SOLAI Ltd F-3, filed Jul 30, 2021
SOLAI Ltd (SLAIY)
As filed with the Securities and Exchange Commission on July 30, 2021
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM F-3
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BIT Mining Limited
(Exact name of registrant as specified in its charter)
Not Applicable
(Translation of registrant’s name into English)
| Cayman Islands | Not Applicable | |
| (State
or other jurisdiction of incorporation or organization) |
(I.R.S.
Employer Identification Number) | |
Units 813&815, Level 8, Core F, Cyberport 3 100 Cyberport Road Hong Kong +852 2596-3098 |
(Address and telephone number of registrant’s principal executive offices)
Cogency Global Inc.
122 East 42nd Street, 18th Floor
New York, New York 10168, U.S.A.
+1 800- 221-0102
(Name, address and telephone
number of agent for service)
Copies to:
| Richard
C. Blake Wilson Sonsini Goodrich & Rosati Professional Corporation 650 Page Mill Road Palo Alto, California 94304 +1 650-493-9300 |
Weiheng Chen Wilson Sonsini Goodrich & Rosati Suite 1509, 15/F Jardine House 1 Connaught Place Central Hong Kong +852 3972-4955 |
Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement.
If only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ¨
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a registration statement pursuant to General Instruction I.C. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ¨
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.C. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ¨
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging growth company ¨
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ¨
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
CALCULATION OF REGISTRATION FEE
| Title of Each Class of Securities to be Registered (1) | Amount
To Be Registered(2) | Proposed Maximum Offering Price per Unit or Share | Proposed Maximum Aggregate Offering Price(2) | Amount
of Registration Fee | ||||||||||||
| Primary Offering: | ||||||||||||||||
Class A ordinary shares, par value US$0.00005 per share(3) | ||||||||||||||||
| Preferred shares | ||||||||||||||||
| Debt Securities | ||||||||||||||||
| Warrants | ||||||||||||||||
| Units | ||||||||||||||||
| Total Primary Offering | — | US$ | — | US$ | 250,000,000 | (4) | US$ | 27,275.00 | (4) | |||||||
| Secondary Offering: | ||||||||||||||||
| Class A ordinary shares, par value US$0.00005 per share (3) | 204,840,000 | US$ | 0.481 | (5) | US$ | 98,528,040 | (5) | US$ | 10,749.41 | (5) | ||||||
| Total | US$ | 348,528,040 | US$ | 38,024.41 | ||||||||||||
| (1) | Includes (i) securities initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this registration statement and the date the securities are first bona fide offered to the public, and (ii) securities that may be purchased by the underwriters pursuant to an over-allotment option. These securities are not being registered for the purposes of sales outside of the United States. Pursuant to Rule 416 under the Securities Act of 1933, as amended, or the Securities Act, this registration statement shall also cover any additional shares of the registrant’s securities that become issuable by reason of any stock splits, stock dividends or similar transactions. |
| (2) | With respect to the primary offering, an indeterminate amount or number of the securities of each identified class described in this registration statement is being registered as may from time to time be issued by the registrant at indeterminate prices in U.S. dollars, and subject to Rule 462(b) under the Securities Act, in no event will the aggregate maximum offering price of all securities sold by the registrant pursuant to this registration statement exceed US$250,000,000 or the equivalent thereof in one or more foreign currencies, foreign currency units or composite currencies. |
| (3) | Includes Class A ordinary shares represented by American Depositary Shares, or ADSs. Each ADS represents the right to receive 10 Class A ordinary shares. The ADSs issuable upon deposit of the Class A ordinary shares registered hereby have been registered under a separate registration statement on Form F-6 (Registration No. 333-192259). |
| (4) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act and reflects the maximum offering price of securities registered hereunder in the primary offering. The proposed maximum aggregate offering price of each class of securities offered by the registrant will be determined from time to time by the registrant in connection with the issuance by the registrant of the securities registered hereunder and is not specified as to each class of securities pursuant to the General Instruction II.C. of Form F-3 under the Securities Act. |
| (5) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act and reflects the maximum offering price of securities registered hereunder in the secondary offering. In accordance with Rule 457(c), the proposed maximum offering price per share shown is the average of the high and low trading prices of the ADSs on the New York Stock Exchange on July 28, 2021. |
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PROSPECTUS
Subject to Completion, dated July 30, 2021
BIT Mining Limited
US$250,000,000
Class A Ordinary Shares
Preferred Shares
Debt Securities
Warrants
Units
and
Up to 204,840,000 Class A ordinary shares offered by the selling shareholders
We may from time to time in one or more offerings offer and sell Class A ordinary shares, including Class A ordinary shares represented by American Depositary Shares, or ADSs, preferred shares, debt securities, warrants, either individually or as units composed of one or more of the other securities, of an aggregate offering price of up to US$250,000,000. The selling shareholders identified in this prospectus may also offer and sell up to an aggregate of 204,840,000 Class A ordinary shares, represented by up to 20,484,000 ADSs. We will not receive any proceeds from the sale of Class A ordinary shares by the selling shareholders.
The ADSs are listed on The New York Stock Exchange under the symbol “BTCM.” The last reported sale price of the ADSs on July 29, 2021 was US$4.87 per ADS.
Each time we or any selling shareholder sells these securities, we or such selling shareholder will provide a supplement to this prospectus that contains specific information about the offering and the terms of the securities offered. The supplement may also add, update or change information contained in this prospectus. You should carefully read this prospectus and any prospectus supplement before you invest in any of these securities.
We or the selling shareholders may offer and sell the securities from time to time at fixed prices, at market prices or at negotiated prices, to or through underwriters, to other purchasers, through agents, or through a combination of these methods, on a continuous or delayed basis. See “Plan of Distribution.” If any underwriters, dealers or agents are involved in the sale of any of the securities, their names, and any applicable purchase price, fee, commission or discount arrangements between or among them, will be set forth, or will be calculable from the information set forth, in the applicable prospectus supplement.
Our ordinary shares consist of Class A ordinary shares, Class A preference shares, and Class B ordinary shares. Each Class A ordinary share is entitled to one vote, each Class A preference share is entitled to 10,000 votes, and each Class B ordinary share is entitled to 10 votes. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon any transfer of Class B ordinary shares by a holder to any person or entity which is not an affiliate of such holder, each of such Class B ordinary shares shall be automatically and immediately converted into one Class A ordinary share. All 65,000 Class A preference shares are held by Good Luck Information Technology Co., Limited, or Good Luck Information, an entity controlled by Mr. Man San Vincent Law, our founder and executive director. The Class A preference shares are not entitled to receive dividends and cannot be converted into Class A ordinary shares, Class B ordinary shares, or ADSs. Upon any transfer of Class A preference shares by Good Luck Information to any person or entity which is not its affiliate, or when Good Luck ceases to be controlled by any person holding executive office in or being a member of our board of director, the Class A preference shares shall cease to have any voting right. If Mr. Man San Vincent Law ceases to serve as our director, we shall be entitled to redeem all of the Class A preference shares at US$1.0 per share. See “Description of Share Capital.”
Investing in these securities involves risks. See the “Risk Factors” section contained in the applicable prospectus supplement and the documents we incorporate by reference in this prospectus to read about factors you should consider before investing in these securities.
This prospectus may not be used to offer or sell any securities unless accompanied by a prospectus supplement.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of the disclosures in this prospectus, including any prospectus supplement and documents incorporated by reference. Any representation to the contrary is a criminal offense.
The date of this prospectus is , 2021
TABLE OF CONTENTS
You should read this prospectus and any prospectus supplement together with the additional information described under the heading “Where You Can Find More Information About Us” and “Incorporation of Documents by Reference.”
In this prospectus, unless otherwise indicated or unless the context otherwise requires,
| · | “ADSs” refers to American depositary shares, each of which represents 10 Class A ordinary shares; |
| · | “Bit Mining,” “we,” “us,” “our company” or “our” refers to BIT Mining Limited, formerly known as 500.com Limited, its predecessor, its subsidiaries and its consolidated affiliated entities; |
| · | “China” or “PRC” refers to the People’s Republic of China, excluding, for purposes of this prospectus only, Taiwan, Hong Kong and Macau; |
| · | “Renminbi” or “RMB” refers to the legal currency of China; |
| · | “U.S. GAAP” refers to generally accepted accounting principles in the United States; and |
| · | “US$,” “dollars” or “U.S. dollars” refers to the legal currency of the United States. |
This prospectus is part of a registration statement on Form F-3 that we have filed with the U.S. Securities and Exchange Commission, or the SEC, using a shelf registration process permitted under the Securities Act. By using a shelf registration statement, we or the selling shareholders identified in this prospectus may sell any of the securities to the extent permitted in this prospectus and the applicable prospectus supplement, from time to time in one or more offerings on a continuous or delayed basis. This prospectus only provides you with a summary description of these securities. Each time we or any selling shareholder sells the securities, we or such selling shareholder will provide a supplement to this prospectus that contains specific information about the securities being offered and the specific terms of that offering. The supplement may also add, update or change information contained in this prospectus. If there is any inconsistency between the information in this prospectus and any prospectus supplement, you should rely on the prospectus supplement.
You should rely only on the information contained or incorporated by reference in this prospectus and in any prospectus supplement. Neither we nor any selling shareholder identified in this prospectus has authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We or the selling shareholders will not make an offer to sell the securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus and the applicable supplement to this prospectus is accurate as of the date on its respective cover, and that any information incorporated by reference is accurate only as of the date of the document incorporated by reference, unless we indicate otherwise. Our business, financial condition, results of operations and prospects may have changed since those dates.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to “incorporate by reference” the information we file with them. This means that we can disclose important information to you by referring you to those documents. Each document incorporated by reference is current only as of the date of such document, and the incorporation by reference of such documents shall not create any implication that there has been no change in our affairs since the date thereof or that the information contained therein is current as of any time subsequent to its date. The information incorporated by reference is considered to be a part of this prospectus and should be read with the same care. When we update the information contained in documents that have been incorporated by reference by making future filings with the SEC, the information incorporated by reference in this prospectus is considered to be automatically updated and superseded. In other words, in the case of a conflict or inconsistency between information contained in this prospectus and information incorporated by reference into this prospectus, you should rely on the information contained in the document that was filed later.
We incorporate by reference the documents listed below:
| · | our annual report on Form 20-F for the fiscal year ended December 31, 2020 filed with the SEC on April 14, 2021; |
| · | our current reports on Form 6-K furnished with the SEC on May 10, 2021, July 16, 2021 and July 30, 2021; |
| · | the description of the securities contained in our registration statement on Form 8-A filed with the SEC on November 18, 2013 (File No. 001-36206) pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, together with all amendments and reports filed for the purpose of updating that description; and |
| · | with respect to each offering of the securities under this prospectus, all our subsequent annual reports on Form 20-F and any report on Form 6-K that indicates that it is being incorporated by reference that we file or furnish with the SEC on or after the date on which the registration statement is first filed with the SEC, including prior to the effectiveness of the registration statement, and until the termination or completion of the offering by means of this prospectus. |
Our annual report for the fiscal year ended December 31, 2020 filed with the SEC on April 14, 2021 contains a description of our business and audited consolidated financial statements with a report by our independent auditor. The consolidated financial statements are prepared and presented in accordance with U.S. GAAP.
Unless expressly incorporated by reference, nothing in this prospectus shall be deemed to incorporate by reference information furnished to, but not filed with, the SEC. Copies of all documents incorporated by reference in this prospectus, other than exhibits to those documents unless such exhibits are specifically incorporated by reference in this prospectus, will be provided at no cost to each person, including any beneficial owner, who receives a copy of this prospectus on the written or oral request of that person made to:
Units 813&815, Level 8, Core F, Cyberport 3
100 Cyberport Road
Hong Kong
+852 2596-3098
You should rely only on the information that we incorporate by reference or provide in this prospectus. Neither we nor any selling shareholder has authorized anyone to provide you with different information. Neither we nor any selling shareholder will make any offer of these securities in any jurisdiction where the offer is not permitted. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front of those documents.
1
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and any prospectus supplement, and the information incorporated by reference herein may contain forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts are forward-looking statements. These forward-looking statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Sections of this prospectus, any accompanying prospectus supplement and the documents incorporated herein and therein by reference, particularly the sections entitled “Risk Factors,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” among others, discuss factors which could adversely impact our business and financial performance.
You can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements about:
| · | our business and operating strategies and plans for the development of existing and new businesses, ability to implement such strategies and plans and expected time; |
| · | developments in, or changes to, laws, regulations, governmental policies, incentives, taxation and regulatory and policy environment affecting our operations and the cryptocurrency and blockchain industry; |
| · | our future business development, financial condition and results of operations; |
| · | expected changes in our revenues, costs or expenditures; |
| · | the trends in, expected growth in and market size of the cryptocurrency and blockchain industry in China and globally; |
| · | our ability to continue to develop new technologies and/or upgrade our existing technologies; |
| · | competitive environment, competitive landscape and potential competitor behavior in our industry, as well as the overall outlook in our industry; |
| · | our ability to attract, train and retain executives and other employees; |
| · | the development of the global financial and capital markets; |
| · | general business, political, social and economic conditions in China and the overseas markets we have business; and |
| · | the length and severity of the recent COVID-19 outbreak and its impact on our business and industry. |
The forward-looking statements made in this prospectus or any prospectus supplement, or the information incorporated by reference herein relate only to events or information as of the date on which the statements are made in such document. Except as required by U.S. federal securities law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus and any prospectus supplement, and the information incorporated by reference herein, along with any exhibits thereto, completely and with the understanding that our actual future results may be materially different from what we expect. Other sections of this prospectus, prospectus supplement and the documents incorporated by reference herein include additional factors which could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.
2
This prospectus and any prospectus supplement, and the information incorporated by reference herein may also contain estimates, projections and statistical data that we obtained from industry publications and reports generated by government or third-party providers of market intelligence. Although we have not independently verified the data, we believe that the publications and reports are reliable. However, the statistical data and estimates in these publications and reports are based on a number of assumptions and if any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. In addition, due to the rapidly evolving nature of the cryptocurrency and blockchain industry in China, projections or estimates about our business and financial prospects involve significant risks and uncertainties. You should not place undue reliance on these forward-looking statements.
3
We are committed to becoming a leading cryptocurrency mining enterprise in China. We have unfurled a comprehensive approach to cryptocurrency mining since we announced our entry into the cryptocurrency industry in December 2020, following which we have entered into definitive agreements to (1) purchase cryptocurrency mining machines, (2) acquire a controlling stake in Loto Interactive Limited (HKEX: 08198) (“Loto Interactive”), (3) acquire the entire mining pool business of Bitdeer Technologies Holding Company operated under BTC.com, including the domain name BTC.com and the cryptocurrency wallet of BTC.com, and (4) acquire a 7-nanometer mining machine manufacturer. We operate cryptocurrency mining machines for the sole purpose of mining cryptocurrencies (primarily Bitcoin and Ethereum), which we may sell for fiat currency from time to time depending on market condition and management's determination of our cash flow needs.
Prior to the voluntary suspension of our online sports lottery sales services in April 2015, we were a leading online sports lottery service provider in China. We acted as an aggregator and processor of lottery purchase orders from our registered user and offered a comprehensive and integrated suite of online lottery services, information, user tools and virtual community venues to our users. Due to the voluntary suspension of our online sports lottery sales services, we have continued to strive for diversification and have offered several other different lines of services, including online gaming services and financial technology services.
Recent development
We entered into a share subscription agreement in January 2021, pursuant to which we conditionally agreed to subscribe for 169,354,839 shares of Loto Interactive, at a price of HK$0.62 per share for a total consideration of approximately HK$105 million (approximately US$13.5 million) in cash. On March 31, 2021, we completed the subscription of 54.2% of Loto Interactive’s shares, and Loto Interactive became our subsidiary. Concurrently with the completion of the share subscription of Loto Interactive, Loto Interactive completed its acquisition of the remaining equity interests in its indirectly held subsidiary, Ganzi Changhe Hydropower Consumption Service Co. Ltd (“Ganzi Changhe”), for a total consideration of approximately RMB88.2 million (approximately US$13.6 million) in cash.
In February 2021, we entered into a share exchange agreement (the “Share Exchange Agreement”), with Blockchain Alliance Technologies Holding Company (“Blockchain Alliance”), pursuant to which we agreed to issue an aggregate of 44,353,435 Class A ordinary shares of our company to Blockchain Alliance at the first closing. On April 15, 2021, the we completed the first closing of its previously announced transactions contemplated by the Share Exchange Agreement, as amended, with Blockchain Alliance. In accordance with the Share Exchange Agreement, the entire mining pool business of Bitdeer Technologies Holding Company operated under BTC.com, including the domain name BTC.com and the cryptocurrency wallet of BTC.com, were transferred to us.
On June 18, 2021, we completed a cash offer to acquire all the shares in issuance of Loto Interactive other than those already owned or agreed to be acquired by us, and a cash offer for the cancellation of all options of Loto Interactive. Upon closing of such cash offers, we acquired a total of 30,642,534 shares and a total of 6,800,000 options, which will be cancelled, and our ownership in Loto Interactive increased to 59.8%.
On July 12, 2021, we entered into a securities purchase agreement with certain investors to raise US$50 million to acquire additional mining machines, build new data centers overseas, expand infrastructure, and improve working capital position. The private placement transaction was closed on July 16, 2021. For details, see “ Private Placement of Class A Ordinary Shares and Warrants”
We have previously conducted our lottery business in China through certain variable interest entities (collectively, the “lottery business-related VIEs”). We have voluntarily suspended our online sports lottery sales services in April 2015 and have transformed our business to blockchain and cryptocurrency mining business since December 2020. Recently, we have adopted the development strategy to focus on the overseas expansion of our cryptocurrency mining business. For example, in May 2021, we entered into a binding investment term sheet to invest in a cryptocurrency mining data center in Texas, the United States, and a binding investment term sheet with a Kazakhstan-based company to jointly invest in a cryptocurrency mining data center in Kazakhstan. We also delivered cryptocurrency mining machines to Kazakhstan in July 2021. On July 28, 2021, we entered into a definitive purchase agreement to acquire new bitcoin mining machines, which are expected to be shipped to Kazakhstan for deployment.
On July 23, 2021, we announced our decision to dispose of our Chinese lottery related business and we effectively terminated all of our contractual arrangements with our lottery business-related VIEs. As of the date of this prospectus, we are in the process of disposing of our lottery related business in China and completing the relevant business registration changes for unwinding the VIE structures of our lottery business-related VIEs. Upon the completion of the disposal of our lottery related business in China, the financial results of our lottery business-related VIEs will no longer be included in our consolidated financial statements.
Since March 31, 2021, we also consolidated the financial results of Zhejiang Keying Huancai Information Technology Co., Ltd. (“Zhejiang Keying”), a VIE primarily engaged in the provision of data analysis and storage services in connection with our pre-existing cryptocurrency mining operations in China, through its contractual arrangement with Loto Interactive Information Technology (Shenzhen) Co., Ltd. (“Loto Shenzhen”), which is indirectly controlled by us after the completion of our acquisition of the majority interest of Loto Interactive on March 31, 2021. On July 23, 2021, the contractual arrangement among Zhejiang Keying, the shareholders of Zhejinag Keying and Loto Shenzhen was terminated, and the shareholders of Zhejiang Keying entered into an equity transfer agreement with Loto Shenzhen to transfer all of Zhejiang Keying’s equity interests to Loto Shenzhen. The shareholders of Zhejiang Keying also executed a letter of undertaking in favor of Loto Shenzhen, and undertook to transfer all assets held by Zhejiang Keying to Loto Shenzhen in the event that the equity transfer could not be completed due to restrictions on foreign investment in or operation of blockchain and cryptocurrency mining-related business in China. As of the date of this prospectus, we are in the process of completing the relevant business registration changes for unwinding the VIE structure of Zhejiang Keying and completing the transfer of equity interests of Zhejiang Keying to Loto Shenzhen.
See “Risk Factors” in Exhibit 99.4 included in our current report on Form 6-K furnished with the SEC on July 30, 2021, for the risk factors and uncertainties relating to our disposal of lottery business-related VIEs and the unwinding of VIE arrangements with such VIEs and Zhejiang Keying, the overseas operation development and expansion, and the regulatory and policy environment affecting our blockchain and cryptocurrency mining business and China-based operations, as well as the securities offering contemplated under this registration statement.
Corporate Information
Our principal executive offices are located at Units 813&815, Level 8, Core F, Cyberport 3, 100 Cyberport Road, Hong Kong. Our telephone number at this address is +852 2596-3098 and our fax number is +852 2360-9738. Our registered office in the Cayman Islands is at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Our website is at ir.btc.com. Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, New York 10168.
4
Investing in the securities involves risk. You should carefully consider each of the risk factors and uncertainties described under the heading “Item 3. Key Information—D. Risk Factors” in our most recently filed annual report on Form 20-F and “Risk Factors” in Exhibit 99.4 included in our current report on Form 6-K furnished with the SEC on July 30, 2021, both of which are incorporated in this prospectus by reference, as updated by our subsequent filings under the Exchange Act, and, if applicable, in any accompanying prospectus supplement or documents incorporated by reference before investing in any of the securities that may be offered or sold pursuant to this prospectus. These risks and uncertainties could materially affect our business, results of operations or financial condition and cause the value of the securities to decline or diminish. You could lose all or part of your investment.
5
We intend to use the net proceeds from the sale of the securities we offer as set forth in the applicable prospectus supplement(s).
We will not receive any proceeds from the sale of securities by the selling shareholders. We may receive up to approximately US$68.1 million in aggregate proceeds from cash exercises of the warrants based on an exercise price equivalent to US$6.81 per ADS. Any proceeds we receive from cash exercise of the warrants will be used to acquire additional mining machines, build new data centers overseas, expand infrastructure, and improve working capital position.
6
PRIVATE PLACEMENT OF CLASS A ORDINARY SHARES AND WARRANTS
On July 12, 2021, we entered into a securities purchase agreement with certain investors, pursuant to which we agreed to issue and sell to such investors (1) an aggregate of 100,000,000 Class A ordinary shares and (2) warrants to purchase up to an additional 100,000,000 Class A ordinary shares, at a purchase price equivalent to US$5.00 per ADS, with one warrant included in the price of each Class A ordinary share. The warrants have a term of three years, and will become exercisable six months after the date of issuance, with an exercise price equivalent to US$6.81 per ADS.
On July 16, 2021, we consummated the transaction and issued (1) 100,000,000 Class A ordinary shares and (2) warrants to purchase up to 100,000,000 Class A ordinary shares, for aggregate proceeds of US$50,000,000. Pursuant to the transaction documents, we may not effect an exercise of the warrants to the extent that, as a result of such exercise, any investor would beneficially own more than 4.99% or 9.99% of the number of Class A ordinary shares outstanding immediately after giving effect to the issuance of Class A ordinary shares issuable upon exercise of such warrants.
H.C. Wainwright & Co. (“H.C.W.”) acted as the sole placement agent for the transaction. On July 16, 2021, we issued to designees of H.C.W. warrants to purchase up to 4,840,000 Class A ordinary shares on substantially the same term as warrants issued to the investors. The investors and designees of H.C.W. are identified as the selling shareholders in this prospectus.
The private placement was conducted pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended, or the Securities Act, under Section 4(a)(2) thereof and/or Rule 506 of Regulation D promulgated thereunder.
Registration Rights
On July 12, 2021, we entered into a registration rights agreement with the investors in connection with the issuance and sale of the securities, whereby we agreed to file a registration statement with the SEC within 20 days thereafter. We are required to use best efforts to have such registration statement declared effective by the SEC within 45 days after filing (in the case of “no review” by the SEC) or 90 days after filing (in the case of “full review” by the SEC). We have agreed to pay the expenses in connection with the filing of such registration statement.
We shall use our best efforts to keep such registration statement continuously effective under the Securities Act until the earlier of (1) the date on which all Class A ordinary shares issued in the private placement and issuable upon the exercise of warrants covered by the registration statement have been sold or (2) the date on which such securities may be sold without restriction pursuant to Rule 144 of the Securities Act.
Pursuant to the terms of the registration rights agreements, we are registering (1) the 100,000,000 Class A ordinary shares and (2) the 100,000,000 Class A ordinary shares, which may be issuable upon the exercise of the warrants, in the registration statement which includes this prospectus. We are also registering the 4,840,000 Class A ordinary shares issuable upon the exercise of warrants held by designees of H.C.W.
7
This prospectus relates to the proposed resale from time to time by the selling shareholders of up to 204,840,000 Class A ordinary shares to be represented by ADSs, consisting of (1) up to 100,000,000 Class A ordinary shares acquired by them pursuant to a securities purchase agreement dated July 12, 2021, and (2) up to 104,840,000 Class A ordinary shares issuable upon exercise of the warrants dated July 16, 2021. For details, see “Private Placement of Class A Ordinary Shares and Warrants.”
The following table, to our knowledge, sets forth information regarding the beneficial ownership of our ordinary shares of the each of selling shareholders identified below as of the latest practicable date as indicated in the footnotes thereto. Any changed or new information given to us by each selling shareholder will be set forth in supplements to this prospectus or amendments to the registration statement of which this prospectus is a part, if and when necessary. As of the date of this prospectus, we have 726,167,739 ordinary shares issued and outstanding, including (1) 726,102,640 Class A ordinary shares, (2) 65,000 Class A preference shares, and (3) 99 Class B ordinary shares. Unless otherwise specified, beneficial ownership is determined in accordance with the rules of the SEC. The information provided in the table below is based in part on information provided by or on behalf of the respective selling shareholder. The selling shareholders may sell less than all of the Class A ordinary shares listed in the following table.
| Ordinary
Shares Beneficially Owned Before the Offering | Maximum
Class A Ordinary Shares to be Offered | Ordinary
Shares Beneficially Owned After the Offering | ||||||||||||||||||||
| Number of Class A ordinary shares | Number of Class A preference shares | Number
of Class B ordinary shares | % of total ordinary shares** | % of aggregate voting powers** | Number | Number
of Class A ordinary shares | Number of Class A preference shares | Number
of Class B ordinary shares | % of total ordinary shares | % of aggregate voting powers | ||||||||||||
| Selling Shareholder: | ||||||||||||||||||||||
| Sabby Volatility Warrant Master Fund, Ltd.(1) | 40,000,000 | — | — | 4.8 | 2.9 | 40,000,000 | — | — | — | — | — | |||||||||||
| Hudson Bay Master Fund Ltd.(2) | 17,600,000 | — | — | 2.1 | 1.3 | 17,600,000 | — | — | — | — | — | |||||||||||
| District 2 Capital Fund LP(3) | 8,800,000 | — | — | 1.1 | * | 8,800,000 | — | — | — | — | — | |||||||||||
| Bigger Capital Fund LP(4) | 8,800,000 | — | — | 1.1 | * | 8,800,000 | — | — | — | — | — | |||||||||||
| Armistice Capital Master Fund Ltd.(5) | 17,600,000 | — | — | 2.1 | 1.3 | 17,600,000 | — | — | — | — | — | |||||||||||
| Anson Investments Master Fund LP (6) | 13,200,000 | — | — | 1.6 | * | 13,200,000 | — | — | — | — | — | |||||||||||
| Anson East Master Fund LP (7) | 4,400,000 | — | — | * | * | 4,400,000 | — | — | — | — | — | |||||||||||
| Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B (8) | 17,600,000 | — | — | 2.1 | 1.3 | 4,400,000 | — | — | — | — | — | |||||||||||
| Vine Grass Garden Limited (9) | 36,000,000 | — | — | 4.3 | 2.7 | 36,000,000 | — | — | — | — | — | |||||||||||
| Ancient Ark Century Limited(10) | 36,000,000 | — | — | 4.3 | 2.7 | 36.000,000 | — | — | — | — | — | |||||||||||
| Noam Rubinstein (11) | 1,524,600 | — | — | * | * | 1,524,600 | — | — | — | — | — | |||||||||||
| Craig Schwabe (12) | 163,350 | — | — | * | * | 163,350 | — | — | — | — | — | |||||||||||
| Michael Vasinkevich (13) | 3,103,650 | — | — | * | * | 3,103,650 | — | — | — | — | — | |||||||||||
| Charles Worthman (14) | 48,400 | — | — | * | * | 48,400 | — | — | — | — | — | |||||||||||
| Total | 204,840,000 | — | — | 24.6 | 14.8 | 204,840,000 | — | — | — | — | — | |||||||||||
*Less than 1%.
**Calculation based on 831,007, 739 ordinary shares, consisting of (1) 726,167,739 ordinary shares issued and outstanding, and (2) the issuance of 104,840,000 Class A ordinary shares upon full exercise of the warrants.
(1) Represents (i) 20,000,000 Class A ordinary shares beneficially owned by Sabby Volatility Warrant Master Fund, Ltd., and (ii) 20,000,000 Class A ordinary shares issuable upon the exercise of a warrant. The address of Sabby Volatility Warrant Master Fund, Ltd. is 10 Mountainview Road, Suite 205, Upper Saddle River, NJ 07458. Sabby Management, LLC is the investment manager of Sabby Volatility Warrant Master Fund, Ltd. and shares voting and investment power with respect to these shares in this capacity. As manager of Sabby Management, LLC, Hal Mintz also shares voting and investment power on behalf of Sabby Volatility Warrant Master Fund, Ltd. Each of Sabby Management, LLC and Hal Mintz disclaims beneficial ownership over the securities listed except to the extent of their pecuniary interest therein.
8
(2) Represents (i) 8,800,000 Class A ordinary shares beneficially owned by Hudson Bay Master Fund Ltd., and (ii) 8,800,000 Class A ordinary shares issuable upon the exercise of a warrant. The address of Hudson Bay Master Fund, Ltd. is 777 Third Avenue, 30th Floor, New York, NY 10017.
(3) Represents (i) 4,400,000 Class A ordinary shares beneficially owned by District 2 Capital Fund LP, and (ii) 4,400,000 Class A ordinary shares issuable upon the exercise of a warrant. The address of District 2 Capital Fund LP is 175 W Carver Street, Huntington, NY 11743.
(4) Represents (i) 4,400,000 Class A ordinary shares beneficially owned by Bigger Capital Fund LP, and (ii) 4,400,000 Class A ordinary shares issuable upon the exercise of a warrant. The address of Bigger Capital Fund LP is 11434 Glowing Sunset LN, Las Vegas, NV, 89135.
(5) Represents (i) 8,800,000 Class A ordinary shares beneficially owned by Armistice Capital Master Fund Ltd., and (ii) 8,800,000 Class A ordinary shares issuable upon the exercise of a warrant. The address of Armistice Capital Master Fund Ltd. is 510 Madison Avenue, 7th Floor, New York, NY 10022.
(6) Represents (i) 6,600,000 Class A ordinary shares beneficially owned by Anson Investments Master Fund LP, and (ii) 6,600,000 Class A ordinary shares issuable upon the exercise of a warrant. The address of Anson Investments Master Fund LP is 155 University Avenue, Suite 207, Toronto, Ontario, Canada, M5H 3B7.
(7) Represents (i) 2,200,000 Class A ordinary shares beneficially owned by Anson East Master Fund LP, and (ii) 2,200,000 Class A ordinary shares issuable upon the exercise of a warrant. The address of Anson East Master Fund LP is 155 University Avenue, Suite 207, Toronto, Ontario, Canada, M5H 3B7.
(8) Represents (i) 8,800,000 Class A ordinary shares beneficially owned by Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B, and (ii) 8,800,000 Class A ordinary shares issuable upon the exercise of a warrant. The address of Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B is 222 Broadway, 19th Floor, New York, NY 10038.
(9) Represents (i) 18,000,000 Class A ordinary shares beneficially owned by Vine Grass Garden Limited, and (ii) 18,000,000 Class A ordinary shares issuable upon the exercise of a warrant. The address of Vine Grass Garden Limited is Sertus Chambers, P.O. Box 905, Quastisky Building, Road Town, Tortola, British Virgin Islands.
(10) Represents (i) 18,000,000 Class A ordinary shares beneficially owned by Ancient Ark Century Limited, and (ii) 18,000,000 Class A ordinary shares issuable upon the exercise of a warrant. The address of Ancient Ark Century Limited is Sertus Chambers, P.O. Box 905, Quastisky Building, Road Town, Tortola, British Virgin Islands.
(11) Represents 1,524,600 Class A ordinary shares issuable upon the exercise of a warrant. Mr. Rubinstein has a business address at c/o. H.C. Wainwright & Co. LLC, 430 Park Avenue, New York, NY 10022. Mr. Rubinstein is an associated person of H.C. Wainwright &Co. LLC, which served as our placement agent for the July 2021 private placement.
(12) Represents 163,350 Class A ordinary shares issuable upon the exercise of a warrant. Mr. Schwabe has a business address at c/o. H.C. Wainwright & Co. LLC, 430 Park Avenue, New York, NY 10022. Mr. Schwabe is an associated person of H.C. Wainwright &Co. LLC, which served as our placement agent for the July 2021 private placement.
(13) Represents 3,103,650 Class A ordinary shares issuable upon the exercise of a warrant. Mr. Vasinkevich has a business address at c/o. H.C. Wainwright & Co. LLC, 430 Park Avenue, New York, NY 10022. Mr. Vasinkevich is an associated person of H.C. Wainwright &Co. LLC, which served as our placement agent for the July 2021 private placement.
(14) Represents 48,400 Class A ordinary shares issuable upon the exercise of a warrant. Mr. Worthman has a business address at c/o. H.C. Wainwright & Co. LLC, 430 Park Avenue, New York, NY 10022. Mr. Worthman is an associated person of H.C. Wainwright &Co. LLC, which served as our placement agent for the July 2021 private placement.
The selling shareholders may sell our Class A ordinary shares, including those represented by ADSs, held by it to or through underwriters, dealers or agents or directly to purchasers or as otherwise set forth in the applicable prospectus supplement. See “Plan of Distribution.” The selling shareholders may also sell, transfer or otherwise dispose of some or all our Class A ordinary shares held by it in transactions exempt from the registration requirements of the Securities Act.
We or the selling shareholders will provide you with a prospectus supplement, which will supplement disclosure on whether the selling shareholders have held any position or office with, have been employed by or otherwise have had a material relationship with us during the three years prior to the date of the prospectus supplement.
9
We may issue, offer and sell from time to time, in one or more offerings, the following securities:
| · | Class A ordinary shares, including Class A ordinary shares represented by ADSs; |
| · | preferred shares; |
| · | debt securities; |
| · | warrants; and. |
| · | units. |
The following is a description of the terms and provisions of our Class A ordinary shares, the ADSs, preferred shares, debt securities, warrants and units, which we may offer and sell using this prospectus. These summaries are not meant to be a complete description of each security. We will set forth in the applicable prospectus supplement a description of the preferred shares, debt securities, warrants, and units, in certain cases, the Class A ordinary shares (including Class A ordinary shares represented by ADSs) that may be offered under this prospectus. The terms of the offering of securities, the offering price and the net proceeds to us, as applicable, will be contained in the prospectus supplement and other offering material relating to such offering. The supplement may also add, update or change information contained in this prospectus. This prospectus and any accompanying prospectus supplement will contain the material terms and conditions for each security. You should carefully read this prospectus and any prospectus supplement before you invest in any of our securities.
10
We are a Cayman Islands exempted company with limited liability and our affairs are governed by our memorandum and articles of association, and the Companies Act (As Revised) of the Cayman Islands, which is referred to as the Companies Act below, and the common law of the Cayman Islands.
As of the date of this prospectus, our authorized share capital is US$100,000 divided into (1) 1,599,935,000 Class A ordinary shares of par value US$0.00005 each, (2) 65,000 Class A preference shares of par value US$0.00005 each, and (3) 400,000,000 Class B ordinary shares of par value US$0.00005 each. As of the date of this prospectus, there are 726,102,640 Class A ordinary shares, 65,000 Class A preference shares, and 99 Class B ordinary shares issued and outstanding.
The following are summaries of material provisions of our current memorandum and articles of association in effect as of the date of this prospectus insofar and the Companies Act as they relate to the material terms of our ordinary shares. You should read our current memorandum and articles of association, which was filed as an exhibit to our annual report on Form 20-F for the fiscal year ended December 31, 2020 filed with the SEC on April 14, 2021. For information on how to obtain copies of our current memorandum and articles of association, see “Where You Can Find More Information About Us.”
Ordinary Shares
General
Certificates representing the ordinary shares are issued in registered form. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their ordinary shares. Our current memorandum and articles of association provide that the company shall only issue non-negotiable and not bearer of negotiable shares.
Register of Members
Under Cayman Islands law, we must keep a register of members and there shall be entered therein:
| · | the names and addresses of the members, together with a statement of the shares held by each member, and such statement shall confirm (1) the amount paid or agreed to be considered as paid, on the shares of each member, (2) the number and category of shares held by each member, and (3) whether each relevant category of shares held by a member carries voting rights under the articles of association of our company, and if so, whether such voting rights are conditional; |
| · | the date on which the name of any person was entered on the register as a member; and |
| · | the date on which any person ceased to be a member. |
Under Cayman Islands law, the register of members of our company is prima facie evidence of the matters set out therein (i.e. the register of members will raise a presumption of fact on the matters referred to above unless rebutted) and a member registered in the register of members shall be deemed as a matter of Cayman Islands law to have legal title to the shares as set against its name in the register of members.
Dividends
The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors.
Voting Rights
Subject to any special rights or restrictions as to voting for the time being attached to any shares, at any general meeting every shareholder who is present in person or by proxy (or, in the case of a shareholder being a corporation, by its duly authorized representative) shall have one vote on a show of hands, and on a poll (1) every shareholder holding Class A ordinary shares present in person or by proxy (or, in the case of a shareholder being a corporation, by its duly appointed representative) shall have one vote for each fully paid Class A ordinary share of which such shareholder is the holder, (2) every shareholder holding Class A preference shares present in person or by proxy (or, in the case of a shareholder being a corporation, by its dully appointed representative) shall have 10,000 votes for each fully paid Class A preference share of which such shareholder is the holder, and (3) every shareholder holding Class B ordinary shares present in person or by proxy (or in the case of a shareholder being a corporation, by its duly appointed representative) shall have 10 votes for each fully paid Class B ordinary share of which such shareholder is the holder. Voting at any meeting of shareholders is by show of hands unless a poll is demanded. A poll may be demanded by the chairman of such meeting or any one shareholder present in person or by proxy holding at least one-tenth of the paid-up shares given a right to vote at the meeting or one-tenth of the total voting rights entitled to vote at the meeting, present in person or by proxy.
11
An ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple majority of votes cast in a general meeting, while a special resolution requires the affirmative vote of no less than three-fourths of votes cast in a general meeting. A special resolution is required for important matters such as a change of name or making changes to our memorandum and articles of association.
Transfer of Ordinary Shares
Subject to the restrictions contained in our memorandum and articles of association, as applicable, any of our shareholders may transfer all or any of his or her ordinary shares by an instrument of transfer in the usual or common form or any other form approved by our board of directors.
Our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share which is not fully paid up or on which our company has a lien. Our board of directors may also decline to register any transfer of any ordinary share unless:
| · | the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer; |
| · | the instrument of transfer is in respect of only one class of ordinary shares; |
| · | the instrument of transfer is properly stamped, if required; |
| · | the ordinary shares transferred are fully paid and free of any lien in favor of us; |
| · | any fee related to the transfer has been paid to us; |
| · | the transfer is not to more than four joint holders; and |
| · | a fee of such maximum sum as the New York Stock Exchange, or the NYSE, may determine to be payable, or such lesser sum as our board of directors may from time to time require, is paid to our company in respect thereof. |
If our directors refuse to register a transfer they are required, within two months after the date on which the instrument of transfer was lodged, to send to each of the transferor and the transferee notice of such refusal.
General Meetings and Shareholder Proposals
As a Cayman Islands exempted company, we are not obliged by the Companies Act to call shareholders’ annual general meetings. Our memorandum and articles of association provide that we may (but are not obliged to) in each year hold a general meeting as our annual general meeting in which case we shall specify the meeting as such in the notices calling it, and the annual general meeting shall be held at such time and place as may be determined by our directors. We, however, hold an annual shareholders’ meeting during each fiscal year, as required by the rules of the NYSE.
Cayman Islands law provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our memorandum and articles of association allow our shareholders holding not less than one-third of our voting share capital to requisition an extraordinary general meeting of the shareholders, in which case the directors are obliged to call such meeting and to put the resolutions so requisitioned to a vote at such meeting; however, our memorandum and articles of association do not provide our shareholders with any right to put any proposals before annual general meetings or extraordinary general meetings not called by such shareholders.
A quorum required for a meeting of shareholders consists of at least one shareholder present in person or by proxy or, if a corporation or other non-natural person, by its duly authorized representative, who collectively hold no less than one-third of our voting share capital. Advance notice of at least 14 days is required for the convening of our annual general meeting and other shareholders’ meetings.
12
Liquidation
On a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of ordinary shares), assets available for distribution among the holders of ordinary shares will be distributed among the holders of the ordinary shares on a pro rata basis. If our assets available for distribution are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses are borne by our shareholders proportionately.
Calls on Ordinary Shares and Forfeiture of Ordinary Shares
Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their ordinary shares. The ordinary shares that have been called upon and remain unpaid are subject to forfeiture.
Redemption of Ordinary Shares
We may issue shares on terms that such shares are subject to redemption, at our option or at the option of the holders, on such terms and in such manner, including out of capital, as may be determined by the board of directors or by a special resolution of our shareholders.
Variations of Rights of Shares
If at any time, our share capital is divided into different classes of shares, all or any of the rights attached to any class of shares may, be materially adversely varied or abrogated with the sanction of a special resolution passed at a general meeting of the holders of the shares of that class or with the consent in writing of the holders of not less than three-fourths of the issued shares of that class. Consequently, the rights of any class of shares cannot be detrimentally altered without a majority of three-fourths of the vote of all of the shares in that class. The rights conferred upon the holders of the shares of any class issued with preferred or other rights will not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be materially adversely varied or abrogated by the creation or issue of further shares ranking pari passu with such existing class of shares.
General Meetings of Shareholders
Shareholders’ meetings may be convened by a majority of our board of directors or our chairman. Additionally, on the requisition of shareholders holding not less than one-third of our voting share capital, the board shall convene an extraordinary general meeting. Advance notice of at least 14 days is required for the convening of our annual general shareholders’ meeting and any other general meeting of our shareholders. A quorum required for a meeting of shareholders consists of at least one shareholder present or by proxy, representing not less than one-third in nominal value of the total issued voting shares in our company.
Election and Removal of Directors
Unless otherwise determined by our company in the general meeting, our memorandum and articles of association provide that our board consists of not less than two directors. There are no provisions relating to retirement of directors upon reaching any age limit.
The directors have the power to appoint any person as a director either to fill a casual vacancy on the board or as an addition to the existing board, subject to our company’s compliance with director nomination procedures required under the NYSE Rules, as long as our shares or the ADSs, are listed on the NYSE, and provided that any candidate for the appointment must be nominated by the nominating and corporate governance committee of our board of directors.
Our memorandum and articles of association provide that persons standing for election as directors at a duly constituted general meeting with requisite quorum are appointed by shareholders by a simple majority of the votes cast on the resolution.
A director may be removed with or without cause by a shareholder resolution which has been passed by at least a simple majority of the votes cast by the shareholders having a right to attend and vote at such meeting.
13
Proceedings of Board of Directors
Our memorandum and articles of association provide that our business is to be managed and conducted by our board of directors. The quorum necessary for the board meeting may be fixed by the board and, unless so fixed at another number, will be a majority of the directors.
Our memorandum and articles of association provide that the board may from time to time at its discretion exercise all powers of our company to raise or borrow money, to mortgage or charge all or any part of the undertaking, property and uncalled capital of our company and, subject to the Companies Act, issue debentures, debenture stock and other securities of our company whenever money is borrowed or as security for any debt, liability or obligation of our company or of any third party.
Inspection of Books and Records
Holders of our ordinary shares have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate records (other than the memorandum and articles of association, the register of mortgages and charges, and copies of any special resolutions passed by our shareholders). However, we in our memorandum and articles of association provide our directors the power to allow our shareholders to inspect our list of shareholders and to receive annual audited financial statements.
Changes in Capital
We may from time to time by ordinary resolution:
| · | increase the share capital by such sum, to be divided into shares of such classes and amount, as the resolution shall prescribe; |
| · | consolidate and divide all or any of our share capital into shares of a larger amount than our existing shares; |
| · | sub-divide our existing shares, or any of them into shares of a smaller amount than that fixed by our Memorandum of Association, provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in case of the share from which the reduced share is derived; or |
| · | cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of our share capital by the amount of the shares so cancelled. |
Subject to the Companies Act, we may by special resolution reduce our share capital or any capital redemption reserve in any manner permitted by law.
Issuance of Additional Ordinary Shares and Preferred Shares
Our memorandum and articles of association authorizes our board of directors to issue additional ordinary shares from time to time as our board of directors shall determine, to the extent of available authorized but unissued shares.
Our memorandum and articles of association authorizes our board of directors to establish from time to time one or more series of preferred shares and to determine, with respect to any series of preferred shares, the terms and rights of that series, including:
| · | the designation of the series; |
| · | the number of shares of the series; |
| · | the dividend rights, dividend rates, conversion rights, voting rights; and |
| · | the rights and terms of redemption and liquidation preferences. |
Our board of directors may issue preferred shares without action by our shareholders to the extent authorized but unissued. In addition, the issuance of preferred shares may be used as an anti-takeover device without further action on the part of the shareholders. Issuance of these shares may dilute the voting power of holders of ordinary shares.
Conversion Rights Attaching to the Shares
Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible under any circumstances. Class A preference shares are not convertible into Class A ordinary shares or Class B ordinary shares.
14
Difference Between Class A, Class B Ordinary Shares, and Class A Preference Shares
The difference among the Class A ordinary shares, Class B ordinary shares, and Class A preference shares are the special voting and conversion rights attached to the Class B ordinary shares and Class A preference shares as disclosed above.
Exempted Company
We are an exempted company with limited liability under the Companies Act of the Cayman Islands. The Companies Act in the Cayman Islands distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except for the exemptions and privileges listed below:
| · | an exempted company does not have to file an annual return of its shareholders with the Registrar of Companies; |
| · | an exempted company’s register of members is not open to inspection; |
| · | an exempted company does not have to hold an annual general meeting; |
| · | an exempted company may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance); |
| · | an exempted company may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; |
| · | an exempted company may register as a limited duration company; and |
| · | an exempted company may register as a segregated portfolio company. |
“Limited liability” means that the liability of each shareholder is limited to the amount, if any, unpaid by the shareholder on the shares of our company, provided that the memorandum and articles of association contains a declaration that the liability of the member is so limited. We are subject to reporting and other informational requirements of the Exchange Act, as applicable to foreign private issuers. Except as otherwise disclosed in this prospectus, we currently intend to continue to comply with the NYSE rules in lieu of following home country practice. The NYSE rules require that every company listed on NYSE hold an annual general meeting of shareholders. In addition, our articles of association allow directors to call an extraordinary general meeting of shareholders pursuant to the procedures set forth in our articles.
Differences in Corporate Law
The Companies Act is modeled after that of England and Wales but does not follow recent statutory enactments in England. In addition, the Companies Act differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of the significant differences between the provisions of the Companies Act applicable to us and the laws applicable to companies incorporated in the United States.
| Cayman Islands | Delaware | |||
| Title of Organizational Documents | Memorandum and Articles of Association | Certificate of Incorporation and Bylaws |
15
| Cayman Islands | Delaware | |||
| Duties of Directors | As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered that he owes the following duties to the company—a duty to act bona fide in the best interests of the company, a duty not to make a profit based on his or her position as director (unless the company permits him to do so) and a duty not to put himself in a position where the interests of the company conflict with his or her personal interest or his or her duty to a third party.
A director of a Cayman Islands company owes to the company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his or her duties a greater degree of skill than may reasonably be expected from a person of his or her knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands. |
Under Delaware law, the business and affairs of a corporation are managed by or under the direction of its board of directors. In exercising their powers, directors are charged with a fiduciary duty of care to protect the interests of the corporation and a fiduciary duty of loyalty to act in the best interests of the company and its stockholders. The duty of care requires that directors act in an informed and deliberative manner and inform themselves, prior to making a business decision, of all material information reasonably available to them. The duty of care also requires that directors exercise care in overseeing and investigating the conduct of the corporation’s employees. The duty of loyalty may be summarized as the duty to act in good faith, not out of self-interest, and in a manner which the director reasonably believes to be in the best interests of the stockholders. | ||
| Limitations on Personal Liability of Directors | The Companies Act has no equivalent provision to Delaware law regarding the limitation of director’s liability. However, as a matter of public policy, Cayman Islands law will not allow the limitation of a director’s liability to the extent that the liability is a consequence of the director committing a crime or of the director’s own fraud, dishonesty or willful default. | Subject to the limitations described below, a certificate of incorporation may provide for the elimination or limitation of the personal liability of a director for money damages to the corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director. Such provision cannot limit liability for breach of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, unlawful payment of dividends or unlawful stock repurchase or redemption. In addition, an exculpatory provision with terms described in the previous sentence cannot limit liability for any act or omission occurring prior to the date when such provision becomes effective. |
16
| Cayman Islands | Delaware | |||
| Indemnification of Directors, Officers, Agents and Others | Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime.
Our memorandum and articles of association permit indemnification of officers and directors for losses, damages, costs and expenses incurred in their capacities as such unless such losses or damages arise from dishonesty, willful default or fraud which may attach to such directors or officers. In addition, we have entered into indemnification agreements with our directors and senior executive officers that provide such persons with additional indemnification beyond that provided in our memorandum and articles of association.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
|
A corporation has the power to indemnify any director, officer, employee, or agent of the corporation who was, is or is threatened to be made a party to an action, suit or proceeding who acted in good faith and in a manner they believed to be in the best interests of the corporation, and if with respect to a criminal proceeding, had no reasonable cause to believe his or her conduct would be unlawful, against amounts actually and reasonably incurred. Additionally, under the Delaware General Corporation Law, a Delaware corporation must indemnify its present or former directors and officers against expenses (including attorneys’ fees) actually and reasonably incurred to the extent that the officer or director has been successful on the merits or otherwise in defense of any action, suit or proceeding brought against him or her by reason of the fact that he or she is or was a director or officer of the corporation. | ||
| Interested Directors | Under our memorandum and articles of association, directors who are in any way, whether directly or indirectly, interested in a contract or proposed contract with our company must declare the nature of their interest at a meeting of the board of directors. Following such declaration, a director may vote in respect of any contract or proposed contract notwithstanding his or her interest, provided that in exercising any such vote, such director’s duties remain as described above. | Under Delaware law, a transaction in which a director has an interest is not void or voidable solely because such interested director is present at or participates in the meeting that authorizes the transaction if: (1) the material facts as to such interested director’s relationship or interests are disclosed or are known to the board of directors and the board in good faith authorizes the transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors are less than a quorum; (2) such material facts are disclosed or are known to the stockholders entitled to vote on such transaction and the transaction is specifically approved in good faith by vote of the stockholders; or (3) the transaction is fair as to the corporation as of the time it is authorized, approved or ratified by the board of directors, a committee of the board, or the stockholders. Under Delaware law, a director could be held liable for any transaction in which such director derived an improper personal benefit. |
17
| Cayman Islands | Delaware | |||
| Voting Requirements | As a matter of Cayman Islands law, certain matters must be approved by special resolution of the shareholders, including amending or adopting memorandum or articles of association of a Cayman Islands company, reduction of share capital, change of name, authorization of a plan of merger, voluntary winding up of the company or the recalling of the voluntary liquidation of the company.
The Companies Act requires that a special resolution be passed by a majority of at least two-thirds or such higher percentage as set forth in the articles of association, of shareholders being entitled to vote and do vote in person or by proxy at a general meeting, or by unanimous written consent of shareholders entitled to vote at a general meeting. Our memorandum and articles of association require that a special resolution be passed by a majority of not less than three-fourths of shareholders being entitled to vote and do vote in person or by proxy at a general meeting, or by unanimous written consent of shareholders entitled to vote at a general meeting.
The Companies Act defines “special resolutions” only. A company’s articles of association can therefore tailor the definition of “ordinary resolutions” as a whole, or with respect to specific provisions. Our memorandum and articles of association provide that an ordinary resolution is a resolution (1) passed by a simple majority of such shareholders as, being entitled to do so, vote in person (or, where proxies are allowed, by proxy) at a general meeting and regard shall be had in computing a majority to the number of votes to which each shareholder is entitled or (2) approved in writing by all of the shareholders entitled to vote at a general meeting in one or more instruments each signed by one or more of the shareholders and the effective date of the resolution so adopted shall be the date on which the instrument (or the last of such instruments, if more than one) is executed.
|
Under Delaware law, each stockholder is entitled to one vote for each share of capital stock held by such stockholder as of the applicable record date, unless otherwise provided in a corporation’s certificate of incorporation. Except as otherwise provided under the Delaware General Corporation Law or by the corporation’s certificate of incorporation or bylaws, under Delaware law, all matters brought before a meeting of stockholders at which a quorum is present (other than the election of directors) require the affirmative vote of the majority of the shares present in person or represented by proxy and entitled to vote at that meeting. Certain matters for stockholder approval, including the approval of certain merger agreements, certain amendments to the certificate of incorporation, and the sale, lease, or exchange of all or substantially all of the corporation’s assets will require approval of the holders of a majority of the outstanding capital stock. The certificate of incorporation may also include a provision requiring supermajority approval by the directors or stockholders for any corporate action.
In addition, under Delaware law, certain business combinations involving interested stockholders of publicly traded corporations may require approval by a supermajority of the non-interested stockholders.
| ||
| Voting for Directors | Our memorandum and articles of association provide that our directors may be appointed by a resolution of our board of directors to fill a casual vacancy on the board of directors or as an addition to the board of directors or by an ordinary resolution of our shareholders. | Under Delaware law, unless otherwise specified in the certificate of incorporation or bylaws of the corporation, directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. |
18
| Cayman Islands | Delaware | |||
| Cumulative Voting | There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands.
Our memorandum and articles of association do not provide for cumulative voting on the election of the directors as described above. |
Under the Delaware law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate of incorporation specifically provides for it. | ||
| Directors’ Powers Regarding Bylaws | Our memorandum and articles of association may only be amended by a special resolution of the shareholders of the company. | The certificate of incorporation may grant the directors the power to adopt, amend or repeal bylaws. | ||
| Nomination and Removal of Directors and Filling Vacancies on Board | Nomination and removal of directors and filling of board vacancies are governed by the terms of the articles of association. Our memorandum and articles of association provide that directors may be removed with or without cause, by an ordinary resolution of our shareholders.
In addition, a director’s office shall be vacated if the director (1) becomes bankrupt or makes any arrangement or composition with his creditors; (2) is found to be or becomes of unsound mind or dies; (3) resigns his office by notice in writing to the company; (4) without special leave of absence from the board of directors, is absent from meetings of the board of directors for three consecutive meetings and the board of directors resolves that his office be vacated; or (5) is removed from office pursuant to any other provisions of our memorandum and articles of association. |
Stockholders may generally nominate directors if they comply with any applicable advance notice provisions and other procedural requirements in company bylaws.
Holders of a majority of the shares then entitled to vote at an election of directors may remove a director with or without cause, except in certain cases involving a classified board or if the company uses cumulative voting. Unless otherwise provided for in the certificate of incorporation or bylaws, directorship vacancies may be filled by a majority of the directors elected or then in office, or by the stockholders.
|
19
| Cayman Islands | Delaware | ||||
| Mergers and Similar Arrangements | The Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For these purposes, (1) “merger” means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company and (2) a “consolidation” means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (i) a special resolution of the shareholders of each constituent company and (ii) such other authorization, if any, as may be specified in such constituent company’s articles of association. The written plan of merger or consolidation must be filed with the Registrar of Companies together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the members and creditors of each constituent company and published in the Cayman Islands Gazette. Dissenting shareholders have the right to be paid the fair value of their shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) if they follow the required procedures, subject to certain exceptions. Court approval is not required for a merger or consolidation which is effected in compliance with these statutory procedures. | Under Delaware law, with certain exceptions, a merger, a consolidation, or a sale, lease or exchange of all or substantially all the assets of a corporation must be approved by the board of directors and a majority of the outstanding shares entitled to vote thereon. However, unless required by its certificate of incorporation, approval is not required by the holders of the outstanding stock of a constituent corporation surviving a merger if:
| |||
| ● | the merger agreement does not amend in any respect its certificate of incorporation;
| ||||
| ● | each share of its stock outstanding prior to the merger will be an identical share of stock following the merger; and | ||||
| ● | either no shares of the surviving corporation’s common stock and no shares, securities or obligations convertible into such stock will be issued or delivered pursuant to the merger, or the authorized unissued shares or treasury shares of the surviving corporation’s common stock to be issued or delivered pursuant to the merger plus those initially issuable upon conversion of any other shares, securities or obligations to be issued or delivered pursuant to the merger do not exceed 20% of the shares of the surviving corporation’s common stock outstanding immediately prior to the effective date of the merger. | ||||
20
| Cayman Islands | Delaware | ||||
In addition, there are statutory provisions that facilitate the reconstruction and amalgamation of companies, provided that the arrangement is approved by a majority in number of each class of shareholders and creditors (representing 75% by value) with whom the arrangement is to be made, and who must, in addition, represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that: |
|||||
| ● | the statutory provisions as to the required majority vote have been met; |
||||
| ●
|
the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class; |
||||
| ●
|
the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and |
||||
| ●
|
the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act. |
||||
| When a takeover offer is made and accepted by holders of 90% of the shares affected within four months, the offeror may, within a two-month period commencing on the expiration of such four month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion. | |||||
| If an arrangement and reconstruction is thus approved, the dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the shares. | |||||
21
| Cayman Islands | Delaware | ||||
| Shareholder Suits | Generally legal proceedings can be originated in the Grand Court of the Cayman Islands. In principle, we will normally be the proper plaintiff and as a general rule a derivative action may not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, the Cayman Islands courts can be expected to apply and follow the common law principles (namely the rule in Foss v. Harbottle and the exceptions thereto) which permit a minority shareholder to commence a class action against, or derivative actions in the name of, a company to challenge: | Class actions and derivative actions generally are available to stockholders under Delaware law for, among other things, breach of fiduciary duty, corporate waste and actions not taken in accordance with applicable law. In such actions, the court generally has discretion to permit a winning plaintiff to recover attorneys’ fees incurred in connection with such action. | |||
| ● | an act which is illegal or ultra vires; |
||||
| ● | an action which requires a resolution with a qualified or special majority which has not been obtained; and |
||||
| ● | an act which constitutes a fraud on the minority where the wrongdoers are themselves in control of the company. |
||||
| Inspection of Corporate Records | Shareholders of a Cayman Islands exempted company have no general right under Cayman Islands law to inspect or obtain copies of the register of members or other corporate records (other than the memorandum and articles of association, the register of mortgages and charges, and copies of any special resolutions passed by our shareholders) of the company. However, these rights may be provided in the company’s articles of association.
Holders of our ordinary shares do not have general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate records. However, our directors are empowered to allow our shareholders to inspect our list of shareholders and to receive annual audited financial statements. |
Under Delaware law, stockholders of a Delaware corporation have the right during normal business hours to inspect for any proper purpose, and to obtain copies of lists of stockholders and other books and records of the corporation and its subsidiaries, if any, to the extent the books and records of such subsidiaries are available to the corporation. A complete list of the stockholders entitled to vote at a stockholders’ meeting generally must be available for stockholder inspection at least ten days before the meeting. | |||
22
| Cayman Islands | Delaware | |||
| Shareholder Proposals and Calling of Special Shareholder Meetings | Cayman Islands law provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our memorandum and articles of association allow our shareholders holding not less than one-third of our voting share capital to requisition a special meeting of the shareholders, in which case the directors are obliged to call such meeting and to put the resolutions so requisitioned to a vote at such meeting; however, our memorandum and articles of association do not provide our shareholders with any right to put any proposals before annual general meetings or extraordinary general meetings not called by such shareholders.
As a Cayman Islands exempted company, we are not obliged by the Companies Act to call shareholders’ annual general meetings. Our memorandum and articles of association provide that we may (but are not obliged to) in each year hold a general meeting as our annual general meeting in which case we shall specify the meeting as such in the notices calling it, and the annual general meeting shall be held at such time and place as may be determined by our directors. We, however, hold an annual shareholders’ meeting during each fiscal year, as required by NYSE rules. |
Unless provided in the corporation’s certificate of incorporation or bylaws, Delaware law does not include a provision restricting the manner in which stockholders may bring business before a meeting.
Delaware law permits the board of directors or any person who is authorized under a corporation’s certificate of incorporation or bylaws to call a special meeting of stockholders.
| ||
| Approval of Corporate Matters by Written Consent | Cayman Islands law and our memorandum and articles of association provide that shareholders may approve corporate matters by way of a unanimous written resolution signed by or on behalf of each shareholder who would have been entitled to vote on such matter at a general meeting without a meeting being held. | Delaware law provides that, unless otherwise provided in the certificate of incorporation, stockholders may take action by written consent signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting of stockholders. |
23
| Cayman Islands | Delaware |
| Dissolution; Winding Up | Under Cayman Islands law, a company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so.
Under the Companies Act of the Cayman Islands and our memorandum and articles of association, our company may be dissolved, liquidated or wound up by special resolution, or by an ordinary resolution on the basis that our company is unable to pay its debt as they become due.
|
Under Delaware law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by stockholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board. A Delaware corporation may also be dissolved by decree or judgment of a Delaware court in certain circumstances. | ||
| Variation of Rights of Shares | Under our memorandum and articles of association, if our share capital is divided into more than one class of shares, we may materially adversely vary the rights attached to any class only with the consent in writing of the holders of a majority of not less than three-fourths of the issued shares of that class or the sanction of a special resolution passed at a general meeting of the holders of the shares of that class. | Under Delaware law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. | ||
| Dividends and Stock Repurchases | The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors. In addition, our shareholders may declare dividends by ordinary resolution, but no dividend shall exceed the amount recommended by our directors. Our memorandum and articles of association provide that the directors may, before recommending or declaring any dividend, set aside out of the funds legally available for distribution such sums as they think proper as a reserve or reserves which shall, in the absolute discretion of the directors, be applicable for meeting contingencies or for equalizing dividends or for any other purpose to which those funds may be properly applied. Under the laws of the Cayman Islands, our company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business. | The Delaware General Corporation Law provides that, subject to any restrictions in a corporation’s certificate of incorporation, dividends may be declared from the corporation’s surplus, or, if there is no surplus, from its net profits for the fiscal year in which the dividend is declared and for the preceding fiscal year, and Delaware common law also imposes a solvency requirement with respect to the payment of dividends. Dividends may not be declared out of net profits, however, if the corporation’s capital has been diminished to an amount less than the aggregate amount of all capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets until the deficiency in the amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets is repaired. Furthermore, applicable Delaware statutory and common law generally provides that a corporation may redeem or repurchase its shares only if the redemption or repurchase would not impair the capital of the corporation and only if the corporation is solvent at the time of the redemption or repurchase, and the redemption or repurchase would not render the corporation insolvent. |
24
| Cayman Islands | Delaware |
| Transactions with Interested Shareholders | Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, it does provide that such transactions must be entered into bona fide in the best interests of the company and for a proper corporate purpose and not with the effect of constituting a fraud on the minority shareholders.
|
The Delaware General Corporation Law contains a business combination statute applicable to Delaware public corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation or bylaws that is approved by its shareholders, it is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target’s outstanding voting stock or who or which is an affiliate or associate of the corporation and owned 15% or more of the corporation’s outstanding voting stock within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target’s board of directors. |
25
DESCRIPTION OF AMERICAN DEPOSITARY SHARES
Deutsche Bank Trust Company Americas, as depositary, will register and deliver the ADSs. Each ADS will represent ownership of 10 Class A ordinary shares, deposited with Deutsche Bank AG, Hong Kong Branch, as custodian for the depositary. Each ADS will also represent ownership of any other securities, cash or other property which may be held by the depositary. The depositary’s corporate trust office at which the ADSs will be administered is located at 60 Wall Street, New York, NY 10005, USA. The principal executive office of the depositary is located at 60 Wall Street, New York, NY 10005, USA.
The Direct Registration System, or DRS, is a system administered by The Depository Trust Company, or DTC, pursuant to which the depositary may register the ownership of uncertificated ADSs, which ownership shall be evidenced by periodic statements issued by the depositary to the ADS holders entitled thereto.
We will not treat ADS holders as our shareholders and accordingly, you, as an ADS holder, will not have shareholder rights. Cayman Islands law governs shareholder rights. The depositary will be the holder of the ordinary shares underlying your ADSs. As a holder of ADSs, you will have ADS holder rights. A deposit agreement among us, the depositary and you, as an ADS holder, and the beneficial owners of ADSs sets out ADS holder rights as well as the rights and obligations of the depositary. The laws of the State of New York govern the deposit agreement and the ADSs. See “—Jurisdiction and Arbitration.”
The following is a summary of the material provisions of the deposit agreement. For more complete information, you should read the entire deposit agreement and the form of American Depositary Receipt. For directions on how to obtain copies of those documents, see “Where You Can Find Additional Information.”
Holding the ADSs
How will you hold your ADSs?
You may hold ADSs either (1) directly (a) by having an American Depositary Receipt, or ADR, which is a certificate evidencing a specific number of ADSs, registered in your name, or (b) by holding ADSs in DRS, or (2) indirectly through your broker or other financial institution. If you hold ADSs directly, you are an ADS holder. This description assumes you hold your ADSs directly. ADSs will be issued through DRS, unless you specifically request certificated ADRs. If you hold the ADSs indirectly, you must rely on the procedures of your broker or other financial institution to assert the rights of ADS holders described in this section. You should consult with your broker or financial institution to find out what those procedures are.
Dividends and Other Distributions
How will you receive dividends and other distributions on the shares?
The depositary has agreed to pay to you the cash dividends or other distributions it or the custodian receives on ordinary shares or other deposited securities, after deducting its fees and expenses. You will receive these distributions in proportion to the number of ordinary shares your ADSs represent as of the record date (which will be as close as practicable to the record date for our ordinary shares) set by the depositary with respect to the ADSs.
| ● | Cash. The depositary will convert or cause to be converted any cash dividend or other cash distribution we pay on the ordinary shares or any net proceeds from the sale of any ordinary shares, rights, securities or other entitlements under the terms of the deposit agreement into U.S. dollars if it can do so on a practicable basis, and can transfer the U.S. dollars to the United States and will distribute promptly the amount thus received. If the depositary shall determine in its judgment that such conversions or transfers are not practical or lawful or if any government approval or license is needed and cannot be obtained at a reasonable cost within a reasonable period or otherwise sought, the deposit agreement allows the depositary to distribute the foreign currency only to those ADS holders to whom it is possible to do so. It will hold or cause the custodian to hold the foreign currency it cannot convert for the account of the ADS holders who have not been paid and such funds will be held for the respective accounts of the ADS holders. It will not invest the foreign currency and it will not be liable for any interest for the respective accounts of the ADS holders. |
| ● | Before making a distribution, any taxes or other governmental charges, together with fees and expenses of the depositary, that must be paid, will be deducted. See “Taxation.” It will distribute only whole U.S. dollars and cents and will round down fractional cents to the nearest whole cent. If the exchange rates fluctuate during a time when the depositary cannot convert the foreign currency, you may lose some or all of the value of the distribution. |
26
| ● | Shares. For any ordinary shares we distribute as a dividend or free distribution, either (1) the depositary will distribute additional ADSs representing such ordinary shares or (2) existing ADSs as of the applicable record date will represent rights and interests in the additional ordinary shares distributed, to the extent reasonably practicable and permissible under law, in either case, net of applicable fees, charges and expenses incurred by the depositary and taxes and/or other governmental charges. The depositary will only distribute whole ADSs. It will try to sell ordinary shares which would require it to deliver a fractional ADS and distribute the net proceeds in the same way as it does with cash. The depositary may sell a portion of the distributed ordinary shares sufficient to pay its fees and expenses, and any taxes and governmental charges, in connection with that distribution. |
| ● | Elective Distributions in Cash or Shares. If we offer holders of our ordinary shares the option to receive dividends in either cash or shares, the depositary, after consultation with us and having received timely notice as described in the deposit agreement of such elective distribution by us, has discretion to determine to what extent such elective distribution will be made available to you as a holder of the ADSs. We must timely first instruct the depositary to make such elective distribution available to you and furnish it with satisfactory evidence that it is legal to do so. The depositary could decide it is not legal or reasonably practicable to make such elective distribution available to you. In such case, the depositary shall, on the basis of the same determination as is made in respect of the ordinary shares for which no election is made, distribute either cash in the same way as it does in a cash distribution, or additional ADSs representing ordinary shares in the same way as it does in a share distribution. The depositary is not obligated to make available to you a method to receive the elective dividend in shares rather than in ADSs. There can be no assurance that you will be given the opportunity to receive elective distributions on the same terms and conditions as the holders of ordinary shares. |
| ● | Rights to Purchase Additional Shares. If we offer holders of our ordinary shares any rights to subscribe for additional shares, the depositary shall having received timely notice as described in the deposit agreement of such distribution by us, consult with us, and we must determine whether it is lawful and reasonably practicable to make these rights available to you. We must first instruct the depositary to make such rights available to you and furnish the depositary with satisfactory evidence that it is legal to do so. If the depositary decides it is not legal or reasonably practicable to make the rights available but that it is lawful and reasonably practicable to sell the rights, the depositary will endeavor to sell the rights and in a riskless principal capacity or otherwise, at such place and upon such terms (including public or private sale) as it may deem proper distribute the net proceeds in the same way as it does with cash. The depositary will allow rights that are not distributed or sold to lapse. In that case, you will receive no value for them. |
If the depositary makes rights available to you, it will establish procedures to distribute such rights and enable you to exercise the rights upon your payment of applicable fees, charges and expenses incurred by the depositary and taxes and/or other governmental charges. The Depositary shall not be obliged to make available to you a method to exercise such rights to subscribe for ordinary shares (rather than ADSs).
U.S. securities laws may restrict transfers and cancellation of the ADSs represented by shares purchased upon exercise of rights. For example, you may not be able to trade these ADSs freely in the United States. In this case, the depositary may deliver restricted depositary shares that have the same terms as the ADSs described in this section except for changes needed to put the necessary restrictions in place.
There can be no assurance that you will be given the opportunity to exercise rights on the same terms and conditions as the holders of ordinary shares or be able to exercise such rights.
| ● | Other Distributions. Subject to receipt of timely notice, as described in the deposit agreement, from us with the request to make any such distribution available to you, and provided the depositary has determined such distribution is lawful and reasonably practicable and feasible and in accordance with the terms of the deposit agreement, the depositary will distribute to you anything else we distribute on deposited securities by any means it may deem practicable, upon your payment of applicable fees, charges and expenses incurred by the depositary and taxes and/or other governmental charges. If any of the conditions above are not met, the depositary will endeavor to sell, or cause to be sold, what we distributed and distribute the net proceeds in the same way as it does with cash; or, if it is unable to sell such property, the depositary may dispose of such property in any way it deems reasonably practicable under the circumstances for nominal or no consideration, such that you may have no rights to or arising from such property. |
The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADS holders. We have no obligation to register ADSs, shares, rights or other securities under the Securities Act. We also have no obligation to take any other action to permit the distribution of ADSs, shares, rights or anything else to ADS holders. This means that you may not receive the distributions we make on our shares or any value for them if we and/or the depositary determines that it is illegal or not practicable for us or the depositary to make them available to you.
27
Deposit, Withdrawal and Cancellation
How are ADSs issued?
The depositary will deliver ADSs if you or your broker deposit ordinary shares or evidence of rights to receive ordinary shares with the custodian. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will register the appropriate number of ADSs in the names you request and will deliver the ADSs to or upon the order of the person or persons entitled thereto.
Except for ordinary shares deposited by us in connection with this offering, no shares will be accepted for deposit during a period of 180 days after the date of this prospectus. The 180 day lock up period is subject to adjustment under certain circumstances as described in the section entitled “Shares Eligible for Future Sales—Lock-up Agreements.”
How do ADS holders cancel an American Depositary Share?
You may turn in your ADSs at the depositary’s corporate trust office or by providing appropriate instructions to your broker. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will deliver the ordinary shares and any other deposited securities underlying the ADSs to you or a person you designate at the office of the custodian. Or, at your request, risk and expense, the depositary will deliver the deposited securities at its corporate trust office, to the extent permitted by law.
How do ADS holders interchange between Certificated ADSs and Uncertificated ADSs?
You may surrender your ADR to the depositary for the purpose of exchanging your ADR for uncertificated ADSs. The depositary will cancel that ADR and will send you a statement confirming that you are the owner of uncertificated ADSs. Alternatively, upon receipt by the depositary of a proper instruction from a holder of uncertificated ADSs requesting the exchange of uncertificated ADSs for certificated ADSs, the depositary will execute and deliver to you an ADR evidencing those ADSs.
Voting Rights
How do you vote?
You may instruct the depositary to vote the ordinary shares or other deposited securities underlying your ADSs at any meeting at which you are entitled to vote pursuant to any applicable law, the provisions of our memorandum and articles of association, and the provisions of or governing the deposited securities. Otherwise, you could exercise your right to vote directly if you withdraw the ordinary shares. However, you may not know about the meeting sufficiently enough in advance to withdraw the ordinary shares.
If we ask for your instructions and upon timely notice from us by regular, ordinary mail delivery, or by electronic transmission, as described in the deposit agreement, the depositary will notify you of the upcoming meeting at which you are entitled to vote pursuant to any applicable law, the provisions of our memorandum and articles of association, and the provisions of or governing the deposited securities, and arrange to deliver our voting materials to you. The materials will include or reproduce (a) such notice of meeting or solicitation of consents or proxies; (b) a statement that the ADS holders at the close of business on the ADS record date will be entitled, subject to any applicable law, the provisions of our memorandum and articles of association, and the provisions of or governing the deposited securities, to instruct the depositary as to the exercise of the voting rights, if any, pertaining to the ordinary shares or other deposited securities represented by such holder's ADSs; and (c) a brief statement as to the manner in which such instructions may be given to the depositary or deemed given in accordance with the second to last sentence of this paragraph if no instruction is received by the depositary to give a discretionary proxy to a person designated by us. Voting instructions may be given only in respect of a number of ADSs representing an integral number of ordinary shares or other deposited securities. For instructions to be valid, the depositary must receive them in writing on or before the date specified. The depositary will try, as far as practical, subject to applicable law and the provisions of our memorandum and articles of association, to vote or to have its agents vote the ordinary shares or other deposited securities (in person or by proxy) as you instruct. The depositary will only vote or attempt to vote as you instruct. If we timely requested the depositary to solicit your instructions but no instructions are received by the depositary from an owner with respect to any of the deposited securities represented by the ADSs of that owner on or before the date established by the depositary for such purpose, the depositary shall deem that owner to have instructed the depositary to give a discretionary proxy to a person designated by us with respect to such deposited securities, and the depositary shall give a discretionary proxy to a person designated by us to vote such deposited securities. However, no such instruction shall be deemed given and no such discretionary proxy shall be given with respect to any matter if we inform the depositary we do not wish such proxy given, substantial opposition exists or the matter materially and adversely affects the rights of holders of the ordinary shares.
We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote the ordinary shares underlying your ADSs. In addition, there can be no assurance that ADS holders and beneficial owners generally, or any holder or beneficial owner in particular, will be given the opportunity to vote or cause the custodian to vote on the same terms and conditions as the holders of our ordinary shares.
28
The depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to exercise your right to vote and you may have no recourse if the ordinary shares underlying your ADSs are not voted as you requested.
In order to give you a reasonable opportunity to instruct the depositary as to the exercise of voting rights relating to deposited securities, if we request the depositary to act, we will give the depositary notice of any such meeting and details concerning the matters to be voted at least 21 business days in advance of the meeting date.
Compliance with Regulations
Information Requests
Each ADS holder and beneficial owner shall (a) provide such information as we or the depositary may request pursuant to law, including, without limitation, relevant Cayman Islands law, any applicable law of the United States of America, our memorandum and articles of association, any resolutions of our Board of Directors adopted pursuant to such memorandum and articles of association, the requirements of any markets or exchanges upon which the ordinary shares, ADSs or ADRs are listed or traded, or to any requirements of any electronic book-entry system by which the ADSs or ADRs may be transferred, regarding the capacity in which they own or owned ADRs, the identity of any other persons then or previously interested in such ADRs and the nature of such interest, and any other applicable matters, and (b) be bound by and subject to applicable provisions of the laws of the Cayman Islands, our memorandum and articles of association, and the requirements of any markets or exchanges upon which the ADSs, ADRs or ordinary shares are listed or traded, or pursuant to any requirements of any electronic book-entry system by which the ADSs, ADRs or ordinary shares may be transferred, to the same extent as if such ADS holder or beneficial owner held ordinary shares directly, in each case irrespective of whether or not they are ADS holders or beneficial owners at the time such request is made.
Fees and Expenses
As an ADS holder, you will be required to pay the following service fees to the depositary bank and certain taxes and governmental charges (in addition to any applicable fees, expenses, taxes and other governmental charges payable on the deposited securities represented by any of your ADSs):
| Service | Fees | |
| • To any person to which ADSs are issued or to any person to which a distribution is made in respect of ADS distributions pursuant to stock dividends or other free distributions of stock, bonus distributions, stock splits or other distributions (except where converted to cash) | Up to US$0.05 per ADS issued | |
| • Cancellation of ADSs, including the case of termination of the deposit agreement | Up to US$0.05 per ADS cancelled | |
| • Distribution of cash dividends | Up to US$0.05 per ADS held | |
| • Distribution of cash entitlements (other than cash dividends) and/or cash proceeds from the sale of rights, securities and other entitlements | Up to US$0.05 per ADS held | |
| • Distribution of ADSs pursuant to exercise of rights. | Up to US$0.05 per ADS held | |
| • Distribution of securities other than ADSs or rights to purchase additional ADSs | Up to US$0.05 per ADS held | |
| • Depositary services | Up to US$0.05 per ADS held on the applicable record date(s) established by the depositary bank |
As an ADS holder, you will also be responsible for paying certain fees and expenses incurred by the depositary bank and certain taxes and governmental charges (in addition to any applicable fees, expenses, taxes and other governmental charges payable on the deposited securities represented by any of your ADSs) such as:
| • | Fees for the transfer and registration of ordinary shares charged by the registrar and transfer agent for the ordinary shares in the Cayman Islands (i.e., upon deposit and withdrawal of ordinary shares). |
| • | Expenses incurred for converting foreign currency into U.S. dollars. |
| • | Expenses for cable, telex and fax transmissions and for delivery of securities. |
| • | Taxes and duties upon the transfer of securities, including any applicable stamp duties, any stock transfer charges or withholding taxes (i.e., when ordinary shares are deposited or withdrawn from deposit). |
29
| • | Fees and expenses incurred in connection with the delivery or servicing of ordinary shares on deposit. |
| • | Fees and expenses incurred in connection with complying with exchange control regulations and other regulatory requirements applicable to ordinary shares, deposited securities, ADSs and ADRs. |
| • | Any applicable fees and penalties thereon. |
The depositary fees payable upon the issuance and cancellation of ADSs are typically paid to the depositary bank by the brokers (on behalf of their clients) receiving the newly issued ADSs from the depositary bank and by the brokers (on behalf of their clients) delivering the ADSs to the depositary bank for cancellation. The brokers in turn charge these fees to their clients. Depositary fees payable in connection with distributions of cash or securities to ADS holders and the depositary services fee are charged by the depositary bank to the holders of record of ADSs as of the applicable ADS record date.
The depositary fees payable for cash distributions are generally deducted from the cash being distributed or by selling a portion of distributable property to pay the fees. In the case of distributions other than cash (i.e., share dividends, rights), the depositary bank charges the applicable fee to the ADS record date holders concurrent with the distribution. In the case of ADSs registered in the name of the investor (whether certificated or uncertificated in direct registration), the depositary bank sends invoices to the applicable record date ADS holders. In the case of ADSs held in brokerage and custodian accounts (via DTC), the depositary bank generally collects its fees through the systems provided by DTC (whose nominee is the registered holder of the ADSs held in DTC) from the brokers and custodians holding ADSs in their DTC accounts. The brokers and custodians who hold their clients’ ADSs in DTC accounts in turn charge their clients’ accounts the amount of the fees paid to the depositary banks.
In the event of refusal to pay the depositary fees, the depositary bank may, under the terms of the deposit agreement, refuse the requested service until payment is received or may set off the amount of the depositary fees from any distribution to be made to the ADS holder.
The depositary may make payments to us or reimburse us for certain costs and expenses, by making available a portion of the ADS fees collected in respect of the ADR program or otherwise, upon such terms and conditions as we and the depositary bank agree from time to time.
Payment of Taxes
You will be responsible for any taxes or other governmental charges payable, or which become payable, on your ADSs or on the deposited securities represented by any of your ADSs. The depositary may refuse to register or transfer your ADSs or allow you to withdraw the deposited securities represented by your ADSs until such taxes or other charges are paid. It may apply payments owed to you or sell deposited securities represented by your ADSs to pay any taxes owed and you will remain liable for any deficiency. If the depositary sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to you any net proceeds, or send to you any property, remaining after it has paid the taxes. You agree to indemnify us, the depositary, the custodian and each of our and their respective agents, directors, employees and affiliates for, and hold each of them harmless from, any claims with respect to taxes (including applicable interest and penalties thereon) arising from any refund of taxes, reduced rate of withholding at source or other tax benefit obtained for you.
Reclassifications, Recapitalizations and Mergers
| If we: | Then: |
| Change the nominal or par value of our ordinary shares | The cash, shares or other securities received by the depositary will become deposited securities.
|
| Reclassify, split up or consolidate any of the deposited securities | Each ADS will automatically represent its equal share of the new deposited securities.
|
Distribute securities on the ordinary shares that are not distributed to you, or Recapitalize, reorganize, merge, liquidate, sell all or substantially all of our assets, or take any similar action
|
The depositary may distribute some or all of the cash, shares or other securities it received. It may also deliver new ADSs or ask you to surrender your outstanding ADRs in exchange for new ADRs identifying the new deposited securities. |
30
Amendment and Termination
How may the deposit agreement be amended?
We may agree with the depositary to amend the deposit agreement and the form of ADR without your consent for any reason. If an amendment adds or increases fees or charges, except for taxes and other governmental charges or expenses of the depositary for registration fees, facsimile costs, delivery charges or similar items, including expenses incurred in connection with foreign exchange control regulations and other charges specifically payable by ADS holders under the deposit agreement, or materially prejudices a substantial existing right of ADS holders, it will not become effective for outstanding ADSs until 30 days after the depositary notifies ADS holders of the amendment. At the time an amendment becomes effective, you are considered, by continuing to hold your ADSs, to agree to the amendment and to be bound by the ADRs and the deposit agreement as amended. If any new laws are adopted which would require the deposit agreement to be amended in order to comply therewith, we and the depositary may amend the deposit agreement in accordance with such laws and such amendment may become effective before notice thereof is given to ADS holders.
How may the deposit agreement be terminated?
The depositary will terminate the deposit agreement if we ask it to do so, in which case the depositary will give notice to you at least 60 days prior to termination. The depositary may also terminate the deposit agreement if the depositary has told us that it would like to resign, or if we have removed the depositary, and in either case we have not appointed a new depositary within 90 days. In either such case, the depositary must notify you at least 30 days before termination.
After termination, the depositary and its agents will do the following under the deposit agreement but nothing else: collect distributions on the deposited securities, sell rights and other property and deliver ordinary shares and other deposited securities upon cancellation of ADSs after payment of any fees, charges, taxes or other governmental charges. Six months or more after the date of termination, the depositary may sell any remaining deposited securities by public or private sale. After that, the depositary will hold the money it received on the sale, as well as any other cash it is holding under the deposit agreement, for the pro rata benefit of the ADS holders that have not surrendered their ADSs. It will not invest the money and has no liability for interest. After such sale, the depositary’s only obligations will be to account for the money and other cash. After termination, we shall be discharged from all obligations under the deposit agreement except for our obligations to the depositary thereunder.
Books of Depositary
The depositary will maintain ADS holder records at its depositary office. You may inspect such records at such office during regular business hours but solely for the purpose of communicating with other holders in the interest of business matters relating to the Company, the ADRs and the deposit agreement.
The depositary will maintain facilities in the Borough of Manhattan, The City of New York to record and process the issuance, cancellation, combination, split-up and transfer of ADRs.
These facilities may be closed at any time or from time to time when such action is deemed necessary or advisable by the depositary in connection with the performance of its duties under the deposit agreement or at our reasonable written request.
Limitations on Obligations and Liability
Limits on our Obligations and the Obligations of the Depositary and the Custodian; Limits on Liability to Holders of ADSs
The deposit agreement expressly limits our obligations and the obligations of the depositary and the custodian. It also limits our liability and the liability of the depositary. The depositary and the custodian:
| ● | are only obligated to take the actions specifically set forth in the deposit agreement without gross negligence or willful misconduct; |
| ● | are not liable if any of us or our respective controlling persons or agents are prevented or forbidden from, or subjected to any civil or criminal penalty or restraint on account of, or delayed in, doing or performing any act or thing required by the terms of the deposit agreement and any ADR, by reason of any provision of any present or future law or regulation of the United States or any state thereof, the Cayman Islands or any other country, or of any other governmental authority or regulatory authority or stock exchange, or on account of the possible criminal or civil penalties or restraint, or by reason of any provision, present or future, of our memorandum and articles of association or any provision of or governing any deposited securities, or by reason of any act of God or war or other circumstances beyond its control (including, without limitation, nationalization, expropriation, currency restrictions, work stoppage, strikes, civil unrest, revolutions, rebellions, explosions and computer failure); |
| ● | are not liable by reason of any exercise of, or failure to exercise, any discretion provided for in the deposit agreement or in our memorandum and articles of association or provisions of or governing deposited securities; |
31
| ● | are not liable for any action or inaction of the depositary, the custodian or us or their or our respective controlling persons or agents in reliance upon the advice of or information from legal counsel, any person presenting ordinary shares for deposit or any other person believed by it in good faith to be competent to give such advice or information; |
| ● | are not liable for the inability of any holder of ADSs to benefit from any distribution on deposited securities that is not made available to holders of ADSs under the terms of the deposit agreement; |
| ● | are not liable for any special, consequential, indirect or punitive damages for any breach of the terms of the deposit agreement, or otherwise; |
| ● | may rely upon any documents we believe in good faith to be genuine and to have been signed or presented by the proper party; |
| ● | disclaim any liability for any action or inaction or inaction of any of us or our respective controlling persons or agents in reliance upon the advice of or information from legal counsel, accountants, any person presenting ordinary shares for deposit, holders and beneficial owners (or authorized representatives) of ADSs, or any person believed in good faith to be competent to give such advice or information; and |
| ● | disclaim any liability for inability of any holder to benefit from any distribution, offering, right or other benefit made available to holders of deposited securities but not made available to holders of ADS. |
The depositary and any of its agents also disclaim any liability (i) for any failure to carry out any instructions to vote, the manner in which any vote is cast or the effect of any vote or failure to determine that any distribution or action may be lawful or reasonably practicable or for allowing any rights to lapse in accordance with the provisions of the deposit agreement, (ii) the failure or timeliness of any notice from us, the content of any information submitted to it by us for distribution to you or for any inaccuracy of any translation thereof, (iii) any investment risk associated with the acquisition of an interest in the deposited securities, the validity or worth of the deposited securities, the credit-worthiness of any third party, (iv) for any tax consequences that may result from ownership of ADSs, ordinary shares or deposited securities, or (v) for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the depositary or in connection with any matter arising wholly after the removal or resignation of the depositary, provided that in connection with the issue out of which such potential liability arises the depositary performed its obligations without gross negligence or willful misconduct while it acted as depositary.
In the deposit agreement, we and the depositary agree to indemnify each other under certain circumstances.
Jurisdiction and Arbitration
The laws of the State of New York govern the deposit agreement and the ADSs and we have agreed with the depositary that the federal or state courts in the City of New York shall have non-exclusive jurisdiction to hear and determine any dispute arising from or in connection with the deposit agreement and that the depositary will have the right to refer any claim or dispute arising from the relationship created by the deposit agreement to arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association.
Requirements for Depositary Actions
Before the depositary will issue, deliver or register a transfer of an ADS, split-up, subdivide or combine ADSs, make a distribution on an ADS, or permit withdrawal of ordinary shares, the depositary may require:
| ● | payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the transfer of any ordinary shares or other deposited securities and payment of the applicable fees, expenses and charges of the depositary; |
| ● | satisfactory proof of the identity and genuineness of any signature or any other matters contemplated in the deposit agreement; and |
| ● | compliance with (A) any laws or governmental regulations relating to the execution and delivery of ADRs or ADSs or to the withdrawal or delivery of deposited securities and (B) such reasonable regulations and procedures as the depositary may establish, from time to time, consistent with the deposit agreement and applicable laws, including presentation of transfer documents. |
32
The depositary may refuse to issue and deliver ADSs or register transfers of ADSs generally when the register of the depositary or our transfer books are closed or at any time if the depositary or we determine that it is necessary or advisable to do so.
Your Right to Receive the Shares Underlying Your ADSs
You have the right to cancel your ADSs and withdraw the underlying ordinary shares at any time except:
| ● | when temporary delays arise because: (1) the depositary has closed its transfer books or we have closed our transfer books; (2) the transfer of ordinary shares is blocked to permit voting at a shareholders’ meeting; or (3) we are paying a dividend on our ordinary shares; |
| ● | when you owe money to pay fees, taxes and similar charges; |
| ● | when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of ordinary shares or other deposited securities, or other circumstances specifically contemplated by Section I.A.(l) of the General Instructions to Form F-6 (as such General Instructions may be amended from time to time); or |
| ● | for any other reason if the depositary or we determine, in good faith, that it is necessary or advisable to prohibit withdrawals. |
The depositary shall not knowingly accept for deposit under the deposit agreement any ordinary shares or other deposited securities required to be registered under the provisions of the Securities Act, unless a registration statement is in effect as to such ordinary shares.
This right of withdrawal may not be limited by any other provision of the deposit agreement.
Direct Registration System
In the deposit agreement, all parties to the deposit agreement acknowledge that the DRS and Profile Modification System, or Profile, will apply to uncertificated ADSs upon acceptance thereof to DRS by DTC. DRS is the system administered by DTC pursuant to which the depositary may register the ownership of uncertificated ADSs, which ownership shall be evidenced by periodic statements issued by the depositary to the ADS holders entitled thereto. Profile is a required feature of DRS which allows a DTC participant, claiming to act on behalf of an ADS holder, to direct the depositary to register a transfer of those ADSs to DTC or its nominee and to deliver those ADSs to the DTC account of that DTC participant without receipt by the depositary of prior authorization from the ADS holder to register such transfer.
33
DESCRIPTION OF PREFERRED SHARES
Our board of directors has the authority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges, and relative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our ordinary shares. Preferred shares could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of management more difficult. Although we do not currently intend to issue any preferred shares, we cannot assure you that we will not do so in the future.
As of the date of this prospectus, we have issued 65,000 Class A preference shares to Good Luck Information, an entity controlled by Mr. Man San Vincent Law, our founder and executive director. Each Class A preference share is entitled to 10,000 votes. The Class A preference shares are not entitled to receive dividends and cannot be converted into Class A ordinary shares, Class B ordinary shares, or ADSs. Upon any transfer of Class A preference shares by Good Luck Information to any person or entity which is not its affiliate, or when Good Luck ceases to be controlled by any person holding executive office in or being a member of our board of director, the Class A preference shares shall cease to have any voting right. If Mr. Man San Vincent Law ceases to serve as our director, we shall be entitled to redeem all of the Class A preference shares at US$1.0 per share.
The material terms of any series of preferred shares that we offer, together with any material U.S. federal income tax considerations relating to such preferred shares, will be described in the applicable prospectus supplement.
Holders of our preferred shares are entitled to certain rights and subject to certain conditions as set forth in our currently effective memorandum and articles of association and the Companies Act. See “Description of Share Capital.”
34
DESCRIPTION OF DEBT SECURITIES
We may issue series of debt securities, which may include debt securities exchangeable for or convertible into ordinary shares or preferred shares. When we offer to sell a particular series of debt securities, we will describe the specific terms of that series in a supplement to this prospectus. The following description of debt securities will apply to the debt securities offered by this prospectus unless we provide otherwise in the applicable prospectus supplement. The applicable prospectus supplement for a particular series of debt securities may specify different or additional terms.
The debt securities offered by this prospectus may be secured or unsecured, and may be senior debt securities, senior subordinated debt securities or subordinated debt securities. The debt securities offered by this prospectus may be issued under an indenture between us and the trustee under the indenture. The indenture may be qualified under, subject to, and governed by, the Trust Indenture Act of 1939, as amended. We have summarized selected portions of the indenture below. The summary is not complete. The form of the indenture has been filed as an exhibit to the registration statement on Form F-3, of which this prospectus is a part, and you should read the indenture for provisions that may be important to you.
The terms of each series of debt securities will be established by or pursuant to a resolution of our board of directors and detailed or determined in the manner provided in a board of directors' resolution, an officers' certificate and by a supplemental indenture. The particular terms of each series of debt securities will be described in a prospectus supplement relating to the series, including any pricing supplement.
We may issue any amount of debt securities under the indenture, which may be in one or more series with the same or different maturities, at par, at a premium or at a discount. We will set forth in a prospectus supplement, including any related pricing supplement, relating to any series of debt securities being offered, the offering price, the aggregate principal amount offered and the terms of the debt securities, including, among other things, the following:
| · | the title of the debt securities; |
| · | the price or prices (expressed as a percentage of the aggregate principal amount) at which we will sell the debt securities; |
| · | any limit on the aggregate principal amount of the debt securities; |
| · | the date or dates on which we will repay the principal on the debt securities and the right, if any, to extend the maturity of the debt securities; |
| · | the rate or rates (which may be fixed or variable) per annum or the method used to determine the rate or rates (including any commodity, commodity index, stock exchange index or financial index) at which the debt securities will bear interest, the date or dates from which interest will accrue, the date or dates on which interest will be payable and any regular record date for any interest payment date; |
| · | the place or places where the principal of, premium, and interest on the debt securities will be payable, and where the debt securities of the series that are convertible or exchangeable may be surrendered for conversion or exchange; |
| · | any obligation or right we have to redeem the debt securities pursuant to any sinking fund or analogous provisions or at the option of holders of the debt securities or at our option, and the terms and conditions upon which we are obligated to or may redeem the debt securities; |
| · | any obligation we have to repurchase the debt securities at the option of the holders of debt securities, the dates on which and the price or prices at which we will repurchase the debt securities and other detailed terms and provisions of these repurchase obligations; |
| · | the denominations in which the debt securities will be issued; |
| · | whether the debt securities will be issued in the form of certificated debt securities or global debt securities; |
35
| · | the portion of principal amount of the debt securities payable upon declaration of acceleration of the maturity date, if other than the principal amount; |
| · | the currency of denomination of the debt securities; |
| · | the designation of the currency, currencies or currency units in which payment of principal of, premium and interest on the debt securities will be made; |
| · | if payments of principal of, premium or interest on, the debt securities will be made in one or more currencies or currency units other than that or those in which the debt securities are denominated, the manner in which the exchange rate with respect to these payments will be determined; |
| · | the manner in which the amounts of payment of principal of, premium or interest on, the debt securities will be determined, if these amounts may be determined by reference to an index based on a currency or currencies other than that in which the debt securities are denominated or designated to be payable or by reference to a commodity, commodity index, stock exchange index or financial index; |
| · | any provisions relating to any security provided for the debt securities; |
| · | any addition to or change in the events of default described in the indenture with respect to the debt securities and any change in the acceleration provisions described in the indenture with respect to the debt securities; |
| · | any addition to or change in the covenants described in the indenture with respect to the debt securities; |
| · | whether the debt securities will be senior or subordinated and any applicable subordination provisions; |
| · | a discussion of material income tax considerations applicable to the debt securities; |
| · | any other terms of the debt securities, which may modify any provisions of the indenture as it applies to that series; and |
| · | any depositaries, interest rate calculation agents, exchange rate calculation agents or other agents with respect to the debt securities. |
We may issue debt securities that are exchangeable for and/or convertible into ordinary shares or preferred shares. The terms, if any, on which the debt securities may be exchanged and/or converted will be set forth in the applicable prospectus supplement. Such terms may include provisions for exchange or conversion, which can be mandatory, at the option of the holder or at our option, and the manner in which the number of ordinary shares, preferred shares or other securities to be received by the holders of debt securities would be calculated.
We may issue debt securities that provide for an amount less than their stated principal amount to be due and payable upon declaration of acceleration of their maturity pursuant to the terms of the indenture. We will provide you with information on the U.S. federal income tax considerations, and other special considerations applicable to any of these debt securities in the applicable prospectus supplement. If we denominate the purchase price of any of the debt securities in a foreign currency or currencies or a foreign currency unit or units, or if the principal of and any premium and interest on any series of debt securities is payable in a foreign currency or currencies or a foreign currency unit or units, we will provide you with information on the restrictions, elections, specific terms and other information with respect to that issue of debt securities and such foreign currency or currencies or foreign currency unit or units in the applicable prospectus supplement.
We may issue debt securities of a series in whole or in part in the form of one or more global securities that will be deposited with, or on behalf of, a depositary identified in the prospectus supplement. Global securities will be issued in registered form and in either temporary or definitive form. Unless and until it is exchanged in whole or in part for the individual debt securities, a global security may not be transferred except as a whole by the depositary for such global security to a nominee of such depositary or by a nominee of such depositary to such depositary or another nominee of such depositary or by such depositary or any such nominee to a successor of such depositary or a nominee of such successor. The specific terms of the depositary arrangement with respect to any debt securities of a series and the rights of and limitations upon owners of beneficial interests in a global security will be described in the applicable prospectus supplement.
36
The indenture and the debt securities will be governed by, and construed in accordance with, the internal laws of the State of New York, unless we otherwise specify in the applicable prospectus supplement.
37
We may issue and offer warrants under the material terms and conditions described in this prospectus and any accompanying prospectus supplement. The accompanying prospectus supplement may add, update or change the terms and conditions of the warrants as described in this prospectus.
General
We may issue warrants to purchase our ordinary shares, preferred shares or debt securities. Warrants may be issued independently or together with any securities and may be attached to or separate from those securities. The warrants will be issued under warrant agreements to be entered into between us and a bank or trust company, as warrant agent, all of which will be described in the prospectus supplement relating to the warrants we are offering. The warrant agent will act solely as our agent in connection with the warrants and will not have any obligation or relationship of agency or trust for or with any holders or beneficial owners of warrants.
Equity Warrants
Each equity warrant issued by us will entitle its holder to purchase the equity securities designated at an exercise price set forth in, or to be determinable as set forth in, the related prospectus supplement. Equity warrants may be issued separately or together with equity securities.
The equity warrants are to be issued under equity warrant agreements to be entered into between us and one or more banks or trust companies, as equity warrant agent, as will be set forth in the applicable prospectus supplement and this prospectus.
The particular terms of the equity warrants, the equity warrant agreements relating to the equity warrants and the equity warrant certificates representing the equity warrants will be described in the applicable prospectus supplement, including, as applicable:
| · | the title of the equity warrants; |
| · | the offering price; |
| · | the aggregate amount of equity warrants and the aggregate amount of equity securities purchasable upon exercise of the equity warrants; |
| · | the currency or currency units in which the offering price, if any, and the exercise price are payable; |
| · | if applicable, the designation and terms of the equity securities with which the equity warrants are issued, and the amount of equity warrants issued with each equity security; |
| · | the date, if any, on and after which the equity warrants and the related equity security will be separately transferable; |
| · | if applicable, the minimum or maximum amount of the equity warrants that may be exercised at any one time; |
| · | the date on which the right to exercise the equity warrants will commence and the date on which the right will expire; |
| · | if applicable, a discussion of United States federal income tax, accounting or other considerations applicable to the equity warrants; |
| · | anti-dilution provisions of the equity warrants, if any; |
| · | redemption or call provisions, if any, applicable to the equity warrants; and |
| · | any additional terms of the equity warrants, including terms, procedures and limitations relating to the exchange and exercise of the equity warrants. |
Holders of equity warrants will not be entitled, solely by virtue of being holders, to vote, to consent, to receive dividends, to receive notice as shareholders with respect to any meeting of shareholders for the election of directors or any other matters, or to exercise any rights whatsoever as a holder of the equity securities purchasable upon exercise of the equity warrants.
38
Debt Warrants
Each debt warrant issued by us will entitle its holder to purchase the debt securities designated at an exercise price set forth in, or to be determinable as set forth in, the related prospectus supplement. Debt warrants may be issued separately or together with debt securities.
The debt warrants are to be issued under debt warrant agreements to be entered into between us, and one or more banks or trust companies, as debt warrant agent, as will be set forth in the applicable prospectus supplement and this prospectus.
The particular terms of each issue of debt warrants, the debt warrant agreement relating to the debt warrants and the debt warrant certificates representing debt warrants will be described in the applicable prospectus supplement, including, as applicable:
| · | the title of the debt warrants; |
| · | the offering price; |
| · | the title, aggregate principal amount and terms of the debt securities purchasable upon exercise of the debt warrants; |
| · | the currency or currency units in which the offering price, if any, and the exercise price are payable; |
| · | the title and terms of any related debt securities with which the debt warrants are issued and the amount of the debt warrants issued with each debt security; |
| · | the date, if any, on and after which the debt warrants and the related debt securities will be separately transferable; |
| · | the principal amount of debt securities purchasable upon exercise of each debt warrant and the price at which that principal amount of debt securities may be purchased upon exercise of each debt warrant; |
| · | if applicable, the minimum or maximum amount of warrants that may be exercised at any one time; |
| · | the date on which the right to exercise the debt warrants will commence and the date on which the right will expire; |
| · | if applicable, a discussion of United States federal income tax, accounting or other considerations applicable to the debt warrants; |
| · | whether the debt warrants represented by the debt warrant certificates will be issued in registered or bearer form, and, if registered, where they may be transferred and registered; |
| · | anti-dilution provisions of the debt warrants, if any; |
| · | redemption or call provisions, if any, applicable to the debt warrants; and |
| · | any additional terms of the debt warrants, including terms, procedures and limitations relating to the exchange and exercise of the debt warrants. |
Debt warrant certificates will be exchangeable for new debt warrant certificates of different denominations and, if in registered form, may be presented for registration of transfer, and debt warrants may be exercised at the corporate trust office of the debt warrant agent or any other office indicated in the related prospectus supplement. Before the exercise of debt warrants, holders of debt warrants will not be entitled to payments of principal of, premium, if any, or interest, if any, on the debt securities purchasable upon exercise of the debt warrants, or to enforce any of the covenants in the indentures governing such debt securities.
39
We may issue units composed of any combination of our Class A ordinary shares, ADSs, preferred shares, debt securities or warrants. We will issue each unit so that the holder of the unit is also the holder of each security included in the unit. As a result, the holder of a unit will have the rights and obligations of a holder of each included security. The unit agreement under which a unit is issued may provide that the securities included in the unit may not be held or transferred separately, at any time or at any time before a specified date.
The following description is a summary of selected provisions relating to units that we may offer. The summary is not complete. When units are offered in the future, a prospectus supplement, information incorporated by reference or a free writing prospectus, as applicable, will explain the particular terms of those securities and the extent to which these general provisions may apply. The specific terms of the units as described in a prospectus supplement, information incorporated by reference, or free writing prospectus will supplement and, if applicable, may modify or replace the general terms described in this section.
This summary and any description of units in the supplement, information incorporated by reference or free writing prospectus is subject to and is qualified in its entirety by reference to the unit agreement, collateral arrangements and depositary arrangements, if applicable. We will file each of these documents, as applicable, with the SEC and incorporate them by reference as an exhibit to the registration statement of which this prospectus is a part on or before we issue a series of units. See “Where You Can Find Additional Information” and “Incorporation of Certain Information by Reference” above for information on how to obtain a copy of a document when it is filed.
The applicable prospectus supplement, information incorporated by reference or free writing prospectus may describe:
| · | the designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those securities may be held or transferred separately; |
| · | any provisions for the issuance, payment, settlement, transfer, or exchange of the units or of the securities composing the units; |
| · | whether the units will be issued in fully registered or global form; and |
| · | any other terms of the units. |
The applicable provisions described in this section, as well as those described under “Description of Shares Capital,” “Description of American Depositary Shares,” “Description of Preferred Shares,” “Description of Debt Securities” and “Description of Warrants” above, will apply to each unit and to each security included in each unit, respectively.
40
We or each of the selling shareholders may sell or distribute the securities offered by this prospectus, from time to time, in one or more offerings, as follows:
| · | through agents; |
| · | to dealers or underwriters for resale; |
| · | directly to purchasers; |
| · | in “at-the-market offerings,” within the meaning of Rule 415(a)(4) of the Securities Act, to or through a market maker or into an existing trading market, on an exchange or otherwise; or |
| · | through a combination of any of these methods of sale. |
The prospectus supplement with respect to the securities may state or supplement the terms of the offering of the securities.
In addition, we may issue the securities as a dividend or distribution or in a subscription rights offering to our existing security holders. In some cases, we or dealers acting for us or on our behalf may also repurchase securities and reoffer them to the public by one or more of the methods described above. This prospectus may be used in connection with any offering of our securities through any of these methods or other methods described in the applicable prospectus supplement.
The securities distributed by any of these methods may be sold to the public, in one or more transactions, either:
| · | at a fixed price or prices, which may be changed; |
| · | at market prices prevailing at the time of sale; |
| · | at prices related to prevailing market prices; or |
| · | at negotiated prices. |
The prospectus supplement relating to any offering will identify or describe:
| · | any terms of the offering; |
| · | any underwriter, dealers or agents; |
| · | any agency fees or underwriting discounts and other items constituting agents’ or underwriters’ compensation; |
| · | the net proceeds to us; |
| · | the purchase price of the securities; |
| · | any delayed delivery arrangements; |
| · | any over-allotment options under which underwriters may purchase additional securities from us; |
| · | the public offering price; |
| · | any discounts or concessions allowed or reallowed or paid to dealers; and |
| · | any exchange on which the securities will be listed. |
41
If we or the selling shareholders use underwriters for a sale of securities, the underwriters will acquire the securities for their own account. The underwriters may resell the securities in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The obligations of the underwriters to purchase the securities will be subject to the conditions set forth in the applicable underwriting agreement. The underwriters will be obligated to purchase all the securities of the series offered if they purchase any of the securities of that series. We or the selling shareholders may change from time to time any public offering price and any discounts or concessions the underwriters allow or reallow or pay to dealers. We or the selling shareholders may use underwriters with whom we have a material relationship. The prospectus supplement will include the names of the principal underwriters the respective amount of securities underwritten, the nature of the obligation of the underwriters to take the securities and the nature of any material relationship between an underwriter and us or the selling shareholders.
If dealers are used in the sale of securities offered through this prospectus, we or the selling shareholders will sell the securities to them as principals. They may then resell those securities to the public at varying prices determined by the dealers at the time of resale. The prospectus supplement will include the names of the dealers and the terms of the transaction.
We or the selling shareholders may designate agents who agree to use their reasonable efforts to solicit purchases for the period of their appointment or to sell securities on a continuing basis.
We or the selling shareholders may also sell securities directly to one or more purchasers without using underwriters or agents. Such securities may also be sold through agents designated from time to time. The prospectus supplement will name any agent involved in the offer or sale of the offered securities and will describe any commissions payable to the agent by us and the selling shareholder. Unless otherwise indicated in the prospectus supplement, any agent will agree to use its reasonable best efforts to solicit purchases for the period of its appointment. We or the selling shareholders may sell the securities directly to institutional investors or others who may be deemed to be underwriters within the meaning of the Securities Act with respect to any sale of those securities. The terms of any such sales will be described in the prospectus supplement.
Underwriters, dealers and agents that participate in the distribution of the securities may be underwriters as defined in the Securities Act, and any discounts or commissions they receive from us or the selling shareholders and any profit on their resale of the securities may be treated as underwriting discounts and commissions under the Securities Act. We will identify in the applicable prospectus supplement any underwriters, dealers or agents and will describe their compensation. We or the selling shareholders may have agreements with the underwriters, dealers and agents to indemnify them against specified civil liabilities, including liabilities under the Securities Act. Underwriters, dealers and agents may engage in transactions with or perform services for us or the selling shareholders in the ordinary course of their businesses.
If the prospectus supplement indicates, we or the selling shareholders may authorize agents, underwriters or dealers to solicit offers from certain types of institutions to purchase securities at the public offering price under delayed delivery contracts. These contracts would provide for payment and delivery on a specified date in the future. The contracts would be subject only to those conditions described in the prospectus supplement. The applicable prospectus supplement will describe the commission payable for solicitation of those contracts.
Unless otherwise specified in the applicable prospectus supplement or any free writing prospectus, each class or series of securities offered will be a new issue with no established trading market, other than our Class A ordinary shares represented by ADSs, which are listed on the New York Stock Exchange. We may elect to list any other class or series of securities on any exchange, but we are not obligated to do so. It is possible that one or more underwriters may make a market in a class or series of securities, but the underwriters will not be obligated to do so and may discontinue any market making at any time without notice. We cannot give any assurance as to the liquidity of the trading market for any of the securities.
In connection with an offering, an underwriter may purchase and sell securities in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of securities than they are required to purchase in the offering. “Covered” short sales are sales made in an amount not greater than the underwriters’ option to purchase additional securities, if any, from us or the selling shareholders in the offering. If the underwriters have an over-allotment option to purchase additional securities from us or the selling shareholders, the underwriters may close out any covered short position by either exercising their over-allotment option or purchasing securities in the open market. In determining the source of securities to close out the covered short position, the underwriters may consider, among other things, the price of securities available for purchase in the open market as compared to the price at which they may purchase securities through the over-allotment option. “Naked” short sales are any sales in excess of such option or where the underwriters do not have an over-allotment option. The underwriters must close out any naked short position by purchasing securities in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the securities in the open market after pricing that could adversely affect investors who purchase in the offering.
42
Accordingly, to cover these short sales positions or to otherwise stabilize or maintain the price of the securities, the underwriters may bid for or purchase securities in the open market and may impose penalty bids. If penalty bids are imposed, selling concessions allowed to syndicate members or other broker-dealers participating in the offering are reclaimed if securities previously distributed in the offering are repurchased, whether in connection with stabilization transactions or otherwise. The effect of these transactions may be to stabilize or maintain the market price of the securities at a level above that which might otherwise prevail in the open market. The impositions of a penalty bid may also affect the price of the securities to the extent that it discourages resale of the securities. The magnitude or effect of any stabilization or other transactions is uncertain. These transactions may be effected on the New York Stock Exchange or otherwise and, if commenced, may be discontinued at any time.
We or the selling shareholders may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with those derivatives, the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so, the third party may use securities pledged by or borrowed from us or the selling shareholders or others to settle those sales or to close out any related open borrowings of stock, and may use securities received from us or the selling shareholders in settlement of those derivatives to close out any related open borrowings of stock. The third party in such sale transactions will be an underwriter and, if not identified in this prospectus, will be identified in the applicable prospectus supplement or a post-effective amendment.
We or the selling shareholders may loan or pledge securities to a financial institution or other third party that in turn may sell the securities short using this prospectus. Such financial institution or third party may transfer its economic short position to investors in our securities or in connection with a concurrent offering of other securities offered by this prospectus or otherwise.
43
Material income tax consequences relating to the purchase, ownership and disposition of any of the securities offered by this prospectus will be set forth in the applicable prospectus supplement relating to the offering of those securities.
44
ENFORCEABILITY OF CIVIL LIABILITIES
We were incorporated under the laws of the Cayman Islands as an exempted company with limited liability. We were incorporated in the Cayman Islands because of certain benefits associated with being a Cayman Islands company, such as political and economic stability, an effective judicial system, a favorable tax system, the absence of foreign exchange control or currency restrictions and the availability of professional and support services. However, the Cayman Islands has a less developed body of securities laws as compared to the United States and provides less protection for investors. In addition, Cayman Islands companies do not have standing to sue before the federal courts of the United States.
Substantially all of our assets are located outside the United States. In addition, most of our directors and executive officers are nationals or residents of jurisdictions other than the United States and substantially all of their assets are located outside the United States. As a result, it may be difficult or impossible for you to effect service of process within the United States upon us or these persons, or to enforce judgments obtained in U.S. courts against us or them, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. It may also be difficult for you to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our executive officers and directors.
We have appointed Cogency Global Inc. as our agent to receive service of process with respect to any action brought against us in the U.S. District Court for the Southern District of New York in connection with this offering under the federal securities laws of the United States or of any State in the United States or any action brought against us in the Supreme Court of the State of New York in the County of New York in connection with this offering under the securities laws of the State of New York.
Maples and Calder (Hong Kong) LLP, our counsel as to Cayman Islands law, and JunzeJun Law Offices, our counsel as to PRC law, have advised us that there is uncertainty as to whether the courts of the Cayman Islands or the PRC would, respectively, (1) recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States and (2) entertain original actions brought in the Cayman Islands or the PRC against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.
Cayman Islands
Maples and Calder (Hong Kong) LLP has informed us that it is uncertain whether the courts of the Cayman Islands would (i) recognize or enforce judgments of U.S. courts obtained against us or our directors or officers that are predicated upon the civil liability provisions of the federal securities laws of the United States or the securities laws of any state in the United States, or (ii) entertain original actions brought in the Cayman Islands against us or our directors or officers that are predicated upon the federal securities laws of the United States or the securities laws of any state in the United States. In addition, Maples and Calder (Hong Kong) LLPhas informed us that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), a judgment obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any reexamination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided that such judgment (1) is given by a foreign court of competent jurisdiction, (2) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given, (3) is final, (4) is not in respect of taxes, a fine or penalty, (5) was neither obtained in a manner, nor is of a kind enforcement of which is contrary to natural justice or the public policy of the Cayman Islands. However, the Cayman Islands courts are unlikely to enforce a judgment obtained from the U.S. courts under civil liability provisions of the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature. A Cayman Islands court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
China
JunzeJun Law Offices has advised us that the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedure Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedure Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. JunzeJun Law Offices has advised us further that under PRC law, a foreign judgment, which does not otherwise violate basic legal principles, state sovereignty, safety or social public interest, may be recognized and enforced by a PRC court, based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. As there existed no treaty or other form of reciprocity between China and the United States governing the recognition and enforcement of judgments as of the date of this prospectus, including those predicated upon the liability provisions of the United States federal securities laws, there is uncertainty whether and on what basis a PRC court would enforce judgments rendered by United States courts.
45
We are being represented by Wilson Sonsini Goodrich & Rosati, Professional Corporation with respect to certain legal matters of United States federal securities and New York state law. The validity of the Class A ordinary shares represented by the ADSs, preferred shares, and legal matters as to Cayman Islands law will be passed upon for us by Maples and Calder (Hong Kong) LLP. Certain legal matters as to PRC law will be passed upon for us by JunzeJun Law Offices. If legal matters in connection with offerings made pursuant to this prospectus are passed upon by counsel to underwriters, dealers or agents, such counsel will be named in the applicable prospectus supplement relating to any such offering. Wilson Sonsini Goodrich & Rosati, Professional Corporation may reply upon Maples and Calder (Hong Kong) LLP with respect to matters governed by Cayman Islands law. Wilson Sonsini Goodrich & Rosati, Professional Corporation and Maples and Calder (Hong Kong) LLP may reply upon JunzeJun Law Offices with respect to matters governed by PRC law.
46
The financial statements and management’s assessment of the effectiveness of internal control over financial reporting (which is included in Management’s Report on Internal Control over Financial Reporting) incorporated in this prospectus by reference to the Annual Report on Form 20-F for the year ended December 31, 2020 have been so incorporated in reliance on the report of MaloneBailey, LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
The financial statements of Blockchain Alliance Technologies Limited and its subsidiaries as of and for the years ended December 31, 2019 and 2020 incorporated in this prospectus by reference to our Current Report on Form 6-K furnished with the SEC on July 30, 2021 have been so incorporated in reliance on the report of MaloneBailey, LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. The registered business address of MaloneBailey, LLP is 10375 Richmond Avenue, Suite 710, Houston Texas 77042.
The financial statements of Loto Interactive Limited and its subsidiaries as of and for the years ended December 31, 2019 and 2020 incorporated in this prospectus by reference to our Current Report on Form 6-K furnished with the SEC on July 30, 2021 have been so incorporated in reliance on the report of Zhonghui Anda CPA Limited, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. The registered business address of Zhonghui Anda CPA Limited is Unit 701, 7/F., Citicorp Centre, 18 Whitfield Road, Causeway Bay, Hong Kong.
47
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We are subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers. Accordingly, we will be required to file reports, including annual reports on Form 20-F, and other information with the SEC. As a foreign private issuer, we are exempt from the rules of the Exchange Act prescribing the furnishing and content of proxy statements to shareholders, and Section 16 short swing profit reporting for our officers and directors and for holders of more than 10% of our Class A ordinary shares. All information filed with the SEC can be obtained over the internet at the SEC’s website at www.sec.gov or inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of these documents, upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 or visit the SEC website for further information on the operation of the public reference rooms. We also maintain a website at ir.btc.com, but information on our website, however, is not, and should not be deemed to be, a part of this prospectus or any prospectus supplement. You should not regard any information on our website as a part of this prospectus or any prospectus supplement.
This prospectus is part of a registration statement we have filed with the SEC. This prospectus omits some information contained in the registration statement in accordance with SEC rules and regulations. You should review the information and exhibits in the registration statement for further information on us and the securities we are offering. Statements in this prospectus and any prospectus supplement concerning any document we filed as an exhibit to the registration statement or that we otherwise filed with the SEC are not intended to be comprehensive and are qualified by reference to these filings. You should review the complete document to evaluate these statements.
48
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
| Item 8. | Indemnification of Directors and Officers. |
Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Under our memorandum and articles of association, to the fullest extent permissible under Cayman Islands law every director and officer of our company shall be indemnified out of the assets of the registrant against actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such director or officer, other than by reason of such director’s or such officer’s own dishonesty, willful default or fraud as determined by a court of competent jurisdiction, in or about the conduct of the registrant’s business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his or her duties, powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by him or her in defending (whether successfully or otherwise) any civil proceedings concerning our company or our affairs in any court whether in the Cayman Islands or elsewhere.
Furthermore, we have entered into indemnification agreements with our directors and officers, a form of which has been filed as Exhibit 10.2 to our registration statement on Form F-1 initially filed with the SEC on October 22, 2013, as amended (File No. 333-191844), pursuant to which we have agreed to indemnify our directors and officers against certain liabilities and expenses that they incur in connection with claims made by reason of their being a director or officer of our company.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Any underwriting agreement entered into in connection with an offering of securities will also provide for indemnification of us and our officers and directors in certain cases.
| Item 9. | Exhibits. |
See Exhibit Index beginning on page II-4 of this registration statement.
| Item 10. | Undertakings. |
| (A) | The undersigned registrant hereby undertakes: |
| (1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
| (i) | To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended, or the Securities Act; |
| (ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or any decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and | |
| (iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
| provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the registration statement is on Form F-3 and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the SEC by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended, or Exchange Act, that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement. |
II-1
| (2) | That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| (3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
| (4) | To file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Exchange Act need not be furnished, provided that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, with respect to registration statements on Form F-3, a post-effective amendment need not be filed to include financial statements and information required by Section 10(a)(3) of the Exchange Act or Rule 3-19 of Regulation S-K if such financial statements and information are contained in periodic reports filed with or furnished to the SEC by the registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in this Form F-3. |
| (5) | That, for the purpose of determining liability under the Securities Act to any purchaser: |
| (i) | Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and |
| (ii) | Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date. |
| (6) | That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
| (i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
| (ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; | |
| (iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
| (iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
II-2
| (B) | Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. |
| (C) | The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| (D) | The undersigned registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of section 310 of the Trust Indenture Act of 1939, as amended, or the Act, in accordance with the rules and regulations prescribed by the SEC under section 305(b)(2) of the Act. |
II-3
EXHIBIT INDEX
| * | To be filed as an exhibit to a post-effective amendment to this registration statement or as an exhibit to a report filed under the Exchange Act and incorporated herein by reference. |
| ** | To be filed pursuant to Section 305(b)(2) of the Trust Indenture Act of 1939, as amended. |
II-4
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Hong Kong, on July 30, 2021.
| BIT Mining Limited | ||
| By: | /s/ Xianfeng Yang | |
| Name: | Xianfeng Yang | |
| Title: | Chief Executive Officer | |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint Xianfeng Yang, as his or her true and lawful attorney-in-fact and agent, each with full power of substitution and re-substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement and sign any registration statement for the same offerings covered by this registration statement that is to be effective upon filing pursuant to Rule 462(b) promulgated under the Securities Act of 1933, as amended, and all post-effective amendments thereto and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature |
Title |
Date | ||
/s/Shengwu Wu Shengwu Wu |
Chairman of the Board | July 30, 2021 | ||
/s/ Man San Vincent Law Man San Vincent Law |
Executive Director | July 30, 2021 | ||
/s/ Bo Yu Bo Yu |
Director | July 30, 2021 | ||
/s/ Qian Sun Qian Sun |
Independent Director | July 30, 2021 | ||
/s/ Honghui Deng Honghui Deng |
Independent Director | July 30, 2021 | ||
/s/ Yu Wei Yu Wei |
Independent Director | July 30, 2021 |
II-5
Signature |
Title |
Date | ||
| /s/ Yan Ki Angel Wong | Independent Director | July 30, 2021 | ||
| Yan Ki Angel Wong | ||||
/s/ Xianfeng Yang Xianfeng Yang |
Chief Executive Officer (principal executive officer) |
July 30, 2021 | ||
/s/ Qiang Yuan Qiang Yuan |
Chief Financial Officer (principal financial and accounting officer) |
July 30, 2021 |
II-6
SIGNATURE OF AUTHORIZED REPRESENTATIVE OF THE REGISTRANT
Pursuant to the Securities Act of 1933, as amended, the undersigned, the duly authorized representative in the United States of BIT Mining Limited, has signed this registration statement in New York, United States of America on July 30, 2021.
| Authorized U.S. Representative Cogency Global Inc. | ||
| By: | /s/ Colleen A. De Vries | |
| Name: | Colleen A. De Vries | |
| Title: | Senior Vice President on behalf of Cogency Global Inc. | |
II-7
Exhibit 4.5.1
Schedule to Exhibit 4.6 -Form of Warrant Dated July 16, 2021
BIT MINING LIMITED
| Name of Warrant Holders | Warrant Shares | Warrant ADSs | Warrant Block | |||||||||
| Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B | 8,800,000 | 880,000 | 4.99 | % | ||||||||
| Armistice Capital Master Fund Ltd. | 8,800,000 | 880,000 | 9.99 | % | ||||||||
| Bigger Capital Fund LP | 4,400,000 | 440,000 | 4.99 | % | ||||||||
| District 2 Capital Fund LP | 4,400,000 | 440,000 | 4.99 | % | ||||||||
| Ancient Ark Century Limited | 18,000,000 | 1,800,000 | 4.99 | % | ||||||||
| Anson East Master Fund LP | 2,200,000 | 220,000 | 4.99 | % | ||||||||
| Anson Investments Master Fund LP | 6,600,000 | 660,000 | 4.99 | % | ||||||||
| Sabby Volatility Warrant Master Fund, Ltd. | 20,000,000 | 2,000,000 | 4.99 | % | ||||||||
| Vine Grass Garden Limited | 18,000,000 | 1,800,000 | 4.99 | % | ||||||||
| Hudson Bay Master Fund Ltd. | 8,800,000 | 880,000 | 9.99 | % | ||||||||
| Craig Schwabe | 163,350 | 16,335 | 4.99 | % | ||||||||
| Charles Worthman | 48,400 | 4,840 | 4.99 | % | ||||||||
| Michael Vasinkevich | 3,103,650 | 310,365 | 4.99 | % | ||||||||
| Noam Rubinstein | 1,524,600 | 152,460 | 4.99 | % | ||||||||
| Total | 104,840,000 | 10,484,000 | ||||||||||
Exhibit 4.6
BIT Mining Limited
INDENTURE
Dated as of , 2021
[__________]
Trustee
TABLE OF CONTENTS
| Page | |||
| ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE | 1 | ||
| Section 1.1 | Definitions | 1 | |
| Section 1.2 | Other Definitions | 4 | |
| Section 1.3 | Incorporation by Reference of Trust Indenture Act | 5 | |
| Section 1.4 | Rules of Construction | 5 | |
| ARTICLE II THE SECURITIES | 6 | ||
| Section 2.1 | Issuable in Series | 6 | |
| Section 2.2 | Establishment of Terms of Series of Securities | 6 | |
| Section 2.3 | Execution and Authentication | 8 | |
| Section 2.4 | Registrar and Paying Agent | 9 | |
| Section 2.5 | Paying Agent to Hold Money in Trust | 10 | |
| Section 2.6 | Securityholder Lists | 10 | |
| Section 2.7 | Transfer and Exchange | 10 | |
| Section 2.8 | Mutilated, Destroyed, Lost and Stolen Securities | 11 | |
| Section 2.9 | Outstanding Securities | 11 | |
| Section 2.10 | Treasury Securities | 12 | |
| Section 2.11 | Temporary Securities | 12 | |
| Section 2.12 | Cancellation | 12 | |
| Section 2.13 | Defaulted Interest | 12 | |
| Section 2.14 | Global Securities | 13 | |
| Section 2.15 | CUSIP Numbers | 14 | |
| ARTICLE III REDEMPTION | 14 | ||
| Section 3.1 | Notice to Trustee | 14 | |
| Section 3.2 | Selection of Securities to be Redeemed | 14 | |
| Section 3.3 | Notice of Redemption | 15 | |
| Section 3.4 | Effect of Notice of Redemption | 15 | |
| Section 3.5 | Deposit of Redemption Price | 15 | |
| Section 3.6 | Securities Redeemed in Part | 15 | |
| ARTICLE IV COVENANTS | 15 | ||
| Section 4.1 | Payment of Principal and Interest | 15 | |
| Section 4.2 | SEC Reports | 16 | |
| Section 4.3 | Compliance Certificate | 16 | |
| Section 4.4 | Stay, Extension and Usury Laws | 16 | |
| Section 4.5 | Corporate Existence | 16 | |
| ARTICLE V SUCCESSORS | 16 | ||
| Section 5.1 | When Company May Merge, etc. | 16 | |
| Section 5.2 | Successor Corporation Substituted | 17 | |
-i-
TABLE OF CONTENTS
(Continued)
| Page | |||
| ARTICLE VI DEFAULTS AND REMEDIES | 17 | ||
| Section 6.1 | Events of Default | 17 | |
| Section 6.2 | Acceleration of Maturity; Rescission and Annulment | 18 | |
| Section 6.3 | Collection of Indebtedness and Suits for Enforcement by Trustee | 19 | |
| Section 6.4 | Trustee May File Proofs of Claim | 20 | |
| Section 6.5 | Trustee May Enforce Claims Without Possession of Securities | 20 | |
| Section 6.6 | Application of Money Collected | 21 | |
| Section 6.7 | Limitation on Suits | 21 | |
| Section 6.8 | Unconditional Right of Holders to Receive Principal and Interest | 22 | |
| Section 6.9 | Restoration of Rights and Remedies | 22 | |
| Section 6.10 | Rights and Remedies Cumulative | 22 | |
| Section 6.11 | Delay or Omission Not Waiver | 22 | |
| Section 6.12 | Control by Holders | 23 | |
| Section 6.13 | Waiver of Past Defaults | 23 | |
| Section 6.14 | Undertaking for Costs | 23 | |
| ARTICLE VII TRUSTEE | 23 | ||
| Section 7.1 | Duties of Trustee | 23 | |
| Section 7.2 | Rights of Trustee | 25 | |
| Section 7.3 | Force Majeure | 26 | |
| Section 7.4 | Individual Rights of Trustee | 26 | |
| Section 7.5 | Trustee’s Disclaimer | 27 | |
| Section 7.6 | Notice of Defaults | 27 | |
| Section 7.7 | Reports by Trustee to Holders | 27 | |
| Section 7.8 | Compensation and Indemnity | 27 | |
| Section 7.9 | Replacement of Trustee | 28 | |
| Section 7.10 | Successor Trustee by Merger, etc. | 29 | |
| Section 7.11 | Eligibility; Disqualification | 29 | |
| Section 7.12 | Preferential Collection of Claims Against Company | 29 | |
| ARTICLE VIII SATISFACTION AND DISCHARGE; DEFEASANCE | 30 | ||
| Section 8.1 | Satisfaction and Discharge of Indenture | 30 | |
| Section 8.2 | Application of Trust Funds; Indemnification | 31 | |
| Section 8.3 | Legal Defeasance of Securities of any Series | 31 | |
| Section 8.4 | Covenant Defeasance | 33 | |
| Section 8.5 | Repayment to Company | 34 | |
| ARTICLE IX SUPPLEMENTAL INDENTURES, AMENDMENTS AND WAIVERS | 34 | ||
| Section 9.1 | Without Consent of Holders | 34 | |
| Section 9.2 | With Consent of Holders | 35 | |
| Section 9.3 | Limitations | 35 | |
| Section 9.4 | Compliance with Trust Indenture Act | 35 | |
| Section 9.5 | Revocation and Effect of Consents | 36 | |
| Section 9.6 | Notation on or Exchange of Securities | 36 | |
| Section 9.7 | Trustee Protected | 36 | |
-ii-
TABLE OF CONTENTS
(Continued)
| Page | |||
| ARTICLE X MISCELLANEOUS | 36 | ||
| Section 10.1 | Trust Indenture Act Controls | 36 | |
| Section 10.2 | Notices | 37 | |
| Section 10.3 | Communication by Holders with Other Holders | 37 | |
| Section 10.4 | Certificate and Opinion as to Conditions Precedent | 37 | |
| Section 10.5 | Statements Required in Certificate or Opinion | 38 | |
| Section 10.6 | Legal Holidays | 38 | |
| Section 10.7 | No Recourse Against Others | 38 | |
| Section 10.8 | Counterparts | 38 | |
| Section 10.9 | Governing Laws | 39 | |
| Section 10.10 | No Adverse Interpretation of Other Agreements | 39 | |
| Section 10.11 | Successors | 39 | |
| Section 10.12 | Severability | 39 | |
| Section 10.13 | Table of Contents, Headings, etc. | 39 | |
| Section 10.14 | Securities in a Foreign Currency or ECU | 39 | |
| Section 10.15 | Judgment Currency | 40 | |
| ARTICLE XI SINKING FUNDS | 41 | ||
| Section 11.1 | Applicability of Article | 41 | |
| Section 11.2 | Satisfaction of Sinking Fund Payments with Securities | 41 | |
| Section 11.3 | Redemption of Securities for Sinking Fund | 42 | |
-iii-
BIT Mining Limited
BIT Mining Limited, reconciliation and tie between Trust Indenture Act of 1939 and Indenture, dated as of , 2021. This reconciliation and tie shall not, for any purpose, be deemed to be part of the Indenture.
| § 310(a)(1) | 7.10 | |
| (a)(2) | 7.10 | |
| (a)(3) | Not Applicable | |
| (a)(4) | Not Applicable | |
| (a)(5) | 7.10 | |
| (b) | 7.10 | |
| § 311(a) | 7.11 | |
| (b) | 7.11 | |
| (c) | Not Applicable | |
| § 312(a) | 2.6 | |
| (b) | 10.3 | |
| (c) | 10.3 | |
| § 313(a) | 7.6 | |
| (b)(1) | 7.6 | |
| (b)(2) | 7.6 | |
| (c)(1) | 7.6 | |
| (d) | 7.6 | |
| § 314(a) | 4.2, 10.5 | |
| (b) | Not Applicable | |
| (c)(1) | 10.4 | |
| (c)(2) | 10.4 | |
| (c)(3) | Not Applicable | |
| (d) | Not Applicable | |
| (e) | 10.5 | |
| (f) | Not Applicable | |
| § 315(a) | 7.1 | |
| (b) | 7.5 | |
| (c) | 7.1 | |
| (d) | 7.1 | |
| (e) | 6.14 | |
| § 316(a) | 2.10 | |
| (a)(1)(A) | 6.12 | |
| (a)(1)(B) | 6.13 | |
| (b) | 6.8 | |
| § 317(a)(1) | 6.3 | |
| (a)(2) | 6.4 | |
| (b) | 2.5 | |
| § 318(a) | 10.1 |
-iv-
Indenture dated as of , 20 between BIT Mining Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands (the “Company”), and [ ], as trustee (the “Trustee”).
Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Securities issued under this Indenture.
ARTICLE
I
DEFINITIONS AND INCORPORATION BY REFERENCE
| Section 1.1 | Definitions |
“Additional Amounts” means any additional amounts which are required hereby or by any Security, under circumstances specified herein or therein, to be paid by the Company in respect of certain taxes imposed on Holders specified herein or therein and which are owing to such Holders.
“Affiliate” of any specified person means any other person directly or indirectly controlling or controlled by or under common control with such specified person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such person, whether through the ownership of voting securities or by agreement or otherwise.
“Agent” means any Registrar, Paying Agent or Notice Agent.
“Board of Directors” means the board of directors of the Company or any duly authorized committee thereof.
“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been adopted by the Board of Directors or pursuant to authorization by the Board of Directors and to be in full force and effect on the date of the certificate and delivered to the Trustee.
“Business Day” means, unless otherwise provided by Board Resolution, Officers’ Certificate or supplemental indenture hereto for a particular Series, any day except a Saturday, Sunday or a legal holiday in The City of New York on which banking institutions are authorized or required by law, regulation or executive order to close or a day the Corporate Trust Office is closed..
“Capital Stock” means any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock.
“Company” means the party named as such above until a successor replaces it and thereafter means the successor.
“Company Order” means written order signed in the name of the Company by two Officers, one of whom must be the Company’s principal executive officer, principal financial officer or principal accounting officer.
“Company Request” means a written request signed in the name of the Company by its Chairman/Chairwoman, its chief executive officer, or its president and by its chief financial officer and delivered to the Trustee.
“Corporate Trust Office” means the office of the Trustee at which at any particular time its corporate trust business shall be principally administered.
“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.
“Depositary” means, with respect to the Securities of any Series issuable or issued in whole or in part in the form of one or more Global Securities, the person designated as Depositary for such Series by the Company, which Depositary shall be a clearing agency registered under the Exchange Act; and if at any time there is more than one such person, “Depositary” as used with respect to the Securities of any Series shall mean the Depositary with respect to the Securities of such Series.
“Discount Security” means any Security that provides for an amount less than the stated principal amount thereof to be due and payable upon declaration of acceleration of the maturity thereof pursuant to Section 6.2.
“Dollars” and “$” means the currency of The United States of America.
“ECU” means the European Currency Unit as determined by the Commission of the European Union.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Foreign Currency” means any currency or currency unit issued by a government other than the government of The United States of America.
“Foreign Government Obligations” means, with respect to Securities of any Series that are denominated in a Foreign Currency, (i) direct obligations of the government that issued or caused to be issued such currency for the payment of which obligations its full faith and credit is pledged or (ii) obligations of a person controlled or supervised by or acting as an agency or instrumentality of such government the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by such government, which, in either case under clauses (i) or (ii), are not callable or redeemable at the option of the issuer thereof.
“GAAP” means accounting principles generally accepted in the United States of America set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect as of the date of determination.
-2-
“Global Security” or “Global Securities” means a Security or Securities, as the case may be, in the form established pursuant to Section 2.2 evidencing all or part of a Series of Securities, issued to the Depositary for such Series or its nominee, and registered in the name of such Depositary or nominee.
“Holder” or “Securityholder” means a person in whose name a Security is registered.
“Indenture” means this Indenture as amended or supplemented from time to time and shall include the form and terms of particular Series of Securities established as contemplated hereunder.
“interest” with respect to any Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity.
“Maturity,” when used with respect to any Security, means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.
“Officer” means the chief executive officer, president, the chief financial officer, the treasurer or any assistant treasurer, general manager, and any vice president of the Company.
“Officer’s Certificate” means a certificate signed by two Officers, one of whom must be the Company’s principal executive officer, principal financial officer or principal accounting officer.
“Opinion of Counsel” means a written opinion of legal counsel, which opinion, is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company.
“person” means any individual, corporation, partnership, joint venture, association, limited liability company, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.
“principal” of a Security means the principal of the Security plus, when appropriate, the premium, if any, on, and any Additional Amounts in respect of, the Security.
“Responsible Officer” means any officer of the Trustee in its Corporate Trust Office and also means, with respect to a particular corporate trust matter, any other officer to whom any corporate trust matter is referred because of his or her knowledge of and familiarity with a particular subject and who shall in each case have direct responsibility for the administration of this Indenture.
“SEC” means the Securities and Exchange Commission.
“Securities” means the debentures, notes or other debt instruments of the Company of any Series authenticated and delivered under this Indenture.
-3-
“Series” or “Series of Securities” means each series of debentures, notes or other debt instruments of the Company created pursuant to Sections 2.1 and 2.2 hereof.
“Stated Maturity” when used with respect to any Security, means the date specified in such Security as the fixed date on which the principal of such Security or interest is due and payable.
“Subsidiary” of any specified person means any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such person or one or more of the other Subsidiaries of that person or a combination thereof.
“TIA” means the Trust Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb) as in effect on the date of this Indenture; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, “TIA” means, to the extent required by any such amendment, the Trust Indenture Act as so amended.
“Trustee” means the person named as the “Trustee” in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall mean or include each person who is then a Trustee hereunder, and if at any time there is more than one such person, “Trustee” as used with respect to the Securities of any Series shall mean the Trustee with respect to Securities of that Series.
“U.S. Government Obligations” means securities which are (i) direct obligations of The United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a person controlled or supervised by and acting as an agency or instrumentality of The United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by The United States of America, and which in the case of (i) and (ii) are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation evidenced by such depository receipt.
| Section 1.2 | Other Definitions |
|
TERM |
DEFINED IN SECTION |
| “Bankruptcy Law” | 6.1 |
| “Custodian” | 6.1 |
| “Event of Default” | 6.1 |
| “Journal” | 10.15 |
| “Judgment Currency” | 10.16 |
| “Legal Holiday” | 10.7 |
| “mandatory sinking fund payment” | 11.1 |
-4-
|
TERM |
DEFINED IN SECTION |
| “Market Exchange Rate” | 10.15 |
| “New York Banking Day” | 10.16 |
| “Notice Agent” | 2.4 |
| “optional sinking fund payment” | 11.1 |
| “Paying Agent” | 2.4 |
| “Registrar” | 2.4 |
| “Required Currency” | 10.16 |
| “successor person” | 5.1 |
| Section 1.3 | Incorporation by Reference of Trust Indenture Act |
Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings:
“Commission” means the SEC.
“indenture securities” means the Securities.
“indenture security holder” means a Security Holder.
“indenture to be qualified” means this Indenture.
“indenture trustee” or “institutional trustee” means the Trustee.
“obligor” on the indenture securities means the Company and any successor obligor upon the Securities.
All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA and not otherwise defined herein are used herein as so defined.
| Section 1.4 | Rules of Construction |
Unless the context otherwise requires:
| (a) | a term has the meaning assigned to it; |
| (b) | an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; |
| (c) | “or” is not exclusive; |
| (d) | words in the singular include the plural, and in the plural include the singular; and |
| (e) | provisions apply to successive events and transactions. |
-5-
ARTICLE
II
THE SECURITIES
Section 2.1 Issuable in Series
The aggregate principal amount of Securities that may be authenticated and delivered under this Indenture is [ ]. The Securities may be issued in one or more Series. All Securities of a Series shall be identical except as may be set forth or determined in the manner provided in a Board Resolution, a supplemental indenture or an Officer’s Certificate detailing the adoption of the terms thereof pursuant to authority granted under a Board Resolution. In the case of Securities of a Series to be issued from time to time, the Board Resolution, Officer’s Certificate or supplemental indenture detailing the adoption of the terms thereof pursuant to authority granted under a Board Resolution may provide for the method by which specified terms (such as interest rate, maturity date, record date or date from which interest shall accrue) are to be determined. Securities may differ between Series in respect of any matters, provided that all Series of Securities shall be equally and ratably entitled to the benefits of the Indenture.
Section 2.2 Establishment of Terms of Series of Securities
At or prior to the issuance of any Securities within a Series, the following shall be established (as to the Series generally, in the case of Subsection 2.2.1 and either as to such Securities within the Series or as to the Series generally in the case of Subsections 2.2.2 through 2.2.21) by or pursuant to a Board Resolution, and set forth or determined in the manner provided in a Board Resolution or Officers’ Certificate, and associated supplemental indenture:
2.2.1. the title of the Series (which shall distinguish the Securities of that particular Series from the Securities of any other Series);
2.2.2. the price or prices (expressed as a percentage of the principal amount thereof) at which the Securities of the Series will be issued;
2.2.3. any limit upon the aggregate principal amount of the Securities of the Series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the Series pursuant to Section 2.7, 2.8, 2.11, 3.6 or 9.6);
2.2.4. the date or dates on which the principal of the Securities of the Series is payable;
2.2.5. the rate or rates (which may be fixed or variable) per annum or, if applicable, the method used to determine such rate or rates (including, but not limited to, any commodity, commodity index, stock exchange index or financial index) at which the Securities of the Series shall bear interest, if any, the date or dates from which such interest, if any, shall accrue, the date or dates on which such interest, if any, shall commence and be payable and any regular record date for the interest payable on any interest payment date;
-6-
2.2.6. the place or places where the principal of and interest, if any, on the Securities of the Series shall be payable, where the Securities of such Series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of such Series and this Indenture may be served, and the method of such payment, if by wire transfer, mail or other means;
2.2.7. if applicable, the period or periods within which, the price or prices at which and the terms and conditions upon which the Securities of the Series may be redeemed, in whole or in part, at the option of the Company;
2.2.8. the obligation, if any, of the Company to redeem or purchase the Securities of the Series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the Series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;
2.2.9. the dates, if any, on which and the price or prices at which the Securities of the Series will be repurchased by the Company at the option of the Holders thereof and other detailed terms and provisions of such repurchase obligations;
2.2.10. if other than denominations of $1,000 and any integral multiple thereof, the denominations in which the Securities of the Series shall be issuable;
2.2.11. the forms of the Securities of the Series and whether the Securities will be issuable as Global Securities;
2.2.12. if other than the principal amount thereof, the portion of the principal amount of the Securities of the Series that shall be payable upon declaration of acceleration of the maturity thereof pursuant to Section 6.2;
2.2.13. the currency of denomination of the Securities of the Series, which may be Dollars or any Foreign Currency, and if such currency of denomination is a composite currency, the agency or organization, if any, responsible for overseeing such composite currency;
2.2.14. the designation of the currency, currencies or currency units in which payment of the principal of and interest, if any, on the Securities of the Series will be made;
2.2.15. if payments of principal of or interest, if any, on the Securities of the Series are to be made in one or more currencies or currency units other than that or those in which such Securities are denominated, the manner in which the exchange rate with respect to such payments will be determined;
2.2.16. the manner in which the amounts of payment of principal of or interest, if any, on the Securities of the Series will be determined, if such amounts may be determined by reference to an index based on a currency or currencies or by reference to a commodity, commodity index, stock exchange index or financial index;
-7-
2.2.17. the provisions, if any, relating to any security provided for the Securities of the Series;
2.2.18. any addition to, or change in the Events of Default which applies to any Securities of the Series and any change in the right of the Trustee or the requisite Holders of such Securities to declare the principal amount thereof due and payable pursuant to Section 6.2;
2.2.19. any addition to, or change in the covenants set forth in Articles IV or V which applies to Securities of the Series;
2.2.20. any material income tax considerations applicable;
2.2.21. if the Securities of the Series are to be convertible into or exchangeable for any securities of any Person (including the Company), the terms and conditions upon which such Securities will be so convertible or exchangeable;
2.2.22. whether the Securities of the Series are subject to subordination and the terms of such subordination;
2.2.23. any other terms of the Securities of the Series (which may supplement, modify or delete any provision of this Indenture insofar as it applies to such Series); and
2.2.24. any depositaries, interest rate calculation agents, exchange rate calculation agents or other agents with respect to Securities of such Series if other than those appointed herein
All Securities of any one Series need not be issued at the same time and may be issued from time to time, consistent with the terms of this Indenture, if so provided by or pursuant to the Board Resolution, supplemental indenture hereto or Officers’ Certificate referred to above.
Section 2.3 Execution and Authentication
Two Officers shall sign the Securities for the Company by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that office at the time the Security is authenticated, the Security shall nevertheless be valid.
A Security shall not be valid until authenticated by the manual or facsimile signature of the Trustee or an authenticating agent. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture.
The Trustee shall at any time, and from time to time, authenticate Securities for original issue in the principal amount provided in the Board Resolution, supplemental indenture hereto or Officers’ Certificate, upon receipt by the Trustee of a Company Order. Each Security shall be dated the date of its authentication unless otherwise provided by a Board Resolution, a supplemental indenture hereto or an Officers’ Certificate.
-8-
The aggregate principal amount of Securities of any Series outstanding at any time may not exceed any limit upon the maximum principal amount for such Series set forth in the Board Resolution, supplemental indenture hereto or Officers’ Certificate delivered pursuant to Section 2.2, except as provided in Section 2.8.
Prior to the issuance of Securities of any Series, the Trustee shall have received and (subject to Section 7.2) shall be fully protected in relying on: (a) the Board Resolution, supplemental indenture hereto or Officers’ Certificate establishing the form of the Securities of that Series or of Securities within that Series and the terms of the Securities of that Series or of Securities within that Series, (b) an Officers’ Certificate complying with Section 10.4, and (c) an Opinion of Counsel complying with Section 10.4.
The Trustee shall have the right to decline to authenticate and deliver any Securities of such Series: (a) if the Trustee, being advised by counsel, determines that such action may not be taken lawfully; or (b) if the Trustee in good faith by its board of directors or trustees, executive committee or a trust committee of directors and/or vice-presidents shall determine that such action would expose the Trustee to personal liability to Holders of any then outstanding Series of Securities.
The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Securities. An authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Company or an Affiliate of the Company.
Section 2.4 Registrar and Paying Agent
Company shall maintain, with respect to each Series of Securities, at the place or places specified with respect to such Series pursuant to Section 2.2, an office or agency where Securities of such Series may be presented or surrendered for payment (“Paying Agent”), where Securities of such Series may be surrendered for registration of transfer or exchange, where Securities of such Series that are convertible or exchangeable may be surrendered for conversion or exchange, as applicable, where Securities of such Series may be surrendered for conversion or exchange (“Registrar”) and where notices and demands to or upon the Company in respect of the Securities of such Series and this Indenture may be delivered (“Notice Agent”). The Trustee or Notice Agent, as applicable, shall deliver such notices and demands to the Company in accordance with Section 10.2 hereof. The Registrar shall keep a register with respect to each Series of Securities and to their transfer and exchange. The Company will give prompt written notice to the Trustee of the name and address, and any change in the name or address, of each Registrar, Paying Agent or Notice Agent. If at any time the Company shall fail to maintain any such required Registrar, Paying Agent or Notice Agent or shall fail to furnish the Trustee with the name and address thereof, such presentations, surrenders, notices and demands may be made or delivered at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.
-9-
The Company hereby appoints the Trustee the initial Registrar, Paying Agent and Notice Agent for each Series unless another Registrar, Paying Agent or Notice Agent, as the case may be, is appointed prior to the time Securities of that Series are first issued.
The Company hereby appoints The Depository Trust Company to act as Depositary with respect to the Securities.
Section 2.5 Paying Agent to Hold Money in Trust The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust, for the benefit of Security Holders of any Series of Securities, or the Trustee, all money held by the Paying Agent for the payment of principal of or interest on the Series of Securities, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary of the Company) shall have no further liability for the money. If the Company or a Subsidiary of the Company acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of Security Holders of any Series of Securities all money held by it as Paying Agent.
Section 2.6 Securityholder Lists
The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Security Holders of each Series of Securities and shall otherwise comply with TIA § 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least ten days before each interest payment date and at such other times as the Trustee may request in writing a list, in such form and as of such date as the Trustee may reasonably require, of the names and addresses of Security Holders of each Series of Securities.
Section 2.7 Transfer and Exchange
Where Securities of a Series are presented to the Registrar or a co-registrar with a request to register a transfer or to exchange them for an equal principal amount of Securities of the same Series, the Registrar shall register the transfer or make the exchange if its requirements for such transactions are met. To permit registrations of transfers and exchanges, the Trustee shall authenticate Securities upon receipt of a Company Order. No service charge shall be made for any registration of transfer or exchange (except as otherwise expressly permitted herein), but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer tax or similar governmental charge payable upon exchanges pursuant to Sections 2.11, 3.6 or 9.6).
Neither the Company nor the Registrar shall be required (a) to issue, register the transfer of, or exchange Securities of any Series for the period beginning at the opening of business fifteen days immediately preceding the mailing of a notice of redemption of Securities of that Series selected for redemption and ending at the close of business on the day of such mailing, or (b) to register the transfer of or exchange Securities of any Series selected, called or being called for redemption as a whole or the portion being redeemed of any such Securities selected, called or being called for redemption in part.
-10-
Section 2.8 Mutilated, Destroyed, Lost and Stolen Securities If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee, upon receipt of a Company Order, shall authenticate and deliver in exchange therefor a new Security of the same Series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and the Trustee, upon receipt of a Company Order, shall authenticate and make available for delivery, in lieu of any such destroyed, lost or stolen Security, a new Security of the same Series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any Series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that Series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 2.9 Outstanding Securities
The Securities outstanding at any time are all the Securities authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest on a Global Security effected by the Trustee in accordance with the provisions hereof and those described in this Section as not outstanding.
If a Security is replaced pursuant to Section 2.8, it ceases to be outstanding until the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company, a Subsidiary of the Company or an Affiliate of the Company) holds on the Maturity of Securities of a Series money sufficient to pay such Securities payable on that date, then on and after that date such Securities of the Series cease to be outstanding and interest on them ceases to accrue.
-11-
A Security does not cease to be outstanding because the Company or an Affiliate of the Company holds the Security.
In determining whether the Holders of the requisite principal amount of outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, the principal amount of a Discount Security that shall be deemed to be outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the Maturity thereof pursuant to Section 6.2.
Section 2.10 Treasury Securities
In determining whether the Holders of the required principal amount of Securities of a Series have concurred in any request, demand, authorization, direction, notice, consent or waiver, Securities of a Series owned by the Company or any Affiliate of the Company shall be disregarded, except that for the purposes of determining whether the Trustee shall be protected in relying on any such request, demand, authorization, direction, notice, consent or waiver only Securities of a Series that the Trustee knows are so owned shall be so disregarded.
Section 2.11 Temporary Securities Until definitive Securities are ready for delivery, the Company may prepare and the Trustee, upon receipt of a Company Order, shall authenticate temporary Securities upon a Company Order. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee, upon receipt of a Company Order, shall authenticate definitive Securities of the same Series and date of maturity in exchange for temporary Securities. Until so exchanged, temporary securities shall have the same rights under this Indenture as the definitive Securities.
Section 2.12 Cancellation
The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. Upon receipt of written instruction from the Company, the Trustee shall cancel all Securities surrendered for transfer, exchange, payment, replacement or cancellation and shall destroy such canceled Securities and deliver a certificate of such destruction to the Company, unless the Company otherwise directs. The Company may not issue new Securities to replace Securities that it has paid or delivered to the Trustee for cancellation.
Section 2.13 Defaulted Interest
If the Company defaults in a payment of interest on a Series of Securities, it shall pay the defaulted interest, plus, to the extent permitted by law, any interest payable on the defaulted interest, to the persons who are Security Holders of the Series on a subsequent special record date. The Company shall fix the record date and payment date. At least 10 days before the record date, the Company shall mail to the Trustee and to each Security Holder of the Series a notice that states the record date, the payment date and the amount of interest to be paid. The Company may pay defaulted interest in any other lawful manner.
-12-
Section 2.14 Global Securities
2.14.1. Terms of Securities. A Board Resolution, a supplemental indenture hereto or an Officers’ Certificate shall establish whether the Securities of a Series shall be issued in whole or in part in the form of one or more Global Securities and the Depositary for such Global Security or Securities.
2.14.2. Transfer and Exchange. Notwithstanding any provisions to the contrary contained in Section 2.7 of the Indenture and in addition thereto, any Global Security shall be exchangeable pursuant to Section 2.7 of the Indenture for Securities registered in the names of Holders other than the Depositary for such Security or its nominee only if (i) such Depositary notifies the Company that it is unwilling or unable to continue as Depositary for such Global Security or if at any time such Depositary ceases to be a clearing agency registered under the Exchange Act, and, in either case, the Company fails to appoint a successor Depositary registered as a clearing agency under the Exchange Act within 90 days of such event or (ii) the Company executes and delivers to the Trustee an Officers’ Certificate to the effect that such
Global Security shall be so exchangeable. Any Global Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for Securities registered in such names as the Depositary shall direct in writing in an aggregate principal amount equal to the principal amount of the Global Security with like tenor and terms.
Except as provided in this Section 2.14.2, a Global Security may not be transferred except as a whole by the Depositary with respect to such Global Security to a nominee of such Depositary, by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such a successor Depositary.
The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.
2.14.3. Legend. Any Global Security issued hereunder shall bear a legend in substantially the following form:
“THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE OF THE DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH A SUCCESSOR DEPOSITARY.”
-13-
2.14.4. Acts of Holders. The Depositary, as a Holder, may appoint agents and otherwise authorize participants to give or take any request, demand, authorization, direction, notice, consent, waiver or other action which a Holder is entitled to give or take under the Indenture..
2.14.5. Payments. Notwithstanding the other provisions of this Indenture, unless otherwise specified as contemplated by Section 2.2, payment of the principal of and interest, if any, on any Global Security shall be made to the Holder thereof.
2.14.6. Consents, Declaration and Directions. Except as provided in Section 2.14.5, the Company, the Trustee and any Agent shall treat a person as the Holder of such principal amount of outstanding Securities of such Series represented by a Global Security as shall be specified in a written statement of the Depositary with respect to such Global Security, for purposes of obtaining any consents, declarations, waivers or directions required to be given by the Holders pursuant to this Indenture.
Section 2.15 CUSIP Numbers
The Company in issuing the Securities may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other elements of identification printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.
ARTICLE
III
REDEMPTION
Section 3.1 Notice to Trustee
The Company may, with respect to any Series of Securities, reserve the right to redeem and pay the Series of Securities or may covenant to redeem and pay the Series of Securities or any part thereof prior to the Stated Maturity thereof at such time and on such terms as provided for in such Securities. If a Series of Securities is redeemable and the Company wants or is obligated to redeem prior to the Stated Maturity thereof all or part of the Series of Securities pursuant to the terms of such Securities, it shall notify the Trustee of the redemption date and the principal amount of Series of Securities to be redeemed. The Company shall give the Trustee notice at least 45 days before the redemption date (or such shorter notice as may be acceptable to the Trustee).
Section 3.2 Selection of Securities to be Redeemed Unless otherwise indicated for a particular Series by a Board Resolution, a supplemental indenture hereto or an Officers’ Certificate, if less than all the Securities of a Series are to be redeemed, the Trustee shall select the Securities of the Series to be redeemed in any manner that the Trustee deems fair and appropriate and in accordance with its customary practices or the selection shall be in accordance with DTC procedures, as applicable. The Trustee shall make the selection from Securities of the Series outstanding not previously called for redemption. The Trustee may select for redemption portions of the principal of Securities of the Series that have denominations larger than $1,000. Securities of the Series and portions of them it selects shall be in amounts of $1,000 or whole multiples of $1,000 or, with respect to Securities of any Series issuable in other denominations pursuant to Section 2.2.10, the minimum principal denomination for each Series and integral multiples thereof. Provisions of this Indenture that apply to Securities of a Series called for redemption also apply to portions of Securities of that Series called for redemption.
-14-
Section 3.3 Notice of Redemption
Unless otherwise indicated for a particular Series by Board Resolution, a supplemental indenture hereto or an Officers’ Certificate, at least 30 days but not more than 60 days before a redemption date, the Company shall mail a notice of redemption by first-class mail to each Holder whose Securities are to be redeemed.
The notice shall identify the Securities of the Series to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) the name and address of the Paying Agent;
(d) that Securities of the Series called for redemption must be surrendered to the Paying Agent to collect the redemption price;
(e) that interest on Securities of the Series called for redemption ceases to accrue on and after the redemption date;
(f) the CUSIP number, if any; and
(g) any other information as may be required by the terms of the particular Series or the Securities of a Series being redeemed.
At the Company’s request, the Trustee shall give the notice of redemption prepared by the Company, in the Company’s name and at its expense.
Section 3.4 Effect of Notice of Redemption Once notice of redemption is mailed or published as provided in Section 3.3, Securities of a Series called for redemption become due and payable on the redemption date and at the redemption price. A notice of redemption may not be conditional. Upon surrender to the Paying Agent, such Securities shall be paid at the redemption price plus accrued interest to the redemption date.
Section 3.5 Deposit of Redemption Price On or before the redemption date, the Company shall deposit with the Paying Agent money sufficient to pay the redemption price of and accrued interest, if any, on all Securities to be redeemed on that date.
Section 3.6 Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Trustee, upon receipt of a Company Order, shall authenticate for the Holder a new Security of the same Series and the same maturity equal in principal amount to the unredeemed portion of the Security surrendered.
ARTICLE
IV
COVENANTS
Section 4.1 Payment of Principal and Interest
The Company covenants and agrees for the benefit of the Holders of each Series of Securities that it will duly and punctually pay the principal of and interest, if any, on the Securities of that Series in accordance with the terms of such Securities and this Indenture.
-15-
Section 4.2 SEC Reports
The Company shall deliver to the Trustee within 15 days after it files them with the SEC copies of the annual reports and of the information, documents, and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The Company also shall comply with the other provisions of TIA § 314(a).
Section 4.3 Compliance Certificate
The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year (which on the date hereof ends on December 31) of the Company, an Officers’ Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his/her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions hereof (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he may have knowledge).
The Company will, so long as any of the Securities are outstanding, deliver to the Trustee, forthwith upon becoming aware of any Default or Event of Default, an Officers’ Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto.
Section 4.4 Stay, Extension and Usury Laws
The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture or the Securities; and the Company (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted.
Section 4.5 Corporate Existence
Subject to Article V, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the rights (charter and statutory), licenses and franchises of the Company; provided, however, that the Company shall not be required to preserve any such right, license or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries taken as a whole and that the loss thereof is not adverse in any material respect to the Holders.
ARTICLE
V
SUCCESSORS
Section 5.1 When Company May Merge, etc.
The Company shall not consolidate with or merge with or into, or convey, transfer or lease all or substantially all of its properties and assets to, any person (a “successor person”) unless:
-16-
(a) the Company is the surviving corporation or the successor person (if other than the Company) is a corporation organized and validly existing under the laws of any U.S. domestic jurisdiction and expressly assumes, the Company’s obligations on the Securities and under this Indenture; and
(b) immediately after giving effect to the transaction, no Default or Event of Default, shall have occurred and be continuing.
The Company shall deliver to the Trustee prior to the consummation of the proposed transaction an Officers’ Certificate to the foregoing effect and an Opinion of Counsel stating that the proposed transaction and any supplemental indenture comply with this Indenture.
Notwithstanding the above, any Subsidiary of the Company may consolidate with, merge into or transfer all or part of its properties to the Company. Neither an Officers’ Certificate nor an Opinion of Counsel shall be required to be delivered in connection therewith.
Section 5.2 Successor Corporation Substituted
Upon any consolidation or merger, or any sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 5.1, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, lease, conveyance or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor person has been named as the Company herein; provided, however, that the predecessor Company in the case of a sale, conveyance or other disposition (other than a lease) shall be released from all obligations and covenants under this Indenture and the Securities.
ARTICLE
VI
DEFAULTS AND REMEDIES
Section 6.1 Events of Default
“Event of Default,” wherever used herein with respect to Securities of any Series, means any one of the following events, unless in the establishing Board Resolution, supplemental indenture or Officers’ Certificate, it is provided that such Series shall not have the benefit of said Event of Default:
(a) default in the payment of any interest on any Security of that Series when it becomes due and payable, and continuance of such default for a period of 30 days (unless the entire amount of such payment is deposited by the Company with the Trustee or with a Paying Agent prior to the expiration of such period of 30 days); or
(b) default in the payment of principal of any Security of that Series at its Maturity; or
(c) default in the performance or breach of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty that has been included in this Indenture solely for the benefit of Series of Securities other than that Series), which default continues uncured for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the outstanding Securities of that Series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or
-17-
(d) the Company pursuant to or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an involuntary case,
(iii) consents to the appointment of a Custodian of it or for all or substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is unable to pay its debts as the same become due; or
(e) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(i) is for relief against the Company in an involuntary case,
(ii) appoints a Custodian of the Company or for all or substantially all of its property, or
(iii) orders the liquidation of the Company,
and the order or decree remains unstayed and in effect for 60 days; or
(f) any other Event of Default provided with respect to Securities of that Series, which is specified in a Board Resolution, a supplemental indenture hereto or an Officers’ Certificate, in accordance with Section 2.2.18.
The term “Bankruptcy Law” means title 11, U.S. Code or any similar U.S. Federal or State law for the relief of debtors. The term “Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.
Section 6.2 Acceleration of Maturity; Rescission and Annulment
If an Event of Default with respect to Securities of any Series at the time outstanding occurs and is continuing (other than an Event of Default referred to in Section 6.1(d) or (e)) then in every such case the Trustee or the Holders of not less than 25% in principal amount of the outstanding Securities of that Series may declare the principal amount (or, if any Securities of that Series are Discount Securities, such portion of the principal amount as may be specified in the terms of such Securities) of and accrued and unpaid interest, if any, on all of the Securities of that Series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) and accrued and unpaid interest, if any, shall become immediately due and payable. If an Event of Default specified in Section 6.1(d) or (e) shall occur, the principal amount (or specified amount) of and accrued and unpaid interest, if any, on all outstanding Securities shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.
-18-
At any time after such a declaration of acceleration with respect to any Series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the outstanding Securities of that Series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if all Events of Default with respect to Securities of that Series, other than the non-payment of the principal and interest, if any, of Securities of that Series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 6.13.
No such rescission shall affect any subsequent Default or impair any right consequent thereon.
Section 6.3 Collection of Indebtedness and Suits for Enforcement by Trustee
The Company covenants that if
(a) default is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or
(b) default is made in the payment of principal of any Security at the Maturity thereof, or
(c) default is made in the deposit of any sinking fund payment, when and as due by the terms of a Security,
then, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and any overdue interest at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or deemed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated.
Notwithstanding any other provision of this Indenture, if an Event of Default with respect to any Securities of any Series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such Series by pursuing any available remedy by proceeding at law or in equity as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.
-19-
Section 6.4 Trustee May File Proofs of Claim
In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same, and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.5 Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.
-20-
Section 6.6 Application of Money Collected
Any money or property collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money or property on account of principal or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee under Section 7.7; and
Second: To the payment of the amounts then due and unpaid for principal of and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and interest, respectively; and
Third: To the Company or to such party as a court of competent jurisdiction shall direct.
Section 6.7 Limitation on Suits
No Holder of any Security of any Series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that Series;
(b) the Holders of not less than 25% in principal amount of the outstanding Securities of that Series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee indemnity satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the outstanding Securities of that Series;
it being understood, and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders.
-21-
Section 6.8 Unconditional Right of Holders to Receive Principal and Interest
Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest, if any, on such Security on the Stated Maturity or Stated Maturities expressed in such Security (or, in the case of redemption, on the redemption date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.
Section 6.9 Restoration of Rights and Remedies
If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.
Section 6.10 Rights and Remedies Cumulative
Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in Section 2.8, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not, to the extent permitted by law, prevent the concurrent assertion or employment of any other appropriate right or remedy.
Section 6.11 Delay or Omission Not Waiver
No delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.
-22-
Section 6.12 Control by Holders
The Holders of not less than a majority in principal amount of the outstanding Securities of any Series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such Series, provided that
(a) such direction shall not be in conflict with any rule of law or with this Indenture,
(b) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and
(c) subject to the provisions of Section 7.1, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer of the Trustee, determine that the proceeding so directed would involve the Trustee in personal liability.
Section 6.13 Waiver of Past Defaults
The Holders of not less than a majority in principal amount of the outstanding Securities of any Series may on behalf of the Holders of all the Securities of such Series, waive any past Default hereunder with respect to such Series and its consequences, except a Default in the payment of the principal of or interest on any Security of such Series (provided, however, that the Holders of a majority in principal amount of the outstanding Securities of any Series may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration). Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.
Section 6.14 Undertaking for Costs
All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the outstanding Securities of any Series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or interest on any Security on or after the Stated Maturity or Stated Maturities expressed in such Security (or, in the case of redemption, on the redemption date).
ARTICLE VII
TRUSTEE
Section 7.1 Duties of Trustee
(a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
-23-
(b) Except during the continuance of an Event of Default:
(i) The Trustee need perform only those duties that are specifically set forth in this Indenture and no others.
(ii) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon Officers’ Certificates or Opinions of Counsel furnished to the Trustee and conforming to the requirements of this Indenture; however, in the case of any such Officers’ Certificates or Opinions of Counsel which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall examine such Officers’ Certificates and Opinions of Counsel to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:
(i) This paragraph does not limit the effect of paragraph (b) of this Section.
(ii) The Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts.
(iii) The Trustee shall not be liable with respect to any action taken, suffered or omitted to be taken by it with respect to Securities of any Series in good faith in accordance with the direction of the Holders of a majority in principal amount of the outstanding Securities of such Series relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such Series.
(iv) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraph (a), (b) and (c) of this Section.
(d) The Trustee may refuse to perform any duty or exercise any right or power unless it receives security or indemnity satisfactory to it against any loss, liability or expense.
(e) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
(f) No provision of this Indenture shall require the Trustee to risk its own funds or otherwise incur any financial liability in the performance of any of its duties, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk is not reasonably assured to it.
-24-
(g) The Paying Agent, the Registrar, the Notice Agent, any agent and any authenticating agent shall be entitled to the protections, immunities and standard of care as are set forth in paragraphs (a), (b) and (c) of this Section with respect to the Trustee.
Section 7.2 Rights of Trustee
(a) The Trustee may rely on and shall be protected in acting or refraining from acting upon any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel. No such Officers’ Certificate or Opinion of Counsel shall be at the expense of the Trustee. Any request or direction of the Company mentioned herein shall be sufficiently evidenced by an Officers’ Certificate.
(c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. No Depositary shall be deemed an agent of the Trustee and the Trustee shall not be responsible for any act or omission by any Depositary.
(d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers, provided that the Trustee’s conduct does not constitute negligence or bad faith. The Trustee shall not be liable for any special, punitive or consequential damages, even if they were reasonably foreseeable.
(e) The Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder and the Trustee may conclusively rely on any such advice or Opinion of Counsel.
(f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders of Securities unless such Holders shall have offered to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.
(g) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit.
-25-
(h) The Trustee shall not be deemed to have notice of any Default (other than a payment default under Section 6.1 or 6.2) or Event of Default unless a Responsible Officer of the Trustee has received written notice of any event which is in fact such a default at the Corporate Trust Office of the Trustee, and such notice references the Securities generally or the Securities of a particular Series and this Indenture.
(i) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.
(j) The Trustee may request that the Issuer deliver an Officers’ Certificate setting forth the names of individuals and titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers’ Certificate may be signed by any person authorized to sign an Officers’ Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded.
(k) The Trustee shall have no duty to inquire as to or monitor the performance of the Issuer with respect to the covenants contained in Article IV.
(l) The Trustee shall not be required to give any note, bond or surety in respect of the execution of the trusts and powers under this Indenture.
(m) Nothing herein shall be deemed to require the Trustee to submit to the jurisdiction or venue of a non-U.S. court.
Section 7.3 Force Majeure
(a) The Trustee shall have no liability for delays or inability to perform its duties hereunder due to forces majeures, events beyond its control, such as (but not exclusively) civil unrest, earthquakes, hurricanes or other natural disasters, floods, utility failures, transmission interruptions, power failures, wars, governmental declarations or Acts of God; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.
(b) Delivery of reports or information by the Company shall not be deemed to confer actual or constructive knowledge or notice on the Trustee with respect to a Default or Event of Default, or otherwise.
Section 7.4 Individual Rights of Trustee
The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or an Affiliate of the Company with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. The Trustee is also subject to Sections 7.11 and 7.12.
-26-
Section 7.5 Trustee’s Disclaimer
The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company’s use of the proceeds from the Securities, and it shall not be responsible for any statement in the Securities other than its authentication.
Section 7.6 Notice of Defaults
If a Default or Event of Default occurs and is continuing with respect to the Securities of any Series and if it is known to a Responsible Officer of the Trustee, the Trustee shall mail (or deliver notice subject to the applicable procedures of the Depositary or relevant clearing system) to each Security Holder of the Securities of that Series notice of a Default or Event of Default within 90 days after it occurs or, if later, after a Responsible Officer of the Trustee has written notice of such Default or Event of Default. Except in the case of a Default or Event of Default in payment of principal of or interest on any Security of any Series, or in the payment of any sinking fund installment, the Trustee may withhold the notice if and so long as its corporate trust committee or a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of Security Holders of that Series.
Section 7.7 Reports by Trustee to Holders
Within 60 days after each , commencing , 20 , the Trustee shall transmit by mail to all Security Holders, as their names and addresses appear on the register kept by the Registrar, a brief report dated as of such anniversary date, in accordance with, and to the extent required under, TIA § 313.
A copy of each report at the time of its mailing to Security Holders of any Series shall be filed with the SEC and each stock exchange on which the Securities of that Series are listed. The Company shall promptly notify the Trustee when Securities of any Series are listed on any stock exchange.
Section 7.8 Compensation and Indemnity
The Company shall pay to the Trustee from time to time compensation for its services as the Company and the Trustee shall from time to time agree upon in writing. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out of pocket expenses incurred by it. Such expenses shall include the reasonable compensation and expenses of the Trustee’s agents and counsel.
-27-
The Company shall indemnify each of the Trustee and any predecessor Trustee against any loss, liability or expense (including the cost of defending itself) incurred by it except as set forth in the next paragraph in the performance of the Trustee duties under this Indenture as Trustee or Agent. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity; provided, however, that failure to so notify the Company shall not relieve it of its obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense; provided, however, the Trustee may conduct its own defense if there is a conflict of interest between the interests of the Company and those of the Trustee. The Trustee may have one separate counsel (in addition to local counsel, if applicable) and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. This indemnification shall apply to officers, directors, employees, shareholders and Agents or agents of the Trustee.
The Company need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee or by any officer, director, employee, shareholder, Agent or agent of the Trustee to the extent it is attributed to its own negligence or willful conduct as determined by a court of competent jurisdiction in a final, non-appealable order.
To secure the Company’s payment obligations in this Section, the Trustee shall have a lien prior to the Securities of any Series on all money or property held or collected by the Trustee, except that held in trust to pay principal of and interest on particular Securities of that Series.
When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.1(d) or (e) occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.
The provisions of this Section shall survive the termination of this Indenture and the resignation and removal of the Trustee.
Section 7.9 Replacement of Trustee
A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section.
The Trustee may resign with respect to the Securities of one or more Series by so notifying the Company at least 30 days prior to the date of the proposed resignation. The Holders of a majority in principal amount of the Securities of any Series may remove the Trustee with respect to that Series by so notifying the Trustee and the Company. The Company may remove the Trustee with respect to Securities of one or more Series if:
(a) the Trustee fails to comply with Section 7.11;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
-28-
If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Securities may appoint a successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee with respect to the Securities of any one or more Series does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of at least a majority in principal amount of the Securities of the applicable Series may petition any court of competent jurisdiction for the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that, the retiring Trustee upon payment of its fees and expenses then unpaid shall transfer all property held by it as Trustee to the successor Trustee subject to the lien provided for in Section 7.8, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee with respect to each Series of Securities for which it is acting as Trustee under this Indenture. A successor Trustee shall mail a notice of its succession to each Security Holder of each such Series. Notwithstanding replacement of the Trustee pursuant to this Section 7.9, the Company’s obligations under Section 7.8 hereof shall continue for the benefit of the retiring Trustee with respect to expenses and liabilities incurred by it prior to such replacement.
Section 7.10 Successor Trustee by Merger, etc.If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee.
Section 7.11 Eligibility; Disqualification
This Indenture shall always have a Trustee who satisfies the requirements of TIA § 310(a)(1), (2) and (5). The Trustee shall always have a combined capital and surplus of at least $150,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA § 310(b).
Section 7.12 Preferential Collection of Claims Against Company
The Trustee is subject to TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated.
-29-
ARTICLE VIII
SATISFACTION AND DISCHARGE; DEFEASANCE
Section 8.1 Satisfaction and Discharge of Indenture
This Indenture shall upon Company Order cease to be of further effect (except as hereinafter provided in this Section 8.1), and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when
(a) either
(i) all Securities theretofore authenticated and delivered (other than Securities that have been destroyed, lost or stolen and that have been replaced or paid) have been delivered to the Trustee for cancellation; or
(ii) all such Securities not theretofore delivered to the Trustee for cancellation
(1) have become due and payable, or
(2) will become due and payable at their Stated Maturity within one year, or
(3) have been called for redemption or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, or
(4) are deemed paid and discharged pursuant to Section 8.3, as applicable;
and the Company, in the case of (1), (2) or (3) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust an amount sufficient for the purpose of paying and discharging the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and interest to the date of such deposit (in the case of Securities which have become due and payable on or prior to the date of such deposit) or to the Stated Maturity or redemption date, as the case may be;
(b) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 7.8, and, if money shall have been deposited with the Trustee pursuant to clause (a) of this Section, the provisions of Sections 2.4, 2.7, 2.8, 8.2 and 8.5 shall survive.
-30-
Section 8.2 Application of Trust Funds; Indemnification
(a) Subject to the provisions of Section 8.5, all money deposited with the Trustee pursuant to Section 8.1, all money and U.S. Government Obligations or Foreign Government Obligations deposited with the Trustee pursuant to Section 8.3 or 8.4 and all money received by the Trustee in respect of U.S. Government Obligations or Foreign Government Obligations deposited with the Trustee pursuant to Section 8.3 or 8.4, shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the persons entitled thereto, of the principal and interest for whose payment such money has been deposited with or received by the Trustee or to make mandatory sinking fund payments or analogous payments as contemplated by Sections 8.3 or 8.4.
(b) The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against U.S. Government Obligations or Foreign Government Obligations deposited pursuant to Sections 8.3 or 8.4 or the interest and principal received in respect of such obligations other than any payable by or on behalf of Holders.
(c) The Trustee shall deliver or pay to the Company from time to time upon Company Request any U.S. Government Obligations or Foreign Government Obligations or money held by it as provided in Sections 8.3 or 8.4 which, in the opinion of a nationally recognized firm of independent certified public accountants expressed in a written certification thereof delivered to the Trustee, are then in excess of the amount thereof which then would have been required to be deposited for the purpose for which such U.S. Government Obligations or Foreign Government Obligations or money were deposited or received. This provision shall not authorize the sale by the Trustee of any U.S. Government Obligations or Foreign Government Obligations held under this Indenture.
Section 8.3 Legal Defeasance of Securities of any Series
Unless this Section 8.3 is otherwise specified, pursuant to Section 2.2.20, to be inapplicable to Securities of any Series, the Company shall be deemed to have paid and discharged the entire indebtedness on all the outstanding Securities of any Series on the 91st day after the date of the deposit referred to in subparagraph (d) hereof, and the provisions of this Indenture, as it relates to such outstanding Securities of such Series, shall no longer be in effect (and the Trustee, at the expense of the Company, shall, at a Company Request, execute proper instruments acknowledging the same), except as to:
(a) the rights of Holders of Securities of such Series to receive, from the trust funds described in subparagraph (d) hereof, (i) payment of the principal of and each installment of principal of and interest on the outstanding Securities of such Series on the Stated Maturity of such principal or installment of principal or interest and (ii) the benefit of any mandatory sinking fund payments applicable to the Securities of such Series on the day on which such payments are due and payable in accordance with the terms of this Indenture and the Securities of such Series;
(b) the provisions of Sections 2.4, 2.7, 2.8, 8.2, 8.3, and 8.5; and
-31-
(c) the rights, powers, trust and immunities of the Trustee;
provided that, the following conditions shall have been satisfied:
(d) the Company shall have deposited or caused to be irrevocably deposited (except as provided in Section 8.2(c)) with the Trustee as trust funds in trust for the purpose of making the following payments, specifically pledged as security for and dedicated solely to the benefit of the Holders of such Securities (i) in the case of Securities of such Series denominated in Dollars, cash in Dollars and/or U.S. Government Obligations, or (ii) in the case of Securities of such Series denominated in a Foreign Currency (other than a composite currency), money and/or Foreign Government Obligations, which through the payment of interest and principal in respect thereof in accordance with their terms, will provide (and without reinvestment and assuming no tax liability will be imposed on such Trustee), not later than one day before the due date of any payment of money, an amount in cash, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge each installment of principal of and interest, if any, on and any mandatory sinking fund payments in respect of all the Securities of such Series on the dates such installments of interest or principal and such sinking fund payments are due;
(e) such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Company is a party or by which it is bound;
(f) no Default or Event of Default with respect to the Securities of such Series shall have occurred and be continuing on the date of such deposit or during the period ending on the 91st day after such date;
(g) the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel to the effect that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the Securities of such Series will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to Federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred;
(h) the Company shall have delivered to the Trustee an Officers’ Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of the Securities of such Series over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company; and
(i) the Company shall have delivered to the Trustee an Officers’Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the defeasance contemplated by this Section have been complied with.
-32-
Section 8.4 Covenant Defeasance
Unless this Section 8.4 is otherwise specified pursuant to Section 2.2.20 to be inapplicable to Securities of any Series, the Company may omit to comply with respect to the Securities of any Series with any term, provision or condition set forth under Sections 4.2, 4.3, 4.4, 4.5, and 5.1 as well as any additional covenants specified in a supplemental indenture for such Series of Securities or a Board Resolution or an Officers’ Certificate delivered pursuant to Section 2.2.20 (and the failure to comply with any such covenants shall not constitute a Default or Event of Default with respect to such Series under Section 6.1) and the occurrence of any event specified in a supplemental indenture for such Series of Securities or a Board Resolution or an Officers’ Certificate delivered pursuant to Section 2.2.18 and designated as an Event of Default shall not constitute a Default or Event of Default hereunder, with respect to the Securities of such Series, provided that the following conditions shall have been satisfied:
(a) With reference to this Section 8.4, the Company has deposited or caused to be irrevocably deposited (except as provided in Section 8.2(c)) with the Trustee as trust funds in trust for the purpose of making the following payments specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities (i) in the case of Securities of such Series denominated in Dollars, cash in Dollars and/or U.S. Government Obligations, or (ii) in the case of Securities of such Series denominated in a Foreign Currency (other than a composite currency), money and/or Foreign Government Obligations, which through the payment of interest and principal in respect thereof in accordance with their terms, will provide (and without reinvestment and assuming no tax liability will be imposed on such Trustee), not later than one day before the due date of any payment of money, an amount in cash, sufficient, in the opinion of a nationally recognized firm of independent certified public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge each installment of principal of and interest, if any, on and any mandatory sinking fund payments in respect of the Securities of such Series on the dates such installments of interest or principal and such sinking fund payments are due;
(b) Such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Company is a party or by which it is bound;
(c) No Default or Event of Default with respect to the Securities of such Series shall have occurred and be continuing on the date of such deposit;
(d) The Company shall have delivered to the Trustee an Opinion of Counsel to the effect that Holders of the Securities of such Series will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and covenant defeasance had not occurred;
-33-
(e) The Company shall have delivered to the Trustee an Officers’ Certificate stating the deposit was not made by the Company with the intent of preferring the Holders of the Securities of such Series over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company; and
(f) The Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the covenant defeasance contemplated by this Section have been complied with.
Section 8.5 Repayment to Company
The Trustee and the Paying Agent shall pay to the Company upon written request any money held by them for the payment of principal and interest that remains unclaimed for two years. After that, Security Holders entitled to the money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person.
ARTICLE IX
SUPPLEMENTAL INDENTURES, AMENDMENTS AND WAIVERS
Section 9.1 Without Consent of Holders
The Company and the Trustee may amend or supplement this Indenture or the Securities of one or more Series without the consent of any Security Holder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Article V;
(c) to provide for uncertificated Securities in addition to or in place of certificated Securities;
(d) to make any change that does not adversely affect the rights of any Security Holder;
(e) to provide for the issuance of and establish the form and terms and conditions of Securities of any Series as permitted by this Indenture;
(f) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more Series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee; or
(g) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA.
-34-
Section 9.2 With Consent of Holders
The Company and the Trustee may enter into a supplemental indenture with the written consent of the Holders of at least a majority in principal amount of the outstanding Securities of each Series affected by such supplemental indenture (including consents obtained in connection with a tender offer or exchange offer for the Securities of such Series), for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Security Holders of each such Series. Except as provided in Section 6.13, the Holders of at least a majority in principal amount of the outstanding Securities of any Series by notice to the Trustee (including consents obtained in connection with a tender offer or exchange offer for the Securities of such Series) may waive compliance by the Company with any provision of this Indenture or the Securities with respect to such Series.
It shall not be necessary for the consent of the Holders of Securities under this Section 9.2 to approve the particular form of any proposed supplemental indenture or waiver, but it shall be sufficient if such consent approves the substance thereof. After a supplemental indenture or waiver under this section becomes effective, the Company shall mail to the Holders of Securities affected thereby, a notice briefly describing the supplemental indenture or waiver. Any failure by the Company to mail or publish such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture or waiver.
Section 9.3 Limitations
Without the consent of each Security Holder affected, an amendment or waiver may not:
(a) reduce the principal amount of Securities whose Holders must consent to an amendment, supplement or waiver;
(b) reduce the rate of or extend the time for payment of interest (including default interest) on any Security;
(c) reduce the principal or change the Stated Maturity of any Security or reduce the amount of, or postpone the date fixed for, the payment of any sinking fund or analogous obligation;
(d) reduce the principal amount of Discount Securities payable upon acceleration of the maturity thereof;
(e) waive a Default or Event of Default in the payment of the principal of or interest, if any, on any Security (except a rescission of acceleration of the Securities of any Series by the Holders of at least a majority in principal amount of the outstanding Securities of such Series and a waiver of the payment default that resulted from such acceleration);
(f) make the principal of or interest, if any, on any Security payable in any currency other than that stated in the Security;
(g) make any change in Sections 6.8, 6.13 or 9.3 (this sentence); or
(h) waive a redemption payment with respect to any Security, provided that such redemption is made at the Company’s option.
Section 9.4 Compliance with Trust Indenture Act
Every amendment or waiver to this Indenture or the issuance of and establishment of the form and terms and conditions of Securities of one or more Series shall be set forth in a supplemental indenture hereto that complies with the TIA as then in effect.
-35-
Section 9.5 Revocation and Effect of Consents
Until an amendment is set forth in a supplemental indenture or a waiver becomes effective, a consent to it by a Holder of a Security is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder’s Security, even if notation of the consent is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent as to his Security or portion of a Security if the Trustee receives the notice of revocation before the date of the supplemental indenture or the date the waiver becomes effective.
Any amendment or waiver once effective shall bind every Security Holder of each Series affected by such amendment or waiver unless it is of the type described in any of clauses (a) through (h) of Section 9.3. In that case, the amendment or waiver shall bind each Holder of a Security who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder’s Security.
Section 9.6 Notation on or Exchange of Securities
The Trustee may place an appropriate notation about an amendment or waiver on any Security of any Series thereafter authenticated. The Company in exchange for Securities of that Series may issue and the Trustee shall authenticate upon receipt of a Company Order new Securities of that Series that reflect the amendment or waiver.
Section 9.7 Trustee Protected
In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 7.1) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee shall sign all supplemental indentures, except that the Trustee need not sign any supplemental indenture that adversely affects its rights.
ARTICLE
X
MISCELLANEOUS
Section 10.1 Trust Indenture Act Controls
If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required or deemed to be included in this Indenture by the TIA, such required or deemed provision shall control.
-36-
Section 10.2 Notices
Any notice or communication by the Company or the Trustee to the other, or by a Holder to the Company or the Trustee, is duly given if in writing, in the English language, referencing this Indenture and the applicable securities or series of securities, and delivered in person or mailed by first-class mail, or by facsimile transmission:
if to the Company:
14 F, West Side, Block B, Building No. 7
Shenzhen Bay Eco-Technology Park
Nanshan District, Shenzhen 518115
The People’s Republic of China
Attention: [·]
if to the Trustee:
[__________]
[__________]
Attention: [__________]
The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.
Any notice or communication to a Security Holder shall be mailed by first-class mail to his address shown on the register kept by the Registrar or delivered subject to the applicable procedures of Depositary or relevant clearing system. Failure to mail a notice or communication to a Security Holder of any Series or any defect in it shall not affect its sufficiency with respect to other Security Holders of that or any other Series.
If a notice or communication is mailed or published in the manner provided above, within the time prescribed, it is duly given, whether or not the Security Holder receives it.
If the Company mails a notice or communication to Security Holders, it shall mail a copy to the Trustee and each Agent at the same time.
Section 10.3 Communication by Holders with Other Holders
Security Holders of any Series may communicate pursuant to TIA § 312(b) with other Security Holders of that Series or any other Series with respect to their rights under this Indenture or the Securities of that Series or all Series. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).
Section 10.4 Certificate and Opinion as to Conditions Precedent
Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers’ Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with.
-37-
Section 10.5 Statements Required in Certificate or Opinion
Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA § 314(a)(4)) shall comply with the provisions of TIA § 314(e) and shall include:
(a) a statement that the person making such certificate or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(d) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with.
The Trustee may make reasonable rules for action by or a meeting of Security Holders of one or more Series. Any Agent may make reasonable rules and set reasonable requirements for its functions.
Section 10.6 Legal Holidays
Unless otherwise provided by Board Resolution, Officers’ Certificate or supplemental indenture hereto for a particular Series, a “Legal Holiday” is any day that is not a Business Day. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period.
Section 10.7 No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Security Holder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities.
Section 10.8 Counterparts
This Indenture may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
-38-
Section 10.9 Governing Laws
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
Section 10.10 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or a Subsidiary of the Company. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.
Section 10.11 Successors
All agreements of the Company in this Indenture and the Securities shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor.
Section 10.12 Severability
In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 10.13 Table of Contents, Headings, etc.
The Table of Contents, Cross Reference Table, and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.
Section 10.14 Securities in a Foreign Currency or ECU
Unless otherwise specified in a Board Resolution, a supplemental indenture hereto or an Officers’ Certificate delivered pursuant to Section 2.2 of this Indenture with respect to a particular Series of Securities, whenever for purposes of this Indenture any action may be taken by the Holders of a specified percentage in aggregate principal amount of Securities of all Series or all Series affected by a particular action at the time outstanding and, at such time, there are outstanding Securities of any Series which are denominated in a coin or currency other than Dollars (including ECUs), then the principal amount of Securities of such Series which shall be deemed to be outstanding for the purpose of taking such action shall be that amount of Dollars that could be obtained for such amount at the Market Exchange Rate at such time. For purposes of this Section 10.15, “Market Exchange Rate” shall mean the noon Dollar buying rate in New York City for cable transfers of that currency as published by the Federal Reserve Bank of New York; provided, however, in the case of ECUs, Market Exchange Rate shall mean the rate of exchange determined by the Commission of the European Union (or any successor thereto) as published in the Official Journal of the European Union (such publication or any successor publication, the “Journal”). If such Market Exchange Rate is not available for any reason with respect to such currency, the Trustee shall use, in its sole discretion and without liability on its part, such quotation of the Federal Reserve Bank of New York or, in the case of ECUs, the rate of exchange as published in the Journal, as of the most recent available date, or quotations or, in the case of ECUs, rates of exchange from one or more major banks in The City of New York or in the country of issue of the currency in question or, in the case of ECUs, in Luxembourg or such other quotations or, in the case of ECUs, rates of exchange as the Trustee, upon consultation with the Company, shall deem appropriate. The provisions of this paragraph shall apply in determining the equivalent principal amount in respect of Securities of a Series denominated in currency other than Dollars in connection with any action taken by Holders of Securities pursuant to the terms of this Indenture.
-39-
All decisions and determinations of the Trustee regarding the Market Exchange Rate or any alternative determination provided for in the preceding paragraph shall be in its sole discretion and shall, in the absence of manifest error, to the extent permitted by law, be conclusive for all purposes and irrevocably binding upon the Company and all Holders.
Section 10.15 Judgment Currency
The Company agrees, to the fullest extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due in respect of the principal of or interest or other amount on the Securities of any Series (the “Required Currency”) into a currency in which a judgment will be rendered (the “Judgment Currency”), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the day on which final unappealable judgment is entered, unless such day is not a New York Banking Day, then the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the New York Banking Day preceding the day on which final unappealable judgment is entered and (b) its obligations under this Indenture to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, any recovery pursuant to any judgment (whether or not entered in accordance with subsection (a)), in any currency other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable, and (iii) shall not be affected by judgment being obtained for any other sum due under this Indenture. For purposes of the foregoing, “New York Banking Day” means any day except a Saturday, Sunday or a legal holiday in The City of New York on which banking institutions are authorized or required by law, regulation or executive order to close.
-40-
ARTICLE XI
SINKING FUNDS
Section 11.1 Applicability of Article
The provisions of this Article shall be applicable to any sinking fund for the retirement of the Securities of a Series, except as otherwise permitted or required by any form of Security of such Series issued pursuant to this Indenture.
The minimum amount of any sinking fund payment provided for by the terms of the Securities of any Series is herein referred to as a “mandatory sinking fund payment” and any other amount provided for by the terms of Securities of such Series is herein referred to as an “optional sinking fund payment.” If provided for by the terms of Securities of any Series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 11.2. Each sinking fund payment shall be applied to the redemption of Securities of any Series as provided for by the terms of the Securities of such Series.
Section 11.2 Satisfaction of Sinking Fund Payments with Securities
The Company may, in satisfaction of all or any part of any sinking fund payment with respect to the Securities of any Series to be made pursuant to the terms of such Securities (1) deliver outstanding Securities of such Series to which such sinking fund payment is applicable (other than any of such Securities previously called for mandatory sinking fund redemption) and (2) apply as credit Securities of such Series to which such sinking fund payment is applicable and which have been repurchased by the Company or redeemed either at the election of the Company pursuant to the terms of such Series of Securities (except pursuant to any mandatory sinking fund) or through the application of permitted optional sinking fund payments or other optional redemptions pursuant to the terms of such Securities, provided that such Securities have not been previously so credited. Such Securities shall be received by the Trustee, together with an Officers’ Certificate with respect thereto, not later than 15 days prior to the date on which the Trustee begins the process of selecting Securities for redemption, and shall be credited for such purpose by the Trustee at the price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. If as a result of the delivery or credit of Securities in lieu of cash payments pursuant to this Section 11.2, the principal amount of Securities of such Series to be redeemed in order to exhaust the aforesaid cash payment shall be less than $100,000, the Trustee need not call Securities of such Series for redemption, except upon receipt of a Company Order that such action be taken, and such cash payment shall be held by the Trustee or a Paying Agent and applied to the next succeeding sinking fund payment, provided, however, that the Trustee or such Paying Agent shall from time to time upon receipt of a Company Order pay over and deliver to the Company any cash payment so being held by the Trustee or such Paying Agent upon delivery by the Company to the Trustee of Securities of that Series purchased by the Company having an unpaid principal amount equal to the cash payment required to be released to the Company.
-41-
Section 11.3 Redemption of Securities for Sinking Fund
Not less than 45 days (unless otherwise indicated in the Board Resolution, supplemental indenture hereto or Officers’ Certificate in respect of a particular Series of Securities) prior to each sinking fund payment date for any Series of Securities, the Company will deliver to the Trustee an Officers’ Certificate specifying the amount of the next ensuing mandatory sinking fund payment for that Series pursuant to the terms of that Series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting of Securities of that Series pursuant to Section 11.2, and the optional amount, if any, to be added in cash to the next ensuing mandatory sinking fund payment, and the Company shall thereupon be obligated to pay the amount therein specified. Not less than 30 days (unless otherwise indicated in the Board Resolution, Officers’ Certificate or supplemental indenture in respect of a particular Series of Securities) before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 3.2 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 3.3. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 3.4, 3.5 and 3.6.
-42-
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.
| BIT Mining Limited | ||
| By: | ||
| Name: | ||
| Its: | ||
| [__________], | ||
| as Trustee | ||
| By: | ||
| Name: | ||
| Its: | ||
Exhibit 5.1
Our ref RHT/663980-000003/20300027v2
BIT Mining Limited
PO Box 309, Ugland House
Grand Cayman
KY1-1104
Cayman Islands
30 July 2021
Dear Sir or Madam
BIT Mining Limited
We have acted as Cayman Islands legal advisers to BIT Mining Limited (the "Company") in connection with the Company’s registration statement on Form F-3, including all amendments or supplements thereto (the "Registration Statement"), filed with the Securities and Exchange Commission under the U.S. Securities Act of 1933, as amended to date relating to (1) the issue by the Company of (i) class A ordinary shares of a par value of US$0.00005 each (the "Ordinary Shares"), including the Ordinary Shares underlying the American depositary shares of the Company (each an "ADS"), each ADS representing ten Ordinary Shares, (ii) preference shares of a par value of US$0.00005 each (“Preference Shares” and together with the Ordinary Shares, the “Shares”), (iii) debt securities of the Company (”Debt Securities”), in one or more series, (iv) warrants to purchase Shares, ADSs or Debt Securities (“Warrants”), and/or (v) units consisting of one or more of the foregoing (“Units”); and (2) the resale by the selling shareholders identified therein of certain Ordinary Shares. The Shares, ADSs Debt Securities, Warrants, and Units being registered for the account of the Company are for a maximum aggregate offering price of US$250,000,000.
We are furnishing this opinion as Exhibits 5.1, 8.1 and 23.3 to the Registration Statement.
| 1 | Documents Reviewed |
For the purposes of this opinion, we have reviewed only originals, copies or final drafts of the following documents and such other documents as we have deemed necessary in order to render the opinions below:
| 1.1 | The certificate of incorporation of the Company dated 20 April 2007 and the certificates of incorporation on change of name of the Company dated 9 May 2011, 9 October 2013 and 9 April 2021. |
| 1.2 | The second amended and restated memorandum and articles of association of the Company as conditionally adopted by a special resolution passed on 21 October 2013 and effective immediately upon the completion of the Company's initial public offering of Class A Ordinary Shares represented by American Depositary Shares, and amended by special resolutions dated 30 December 2016 and 8 April 2021 respectively (the "Memorandum and Articles"). |
| 1.3 | The minutes (the "Minutes") of the meeting of the board of directors of the Company held on 12 July 2021 (the "Meeting") and the written resolutions of the directors of the Company dated 19 July 2021 (the "Written Resolutions"). |
| 1.4 | A certificate of good standing with respect to the Company issued by the Registrar of Companies dated 7 July 2021 (the "Certificate of Good Standing"). |
| 1.5 | A certificate from a director of the Company a copy of which is attached to this opinion letter (the "Director's Certificate"). |
| 1.6 | The Registration Statement. |
| 1.7 | The securities purchase agreement dated as of 12 July 2021 made between the Company and the purchasers named therein (the "SPA", together with the Warrants, the "Documents"). |
| 1.8 | The form of Warrants to purchase Shares, ADSs or Debt Securities of the Company to be issued by the Company to the purchasers named in the SPA. |
| 2 | Assumptions |
The following opinions are given only as to, and based on, circumstances and matters of fact existing and known to us on the date of this opinion letter. These opinions only relate to the laws of the Cayman Islands which are in force on the date of this opinion letter. In giving these opinions we have relied (without further verification) upon the completeness and accuracy, as of the date of this opinion letter, of the Director's Certificate and the Certificate of Good Standing. We have also relied upon the following assumptions, which we have not independently verified:
| 2.1 | The Documents have been or will be authorised and duly executed and unconditionally delivered by or on behalf of all relevant parties in accordance with all relevant laws (other than, with respect to the Company, the laws of the Cayman Islands). |
| 2.2 | The Documents are, or will be, legal, valid, binding and enforceable against all relevant parties in accordance with their terms under the laws of the State of New York and all other relevant laws (other than, with respect to the Company, the laws of the Cayman Islands). |
| 2.3 | The choice of the laws of the State of New York as the governing law of the Documents has been made in good faith and would be regarded as a valid and binding selection which will be upheld by the courts of the State of New York and any other relevant jurisdiction (other than the Cayman Islands) as a matter of the laws of the State of New York and all other relevant laws (other than the laws of the Cayman Islands). |
| 2.4 | Copies of documents, conformed copies or drafts of documents provided to us are true and complete copies of, or in the final forms of, the originals, and translations of documents provided to us are complete and accurate. |
| 2.5 | All signatures, initials and seals are genuine. |
| 2.6 | The Company will have sufficient authorized but unissued Shares in its authorized share capital to enable the Company to issue the Shares upon exercise of the Warrants. |
| 2.7 | The capacity, power, authority and legal right of all parties under all relevant laws and regulations (other than, with respect to the Company, the laws and regulations of the Cayman Islands) to enter into, execute, unconditionally deliver and perform their respective obligations under the Documents. |
| 2.8 | No invitation has been or will be made by or on behalf of the Company to the public in the Cayman Islands to subscribe for any of the Units, the Warrants, the ADSs or the Shares. |
| 2.9 | The Warrants will be issued, authenticated and certificated as required in accordance with the provisions of the SPA, and certificates representing the Warrants will have been duly executed, countersigned, registered and delivered in accordance with the provisions of the SPA. |
| 2.10 | There is no contractual or other prohibition or restriction (other than as arising under Cayman Islands law) binding on the Company prohibiting or restricting it from entering into and performing its obligations under the Documents. |
| 2.11 | No monies paid to or for the account of any party under the Documents or any property received or disposed of by any party to the Documents in each case in connection with the Documents or the consummation of the transactions contemplated thereby represent or will represent proceeds of criminal conduct or criminal property or terrorist property (as defined in the Proceeds of Crime Act (As Revised) and the Terrorism Act (As Revised), respectively). |
| 2.12 | There is nothing contained in the minute book or corporate records of the Company (which we have not inspected) which would or might affect the opinions set out below. |
| 2.13 | There is nothing under any law (other than the laws of the Cayman Islands) which would or might affect the opinions set out below. Specifically, we have made no independent investigation of the laws of the State of New York. |
| 2.14 | The Company will receive money or money's worth in consideration for the issue of the Shares and none of the Shares were or will be issued for less than par value. |
Save as aforesaid we have not been instructed to undertake and have not undertaken any further enquiry or due diligence in relation to the transaction the subject of this opinion letter.
| 3 | Opinion |
Based upon the foregoing and subject to the qualifications set out below and having regard to such legal considerations as we deem relevant, we are of the opinion that:
| 3.1 | The Company has been duly incorporated as an exempted company with limited liability and is validly existing and in good standing with the Registrar of Companies under the laws of the Cayman Islands. |
| 3.2 | The authorised share capital of the Company is US$100,000 divided into 1,599,935,000 Class A ordinary shares of par value US$0.00005 each, (2) 65,000 Class A preference shares of par value US$0.00005 each, and (3) 400,000,000 Class B ordinary shares of par value US$0.00005 each. |
| 3.3 | The issue and allotment of the Shares as contemplated by the Registration Statement (including the Shares underlying the ADSs issuable upon the exercise of the Warrants) have been duly authorised and when allotted, issued and paid for as contemplated in the Registration Statement, the Shares will be legally issued and allotted, fully paid and non-assessable. As a matter of Cayman law, a share is only issued when it has been entered in the register of members (shareholders). |
| 3.4 | The execution, issue, delivery and performance of the Documents, including the issue of the Shares, ADSs, Warrants and Units as contemplated by the Registration Statement, have been authorised by and on behalf of the Company and, upon the execution and unconditional delivery of the Documents by any Authorized Officer (as defined in the Written Resolutions) for and on behalf of the Company, the Documents will have been duly executed, issued and delivered on behalf of the Company and will constitute the legal, valid and binding obligations of the Company enforceable in accordance with their terms. |
| 3.5 | The statements under the caption "Enforceability of Civil Liabilities" in the prospectus forming part of the Registration Statement, to the extent that they constitute statements of Cayman Islands law, are accurate in all material respects and that such statements constitute our opinion. |
| 4 | Qualifications |
The opinions expressed above are subject to the following qualifications:
| 4.1 | The obligations assumed by the Company under the Documents will not necessarily be enforceable in all circumstances in accordance with their terms. In particular: |
| (a) | enforcement may be limited by bankruptcy, insolvency, liquidation, reorganisation, readjustment of debts or moratorium or other laws of general application relating to, protecting or affecting the rights of creditors; |
| (b) | enforcement may be limited by general principles of equity. For example, equitable remedies such as specific performance may not be available, inter alia, where damages are considered to be an adequate remedy; |
| (c) | some claims may become barred under relevant statutes of limitation or may be or become subject to defences of set off, counterclaim, estoppel and similar defences; |
| (d) | where obligations are to be performed in a jurisdiction outside the Cayman Islands, they may not be enforceable in the Cayman Islands to the extent that performance would be illegal under the laws of that jurisdiction; |
| (e) | the courts of the Cayman Islands have jurisdiction to give judgment in the currency of the relevant obligation and statutory rates of interest payable upon judgments will vary according to the currency of the judgment. If the Company becomes insolvent and is made subject to a liquidation proceeding, the courts of the Cayman Islands will require all debts to be proved in a common currency, which is likely to be the "functional currency" of the Company determined in accordance with applicable accounting principles. Currency indemnity provisions have not been tested, so far as we are aware, in the courts of the Cayman Islands; |
| (f) | arrangements that constitute penalties will not be enforceable; |
| (g) | enforcement may be prevented by reason of fraud, coercion, duress, undue influence, misrepresentation, public policy or mistake or limited by the doctrine of frustration of contracts; |
| (h) | provisions imposing confidentiality obligations may be overridden by compulsion of applicable law or the requirements of legal and/or regulatory process; |
| (i) | the courts of the Cayman Islands may decline to exercise jurisdiction in relation to substantive proceedings brought under or in relation to the SPA or the Warrants in matters where they determine that such proceedings may be tried in a more appropriate forum; |
| (j) | we reserve our opinion as to the enforceability of the relevant provisions of the Documents to the extent that they purport to grant exclusive jurisdiction as there may be circumstances in which the courts of the Cayman Islands would accept jurisdiction notwithstanding such provisions; |
| (k) | a company cannot, by agreement or in its articles of association, restrict the exercise of a statutory power and there is doubt as to the enforceability of any provision in the SPA or the Warrants whereby the Company covenants to restrict the exercise of powers specifically given to it under the Companies Act (As Revised), including, without limitation, the power to increase its authorised share capital, amend its memorandum and articles of association or present a petition to a Cayman Islands court for an order to wind up the Company. |
| 4.2 | To maintain the Company in good standing with the Registrar of Companies under the laws of the Cayman Islands, annual filing fees must be paid and returns made to the Registrar of Companies within the time frame prescribed by law. |
| 4.3 | The phrase "non-assessable" means, with respect to the Shares in the Company, that a shareholder shall not, solely by virtue of its status as a shareholder, be liable for additional assessments or calls on the Shares by the Company or its creditors (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil). |
| 4.4 | The obligations of the Company may be subject to restrictions pursuant to United Nations and United Kingdom sanctions extended to the Cayman Islands by Orders of Her Majesty in Council and sanctions imposed by Cayman Islands authorities, under Cayman Islands legislation. |
| 4.5 | We express no opinion as to the meaning, validity or effect of any references to foreign (i.e. non-Cayman Islands) statutes, rules, regulations, codes, judicial authority or any other promulgations and any references to them in the SPA or the Warrants. |
Except as specifically stated herein, we express no view as to the commercial terms of the SPA or the Warrants or whether such terms represent the intentions of the parties, and we make no comment with regard to warranties or representations that may be made by or with respect to the Company in any of the documents or instruments cited in this opinion or otherwise with respect to the commercial terms of the transactions, which are the subject of this opinion.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our name under the heading "Legal Matters" and elsewhere in the prospectus included in the Registration Statement. In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the U.S. Securities Act of 1933, as amended, or the Rules and Regulations of the Commission thereunder.
Yours faithfully
/s/ Maples and Calder (Hong Kong) LLP
Maples and Calder (Hong Kong) LLP
Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this “Agreement”) is dated as of July 12, 2021, between BIT Mining Limited, a company established and existing under the laws of the Cayman Islands (the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively, the “Purchasers”).
WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1:
“Acquiring Person” shall have the meaning ascribed to such term in Section 4.5.
“Action” shall have the meaning ascribed to such term in Section 3.1(j).
“ADSs” means the Company’s American Depositary Shares, each representing ten (10) Class A Shares.
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Bee Computing Share Exchange Agreement” means that certain share exchange agreement by and among the Company and shareholders of Bee Computing (HK) Limited entered into in April 2021.
“Board of Directors” means the board of directors of the Company.
“Blockchain Alliance Share Exchange Agreement” means that certain share exchange agreement between the Company and Blockchain Alliance Technologies Holding Company entered into in February 2021, as amended by that certain amendment to share exchange agreement between the Company and Blockchain Alliance Technologies Holding Company dated April 15, 2021.
“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States, the Cayman Islands, the PRC and Hong Kong or any day on which banking institutions in the State of New York, the Cayman Islands, the PRC or Hong Kong are authorized or required by law or other governmental action to close; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York, the Cayman Islands, the PRC or Hong Kong generally are open for use by customers on such day.
“Class A Shares” means the class A ordinary shares, par value US$0.00005 per share, of the Company and any other class of securities into which such securities may hereafter be reclassified or changed.
“Closing” means the closing of the purchase and sale of the Shares and Warrants pursuant to Section 2.1.
“Closing Date” means the second (2nd) Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Shares and the Warrants, in each case, have been satisfied or waived.
“Commission” means the United States Securities and Exchange Commission.
“Company Cayman Counsel” means Maples and Calder (Hong Kong) LLP.
“Company US Counsel” means Wilson Sonsini Goodrich & Rosati LLP.
“Deposit Agreement” means the deposit agreement, dated November 21, 2013, by and among the Company, the Depositary and the holders and beneficial owners of American Depositary Shares evidenced by American Depositary Receipts issued thereunder.
“Depositary” means Deutsche Bank Trust Company Americas.
“Disclosure Time” means, (i) if this Agreement is signed on a day that is not a Trading Day or after 9:00 a.m. (New York City time) and before midnight (New York City time) on any Trading Day, 9:01 a.m. (New York City time) on the Trading Day immediately following the date hereof, unless otherwise instructed as to an earlier time by the Placement Agent, and (ii) if this Agreement is signed between midnight (New York City time) and 9:00 a.m. (New York City time) on any Trading Day, no later than 9:01 a.m. (New York City time) on the date hereof, unless otherwise instructed as to an earlier time by the Placement Agent.
“Effective Date” means the earliest of the date that (a) the initial Registration Statement registering for resale of all Share ADSs and Warrant ADSs has been declared effective by the Commission, (b) all of the Share ADSs and Warrant ADSs have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale restrictions, (c) following the one year anniversary of the Closing Date provided that a holder of Share ADSs or Warrant ADSs is not an Affiliate of the Company, or (d) all of the Share ADSs and Warrant ADSs may be sold pursuant to an exemption from registration under Section 4(a)(1) of the Securities Act without volume or manner-of-sale restrictions and the Company’s counsel has delivered to such holders a standing written unqualified opinion that resales may then be made by such holders of the Share ADSs and Warrant ADSs pursuant to such exemption which opinion shall be in form and substance reasonably acceptable to such holders.
2
“Escrow Agent” means Continental Stock Transfer & Trust Company, with offices at 1 Street, 30th Floor, New York, NY 10004.
“Escrow Agreement” means the escrow agreement entered into, by and among the Company, the Escrow Agent and the Placement Agent pursuant to which the Purchasers shall deposit Subscription Amounts with the Escrow Agent to be applied to the transactions contemplated hereunder.
“Evaluation Date” shall have the meaning ascribed to such term in Section 3.1(s).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exempt Issuance” means the issuance of (a) Class A Shares, ADSs or options to employees, officers, directors, consultants or advisors of the Company pursuant to any stock or option plan duly adopted for such purpose for services rendered to the Company, provided that any securities issued to consultants or advisors pursuant to this clause (a) are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection therewith during the prohibition period in Section 4.12(a) herein, (b) warrants to the Placement Agent in connection with the transactions pursuant to this Agreement and any Class A Shares or ADSs upon exercise of the warrants to the Placement Agent, if applicable, and/or Class A Shares or ADSs upon the exercise or exchange of or conversion of securities exercisable or exchangeable for or convertible into Class A Shares or ADSs issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with stock splits or combinations) or to extend the term of such securities, (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that such securities are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection therewith during the prohibition period in Section 4.12(a) herein, and provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, and (d) Class A Shares that may be issuable pursuant to the Blockchain Alliance Share Exchange Agreement and the Bee Computing Share Exchange Agreement, provided that (a) the Blockchain Alliance Share Exchange Agreement and the Bee Computing Share Exchange Agreement have not been amended since the date of this Agreement and (b) any Class A Shares issued pursuant to the Blockchain Alliance Share Exchange Agreement and the Bee Computing Share Exchange Agreement are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection therewith during the prohibition period in Section 4.12(a) herein (other than registration rights in connection with that certain registration rights agreement entered into between the Company and Blockchain Alliance Technologies Holding Company in April 2021).
“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.
3
“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).
“Hong Kong” means the Hong Kong Special Administrative Region of the PRC.
“Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(p).
“Legend Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).
“Liens” means a lien, charge pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).
“Material Permits” shall have the meaning ascribed to such term in Section 3.1(n).
“Ordinary Share Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time ADSs or Class A Shares, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, ADSs or Class A Shares.
“Purchase Price” means $5.00 for every ten (10) Shares, which shall represent one (1) ADS, subject, in each case, to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Class A Shares or ADSs that occur after the date of this Agreement and prior to the Closing Date.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Placement Agent” means H.C. Wainwright & Co., LLC.
“PRC” means the People’s Republic of China, but solely for the purposes of this Agreement, excluding Hong Kong, the Macau Special Administrative Region and Taiwan.
“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.
“Public Information Failure” shall have the meaning ascribed to such term in Section 4.2(b).
“Public Information Failure Payments” shall have the meaning ascribed to such term in Section 4.2(b).
“Purchaser Party” shall have the meaning ascribed to such term in Section 4.8.
“Registrar” means Maples Group.
4
“Registration Rights Agreement” means the Registration Rights Agreement, dated on or about the date hereof, among the Company and the Purchasers, in the form of Exhibit A attached hereto.
“Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale by the Purchasers of the Share ADSs and the Warrant ADSs.
“Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e).
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).
“Securities” means the Shares, the Share ADSs, the Warrants, the Warrant Shares and the Warrant ADSs.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Shares” means the Class A Shares issued or issuable to each Purchaser pursuant to this Agreement.
“Share ADSs” means the ADSs representing the Shares.
“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include locating and/or borrowing ADSs or Class A Shares).
“Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for Shares and Warrants purchased hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds.
“Subsidiary” means any subsidiary of the Company as set forth in the SEC Reports and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.
“Trading Day” means a day on which the principal Trading Market is open for trading.
“Trading Market” means any of the following markets or exchanges on which the ADSs are listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).
“Transaction Documents” means this Agreement, the Warrants, the Registration Rights Agreement, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.
5
“Variable Rate Transaction” shall have the meaning ascribed to such term in Section 4.12(b).
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the ADSs are then listed or quoted on a Trading Market, the daily volume weighted average price of the ADSs for such date (or the nearest preceding date) on the Trading Market on which the ADSs are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the ADSs for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the ADSs are not then listed or quoted for trading on OTCQB or OTCQX and if prices for the ADSs are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per ADS so reported, or (d) in all other cases, the fair market value of an ADS as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“Warrants” means, collectively, the ADS purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which Warrants shall be exercisable six months after the Closing Date and have a term of exercise equal to two and one-half (2 1/2) years after the initial exercise date, in the form of Exhibit B attached hereto.
“Warrant ADSs” means ADSs issuable upon exercise of the Warrants.
“Warrant Shares” means Class A Shares underlying Warrant ADSs.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, up to an aggregate of $50 million of Shares and Warrants. Each Purchaser shall deliver to the Escrow Agent, via wire transfer, immediately available funds equal to such Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser, and the Company shall deliver, or cause to be delivered, to each Purchaser its respective Shares and Warrants, as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of the Placement Agent’s legal counsel or such other location as the parties shall mutually agree.
2.2 Deliveries.
(a) On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:
(i) this Agreement duly executed by the Company;
6
(ii) a certificate of good standing of the Company issued by the competent authority of the Cayman Islands no more than five (5) Business Days prior to the Closing Date;
(iii) a copy of the share certificate evidencing a number of Shares equal to such Purchaser’s Subscription Amount divided by the Purchase Price, registered in the name of such Purchaser and the Company’s register of members list Purchaser as the registered holder of such number of Shares;
(iv) a Warrant duly executed by the Company to such Purchaser to purchase up to a number of Warrant ADSs equal to 100% of such Purchaser’s Share ADSs, with an exercise price per Warrant ADS equal to $6.81, subject to adjustment therein;
(v) the Company shall have provided each Purchaser with the Company’s wire instructions, on Company letterhead and executed by the Chief Executive Officer or Chief Financial Officer;
(vi) the Registration Rights Agreement duly executed by the Company; and
(vii) a legal opinion of Company U.S. Counsel and Company Cayman Counsel, in form and substance reasonably satisfactory to the Placement Agent.
(b) On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company or Escrow Agent, as applicable, the following:
(i) this Agreement duly executed by such Purchaser;
(ii) such Purchaser’s Subscription Amount by wire transfer to the account specified in writing by the Escrow Agent; and
(iii) the Registration Rights Agreement duly executed by such Purchaser.
2.3 Closing Conditions.
(a) The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:
(i) the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);
(ii) all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed; and
(iii) the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.
(b) The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:
7
(i) the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) when made and on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);
(ii) all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;
(iii) the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;
(iv) there shall have been no Material Adverse Effect with respect to the Company since the date hereof; and
(v) from the date hereof to the Closing Date, trading in the ADSs shall not have been suspended by the Commission or the Company’s principal Trading Market, and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable to purchase the Securities at the Closing.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. Except as set forth in the SEC Reports filed 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 risk factor disclosures contained under the heading “Risk Factors,” any disclosure of risks included in any “forward-looking statements” disclaimer or any other statements that are similarly cautionary, predictive or forward-looking in nature; it being further agreed that any information disclosed in any such SEC Report shall be deemed disclosure only with respect to a Section of this Agreement to which the relevance of such information is reasonably apparent to the Company and the Purchasers from the text of such information contained in such SEC Report), the Company represents and warrants to each of the Purchasers that, as of the date hereof and as of the Closing Date:
(a) Subsidiaries. The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. If the Company has no subsidiaries, all other references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.
8
(b) Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing, to the extent the concept of good standing applies in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
(c) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(d) No Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, anti-dilution or similar adjustments, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.
9
(e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.4 of this Agreement, (ii) the filing with the Commission pursuant to the Registration Rights Agreement, (iii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities and the listing of the Share ADSs and Warrant ADSs for trading thereon in the time and manner required thereby and (iv) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).
(f) Issuance of the Securities. The Shares and Warrant Shares are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The Company has reserved from its duly authorized capital stock the maximum number of Class A Shares issuable pursuant to this Agreement and the Warrants. In all cases, the issuance of the Share ADSs and the Warrant ADSs upon exercise of the Warrants, respectively, are subject to the terms of the Deposit Agreement and the documentation requirements of the Depositary (including but not limited to opinions of counsel).
(g) Capitalization. The Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than as disclosed in the SEC Report or pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of ADSs or Class A Shares to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion and/or exercise of Ordinary Share Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as set forth in the SEC Reports or as a result of the purchase and sale of the Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any ADSs or Class A Shares or the capital stock of any Subsidiary, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional ADSs, Class A Shares or Ordinary Share Equivalents or capital stock of any Subsidiary. The issuance and sale of the Securities will not obligate the Company or any Subsidiary to issue ADSs, Class A Shares or other securities to any Person (other than the Purchasers). There are no outstanding securities or instruments of the Company or any Subsidiary with any provision that adjusts the exercise, conversion, exchange or reset price of such security or instrument upon an issuance of securities by the Company or any Subsidiary. There are no outstanding securities or instruments of the Company or any Subsidiary that contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to redeem a security of the Company or such Subsidiary. The Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.
10
(h) SEC Reports; Financial Statements. Except for the Company’s annual report on Form 20-F for the fiscal year ended December 31, 2019 (the “2019 20-F”), the Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension (including following any extensions of time for filing provided by Rule 12b-25 promulgated under the Exchange Act). As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a 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 were made, not misleading. The Company has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.
(i) Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included within the SEC Reports, except as set forth in the SEC Reports, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance of the Securities contemplated by this Agreement or as set forth in the SEC Reports, no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective businesses, prospects, properties, operations, assets or financial condition that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least one (1) Trading Day prior to the date that this representation is made.
11
(j) Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”), which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.
(k) Labor Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company or any Subsidiary is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(l) Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree, or order of any court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including, without limitation, all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.
12
(m) Environmental Laws. The Company and its Subsidiaries (i) are in compliance with all federal, state, local and foreign laws relating to pollution or protection of human health or the environment (including ambient air, surface water, groundwater, land surface or subsurface strata), including laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations, issued, entered, promulgated or approved thereunder (“Environmental Laws”); (ii) have received all permits licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses; and (iii) are in compliance with all terms and conditions of any such permit, license or approval where in each clause (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
(n) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.
(o) Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.
(p) Intellectual Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or required for use in connection with their respective businesses as described in the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, except as would not have a Material Adverse Effect, within two (2) years from the date of this Agreement. Neither the Company nor any Subsidiary has received, since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as could not have or reasonably be expected to not have a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company has no knowledge of any facts that would preclude it from having valid license rights or clear title to the Intellectual Property Rights. The Company has no knowledge that it lacks or will be unable to obtain any rights or licenses to use all Intellectual Property Rights that are necessary to conduct its business.
13
(q) Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business.
(r) Transactions with Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case in excess of $120,000 other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.
(s) Sarbanes-Oxley; Internal Accounting Controls. The Company and the Subsidiaries are in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect, the internal control over financial reporting of the Company and its Subsidiaries.
14
(t) Certain Fees. Except for the fees and expenses of the Placement Agent, no brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.
(u) Private Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.
(v) Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the Investment Company Act of 1940, as amended.
(w) Registration Rights. Except for the Registration Rights Agreement, that certain registration rights agreement entered into between the Company and Good Luck Information Technology Co., Limited in February 2021 and that certain registration rights agreement entered to between the Company and Blockchain Alliance Technologies Holding Company in April 2021, no Person has any right to cause the Company or any Subsidiary to effect the registration under the Securities Act of any securities of the Company or any Subsidiary.
(x) Listing and Maintenance Requirements. The Class A Shares and the ADSs are registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the ADSs or Class A Shares under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration. Other than any communication in connection with the filing of the 2019 20-F, the Company has not, in the twelve (12) months preceding the date hereof, received notice from any Trading Market on which the ADSs are or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements. The ADSs are currently eligible for electronic transfer through the Depository Trust Company or another established clearing corporation and the Company is current in payment of the fees to the Depository Trust Company (or such other established clearing corporation) in connection with such electronic transfer.
(y) Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s articles of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including, without limitation, as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.
15
(z) Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute material, non-public information. The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, is true and correct in all material respect and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve (12) months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a 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 were made and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.
(aa) No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.
(bb) Solvency. Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the Shares and Warrant hereunder, (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date.
16
(cc) Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis for any such claim.
(dd) No General Solicitation. Neither the Company nor any Person acting on behalf of the Company has offered or sold any of the Securities by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchasers and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.
(ee) Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any provision of FCPA.
(ff) Accountants. The Company’s independent registered public accounting firm is MaloneBailey, LLP. To the knowledge and belief of the Company, such accounting firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the fiscal year ending December 31, 2021.
(gg) No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents.
(hh) Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.
17
(ii) Acknowledgment Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(g) and 4.14 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers has been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified term, (ii) past or future open market or other transactions by any Purchaser, specifically including, without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price of the Company’s publicly-traded securities, (iii) any Purchaser, and counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, presently may have a “short” position in the ADSs or Class A Shares and (iv) each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction. The Company further understands and acknowledges that (y) one or more Purchasers may engage in hedging activities at various times during the period that the Securities are outstanding, including, without limitation, during the periods that the value of the Warrant ADSs deliverable with respect to Securities are being determined, and (z) such hedging activities (if any) could reduce the value of the existing stockholders' equity interests in the Company at and after the time that the hedging activities are being conducted. The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.
(jj) Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s placement agent in connection with the placement of the Securities.
(kk) Intentionally Omitted.
(ll) Form F-3 Eligibility. The Company is eligible to register the resale of the Securities for resale by the Purchaser on Form F-3 promulgated under the Securities Act.
(mm) Stock Option Plans. Each stock option granted by the Company under the Company’s stock option plan was granted (i) in accordance with the terms of the Company’s stock option plan and (ii) with an exercise price at least equal to the fair market value of the ADSs or Class A Shares on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company’s stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.
(nn) Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director, officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).
18
(oo) U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s request.
(pp) Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
(qq) Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”), and no Action or Proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened.
(rr) No Disqualification Events. With respect to the Securities to be offered and sold hereunder in reliance on Rule 506 under the Securities Act, none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person” and, together, “Issuer Covered Persons”) is subject to any of the "Bad Actor" disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Purchasers a copy of any disclosures provided thereunder.
(ss) Other Covered Persons. Other than the Placement Agent, the Company is not aware of any person (other than any Issuer Covered Person) that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the sale of any Securities.
(tt) Notice of Disqualification Events. The Company will notify the Purchasers and the Placement Agent in writing, prior to the Closing Date of (i) any Disqualification Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating to any Issuer Covered Person.
19
3.2 Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein, in which case they shall be accurate as of such date):
(a) Organization; Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(b) Understandings or Arrangements. Such Purchaser is acquiring the Securities as principal for its own account and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business. Such Purchaser understands that the Securities are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.
(c) Purchaser Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which it exercises any Warrants, it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), (a)(8), (a)(9), (a)(12), or (a)(13) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.
(d) Experience of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
20
(e) General Solicitation. Such Purchaser is not, to such Purchaser’s knowledge, purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or, to the knowledge of such Purchaser, any other general solicitation or general advertisement.
(f) Access to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including all exhibits and schedules thereto) and the SEC Reports and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Such Purchaser acknowledges and agrees that neither the Placement Agent nor any Affiliate of the Placement Agent has provided such Purchaser with any information or advice with respect to the Securities nor is such information or advice necessary or desired. Neither the Placement Agent nor any Affiliate has made or makes any representation as to the Company or the quality of the Securities and the Placement Agent and any Affiliate may have acquired non-public information with respect to the Company which such Purchaser agrees need not be provided to it. In connection with the issuance of the Securities to such Purchaser, neither the Placement Agent nor any of its Affiliates has acted as a financial advisor or fiduciary to such Purchaser.
(g) Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other than to other Persons party to this Agreement or to such Purchaser’s representatives, including, without limitation, its officers, directors, partners, legal and other advisors, employees, agents and Affiliates, such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, for the avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to locating or borrowing securities in order to effect Short Sales or similar transactions in the future
21
(h) Sufficient Funds. At and immediately prior to each Closing, such Purchaser will have cash in immediately available funds in excess of such Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser.
The Company acknowledges and agrees that the representations contained in this Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transactions contemplated hereby.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act.
(b) The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following form:
[NEITHER] THIS SECURITY [NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE] [HAS/HAVE] [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY [AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act. Such pledge shall not be deemed to be a transfer, sale or assignment of the Securities hereunder and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities, including, if the Securities are subject to registration pursuant to the Registration Rights Agreement, the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of Selling Stockholders (as defined in the Registration Rights Agreement) thereunder.
22
(c) Certificates evidencing the Shares and Warrant Shares underlying the Shares ADSs or Warrant ADSs, as applicable, shall not contain any legend (including the legend set forth in Section 4.1(b) hereof), (i) while a registration statement (including the Registration Statement) covering the resale of such security is effective under the Securities Act, (ii) upon issuance of the Share ADSs and Warrant ADSs in connection with a resale pursuant to an effective registration statement (including the Registration Statement) under the Securities Act, (iii) following any sale of such Share ADSs or Warrant ADSs pursuant to Rule 144 (assuming cashless exercise of the Warrants), (iv) if such Share ADSs or Warrant ADSs are eligible for sale under Rule 144 (assuming cashless exercise of the Warrants), without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Share ADSs and Warrant ADSs and without volume or manner-of-sale restrictions, or (v) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). The Company shall cause its counsel to issue a legal opinion to the Depositary (in a form reasonable acceptable to the Depositary) and/or the Registrar or the Purchaser promptly after the Effective Date if required by the Depositary and/or the Registrar to effect the removal of the legend hereunder, or if requested by a Purchaser, respectively. No medallion guarantee (or other type of guarantee or notarization) shall be required for the removal of any legend hereunder. If all or any portion of a Warrant is exercised at a time when there is an effective registration statement to cover the resale of the Warrant ADSs, or if such Share ADSs or Warrant ADSs may be sold under Rule 144 and the Company is then in compliance with the current public information required under Rule 144 (assuming cashless exercise of the Warrants), or if the Share ADSs or Warrant ADSs may be sold under Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Share ADSs or Warrant ADSs or if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission) then the Company shall cause to be issued Warrant ADSs free of all legends . The Company agrees that following the Effective Date or at such time as such legend is no longer required under this Section 4.1(c), it will, no later than the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined below) following the delivery by a Purchaser to the Company of a certificate representing Shares or Warrant Shares, as the case may be, issued with a restrictive legend (such date, the “Legend Removal Date”), cause to be delivered to such Purchaser a certificate representing the applicable number of ADSs representing such Shares or Warrant Shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to the Depositary or the Registrar that enlarge the restrictions on transfer set forth in this Section 4. ADSs representing Shares or Warrant Shares subject to legend removal hereunder, Share ADSs or Warrant ADSs shall be transmitted by the Depositary to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company System as directed by such Purchaser to the Company. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the ADSs as in effect on the date of delivery of a certificate representing Shares or Warrants Shares, as the case may be, issued with a restrictive legend. The Company shall be responsible for any Depositary fees or DTC fees with respect to any issuance of Securities or the removal of any legends with respect to any Securities in accordance herewith.
23
(d) In addition to such Purchaser’s other available remedies, subject to the timely delivery by such Purchaser of any documentation required by the Depositary or the Registrar, the Company shall pay to a Purchaser, in cash, (i) as partial liquidated damages and not as a penalty, for each $1,000 of Shares or Warrant Shares (based on the VWAP of the ADSs on the date such Securities are submitted to the Depositary and/or Registrar) delivered for removal of the restrictive legend and re-issuance in the form of ADSs subject to Section 4.1(c), $10 per Trading Day (increasing to $20 per Trading Day five (5) Trading Days after such damages have begun to accrue) for each Trading Day after the Legend Removal Date until ADSs representing such Securities are delivered to the Purchaser without legends pursuant to Section 4.1(c) and (ii) if the Company fails to (a) issue and deliver (or cause to be delivered) to a Purchaser by the first (1st) Trading Day following the Legend Removal Date ADSs representing the Securities so delivered to the Company by such Purchaser that is free from all restrictive and other legends and (b) if after the first (1st) Trading Day following the Legend Removal Date such Purchaser purchases (in an open market transaction or otherwise) ADSs or Class A Shares to deliver in satisfaction of a sale by such Purchaser of all or any portion of the number of ADSs representing Shares or Warrant Shares, or a sale of a number of ADSs or Class A Shares equal to all or any portion of the number of ADSs representing Shares or Warrant Shares that such Purchaser anticipated receiving from the Company without any restrictive legend, then, an amount equal to the excess of such Purchaser’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the ADSs or Class A Shares so purchased (including brokerage commissions and other out-of-pocket expenses, if any) (the “Buy-In Price”) over the product of (A) such number of ADSs representing Shares or Warrant Shares that the Company was required to deliver to such Purchaser by the Legend Removal Date multiplied by (B) the lowest closing sale price of the ADSs on any Trading Day during the period commencing on the date of the delivery by such Purchaser to the Company of the applicable ADSs representing Shares or Warrant Shares (as the case may be) and ending on the date of such delivery and payment under this clause (ii)..
(e) Each Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser will sell any Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities are sold pursuant to a Registration Statement, they will be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding.
4.2 Furnishing of Information; Public Information.
(a) Until the earliest of the time that no Purchaser owns Securities, the Company shall maintain the registration of the ADSs under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act.
24
(b) At any time during the period commencing from the six (6) month anniversary of the date hereof and ending at such time that all of the Securities may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if the Company (i) shall fail for any reason to satisfy the current public information requirement under Rule 144(c) or (ii) has ever been an issuer described in Rule 144(i)(1)(i) or becomes an issuer in the future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2) (a “Public Information Failure”) then, in addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell the Securities, an amount in cash equal to two percent (2.0%) of the aggregate Subscription Amount of such Purchaser’s Securities on the day of a Public Information Failure and on every thirtieth (30th) day (pro rated for periods totaling less than thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that such public information is no longer required for the Purchasers to transfer the Share ADSs and Warrant ADSs pursuant to Rule 144. The payments to which a Purchaser shall be entitled pursuant to this Section 4.2(b) are referred to herein as “Public Information Failure Payments.” Public Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which such Public Information Failure Payments are incurred and (ii) the third (3rd) Business Day after the event or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of one and one-half percent (1.5%) per month (prorated for partial months) until paid in full. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Public Information Failure, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.
4.3 Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.
4.4 Securities Laws Disclosure; Publicity. The Company shall (a) by the Disclosure Time, issue a press release disclosing the material terms of the transactions contemplated hereby, and (b) file a Report of a Foreign Issuer on Form 6-K, including the Transaction Documents as exhibits thereto, with the Commission within the time required by the Exchange Act. From and after the issuance of such press release, the Company represents to the Purchasers that it shall have publicly disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the issuance of such press release, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates on the one hand, and any of the Purchasers or any of their Affiliates on the other hand, shall terminate. The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except (a) as required by federal securities law in connection with (i) any registration statement contemplated by the Registration Rights Agreement and (ii) the filing of final Transaction Documents with the Commission and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).
25
4.5 Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers.
4.6 Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, which shall be disclosed pursuant to Section 4.4, the Company covenants and agrees that neither it, nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that constitutes, or the Company reasonably believes constitutes, material non-public information, unless prior thereto such Purchaser shall have consented to the receipt of such information and agreed with the Company to keep such information confidential. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company. To the extent that the Company, any of its Subsidiaries, or any of their respective officers, director, agents, employees or Affiliates delivers any material, non-public information to a Purchaser without such Purchaser’s consent, the Company hereby covenants and agrees that such Purchaser shall not have any duty of confidentiality to the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates, or a duty to the Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates not to trade on the basis of, such material, non-public information, provided that the Purchaser shall remain subject to applicable law. To the extent that any notice provided pursuant to any Transaction Document constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Report of a Foreign Issuer on Form 6-K. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.
4.7 Use of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes and shall not use such proceeds: (a) for the satisfaction of any portion of the Company’s debt other than payment pursuant to any bona fide financing transactions secured by interests in the Company’s cryptocurrencies operations or payment of trade payables in the ordinary course of business, (b) for the redemption of any ADSs or Class A Shares or Ordinary Share Equivalents, (c) for the settlement of any outstanding litigation or (d) in violation of FCPA or OFAC regulations.
26
4.8 Indemnification of Purchasers. Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is solely based upon a material breach of such Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which is finally judicially determined to constitute fraud, gross negligence or willful misconduct) or (c) in connection with any registration statement of the Company providing for the resale by the Purchasers of the Warrant ADSs issued and issuable upon exercise of the Warrants, the Company will indemnify each Purchaser Party, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses, as incurred, arising out of or relating to (i) any untrue or alleged untrue statement of a material fact contained in such registration statement, any prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that such untrue statements or omissions are based solely upon information regarding such Purchaser Party furnished in writing to the Company by such Purchaser Party expressly for use therein, or (ii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder in connection therewith. If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section 4.8 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law.
4.9 Reservation of Securities. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of Class A Shares for the purpose of enabling the Company to issue Shares pursuant to this Agreement and Warrant Shares pursuant to any exercise of the Warrants.
27
4.10 Listing of ADSs. The Company hereby agrees to use best efforts to maintain the listing or quotation of the ADSs on the Trading Market on which it is currently listed, and concurrently with the Closing, the Company shall apply to list or quote all of the Share ADSs and Warrant ADSs on such Trading Market and promptly secure the listing of all of the Share ADSs and Warrant ADSs on such Trading Market. The Company further agrees, if the Company applies to have the ADSs traded on any other Trading Market, it will then include in such application all of the Share ADSs and Warrant ADSs, and will take such other action as is necessary to cause all of the Share ADSs and Warrant ADSs to be listed or quoted on such other Trading Market as promptly as possible. The Company will then take all action reasonably necessary to continue the listing and trading of its ADSs on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market. The Company agrees to maintain the eligibility of the ADSs for electronic transfer through the Depository Trust Company or another established clearing corporation, including, without limitation, by timely payment of fees to the Depository Trust Company or such other established clearing corporation in connection with such electronic transfer.
4.11 Participation in Future Financing.
(a) From the date hereof until the 24-month anniversary of the Closing Date, upon any issuance by the Company or any of its Subsidiaries of ADSs, Class A Shares or Ordinary Share Equivalents for cash consideration, indebtedness or a combination of units thereof (a “Subsequent Financing”), the Purchasers shall have the right to participate in up to an aggregate amount of the Subsequent Financing equal to 50% of the Subsequent Financing (the “Participation Maximum”), pro rata to each Purchaser’s Subscription Amount, on the same terms, conditions and price provided for in the Subsequent Financing.
(b) Between the time period of 4:00 pm (New York City time) and 6:00 pm (New York City time) on the Trading Day immediately prior to the Trading Day of the expected announcement of the Subsequent Financing (or, if the Trading Day of the expected announcement of the Subsequent Financing is the first Trading Day following a holiday or a weekend (including a holiday weekend), between the time period of 4:00 pm (New York City time) on the Trading Day immediately prior to such holiday or weekend and 2:00 pm (New York City time) on the day immediately prior to the Trading Day of the expected announcement of the Subsequent Financing), the Company shall deliver to each Purchaser a written notice of the Company’s intention to effect a Subsequent Financing (a “Subsequent Financing Notice”), which notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed to be effected and shall include a term sheet and transaction documents relating thereto as an attachment.
(c) Any Purchaser desiring to participate in such Subsequent Financing must provide written notice to the Company by 6:30 am (New York City time) on the Trading Day following the date on which the Subsequent Financing Notice is delivered to the Purchaser (the “Notice Termination Time”) that the Purchaser is willing to participate in the Subsequent Financing, the amount of the Purchaser’s participation, and representing and warranting that the Purchaser has such funds ready, willing, and available for investment on the terms set forth in the Subsequent Financing Notice. If the Company receives no such notice from a Purchaser as of such Notice Termination Time, the Purchaser shall be deemed to have notified the Company that it does not elect to participate in such Subsequent Financing.
(d) If, by the Notice Termination Time, notifications by the Purchasers of their willingness to participate in the Subsequent Financing (or to cause their designees to participate) is, in the aggregate, less than the total amount of the Subsequent Financing, then the Company may effect the remaining portion of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice.
28
(e) If, by the Notice Termination Time, the Company receives responses to a Subsequent Financing Notice from Purchasers seeking to purchase more than the aggregate amount of the Participation Maximum, the Purchaser shall have the right to purchase its Pro Rata Portion (as defined below) of the Participation Maximum. “Pro Rata Portion” means the ratio of (x) the Subscription Amount of Securities purchased on the Closing Date by a Purchaser participating under this Section 4.11 and (y) the sum of the aggregate Subscription Amounts of Securities purchased on the Closing Date by all Purchasers participating under this Section 4.11.
(f) The Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will again have the right of participation set forth above in this Section 4.11, if the definitive agreement related to the initial Subsequent Financing Notice is not entered into for any reason on the terms set forth in such Subsequent Financing Notice within two (2) Trading Days after the date of delivery of the initial Subsequent Financing Notice.
(g) The Company and each Purchaser agree that, if any Purchaser elects to participate in the Subsequent Financing, the transaction documents related to the Subsequent Financing shall not include any term or provision that, directly or indirectly, will, or is intended to, exclude one or more of the Purchasers from participating in a Subsequent Financing, including, but not limited to, provisions whereby the Purchaser shall be required to agree to any restrictions on trading as to any the securities of the Company or be required to consent to any amendment to or termination of, or grant any waiver, release or the like under or in connection with, this Agreement, without the prior written consent of the Purchaser. In addition, the Company and each Purchaser agree that, in connection with a Subsequent Financing, the transaction documents related to the Subsequent Financing shall include a requirement for the Company to issue a widely disseminated press release by 9:30 am (New York City time) on the Trading Day of execution of the transaction documents in such Subsequent Financing (or, if the date of execution is not a Trading Day, on the immediately following Trading Day) that discloses the material terms of the transactions contemplated by the transaction documents in such Subsequent Financing.
(h) Notwithstanding anything to the contrary in this Section 4.11 and unless otherwise agreed to by the Purchaser, the Company shall either confirm in writing to the Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that the Purchaser will not be in possession of any material, non-public information, by 9:30 am (New York City time) on the second (2nd) Trading Day following date of delivery of the Subsequent Financing Notice. If by 9:30 am (New York City time) on such second (2nd) Trading Day, no public disclosure regarding a transaction with respect to the Subsequent Financing has been made, and no notice regarding the abandonment of such transaction has been received by the Purchaser, such transaction shall be deemed to have been abandoned and the Purchaser shall not be deemed to be in possession of any material, non-public information with respect to the Company or any of its Subsidiaries.
(i) Notwithstanding the foregoing, this Section 4.11 shall not apply in respect of an Exempt Issuance.
29
4.12 Subsequent Equity Sales.
(a) From the date hereof until thirty (30) days after the Effective Date, neither the Company nor any Subsidiary shall issue, enter into any agreement to issue or announce the issuance or proposed issuance of any ADSs, Class A Shares or Ordinary Share Equivalents or file any registration statement or any amendment or supplement thereto, in each case other than (i) as contemplated pursuant to the Registration Rights Agreement, (ii) filing a registration statement on Form S-8 in connection with any employee benefit plan, or (iii) filing of a new “universal shelf” registration statement on Form F-3 concurrently with the filing of the initial Registration Statement on F-3 pursuant the Registration Rights Agreement.
(b) From the date hereof until the one (1) year anniversary of the Effective Date, the Company shall be prohibited from effecting, or entering into an agreement to effect, any issuance by the Company or any of its Subsidiaries of ADSs, Class A Shares or Ordinary Share Equivalents (or a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional ADSs or Class A Shares either (A) at a conversion price, exercise price or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the ADSs or Class A Shares at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the ADSs or Class A Shares or (ii) enters into, or effects a transaction under, any agreement, including, but not limited to, an equity line of credit, whereby the Company may issue securities at a future determined price. Any Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages.
(c) Notwithstanding the foregoing, this Section 4.12 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance.
4.13 Equal Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.
30
4.14 Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press release as described in Section 4.4, such Purchaser will maintain the confidentiality of the existence and terms of this transaction. Notwithstanding the foregoing and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4 and (iii) no Purchaser shall have any duty of confidentiality or duty not to trade in the securities of the Company to the Company or its Subsidiaries after the issuance of the initial press release as described in Section 4.4. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.
4.15 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of any Purchaser.
4.16 Capital Changes. Until the one-year anniversary of the Effective Date, the Company shall not undertake a reverse or forward stock split or reclassification of the Class A Shares or ADSs without the prior written consent of the Purchasers holding a majority in interest of the Shares.
4.17 Acknowledgment of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding ADSs and Class A Shares, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligations under the Transaction Documents, including, without limitation, its obligation to issue the Shares and Warrant Shares pursuant to the Transaction Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of the Company.
ARTICLE V.
MISCELLANEOUS
5.1 Termination. This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing has not been consummated on or before the fifth (5th) Trading Day following the date hereof; provided, however, that no such termination will affect the right of any party to sue for any breach by any other party (or parties).
5.2 Fees and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Depositary fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company and any exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.
31
5.3 Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
5.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the time of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment at the email address as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the time of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment at the email address as set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto. To the extent that any notice provided pursuant to any Transaction Document constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Report of a Foreign Issuer on Form 6-K.
5.5 Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and Purchasers which purchased at least 50.1% in interest of the Shares based on the initial Subscription Amounts hereunder (or, prior to the Closing, the Company and each Purchaser) or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought, provided that if any amendment, modification or waiver disproportionately and adversely impacts a Purchaser (or group of Purchasers), the consent of such disproportionately impacted Purchaser (or group of Purchasers) shall also be required. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. Any proposed amendment or waiver that disproportionately, materially and adversely affects the rights and obligations of any Purchaser relative to the comparable rights and obligations of the other Purchasers shall require the prior written consent of such adversely affected Purchaser. Any amendment effected in accordance with this Section 5.5 shall be binding upon each Purchaser and holder of Securities and the Company.
5.6 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”
5.8 No Third-Party Beneficiaries. The Placement Agent shall be the third-party beneficiary of the representations and warranties of the Company in Section 3.1 and the representations and warranties of the Purchasers in Section 3.2. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.8 and this Section 5.8.
32
5.9 Governing Law; Agent for Service of Process, Etc. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Action or Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such Action or Proceeding is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such Action or Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If any party shall commence an Action or Proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section 4.8, the prevailing party in such Action or Proceeding shall be reimbursed by the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Action or Proceeding. In addition to and without limiting the foregoing, the Company confirms that it has appointed Cogency Global Inc., as its authorized agent (the “Authorized Agent”) upon whom process may be served in any suit, action or proceeding arising out of or based upon the Transaction Documents or the transactions contemplated thereby which may be instituted in any New York federal or state court, by any of the Purchasers, and expressly accepts the non-exclusive jurisdiction of any such court in respect of any such suit, action or proceeding. The Company hereby represents and warrants that the Authorized Agent has accepted such appointment and has agreed to act as said agent for service of process, and the Company agrees to take any and all action, including the filing of any and all documents that may be necessary to continue such appointment in full force and effect as aforesaid. The Company hereby authorizes and directs the Authorized Agent to accept such service. Service of process upon the Authorized Agent shall be deemed, in every respect, effective service of process upon the Company. If the Authorized Agent shall cease to act as agent for service of process, the Company shall appoint, without unreasonable delay, another such agent in the City of New York, State of New York, United States, and notify each Purchaser of such appointment. This paragraph shall survive any termination of this Agreement, in whole or in part.
5.10 Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.
5.11 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.
33
5.12 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights; provided, however, that, in the case of a rescission of an exercise of a Warrant, the applicable Purchaser shall be required to return any ADSs subject to any such rescinded exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid to the Company for such shares and the restoration of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).
5.14 Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.
5.15 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any Action for specific performance of any such obligation the defense that a remedy at law would be adequate.
5.16 Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.
34
5.17 Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any Proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents. For reasons of administrative convenience only, each Purchaser and its respective counsel have chosen to communicate with the Company through the legal counsel of the Placement Agent. The legal counsel of the Placement Agent does not represent any of the Purchasers and only represents the Placement Agent. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers. It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and not between and among the Purchasers.
5.18 Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled.
5.19 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
5.20 Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and every reference to share prices and ADSs or Class A Shares in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the ADSs or Class A Shares that occur after the date of this Agreement.
5.21 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
(Signature Pages Follow)
35
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
| BIT Mining ltd | Address for Notice: | ||
|
14F, West Side, Block B, Building No. 7 Shenzhen Bay Eco-Technology Park Nanshan District, Shenzhen 518115 The People’s Republic of China | |||
| /s/ Yu Bo | Email: | ||
| Name: Yu Bo | Fax: | ||
| Title: Director | |||
|
With a copy to (which shall not constitute notice): |
|||
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
[PURCHASER SIGNATURE PAGES TO BTCM SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
| Name of Purchaser: | ANSON INVESTMENTS MASTER FUND LP |
| /s/ AMIN NATHOO |
| Name of Authorized Signatory: | AMIN NATHOO |
| Title of Authorized Signatory: | Director, Anson Advisors Inc. |
[SIGNATURE PAGES CONTINUE]
[PURCHASER SIGNATURE PAGES TO BTCM SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
| Name of Purchaser: | Armistice Capital Master Fund Ltd. |
| /s/ Steven Boyd |
| Name of Authorized Signatory: | Steven Boyd |
| Title of Authorized Signatory: | CIO of Armistice Capital, LLC, the Investment Manager |
[SIGNATURE PAGES CONTINUE]
[PURCHASER SIGNATURE PAGES TO BTCM SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
| Name of Purchaser: | Bigger Capital Fund, LP |
| /s/ Michael Bigger |
| Name of Authorized Signatory: | Michael Bigger |
| Title of Authorized Signatory: | Managing member of the GP |
[SIGNATURE PAGES CONTINUE]
[PURCHASER SIGNATURE PAGES TO BTCM SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
| Name of Purchaser: | District 2 Capital fund LP |
| /s/ Michael Bigger |
| Name of Authorized Signatory: | Michael Bigger |
| Title of Authorized Signatory: | Managing member of the GP |
[SIGNATURE PAGES CONTINUE]
[PURCHASER SIGNATURE PAGES TO BTCM SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
| Name of Purchaser: | Hudson Bay Master Fund Ltd. |
| /s/ Richard Allison |
| Name of Authorized Signatory: | Richard Allison |
| Title of Authorized Signatory: | Authorized Signatory* |
| * Authorized Signatory Hudson Bay Capital Management LP not individually, but solely as Investment Advisor to Hudson Bay Master Fund Ltd. |
[SIGNATURE PAGES CONTINUE]
[PURCHASER SIGNATURE PAGES TO BTCM SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
| Name of Purchaser: |
Sabby Volatility Warrant Master Fund, Ltd. |
| /s/ Robert Grundstein |
| Name of Authorized Signatory: | Robert Grundstein |
| Title of Authorized Signatory: | COO of Purchaser’s Investment Manager |
[SIGNATURE PAGES CONTINUE]
[PURCHASER SIGNATURE PAGES TO BTCM SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
| Name of Purchaser: | Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B |
| /s/ Waqas Khatri |
| Name of Authorized Signatory: | Waqas Khatri |
| Title of Authorized Signatory: | Director |
[SIGNATURE PAGES CONTINUE]
[PURCHASER SIGNATURE PAGES TO BTCM SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
| Name of Purchaser: | Vine Grass Garden Limited |
| /s/ Joyce WONG |
| Name of Authorized Signatory: | Joyce WONG |
| Title of Authorized Signatory: | Director |
[SIGNATURE PAGES CONTINUE]
[PURCHASER SIGNATURE PAGES TO BTCM SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
| Name of Purchaser: | Ancient Ark Century Limited |
| /s/ Li Yunchun |
| Name of Authorized Signatory: | Li Yunchun |
| Title of Authorized Signatory: | Director |
[SIGNATURE PAGES CONTINUE]
Exhibit A
Form of Registration Rights Agreement
Exhibit B
Form of Warrants
Exhibit 10.2
January 28, 2021
500.COM LIMITED
AND
LOTO INTERACTIVE LIMITED
|
SUBSCRIPTION AGREEMENT in respect of 169,354,839 Shares in the authorized share capital of LOTO INTERACTIVE LIMITED
|
CONTENTS
| CLAUSE | PAGE | |
| 1. | DEFINITIONS AND INTERPRETATION | 1 |
| 2. | SUBSCRIPTION | 4 |
| 3. | CONDITIONS | 4 |
| 4. | COMPLETION | 5 |
| 5. | REPRESENTATIONS AND WARRANTIES | 6 |
| 6. | VARIATION | 7 |
| 7. | ASSIGNMENT | 7 |
| 8. | WAIVERS | 7 |
| 9. | SEVERABILITY | 8 |
| 10. | TERMINATION | 8 |
| 11. | ANNOUNCEMENTS | 8 |
| 12. | CONFIDENTIALITY | 8 |
| 13. | TIME OF THE ESSENCE | 9 |
| 14. | COSTS AND EXPENSES | 9 |
| 15. | NOTICES | 9 |
| 16. | COUNTERPARTS | 9 |
| 17. | MISCELLANEOUS | 10 |
| 18. | GOVERNING LAW AND JURISDICTION | 10 |
i
THIS AGREEMENT is made on January 28, 2021
BETWEEN:
| (1) | 500.COM LIMITED, a company incorporated under the laws of the Cayman Islands, whose business address is at 12F, West Side, Block B, Building No. 7, Shenzhen Bay Eco-Technology Park, Nanshan District, Shenzhen, the PRC (the Subscriber); and |
| (2) | LOTO INTERACTIVE LIMITED, a company incorporated under the laws of the Cayman Islands, with its principal place of business in Hong Kong at Units 813 & 815, Level 8, Core F, Cyberport 3, 100 Cyberport Road, Hong Kong and the shares of which are listed on the GEM operated by The Stock Exchange of Hong Kong Limited (stock code: 8198) (the Company). |
WHEREAS:
(A) As at the date of this Agreement, the Company has 379,023,983 issued Shares, which have been issued, fully paid and are listed on the GEM operated by the Hong Kong Stock Exchange. As at the date of this Agreement, the Subscriber holds 127,871,432 Shares, representing approximately 33.74% of the issued share capital of the Company.
(B) The Company proposes to issue the New Shares to the Subscriber.
(C) The Company has agreed to allot and issue, and the Subscriber has agreed to subscribe for, the New Shares on the terms and conditions of this Agreement.
(D) The Company proposes to enter into the Acquisition Agreement in relation to the Acquisition. The Subscription and the Acquisition shall be inter-conditional, and the Company proposes to apply the Total Subscription Price towards the Acquisition.
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement (including the recitals above), the following expressions shall, unless the context otherwise requires, have the following meaning:
Acquisition means the acquisition of an aggregate of 49% equity interest of 甘孜州长河水电消纳服务有限公司 (Ganzi Changhe Hydropower Consumption Service Co., Ltd.) by a wholly-owned subsidiary of the Company from 深圳市诚佑科技有限公司 (Shenzhen Chengyou Technology Co., Ltd.) and Mr. Guo Xiaoquan (郭筱筌) pursuant to the Acquisition Agreement;
Acquisition Agreement means the sale and purchase agreement to be entered into on or around the same date as the date of this Agreement in connection with the Acquisition;
Affiliate means, in relation to a person, any other person which, directly or indirectly, controls, is controlled by or is under the common control of the first mentioned person. For the purposes of this Agreement, control means, in relation to any person, having the power to direct the management or policies of such person, whether through the ownership of more than 50% of the voting power of such person, through the power to appoint a majority of the members of the board of directors or similar governing body of such person, or through contractual arrangements or otherwise, and references to controlled or controlling shall be construed accordingly;
Agreement means this agreement, where applicable, as amended or varied from time to time by an instrument in writing duly executed by the parties;
1
Announcement means the announcement by the Company of the Subscription and the transactions contemplated under this Agreement which the Company proposes to issue immediately following the entry into of this Agreement;
Applicable Law means, with respect to any person, any laws, regulations, rules, standards, measures, guidelines, treaties, judgments, determination, orders or notices of any Government Authority or stock exchange that is applicable to such person;
Approval Authorities has the meaning given in clause 3.5;
Board means the board of directors of the Company from time to time;
Business Day means any day (other than a Saturday, Sunday and public holiday) on which banks are open for general banking business in the Cayman Islands, Hong Kong and the PRC;
Company has the meaning given in the Preamble;
Company’s Warranty means a statement contained in Schedule 1 to this Agreement and Company’s Warranties means all of those statements;
Completion means completion of the Subscription in accordance with clause 4;
Completion Date has the meaning given in clause 4.1;
Conditions means the conditions set out in clause 3.1;
Confidential Information means all information which relates to the provisions or subject matter of this Agreement or any document referred to herein or the negotiations relating to this Agreement or details relating to the parties including business, marketing, technical, scientific or other information, but does not include information:
| (i) | to the extent that it is or becomes generally known to the public not as a result of any breach of this Agreement; |
| (ii) | that was in the lawful possession of the receiving party prior to its disclosure by the disclosing party; or |
| (iii) | that is or becomes available to the receiving party other than as a result of a disclosure by a person in breach of a duty of confidentiality owed to the disclosing party; |
Encumbrance means a mortgage, charge, pledge, lien, option, restriction, right of first refusal, right of pre-emption, third party right or interest, other encumbrance or security interest of any kind, or another type of preferential arrangement (including, without limitation, a title transfer or retention arrangement) having similar effect;
Equity Securities means Shares or any options or other securities which are by their terms convertible into or exchangeable or exercisable for Shares in the share capital of the Company;
GEM Listing Rules means the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited;
Government Authority means any national, provincial, municipal or local government, administrative or regulatory body or department, court, tribunal, arbitrator or any body that exercises the function of a regulator;
2
Group means the Company and its subsidiaries;
HK$ means Hong Kong dollar, the lawful currency of Hong Kong, and references to any amount in such currency shall be deemed to include a reference to any equivalent amount in any other currency;
Hong Kong means the Hong Kong Special Administrative Region of the PRC;
Hong Kong Stock Exchange means The Stock Exchange of Hong Kong Limited;
Long Stop Date means the date falling six (6) months after the date of this Agreement (or such other date as the parties may agree in writing);
New Shares means the number of new Shares set out in clause 2.1 to be allotted and issued by the Company and to be subscribed by the Subscriber in accordance with the terms and conditions of this Agreement and New Share means any one of them;
parties means the Subscriber and the Company and party means either of them;
PRC means The People’s Republic of China, which expression for the purpose of this Agreement, except where the context requires, does not apply to Hong Kong, the Macau Special Administrative Region or Taiwan;
Public Documents means the annual and interim reports, circulars and announcements of the Company published on the website of the Hong Kong Stock Exchange;
Securities Act has the meaning given in clause 5.4(i);
SFC means The Securities and Futures Commission of Hong Kong;
SFO means the Securities and Futures Ordinance of Hong Kong (Chapter 571 of the Laws of Hong Kong);
Shares means ordinary shares of HK$0.1 each in the issued share capital of the Company, which are listed on GEM operated by the Hong Kong Stock Exchange and traded in HK$;
Specific Mandate means the specific mandate proposed to be granted to the Board at an extraordinary general meeting of the Company in relation to the issue of the New Shares;
Subscriber has the meaning given in the Preamble;
Subscriber’s Warranty means a statement contained in clause 5.4 and Subscriber’s Warranties means all of those statements;
Subscription means the subscription for the New Shares in accordance with the terms and conditions of this Agreement;
Subscription Price means HK$0.62 per New Share;
Total Subscription Price means the Subscription Price multiplied by the number of New Shares to be allotted and issued under this Agreement, being the amount of HK$ 105,000,000.18;
Trading Day means a day on which the Shares are generally traded on the Hong Kong Stock Exchange; and
3
United States and U.S. means the United States of America, its territories and possession, any state of the United States and the District of Columbia.
| 1.2 | In this Agreement, unless the context otherwise requires: |
| (a) | references to a person include any individual, firm, body corporate (wherever incorporated), government, state or agency of a state or any joint venture, association or partnership (whether or not having separate legal personality); |
| (b) | headings do not affect the interpretation of this Agreement; |
| (c) | the singular shall include the plural and vice versa; |
| (d) | references to one gender include all genders; and |
| (e) | any phrase introduced by the terms including, include, in particular or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms. |
1.3 In this Agreement, references to any statute or statutory provisions includes a reference to that statute or statutory provision as from time to time amended, extended or reenacted.
| 2. | SUBSCRIPTION |
2.1 Subject to the terms and conditions of this Agreement, the Company shall allot and issue to the Subscriber, and the Subscriber shall subscribe for, an aggregate of 169,354,839 New Shares at Completion at the Subscription Price subject to the memorandum and articles of association of the Company.
2.2 The New Shares shall be allotted by the Company to the Subscriber and issued in accordance with clause 4.2(c), fully paid and free from all Encumbrances.
2.3 The New Shares shall rank pari passu in all respects with the Shares already in issue at the date of allotment and in particular will rank in full for all dividends and all other distributions declared, made or paid at any time after the date of allotment and issue.
| 3. | CONDITIONS |
3.1 Completion of the Subscription shall be conditional upon the following conditions having been satisfied:
| (a) | the passing of an ordinary resolution by the independent shareholders of the Company at the general meeting of the Company for approving the Specific Mandate and the allotment and issue of the New Shares by the Company in accordance with the Applicable Law (including the GEM Listing Rules); |
| (b) | the Listing Committee of the Hong Kong Stock Exchange granting approval for the listing of, and permission to deal in, the New Shares on the Hong Kong Stock Exchange and such approval and permission remaining in full force and effect; |
| (c) | the passing of an ordinary resolution by the shareholders of the Company at the general meeting of the Company for approving the increase of authorised share capital of the Company to HK$65,000,000 divided into 650,000,000 shares of HK$0.1 each; |
| (d) | all necessary governmental approvals, consents, filings and reports for the completion of the Subscription having been obtained or duly filed (as applicable) by the Company; |
4
| (e) | all necessary governmental, shareholders’ and the third parties’ approvals, consents, filings and reports for the completion of the Subscription having been obtained or duly filed (as applicable) by the Subscriber; and |
| (f) | the transactions contemplated by the Acquisition Agreement having become unconditional in accordance with its terms (other than any condition relating to this Agreement having become unconditional). |
3.2 The Company shall use all reasonable efforts to achieve satisfaction of the Conditions (a), (b), (c), (d) and (f) as soon as possible before the Long Stop Date, and the Subscriber shall use all reasonable efforts to achieve satisfaction of the Condition (e) as soon as possible before the Long Stop Date.
3.3 The conditions specified in clause 3.1 above are not capable of being waived by any of the parties hereto.
3.4 In the event that Completion does not take place by the Long Stop Date, the parties shall then consult each other and discuss a later date for the satisfaction of the Conditions and the Completion as the parties may agree in writing. In the event that the parties cannot agree to a later date, either party shall be entitled to terminate this Agreement by written notice to the other party and this Agreement and all rights and obligations of the parties hereunder shall cease and terminate save for accrued rights and obligations of the parties under this Agreement.
3.5 Each of the Parties shall, at the request of the relevant governmental authorities referred to in clause 3.1 (the Approval Authorities), furnish such information, supply such documents and do all such acts and things as may reasonably be required by such Approval Authorities in connection with the fulfillment of the Conditions in respect of such party, and each party shall be responsible for its own fees in relation thereto. At the request of a party, the other party shall update such party of the progress of the application for the approvals or consents from the Approval Authorities in relation to the Subscription as soon as possible.
| 4. | COMPLETION |
4.1 Completion shall take place within ten (10) Business Days after the satisfaction of all the Conditions and at the date and time specified in a written notice from the Company to the Subscriber (the Completion Date), which the Company shall send to the Subscriber not less than three (3) business days before the Completion Date, or such other date as may be agreed by the Company and the Subscriber in writing.
4.2 At Completion:
| (a) | the Company shall deliver to the Subscriber a copy of the resolutions of the Board approving the execution and performance of this Agreement and the allotment and issue of the New Shares to the Subscriber; |
| (b) | the Subscriber shall make full payment of the Total Subscription Price in Hong Kong dollars in immediately available funds without any deduction or set-off by direct transfer to the Company’s designated account; |
| (c) | the Company shall allot the New Shares to the Subscriber and, if the Subscriber elects to obtain definitive share certificates in respect of the New Shares pursuant to clause 4.2(d)(i), shall promptly thereafter register (or procure the share registrar to register) the Subscriber as member of the Company in respect of the New Shares and deliver a copy of the updated register of members of the Company to the Subscriber evidencing the Subscriber as the owner of the New Shares; and |
5
| (d) | at the option of the Subscriber, the Company shall either (i) issue the share certificates in respect of the New Shares in the name of the Subscriber and deliver to the Subscriber definitive share certificates in respect of the New Shares or otherwise as the Subscriber may direct or (ii) issue the share certificates in respect of the New Shares in the name of HKSCC Nominees Limited and deliver the share certificates to Hong Kong Securities Clearing Company Limited for credit to such account with the Central Clearing and Settlement System established and operated by Hong Kong Securities Clearing Company Limited as may be instructed by the Subscriber for such purpose. |
4.3 Neither party shall be obliged to complete the transactions under this Agreement unless the other party complies with all its obligations under clause 4.2.
| 5. | REPRESENTATIONS AND WARRANTIES |
5.1 The Company hereby represents and warrants to the Subscriber that as of the date of this Agreement, each Company’s Warranty is true and accurate and not misleading.
5.2 Each of the Company’s Warranties shall be construed as separate, and shall be true and accurate and not misleading immediately before Completion by reference to the facts and circumstances then existing.
5.3 The Company acknowledges that the Subscriber is entering into this Agreement in reliance on each Company’s Warranty which has also been given as a representation and with the intention of inducing the Subscriber to enter into this Agreement.
5.4 The Subscriber hereby represents and warrants to the Company that as of the date of this Agreement each of the following are true, accurate and not misleading:
| (a) | it has been duly incorporated and is validly existing under the laws of its place of incorporation; |
| (b) | it has full power, authority and capacity, and has taken all actions (including all necessary consents, approvals and authorisations from any governmental bodies, shareholders or the third parties) required to enter into and perform its obligations under this Agreement; |
| (c) | this Agreement has been duly authorised, executed and delivered by the Subscriber and constitutes a legal and binding obligation of the Subscriber enforceable against it in accordance with its terms; |
| (d) | the execution and delivery of this Agreement by the Subscriber and the Subscription will not contravene or result in a contravention of (i) the memorandum and articles of association or other constituent or constitutive documents of the Subscriber or (ii) the laws of any jurisdiction to which the Subscriber is subject in respect of the transactions contemplated under this Agreement or which may otherwise be applicable to the Subscriber in connection with the Subscription or (iii) any agreement or other instrument binding upon the Subscriber or any judgment, order or decree of any governmental body, agency or court having jurisdiction over such Subscriber; |
| (e) | the Subscriber is not subscribing for the New Shares with a view to, or for resale in connection with, any public sale or distribution thereof in violation of the laws of any other jurisdiction; |
| (f) | the New Shares will be subscribed by the Subscriber on the basis that the Subscriber has relied only on information in relation to the Company that is generally available to the public (including, without limitation, information contained in the Public Documents published by the Company) as well as information independently developed and applied by the Subscriber using only its own knowledge and resources and that the Subscriber has not relied, and will not be entitled to rely, on any legal opinion or other advice given by legal counsel to the Company or the Company’s representatives or advisers, and has taken its own independent advice to the extent it has considered necessary and appropriate; |
6
| (g) | it will accept the New Shares subject to the memorandum and articles of association of the Company; |
| (h) | it is subscribing for the New Shares as a principal and not as agent or trustee for any other person; and |
| (i) | it is either (i) not a “U.S. person” as defined in Rule 902 of Regulation S of United States Securities Act of 1933, as amended (the “Securities Act”), or (ii) an “accredited investor” within the meaning of Rule 501(a) under Regulation D of the Securities Act. |
5.5 Each of the representations and warranties of the Subscriber set out in clause 5.4 shall be construed as separate, and shall be deemed to be repeated immediately before Completion by reference to the facts and circumstances then existing.
5.6 The Subscriber acknowledges that the Company is entering into this Agreement in reliance on each Subscriber’s Warranty which has also been given as a representation and with the intention of inducing the Company to enter into this Agreement.
5.7 If any party fails to perform any of its obligations in any material respect (including its obligation at Completion) under this Agreement or breaches any of the terms set out in this Agreement or any warranties given by it in any material respect prior to Completion, then without prejudice to all and any other rights and remedies available at any time to a non-defaulting party (including but not limited to the right to damages for any loss suffered by that party), any non-defaulting party may by notice either require the defaulting party to perform such obligations or, insofar as the same is practicable, remedy such breach or to the extent it relates to the failure of the defaulting party to perform any of its obligations on or prior to Completion in any material respect, treat the defaulting party as having repudiated this Agreement and rescind the same, whereupon neither party shall be obliged to perform any of its obligations hereunder and shall not have any claim against each other, except in respect of claims arising out of any antecedent breach of this Agreement. The rights conferred upon the respective parties by the provisions of this clause 5 are in addition to and do not prejudice any other rights the respective parties may have under law. Failure to exercise any of the rights herein conferred shall not constitute a waiver of any such rights.
| 6. | VARIATION |
6.1 No amendment of this Agreement shall be valid unless it is in writing and duly executed by or on behalf of all of the parties to it.
| 7. | ASSIGNMENT |
7.1 No party to this Agreement shall nor shall it purport to assign, transfer, charge, pledge, delegate or otherwise deal with all or any of its rights under this Agreement nor grant, declare, create or dispose of any right or interest in it without the prior written consent of the other party to this Agreement. Any purported assignment in contravention of this clause 7 shall be void.
| 8. | Waivers |
8.1 No failure or delay by a party in exercising any right or remedy provided by law or under this Agreement shall impair such right or remedy or operate or be construed as a waiver or variation of it or preclude its exercise at any subsequent time and no single or partial exercise of any such right or remedy shall preclude any further exercise of it or the exercise of any other remedy.
7
| 9. | SEVERABILITY |
9.1 If any provision of this Agreement is held to be invalid or unenforceable, then such provision shall (so far as it is invalid or unenforceable) be given no effect and shall be deemed not to be included in this Agreement but without invalidating any of the remaining provisions of this Agreement.
| 10. | TERMINATION |
10.1 This Agreement may be terminated:
| (a) | in accordance with clause 3.4; |
| (b) | by either party in the event there is a material breach of this Agreement on the part of the other party; or |
| (c) | with the written consent of all the parties to this Agreement. |
10.2 In the event that the Agreement is terminated pursuant to clause 10.1, neither party shall have any claim under this Agreement of any nature against the other party except in respect of any rights and liabilities which have accrued before termination under this Agreement.
10.3 Each party shall inform the other party immediately of any matter which in its reasonable opinion would entitle that other party to terminate this Agreement.
| 11. | ANNOUNCEMENTS |
11.1 Save for the Announcement in connection with, among others, the Subscription or as otherwise required by law (including any Applicable Laws of any other places which has a jurisdiction over the Company) or any stock exchanges (including the Hong Kong Stock Exchange), government authority, or any other regulatory authority which has jurisdiction over the Company, the Subscriber or the Subscription, no announcement or circular relating to the parties, this Agreement and the transactions contemplated herein shall be made by or on behalf of any party to this Agreement without the prior approval in writing of the other party.
| 12. | CONFIDENTIALITY |
12.1 Subject to clause 12.2, each party shall keep the Confidential Information confidential. No reference or disclosure shall be made by a party regarding any Confidential Information to a third party without the other party’s prior written consent. The Confidential Information shall not be used for any purposes other than those explicitly specified in this Agreement or in connection with the transactions contemplated by this Agreement.
12.2 Clause 12.1 does not apply to disclosure of Confidential Information:
| (a) | to any director, officer or employee of any party whose function requires him to have the Confidential Information; |
| (b) | to any adviser, consultant, agent or financing sources of any party in connection with the transactions contemplated by this Agreement on a need-to-know basis; |
| (c) | the disclosure of this Agreement by the Company as required by law (including any Applicable Laws of any other places which has a jurisdiction over the Company) or any stock exchanges (including the Hong Kong Stock Exchange) or Government Authority which has jurisdiction over the Company, the Subscriber or the Subscription (including, without limitation, making it available for inspection by the public in accordance with the GEM Listing Rules); |
8
| (d) | any submission of this Agreement by each party for the purpose of seeking regulatory approvals and consents in connection with the Subscription; and |
| (e) | by the Subscriber to its Affiliates， |
provided that in relation to paragraph (a), (b) or (e) above, the disclosing party shall procure that the persons and/or the Affiliates that receive the Confidential Information shall comply with clauses 12.1 and 12.2.
12.3 After the expiration or termination of this Agreement, the receiving party receiving the Confidential Information shall return to the disclosing party (or destroy), upon the request of the other party, all materials (including photocopies) containing the disclosing party’s Confidential Information.
| 13. | TIME OF THE ESSENCE |
13.1 Any time, date or period mentioned in this Agreement may be extended by mutual written agreement between the parties but, as regards any time, date or period originally fixed or any date or period so extended as aforesaid, time shall be of the essence.
| 14. | COSTS AND EXPENSES |
14.1 Each party to this Agreement shall bear its own costs and expenses incurred in relation to the negotiation, preparation and implementation of this Agreement.
| 15. | NOTICES |
15.1 All notices delivered hereunder shall be in writing and shall be communicated to the following addresses:
If to the Subscriber:
| Address: | 12F, West Side, Block B, Building No. 7, Shenzhen Bay Eco-Technology Park, Nanshan District, Shenzhen, the PRC |
| Facsimile: | +86-755-83796070 |
| For the attention of: | Mr. YU Bo |
If to the Company:
| Address: | Units 813&815，Level 8, Core F, Cyberport 3, 100 Cyberport Road, Hong Kong |
| Facsimile: | +852 2656 0023 |
| For the attention of: | Mr. YAN Hao |
15.2 Any such notice shall be served either by hand or by sending it by courier or by facsimile (followed by e-mail notification in both cases). Any notice shall be deemed to have been served, if served by hand or by courier, when delivered, and if sent by facsimile, at the time of transmission. Any notice received on a Saturday or Sunday or public holiday shall be deemed to be received on the next Business Day.
| 16. | COUNTERPARTS |
16.1 This Agreement may be executed in any number of counterparts, and by each party hereto on separate counterparts. Each counterpart is an original, but all counterparts shall together constitute one and the same instrument. Delivery of an executed counterpart signature page of this Agreement by e-mail attachment (PDF) shall be an effective mode of delivery.
9
| 17. | MISCELLANEOUS |
17.1 This Agreement sets out the entire agreement between the parties in respect of the subscription of the New Shares and supersedes any previous agreements between the parties relating to the subject matter of this Agreement. Neither party has entered into this Agreement in reliance upon any representation, warranty or undertaking of the other party which is not expressly set out or referred to in this Agreement.
17.2 Each party shall perform (or procure the performance of) all further acts and things and execute and deliver (or procure the execution and delivery of) such further documents, as may be required by law or as may be necessary or reasonably required by the other party to implement and give effect to this Agreement.
| 18. | GOVERNING LAW AND JURISDICTION |
18.1 This Agreement shall be governed by and construed in accordance with the laws of Hong Kong.
18.2 Any dispute, controversy or claim arising out of or relating to this Agreement, including the validity, invalidity, breach or termination thereof, shall be settled by arbitration in Hong Kong under the Hong Kong International Arbitration Centre Administered Arbitration Rules in force when the notice of arbitration is submitted in accordance with these Rules. The arbitral award is final and binding upon the parties. The language of the arbitration shall be both Chinese and English.
18.3 There shall be three (3) arbitrators who may be selected from within or outside Hong Kong International Arbitration Centre’s panel of arbitrators. Each of the parties shall each nominate one arbitrator in accordance with the Hong Kong International Arbitration Centre Administered Arbitration Rules and the third arbitrator shall be jointly selected by both parties. If the parties fail to nominate the third arbitrator within the term stipulated by the Hong Kong International Arbitration Centre, the HKIAC Council shall appoint the third arbitrator. The third arbitrator shall be the presiding arbitrator.
18.4 When any dispute occurs and when any dispute is under arbitration, except for the matters under dispute, the parties shall continue to exercise their remaining respective rights, and fulfill their remaining respective obligations under this Agreement.
10
IN WITNESS WHEREOF this Agreement has been entered into the day and year first before written.
|
SIGNED by Yu Bo for and on behalf of 500.COM LIMITED |
) ) ) |
[Signature Page]
IN WITNESS WHEREOF this Agreement has been entered into the day and year first before written.
|
SIGNED by Chiu Man Chow for and on behalf of LOTO INTERACTIVE LIMITED |
) ) ) ) |
[Signature Page]
Schedule 1
Company’s Warranties
| 1. | The Company has been duly incorporated and is validly existing under the laws of its place of incorporation. |
| 2. | The Company has full power, authority and capacity to allot and issue the New Shares, and has taken all actions required, including but not limited to, subject to the Conditions in clause 3.1 being satisfied, the obtaining of all necessary governmental or regulatory approval, in order to enter into and perform its obligations under this Agreement and the transactions contemplated herein. |
| 3. | The execution and delivery of this Agreement by the Company and the Subscription will not contravene or result in a contravention of (i) the articles of association or other constituent or constitutive documents of the Company or (ii) the laws of any jurisdiction to which the Company is subject in respect of the transactions contemplated under this Agreement or which may otherwise be applicable to the Company in connection with the Subscription or (iii) any agreement or other instrument binding upon the Company or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company. |
| 4. | This Agreement has been duly authorised, executed and delivered by the Company and constitutes a valid, legal and binding obligation of the Company enforceable against it in accordance with its terms. |
| 5. | All information contained in the Public Documents is true and accurate in all material respects and does not omit to state any material fact necessary to make the information therein misleading. |
| 6. | The Company does not possess any price sensitive information in relation to it or its subsidiaries that the Company has failed to disclose as required under the GEM Listing Rules and the SFO other than that in relation to the Subscription and the transactions contemplated under this Agreement and the Acquisition. |
| 7. | As at the date of this Agreement, 379,023,983 Shares in the Company’s share capital have been issued, fully paid and are listed on the GEM operated by the Hong Kong Stock Exchange. |
| 8. | The New Shares will on allotment and issue be free from all Encumbrances and shall rank pari passu in all respects with the Shares in issue at the date of allotment and in particular will rank in full for all dividends and other distributions declared, made or paid at any time after the date of allotment and issue. |
| 9. | The Specific Mandate is capable and sufficient to cover the allotment and issue of the New Shares to the Subscriber. |
| 10. | The Group has conducted its business in accordance with Applicable Laws in all material respects. |
| 11. | Other than disclosed in the Public Documents on or before the date of this Agreement, there are no proceedings that have commenced or are pending for the bankruptcy, insolvency, winding up, liquidation or reorganisation of any member of the Group and there is no bankruptcy or insolvency in any member of the Group, which would have a material adverse effect on the operations and financial position of the Group as a whole. |
Exhibit 10.3
SHARE EXCHANGE AGREEMENT
by and between
500.COM LIMITED
and
BLOCKCHAIN ALLIANCE TECHNOLOGIES HOLDING COMPANY
Dated as of February 16, 2021
TABLE OF CONTENTS
Page
| ARTICLE I DEFINITIONS | 1 | |
| Section 1.01. | Defined Terms | 1 |
| Section 1.02. | Interpretation and Rules of Construction | 11 |
| ARTICLE II SHARE EXCHANGE | 11 | |
| Section 2.01. | Share Exchange | 11 |
| Section 2.02. | Closings | 12 |
| Section 2.03. | Closing Deliveries by the Company at First Closing | 13 |
| Section 2.04. | Closing Deliveries by Blockchain Alliance at First Closing | 14 |
| Section 2.05. | Closing Deliveries at Second Closing | 14 |
| ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY | 15 | |
| Section 3.01. | Organization and Qualification | 15 |
| Section 3.02. | Corporate Authorization | 15 |
| Section 3.03. | Valid Issuance of the Company Exchange Shares | 15 |
| Section 3.04. | Capitalization | 16 |
| Section 3.05. | Non-contravention | 16 |
| Section 3.06. | Governmental Consents and Approvals | 17 |
| Section 3.07. | No Actions | 17 |
| Section 3.08. | SEC Reports; Financial Statements | 17 |
| Section 3.09. | Compliance with Laws; Permits | 18 |
| Section 3.10. | Taxes | 19 |
| Section 3.11. | Absence of Certain Changes or Events | 19 |
| Section 3.12. | Purchase for Own Account; Economic Risk | 19 |
| Section 3.13. | Private Placement; Non-U.S. Person or Accredited Investor | 19 |
| Section 3.14. | Brokers | 20 |
| Section 3.15. | No Additional Representations | 20 |
| ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BLOCKCHAIN ALLIANCE | 20 | |
| Section 4.01. | Corporate Status | 20 |
| Section 4.02. | Corporate Authorization | 21 |
| Section 4.03. | Non-contravention | 21 |
| Section 4.04. | Governmental Consents and Approvals | 21 |
| Section 4.05. | Organizational Documents | 21 |
| Section 4.06. | Capitalization of the Blockchain Alliance Target Company | 22 |
| Section 4.07. | Capitalization of Blockchain Alliance HK and Blockchain Alliance Beijing | 22 |
| Section 4.08. | Absence of Certain Changes or Events | 23 |
| Section 4.09. | Compliance with Laws; Permits; Sanctions Laws | 23 |
| Section 4.10. | Taxes | 24 |
i
| Section 4.11. | Material Contracts | 24 |
| Section 4.12. | Labor; Employment Matters; Employee Benefit Plans | 26 |
| Section 4.13. | Real Property; Title to Assets | 27 |
| Section 4.14. | Intellectual Property Rights | 28 |
| Section 4.15. | No Actions | 29 |
| Section 4.16. | Environmental Matters | 29 |
| Section 4.17. | Related Party Transactions | 29 |
| Section 4.18. | Purchase for Own Account; Economic Risk | 29 |
| Section 4.19. | Private Placement. Non-U.S. Person or Accredited Investor | 30 |
| Section 4.20. | Brokers | 30 |
| Section 4.21. | No Additional Representations | 30 |
| ARTICLE V ADDITIONAL AGREEMENTS | 30 | |
| Section 5.01. | Further Assurance | 30 |
| Section 5.02. | Conduct of Business of Spin-off Entities and Transferred Business Prior to First Closing | 31 |
| Section 5.03. | Conduct of Business of the Company Prior to First Closing | 33 |
| Section 5.04. | No Solicitation | 34 |
| Section 5.05. | PRC Tax Matters | 34 |
| Section 5.06. | Access to Information | 35 |
| Section 5.07. | Related Party Arrangements | 35 |
| Section 5.08. | Notices of Certain Events | 35 |
| Section 5.09. | Release | 36 |
| Section 5.10. | Listing | 36 |
| Section 5.11. | Company’s Covenant | 36 |
| Section 5.12. | Mining Pool Business Operation | 37 |
| ARTICLE VI CONDITIONS TO FIRST CLOSING | 37 | |
| Section 6.01. | Conditions to Obligations of the Company to First Closing | 37 |
| Section 6.02. | Conditions to Obligations of Blockchain Alliance to First Closing | 38 |
| ARTICLE VII INDEMNIFICATION | 39 | |
| Section 7.01. | Survival of Representations and Warranties | 39 |
| Section 7.02. | Indemnification by the Company | 39 |
| Section 7.03. | Indemnification by Blockchain Alliance | 40 |
| Section 7.04. | Limits on Indemnification | 40 |
| Section 7.05. | Exclusive Remedy | 41 |
| ARTICLE VIII TERMINATION | 41 | |
| Section 8.01. | Termination | 41 |
| Section 8.02. | Effect of Termination | 42 |
| ARTICLE IX MISCELLANEOUS | 42 | |
| Section 9.01. | Notices | 42 |
| Section 9.02. | Confidentiality | 43 |
| Section 9.03. | Adjustments for Share Splits, etc. | 43 |
ii
| Section 9.04. | Amendment | 43 |
| Section 9.05. | Taxes and Expenses | 43 |
| Section 9.06. | Assignment | 43 |
| Section 9.07. | No Third-Party Beneficiaries | 43 |
| Section 9.08. | Governing Law; Arbitration | 43 |
| Section 9.09. | Entire Agreement | 44 |
| Section 9.10. | Severability | 44 |
| Section 9.11. | Counterparts | 44 |
| Section 9.12. | Specific Performance | 44 |
| Schedules | ||
| Schedule I | Blockchain Alliance Disclosure Schedule | |
| Schedule II | Blockchain Alliance Group Company Restructuring Schedule | |
| Schedule III | Operational Information | |
| Exhibit | ||
| Exhibit A | Form of Registration Rights Agreement |
iii
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT, dated as of February 16, 2021 (this “Agreement”), is by and between 500.com Limited, a Cayman Islands exempted company listed on the New York Stock Exchange (the “Company”), and Blockchain Alliance Technologies Holding Company, a Cayman Islands exempted company (“Blockchain Alliance”). The Company and Blockchain Alliance are referred to in this Agreement collectively as the “Parties” and individually as a “Party.”
RECITALS
WHEREAS, Blockchain Alliance owns or will own, at the First Closing, all of the issued and outstanding shares of Blockchain Alliance Technologies Limited with its BVI company number of 2033013 (the “Blockchain Alliance Target Company”), a business company duly incorporated and validly existing under the Laws of British Virgin Islands, and Blockchain Alliance Target Company directly owns all of the issued and outstanding shares of Blockchain Alliance HK Limited with its company number of 2930630 (“Blockchain Alliance HK”), a company duly incorporated and validly existing under the Laws of Hong Kong; and
WHEREAS, Blockchain Alliance desires to, sell the Blockchain Alliance Exchange Shares (as defined below) to the Company and the Company desires to issue and sell the Company Exchange Shares to Blockchain Alliance in exchange for the Blockchain Alliance Exchange Shares, pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Parties to this Agreement hereby agree as follows:
ARTICLE
I
DEFINITIONS
Section 1.01. Defined Terms. For the purposes of this Agreement, the following terms shall have the following meanings:
“Action” means any claim, action, suit, arbitration, inquiry, litigation, proceeding or investigation by or before any Governmental Authority.
“Affiliate” means, with respect to any specified Person, any other Person that controls, is controlled by, or is under common control with such specified Person. As used herein, the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or to cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.
“Agreement” shall have the meaning ascribed to this term in the preamble to this Agreement.
1
“Audited Financial Statements” shall have the meaning ascribed to this term in Section 2.02(b).
“Bankruptcy and Equity Exception” shall have the meaning ascribed to this term in Section 3.02.
“Bitdeer” means Bitdeer Technologies Holding Company, an exempted company duly incorporated and validly existing under the Laws of the Cayman Islands.
“Blockchain Alliance” shall have the meaning ascribed to this term in the preamble to this Agreement.
“Blockchain Alliance Board” means the board of directors of Blockchain Alliance.
“Blockchain Alliance Disclosure Schedule” means the disclosure schedule delivered by Blockchain Alliance to the Company concurrently with the execution and delivery of this Agreement and attached to this Agreement as Schedule I.
“Blockchain Alliance Exchange Shares” means all of the issued and outstanding shares of the Blockchain Alliance Target Company.
“Blockchain Alliance Fundamental Reps” means the representations and warranties of Blockchain Alliance contained in Section 4.01, Section 4.02, Section 4.03, Section 4.06(a), Section 4.06(b), and Section 4.20.
“Blockchain Alliance Group Companies” means Blockchain Alliance, Blockchain Alliance Target Company and Blockchain Alliance HK, each a “Blockchain Alliance Group Company”.
“Blockchain Alliance Group Company Restructuring” means the restructuring transactions of transferring the Transferred Business (including but not limited to the entire mining pool business and ownership of and registration right to the domain name btc.com) listed in the Blockchain Alliance Group Company Restructuring Schedule to Blockchain Alliance HK pursuant to this Agreement and the Blockchain Alliance Group Company Restructuring Schedule.
“Blockchain Alliance Group Company Restructuring Schedule” means the schedule delivered by Blockchain Alliance to the Company concurrently with the execution and delivery of this Agreement and attached to this Agreement as Schedule II.
“Blockchain Alliance HK” shall have the meaning ascribed to this term in the recitals to this Agreement.
“Blockchain Alliance Indemnified Party” shall have the meaning ascribed to this term in Section 7.02.
“Blockchain Alliance Intellectual Property” shall have the meaning ascribed to this term in Section 4.14(a).
2
“Blockchain Alliance Material Adverse Effect” means any Effect that, individually or in the aggregate with all other Effects, has or would reasonably be expected to (a) have a material adverse effect on the business, liabilities, assets, financial condition or results of operations of the Spin-off Entities and the Transferred Business, taken as a whole or (b) prevent or materially delay the consummation of the Transactions by Blockchain Alliance or otherwise be materially adverse to the ability of Blockchain Alliance to perform its obligations under this Agreement or the Registration Rights Agreement; provided, however, solely with respect to clause (a) above, that in no event shall any Effect to the extent arising out of or resulting from any of the following, either alone or in combination, constitute, or be taken into account in determining whether there has been a Blockchain Alliance Material Adverse Effect: (i) changes in general business, economic or political conditions or changes in financial, credit or securities markets in general; (ii) changes in applicable accounting standards or regulatory accounting requirements after the date hereof; (iii) changes in applicable Laws that are binding on any Spin-off Entity and the Transferred Business; (iv) effects resulting from the consummation of the Transactions, or the public announcement of this Agreement or the identity of the parties hereto, including any losses of customers or employees, or any disruption in or loss of suppliers, distributors, providers or similar parties with whom any Spin-off Entity has any relationship, and the initiation of shareholder litigation or other legal proceeding related to this Agreement or the Transactions; (v) acts of God, natural disasters, epidemics, pandemic outbreaks, declarations of war, acts of sabotage or terrorism, or outbreak or escalation of hostilities; (vi) actions or omissions of any of Blockchain Alliance or its Subsidiaries that are expressly required by this Agreement or with the written consent or at the written request of the Company; (vii) changes, effects or circumstances affecting the industries or markets of the Transferred Business, or (viii) the failure by Blockchain Alliance to meet any internal or industry estimates, expectations, forecasts, projections or budgets for any period in relation to the Transferred Business (it being understood that the facts or occurrences giving rise to or contributing to such failure may be taken into account in determining whether a Blockchain Alliance Material Adverse Effect has occurred); provided, that any Effects set forth in clauses (i), (ii), (iii), (v) and (vii) above may be taken into account in determining whether a Blockchain Alliance Material Adverse Effect has occurred if and to the extent such Effects individually or in the aggregate have a materially disproportionate impact on the Spin-off Entities and the Transferred Business, taken as a whole, relative to the other participants in the industries of the Transferred Business.
“Blockchain Alliance Released Claims” shall have the meaning ascribed to this term in Section 5.09.
“Blockchain Alliance Released Parties” shall have the meaning ascribed to this term in Section 5.09.
“Blockchain Alliance Releasing Parties” shall have the meaning ascribed to this term in Section 5.09.
“Blockchain Alliance Beijing” means 北京硅芯扬航科技有限公司, a company duly incorporated and validly existing under the Laws of PRC.
3
“Blockchain Alliance Singapore” means Bitmaintech Pte. Ltd., a company duly incorporated and validly existing under the Laws of Singapore.
“Blockchain Alliance Target Company” shall have the meaning ascribed to this term in the recitals to this Agreement.
“Business Day” means any day that is not a Saturday, a Sunday or other day on which commercial banks are required or authorized by Law to be closed in the city of Beijing, Hong Kong, Singapore, the Cayman Islands, British Virgin Islands, or New York.
“Clawback Right” shall have the meaning ascribed to this term in Section 2.02(b).
“Clawback Shares” shall be 4,435,344 Company Class A Ordinary Shares, multiplied by a fraction, the numerator of which is the Net Operating Loss suffered from the Transferred Business for the fiscal year ending December 31, 2021 based on the Audited Financial Statements and the denominator of which is US$10,000,000, rounded to the nearest whole number; provided that if the Net Operating Loss suffered from the Transferred Business then operated by the Company for the fiscal year ending December 31, 2021 exceeds US$10,000,000, then the maximum Clawback Shares shall be 4,435,344 Company Class A Ordinary Shares.
“Closings” shall have the meaning ascribed to this term in Section 2.02(a).
“Company” shall have the meaning ascribed to this term in the preamble to this Agreement.
“Company ADSs” means the American depositary shares of the Company, each representing ten (10) Class A Ordinary Shares.
“Company Class A Ordinary Shares” means the Class A ordinary shares of the Company, par value of US$0.00005 per share.
“Company Class B Ordinary Shares” means the Class B ordinary shares of the Company, par value of US$0.0005 per share.
“Company Exchange Shares” means, subject to the Clawback Right, the Initial Company Exchange Shares and, if any, the Earn-Out Company Exchange Shares.
“Company Fundamental Reps” means the representations and warranties of the Company contained in Section 3.01, Section 3.02, Section 3.03, Section 3.04(a), Section 3.05, and Section 3.14.
“Company Indemnified Party” shall have the meaning ascribed to this term in Section 7.03.
4
“Company Material Adverse Effect” means any fact, event, circumstance, change, development or effect (any such item, an “Effect”) that, individually or in the aggregate with all other Effects, has or would reasonably be expected to (a) have a material adverse effect on the business, liabilities, assets, financial condition or results of operations of the Group Companies, taken as a whole or (b) prevent or materially delay the consummation of the Transactions by the Company or otherwise be materially adverse to the ability of the Company to perform its obligations under this Agreement or Registration Rights Agreement; provided, however, solely with respect to clause (a) above, that in no event shall any Effect to the extent arising out of or resulting from any of the following, either alone or in combination, constitute, or be taken into account in determining whether there has been a Company Material Adverse Effect: (i) changes in general business, economic or political conditions or changes in financial, credit or securities markets in general; (ii) changes in GAAP or regulatory accounting requirements after the date hereof; (iii) changes in applicable Laws that are binding on any Group Company; (iv) effects resulting from the consummation of the Transactions, or the public announcement of this Agreement or the identity of the parties hereto, including any losses of customers or employees, or any disruption in or loss of suppliers, distributors, providers or similar parties with whom any Group Company has any relationship, and the initiation of shareholder litigation or other legal proceeding related to this Agreement or the Transactions; (v) acts of God, natural disasters, epidemics, pandemic outbreaks, declarations of war, acts of sabotage or terrorism, or outbreak or escalation of hostilities; (vi) changes in the market price or trading volume of the Company ADSs (it being understood that the facts or occurrences giving rise to or contributing to such changes in this clause (vi) may be taken into account in determining whether a Company Material Adverse Effect has occurred); (vii) actions or omissions of any Group Company that are expressly required by this Agreement or with the written consent or at the written request of Blockchain Alliance; (viii) changes, effects or circumstances affecting the industries or markets in which any Group Company operates; or (ix) the failure by any Group Company to meet any internal or industry estimates, expectations, forecasts, projections or budgets for any period (it being understood that the facts or occurrences giving rise to or contributing to such failure may be taken into account in determining whether a Company Material Adverse Effect has occurred); provided, that any Effects set forth in clauses (i), (ii), (iii), (v) and (viii) above may be taken into account in determining whether a Company Material Adverse Effect has occurred if and to the extent such Effects individually or in the aggregate have a materially disproportionate impact on the Group Companies, taken as a whole, relative to the other participants in the industries in which the Group Companies conduct their businesses.
“Company Ordinary Shares” means Company Class A Ordinary Shares and Company Class B Ordinary Shares.
“Company SEC Reports” means all registration statements, proxy statements, reports, forms and other documents required to be filed with or furnished to SEC by the Company and all exhibits included therein.
“Company Significant Subsidiaries” means the Subsidiaries of Company that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X under the Exchange Act.
“Contract” means any legally binding contract, agreement, arrangement, note, bond, indenture, mortgage, indenture, lease, sublease, license, permit, concession, franchise, plan or other instrument, right or obligation.
“Currently Owned Intellectual Property” means all Intellectual Properties owned by, or under obligation of assignment to, any Spin-off Entity, as of the date hereof.
5
“Earn-Out Company Exchange Shares” shall be 22,176,718 Company Class A Ordinary Shares, multiplied by a fraction, the numerator of which is the Net Operating Profit generated by the Transferred Business for the fiscal year ending December 31, 2021 based on the Audited Financial Statements and the denominator of which is US$20,000,000, rounded to the nearest whole number; provided that if the Net Operating Profit generated by the Transferred Business then operated by the Company for the fiscal year ending December 31, 2021 exceeds US$20,000,000, then the maximum Earn-Out Company Exchange Shares shall be 22,176,718 Company Class A Ordinary Shares.
“Exchange Act” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“First Closing” shall have the meaning ascribed to this term in Section 2.02(a).
“First Closing Date” shall have the meaning ascribed to this term in Section 2.02(a).
“GAAP” means the generally accepted accounting principles as applied in the United States.
“Governmental Authority” means any federal, national, foreign, supranational, state, provincial, local or other governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body.
“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award of any Governmental Authority.
“Group Companies” means the Company and its Subsidiaries.
“HKIAC” shall have the meaning ascribed to this term in Section 9.08(b).
“HKIAC Rules” shall have the meaning ascribed to this term in Section 9.08(b).
“Indebtedness” means, with respect to any Person, without duplication, (a) any liabilities for borrowed money or amounts owed or indebtedness issued in substitution for or exchange of indebtedness for borrowed money, (b) obligations evidenced by notes, bonds, debentures or other similar instruments, (c) obligations for amounts drawn under bankers’ acceptances, letters of credit or other financial guaranties, (d) all obligations for the deferred purchase price of property or services, (e) all obligations as lessee under leases that are required to be recorded as capital leases in accordance with applicable accounting standards, (f) all payment obligations under any swap or hedge agreements, (g) any accrued and unpaid interest on, and any prepayment premiums, penalties or other contractual charges in respect of, any of the items described in the foregoing clauses (a) through (f), and (h) all guaranties and other contingent obligations in respect of the liabilities or obligations of any other Person for any of the items described in the foregoing clauses (a) through (g).
“Indemnified Party” means a Company Indemnified Party or a Blockchain Alliance Indemnified Party, as the case may be.
“Initial Company Exchange Shares” means 44,353,435 Company Class A Ordinary Shares.
6
“Injunction” shall have the meaning ascribed to this term in Section 6.01(b).
“Intellectual Property” means (a) inventions and discoveries, whether patentable or not, in any jurisdiction, including United States, non-United States and international patents, patent applications (including divisions, continuations, continuations in part and renewal applications) and statutory invention registrations, and any renewals, extensions or reissues thereof, in any jurisdiction (b) trademarks, service marks, brand names, certification marks, trade dress, domain names, logos, trade names, corporate names and other source identifiers, the goodwill associated with the foregoing and registrations and applications for registration thereof including any extension, modification or renewal of any such registration or application, (c) copyrightable works, copyrights, and registrations and applications for registration thereof, (d) confidential and proprietary information, including trade secrets and know-how, (e) rights of privacy, publicity and endorsement, and (f) any similar intellectual property or proprietary rights.
“Knowledge” means, (a) with respect to the Company, the actual knowledge of the directors and executive officers of the Company; and (b) with respect to Blockchain Alliance, means the actual knowledge of the directors and executive officers of Blockchain Alliance.
“Law” means any federal, national, foreign, supranational, state, provincial, local or similar statute, law, treaty, ordinance, regulation, rule, code, order, requirement or rule of law (including common law) or any Governmental Order.
“Lien” means any security interest, pledge, hypothecation, mortgage, lien, license, claim, charge, title retention, right to acquire, option, levy, proxy, right of first refusal, and any other encumbrance or condition of any kind, including any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership.
“Losses” means losses, damages, liabilities, deficiencies, Actions, judgments, interests, awards, penalties, fines, costs and expenses of whatever kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder; provided, that “Losses” shall not include punitive damages, except in the case of fraud or to the extent actually awarded to any Person by any Governmental Authority.
“Material Contract” shall have the meaning ascribed to this term in Section 4.11(a).
“Net Operating Loss” means, for any period, the net loss of the Transferred Business as determined in the Audited Financial Statements, prepared in accordance with GAAP consistently applied, excluding share-based compensation expense, impairment losses of cryptocurrencies due to cryptocurrency price fluctuations, profits or losses of disposition of cryptocurrencies, intangible assets amortization of domain name of BTC.com or impairment losses on goodwill due to acquiring the Transferred Business, and any other profits or losses outside the ordinary course of business with respect to operation of BTC.com.
7
“Net Operating Profit” means, for any period, the net profit of the Transferred Business as determined in the Audited Financial Statements, prepared in accordance with GAAP consistently applied, excluding share-based compensation expense, impairment losses of cryptocurrencies due to cryptocurrency price fluctuations, profits or losses of disposition of cryptocurrencies, intangible assets amortization of domain name of BTC.com or impairment losses on goodwill due to acquiring the Transferred Business, and any other profits or losses outside the ordinary course of business with respect to operation of BTC.com.
“Organizational Documents” means, with respect to an entity, its certificate of incorporation, articles of incorporation, by-laws, articles of association, memorandum of association, certificate of trust, trust agreement, partnership agreement, limited partnership agreement, certificate of formation, limited liability company agreement or operating agreement, as applicable.
“Owned Intellectual Property” shall have the meaning ascribed to this term in Section 4.14(a).
“Owned Real Property” shall have the meaning ascribed to this term in Section 4.13(a).
“Party” shall have the meaning ascribed to this term in the preamble to this Agreement.
“Permit” means any permit, license, franchise, approval, registration, filing, qualification, variance, certificate, certification, consent of any Governmental Authority.
“Permitted Liens” means (a) statutory Liens for Taxes and other governmental charges and assessments not yet due or payable, (b) Liens of carriers, warehousemen, mechanics, materialmen and other like Liens arising in the ordinary course of business, (c) easements, rights of way, encroachments, zoning ordinances and other similar encumbrances affecting real property, (d) statutory Liens in favor of lessors arising in connection with any leased property, and (e) Liens arising under securities or blue sky Laws.
“Permitted Transferee” shall have the meaning ascribed to this term in the Registration Rights Agreement.
“Person” means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization, Governmental Authority or other entity.
“PRC” means the People’s Republic of China, but solely for the purposes of this Agreement, excluding the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan.
“Purchased Assets” shall have the meaning ascribed to this term in Section 4.13(b).
“Real Property Leases” shall have the meaning ascribed to this term in Section 4.13(c).
“Registration Rights Agreement” means that certain Registration Rights Agreement to be entered into by and between the Company and Blockchain Alliance, substantially in the form attached hereto as Exhibit A.
8
“Related Person” means (a) Blockchain Alliance or any of its Affiliates (other than the Spin-off Entities), (b) any officer or director of any Spin-off Entity or any Person described in clause (a), and (c) any immediate family member of any natural persons described in clause (a) or (b).
“Representatives” means, with respect to any Person, such Person’s Affiliates and such Person and its Affiliates’ respective directors, officers, employees, members, partners, accountants, consultants, advisors, attorneys, agents and other representatives.
“Reserved Amount” shall have the meaning ascribed to this term in Section 5.11.
“RMB” means Renminbi, the lawful currency of the PRC.
“Sanctioned Person” means an individual, entity or vessel (i) that appears on any list (the “List”) of sanctioned parties issued by the United Nations Security Council or by the United States (including such lists issued by the U.S. Treasury Department’s Office of Foreign Assets Control and by the U.S. State Department), (ii) that is organized, resident, or based in North Korea, Iran, Syria, Cuba, Crimea, or Venezuela, or (iii) that is owned or controlled by an individual or entity covered by (i) or (ii).
“Sanctions Laws and Regulations” means (i) all laws, regulations and executive orders administered by the U.S. Treasury Department Office of Foreign Assets Control, including without limitation, the Trading With the Enemy Act, the International Emergency Economic Powers Act, the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, the Iran Sanctions Act, the United Nations Participation Act, and the Syria Accountability and Lebanese Sovereignty Act, all as amended, regulations found at Title 31, Subtitle B, Chapter 5 of the U.S. Code of Federal Regulations (C.F.R.) and any enabling legislation or executive order relating to any of the above, as collectively interpreted and applied by the U.S. Government at the prevailing point in time; (ii) any U.S. sanctions related to or administered by the U.S. Department of State; or (iii) any sanctions Laws, regulations, directives, measures or embargos imposed or administered by the United Nations Security Council, Her Majesty’s Treasury, the European Union (including under Council Regulation (EC) No. 194/2008), or any other jurisdiction that has issued a restrictive trade law applicable to the Transferred Business.
“SEC” means the United States Securities and Exchange Commission.
“Second Closing” shall have the meaning ascribed to this term in Section 2.02(b).
“Second Closing Date” shall have the meaning ascribed to this term in Section 2.02(b).
“Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Spin-off Entities” means Blockchain Alliance Target Company, Blockchain Alliance HK and Blockchain Alliance Beijing and each, a “Spin-off Entity.”
“Subsidiary” of any Person means any corporation, partnership, joint venture or other legal entity: (a) of which voting power to elect a majority of the board of directors or others performing similar functions with respect to such organization is held directly or indirectly by such Person or by any one or more of such Person’s Subsidiaries, (b) of which at least fifty percent (50%) of the voting interests is controlled by such Person by any one or more of such Person’s Subsidiaries, (c) of which such Person or any Subsidiary of such Person is a general partner, or (d) whose assets and financial results are consolidated with such Person and are recorded on the books of such Person for financial reporting purposes in accordance with applicable accounting standards.
9
“Tax” means (a) any federal, national, provincial, municipal, local or taxes, duties, imposts, levies, or other like assessments in the nature of a tax, in each case, imposed by any Governmental Authority, including all net income (including enterprise income tax and individual income withholding tax), turnover (including value-added tax, business tax, and consumption tax), resource (including urban and township land use tax), special purpose (including land value-added tax, urban maintenance and construction tax, and additional education fees), property (including urban real estate tax and land use fees), documentation (including stamp duty and deed tax), filing, recording, tariffs (including import duty and import value-added tax), and other taxes, and (b) all interest, penalties (administrative, civil or criminal), or additional amounts imposed by any Governmental Authority in connection with any item described in clause (a) above.
“Tax Return” means any report, return, document, declaration or other information or filing required to be supplied to any taxing authority with respect to Taxes, including information returns or any documents with respect to or accompanying payments of estimated Taxes.
“Termination Date” shall have the meaning ascribed to this term in Section 8.01(c).
“Transactions” means all transactions contemplated in this Agreement and the Registration Rights Agreement.
“Transferred Business” means the entire mining pool business of Bitdeer to be transferred to Blockchain Alliance Group Companies on or prior to the First Closing, including but not limited to the Purchased Assets, Transferred Contracts, Transferred Employees and Transferred Intellectual Property.
“Transferred Contracts” means the contracts listed in Section IV (第四部分) of the Blockchain Alliance Group Company Restructuring Schedule pursuant to which such contracts shall have been duly transferred to Blockchain Alliance HK or Blockchain Alliance Beijing as of the First Closing.
“Transferred Employees” means employees listed in Section V (第五部分) of the Blockchain Alliance Group Company Restructuring Schedule pursuant to which such employees shall have been duly transferred to and employed by Blockchain Alliance HK or Blockchain Alliance Beijing as of the First Closing.
“Transferred Intellectual Property” means the intellectual properties listed in Section III (第三部分) of the Blockchain Alliance Group Company Restructuring Schedule (including but not limited to the domain name btc.com) pursuant to which such intellectual properties shall have been duly transferred to and owned by Blockchain Alliance HK or Blockchain Alliance Beijing as of the First Closing.
10
Section 1.02. Interpretation and Rules of Construction. 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 definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. When reference is made to an Article, Section, Schedule or Exhibit, such reference is to an Article or Section of, or Schedule or Exhibit to, this Agreement unless otherwise indicated. References to clauses without a cross-reference to a Section or subsection are references to clauses within the same Section or, if more specific, subsection. References from or through any date shall mean, unless otherwise specified, from and including or through and including, respectively. The table of contents and 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. All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto, unless otherwise defined therein. The words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement. Any references in this Agreement to “US$” shall be to U.S. dollars. References to days mean calendar days unless otherwise specified. When used herein, the word “extent” and the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such word or phrase shall not simply mean “if.” The term “or” is not exclusive. The word “will” shall be construed to have the same meaning and effect as the word “shall.” Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes, except, in the case of agreements or instruments listed in the Blockchain Alliance Disclosure Schedule, only to the extent the applicable amendment, modification or supplement is also appropriately listed therein. References in this Agreement to specific laws or to specific provisions of laws shall include all rules and regulations promulgated thereunder. Each of the Parties has participated in the drafting and negotiation of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement must be construed as if it is drafted by all the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authorship of any of the provisions of this Agreement.
ARTICLE
II
SHARE EXCHANGE
Section 2.01. Share Exchange. Upon the terms and subject to the conditions of this Agreement, at the applicable Closings, Blockchain Alliance agrees to sell to the Company the Blockchain Alliance Exchange Shares, and in exchange therefor, the Company agrees to issue and sell to Blockchain Alliance the Company Exchange Shares, subject to the Clawback Right, in each case, free and clear of all Liens (other than Permitted Liens) and with all rights attaching on and from the applicable Closings.
11
Section 2.02. Closings.
(a) First Closing. The closing of the issuance and sale of the Initial Company Exchange Shares (the “First Closing”, together with the Second Closing, the “Closings”) shall take place remotely via the electronic exchange of the closing documents and signatures by facsimile or email (in PDF format) at 8:00 a.m. on a day that is within five (5) Business Days after the last of the conditions to First Closing set forth in Article VI has been satisfied or waived (other than conditions which by their nature are to be satisfied at the First Closing), or such other date, time or place as the Parties may mutually agree upon in writing (the date on which the First Closing, the “First Closing Date”). The Parties acknowledge and agree that all transactions occurring at the First Closing shall be deemed to be taken, and all documents to be executed and delivered by all Parties at the First Closing shall be deemed to have been executed and delivered, simultaneously at the First Closing, and no proceedings shall be deemed taken nor any document executed or delivered until all have been taken, executed and delivered.
(b) Second Closing.
(i) Within five (5) Business Days after the completion of the consolidated audited annual financial statements of the Company which shall cover the Transferred Business then operated by the Company (the “Audited Financial Statements”) prepared in accordance with GAAP for the fiscal year ending December 31, 2021, in any event the consolidated audited annual financial statements of the Company shall be completed prior to April 30, 2022, the Company shall prepare and deliver to Blockchain Alliance a statement of the Net Operating Profit or the Net Operating Loss, as the case may be, of the Transferred Business based on the Audited Financial Statements.
(ii) If the Transferred Business during the fiscal year ending December 31, 2021 records any Net Operating Profits, the Company shall issue and sale to Blockchain Alliance the Earn-Out Company Exchange Shares at par value within ten (10) Business Days after the delivery of the calculation of the Net Operating Profit of the Transferred Business under Section 2.02(b)(i) and confirmation of the calculation of the Net Operating Profit by Blockchain Alliance.
(iii) If the Transferred Business during the fiscal year ending December 31, 2021 records any Net Operating Loss, the Company shall have the right (but not obligation) to, and Blockchain Alliance shall be obligated to cooperate or cause the cooperation of, the Company’s repurchase at par value of any and all of the Clawback Shares (the “Clawback Right”) directly or indirectly held by Blockchain Alliance or any Permitted Transferee of Blockchain Alliance, within ten (10) Business Days after the delivery of the calculation of the Net Operating Loss of the Transferred Business under Section 2.02(b)(i) and confirmation of the calculation of the Net Operating Loss by Blockchain Alliance; provided, however, that, the Company shall not have the Clawback Right if it is then in material breach of Section 5.11(a)(i) that results in any Net Operating Loss.
(iv) The closing of the transactions contemplated by Section 2.02(b)(ii) or Section 2.02(b)(iii), as applicable, shall be referred to as the “Second Closing” (the date on which the Second Closing takes place, the “Second Closing Date”). The Parties acknowledge and agree that all transactions occurring at the Second Closing shall be deemed to be taken, and all documents to be executed and delivered by all Parties at the Second Closing shall be deemed to have been executed and delivered, simultaneously at the Second Closing, and no proceedings shall be deemed taken nor any document executed or delivered until all have been taken, executed and delivered.
12
(v) (a) If Blockchain Alliance wishes to dispute the Net Operating Profit or the Net Operating Loss set forth in the Audited Financial Statements, Blockchain Alliance shall provide the Company, within ten (10) Business Days (the “Initial Dispute Period”) of its receipt of the calculation of the Net Operating Profit or the Net Operating Loss, a notice (a “Dispute Notice”) setting forth any disputed items in the calculation of the Net Operating Profit or the Net Operating Loss. During the period of thirty (30) days (the “Dispute Negotiation Period”) immediately following the delivery of the Dispute Notice, the Company and Blockchain Alliance will attempt to resolve in good faith the disputed items set forth in the Dispute Notice, and if all such disputed items are resolved by the Company and Blockchain Alliance during such time period, then the resulting Net Operating Profit or the Net Operating Loss shall be final and binding on all parties, and (b) If the Dispute Notice is delivered in accordance with the foregoing sentences and any disputed items set forth in that notice remain unresolved at the end of the Dispute Negotiation Period, the unresolved disputed items will be referred for final binding resolution to an independent “Big Four” accounting firm (the “Independent Accounting Firm”) which is not the auditor which prepared the Audited Financial Statements within thirty (30) days after the end of the Dispute Negotiation Period. The Company and Blockchain Alliance shall cooperate in good faith to procure the timely appointment of the Independent Accounting Firm to perform the services provided for herein. If no Independent Accounting Firm is agreed upon and engaged within three (3) Business Days after the end of the Dispute Negotiation Period, Blockchain Alliance is entitled to appoint such Independent Accounting Firm in accordance with this Section 2.2(b)(v). The Company shall make a written submission to the Independent Accounting Firm within five (5) Business Days after the Independent Accounting Firm’s appointment, which submission shall contain a computation of the Net Operating Profit or the Net Operating Loss and any information, arguments, and support for such computation as reasonably requested by the Independent Accounting Firm. The determination of the Independent Accounting Firm will be conclusive and binding upon the parties. In all cases, the fees and expenses charged by the Independent Accounting Firm for its review shall be equally allocated among the Company and Blockchain Alliance.
Section 2.03. Closing Deliveries by the Company at First Closing. At the First Closing, the Company shall deliver or cause to be delivered to Blockchain Alliance:
(a) a duly issued share certificate in the name of Blockchain Alliance representing the Initial Company Exchange Shares;
13
(b) a certified true copy of the Register of Members of the Company as of the First Closing Date reflecting Blockchain Alliance’s ownership of the Initial Company Exchange Shares and duly certified by the registered office provider or agent of the Company;
(c) a certified true copy of the resolutions duly and validly adopted by the board of directors of the Company evidencing its authorization and approval of the execution and delivery of this Agreement and the Registration Rights Agreement and the consummation of the Transactions; and
(d) the Registration Rights Agreement, duly executed by the Company.
Section 2.04. Closing Deliveries by Blockchain Alliance at First Closing. At the First Closing, Blockchain Alliance shall deliver or cause to be delivered to the Company:
(a) a duly issued share certificate in the name of the Company (or its nominee), representing the Company (or its nominee)’s ownership of the Blockchain Alliance Exchange Shares;
(b) a certified true copy of the Register of Members of the Blockchain Alliance Target Company as of the First Closing Date reflecting the Company (or its nominee)’s ownership of the Blockchain Alliance Exchange Shares and duly certified by the registered office provider or agent of the Blockchain Alliance Target Company;
(c) a certified true copy of the resolutions duly and validly adopted by the Blockchain Alliance Board evidencing its authorization and approval of the execution and delivery of this Agreement and the Registration Rights Agreement and the consummation of the Transactions;
(d) certified true copies of the resolutions duly and validly adopted by board of directors of the Blockchain Alliance Target Company evidencing its approval of the transfer of the Blockchain Alliance Exchange Shares and the change of directors of the Blockchain Alliance Target Company as contemplated by this Agreement;
(e) a certified true copy of the Register of Directors of the Blockchain Alliance Target Company as of the First Closing Date reflecting the board of directors of the Blockchain Alliance Target Company is consisting of the Persons designated by the Company prior to the First Closing;
(f) the Registration Rights Agreement, duly executed by Blockchain Alliance; and
(g) certification of the Reserved Amount pursuant to Section 5.11(b).
Section 2.05. Closing Deliveries at Second Closing.
(a) If the Company shall issue to Blockchain Alliance any Earn-Out Company Exchange Shares in accordance with Section 2.02(b)(ii), then at the Second Closing, the Company shall deliver or cause to be delivered to Blockchain Alliance (i) a duly issued share certificate in the name of Blockchain Alliance representing the Earn-Out Company Exchange Shares; and (ii) a certified true copy of the Register of Members of the Company as of the Second Closing Date reflecting Blockchain Alliance’s ownership of the Earn-Out Company Exchange Shares and duly certified by the registered office provider or agent of the Company.
(b) If the Company exercises the Clawback Right in accordance with Section 2.02(b)(iii), then at the Second Closing, (i) Blockchain Alliance shall (x) deliver or cause to be delivered to the Company the share certificate representing the Initial Company Exchange Shares, and (y) execute, or cause any of its Permitted Transferees to execute any and all transfer instruments as necessary or reasonably desirable to carry out the purposes or intent of the Clawback Right; (ii) the Company shall deliver to Blockchain Alliance a duly issued share certificate in the name of Blockchain Alliance representing such number of Company Class A Ordinary Shares which is a result of the Initial Company Exchange Shares deducted by the Clawback Shares; and (iii) the Company shall deliver to Blockchain Alliance a certified true copy of the updated Register of Members of the Company as of the Second Closing Date reflecting the number of Company Class A Ordinary Shares which is a result of the Initial Company Exchange Shares deducted by the Clawback Shares held by Blockchain Alliance or its Permitted Transferee.
14
ARTICLE
III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company SEC Reports filed prior to the date of this Agreement (without giving effect to any amendment to any such Company SEC Report filed on or after the date hereof and excluding any risk factor disclosures contained under the heading “Risk Factors,” any disclosure of risks included in any “forward-looking statements” disclaimer or any other statements that are nonspecific, similarly cautionary, predictive or forward-looking in nature; it being further agreed that (i) any information disclosed in any such Company SEC Report shall be deemed disclosure only with respect to a Section of this Agreement to which the relevance of such information is reasonably apparent to from the text of such information contained in such Company SEC Report and (ii) no information disclosed in any such Company SEC Report shall be deemed to qualify or modify the Company Fundamental Reps), the Company hereby represents and warrants to Blockchain Alliance, as of the date hereof and as of the First Closing Date, except if a representation or warranty is made as of a specified date, as of such date, each of the representations and warranties contained in this Article III.
Section 3.01. Organization and Qualification. Each Group Company is a legal entity duly organized, validly existing and in good standing (to the extent the relevant jurisdiction recognizes such concept of good standing) under the Laws of the jurisdiction of its organization. Each Group Company has the requisite power and authority (corporate or otherwise) to own, lease or operate its properties and assets and to carry on its business as it is now being conducted. Each Group Company is duly qualified to do business and is in good standing (to the extent the relevant jurisdiction recognizes such concept of good standing) in each jurisdiction in which the nature of the business conducted by it or the character the properties and assets owned, leased or operated by it makes such qualification necessary, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be excepted to have a Company Material Adverse Effect.
Section 3.02. Corporate Authorization. The Company has all necessary corporate power and authority to execute and deliver this Agreement and the Registration Rights Agreement and to perform its obligations hereunder and thereunder. The execution, delivery and performance of this Agreement and Registration Rights Agreement by the Company have been duly authorized by all necessary corporate action on the part of the Company. This Agreement has been, and the Registration Rights Agreement will be, duly executed and delivered by the Company, and when executed and delivered by the Company, assuming due authorization, execution and delivery by Blockchain Alliance which is a counterparty to such agreement, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforcement may be limited by general principles of equity, whether applied in a court of Law or a court of equity, and by applicable bankruptcy, insolvency and similar Law affecting creditors’ rights and remedies generally (the “Bankruptcy and Equity Exception”).
Section 3.03. Valid Issuance of the Company Exchange Shares. The Company Exchange Shares, when issued in accordance with the terms and conditions of this Agreement and sold against receipt of consideration therefor, will be validly issued, fully paid and nonassessable, free and clear of any and all Liens (other than Permitted Liens).
15
Section 3.04. Capitalization.
(a) The authorized share capital of the Company consists of 1,000,000,000 Company Ordinary Shares, of which 7,00,000,000 Company Ordinary Shares are designated as Company Class A Ordinary Shares and 300,000,000 are designated as Company Class B Ordinary Shares. As of January 31, 2021, there were 443,534,252 Company Class A Ordinary Shares issued and outstanding and 99 Company Class B Ordinary Shares issued and outstanding. All of the issued and outstanding shares of the Company have been duly authorized and validly issued and are fully paid and nonassessable.
(b) Except for the Company Exchanges Shares and except as set forth in Section 3.04(a) and Section 3.04(b) and 31,364,570 Company Ordinary Shares reserved for issuance under the duly approved share incentive plans of the Company, there are (i) no issued, reserved for issuance or outstanding shares of capital stock or voting securities of, or other ownership interests in the Company, (ii) no outstanding securities of the Company convertible or exchangeable for shares of capital stock or voting securities of, or other ownership interests in the Company and (iii) no rights, options, warrants, calls or other similar rights, agreements or commitments that obligate the Company to (A) issue, transfer or sell any shares of capital stock, voting securities or other ownership interests or any securities convertible into or exchangeable for such shares of capital stock, voting securities or other ownership interests, (B) give any person a right to subscribe for or acquire any shares of capital stock or voting securities of, or other ownership interests in the Company or (C) redeem or otherwise acquire any shares of capital stock or voting securities of, or other ownership interests in the Company.
(c) The Company Exchange Shares being issued to Blockchain Alliance hereunder, will not be issued in violation of any purchase option, call option, preemptive right, resale right, subscription right, right of first refusal or similar right or any other Contracts, except restrictions imposed by the Securities Act and any applicable state securities Laws.
Section 3.05. Non-contravention. The execution, delivery and performance by the Company of this Agreement and the Registration Rights Agreement do not and will not materially (a) violate any provision of the Organizational Documents of the Company, (b) violate any Law or Governmental Order applicable to any Group Company or (c) conflict with, result in any breach of, constitute a default (or an event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, any Contract to which any Group Company is a party or result in the creation of any Lien upon any of the properties or assets of any Group Company, other than, in the case of clauses (b) and (c) above, any such conflict, violation, default, termination, amendment, acceleration, suspension, revocation or cancellation that would not, individually or in the aggregate, reasonably be excepted to have a Company Material Adverse Effect.
16
Section 3.06. Governmental Consents and Approvals The execution, delivery and performance by the Company of this Agreement and the Registration Rights Agreement do not and will not require any consent, approval, authorization or other order of, action by, filing with, or notification to, any Governmental Authority, other than any approvals or filings required in connection with or in compliance with any obligations under the Securities Act, the Exchange Act and the applicable listing rules and regulations of the stock exchange where the Company is listed, except, in each case, where failure to obtain such consent, approval, authorization or action, or to make such filing or notification would not, individually or in the aggregate, reasonably be excepted to result in a Company Material Adverse Effect.
Section 3.07. No Actions. There are no Actions against any of the Group Companies pending or, to the Knowledge of the Company, threatened before any Governmental Authority which would, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect.
Section 3.08. SEC Reports; Financial Statements.
(a) Save as the Company’s annual report on Form 20-F for the fiscal year ended December 31, 2019, the Company has timely (including following any extensions of time for filing provided by Rule 12b-25 promulgated under the Exchange Act) filed or furnished, as applicable, all Company SEC Reports. Each of the Company SEC Reports, as of its filing date and except to the extent corrected by a subsequent Company SEC Report, has complied or, if filed or furnished after the date hereof and before the First Closing Date, will comply, as to form in all material respects with all applicable requirements of the Securities Act and the Exchange Act, each as in effect on the dates such Company SEC Report was filed or amended, as the case may be. No Subsidiary of the Company is subject to the reporting requirements of Sections 13(a) and 15(d) of the Exchange Act. The Company SEC Reports did not contain, when filed or furnished (or, if amended or superseded by a filing prior to the date hereof, on the date of such filing), any untrue statement of a material fact or omitted to state a 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. No executive officer of the Company has failed in any respect to make the certifications required of him or her under section 302 or section 906 of the Sarbanes-Oxley Act of 2002, in each case with respect to the Company SEC Reports.
(b) The financial statements included or incorporated by reference in the Company SEC Reports (including, in each case, any notes thereto, collectively, the “Company Financial Information”) fairly present (except as may be indicated in the notes thereto), or in the case of Company SEC Reports filed or furnished after the date of this Agreement, will fairly present, to the extent practicable, in all material respects, the financial position and the results of operations, shareholders’ equity and cash flows of the Company and its consolidated Subsidiaries as of the respective dates thereof and for the respective periods indicated therein (subject, in the case of the unaudited interim financial statements, to the absence of notes and normal year-end adjustments that are not material in the aggregate). Such Company Financial Information has been prepared in accordance with GAAP applied on a consistent basis, except as specifically indicated in the notes thereto.
(c) The Company is in compliance in all material respects with the applicable listing and corporate governance rules and regulations of New York Stock Exchange. As of the date hereof, the Company has not received notice from New York Stock Exchange to the effect that the Company is not in compliance with the listing or maintenance requirements of New York Stock Exchange. The Company is not aware of any violation of the listing or maintenance requirements of New York Stock Exchange and is not delisted by New York Stock Exchange or does not reasonably anticipate that the Company will be delisted by New York Stock Exchange in the foreseeable future, nor are the Company’s securities “chilled” by the Depositary Trust Company. The Company and its Subsidiaries are unaware of any facts or circumstances which would reasonably be expected to give rise to any of the foregoing.
17
(d) The Company has established and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as required under Rule 13a-15 or 15d-15 of the Exchange Act. Such disclosure controls and procedures are designed to ensure that material information relating to the Company, including its Subsidiaries, required to be included in reports filed or furnished under the Exchange Act is accumulated and communicated to Company’s management, including the chief executive officer and chief financial officer of the Company, to allow timely decisions regarding required disclosure. Neither the Company nor, to Company’s Knowledge, the Company’s independent registered public accounting firm, has identified or been made aware of “significant deficiencies” or “material weaknesses” (as defined by the Public Company Accounting Oversight Board) in the design or operation of Company’s internal controls and procedures which could reasonably adversely affect Company’s ability to record, process, summarize or report financial data, in each case which has not been subsequently remediated. The Company’s independent registered public accounting firm and the audit committee of the board of directors of the Company have not been advised of any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.
Section 3.09. Compliance with Laws; Permits.
(a) Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, each Group Company has been in compliance with all Laws and Governmental Orders applicable to them. As of the First Closing, the Group Companies hold all Permits necessary for the lawful conduct of their respective businesses as currently conducted and are in compliance with the terms of all such Permits, in each case except as would not, individually or in the aggregate, reasonably be excepted to have a Company Material Adverse Effect.
(b) None of the Group Companies or to the Knowledge of the Company, any of their respective directors, executives , or agents acting under and with the express authorization of such Group Company, has (i) used any corporate funds for any illegal contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) used any corporate funds for any direct or indirect unlawful payments to any foreign or domestic government officials or employees, (iii) violated or is violating any provision of the U.S. Foreign Corrupt Practices Act of 1977, the PRC Law on Anti-Unfair Competition promulgated on September 2, 1993, or the Interim Rules on Prevention of Commercial Bribery promulgated on November 15, 1996, or any PRC Law in relation thereto, (iv) established or maintained any fund of corporate monies or other properties not recorded on the books and records of any Group Company, (v) to the Knowledge of the Company, made any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment of any nature, or (vi) violated or operated in noncompliance with any applicable money laundering law, anti-terrorism law or regulation, anti-boycott regulations, export restrictions or embargo regulations. None of the Group Companies or, to the Knowledge of the Company, any of their respective directors, executives or agents acting under and with the express authorization of such Group Company, is currently the target of any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department.
18
Section 3.10. Taxes. All material Tax Returns of the Group Companies have been timely filed in accordance with applicable Laws and all such Tax Returns are true, correct, and complete in all material respects. All material Taxes (whether or not shown on a Tax Return) of the Group Companies have been timely paid. Each of the Group Companies has timely paid or withheld all material Taxes required to be paid or withheld with respect to its employees, independent contractors, creditors and other third parties and timely paid over such Taxes to the appropriate Governmental Authority. None of the Group Companies has executed any outstanding waiver of any statute of limitations or outstanding extension of the period, for the assessment or collection of any material Tax. To the Knowledge of the Company, no audit or Action of, or with respect to, any material Tax Return or material Taxes of any the Group Company is currently in progress or threatened. No deficiency for any material amount of Tax has been asserted or assessed by a Governmental Authority against the Group Companies that has not been satisfied by payment, settled or withdrawn. All preferential tax treatments granted to the Group Companies have been properly approved by or filed with the competent Governmental Authorities in accordance with applicable Laws. No written claim has been made by a Governmental Authority in any jurisdiction where any Group Company has not filed material Tax Return that such Person is or may be subject to material Tax or any filing requirement related to material Tax in that jurisdiction. None of Group Companies is a party to or bound by, or has any obligation under, any Tax allocation agreement, Tax indemnity agreement, Tax sharing agreement or similar contract or arrangement to indemnify any other Person with respect to Taxes that will be in effect after the First Closing. The charges, accruals and reserves for Taxes with respect to the Group Companies reflected on the books and records of Group Companies are adequate to cover material Tax liabilities accruing through the end of the last period for which Group Companies ordinarily record items on their respective books. Since the end of the last period for which Group Companies ordinarily record items on their respective books, none of the Group Companies has engaged in any transaction, or taken any action that would materially impact any Tax asset or Tax liability of Group Companies.
Section 3.11. Absence of Certain Changes or Events. Since December 31, 2020, (a) the Group Companies have conducted all their respective businesses, in each case in all material respects in the ordinary course of business, (b) there has not been any action taken by the Group Companies that would not constitute a breach of Section 5.03, and (c) there has not been any Effect that would, individually or in the aggregate, reasonably be excepted to have a Company Material Adverse Effect.
Section 3.12. Purchase for Own Account; Economic Risk. The Company is acquiring the Blockchain Alliance Exchange Shares for investment for its own account and not with a view to the distribution thereof in violation of the Securities Act. The Company acknowledges that it (a) can bear the economic risk of its investment in the Blockchain Alliance Exchange Shares, and (b) has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Blockchain Alliance Exchange Shares.
Section 3.13. Private Placement; Non-U.S. Person or Accredited Investor The Company understands that (a) the Blockchain Alliance Exchange Shares have not been registered under the Securities Act or any state securities Laws and (b) the Blockchain Alliance Exchange Shares may not be sold unless such disposition is registered under the Securities Act and applicable state securities Laws or is exempt from registration thereunder. The Company represents that it is either (i) an institutional “accredited investor” within the meaning of Rule 501(a) of Regulation D under the Securities Act, or (ii) is not a U.S. Person and it is located outside the United States, as such terms are defined in Rule 902 of Regulation S under the Securities Act.
19
Section 3.14. Brokers. No broker, finder or investment banker 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 or on behalf of the Company or any of its Subsidiaries.
Section 3.15. No Additional Representations. The Company acknowledges that Blockchain Alliance makes no express or implied representations or warranties as to any matter whatsoever except as expressly set forth in this Agreement, the Registration Rights Agreement or any written certificate delivered by Blockchain Alliance to the Company in accordance with the terms hereof and thereof, and that any such other representations and warranties are expressly disclaimed and that the Company does not rely on any such other representations and warranties or the accuracy or completeness thereof.
ARTICLE
IV
REPRESENTATIONS AND WARRANTIES OF BLOCKCHAIN ALLIANCE
Except as set forth in the Blockchain Alliance Disclosure Schedule (it being agreed that (i) any information disclosed in such Blockchain Alliance Disclosure Schedule shall be deemed disclosure only with respect to a Section of this Agreement to which the relevance of such information is reasonably apparent to from the text of such information contained in such Blockchain Alliance Disclosure Schedule), Blockchain Alliance represents and warrants to the Company, as of the date hereof and as of the First Closing Date, except if a representation or warranty is made as of a specified date, as of such date, each of the representations and warranties contained in this Article IV.
Section 4.01. Corporate Status.
(a) Blockchain Alliance is a legal entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization. Blockchain Alliance has the requisite power and authority (corporate or otherwise) to own, lease or operate its properties and assets and to carry on its business as it is now being conducted. Blockchain Alliance is duly qualified to do business and is in good standing (to the extent the relevant jurisdiction recognizes such concept of good standing) in each jurisdiction in which the nature of the business conducted by it or the character the properties and assets owned, leased or operated by it makes such qualification necessary, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Blockchain Alliance Material Adverse Effect.
(b) Each Spin-off Entity is a legal entity duly organized, validly existing and in good standing (to the extent the relevant jurisdiction recognizes such concept of good standing) under the Laws of the jurisdiction of its organization. Each Spin-off Entity has the requisite power and authority (corporate or otherwise) to own, lease or operate its properties and assets and to carry on its business as it is now being conducted. Each Spin-off Entity is duly qualified to do business and is in good standing (to the extent the relevant jurisdiction recognizes such concept of good standing) in each jurisdiction in which the nature of the business conducted by it or the character the properties and assets owned, leased or operated by it makes such qualification necessary, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Blockchain Alliance Material Adverse Effect.
(c) Other than as contemplated by the Blockchain Alliance Group Company Restructuring Schedule, Blockchain Alliance Beijing is a dormant entity which owns no assets (other than immaterial assets), conducts no business or operations, has no liabilities or employees, is not a party to any Contracts and generates no revenue.
20
Section 4.02. Corporate Authorization. Blockchain Alliance has all necessary corporate power and authority to execute and deliver this Agreement and the Registration Rights Agreement and to perform its obligations hereunder and thereunder. The execution, delivery and performance of this Agreement and Registration Rights Agreement by Blockchain Alliance have been duly authorized by all necessary corporate action on the part of Blockchain Alliance. This Agreement has been, and the Registration Rights Agreement will be, duly executed and delivered by Blockchain Alliance, and when executed and delivered by Blockchain Alliance, assuming due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of Blockchain Alliance, enforceable against Blockchain Alliance in accordance with its terms, subject to the Bankruptcy and Equity Exception.
Section 4.03. Non-contravention. The execution, delivery and performance by Blockchain Alliance of this Agreement and the Registration Rights Agreement do not and will not materially (a) violate any provision of the Organizational Documents of Blockchain Alliance, (b) violate any Law or Governmental Order applicable to Blockchain Alliance or any Spin-off Entity or (c) conflict with, result in any breach of, constitute a default (or an event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, any Contract to which Blockchain Alliance or any Spin-off Entity is a party or result in the creation of any Lien upon any of the properties or assets of Blockchain Alliance or any Spin-off Entity, other than, in the case of clauses (b) and (c) above, any such conflict, violation, default, termination, amendment, acceleration, suspension, revocation or cancellation that would not, individually or in the aggregate, reasonably be expected to have a Blockchain Alliance Material Adverse Effect.
Section 4.04. Governmental Consents and Approvals. The execution, delivery and performance by Blockchain Alliance of this Agreement and the Registration Rights Agreement do not and will not require any consent, approval, authorization or other order of, action by, filing with, or notification to, any Governmental Authority, other than any approvals or filings required in connection with or in compliance with any obligations under the Securities Act and the Exchange Act, except, in each case, where failure to obtain such consent, approval, authorization or action, or to make such filing or notification would not, individually or in the aggregate, reasonably be expected to result in a Blockchain Alliance Material Adverse Effect.
Section 4.05. Organizational Documents. Blockchain Alliance has furnished or otherwise made available to the Company complete and correct copies of the Organizational Documents of each Blockchain Alliance Group Company and all such Organizational Documents are in full force and effect.
21
Section 4.06. Capitalization of the Blockchain Alliance Target Company.
(a) Section 4.06(a) of the Blockchain Alliance Disclosure Schedule sets forth the capitalization of the Blockchain Alliance Target Company as of the date hereof and as of the First Closing Date. The Blockchain Alliance Exchange Shares constitute all of the issued and outstanding share capital of the Blockchain Alliance Target Company, all of which have been duly authorized, validly issued and are fully paid and non-assessable. At or prior to the First Closing, Blockchain Alliance shall own the Blockchain Alliance Exchange Shares, beneficially and of record, free and clear of any Liens (other than Permitted Liens). Upon transfer of the Blockchain Alliance Exchange Shares at the First Closing, the Company will acquire good and valid title to all of the Blockchain Alliance Exchange Shares, free and clear of any Liens (other than Permitted Liens).
(b) Except for the Blockchain Alliance Exchange Shares, there are (i) no issued, reserved for issuance or outstanding shares of capital stock or voting securities of, or other ownership interests in the Blockchain Alliance Target Company, (ii) no outstanding securities of Bitdeer, Blockchain Alliance or any of their Subsidiaries convertible or exchangeable for shares of capital stock or voting securities of, or other ownership interests in the Blockchain Alliance Target Company and (iii) no rights, options, warrants, calls or other similar rights, agreements or commitments that obligate Bitdeer, Blockchain Alliance or any of their Subsidiaries to (A) issue, transfer or sell any shares of capital stock, voting securities or other ownership interests in Blockchain Alliance Target Company or any securities convertible into or exchangeable for such shares of capital stock, voting securities or other ownership interests, (B) give any person a right to subscribe for or acquire any shares of capital stock or voting securities of, or other ownership interests in the Blockchain Alliance Target Company or (C) redeem or otherwise acquire any shares of capital stock or voting securities of, or other ownership interests in the Blockchain Alliance Target Company.
(c) The Blockchain Alliance Exchange Shares being transferred to the Company or its nominee hereunder, will not be transferred in violation of any purchase option, call option, preemptive right, resale right, subscription right, right of first refusal or similar right or any other Contracts, except restrictions imposed by the Securities Act and any applicable state securities Laws.
Section 4.07. Capitalization of Blockchain Alliance HK and Blockchain Alliance Beijing
(a) All of the outstanding shares of capital stock or voting securities of, or other ownership interests in Blockchain Alliance HK have been duly authorized and validly issued, fully paid and nonassessable and are owned beneficially and of record by Blockchain Alliance Target Company, free and clear of any Liens. Except as set forth in Section 4.07 of the Blockchain Alliance Disclosure Schedule, all of the registered capital of, or other ownership interests in Blockchain Alliance Beijing have been duly authorized and validly issued, fully paid and nonassessable and are owned beneficially and of record by Blockchain Alliance HK, free and clear of any Liens.
(b) There are (i) no issued, reserved for issuance or outstanding shares of capital stock or voting securities of, or other ownership interests in either Blockchain Alliance HK or Blockchain Alliance Beijing, (ii) no outstanding securities of Bideer, Blockchain Alliance or any of their Subsidiaries convertible or exchangeable for shares of capital stock or voting securities of, or other ownership interests in either Blockchain Alliance HK or Blockchain Alliance Beijing and (iii) no rights, options, warrants, calls or other similar rights, agreements or commitments that obligate Bitdeer, Blockchain Alliance or any of their Subsidiaries to (A) issue, transfer or sell any shares of capital stock, voting securities, or other ownership interests in either Blockchain Alliance HK or Blockchain Alliance Beijing or any securities convertible into or exchangeable for such shares of capital stock, voting securities or other ownership interests, (B) give any person a right to subscribe for or acquire any shares of capital stock or voting securities of, or other ownership interests in either Blockchain Alliance HK or Blockchain Alliance Beijing or (C) redeem or otherwise acquire any shares of capital stock or voting securities of, or other ownership interests in either Blockchain Alliance HK or Blockchain Alliance Beijing.
22
Section 4.08. Absence of Certain Changes or Events. Since December 31, 2020, (a) The Spin-off Entities and all Transferred Business shall have been conducted in all material respects in the ordinary course of business consistent with past practice, (b) except as set forth in Section 4.08 of the Blockchain Alliance Disclosure Schedule, there has not been any action taken by Blockchain Alliance or any of its Subsidiaries that would constitute a breach of Section 5.02, and (c) there has not been any Effect that would, individually or in the aggregate, have a Blockchain Alliance Material Adverse Effect.
Section 4.09. Compliance with Laws; Permits; Sanctions Laws.
(a) Except as would not, individually or in the aggregate, reasonably be expected to have a Blockchain Alliance Material Adverse Effect, each Spin-off Entity, and each of Bitdeer and its Subsidiaries, to the extent in relation to the Transferred Business, has been in compliance with all Laws and Governmental Orders applicable to them. As of the First Closing, the Spin-off Entities hold all Permits necessary for the lawful conduct of their respective businesses (including but not limited to the Transferred Business) and are in compliance in all respects with the terms of all such Permits, except as would not, individually or in the aggregate, reasonably be expected to have a Blockchain Alliance Material Adverse Effect.
(b) None of the Spin-off Entities or any of Bitdeer or its Subsidiaries, to the extent in relation to its ownership, management and operation of the Transferred Business, or any of their respective directors, executives or, to the Knowledge of Blockchain Alliance, agents, to the extent in relation to its ownership, management and operation of the Transferred Business, has (i) used any corporate funds for any illegal contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) used any corporate funds for any direct or indirect unlawful payments to any foreign or domestic government officials or employees, (iii) violated or is violating any provision of the U.S. Foreign Corrupt Practices Act of 1977, the PRC Law on Anti-Unfair Competition promulgated on September 2, 1993, or the Interim Rules on Prevention of Commercial Bribery promulgated on November 15, 1996, or any PRC Law in relation thereto, (iv) established or maintained any fund of corporate monies or other properties not recorded on any of their books and records, (v) to the Knowledge of Blockchain Alliance, made any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment of any nature, or (vi) violated or operated in noncompliance with any applicable money laundering law, anti-terrorism law or regulation, anti-boycott regulations, export restrictions or embargo regulations. None of the Spin-off Entities or any of Bitdeer or its Subsidiaries, to the extent in relation to its ownership, management and operation of the Transferred Business, or any of their respective directors, executives or, to the Knowledge of Blockchain Alliance, agents is currently the target of any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department.
23
(c) To the Knowledge of Blockchain Alliance, neither the Spin-off Entities or any of Bitdeer or its Subsidiaries, to extent in relation to the Transferred Business, or any of their respective directors, officers, employees, agents, affiliates or other Person acting on their behalf (i) is not, or has not, directly or indirectly, engaged in or facilitated any activities that would result in a violation of any of the Sanctions Laws and Regulations since the date of such Sanctions Laws and Regulations; or (ii) is not, or has not, directly or indirectly, engaged in or facilitated any business activity or other business dealings with any Sanctioned Person since the date of the applicable List.
Section 4.10. Taxes. Except as set forth in Section 4.10 of the Blockchain Alliance Disclosure Schedule, all material Tax Returns of the Spin-off Entities have been timely filed in accordance with applicable Laws and all such Tax Returns are true, correct, and complete in all material respects. All material Taxes (whether or not shown on a Tax Return) of the Spin-off Entities have been timely paid. Each of the Spin-off Entities has timely paid or withheld all material Taxes required to be paid or withheld with respect to its employees, independent contractors, creditors and other third parties and timely paid over such Taxes to the appropriate Governmental Authority. None of the Spin-off Entities has executed any outstanding waiver of any statute of limitations or outstanding extension of the period, for the assessment or collection of any material Tax. To the Knowledge of Blockchain Alliance, no audit or Action of, or with respect to, any material Tax Return or material Taxes of any Spin-off Entity is currently in progress or threatened. No deficiency for any material amount of Tax has been asserted or assessed by a Governmental Authority against the Spin-off Entities that has not been satisfied by payment, settled or withdrawn. All preferential tax treatments granted to the Spin-off Entities have been properly approved by or filed with the competent Governmental Authorities in accordance with applicable Laws. No written claim has been made by a Governmental Authority in any jurisdiction where any Spin-off Entity has not filed material Tax Return that such Person is or may be subject to material Tax or any filing requirement related to material Tax in that jurisdiction. None of the Spin-off Entities is a party to or bound by, or has any obligation under, any Tax allocation agreement, Tax indemnity agreement, Tax sharing agreement or similar contract or arrangement to indemnify any other Person with respect to Taxes that will be in effect after the First Closing. The charges, accruals and reserves for Taxes with respect to the Spin-off Entities reflected on the books and records of the Spin-off Entities are adequate to cover material Tax liabilities accruing through the end of the last period for which the Spin-off Entities ordinarily record items on their respective books. Since the end of the last period for which the Spin-off Entities ordinarily record items on their respective books, none of the Spin-off Entities has engaged in any transaction, or taken any action that would materially impact any Tax asset or Tax liability of the Spin-off Entities.
Section 4.11. Material Contracts.
(a) Except for any Contracts to be executed to commutate the Blockchain Alliance Group Company Restructuring pursuant to the Blockchain Alliance Group Company Restructuring Schedule after the date hereof and any Contract listed in Blockchain Alliance Group Company Restructuring Schedule, Section 4.11 of the Blockchain Alliance Disclosure Schedule sets forth a complete list of each of the following Contracts (i) that any Spin-off Entity is a party to, (ii) which the Spin-off Entity’ properties or assets are bound by, and (iii) the Transferred Business are subject to (each such Contract described in clauses (i) to (xvii) below, is referred to as a “Material Contract”) and that have not expired or been terminated:
24
(i) any Contract relating to the issuance of any share capital or voting securities of or any other ownership interests in any Spin-off Entity or any securities convertible, exchangeable or exercisable into any share capital or voting securities of or any other ownership interests in any Spin-off Entity;
(ii) any Contract that involves payments (or a series of payments), contingent or otherwise, of RMB100,000 or more individually or in the aggregate with respect to a series of related agreements, in cash, property or services;
(iii) any Contract relating to Indebtedness or placing of a Lien (other than a Permitted Lien) on (a) any assets of any Spin-off Entity, or (b) Transferred Business, in each case involving an aggregate amount as of the date hereof greater than RMB100,000;
(iv) any Contract under which any Spin-off Entity has advanced or loaned monies to any other Person or otherwise agreed to advance, loan or invest any funds involving an amount in excess of RMB100,000 individually or in any series of related transaction;
(v) any joint venture contracts, strategic cooperation, partnership arrangements or other agreements, including those involving a sharing of profits, losses, costs or liabilities with any third party;
(vi) any Contract that limits, or purports to limit, the ability of any Spin-off Entity or any of the Transferred Business to compete in any line of business or with any Person or in any geographic area or during any period of time;
(vii) any Contracts that contain continuing indemnification, guarantee, earn-out or other contingent payment obligations, in each case involving an aggregate amount as of the date hereof greater than RMB100,000;
(viii) any Contract for the acquisition or disposition, directly or indirectly (including by merger, consolidation, combination or amalgamation) of assets or share capital or other equity interests of another Person, for a consideration in excess of RMB100,000;
(ix) any Contract with Governmental Authority;
(x) any Contracts that prohibits the payment of dividends or distributions in respect of the share capital of any Spin-off Entity, prohibits the pledging of such share capital or prohibits the issuance of guarantees by any Spin-off Entity;
(xi) any Contract that will be terminated or varied upon consummation of the Transactions or upon a change of control of the Spin-off Entities or the Transferred Business, as applicable, will subject the consummation of the Transactions to the consent of any Person or will trigger any payment to any Person as a result of the consummation of the Transactions;
(xii) any Contract (a) between any Spin-off Entity, on the one hand, and any Related Person, on the other hand, and (b) between Bitdeer or any of its Subsidiaries, on the one hand, and any Related Person, on the other hand, with respect to the Transferred Business, in each case, other than any employment agreement relating to services as employees, officers or directors of any Spin-off Entity;
25
(xiii) any Contract relating to any license or acquisition of any Intellectual Property providing for annual payments (a) to or by any Spin-off Entity or (b) with respect to any Transferred Business, in each case, in the amount in excess of RMB100,000;
(xiv) any Contract involving the waiver, compromise, or settlement of any material Action;
(xv) any Contract that contains any dealer, sales representative, marketing or other similar agreement with an amount which is in excess of RMB100,000; and
(xvi) any Contract pursuant to which any Spin-off Entity has granted a power of attorney, agency or similar authority to a third party.
(b) A true and complete copy of each Material Contract has been made available to the Company by Blockchain Alliance. Each Material Contract is a legal, valid and binding obligation of the relevant Spin-off Entity, Blockchain Alliance or applicable Subsidiaries of Blockchain Alliance, and, to the Knowledge of Blockchain Alliance, the other parties thereto, in full force and effect and enforceable in accordance with its terms subject to the Bankruptcy and Equity Exception. None of the Spin-off Entities or, to the Knowledge of Blockchain Alliance, any other party thereto is in breach or violation of, or default under, any Material Contract in any material respect. The Spin-off Entities have not received any written claim or notice of default, amendment, modification, termination or cancellation under any such Material Contract in any material respect.
Section 4.12. Labor; Employment Matters; Employee Benefit Plans.
(a) No Spin-off Entity is a party to any collective bargaining, trade union or works council agreement or other labor union contract, and, to the Knowledge of Blockchain Alliance, there are no organizational campaigns, petitions or other unionization activities seeking recognition of a collective bargaining unit relating to any employee of the Spin-off Entities. Since the incorporation date of respective Spin-off Entity, there has been no organized strike, slowdown, work stoppage or lockout, or similar activity or, to the Knowledge of Blockchain Alliance, threat thereof, by or with respect to any employee of the Spin-off Entities or any Transferred Employee.
(b) The consent of, consultation of or the rendering of formal advice by any labor or trade union, works council, or any other employee representative body is not required for any of the Blockchain Alliance Group Companies to consummate any of the Transactions.
26
(c) Except as would not reasonably be expected to have a Blockchain Alliance Material Adverse Effect, (i) Spin-off Entities are currently in compliance in all respects with all Laws relating to the employment of labor, including those related to wages, hours, social insurance, collective bargaining and the payment and withholding of Taxes, and (ii) there is no charge of discrimination in employment or employment practices, for any reason, including, age, gender, race, religion or other legally protected category, which has been asserted or is now pending or, to the Knowledge of Blockchain Alliance, threatened against any of the Spin-off Entities or any of the Transferred Business before any Governmental Authority.
(d) None of the Spin-off Entities has adopted any material benefit and compensation plans, agreements, or arrangements, whether written or oral, including, without limitation, plans and agreements to provide severance or fringe benefits, covering current or former service providers.
Section 4.13. Real Property; Title to Assets.
(a) Section 4.13 of the Blockchain Alliance Disclosure Schedule sets forth a true, correct and complete list of all real property and interests in real property owned by the Spin-off Entities (collectively, the “Owned Real Property”) as of the date hereof. Except as would not, individually or in the aggregate, reasonably be excepted to have a Blockchain Alliance Material Adverse Effect, (i) the Spin-off Entities have a good and valid title to all the Owned Real Property free and clear of any Liens, except for Permitted Liens, and (ii) possession and quiet enjoyment of the Owned Real Property by the Spin-off Entities have not been disturbed and, to the Knowledge of Blockchain Alliance, there are no disputes with respect to such Owned Real Property.
(b) Section II (第二部分) of the Blockchain Alliance Group Company Restructuring Schedule sets forth a true, correct and complete list of all real property and interests in real property currently owned by Blockchain Alliance or certain of its Subsidiaries to be transferred to Blockchain Alliance HK or Blockchain Alliance Beijing before the First Closing pursuant to this Agreement and Blockchain Alliance Group Company Restructuring Schedule (collectively with certain other assets listed in Section II (第二部分) of the Blockchain Alliance Group Company Restructuring Schedule, the “Purchased Assets”). Except as would not, individually or in the aggregate, reasonably be excepted to have a Blockchain Alliance Material Adverse Effect, as of the First Closing, (i) Blockchain Alliance HK or Blockchain Alliance Beijing shall have a good and valid title to all the Purchased Assets free and clear of any Liens, except for Permitted Liens, and (ii) the possession and quiet enjoyment of the Purchased Assets by Blockchain Alliance HK or Blockchain Alliance Beijing shall have not been disturbed and, to the Knowledge of Blockchain Alliance, there are no disputes with respect to such Purchased Assets.
(c) Blockchain Alliance has made available to Company true, correct and complete copies of all leases, subleases and other agreements and all modifications, amendments and supplements thereto (collectively, the “Real Property Leases”) under which (i) any Spin-off Entity uses or occupies or has the right to use or occupy, now or in the future, any leased real property; and (ii) the Transferred Business is operated in any leased real property. Except as would not, individually or in the aggregate, reasonably be excepted to have a Blockchain Alliance Material Adverse Effect, with respect to each Real Property Lease, as of the First Closing: (x) such Real Property Lease constitutes a valid and legally binding obligation of the Spin-off Entities and, to the Knowledge of Blockchain Alliance, the other parties thereto, in full force and effect and enforceable in accordance with its terms subject to the Bankruptcy and Equity Exception, (y) the Spin-off Entities have a good and valid leasehold interest in the leased real property under such Real Property Lease, free and clear of all Liens, except for Permitted Liens, (z) possession and quiet enjoyment of the leased real property under such Real Property Lease by the Spin-off Entities have not been disturbed and, to the Knowledge of Blockchain Alliance, there are no disputes with respect to such Real Property Lease, and (iv) the Spin-off Entities are not and, to the Knowledge of Blockchain Alliance, no other party to such Real Property Lease is, in breach or default under such Real Property Lease.
27
(d) At the First Closing, the Spin-off Entities shall own and possess all private keys for digital assets to the extent needed to carry out the Transferred Business. At the First Closing, the Spin-off Entities shall maintain effective control over all of its cryptocurrency wallets and proper storage of the private keys. to the Knowledge of Blockchain Alliance, the Spin-off Entities shall, at the First Closing, not be exposed to any potential liabilities caused by theft or loss of digital assets stored with the wallets transferred with the Transferred Business by any third party users.
(e) Except as would not, individually or in the aggregate, reasonably be excepted to have a Blockchain Alliance Material Adverse Effect, the Spin-off Entities have good and marketable title to, or a valid and binding leasehold interest in, all other properties and assets, in each case free and clear of all Liens, except for Permitted Liens.
Section 4.14. Intellectual Property Rights.
(a) Except as would not, individually or in the aggregate, reasonably be excepted to have a Blockchain Alliance Material Adverse Effect, the Spin-off Entities (i) own all right, title and interest in and to the Currently Owned Intellectual Property as of the date hereof and as of the First Closing Date, and (ii) own all right, title and interest in and to the Transferred Intellectual Property (including but not limited to the ownership of and registration right to the domain name btc.com) (together with the Currently Owned Intellectual Property, “Owned Intellectual Property”) as of the First Closing Date, in each case free and clear of all Liens (other than Permitted Liens) and have valid and sufficient rights to use all other Intellectual Property used in, or necessary to conduct, the business of the Spin-off Entities as currently conducted and the Transferred Business, free and clear of all Liens (other than Permitted Liens) (together with the Owned Intellectual Property, the “Blockchain Alliance Intellectual Property”).
(b) Except as would not, individually or in the aggregate, reasonably be excepted to have a Blockchain Alliance Material Adverse Effect, no Bitdeer or applicable Subsidiaries of Bitdeer has received written notice of any claim that any Spin-off Entity has or is, or any Transferred Business was or is involved in, any infringement, dilution or misappropriation of any Intellectual Property right of any Person, including any demands or unsolicited offers to license any Intellectual Property. Except as would not, individually or in the aggregate, reasonably be excepted to have a Blockchain Alliance Material Adverse Effect, none of the Spin-off Entities or the Transferred Business infringes, dilutes or misappropriates or has infringed, diluted or misappropriated any Intellectual Property rights of any Person. To the Knowledge of Blockchain Alliance, no Person is currently infringing, diluting or misappropriating the Owned Intellectual Property in any material respect.
28
(c) Except as would not, individually or in the aggregate, reasonably be excepted to have a Blockchain Alliance Material Adverse Effect, there are no pending or, to the Knowledge of Blockchain Alliance, threatened, Actions by any Person challenging the validity or enforceability of, or the use or ownership by any Spin-off Entity of, any Blockchain Alliance Intellectual Property.
Section 4.15. No Actions. There are no Actions against any of the Spin-off Entities or against the Transferred Business pending or, to the Knowledge of Blockchain Alliance, threatened before any Governmental Authority which would, individually or in the aggregate, reasonably be expected to result in a Blockchain Alliance Material Adverse Effect.
Section 4.16. Environmental Matters. The Spin-off Entities and the Transferred Business have complied and is in compliance in all material respects with all applicable environmental Laws, have obtained and possess and has been in compliance in all material respects with all permits, licenses and other authorizations necessary to operate the business as currently operated under any environmental Law, and all such environmental Permits are in full force and effect.
Section 4.17. Related Party Transactions. Except as set forth in Section 4.17 of the Blockchain Alliance Disclosure Schedule, as of the First Closing Date, no Related Person of any Spin-off Entity (a) has, directly or indirectly, a material economic interest in any Person that (i) furnishes or sells services or products that competes with the Transferred Business, or (ii) is otherwise engaged in business that directly competes with the Transferred Business, (b) has, directly or indirectly, an economic interest in any Person that purchases from or sells or furnishes to any Spin-off Entity any material value of goods or services, (c) has, directly or indirectly, a beneficial interest in any Material Contract to which any Spin-off Entity is a party, (d) has, directly or indirectly, any material contractual or other arrangement with any Spin-off Entity, (e) received any payment or other benefit from any Spin-off Entity, or (f) advanced or owed any material amount of money to any Spin-off Entity. No Spin-off Entity has extended or maintained credit, arranged for the extension of credit or renewed an extension of credit in the form of a personal loan to or for any director or executive officer of Blockchain Alliance Group Company.
Section 4.18. Purchase for Own Account; Economic Risk. Except for the proposed distribution of Company Exchange Shares to Blockchain Alliance’s shareholders as of the First Closing, Blockchain Alliance is acquiring the Company Exchange Shares for investment for its own account and not with a view to the distribution thereof in violation of the Securities Act. Blockchain Alliance acknowledges that it (a) can bear the economic risk of its investment in the Company Exchange Shares, and (b) has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Company Exchange Shares.
29
Section 4.19. Private Placement. Non-U.S. Person or Accredited Investor. Blockchain Alliance understands that (a) the Company Exchange Shares have not been registered under the Securities Act or any state securities Laws and (b) the Company Exchange Shares may not be sold unless such disposition is registered under the Securities Act and applicable state securities Laws or is exempt from registration thereunder. Blockchain Alliance represents that it is either (i) an institutional “accredited investor” within the meaning of Rule 501(a) of Regulation D under the Securities Act, or (ii) is not a U.S. Person and it is located outside the United States, as such terms are defined in Rule 902 of Regulation S under the Securities Act. Blockchain Alliance acknowledges that the certificates representing the Company Exchange Shares will bear the following legend:
“THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT OR IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, QUALIFIES AS AN EXEMPT TRANSACTION UNDER THE ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. THE SHARES ARE SUBJECT TO THE TRANSFER RESTRICTIONS SET FORTH IN THE REGISTRATION RIGHTS AGREEMENT, DATED BY AND BETWEEN BLOCKCHAIN ALLIANCE TECHNOLOGIES HOLDINGS COMPANY AND THE COMPANY.”
Section 4.20. Brokers. No broker, finder or investment banker 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 or on behalf of any Blockchain Alliance Group Company.
Section 4.21. No Additional Representations. Blockchain Alliance acknowledges that the Company makes no express or implied representations or warranties as to any matter whatsoever except as expressly set forth in this Agreement, the Registration Rights Agreement or any written certificate delivered by the Company to Blockchain Alliance in accordance with the terms hereof and thereof, and that any such other representations and warranties are expressly disclaimed and that Blockchain Alliance does not rely on any such other representations and warranties or the accuracy or completeness thereof.
ARTICLE
V
ADDITIONAL AGREEMENTS
Section 5.01. Further Assurance. During the period from the date of this Agreement to the earlier of the First Closing Date, each of the Parties agrees to do or cause to be done all things necessary or reasonably advisable under applicable Laws to consummate the Transactions on a timely basis, including using its commercially reasonable efforts to give such notices and obtain all other authorizations, consents, orders and approvals of all Governmental Authorities and other third parties that may be or become necessary for its execution and delivery of, and the performance of its obligations pursuant to, this Agreement. Blockchain Alliance shall, promptly after the date hereof but in any case before the First Closing, provide the Company the documents and information in relation to the Transferred Business listed in Schedule III in reasonable details.
30
Section 5.02. Conduct of Business of Spin-off Entities and Transferred Business Prior to First Closing. Except as required by any Law, or in line with the ordinary course of business consistent with past practice (including, for the avoidance of doubt, ordinary marketing activities), or expressly required or permitted by this Agreement, or pursuant to the Blockchain Alliance Group Company Restructuring Schedule, or with the prior written consent of the Company, from the date hereof to the First Closing Date, Blockchain Alliance shall ensure that its applicable Affiliates conduct the Transferred Business, and shall cause the Spin-off Entities to be operated and the Transferred Business to be conducted, in the ordinary course of business consistent with past practice and use commercially reasonable efforts to (a) preserve substantially intact the present business organization of the Spin-off Entities and the Transferred Business, (b) maintain, in all material respects, the assets, properties, operations and the Permits of the Spin-off Entities and the Transferred Business, (c) keep available the services of the key directors and executive officers of the Spin-off Entities and the Transferred Business, (d) preserve, in all material respects, the present relationships with the Persons with which any Spin-off Entity or the Transferred Business has material business relationships, and (e) manage the working capital (including the timing of collection of accounts receivable and of the payment of accounts payable and the management of inventory) of the Spin-off Entities, and the applicable Affiliates of Blockchain Alliance with respect to the Transferred Business, in the ordinary course of business consistent with past practice. Without limiting the generality of the foregoing, except as required by any Law, or in line with the ordinary course of business consistent with past practice (including, for the avoidance of doubt, ordinary marketing activities) (which should not apply to any item set forth in Section 5.02(a) through Section 5.02(f)), or expressly required, or permitted by this Agreement or pursuant to the Blockchain Alliance Group Company Restructuring Schedule, or as set forth in Section 5.02 of Blockchain Alliance Disclosure Schedule, or with the prior written consent of the Company, Blockchain Alliance agrees that, from the date hereof to the First Closing Date, Blockchain Alliance shall not and shall cause none of the Spin-off Entities to take any of the following actions, or agree, resolve or commit to do any of the foregoing actions:
(a) amend the Organizational Documents of any of Blockchain Alliance and Spin-off Entities;
(b) issue, sell, transfer or dispose of, or pledge, redeem, purchase or acquire, any shares of the capital stock or other equity interests of any of Blockchain Alliance and Spin-off Entities, or grant any options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other agreements or rights to purchase or otherwise acquire any shares of the capital stock or other equity interests of any of Blockchain Alliance and Spin-off Entities, or grant any stock appreciation, phantom stock, profit participation, or similar rights, of any of Blockchain Alliance and Spin-off Entities;
(c) effect any recapitalization, reclassification, share split or like change in the capitalization of any of Blockchain Alliance and Spin-off Entities;
(d) effect or commence any liquidation, bankruptcy, dissolution, scheme of arrangement, merger, consolidation, amalgamation, restructuring, reorganization or similar transaction involving any Spin-off Entity (other than transactions contemplated in the Blockchain Alliance Group Company Restructuring Schedule);
(e) make or change any material Tax election, adopt or change a method of Tax accounting, amend any material Tax Returns or file any claims for material Tax refunds, settle any material Tax claim, audit or assessment or surrender any right to claim a material Tax refund, offset or other reduction in material Tax liability of any of Spin-off Entities;
31
(f) declare or pay or set aside for payment of any dividends on authorize or make other distributions in respect of any of the capital stock or other equity interests of any of Spin-off Entities;
(g) incur, terminate or prepay any Indebtedness, or incur capital expenditures or similar obligations or liabilities, in excess of RMB100,000 in the aggregate by any of Spin-off Entities;
(h) acquire or agree to acquire any real property, corporation, partnership, limited liability company, other business organization or division thereof or any material amount of assets by any of Spin-off Entities, other than such acquisitions in an amount not to exceed RMB100,000 in the aggregate (other than transactions contemplated in the Blockchain Alliance Group Company Restructuring Schedule);
(i) sell, lease, pledge, assign, transfer or dispose of or incur any Lien on assets having a value in excess of RMB100,000 in the aggregate by any of Spin-off Entities (other than transactions contemplated in the Blockchain Alliance Group Company Restructuring Schedule);
(j) (A) hire or retain any officer, director, employee or individual independent contractor with annual base compensation of RMB500,000 or more by any of Spin-off Entities, (B) terminate the service of any officer, director, employee or individual independent contractor with annual base compensation of RMB500,000 or more, other than for “cause” or take any action that is reasonably likely to give rise to a “good reason” (or any term of similar import) claim by any of Spin-off Entities; (C) increase in any manner any compensation, bonus, benefits payable or severance entitlements of any officer, director, employee or individual independent contractor by 5% by any of Spin-off Entities; or (D) adopt, enter into or amend any share incentive plan or material benefits plan by any of Spin-off Entities;
(k) enter into any new line of business, or abandon or discontinue any existing lines of business by any of Spin-off Entities (other than transactions contemplated in the Blockchain Alliance Group Company Restructuring Schedule);
(l) make any loans, advances or capital contributions to, or investments in, any other Person in excess of RMB100,000 in the aggregate by any of Spin-off Entities (other than transactions contemplated in the Blockchain Alliance Group Company Restructuring Schedule);
(m) enter into, amend or modify in any material respect or terminate any Material Contract (or any Contract that would have been a Material Contract if in effect on the date hereof) or otherwise waive, release or assign any material rights, claims or benefits by any of Spin-off Entities (other than transactions contemplated in the Blockchain Alliance Group Company Restructuring Schedule);
32
(n) settle, or offer or propose to settle, (i) any material Action with an amount in excess of RMB100,000, or (ii) any Action that relates to the Transactions, in each case by any of Spin-off Entities;
(o) sell, lease, license, or otherwise transfer or dispose of, abandon or permit to lapse, fail to take any action necessary to maintain, enforce or protect any material Blockchain Alliance Intellectual Property by any of Spin-off Entities (other than transactions contemplated in the Blockchain Alliance Group Company Restructuring Schedule);
(p) mortgage, pledge or subject to any material Lien (other than Permitted Liens) over any asset, in excess of RMB100,000 in the aggregate by any of Spin-off Entities;
(q) terminate or cancel, let lapse, or amend or modify in any material respect, other than renewals in the ordinary course of business, any material insurance policies maintained by
it which is not promptly replaced by a comparable amount of insurance coverage by any of Spin-off Entities;
(r) undertake any action or fail to take any action that would have a Blockchain Alliance Material Adverse Effect;
(s) enter into, amend or modify in any material respect or terminate any Material Contract (or any Contract that would have been a Material Contract if in effect on the date hereof) or otherwise waive, release or assign any material rights, claims or benefits by any of Spin-off Entities (other than transactions contemplated in the Blockchain Alliance Group Company Restructuring Schedule); or
(t) agree, resolve or commit to do any of the foregoing.
Section 5.03. Conduct of Business of the Company Prior to First Closing. Except as required by any Law, or in line with the ordinary course of business (including, for the avoidance of doubt, ordinary marketing activities), or expressly required or permitted by this Agreement, or pursuant to the Blockchain Alliance Group Company Restructuring Schedule, or with the prior written consent of Blockchain Alliance, from the date hereof to the Frist Closing Date, the Company shall, and shall cause each of its Subsidiaries to, conduct the business of the Group Companies in the ordinary course of business and use commercially reasonable efforts to (a) preserve substantially intact the present business organization of the Group Companies, (b) maintain, in all material respects, the assets, properties, operations and the Permits of the Group Companies, (c) keep available the services of the key directors and executive officers of the Group Companies, (d) preserve, in all material respects, the present relationships with the Persons with which any Group Company has material business relationships, and (e) manage the working capital (including the timing of collection of accounts receivable and of the payment of accounts payable and the management of inventory) of the Group Companies in the ordinary course of business. Without limiting the generality of the foregoing, except as required by any Law, or in line with the ordinary course of business (including, for the avoidance of doubt, ordinary marketing activities) (which should not apply to any item set forth in Section 5.03(a) through Section 5.03(d)), or expressly required or permitted by this Agreement, or pursuant to the Blockchain Alliance Group Company Restructuring Schedule, or with the prior written consent of Blockchain Alliance, the Company agrees that, from the date hereof to the Closing Date, the Company shall not take, and shall not cause any of its Group Companies to take, any of the following actions, or agree, resolve or commit to do any of the foregoing actions:
33
(a) amend Organizational Documents of the Company other than the change of name of the Company;
(b) effect any recapitalization, reclassification, share split or like change in the capitalization of the Company;
(c) effect or commence any liquidation, bankruptcy, dissolution, scheme of arrangement, merger, consolidation, amalgamation, restructuring, reorganization or similar transaction involving the Company and Company Significant Subsidiaries (other than
transactions contemplated in the Blockchain Alliance Group Company Restructuring Schedule);
(d) declare or pay or set aside for payment of any dividends on authorize or make other distributions in respect of any of its capital stock or other equity interests;
(e) fail to make in a timely manner any filings or registrations with the SEC required under the Securities Act or the Exchange Act or the rules and regulations promulgated thereunder;
(f) agree, resolve or commit to do any of the foregoing.
Section 5.04. No Solicitation. Blockchain Alliance agrees that for a period of twenty-four (24) months following the First Closing, it will not and it will ensure that its Affiliates (and any Person acting on behalf of or in concert with it or any of its Affiliates) will not, directly or indirectly, solicit for employment or hire any officer, director, or employee of any Spin-off Entity. The restrictions of this Section 5.04 shall not prohibit Blockchain Alliance or its Affiliates, however, from (i) conducting any general solicitations for employment, such as any newspaper or Internet help wanted advertisement, directly or through any agent (including placement and recruiting agencies) that is not directed at such Persons, or (ii) hiring any such Person (a) who approaches Blockchain Alliance in response to such advertisements or general solicitations, (b) who contacts Blockchain Alliance on his or her own initiative without any direct or indirect solicitation from Blockchain Alliance or (c) whose employment with any Spin-off Entity has ceased.
Section 5.05. PRC Tax Matters. The Parties hereby acknowledge, covenant and agree that (i) the Company and the Blockchain Alliance Group Companies shall have no obligation to pay any Tax assessed by the applicable PRC Governmental Authority on Blockchain Alliance to be paid by with respect to the sale of the Blockchain Alliance Exchange Shares pursuant to this Agreement and (ii) Blockchain Alliance shall bear and pay any Tax as assessed by the applicable PRC Governmental Authority on Blockchain Alliance with respect to the sale of the Blockchain Alliance Exchange Shares pursuant to this Agreement.
34
Section 5.06. Access to Information. (a) Subject to applicable Law, from the date hereof to the First Closing Date, Blockchain Alliance shall (i) give, and shall cause to be given, the Company and its Representatives, upon prior written notice, reasonable access, during normal business hours and under reasonable circumstances, to the offices, properties, books and records of the Spin-off Entities and the Transferred Business, (b) furnish, and shall cause to be furnished, to the Company and its Representatives such financial and operating data and other information relating to the Spin-off Entities and the Transferred Business as such Persons may reasonably request and (c) instruct the Representatives of the Blockchain Alliance Group Companies to cooperate with the Company in its investigation of the Spin-off Entities and the Transferred Business. Any investigation pursuant to this Section shall be conducted in such manner as not to interfere unreasonably with the conduct of the business of the Blockchain Alliance and its Subsidiaries.
(b) Subject to applicable Law, from the date hereof to the First Closing Date, the Company shall (i) give, and shall cause to be given, Blockchain Alliance and its Representatives, upon prior written notice, reasonable access, during normal business hours and under reasonable circumstances, to the offices, properties, books and records of the Company and its Subsidiaries, (b) furnish, and shall cause to be furnished, to Blockchain Alliance and its Representatives such financial and operating data and other information relating to the Company and its Subsidiaries as such Persons may reasonably request and (c) instruct the Representatives of the Company and its Subsidiaries to cooperate with Blockchain Alliance in its investigation of the Company and its Subsidiaries. Any investigation pursuant to this Section shall be conducted in such manner as not to interfere unreasonably with the conduct of the business of the Company and its Subsidiaries. Blockchain Alliance acknowledges that certain information obtained pursuant to this Section 5.06(b) may constitute material non-public information under applicable securities laws and acknowledges and understands that applicable securities laws limit trading in securities while in possession of any material non-public information.
Section 5.07. Related Party Arrangements. Except as set forth in Section 5.07 of the Blockchain Alliance Disclosure Schedule, Blockchain Alliance shall cause all Contracts, commitments or arrangements between or among any Spin-off Entity, on the one hand, and any of its Related Person, on the other hand, to be terminated effective as of the First Closing without continuing liability of any kind on any Spin-off Entity, and Blockchain Alliance shall deliver written evidence of such termination to the Company at or prior to the First Closing.
Section 5.08. Notices of Certain Events. Each of the Company and Blockchain Alliance shall promptly notify the other in writing of:
(a) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the Transactions;
(b) any notice or other communication from any Governmental Authority in connection with the Transactions;
(c) any Actions commenced or, to the Knowledge of the Company or the Knowledge of Blockchain Alliance, threatened against any Group Company or any of Blockchain Alliance and the Blockchain Alliance Group Companies, as the case may be, that, if pending on the date of this Agreement, would have been required to have been disclosed by such Party pursuant to such Party’s representations and warranties contained herein, or that relate to the consummation of the Transactions;
35
(d) if any inaccuracy or breach of any representation or warranty or failure to perform any covenant or agreement on the part of the Company or Blockchain Alliance, as the case may be, set forth in this Agreement shall have occurred that would cause the conditions set forth in Article VI not to be satisfied;
(e) any material failure of the Company or Blockchain Alliance, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; and
(f) the occurrence or non-occurrence of any event which would be likely to cause any condition to the obligations of the Company or Blockchain Alliance, as applicable, to effect the transactions contemplated hereby not to be satisfied.
provided, however, that the delivery of any notice pursuant to this Section 5.08 shall not limit or otherwise affect the remedies available hereunder to the Party receiving such notice.
Section 5.09. Release. Effective as of the First Closing, Blockchain Alliance, on behalf of itself, its successors and assigns, Affiliates and its and their respective equityholders, members, managers, partners, directors, officers, employees, agents and other Representatives (collectively, the “Blockchain Alliance Releasing Parties”), does hereby unconditionally and irrevocably release and discharge the Spin-off Entities and their respective predecessors, successors, direct or indirect equityholders, assigns and Affiliates, and their respective members, managers, partners, directors, officers, employees, agents and other representatives in their capacities as such (collectively, the “Blockchain Alliance Released Parties”), from any and all Losses, liabilities or claims of every kind, in connection with any transaction or occurrence arising up to and including the First Closing, whether in law, equity or otherwise, known or unknown, suspected or unsuspected (including any fiduciary duty Actions against the Blockchain Alliance Released Parties) that any Blockchain Alliance Releasing Party now has, has had or could have asserted against any of the Blockchain Alliance Released Parties prior to and including the First Closing Date (including with respect to, arising out of or relating to any Blockchain Alliance Releasing Party’s status (directly or indirectly through one or more other Persons) as an employee, stockholder, option holder, representative, agent, director and/or officer of any Blockchain Alliance prior to and including the First Closing Date) (collectively, the “Blockchain Alliance Released Claims”). Each Blockchain Alliance Releasing Party hereby irrevocably agrees to refrain from, directly or indirectly, asserting any Action against any Blockchain Alliance Released Party based upon any Blockchain Alliance Released Claim.
Section 5.10. Listing. The Company will make best efforts to maintain the listing and trading of its the Company Ordinary Shares or the Company ADSs on New York Stock Exchange, and will comply in all material respects with the Company’s reporting, filing and other obligations under the bylaws or rules of FINRA and such exchange, as applicable.
Section 5.11. Company’s Covenant. (a) During the period from the First Closing until December 31, 2021, the Company agrees that (i) the Company and its Affiliates will make decisions relating to the management and strategy of the Transferred Business then operated by the Company in good faith and in a manner consistent with the reasonable industry standards, and (ii) neither the Company nor its Affiliates shall take any action or refrain from taking any action with the intent to prevent or limit the possibilities of the occurrence of the issuance and sale of the Earn-Out Company Exchange Shares, (b) within three (3) months following the First Closing Date, the Company agrees and covenants to repay or return Blockchain Alliance the number of each type of cryptocurrencies (the “Reserved Amount”) equal to the quantity of balances of such type of cryptocurrencies with respect to the Transferred Business as of the date immediately preceding the First Closing Date which shall exclude such type of cryptocurrencies payable to any third party including without limitation cryptocurrencies miners and shall be certified by a director of Blockchain Alliance at the First Closing, and (c) subject to this Agreement and the Registration Rights Agreement, the Company shall cooperate with Blockchain Alliance to update the register of members of the Company and issue the new share certificates of the Company in the event that the Blockchain Alliance distributes the Company Exchange Shares to Blockchain Alliance’s shareholders.
36
Section 5.12. Mining Pool Business Operation. During the period from the First Closing until the Second Closing, the Parties acknowledge and agree that (i) the mining pool business transferred to the Company shall be operated by an operation team with its members appointed by Bitdeer and shall be operated under the direction of Bitdeer, (ii) Bitdeer is entitled to change the composition of such operation team and its members’ duties and responsibilities, as necessary at its sole discretion, and (iii) the Company is entitled to appoint one (1) financial staff and other staff to assist the operation of such mining pool business.
ARTICLE
VI
CONDITIONS TO FIRST CLOSING
Section 6.01. Conditions to Obligations of the Company to First Closing. The obligations of the Company to consummate the Transactions contemplated at the First Closing shall be subject to the satisfaction or waiver (where permissible), at or prior to the First Closing, of each of the following conditions:
(a) The representations and warranties of Blockchain Alliance contained in Article IV of this Agreement (i) that are qualified by materiality or Blockchain Alliance Material Adverse Effect, shall be true and correct in all respects, and (ii) that are not qualified by materiality or Blockchain Alliance Material Adverse Effect, shall be true and correct in material respects, in each case of (i) and (ii), as of the date of this Agreement and as of the First Closing (except for representations and warranties that expressly speak as of a specified date, in which case as of such specified date).
(b) No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law which is then in effect (whether temporary, preliminary or permanent) and has the effect of enjoining, restraining, prohibiting or otherwise making the consummation of the Transactions illegal (an “Injunction”).
(c) Blockchain Alliance shall have performed and complied in all material respects with all agreements, covenants and conditions contained in this Agreement that are required to be performed or complied with by it at or prior to the First Closing.
37
(d) No Blockchain Alliance Material Adverse Effect shall have occurred following the date of this Agreement.
(e) Blockchain Alliance shall have delivered to the Company a certificate, dated as of the First Closing Date, signed by a duly authorized executive officer of Blockchain Alliance, certifying that the conditions specified in Section 6.01(a) through Section 6.01(d) are satisfied.
(f) The Purchased Assets (including but not limited to the entire mining pool business of Bitdeer), Transferred Intellectual Property (including but not limited to the ownership of and registration right to the domain name btc.com), Transferred Employees, Transferred Contracts and other assets relating to the Transferred Business shall have been duly transferred from Blockchain Alliance Singapore to the Spin-off Entities pursuant to the Blockchain Alliance Group Company Restructuring Schedule, and Blockchain Alliance shall have delivered reasonable supporting documents evidencing the same to the Company.
Section 6.02. Conditions to Obligations of Blockchain Alliance to First Closing. The obligations of Blockchain Alliance to consummate the Transactions contemplated at the First Closing shall be subject to the satisfaction or waiver (where permissible), at or prior to the First Closing, of each of the following conditions:
(a) The representations and warranties of the Company contained in Article III (i) that are qualified by materiality or Company Material Adverse Effect, shall be true and correct in all respects, and (ii) that are not qualified by materiality or Company Material Adverse Effect, shall be true and correct in material respects, in each case of (i) and (ii), as of the date of this Agreement and as of the First Closing (except for representations and warranties that expressly speak as of a specified date, in which case as of such specified date).
(b) No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Injunction.
(c) The Company shall have performed and complied in all material respects with all agreements, covenants and conditions contained in this Agreement that are required to be performed or complied with by it at or prior to the First Closing.
(d) No Company Material Adverse Effect shall have occurred following the date of this Agreement.
(e) The Company shall have delivered to Blockchain Alliance a certificate, dated as of the First Closing Date, signed by a duly authorized executive officer of the Company, certifying that the conditions specified in Section 6.02(a) through 6.02(d) are satisfied.
(f) The Company shall remain listed on New York Stock Exchange and the listing application for the Company Exchange Shares, if applicable, shall have been approved by New York Stock Exchange. As of the First Closing Date, The Company shall not have received any written notice from New York Stock Exchange that it has failed, or would reasonably be expected to fail to meet the New York Stock Exchange listing requirements as of the First Closing Date for any reason, where such notice has not been subsequently withdrawn by New York Stock Exchange or the underlying failure appropriately remedied or satisfied.
38
ARTICLE
VII
INDEMNIFICATION
Section 7.01. Survival of Representations and Warranties.
(a) The representations and warranties of the Company contained in this Agreement shall survive the First Closing until one (1) year after the First Closing; provided, however, that the Company Fundamental Reps shall survive indefinitely. The covenants and agreements of the Company set forth in this Agreement shall survive the First Closing until fully discharged in accordance with their terms. Blockchain Alliance’s right to indemnification with respect to the representations, warranties, covenants or agreements of the Company shall not be affected or deemed waived by reason of any investigation made at any time by or on behalf of Blockchain Alliance.
(b) The representations and warranties of Blockchain Alliance contained in this Agreement shall survive the First Closing until one (1) year after the First Closing; provided, however, that the Blockchain Alliance Fundamental Reps shall survive indefinitely. The covenants and agreements of Blockchain Alliance set forth in this Agreement shall survive the First Closing until fully discharged in accordance with their terms. The Company’s right to indemnification with respect to the representations, warranties, covenants or agreements of Blockchain Alliance shall not be affected or deemed waived by reason of any investigation made at any time by or on behalf of the Company.
(c) Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the non-breaching Party to the breaching Party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the relevant representation, warranty, covenant or agreement and such claims shall survive until finally resolved.
Section 7.02. Indemnification by the Company. Following the First Closing, the Company shall indemnify and defend each of Blockchain Alliance and its Representatives (each a “Blockchain Alliance Indemnified Party”) against, and shall hold each of them harmless from and against, any and all Losses actually suffered or incurred by, or imposed upon, the Blockchain Alliance Indemnified Parties arising out of or resulting from:
(a) any material inaccuracy or material breach of any representation or warranty made by the Company under this Agreement; or
(b) any material violation or material nonperformance of any covenant or agreement of the Company under this Agreement.
39
Section 7.03. Indemnification by Blockchain Alliance. Following the First Closing, Blockchain Alliance shall indemnify and defend the Company and its Representatives (each a “Company Indemnified Party”) against, and shall hold each of them harmless from and against, any and all Losses actually suffered or incurred by, or imposed upon, the Company Indemnified Parties arising out of or resulting from:
(a) any material inaccuracy or material breach of any representation or warranty made by Blockchain Alliance under this Agreement;
(b) any material violation or material nonperformance of any covenant or agreement by Blockchain Alliance under this Agreement;
(c) Blockchain Alliance’s failure to timely pay any Taxes imposed on Blockchain Alliance in connection with any corporate restructuring of the Spin-off Entities conducted in furtherance of the Blockchain Alliance Group Company Restructuring under any applicable Laws; or
(d) Any claim or dispute arising from conducting the Blockchain Alliance Group Company Restructuring in material violation of applicable laws or contracts to which the Spin-off Entity is a party or the Transferred Business are bound by.
Section 7.04. Limits on Indemnification. The indemnification provided for in Section 7.02 and Section 7.03 shall be subject to the following limitations:
(a) The Company shall not be liable for any claim for indemnification pursuant to Section 7.02 unless and until the aggregate amount of all indemnifiable Losses under Section 7.02 exceeds US$1 million, in which event the Company shall be required to pay or be liable for all such Losses from the first dollar. The aggregate amount of all Losses for which the Company shall be liable pursuant to Section 7.02 shall not exceed US$7.68 million.
(b) Blockchain Alliance shall not be liable for any claim for indemnification pursuant to Section 7.03 unless and until the aggregate amount of all indemnifiable Losses under Section 7.03 exceeds US$1 million, in which event Blockchain Alliance shall be required to pay or be liable for all such Losses from the first dollar. The aggregate amount of all Losses for which Blockchain Alliance shall be liable pursuant to Section 7.03 shall not exceed US$7.68 million.
(c) Notwithstanding the foregoing, the limitations set forth in Section 7.04(a) and Section 7.04(b) shall not apply to Losses arising out of or resulting from any inaccuracy or breach of any Company Fundamental Reps, Blockchain Alliance Fundamental Reps or any failure by either the Company or Blockchain Alliance of their respective obligations under Section 2.02(b).
(d) The amount of any Losses payable by the Indemnifying Party under this Agreement shall be net of any amounts actually recovered by the Indemnified Party from any other Person determined to be responsible therefor. If the Indemnifying Party has paid an amount in discharge of any claim under this Agreement and the Indemnified Party has been compensated in full for all Losses it has suffered with respect to the same subject matter of such claim, then to the extent the Indemnified Party subsequently recovers (whether by payment, discount, credit, relief, or otherwise) from a third party a sum which further indemnifies or which is the same subject matter of claim such that the Indemnified Party’s recovery and retention of such amount would constitute double recovery for the same subject matter of claim, it shall as soon as reasonably practicable pay over such amount to the Indemnifying Party less all costs of recovery and Taxes with respect thereto. To the extent required by applicable Law and reasonably practicable, each Indemnified Party shall use commercially reasonable efforts to mitigate any Losses for which the Indemnified Party makes claims under this Agreement; provided, however, that nothing herein shall require an Indemnified Party to maintain any insurance policies, commence any proceedings against a third party, or obtain any insurance proceeds from other sources of indemnification available to such party in respect of the Losses.
40
(e) An Indemnified Party shall not be entitled to recover from the Indemnifying Party under this Agreement more than once in respect of the same portion of the same Losses suffered.
Section 7.05. Exclusive Remedy. Following the First Closing, notwithstanding any other provision contained herein, this Article VII shall be the sole and exclusive monetary remedy of the Parties for any and all claims arising out of or resulting from this Agreement, except that no limitation or exceptions with respect to the obligations or liabilities on any Indemnifying Party in this Article VII shall apply to any claims arising out of or resulting from fraud or willful misconduct on the part of any Indemnifying Party. Nothing in this Article VII or elsewhere in this Agreement shall limit any Party’s right to specific performance or other equitable or non-monetary remedies.
ARTICLE
VIII
TERMINATION
Section 8.01. Termination. This Agreement may be terminated at any time prior to the First Closing:
(a) by the mutual written consent of the Company and Blockchain Alliance;
(b) by either the Company by written notice to Blockchain Alliance or by Blockchain Alliance by written notice to the Company, in the event that any Governmental Authority having competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any Injunction which shall have become final and non-appealable;
(c) by either the Company by written notice to Blockchain Alliance or by Blockchain Alliance by written notice to the Company, in the event that the First Closing shall not have occurred on or before April 15, 2021 or such other date as mutually agreed in writing by the Company and Blockchain Alliance (the “Termination Date”);
(d) by the Company by written notice to Blockchain Alliance, if (i) Blockchain Alliance shall have breached any representation, warranty, covenant or agreement set forth in this Agreement, (ii) such breach or misrepresentation is not cured within twenty (20) days after Blockchain Alliance receives written notice thereof from the Company (or such shorter period between the date of such notice and the Termination Date), and (iii) such breach or misrepresentation would cause any of the conditions set forth in Section 6.01 not to be satisfied; provided, however, that, the Company shall not have the right to terminate this Agreement pursuant to this Section 8.01(d) if it is then in material breach of this Agreement that would result in any conditions to the First Closing set forth in Section 6.01 not being satisfied; or
41
(e) by Blockchain Alliance by written notice to the Company if (i) the Company shall have breached any representation, warranty, covenant or agreement set forth in this Agreement, (ii) such breach or misrepresentation is not cured within twenty (20) days after the Company receives written notice thereof from Blockchain Alliance (or such shorter period between the date of such notice and the Termination Date), and (iii) such breach or misrepresentation would cause any of the conditions set forth in Section 6.02 not to be satisfied; provided, however, that, Blockchain Alliance shall not have the right to terminate this Agreement pursuant to this Section 8.01(e) if it is then in material breach of this Agreement that would result in any conditions to the First Closing set forth in Section 6.02 not being satisfied.
Section 8.02. Effect of Termination. In the event of termination of this Agreement pursuant to Section 8.01, this Agreement shall forthwith become void and there shall be no liability under this Agreement on the part of any Party except that nothing herein shall relieve any Party from liability to another Party (a) for any breach of this Agreement that occurred before such termination and (b) or resulting from fraud or willful misconduct and the terms of this Section 8.02 and Article IX shall survive any such termination.
ARTICLE
IX
MISCELLANEOUS
Section 9.01. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed duly given, made or received on the date of delivery if delivered in person or by internationally recognized overnight courier service, or on the date of confirmation of receipt of transmission by facsimile or by email (provided that confirmation of transmission is mechanically or electronically generated and kept on file by the sending Party), to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 9.01):
(a) If to the Company, to:
12F, West Side, Block B, Building No. 7
Shenzhen Bay Eco-Technology Park, Nanshan District
Shenzhen, the PRC
Attn: Mr. YU Bo
(b) If to Blockchain Alliance, to:
If to Blockchain Alliance, to Room 662, Building A, No. 8 college, No. 18
Xueqing Road, Haidian District, Beijing 100083
Attn: Mr. Jihan Wu
42
Section 9.02. Confidentiality. For a period of twelve (12) months following the date hereof, Blockchain Alliance shall, and shall cause its Affiliates and their respective Representatives to, hold in strict confidence any and all information, whether written or oral, concerning the Spin-off Entities and the Transferred Business (the “Confidential Information”), except to the extent that Blockchain Alliance can show that such information (a) is generally available to and known by the public through no fault of Blockchain Alliance, any of its Affiliates or their respective Representatives; or (b) is lawfully acquired by Blockchain Alliance, any of its Affiliates or their respective Representatives from and after the First Closing from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. The Parties hereto agree that the Confidential Information may be disclosed (a) to Blockchain Alliance’s Affiliates and its and their respective Representatives on a need-to-know basis; (b) in the event that Blockchain Alliance or any of its Affiliates or their respective Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Law or applicable national securities exchange, under such circumstances, Blockchain Alliance shall promptly notify the Company in writing and shall disclose only that portion of such information is legally required to be disclosed, provided that Blockchain Alliance shall use commercially reasonable efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.
Section 9.03. Adjustments for Share Splits, etc. Wherever in this Agreement there is a reference to a specific number of the Company Ordinary Shares or Blockchain Alliance Exchange Shares, then upon the occurrence of any subdivision, combination or share or extraordinary dividend of or on Company Exchange Shares or Blockchain Alliance Exchange Shares with an effective or record date from the date hereof until the applicable Closing, the specific number of such shares so referenced in this Agreement shall be proportionally adjusted to reflect the effect on the outstanding shares of such class or series of shares by such subdivision, combination or dividend.
Section 9.04. Amendment. Any provision of this Agreement may be amended or waived prior to the First Closing if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each Party to this Agreement or, in the case of a waiver, by each Party against whom the waiver is to be effective. No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
Section 9.05. Taxes and Expenses. Each Party shall pay all of its own fees and expenses (including attorneys’ fees) incurred in connection with this Agreement and the Transactions.
Section 9.06. Assignment. This Agreement and the rights and obligations of the Parties hereunder may not be assigned by the Company without Blockchain Alliance’s written consent or by Blockchain Alliance without the Company’s written consent. Any assignment in violation of this Section 8.06 shall be null and void.
Section 9.07. No Third-Party Beneficiaries. Except for the provisions of Article VII relating to the Indemnified Parties, and the provisions of Section 5.09 relating to the Blockchain Alliance Released Parties, this Agreement shall be binding upon and inure solely to the benefit of the Parties and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever.
Section 9.08. Governing Law; Arbitration.
(a) This Agreement shall be governed by, and construed in accordance with, the Laws of the State of New York without regard to its conflicts of law principles thereof.
43
(b) Any dispute, controversy or claim arising out of or relating to this Agreement or its subject matter shall be finally settled by arbitration. The place and seat of arbitration shall be Hong Kong, and the arbitration shall be administered by the Hong Kong International Arbitration Centre (the “HKIAC”) in accordance with the HKIAC Administered Arbitration Rules then in force (the “HKIAC Rules”). The number of arbitrators shall be three (3). In the event that there are more than two parties to an arbitration, one arbitrator shall be appointed by Blockchain Alliance and one arbitrator shall be appointed by the Company. The third arbitrator, who shall serve as chairperson of the arbitral tribunal, shall be selected by the mutual agreement of the first two arbitrators. Any arbitrator that is not so appointed shall instead be appointed in accordance with the HKIAC Rules. The language to be used in the arbitration proceedings shall be English. The award of the arbitral tribunal shall be final, conclusive and binding upon the Parties. Judgment upon any award may be entered and enforced in any court having jurisdiction over a Party or any of its assets. For the purpose of the enforcement of an award, the Parties irrevocably and unconditionally submit to the jurisdiction of any competent court and waive any defenses to such enforcement, including any defenses based on lack of personal jurisdiction or inconvenient forum.
Section 9.09. Entire Agreement. This Agreement and the Registration Rights Agreement constitute the entire agreement between the Parties with respect to the subject matter of this Agreement and supersede all prior agreements and understandings, both oral and written, between the Parties and/or their Affiliates with respect to the subject matter of this Agreement.
Section 9.10. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under any Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect for so long as the economic or legal substance of the Transactions is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Company and Blockchain Alliance shall negotiate together in good faith to modify this Agreement so as to effect the original intent of both the Company and Blockchain Alliance as closely as possible in an acceptable manner in order that the Transactions are consummated as originally contemplated to the greatest extent possible.
Section 9.11. Counterparts. This Agreement may be executed and delivered (including by electronic transmission in PDF format or by facsimile transmission) in one or more counterparts, and by the 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. The Parties acknowledge and agree that irreparable damage would occur, no adequate remedy at law would exist and damages would be difficult to determine if any of the provisions of this Agreement are not performed in accordance with their specific terms. Accordingly, in addition to any other right or remedy to which a Party may be entitled, at law or in equity, it shall be entitled to seek enforcement of any provision of this Agreement by a decree of specific performance and to seek temporary, preliminary and permanent injunctive relief to prevent breaches or threatened breaches of any of the provisions of this Agreement, without the necessity of proving the inadequacy of money damages as a remedy and without the necessity of posting any bond or other undertaking. The Parties further agree not to assert that a remedy of specific performance is unenforceable, invalid, contrary to applicable Law or inequitable for any reason, nor to assert that a remedy of monetary damages would provide an adequate remedy for any such breach.
[Remainder of Page Intentionally Left Blank]
44
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
| 500.COM LIMITED | |
| /s/ Bo YU | |
| Name: Bo YU | |
| Title: Director |
[Signature Page to Share Exchange Agreement]
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
| BLOCKCHAIN ALLIANCE TECHNOLOGIES HOLDING COMPANY | |
| /s/ Jihan Wu | |
| Name: Jihan Wu | |
| Title: Director |
[Signature Page to Share Exchange Agreement]
Schedule I – Blockchain Alliance Disclosure Schedule
Schedule II – Blockchain Alliance Group Company Restructuring Schedule
2
Schedule III – Operational Information
Exhibit A – Form of Registration Rights Agreement
Exhibit 10.4
AMENDMENT TO SHARE EXCHANGE AGREEMENT
THIS AMENDMENT TO SHARE EXCHANGE AGREEMENT (this “Amendment”) is made as of April 15, 2021 by and among:
| (1) | BIT Mining Limited (formerly known as 500.com Limited), an exempted company incorporated and existing under the laws of the Cayman Islands (the “Company”); and |
| (2) | Blockchain Alliance Technologies Holding Company, a company incorporated and existing under the laws of the Cayman Islands (“Blockchain Alliance”). |
Each of the forgoing parties is referred to herein individually as a “Party” and collectively as the “Parties”.
RECITALS
A. The Parties entered into a Share Exchange Agreement dated as of February 16, 2021 (the “Share Exchange Agreement”).
B. The Parties intend to make certain adjustments to the Share Exchange Agreement pursuant to the Amendment.
| 1. | Definitions and Interpretation. |
1.1 Definitions.
All capitalized terms used but not defined in this Amendment shall have the respective meanings assigned to such terms in the Share Exchange Agreement and the rules of interpretation and construction set forth in Section 1.02 of the Share Exchange Agreement shall apply to this Amendment.
| 2. | Amendment Relating to the Earn-Out and Clawback. |
2.1 The defined term “Clawback Shares” in Section of 1.01 of the Share Exchange Agreement is hereby deleted and replaced in its entirety with the following:
““Clawback Shares” shall be 4,435,344 Company Class A Ordinary Shares, multiplied by a fraction, the numerator of which is the Net Operating Loss suffered from the Transferred Business for the Relevant Period based on the Audited Financial Statements and the denominator of which is US$10,000,000, rounded to the nearest whole number; provided that if the Net Operating Loss suffered from the Transferred Business then operated by the Company for the Relevant Period exceeds US$10,000,000, then the maximum Clawback Shares shall be 4,435,344 Company Class A Ordinary Shares.”
2.2 The defined term “Earn-Out Company Exchange Shares” in Section of 1.01 of the Share Exchange Agreement is hereby deleted and replaced in its entirety with the following:
““Earn-Out Company Exchange Shares” shall be 22,176,718 Company Class A Ordinary Shares, multiplied by a fraction, the numerator of which is the Net Operating Profit generated by the Transferred Business for the Relevant Period based on the Audited Financial Statements and the denominator of which is US$20,000,000, rounded to the nearest whole number; provided that if the Net Operating Profit generated by the Transferred Business then operated by the Company for the Relevant Period exceeds US$20,000,000, then the maximum Earn-Out Company Exchange Shares shall be 22,176,718 Company Class A Ordinary Shares.”
1
2.3 A new defined term of “Relevant Period” shall be added in Section of 1.01 of the Share Exchange Agreement after the definition of “Related Person” and before the definition of “Representative”.
““Relevant Period” means the period from April 1, 2021 to March 31, 2022.”
2.4 Section 2.02(b)(i) of the Share Exchange Agreement is hereby deleted and replaced in its entirety with the following:
“(i) Within five (5) Business Days after the completion of the consolidated audited financial statements of the Company which shall cover the Transferred Business then operated by the Company (the “Audited Financial Statements”) prepared in accordance with GAAP for the Relevant Period, in any event the foregoing consolidated audited financial statements of the Company shall be completed within four (4) months after the Relevant Period, the Company shall prepare and deliver to Blockchain Alliance a statement of the Net Operating Profit or the Net Operating Loss, as the case may be, of the Transferred Business based on the Audited Financial Statements. The fees and expense charged in connection with preparing the Audited Financial Statements for the period from January 1, 2022 to March 31, 2022 shall be borne by Blockchain Alliance.”
2.5 Section 2.02(b)(ii) of the Share Exchange Agreement is hereby deleted and replaced in its entirety with the following:
“(ii) If the Transferred Business during the Relevant Period records any Net Operating Profits, the Company shall issue and sale to Blockchain Alliance the Earn-Out Company Exchange Shares at par value within ten (10) Business Days after the delivery of the calculation of the Net Operating Profit of the Transferred Business under Section 2.02(b)(i) and confirmation of the calculation of the Net Operating Profit by Blockchain Alliance.”
2.6 Section 2.02(b)(iii) of the Share Exchange Agreement is hereby deleted and replaced in its entirety with the following:
“(iii) If the Transferred Business during the Relevant Period records any Net Operating Loss, the Company shall have the right (but not obligation) to, and Blockchain Alliance shall be obligated to cooperate or cause the cooperation of, the Company’s repurchase at par value of any and all of the Clawback Shares (the “Clawback Right”) directly or indirectly held by Blockchain Alliance or any Permitted Transferee of Blockchain Alliance, within ten (10) Business Days after the delivery of the calculation of the Net Operating Loss of the Transferred Business under Section 2.02(b)(i) and confirmation of the calculation of the Net Operating Loss by Blockchain Alliance; provided, however, that, the Company shall not have the Clawback Right if it is then in material breach of Section 5.11(a)(i) that results in any Net Operating Loss.”
2
2.7 Section 5.11(a) of the Share Exchange Agreement is hereby deleted and replaced in its entirety with the following:
“(a) During the period from the First Closing until the expiration of the Relevant Period, the Company agrees that (i) the Company and its Affiliates will make decisions relating to the management and strategy of the Transferred Business then operated by the Company in good faith and in a manner consistent with the reasonable industry standards, and (ii) neither the Company nor its Affiliates shall take any action or refrain from taking any action with the intent to prevent or limit the possibilities of the occurrence of the issuance and sale of the Earn-Out Company Exchange Shares,”
2.8 Section 5.12 of the Share Exchange Agreement is hereby deleted and replaced in its entirety with the following:
“During the period from the First Closing until the expiration of the Relevant Period, the Parties acknowledge and agree that (i) the mining pool business transferred to the Company shall be operated by an operation team with its members appointed by Bitdeer and shall be operated under the direction of Bitdeer, (ii) Bitdeer is entitled to change the composition of such operation team and its members’ duties and responsibilities, as necessary at its sole discretion, and (iii) the Company is entitled to appoint one (1) financial staff and other staff to assist the operation of such mining pool business.”
| 3. | Registration Rights Agreement. The Parties acknowledge and agree that the Registration Rights Agreement attached to the Share Exchange Agreement in a form as Exhibit A shall be updated on the date hereof to reflect the amendments as set forth in Section 2 of this Amendment accordingly, as applicable. |
| 4. | Miscellaneous. |
4.1 Except as expressly amended and/or superseded by this Amendment, the Share Exchange Agreement remains and shall remain in full force and effect. This Amendment shall not constitute an amendment or waiver of any provision of the Share Exchange Agreement, except as expressly set forth herein. Upon the execution and delivery hereof, the Share Exchange Agreement shall thereupon be deemed to be amended as hereinabove set forth as fully and with the same effect as if the amendments made hereby were originally set forth in the Share Exchange Agreement. This Amendment and the Share Exchange Agreement shall each henceforth be read, taken and construed as one and the same instrument, but such amendments and supplements shall not operate so as to render invalid or improper any action heretofore taken under the Share Exchange Agreement. If and to the extent there are any inconsistencies between the Share Exchange Agreement and this Amendment with respect to the matters set forth herein, the terms of this Amendment shall control.
4.2 The Share Exchange Agreement as amended by this Amendment constitutes the entire agreement of the Parties with respect to the subject matter set forth in the Share Exchange Agreement and supersede any prior understandings, negotiations, agreements or representations by or among the parties hereto, written or oral, to the extent they related in any way to the subject matter hereof or thereof.
4.3 The provisions of Article 9 of the Share Exchange Agreement (other than Section 9.09 (Entire Agreement)) shall apply mutatis mutandis to this Amendment.
[The remainder of this page has been left intentionally blank]
3
IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date first written above.
| BIT Mining Limited | ||
| /s/: | Yu Bo | |
| Name: Yu Bo | ||
| Title: Authorized Signatory | ||
IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date first written above.
| Blockchain Alliance Technologies Holding Company | ||
| /s/ | Wu Jihan | |
| Name: Wu Jihan | ||
| Title: Director | ||
Exhibit 10.5
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this “Agreement”) is made and entered into as of July 12, 2021, between BIT Mining Limited, a company established and existing under the laws of the Cayman Islands (the “Company”), and each of the several purchasers signatory hereto (each such purchaser, a “Purchaser” and, collectively, the “Purchasers”).
This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof, between the Company and each Purchaser (the “Purchase Agreement”).
The Company and each Purchaser hereby agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:
“Advice” shall have the meaning set forth in Section 6(d).
“Depositary” means Deutsche Bank Trust Company Americas.
“Effectiveness Date” means, with respect to the Initial Registration Statement required to be filed hereunder, the 45th calendar day following the date hereof (or, in the event of a “full review” by the Commission, the 90th calendar day following the date hereof) and with respect to any additional Registration Statements which may be required pursuant to Section 2(c) or Section 3(c), the 45th calendar day following the date on which an additional Registration Statement is required to be filed hereunder (or, in the event of a “full review” by the Commission, the 90th calendar day following the date such additional Registration Statement is required to be filed hereunder); provided, however, that in the event the Company is notified by the Commission that one or more of the above Registration Statements will not be reviewed or is no longer subject to further review and comments, the Effectiveness Date as to such Registration Statement shall be the fifth (5th) Trading Day following the date on which the Company is so notified if such date precedes the dates otherwise required above, provided, further, if such Effectiveness Date falls on a day that is not a Trading Day, then the Effectiveness Date shall be the next succeeding Trading Day.
“Effectiveness Period” shall have the meaning set forth in Section 2(a).
“Event” shall have the meaning set forth in Section 2(d).
“Event Date” shall have the meaning set forth in Section 2(d).
“Filing Date” means, with respect to the Initial Registration Statement required hereunder, the 20th calendar day following the date hereof and, with respect to any additional Registration Statements which may be required pursuant to Section 2(c) or Section 3(c), the earliest practical date on which the Company is permitted by SEC Guidance to file such additional Registration Statement related to the Registrable Securities.
“Holder” or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.
“Indemnified Party” shall have the meaning set forth in Section 5(c).
“Indemnifying Party” shall have the meaning set forth in Section 5(c).
“Initial Registration Statement” means the initial Registration Statement filed pursuant to this Agreement.
“Losses” shall have the meaning set forth in Section 5(a).
“Plan of Distribution” shall have the meaning set forth in Section 2(a).
“Prospectus” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated by the Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.
“Registrable Securities” means, as of any date of determination, (a) all Shares, (b) all Share ADS, (c) all Warrant Shares and Warrant ADSs then issued and issuable upon exercise of the Warrants (assuming on such date the Warrants are exercised in full without regard to any exercise limitations therein) and (d) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided, however, that any such Registrable Securities shall cease to be Registrable Securities (and the Company shall not be required to maintain the effectiveness of any, or file another, Registration Statement hereunder with respect thereto) for so long as (a) a Registration Statement with respect to the sale of such Registrable Securities is declared effective by the Commission under the Securities Act and such Registrable Securities have been disposed of by the Holder in accordance with such effective Registration Statement, (b) such Registrable Securities have been previously sold in accordance with Rule 144 as set forth in a written opinion letter to such effect, addressed, delivered and acceptable to the Depositary and the affected Holders, or (c) such securities become eligible for resale without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144 as set forth in a written opinion letter to such effect, addressed, delivered and acceptable to the Depositary and the affected Holders (assuming that such securities and any securities issuable upon exercise, conversion or exchange of which, or as a dividend upon which, such securities were issued or are issuable, were at no time held by any Affiliate of the Company, and all Warrants are exercised by “cashless exercise”), as reasonably determined by the Company, upon the advice of counsel to the Company.
“Registration Statement” means any registration statement required to be filed hereunder pursuant to Section 2(a) and any additional registration statements contemplated by Section 2(c) or Section 3(c), including (in each case) the Prospectus, amendments and supplements to any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in any such registration statement.
“Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“Selling Shareholder Questionnaire” shall have the meaning set forth in Section 3(a).
“SEC Guidance” means (i) any publicly-available written or oral guidance of the Commission staff, or any comments, requirements or requests of the Commission staff and (ii) the Securities Act.
2. Shelf Registration.
(a) On or prior to each Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale of all of the Registrable Securities that are not then registered on an effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415. Each Registration Statement filed hereunder shall be on Form F-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form F-3, in which case such registration shall be on another appropriate form in accordance herewith, subject to the provisions of Section 2(e)) and shall contain (unless otherwise directed by at least 85% in interest of the Holders) substantially the “Plan of Distribution” attached hereto as Annex A and substantially the “Selling Shareholder” section attached hereto as Annex B; provided, however, that no Holder shall be required to be named as an “underwriter” without such Holder’s express prior written consent. Subject to the terms of this Agreement, the Company shall use its best efforts to cause a Registration Statement filed under this Agreement (including, without limitation, under Section 3(c)) to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event no later than the applicable Effectiveness Date, and shall use its best efforts to keep such Registration Statement continuously effective under the Securities Act until the date that all Registrable Securities covered by such Registration Statement (i) have been sold, thereunder or pursuant to Rule 144 as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Depositary and the affected Holders, or (ii) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144, as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Depositary and the affected Holders (the “Effectiveness Period”). The Company shall request effectiveness of a Registration Statement as of 5:00 p.m. (New York City time) on a Trading Day. The Company shall immediately notify the Holders via facsimile or by e-mail of the effectiveness of a Registration Statement on the same Trading Day that the Company confirms effectiveness with the Commission, which shall be the date requested for effectiveness of such Registration Statement. The Company shall, by 9:30 a.m. (New York City time) on or before the second (2nd) Trading Day after the effective date of such Registration Statement, file a final Prospectus with the Commission as required by Rule 424. Failure to so notify the Holder within one (1) Trading Day of such notification of effectiveness or failure to file a final Prospectus as foresaid shall be deemed an Event under Section 2(d).
(b) Notwithstanding the registration obligations set forth in Section 2(a), if the Commission informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration statement, the Company agrees to promptly inform each of the Holders thereof and use its commercially reasonable efforts to file amendments to the Initial Registration Statement as required by the Commission, covering the maximum number of Registrable Securities permitted to be registered by the Commission, on Form F-3 or such other form available to register for resale the Registrable Securities as a secondary offering, subject to the provisions of Section 2(e); with respect to filing on Form F-3 or other appropriate form, and subject to the provisions of Section 2(d) with respect to the payment of liquidated damages; provided, however, that prior to filing such amendment, the Company shall be obligated to use diligent efforts to advocate with the Commission for the registration of all of the Registrable Securities in accordance with the SEC Guidance, including without limitation, Compliance and Disclosure Interpretation 612.09.
(c) Notwithstanding any other provision of this Agreement and subject to the payment of liquidated damages pursuant to Section 2(d), if the Commission or any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the Commission for the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by a Holder as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement will be reduced as follows:
| a. | First, the Company shall reduce or eliminate any securities to be included other than Registrable Securities; |
| b. | Second, the Company shall reduce Registrable Securities represented by Warrants (applied, in the case that some Warrants may be registered, to the Holders on a pro rata basis based on the total number of unregistered Warrant Shares held by such Holders); and |
| c. | Third, the Company shall reduce Registrable Securities represented by Shares (applied, in the case that some Shares may be registered, to the Holders on a pro rata basis based on the total number of unregistered Shares held by such Holders). |
In the event of a cutback hereunder, the Company shall give the Holder at least five (5) Trading Days prior written notice along with the calculations as to such Holder’s allotment. In the event the Company amends the Initial Registration Statement in accordance with the foregoing, the Company will use its best efforts to file with the Commission, as promptly as allowed by the Commission or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on Form F-3 or such other form available to register for resale those Registrable Securities that were not registered for resale on the Initial Registration Statement, as amended.
(d) If: (i) the Initial Registration Statement is not filed on or prior to its Filing Date (if the Company files the Initial Registration Statement without affording the Holders the opportunity to review and comment on the same as required by Section 3(a) herein, the Company shall be deemed to have not satisfied this clause (i)), or (ii) the Company fails to file with the Commission a request for acceleration of a Registration Statement in accordance with Rule 461 promulgated by the Commission pursuant to the Securities Act, within five (5) Trading Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the Commission that such Registration Statement will not be “reviewed” or will not be subject to further review, or (iii) prior to the effective date of a Registration Statement, the Company fails to file a pre-effective amendment and otherwise respond in writing to comments made by the Commission in respect of such Registration Statement within ten (10) calendar days after the receipt of comments by or notice from the Commission that such amendment is required in order for such Registration Statement to be declared effective, or (iv) a Registration Statement registering for resale all of the Registrable Securities is not declared effective by the Commission by the Effectiveness Date of the Initial Registration Statement, or (v) after the effective date of a Registration Statement, such Registration Statement ceases for any reason to remain continuously effective as to all Registrable Securities included in such Registration Statement, or the Holders are otherwise not permitted to utilize the Prospectus therein to resell such Registrable Securities, for more than ten (10) consecutive calendar days or more than an aggregate of fifteen (15) calendar days (which need not be consecutive calendar days) during any 12-month period (any such failure or breach being referred to as an “Event”; provided, however, that, the Purchaser’s inability to utilize the Prospectus contained in the Registration between April 1st of each year and the date on which the Company files it annual report on form 20-F, which shall be no later than April 30th of the same year, solely due to staleness under Regulation S-X of the Company’s financial statements contained or incorporated by reference therein shall not be deemed an Event hereunder, and for purpose of clause (ii) the date on which such five (5) Trading Day period is exceeded, and for purpose of clause (iii) the date which such ten (10) calendar day period is exceeded, and for purpose of clause (v) the date on which such ten (10) or fifteen (15) calendar day period, as applicable, is exceeded being referred to as an “Event Date”), then, in addition to any other rights the Holders may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the earlier of (i) the date that the applicable Event is cured or (ii) the date that Registrable Securities may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144, the Company shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty, equal to the product of 2.0% multiplied by the aggregate Subscription Amount paid by such Holder pursuant to the Purchase Agreement. If the Company fails to pay any partial liquidated damages pursuant to this Section in full within seven (7) days after the date payable, the Company will pay interest thereon at a rate of 18% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of a month prior to the cure of an Event.
(e) If Form F-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (i) register the resale of the Registrable Securities on another appropriate form and (ii) undertake to register the Registrable Securities on Form F-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form F-3 covering the Registrable Securities has been declared effective by the Commission.
(f) Notwithstanding anything to the contrary contained herein, in no event shall the Company be permitted to name any Holder or affiliate of a Holder as any underwriter without the prior written consent of such Holder.
3. Registration Procedures.
In connection with the Company’s registration obligations hereunder, the Company shall:
(a) Not less than five (5) Trading Days prior to the filing of each Registration Statement and not less than one (1) Trading Day prior to the filing of any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated or deemed to be incorporated therein by reference), the Company shall (i) furnish to each Holder copies of all such documents proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the review of such Holders, and (ii) cause its officers and directors, counsel and independent registered public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to each Holder, to conduct a reasonable investigation within the meaning of the Securities Act. The Company shall not file a Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Holders of a majority of the Registrable Securities shall reasonably object in good faith, provided that, the Company is notified of such objection in writing no later than three (3) Trading Days after the Holders have been so furnished copies of a Registration Statement or one (1) Trading Day after the Holders have been so furnished copies of any related Prospectus or amendments or supplements thereto. Each Holder agrees to furnish to the Company a completed questionnaire in the form attached to this Agreement as Annex C (a “Selling Shareholder Questionnaire”) on a date that is not less than two (2) Trading Days prior to the Filing Date or by the end of the third (3th) Trading Day following the date on which such Holder receives draft materials in accordance with this Section.
(b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the Prospectus used in connection therewith as may be necessary to keep a Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities, (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented or amended, to be filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to a Registration Statement or any amendment thereto and provide as promptly as reasonably possible to the Holders true and complete copies of all written correspondence from and to the Commission relating to a Registration Statement (provided that, the Company shall excise any information contained therein which would constitute material non-public information regarding the Company or any of its Subsidiaries), and (iv) comply in all material respects with the applicable provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holders thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented.
(c) If during the Effectiveness Period, the number of Registrable Securities at any time exceeds 100% of ADSs then registered in a Registration Statement, then the Company shall file as soon as reasonably practicable, but in any case prior to the applicable Filing Date, an additional Registration Statement covering the resale by the Holders of not less than the number of such Registrable Securities.
(d) Notify the Holders of Registrable Securities to be sold (which notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible (and, in the case of (i)(A) below, not less than one (1) Trading Day prior to such filing) and (if requested by any such Person) confirm such notice in writing no later than one (1) Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement is proposed to be filed, (B) when the Commission notifies the Company whether there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration Statement, and (C) with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information, (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose, (v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in a Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case of a Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and (vi) of the occurrence or existence of any pending corporate development with respect to the Company that the Company believes may be material and that, in the determination of the Company, makes it not in the best interest of the Company to allow continued availability of a Registration Statement or Prospectus; provided, however, that in no event shall any such notice contain any information which would constitute material, non-public information regarding the Company or any of its Subsidiaries.
(e) Use its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order stopping or suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.
(f) Furnish to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent requested by such Person, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission, provided that any such item which is available on the EDGAR system (or successor thereto) need not be furnished in physical form.
(g) Subject to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(d).
(h) Prior to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from the registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by each Registration Statement, provided that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction.
(i) If requested by a Holder, cooperate with such Holder to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holder may request.
(j) Upon the occurrence of any event contemplated by Section 3(d), as promptly as reasonably possible under the circumstances taking into account the Company’s good faith assessment of any adverse consequences to the Company and its shareholders of the premature disclosure of such event, prepare a supplement or amendment, including a post-effective amendment, to a Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Holders in accordance with clauses (iii) through (vi) of Section 3(d) above to suspend the use of any Prospectus until the requisite changes to such Prospectus have been made, then the Holders shall suspend use of such Prospectus. The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company shall be entitled to exercise its right under this Section 3(j) to suspend the availability of a Registration Statement and Prospectus, subject to the payment of partial liquidated damages otherwise required pursuant to Section 2(d), for a period not to exceed sixty (60) calendar days (which need not be consecutive days) in any 12-month period.
(k) Otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission under the Securities Act and the Exchange Act, including, without limitation, Rule 172 under the Securities Act, file any final Prospectus, including any supplement or amendment thereof, with the Commission pursuant to Rule 424 under the Securities Act, promptly inform the Holders in writing if, at any time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Holders are required to deliver a Prospectus in connection with any disposition of Registrable Securities and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder.
(l) The Company shall use its best efforts to maintain eligibility for use of Form F-3 (or any successor form thereto) for the registration of the resale of Registrable Securities.
(m) The Company may require each selling Holder to furnish to the Company a certified statement as to the number of ADSs and/or Class A Shares beneficially owned by such Holder and, if required by the Commission, the natural persons thereof that have voting and dispositive control over the shares. During any periods that the Company is unable to meet its obligations hereunder with respect to the registration of the Registrable Securities solely because any Holder fails to furnish such information within three (3) Trading Days of the Company’s request, any liquidated damages that are accruing at such time as to such Holder only shall be tolled and any Event that may otherwise occur solely because of such delay shall be suspended as to such Holder only, until such information is delivered to the Company.
4. Registration Expenses. All fees and expenses incident to the performance of or compliance with, this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made with the Commission, (B) with respect to filings required to be made with any Trading Market on which the ADSs are then listed for trading, and (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or similar commissions of any Holder or, except to the extent provided for in the Transaction Documents, any legal fees or other costs of the Holders.
5. Indemnification.
| (a) | Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, members, partners, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to perform under a margin call of ADSs), investment advisors and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, members, shareholders, partners, agents and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Agreement, except to the extent, but only to the extent, that (i) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement, such Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or (ii) in the case of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 6(d). The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified person and shall survive the transfer of any Registrable Securities by any of the Holders in accordance with Section 6(h). |
| (b) | Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, to the extent arising out of or based solely upon: any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company expressly for inclusion in such Registration Statement or such Prospectus or (ii) to the extent, but only to the extent, that such information relates to such Holder’s information provided in the Selling Shareholder Questionnaire or the proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement (it being understood that the Holder has approved Annex A and Annex B hereto for this purpose), such Prospectus or in any amendment or supplement thereto. In no event shall the liability of a selling Holder be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such Holder in connection with any claim relating to this Section 5 and the amount of any damages such Holder has otherwise been required to pay by reason of such untrue statement or omission) received by such Holder upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation. |
| (c) | Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof, provided that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have materially and adversely prejudiced the Indemnifying Party. |
An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses, (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding, or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.
Subject to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying Party, provided that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) not to be entitled to indemnification hereunder.
| (d) | Contribution. If the indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include , subject to the limitations set forth in this Agreement , any reasonable attorneys’ or other fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms. |
The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. In no event shall the contribution obligation of a Holder of Registrable Securities be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such Holder in connection with any claim relating to this Section 5 and the amount of any damages such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation.
The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.
6. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, shall be entitled to specific performance of its rights under this Agreement. Each of the Company and each Holder agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.
(b) No Piggyback on Registrations; Prohibition on Filing Other Registration Statements. The Company shall not include the securities of any of its security holders (other than the Holders in such capacity pursuant hereto) in any Registration Statements other than the Registrable Securities and securities to be registered for Company’s own account to the extent permitted by the Purchase Agreement. The Company shall not file any other registration statements until all Registrable Securities are registered pursuant to a Registration Statement that is declared effective by the Commission, provided that this Section 6(b) shall not prohibit the Company from filing amendments to registration statements filed prior to the date of this Agreement.
(c) [RESERVED]
(d) Discontinued Disposition. By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(d)(iii) through (vi), such Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed. The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company agrees and acknowledges that any periods during which the Holder is required to discontinue the disposition of the Registrable Securities hereunder shall be subject to the provisions of Section 2(d).
(e) Piggy-Back Registrations. If, at any time during the Effectiveness Period, there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option or other employee benefit plans, then the Company shall deliver to each Holder a written notice of such determination and, if within fifteen days after the date of the delivery of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered; provided, however, that the Company shall not be required to register any Registrable Securities pursuant to this Section 6(e) that are eligible for resale pursuant to Rule 144 (without volume restrictions or current public information requirements) promulgated by the Commission pursuant to the Securities Act or that are the subject of a then effective Registration Statement that is available for resales or other dispositions by such Holder.
(f) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holders of 50.1% or more of the then outstanding Registrable Securities (for purposes of clarification, this includes any Registrable Securities issuable upon exercise or conversion of any Security), provided that, if any amendment, modification or waiver disproportionately and adversely impacts a Holder (or group of Holders), the consent of such disproportionately impacted Holder (or group of Holders) shall be required. If a Registration Statement does not register all of the Registrable Securities pursuant to a waiver or amendment done in compliance with the previous sentence, then the number of Registrable Securities to be registered for each Holder shall be reduced pro rata among all Holders and each Holder shall have the right to designate which of its Registrable Securities shall be omitted from such Registration Statement. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of a Holder or some Holders and that does not directly or indirectly affect the rights of other Holders may be given only by such Holder or Holders of all of the Registrable Securities to which such waiver or consent relates; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the first sentence of this Section 6(f). No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration also is offered to all of the parties to this Agreement.
(g) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as set forth in the Purchase Agreement.
(h) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. The Company may not assign (except by merger) its rights or obligations hereunder without the prior written consent of all of the Holders of the then outstanding Registrable Securities. Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under Section 5.7 of the Purchase Agreement.
(i) No Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Except as set forth on Schedule 6(i), neither the Company nor any of its Subsidiaries has previously entered into any agreement granting any registration rights with respect to any of its securities to any Person that have not been satisfied in full.
(j) Execution and Counterparts. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.
(k) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined in accordance with the provisions of the Purchase Agreement.
(l) Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.
(m) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
(n) Headings. The headings in this Agreement are for convenience only, do not constitute a part of the Agreement and shall not be deemed to limit or affect any of the provisions hereof.
(o) Independent Nature of Holders’ Obligations and Rights. The obligations of each Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Holders are in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated by this Agreement or any other matters, and the Company acknowledges that the Holders are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or transactions. Each Holder shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding for such purpose. The use of a single agreement with respect to the obligations of the Company contained was solely in the control of the Company, not the action or decision of any Holder, and was done solely for the convenience of the Company and not because it was required or requested to do so by any Holder. It is expressly understood and agreed that each provision contained in this Agreement is between the Company and a Holder, solely, and not between the Company and the Holders collectively and not between and among Holders.
********************
(Signature Pages Follow)
IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.
| BIT MINING Limited | ||
| /s/ Yu Bo | ||
| Name: Yu Bo | ||
| Title: Director | ||
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
[SIGNATURE PAGE OF HOLDERS TO RRA]
| Name of Holder: ANSON INVESTMENT MASTER FUND LP | |
| /s/ AMIN NATHOO | |
| Name of Authorized Signatory: AMIN NATHOO | |
| Title of Authorized Signatory: Director, Anson Advisors Inc. |
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO RRA]
| Name of Holder: ANSON EAST MASTER FUND LP | |
| /s/ AMIN NATHOO | |
| Name of Authorized Signatory: AMIN NATHOO | |
| Title of Authorized Signatory: Director, Anson Advisors Inc. |
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO RRA]
| Name of Holder: Armistice Capital Master Fund Ltd. | |
| /s/ Steven Boyd | |
| Name of Authorized Signatory: Steven Boyd | |
| Title of Authorized Signatory: CIO of Armistice Capital, LLC, the Investment Manager |
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO RRA]
| Name of Holder: Bigger Capital Fund, LP | |
| /s/ Michael Bigger | |
| Name of Authorized Signatory: Michael Bigger | |
| Title of Authorized Signatory: Managing Member of the GP |
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO RRA]
| Name of Holder: District 2 Capital Fund LP | |
| /s/ Michael Bigger | |
| Name of Authorized Signatory: Michael Bigger | |
| Title of Authorized Signatory: Managing Member of the GP |
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO RRA]
| Name of Holder: Hudson Bay Master Fund Ltd. | |
| /s/ Richard Allison | |
| Name of Authorized Signatory: Richard Allison | |
| Title of Authorized Signatory: Authorized Signatory* |
*Authorized Signatory
Hudson Bay Capital Management LP
not individually, but solely as
Investment Advisor to Hudson Bay Master Fund Ltd.
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO RRA]
| Name of Holder: Sabby Volatility Warrant Master Fund, Ltd. | |
| /s/ Robert Grundstein | |
| Name of Authorized Signatory: Robert Grundstein | |
| Title of Authorized Signatory: COO of Holder’s Investment Manager |
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO RRA]
| Name of Holder: Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B | |
| /s/ Waqas Khatri | |
| Name of Authorized Signatory: Waqas Khatri | |
| Title of Authorized Signatory: Director |
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO RRA]
| Name of Holder: Vine Grass Garden Limited | |
| /s/ Joyce WONG | |
| Name of Authorized Signatory: Joyce WONG | |
| Title of Authorized Signatory: Director |
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO RRA]
| Name of Holder: Ancient Ark Century Limited | |
| /s/ Li Yunchun | |
| Name of Authorized Signatory: Li Yunchun | |
| Title of Authorized Signatory: Director |
Annex A
Plan of Distribution
Each Selling Shareholder (the “Selling Shareholders”) of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the New York Stock Exchange or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Shareholder may use any one or more of the following methods when selling securities:
| · | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| · | block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
| · | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| · | an exchange distribution in accordance with the rules of the applicable exchange; |
| · | privately negotiated transactions; |
| · | settlement of short sales; |
| · | in transactions through broker-dealers that agree with the Selling Shareholders to sell a specified number of such securities at a stipulated price per security; |
| · | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
| · | a combination of any such methods of sale; or |
| · | any other method permitted pursuant to applicable law. |
The Selling Shareholders may also sell securities under Rule 144 or any other exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather than under this prospectus.
Broker-dealers engaged by the Selling Shareholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Shareholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.
In connection with the sale of the securities or interests therein, the Selling Shareholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Shareholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Shareholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The Selling Shareholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Shareholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities.
The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the Selling Shareholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Shareholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the ADSs for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Shareholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the ADSs by the Selling Shareholders or any other person. We will make copies of this prospectus available to the Selling Shareholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
Annex B
SELLING SHAREHOLDERS
The ADSs being offered by the selling shareholders are those previously issued to the selling shareholders, and those issuable to the selling shareholders, upon exercise of the warrants. For additional information regarding the issuances of those ADSs and warrants, see “Private Placement of Shares and Warrants” above. We are registering the ADSs in order to permit the selling shareholders to offer the shares for resale from time to time. Except for the ownership of the ADSs and the warrants, the selling shareholders have not had any material relationship with us within the past three years.
The table below lists the selling shareholders and other information regarding the beneficial ownership of the ADSs by each of the selling shareholders. The second column lists the number of ADSs beneficially owned by each selling shareholder, based on its ownership of the ADSs and warrants, as of ________, 2020, assuming exercise of the warrants held by the selling shareholders on that date, without regard to any limitations on exercises.
The third column lists the ADSs being offered by this prospectus by the selling shareholders.
In accordance with the terms of a registration rights agreement with the selling shareholders, this prospectus generally covers the resale of the sum of (i) the number of ADSs issued to the selling shareholders in the “Private Placement of Shares and Warrants” described above and (ii) the maximum number of ADSs issuable upon exercise of the related warrants, determined as if the outstanding warrants were exercised in full as of the trading day immediately preceding the date this registration statement was initially filed with the SEC, each as of the trading day immediately preceding the applicable date of determination and all subject to adjustment as provided in the registration right agreement, without regard to any limitations on the exercise of the warrants. The fourth column assumes the sale of all of the shares offered by the selling shareholders pursuant to this prospectus.
Under the terms of the warrants, a selling shareholder may not exercise the warrants to the extent such exercise would cause such selling shareholder, together with its affiliates and attribution parties, to beneficially own a number of ADSs which would exceed 4.99% of our then outstanding ADSs following such exercise, excluding for purposes of such determination ADSs issuable upon exercise of the warrants which have not been exercised. The number of shares in the second column does not reflect this limitation. The selling shareholders may sell all, some or none of their shares in this offering. See "Plan of Distribution."
Name of Selling Shareholder |
Number of shares of Owned Prior to Offering | Maximum Number of shares to be Sold Pursuant to this Prospectus | Number of shares of Owned After Offering |
Annex C
BIT MINING Limited
Selling Shareholder Notice and Questionnaire
The undersigned beneficial owner of American Depositary Shares each representing 10 shares of Class A Ordinary Shares, par value $0.00005 per share (the “Registrable Securities”) of BIT Mining Limited, a company established and existing under the laws of the Cayman Islands (the “Company”), understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “Commission”) a registration statement (the “Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement (the “Registration Rights Agreement”) to which this document is annexed. A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.
Certain legal consequences arise from being named as a selling shareholder in the Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling shareholder in the Registration Statement and the related prospectus.
NOTICE
The undersigned beneficial owner (the “Selling Shareholder”) of Registrable Securities hereby elects to include the Registrable Securities owned by it in the Registration Statement.
The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:
QUESTIONNAIRE
| 1. | Name. |
| (a) | Full Legal Name of Selling Shareholder |
| (b) | Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities are held: |
| (c) | Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by this Questionnaire): |
2. Address for Notices to Selling Shareholder:
| Telephone: | |
| Fax: | |
| Contact Person: | |
3. Broker-Dealer Status:
| (a) | Are you a broker-dealer? |
Yes ¨ No ¨
| (b) | If “yes” to Section 3(a), did you receive your Registrable Securities as compensation for investment banking services to the Company? |
Yes ¨ No ¨
| Note: | If “no” to Section 3(b), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement. |
| (c) | Are you an affiliate of a broker-dealer? |
Yes ¨ No ¨
| (d) | If you are an affiliate of a broker-dealer, do you certify that you purchased the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities? |
Yes ¨ No ¨
| Note: | If “no” to Section 3(d), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement. |
4. Beneficial Ownership of Securities of the Company Owned by the Selling Shareholder.
Except as set forth below in this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than the securities issuable pursuant to the Purchase Agreement.
| (a) | Type and Amount of other securities beneficially owned by the Selling Shareholder: |
Schedule 6(i)
Outstanding Registration Rights
Registration rights in connection with that certain registration rights agreement entered into between the Company and Good Luck Information Technology Co., Limited in February 2021.
Registration rights in connection with that certain registration rights agreement entered into between the Company and Blockchain Alliance Technologies Holding Company in April 2021.
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in this Registration Statement on Form F-3 of our report dated April 14, 2021 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in BIT Mining Limited’s Annual Report on Form 20-F for the year ended December 31, 2020 and our report dated July 30, 2021 with respect to the audited combined financial statements of Blockchain Alliance Technologies Limited for the years ended December 31, 2019 and 2020 appearing in the report on Form 6-K of BIT Mining Limited dated July 30, 2021.
We also consent to the references to us under the heading “Experts” in such Registration Statement.
/s/ MaloneBailey, LLP
www.malonebailey.com
Houston, Texas
July 30, 2021
Exhibit 23.2
Our Ref. :L129/TW/ry/rl
30 July 2021
The Board of Directors
Loto Interactive Limited
Hong Kong
Dear Sirs,
Loto Interactive Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”)
We refer to the registration statement on Form F-3 of BIT Mining Limited dated 30 July 2021 (the “Registration Statement”).
We hereby consent to the incorporation by reference in the Registration Statement of our auditor’s reports dated 30 April 2021 on the financial statements of the Company for the years ended 31 December 2019 and 2020 in the Registration Statement, and the references to us under the heading "Experts" in such Registration Statement.
It should be noted that we have not performed an assurance engagement in accordance with any assurance standard on the financial statements of the Company for any period subsequent to 30 July 2021. This consent should not be construed as in any way updating or refreshing the aforementioned auditor’s reports nor do we accept responsibility for such reports beyond that owed to those to whom the reports were addressed by us at the dates of their issue.
Yours faithfully,
/s/ ZHONGHUI ANDA CPA Limited
ZHONGHUI ANDA CPA Limited
Certified Public Accountants
Hong Kong
Exhibit 23.4
北京 上海深圳杭州廣州昆明天津成都寧波福州西安南京南寧濟南 重慶
蘇州 長沙太原武漢 貴陽 烏魯木齊 鄭州 石家莊香港巴黎 馬德裡 硅谷 斯德哥尔摩
深圳市深南大道6008號特區報業大廈22/24/31層 郵編：518009
22/24/31/F, Tequbaoye Building, 6008 Shennan Avenue, Shenzhen, Guangdong Province 518009, China
電話/Tel: (+86)(755) 83515666傳真/Fax: (+86)(755) 83515333
網址/Website:http://www.grandall.com.cn 郵箱/Email: grandallsz@grandall.com.cn
July 30, 2021
| To: | BIT Mining Limited |
12F, West Side, Block B, Building No. 7
Shenzhen Bay Eco-Technology Park
Nanshan District
Shenzhen, 518115
People’s Republic of China
Consent Letter
Dear Sirs or Madams,
We hereby consent to the incorporation by reference into the Registration Statement on Form F-3 (the “Registration Statement”) of the summary of our opinion under the headings “Re: Legal Opinion on Certain PRC Law Matters” in BIT Mining Limited’s Annual Report on Form 20-F for the year ended December 31, 2020 (the “Annual Report”), which will be filed with the Securities and Exchange Commission (the “SEC”) on the date hereof. We further consent to the filing of this consent letter with the SEC as an exhibit to the Registration Statement.
In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the United States Securities Act of 1933, as amended, or the rules and regulations of the SEC thereunder.
Yours sincerely,
/s/ Grandall Law Firm (Shenzhen)
Grandall Law Firm (Shenzhen)
1
Exhibit 23.5
上海市浦东新区杨高南路729号陆家嘴世纪金融广场1号楼40层
40/F, Building No.1 of Lujiazui Century Financial Plaza, 729 South Yanggao Road, Pudong District, Shanghai
电话(Tel): +86-21-6106 0889 传真(Fax): +86-21-6106 0890 网址(Website): www.junzejun.com
BIT Mining Limited
14F, West Side, Block B, Building No. 7
Shenzhen Bay Eco-Technology Park
Nanshan District, Shenzhen 518115
The People’s Republic of China
+86 755-8835-2500
Dear Madams and Sirs:
We hereby consent to the use of our name under the headings “ENFORCEABILITY OF CIVIL LIABILITIES” and “LEGAL MATTERS” in the prospectus included in the registration statement on Form F-3, filed by BIT Mining Limited with the U.S. Securities and Exchange Commission on July 30, 2021, under the United States Securities Act of 1933, as amended.
In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the regulations promulgated thereunder.
Yours faithfully,
/s/ JunZeJun Law Offices
JunZeJun Law Offices