any of the Company and any of its wholly owned subsidiaries;

 

(v) prohibits the payment of dividends or distributions in respect of the capital stock of the Company or any of its subsidiaries or prohibits the pledging of the capital stock of the Company or any subsidiary of the Company;

 

(vi)   with respect to any acquisition or disposition of assets (including capital stock or other equity interest in another Person), whether by merger, sale of shares, sale of assets or otherwise, pursuant to which the Company or any of its subsidiaries has continuing obligations following the date hereof, including indemnification, guarantee, “earn-out” or other contingent or outstanding payment obligations that are material to the Company and its subsidiaries, taken as a whole;

 

(vii) is a settlement, conciliation, or similar Contract with any Governmental Entity pursuant to which the Company or any of its subsidiaries has continuing obligations that materially restrict the operations of the Company or such subsidiary or that involve the payment of more than $1,000,000 after the date of this Agreement;

 

(viii) is a collective bargaining Contract or other Contract with any labor union, works council, labor organization, or other representative of any Company Employees (each, a “CBA”);

 

(ix)   requires the Company or any of its subsidiaries, directly or indirectly, to make any advance, loan, extension of credit or capital contribution to, or other investment in, any Person (other than the Company or any of its wholly owned subsidiaries) in any such case which is in excess of $1,000,000;

 

(x) contains any covenant that subject the Company or any of its subsidiary to, or that, upon the consummation of the Merger would subject Parent or any of its subsidiaries to, any “most-favored nation” provision or similar preferential terms, exclusivity or similar obligations or any arrangement that grants another Person any right of first refusal, first offer, first negotiation or similar preferential right;

 

(xi)   contains a standstill or similar agreement pursuant to which one party has agreed not to acquire assets or securities of the other party or any of its Affiliates;

 

(xii) contains any exchange-traded or over-the-counter swap, forward, future, option, cap, floor or collar financial provision, or any other interest-rate, commodity price, equity value or foreign currency protection provision;

 

(xiii) is a loan or other Contract between the Company or any of its subsidiaries, on the one hand, and any director, member of senior management, major shareholder or any other related party of the Company or any of its subsidiaries, on the other hand, including such loan or Contract that is required to be reported under Item 7 of Form 20-F of the SEC, other than in relation to (A) payment of salary or fees for services rendered in the capacity of an officer, director or employee of the Company or any of its subsidiaries, (B) reimbursement for expenses incurred on behalf of the Company or any of its subsidiaries and (C) other employee benefits, including award agreements, notices of grants and other similar documents under any Company Share Plan;

 

 

(xiv)   is between the Company or any of its subsidiaries, on the one hand, and a Governmental Entity, on the other hand;

 

(xv)   any Contract that is for the employment or engagement, severance, change in control, or other similar agreement of (x) each Company Employee at the level of vice president of the Company or any of its subsidiaries or above or (y) any other Company Employee at base annual compensation in excess of $500,000;

 

(xvi)   requires or permits the Company or any of its subsidiaries, or any successor to, or acquirer of the Company or any of its subsidiaries, to make any payment to another Person or to give notice to or obtain consent from another Person, or gives another Person a right to receive or elect to receive any payment or terminate or materially amend or modify any Contract between the Company or any of its subsidiaries and such Person, in each case as a result of a change of control of the Company or any of its subsidiaries, the Merger or other transactions contemplated hereby;

 

(xvii)   is a Material Lease;

 

(xviii)   is a Contract relating to the assignment, transfer, licensing, or grant of any other rights under, any material Intellectual Property by or to the Company or any of its subsidiaries, or otherwise relating to any material Intellectual Property (including covenant-not-to-sue, research and development, joint development, coexistence, consent-to-use, concurrent use, and settlement agreements), excluding (x) Off-the-Shelf Software Licenses and (y) non-exclusive licenses of Intellectual Property granted by the Company or its subsidiaries to their customers in the ordinary course of business consistent with past practices; and

 

(xix)   has resulted in payments to or from the Company or any of its subsidiaries of more than $1,000,000 in the aggregate during the twelve-month period ended the date of this Agreement, except for any Contract that is otherwise of a type described in ‎Section 3.9(a)(i) to Section 1.1(a)(i).

 

Each Contract set forth (or required to be set forth) in ‎Section 3.9(a) of the Company Disclosure Letter or filed (or which is required to be filed) as an exhibit to the SEC Reports as a “material contract” pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act (in each case, excluding any Company Share Plan), is referred to herein as a “Material Contract”.

 

(b) Each of the Material Contracts is valid and binding on the Company and each of its subsidiaries as parties thereto and, to the knowledge of the Company, each other party thereto, and is in full force and effect and enforceable in accordance with its terms, subject to the Bankruptcy and Equity Exception, except (i) to the extent that any Material Contract expires or terminates in accordance with its terms, and (ii) for such failures to be valid and binding or to be in full force and effect that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (x) neither the Company nor any of its subsidiaries has received written notice from any other party to a Material Contract that such other party intends to terminate, not renew, or renegotiate in any material respects the terms of any such Material Contract (except in accordance with the terms thereof) and (y) to the knowledge of the Company, there is no breach or default under any Material Contract by the Company or any of its subsidiaries or any other party thereto and no event or condition has occurred that constitutes, or, with or without the lapse of time or the giving of notice or both, would constitute, a default thereunder by the Company or any of its subsidiaries.

 

 

Section 3.10 Absence of Certain Changes or Events. (a) Since December 31, 2022, through the date of this Agreement, except as contemplated by this Agreement, the Company and its subsidiaries have not taken or agreed to take any action that, if taken after the date hereof, would require the consent of Parent pursuant to the terms of ‎Section 5.1 hereof and (b) since December 31, 2022, there has not occurred any event, development, change, effect or occurrence that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 3.11 Absence of Litigation. There are no litigations, suits, claims, charges, actions, proceedings, audits, investigations or arbitrations (each, an “Action”) pending or, to the knowledge of the Company, threatened against the Company or any of its subsidiaries or any of their respective assets or properties, other than any such Action that would not, individually or in the aggregate, reasonably be expected to (i) have a Material Adverse Effect or (ii) prevent, materially delay or materially impede the consummation by the Company of the Merger and the other transactions contemplated by this Agreement or the ability of the Company to fully perform its covenants and obligations pursuant to this Agreement. Neither the Company nor any of its subsidiaries or any of their respective properties or assets is or are subject to any Order, except for those that would not, individually or in the aggregate, reasonably be expected to (A) have a Material Adverse Effect or (B) prevent, materially delay or materially impede the consummation by the Company of the Merger and the other transactions contemplated by this Agreement or the ability of the Company to fully perform its covenants and obligations pursuant to this Agreement.

 

Section 3.12 Labor and Employment Matters.

 

(a) To the knowledge of the Company, neither the Company nor any of its subsidiaries is a party to or bound by any CBA, no Company Employee is represented by any labor union, works counsel or other labor organization with respect to employment with the Company or any of its subsidiaries, and no CBA is being negotiated by the Company or any of its subsidiaries. There are no strikes, work stoppages, slowdowns, lockouts or similar material labor disputes pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its subsidiaries, and none have occurred since the Applicable Date. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, there are no, and since the Applicable Date, there have not been any (i) unfair labor practice complaints pending or, to the knowledge of the Company, threatened against the Company or any of its subsidiaries before any labor relations tribunal or authority or (ii) to the knowledge of the Company, union organizing efforts by or affecting any Company Employees.

 

(b) The Company and its subsidiaries have no notice or consultation obligations to any labor union, labor organization or works council, which is representing any Company Employee, in connection with the execution of this Agreement or consummation of the transactions contemplated by this Agreement, except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. There are no pending or, to the knowledge of the Company, threatened Actions against the Company or any of its subsidiaries relating to Company Employees or applicable employment Laws, except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

 

(c) The Company and its subsidiaries are, and since the Applicable Date have been, in compliance in all material respects with all applicable Laws relating to labor and employment, including all laws respecting terms and conditions of employment, health and safety, wages and hours (including the classification of employees as exempt or non-exempt from overtime pay requirements and the proper classification of individuals as non-employee contractors or consultants), social security payments and housing fund contribution, mandatory provident fund or other statutory pension contribution, immigration, discrimination, disability rights, plant closures and layoffs, workers’ compensation, labor relations, employee leave issues, and unemployment insurance.

 

(d) No executive or key employee of the Company or any of its subsidiaries has given notice that he or she plans to terminate employment with the Company or the applicable subsidiary and no significant number of employees of the Company or any of its subsidiaries have given notice that they plan to terminate employment with the Company or the applicable subsidiary, except as would not have a Material Adverse Effect.

 

Section 3.13 Insurance. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, all insurance policies (including any self-insurance or “fronting” insurance programs maintained by the Company or any of its subsidiaries) of the Company and its subsidiaries which are material to the Company and its subsidiaries, individually or taken as a whole, (a) are in full force and effect and provide insurance in such amounts and against such risks as is sufficient to comply with applicable Law and as is customary in all material respects in the industries in which the Company and its subsidiaries operate and (b) all premiums due with respect to such insurance policies have been paid in accordance with the terms thereof.

 

Section 3.14 Properties.

 

(a) Except as would not have, individually or in the aggregate, a Material Adverse Effect, the Company or a subsidiary of the Company owns and has obtained the ownership certificate duly issued by a competent Governmental Entity to each parcel of Owned Real Property which evidences that the Company or a subsidiary has good title to the Owned Real Property, free and clear of all liens, encumbrances, licenses, covenants not to sue, options, rights of first refusal, rights of first offer, claims and defects, and imperfections of title (collectively, “Liens”) except in all cases for the Permitted Liens, and the land use rights relating to the Owned Real Property have been obtained from a competent Governmental Entity and all amounts (including, if applicable, land grant premiums) required under applicable Law in connection with securing such title or land use rights have been paid in full.

 

 

(b) The Company and its subsidiaries have duly complied with, in all material respects, the terms and conditions of, and all of its obligations under, the relevant land use rights contract or real property purchase contract in relation to any Owned Real Property. With respect to each Owned Real Property, other than the right of Parent and Merger Sub pursuant to this Agreement and the statutory rights of first refusal of any lessee under the Laws of the PRC, there are no outstanding options, rights of first offer or rights of first refusal to purchase such Owned Real Property or any portion thereof or interest therein. Neither the Company nor any of its subsidiaries is a party to any agreement or option to purchase any real property or interest therein.

 

(c) “Material Leased Real Property” means each Leased Real Property that provide for (i) leased areas of more than 200 square meters, or (ii) annual rents of more than $60,000 (the Leases under which the Company or any of its subsidiaries uses or occupies or has the right to use or occupy any Material Leased Real Property, and all modifications, amendments and supplements thereto, the “Material Leases”). Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (A) each of the Company and its subsidiaries has a good and valid leasehold or subleasehold interest in each relevant parcel of the Material Leased Real Property, free and clear of all Liens, except for Permitted Liens; and (B) to the knowledge of the Company, each Material Lease is legal, valid, binding, enforceable and in full force and effect, subject to the Bankruptcy and Equity Exception. Neither the Company nor any of its applicable subsidiaries is in breach or violation of, or default under any Material Lease and to the knowledge of the Company, no event has occurred or circumstance exists which, with the delivery of notice, the passage of time or both, would constitute such a breach or default, or permit the termination, modification or acceleration of rent under such Material Lease.

 

(d) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (i) each Owned Real Property is in compliance with all Laws applicable to such Owned Real Property, including such Laws in respect of land expropriation, land bidding, city planning and zoning, construction design, building construction, and construction inspection and acceptance; (ii) each Owned Real Property is permitted to be used for the business that the Company or its relevant subsidiary (as applicable) currently operates therein; and (iii) each of the Company and its subsidiaries is permitted to conduct business in the relevant Owned Real Property.

 

(e) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, as of the date of this Agreement, no party to any Material Lease including the Company or any of its subsidiaries has given written notice to the Company or such subsidiary of, or made a written claim against the Company or any such subsidiary with respect to, any breach or default thereunder. As of the date of this Agreement, neither the Company nor any of its subsidiaries has received written notice of the existence of any outstanding Order, and, to the knowledge of the Company, there is no such Order threatened, relating to the ownership, lease, use, occupancy or operation by any Person of any Owned Real Property or Material Leased Real Property.

 

(f)   Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the Company and its subsidiaries have good title to, or a valid and binding leasehold interest in, all other properties and assets (excluding Owned Real Property, Leased Real Property and Intellectual Property), in each case free and clear of all Liens, except Permitted Liens.

 

 

Section 3.15 Tax Matters.

 

(a) The Company and each of its subsidiaries (A) have timely filed (taking into account any extension of time within which to file) all material Tax Returns (as defined below) required to be filed by any of them and all such filed Tax Returns are complete and accurate in all material respects; (B) have timely paid all material Taxes (as defined below) that are due and payable whether or not shown as due on such filed Tax Returns and have withheld all material amounts of Taxes required to be withheld from amounts owing to any employee, creditor, equity holder, or other third party; and (C) have not waived any statute of limitations with respect to Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency which waiver or extension has not yet expired.

 

(b) No Tax audits, examinations, investigations or other proceedings with respect to any material Taxes of or with respect to the Company or any of its subsidiaries are currently pending and neither the Company nor any of its subsidiaries has received written notice from a Tax authority of an upcoming audit, examination, investigation or other proceeding with respect to any material Taxes.

 

(c) There are no Liens on any of the assets of the Company or any of its subsidiaries that arose in connection with any failure (or alleged failure) to pay any Tax, other than for Taxes that are not yet due and payable or for Taxes that are being contested in good faith by appropriate proceeding and for which adequate reserves have been provided in accordance with GAAP.

 

(d) Neither the Company nor any of its subsidiaries (A) has any material liability for the Taxes of any Person (other than the Company or its subsidiaries) as a result of being a member of a combined, unitary, consolidated or similar tax group, as a transferee or successor, by Contract, or otherwise, or (B) is a party to or bound by (x) any ruling or written agreement with a Tax authority, in each case, with respect to any material Taxes, or (y) any material Tax sharing agreement, Tax allocation agreement or Tax indemnity agreement (other than any other customary commercial agreements or Contracts not primarily related to Tax or any agreement among or between only the Company or any of its subsidiaries).

 

(e) No written claim has been made by a Governmental Entity in a jurisdiction where the Company or any of its subsidiaries does not file Tax Returns such that it is or may be subject to taxation by, or required to file any Tax Return in, that jurisdiction.

 

(f)   None of the Company or any of its subsidiaries is or has been a member of an affiliated group (other than a group the common parent of which is or was the Company) filing an affiliated, consolidated, combined or unitary Tax Return.

 

(g) No material penalties have been imposed by any Governmental Entity or Tax authority on the Company or any of its subsidiaries due to any violation of Tax Laws.

 

(h) Notwithstanding any other representation and warranties in this Agreement, the representations and warranties in this Section 3.15 constitute the only representations and warranties of the Company with respect to Tax matters.

 

 

(i) For purposes of this Agreement:

 

(i) “Taxes” means all federal, state, local and non-U.S. income, profits, franchise, gross receipts, windfall, environmental, customs duty, capital stock, severance, stamp, payroll, sales, employment, unemployment, disability, social security, use, property, withholding, excise, license, production, value added, occupancy, land value appreciation, deed, registration, alternative, add-on minimum, branch profits, premium, business and national tax and other taxes, duties or other like assessments of any nature whatsoever imposed by any Governmental Entity, including any obligations with respect to escheat or unclaimed property together with all interest, penalties and additions imposed with respect to such amounts and any interest in respect of such penalties and additions;

 

(ii) “Tax Law” means any Law relating to Taxes; and

 

(iii) “Tax Return” means all returns and reports (including any elections, disclosures, information returns and attached schedules) filed or required to be filed with a Tax authority, including any information return, claim for refund, declaration of estimated Tax or amendment to any of the foregoing.

 

Section 3.16 Schedule 13E-3; Proxy Statement. None of the information supplied or to be supplied by the Company for inclusion or incorporation by reference in (a) the Schedule 13E-3, at the time the Schedule 13E-3, or any amendment or supplement thereto, is filed with the SEC or (b) the proxy statement to be sent to the shareholders of the Company in connection with the Shareholders’ Meeting (such proxy statement, as amended or supplemented, including the letter to shareholders, notice of meeting and form of proxy the “Proxy Statement”), on the date it (and any amendment or supplement thereto) is first filed as an exhibit of the Schedule 13E-3 with the SEC, or at the time it is first mailed to the shareholders of the Company or at the time of the Shareholders’ Meeting, will contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not false or misleading. Notwithstanding the foregoing, the Company makes no representation or warranty with respect to any statement made or incorporated by reference in any of the foregoing documents based on information supplied by or on behalf of Parent or Merger Sub or any of their respective Representatives which is contained or incorporated by reference in the Schedule 13E-3 or the Proxy Statement.

 

Section 3.17 Intellectual Property.

 

(a) ‎Section 3.17(a) of the Company Disclosure Letter contains a true and complete list, as of the date of this Agreement, of all patented, registered or applied-for Intellectual Property that are owned by or filed, patented or registered in the name of, the Company or any of its subsidiaries (collectively, the “Company Intellectual Property”). Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the Company or one of its wholly-owned subsidiaries solely and exclusively owns all right, title, and interest in and to all Company Intellectual Property, free and clear of all Liens. The Company Intellectual Property constitutes the whole Intellectual Properties that is necessary to conduct the businesses of the Company and its subsidiaries as currently conducted.

 

(b) Since the Applicable Date, except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect (i) the Company and its subsidiaries’ have not infringed, diluted, misappropriated, or otherwise violated, and the current conduct of their businesses, does not infringe, dilute, misappropriate or otherwise violate the Intellectual Property of any third party; and (ii) to the knowledge of the Company, the material Intellectual Property owned by the Company and its subsidiaries has not been infringed, diluted, misappropriated or otherwise violated, and is not being infringed, diluted, misappropriated or otherwise violated by any third party.

 

 

(c) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (i) none of the Intellectual Property owned by the Company or its subsidiaries is subject to any outstanding settlement or order, or is jointly owned by any other Person; (ii) all of the Intellectual Property owned by the Company or its subsidiaries is subsisting, and to the knowledge of the Company, valid and enforceable; and (iii) the Company and its subsidiaries are not, and have not since the Applicable Date been, a party to any Action or received any demand or notice in writing, and to the knowledge of the Company, no Action is threatened in writing (including “cease and desist” letters and offers or requests to take a license) against any of them, in each case, that relates to any Intellectual Property.

 

(d) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (i) the Company and its subsidiaries have taken commercially reasonable steps to protect and maintain (including protecting the confidentiality of) the Company Data and the integrity, continuous operation and security of the Company Systems; and (ii) to the knowledge of the Company, there have been no breaches, outages or intrusions of any Company System, nor any loss, compromise or damage of, breach of security with respect to, or unauthorized access to any Company Data in the Company’s or its subsidiaries’ possession or under its or their control.

 

(e) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (i) the Company Systems are sufficient for the operation of the Company’s and its subsidiaries’ businesses as currently conducted; and (ii) the Company and its subsidiaries maintain commercially reasonable disaster recovery plans, procedures and facilities sufficient for their businesses.

 

(f)   Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (i) the Company and its subsidiaries are, and have been since the Applicable Date, in compliance with all Data Privacy and Security Requirements and have established and maintain policies and procedures relating to Personal Data that comply with all applicable Laws; (ii) the Company Systems are functional, operate in a reasonable manner, and in sufficiently good working condition to effectively perform the expected function, operation, and purposes; and (iii) since the Applicable Date, no demands or notices in writing have been received by, and no Actions have been made (or to the knowledge of the Company threatened in writing) against, the Company or its subsidiaries alleging a violation of any of the Data Privacy and Security Requirements, and none of the Company or its subsidiaries have been subject to any audits, proceedings or, to the knowledge of the Company, investigations with regard to violation of any of the Data Privacy and Security Requirements.

 

(g) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the Company and its subsidiaries own all right, title, and interest in and to all material Intellectual Property created or developed by, for, or under the direction or supervision of the Company or its subsidiaries. Each current and former employee, consultant, and contractor of the Company and its subsidiaries who has been or is involved in the creation or development of any such Intellectual Property, has entered into a valid and enforceable written agreement with the Company or one of its subsidiaries, as applicable, presently assigning to the Company or such subsidiary all Intellectual Property created or developed by such Person within the scope of such Person’s duties to the Company or one of its subsidiaries, as applicable, and prohibiting such Person from using or disclosing trade secrets or confidential information of the Company or one of its subsidiaries, as applicable. To the knowledge of the Company, no current or former employee, consultant, or contractor of the Company or any of its subsidiaries has been or is in breach of any such agreement.

 

 

Section 3.18 Environmental Matters.

 

(a) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (i) the Company and its subsidiaries are and have since the Applicable Date been, in compliance with all applicable Environmental Laws, which compliance has included obtaining, maintaining, and complying with all material Licenses required under such applicable Environmental Laws, and all such material Licenses are in full force and effect; (ii) neither the Company nor any of its subsidiaries has received written notice of any actual or alleged violation of or liability (contingent or otherwise) under any Environmental Law; and (iii) neither the Company nor any of its subsidiaries (nor any other Person to the extent giving rise to a liability of the Company or any of its subsidiaries) has treated, stored, disposed of, arranged for the disposal of, transported, handled, released, exposed any Person to, or owned or operated any property or facility contaminated by Hazardous Materials in each case so as to give rise to a liability (contingent or otherwise) of the Company or any of its subsidiaries under any Environmental Law.

 

(b) For purposes of this Agreement, the following terms shall have the meanings assigned below:

 

“Environmental Laws” shall mean all Laws and Orders regarding public or worker health or safety, pollution or protection of the environment, including without limitation Laws and Orders relating to (a) the required environmental impact assessment and approval, and completion inspection on environment protection facility in respect of construction projects, (b) the protection of health, safety or the environment (including radioisotope safety, bio safety and fire protection) or (c) the handling, use, transportation, disposal, release or threatened release of any Hazardous Materials.

 

“Hazardous Material” shall mean any substance, material or waste defined or regulated as “hazardous,” “toxic,” “a pollutant,” “a contaminant,” or words of similar meaning, or for which liability or standards of conduct may be imposed, under any Environmental Law.

 

Section 3.19 Opinion of Financial Advisor. Kroll Inc. (the “Financial Advisor”) rendered its oral opinion to the Special Committee and subsequently confirmed by delivery of a written opinion, dated as of the date of this Agreement, to the effect that, as of such date, and based upon and subject to the factors, assumptions, limitations and qualifications set forth in the Financial Advisor’s written opinion, the Per Share Merger Consideration to be paid to the holders of Ordinary Shares (other than the Excluded Shares, the Dissenting Shares and Ordinary Shares represented by ADSs) and the Per ADS Merger Consideration to be paid to the holders of ADS (other than ADSs representing the Excluded Shares) pursuant to this Agreement is fair from a financial point of view to such holders. A signed, correct and complete copy of such opinion will promptly be made available to Parent, for informational purposes only, following receipt thereof by the Company.

 

 

Section 3.20 Brokers. No broker, finder or investment banker (other than the Financial Advisor) is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by and on behalf of the Company or any of its subsidiaries.

 

Section 3.21 Anti-takeover Provisions. There are no “fair prices,” “moratoriums,” “business combinations,” “control share acquisitions” or other forms of anti-takeover statutes or regulations enacted under any Laws, or “poison pills”, “shareholder rights plans” or similar Contracts to each of which the Company is a party with respect to any shares of the Company, or similar provisions under the organizational documents of the Company and its subsidiaries (collectively, “Takeover Statute”), in each case applicable to this Agreement, the Merger or other transactions contemplated hereby. The Company has taken all necessary actions to exempt this Agreement, the Merger and the other transactions contemplated hereby from any Takeover Statute applicable to this Agreement, the Merger or other transactions contemplated hereby.

 

Section 3.22 No Other Representations or Warranties. Except for the representations and warranties contained in this ‎Article III and in any certificate delivered in connection with this Agreement, neither the Company nor any other Person on behalf of the Company makes any other express or implied representation or warranty with respect to the Company or with respect to any other information provided to Parent or Merger Sub.

 

Article IV

REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB

 

Parent and Merger Sub each hereby represents and warrants to the Company that, except as set forth on the corresponding sections or subsections of the disclosure letter delivered to the Company by Parent and Merger Sub concurrently with entering into this Agreement (the “Parent Disclosure Letter”), it being acknowledged and agreed that disclosure of any item in any section or subsection of the Parent Disclosure Letter shall also be deemed disclosure with respect to any other section or subsection of this Agreement to which the relevance of such item is reasonably apparent:

 

Section 4.1 Organization. Each of Parent and Merger Sub is a legal entity duly incorporated, organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization and has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and, to the extent such concept is applicable, is in good standing as a foreign corporation or other legal entity in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so organized, qualified or, to the extent such concept is applicable, in such good standing, or to have such power or authority, would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect (as defined below). Parent has made available to the Company prior to the date of this Agreement a complete and correct copy of the memorandum and articles of association or other governing instruments of Parent and Merger Sub, each as amended to the date of this Agreement, and each as so delivered is in full force and effect as of the date hereof.

 

 

Section 4.2 Authority. Each of Parent and Merger Sub has all requisite corporate power and authority, and has taken all corporate or other action necessary, in order to execute, deliver and perform its obligations under, this Agreement, and to consummate the Merger and the other transactions contemplated hereby. The entry into, execution, delivery and performance of this Agreement by each of Parent and Merger Sub and the consummation by each of Parent and Merger Sub of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate or similar action by the respective director(s) of Parent and Merger Sub and, promptly following the execution of this Agreement, Parent will approve and adopt this Agreement and the transactions contemplated hereby, including the Merger, in its capacity as sole shareholder of Merger Sub, and no other corporate proceedings or shareholder or similar action on the part of Parent or Merger Sub or any of their Affiliates are necessary to authorize this Agreement, to perform their respective obligations hereunder, or to consummate the transactions contemplated hereby (other than the filing of the Plan of Merger with the Registrar of Companies pursuant to the Cayman Islands Companies Law). This Agreement has been duly and validly executed, performed and delivered by each of Parent and Merger Sub and, assuming the due authorization, execution, performance and delivery hereof by the Company, is a valid, legal and binding agreement of Parent and Merger Sub, enforceable against each of Parent and Merger Sub in accordance with its terms, subject to the Bankruptcy and Equity Exception.

 

Section 4.3 No Conflict; Required Filings and Consents.

 

(a) The entry into, execution, delivery and performance of this Agreement by Parent and Merger Sub do not, and the consummation of the Merger and the other transactions contemplated hereby will not (i) breach, violate or conflict with the memorandum and articles of association or other organizational or governing documents of each of Parent and Merger Sub or the comparable governing instruments of any of their respective subsidiaries, (ii) assuming that all consents, approvals and authorizations contemplated by clauses (i) through (iii) of subsection (b) below have been obtained, and all filings described in such clauses have been made, conflict with, breach or violate any Law applicable to Parent or Merger Sub or by which either of them or any of their respective properties or assets are bound including the provisions of the Cayman Islands Companies Law or (iii) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both would become a default), require a consent or result in the loss of a benefit under, or give rise to any right of termination, cancellation, amendment or acceleration of, or result in the creation of a Lien (except a Permitted Lien) on any of the material assets of Parent or Merger Sub pursuant to, any Contracts to which Parent or Merger Sub, or any Affiliate thereof, is a party or by which Parent or Merger Sub or any of their Affiliates or its or their respective properties or assets are bound (including any Contract to which an Affiliate of Parent or Merger Sub is a party), except, in the case of clauses (ii) and (iii), for any such conflict, violation, breach, default, loss, right or other occurrence which would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

 

(b) The entry into, execution, delivery and performance of this Agreement by each of Parent and Merger Sub and the consummation of the Merger and the other transactions contemplated hereby by each of Parent and Merger Sub do not and will not require any consent, approval, authorization or permit of, action by, filing with or notification to, any Governmental Entity, except for (i) the applicable requirements, if any, of the Exchange Act and the rules and regulations promulgated thereunder and state securities, takeover and “blue sky” laws, including the joining of Parent and Merger Sub (and their Affiliates) in the filing of the Rule 13e-3 Transaction Statement on Schedule 13E-3 (with the Proxy Statement as an exhibit thereto), and the filing of one or more amendments to the Schedule 13E-3 (with the Proxy Statement as an exhibit thereto) to respond to comments of the SEC, if any, (ii) the filing of the Plan of Merger with the Registrar of Companies pursuant to the Cayman Islands Companies Law, and (iii) any such consent, approval, authorization, permit, action, filing or notification the failure of which to make or obtain would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

 

 

Section 4.4 Absence of Litigation. As of the date of this Agreement, there are no Actions pending or, to the knowledge of Parent, threatened against Parent or Merger Sub or any of their respective assets, properties or subsidiaries, other than any such Action that would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. Neither Parent nor any of its subsidiaries nor any of their respective material properties or assets is or are subject to any Order, except for those that would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

 

Section 4.5 Capitalization and Operations. Parent is authorized to issue a maximum of 50,000 ordinary shares, with par value of $1.00 per share, 1,000 of which are validly issued and outstanding as of the date of this Agreement. The authorized share capital of Merger Sub consists solely of 500,000,000 ordinary shares, par value $0.0001 per share, one (1) of which are validly issued and outstanding as of the date of this Agreement. Such one issued and outstanding share of Merger Sub is, and at and immediately prior to the Effective Time will be, owned by Parent. Merger Sub has been formed solely for the purpose of engaging in the transactions contemplated hereby and prior to the Effective Time will have engaged in no other business activities and will have no assets, liabilities or obligations of any nature other than (i) as expressly contemplated herein or in any other Transaction Document and (ii) liabilities and obligations incidental to its formation and the maintenance of its existence.

 

Section 4.6 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission for which the Company will be liable prior to the Closing in connection with the transactions contemplated by this Agreement based upon arrangements made by and on behalf of Parent or Merger Sub.

 

Section 4.7 Certain Arrangements. As of the date of this Agreement, except as set forth in ‎Section 4.7 of the Parent Disclosure Letter, none of Parent, Merger Sub or any of their respective Affiliates or any other Person on behalf of Parent or Merger Sub or their respective Affiliates has entered into any contract, commitment, agreement, instrument, obligation, arrangement, understanding or undertaking, whether written or oral, with any shareholder of the Company or any member of the Company’s management, officers, or directors that is related to the transactions contemplated by this Agreement or pursuant to which the Company would be entitled to receive consideration in respect of any securities of the Company of a different amount or nature than the consideration provided in respect of such securities of the Company pursuant to this Agreement.

 

Section 4.8 Financing.

 

(a) Parent has delivered to the Company true, complete and correct copies of (i) the executed commitment letter, dated as of the date hereof, between Parent and Founder Shareholder (including all exhibits, schedules and annexes thereto (if any), as may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof, the “Equity Commitment Letter”), pursuant to which the Founder Shareholder has committed, subject to the terms and conditions set forth therein, to invest each amount set forth therein (collectively, the “Cash Financing”) and (ii) the Support Agreement (together with the Equity Commitment Letter, collectively, the “Financing Commitments”), pursuant to which, subject to the terms and conditions therein, the Parent and the Founder Shareholder has committed to consummate the Merger and other transactions contemplated by this Agreement (together with the Cash Financing, collectively, the “Financing”). Each Financing Commitment provides that the Company is a third party beneficiary thereof and entitled to enforce such Financing Commitment in accordance with the terms and conditions set forth therein. As of the date hereof, the Financing Commitments are in full force and effect with respect to, and are the legal, valid, binding and enforceable obligations of, Parent, Merger Sub (as applicable) and, to the knowledge of Parent, each of the other parties thereto, in each case, subject to the Bankruptcy and Equity Exception.

 

 

Section 4.9 Limited Guarantee. Parent has furnished to the Company a true, complete and correct copy of the Limited Guarantee. The Limited Guarantee has been duly and validly executed and delivered by the Founder Shareholder executing such Limited Guarantee and is in full force and effect. The Limited Guarantee is a (i) legal, valid and binding obligation of the Founder Shareholder and (ii) enforceable in accordance with its respective terms against the Founder Shareholder. There is no default under any Limited Guarantee by the Founder Shareholder, and no event has occurred that with the lapse of time or the giving of notice or both would constitute a default thereunder by the Founder Shareholder.

 

Section 4.10 Ownership of Shares. As of the date of this Agreement, other than the Founder Shares, neither of Parent and Merger Sub, nor to the knowledge of Parent, the Founder Shareholder beneficially owns (as defined in Rule 13d-3 under the Exchange Act) any Ordinary Shares or any other securities of, or any other economic interest (through derivative securities or otherwise) in, the Company or any option, warrants or other rights to acquire or vote any Ordinary Shares or any other securities of the Company, or to acquire any other economic interest (through derivative securities or otherwise) in the Company.

 

Section 4.11 Solvency. Neither Parent nor Merger Sub is entering into the transactions contemplated by this Agreement with the intent to hinder, delay or defraud either present or future creditors. Assuming that (a) the conditions to the obligation of Parent and Merger Sub to consummate the Merger set forth in ‎Section 7.1 and ‎Section 7.2 have been satisfied or waived and (b) the representations and warranties of the Company in ‎Article III are true and correct, then immediately following the Effective Time and after giving effect to all of the transactions contemplated by this Agreement, including the Financing, the payment of the aggregate consideration to which the shareholders and other equity holders of the Company are entitled under ‎Article II, funding of any obligations of the Surviving Company or its subsidiaries which become due or payable by the Surviving Company and its subsidiaries in connection with, or as a result of, the Merger and payment of all related fees and expenses, the Surviving Company and each of its subsidiaries, on a consolidated basis, will not be insolvent (either because its financial condition is such that the sum of its debts, including contingent and other liabilities, is greater than the fair market value of its assets or because the fair saleable value of its assets is less than the amount required to pay its probable liability on its existing debts, including contingent and other liabilities, as they mature).

 

 

Section 4.12 No Other Contracts. There is no Contract, whether written or oral, (a) between Parent, Merger Sub, the Founder Shareholder or any of their respective Affiliates, on the one hand, and any director, officer, employee or shareholder of the Company and its subsidiaries, on the other hand, that relates in any way to the transactions contemplated by this Agreement, or (b) pursuant to which any shareholder of the Company has agreed to vote to approve this Agreement or the Merger or has agreed to vote against any Acquisition Proposal or Superior Proposal.

 

Section 4.13 Schedule 13E-3; Proxy Statement. None of the information supplied or to be supplied by Parent or Merger Sub for inclusion or incorporation by reference in (a) the Schedule 13E-3, at the time the Schedule 13E-3, or any amendment or supplement thereto, is filed with the SEC or (b) the Proxy Statement, on the date it (and any amendment or supplement thereto) is first filed as an exhibit of the Schedule 13E-3 with the SEC, or at the time it is first mailed to the shareholders of the Company or at the time of the Shareholders’ Meeting, will contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not false or misleading. Notwithstanding the foregoing, neither Parent nor Merger Sub makes any representation or warranty with respect to any statement made in any of the foregoing documents based on information supplied by or on behalf of the Company or any of its Representatives which is contained or incorporated by reference in the Schedule 13E-3 or the Proxy Statement.

 

Section 4.14 Non-Reliance on Company Estimates. The Company has made available to Parent, Merger Sub or their respective Affiliates and Representatives, and may continue to make available, certain estimates, projections and other forecasts for the business of the Company and its subsidiaries and certain plan and budget information. Each of Parent and Merger Sub hereby acknowledges and agrees that (a) these estimates, projections, forecasts, plans and budgets and the assumptions on which they are based were prepared for specific purposes and may vary significantly from each other, (b) there are uncertainties inherent in attempting to make such estimates, projections, forecasts, plans and budgets, (c) Parent and Merger Sub are taking full responsibility for making their own evaluation of the adequacy and accuracy of all estimates, projections, forecasts, plans and budgets so furnished to them (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans and budgets), and (d) neither Parent nor Merger Sub is relying on any estimates, projections, forecasts, plans or budgets (or the accuracy or completeness thereof) furnished by the Company, its subsidiaries or their respective Affiliates and Representatives, and neither Parent nor Merger Sub shall, and shall cause their respective Affiliates and Representatives not to, hold any such Person liable with respect thereto, in each case, except for the representations and warranties of the Company set forth in ‎Article III.

 

Section 4.15 Independent Investigation. Parent and Merger Sub have conducted their own independent investigation, review and analysis of the business, operations, assets, liabilities, results of operations and financial condition of the Company and its subsidiaries, which investigation, review and analysis was performed by Parent, Merger Sub, their respective Affiliates and Representatives. Each of Parent and Merger Sub acknowledges that it, its Affiliates and their respective Representatives have been provided sufficient access to the personnel, properties, facilities and records of the Company and its subsidiaries for such purpose. In entering into this Agreement, each of Parent and Merger Sub acknowledges and agrees that it has relied solely on the aforementioned investigation, review and analysis and not on any statements, representations or opinions of any of the Company, its Affiliates or their respective Representatives, except for the representations and warranties of the Company set forth in ‎Article III.

 

 

Section 4.16 No Other Representations or Warranties. Except for the representations and warranties contained in this ‎Article IV, none of Parent, Merger Sub or any other Person on behalf of Parent or Merger Sub makes any other express or implied representation or warranty with respect to Parent or Merger Sub.

 

Article V 

CONDUCT OF BUSINESS PENDING THE MERGER

 

Section 5.1 Conduct of Business of the Company Pending the Merger. From the date of this Agreement until the earlier of the Effective Time and the valid termination of this Agreement in accordance with ‎Article VIII, except as otherwise expressly required by this Agreement, as required by applicable Laws or as Parent shall otherwise consent in writing (which consent shall not be unreasonably withheld, conditioned or delayed), (a) the Company shall and shall cause its subsidiaries to, (x) conduct its and their respective businesses in the ordinary course of business consistent with past practices in all material aspects, and (y) use reasonable efforts to maintain in effect all material Licenses necessary for the lawful conduct of its and their respective businesses and (z) use its and their respective reasonable efforts to preserve substantially intact its and each of its subsidiaries’ business organization and material business relationships (including with key customers, suppliers, employees and lessors), and (b) without limiting the foregoing, the Company shall not and shall cause each of its subsidiaries not to:

 

(i) (A) amend, adopt any amendment to or otherwise change its Memorandum of Association or other applicable governing instruments or (B) enter into any agreement of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganizational document;

 

(ii) make any acquisition of (whether by merger, consolidation or acquisition of stock or substantially all of the assets), or make any investment in any interest in, any business or any corporation, partnership or other business organization or division thereof or any property or assets, in each case, except for (A) purchases of inventory and other assets in the ordinary course of business consistent with past practices or pursuant to existing Contracts in effect as of the date hereof, (B) acquisitions not to exceed $1,000,000 in the aggregate, or (C) investments in any wholly owned subsidiaries of the Company;

 

(iii) issue, sell, grant, authorize, pledge, encumber or dispose of (or authorize the issuance, sale, grant, authorization, pledge, encumbrance or disposition of), any Company Securities (except for (A) any issuance, sale or disposition to the Company or a wholly owned subsidiary of the Company by any subsidiary of the Company or (B) any issuance of Ordinary Shares upon the exercise of Company Options outstanding on the date hereof in accordance with their terms on the date hereof);

 

 

(iv)   reclassify, combine, split, reverse split, consolidate, recapitalize, subdivide, redeem, purchase or otherwise acquire any shares or other ownership interests of the Company or any of its subsidiaries (or any warrants, options or other rights to acquire the foregoing) or consummate or authorize any other similar transaction with respect to shares or ownership interests of the Company or any of its subsidiaries (or any warrants, options or other rights to acquire the foregoing) other than (A) the acquisition by the Company of Ordinary Shares in connection with the surrender, cancellation of Ordinary Shares by holders of Company Options in full or partial payment of any purchase price and any applicable Taxes payable by such holder upon the exercise, settlement or lapse of conditions or restrictions on the Company Options, (B) the withholding of Ordinary Shares to satisfy Tax obligations with respect to Company Equity Awards, (C) the acquisition by the Company of Ordinary Shares in connection with the forfeiture of Company Equity Awards, or (D) purchase, transfer or other disposal between or among the Company and its wholly owned subsidiaries;

 

(v) create or incur any Lien, other than Permitted Liens, in excess of $1,000,000 of notional debt in the aggregate on any material assets of the Company or its subsidiaries;

 

(vi)   make any loans, advances, capital contributions to, or other investments in, any Person (other than the Company or any of its wholly owned subsidiaries) in excess of $1,000,000 in the aggregate;

 

(vii) sell, transfer or otherwise dispose of (whether by merger, consolidation or disposition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or otherwise sell, lease, assign, license, transfer, exchange, swap, abandon, permit to lapse or expire, grant an easement with respect to, grant any rights under, or subject to any Lien (other than Permitted Liens), allow to expire, fail to maintain or protect in full force and effect (including any failure to protect the confidentiality of), or dispose of any assets, rights or properties (including Owned Real Property and Intellectual Property) other than (A) sales or dispositions of inventory and other tangible assets in the ordinary course of business consistent with past practices or pursuant to existing Contracts in effect as of the date hereof, (B) leases or sub-leases of tangible assets, (C) between or among the Company and its wholly owned subsidiaries, or (D) other sales, leases, transfers, exchanges, swaps, or dispositions of tangible assets or properties (other than the Owned Real Property) to the Company or any wholly owned subsidiary of the Company or of tangible assets or properties with a value of less than $1,000,000 in the aggregate;

 

(viii) declare, set aside, establish a record date for, authorize, make or pay any dividend or other distribution, payable in cash, shares, stock, property or otherwise, with respect to any of the Company’s or its subsidiaries’ shares or capital stock (except for any dividend or distribution by a subsidiary of the Company to the Company or any wholly owned subsidiary of the Company);

 

(ix)   authorize or make any capital expenditures which are, in the aggregate, in excess of $1,000,000 other than as set forth in the annual budget made available to Parent and expenditures necessary to maintain assets in good repair consistent with the past practice;

 

(x) other than (A) as required by the terms of any Contract in effect as of the date hereof in accordance with its terms as of the date hereof as previously provided to Parent or (B) in the ordinary course of business consistent with past practices, (x) enter into any Contract that would have been a Material Contract if it had been in effect as of the date hereof, (y) extend or renew any Material Contract or any Contract that would have been a Material Contract if it had been in effect as of the date hereof, or (z) otherwise modify, amend, terminate, permit to expire or waive any material rights or obligations under any Material Contract or any Contract that would have been a Material Contract if it had been in effect as of the date hereof;

 

 

(xi)   except for intercompany loans between the Company and any of its wholly owned subsidiaries or between any wholly owned subsidiaries of the Company, incur, prepay, issue, syndicate, refinance, or otherwise become liable for, indebtedness for borrowed money in excess of $1,000,000, or modify in any material respect the terms of any such indebtedness for borrowed money, or assume, guarantee or endorse the obligations of any Person (other than a wholly owned subsidiary of the Company), in each case, in excess of $1,000,000, other than guarantees incurred in compliance with this ‎Section 5.1 by the Company of indebtedness of subsidiaries of the Company;

 

(xii) except as required by Law or as required pursuant to this Agreement or the terms of any Company Plan as in effect on the date hereof and disclosed and provided to Parent before the date hereof, (A) increase the compensation or benefits (including change in control, retention, severance termination pay, deferred compensation or other similar arrangement) of any of its directors, officers, employees, contractors, consultants, or service providers (including those of its subsidiaries, collectively, “Company Employees”) (except base salary or wage increases for employees in the ordinary course of business consistent with past practices and not to exceed 2.5% of aggregate base salaries in effect on the date hereof for applicable employees with respect to employees or service providers who are not directors or executive officers and whose annual base compensation is less than $500,000 prior to any such increase, including pursuant to the Company’s regular merit review process), (B) make, announce or grant any long-term incentive compensation (including equity-based incentive compensation) bonus, change in control, retention, severance, termination pay or other similar arrangement to any current or former directors, officers, employees, contractors, consultants, or service providers, (C) establish, adopt, enter into, amend or terminate any Company Plan or any employment, consulting or severance agreement or other similar arrangement with any of its present or former Company Employees, except in connection with a replacement hiring for employees whose annual base compensation is less than $500,000, (D) loan or advance any money or any other property to any present or former Company Employee, (E) hire (other than in connection with an ordinary course replacement hiring for employees whose annual compensation is less than $500,000) or terminate (other than for cause) any Company Employee with an annual base compensation in excess of $500,000, or (F) take any action to accelerate the vesting, funding or payment of any compensation, or benefits under, any Company Plan or otherwise;

 

(xiii) make any material change in any accounting principles, procedures, policies or practices, except as may be required to conform to changes in applicable Law or GAAP or regulatory requirements with respect thereto;

 

(xiv)   except as required by GAAP or applicable Law, (A) make any material change to any method of accounting for any material Tax, (B) make, revoke, or change any material Tax election, (C) surrender any claim for a refund of a material amount of Taxes, (D) enter into any closing agreement or other ruling or written agreement with a Tax authority with respect to any material Taxes, (E) amend any material Tax Return, or (F) settle or compromise any material Tax liability;

 

(xv)   fail to make in a timely manner any filings with the SEC required under the Securities Act or the Exchange Act or the rules and regulation promulgated thereunder or any other Governmental Entity;

 

 

(xvi)   waive, release, settle or compromise any Action, other than settlements or compromises of litigation that do not impose any material non-monetary obligations on the Company or its subsidiaries and where the amounts paid does not exceed $1,000,000 in the aggregate;

 

(xvii)   enter any new line of business outside of its existing business as of the date hereof that is material to the Company or its subsidiaries, taken as a whole;

 

(xviii)   commit any violations of applicable Anti-Corruption Laws, Sanction Laws or Ex-Im Laws; or

 

(xix)   agree, authorize or commit to do or take any of the foregoing actions described in ‎Section 5.1(b)(i) through ‎Section 5.1(b)(xvii).

 

Section 5.2 Conduct of Business of Parent and Merger Sub Pending the Merger. Each of Parent and Merger Sub agrees that, from the date of this Agreement until the earlier of the Effective Time and the valid termination of this Agreement in accordance with ‎Article VIII, it shall not take any action (including any action with respect to a third party) that would, or would reasonably be expected to, individually or in the aggregate, have a Parent Material Adverse Effect.

 

Section 5.3 No Control of Other Party’s Business. Without in any way limiting any Party’s rights or obligations under this Agreement (including ‎Section 5.1 and ‎Section 5.2), nothing contained in this Agreement shall give Parent or Merger Sub, directly or indirectly, the right to control or direct the Company’s or its subsidiaries’ operations prior to the Effective Time, and nothing contained in this Agreement shall give the Company, directly or indirectly, the right to control or direct Parent’s or its subsidiaries’ operations prior to the Effective Time. Prior to the Effective Time, each of the Company and Parent shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its subsidiaries’ respective operations.

 

Article VI

ADDITIONAL AGREEMENTS

 

Section 6.1 Schedule 13E-3; Proxy Statement.

 

(a) The Company shall, with the assistance of Parent and Merger Sub, prepare the Proxy Statement relating to authorization and approval of this Agreement, the Plan of Merger and the transactions contemplated hereby (including the Merger) and including a notice convening the Shareholders’ Meeting in accordance with the Memorandum of Association, as promptly as reasonably practicable after the date of this Agreement. Unless the Board of Directors has made a Change of Recommendation (upon unanimous recommendation of the Special Committee) in accordance with the provisions of this Agreement, the Recommendation shall be included in the Proxy Statement. Concurrently with the preparation of the Proxy Statement, the Company, Parent and Merger Sub shall jointly prepare a Schedule 13E-3 and use their reasonable best efforts to cause the initial Schedule 13E-3 (with the initial Proxy Statement filed as an exhibit) to be filed with the SEC as promptly as practicable after the date of this Agreement. The Company and Parent will cooperate and consult with each other in preparation of the Schedule 13E-3 and the Proxy Statement including furnishing the information required by the Exchange Act to be set forth in the Schedule 13E-3 or the Proxy Statement. Parent and Merger Sub shall, and shall cause the Founder Shareholder and their respective Affiliates and Representatives to, provide reasonable assistance and cooperation to the Company in the preparation, filing and mailing/distribution of the Schedule 13E-3 and the resolution of comments from the SEC.

 

 

(b) Subject to applicable Law, and anything in this Agreement to the contrary notwithstanding, prior to filing of the Proxy Statement and the Schedule 13E-3 (or any amendment or supplement thereto) to the SEC, or any dissemination of the Proxy Statement to the shareholders of the Company, the Company shall provide Parent and its counsel with a reasonable opportunity to review and to comment on such documents, which the Company shall consider in good faith. Each of Company, Parent and Merger Sub will furnish all information concerning such Party to the other Parties as reasonably requested in connection with the preparation, filing and distribution of the Proxy Statement and Schedule 13E-3. If at any time prior to the Shareholders’ Meeting, the Company, Parent or Merger Sub discovers any information relating to the Company, Parent, Merger Sub or any of their respective Affiliates, officers or directors that should be set forth in an amendment or supplement to the Proxy Statement and Schedule 13E-3 so that the Proxy Statement and Schedule 13E-3 would not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not false or misleading, the Party which discovers such information shall promptly notify the other Parties hereto and an appropriate amendment or supplement describing such information shall be filed with the SEC and, to the extent required by applicable Law, disseminated to the shareholders of the Company; provided, however, that each Party makes no representation or warranty with respect to any statement made in the Proxy Statement or the Schedule 13E-3 based on information supplied by any of the other Parties or any of their Representatives which is contained or incorporated by reference in the Proxy Statement or the Schedule 13E-3. The Company shall promptly notify Parent and Merger Sub upon the receipt of any correspondences from the SEC with respect to, or any request from the SEC for amendments or supplements, to the Proxy Statement or the Schedule 13E-3 and shall provide Parent with copies of all correspondences between it and its Representatives, on the one hand, and the SEC, on the other hand, relating to the Proxy Statement or the Schedule 13E-3. Prior to filing or mailing the Proxy Statement and Schedule 13E-3 (or any amendment or supplement thereto) or responding to any comments, request or other correspondences of any Governmental Entity with respect thereto, the Company (i) shall provide Parent and Merger Sub a reasonable opportunity to review and comment on such document or response and (ii) shall consider in good faith all comments reasonably proposed by Parent and Merger Sub and (iii) shall not file or mail such document or respond to the SEC prior to (i) and (ii). As promptly as practicable after the SEC confirms that it has no further comments to the Proxy Statement and the Schedule 13E-3 (but in any event no more than five (5) Business Days following receipt of such confirmation from the SEC), the Company shall (i) cause the Proxy Statement to be mailed to holders of Ordinary Shares (including Ordinary Shares represented by ADSs) as of the record date established for the Shareholders’ Meeting promptly (the “Record Date”) and (ii) instruct the Depositary to (A) fix the Record Date as the record date for determining the holders of ADSs who shall be entitled to give instructions for the exercise of the voting rights pertaining to the Ordinary Shares represented by ADSs (the “Record ADS Holders”), (B) provide all proxy solicitation materials to all Record ADS Holders, and (C) vote all Ordinary Shares represented by ADSs in accordance with the instructions of such corresponding Record ADS Holders.

 

 

(c) Each of the Company, Parent and Merger Sub agrees to promptly correct any information provided by it specifically for use in the Proxy Statement or the Schedule 13E-3 if and to the extent that such information has become false or misleading in any material respect.

 

Section 6.2 Shareholders’ Meeting; Board Recommendation.

 

(a) Subject to ‎Section 6.3(c), the Company shall as promptly as practicable following the date on which the SEC confirms that it has no further comments on the Schedule 13E-3 and the Proxy Statement, take all action required under the Cayman Islands Companies Law and the Memorandum of Association necessary to promptly and duly call, give notice of, convene, constitute and hold as promptly as practicable an extraordinary general meeting of the Company for the purpose of approving this Agreement and the transactions contemplated hereby (including any adjournment thereof, the “Shareholders’ Meeting”); provided that the Company may postpone or adjourn such meeting solely (i) to the extent required by Law, (ii) to allow reasonable additional time to solicit additional proxies to the extent the Company reasonably believes necessary in order to obtain the Company Requisite Vote, (iii) if as of the time for which the Shareholders’ Meeting is originally scheduled (as set forth in the Proxy Statement) there are insufficient Ordinary Shares (including Ordinary Shares represented by ADSs) represented (either in person or by proxy) to constitute a quorum is necessary to conduct the business of the Shareholders’ Meeting, or (iv) upon Parent’s written request and at Parent’s direction, for a period of up to ten (10) Business Days if the Company, acting through its Board of Directors, delivered any Change Notice pursuant to the terms of ‎Section 6.3(c) within five (5) Business Days before the then-scheduled date of the Shareholders’ Meeting. The Company, acting through its Board of Directors, shall, subject to ‎Section 6.3(c), (a) make the Recommendation and include in the Proxy Statement the Recommendation and (b) use its reasonable best efforts to obtain the Company Requisite Vote.

 

(b) Except as set out in ‎Section 6.3(c) and ‎Section 6.3(d), the Board of Directors (and each of its committees) shall not (1) fail to include the Recommendation in the Proxy Statement, (2) withdraw, modify, qualify or change, in each case in a manner adverse to Parent or Merger Sub, the Recommendation, (3) fail to reaffirm the Recommendation with any Person other than Parent and Merger Sub within five (5) Business Days of a request therefor in writing by Parent following the public disclosure of an Acquisition Proposal, (4) fail to recommend, in a Solicitation/Recommendation Statement on Schedule 14D-9 against any Acquisition Proposal that is a tender offer or exchange offer subject to Regulation 14D promulgated under the Exchange Act within ten (10) Business Days after the commencement (within the meaning of Rule 14d-2 under the Exchange Act) of such tender offer or exchange offer (it being understood and agreed that any communication made in accordance with ‎Section 6.3(d) with respect to such tender offer or exchange offer, shall not be deemed a Change of Recommendation if such communication is made prior to the tenth Business Day after the commencement (within the meaning of Rule 14d-2 under the Exchange Act) of such tender offer or exchange offer) or (5) resolve to effect or publicly announce an intention or resolution to effect any of the foregoing, or take any other action or make any other public statement in connection with the Shareholders’ Meeting inconsistent with the Recommendation (any of the actions described in the foregoing clauses (1) through (5), a “Change of Recommendation”). Notwithstanding anything to the contrary contained in this Agreement, the obligation of the Company to call, give notice of, convene and hold the Shareholders’ Meeting shall not be limited or otherwise affected by the commencement, disclosure, announcement or submission to it of any Acquisition Proposal, or by any Change of Recommendation. Without the prior written consent of Parent, authorization and approval of this Agreement, the Plan of Merger and the transactions (including the Merger) contemplated hereby shall be the only matters (other than procedural matters) proposed to be voted upon by the shareholders of the Company at the Shareholders’ Meeting.

 

 

Section 6.3 No Solicitation of Transactions.

 

(a) Until the Effective Time or, if earlier, the valid termination of this Agreement in accordance with ‎Article VIII:

 

(i) the Company and its subsidiaries shall not, and shall cause their respective Representatives not to, directly or indirectly:

 

(1) solicit, initiate or take any other action to knowingly facilitate or encourage any Acquisition Proposal or any inquiry, proposal or offer that could reasonably be expected to lead to an Acquisition Proposal;

 

(2) engage in, continue or otherwise participate in any discussions or negotiations regarding an Acquisition Proposal or any inquiry, proposal or offer that could reasonably be expected to lead to an Acquisition Proposal, or provide any non-public information or data concerning the Company or any of its subsidiaries to any Person (other than Parent, Merger Sub or any designees of Parent or Merger Sub) with the intent to induce the making, submission or announcement of, or the intent to encourage, facilitate or assist, an Acquisition Proposal or any inquiry, proposal or offer that could reasonably be expected to lead to an Acquisition Proposal;

 

(3) approve, endorse, recommend, execute or enter into any letter of intent, agreement in principle, merger agreement, acquisition agreement, option agreement or other similar agreement (other than a customary confidentiality agreement) providing for, relating to, or reasonably be expected to result in any Acquisition Proposal (the “Alternative Acquisition Agreement”);

 

(4) amend or grant any waiver or release under any standstill or similar agreement with respect to any class of equity interests of the Company or any of its subsidiaries (provided that if the Board of Directors determines in its good faith judgement upon the unanimous recommendation of the Special Committee, after consultation with its financial advisor and outside legal counsel, that the failure to take such action would be inconsistent with its fiduciary duties under applicable Law, the Company may waive any such provision solely to the extent necessary to permit the Person bound by such provision to make an Acquisition Proposal to the Board of Directors); or

 

(5) resolve, propose or agree to do any of the foregoing; and

 

(ii) the Company and its subsidiaries shall, and shall cause their respective Representatives to, immediately cease and cause to be terminated any existing activities, discussions or negotiations with any Persons conducted heretofore with respect to any Acquisition Proposal or any inquiry, proposal or offer that could reasonably be expected to lead to an Acquisition Proposal. The Company shall immediately (A) terminate all access of any Person (other than Parent and its Representatives) to any electronic data room maintained by the Company in connection with the transactions contemplated hereunder and (B) request each Person that has heretofore executed a confidentiality agreement in connection with such Person’s consideration of acquiring (whether by merger, acquisition of shares or assets or otherwise) the Company or any of its subsidiaries, to return (or if permitted by the applicable confidentiality agreement, destroy) all information required to be returned (or, if applicable, destroyed) by such Person under the terms of the applicable confidentiality agreement.

 

 

(b) Notwithstanding anything to the contrary in this Agreement, at any time prior to the receipt of the Company Requisite Vote, the Company, its subsidiaries and its and their respective Representatives may, following the receipt of an unsolicited bona fide written Acquisition Proposal after the date hereof that did not result from a breach of this ‎Section 6.3 (in each case other than any immaterial non-compliance that does not adversely affect Parent or Merger Sub):

 

(i) contact the Person who has made such Acquisition Proposal or its Representatives to clarify the terms and conditions thereof solely to the extent the Board of Directors (upon the unanimous recommendation of the Special Committee), or the Special Committee, shall have determined in good faith that such contact is necessary to clarify ambiguities in the terms or conditions proposed in order to determine whether such Acquisition Proposal constitutes a Superior Proposal or could reasonably be expected to result in a Superior Proposal;

 

(ii) provide information (including any non-public information or data concerning the Company or any of its subsidiaries) in response to the request of the Person or group of Persons who has made such Acquisition Proposal, if and only if, prior to providing such information, the Company has received from the Person or group of Persons so requesting such information an executed confidentiality agreement (a complete copy of which shall be promptly provided to Parent); provided that the Company shall concurrently make available to Parent any non-public information concerning the Company or any of its subsidiaries that is provided to any Person or group of Persons making such Acquisition Proposal that is given such access and that was not previously made available to Parent or its Representatives; or

 

(iii) engage or participate in any discussions or negotiations with the Person or group of Persons who has made such Acquisition Proposal;

 

provided that prior to taking any action described in ‎Section 6.3(b)(i) or ‎Section 6.3(b)(iii)‎ above, the Board of Directors (upon the unanimous recommendation of the Special Committee) or the Special Committee has determined in its good faith judgement, based on the information then available and after consultation with its financial advisor and outside legal counsel, that such Acquisition Proposal either constitutes a Superior Proposal or could reasonably be expected to result in a Superior Proposal and that the failure to take such action would be inconsistent with the directors’ fiduciary duties under applicable Laws.

 

 

(c) Notwithstanding anything to the contrary set forth in this Agreement but subject to compliance by the Company with this ‎Section 6.3, at any time prior to obtaining the Company Requisite Vote, the Board of Directors (upon the unanimous recommendation of the Special Committee) or the Special Committee may effect a Change of Recommendation in connection with an Acquisition Proposal and/or authorize the Company to terminate this Agreement in accordance with ‎Section 8.1(d)(ii) to enter into an Alternative Acquisition Agreement in respect of a Superior Proposal, if and only if:

 

(i) the Board of Directors determines in its good faith judgement upon the unanimous recommendation of the Special Committee, after consultation with its financial advisor and outside legal counsel, in response to an unsolicited bona fide Acquisition Proposal that did not result from any breach of this ‎Section 6.3, that such proposal constitutes a Superior Proposal and the failure to effect a Change of Recommendation with respect to such Acquisition Proposal would be inconsistent with the directors’ fiduciary duties under applicable Laws;

 

(ii) prior to effecting a Change of Recommendation in connection with an Acquisition Proposal in accordance with this ‎‎Section 6.3(c), (A) the Company shall have provided prior written notice (the “Change Notice”) to Parent that the Board of Directors has resolved to effect a Change of Recommendation pursuant to ‎Section 6.3(c)(i), describing in reasonable detail the reasons for such Change of Recommendation (which notice shall specify the identity of the party making the Acquisition Proposal and the material terms thereof) and provide copies of all relevant documents (other than redacted terms of financing documents) relating to such Acquisition Proposal, and (B) the Company (1) shall, and shall cause its Representatives to, during the period beginning at 5:00 p.m. Hong Kong Time on the day of delivery by the Company to Parent of such Change Notice (or, if delivered after 5:00 p.m. Hong Kong Time or on any day other than a Business Day, beginning at 5:00 p.m. Hong Kong Time on the next Business Day) and ending ten (10) Business Days later at 5:00 p.m. Hong Kong Time (as may be renewed, the “Notice Period”) negotiate with Parent and its Representatives in good faith (to the extent Parent desires to negotiate) any proposed modifications to the terms and conditions of this Agreement or the Financing Commitments so that such Acquisition Proposal ceases to constitute a Superior Proposal or so that the failure to effect a Change of Recommendation would no longer be inconsistent with the directors’ fiduciary duties under applicable Law, and (2) shall permit Parent and its Representatives during the Notice Period to make a presentation to the Board of Directors or the Special Committee regarding this Agreement or the Financing Commitments and any adjustments with respect thereto (to the extent Parent desires to make such presentation); provided that, in the event of any material revisions to the Acquisition Proposal that are adverse to the Company, the Company shall deliver a new written notice to Parent and comply again with the requirements of this ‎‎Section 6.3(c)(ii) with respect to such new written notice; provided, further, that with respect to the new written notice to Parent, the Notice Period shall be deemed to be a five (5) Business-Day period rather than the ten (10) Business-Day period first described above; and

 

(iii) following the end of the Notice Period (and any renewed period thereof), the Board of Directors upon the unanimous recommendation of the Special Committee or the Special Committee shall have determined in its good faith judgement (after consultation with its independent financial advisor and outside legal counsel), after considering the terms of any proposed amendment or modification to this Agreement or the Financing Commitments, that the Acquisition Proposal continues to constitute a Superior Proposal and failure to effect a Change of Recommendation with respect to such Acquisition Proposal would still be inconsistent with the directors’ fiduciary duties under applicable Laws.

 

 

(d) Notwithstanding anything to the contrary set forth in this Agreement, at any time prior to obtaining the Company Requisite Vote, if an Intervening Event has occurred and the Board of Directors upon the unanimous recommendation of the Special Committee or the Special Committee determines, in its good faith judgement, after consultation with its financial advisor and outside legal counsel, that failure to make a Change of Recommendation would be inconsistent with the directors’ fiduciary duties under applicable Law, the Board of Directors (upon the unanimous recommendation of the Special Committee) or the Special Committee may effect a Change of Recommendation; provided that prior to effecting a Change of Recommendation in connection with an Intervening Event in accordance with this Section 6.3(d), (i) the Company shall have provided a prior written notice (the “Notice of Intervening Event”) to Parent that the Board of Directors intends to effect a Change of Recommendation pursuant to this Section 6.3(d), describing in reasonable detail the facts of such Intervening Event, and (ii) the Company (A) shall, and shall cause its Representatives to, during the period beginning at 5:00 p.m. Hong Kong Time on the day of delivery by the Company to Parent of such Notice of Intervening Event (or, if delivered after 5:00 p.m. Hong Kong Time or on any day other than a Business Day, beginning at 5:00 p.m. Hong Kong Time on the next Business Day) and ending five (5) Business Days later at 5:00 p.m. Hong Kong Time (the “Intervening Event Notice Period”) negotiate with Parent and its Representatives in good faith (to the extent Parent desires to negotiate) any proposed modifications to the terms and conditions of this Agreement or any financing commitment in a manner that obviates the need for such Change of Recommendation or so that the failure to effect a Change of Recommendation would no longer be inconsistent with the directors’ fiduciary duties under applicable Law, and (B) shall permit Parent and its Representatives during the Intervening Event Notice Period to make a presentation to the Board of Directors or the Special Committee regarding this Agreement or the Financing Commitments and any adjustments with respect thereto (to the extent Parent desires to make such presentation); and (iii) following the end of the Intervening Event Notice Period, the Board of Directors (upon the unanimous recommendation of the Special Committee) or the Special Committee determines, in its good faith judgment after consultation with its financial advisor and outside legal counsel, that failure to make a Change of Recommendation would still be inconsistent with the directors’ fiduciary duties under applicable Law.

 

(e) Nothing contained in this ‎Section 6.3 shall be deemed to prohibit the Company or its Board of Directors (or the Special Committee) from taking and disclosing to its shareholders a position contemplated by Rule 14d-9, Rule 14e-2(a) or Item 1012 of Regulation M-A promulgated under the Exchange Act (or any similar communication to shareholders in connection with the making or amendment of a tender offer or exchange offer), making a customary “stop-look-and-listen” communication to the shareholders of the Company pursuant to Rule 14d-9(f) under the Exchange Act (or any similar communications to the shareholders of the Company) or from making any legally required disclosure to shareholders with regard to the transactions contemplated by this Agreement or an Acquisition Proposal; provided that any public disclosure (other than any “stop, look and listen” statement) by the Company or its Board of Directors (or the Special Committee) relating to any determination or other action by the Board of Directors (or the Special Committee) with respect to any Acquisition Proposal (i) shall be deemed to be a Change of Recommendation unless the Board of Directors expressly publicly reaffirms its Recommendation in such disclosure and (ii) shall not permit the Company or its Board of Directors to effect a Change of Recommendation (upon unanimous recommendation of the Special Committee) that is not otherwise permitted by ‎Section 6.3(c).

 

 

(f)   The Company agrees that it will as promptly as reasonably practicable (and, in any event, within forty-eight (48) hours) notify Parent if it or, to its knowledge, any of its Representatives becomes aware that any Acquisition Proposal (or any inquiry, proposal or offer that could reasonably be expected to lead to an Acquisition Proposal) is received by, any non-public information is requested from, or any discussions or negotiations are sought to be initiated or continued with, the Company, its Board of Directors (or any committee thereof) or any Representative of the foregoing, indicating, in connection with such notice, the identity of the Person or group of Persons making such Acquisition Proposal (or such inquiry, proposal or offer that could reasonably be expected to lead to an Acquisition Proposal) and the material terms and conditions of such Acquisition Proposal (or such inquiry, proposal or offer that could reasonably be expected to lead to an Acquisition Proposal) (including, if applicable, copies of any written inquiry, proposal, offer, proposed Contracts, term sheets or letters of intent) and thereafter shall keep Parent reasonably informed, on a reasonably prompt basis, of any material change to the terms of any such Acquisition Proposal (or such inquiry, proposal or offer that could reasonably be expected to lead to an Acquisition Proposal) and the status of any such discussions or negotiations (including by providing Parent with copies of all material written correspondence relating to such Acquisition Proposal or requests exchanged between the Company or any of its subsidiaries, on the one hand, and the Person making such Acquisition Proposal or request, on the other hand), in each case subject to the Company’s confidentiality obligations by contract or under applicable Law. None of the Company, its Board of Directors or the Special Committee shall enter into any Contract or other binding agreement with any Person to limit the Company’s ability (i) to give prior notice to Parent of its intention to effect a Change of Recommendation or (ii) to fully perform its covenants and obligations pursuant to ‎Section 6.2 and ‎Section 6.3 this Agreement.

 

(g) For purposes of this Agreement, the following terms shall have the meanings assigned below:

 

(i) “Acquisition Proposal” means any inquiry, proposal or offer from any Person (other than Parent and Merger Sub) relating to (1) any direct or indirect acquisition, or purchase of a business that constitutes 20% or more of the net revenues, net income or assets of the Company and its subsidiaries, taken as a whole, (2) any direct or indirect acquisition, purchase or issuance of 20% or more of the total voting power of the equity interests of the Company, (3) any tender offer or exchange offer that if consummated would result in any Person beneficially owning 20% or more of the total voting power of the equity interest of the Company, (4) any merger, amalgamation, reorganization, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company (or any subsidiary of the Company whose business constitutes 20% or more of the net revenues, net income or assets of the Company and its subsidiaries, taken as a whole) or (5) any combination of the foregoing; provided that the Merger shall not be deemed an Acquisition Proposal.

 

(ii) “Intervening Event” means a material change, event, occurrence or development that occurs or arises after the date of this Agreement affecting or with respect to the Company and its subsidiaries or their business, assets or operations that was not known or reasonably foreseeable to either the Board of Directors or the Special Committee on the date of this Agreement, which change, event, occurrence or development becomes known to the Board of Directors or the Special Committee before receipt of the Company Requisite Vote; provided that in no event shall the receipt, existence of or terms of an Acquisition Proposal or a Superior Proposal or any inquiry relating thereto or the consequences thereof constitute an Intervening Event.

 

 

(iii) “Superior Proposal” means a bona fide and written Acquisition Proposal (provided that, for the purposes of this definition of Superior Proposal, each reference to “20%” in the definition of “Acquisition Proposal” shall be replaced with “50%”) that the Board of Directors in good faith judgement upon the unanimous recommendation of the Special Committee determines (A) is reasonably likely to be consummated in accordance with its terms and (B) would, if consummated, result in a transaction that is more favorable from a financial point of view to the shareholders of the Company (other than holders of the Excluded Shares) than the transactions contemplated hereby, in each case, after (x) consultation with its financial advisor and outside legal counsel and (y) taking into account all such factors and matters deemed relevant in good faith by the Board of Directors, including legal, financial (including the financing terms of any such proposal), regulatory or other consents and approvals, timing, the identity of the person making the proposal or other aspects of such proposal and the transactions contemplated hereby (after consultation with the external financial and legal advisors) and after taking into account any changes to the terms of this Agreement offered in writing by Parent in response to such Superior Proposal pursuant to, and in accordance with, ‎Section 6.3(c); provided, however, that any such offer shall not be deemed to be a “Superior Proposal” if (i) such offer is subject to the conduct of any due diligence review or investigation of the Company or any of its subsidiaries by the party making the offer (which, for the avoidance of doubt, shall not include the inclusion of a customary “access to information” covenant such as ‎Section 6.6 in any documentation for such transaction) or (ii) the consummation of the transaction contemplated by such offer is conditional upon receipt of financing.

 

(h) Notwithstanding anything to the contrary set forth in this ‎Section 6.3(h)‎, the Company acknowledges and agrees that (i) any violation of the restrictions or obligations set forth in this ‎Section 6.3 by any subsidiary of the Company or their or the Company’s Representatives shall constitute a breach of this ‎Section 6.3 by the Company, and (ii) it shall not nor shall it permit its subsidiaries to enter into any agreement that prohibits or restricts the Company from providing to Parent the information contemplated by this ‎Section 6.3 or otherwise complying with this ‎Section 6.3.

 

(i) Parent and Merger Sub shall not, and shall cause their Affiliates not to, enter into or seek to enter into any arrangements or Contracts that are effective prior to obtaining the Company Requisite Vote with any director, management member or any other employee of the Company or its subsidiaries that contain any terms that prohibit or restrict such director, management member or employee from taking any actions on behalf of the Company or any of its subsidiaries in connection with any Acquisition Proposal to the extent such actions are permitted to be taken by the Company pursuant to this ‎Section 6.3.

 

Section 6.4 Further Action; Efforts.

 

(a) Subject to the terms and conditions of this Agreement, each Party will use its reasonable best efforts (i) to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws and regulations to cause the conditions to Closing to be satisfied and to consummate and make effective the Merger and the other transactions contemplated hereby as soon as practicable, including preparing and filing as promptly as practicable all documentation to effect all necessary notices, reports and other filings and (ii) to obtain as promptly as practicable all consents, approvals, registrations, authorizations, waivers, permits and Orders necessary or advisable to be obtained from any third party or any Governmental Entity in order to consummate the Merger or any of the other transactions contemplated hereby; provided, that the Company shall not agree to take any such steps (including any hold separate, restructuring, reorganization, sale, divestiture or disposition) without the prior written consent of Parent; provided further, that none of the Parties or any of their Affiliates shall be required to hold separate, restructure, reorganize, sell, divest, dispose of, or otherwise take or commit to any action that limits its freedom of action with respect to, or its ability to retain, any of its businesses, services or assets. If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and directors of each Party shall use their reasonable best efforts to take all such action.

 

 

(b) Each of Parent and Merger Sub, on the one hand, and the Company, on the other hand, shall use its reasonable best efforts to (i) cooperate with each other in connection with any filing or submission and in connection with any investigation or other inquiry, including any proceeding initiated by a private party; (ii) subject to applicable Law, furnish to the other Party as promptly as reasonably practicable all information required for any application or other filing to be made by the other Party pursuant to any applicable Law in connection with the transactions contemplated by this Agreement; (iii) promptly notify the other Party of any substantive communication received by such Party from, or given by such Party to, any Governmental Entity and of any substantive communication received or given in connection with any proceeding by a private party, in each case regarding any of the transactions contemplated hereby and, subject to applicable Law, furnish the other Party promptly with copies of all correspondence and communications between them and any Governmental Entity with respect to the transactions contemplated by this Agreement; (iv) respond as promptly as reasonably practicable to any inquiries received from, and supply as promptly as reasonably practicable any additional information or documentation that may be requested by any Governmental Entity in respect of such registrations, declarations and filings or such transactions; and (v) permit the other Party to review, to the extent legally permissible and reasonably practicable, any substantive communication given by it to, and consult with each other in advance, and consider in good faith the other Party’s reasonable comments in connection with, any material communication, meeting or conference with, any Governmental Entity or, in connection with any proceeding by a private party, with any other Person; provided that each Party shall be entitled to redact materials (1) as necessary to comply with contractual arrangements, (2) as necessary to address good faith legal privilege or confidentiality concerns or (3) to the extent relating to Company valuation and similar matters relating to the Merger.

 

(c) No Party shall independently participate in any substantive meeting or communication with any Governmental Entity in respect of any such filings, investigation or other inquiry relating to ‎Section 6.4(a) or ‎Section 6.4(b) without giving the other Parties sufficient prior notice of the meeting and, to the extent permitted by such Governmental Entity, the opportunity to attend or participate in such substantive meeting or communication.

 

(d) The Parties acknowledge and agree that all obligations of the Company, Parent and Merger Sub related to regulatory approvals required under applicable antitrust Laws shall be governed exclusively by this ‎Section 6.4.

 

Section 6.5 Notification of Certain Matters. The Company shall give prompt written notice to Parent, and Parent shall give prompt written notice to the Company, of (a) any notice or other communication received by such Party from any Governmental Entity in connection with the Merger or the other transactions contemplated hereby or from any Person alleging that the consent of such Person is or may be required in connection with the Merger or the other transactions contemplated herein, if the subject matter of such communication or the failure of such Party to obtain such consent could be material to the Company, the Surviving Company or Parent and (b) any Actions commenced or, to such Party’s knowledge, threatened against, relating to or involving or otherwise affecting such Party or any of its subsidiaries which relate to the Merger or the other transactions contemplated hereby; provided that the delivery of any notice pursuant to this ‎Section 6.5 shall not (i) cure any breach of, or non-compliance with, any other provision of this Agreement or (ii) limit the remedies available to the Party receiving such notice. The Parties agree and acknowledge that the Company’s, on the one hand, and Parent’s on the other hand, compliance or failure of compliance with (but not Willful Breach of) this ‎Section 6.5 shall not be taken into account for purposes of determining whether the condition referred to in ‎Section 7.2(b) or ‎Section 7.3(b), respectively, shall have been satisfied with respect to performance in all material respects with this ‎Section 6.5.

 

 

Section 6.6 Access to Information; Confidentiality. From the date hereof until the earlier of the Effective Time and the valid termination of this Agreement in accordance with ‎Article VIII, upon reasonable prior written notice from Parent, the Company shall, and shall use its reasonable best efforts to cause its subsidiaries, officers, directors and employees to, afford Parent and its Representatives reasonable access, consistent with applicable Law, at normal business hours to the Company’s and its subsidiaries’ respective officers, employees, properties, offices, and other facilities and to all books and records, and shall furnish Parent reasonably promptly with all financial, operating and other data and information concerning its and its subsidiaries’ businesses and properties as Parent or its Representatives, may from time to time reasonably request. Notwithstanding the foregoing, any such investigation or consultation shall be conducted in such a manner as not to interfere unreasonably with the business or operations of the Company or its subsidiaries or otherwise result in any significant interference with the prompt and timely discharge by such officers, employees and other authorized Representatives of their normal duties. Neither the Company nor any of its subsidiaries shall be required to provide access or to disclose information where such access or disclosure would jeopardize any attorney-client privilege of the Company or any of its subsidiaries or contravene any applicable Law, rule, regulation, order, judgment, decree or binding agreement entered into prior to the date of this Agreement (provided that the Company will use commercially reasonable efforts to, and will cause its subsidiaries to use commercially reasonable efforts to, (i) enter into a joint defense agreement with Parent if requested with respect to any such information or (ii) cooperate with Parent in seeking and use reasonable best efforts to secure any consent or waiver or other arrangement to allow disclosure of such information in a manner that would not result in such violation, contravention, prejudice, or loss of privilege). All requests for information made pursuant to this ‎Section 6.6 shall be directed to the executive officer or other Person designated by the Company.

 

Section 6.7 Stock Deregistration. Prior to the Closing Date, the Company shall cooperate with Parent and use its reasonable best efforts to take, or cause to be taken, all actions, and do or cause to be done all things, reasonably necessary, proper or advisable on its part under applicable Laws to enable the deregistration of the Ordinary Shares and ADSs under the Exchange Act as promptly as practicable after the Effective Time.

 

Section 6.8 Publicity. Except as may be required by applicable Law, the press release announcing the execution of this Agreement shall be issued only in such form as shall be mutually agreed upon by the Company and Parent. Thereafter, at any time prior to the earlier of the Effective Time and the valid termination of this Agreement pursuant to ‎Article VIII, the Company and Parent shall consult with each other (i) prior to issuing, and provide each other a reasonable opportunity review and comment on (and reasonably consider such proposed comments), any press releases or any public announcements with respect to this Agreement or the transactions (including the Merger) contemplated by this Agreement and (ii) prior to making any filings with any third party or any Governmental Entity (including any national securities exchange or interdealer quotation service) with respect thereto, except for (A) as may be required by Law or by obligations pursuant to any listing agreement with or rules of any national securities exchange or interdealer quotation service or by the request of any Governmental Entity, in each case, as determined in the good faith judgment of the Party proposing to make such release (in which case, such Party shall not issue or cause the publication of such press release or other public announcement without, to the extent practicable, prior review by and consultation with the other Party), and (B) any action pursuant to and in compliance with ‎Section 6.3. Notwithstanding the foregoing, Parent, Merger Sub and their respective Affiliates may provide communications regarding this Agreement and the transactions contemplated hereby to existing or prospective general and limited partners, equity holders, members, managers, investors of any Affiliates of such Person, any debt financing sources or any of their Affiliates or professional advisers, in each case, who are subject to customary confidentiality restrictions. Notwithstanding the foregoing, the restrictions set forth in this ‎Section 6.8 shall not apply to any release or announcement by the Company or its Affiliates made or proposed to be made in connection with and related to a Change of Recommendation (to the extent such Change of Recommendation is in compliance with the terms and conditions of this Agreement).

 

 

Section 6.9 Directors’ and Officers’ Indemnification.

 

(a) From and after the Effective Time, Parent shall cause the Surviving Company to agree that it will indemnify and hold harmless each present and former director and officer of the Company or any of its subsidiaries (in each case, when acting in such capacity) (the “Indemnified Parties”), against any costs or expenses (including reasonable attorneys’ fees and expenses), judgments, fines, losses, claims, damages, liabilities or awards paid in settlement incurred in connection with any actual or threatened claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative and whether formal or informal (each, a “Proceeding”), arising out of, relating to or in connection with matters existing or occurring at or prior to the Effective Time (including the fact that such Person is or was a director or officer of the Company or any of its subsidiaries or any acts or omissions occurring or alleged to occur prior to the Effective Time), whether asserted or claimed prior to, at or after the Effective Time, to the fullest extent that the Company would have been permitted under the Laws of the Cayman Islands and its Memorandum of Association in effect on the date of this Agreement to indemnify such Person (and Parent or the Surviving Company shall advance expenses (including reasonable legal fees and expenses) incurred in the defense of any Proceeding, including any expenses incurred in successfully enforcing such Person’s rights under this ‎Section 6.9; provided that the Person to whom expenses are advanced provides an undertaking to repay such advances if it is ultimately determined that such Person is not entitled to indemnification pursuant to this ‎Section 6.9); provided further that any determination required to be made with respect to whether an officer’s or director’s conduct complies with the standards set forth under the Laws of the Cayman Islands and the Company’s Memorandum of Association shall be made by independent counsel selected by the Surviving Company. In the event of any such Proceeding (x) neither Parent nor the Surviving Company shall settle, compromise or consent to the entry of any judgment in any Proceeding in which indemnification has been sought by such Indemnified Party hereunder, unless such settlement, compromise or consent includes an unconditional release of such Indemnified Party from all liability arising out of such Proceeding or such Indemnified Party otherwise consents (which consent shall not be unreasonably withheld, conditioned or delayed), (y) the Surviving Company shall reasonably cooperate with the Indemnified Party in the defense of any such matter and (z) the Indemnified Party shall not settle, compromise or consent to the entry of any judgment in any Proceeding in which indemnification has been sought by such Indemnified Party hereunder without the prior written consent of Parent or the Surviving Company (which consent shall not be unreasonably withheld, conditioned or delayed).

 

 

(b) Any Indemnified Party wishing to claim indemnification under this ‎Section 6.9, upon learning of any such Proceeding, shall promptly notify Parent thereof, but the failure to so notify shall not relieve Parent or the Surviving Company of any liability it may have to such Indemnified Party except to the extent such failure materially prejudices the indemnifying Party.

 

(c) Parent agrees to cause the Surviving Company to honor and perform the obligations under any indemnification provision and any exculpation provision in the Company’s Memorandum of Association. The provisions in the Surviving Company’s memorandum and articles of association with respect to indemnification, advancement of expenses and exculpation of former or present directors and officers shall be no less favorable to such directors and officers than such provisions contained in the Company’s Memorandum of Association in effect as of the date hereof, which provisions shall not be amended, repealed or otherwise modified for a period of six (6) years after the Effective Time in any manner that would adversely affect the rights thereunder of any such individuals except as required by applicable Law.

 

If Parent or the Surviving Company or any of their respective successors or assigns (i) shall consolidate or amalgamate with or merge into any other corporation or entity and shall not be the continuing, merged or surviving company or entity of such consolidation or merger or (ii) shall transfer all or substantially all of its properties and assets to any individual, corporation or other entity, then, and in each such case, proper provisions shall be made so that the successors and assigns of Parent or the Surviving Company shall assume all of the obligations set forth in this ‎Section 6.9.

 

(d) The provisions of this ‎Section 6.9 shall survive the Merger and, following the Effective Time, are intended to be for the benefit of, and shall be enforceable by, each of the Indemnified Parties and their heirs and representatives.

 

(e) The rights of the Indemnified Parties under this ‎Section 6.9 shall be in addition to any rights such Indemnified Parties may have under the Memorandum of Association of the Company or the comparable governing instruments of any of its subsidiaries, or under any applicable Contracts or Laws.

 

Section 6.10 Parent Financing.

 

(a) Parent and Merger Sub shall use their respective reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary or advisable to arrange and consummate the Financing on the terms and conditions described in or contemplated by the Financing Commitments, including using reasonable best efforts to (i) maintain in effect the Financing Commitments, provided that Parent and Merger Sub may amend, replace, supplement or modify their debt financing commitments (if applicable) to add or join lenders, lead arrangers, bookrunners, syndication agent or similar entities as parties thereto who have not executed the debt financing commitment (if applicable) as of the date hereof, (ii) satisfy (or obtain waivers to) on a timely basis all conditions applicable to Parent or Merger Sub to funding in the Financing Commitments and the definitive agreements to be entered into pursuant thereto, and (iii) enforce its rights under the Financing Commitments and consummate the Financing prior to or at the Closing. None of Parent and Merger Sub shall agree to or permit any amendments or modifications to, or grant any waivers of, any condition or other provision under the Financing Commitments or any definitive agreements with respect thereto without the prior written consent of the Company if such amendments, modifications or waivers would (i) reduce the aggregate amount of the Financing or (ii) impose new or additional conditions to the availability of the Financing or otherwise expand, amend or modify the Financing in a manner that would reasonably be expected to (A) prevent or materially delay the ability of Parent or Merger Sub to consummate the Merger and the other transactions contemplated hereby or (B) adversely impact in any material respect the ability of Parent or Merger Sub to enforce its rights against the other parties to the Financing Commitments or any definitive agreements with respect thereto. Without limiting the generality of the foregoing, neither Parent nor Merger Sub shall release or consent to the termination of the obligations of the financing sources under any Financing Commitments or definitive agreement with respect thereto other than in accordance with the terms thereof.

 

 

(b) The Company shall ensure that, at the Closing, the aggregate amount of Available Company Cash shall equal or exceed the Required Available Cash Amount (the “Available Company Cash Financing”) and shall, upon request of Parent at least five (5) Business Days prior to the proposed Closing Date, deposit all or any portion of the Available Company Cash Financing with the Paying Agent as a source of funds for the payment of the aggregate Per Share Merger Consideration pursuant to Section 2.1 or make available all or any portion of the Available Company Cash Financing for use as a source of funds for the payment of the aggregate amount payable by Parent and Merger to holders of Vested Company Options pursuant to ‎Section 2.2(b)(iii); provided that (i) the Company and its subsidiaries shall have no liabilities to Parent or Merger Sub to pay any Company Termination Fee or other damages if the Available Company Cash Financing becomes unavailable for any reason and (ii) Parent shall use its commercially reasonable efforts to cause the Paying Agent to immediately refund and deliver to the Company all Available Company Cash Financing that has been deposited with the Paying Agent if the Effective Time has not occurred within five (5) Business Days following such deposit by the Company. The Parties shall use their reasonable best efforts to cooperate with each other with respect to the Available Company Cash Financing and shall keep each other reasonably informed on a reasonably current basis of the status of the Available Company Cash Financing. For purposes of this Agreement, “Available Company Cash” means cash of the Company in U.S. dollars in a U.S. dollar denominated bank account of the Company opened at a bank outside the PRC, net of issued but uncleared checks and drafts, available free of any Liens at the Closing for use by Parent and Merger Sub as a source of funds to pay the aggregate Merger Consideration and the fees and expenses payable by them in connection with the Merger and the other transactions contemplated by this Agreement.

 

Section 6.11 Takeover Statutes. If any Takeover Statute is or may become applicable to the Merger or the other transactions contemplated by this Agreement, each of the Company and Parent shall use its reasonable best efforts, and the members of their respective boards of directors shall grant such approvals, to take such actions as are necessary so that such transactions may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise act to eliminate or minimize the effects of such statute or regulation on such transactions.

 

Section 6.12 Transaction Litigation. In the event that any shareholder litigation related to this Agreement, the Merger or the other transactions contemplated by this Agreement is brought, or, to the knowledge of the Company, threatened in writing, against the Company, its officers or any members of its Board of Directors prior to the Effective Time (the “Transaction Litigation”), the Company shall promptly notify Parent of any such Transaction Litigation and shall keep Parent reasonably informed with respect to the status thereof, including, by promptly providing Parent copies of all proceedings and correspondence relating to such Transaction Litigation to the extent legally permissible. The Company shall give Parent reasonable opportunity to participate in the defense or settlement of any Transaction Litigation and shall consider in good faith Parent’s advice with respect to such Transaction Litigation. The Company shall not settle or agree to settle any Transaction Litigation, or take any action to settle, without Parent’s prior written consent (which consent shall not be unreasonably withheld, delayed or conditioned).

 

Section 6.13 Resignation of Directors. Prior to the Effective Time, except as otherwise may be agreed by Parent, the Company shall use its commercially reasonable efforts to cause to be delivered to Parent the resignation of all members of the Board of Directors who are in office immediately prior to the Effective Time, which resignations shall be effective at the Effective Time.

 

 

Section 6.14 Obligations of Merger Sub; Obligations of Subsidiaries.

 

(a) Parent shall take all action necessary to cause Merger Sub and the Surviving Company to perform their respective obligations under this Agreement.

 

(b) The Company shall take all action necessary to cause its subsidiaries to perform their respective obligations under this Agreement.

 

Section 6.15 Actions Taken at Direction of Parent, Merger Sub or Founder Shareholder.Section 6.16 Notwithstanding anything herein to the contrary, the Company shall not be deemed to be in breach of any representation, warranty, covenant or agreement hereunder, if such breach or alleged breach is the proximate result of action or inaction not required by this Agreement taken by the Company at the direction of Parent, Merger Sub or the Founder Shareholder, regardless of whether there is any approval or direction of the Board of Directors or the Special Committee.

 

Article VII 

CONDITIONS OF MERGER

 

Section 7.1 Conditions to Obligation of Each Party to Effect the Merger. The respective obligations of each Party to effect the Merger shall be subject to the satisfaction (or written waiver, if permissible under Law, by Parent and the Company) at or prior to the Effective Time of the following conditions:

 

(a) Shareholder Approval. The Company Requisite Vote shall have been obtained; and

 

(b) Orders. No Law, statute, rule, regulation, executive order, decree, ruling, injunction, judgment or other order (whether temporary, preliminary or permanent) shall have been enacted, entered, promulgated or enforced by any Governmental Entity of a competent jurisdiction (collectively, the “Orders”) which prohibits, restrains, makes illegal or enjoins the consummation of the transactions (including the Merger) contemplated by this Agreement shall remain in effect.

 

Section 7.2  Conditions to Obligations of Parent and Merger Sub. The obligations of Parent and Merger Sub to effect the Merger shall be further subject to the satisfaction (or written waiver by Parent) at or prior to the Effective Time of the following conditions:

 

(a) Representations and Warranties. Each of the representations and warranties of the Company set forth in (i) ‎Article III (other than ‎Section 3.1 (Organization and Qualification; Subsidiaries), ‎Section 3.2 (Memorandum and Articles of Association), ‎Section 3.3 (Capitalization), ‎Section 3.4 (Authority), ‎Section 3.10(b), ‎Section 3.20 (Brokers) and ‎Section 3.21 (Anti-takeover Provisions)) shall be true and correct in all respects as of the date hereof and as of the Effective Time as though made on and as of such date (except to the extent that any such representation or warranty expressly is made as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), except where the failure of any such representations and warranties to be so true and correct, individually or in the aggregate, has not had a Material Adverse Effect, (ii) ‎Section 3.10(b) shall be true and correct in all respects as of the date hereof and as of the Effective Time as though made on and as of such date, (iii) ‎Section 3.1 (Organization and Qualification; Subsidiaries), ‎Section 3.2 (Memorandum and Articles of Association), ‎Section 3.3 (Capitalization) (other than clauses (a) and (c) thereof, which is subject to clause (iv) below), ‎Section 3.4 (Authority), ‎Section 3.20 (Brokers) and ‎Section 3.21 (Anti-takeover Provisions) shall be true and correct in all material respects (without giving effect to any “materiality,” “Material Adverse Effect” or similar qualifiers contained in any such representations and warranties) as of the date hereof and the Effective Time as though made on and as of such date (except to the extent that any such representation or warranty expressly is made as of an earlier date, in which case such representation and warranty shall be true and correct as of such specified date), and (iv) ‎Section 3.3(a) and ‎Section 3.3(c) shall be true and correct in all respects as of the date hereof and as of the Effective Time as though made on and as of such date (except to the extent that any such representation or warranty expressly is made as of an earlier date, in which case such representation and warranty shall be true and correct as of such specified date), except where the failure of such representations and warranties to be so true and correct, individually or in the aggregate, has not resulted in, and would not be reasonably expected to result in more than de minimis additional cost, expense or liability to the Company, Parent, Merger Sub or their Affiliates;

 

 

(b) Performance of Obligations of the Company. The Company shall have performed in all material respects the obligations, and complied in all material respects with the agreements and covenants, required to be performed by, or complied with by, it under this Agreement at or prior to the Effective Time;

 

(c) Certificate. Parent shall have received a certificate of an executive officer of the Company, dated as of the Effective Time, certifying that the conditions set forth in ‎Section 7.2(a), ‎Section 7.2(b) and ‎Section 7.2‎(d) have been satisfied; and

 

(d) No Material Adverse Effect. No Material Adverse Effect shall have occurred since the date of this Agreement and be continuing.

 

(e) Dissenting Shareholders. The aggregate amount of Dissenting Shares shall be less than 10% of the total issued and outstanding Ordinary Shares (including Ordinary Shares represented by ADSs) immediately prior to the Effective Time.

 

Section 7.3 Conditions to Obligations of the Company. The obligation of the Company to effect the Merger shall be further subject to the satisfaction (or written waiver by the Company) at or prior to the Effective Time of the following conditions:

 

(a) Representations and Warranties. Each of the representations and warranties of Parent and Merger Sub set forth in this Agreement shall be true and correct, in each case as of the date hereof and the Effective Time as though made on and as of such date (except to the extent that any such representation or warranty expressly is made as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), except where the failure of any such representations and warranties to be true and correct, individually or in the aggregate, would not reasonably be expected to prevent, materially delay or have a material adverse effect on the ability of Parent or Merger Sub to consummate the transactions contemplated by this Agreement (a “Parent Material Adverse Effect”);

 

(b) Performance of Obligations of Parent and Merger Sub. Each of Parent and Merger Sub shall have performed in all material respects the obligations, and complied in all material respects with the agreements and covenants, required to be performed by or complied with by it under this Agreement at or prior to the Effective Time; and

 

(c) Certificate. The Company shall have received a certificate of an executive officer of Parent, dated as of the Closing Date, certifying that the conditions set forth in ‎Section 7.3(a) and ‎Section 7.3(b) have been satisfied.

 

Article VIII  

TERMINATION

 

Section 8.1 Termination.

 

This Agreement may only be terminated and the Merger may only be abandoned at any time prior to the Effective Time:

 

(a) by mutual written consent of Parent and the Company;

 

(b) by either Parent or the Company if any Order having the effect set forth in ‎Section 7.1(b) has become final and non-appealable; provided that the right to terminate this Agreement pursuant to this ‎Section 8.1(b) shall not be available to the Party seeking to terminate if such Party (or, in the case of Parent, Merger Sub, or in the case of the Company, any of its subsidiaries) is in breach of, or has breached, in any material respect, any of its obligations under this Agreement, which breach has been the primary cause of such Order;

 

(c) by either Parent or the Company if the Effective Time has not occurred on or before December 31, 2023 (the “End Date”); provided that, the End Date may be extended by mutual written agreement of Parent and the Company; provided, further, that the right to terminate this Agreement pursuant to this ‎Section 8.1(c) shall not be available to the Party seeking to terminate if such Party (or, in the case of Parent, Merger Sub, or in the case of the Company, any of its subsidiaries) is in breach of, or has breached, in any material respect, any of its obligations under this Agreement required to be performed at or prior to the Effective Time, which breach has been the primary cause of the failure of the Effective Time to occur on or before the End Date (such breach, a “Disqualifying Breach”).

 

 

(d) by written notice from the Company if:

 

(i) there has been a breach of any representation, warranty, covenant or agreement on the part of Parent or Merger Sub contained in this Agreement, or any such representation or warranty is untrue, such that the conditions set forth in ‎Section 7.3(a) or ‎Section 7.3(b) would not be satisfied and, in either such case, such breach or condition is not curable or, if curable, is not cured prior to the earlier of (A) thirty (30) days after written notice thereof is given by the Company to Parent or (B) the End Date; provided that the Company shall not have the right to terminate this Agreement pursuant to this ‎Section 8.1(d)‎ if the Company is then in breach of any of its representations, warranties, covenants or agreements contained in this Agreement that would cause a condition set forth in ‎Section 7.1 or ‎Section 7.2 not to be satisfied;

 

(ii) prior to obtaining the Company Requisite Vote, the Board of Directors or the Special Committee has authorized the Company to effect a Change of Recommendation pursuant to ‎Section 6.3(c).

 

(e) by written notice from Parent if:

 

(i) there has been a breach of any representation, warranty, covenant or agreement on the part of the Company contained in this Agreement, or any such representation or warranty shall be untrue, such that the conditions set forth in ‎Section 7.2(a) or ‎Section 7.2(b) would not be satisfied and, in either such case, such breach or condition is not curable or, if curable, is not cured prior to the earlier of (A) 30 days after written notice thereof is given by Parent to the Company or (B) the End Date; provided that Parent shall not have the right to terminate this Agreement pursuant to this ‎Section 8.1(e)(i) if Parent or Merger Sub is then in breach of any of its representations, warranties, covenants or agreements contained in this Agreement that would cause a condition set forth in ‎Section 7.1 or ‎Section 7.3 not to be satisfied; or

 

(ii) the Board of Directors or the Special Committee has made, prior to obtaining the Company Requisite Vote, a Change of Recommendation;

 

(f) by either Parent or the Company if the Company Requisite Vote has not been obtained at the Shareholders’ Meeting duly convened therefor or at any adjournment thereof, in each case, at which a vote on the approval of this Agreement, the Merger and the other transactions contemplated hereby was taken; or

 

(g) by the Company, if (i) all of the conditions set forth in ‎Section 7.1 and ‎Section 7.2 (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions at the Closing) have been and continue to be satisfied or waived in accordance with this Agreement, (ii) Parent and Merger Sub fail to consummate the Merger within five (5) Business Days of the date on which the Closing should have occurred pursuant to ‎Section 1.2 and (iii) the Company shall have given Parent a written notice of the proposed Closing Date and the Company is ready, willing and able to consummate the Merger on such date.

 

Section 8.2 Effect of Termination.

 

(a) In the event of the valid termination of this Agreement pursuant to ‎Section 8.1, written notice thereof shall be given to the other Party or Parties hereto, specifying the provision hereof pursuant to which such termination is made and this Agreement shall forthwith become void and there shall be no liability or obligation on the part of any Party hereto, except as provided in ‎Section 6.8 (Publicity), this ‎Section 8.2 (Effect of Termination), ‎Section 8.3 (Expenses) and ‎Article IX (General Provisions), which shall survive such valid termination in accordance with its terms and conditions. The Parties acknowledge and agree that nothing in this ‎Section 8.2 shall be deemed to affect their right to specific performance in accordance with the terms and conditions set forth in ‎Section 9.12.

 

 

(b) In the event that:

 

(i) this Agreement is validly terminated by Parent pursuant to ‎Section 8.1(e)(i) or ‎Section 8.1(e)(ii), then the Company shall pay to Parent (or one or more of its designees) a fee of $150,000 (the “Company Termination Fee”) by wire transfer of immediately available funds, such payment to be made within two (2) Business Days of the applicable termination.

 

(ii) this Agreement is validly terminated by the Company pursuant to ‎Section 8.1(d)(i) or ‎Section 8.1(g), Parent shall pay to the Company a fee of $300,000 (the “Parent Termination Fee”) by wire transfer of immediately available funds, such payment to be made within two (2) Business Days of the applicable termination.

 

(c) The Parties acknowledge and hereby agree that each of the Parent Termination Fee and the Company Termination Fee, as applicable, if, as and when required pursuant to this ‎Section 8.2, shall not constitute a penalty but will be liquidated damages, in a reasonable amount that will compensate the party receiving such amount in the circumstances in which it is payable for the efforts and resources expended and opportunities foregone while negotiating this Agreement and in reliance on this Agreement and on the expectation of the consummation of the Merger, which amount would otherwise be impossible to calculate with precision. The Parties acknowledge and hereby agree that in no event shall either the Company be required to pay the Company Termination Fee or Parent be required to pay the Parent Termination Fee, as the case may be, on more than one occasion.

 

(d) Each of the Company, Parent and Merger Sub acknowledges that the agreements contained in this ‎Section 8.2 are an integral part of the transactions contemplated by this Agreement and that, without these agreements, the Parties would not enter into this Agreement. If the Company fails to timely pay an amount due pursuant to ‎Section 8.2(b)(i) or Parent fails to timely pay an amount due pursuant to ‎Section 8.2(b)(ii), and, in order to obtain such payment, Parent, on the one hand, or the Company, on the other hand, commences a suit that results in a final and non-appealable judgment against the Company for the amount set forth in ‎Section 8.2(b)(i) or any portion thereof, or a final and non-appealable judgment against Parent for the amount set forth in ‎Section 8.2(b)(ii), or any portion thereof, the Company shall pay to Parent, or Parent shall pay to the Company, its reasonable and documented out-of-pocket costs and expenses (including reasonable and documented out-of-pocket attorneys’ fees and the reasonable and documented out-of-pocket fees and expenses of any expert or consultant engaged by Parent or the Company (as applicable) in connection with such suit), together with interest on the amount of such payment from the date such payment was required to be made until the date of payment at the prime rate as published in The Wall Street Journal, Eastern Edition in effect on the date of such payment. Any amount payable pursuant to ‎Section 8.2(b) shall be paid by the applicable Party by wire transfer of same day funds prior to or on the date such payment is required to be made under ‎Section 8.2(b).

 

(e) Notwithstanding anything to the contrary in this Agreement, but subject to ‎Section 9.12, in any circumstance in which this Agreement is terminated and Parent has the right to receive payment of the Company Termination Fee from the Company pursuant to this ‎Section 8.2, the payment of the Company Termination Fee and, if applicable, the costs and expenses of Parent pursuant to ‎Section 8.2(d) shall be the sole and exclusive remedies of Parent Related Parties against the Company, its subsidiaries and any of their respective former, current or future general or limited partners, shareholders, controlling Persons, managers, members, directors, officers, employees, Affiliates, representatives, agents or any their respective assignees or successors or any former, current or future general or limited partner, shareholder, controlling Person, manager, member, director, officer, employee, Affiliate, representative, agent, assignee or successor of any of the foregoing (collectively, “Company Related Parties”) for any loss or damage suffered as a result of the failure of the Merger and the other transactions contemplated by this Agreement to be consummated or for a breach of, or failure to perform under, this Agreement or any certificate or other document delivered in connection herewith or otherwise or in respect of any oral representation made or alleged to have been made in connection herewith or therewith; provided that, in no event shall Company Related Party be liable for monetary damages in excess of the amount of the Company Termination Fee in the aggregate (and any costs, expenses, interest and other amounts payable pursuant to ‎Section 8.2(d)), and that upon payment of such amounts, none of the Company Related Parties shall have any further liability or obligation relating to or arising out of this Agreement (except that the Company shall remain obligated to pay to Parent and Merger Sub any amount due and payable pursuant to ‎Section 8.2(d)), whether in equity or at law, in contract, in tort or otherwise, except that nothing shall relieve the Company of its obligations under ‎Section 6.8.

 

(f)   Notwithstanding anything to the contrary in this Agreement, if the Merger fails to consummate or if Parent or Merger Sub breaches this Agreement (whether willfully (including a Willful Breach), intentionally, unintentionally or otherwise) or fails to perform hereunder (whether willfully (including a Willful Breach), intentionally, unintentionally or otherwise), then, except for the right to seek specific performance in accordance with and subject to the terms and conditions of ‎Section 9.12, the sole and exclusive remedies (whether at law, in equity, in contract, in tort or otherwise) against Parent or the Merger Sub (each a “Parent Related Party”) for any breach, loss, damage or failure to perform under or otherwise arising from or in connection with this Agreement or any certificate or other document delivered in connection herewith or otherwise or in respect of any oral representation made or alleged to have been made in connection herewith or therewith shall be for the Company to (x) terminate this Agreement pursuant to ‎‎Section 8.1(d) or ‎Section 8.1(g) and receive payment of the Parent Termination Fee or (y) seek to recover monetary damages from Parent in connection with any termination of this Agreement in a circumstance in which the Parent Termination Fee is not actually paid; provided, that in no event shall Parent Related Party be subject to monetary damages in excess of the amount of the Parent Termination Fee in the aggregate (and any costs, expenses, interest and other amounts payable pursuant to ‎Section 6.8, and ‎Section 8.2(d)).

 

 

(g) This Agreement may only be enforced against, and any claims or causes of action that may be based upon or under, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement may only be made (i) against the entities that are expressly identified as Parties hereto, and (ii) to the extent pursuant to and in accordance with the terms of the Support Agreement, the Equity Commitment Letter or the Limited Guarantee, against any party thereto. No other Company Related Party shall have any liability for any obligations or liabilities of the Parties to this Agreement or for any claim against the Parties to this Agreement (whether in tort, contract or otherwise) based on, in respect of, or by reason of, the Merger or the other transactions contemplated by this Agreement or in respect of any oral representations made or alleged to be made in connection herewith.

 

Section 8.3 Expenses. Except as otherwise specifically provided herein, each Party shall bear its own expenses in connection with this Agreement and the transactions contemplated hereby.

 

Article IX

 

GENERAL PROVISIONS

 

Section 9.1 Non-Survival of Representations, Warranties, Covenants and Agreements. None of the representations, warranties, covenants and agreements in this Agreement or in any instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such representations, warranties, covenants and agreements, shall survive the Effective Time, except for those covenants and agreements contained herein that by their terms apply or are to be performed in whole or in part after the Effective Time.

 

Section 9.2 Modification or Amendment. Subject to the provisions of applicable Law, at any time prior to the Effective Time, the Parties may modify or amend this Agreement by written agreement, executed and delivered by duly authorized officers of the respective Parties; provided that the Company may only take such action with the approval of the Special Committee.

 

Section 9.3 Waiver. At any time prior to the Effective Time, any Party hereto may (a) extend the time for the performance of any of the obligations or other acts of the other Parties, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (c) subject to the requirements of applicable Law, waive compliance with any of the agreements or conditions contained herein; provided that the Company may only take such action with the approval of the Special Committee. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the Party or Parties to be bound thereby and specifically referencing this Agreement. The failure of any Party to assert any rights or remedies shall not constitute a waiver of such rights or remedies, nor shall any single or partial exercise thereof preclude any other or further exercise of any other right or remedy hereunder.

 

 

Section 9.4 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by e-mail or by express courier (postage prepaid and providing proof of delivery) to the respective Parties at the following addresses, or email addresses as follows (or at such other address, or email address for a Party as is specified by like notice):

 

(a) if to Parent or Merger Sub:

 

c/o Craigmuir Chambers, Road Town, Tortola, VG 1110, British Virgin Islands
Attention: Yi Zhang
Email: ir@zhangmen.com

 

with an additional copy (which shall not constitute notice) to:

 

Davis Polk & Wardwell LLP

the Hong Kong Club Building, 3A Chater Road,

Hong Kong, China
Attention: Li He
Email: li.he@davispolk.com

 

(b) if to the Company:

 

Zhangmen Education Inc.
No.1666 North Sichuan Road,

Hongkou District

Shanghai, China
Attention: Legal Department

 

Email: law@zhangmen.com

 

(c) if to the Special Committee, addressed to it care of the Company, with a copy (which shall not constitute notice) to:

 

The Special Committee

Zhangmen Education Inc.

No.1666 North Sichuan Road

Hongkou District

Shanghai, China 200080

People’s Republic of China

Attention: Mr. Paul Qi, Mr. Adam Zhao
Email: Paul@fb-cap.com, adamchaw@qq.com

 

with an additional copy (which shall not constitute notice) to:

 

Linklaters

11^th floor Alexandra House

Chater Road,

Hong Kong, China 

Attention: Xiaoxi Lin
Email: xiaoxi.lin@linklaters.com

 

Section 9.5 Certain Definitions.

 

(a) Defined Terms. For purposes of this Agreement:

 

“Affiliate” means, with respect to any Person, any other Person directly or indirectly, controlling, controlled by, or under common control with, such Person, and with respect to the Founder Shareholder and the Parent, excludes the Company and its subsidiaries;

 

 

“Business Day” means any day other than a Saturday or Sunday and other than a day on which banks are required or authorized to close in the Cayman Islands, the PRC, Hong Kong or the City of New York, New York, as the case may be, or on which a tropical cyclone warning no. 8 or above or a “black” rainstorm warning signal is hoisted in Hong Kong at any time between 9:00 a.m. and 5:00 p.m. Hong Kong time;

 

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

 

“Company Data” means trade secrets, confidential information, and Personal Data included in Company Intellectual Property;

 

“Company Equity Award” means any Company Option, Company Restricted Share Award or other award payable in Company Securities or whose value is determined with reference to the value of Company Securities, whether granted pursuant to the Company Share Plans or otherwise;

 

“Company Option” means each outstanding share option, whether vested or unvested, that is outstanding, unexercised, not yet expired as of immediately prior to the Effective Time and issued by the Company pursuant to any Company Share Plan that entitles the holder thereof to purchase Ordinary Shares upon the vesting of such award;

 

“Company Restricted Share Award” means each outstanding award of restricted Ordinary Shares issued by the Company pursuant to any Company Share Plan that is subject to transfer and other restrictions which may lapse upon the vesting of such award;

 

“Company Share Plans” means, collectively, the Global Online Education Inc. Amended and Restated 2018 Option Plan and the Zhangmen Education Inc. 2021 Share Incentive Plan, and a “Company Share Plan” means any one of the foregoing plans;

 

“Company Systems” means all computerized, automated, information technology or similar systems, platforms and networks owned, used or held for use by, for, or on behalf of the Company or any of its subsidiaries, including Software, hardware, data processing and storage, record keeping, communications, telecommunications, network equipment, peripherals, information technology, mobile and other platforms, and data and information contained in or transmitted by any of the foregoing, together with documentation relating to any of the foregoing;

 

“control” (including the terms “controlling”, “controlled”, “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a Person, whether through the ownership of voting securities, by contract or otherwise;

 

 

“Data Privacy and Security Requirements” mean (i) the Company’s and its subsidiaries internal and posted policies and procedures with respect to privacy, Personal Data, data and system security; (ii) applicable privacy and data security Laws and industry standards (including the Payment Card Industry Data Security Standards); and (iii) applicable requirements relating to data collection, use, privacy, security or protection under any Contracts;

 

“Depositary” means Citibank, N.A.

 

“Ex-Im Laws” means all U.S. and non-U.S. Laws relating to export, reexport, transfer, and import controls, including the Export Administration Regulations, the International Traffic in Arms Regulations, and the customs and import Laws administered by U.S. Customs and Border Protection;

 

“Excluded Shares” means (i) Cancelled Shares (including Founder Shares) and (ii) any Ordinary Shares (including ADSs corresponding to such Ordinary Shares) held by the Depositary and reserved for issuance and allocation pursuant to the Company Share Plans;

 

“GAAP” means the generally accepted accounting principles in the United States;

 

“Government Official” means: (i) any official, officer, employee or any person acting in an official capacity for or on behalf of any Governmental Entity; (ii) any political party or party official or candidate for political office; (iii) a Politically Exposed Person as defined by the Financial Action Task Force; or (iv) any company, business, enterprise or other entity owned, in whole or in part, or controlled by any person described in the foregoing clauses (i), (ii) or (iii) of this definition;

 

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

 

“Intellectual Property” means all of the following in any jurisdiction in the world: (i) inventions, whether patentable or not, and all patents and patent applications; (ii) copyrights, copyrightable works, works of authorship, content, moral rights, and data and database rights; (iii) Software; (iv) trademarks, service marks, domain names, corporate names, trade names, logos, designs, brands, rights to social media accounts, trade dress, other indicia of source, origin or quality, and the goodwill of the business symbolized by any of the foregoing; (v) know-how, trade secrets, confidential information, and Personal Data; (vi) privacy rights, data protection rights, and rights of publicity; (vii) registrations, applications and renewals related to any of the foregoing; and (viii) all other intellectual property, industrial property and proprietary rights of any kind or nature;

 

“knowledge” (i) with respect to the Company means the actual knowledge of any member of the Special Committee and (ii) with respect to Parent or Merger Sub means the actual knowledge of any of the individuals listed in ‎Section 9.5(a) of the Parent Disclosure Letter;

 

“Law” means any federal, state, local, municipal, foreign or other law, statute, constitution, principle of common law, ordinance, code, decree, order, judgment, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Entity and any award, order or decision of an applicable arbitrator or arbitration panel (public or private);

 

“Lease” means any and all leases, subleases, licenses, concessions, sale/leaseback arrangements or similar arrangements and other occupancy agreements pursuant to which the Company or any of its subsidiaries holds any Leased Real Property, including the right to all security deposits and other amounts and instruments deposited by or on behalf of the Company or any of the Company’s subsidiaries thereunder;

 

“Leased Real Property” means the real property leased, subleased, licensed or otherwise occupied by the Company or any of its subsidiaries as tenant, sublessee, licensee or occupier, together with, to the extent leased by the Company or any of its subsidiaries, all buildings and other structures, facilities or improvements currently or hereafter located thereon, all fixtures, systems and equipment affixed thereto and all easements, licenses, rights, hereditaments and appurtenances relating to the foregoing;

 

 

“Material Adverse Effect” means any event, development, change, effect or occurrence that, individually or in the aggregate with all other events, developments, changes, effects or occurrences, has, or would reasonably be expected to have, a material adverse effect on or with respect to the business, results of operation or condition (financial or otherwise), assets or liabilities of the Company and its subsidiaries, taken as a whole, provided that, no events, developments, changes, effects or occurrences relating to, arising out of or in connection with or resulting from any of the following shall be deemed, either alone or in combination, to constitute or contribute to a Material Adverse Effect: (i) general changes or developments in the economy or the financial, debt, capital, credit or securities markets in the United States, the PRC or elsewhere in the world in which the Company or its subsidiaries have material operations, including as a result of changes in geopolitical conditions, (ii) general changes or developments in the industries in which the Company or its subsidiaries operate, (iii) (A) the execution and delivery of this Agreement or the public announcement or pendency of the Merger or other transactions contemplated hereby, or the identity of Parent, the Founder Shareholder or any of their respective Affiliates, including any impact thereof on relationships, contractual or otherwise, with customers, suppliers, vendors, investors, lenders, partners, contractors or employees of the Company and its subsidiaries, (B) the performance of this Agreement and the transactions contemplated hereby, including compliance with the covenants set forth herein and (C) any action taken or omitted by the Company at the express written request of or with the express written consent of Parent or Merger Sub, provided that this clause (iii) shall not apply to any representation or warranty set forth in ‎Article III to the extent the purpose of such representation or warranty is to address the consequences resulting from this Agreement or the consummation of transactions (including the Merger) contemplated under this Agreement, (iv) changes in any applicable Laws or regulations or applicable accounting regulations or principles or interpretation or enforcement thereof, (v) any typhoon, hurricane, tornado, earthquake, flood, tsunami, natural disaster, act of God, pandemic (including the COVID-19 virus pandemic) or other comparable events or outbreak or escalation of hostilities or war (whether or not declared), military actions or any act of sabotage or terrorism, or national or international political or social conditions, (vi) any decline in the market price or trading volume of the Ordinary Shares or ADSs or the credit rating of the Company (provided, that the facts, circumstances, developments, events, changes, effects or occurrences giving rise to or contributing to such decline may be deemed to constitute, or be taken into account in determining whether there has been or would reasonably be expected to be, a Material Adverse Effect), (vii) any failure by the Company to meet any published analyst estimates or expectations of the Company’s revenue, earnings or other financial performance or results of operations for any period, in and of itself, or any failure by the Company to meet its internal or published projections, budgets, plans or forecasts of its revenues, earnings or other financial performance or results of operations (provided, that the facts, circumstances, developments, events, changes, effects or occurrences giving rise to or contributing to such decline may be deemed to constitute, or be taken into account in determining whether there has been or would reasonably be expected to, a Material Adverse Effect), (viii) any Action threatened, made or brought by any of the current or former shareholder of the Company (or on their behalf or on behalf of the Company) against the Company or any of its directors, officers or employees arising out of this Agreement or the Merger, or (ix) the availability of equity or other financing to Parent or Merger Sub; except in the cases of clauses (i), (ii), (iv) or (v), to the extent that the Company and its subsidiaries, taken as a whole, are disproportionately affected thereby as compared with other participants in the industries in which the Company and its subsidiaries operate (in which case solely the incremental disproportionate impact or impacts may be taken into account in determining whether there has been or would reasonably be expected to be a Material Adverse Effect);

 

“material subsidiaries” means (A) Zhangmen Technology HK Limited, (B) Shanghai Zhangxinrui Technology Co., Ltd., and (C) Shanghai Zhangda Education Technology Co., Ltd.;

 

“OFAC” means the U.S. Department of Treasury Office of Foreign Assets Control;

 

“Off-the-Shelf Software Licenses” means licenses granted to the Company and its subsidiaries for standard, commercially available, off-the-shelf software that are provided solely in executable form and for the Company’s and its subsidiaries’ internal use (and not for server or development use) involving payments of less than $100,000 annually;

 

“Order” means any Law, order, judgment, injunction, award, decision, determination, stipulation, ruling, subpoena, writ, decree or verdict enacted, issued, promulgated, enforced or entered by or with any Governmental Entity;

 

 

“Owned Real Property” means all land, together with all buildings, structures, improvements and fixtures located thereon, and all easements and other rights and interests appurtenant thereto, owned by the Company or any subsidiary of the Company;

 

“Permitted Liens” means (A) statutory liens securing payments not yet due and payable as of the Closing Date, including liens of lessors pursuant to the terms of any lease, (B) easements, rights of way or other similar matters of record affecting title to such Owned Real Property which do not or would not materially impair the use or occupancy of such Owned Real Property in the operation of the business of the Company or any of its subsidiaries conducted thereon, (C) encumbrances for Taxes not yet due and owing or for Taxes that are being contested in good faith by appropriate proceeding and for which adequate reserves have been provided in accordance with GAAP, (D) pledges or deposits made in the ordinary course of business consistent with past practices to secure obligations under workers’ compensation, unemployment insurance, social security, retirement and similar Laws or similar legislation or to secure public or statutory obligations, (E) mechanics’, carriers’, workmen’s, repairmen’s or other like encumbrances arising or incurred in the ordinary course of business consistent with past practices for amounts which are not yet past due, and (F) non-exclusive licenses of Intellectual Property granted by the Company or its subsidiaries to their customers in the ordinary course of business consistent with past practices, (G) Liens that are disclosed in the SEC Reports filed or furnished prior to the date hereof, and (H) Liens securing indebtedness or liabilities that (x) are reflected in the SEC Reports filed or furnished prior to the date hereof or (y) that have otherwise been disclosed to Parent in writing as of the date of this Agreement;

 

“Person” means an individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, unincorporated organization, other entity or group (as defined in Section 13(d)(3) of the Exchange Act), including, for the avoidance of doubt, any group of Persons;

 

“Personal Data” means any data or other information that can be used, directly or indirectly, alone or in combination with other information, to identify an individual or is otherwise protected by or subject to any privacy or data security Laws;

 

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

 

“Representatives” means a Person’s officers, directors, employees, accountants, consultants, legal counsel, investment bankers, advisors, agents and other representatives;

 

“Required Available Cash Amount” means $2,450,000;

 

 

“Sanctioned Person” means any individual or entity that is the subject or target of sanctions or restrictions under Sanctions Laws or Ex-Im Laws, including: (i) any individual or entity listed on any applicable U.S. or non-U.S. sanctions- or export-related restricted party list, including OFAC’s Specially Designated Nationals and Blocked Persons List; (ii) any entity that is, in the aggregate, 50% or greater owned, directly or indirectly, or otherwise controlled by a Person or Persons described in clause (i); or (iii) any national of a Sanctioned Country;

 

“Sanctions Laws” means all U.S. and non-U.S. Laws relating to economic or trade sanctions, including the Laws administered or enforced by the United States (including by OFAC or the U.S. Department of State) or the United Nations Security Council;

 

“Software” means (i) software of any type, including computer programs, applications, architectures, libraries, firmware, and middleware, software development kits, libraries, tools, interfaces, and software implementations of algorithms, models and methodologies, in each case, whether in source code or object code, (ii) data and databases, and (iii) documentation relating to any of the foregoing; together with intellectual property, industrial property and proprietary rights in and to any of the foregoing;

 

“subsidiary” or “subsidiaries” means, with respect to any Person (A) any corporation, association or other business entity (other than a partnership, joint venture or limited liability company) of which more than 50% of the total voting power of shares of stock or other equity interests of such Person entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other subsidiaries of that Person or a combination thereof (including through any contractual arrangement) and (B) any partnership, joint venture or limited liability company of which (i) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other subsidiaries of that Person or a combination thereof, whether in the form of membership, general, special or limited partnership interests, through any contractual arrangement or otherwise, (ii) such Person or any subsidiary of such Person is a controlling general partner or otherwise controls such entity (including through any contractual arrangement). For the avoidance of doubt, for purposes of this Agreement, each branch office of any subsidiary of the Company, whether registered or not as required by the applicable laws of the jurisdiction of its operation, shall be deemed as a subsidiary of the Company;

 

“Transaction Documents” means, collectively, this Agreement and any other agreement or document contemplated thereby or any document or instrument delivered in connection hereunder or thereunder; and

 

“Willful Breach” means (i) with respect to any breaches or failures to perform any of the covenants or other agreements contained in this Agreement, a material breach that is a consequence of an act or failure to act undertaken by the breaching Party with actual or constructive knowledge (which shall be deemed to include knowledge of facts that a Person acting reasonably should have, based on reasonable due inquiry) that such Party’s act or failure to act would, or would reasonably be expected to, result in or constitute a breach of this Agreement or (ii) fraud.

 

 

(b) Other Defined Terms. The following terms have the meanings set forth in the Sections set forth below:

 

Defined Term		Section
Acquisition Proposal		‎Section 6.3(e)(i)
Action		‎Section 3.11
ADS		‎Section 2.1(b)
Agreement		Preamble
Alternative Acquisition Agreement		‎Section 6.3(a)(i)(3)
Anti-Corruption Laws		‎Section 3.6(b)
Available Company Cash		‎Section 6.10
Applicable Date		‎Section 3.7(a)
Arbitrator		‎Section 9.13
Bankruptcy and Equity Exception		‎Section 3.4
Board of Directors		Recitals
Cancelled Shares		‎Section 2.1(c)
Cayman Islands Companies Law		Recitals
CBA		‎Section 3.9(a)(viii)
Change of Recommendation		‎Section 6.2
Class A Share		‎Section 2.1(a)
Class B Share		‎Section 2.1(a)
Closing		‎Section 1.2
Closing Date		‎Section 1.2
Company		Preamble
Company Disclosure Letter		‎Article III
Company Employees		Section 5.1(b)(xii)
Company Intellectual Property		Section 3.17(a)
Company Related Parties		‎Section 8.2(e)
Company Requisite Vote		‎Section 3.4
Company Securities		‎Section 3.3(c)
Company Termination Fee		‎Section 8.2(b)(i)
Contract		‎Section 3.9(a)
Disqualifying Breach		‎Section 8.1(c)
Dissenter Rights		‎Section 2.1(d)
Dissenting Shares		‎Section 2.1(d)
Dissenting Shareholders		‎Section 2.1(d)
Effective Time		‎Section 1.3
End Date		‎Section 8.1(c)
Environmental Laws		Section 3.18(b)
Exchange Act		‎Section 3.5(b)
Exchange Fund		‎Section 2.3(a)
Financial Advisor		Section 3.19
Financing		‎Section 4.8(a)

 

 

Financing Commitment		‎Section 4.8(a)
Founder Shareholder		Recitals
Founder Shares		Recitals
Governmental Entity		‎Section 3.5(b)
Hazardous Materials		Section 3.18(b)
HKIAC		‎Section 9.13
Indemnified Parties		‎Section 6.9(a)
Licenses		‎Section 3.6(a)
Liens		Section 3.14(a)
Limited Guarantee		Preamble
Material Contract		‎Section 3.9(a)
Material Lease		Section 3.14(c)
Material Leased Real Property		Section 3.14(c)
Memorandum of Association		‎Section 3.2
Merger		Recitals
Merger Consideration		‎Section 2.3(a)
Merger Sub		Preamble
Notice Period		‎Section 6.3(c)(ii)
Orders		‎Section 7.1(b)
Ordinary Shares		‎Section 3.3
Parent		Preamble
Parent Disclosure Letter		‎Article IV
Parent Material Adverse Effect		‎Section 7.3(a)
Parent Related Party		‎Section 8.2(f)
Parent Termination Fee		‎Section 8.2(b)(ii)
Party/Parties		Preamble
Paying Agent		‎Section 2.3(a)
Per ADS Merger Consideration		‎Section 2.1(b)
Per Share Merger Consideration		‎Section 2.1(a)
Permitted Liens		Section 3.14(a)
Plan of Merger		‎Section 1.3
Proceeding		‎Section 6.9(a)
Proxy Statement		Section 3.16
Recommendation		‎Section 3.4
Record ADS Holders		‎Section 6.1(b)
Record Date		‎Section 6.1(b)
SEC		‎Section 3.7(a)
Schedule 13E-3		‎Section 3.5(b)
Registrar of Companies		‎Section 1.3
SEC Reports		‎Section 3.7(a)
Securities Act		‎Section 3.7(a)
Share Certificates		‎Section 2.3(b)
Shareholders’ Meeting		‎Section 6.2
Special Committee		Recitals
Superior Proposal		Section 6.3(e)(ii)
Support Agreement		Recitals
Surviving Company		Recitals

 

 

Takeover Statute		Section 3.21
Tax Return		‎Section 3.15(i)(iii)
Tax Law		‎Section 3.15(i)(ii)
Taxes		‎Section 3.15(i)(i)
Trade Control Laws		‎Section 3.6(d)
Transaction Litigation		‎Section 6.12
Uncertificated Shares		‎Section 2.3(b)
Unvested Company Option		‎Section 2.2(b)‎
Unvested Company Restrict Share Award		‎Section 2.2(b)‎

 

Section 9.6 Severability. If any term or other provision of this Agreement is found by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.

 

Section 9.7 Entire Agreement; Assignment. This Agreement (including the Exhibits hereto and the Company Disclosure Letter and the Parent Disclosure Letter) constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersede all prior agreements and undertakings, both written and oral, among the Parties, or any of them, with respect to the subject matter hereof and thereof. This Agreement shall not be assigned by operation of law or otherwise without the prior written consent of each of the other Parties, and any assignment without such consent shall be null and void.

 

Section 9.8 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each Party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement, other than (a) at and after the Effective Time, with respect to the provisions of ‎Section 6.9 which shall inure to the benefit of the Persons or entities benefiting therefrom who are intended to be third-party beneficiaries thereof, (b) at and after the Effective Time, the rights of the holders of Ordinary Shares (including Ordinary Shares represented by ADSs) to receive the Per Share Merger Consideration or Per ADS Merger Consideration (as applicable) in accordance with the terms and conditions of this Agreement, and (c) at and after the Effective Time, the rights of the holders of Company Options or Company Restricted Share Awards to receive the payments or in exchange therefor the applicable equity-based awards of Parent contemplated by ‎Section 2.2(b) in accordance with the terms and conditions of this Agreement.

 

Section 9.9 Governing Law.

 

This Agreement and all claims or causes of action (whether in contract, tort or otherwise) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement), shall be interpreted, construed, performed and enforced in accordance with the Laws of the State of New York without giving effect to its principles or rules of conflict of laws to the extent such principles or rules would require or permit the application of the Laws of another jurisdiction.

 

 

Section 9.10 Headings. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.

 

Section 9.11 Counterparts. This Agreement may be executed and delivered (including by “.pdf,” or other electronic transmission) in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

 

Section 9.12 Specific Performance.

 

(a) The Parties agree that irreparable damage for which monetary damages, even if available, may not be an adequate remedy, would occur in the event that the Parties do not perform the provisions of this Agreement in accordance with its specified terms or otherwise breach such provisions. The Parties acknowledge and agree that, subject in all respects to the terms and conditions of this ‎Section 9.12, the Parties shall be entitled to seek an injunction, specific performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, without any requirement for the posting of security, this being in addition to any other remedy to which they are entitled at law or in equity.

 

(b) Notwithstanding anything else to the contrary in this Agreement, for the avoidance of doubt, while the Company may concurrently seek (i) specific performance or other equitable relief, subject in all respects to this ‎Section 9.12 and (ii) payment of the Parent Termination Fee pursuant to ‎Section 8.2(b), under no circumstances shall the Company be permitted or entitled to receive both (1) a grant of specific performance to cause the Financing to be funded at the Closing in accordance with the terms of this Section 9.12 (whether under this Agreement or the Financing Commitments) or other equitable relief that results in a Closing, and (2) payment of the Parent Termination Fee.

 

(c) Notwithstanding anything else to the contrary in this Agreement, for the avoidance of doubt, while Parent or Merger Sub may concurrently seek (i) specific performance or other equitable relief, subject in all respects to this ‎Section 9.12 and (ii) payment of the Company Termination Fee pursuant to ‎Section 8.2(b), under no circumstances shall Parent and Merger Sub be permitted or entitled to receive both (1) a grant of specific performance or other equitable relief that results in a Closing, and (2) payment of the Company Termination Fee.

 

Section 9.13 Jurisdiction. Subject to ‎Section 9.9, ‎Section 9.12 and the last sentence of this ‎Section 9.13, any disputes, actions and proceedings against any party or arising out of or in any way relating to this Agreement shall be submitted to the Hong Kong International Arbitration Centre (“HKIAC”) and resolved in accordance with the Arbitration Rules of HKIAC in force at the relevant time and as may be amended by this ‎Section 9.13. The place of arbitration shall be Hong Kong. The official language of the arbitration shall be English and the arbitration tribunal shall consist of three (3) arbitrators (each, an “Arbitrator”). The claimant(s), irrespective of number, shall nominate jointly one (1) Arbitrator; the respondent(s), irrespective of number, shall nominate jointly one (1) Arbitrator; and a third Arbitrator will be nominated jointly by the first two Arbitrators and shall serve as chairman of the arbitration tribunal. In the event the claimant(s) or respondent(s) or the first two Arbitrators shall fail to nominate or agree the joint nomination of an Arbitrator or the third Arbitrator within the time limits specified by the Rules, such Arbitrator shall be appointed promptly by the HKIAC. The arbitration tribunal shall have no authority to award punitive or other punitive-type damages. The award of the arbitration tribunal shall be final and binding upon the disputing parties. Any party to an award may apply to any court of competent jurisdiction for enforcement of such award and, for purposes of the enforcement of such award, the parties irrevocably and unconditionally submit to the jurisdiction of any court of competent jurisdiction and waive any defenses to such enforcement based on lack of personal jurisdiction or inconvenient forum.

 

 

Section 9.14 WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER SUB AND THE COMPANY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF PARENT, MERGER SUB OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF OR THEREOF.

 

Section 9.15 Interpretation. When reference is made in this Agreement to an Article, Exhibit, Schedule or Section, such reference shall be to an Article, Exhibit, Schedule or Section of this Agreement unless otherwise indicated. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof,” “herein,” “hereby” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant thereto unless otherwise defined therein. Words of any gender include each other gender and neuter genders and words using the singular or plural number also include the plural or singular number, respectively. Any Contract or Law defined or referred to herein means such Contract or Law as from time to time amended, modified or supplemented, including (in the case of Contracts) by waiver or consent and (in the case of Laws) by succession or comparable successor statutes and references to all attachments thereto and instruments incorporated therein. The word “or” shall not be exclusive. For purposes of this Agreement (other than ‎Section 3.19 and ‎Section 6.3), the term “made available”, with respect to any document or item, shall mean that such document or item has been made available to Parent or the Company on or before the date of this Agreement. With respect to the determination of any period of time, “from” means “from and including”. The word “will” shall be construed to have the same meaning as the word “shall”. Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. The word “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”. References to “dollars” or “$” are to United States of America dollars. The phrase “consistent with past practices” means past customs and practices of the Company, taking into account any changes in such customs and practices that may have been implemented in response to or as a result of the COVID-19 pandemic. Any deadline or time period set forth in this Agreement that by its terms ends on a day that is not a Business Day shall be automatically extended to the next succeeding Business Day. Each of the Parties has participated in the drafting and negotiating of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if it is drafted jointly by all the Parties and without regard to any presumption, burden of proof or rule requiring construction or interpretation against the Party drafting or causing any instrument to be drafted.

 

[Remainder of Page Intentionally Left Blank]

 

 

IN WITNESS WHEREOF, the Company, Parent and Merger Sub and have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

 

	COMPANY:
	Zhangmen Education Inc.
	By:	/s/ Jicai Qi
		Name:	Jicai Qi
		Title:	Chairman of the Special Committee
	PARENT:
	Ultimate Vitor II Holdings Limited
	By:	/s/ Yi Zhang
		Name	Yi Zhang
		Title:	Director
	MERGER SUB:
	Summit Lustre Limited
	By:	/s/ Yi Zhang
		Name:	Yi Zhang
		Title:	Director

 

[Signature Page to Merger Agreement]

 

 

EXHIBIT A

 

PLAN OF MERGER

 

 

The Companies Act (As Revised) of the Cayman Islands

 

Plan of Merger

 

This plan of merger (the “Plan of Merger”) is made on [ ] 2023 between Zhangmen Education Inc. (the “Surviving Company”) and SUMMIT LUSTRE LIMITED (the “Merging Company”).

 

Whereas the Merging Company is a Cayman Islands exempted company and is entering into this Plan of Merger pursuant to the provisions of Part XVI of the Companies Act (As Revised) (the “Statute”).

 

Whereas the Surviving Company is a Cayman Islands exempted company and is entering into this Plan of Merger pursuant to the provisions of Part XVI of the Statute.

 

Whereas the directors of the Merging Company and the directors of the Surviving Company deem it desirable and in the commercial interests of the Merging Company and the Surviving Company, respectively, that the Merging Company be merged with and into the Surviving Company and that the undertaking, property and liabilities of the Merging Company vest in the Surviving Company (the “Merger”).

 

Terms not otherwise defined in this Plan of Merger shall have the meanings given to them under the Agreement and Plan of Merger dated 28 July 2023 and made between, amongst others, the Surviving Company and the Merging Company (the “Merger Agreement”) a copy of which is annexed at Annexure 1 hereto.

 

Now therefore this Plan of Merger provides as follows:

 

1

The constituent companies (as defined in the Statute) to this Merger are the Surviving Company and the Merging Company.

 

2

The surviving company (as defined in the Statute) is the Surviving Company.

 

3

The registered office of the Surviving Company is c/o Maples Corporate Services Limited of PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands and the registered office of the Merging Company is c/o Harneys Fiduciary (Cayman) Limited, 4th Floor, Harbour Place, 103 South Church Street, P.O. Box 10240, Grand Cayman KY1-1002, Cayman Islands.

 

4

Immediately prior to the Effective Date (as defined below), the authorised share capital of the Surviving Company will be US$80,000 divided into 8,000,000,000 shares comprising of (i) 7,000,000,000 Class A Ordinary Shares of a par value of US$0.00001 each (the “Class A Ordinary Shares”), (ii) 500,000,000 Class B Ordinary Shares of a par value of US$0.00001 each (the “Class B Ordinary Shares”), and (iii) 500,000,000 shares of a par value of US$0.00001 each of such class or classes (however designated) as the board of directors may determine in accordance with the articles of association of the Surviving Company and the Surviving Company will have 1,245,504,866 Class A Ordinary Shares and 194,878,011 Class B Ordinary Shares in issue.

 

5

Immediately prior to the Effective Date (as defined below), the authorised share capital of the Merging Company will be USD50,000.00 divided into 500,000,000 Ordinary shares of par value USD 0.0001 each and the Merging Company will have 1 ordinary share in issue.

 

6

The date on which it is intended that the Merger is to take effect is the date that this Plan of Merger is registered by the Registrar in accordance with section 233(13) of the Statute (the “Effective Date”).

 

 

7

The terms and conditions of the Merger, including the manner and basis of converting shares in each constituent company into shares in the Surviving Company, are set out in the Merger Agreement in the form annexed at Annexure 1 hereto.

 

8

The rights and restrictions attaching to the shares in the Surviving Company are set out in the Eleventh Amended and Restated Memorandum and Articles of Association of the Surviving Company in the form annexed at Annexure 2 hereto.

 

9

Upon the Effective Date, the authorised share capital of the Surviving Company be decreased from US$80,000 divided into 8,000,000,000 shares comprising of (i) 7,000,000,000 Class A Ordinary Shares of a par value of US$0.00001 each, (ii) 500,000,000 Class B Ordinary Shares of a par value of US$0.00001 each, and (iii) 500,000,000 shares of a par value of US$0.00001 each of such class or classes (however designated) as the board of directors may determine in accordance with the articles of association to US$50,000 divided into 5,000,000,000 Ordinary shares of par value US$0.00001 each.

 

10

The Tenth Amended and Restated Memorandum and Articles of Association of the Surviving Company shall be amended and restated by the deletion in their entirety and the substitution in their place of the Eleventh Amended and Restated Memorandum and Articles of Association in the form annexed at Annexure 2 hereto on the Effective Date, and the authorised share capital of the Surviving Company upon the Effective Date shall be as set out therein.

 

11

There are no amounts or benefits which are or shall be paid or payable to any director of either the Merging Company or the Surviving Company consequent upon the Merger.

 

12

The Merging Company has granted no fixed or floating security interests that are outstanding as at the date of this Plan of Merger.

 

13

The Surviving Company has granted no fixed or floating security interests that are outstanding as at the date of this Plan of Merger.

 

14

The name and address of the sole director of the surviving company (as defined in the Statute) is Zhang Yi of No. 868, Tianbao Road, Hongkou District, Shanghai, China.

 

15

This Plan of Merger has been approved by the board of directors of each of the Surviving Company and the Merging Company pursuant to section 233(3) of the Statute.

 

16

This Plan of Merger has been authorised by the shareholder(s) of each of the Surviving Company and the Merging Company pursuant to section 233(6) of the Statute by way of resolutions passed at an extraordinary general meeting of the Surviving Company and written resolutions of the sole shareholder of the Merging Company, respectively.

 

 

17

At any time prior to the Effective Date, this Plan of Merger may be:

 

17.1

terminated by the board of directors of either the Surviving Company or the Merging Company;

 

17.2

amended by the board of directors of both the Surviving Company and the Merging Company to:

 

(a)

change the Effective Date provided that such changed date shall not be a date later than the ninetieth day after the date of registration of this Plan of Merger with the Registrar of Companies; and

 

(b)

effect any other changes to this Plan of Merger which the directors of both the Surviving Company and the Merging Company deem advisable, provided that such changes do not materially adversely affect any rights of the shareholders of the Surviving Company or the Merging Company, as determined by the directors of both the Surviving Company and the Merging Company, respectively.

 

18

This Plan of Merger may be executed in counterparts.

 

19

This Plan of Merger shall be governed by and construed in accordance with the laws of the Cayman Islands.

 

[Signature Page to Follow]

 

 

In witness whereof the parties hereto have caused this Plan of Merger to be executed on the day and year first above written.

 

SIGNED by________________________	)
Duly authorised for	)	__________________________
and on behalf of	)	Director
Zhangmen Education Inc.	)

 

 

In witness whereof the parties hereto have caused this Plan of Merger to be executed on the day and year first above written.

 

SIGNED by________________________	)
Duly authorised for	)	__________________________
and on behalf of	)	Director
SUMMIT LUSTRE LIMITED	)

 

 

Annexure 1

 

Agreement and Plan of Merger

 

 

 

 

Annexure 2

 

Eleventh Amended and Restated Memorandum and Articles of Association of the Surviving Company

 

 

 

 

Exhibit 99.3

 

Execution Version

 

SUPPORT AGREEMENT

 

This SUPPORT AGREEMENT (this “Agreement”) is entered into as of July 28, 2023 by and among:

 

1.

Ultimate Vitor II Holdings Limited, a business company incorporated under the Laws of the British Virgin Islands (“Ultimate Vitor”);

 

2.

Summit Lustre Limited, an exempted company with limited liability incorporated under the Laws of the Cayman Islands and a wholly-owned subsidiary of Ultimate Vitor (“Merger Sub”);

 

3.

Zhangmen Education Inc., an exempted company with limited liability incorporated under the laws of the Cayman Islands (the “Company”);

 

4.

Mr. Yi Zhang (the “Founder Shareholder”);

 

5.

Ultimate Vitor Family Trust, a trust established under a trust deed between the Founder Shareholder as settlor and TMF (Cayman) Ltd. as trustee (“Ultimate Vitor Family Trust”, together with Ultimate Vitor, and the Founder Shareholder, the “Founder Parties”).

 

Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Merger Agreement (as defined below).

 

RECITALS

 

WHEREAS, Ultimate Vitor, Merger Sub, and the Company, have, concurrently with the execution of this Agreement, entered into an Agreement and Plan of Merger, dated as of the date hereof (as may be amended, restated, supplemented or otherwise modified from time to time, the “Merger Agreement”), pursuant to which Merger Sub will be merged with and into the Company, with the Company continuing as the surviving corporation and a wholly-owned subsidiary of Ultimate Vitor (the “Merger”), upon the terms and subject to the conditions set forth in the Merger Agreement;

 

WHEREAS, as of the date hereof, the Founder Shareholder is the ultimate beneficial owner of 194,878,011 class B ordinary shares, par value US$0.00001, of the Company (the “Founder Shares”). The Founder Shares, together with any other ordinary shares, par value US$0.00001 of the Company (the “Shares”) (including Shares represented by ADSs) and securities of the Company owned (whether beneficially or of record) by the Founder Parties, directly or indirectly, as of the date hereof or acquired (whether beneficially or of record) by any of the Founder Parties, directly or indirectly, after the date hereof and prior to the earlier of the Closing and the termination of all of obligations of the Founder Parties under this Agreement, including, without limitation, any Shares (including Shares represented by ADSs) or securities of the Company acquired by means of purchase, dividend or distribution, or issued upon the exercise or settlement of any Company Options, Company Restricted Share Awards, or warrants or the conversion of any convertible securities or otherwise, shall be collectively referred to herein as its or his “Securities”; and

 

 

WHEREAS, in connection with the consummation of the Merger, (a) each of the Founder Parties agrees to the cancellation of the Founder Shares (including Founder Shares represented by ADSs) for no consideration, and (b) each of the Founder Parties agrees to vote the Securities at the Shareholders’ Meeting in favor of the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, and take any and all other actions in furtherance of the transactions contemplated by the Merger Agreement, in each case upon the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I
Voting

 

Section 1.1 Voting. From and after the date hereof until the Expiration Time (as defined below), each of the Founder Parties (solely in their capacity as beneficial owner of their respective Securities) irrevocably and unconditionally agrees that at the Shareholders’ Meeting or any other annual or extraordinary general meeting of the shareholders of the Company, however called, at which any of the matters described in paragraphs (a) – (f) hereof is to be considered (and any adjournment or postponement thereof), it or he shall (i) appear or cause its or his Affiliate(s) or representative(s) to appear at such meeting or otherwise cause its or his Securities to be counted as present thereat for purposes of determining whether a quorum is present, and (ii) vote or cause to be voted (including by proxy, if applicable) all of its or his Securities:

 

(a) for the authorization and approval of the Merger Agreement, the Merger, Plan of Merger and the other transactions contemplated by the Merger Agreement;

 

(b) against any Acquisition Proposal or any other transaction, proposal, agreement or action made in opposition to authorization and approval of the Merger Agreement or in competition or inconsistent with the transactions contemplated by the Merger Agreement, including the Merger;

 

(c) against any other action, agreement or transaction that is intended, that could reasonably be expected, or the effect of which could reasonably be expected, to materially impede, interfere with, delay, postpone, discourage or adversely affect any of the transactions contemplated by the Merger Agreement, including the Merger, or this Agreement or the performance by it or him of its or his obligations under this Agreement, including without limitation, (i) any extraordinary corporate transaction, such as a scheme of arrangement, merger, consideration or other business combination involving the Company or any of its subsidiaries (other than the Merger); (ii) a sale, lease or transfer of any material assets of the Company or any of its subsidiaries or a reorganization, recapitalization or liquidation of the Company or any of its subsidiaries; (iii) any material change in the present capitalization or dividend policy of the Company or any amendment or other change to the Company’s memorandum or articles of association, except if approved in writing by Ultimate Vitor; or (iv) any other action that would require the consent of Ultimate Vitor pursuant to the Merger Agreement, except if approved in writing by Ultimate Vitor;

 

 

(d) against any action, proposal, transaction or agreement that could reasonably be expected to result in a breach in any respect of any covenant, representation or warranty or any other obligation or agreement of the Company contained in the Merger Agreement, or of it or him contained in this Agreement or otherwise reasonably requested by Ultimate Vitor in order to consummate the transactions contemplated by the Merger Agreement, including the Merger;

 

(e) in favor of any other matter necessary to effect the transactions contemplated by the Merger Agreement, including the Merger; and

 

(f) in favor of any adjournment or postponement of the Shareholders’ Meeting or other annual or extraordinary general meeting of the shareholders of the Company, however called, at which any of the matters described in paragraphs (a) – (e) in this ‎Section 1.1 is to be considered (and any adjournment or postponement thereof) as may be reasonably requested by Ultimate Vitor.

 

Section 1.2 Restrictions on Transfers. Except as provided for in Article II below or pursuant to the Merger Agreement, each of the Founder Parties hereby agrees that, from the date hereof until the Expiration Time (as defined below), such person shall not, and shall cause its or his Affiliates not to, directly or indirectly:

 

(a) offer for sale, sell (constructively or otherwise), transfer, assign, tender in any tender or exchange offer, pledge, grant, encumber, hypothecate or similarly dispose of (by merger, testamentary disposition, operation of Law or otherwise) (collectively, “Transfer”), or enter into any Contract, option or other arrangement or understanding with respect to the Transfer of any of its or his Securities or any interest therein, including, without limitation, any swap transaction, option, warrant, forward purchase or sale transaction, futures transaction, cap transaction, floor transaction, collar transaction or any other similar transaction (including any option with respect to any such transaction) or combination of any such transactions, in each case involving any of its or his Securities which (x) has, or could reasonably be expected to have, the effect of reducing or limiting such person’s economic interest in such Securities and/or (y) with respect to its or his Securities, grants a third party the right to vote or direct the voting of such Securities;

 

(b) deposit any of its or his Securities into a voting trust or enter into a voting agreement or arrangement or grant any proxy or power of attorney with respect thereto that is inconsistent with this Agreement;

 

(c) convert or exchange, or take any action which would result in the conversion or exchange of, any of its or his Securities;

 

(d) knowingly take any action that would make any representation or warranty of such person set forth in this Agreement untrue or incorrect or have the effect of preventing, disabling, or delaying such persons from performing any of its or his obligations under this Agreement; or

 

 

(e) agree (whether or not in writing) to take any of the actions referred to in the foregoing clauses (a) – (d).

 

Any purported Transfer in violation of this Section 1.2 shall be void.

 

Section 1.3 Acquisition of Shares. The parties acknowledge that, prior to the Effective Time, any Founder Party may acquire, directly or indirectly, additional Shares from other directors or employees of the Company (or resulting from the exercise of Company Options acquired from such persons), for so long as such acquisition is not prohibited by applicable Laws, any contract to which the applicable Founder Party is a party and otherwise would not adversely affect the transactions contemplated under the Merger Agreement. Such newly acquired Shares shall be deemed as “Founder Shares” hereunder.

 

ARTICLE II
Cancellation of Founder Shares

 

Section 2.1 Cancellation of Founder Shares. Subject to the terms and conditions set forth herein, each of the Founder Parties agrees that, at the Effective Time, all of the Founder Shares (as adjusted pursuant to Section 1.3, including those represented by ADSs) shall be cancelled automatically at no consideration pursuant to the Merger Agreement in connection with the Merger. Each of the Founder Parties will take (and cause their respective Affiliates to take) all actions necessary to cause the number of Founder Shares (as adjusted pursuant to Section 1.3, including those represented by ADSs) to be treated as set forth herein and in the Merger Agreement.

 

Section 2.2 Effect of the Merger on Founder Shares. Ultimate Vitor agrees that it shall not have the right to receive the Per Share Merger Consideration (or the Per ADS Merger Consideration, if applicable) in connection with the Merger with respect to any Founder Shares held by it, directly or indirectly, as of immediately prior to the Effective Time, and, at the Effective Time, each Founder Share held by it shall be cancelled and cease to exist without payment of any consideration or distribution therefor.

 

ARTICLE III
Representations, Warranties and Covenants of the Founder Parties

 

Section 3.1 Representations and Warranties. Each of the Founder Parties, severally and not jointly, represents and warrants to each other party hereto that, as of the date hereof and as of the Closing:

 

(a) such person (i) is duly incorporated, organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization, to the extent such concept is applicable, and (ii) has the requisite corporate, limited partnership or organizational (as applicable) and legal power and authority to execute and deliver this Agreement, to perform such person’s obligations hereunder and to consummate the transactions contemplated hereby;

 

 

(b) this Agreement has been duly executed and delivered by such person and, if such person is not a natural person, the execution, delivery and performance of this Agreement by such person, and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate or similar action on the part of such person and no other corporate or similar actions or proceedings on the part of such person are necessary to authorize this Agreement or to consummate the transactions contemplated hereby, on a timely basis;

 

(c) this Agreement constitutes a legal, valid and binding agreement of such person, enforceable against such person in accordance with its terms, except as enforcement may be limited by the effects of applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and any implied covenant of good faith and fair dealing;

 

(d) except for the applicable requirements of the Exchange Act and Laws of the Cayman Islands, (i) no filing with, and no permit, authorization, consent or approval of, any Governmental Entity is necessary on the part of such person for the execution, deliver and performance of this Agreement by such person or the consummation by such person of the transactions contemplated hereby, and (ii) neither the execution, delivery or performance of this Agreement by person, nor the consummation by such person of the transactions contemplated hereby, nor compliance by such person with any of the provisions hereof shall (x), if such person is not a natural person, conflict with or violate any provision of the organizational documents of such person, (y) result in any breach or violation of, or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien on property or assets of such person pursuant to, any Contract to which such person is a party or by which such person or any property or asset of such person is bound or affected, in each case which have, or could have, the effect of preventing, impeding or interfering with or adversely affecting the performance by such person of its or his obligations under this Agreement, or (z) violate any order, writ, injunction, decree, statute, rule or regulation applicable to such person or any of such person’s properties or assets.

 

(e) with respect to the Founder Shareholder, he (x) is and, immediately prior to the Closing, will be the ultimate beneficial owner of, and has and, immediately prior to the Closing, will have good and valid title to his Founder Shares, free and clear of any Liens, and (y) has and, as of the Closing will have, sole or shared (together with his Affiliates) voting power, power of disposition, and power to control dissenter’s rights, with respect to all of his Founder Shares, with no limitations, qualifications, or restrictions on such rights, in each case of the foregoing clauses (x) and (y), subject to applicable United States federal securities Laws and Laws of the Cayman Islands and the British Virgin Islands;

 

(f) except as contemplated hereby, there are no options, warrants or other rights, agreements, arrangements or commitments of any character to which such person is a party relating to the pledge, disposition or voting of any of its or his Founder Shares and its or his Founder Shares are not subject to any voting trust agreement or other Contract to which such person or any of its or his Affiliates is a party restricting or otherwise relating to the voting or Transfer of such Founder Shares;

 

 

(g) such person has not Transferred any interest in any of the Founder Shares;

 

(h) such person has not appointed or granted any proxy or power of attorney that is still in effect with respect to any of its or his Founder Shares, except the voting power granted as contemplated by this Agreement;

 

(i) there are no Action pending or, to the knowledge of such person, threatened against such person or any other person that restricts or prohibits (or, if successful, could restrict or prohibit) the ability of such person to perform, or the performance of, its or his obligations hereunder or to consummate the transactions contemplated hereby;

 

(j) such person has been afforded the opportunity to ask such questions as it or he has deemed necessary of, and to receive answers concerning the terms and conditions of the transactions contemplated hereby and such person acknowledges that it has been advised to discuss with its or his own counsel the meaning and legal consequences of the representations and warranties of such person in this Agreement and the transactions contemplated hereby; and

 

(k) such person understands and acknowledges that Ultimate Vitor and Merger Sub are entering into the Merger Agreement in reliance upon such person’s execution, delivery and performance of this Agreement.

 

Section 3.2 Covenants. Each of the Founder Parties, severally and not jointly:

 

(a) agrees, prior to the Expiration Time, not to (and cause its or his Affiliates not to) knowingly take any action that would make any representation or warranty of such person contained herein untrue or incorrect or have or could have the effect of preventing, impeding or interfering with or adversely affecting the performance by such person of its or his obligations under this Agreement;

 

(b) irrevocably and unconditionally waives (and cause its or his Affiliates to waive), and agrees not to exercise (and cause it or his Affiliates not to exercise), any rights of appraisal, rights of dissent or similar rights relating to the Merger and any other transactions contemplated by the Merger Agreement that such person may have by virtue of or with respect to such person’s Securities (including, without limitation, any rights under Section 238 of the Cayman Companies Law) prior to the Expiration Time;

 

(c) agrees to permit (and cause its or his Affiliates to permit) the Company to publish and disclose in the Schedule 13E-3 and the Proxy Statement (including all documents filed with the SEC in accordance therewith), such person’s identity and beneficial ownership of Shares or other equity securities of the Company and the nature of such person’s commitments, arrangements and understandings under this Agreement;

 

(d) agrees and covenants that such person shall (and shall cause its or his Affiliates to) promptly notify Ultimate Vitor of any new Shares and other securities of the Company with respect to which beneficial ownership is acquired by such person, including, without limitation, by purchase, as a result of a stock dividend, stock split, recapitalization, combination, reclassification, exchange or change of such shares, or upon exercise or conversion of any securities of the Company after the date hereof.

 

 

(e) agrees further that, such person shall (and shall cause its or his Affiliates to) execute and deliver any additional documents, consents or instruments and take such further actions as may be necessary or desirable to carry out the provisions of this Agreement.

 

ARTICLE IV
Termination

 

Section 4.1 This Agreement, and the obligations of the Founder Parties hereunder shall terminate and be of no further force or effect immediately upon the first to occur of (a) the Effective Time, (b) the date of termination of the Merger Agreement in accordance with its terms, or (c) the written agreement of the Founder Parties (such time, the “Expiration Time”); provided, that this Article IV and Article V shall survive any termination of this Agreement. Nothing in this Article IV shall relieve or otherwise limit any party’s liability for any breach of this Agreement prior to the termination of this Agreement.

 

ARTICLE V
Miscellaneous

 

Section 5.1 Joint Liability.

 

(a) Each of the Founder Parties shall perform its or his obligations under this Agreement, including without limitation, obligations under Article I above.

 

(b) Notwithstanding anything to the contrary, each of the Founder Parties shall be jointly and severally liable with each other with respect to all representations, warranties, covenants and agreements of such parties under this Agreement.

 

Section 5.2 Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person or upon confirmation of receipt when transmitted by electronic mail or on receipt after dispatch by registered or certified mail, postage prepaid, addressed, or on the next business day if transmitted by international overnight courier, in each case to the respective parties at the address set forth on the signature pages hereto under each party’s name (or at such other address for a party as shall be specified in a notice given in accordance with this ‎Section 5.1).

 

Section 5.3 Severability. If any provision of this Agreement is held to be invalid or unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the maximum extent possible. In any event, the invalidity or unenforceability of any provision of this Agreement in any jurisdiction shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of this Agreement, including that provision, in any other jurisdiction.

 

 

Section 5.4 Entire Agreement. This Agreement, the Equity Commitment Letter, the Limited Guarantee, the Merger Agreement and the agreements contemplated thereby, constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof.

 

Section 5.5 Specific Performance. Each of the parties hereto acknowledge and agree that the other parties would be irreparably injured by a breach of this Agreement by it and that money damages alone would not be an adequate remedy for any actual or threatened breach of this Agreement. Accordingly, each party shall be entitled to specific performance or injunctive or other equitable relief (without posting a bond or other security) to enforce or prevent any violations of any provision of this Agreement, in addition to all other rights and remedies available at law or in equity to such party, including the right to claim money damages for breach of any provision of this Agreement. All rights, powers, and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by a party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by a party.

 

Section 5.6 Amendments; Waivers. At any time prior to the Expiration Time, any provision of this Agreement may be amended or waived if, and only if such amendment or waiver is in writing and signed, (i) in the case of an amendment, by the parties hereto, or (ii) in the case of a waiver, by the party against whom the waiver is to be effective. Notwithstanding the foregoing, no failure or delay by a party hereto in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any other right hereunder.

 

Section 5.7 Governing Law; Jurisdiction.

 

(a) This Agreement shall be governed by, and construed in accordance with, the Laws of the State of New York, without giving effect to any choice of law or conflict of law rules or provisions that would cause the application of the Laws of any jurisdiction other than the State of New York.

 

(b) Any disputes, actions and proceedings against any party or arising out of or in any way relating to this Agreement shall be submitted to the Hong Kong International Arbitration Centre (“HKIAC”) and resolved in accordance with the Arbitration Rules of HKIAC in force at the relevant time and as may be amended by this Section 5.6. The place of arbitration shall be Hong Kong. The official language of the arbitration shall be English and the arbitration tribunal shall consist of three (3) arbitrators (each, an “Arbitrator”). The claimant(s), irrespective of number, shall nominate jointly one (1) Arbitrator; the respondent(s), irrespective of number, shall nominate jointly one (1) Arbitrator; and a third Arbitrator will be nominated jointly by the first two Arbitrators and shall serve as chairman of the arbitration tribunal. In the event the claimant(s) or respondent(s) or the first two Arbitrators shall fail to nominate or agree the joint nomination of an Arbitrator or the third Arbitrator within the time limits specified by the Rules, such Arbitrator shall be appointed promptly by the HKIAC. The arbitration tribunal shall have no authority to award punitive or other punitive-type damages. The award of the arbitration tribunal shall be final and binding upon the disputing parties. Any party to an award may apply to any court of competent jurisdiction for enforcement of such award and, for purposes of the enforcement of such award, the parties irrevocably and unconditionally submit to the jurisdiction of any court of competent jurisdiction and waive any defenses to such enforcement based on lack of personal jurisdiction or inconvenient forum.

 

 

Section 5.8 Waiver of Jury Trial. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING BETWEEN THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 5.9 Third Party Beneficiaries. There are no third party beneficiaries of this Agreement and nothing in this Agreement, express or implied, is intended to confer on any person other than the parties hereto (and their respective successors, heirs and permitted assigns), any rights, remedies, obligations or liabilities, except as specifically set forth in this Agreement; provided that, for the avoidance of doubt, the covenant of the Founder Parties set forth in Section 3.2(b) of this Agreement is made for the benefit of the Company, each of which has an independent right to rely on and the Company shall be entitled to specific performance of the terms hereof in accordance with Section 5.5 and to enforce or prevent any violations of the other parties hereto of this Agreement to the full extent permitted by law.

 

Section 5.10 Assignment; Binding Effect. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of Law or otherwise) without the prior written consent of the other parties, except that Ultimate Vitor may assign this Agreement (in whole but not in part) in connection with a permitted assignment of the Merger Agreement by Ultimate Vitor, as applicable. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns and, in the case of each of the Founder Parties, its or his estate, heirs, beneficiaries, representatives and executors.

 

Section 5.11 No Presumption Against Drafting Party. Each of the parties to this Agreement acknowledges that it has been represented by independent counsel in connection with this Agreement and the transactions contemplated by this Agreement. Accordingly, any rule of Law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the drafting party has no application and is expressly waived.

 

Section 5.12 Capacity. Notwithstanding anything to the contrary in this Agreement, (i) each of the Founder Parties is entering into this Agreement, and agreeing to become bound hereby, solely in his or its capacity as a beneficial owner of Securities and not in any other capacity (including without limitation any capacity as a director or officer of the Company) and (ii) nothing in this Agreement shall obligate any Founder Party or his or its Representatives to take, or forbear from taking, as a director or officer of the Company, any action which is inconsistent with his or its fiduciary duties under applicable Law.

 

Section 5.13 Counterparts. This Agreement may be executed in counterparts and all counterparts taken together shall constitute one document. E-mailed copies of signatures shall be deemed to be originals for purposes of the effectiveness of this Agreement.

 

 

Section 5.14 Interpretation. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof,” “herein,” “hereby” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant thereto unless otherwise defined therein. Words of any gender include each other gender and neuter genders and words using the singular or plural number also include the plural or singular number, respectively.

 

Section 5.15 Confidentiality. This Agreement shall be treated as confidential. This Agreement may not be used, circulated, quoted or otherwise referred to in any document, except with the written consent of Ultimate Vitor, provided that the parties hereto may disclose the existence and content of this Agreement to the extent required by applicable Law, the applicable rules of any national securities exchange or in connection with any SEC filing relating to the Merger.

 

[Signature Pages to Follow]

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the date and year first written above.

 

	Ultimate Vitor II Holdings Limited
	By:	/s/ Yi Zhang
	Name:	Yi Zhang
	Title:	Director

 

	Notice details:
	c/o Craigmuir Chambers, Road Town, Tortola, VG 1110, British Virgin Islands
	Attention: Yi Zhang
	Email: ir@zhangmen.com

 

[Signature Page to Support Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the date and year first written above.

 

	Summit Lustre Limited
	By:	/s/ Yi Zhang
	Name:	Yi Zhang
	Title:	Director

 

	Notice details:
	c/o Craigmuir Chambers, Road Town, Tortola, VG 1110, British Virgin Islands
	Attention: Yi Zhang
	Email: ir@zhangmen.com

 

[Signature Page to Support Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the date and year first written above.

 

	Zhangmen Education Inc.
	By:	/s/ Jicai Qi
	Name:	Jicai Qi
	Title:	Chairman of the Special Committee

 

	Notice details:
	Address:	No.1666 North Sichuan Road,
		Hongkou District, Shanghai, China
	Attention:	Legal Department
	Email:	law@zhangmen.com

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the date and year first written above.

 

	Yi Zhang
	/s/ Yi Zhang

 

	Notice details:
	Address:	c/o Craigmuir Chambers, Road Town, Tortola, VG 1110, British Virgin Islands
	Attention:	Yi Zhang
	Email:	ir@zhangmen.com

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the date and year first written above.

 

	Ultimate Vitor Family Trust
	For and on behalf of TMF (Cayman) Ltd.
	By:	/s/ Yeu Chi Fai
	By:	/s/ Liu Kin Wai
	Name:	TMF (Cayman) Ltd.
	Title:	Trustee of the Trust

 

	Notice details:
	Address:	c/o 31/F, Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong
	Attention:	Jenny Wong
	Email:	jenny.wong@tmf-group.com

 

 

15

 

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