UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of September 2015
Commission File Number: 001-34454
Shanda Games Limited
(Translation of registrant’s name
into English)
No. 1 Office Building
No. 690 Bibo Road
Pudong New Area
Shanghai 201203
People’s Republic of China
(8621) 5050-4740
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: |
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Form 20-F x Form 40-F ¨ |
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Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨ |
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Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨ |
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Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934: |
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Yes ¨ No x |
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-____________ |
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
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Shanda Games Limited |
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Date: September 24, 2015 |
By: |
/s/ Yingfeng Zhang |
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Name: Yingfeng Zhang |
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Title: Acting Chief Executive Officer |
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EXHIBIT INDEX
Exhibit No. |
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Description |
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Exhibit 99.1 |
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Press release |
Exhibit 99.2 |
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Amended and Restated Agreement and Plan of Merger |
Exhibit 99.1
Shanda Games
Limited Enters into Amended and Restated Merger Agreement
For Going Private
Transaction
HONG KONG, September
24, 2015 -- Shanda Games Limited (NASDAQ: GAME) (“Shanda Games” or the “Company”), a leading online
game developer, operator and publisher in China, announced that it entered into an Amended and Restated Agreement and Plan
of Merger (the “Amended and Restated Merger Agreement”) with Capitalhold Limited (“Parent”)
and Capitalcorp Limited, a wholly owned subsidiary of Parent (“Merger Sub”) on September 23, 2015. The Amended and
Restated Merger Agreement amends and restates in its entirety the Agreement and Plan of Merger, dated as of April 3, 2015, by
and among Parent, Merger Sub and the Company (the “Original Merger Agreement”).
Under the terms of the Amended and Restated Merger Agreement, Merger Sub will merge with and into the Company, with the Company
continuing as the surviving corporation and becoming a wholly owned subsidiary of Parent (the “Merger”). Pursuant to the Amended
and Restated Merger Agreement, Parent, Merger Sub and the Company agreed, among other things, to extend the “Termination Date”,
as defined in Section 8.02(a) of the Original Merger Agreement, to December 31, 2015.
Additional Information about the
Transactions
The Company will furnish
to the Securities and Exchange Commission (the “SEC”) a report on Form 6-K regarding the Amended and Restated Merger
Agreement, which will include as an exhibit thereto the Amended and Restated Merger Agreement. All parties desiring details regarding
the Merger and the transactions contemplated by the Amended and Restated Merger Agreement are urged to review these documents,
which are available at the SEC’s website (http://www.sec.gov).
Cautionary Statement concerning
Forward Looking Statements
This news release may include certain
statements that are not descriptions of historical facts, but are forward-looking statements. These forward-looking statements
can be identified by terminology such as “will,” “expects,” “anticipates,” “future,”
“intends,” “plans,” “believes,” “estimates” and similar statements. Forward-looking
statements involve risks, uncertainties and other factors that could cause actual results to differ materially from those contained
in any such statements. Potential risks and uncertainties include, but are not limited to, uncertainties as to how the Company’s
shareholders will vote at the meeting of shareholders, the possibility that competing offers will be made, the possibility that
various closing conditions to the Merger may not be satisfied or waived and other risks and uncertainties discussed in the Company’s
filings with the SEC, as well as the Schedule 13E-3 transaction statement and the proxy statement to be filed by the Company in
connection with the Merger. Shanda Games does not undertake any obligation to update any forward-looking statement, except as required
under applicable law.
About Shanda Games
Shanda Games Limited (NASDAQ: GAME)
is a leading online game developer, operator and publisher in China. Shanda Games offers a diversified game portfolio, which includes
some of the most popular massively multiplayer online (MMO) games and mobile games in China and in overseas markets, targeting
a large and diverse community of users. Shanda Games manages and operates online games that are developed in-house, co-developed
with world-leading game developers, acquired through investments or licensed from third parties. For more information about Shanda
Games, please visit http://www.ShandaGames.com.
Contact
Shanda Games Limited
Stefanie Guo, Investor Relations
Phone: +86-21-5050-4740 (Shanghai)
Email: IR@ShandaGames.com
Exhibit 99.2
Execution
Version
CONFIDENTIAL
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
among
CAPITALHOLD LIMITED
CAPITALCORP LIMITED
and
SHANDA GAMES LIMITED
Dated as of September 23, 2015
TABLE OF CONTENTS
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Page |
Article
I THE MERGER |
2 |
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Section
1.01 The Merger. |
2 |
Section
1.02 Closing; Closing Date. |
2 |
Section
1.03 Effective Time. |
3 |
Section
1.04 Effects of the Merger. |
3 |
Section
1.05 Memorandum and Articles of Association of Surviving Corporation. |
3 |
Section
1.06 Directors and Officers. |
3 |
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Article
II CONVERSION OF SECURITIES; MERGER CONSIDERATION |
4 |
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Section
2.01 Conversion of Securities. |
4 |
Section
2.02 Share Incentive Plan, Outstanding Company Options, Company RS and Company RSUs. |
5 |
Section
2.03 Dissenting Shares. |
6 |
Section
2.04 Exchange of Share Certificates, etc. |
6 |
Section
2.05 No Transfers. |
9 |
Section
2.06 Termination of Deposit Agreement. |
10 |
Section
2.07 Agreement of Fair Value. |
10 |
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Article
III REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
10 |
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Section
3.01 Organization and Qualification; Subsidiaries. |
10 |
Section
3.02 Memorandum and Articles of Association. |
11 |
Section
3.03 Capitalization. |
11 |
Section
3.04 Authority Relative to This Agreement. |
12 |
Section
3.05 No Conflict; Required Filings and Consents. |
13 |
Section
3.06 Permits; Compliance. |
14 |
Section
3.07 SEC Filings; Financial Statements. |
15 |
Section
3.08 No Undisclosed Liabilities. |
16 |
Section
3.09 Absence of Certain Changes or Events. |
16 |
Section
3.10 Absence of Litigation. |
16 |
Section
3.11 Employee Benefit Plans. |
16 |
Section
3.12 Labor and Employment Matters. |
17 |
Section
3.13 Real Property. |
18 |
Section
3.14 Intellectual Property. |
18 |
Section
3.15 Taxes. |
21 |
Section
3.16 Environmental Matters. |
23 |
Section
3.17 Material Contracts. |
23 |
Section
3.18 Insurance. |
24 |
Section
3.19 Opinion of Financial Advisor. |
24 |
Section
3.20 Brokers. |
24 |
Section
3.21 Takeover Statute. |
25 |
Section
3.22 No Additional Representations. |
25 |
TABLE OF CONTENTS
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Page |
Article
IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB |
25 |
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Section
4.01 Corporate Organization. |
25 |
Section
4.02 Authority Relative to This Agreement. |
26 |
Section
4.03 No Conflict; Required Filings and Consents. |
26 |
Section
4.04 Capitalization. |
27 |
Section
4.05 Available Funds and Equity Financing. |
27 |
Section
4.06 Brokers. |
28 |
Section
4.07 Guarantees. |
28 |
Section
4.08 Absence of Litigation. |
28 |
Section
4.09 Ownership of Company Shares. |
29 |
Section
4.10 Solvency |
29 |
Section
4.11 Parent Group Contracts |
29 |
Section
4.12 Independent Investigation |
30 |
Section
4.13 No Additional Representations. |
30 |
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Article
V CONDUCT OF BUSINESS PENDING THE MERGER |
30 |
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Section
5.01 Conduct of Business by the Company Pending the Merger. |
30 |
Section
5.02 Conduct of Business by Parent and Merger Sub Pending the Merger. |
33 |
Section
5.03 No Control of Other Party’s Business. |
34 |
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Article
VI ADDITIONAL AGREEMENTS |
34 |
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Section
6.01 Proxy Statement and Schedule 13E-3. |
34 |
Section
6.02 Company Shareholders’ Meeting. |
36 |
Section
6.03 Access to Information. |
37 |
Section
6.04 No Solicitation of Transactions. |
38 |
Section
6.05 Directors’ and Officers’ Indemnification and Insurance. |
43 |
Section
6.06 Notification of Certain Matters. |
45 |
Section
6.07 Financing. |
46 |
Section
6.08 Further Action; Reasonable Best Efforts. |
46 |
Section
6.09 Obligations of Parent and Merger Sub. |
47 |
Section
6.10 Participation in Litigation. |
47 |
Section
6.11 Resignations. |
48 |
Section
6.12 Public Announcements. |
48 |
Section
6.13 Stock Exchange Delisting. |
48 |
Section
6.14 Takeover Statutes. |
48 |
Section
6.15 SAFE Registration. |
49 |
Section
6.16 No Amendment to Parent Group Contracts or Certain Other Documents. |
49 |
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Article
VII CONDITIONS TO THE MERGER |
49 |
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Section
7.01 Conditions to the Obligations of Each Party. |
49 |
Section
7.02 Conditions to the Obligations of Parent and Merger Sub. |
50 |
Section
7.03 Conditions to the Obligations of the Company. |
51 |
Section
7.04 Frustration of Closing Conditions. |
51 |
TABLE OF CONTENTS
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Page |
Article
VIII TERMINATION |
51 |
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Section
8.01 Termination by Mutual Consent. |
51 |
Section
8.02 Termination by Either the Company or Parent. |
51 |
Section
8.03 Termination by the Company. |
52 |
Section
8.04 Termination by Parent. |
53 |
Section
8.05 Effect of Termination. |
53 |
Section
8.06 Termination Fee and Expenses. |
53 |
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Article
IX GENERAL PROVISIONS |
56 |
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Section
9.01 Non-Survival of Representations, Warranties and Agreements. |
56 |
Section
9.02 Notices. |
56 |
Section
9.03 Certain Definitions.5 |
57 |
Section
9.04 Severability. |
68 |
Section
9.05 Interpretation. |
68 |
Section
9.06 Entire Agreement; Assignment. |
69 |
Section
9.07 Parties in Interest. |
69 |
Section
9.08 Specific Performance. |
70 |
Section
9.09 Governing Law; Dispute Resolution. |
71 |
Section
9.10 Amendment. |
71 |
Section
9.11 Waiver. |
72 |
Section
9.12 Counterparts. |
72 |
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Annex A Plan of Merger |
A-1 |
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made as of September 23, 2015 (the “Execution Date”),
among Capitalhold Limited, an exempted company with limited liability incorporated under the laws of the Cayman Islands (“Parent”),
Capitalcorp Limited, an exempted company with limited liability incorporated under the laws of the Cayman Islands and a wholly-owned
subsidiary of Parent (“Merger Sub”), and Shanda Games Limited, an exempted company with limited liability incorporated
under the laws of the Cayman Islands (the “Company”) and amends and restates in entirety that certain Agreement
and Plan of Merger (the “Original Merger Agreement”), dated as of April 3, 2015 (the “Original Execution
Date”), among Parent, Merger Sub and the Company.
WHEREAS, the parties
to the Original Merger Agreement desire to amend and restate the Original Merger Agreement in its entirety on the terms and subject
to the conditions set forth therein and accordingly, (i) the boards of directors of each of Parent, Merger Sub and the Company
have approved this Agreement and (ii) a special committee, comprised of independent members of the board of directors of the Company
(the “Special Committee”), has recommended this Agreement;
WHEREAS, the Parties
intend, as set forth in Section 9.05(b), that (i) all references in this Agreement to “the date hereof” or “the
date of this Agreement” shall refer to the Original Execution Date, (ii) the date on which the representations and warranties
set forth in Articles III and IV are made shall not change as a result of the execution of this Agreement and shall be made as
of such dates as they were in the Original Merger Agreement and (iii) each reference to “this Agreement” or “herein”
in the representations and warranties set forth in Articles III and IV shall refer to “the Original Merger Agreement,”
in each of cases (i), (ii) and (iii), unless expressly indicated otherwise in this Agreement;
WHEREAS, Parent and
the Company intend to enter into a transaction pursuant to which Merger Sub will be merged with and into the Company (the “Merger”),
with the Company surviving the Merger and becoming a wholly-owned Subsidiary of Parent as a result of the Merger;
WHEREAS, the board
of directors of the Company (the “Company Board”), acting upon the unanimous recommendation of the Special Committee,
has (a) determined that the Merger and other transactions contemplated by this Agreement (collectively, the “Transactions”),
are fair to and in the best interests of the Company and the shareholders and holders of American depositary shares of the Company
who are unaffiliated with the Company and whose securities are to be purchased pursuant to this Agreement and (b) acknowledged,
approved, adopted, authorized, confirmed and ratified this Agreement;
WHEREAS, the board
of directors of each of Parent and Merger Sub has (a) approved the execution, delivery and performance by Parent and Merger Sub,
respectively, of this Agreement, the Plan of Merger and the consummation of the Transactions and (b) declared it advisable for
Parent and Merger Sub, respectively, to enter into this Agreement and the Plan of Merger;
WHEREAS, concurrently
with the execution and delivery of the Original Merger Agreement, Yili Shengda, Zhongrong Shengda, Zhongrong Investment, Hongtai,
Hongzhi and Hao Ding (collectively, the “Rollover Shareholders”) and Parent executed and delivered a support
agreement, dated as of the Original Execution Date (the “Support Agreement”), providing that, among other things,
(a) the Rollover Shareholders will vote all Shares held directly or indirectly by them in favor of the authorization and approval
of the Original Merger Agreement, as amended from time to time, the Plan of Merger and the Transactions and (b) the Rollover Shareholders
agree, upon the terms and subject to the conditions in the Support Agreement, to receive no consideration for the cancellation
of the Rollover Shares in accordance with the Original Merger Agreement, as amended from time to time; and
WHEREAS, concurrently
with the execution of the Original Merger Agreement, each of the Sponsors (each, a “Guarantor”, and collectively
the “Guarantors”) executed and delivered a limited guarantee in favor of the Company with respect to certain
obligations of Parent under the Original Merger Agreement, as amended from time to time (each, a “Limited Guarantee”
and collectively, the “Limited Guarantees”).
NOW, THEREFORE, in
consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
Article
I
THE MERGER
Section 1.01 The
Merger.
Upon the terms and
subject to the conditions set forth in this Agreement, and in accordance with the Cayman Islands Companies Law Cap. 22 (Law 3
of 1961, as consolidated and revised) (the “CICL”), at the Effective Time, Merger Sub shall be merged with
and into the Company. As a result of the Merger, the separate corporate existence of Merger Sub shall cease and the Company shall
continue as the surviving corporation in the Merger (the “Surviving Corporation”) under the Laws of the Cayman
Islands and become a wholly-owned Subsidiary of Parent.
Section 1.02 Closing;
Closing Date.
Unless otherwise unanimously
agreed in writing between the Company, Parent and Merger Sub, the closing for the Merger (the “Closing”) shall
take place at 10:00 a.m. (Beijing time) at the offices of Wilson Sonsini Goodrich & Rosati, P.C., Jin Mao Tower, 38F, Unit
3, 88 Century Blvd, Pudong, Shanghai, China as soon as practicable, but in any event no later than the second Business Day following
the day on which the last of the conditions set forth in Article VII to be satisfied or, if permissible, waived (other than those
conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or, if permissible, waiver
of those conditions) shall be satisfied or, if permissible, waived in accordance with this Agreement (such date being the “Closing
Date”).
Section 1.03 Effective
Time.
Subject to the
provisions of this Agreement, on the Closing Date, Merger Sub and the Company shall execute a plan of merger (the “Plan
of Merger”) substantially in the form set out in Annex A attached hereto and such parties shall file the Plan of Merger
and other documents required under the CICL to effect the Merger with the Registrar of Companies of the Cayman Islands as provided
by Section 233 of the CICL. The Merger shall become effective on the date when the Plan of Merger is registered by the Registrar,
or such other date specified in the Plan of Merger being not later than the ninetieth (90th) day after the date of such registration,
in accordance with the CICL (the “Effective Time”).
Section 1.04 Effects
of the Merger.
At the Effective Time,
the Merger shall have the effects specified in the CICL. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, the Surviving Corporation shall succeed to and assume all the rights, property of every description, including
choses in action, and the business, undertaking, goodwill, benefits, immunities and privileges, mortgages, charges or security
interests and all contracts, obligations, claims, debts and liabilities of the Company and Merger Sub in accordance with the CICL.
Section 1.05 Memorandum
and Articles of Association of Surviving Corporation.
At the Effective Time,
the memorandum and articles of association of Merger Sub, as in effect immediately prior to the Effective Time, shall be the memorandum
and articles of association of the Surviving Corporation until thereafter amended as provided by Law and such memorandum and articles
of association; provided that at the Effective Time, (a) Article I of the memorandum of association of the Surviving Corporation
shall be amended to read as follows: “The name of the corporation is “Shanda Games Limited” and the articles
of association of the Surviving Corporation shall be amended to refer to the name of the Surviving Corporation as “Shanda
Games Limited”, (b) references therein to the authorized share capital of the Surviving Corporation shall be amended to
refer to the correct authorized capital of the Surviving Corporation as approved in the Plan of Merger, if necessary, and (c)
the memorandum and articles of association of the Surviving Corporation will contain provisions no less favorable to the intended
beneficiaries with respect to exculpation and indemnification of liability and advancement of expenses than are set forth in the
memorandum and articles of association of the Company as in effect on the date hereof, in accordance with Section 6.05(a).
Section 1.06 Directors
and Officers.
The parties hereto
shall take all actions necessary so that (a) the directors of Merger Sub immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation and (b) the officers of the Company immediately prior to the Effective Time shall
be the initial officers of the Surviving Corporation, in each case, unless otherwise determined by Parent prior to the Effective
Time, and until their respective successors are duly elected or appointed and qualified or until the earlier of their death, resignation
or removal in accordance with the memorandum and articles of association of the Surviving Corporation.
Article
II
CONVERSION OF SECURITIES; MERGER CONSIDERATION
Section 2.01 Conversion
of Securities.
At the Effective Time,
by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the holders of any securities
of the Company:
(a) each Class A
ordinary share, par value $0.01 each, of the Company (a “Class A Share” or, collectively, the “Class
A Shares”) issued and outstanding immediately prior to the Effective Time (other than the Excluded Shares, the Dissenting
Shares and Class A Shares represented by ADSs and Company RSs) shall be cancelled in exchange for the right to receive $3.55 in
cash per Class A Share without interest (the “Per Share Merger Consideration”) payable in the manner provided
in Section 2.04;
(b) each American
Depositary Share, representing two (2) Class A Shares (each, an “ADS” or collectively, the “ADSs”),
issued and outstanding immediately prior to the Effective Time (other than ADSs representing the Excluded Shares), and each Class
A Share represented by such ADSs, shall be cancelled in exchange for the right to receive $7.10 in cash per ADS without interest
(the “Per ADS Merger Consideration”) pursuant to the terms and conditions set forth in this Agreement and the
Deposit Agreement; provided that in the event of any conflict between this Agreement and the Deposit Agreement, this Agreement
shall prevail;
(c) each of the Excluded
Shares issued and outstanding immediately prior to the Effective Time, shall be cancelled without payment of any consideration
or distribution therefor;
(d) each of the Dissenting
Shares shall carry no rights other than the right to receive the applicable payments set forth in Section 2.03;
(e) each of the Company
RSs shall be cancelled in accordance with Section 2.02(a) and thereafter represent only the right to receive the applicable payments
set forth in Section 2.02(c);
(f) each of the Company
RSUs shall be cancelled in accordance with Section 2.02(a) and thereafter represent only the right to receive the applicable payments
set forth in Section 2.02(c);
(g) all Shares issued
and outstanding immediately prior to the Effective Time, including Shares represented by ADSs, shall cease to be outstanding,
shall be cancelled and shall cease to exist, and the register of members of the Company shall be amended accordingly; and
(h) each ordinary
share, par value $0.01 each, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into
and become one validly issued, fully paid and non-assessable ordinary share, par value $0.01 each, of the Surviving Corporation.
Such ordinary shares shall constitute the only issued and outstanding share capital of the Surviving Corporation, which shall
be reflected in the register of members of the Surviving Corporation.
Section 2.02 Share
Incentive Plan, Outstanding Company Options, Company RS and Company RSUs.
(a) At the Effective
Time, the Company shall (i) terminate the Company’s Share Incentive Plan and any relevant award agreements entered into
under the Share Incentive Plan, (ii) cancel each Company Option that is outstanding and unexercised, whether or not vested or
exercisable, (iii) cancel each Company RS that is outstanding and (iv) cancel each Company RSU that is outstanding.
(b) Each former holder
(or his or her designee) of a Company Option that is cancelled at the Effective Time shall, in exchange thereof, be paid by the
Surviving Corporation or one of its Subsidiaries, as soon as practicable after the Effective Time (without interest), a cash amount
equal to the product of (i) the excess, if any, of the Per Share Merger Consideration over the Exercise Price of such Company
Option and (ii) the number of Shares underlying such Company Option; provided that if the Exercise Price of any such Company
Option is equal to or greater than the Per Share Merger Consideration, such Company Option shall be cancelled without any payment
therefor.
(c) Each former holder
(or his or her designee) of a Company RS that is cancelled at the Effective Time shall, in exchange thereof, be paid by the Surviving
Corporation or one of its Subsidiaries, as soon as practicable after the Effective Time (without interest), a cash amount equal
to the Per Share Merger Consideration for each cancelled Company RS of such former holder.
(d) Each former holder
(or his or her designee) of a Company RSU that is cancelled at the Effective Time shall, in exchange thereof, be paid by the Surviving
Corporation or one of its Subsidiaries, as soon as practicable after the Effective Time (without interest), a cash amount equal
to the Per Share Merger Consideration for each cancelled Company RSU of such former holder.
(e) Any payment under
this Section 2.02 shall be subject to all applicable Taxes and Tax withholding requirements, and each former holder of Company
Options, Company RSs and Company RSUs shall be personally responsible for the proper reporting and payment of all Taxes related
to any distribution contemplated by this Section 2.02.
(f) At or prior to
the Effective Time, the Company, the Company Board or the compensation committee of the Company Board, as applicable, shall pass
any resolutions and take any actions that are reasonably necessary to effectuate the provisions of this Section 2.02. The Company
shall take all reasonable actions necessary to ensure that from and after the Effective Time neither Parent nor the Surviving
Corporation will be required to issue Shares or other share capital of the Company or the Surviving Corporation to any person
pursuant to the Share Incentive Plan or in settlement of any Company Option, Company RS or Company RSU (as applicable). Promptly
following the date hereof, the Company shall deliver written notice to each holder of Company Options, Company RSs and/or Company
RSUs informing such holder of the effect of the Merger on his or her Company Options, Company RSs and/or Company RSUs (as applicable).
Section 2.03 Dissenting
Shares.
(a) Notwithstanding
any provision of this Agreement to the contrary and to the extent available under the CICL, Shares that are issued and outstanding
immediately prior to the Effective Time and that are held by shareholders who shall have validly exercised and not effectively
withdrawn or lost their rights to dissent from the Merger, or dissenter rights, in accordance with Section 238 of the CICL (collectively,
the “Dissenting Shares” and holders of Dissenting Shares collectively being referred to as “Dissenting
Shareholders”) shall not be entitled to receive the Per Share Merger Consideration and shall instead be entitled to
receive only the payment of the fair value of such Dissenting Shares held by them determined in accordance with the provisions
of Section 238 of the CICL.
(b) For the avoidance
of doubt, all Shares held by Dissenting Shareholders who shall have failed to exercise or who effectively shall have withdrawn
or lost their dissenter rights under Section 238 of the CICL shall thereupon (i) not be deemed to be Dissenting Shares and (ii)
be deemed to have been converted into, and to have become exchanged for, as of the Effective Time, the right to receive the Per
Share Merger Consideration, without any interest thereon, in the manner provided in Section 2.04. Parent shall promptly deposit
or cause to be deposited with the Paying Agent any additional funds necessary to pay in full the aggregate Per Share Merger Consideration
so due and payable to such shareholders who have failed to exercise or who shall have effectively withdrawn or lost such dissenter
rights under Section 238 of the CICL.
(c) The Company shall
give Parent (i) prompt notice of any notices of objection, notices of dissent or demands for appraisal, under Section 238 of the
CICL received by the Company, attempted withdrawals of such notices or demands, and any other instruments served pursuant to applicable
Laws of the Cayman Islands and received by the Company relating to its shareholders’ rights to dissent from the Merger or
appraisal rights and (ii) the opportunity to direct all negotiations and proceedings with respect to any such notice or demand
for appraisal under the CICL. The Company shall not, except with the prior written consent of Parent, make any payment with respect
to any exercise by a shareholder of its rights to dissent from the Merger or any demands for appraisal or offer to settle or settle
any such demands or approve any withdrawal of any such demands.
(d) In the event
that any written notices of objection to the Merger are served by any shareholders of the Company pursuant to section 238(2) of
the CICL, the Company shall serve written notice of the authorization and approval of this Agreement, the Plan of Merger and the
Transactions on such shareholders pursuant to section 238(4) of the CICL within 20 days of obtaining the Requisite Company Vote
at the Shareholders’ Meeting.
Section 2.04 Exchange
of Share Certificates, etc.
(a) Paying Agent.
Prior to the Effective Time, Parent shall appoint a bank or trust company selected by Parent with the Company’s prior consent
(such consent not to be unreasonably withheld, conditioned or delayed) to act as paying agent (the “Paying Agent”)
for all payments required to be made pursuant to Section 2.01(a), Section 2.01(b) and Section 2.03(b) (collectively, the “Merger
Consideration”), and Parent shall enter into a paying agent agreement with the Paying Agent in form and substance reasonably
acceptable to the Company. At or prior to the Effective Time, or in the case of payments pursuant to Section 2.03(b), when ascertained
pursuant to Section 2.03(b), Parent shall deposit, or cause to be deposited, with the Paying Agent, for the benefit of the holders
of Shares and ADSs, cash in an amount sufficient to pay the Merger Consideration (such cash being hereinafter referred to as the
“Exchange Fund”).
(b) Exchange Procedures.
Promptly after the Effective Time (and in any event within three Business Days), the Surviving Corporation shall cause the Paying
Agent to mail to each person who was, at the Effective Time, a registered holder of Shares entitled to receive the Per Share Merger
Consideration pursuant to Section 2.01(a): (i) a letter of transmittal (which shall
be in customary form for a company incorporated in the Cayman Islands reasonably acceptable to Parent and the Company, and shall
specify the manner in which the delivery of the Per Share Merger Consideration to registered holders of Shares shall be effected
and contain such other provisions as Parent and the Company may mutually agree prior to the Effective Time) and (ii) instructions
for use in effecting the surrender of any issued share certificates representing Shares (the “Share Certificates”)
(or affidavits and indemnities of loss in lieu of the Share Certificates as provided in Section
2.04(c)) or non-certificated Shares represented by book entry (“Uncertificated
Shares”) and/or such other documents as may be required in exchange for the Per Share Merger Consideration. Upon surrender
of, if applicable, a Share Certificate (or affidavit and indemnity of loss in lieu of the Share Certificate as provided in Section
2.04(c)) or Uncertificated Shares and/or such other documents as may be required pursuant
to such instructions to the Paying Agent in accordance with the terms of such letter of transmittal, duly executed in accordance
with the instructions thereto, each registered holder of Shares represented by such Share Certificate (or affidavits and indemnities
of loss in lieu of the Share Certificates as provided in Section 2.04(c))
and each registered holder of Uncertificated Shares shall be entitled to receive in exchange therefor a check, in the amount equal
to (x) the number of Shares represented by such Share Certificate (or affidavit and indemnity of loss in lieu of the Share
Certificate as provided in Section 2.04(c)) or the
number of Uncertificated Shares multiplied by (y) the Per Share Merger Consideration, and any Share Certificate
so surrendered shall forthwith be marked as cancelled. Prior to the Effective Time, Parent and the Company shall establish procedures
with the Paying Agent and the Depositary to ensure that (A) the Paying Agent will transmit to the Depositary as promptly as reasonably
practicable following the Effective Time an amount in cash in immediately available funds equal to the product of (x) the number
of ADSs issued and outstanding immediately prior to the Effective Time (other than ADSs representing Excluded Shares) and (y)
the Per ADS Merger Consideration and (B) the Depositary will distribute the Per ADS Merger Consideration to holders of ADSs pro
rata to their holdings of ADSs (other than ADSs representing Excluded Shares) upon surrender by them of the ADSs. Pursuant to
the terms of the Deposit Agreement, the ADS holders will pay any applicable fees, charges and expenses of the Depositary and government
charges (other than withholding Taxes, if any) due to or incurred by the Depositary in connection with the cancellation of their
ADSs. The Surviving Corporation will pay any applicable fees, charges and expenses of the Depositary and government charges (other
than withholding Taxes, if any) due to or incurred by the Depositary in connection with the distribution of the Per ADS Merger
Consideration to ADS holders and the termination of the ADS program or facility (other than the ADS cancellation fee, which shall
be payable in accordance with the Deposit Agreement). No interest shall be paid or will accrue on any amount payable in respect
of the Shares or ADSs pursuant to the provisions of this Article II. In the event of a transfer of ownership of Shares, including,
but not limited to, through the exercise of a Company Option or Company Options, as the case may be, prior to the Effective Time
that is not registered in the register of members of the Company as of the Effective Time, the Per Share Merger Consideration
in respect of such Shares will be paid to such transferee upon delivery of evidence to the reasonable satisfaction of the Paying
Agent of such transferee’s entitlement to the relevant Shares and evidence that any applicable share transfer Taxes have
been paid or are not applicable, in each case, as of the Effective Time; provided that in the case of an exercise of a
Company Option or Company Options, among other things, evidence of payment for Shares together with the applicable notice of exercise
shall constitute reasonably satisfactory evidence of such transferee’s entitlement to the relevant Shares.
(c) Lost Certificates.
If any Share Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Share Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation or the Paying Agent,
the posting by such person of a bond, in such reasonable amount as the Surviving Corporation or the Paying Agent may direct, as
indemnity against any claim that may be made against it with respect to such Share Certificate, the Paying Agent will pay in respect
of such lost, stolen or destroyed Share Certificate an amount equal to the Per Share Merger Consideration multiplied by
the number of Shares represented by such Share Certificate to which the holder thereof is entitled pursuant to Section 2.01(a).
(d) Untraceable
and Dissenting Shareholders. Remittances for the Per Share Merger Consideration or the Per ADS Merger Consideration, as the
case may be, shall not be sent to holders of Shares or ADSs who are untraceable unless and until, except as provided below, they
notify the Paying Agent or the Depositary, as applicable, of their current contact details. A holder of Shares or ADSs will be
deemed to be untraceable if (i) such person has no registered address in the register of members (or branch register) maintained
by the Company or the Depositary, as applicable, (ii) on the last two consecutive occasions on which a dividend has been paid
by the Company a check payable to such person either (A) has been sent to such person and has been returned undelivered or has
not been cashed or (B) has not been sent to such person because on an earlier occasion a check for a dividend so payable has been
returned undelivered, and in any such case no valid claim in respect thereof has been communicated in writing to the Company or
the Depositary, as applicable or (iii) notice of the Shareholders’ Meeting convened to vote on the Merger has been sent
to such person and has been returned undelivered. Monies due to Dissenting Shareholders and shareholders of the Company who are
untraceable shall be returned to the Surviving Corporation on demand and held in a non-interest bearing bank account for the benefit
of Dissenting Shareholders and shareholders of the Company (including holders of ADSs) who are untraceable. Monies unclaimed after
a period of seven years from the Closing Date shall be forfeited and shall revert to the Surviving Corporation.
(e) Adjustments
to Merger Consideration. The Per Share Merger Consideration and the Per ADS Merger Consideration shall be equitably adjusted
to reflect appropriately the effect of any share split, reverse share split, share dividend (including any dividend or distribution
of securities convertible into Shares), extraordinary cash dividends, reorganization, recapitalization, reclassification, combination,
exchange of shares or other like change with respect to Shares occurring on or after the date hereof and prior to the Effective
Time and to provide to the holders of Shares (including Shares represented by ADSs), Company Options, Company RSs and Company
RSUs the same economic effect as contemplated by this Agreement prior to such action.
(f) Investment
of Exchange Fund. The Exchange Fund, pending its disbursement to the holders of Shares and ADSs, shall be invested by the
Paying Agent as directed by Parent; provided that (i) Parent shall not direct the Paying Agent to make any such investments
that are speculative in nature and (ii) no such investment or losses shall affect the amounts payable to such holders and Parent
shall promptly replace or cause to be replaced any funds deposited with the Paying Agent that are lost through any investment
so as to ensure that the Exchange Fund is at all times maintained at a level sufficient for the Paying Agent to pay the Merger
Consideration. Earnings from investments shall be the sole and exclusive property of Parent and the Surviving Corporation. Except
as contemplated by Section 2.04(b) and this Section 2.04(f), the Exchange Fund shall not be used for any other purpose.
(g) Termination
of Exchange Fund. Any portion of the Exchange Fund that remains unclaimed by the holders of Shares or ADSs for six months
after the Effective Time shall be delivered to the Surviving Corporation upon demand, and any holders of Shares and ADSs who have
not theretofore complied with this Article II shall thereafter look only to the Surviving Corporation for the cash to which they
are entitled pursuant to Section 2.01(a) and Section 2.01(b).
(h) No Liability.
None of the Paying Agent, the Rollover Shareholders, the Sponsors, Parent, the Surviving Corporation or the Depositary shall be
liable to any former holder of Shares for any such Shares (including Shares represented by ADSs) (or dividends or distributions
with respect thereto) or cash properly delivered to a public official pursuant to any applicable abandoned property, bona vacantia,
escheat or similar Law. Any amounts remaining unclaimed by such holders at such time at which such amounts would otherwise escheat
to or become property of any Governmental Authority shall become, to the extent permitted by applicable Laws, the property of
the Surviving Corporation or its designee, free and clear of all claims or interest of any person previously entitled thereto.
(i) Withholding
Rights. Each of Parent, the Surviving Corporation, the Paying Agent and the Depositary shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any holder of Shares, ADSs, Company Options, Company RSs
or Company RSUs such amounts as it is required to deduct and withhold with respect to the making of such payment under any provision
of applicable Tax Law. To the extent that amounts are so withheld by Parent, the Surviving Corporation, the Paying Agent or the
Depositary, as the case may be, such withheld amounts shall be (i) remitted by Parent, the Surviving Corporation, the Paying Agent
or the Depositary to the applicable Governmental Authority and (ii) to the extent so remitted, treated for all purposes of
this Agreement as having been paid to the holder of the Shares, ADSs, Company Options, Company RSs or Company RSUs in respect
of which such deduction and withholding was made by Parent, the Surviving Corporation, the Paying Agent or the Depositary, as
the case may be.
Section 2.05 No
Transfers.
From and after the
Effective Time, (a) no transfers of Shares shall be effected in the register of members of the Company and (b) the holders of
Shares (including Shares represented by ADSs) issued and outstanding immediately prior to the Effective Time shall cease to have
any rights with respect to such Shares, except as otherwise provided in this Agreement or by Law. On or after the Effective Time,
any Share Certificates presented to the Paying Agent, Parent or Surviving Corporation for transfer or any other reason shall be
canceled in exchange for the right to receive the cash consideration to which the holders thereof are entitled under this Article
II in the case of Shares other than the Excluded Shares, and for no consideration in the case of Excluded Shares.
Section 2.06 Termination
of Deposit Agreement.
As soon as reasonably
practicable after the Effective Time, the Surviving Corporation shall provide notice to JPMorgan Chase Bank, N.A. (the “Depositary”)
to terminate the deposit agreement, dated September 24, 2009, between the Company, the Depositary and all holders from time to
time of ADSs issued thereunder (the “Deposit Agreement”) in accordance with its terms.
Section 2.07 Agreement
of Fair Value.
Parent, Merger Sub
and the Company respectively agree that the Per Share Merger Consideration represents the fair value of the Shares for the purposes
of Section 238(8) of the CICL.
Article
III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except (a) as set
forth in the Company Disclosure Schedule (it being understood that (1) any information set forth in one section or subsection
of the Company Disclosure Schedule shall be deemed to apply to and qualify the section or subsection of this Agreement to which
it corresponds in number and each other section or subsection of this Agreement to the extent that it is reasonably apparent that
such information is relevant to such other section or subsection, and (2) notwithstanding that any representation specifically
references a section or subsection of the Company Disclosure Schedule, each representation shall be deemed to be qualified by
any information in the Company Disclosure Schedule where it is reasonably apparent that such information is relevant to such representation),
and (b) as disclosed in the Company SEC Reports filed or furnished prior to the date of this Agreement (excluding any language
in such reports that is predictive or forward-looking, in each case other than any specific factual information contained therein),
the Company hereby represents and warrants to Parent and Merger Sub that:
Section 3.01 Organization
and Qualification; Subsidiaries.
Each of the Company
and its Subsidiaries (i) is an entity duly organized, validly existing and in good standing (with respect to jurisdictions that
recognize the concept of good standing) under the Laws of the jurisdiction of its organization and (ii) has the requisite corporate
or similar power and authority to own, lease and operate its properties and assets and to carry on its business as it is now being
conducted, except, with respect to clause (ii), where the failure to have such power and authority would not reasonably be expected
to have a Company Material Adverse Effect. The Company and each of its Subsidiaries is duly qualified or licensed as a foreign
corporation or other legal entity to do business, and is in good standing (with respect to jurisdictions that recognize the concept
of good standing), in each jurisdiction where the character of the properties or assets owned, leased or operated by it or the
nature of its business makes such qualification or licensing necessary, except where the failure to be so qualified or licensed
or in good standing would not reasonably be expected to have a Company Material Adverse Effect.
Section 3.02 Memorandum
and Articles of Association.
Except as disclosed
in Section 3.02 of the Company Disclosure Schedule, the memorandum and articles of association or other equivalent organizational
documents, as applicable, of each of the Company and its Subsidiaries are in full force and effect. Neither the Company nor any
of its Subsidiaries is in violation of any of the provisions of its memorandum and articles of association or equivalent organizational
documents, as applicable, in any material respect.
Section 3.03 Capitalization.
(a) The authorized
share capital of the Company consists of 16,000,000,000 Class A Shares and 4,000,000,000 Class B ordinary shares of a nominal
or par value of $0.01 each (“Class B Shares” and together with the Class A Shares, the “Shares”).
As of the date hereof, (i) 443,179,215 Class A Shares (which number includes 11,440,370 vested Company RSs and 768,020 vested
Company RSUs) and 97,518,374 Class B Shares are issued and outstanding, all of which are duly authorized, validly issued, fully
paid and non-assessable, (ii) 11,666,618 Shares are reserved for future issuance pursuant to outstanding Company Options, and
(iii) 626,377 Shares and 136,368 Shares are reserved for future issuance pursuant to outstanding unvested Company RSUs and unvested
Company RSs, respectively. Each Company Option, Company RS and Company RSU was granted in accordance with all applicable Laws
in all material respects, all of the terms and conditions of the relevant Share Incentive Plan and in compliance with the rules
and regulations of the NASDAQ (“NASDAQ”) in all material respects. All Shares subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and non-assessable.
(b) Except for the
Company Options, Company RSs and Company RSUs referred to in Section 3.03(a) or as disclosed in Section 3.03(b) of the Company
Disclosure Schedule, there are no options, warrants, convertible debt, other convertible instruments or other rights, agreements,
arrangements or commitments of any character issued by the Company or any of its Subsidiaries relating to the issued or unissued
share capital of the Company or any of its Subsidiaries or obligating the Company or any of its Subsidiaries to issue or sell
any shares of capital stock or other securities of the Company or any of its Subsidiaries or any securities or obligations convertible
or exchangeable into or exercisable for, or giving any person a right to subscribe for or acquire, any securities of the Company
or any of its Subsidiaries and no securities or obligations evidencing such rights are authorized, issued or outstanding. There
are no outstanding contractual obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any Shares or any share capital or other securities of the Company or any of its Subsidiaries. As of the date of this Agreement,
no bonds, debentures, notes or other Indebtedness of the Company having the right to vote (or convertible into or exercisable
for securities having the right to vote) on any matters on which shareholders of the Company may vote are issued or outstanding.
(c) Each outstanding
share of capital stock of, or other equity interest in, each Subsidiary wholly-owned by the Company is (i) duly authorized, validly
issued, fully paid and non-assessable (to the extent such concept is applicable in the relevant jurisdiction), (ii) owned
by the Company or another of its wholly-owned Subsidiaries free and clear of all Liens (other than Permitted Encumbrances) and
(iii) not subject to any outstanding obligations of the Company or any of its Subsidiaries requiring the registration under any
securities Law for sale of such share of capital stock or other equity interests. Each outstanding share of capital stock of or
other equity interest that is directly or indirectly owned by the Company in each Subsidiary that is not wholly-owned by the Company
is (i) duly authorized, validly issued, fully paid and non-assessable (to the extent such concept is applicable in the relevant
jurisdiction), (ii) owned by the Company or another of its Subsidiaries free and clear of all Liens (other than Permitted Encumbrances)
and (iii) not subject to any outstanding obligations of the Company or any of its Subsidiaries requiring the registration under
any securities Law for sale of such share of capital stock or other equity interest.
Section 3.04 Authority
Relative to This Agreement.
(a) The Company has
all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and, subject
to receipt of the Company Shareholder Approval, to consummate the Transactions. The execution and delivery of this Agreement by
the Company and the consummation by the Company of the Transactions have been duly and validly authorized by all necessary corporate
action, and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate
the Transactions (other than, with respect to the approval of this Agreement and the Merger, obtaining the Company Shareholder
Approval). This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Parent and Merger Sub, constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to bankruptcy, insolvency (including all Laws relating to fraudulent
transfers), reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights
and to general equity principles (the “Bankruptcy and Equity Exception”).
(b) The Company Board,
acting upon the unanimous recommendation of the Special Committee, by resolutions duly adopted by unanimous vote of those directors
voting at a meeting duly called and held and not subsequently rescinded or modified in a manner adverse to Parent, has (i) determined
that the execution of this Agreement and the Plan of Merger and the consummation of the Transactions, including the Merger, are
fair to, and in the best interests of, the Company and its shareholders (other than holders of Excluded Shares); (ii) approved
and declared advisable the Merger, the other Transactions and this Agreement; (iii) resolved to recommend the approval and adoption
of this Agreement, the Plan of Merger and the Transactions to the holders of Shares, and directed that this Agreement be submitted
for approval by the shareholders of the Company at the Shareholders’ Meeting (the “Company Recommendation”)
and (iv) taken all such actions as may be required to enter into this Agreement and, as of the Closing Date, shall have taken
all actions as may be required to be taken by the Company to effect the Transactions, including obtaining any necessary consents
in respect of the Share Incentive Plans.
(c) The only vote
of the holders of any class or series of share capital of the Company necessary to approve and adopt this Agreement and the Merger
is the affirmative vote of shareholders holding two-thirds or more of the voting power represented by the Shares present and voting
in person or by proxy as a single class at the Shareholders’ Meeting (the “Requisite Company Vote”).
(d) The representations
and warranties set forth in this Section 3.04 shall be made (i) with respect to the Original Merger Agreement, as of the
Original Execution Date, and (ii) with respect to this Agreement, as of the Execution Date.
Section 3.05 No
Conflict; Required Filings and Consents.
(a) The execution
and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company and the consummation
of the Merger will not, (i) assuming the Requisite Company Vote is obtained, conflict with or violate the memorandum and articles
of association or other equivalent organizational documents of the Company or any of its Subsidiaries; (ii) assuming all consents,
approvals, authorizations and other actions described in Section 3.05(b) have been obtained or taken and all filings and obligations
described in Section 3.05(b) have been made or satisfied and that the Requisite Company Vote is obtained, conflict with or violate
any Law applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries
is bound or affected; or (iii) violate, conflict with, require consent under, result in any breach of, result in loss of
benefit under, or constitute a default (or an event that, with notice or lapse of time or both, would become a default) under,
or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien on
any property or asset of the Company or any of its Subsidiaries (other than Permitted Encumbrances) pursuant to, any note, bond,
mortgage, indenture, deed of trust, contract, agreement, Lease, license, Company Permit or other instrument or obligation to which
the Company of any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or any of their respective
assets or properties is bound or affected, except, (1) with respect to clauses (ii) and (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which would not reasonably be expected to have a Company Material Adverse Effect, and
(2) with respect to clause (iii), as disclosed in Section 3.05(a)(iii) of the Company Disclosure Schedule.
(b) Other than filings
and/or notices required for (i) compliance with the applicable requirements of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) and the rules and regulations promulgated thereunder (including the joining of the Company
in the filing of the Schedule 13E-3, the furnishing of Form 6-K with the proxy statement relating to the Merger (including any
amendment or supplement thereto, the “Proxy Statement”), and the filing or furnishing of one or more amendments
to the Schedule 13E-3 and such Form 6-K to respond to comments of the SEC, if any, on the Schedule 13E-3 and such Form 6-K), (ii)
compliance with the rules and regulations of NASDAQ, (iii) the filing of the Plan of Merger and related documentation with the
Registrar of Companies of the Cayman Islands and the publication of notification of the Merger in the Cayman Islands Government
Gazette pursuant to the CICL, and (iv) the consent, approvals, authorizations or permits of, or filing with or notifications
to, the Governmental Authorities set forth in Section 3.05(b) of the Company Disclosure Schedule (collectively, the “Requisite
Regulatory Approvals”), no notices, reports or other filings are required to be made by the Company with, nor are any
consents, registrations, approvals, permits or authorizations required to be obtained by the Company from, any Governmental Authority
in connection with the execution, delivery and performance of this Agreement by the Company and the consummation by the Company
of the Merger and the other Transactions, except for those that the failure to make or obtain would not reasonably be expected
to have a Company Material Adverse Effect.
Section 3.06 Permits;
Compliance.
(a) Except as disclosed
in Section 3.06(a) of the Company Disclosure Schedule, (i) the business of each of the Company and its Subsidiaries is conducted
in compliance with all Laws applicable to the Company or such Subsidiary or by which any property, asset or right of the Company
or such Subsidiary is bound, (ii) the Company is in compliance with the applicable listing, corporate governance and other rules
and regulations of NASDAQ, (iii) each of the Company and its Subsidiaries is in possession of all Company Permits necessary for
the lawful conduct of its business and the ownership, use, occupancy and operation of its assets and properties, (iv) all approvals
of, and filings and registrations and other requisite formalities with, Governmental Authorities in the PRC required to be made
by the Company or its Subsidiaries in respect of the Company and the Subsidiaries and their capital structure and operations,
including registrations with the State Administration for Industry and Commerce, the State Administration of Foreign Exchange
(“SAFE”) and the State Administration of Taxation, and their respective local counterparts, have been duly
completed in accordance with applicable PRC Laws, (v) each of the Company and its Subsidiaries is in compliance with the terms
of such Company Permits, and (vi) no such Company Permit shall cease to be effective as a result of the Transactions, except,
in each case, for such non-compliance, non-possession or failure to complete or remain effective as would not reasonably be expected
to have a Company Material Adverse Effect. Without limiting the foregoing, each of the Company and its Subsidiaries is in compliance
with all applicable Law relating to: (A) the privacy of users of (including Internet users who view or interact with) the Company
Products and all of the Company’s and its Subsidiaries’ websites; and (B) the collection, use, storage, retention,
disclosure, and disposal of any Personal Information collected by the Company or any of its Subsidiaries, or, to the knowledge
of the Company, by third parties acting on the Company’s or any of its Subsidiaries’ behalf or having authorized access
to the Company’s or any of its Subsidiaries’ records, except, in each case, for such non-compliance as would not reasonably
be expected to have a Company Material Adverse Effect.
(b) In the past
three (3) years, except as would not reasonably be expected to have a Company Material Adverse Effect, none of the Company, any
of its Subsidiaries or any of their respective directors, officers or employees or, to the knowledge of the Company, any agent
or any other person acting for or on behalf of the Company or any of its Subsidiaries has (i) made any bribe, influence payment,
kickback, payoff, or any other type of payment that would be unlawful under any applicable Law or (ii) offered, paid, promised
to pay, or authorized any payment or transfer of, anything of value, directly or indirectly, to any Government Official for the
purpose of (1) improperly influencing any act or decision of such Government Official in his official capacity, (2) improperly
inducing such Government Official to do or omit to do any act in relation to his lawful duty, (3) securing any improper advantage,
or (4) inducing such Government Official to improperly influence or affect any act or decision of any Governmental Authority,
in each case, in order to assist the Company or any of its Subsidiaries in obtaining or retaining business for or with, or in
directing business to, any person.
Section 3.07 SEC
Filings; Financial Statements.
(a) The Company has
filed or furnished, as the case may be, all forms, reports, statements, schedules and other documents required to be filed with
or furnished to the Securities and Exchange Commission (the “SEC”) by it since December 31, 2012 (the “Company
SEC Reports”). The Company SEC Reports (i) at the time they were filed and, if amended, as of the date of such
amendment, complied in all material respects with all applicable requirements of the Securities Act of 1933, as amended (the “Securities
Act”) or the Exchange Act (in each case, including the rules and regulations promulgated thereunder), and (ii) did not,
at the time they were filed, and, if amended, as of the date of such amendment, 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 made therein, in the
light of the circumstances under which they were made, not misleading.
(b) The Company maintains
internal control over financial reporting (as defined in Rule 13a-15 or 15d-15, as applicable, of the Exchange Act) that is designed
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with GAAP.
(c) The audited consolidated
financial statements included in or incorporated by reference into the Company SEC Reports (including the related notes and schedules)
fairly present, or, in the case of Company SEC Reports filed after the date hereof, will fairly present, in all material respects,
the consolidated financial position of the Company and its consolidated Subsidiaries as of their respective dates, and the consolidated
results of operations, changes in shareholders’ equity and cash flows, as the case may be, of the Company and its consolidated
Subsidiaries for the periods set forth therein, in each case in accordance with GAAP, except to the extent that such information
has been amended or superseded by later Company SEC Reports filed prior to the date hereof.
(d) The Company has
implemented disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) that are designed to ensure
that material information relating to the Company required to be included in reports filed under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the SEC’s rules and related forms, and that such
information is accumulated and communicated to the Company’s chief executive officer and chief financial officer (or other
persons performing similar functions), as appropriate, to allow timely decisions regarding required disclosure. Neither the Company
nor, to the Company’s knowledge, its independent registered public accounting firm, has identified or been made aware of
any “significant deficiencies” or “material weaknesses” (as defined by the Public Company Accounting Oversight
Board) in the design or operation of the internal controls and procedures of the Company which are reasonably likely to adversely
affect the ability of the Company to record, process, summarize and report financial data, in each case which has not been subsequently
remediated. To the Company’s knowledge, there is, and since December 31, 2011 there has been, no fraud, whether or not material,
that involves the management of the Company or other employees who have a significant role in the internal controls over financial
reporting utilized by the Company.
Section 3.08 No
Undisclosed Liabilities. Except as disclosed in Section 3.08 of the Company Disclosure Schedule, none of the Company
or any Subsidiary of the Company has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise)
that would be required by GAAP to be reflected on a consolidated balance sheet of the Company and its Subsidiaries, except for
liabilities or obligations (i) which have not and would not reasonably be expected to have a Company Material Adverse Effect,
(ii) reflected or reserved against in the 2014 Balance Sheet, (iii) incurred after December 31, 2014, in the ordinary course of
business consistent with past practice, or (iv) incurred pursuant to the Transactions.
Section 3.09 Absence
of Certain Changes or Events. Except as disclosed in Section 3.09 of the Company Disclosure Schedule, since December
31, 2014, (a) the Company and its Subsidiaries have conducted their respective businesses in all material respects in the ordinary
course of business consistent with past practice, and (b) there has not been (A) any Company Material Adverse Effect, (B) any
declaration, setting aside or payment of any dividend or other distribution with respect to any shares of share capital of the
Company or any of its Subsidiaries (except for dividends or other distributions by any Subsidiary of the Company to the Company
or to any other Subsidiary of the Company), (C) any adoption of, resolution to approve or petition or similar proceeding or order
in relation to, a plan of complete or partial liquidation, dissolution, scheme of arrangement, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of its Subsidiaries, or (D) any receiver, trustee, administrator
or other similar person appointed in relation to the affairs of the Company or its property or any part thereof.
Section 3.10 Absence
of Litigation. Except as disclosed in Section 3.10 of the Company Disclosure Schedule, as of the date hereof, there
is no Proceeding pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries or any
property or asset of the Company or any of its Subsidiaries before any Governmental Authority that has had or would reasonably
be expected to have a Company Material Adverse Effect. None of the Company, its Subsidiaries or any material property or asset
of the Company or any of its Subsidiaries is subject to any continuing order of, consent decree, settlement agreement or other
similar written agreement with, or, to the knowledge of the Company, continuing investigation by, any Governmental Authority or
any Order of any Governmental Authority, except as would not reasonably be expected to have a Company Material Adverse Effect.
Section 3.11 Employee
Benefit Plans. True and complete copies of all material benefit and compensation plans, agreements, or arrangements, including
plans and agreements to provide severance, change-in-control or retention bonuses, profit-sharing, equity compensation or incentives,
deferred compensation, welfare benefits or fringe benefits, employment or consulting agreements (collectively, the “Plans”)
covering current or former directors, employees or consultants of the Company or any of its Subsidiaries (or a summary thereof,
if any Plan is not in writing), including all amendments thereto, have been provided or made available to Parent and Merger Sub,
and Section 3.11(a) of the Company Disclosure Schedule sets forth a complete list of the Plans; provided that with respect
to each Plan that is documented on a standard form or template, only such standard form or template is listed in Section 3.11(a)
of the Company Disclosure Schedule and only a copy of such standard form or template has been provided or made available to Parent
and Merger Sub. Except as disclosed in Section 3.11(a) of the Company Disclosure Schedule: (i) neither the Company nor any of
its Subsidiaries has made any commitment, whether legally binding or not, to create any additional Plan or materially modify or
change any existing Plan and (ii) since December 31, 2014 there has been no material change, amendment, modification to, or adoption
of, any Plan.
(b) Except as otherwise
specifically provided in this Agreement regarding the Company Options, Company RSs and Company RSUs, neither the execution and
delivery of this Agreement nor the consummation of the Transactions (either alone or in conjunction with another event, such as
a termination of employment) will (x) result in any material payment becoming due to any current or former director, employee
or consultant of the Company or any of its Subsidiaries under any of the Plans or otherwise; (y) materially increase any benefits
otherwise payable under any of the Plans; or (z) result in any acceleration of the time of payment or vesting of any such material
payments or benefits.
(c) There is no outstanding
Order against the Plans that would reasonably be expected to have a Company Material Adverse Effect. (i) Each document prepared
in connection with each Plan complies in all material respects with applicable Law; (ii) each Plan has been operated in material
compliance with its terms, applicable Law, and, to the extent applicable, in accordance with generally accepted accounting practices
in the applicable jurisdiction applied to such matters; (iii) no circumstance, fact or event exists that would result in any material
default under, or violation of, any Plan; and (iv) no material Proceeding is pending or, to the knowledge of the Company, threatened
with respect to any Plan.
(d) Except as disclosed
in Section 3.11(d) of the Company Disclosure Schedule, the Company is not obligated, pursuant to any of the Plans, to grant any
options or other rights to purchase Shares to any director, employee or, consultant of the Company or any of its Subsidiaries
after the date hereof.
Section 3.12 Labor
and Employment Matters.
(a) Neither the Company
nor any of its Subsidiaries is a party to any collective bargaining agreement applicable to persons employed by the Company or
any of its Subsidiaries. Except as would not have a Company Material Adverse Effect, (i) neither the Company nor any of its Subsidiaries
has breached or otherwise failed to comply in any respect with the provisions of any collective bargaining agreement and there
are no grievances outstanding against the Company or any of its Subsidiaries under any such agreement and (ii) there are no employment
related or unfair labor practice complaints pending against the Company or any of its Subsidiaries before any Governmental Authority.
No labor strikes, work stoppages, slowdowns or other material labor disputes are underway or have occurred or, to the knowledge
of the Company, been threatened in the past three (3) years.
(b) Except as disclosed
in Section 3.12(b) of the Company Disclosure Schedule or as would not reasonably be expected to have a Company Material Adverse
Effect, (i) the Company and its Subsidiaries are currently in compliance in all respects with all Laws relating to the employment
of labor, including those related to wages, hours, collective bargaining, retaliation, civil rights, safety and health, immigration
laws, and the payment and withholding of Taxes; and (ii) to the Company’s knowledge, 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 threatened, against the Company or any of its Subsidiaries before any Governmental
Authority in any jurisdiction in which the Company or any of its Subsidiaries has employed or currently employs any person.
Section 3.13 Real
Property.
(a) Section 3.13(a)
of the Company Disclosure Schedule sets forth all of the real property owned by the Company and its Subsidiaries that is material
to the business of the Company and its Subsidiaries taken as a whole (the “Owned Real Property”). Except as
would not reasonably be expected to have a Company Material Adverse Effect, each of the Company and its Subsidiaries has good
and marketable title to each parcel of Owned Real Property, free and clear of all Liens, except Permitted Encumbrances.
(b) The Company has
made available to Parent copies of all Leases under which the Company or any of its Subsidiaries uses or occupies or has the right
to use or occupy, now or in the future, any real property that is material to the business of the Company and its Subsidiaries
taken as a whole (the “Leased Real Property”) (and all modifications, amendments and supplements thereto).
Except as disclosed in Section 3.13(b) of the Company Disclosure Schedule or as would not reasonably be expected to have a Company
Material Adverse Effect, each of the Company and its Subsidiaries has a good and valid leasehold interest in each parcel of the
Leased Real Property, free and clear of all Liens, except Permitted Encumbrances.
(c) As of the date
of this Agreement, no third party to any such Leases has given written notice to the Company or any of its Subsidiaries or made
a written claim against the Company or any of its Subsidiaries with respect to any material breach or default thereunder.
(d) Except as would
not reasonably be expected to have a Company Material Adverse Effect, the Company and its Subsidiaries have good and marketable
title to, or a valid and binding leasehold interest in, all other properties and assets (excluding Owned Real Property, Leased
Real Property and Intellectual Property) that are material to the business of the Company and its Subsidiaries taken as a whole,
in each case free and clear of all Liens, except Permitted Encumbrances.
Section 3.14 Intellectual
Property.
(a) Section 3.14(a)
of the Company Disclosure Schedule contains a list of (i) each item of Registered IP in which the Company or any of its Subsidiaries
has or purports to have an ownership interest of any nature (whether exclusively, jointly with another person, or otherwise),
(ii) the jurisdiction in which such item of Registered IP has been registered or filed and the applicable application, registration,
or serial or other similar identification number, and (iii) any other person that, to the knowledge of the Company, has an ownership
interest in such item of Registered IP and the nature of such ownership interest.
(b) Except as would
not reasonably be expected to have a Company Material Adverse Effect or as disclosed in Section 3.14(b) of the Company Disclosure
Schedule, the Company and its Subsidiaries have valid and enforceable rights to use all Intellectual Property and Technology used
in, or necessary to conduct, the business of the Company or its Subsidiaries as it is currently conducted (the “Company
Intellectual Property”), free and clear of all Liens (other than Permitted Encumbrances).
(c) Except as would
not reasonably be expected to have a Company Material Adverse Effect, neither the Company nor any of its Subsidiaries has received
written notice of any claim that it, or the business conducted by it, is infringing, diluting, disclosing without authorization
or misappropriating or has infringed, diluted, disclosed without authorization or misappropriated any Intellectual Property right
of any person, including any demands or unsolicited offers to license any Intellectual Property. Except as would not reasonably
be expected to have a Company Material Adverse Effect, to the knowledge of the Company, neither the Company nor any of its Subsidiaries
nor the business conducted by the Company or any of its Subsidiaries infringes, dilutes, discloses without authorization or misappropriates
any Intellectual Property rights of any person or engages in unfair competition or trade practices under the Laws of any relevant
jurisdiction. Except as would not reasonably be expected to have a Company Material Adverse Effect, to the knowledge of the Company,
no third party is currently infringing, diluting, disclosing without authorization or misappropriating any Company Owned IP.
(d) Except as would
not reasonably be expected to have a Company Material Adverse Effect, there are no pending or, to the knowledge of the Company,
threatened, Proceedings by any person challenging the validity or enforceability of, or the use or ownership by the Company or
any of its Subsidiaries of, any of the Company Intellectual Property, or to the knowledge of the Company, against any Person who
may be entitled to be indemnified or reimbursed by the Company or any of its Subsidiaries with respect to such Proceeding.
(e) Except as would
not reasonably be expected to have a Company Material Adverse Effect, the Company and each of its Subsidiaries own all right,
title and interest in and to all Intellectual Property and Technology owned by, claimed or purported to be owned by, or created
or developed by, for or under the direction or supervision of, the Company or any such Subsidiary (collectively, “Company
Owned IP”), free and clear of any Liens (other than Permitted Encumbrances), and all current or former employees, consultants,
or contractors of the Company and each such Subsidiary, as applicable, who are participating or have participated in the creation
or development of any such Company Owned IP, have executed and delivered to the Company or such Subsidiary a valid and enforceable
agreement (i) providing for the non-disclosure and restricted use by such person of confidential information (ii) providing for
the assignment by such person to the Company or such Subsidiary of any Intellectual Property developed or arising out of such
person’s employment by or engagement by the Company or such Subsidiary, and (iii) providing for the waiver of any non-assignable
rights, including moral rights, to such Company Owned IP. Except as would not reasonably be expected to have a Company Material
Adverse Effect, to the knowledge of the Company, no employee of the Company or any of its Subsidiaries is (1) bound by or otherwise
subject to any Contract restricting such employee from performing their duties for the Company or any such Subsidiary or (2) in
breach of any Contract with any former employer or other person concerning Intellectual Property rights or confidentiality due
to their activities as an employee of the Company or any such Subsidiary. Except as would not reasonably be expected to have a
Company Material Adverse Effect, neither the Company nor any of its Subsidiaries has transferred ownership of (whether a whole
or partial interest), or granted any exclusive right to use, any Company Owned IP to any person.
(f) Except as disclosed
in Section 3.14(f) of the Company Disclosure Schedule, the Company and its Subsidiaries have taken all actions reasonably necessary
to maintain and protect each material item of Company Owned IP. Immediately subsequent to the Effective Time, the Company Intellectual
Property shall be owned by or available for use by the Company and its Subsidiaries on terms and conditions materially identical
to those under which the Company and its Subsidiaries owned or used the Company Intellectual Property immediately prior to the
Effective Time.
(g) Except as disclosed
in Section 3.14(g) of the Company Disclosure Schedule or as would not reasonably be expected to have a Company Material Adverse
Effect, neither the execution, delivery, or performance of this Agreement by the Company nor the consummation of the Merger will,
with or without notice or the lapse of time, result in, or give any other person the right or option to cause or declare, (i)
a loss of, or Lien on, any Company Owned IP; (ii) a breach, termination, suspension, acceleration or modification of any right
or obligation under any Company IP Contract; (iii) the release, disclosure or delivery of any Company Owned IP by or to any escrow
agent or other person; (iv) the grant, assignment or transfer by the Company or any Subsidiary to any other person of any license
or other right or interest under, to, or in any Company Intellectual Property; or (v) payment of any amount or offer of any discounts
by the Company or any Subsidiary in connection with any Company Intellectual Property to any person, in each case in a manner
other than that in which the Company or any of its Subsidiaries would be obligated had the Transactions not occurred.
(h) Except as would
not reasonably be expected to have a Company Material Adverse Effect, no funding, facilities, or personnel of any Governmental
Authority or any public or private university, college or other educational or research institution were used, directly or indirectly,
to develop or create, in whole or in part, any Company Owned IP.
(i) Section 3.14(i)
of the Company Disclosure Schedule contains a list and description of all standard-setting organizations, industry bodies and
other standards related activities in which the Company or any of its Subsidiaries has participated in or contributed to, as well
as a list of Patents which the Company or any of its Subsidiaries license as a result of its participation in such standards bodies.
(j) Except as would
not reasonably be expected to have a Company Material Adverse Effect, to the knowledge of the Company, no Software used in the
operation of the business of the Company and any of its Subsidiaries, including in or for the Company Products (collectively,
“Company Software”) contains any “back door,” “drop dead device,” “time bomb,”
“Trojan horse,” “virus,” “worm,” “spyware” or “adware” (as such terms
are commonly understood in the software industry) or any other code designed or intended to disrupt or disable the operation of,
or provide unauthorized access to, a computer system or network or compromise the privacy or data security of a user.
(k) No Source Code
for Software included in the Company Owned IP for any Company Product has been delivered, licensed, or made available to any escrow
agent or other person who is not, as of the date of this Agreement, an employee of the Company or any of its Subsidiaries. Neither
the Company nor any of its Subsidiaries has any duty or obligation (whether present, contingent or otherwise) to deliver, license,
or make available such Source Code for any Company Product to any escrow agent or other person. No event has occurred, and no
circumstance or condition exists, that (with or without notice or lapse of time) will, or would reasonably be expected to, result
in the delivery, license or disclosure of any such Source Code for any Company Product to any other person who is not, as of the
date of this Agreement, an employee of the Company or any of its Subsidiaries.
(l) No Company Software
included in the Company Owned IP is subject to any “copyleft” or other obligation or condition (including any obligation
or condition under any “open source” license such as the GNU Public License, Lesser GNU Public License, or Mozilla
Public License) that (i) could require, or could condition the use or distribution of such Company Software or portion thereof
on, (A) the disclosure, licensing or distribution of any Source Code for any portion of such Company Software, or (B) the granting
to licensees of the right to make derivative works or other modifications to such Company Software or portions thereof, (C) the
licensing under terms that allow the Company Software or portions thereof or interfaces therefor to be reverse engineered, reverse
assembled or disassembled (other than by operation of law), or (D) redistribution at no license fee or (ii) could otherwise impose
any limitation, restriction or condition on the right or ability of the Company or any of its Subsidiaries to use, distribute
or charge for any such Company Software.
(m) Except as would
not reasonably be expected to have a Company Material Adverse Effect, the Company IT Assets are adequate for, and operate and
perform in accordance with their documentation and functional specifications and otherwise as required in connection with, the
operation of the Company’s business and the Company and its Subsidiaries have implemented reasonable backup, security and
disaster recovery measures and technology consistent with industry practices in the PRC.
(n) Except as would
not reasonably be expected to have a Company Material Adverse Effect, the Company and each of its Subsidiaries maintain commercially
reasonable information security practices with respect to the collection, storage, retention, use, disclosure and disposal of
Personal Information, and there has been no unauthorized access to, or misuse of, Personal Information owned or licensed by the
Company or any of its Subsidiaries or in the Company’s or any of its Subsidiaries’ possession or control.
Section 3.15 Taxes.
(a) Except as disclosed
in Section 3.15 of the Company Disclosure Schedule or as would not reasonably be expected to have a Company Material Adverse Effect,
all Tax Returns required to be filed by or with respect to the Company or any of its Subsidiaries have been timely filed and all
such Tax Returns are true, correct, and complete in all material respects and all entitlements of Tax exemption, Tax holidays,
Tax incentive or other preferential treatments or financial subsidies enjoyed by the Company or any of its Subsidiaries have been
obtained in compliance with applicable Laws.
(b) Except as would
not reasonably be expected to have a Company Material Adverse Effect, all Taxes of the Company and its Subsidiaries due and payable
have been timely paid. The unpaid Taxes of the Company and its Subsidiaries did not, as of December 31, 2014, exceed in any material
respect the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth in the 2014 Balance Sheet (including any notes thereto). Neither the Company nor any of its Subsidiaries
has incurred any material liability for Taxes since December 31, 2014 other than in the ordinary course of business consistent
with past practice. Except as would not reasonably be expected to have a Company Material Adverse Effect, there are no Tax liens
on the assets of the Company or any of its Subsidiaries other than for Taxes not yet due and payable and Taxes that are being
contested in good faith and by appropriate proceedings.
(c) Except as would
not reasonably be expected to have a Company Material Adverse Effect, each of the Company and its Subsidiaries has timely paid
or withheld all Taxes required to be paid or withheld with respect to their employees, independent contractors, creditors and
other third parties (and timely paid over such Taxes to the appropriate Governmental Authority).
(d) Neither the Company
nor any of its Subsidiaries 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 and there has been no request by any Governmental Authority to execute
such a waiver or extension. No audit or other examination or administrative, judicial or other proceeding of, or with respect
to, any material Tax Return or material Taxes of the Company or any of its Subsidiaries is currently in progress, and neither
the Company nor any of its Subsidiaries has been notified of any written request for, or, to the knowledge of the Company, any
threat of, such an audit or other examination or administrative, judicial or other proceeding. No deficiency for any material
amount of Tax has been asserted or assessed by any Governmental Authority against the Company or any of its Subsidiaries that
has not been satisfied by payment, settled or withdrawn. No claim has been made by any Governmental Authority in a jurisdiction
where the Company or any of its Subsidiaries does not file Tax Returns that the Company or such Subsidiary is or may be subject
to taxation by such jurisdiction.
(e) Each of the Company’s
Subsidiaries formed in the PRC has, in accordance with applicable Law, duly registered with the relevant PRC Governmental Authority,
obtained and maintained the validity of all national and local Tax registration certificates and complied in all material respects
with all requirements imposed by such Governmental Authority. No submissions made by or on behalf of the Company or any of its
Subsidiaries to any Governmental Authority in connection with obtaining Tax exemptions, Tax holidays, Tax deferrals, Tax incentives
or other preferential Tax treatments or Tax rebates contained any material misstatement or omission that would have affected the
granting of such Tax exemptions, preferential treatments or rebates. No suspension, revocation or cancellation of any such Tax
exemptions, preferential treatments or rebates is pending or, to the Company’s knowledge, threatened. Except as would not
reasonably be expected to have a Company Material Adverse Effect, the Transactions will not have any adverse effect on the continued
validity and effectiveness of any such Tax exemptions, preferential treatments or rebates and will not result in the claw-back
or recapture of any such Tax exemptions, preferential treatments or rebates.
Section 3.16 Environmental
Matters.
Except as would not
reasonably be expected to have a Company Material Adverse Effect:
(a) The Company
and its Subsidiaries are in compliance with all applicable Environmental Laws. The Company and each of its Subsidiaries have obtained
and possess all permits, licenses and other authorizations currently required for their establishment and their operation under
any Environmental Law (the “Environmental Permits”), and all such Environmental Permits are in full force and
effect.
(b) To the knowledge
of the Company, neither the Company nor any of its Subsidiaries has received any written notice, demand, letter, claim or request
for information alleging that the Company or any of its Subsidiaries is in violation of or liable under any Environmental Law.
(c) Neither the Company
nor any of its Subsidiaries is subject to any Order by any Governmental Authority or agreement with any third party concerning
liability under any Environmental Law.
Section 3.17 Material
Contracts.
(a) Except (1) for
this Agreement, (2) for Contracts filed as exhibits to the Company SEC Reports or incorporated therein by reference and (3) as
disclosed in Section 3.17(a) of the Company Disclosure Schedule, as of the date hereof, none of the Company or its Subsidiaries
is a party to or bound by:
(i) any Contract
that would be required to be filed by the Company pursuant to Item 4 of the Instructions to Exhibits of Form 20-F under the Exchange
Act;
(ii) any Contract
between the Company or any of its Subsidiaries and any director or executive officer of the Company or any person beneficially
owning five percent or more of the outstanding Shares required to be disclosed pursuant to Item 7B or Item 19 of Form 20-F under
the Exchange Act;
(iii) any Contract
for the license to or from the Company or any of its Subsidiaries of any material Intellectual Property; and
(iv) any Contract
containing noncompetition or other covenants that in any way purport to restrict the Company or any of its Subsidiaries’
business or limit the freedom of the Company or any of its Subsidiaries to engage in any line of business or containing exclusivity
obligations, “most favored nation” or right of first refusal provisions.
Each such Contract
described in clauses (i) through (iv) above and each such Contract that would be a Material Contract but for the exception of
being filed as an exhibit to the Company SEC Reports is referred to herein as a “Material Contract”.
(b) The Company has
made available to Parent true and correct copies of all Material Contracts. Except as would not reasonably be expected to have
a Company Material Adverse Effect, (i) each Material Contract is a legal, valid and binding obligation of the Company or
its Subsidiaries party thereto and, to the Company’s knowledge, the other parties thereto, and enforceable against the Company
or such Subsidiary in accordance with its terms, in each case subject to the Bankruptcy and Equity Exception, (ii) neither the
Company nor any of its Subsidiaries nor, to the Company’s knowledge, any other party thereto is in breach or violation of,
or default under, any Material Contract and no event has occurred or not occurred through the Company’s or any of its Subsidiaries’
action or inaction or, to the Company’s knowledge, the action or inaction of any third party, that with notice or lapse
of time or both would constitute a breach or violation of, or default under, any Material Contract and (iii) the Company and its
Subsidiaries have not received any written claim or notice of default, termination or cancellation under any such Material Contract.
Section 3.18 Insurance.
Except as would not
reasonably be expected to have a Company Material Adverse Effect, (a) all insurance policies and all self-insurance programs and
arrangements relating to the business, assets, liabilities and operations of the Company and its Subsidiaries are in full force
and effect, and (b) the Company has no reason to believe that it or any of its Subsidiaries will not be able to (i) renew its
existing insurance policies as and when such policies expire or (ii) obtain comparable coverage from comparable insurers as may
be necessary to continue its business without a significant increase in cost.
Section 3.19 Opinion
of Financial Advisor.
The Special Committee
has received the written opinion of Merrill Lynch (Asia Pacific) Limited (the “Financial Advisor”), dated as
of the date hereof, to the effect that, as of the date of this Agreement, the Per Share Merger Consideration and Per ADS Merger
Consideration to be received by holders of Shares and ADSs (other than holders of Excluded Shares) is fair, from a financial point
of view, to such holders and a copy of such opinion will promptly be provided to Parent, solely for informational purposes, following
receipt thereof by the Special Committee. It is agreed and understood that such opinion may not be relied on by Parent or Merger
Sub.
Section 3.20 Brokers.
No broker, finder
or investment banker (other than the Financial Advisor and the Strategic Advisor) is entitled to any brokerage, finder’s
or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of the Company. The
Company has furnished to Parent a correct and complete copy of all agreements on behalf of the Company with the Financial Advisor
and the Strategic Advisor pursuant to which such firms would be entitled to any payment relating to the Transactions.
Section 3.21 Takeover
Statute.
The Company is not
a party to any shareholder rights plan or “poison pill” agreement. No “business combination”, “fair
price”, “moratorium”, “control share acquisition” or other similar anti-takeover statute or regulation
save for the CICL or any similar anti-takeover provision in the Company’s memorandum and articles of association (each,
a “Takeover Statute”) is applicable to the Company, the Shares, the Merger or the other Transactions.
Section 3.22 No
Additional Representations.
Except for the representations
and warranties made by the Company in this Article III, neither the Company nor any other person makes any other express or implied
representation or warranty with respect to the Company or any of its Subsidiaries or their respective business, operations, assets,
liabilities, condition (financial or otherwise) or prospects or any information provided to Parent, Merger Sub or any of their
Affiliates or Representatives, notwithstanding the delivery or disclosure to Parent, Merger Sub or any of their Affiliates or
Representatives of any documentation, estimates, projections, forecasts or other information in connection with the Transactions,
and each of Parent and Merger Sub acknowledges the foregoing. Neither the Company nor any other person will have or be subject
to any liability or indemnity obligations to Parent, Merger Sub or any other person resulting from the distribution or disclosure
or failure to distribute or disclose to Parent, Merger Sub or any of their Affiliates or Representatives, or their use of, any
information, unless and to the extent such information is expressly included in the representations and warranties contained in
this Article III.
Article
IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger
Sub hereby, jointly and severally, represent and warrant to the Company that:
Section 4.01 Corporate
Organization.
Each of Parent and
Merger Sub is an exempted company duly incorporated, validly existing and in good standing under the Laws of the Cayman Islands
and has the requisite corporate power and authority and all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted, except where the failure to be so organized, existing or in good standing
or to have such power, authority and governmental approvals would not, individually or in the aggregate, prevent or materially
delay consummation of any of the Transactions by Parent or Merger Sub or otherwise be materially adverse to the ability of Parent
or Merger Sub to perform their material obligations under this Agreement. Parent has heretofore made available to the Company
complete and correct copies of the memorandum and articles of association of Parent and Merger Sub, each as amended to date, and
each as so delivered is in full force and effect.
Section 4.02 Authority
Relative to This Agreement.
(a) Each of
Parent and Merger Sub has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the Transactions. The execution and delivery of this Agreement by Parent and Merger Sub and the consummation
by Parent and Merger Sub of the Transactions have been duly and validly authorized by all necessary corporate action, and no other
corporate proceedings on the part of Parent or Merger Sub are necessary to authorize this Agreement and the Plan of Merger or
to consummate the Transactions (other than the filings, notifications and other obligations and actions described in Section
4.03(b)). This Agreement has been duly and validly executed and delivered by Parent and Merger Sub and, assuming due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding obligation of each of Parent and Merger Sub, enforceable
against each of Parent and Merger Sub in accordance with its terms, subject to the Bankruptcy and Equity Exception.
(b) The representations
and warranties set forth in this Section 4.02 shall be made (i) with respect to the Original Merger Agreement, as of the
Original Execution Date, and (ii) with respect to this Agreement, as of the Execution Date.
Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder
and to consummate the Transactions. The execution and delivery of this Agreement by Parent and Merger Sub and the consummation
by Parent and Merger Sub of the Transactions have been duly and validly authorized by all necessary corporate action, and no other
corporate proceedings on the part of Parent or Merger Sub are necessary to authorize this Agreement and the Plan of Merger or
to consummate the Transactions (other than the filings, notifications and other obligations and actions described in Section 4.03(b)).
This Agreement has been duly and validly executed and delivered by Parent and Merger Sub and, assuming due authorization, execution
and delivery by the Company, constitutes a legal, valid and binding obligation of each of Parent and Merger Sub, enforceable against
each of Parent and Merger Sub in accordance with its terms, subject to the Bankruptcy and Equity Exception.
Section 4.03 No
Conflict; Required Filings and Consents.
(a) The execution
and delivery of this Agreement and the Plan of Merger by Parent and Merger Sub do not, and the performance of this Agreement and
the Plan of Merger by Parent and Merger Sub will not, (i) conflict with or violate the memorandum and articles of association
of either Parent or Merger Sub, (ii) assuming that all consents, approvals, authorizations and other actions described in Section
4.03(b) have been obtained and all filings and obligations described in Section 4.03(b) have been made, conflict with or violate
any Law applicable to Parent or Merger Sub or by which any property or asset of either of them is bound or affected, or (iii)
result in any breach of, or constitute a default (or an event that, with notice or lapse of time or both, would become a default)
under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a
Lien on any property or asset of Parent or Merger Sub pursuant to, any Contract or obligation to which Parent or Merger Sub is
a party or by which Parent or Merger Sub or any property or asset of either of them is bound or affected, except, with respect
to clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults or other occurrences that would not, individually
or in the aggregate, prevent or materially delay consummation of any of the Transactions by Parent or Merger Sub or otherwise
be materially adverse to the ability of Parent and Merger Sub to perform their material obligations under this Agreement.
(b) The execution
and delivery of this Agreement by Parent and Merger Sub do not, and the performance of this Agreement by Parent and Merger Sub
and the consummation by Parent and Merger Sub of the Transactions will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Authority, except (i) for the filings and/or notices pursuant to Section
13 of the Exchange Act and the rules and regulations thereunder, (ii) for compliance with the rules and regulations of NASDAQ,
(iii) for the filing of the Plan of Merger and related documentation with the Registrar of Companies of the Cayman Islands
and publication of notification of the Merger in the Cayman Islands Government Gazette pursuant to the CICL and (iv) for the Requisite
Regulatory Approvals.
(c) Merger Sub has
no secured creditors holding a fixed or floating security interest.
Section 4.04 Capitalization.
(a) The authorized
share capital of Parent consists solely of 1,000,000,000 ordinary shares, consisting of 800,000,000 class A ordinary shares and
200,000,000 class B ordinary shares, par value $0.000001 each. As of the date hereof, (i) no class A ordinary shares of Parent
are issued and outstanding and (ii) 10 class B ordinary shares of Parent are issued and outstanding, which are duly authorized,
validly issued, fully paid and non-assessable, half of which are owned by each of Yili Shengda and Zhongrong Shengda. As of the
Effective Time, (i) approximately 443,179,215 class A ordinary shares of Parent shall be issued and outstanding, which shall be
duly authorized, validly issued, fully paid and non-assessable, approximately 61,776,334, 61,776,335, 80,577,828, 107,438,129,
33,034,220 and 66,068,441 of which shall be owned by Hongtai, Hongzhi, Zhongrong Investment, Hao Ding, Zhengjun Investment and
Ningxia Silkroad, respectively, and the remainder of which shall be owned by Zhongrong Legend; and (ii) 97,518,374 class B ordinary
shares of Parent shall be issued and outstanding, which shall be duly authorized, validly issued, fully paid and non-assessable,
half of which shall be owned by each of Yili Shengda and Zhongrong Shengda. Parent was formed solely for the purpose of engaging
in the transactions contemplated by this Agreement, and it has not conducted any business prior to the date hereof and has no,
and prior to the Effective Time will have no, assets, liabilities or obligations of any nature other than the Equity Commitment
Letters and those incident to its formation and capitalization pursuant to this Agreement and the Transactions.
(b) The authorized
share capital of Merger Sub consists solely of 100,000 ordinary shares, par value $0.01 each. As of the date hereof and as of
immediately prior to the Effective Time, one ordinary share of Merger Sub is and shall be issued and outstanding, which is and
shall be duly authorized, validly issued, fully paid and non-assessable and is and shall be owned by Parent. Merger Sub was formed
solely for the purpose of engaging in the Transactions, and it has not conducted any business prior to the date hereof and has
no, and prior to the Effective Time will have no, assets, liabilities or obligations of any nature other than those incident to
its formation and capitalization and pursuant to this Agreement and the Transactions.
Section 4.05 Available
Funds and Equity Financing.
(a) Parent has delivered
to the Company true and complete copies of executed equity commitment letters from the Sponsors (the “Equity Commitment
Letters”) pursuant to which each of the Sponsors has committed to purchase, or cause the purchase of, for cash, subject
to the terms and conditions thereof, equity securities of Parent, up to the aggregate amount set forth in its Equity Commitment
Letter (the “Equity Financing”). The proceeds of the Equity Financing shall be used to finance the consummation
of the Transactions.
(b) As of the date
hereof, (i) each of the Equity Commitment Letters is in full force and effect and is a legal, valid and binding obligation of
Parent and/or Merger Sub (as applicable and subject to the Bankruptcy and Equity Exception) and, to the knowledge of Parent, the
other parties thereto (subject to the Bankruptcy and Equity Exception) and (ii) none of the Equity Commitment Letters has been
amended or modified and no such amendment or modification (other than as permitted by Section 6.07 or this Section 4.05) is contemplated,
and the respective commitments contained in the Equity Commitment Letters have not been withdrawn or rescinded in any material
respect (other than as permitted by Section 6.07 or this Section 4.05). Assuming (A) the Equity Financing is funded in accordance
with the Equity Commitment Letters and (B) the satisfaction of the conditions to the obligation of Parent and Merger Sub to consummate
the Merger as set forth in Section 7.01 and Section 7.02 or the waiver of such conditions, as of the date hereof, the net proceeds
of the Equity Financing contemplated by the Equity Commitment Letters will be sufficient for Parent and the Surviving Corporation
to pay (1) the Merger Consideration and (2) any other amounts required to be paid in connection with the consummation of
the Transactions upon the terms and conditions contemplated hereby and all related fees and expenses associated therewith. The
Equity Commitment Letters contain all of the conditions precedent to the obligations of the parties thereunder to make the Equity
Financing available to Parent or Merger Sub on the terms and conditions contained therein. As of the date hereof, there are no
side letters or other agreements, Contracts or arrangements (whether written or oral) to which Parent or any of its Affiliates
is a party related to the funding or investing, as applicable, of the full amount of the Equity Financing other than as expressly
set forth in the Equity Commitment Letters. As of the date hereof, no event has occurred that, with or without notice, lapse of
time or both, would constitute a default or breach under the Equity Commitment Letters on the part of Parent or Merger Sub or,
to the knowledge of Parent, any other parties thereto.
Section 4.06 Brokers.
No broker, finder
or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions
based upon arrangements made by or on behalf of Parent or Merger Sub.
Section 4.07 Guarantees.
Assuming the due authorization,
execution and delivery by the Company, each Limited Guarantee is in full force and effect and is a legal, valid and binding obligation
of the Guarantor that executed it, subject to the Bankruptcy and Equity Exception, and no event has occurred that, with or without
notice, lapse of time or both, would constitute a default on the part of such Guarantor under such Limited Guarantee.
Section 4.08 Absence
of Litigation.
To the knowledge of
Parent and Merger Sub, as of the date hereof, (a) there is no material Proceeding pending or threatened against Parent or Merger
Sub or any of their respective Affiliates before any Governmental Authority and (b) neither Parent nor Merger Sub nor any of their
Affiliates is subject to any continuing order of, consent decree, settlement agreement or other similar written agreement with,
or continuing investigation by, any Governmental Authority, or any order, writ, judgment, injunction, decree, determination or
award of any Governmental Authority, in each case that seeks to, or would reasonably be expected to, prevent or materially impair
or delay the consummation of the Merger or other Transactions.
Section 4.09 Ownership
of Company Shares.
As of the date hereof,
other than the Rollover Shares, each of which shall be cancelled without payment of any consideration or distribution therefor
at the Effective Time, none of Parent, Merger Sub, the Rollover Shareholders and the Sponsors nor any of their respective Affiliates
beneficially own (as such term is used in Rule 13d-3 promulgated under the Exchange Act) any Shares or other securities or any
other economic interest (through derivative securities or otherwise) of the Company or any options, warrants or other rights to
acquire Shares or other securities of, or any other economic interest (through derivative securities or otherwise) in the Company.
Section 4.10 Solvency.
Neither Parent nor
Merger Sub is entering into the Transactions contemplated hereby with the intent to hinder, delay or defraud either present or
future creditors. Immediately after giving effect to all of the Transactions contemplated hereby, including the Equity Financing
and the payment of the Merger Consideration and all other amounts required to be paid in connection with the consummation of the
Transactions assuming (a) satisfaction of the conditions to the obligation of Parent and Merger Sub to consummate the Merger as
set forth herein, or the waiver of such conditions and (b) the accuracy of the representations and warranties of the Company set
forth in Article III (for such purposes, the representations and warranties that are qualified as to materiality or “Company
Material Adverse Effect” shall be true and correct in all respects and those not so qualified shall be true and correct
in all material respects), the Surviving Corporation will be solvent (as such term is used under the Laws of the Cayman Islands)
at and immediately after the Effective Time.
Section 4.11 Parent
Group Contracts.
Parent has delivered
to the Company and the Special Committee a true and complete copy of each of: (a) the Consortium Agreement, (b) the Equity Commitment
Letters, (c) the Support Agreement, and (d) the Limited Guarantees (collectively, the “Parent Group Contracts”),
including all amendments thereto or modifications thereof, if any. Other than the Parent Group Contracts, there are no side letters
or other oral or written Contracts, agreements, arrangements or understandings (whether or not legally enforceable) (i) relating
to or entered into in connection with the Transactions between or among Parent, Merger Sub, any Rollover Shareholder, any Sponsor
or any of their respective Affiliates (excluding any agreements among any one or more of the foregoing solely relating to the
Surviving Corporation following the Effective Time), (ii) relating to or entered into in connection with the Transactions between
or among Parent, Merger Sub, any Rollover Shareholder, any Sponsor or any of their respective Affiliates, on the one hand, and
any member of the Company’s management, any members of the Company Board or any of the Company’s shareholders in their
capacities as such, on the other hand, (iii) relating to the operation, governance or management of the Company between or among
Parent, Merger Sub, any Rollover Shareholder, any Sponsor or any of their respective Affiliates, and there have been no such Contracts,
agreements, arrangements or understanding prior to the date of this Agreement, or (iv) pursuant to which any shareholder of the
Company would be entitled to receive consideration of a different amount or nature than the Per Share Merger Consideration or
the Per ADS Merger Consideration or pursuant to which any shareholder of the Company has agreed to vote to approve this Agreement
or the Merger or has agreed to vote against any Superior Proposal and to which, in each case, Parent, Merger Sub, any Rollover
Shareholder, any Sponsor or any of their respective Affiliates is a party.
Section 4.12 Independent
Investigation.
Parent and Merger
Sub have conducted their own independent investigation, review and analysis of the business, operations, assets, liabilities,
results of operations, financial condition and prospects of the Company and its Subsidiaries, which investigation, review and
analysis were performed by Parent, Merger Sub, their respective Affiliates and Representatives. Each of Parent and Merger Sub
acknowledges that as of the date hereof, it, its Affiliates and their respective Representatives have been provided adequate access
to the personnel, properties, facilities and records of the Company and its Subsidiaries for such purpose. In entering into this
Agreement, each of Parent and Merger Sub acknowledges that it has relied solely upon the aforementioned investigation, review
and analysis and not on any statements, representations or opinions of any of the Company, its Affiliates or their respective
Representatives (except for the representations and warranties of the Company set forth in this Agreement and in any certificate
delivered pursuant to this Agreement).
Section 4.13 No
Additional Representations.
Except for the representations
and warranties set forth in this Article IV, neither Parent nor Merger Sub nor any other person on behalf of either of them makes
any other express or implied representation or warranty with respect to Parent or Merger Sub, or their respective business, operations,
assets, liabilities, condition (financial or otherwise) or prospects, notwithstanding the delivery or disclosure to the Company
or any of its Affiliates or Representatives of any documentation, forecasts or other information with respect to any one or more
of the foregoing, and the Company acknowledges the foregoing.
Article
V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.01 Conduct
of Business by the Company Pending the Merger.
(a) The Company covenants
and agrees that, between the date of this Agreement and the Effective Time, except (i) as required by applicable Law, (ii) as
set forth in Section 5.01 of the Company Disclosure Schedule, (iii) as expressly contemplated or permitted by any other provision
of this Agreement or (iv) with the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned,
or delayed), the businesses of the Company and its Subsidiaries shall be conducted in the ordinary course of business and in a
manner consistent with past practice and the Company and each of its Subsidiaries shall use their reasonable best efforts to (A)
preserve intact their existing assets in all material respects, (B) preserve substantially intact their business organization,
(C) keep available the services of their current officers and key employees and (D) maintain and preserve intact in all material
respects their current relationships with customers, suppliers and distributors with which the Company or any of its Subsidiaries
has material business relations.
(b) By way of amplification
and not limitation, except (i) as set forth in Section 5.01 of the Company Disclosure Schedule, (ii) as required by applicable
Law, (iii) as expressly contemplated or permitted by any other provision of this Agreement or (iv) with the prior written
consent of Parent (which consent shall not be unreasonably withheld, conditioned, or delayed), the Company will not and will not
permit its Subsidiaries to:
(i) amend or otherwise
change its memorandum and articles of association or other equivalent organizational documents;
(ii) other than
in connection with the exercise of any Company Options, Company RSs or Company RSUs in accordance with the Share Incentive Plan,
(A) issue, sell, pledge, terminate or dispose of, (B) grant a Lien on or permit a Lien to exist on, or (C) authorize the issuance,
sale, pledge, termination or disposition of, or granting or placing of a Lien on, any share capital or other ownership interests
of the Company or any of its Subsidiaries, or any agreement, contract or instrument amounting to control over, or enabling control
of, the Company or any of its Subsidiaries, or any options, warrants, convertible securities or other rights of any kind to acquire
any share capital or other ownership interest (including any phantom interest) of the Company or any of its Subsidiaries;
(iii) (A) sell,
pledge or dispose of, (B) grant a Lien on or permit a Lien to exist on, or (C) authorize the sale, pledge or disposition of, or
granting or placing of a Lien on, any assets of the Company or any of its Subsidiaries having a current value in excess of $50,000,000,
except in the ordinary course of business and in a manner consistent with past practice;
(iv) declare,
set aside, make or pay any dividend or other distribution, payable in cash, share, property or otherwise, with respect to any
of its share capital, except for dividends by any of the Company’s direct or indirect wholly-owned Subsidiaries to the Company
or any of its other wholly-owned Subsidiaries;
(v) adjust, reclassify,
combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its share capital, in each
case other than in connection with (A) acquisition in connection with the forfeiture of Company Options, Company RSs or Company
RSUs or (B) acquisition in connection with the net exercise of Company Options in accordance with the terms thereof;
(vi) (A)
acquire (including by merger, consolidation or acquisition of share or assets or any other business combination) any corporation,
partnership, other business organization or any division thereof or any assets, except for any such acquisitions for consideration
not exceeding $50,000,000; (B) incur any Indebtedness or issue any debt securities or assume, guarantee or endorse, or otherwise
become responsible for, the obligations of any person, or make any loans or advances or capital contribution to, or investment
in, any person, except (1) for Indebtedness the outstanding amount of which (after deducting the aggregate amount of cash and
cash equivalents held by the Company and its Subsidiaries), does not exceed $200,000,000 or its equivalent in the aggregate for
the Company and its Subsidiaries or (2) under the Company’s or any of its Subsidiaries’ existing credit facilities
as in effect on the date hereof in an aggregate amount not to exceed the maximum amount authorized under the Contracts evidencing
such Indebtedness (including any renewal, extension, refinancing or replacement of such Contracts on substantially the same or
similar terms); (C) authorize, or make any commitment with respect to, any single capital expenditure which is in excess
of $10,000,000 or capital expenditures which are, in the aggregate, in excess of $50,000,000 for the Company and its Subsidiaries
taken as a whole, other than expenditures necessary to maintain existing assets in good repair and working condition, consistent
with past practice; or (D) amend any Contract to effect any matter set forth in this Section
5.01(b)(vi);
(vii) establish
any new Subsidiary;
(viii) engage
in the conduct of any new line of business material to the Company and its Subsidiaries, taken as a whole, outside of the Company’s
existing business segments;
(ix) make any
material changes with respect to accounting policies or procedures materially affecting the reported consolidated assets, liabilities
or results of operations of the Company and its Subsidiaries, except as required by changes in applicable generally accepted accounting
principles or Law;
(x) settle any
Proceeding, other than settlements (A) in the ordinary course of business and consistent with past practice, (B) requiring the
Company and its Subsidiaries to pay monetary damages not exceeding $10,000,000, and (C) not involving the admission of any wrongdoing
by the Company or any of its Subsidiaries;
(xi) enter into
or materially amend or modify, terminate or consent to the termination of any Material Contract (or any Contract that would be
a Material Contract if such Contract had been entered into prior to the date of this Agreement), or amend, waive, modify, terminate
or consent to the termination of the Company’s or any of its Subsidiaries’ material rights thereunder, other than
in the ordinary course of business and consistent with past practice;
(xii) make or
change any material Tax election, materially amend any Tax Return (except as required by applicable Law), enter into any material
closing agreement with respect to Taxes, surrender any right to claim a material refund of Taxes, settle or finally resolve any
material controversy with respect to Taxes or materially change any method of Tax accounting;
(xiii) (A) abandon,
fail to maintain, or allow to lapse, including by failure to pay the required fees in any jurisdiction, or disclaim, dedicate
to the public, sell, assign or grant any security interest in, to or under any material Company Intellectual Property; (B) grant
to any third party any license, or enter into any covenant not to sue, with respect to any material Company Intellectual Property,
except non-exclusive licenses in the ordinary course of business consistent with past practice; (C) develop, create or invent
any Intellectual Property jointly with any third party, except under existing arrangements or in the ordinary course of business;
(D) disclose or allow to be disclosed any material confidential information or material confidential Company Intellectual
Property to any person, other than employees of the Company or its Subsidiaries that are subject to a confidentiality or non-disclosure
covenant protecting against further disclosure thereof, except under existing arrangements or in the ordinary course of business
consistent with past practice; or (D) fail to notify Parent promptly of any material infringement, misappropriation, unauthorized
disclosure or other violation of or conflict with any material Company Intellectual Property of which the Company or any of its
Subsidiaries becomes aware and to reasonably consult with Parent regarding the actions (if any) to take to protect such Company
Intellectual Property;
(xiv) except as
required pursuant to existing written plans or Contracts in effect as of the date hereof, or as otherwise required by applicable
Law or carried out in the ordinary course of business consistent with past practice, (A) enter into any new employment or compensatory
agreements (including the renewal of any consulting agreement) with any executive officer or director of the Company or any of
its wholly-owned Subsidiaries, (B) increase the compensation, bonus or pension, welfare, severance or other benefits of,
pay any bonus to, or make any new equity awards to any director, employee or consultant of the Company or any of its Subsidiaries,
(C) establish, adopt, materially amend or terminate any Plan (except as required by Law) or materially amend the terms of any
outstanding equity-based awards (except as contemplated by this Agreement), (D) take any action to accelerate the vesting or payment,
or fund or in any other way secure the payment, of material compensation or benefits under any Plan, to the extent not already
required in any such Plan or contemplated by this Agreement, (E) materially change any actuarial or other assumptions used to
calculate funding obligations with respect to any Plan or to materially change the manner in which contributions to such plans
are made or the basis on which such contributions are determined, except as may be required by GAAP, (F) forgive any loans to
directors, officers or employees of the Company or any of its Subsidiaries, or (G) enter into any collective bargaining agreement
or similar labor agreement;
(xv) fail to keep
in force material insurance policies providing insurance coverage with respect to the assets, operations and activities of the
Company or any of its Subsidiaries as are currently in effect;
(xvi) take any
action that is intended, or would reasonably be expected to, result in any of the conditions to the Merger set forth in Article
VII not being satisfied;
(xvii) fail to
make in a timely manner any filings with the SEC required under the Securities Act or the Exchange Act or the rules and regulations
promulgated thereunder; or
(xviii) agree,
authorize, commit, or enter into any formal agreement to do any of the foregoing.
Section 5.02 Conduct
of Business by Parent and Merger Sub Pending the Merger.
Each
of Parent and Merger Sub agrees that, from the date hereof until the earlier of the Effective Time and termination of this Agreement
pursuant to Article VIII, it shall not: (a) take any action that
is intended to or would reasonably be likely to result in any of the conditions to effecting the Merger becoming incapable of
being satisfied; or (b) take any action or fail to take any action that would, or would be reasonably likely to, individually
or in the aggregate, prevent, materially delay or materially impede the ability of Parent or Merger Sub to consummate the Merger
or the other Transactions in accordance with the terms of this Agreement.
Section 5.03 No
Control of Other Party’s Business.
Except as otherwise
expressly provided herein, nothing contained in this Agreement is intended to give Parent or Merger Sub, directly or indirectly,
the right to control or direct the Company’s or the Company’s Subsidiaries’ operations prior to the Effective
Time, and nothing contained in this Agreement is intended to give the Company, directly or indirectly, the right to control or
direct Parent’s or Merger Sub’s operations. Prior to the Effective Time, each of Parent, Merger Sub and the Company
shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its
Subsidiaries respective operations.
Article
VI
ADDITIONAL AGREEMENTS
Section 6.01 Proxy
Statement and Schedule 13E-3.
(a) As soon as practicable
following the date hereof, the Company with the assistance of Parent and Merger Sub, shall prepare the Proxy Statement. Concurrently
with the preparation of the Proxy Statement, the Company, Parent and Merger Sub shall jointly prepare and cause to be filed with
the SEC a Rule 13e-3 transaction statement on Schedule 13E-3 relating to the authorization and approval of this Agreement, the
Plan of Merger and the Transactions by the shareholders of the Company (such Schedule 13E-3, as amended or supplemented, being
referred to herein as the “Schedule 13E-3”). Each of the Company, Parent and Merger Sub shall use its reasonable
best efforts to ensure that the Proxy Statement and the Schedule 13E-3 comply in all material respects with the requirements of
the Exchange Act and the rules and regulations promulgated thereunder. Each of the Company, Parent and Merger Sub shall use its
reasonable best efforts to respond promptly to any comments of the SEC with respect to the Proxy Statement and the Schedule 13E-3.
Each of Parent and Merger Sub shall provide reasonable assistance and cooperation to the Company in the preparation, filing and
distribution of the Proxy Statement, the Schedule 13E-3 and the resolution of comments from the SEC. Upon its receipt of any comments
from the SEC or its staff or any request from the SEC or its staff for amendments or supplements to the Proxy Statement and the
Schedule 13E-3, the Company shall promptly notify Parent and Merger Sub and in any event within 24 hours and shall provide Parent
with copies of all correspondence between the Company and its representatives, on the one hand, and the SEC and its staff, on
the other hand. Prior to filing the Schedule 13E-3 or mailing the Proxy Statement (or in each case, any amendment or supplement
thereto) or responding to any comments of the SEC with respect thereto, the Company (i) shall provide Parent and Merger Sub with
a reasonable period of time to review and comment on such document or response and (ii) shall consider in good faith all
additions, deletions or changes reasonably proposed by Parent in good faith. If at any time prior to the Shareholders’ Meeting,
any information relating to the Company, Parent, Merger Sub or any of their respective Affiliates, officers or directors, is discovered
by the Company, Parent or Merger Sub that should be set forth in an amendment or supplement to the Proxy Statement and/or the
Schedule 13E-3 so that the Proxy Statement and/or Schedule 13E-3 shall not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading, the party that discovers such information shall promptly notify
the other parties hereto and the Company shall file an appropriate amendment or supplement describing such information with the
SEC and, to the extent required by applicable Law, disseminate to the shareholders of the Company.
(b) Each of Parent,
Merger Sub and the Company agrees, as to itself and its respective Affiliates or Representatives, that none of the information
supplied or to be supplied by Parent, Merger Sub or the Company, as applicable, expressly for inclusion or incorporation by reference
in the Proxy Statement, the Schedule 13E-3 or any other documents filed or to be filed with the SEC in connection with the Transactions,
will, as of the time such documents (or any amendment thereof or supplement thereto) are mailed to the holders of Shares and at
the time of the Shareholders’ Meeting, contain any untrue statement of a material fact, or omit to state any material fact
required to be stated therein in order to make the statements therein, in light of the circumstances under which they were made,
not misleading. Each of Parent, Merger Sub and the Company further agrees that all documents that such party is responsible for
filing with the SEC in connection with the Merger will comply as to form and substance in all material respects with the applicable
requirements of the Securities Act, the Exchange Act and any other applicable Laws and that all information supplied by such party
for inclusion or incorporation by reference in such document will not contain any untrue statement of a material fact, or omit
to state any material fact required to be stated therein in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. If at any time prior to the Effective Time, any event or circumstance relating to
Parent, Merger Sub or the Company, or their respective officers or directors, should be discovered that should be set forth in
an amendment or a supplement to the Proxy Statement or the Schedule 13E-3 so that such document would not include any misstatement
of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading, the party discovering such event or circumstance shall promptly inform the other parties
and an appropriate amendment or supplement describing such event or circumstance shall be promptly filed with the SEC and disseminated
to the shareholders of the Company to the extent required by Law; provided that prior to such filing, the Company and Parent,
as the case may be, shall consult with each other with respect to such amendment or supplement and shall afford the other party
and their Representatives a reasonable opportunity to comment thereon.
(c) At the Shareholders’
Meeting, and any other meeting of the shareholders of the Company called to seek the Company Shareholder Approval or in any other
circumstances upon which a vote, consent or other approval (including by written consent) with respect to this Agreement, the
Plan of Merger or the Transactions contemplated herein is sought, Parent shall vote, and shall cause the Rollover Shareholders
and their respective Affiliates to vote, or cause to be voted, all Shares held directly or indirectly by the Rollover Shareholders
and their respective Affiliates as of the date hereof in favor of the authorization and approval of this Agreement, the Plan of
Merger and the Transactions.
Section 6.02 Company
Shareholders’ Meeting.
(a) As soon as practicable
after the SEC confirms that it has no further comments on the Schedule 13E-3 but in any event no later than five days after such
confirmation, the Company shall (i) establish a record date for determining shareholders of the Company entitled to vote at the
Shareholders’ Meeting (the “Record Date”) and shall not change such Record Date or establish a different
record date for the Shareholders’ Meeting without the prior written consent of Parent, unless required to do so by applicable
Laws; and in the event that the date of the Shareholders’ Meeting as originally called is for any reason adjourned or postponed
or otherwise delayed, the Company agrees that unless Parent shall have otherwise approved in writing or as required by applicable
Laws or stock exchange requirement, the Company shall, if possible, implement such adjournment or postponement or other delay
in such a way that the Company does not establish a new Record Date for the Shareholders’ Meeting, as so adjourned, postponed
or delayed, (ii) mail or cause to be mailed the Proxy Statement to the holders of Shares (and concurrently furnish the Proxy Statement
under Form 6-K), including Shares represented by ADSs, as of the Record Date, for the purpose of voting upon the authorization
and approval of this Agreement, the Plan of Merger and the Transactions and (iii) instruct the Depositary to (A) fix the
Record Date as the record date for determining the holders of ADSs who shall be entitled to give instructions for the exercise
of the voting rights pertaining to the Shares represented by ADSs (the “Record ADS Holders”), (B) provide all
proxy solicitation materials to all Record ADS Holders and (C) vote all Shares represented by ADSs in accordance with the instructions
of such corresponding Record ADS Holders. Subject to Section 6.02(b), without the consent of Parent, the authorization and approval
of this Agreement, the Plan of Merger and the Transactions, are the only matters (other than procedural matters) that shall be
proposed to be voted upon by the shareholders of the Company at the Shareholders’ Meeting.
(b) No later than
30 days after the date of mailing the Proxy Statement, the Company shall hold the Shareholders’ Meeting. Subject to Section
6.04, (i) the Company Board shall recommend to holders of the Shares that they authorize and approve this Agreement, the Plan
of Merger and the Transactions, and shall include such recommendation in the Proxy Statement and (ii) the Company shall use its
reasonable best efforts to solicit from its shareholders proxies in favor of the authorization and approval of this Agreement,
the Plan of Merger and the Transactions and shall take all other action necessary or advisable to secure the Requisite Company
Vote. Notwithstanding anything to the contrary contained in this Agreement, unless this Agreement is validly terminated in accordance
with Section 8.03(c), the Company’s obligations pursuant to this Section 6.02 shall not be limited or otherwise affected
by the commencement, public proposal, public disclosure or communication to the Company or any other person of any Competing Transaction
or by any Change in the Company Recommendation.
(c) Notwithstanding
Section 6.02(b), after consultation in good faith with Parent, the Company may recommend the adjournment of the Shareholders’
Meeting to its shareholders (i) to the extent necessary to ensure that any required supplement or amendment to the Proxy Statement
is provided to the holders of Shares within a reasonable amount of time in advance of the Shareholders’ Meeting, (ii) as
otherwise required by applicable Law, (iii) if as of the time for which the Shareholders’ Meeting is scheduled as set forth
in the Proxy Statement, there are insufficient Shares represented (in person or by proxy) to constitute a quorum necessary to
conduct the business of the Shareholders’ Meeting or (iv) if an Intervening Event has occurred and the Company Board (acting
upon the recommendation of the Special Committee) or the Special Committee determines, in its good faith judgment upon advice
by outside legal counsel engaged by the Special Committee, that the failure to take such action would reasonably be expected to
breach its fiduciary duties under applicable Law. If the Shareholders’ Meeting is adjourned, the Company shall convene and
hold the Shareholders’ Meeting as soon as reasonably practicable thereafter, subject to the immediately preceding sentence;
provided that the Company shall not recommend to its shareholders the adjournment of the Shareholders’ Meeting to
a date that is less than five Business Days prior to the Termination Date.
(d) Parent may request
that the Company adjourn or postpone the Shareholders’ Meeting for up to 90 days (but in any event no later than five Business
Days prior to the Termination Date), (i) if as of the time for which the Shareholders’ Meeting is originally scheduled (as
set forth in the Proxy Statement) there are insufficient Shares represented (either in person or by proxy) (A) to constitute a
quorum necessary to conduct the business of the Shareholders’ Meeting or (B) voting in favor of approval of this Agreement
and the Transactions to obtain the Requisite Company Vote, or (ii) in order to allow reasonable additional time for (A) the filing
and mailing of, at the reasonable request of Parent, any supplemental or amended disclosure and (B) such supplemental or amended
disclosure to be disseminated and reviewed by the Company’s shareholders prior to the Shareholders’ Meeting, in which
event the Company shall, in each case, cause the Shareholders’ Meeting to be postponed or adjourned in accordance with Parent’s
request.
Section 6.03 Access
to Information.
(a) From the date
hereof until the earlier of the Effective Time and termination of this Agreement pursuant to Article VIII and subject to applicable
Law and the Confidentiality Agreements, upon reasonable advance notice from Parent, the Company shall (i) provide to Parent (and
Parent’s officers, directors, employees, accountants, consultants, financial and legal advisors, agents, financing sources
(including potential sources) and other authorized representatives of Parent and such other parties, collectively, “Representatives”)
reasonable access during normal business hours to the offices, properties, books and records of the Company or any of its Subsidiaries,
(ii) furnish to Parent and its Representatives such existing financial and operating data and other existing information as such
persons may reasonably request in writing and (iii) instruct its and its Subsidiaries’ employees, legal counsel, financial
advisors, auditors and other Representatives to reasonably cooperate with Parent and its Representatives in their investigation.
Notwithstanding the foregoing, any such investigation shall be conducted in such a manner as not to interfere unreasonably with
the business or operations of the Company or its Subsidiaries or otherwise result in any significant interference with the timely
discharge by the employees of the Company or its Subsidiaries of their duties.
(b) Notwithstanding
anything to the contrary in Section 6.03(a), nothing in this Agreement shall require the Company or any of its Subsidiaries to
provide Parent or any of its Representatives with access to any books, records, documents or other information to the extent that
(i) such books, records, documents or other information is subject to any confidentiality agreement with a Third Party; provided
that at the request of Parent, the Company shall use its reasonable best efforts to obtain a waiver from such Third Party,
(ii) the disclosure of such books, records, documents or other information would result in the loss of attorney-client or other
legal privilege or (iii) the disclosure of such books, records, documents or other information is prohibited by applicable Law.
(c) All information
provided or made available pursuant to this Section 6.03 to Parent or its Representatives shall be subject to the Confidentiality
Agreements.
(d) No investigation
pursuant to this Section 6.03 shall affect any representation or warranty in this Agreement of any party hereto or any condition
to the obligations of the parties hereto.
Section 6.04 No
Solicitation of Transactions.
(a) Until the earlier
of the Effective Time and termination of this Agreement pursuant to Article VIII, except as set forth in Section 6.04(b), the
Company agrees that neither it nor any of its Subsidiaries, and that it will cause its and its Subsidiaries’ Representatives
(including any investment banker, attorney or accountant retained by the Company or any of its Subsidiaries), not to, in each
case, directly or indirectly, (i) solicit, initiate or purposefully encourage (including by way of furnishing nonpublic information
concerning the Company or any of its Subsidiaries), or take any other action to purposefully facilitate, any inquiries or the
making of any proposal or offer (including any proposal or offer to its shareholders) that constitutes, or that in the Company’s
good faith judgment could reasonably be expected to lead to, a Competing Transaction, (ii) enter into, maintain or continue discussions
or negotiations with, or provide any nonpublic information concerning the Company or any of its Subsidiaries to, any Third Party
in furtherance of such inquiries or to obtain such proposal or offer for a Competing Transaction or any proposal or offer that
in the Company’s good faith judgment could reasonably be expected to lead to a Competing Transaction, (iii) agree to, approve,
endorse, recommend or consummate any Competing Transaction or enter into any letter of intent or Contract (other than an Acceptable
Confidentiality Agreement) or commitment contemplating or otherwise relating to any Competing Transaction, (iv) grant any waiver,
amendment or release under any standstill, confidentiality or similar agreement or Takeover Statutes (and the Company shall promptly
take all action necessary to terminate or cause to be terminated any such waiver previously granted with respect to any provision
of any such confidentiality, standstill or similar agreement or Takeover Statute and to enforce each such confidentiality, standstill
and similar agreement) or (v) authorize or permit any of the Representatives of the Company or any of its Subsidiaries to
take any action set forth in clauses (i) – (iv) of this Section 6.04(a). The Company shall notify Parent as promptly as
practicable (and in any event within two Business Days after the Company has knowledge thereof), orally and in writing, of any
proposal or offer, or any inquiry or contact with any person, regarding a Competing Transaction or that in the Company’s
good faith judgment could reasonably be expected to lead to a Competing Transaction, specifying (x) the material terms and conditions
thereof (including material amendments or proposed material amendments) and providing, if applicable, copies of any written requests,
proposals or offers, including proposed agreements, and (y) the identity of the party making such proposal or offer or inquiry
or contact. The Company shall keep Parent informed, on a reasonably current basis (and in any event within two Business Days of
the occurrence of any material changes, developments, discussions or negotiations) of the status and terms of any such proposal,
offer, inquiry, contact or request and of any material changes in the status and terms of any such proposal, offer, inquiry, contact
or request (including the material terms and conditions thereof). Without limiting the foregoing, the Company shall provide Parent
with 24 hours prior notice (or such lesser prior notice as is provided to the members of the Company Board or members of the Special
Committee) of any meeting of the Company Board or Special Committee at which the Company Board or Special Committee, as applicable,
is reasonably expected to consider any Competing Transaction. The Company shall, and shall cause its Subsidiaries and the Representatives
of the Company and its Subsidiaries to, immediately cease and terminate all existing discussions or negotiations with any parties
conducted heretofore with respect to a Competing Transaction. The Company shall not, and shall cause its Subsidiaries not to,
enter into any confidentiality agreement with any Third Party subsequent to the date hereof which prohibits the Company from providing
such information to Parent.
(b) Notwithstanding
anything to the contrary in Section 6.04(a), at any time prior to the receipt of the Requisite Company Vote, following the receipt
of an unsolicited, written, bona fide proposal or offer regarding a Competing Transaction that was not obtained in violation of
this Section 6.04 (other than any immaterial non-compliance that does not adversely affect Parent or Merger Sub), the Company
and its Representatives may, with respect to such proposal or offer and acting only upon the recommendation of the Special Committee:
(i) contact the
person who has made such proposal or offer to clarify and understand the terms and conditions thereof to the extent the Special
Committee shall have determined in good faith that such contact is necessary to determine whether such proposal or offer constitutes
a Superior Proposal or could reasonably be expected to result in a Superior Proposal;
(ii) provide information
in response to the request of the person who has made such proposal or offer, if and only if, prior to providing such information,
the Company has received from the person so requesting such information an executed Acceptable Confidentiality Agreement; provided
that the Company shall concurrently make available to Parent any information concerning the Company and the Subsidiaries that
is provided to any such person and that was not previously made available to Parent or its Representatives; and
(iii) engage or
participate in any discussions or negotiations with the person who has made such proposal or offer;
provided that
prior to taking any actions described in clause (ii) or (iii), the Company Board (acting only upon recommendation of the Special
Committee) or the Special Committee, has (A) determined, in its good faith judgment, after consultation with its financial
advisor and outside legal counsel, that such proposal or offer constitutes or could reasonably be expected to result in a Superior
Proposal, (B) determined, in its good faith judgment, after consultation with its financial advisor and outside legal counsel,
that, in light of such Superior Proposal, failure to take such action would be inconsistent with its fiduciary duties under applicable
Law and (C) provided written notice to Parent at least two Business Days prior to taking any such action.
(c) Except as set
forth in Section 6.04(d), neither the Company Board nor any committee thereof shall (i) (A) change, withhold, withdraw, qualify
or modify (or publicly propose to change, withhold, withdraw, qualify or modify), in a manner adverse to Parent or Merger Sub,
the Company Recommendation, (B) fail to include the Company Recommendation in the Proxy Statement, (C) adopt, approve or recommend,
or publicly propose to adopt, approve or recommend to the shareholders of the Company, a Competing Transaction, (D) if a tender
offer or exchange offer that constitutes a Competing Transaction is commenced, fail to publicly recommend against acceptance of
such tender offer or exchange offer by the Company shareholders (including, for these purposes, by disclosing that it is taking
no position with respect to the acceptance of such tender offer or exchange offer by its shareholders, which shall constitute
a failure to recommend against acceptance of such tender offer or exchange offer; provided that a customary “stop,
look and listen” communication by the Company Board pursuant to Rule 14d−9(f) of the Exchange Act or a statement that
the Company Board has received and is currently evaluating such Competing Transaction shall not be prohibited or be deemed to
be a Change in the Company Recommendation) within 10 Business Days after the commencement thereof, (E) fail to recommend against
any Competing Transaction subject to Regulation 14D under the Exchange Act in a Solicitation/Recommendation Statement on Schedule
14D-9 within 10 Business Days after the commencement thereof or (F) fail to publicly reaffirm the Company Recommendation
following any Competing Transaction having been publicly made, proposed or communicated (and not publicly withdrawn) within 10
Business Days after Parent so requests in writing; provided that Parent may not make such request more than one time with
respect to any given Competing Transaction unless there shall have been an additional public announcement with respect to such
Competing Transaction (any of the foregoing, a “Change in the Company Recommendation”) or (ii) cause or permit
the Company or any of its Subsidiaries to enter into any letter of intent, memorandum of understanding, agreement in principle,
merger agreement, acquisition agreement or other or similar document or Contract with respect to any Competing Transaction other
than an Acceptable Confidentiality Agreement entered into in compliance with Section 6.04(b) (an “Alternative Acquisition
Agreement”).
(d) Notwithstanding
anything to the contrary set forth in this Agreement, from the date hereof and at any time prior to the receipt of the Requisite
Company Vote, if the Company has received a bona fide written proposal or offer with respect to a Competing Transaction that was
not obtained in violation of Section 6.04 (other than any immaterial non-compliance that does not adversely affect Parent or Merger
Sub) and the Company Board (acting only upon the recommendation of the Special Committee) or the Special Committee determines
in its good faith judgment (after consultation with its financial advisor and outside legal counsel), that such proposal or offer
constitutes a Superior Proposal and failure to make a Change in the Company Recommendation with respect to such Superior Proposal
would be inconsistent with its fiduciary duties under applicable Law, the Company Board (acting only upon the recommendation of
the Special Committee) or the Special Committee (to the extent it is within the authority of the Special Committee) may effect
a Change in the Company Recommendation and/or authorize the Company to enter into an Alternative Acquisition Agreement with respect
to such Superior Proposal but only (i) if the Company shall have complied with the requirements of Section 6.04(a) and Section
6.04(b) with respect to such proposal or offer (ii) after (A) providing at least five Business Days’ (the “Superior
Proposal Notice Period”) written notice to Parent (a “Notice of Superior Proposal”) advising Parent
that the Company Board or the Special Committee, as applicable, has received a Superior Proposal, specifying the material terms
and conditions of such Superior Proposal (and providing any proposed agreements related thereto), identifying the person making
such Superior Proposal and indicating that the Company Board or the Special Committee (to the extent it is within the authority
of the Special Committee), as applicable, intends to effect a Change in the Company Recommendation and the manner in which it
intends (or may intend) to do so; it being understood that the Notice of Superior Proposal or any amendment or update thereto
or the determination to so deliver such notice shall not constitute a Change in the Company Recommendation, (B) negotiating with
and causing its financial and legal advisors to negotiate with Parent, Merger Sub and their respective Representatives in good
faith (to the extent Parent desires to negotiate) to make such adjustments in the terms and conditions of this Agreement and the
Equity Financing, so that such Third-Party proposal or offer would cease to constitute a Superior Proposal, and (C) permitting
Parent and its Representatives to make a presentation to the Company Board and the Special Committee regarding this Agreement,
the Equity Financing and any adjustments with respect thereto (to the extent Parent desires to make such presentation); provided
that any material modifications to such Third-Party proposal or offer that the Company Board or the Special Committee, as
applicable, has determined to be a Superior Proposal shall be deemed a new Superior Proposal and the Company shall be required
to again comply with the requirements of this Section 6.04, provided, further, that with respect to such new Superior Proposal,
the Superior Proposal Notice Period shall be deemed to be a three Business Day period rather than the five Business Day period
first described above and (iii) following the end of such five Business Day period or three Business Day period (as applicable),
the Company Board (acting only upon the recommendation of the Special Committee) or the Special Committee shall have determined
in its good faith judgment (after consultation with its financial advisor and outside legal counsel) that taking into account
any changes to this Agreement and the Equity Financing proposed by Parent and Merger Sub in response to the Notice of Superior
Proposal or otherwise, that the proposal or offer with respect to the Competing Transaction giving rise to the Notice of Superior
Proposal continues to constitute a Superior Proposal.
(e) Notwithstanding
anything to the contrary set forth in this Agreement, from the date hereof and at any time prior to the receipt of the Requisite
Company Vote, if an Intervening Event has occurred and the Company Board (acting upon the recommendation of the Special Committee)
or the Special Committee determines, in its good faith judgment upon advice by outside legal counsel engaged by the Special Committee,
that the failure to take such action would reasonably be expected to breach its fiduciary duties under applicable Law, the Company
Board (acting upon the recommendation of the Special Committee) or the Special Committee may effect a Change in the Company Recommendation.
(f) A “Competing
Transaction” means any of the following (other than the Transactions): (i) any merger, consolidation, share exchange,
business combination, scheme of arrangement, amalgamation, recapitalization, liquidation, dissolution or other similar transaction
involving the Company or any of its Subsidiaries whose assets, individually or in the aggregate, constitute 15% or more of the
consolidated assets of the Company or to which 15% or more of the total revenue or net income of the Company are attributable,
(ii) any sale, lease, exchange, transfer or other disposition of assets or businesses that constitute or represent 15% or more
of the total revenue, net income or assets of the Company and its Subsidiaries, taken as a whole, (iii) any sale, exchange,
transfer or other disposition of 15% or more of any class of equity securities of the Company, or securities convertible into
or exchangeable for 15% or more of any class of equity securities of the Company, (iv) any tender offer or exchange offer that,
if consummated, would result in any person beneficially owning 15% or more of any class of equity securities of the Company, (v)
any combination of the foregoing.
(g) An “Intervening
Event” means a material event, development or change with respect to the Company and its Subsidiaries or the business
of the Company and its Subsidiaries, that (i) is unknown by the Company Board and the Special Committee as of or prior to the
date hereof and (ii) occurs, arises or becomes known to the Company Board or the Special Committee after the date hereof and on
or prior to the receipt of the Requisite Company Vote; provided that the receipt by the Company of a Competing Transaction
or Superior Proposal will not be deemed to constitute an Intervening Event.
(h) A “Superior
Proposal” means a bona fide written proposal or offer with respect to a Competing Transaction, which was not obtained
in violation of Section 6.04, that would result in any person (or its shareholders, members or other equity owners) becoming the
beneficial owner, directly or indirectly, of more than 50% of the assets (on a consolidated basis), or more than 50% of the total
voting power of the equity securities, of the Company that the Company Board (acting only upon the recommendation of the Special
Committee) or the Special Committee has determined in its good faith judgment (after consultation with its financial advisor and
outside legal counsel): (A) is reasonably likely to be consummated in accordance with its terms without significant delay, taking
into account all legal, financial and regulatory aspects of the proposal (including financing, regulatory or other consents and
approvals, shareholder litigation, the identity of the person making the proposal, breakup or termination fee and expense reimbursement
provisions, expected timing, risk and likelihood of consummation and other relevant events and circumstances) and (B) would, if
consummated, result in a transaction more favorable to the Company’s shareholders (other than the Rollover Shareholders)
from a financial point of view than the Transactions; provided that no offer or proposal shall be deemed to be a “Superior
Proposal” if any financing required to consummate the transaction contemplated by such offer or proposal is not fully committed
or if the receipt of any such financing is a condition to the consummation of such transaction, or if the Company’s recourse
in the event such transaction is not consummated because of the failure to obtain financing is less favorable to the Company in
any material respect than the Company’s recourse in such an event hereunder.
(i) Prior to the
termination of this Agreement pursuant to Article VIII, the Company shall not submit to the vote of its shareholders any Competing
Transaction or enter into any Alternative Acquisition Agreement or propose to do so.
(j) Nothing contained
in this Section 6.04 shall be deemed to prohibit the Company, the Company Board or the Special Committee from (i) complying with
its disclosure obligations under U.S. federal or state or non-U.S. Law, including (A) disclosure of factual information regarding
the business, financial condition or results of operations of the Company or (B) taking and disclosing to its shareholders a position
contemplated by Rule 14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation M-A promulgated under the Exchange Act (or any similar
communication to shareholders in connection with the making or amendment of a tender offer or exchange offer); provided
that any such disclosure (other than a “stop, look and listen” communication of the type contemplated by Rule 14d-9(f)
under the Exchange Act or a statement that the Company Board or the Special Committee has received and is currently evaluating
such Competing Transaction) that does not include an express rejection of any applicable Competing Transaction or an express reaffirmation
of its recommendation in favor of the transactions contemplated by this Agreement shall be deemed to be a Change in the Company
Recommendation or (ii) making any “stop-look-and-listen” communication of the type contemplated by Rule 14d-9(f) under
the Exchange Act.
Section 6.05 Directors’
and Officers’ Indemnification and Insurance.
(a) The indemnification,
advancement and exculpation provisions of the indemnification agreements by and among the Company and its directors and certain
executive officers as in effect at the Effective Time shall survive the Merger and shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that would adversely affect the rights thereunder of
the current or former directors or officers of the Company or any of its Subsidiaries. The memorandum and articles of association
of the Surviving Corporation shall contain provisions no less favorable to the intended beneficiaries with respect to exculpation
and indemnification of liability and advancement of expenses than are set forth in the memorandum and articles of association
of the Company as in effect on the date hereof, and Parent shall cause such provisions not be amended, repealed or otherwise modified
for a period of six years from the Effective Time in any manner that would affect adversely the rights thereunder of individuals
who, at or prior to the Effective Time, were directors, officers, employees, fiduciaries or agents of the Company, unless such
modification shall be required by Law. From and after the Effective Time, any agreement of any Indemnified Party with the Company
or any of its Subsidiaries regarding exculpation or indemnification of liability or advancement of expenses shall be assumed by
the Surviving Corporation, shall survive the Merger and shall continue in full force and effect in accordance with its terms.
(b) The Surviving
Corporation shall, and Parent shall cause the Surviving Corporation to, maintain in effect for six years from the Effective Time
the current directors’ and officers’ liability insurance policies maintained by the Company with respect to matters
occurring prior to the Effective Time, including acts or omissions occurring in connection with this Agreement and the consummation
of the Transactions (the parties covered thereby, the “Indemnified Parties”) on terms with respect to coverage
and amount no less favorable to the Indemnified Parties than those in effect as of the Effective Time; provided that the
Surviving Corporation may substitute therefor policies of at least the same coverage containing terms, conditions, retentions
and limits of liability that are no less favorable than those provided under the Company’s current policies; provided,
further, that in no event shall the Surviving Corporation be required to expend pursuant to this Section 6.05(b) more than an
amount per year equal to 300% of current annual premiums paid by the Company for such insurance, and if the cost of such insurance
policy exceeds such amount, then the Surviving Corporation shall obtain a policy with the greatest coverage for a cost not exceeding
such amount. In addition, the Company may and, at Parent’s request, the Company shall, purchase a six-year “tail”
prepaid policy prior to the Effective Time on terms, conditions, retentions and limits of liability no less advantageous to the
Indemnified Parties than the existing directors’ and officers’ liability insurance maintained by the Company. If such
“tail” prepaid policies have been obtained by the Company prior to the Effective Time, the Surviving Corporation shall,
and Parent shall cause the Surviving Corporation to, maintain such policies in full force and effect, and continue to honor the
respective obligations thereunder, and all other obligations of Parent or Surviving Corporation under this Section 6.05(b) shall
terminate.
(c) Subject to the
terms and conditions of this Section 6.05, from and after the Effective Time, the Surviving Corporation shall comply, and Parent
shall cause the Surviving Corporation to comply, with all of the Company’s obligations, and each of the Surviving Corporation
and Parent shall cause its Subsidiaries to comply with their respective obligations to indemnify and hold harmless (including
any obligations to advance funds for expenses) (i) the Indemnified Parties against any and all costs or expenses (including reasonable
attorneys’ fees and expenses), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement in
connection with any actual or threatened claim, action, suit, proceeding or investigation, whether civil, criminal, administrative
or investigative (“Damages”), arising out of, relating to or in connection with (A) the fact that an Indemnified
Party is or was a director, officer or employee of the Company or any of its Subsidiaries or (B) any acts or omissions occurring
or alleged to have occurred (including acts or omissions with respect to the approval of this Agreement or the Transactions or
arising out of or pertaining to the Transactions and actions to enforce this provision or any other indemnification or advancement
right of any Indemnified Party) prior to or at the Effective Time, to the extent provided under the Company’s or such Subsidiaries’
respective organizational and governing documents or agreements in effect on the date hereof (true and complete copies of which
shall have been delivered to Parent prior to the date hereof) and to the fullest extent permitted by the CICL or any other applicable
Law; provided that such indemnification shall be subject to any limitation imposed from time to time under applicable Law
and (ii) such persons against any and all Damages arising out of acts or omissions in such persons’ official capacity as
an officer, director or other fiduciary of the Company or any of its Subsidiary if such service was at the request or for the
benefit of the Company or any of its Subsidiaries.
(d) Upon being served
with any summons, citation, subpoena, complaint, indictment, information, or other document relating to any Proceeding which may
result in the payment or advancement of any amounts under Section 6.05(c), the organizational and governing documents of the Company
or any of its Subsidiaries, or any existing indemnification agreements, the person seeking indemnification shall notify the Surviving
Corporation promptly, but in all events no later than the earlier of (i) five days after actual receipt, and (ii) as soon as necessary
after actual receipt to prevent the Surviving Corporation or any of its Subsidiaries from being materially and adversely prejudiced
by late notice. The Surviving Corporation (or a Subsidiary nominated by it) shall have the right to participate in any such Proceeding
and, at its option, assume the defense of such Proceeding. The person seeking indemnification shall have the right to effectively
participate in the defense and/or settlement of such Proceeding, including receiving copies of all correspondence and participating
in all meetings and teleconferences concerning the Proceeding. In the event the Surviving Corporation (or a Subsidiary nominated
by it) assumes the defense of any Proceeding pursuant to this Section 6.05(d), neither the Surviving Corporation nor any of its
Subsidiaries shall be liable to the person seeking indemnification for any fees of counsel subsequently incurred by such person
with respect to the same Proceeding.
(e) In the event
the Company or the Surviving Corporation or any of their respective successors or assigns (i) consolidates with or merges into
any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers
all or substantially all of its properties and assets to any person, then, and in each such case, proper provision shall be made
so that the successors and assigns of the Company or the Surviving Corporation, as the case may be, or at Parent’s option,
Parent, shall assume the obligations set forth in this Section 6.05.
(f) The agreements
and covenants contained in this Section 6.05 shall be in addition to any other rights an Indemnified Party may have under the
memorandum and articles of association of the Company or any of its Subsidiaries (or equivalent constitutional documents), or
any agreement between an Indemnified Party and the Company or any of its Subsidiaries, under the CICL or other applicable Law,
or otherwise. The provisions of this Section 6.05 shall survive the consummation of the Merger and are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties and their heirs and legal representatives, each of which
shall be a Third-Party beneficiary of the provisions of this Section 6.05. The obligations of Parent and the Surviving Corporation
under this Section 6.05 shall not be terminated or modified in such a manner as to adversely affect the rights of any Indemnified
Party without the consent of such Indemnified Party.
(g) Nothing in this
Agreement is intended to, shall be construed to or shall release, waive or impair any rights to directors’ and officers’
insurance claims under any policy that is or has been in existence with respect to the Company or any of its Subsidiaries or their
respective officers, directors and employees; it being understood and agreed that the indemnification provided for in this Section
6.05 is not prior to or in substitution for any such claims under any such policies.
Section 6.06 Notification
of Certain Matters.
Each of the Company
and Parent 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 Proceedings
commenced or, to the knowledge of the Company or the knowledge of Parent, threatened against the Company or any of its Subsidiaries
or Parent and any of its Subsidiaries, as the case may be, that, if pending on the date hereof, would have been required to have
been disclosed by such party pursuant to any of such party’s representations and warranties contained herein, or that relate
to such party’s ability to consummate the Transactions; and
(d) if a
breach of any representation or warranty or failure to perform any covenant or agreement on the part of such party set forth
in this Agreement shall have occurred that would cause the conditions set forth in Section 7.01, Section 7.02 or Section 7.03
not to be satisfied;
together,
in each case, with a copy of any such notice, communication or Proceeding; provided that the delivery of any notice pursuant
to this Section 6.06 shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice;
provided, further, that failure to give prompt notice pursuant to Section 6.06(d) shall not constitute a failure of a condition
to the Merger set forth in Article VII except to the extent that the underlying breach of a representation or warranty or failure
to perform any covenant or agreement not so notified would, standing alone, constitute such a failure; provided, further,
that the Company’s unintentional failure to give notice under this Section 6.06 shall not be deemed to be a breach of covenant
under this Section 6.06 but instead shall constitute only a breach of the underlying representation or warranty or covenant or
condition, as the case may be.
Section 6.07 Financing.
(a) Subject
to the terms and conditions of this Agreement, each of Parent and Merger Sub shall use its reasonable best efforts to (i) obtain
the Equity Financing on the terms and conditions described in the Equity Commitment Letters, (ii) maintain in effect the Equity
Commitment Letters until the Transactions are consummated, (iii) satisfy, or cause to be satisfied, on a timely basis all conditions
to the closing of and funding under the Equity Commitment Letters applicable to Parent and/or Merger Sub that are within its control,
(iv) consummating the Equity Financing at or prior to the Effective Time and (v) subject to Section 9.08, enforcing the parties’
funding obligations and the rights of Parent and Merger Sub under the Equity Commitment Letters to the extent necessary
to fund the Merger Consideration; provided that Parent and/or Merger Sub may amend or modify the Equity Commitment Letters
so long as (A) the aggregate proceeds of the Equity Financing (as amended or modified) will be sufficient for Parent and the Surviving
Corporation to pay (1) the Merger Consideration and (2) any other amounts required to be paid in connection with the consummation
of the Transactions upon the terms and conditions contemplated hereby and (B) such amendment or modification would not prevent,
materially delay or materially impede or impair (1) the ability of Parent and Merger Sub to consummate the Transactions or (2)
the rights and benefits of the Company under the Equity Commitment Letters. Parent shall deliver to the Company true and complete
copies of such amendment or modification as promptly as practicable after execution thereof. In the event any portion of the Equity
Financing becomes unavailable on the terms and conditions contemplated in the Equity Commitment Letters, Parent shall promptly
notify the Company.
(b) Subject
to the terms and conditions of this Agreement, Parent and Merger Sub agree not to amend, modify or waive any provision of the
Equity Commitment Letters, if such amendment, modification or waiver reduces (or would reduce) the aggregate amount of the Equity
Financing or imposes new or additional conditions or otherwise expands, amends or modifies the conditions to the Equity Financing
in a manner that, in each case, would be expected to prevent or materially delay or otherwise materially and adversely affect
the ability of Parent or Merger Sub to consummate the Transactions. Parent shall give the Company prompt notice (i) upon
becoming aware of any breach of any material provision of the Equity Commitment Letters or termination of any such Equity Commitment
Letter by any party to such Equity Commitment Letter or (ii) upon the receipt of any written notice from any party to an Equity
Commitment Letter with respect to any threatened breach of any material provision of the Equity Commitment Letters or threatened
termination of any such Equity Commitment Letters.
Section 6.08 Further
Action; Reasonable Best Efforts.
(a) Upon the terms
and subject to the conditions of this Agreement, each of the parties hereto and their respective Representatives shall (i) make
promptly its respective filings, and thereafter make any other required submissions, with each relevant Governmental Authority
with jurisdiction over enforcement of any applicable antitrust or competition Laws with respect to the Transactions, and coordinate
and cooperate fully with the other parties in exchanging such information and providing such assistance as the other parties may
reasonably request in connection therewith (including (A) obtaining consent (such consent not be unreasonably withheld, conditioned
or delayed) from the other parties promptly before making any substantive communication (whether verbal or written) with any Governmental
Authority in connection with such filings or submissions, (B) permitting the other parties to review in advance, and consulting
with the other parties on, any proposed filing, submission or communication (whether verbal or written) by such party to any Governmental
Authority and (C) giving the other parties the opportunity to attend and participate at any meeting with any Governmental
Authority in respect of any filing, investigation or other inquiry) and (ii) cooperate with the other parties hereto and
use its reasonable best efforts, and cause its Subsidiaries to use their respective reasonable best efforts, to take or cause
to be taken, all appropriate action, and to do, or cause to be done, all things necessary, proper or advisable under applicable
Laws or otherwise to consummate and make effective the Transactions, including employing such resources as are necessary to obtain
the Requisite Regulatory Approvals and taking any and all steps necessary to avoid or eliminate each and every impediment under
any antitrust or competition Law that may be asserted by any Governmental Authority so as to enable the parties hereto to expeditiously
consummate the Transactions, including committing to and effecting, by consent decree, hold separate orders, or otherwise, the
restructuring, reorganization, sale, divestiture or disposition of such of its assets, properties or businesses; provided
that no party hereto shall be required to take any such action if such action would have a Company Material Adverse Effect.
(b) Each party hereto
shall, upon request by any other party, furnish such other party with all information concerning itself, its Subsidiaries, directors,
officers and shareholders and such other matters as may be reasonably necessary or advisable in connection with the Proxy Statement,
the Schedule 13E-3, or any other statement, filing, notice or application made by or on behalf of Parent, Merger Sub, the Company
or any of their respective Subsidiaries to any Third Party and/or any Governmental Authority in connection with the Transactions.
Section 6.09 Obligations
of Parent and Merger Sub.
Parent shall take
all action necessary to cause Merger Sub to perform its obligations under this Agreement and to consummate the Transactions on
the terms and subject to the conditions set forth in this Agreement.
Section 6.10 Participation
in Litigation.
Prior to the Effective
Time, Parent shall give prompt notice to the Company, and the Company shall give prompt notice to Parent, of any Proceedings commenced
or, to the Company’s knowledge on the one hand and Parent’s knowledge on the other hand, threatened against such party
or its directors that relate to this Agreement and the Transactions. The Company shall give Parent the opportunity to participate
in the defense or settlement of any shareholder Proceeding against the Company and/or its directors relating to this Agreement
or the Transactions, and no such Proceeding shall be settled without Parent’s prior written consent (such consent not be
unreasonably withheld, conditioned or delayed); provided that the Company may, without Parent’s prior written consent,
settle Proceedings that involve only the payment of money damages not in excess of $1,000,000 in the aggregate.
Section 6.11 Resignations.
To the extent requested
by Parent in writing at least three Business Days prior to Closing, on the Closing Date, the Company shall use reasonable best
efforts to cause to be delivered to Parent duly signed resignations, effective as of the Effective Time, of the directors of the
Company or any of its Subsidiaries designated by Parent.
Section 6.12 Public
Announcements.
Except as may be required
by applicable Law, the press release announcing the execution of this Agreement shall be issued only in such form as shall be
mutually agreed upon by the Company and Parent. Thereafter, at any time prior to termination of this Agreement pursuant to Article
VIII, Parent and the Company shall consult with each other before issuing any press release, having any communication with the
press (whether or not for attribution), making any other public statement or scheduling any press conference or conference call
with investors or analysts with respect to this Agreement or the Transactions and, except in respect of any such press release,
communication, other public statement, press conference or conference call as may be required by applicable Law or rules and policies
of NASDAQ, shall not issue any such press release, have any such communication, make any such other public statement or schedule
any such press conference or conference call prior to such consultation. Notwithstanding the foregoing, the restrictions set forth
in this Section 6.12 shall not apply to any release or announcement made or proposed to be made by the Company in connection with
a Change in Company Recommendation made in compliance with this Agreement.
Section 6.13 Stock
Exchange Delisting.
Prior to the Effective
Time, the Company shall cooperate with Parent and use reasonable best efforts to take, or cause to be taken, all actions, and
do or cause to be done all things, reasonably necessary, proper or advisable on its part under applicable Laws and rules and policies
of NASDAQ to enable the delisting of the Class A Shares and ADSs from NASDAQ and the deregistration of the Class A Shares and
ADSs under the Exchange Act as promptly as practicable after the Effective Time.
Section 6.14 Takeover
Statutes.
If any Takeover Statute
is or may become applicable to any of the Transactions, the parties hereto shall use their respective reasonable best efforts
(a) to take all action necessary so that no Takeover Statute is or becomes applicable to any of the Transactions and (b) if any
such Takeover Statute is or becomes applicable to any of the foregoing, to take all action necessary (including, in the case of
the Company and the Company Board, grant all necessary approvals) so that the Transactions may be consummated as promptly as practicable
on the terms contemplated by this Agreement, including all actions to eliminate or lawfully minimize the effects of such Takeover
Statute on the Transactions.
Section 6.15 SAFE
Registration.
The Company shall
as soon as practicable after the date hereof, (a) use its commercially reasonable efforts to assist in the preparation of applications
to SAFE by shareholders of the Company who are PRC residents for the registration of their respective holdings of Shares (whether
directly or indirectly) in accordance with the requirements of applicable SAFE rules, including by promptly providing such shareholders
with such information relating to the Company and its Subsidiaries as is required for such application, and (b) cause its PRC
Subsidiaries (to the extent applicable) to comply with the requirements of such SAFE rules.
Section 6.16 No
Amendment to Parent Group Contracts or Certain Other Documents.
Without
the Company’s prior written consent, (a) Parent and Merger Sub shall not, and shall cause the members of the Parent Group
not to, enter into any Contract or amend, modify, withdraw or terminate any Parent Group Contract or waive any rights thereunder
in a manner that would (i) result, directly or indirectly, in any of the Rollover Shares ceasing to be treated as Excluded Shares
or change the number of Rollover Shares of Yili Shengda, Zhongrong Shengda, Zhongrong Investment, Hongtai, Hongzhi and Hao Ding,
(ii) individually or in the aggregate, prevent or materially delay the ability of Parent or Merger Sub to consummate the Merger
and the other Transactions or (iii) prevent or materially impair the ability of any management member or director of the Company,
with respect to any Superior Proposal, taking any of the actions described in Section
6.04 to the extent such actions are permitted to be taken by the Company thereunder, (b) Parent and Merger Sub shall not, and
shall cause the members of the Parent Group not to, enter into or modify any Contract pursuant to which any management members,
directors or shareholders of the Company, or any of their respective Affiliates receives any consideration or other economic value
from any person in connection with the Transactions that is not provided or expressly contemplated in the Parent Group Contracts
as of the date hereof, including any carried interest, share option, share appreciation right or other forms of equity or quasi-equity
right and (c) Parent and Merger Sub shall not, and shall cause the members of the Parent Group not to, adopt, enter into
or modify any constitutional documents of any member of the Parent Group, any Contract or any understanding that would prevent
or materially impair the satisfaction of the condition set forth in Section 7.01(b).
Within two Business Days after the execution thereof, Parent and Merger Sub shall provide the Company with a copy of any Contract
relating to the Transactions that is entered into after the date hereof and to which a member of the Parent Group is a party.
Article
VII
CONDITIONS TO THE MERGER
Section 7.01 Conditions
to the Obligations of Each Party.
The obligations of
the Company, Parent and Merger Sub to consummate the Merger are subject to the satisfaction or waiver (where permissible under
applicable Law) of the following conditions at or prior to the Closing Date:
(a) Shareholder Approval.
This Agreement, the Plan of Merger and the Transactions shall have been authorized and approved by holders of Shares constituting
the Requisite Company Vote at the Shareholders’ Meeting in accordance with the CICL and the Company’s memorandum and
articles of association.
(b) No Injunction.
No Governmental Authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any Law or award,
writ, injunction, determination, rule, regulation, judgment, decree or executive order (an “Order”), whether
temporary, preliminary or permanent, that is then in effect or has the effect of enjoining, restraining, prohibiting or otherwise
making illegal the consummation of the Transactions, and the consummation of the Transactions shall not have been subject to any
requirement to make any regulatory filing or obtain any regulatory approval under the PRC Anti-Monopoly Law.
Section 7.02 Conditions
to the Obligations of Parent and Merger Sub.
The obligations of
Parent and Merger Sub to consummate the Merger are subject to the satisfaction or waiver (where permissible under applicable Law)
of the following additional conditions at or prior to the Closing Date:
(a) Representations
and Warranties. (i) The representations and warranties of the Company contained in Section
3.04 shall be true and correct in all material respects, (ii) the representations and warranties of the Company contained in the
first two sentences of Section 3.03(a) shall be true and correct in all respects (except for de minimis inaccuracies),
and (iii) each of the other representations and warranties of the Company contained in this Agreement (without giving effect to
any qualification as to “materiality” or “Company Material Adverse Effect” set forth therein), shall be
true and correct in all respects, in each case as of the date of this Agreement and as of the Closing Date, as though made on,
or at, and as of such date or time (except to the extent expressly made as of a specific date, in which case as of such date),
except in the case of clause (iii), where the failure of such representations and warranties of the Company to be so true and
correct would not constitute a Company Material Adverse Effect.
(b) Agreements and
Covenants. The Company shall have performed or complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the Closing Date.
(c) No Material Adverse
Effect. No Company Material Adverse Effect shall have occurred since the date hereof and be continuing.
(d) Officer Certificate.
The Company shall have delivered to Parent a certificate, dated the Closing Date, signed by a senior executive officer of the
Company, certifying as to the satisfaction of the conditions specified in Section 7.02(a), Section 7.02(b) and Section 7.02(c).
(e) Dissenting Shareholders.
The holders of no more than 10% of the Shares shall have validly served a notice of dissent under Section 238(2) of the CICL.
Section 7.03 Conditions
to the Obligations of the Company.
The obligations of
the Company to consummate the Merger are subject to the satisfaction or waiver (where permissible under applicable Law) of the
following additional conditions at or prior to the Closing Date:
(a) Representations
and Warranties. The representations and warranties of Parent and Merger Sub contained in this Agreement (without giving effect
to any qualification as to “materiality” set forth therein) shall be true and correct in all respects as of the date
hereof and as of the Closing Date, as though made on and as of such date and time (other than representations and warranties that
by their terms address matters only as of a specified time, which shall be true and correct only as of such time), except where
the failure of such representations and warranties of Parent and Merger Sub to be so true and correct, individually or in the
aggregate, have not, and would not reasonably be expected to, prevent, materially delay or materially impede or impair the ability
of Parent and Merger Sub to consummate the Transactions.
(b) Agreements and
Covenants. Each of Parent and Merger Sub shall have performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or prior to the Closing Date.
(c) Officer Certificate.
Parent shall have delivered to the Company a certificate, dated the date of the Closing, signed by an executive officer of Parent,
certifying as to the satisfaction of the conditions specified in Section 7.03(a) and Section 7.03(b).
Section 7.04 Frustration
of Closing Conditions.
Prior to the Termination
Date, none of the Company, Parent or Merger Sub may rely on the failure of any condition set forth in this Article VII to be satisfied
if such failure was caused by such party’s failure to act in good faith to comply with this Agreement and consummate the
Transactions.
Article
VIII
TERMINATION
Section 8.01 Termination
by Mutual Consent.
This Agreement may
be terminated and the Transactions may be abandoned at any time prior to the Effective Time by mutual written consent of Parent
and the Company with the approval of their respective boards of directors (or in the case of the Company, acting upon the recommendation
of the Special Committee).
Section 8.02 Termination
by Either the Company or Parent.
This Agreement may
be terminated by either the Company (acting only upon the recommendation of the Special Committee) or Parent at any time prior
to the Effective Time, if:
(a) the Effective
Time shall not have occurred on or before December 31, 2015 (the “Termination Date”); or
(b) any Governmental
Authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any final and non-appealable
Order that, or taken any other final and non-appealable action that, has the effect of making consummation of the Transactions
illegal or otherwise preventing or prohibiting consummation of the Transactions; or
(c) the Requisite
Company Vote shall not have been obtained at the Shareholders’ Meeting duly convened therefor and concluded or at any adjournment
or postponement thereof;
provided that
the right to terminate this Agreement pursuant to this Section 8.02 shall not be available to any party whose failure to fulfill
any of its obligations under this Agreement has been a material cause of, or resulted in, the failure of the applicable condition(s)
being satisfied.
Section 8.03 Termination
by the Company.
This Agreement may
be terminated by the Company (acting only upon the recommendation of the Special Committee) at any time prior to the Effective
Time, if:
(a) a breach of any
representation, warranty, agreement or covenant of Parent or Merger Sub set forth in this Agreement shall have occurred, which
breach (i) would give rise to the failure of a condition set forth in Section 7.03(a) or Section 7.03(b) and as a result of such
breach, such condition would not be capable of being satisfied prior to the Termination Date and (ii) is incapable of being
cured or, if capable of being cured, is not cured by Parent or Merger Sub, as applicable, within 30 days following receipt of
written notice of such breach from the Company (or, if the Termination Date is less than 30 calendar days from the date of receipt
of such notice, by the Termination Date); provided that the Company shall not have the right to terminate this Agreement
pursuant to this Section 8.03(a) if the Company is then in material breach of any representations, warranties, agreements or covenants
of the Company hereunder that would give rise to the failure of a condition set forth in Section 7.02;
(b) (i) all of the
conditions set forth in Section 7.01 and Section 7.02 (other than those conditions that by their nature are to be satisfied by
actions taken at the Closing) have been satisfied, (ii) the Company has delivered to Parent an irrevocable written notice confirming
that all of the conditions set forth Section 7.03 have been satisfied (or that the Company is willing to waive any unsatisfied
conditions in Section 7.03) and that it is ready, willing and able to consummate the Closing and (iii) Parent and Merger Sub fail
to complete the Closing within five Business Days following the date on which the Closing should have occurred pursuant to Section
1.02; or
(c) prior
to the receipt of the Requisite Company Vote, (i) the Company Board (acting only upon the recommendation of the Special Committee)
or the Special Committee (to the extent it is within the authority of the Special Committee) has authorized the Company to enter
into an Alternative Acquisition Agreement with respect to a Superior Proposal pursuant to Section
6.04(d) and (ii) the Company concurrently with, or immediately after, the termination of this Agreement enters into the Alternative
Acquisition Agreement with respect to the Superior Proposal referred to in the foregoing clause (i); provided that the
Company shall not be entitled to terminate this Agreement pursuant to this Section 8.03(c) unless the Company has (A) complied
in all respects with the requirements of Section 6.04 with respect to such Superior Proposal and/or Alternative Acquisition Agreement
(other than immaterial non-compliance that does not adversely affect Parent or Merger Sub) and (B) complied in all respects with
Section 8.06 and pays in full the Company Termination Fee prior to or concurrently with taking any action pursuant to this Section
8.03(c). Any purported termination of this Agreement by the Company pursuant to this Section 8.03(c) shall be void and of no force
or effect if the Company shall not have paid the Company Termination Fee in accordance with this Section 8.03(c).
Section 8.04 Termination
by Parent.
This Agreement may
be terminated by Parent at any time prior to the Effective Time, if:
(a) a breach of any
representation, warranty, agreement or covenant of the Company set forth in this Agreement shall have occurred, which breach (i)
would give rise to the failure of a condition set forth in Section 7.02(a) or Section 7.02(b) and as a result of such breach,
such condition would not be capable of being satisfied prior to the Termination Date and (ii) is incapable of being cured or,
if capable of being cured, is not cured by the Company within 30 days following receipt of written notice of such breach from
Parent or Merger Sub (or, if the Termination Date is less than 30 calendar days from the date of receipt of such notice, by the
Termination Date); provided that Parent shall not have the right to terminate this Agreement pursuant to this Section 8.04(a)
if either Parent or Merger Sub is then in material breach of any representations, warranties or covenants of Parent or Merger
Sub hereunder that would give rise to the failure of a condition set forth in Section 7.03; or
(b) the Company Board
or any committee thereof shall have effected a Change in the Company Recommendation.
Section 8.05 Effect
of Termination.
In the event of the
termination of this Agreement pursuant to Article VIII, this Agreement shall forthwith become void, and there shall be no liability
under this Agreement on the part of any party hereto (or any Representative of such party); provided that the terms of
Section 6.03(c), Section 6.12, Article VIII and Article IX shall survive any termination of this Agreement.
Section 8.06 Termination
Fee and Expenses.
(a) In the event
that:
(i) (A) a bona
fide proposal or offer with respect to a Competing Transaction shall have been publicly made, proposed or communicated (and not
publicly withdrawn), after the date hereof and prior to the Shareholders’ Meeting (or prior to the termination of this Agreement
if there has been no Shareholders’ Meeting), (B) following the occurrence of an event described in the preceding clause
(A), this Agreement is terminated by the Company or Parent pursuant to Section 8.02(a) or Section 8.02(c) and (C) within 12 months
after the termination of this Agreement, the Company consummates, or enters into a definitive agreement in connection with, any
Competing Transaction by a Third Party (in each case whether or not the Competing Transaction was the same Competing Transaction
referred to in Clause (A)); provided that for purposes of this Section 8.06(a), all references to “15%” in
the definition of “Competing Transaction” shall be deemed to be references to “50%”);
(ii) this Agreement
is terminated by Parent pursuant to Section 8.04; or
(iii) this Agreement
is terminated by the Company pursuant to Section 8.03(c),
then the Company shall
pay to Parent or its designees an amount equal to $57,250,000 (the “Company Termination Fee”) by
wire transfer of same day funds as promptly as possible (but in any event (A) within five Business Days after such termination
in the case of a termination referred to in clause (ii), (B) within two Business Days following the consummation by the Company
of a Competing Transaction or entry by the Company into the definitive agreement in connection with a Competing Transaction in
the case of a termination referred to in clause (i) or (C) prior to or concurrently with the termination of this Agreement in
the case of a termination pursuant to clause (iii)); it being understood that in no event shall the Company be required to pay
the Company Termination Fee on more than one occasion.
(b) Parent will pay,
or cause to be paid, to the Company an amount equal to $114,500,000 (the “Parent Termination Fee”)
if this Agreement is terminated by the Company pursuant to Section 8.03(a) or Section 8.03(b), such payment to be made as promptly
as possible (but in any event within five Business Days) following such termination by wire transfer of same day funds); it being
understood that in no event shall Parent be required to pay the Parent Termination Fee on more than one occasion.
(c) In the event
that the Company shall terminate this Agreement pursuant to Section 8.03(a) or Section 8.03(b), then Parent shall pay, or caused
to be paid, to the Company by wire transfer of same day funds, as promptly as possible (but in any event within three Business
Days) following the delivery by the Company of an invoice therefor, all Expenses incurred by the Company and its Affiliates in
connection with the Transactions up to a maximum amount equal to $3,000,000.
(d) In the event
that Parent shall terminate this Agreement pursuant to Section 8.04, the Company shall pay Parent or its designees by wire transfer
of same day funds, as promptly as possible (but in any event within three Business Days) following the delivery by Parent of an
invoice therefor, all Expenses incurred by Parent, Merger Sub and their respective Affiliates in connection with the Transactions,
including the Equity Financing, up to a maximum amount equal to $3,000,000.
(e) Except as set
forth in Section 8.06(c) and Section 8.06(d), all Expenses incurred in connection with this Agreement and the Transactions shall
be paid by the party incurring such Expenses, whether or not the Merger or any other Transaction is consummated.
(f) In the event
that the Company fails to pay the Company Termination Fee or any Expenses, or Parent fails to pay the Parent Termination Fee or
any Expenses, when due and in accordance with the requirements of this Agreement, the Company or Parent, as the case may be, shall
reimburse the other party for reasonable costs and expenses actually incurred or accrued by the other party (including fees and
expenses of counsel) in connection with the collection under and enforcement of this Section 8.06, together with interest on such
unpaid Company Termination Fee or Parent Termination Fee or Expenses, as the case may be, commencing on the date that the Company
Termination Fee or Parent Termination Fee or Expenses, as the case may be, became due, at the prime rate as published in the Wall
Street Journal Table of Money Rates on such date plus 5.00%. Such collection expenses shall not otherwise diminish in any way
the payment obligations hereunder.
(g) Each of the Company,
Parent and Merger Sub acknowledges that (i) the agreements contained in this Section 8.06 are an integral part of the Transactions,
(ii) the damages resulting from termination of this Agreement under circumstances where a Company Termination Fee or Parent
Termination Fee is payable are uncertain and incapable of accurate calculation and therefore, the amounts payable pursuant to
Section 8.06(a) or Section 8.06(b) are not a penalty but rather constitute amounts akin to liquidated damages in a reasonable
amount that will compensate Parent or the Company, as the case may be, for the efforts and resources expended and opportunities
foregone while negotiating this Agreement and in reliance on this Agreement and on the expectation of the consummation of the
Transactions, and (iii) without the agreements contained in this Section 8.06, the parties hereto would not have entered into
this Agreement.
(h) (i) Subject
to Section 9.08, the Equity Commitment Letters or the Limited
Guarantees, in the event that Parent or Merger Sub fails to effect the Closing for any reason or no reason or they otherwise breach
this Agreement (whether willfully, intentionally, unintentionally or otherwise) or otherwise fail to perform hereunder (whether
willfully, intentionally, unintentionally or otherwise), then the Company’s right to terminate this Agreement and receive
the Parent Termination Fee pursuant to Section 8.06(b), the Expenses under Section 8.06(c) and the expenses under Section 8.06(f)
and the guarantee of such obligations pursuant to the Limited Guarantees (subject to their terms, conditions and limitations),
shall be the sole and exclusive remedy (whether at law, in equity, in contract, in tort or otherwise) of the Company or any of
its Subsidiaries and all members of the Company Group against (A) Parent, Merger Sub, the Guarantors, and the Sponsors, (B) the
former, current and future holders of any equity, partnership or limited liability company interest, controlling persons, directors,
officers, employees, agents, attorneys, Affiliates, members, managers, general or limited partners, stockholders, or assignees
of Parent, Merger Sub or any Guarantor or Sponsor, (C) any lender or prospective lender, lead arranger, arranger, agent or representative
of or to Parent, Merger Sub or any Guarantor or Sponsor, or (D) any holders or future holders of any equity, stock, partnership
or limited liability company interest, controlling persons, directors, officers, employees, agents, attorneys, Affiliates, members,
managers, general or limited partners, stockholders, assignees of any of the foregoing (clauses (A)-(D), collectively, the “Parent
Group”), for any loss or damage suffered as a result of any breach of any representation, warranty, covenant or agreement
(whether willfully, intentionally, unintentionally or otherwise) or failure to perform hereunder (whether willfully, intentionally,
unintentionally or otherwise) or other failure of the Merger or the other Transactions to be consummated (whether willfully, intentionally,
unintentionally or otherwise). For the avoidance of doubt, neither Parent nor any other member of the Parent Group shall have
any liability for monetary damages of any kind or nature or arising in any circumstance in connection with this Agreement or any
of the Transactions (including the Equity Commitment Letters and
the Limited Guarantees) other than the payment of the Parent Termination Fee pursuant to Section 8.06(b), the Expenses under Section
8.06(c) and the expenses pursuant to Section 8.06(f), and in no event shall the Company or any of its Subsidiaries, the direct
or indirect shareholders of the Company or any of its Subsidiaries, or any of their respective Affiliates, directors, officers,
employees, members, managers, partners, representatives, advisors or agents of the foregoing (collectively, the “Company
Group”) seek, or permit to be sought, on behalf of any member of the Company Group, any monetary damages from any member
of the Parent Group in connection with this Agreement or any of the Transactions (including the Equity Commitment Letters
and the Limited Guarantees), other than (without duplication) from Parent
or Merger Sub to the extent provided in Section 8.06(b), Section 8.06(c) and Section 8.06(f), or the Guarantors to the extent
provided in the relevant Limited Guarantee.
(ii) Subject to Section
9.08, Parent’s right to terminate this Agreement and receive the Company Termination Fee pursuant to Section 8.06(a), the
Expenses under Section 8.06(d) and expenses under Section 8.06(f) shall be the sole and exclusive remedy (whether at law, in equity,
in contract, in tort or otherwise) of any member of the Parent Group against any member of the Company Group for any loss or damage
suffered as a result of any breach of any representation, warranty, covenant or agreement (whether willfully, intentionally, unintentionally
or otherwise) or failure to perform hereunder (whether willfully, intentionally, unintentionally or otherwise) or other failure
of the Merger to be consummated (whether willfully, intentionally, unintentionally or otherwise). Neither the Company nor any
other member of the Company Group shall have any liability for monetary damages of any kind or nature or arising in any circumstance
in connection with this Agreement or any of the Transactions other than the payment by the Company of the Company Termination
Fee pursuant to Section 8.06(a), the Expenses under Section 8.06(d) and the expenses under Section 8.06(f), and in no event shall
any of Parent, Merger Sub or any other member of the Parent Group seek, or permit to be sought, on behalf of any member of the
Parent Group, any monetary damages from any member of the Company Group in connection with this Agreement or any of the Transactions,
other than (without duplication) from the Company to the extent provided in Section 8.06(a), Section 8.06(d) and Section 8.06(f).
Article
IX
GENERAL PROVISIONS
Section 9.01 Non-Survival
of Representations, Warranties and Agreements.
The representations,
warranties and agreements in this Agreement and in any certificate delivered pursuant hereto shall terminate at the earlier of
the Effective Time and termination of this Agreement pursuant to Article VIII, except that this Section 9.01 shall not limit any
covenant or agreement of the parties hereto that by its terms contemplates performance after the Effective Time or termination
of this Agreement, including the agreements set forth in Article I and Article II, Section 6.06 and this Article IX.
Section 9.02 Notices.
All notices, requests,
claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly
given upon receipt) by delivery in person, by facsimile or by international overnight courier 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
9.02):
if to Parent or Merger
Sub:
c/o Ningxia Yilida
Capital Investment Limited Partnership
No. 19, Lane 666,
Zhangheng Road,
Pudong New Area, Shanghai,
China
Attention: Mr. Yingfeng
Zhang
c/o Ningxia Zhongyincashmere
International Group Co., Ltd.
Zhongyin Avenue, The
Cashmere Industrial Park
Lingwu, Ningxia Province,
China
Attention: Ms. Xiaofei
Chen
Facsimile: +86 591
4519290
with a copy to:
Wilson Sonsini Goodrich
& Rosati
Jin Mao Tower, 38F,
Unit 3
88 Century Blvd, Pudong
Shanghai 200121, China
Attention: Zhan
Chen, Esq.
Facsimile: +86 21
6165 1799
if to the Company:
Shanda Games
Limited
No. 1 Office Building
No. 690 Bibo Road
Pudong New Area
Shanghai 201203
The People’s
Republic of China
Attention: Mr.
Yingfeng Zhang
Facsimile: +86
21 5050 4740 (ext. 897286)
with a copy to:
Sullivan & Cromwell
28th Floor, Nine Queen’s
Road Central
Hong Kong
Attention: Chun
Wei, Esq.
Facsimile: +852
2522 2280
Section 9.03 Certain
Definitions.
(a) For purposes
of this Agreement:
“2014 Balance
Sheet” means the audited consolidated balance sheet of the Company and its consolidated Subsidiaries as at December 31,
2014, including the notes thereto.
“Acceptable
Confidentiality Agreement” means a confidentiality agreement that contains provisions that are no less favorable in the
aggregate to the Company than those contained in the Confidentiality Agreements; provided that such agreement and any related
agreements (i) need not contain “standstill” provisions and (ii) shall not include any provision calling for
any exclusive right to negotiate with such party or having the effect of prohibiting the Company from satisfying its obligations
under this Agreement.
“Affiliate”
of a specified person means a person who, directly or indirectly through one or more intermediaries, controls, is controlled by,
or is under common control with, such specified person.
“Business Day”
means any day other than a Saturday or Sunday or a day on which banks are required or authorized to close in New York, the Cayman
Islands, the British Virgin Islands, Hong Kong or Singapore, a public holiday in the PRC.
“Company Disclosure
Schedule” means the disclosure schedule delivered by the Company to and accepted by Parent and Merger Sub on the date hereof.
“Company IP
Contract” means any Contract, to which the Company or any of its Subsidiaries is party or by which the Company or any of
its Subsidiaries is bound, that contains any assignment or license of, or covenant not to assert or enforce, any Intellectual
Property or that otherwise relates to any Company Owned IP or Intellectual Property licensed by, with or to the Company or any
of its Subsidiaries.
“Company IT
Assets” means all Software, systems, servers, computers, hardware, firmware, middleware, networks, data communications lines,
routers, hubs, switches and all other information technology equipment, and all associated documentation owned by or licensed,
pursuant to valid and enforceable license agreements, to the Company and its Subsidiaries.
“Company Material
Adverse Effect” means any fact, event, circumstance, change, condition or effect that, individually or in the aggregate
with all other facts, events, circumstances, changes, conditions and effects, has or would reasonably be expected to have a materially
adverse effect on the business, financial condition, or results of operations of the Company and its Subsidiaries taken as a whole;
provided, however, that in no event shall any of the following, either alone or in combination, constitute, or be taken
into account in determining whether there has been or would be, a Company Material Adverse Effect: (i) changes affecting the financial,
credit or other securities or capital markets, or in general economic, business, regulatory, legislative or political conditions
in any country or region in which the Company or any of its Subsidiaries conduct business, including changes in interest rates
and foreign exchange rates; (ii) changes in GAAP or any interpretation thereof after the date hereof; (iii) changes in applicable
Law, directives or policies of a Governmental Authority of general applicability, or any interpretation, implementation or enforcement
thereof, that are binding on the Company or any of its Subsidiaries; (iv) changes that are the result of factors generally affecting
the industries and markets in which the Company and its Subsidiaries operate; (v) effects resulting from the announcement,
pendency or consummation of this Agreement or the identity of Parent and its Affiliates, including, without limitation, the initiation
of litigation or other legal proceeding related to this Agreement or the Transactions, or any loss of or change in relationship
with any customer, supplier, employee, vendor or other business partner of the Company; (vi) any failure by the Company or
any of its Subsidiaries to meet any analyst estimates or expectations of the Company’s or such Subsidiary’s revenue,
earnings or other financial performance or results of operations for any period, or any failure by the Company or any of its Subsidiaries
to meet its internal or published projections, estimates, budgets, plans or forecasts of its revenues, earnings or other financial
performance measures, operating statistics or results of operations (it being understood that the facts or occurrences giving
rise to or contributing to such failure that are not otherwise excluded from the definition of “Company Material Adverse
Effect” may be taken into account in determining whether there has been a Company Material Adverse Effect); (vii) natural
or manmade disasters, acts of sabotage or terrorism, declarations, outbreaks or escalations of war or major hostilities, or other
force majeure events; (viii) changes in the market price or trading volume of Shares or ADSs (it being understood that the facts
or occurrences giving rise to or contributing to such changes that are not otherwise excluded from the definition of “Company
Material Adverse Effect” may be taken into account in determining whether there has been a Company Material Adverse Effect);
(ix) any acts or omissions of the Company or any of its Subsidiaries taken, directly or indirectly, at the direction or request
of, or with the consent of, Parent or any officer or director of Parent, or at the request of Parent; provided that facts,
events, circumstances, developments, conditions, changes, occurrences or effects set forth in clauses (i), (ii), (iii), (iv) and
(vii) above may be taken into account in determining whether a “Company Material Adverse Effect” has occurred or reasonably
would be expected to occur if and to the extent such facts, events, circumstances, developments, conditions, changes, occurrences
or effects individually or in the aggregate have a materially disproportionate impact on the Company and its Subsidiaries, taken
as a whole, relative to the other participants in the industries in which the Company and its Subsidiaries conduct their businesses.
“Company Option”
means each option to purchase Shares whether or not granted under the Share Incentive Plan on or prior to the Closing Date, whether
or not such option has become vested on or prior to the Closing Date in accordance with the terms thereof.
“Company Permits”
means all franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, concessions, registrations,
clearances, exemptions, certificates, approvals and orders of any Governmental Authority required under applicable Law for the
conduct of the Company’s business.
“Company Products”
means the products and services designed, developed, manufactured, offered, provided, marketed, licensed, sold, distributed or
otherwise made available by or for the Company or any of its Subsidiaries.
“Company RS”
means each share of restricted stock whether or not granted under the Share Incentive Plan on or prior to the Closing Date, the
restrictions over which have not lapsed on or prior to the Closing Date in accordance with the terms thereof.
“Company RSU”
means each restricted stock unit or other right to acquire Shares whether or not granted under the Share Incentive Plan on or
prior to the Closing Date, whether or not the restrictions over which have lapsed on or prior to the Closing Date in accordance
with the terms thereof.
“Company Shareholder
Approval” means the approval and adoption of this Agreement and the Transactions (including the Merger) at the Shareholders’
Meeting by the Requisite Company Vote.
“Confidentiality
Agreements” means the confidentiality agreements between the Company and each of the Sponsors, as amended and restated from
time to time.
“Consortium
Agreement” means the Consortium Agreement by and among Ningxia Yilida, Ningxia Zhongyincashmere, Hongtai, Hongzhi and Hao
Ding dated as of March 16, 2015, as amended and supplemented from time to time.
“Contract”
means any legally enforceable note, bond, mortgage, indenture, deed of trust, contract, agreement, lease, license, permit, franchise
or other instrument.
“control”
(including the terms “controlled by” and “under common control with”) means the possession, directly or
indirectly, or as trustee or executor, of the power to direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities or the possession of voting power, as trustee or executor, by contract or credit
arrangement or otherwise.
“Environmental
Law” means any applicable PRC local, provincial or national Law relating to (a) the protection of health, safety or the
environment or (b) the handling, use, transportation, disposal, release or threatened release of any Hazardous Substance.
“Exercise Price”
means, with respect to any Company Option, the applicable exercise price per Share underlying such Company Option.
“Excluded Shares”
means, collectively, (i) the Rollover Shares and (ii) Shares held by Parent, the Company or any of their Subsidiaries.
“Expenses”
means, with respect to any party hereto, all out-of-pocket fees and expenses (including all fees and expenses of counsel, accountants,
investment banking firms and other financial institutions, experts and consultants to such party and its Affiliates) actually
incurred or accrued by such party or its Affiliates or on its or their behalf or for which it or they are liable in connection
with or related to the authorization, preparation, negotiation, execution and performance of the Transactions, the preparation,
printing, filing and mailing of the Schedule 13E-3 and the Proxy Statement, the solicitation of shareholder approvals, the
filing of any required notices under applicable Laws and all other matters related to the closing of the Merger and the other
Transactions.
“Governmental
Authority” means any federal, national, foreign, supranational, state, provincial, county, local or other governmental,
regulatory or administrative authority, agency, instrumentality or commission or any court, tribunal, or judicial or arbitral
body of competent jurisdiction.
“Government
Official” means any officer, employee or other individual acting in an official capacity for a Governmental Authority or
agency or instrumentality thereof (including any state-owned or controlled enterprise).
“Hao
Ding” means Hao Ding International Limited, a company established
under the laws of the British Virgin Islands.
“Hazardous Substance”
means any chemical, pollutant, waste or substance that is (i) listed, classified or regulated under any Environmental Law
as hazardous substance, toxic substance, pollutant, contaminant or oil or (ii) any petroleum product or by product, asbestos containing
material, polychlorinated biphenyls or radioactive material.
“Hongtai”
means Orient Hongtai (Hong Kong) Limited, a company incorporated and existing under the laws of Hong Kong and
an Affiliate of Orient Securities Company Limited.
“Hongzhi”
means Orient Hongzii (Hong Kong) Limited, a company incorporated and existing under the laws of Hong Kong and
an Affiliate of Orient Securities Company Limited.
“Indebtedness”
means, with respect to any person, (i) all indebtedness of such person, whether or not contingent, for borrowed money, (ii) all
obligations of such person for the deferred purchase price of property or services, (iii) all obligations of such person evidenced
by notes, bonds, debentures or other similar instruments, (iv) all obligations of such person under currency, interest rate or
other swaps, and all hedging and other obligations of such person under other derivative instruments, (v) all indebtedness created
or arising under any conditional sale or other title retention agreement with respect to property acquired by such person (even
though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession
or sale of such property), (vi) all obligations of such person as lessee under leases that have been or should be, in accordance
with GAAP, recorded as capital leases, (vii) all obligations, contingent or otherwise, of such person under acceptance, letter
of credit or similar facilities, (viii) all Indebtedness of others referred to in clauses (i) through (vii) guaranteed directly
or indirectly in any manner by such person and (ix) all Indebtedness referred to in clauses (i) through (vii) secured by (or for
which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Liens on property
(including accounts and contract rights) owned by such person, even though such person has not assumed or become liable for the
payment of such Indebtedness.
“Intellectual
Property” means all (i) patents worldwide, including utility models, inventions and discoveries, statutory invention registrations,
mask works, invention disclosures, and industrial designs, community designs and other designs, and including all divisionals,
substitutions, continuations, continuations-in-part, continuing prosecution applications, reissues, re-examinations, renewals,
restorations, and extensions, and any counterparts worldwide claiming priority therefrom, and all rights in and to any of the
foregoing (“Patents”), including all members of (a) all Patents in the same priority chain (i.e., all Patents
that claim priority to the same non-provisional application or applications, and all Patents from which priority is claimed by
the identified Patent), (b) all corresponding foreign Patents, and (c) all Patents that are subject to a terminal disclaimer that
disclaims the term of any such Patent beyond the term of any member of the family, (ii) Trademarks, (iii) copyrights and all other
rights with respect to Works of Authorship, including moral and economic rights however denominated, design rights and database
rights therein and thereto, (iv) information and materials not generally known to the public and qualifying as a trade secret
under applicable Law, including (A) any technical, engineering, manufacturing, product, marketing, servicing, financial, supplier,
and other information and materials, and (B) any customer, vendor, and distributor lists, contact and registration information,
and correspondence (“Trade Secrets”), including rights to limit the use or disclosure thereof by any person,
(v) rights of privacy and publicity, including all rights with respect to the use of a person’s name, signature, likeness,
image, photograph, voice, identity, personality, and biographical and personal information and materials, (vi) claims and causes
of action arising out of or related to any past, current or future infringement, misappropriation, interference or violation of
any of the foregoing, (vii) registrations, applications, renewals and extensions for any of the foregoing in clauses (i)-(v),
and (viii) any and all other proprietary rights equivalent or similar to the foregoing which may exist or be created under the
laws of any jurisdiction in the world.
“knowledge”
means, with respect to the Company, the actual knowledge after inquiry of such individual’s direct reports as would be usual
in connection with the ordinary course of, and consistent with the past practice of, such individual’s position at the Company,
as of the date of this Agreement, of the Chief Executive Officer, Chief Financial Officer, Chief Technology Officer and General
Counsel of the Company, and with respect to any other party hereto, the actual knowledge of any director or executive officer
of such party.
“Law”
means any federal, state, local, national, supranational, foreign or administrative law (including common law), statute, ordinance,
regulation, requirement, regulatory interpretation, rule, code or Order.
“Leases”
shall mean all leases, subleases, licenses, or other similar agreements, including all amendments, extensions, renewals, guarantees
and other agreements with respect thereto, pursuant to which the Company or any of its Subsidiaries holds any Leased Real Property,
including the right to all security deposits and other amounts and instruments deposited by or on behalf of the Company or any
of its Subsidiaries.
“Liens”
means any security interest, pledge, hypothecation, mortgage, lien (including environmental and Tax liens), violation, charge,
lease, license, encumbrance, easement, adverse claim, reversion, reverter, preferential arrangement, restrictive covenant, condition
or restriction of any kind, including any restriction on the use, voting, transfer, receipt of income or other exercise of any
attributes of ownership.
“Ningxia
Silkroad” means Ningxia Silkroad Equity Investment Partnership Enterprise (Limited Partnership), a limited partnership
formed under the laws of the People’s Republic of China and controlled
by Ningxia Zhongyincashmere.
“Ningxia
Yilida” means Ningxia Yilida Capital Investment Limited Partnership, a limited partnership formed under the laws
of the People’s Republic of China and an Affiliate of Mr.
Yingfeng Zhang.
“Ningxia Zhongyincashmere”
means Ningxia Zhongyincashmere International Group Co., Ltd., a company formed under the laws of the People’s Republic of
China.
“Permitted Encumbrances”
shall mean (i) Liens for Taxes, assessments and charges or levies by Governmental Authorities not yet due and payable or that
are being contested in good faith and by appropriate proceedings, (ii) mechanics’, carriers’, workmen’s, repairmen’s,
materialmen’s or other Liens or security interests arising or incurred in the ordinary course of business relating to obligations
as to which there is no default on the part of the Company or any of its Subsidiaries or that secure a liquidated amount, that
are being contested in good faith and by appropriate proceedings, (iii) leases, subleases and licenses (other than capital leases
and leases underlying sale and leaseback transactions), (iv) Liens imposed by applicable Law, (v) pledges or deposits to secure
obligations under workers’ compensation Laws or similar legislation or to secure public or statutory obligations, (vi) pledges
and deposits to secure the performance of bids, trade contracts, leases, surety and appeal bonds, performance bonds and other
obligations of a similar nature, in each case in the ordinary course of business, (vii) easements, covenants and rights of way
(unrecorded and of record) and other similar restrictions of record, and zoning, building and other similar restrictions, in each
case that do not adversely affect in any material respect the current use of the applicable property owned, leased, used or held
for use by the Company or any of its Subsidiaries, (viii) Liens securing indebtedness or liabilities that (A) are reflected in
the Company SEC Reports filed or furnished prior to the date hereof, or (B) have otherwise been disclosed to Parent in writing
as of the date of this Agreement, (ix) matters which would be disclosed by an accurate survey or inspection of the real property
which do not materially impair the occupancy or current use of such real property which they encumber, (x) outbound non-exclusive
license agreements and non-disclosure agreements entered into in the ordinary course of business consistent with past practice,
(xi) standard survey and title exceptions, and (xii) any other Liens that have been incurred or suffered in the ordinary
course of business and that would not have a Company Material Adverse Effect.
“person”
means an individual, corporation, partnership, limited partnership, limited liability company, syndicate, person (including a
“person” as defined in Section 13(d)(3) of the Exchange Act), trust, association or entity or government, political
subdivision, agency or instrumentality of a government.
“Personal Information”
means individually-identifiable information from or about an individual, including an individual’s: first and last name,
home or other physical address, including street name and city or town; telephone number, including home telephone number and
mobile telephone number; email address or other online contact information, such as a user identifier or screen name; photograph;
financial account number or credit card number; tax identification number, social security number, driver’s license number,
passport number or other government-issued identifier; employee identification number; persistent identifier, such as IP address
or other unique identifier associated with a person, device or web browser; list of contacts; physical location; or any other
information deemed to be personally identifiable information pursuant to applicable Law.
“PRC”
means the People’s Republic of China, which for the purposes of this Agreement only shall not include the Hong Kong Special
Administrative Region, the Macau Special Administrative Region and Taiwan.
“Proceeding”
means any action, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate
proceeding), hearing, inquiry, audit, examination or investigation commenced, brought, conducted or heard by or before, or otherwise
involving, any arbitrator, arbitration panel, court or other Governmental Authority.
“Registered
IP” means all Company Owned IP that, as of the date of this Agreement, is registered, filed or issued under the authority
of, with or by any Governmental Authority, including all Patents, registered copyrights, registered Trademarks, registered domain
names, and all applications for any of the foregoing.
“Rollover
Shares” means (i) with respect to Yili Shengda, 48,759,187
Class B Shares, (ii) with respect to Zhongrong Shengda, 48,759,187 Class B Shares, (iii) with respect to Zhongrong Investment,
80,577,828 Class A Shares, (iv) with respect to Hongtai, 61,776,334 Class A Shares, (v) with respect to Hongzhi, 61,776,335 Class
A Shares and (vi) with respect to Hao Ding, 107,438,129 Class A Shares.
“Share Incentive
Plan” means the amended and restated Shanda Games Limited 2008 Equity Compensation Plan and all amendments and modifications
thereto.
“Shareholders’
Meeting” means the meeting of the Company’s shareholders (including any adjournments or postponements thereof) to
be held to consider the authorization and approval of this Agreement, the Plan of Merger and the Transactions, including the Merger.
“Software”
means all (i) computer programs, applications, systems and software code of any nature, whether operational or under development,
including executable code, data files, rules, definitions derived from the foregoing, and any derivations, updates, enhancements
and customizations of any of the foregoing, and any related processes, know-how, APIs, user interfaces, command structures, menus,
buttons and icons, flow charts, software implementations of algorithms, models and methodologies, program interfaces, and Source
Code and object code, (ii) Internet and intranet websites, databases and compilations, including data and collections of data,
whether machine-readable or otherwise, (iii) development and design tools, library functions and compilers, (iv) technology
supporting websites, and the contents and audiovisual displays of websites and (v) media, documentation and other works of authorship,
including operating procedures, methods, tools, developers’ kits, utilities, developers’ notes, user manuals and training
materials, including comments and annotations related thereto, whether machine-readable or otherwise, relating to or embodying
any of the foregoing or on which any of the foregoing is recorded, stored, encoded or written on disk, tape, film, memory device,
paper or other media of any nature.
“Source Code”
means human-readable computer software code, including related programmer comments and annotations, build scripts, test scripts,
help text, data and data structures, instructions and other documentation for such computer software code that enables a programmer
to understand and modify such software.
“Special Committee”
means a committee of the Company Board consisting of members of the Company Board that are not affiliated with Parent or Merger
Sub and are not members of the management of the Company.
“Sponsors”
means Zhengjun Investment, Ningxia Silkroad and Zhongrong
Legend.
“Strategic Advisor”
means Kilometre Capital Management Cayman.
“Subsidiary”
means, with respect to any party, any person (i) of which such party or any other Subsidiary of such party is a general or managing
partner, (ii) of which at least a majority of the securities (or other interests having by their terms ordinary voting power to
elect a majority of the board of directors or other performing similar functions with respect to such corporation or other organization)
is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries, or by such party and
one or more of its Subsidiaries or (iii) whose assets and financial results are consolidated with the net earnings of such party
and are recorded on the books of such party for financial reporting purposes in accordance with GAAP.
“Tax”
or “Taxes” means any and all taxes, fees, levies, duties, tariffs, imposts and other charges of any kind (together
with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Governmental
Authority or taxing authority, including: taxes or other charges on or with respect to income, franchise, windfall or other profits,
gross receipts, occupation, property, real estate, deed, land use, sales, use, capital stock, payroll, severance, wages, employment
(including withholding obligations imposed on employer/payer), social security, workers’ compensation, unemployment compensation
or net worth; taxes or other charges in the nature of excise, withholding (as payor or payee), ad valorem, stamp, transfer, value-added
or gains taxes; license, registration and documentation fees; and customers’ duties, tariffs and similar charges.
“Tax Return”
means any return, declaration, report, election, claim for refund or information return or other statement or form filed or required
to be filed with any Governmental Authority relating to Taxes, including any schedule or attachment thereto, and including any
amendment thereof.
“Technology”
means and includes diagrams, inventions (whether or not patentable), invention disclosures, protocols, layout rules, schematics,
including, build instructions, test instructions, test reports, performance data, procedures, specifications, technical data,
product roadmaps, personnel information, customer purchasing histories and any other forms of technology, in each case whether
or not embodied in any tangible form and including all tangible embodiments of any of the foregoing.
“Third Party”
means any person or “group” (as defined under Section 13(d) of the Exchange Act) of persons, other than Parent or
any of its Affiliates or Representatives.
“Trademarks”
means trademarks, service names, service marks, domain names, uniform resource locators, trade dress, trade names, geographical
indications, logos and design marks, fictitious and other business names and identifiers, brand names, collective membership marks,
certification marks, slogans, 800 numbers, social media pages or designations, hash tags and other forms of indicia of origin,
whether or not registrable as a trademark in any given jurisdiction, including the goodwill symbolized thereby or associated therewith.
“Works of Authorship”
means Software, websites, content, images, graphics, text, photographs, artwork, audiovisual works, sound recordings, graphs,
drawings, reports, analyses, writings, and other works of authorship and copyrightable subject matter, and any modifications,
improvements and derivative works of any of the foregoing.
“Yili
Shengda” means Yili Shengda Investment Holdings (Hong Kong) Company Limited, a company formed under the laws of Hong Kong
and an Affiliate of Mr. Yingfeng Zhang.
“Zhengjun
Investment” means Ningxia Zhengjun Equity Investment Partnership Enterprise (Limited Partnership), a limited partnership
formed under the laws of the People’s Republic of China and an
Affiliate of Ningxia Yilida.
“Zhongrong Investment”
means Zhongrong Investment Holdings (Hong Kong) Co., Ltd., a company organized under the laws of Hong Kong and controlled by Ningxia
Zhongyincashmere.
“Zhongrong
Legend” means Ningxia Zhongrong Legend Equity Investment Partnership Enterprise (Limited Partnership), a limited
partnership formed under the laws of the People’s Republic of China
and controlled by Ningxia Zhongyincashmere.
“Zhongrong Shengda”
means Zhongrong Shengda Investment Holdings (Hong Kong) Company Limited, a company formed under the laws of Hong Kong and controlled
by Ningxia Zhongyincashmere.
(b) The following
terms have the meaning set forth in the Sections set forth below:
Defined Term |
Location of Definition |
|
|
ADS; ADSs |
Section 2.01(c) |
Agreement |
Preamble |
Alternative Acquisition Agreement |
Section 6.04(c) |
Arbitrator |
Section 9.09(b) |
Bankruptcy and Equity Exception |
Section 3.04(a) |
Change in the Company Recommendation |
Section 6.04(c) |
CICL |
Section 1.01 |
Class A Share; Class A Shares |
Section 2.01(a) |
Class B Shares |
Section 3.03(a) |
Closing |
Section 1.02 |
Closing Date |
Section 1.02 |
Company |
Preamble |
Company Board |
Recitals |
Company Group |
Section 8.06(h)(i) |
Company Intellectual Property |
Section 3.14(a) |
Company Owned IP |
Section 3.14(f) |
Company Recommendation |
Section 3.04(b) |
Company SEC Reports |
Section 3.07(a) |
Company Software |
Section 3.14(j) |
Company Termination Fee |
Section 8.06(a) |
Competing Transaction |
Section 6.04(e) |
Damages |
Section 6.05(c) |
Deposit Agreement |
Section 2.06 |
Depositary |
Section 2.06 |
Dissenting Shareholders |
Section 2.03(a) |
Dissenting Shares |
Section 2.03(a) |
Defined Term |
Location of Definition |
|
|
Effective Time |
Section 1.03 |
Environmental Permits |
Section 3.16(a) |
Equity Commitment Letters |
Section 4.05(a) |
Equity Financing |
Section 4.05(a) |
Exchange Act |
Section 3.05(b) |
Exchange Fund |
Section 2.04(a) |
Execution Date |
Preamble |
Financial Advisor |
Section 3.19 |
GAAP |
Section 3.07(c) |
Guarantor; Guarantors |
Recitals |
HKIAC |
Section 9.09(b) |
Indemnified Parties |
Section 6.05(b) |
Leased Real Property |
Section 3.13(b) |
Limited Guarantee; Limited Guarantees |
Recitals |
Material Contracts |
Section 3.17(a) |
Merger |
Recitals |
Merger Consideration |
Section 2.04(a) |
Merger Sub |
Preamble |
NASDAQ |
Section 3.03(a) |
NDA |
Section 3.17(a)(v) |
Notice of Superior Proposal |
Section 6.04(d) |
Order |
Section 7.01(b) |
Original Execution Date |
Preamble |
Original Merger Agreement |
Preamble |
Owned Real Property |
Section 3.13(a) |
Parent |
Preamble |
Parent Group |
Section 8.06(h)(i) |
Parent Termination Fee |
Section 8.06(b) |
Paying Agent |
Section 2.04(a) |
Per ADS Merger Consideration |
Section 2.01(c) |
Per Share Merger Consideration |
Section 2.01(a) |
Plan |
Section 3.11(a) |
Plan of Merger |
Section 1.03 |
Proceeding |
Section 3.10 |
Proxy Statement |
Section 3.05(b) |
Record ADS Holders |
Section 6.02(a) |
Record Date |
Section 6.02(a) |
Representatives |
Section 6.03(a) |
Requisite Company Vote |
Section 3.04(c) |
Requisite Regulatory Approvals |
Section 3.05(b) |
Rollover Shareholders |
Recitals |
SAFE |
Section 3.06 |
Schedule 13E-3 |
Section 6.01(a) |
SEC |
Section 3.07(a) |
Defined Term |
Location of Definition |
|
|
Securities Act |
Section 3.07(a) |
Share Certificates |
Section 2.04(b) |
Shares |
Section 3.03(a) |
Special Committee |
Recitals |
Superior Proposal |
Section 6.04(h) |
Superior Proposal Notice Period |
Section 6.04(d) |
Support Agreement |
Recitals |
Surviving Corporation |
Section 1.01 |
Takeover Statute |
Section 3.21 |
Termination Date |
Section 8.02(a) |
Transactions |
Recitals |
Uncertificated Shares |
Section 2.04(b) |
Section 9.04 Severability.
If any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that
the Transactions be consummated as originally contemplated to the fullest extent possible.
Section 9.05 Interpretation.
(a) When a reference
is made in this Agreement to a Section, Article or Exhibit such reference shall be to a Section, Article or Exhibit of this Agreement
unless otherwise indicated. The table of contents and headings contained in this Agreement or in any Exhibit are for convenience
of reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. All words used in
this Agreement will be construed to be of such gender or number as the circumstances require. Any capitalized terms used in any
Exhibit but not otherwise defined therein shall have the meaning set forth in this Agreement. All Exhibits annexed hereto or referred
to herein are hereby incorporated in and made a part of this Agreement as if set forth herein. The word “including”
and words of similar import when used in this Agreement will mean “including, without limitation,” unless otherwise
specified. The words “hereof,” “herein” and “hereunder” and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. 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. 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 and references to all attachments thereto and instruments incorporated therein. References to
a person are also to its permitted successors and assigns. 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 symbol “$” refers
to United States Dollars. All $ amounts used in Article III and Article V include
the equivalent amounts denominated in other currencies. The word “extent” in the phrase “to the extent”
means the degree to which a subject or other thing extends and such phrase shall not mean simply “if.” Reference to
“day” means a calendar day unless otherwise indicated as a “Business Day.”
(b) Notwithstanding
anything to the contrary elsewhere in this Agreement, (i) all references in this Agreement to “the date hereof”
or “the date of this Agreement” shall refer to the Original Execution Date, (ii) the date on which the representations
and warranties set forth in Articles III and IV are made shall not change as a result of the execution of this Agreement and shall
be made as of such dates as they were in the Original Merger Agreement, it being agreed that if any such representations and warranties
are not expressly made as of another date such representations and warranties shall be made as of the Original Execution Date,
and (iii) each reference to “this Agreement” or “herein” in the representations and warranties set forth
in Articles III and IV shall refer to “the Original Merger Agreement,” in each of cases (i), (ii) and (iii), unless
expressly indicated otherwise in this Agreement.
Section 9.06 Entire
Agreement; Assignment.
This Agreement (including
the Exhibits and Schedules hereto), the Company Disclosure Schedule and the Confidentiality Agreements constitute the entire agreement
among the parties with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written
and oral, among the parties, or any of them, with respect to the subject matter hereof. This Agreement shall not be assigned (whether
pursuant to a merger, by operation of Law or otherwise), except that Parent and Merger Sub may assign all or any of their rights
and obligations hereunder to any Affiliate of Parent, provided that no such assignment shall relieve the assigning party
of its obligations hereunder if such assignee does not perform such obligations.
Section 9.07 Parties
in Interest.
This Agreement shall
be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended
to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement,
other than Section 6.05 and Section 8.06(h) (which are intended to be for the benefit of the persons covered thereby and may be
enforced by such persons); provided that in no event shall any holders of Shares (including Shares represented by ADSs)
or holders of Company Options, Company RSs and Company RSUs, in each case in their capacity as such, have any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
Section 9.08 Specific
Performance.
(a) Subject to Section
9.08(b) and Section 9.08(d), the parties hereto agree that irreparable damage would occur in the event any provision of this Agreement
were not performed in accordance with the terms hereof by the parties, and that money damages or other legal remedies would not
be an adequate remedy for such damages. Accordingly, subject to Section 9.08(b) and Section 9.08(d), the parties hereto acknowledge
and hereby agree that in the event of any breach by the Company, on the one hand, or Parent or Merger Sub, on the other hand,
of any of their respective covenants or obligations set forth in this Agreement, the Company, on the one hand, or Parent or Merger
Sub, on the other hand, shall each be entitled to specific performance of the terms hereof (including the obligation of the parties
to consummate the Merger, subject in each case to the terms and conditions of this Agreement), including an injunction or injunctions
to prevent breaches of this Agreement by any party, in addition to any other remedy at law or equity (including, subject to Section
9.08(b), the Company demanding that Parent and Merger Sub use reasonable best efforts to obtain the Equity Financing in accordance
with Section 6.07).
(b) Notwithstanding
the foregoing, the Company’s right to seek or obtain an injunction or injunctions, or other appropriate form of specific
performance or equitable relief, in each case, with respect to causing Parent and/or Merger Sub to cause the Equity Financing
to be funded at any time and/or to effect the Closing in accordance with
Section 1.02, on the terms and subject to the conditions in this Agreement, shall be subject to the satisfaction of each of the
following conditions: (i) all conditions in Section 7.01 and Section 7.02 (other than those conditions that by their terms are
to be satisfied at the Closing) have been satisfied or waived, (ii) Parent and Merger Sub fail to complete the Closing by
the date on which the Closing is required to have occurred pursuant to Section 1.02 and (iii) the Company has irrevocably confirmed
in writing that (A) all conditions set forth in Section 7.03 have been satisfied or that it is willing to waive any of the conditions
to the extent not so satisfied in Section 7.03 and (B) if specific performance is granted and the Equity Financing is funded,
then the Closing will occur.
(c) Each party (i)
waives any defenses in any action for an injunction or other appropriate form of specific performance or equitable relief, including
the defense that a remedy at law would be adequate and (ii) waives any requirement under any Law to post a bond or other security
as a prerequisite to obtaining an injunction or other appropriate form of specific performance or equitable relief.
(d) Notwithstanding
anything herein to the contrary, (i) Parent and Merger Sub, on the one hand, and the Company, on the other hand, agree that the
election to pursue an injunction or other appropriate form of specific performance or equitable relief shall not restrict, impair
or otherwise limit Parent and Merger Sub or the Company from, in the alternative, seeking to terminate the Agreement and collect
the Company Termination Fee pursuant to Section 8.06(a), Expenses under Section 8.06(d) and expenses under Section 8.06(f), by
Parent on the one hand, or the Parent Termination Fee pursuant to Section 8.06(b), Expenses under Section 8.06(c) and expenses
under Section 8.06(f), by the Company on the other hand and (ii) upon the payment of such amounts, the remedy of specific
performance shall not be available against the party making such payment and, if such party is Parent or Merger Sub, any other
member of the Parent Group or, if such party is the Company, any other member of the Company Group.
(e) This
Section 9.08 shall not be deemed to alter, amend, supplement or otherwise modify the terms of any Equity Commitment Letter
(including the expiration or termination provisions thereof).
Section 9.09 Governing
Law; Dispute Resolution.
(a) This Agreement
shall be interpreted, construed and governed by and in accordance with the Laws of the State of New York without regard to the
conflicts of Law principles thereof that would subject such matter to the Laws of another jurisdiction, except that the following
matters arising out of or relating to this Agreement shall be interpreted, construed and governed by and in accordance with the
Laws of the Cayman Islands in respect of which the parties hereto hereby irrevocably submit to the nonexclusive jurisdiction of
the courts of the Cayman Islands: the Merger, the vesting of the undertaking, property and liabilities of Merger Sub in the Surviving
Corporation, the cancellation of the Shares (including Shares represented by ADSs), the rights provided for in Section 238 of
the CICL with respect to any Dissenting Shares, the fiduciary or other duties of the Company Board and the directors of Merger
Sub and the internal corporate affairs of the Company and Merger Sub.
(b) Subject to Section
9.08 and the last sentence of this Section 9.09(b), any disputes, actions and proceedings against any party or arising out of
or in any way relating to this Agreement shall be submitted to the Hong Kong International Arbitration Centre (“HKIAC”)
and resolved in accordance with the Arbitration Rules of HKIAC in force at the relevant time (the “Rules”)
and as may be amended by this Section 9.09. The place of arbitration shall be Hong Kong. The official language of the arbitration
shall be English and the arbitration tribunal shall consist of three arbitrators (each, an “Arbitrator”). The
claimant(s), irrespective of number, shall nominate jointly one Arbitrator; the respondent(s), irrespective of number, shall nominate
jointly one Arbitrator; and a third Arbitrator will be nominated jointly by the first two Arbitrators and shall serve as chairman
of the arbitration tribunal. In the event the claimant(s) or respondent(s) or the first two Arbitrators shall fail to nominate
or agree the joint nomination of an Arbitrator or the third Arbitrator within the time limits specified by the Rules, such Arbitrator
shall be appointed promptly by the HKIAC. The arbitration tribunal shall have no authority to award punitive or other punitive-type
damages. The award of the arbitration tribunal shall be final and binding upon the disputing parties. Any party to an award may
apply to any court of competent jurisdiction for enforcement of such award and, for purposes of the enforcement of such award,
the parties irrevocably and unconditionally submit to the jurisdiction of any court of competent jurisdiction and waive any defenses
to such enforcement based on lack of personal jurisdiction or inconvenient forum.
Section 9.10 Amendment.
This Agreement may
be amended by the parties hereto at any time prior to the Effective Time by action taken (a) with respect to Parent and Merger
Sub, by or on behalf of their respective boards of directors, and (b) with respect to the Company, by the Company Board (upon
recommendation of the Special Committee); provided that after the approval of this Agreement and the Transactions by the
shareholders of the Company, no amendment may be made that would reduce the amount or change the type of consideration in exchange
for which each Share (including Shares represented by ADSs) shall be cancelled upon consummation of the Merger. This Agreement
may not be amended except by an instrument in writing signed by each of the parties hereto.
Section 9.11 Waiver.
At any time prior
to the Effective Time, any party hereto may by action taken (a) with respect to Parent and Merger Sub, by or on behalf of
their respective boards of directors and (b) with respect to the Company, by action taken by or on behalf of the Special
Committee, (i) extend the time for the performance of any obligation or other act of any other party hereto, (ii) waive any
inaccuracy in the representations and warranties of any other party contained herein or in any document delivered pursuant hereto
and (iii) waive compliance with any agreement of any other party or any condition to its own obligations contained herein. Any
such extension or waiver shall be valid if set forth in an instrument in writing signed by the party or parties to be bound thereby.
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 9.12 Counterparts.
This Agreement may
be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto
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.
[Remainder of Page Left
Blank Intentionally]
IN WITNESS WHEREOF,
Parent, Merger Sub and the Company have caused this Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
|
CAPITALHOLD LIMITED |
|
|
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By: |
/s/ Zhang Yingfeng |
|
|
Name: Zhang Yingfeng |
|
|
Title: Director |
|
|
|
|
CAPITALCORP LIMITED |
|
|
|
|
By: |
/s/ Zhang Yingfeng |
|
|
Name: Zhang Yingfeng |
|
|
Title: Director |
[Signature Page
to Agreement and Plan of Merger]
IN WITNESS WHEREOF,
Parent, Merger Sub and the Company have caused this Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
|
SHANDA GAMES LIMITED |
|
|
|
|
By: |
/s/ Li Yao |
|
|
Name: Li Yao |
|
|
Title: CFO |
[Signature Page
to Agreement and Plan of Merger]
ANNEX A
PLAN OF MERGER
THIS PLAN OF MERGER is made on ________
2015.
BETWEEN
(1) Capitalcorp
Limited, an exempted company incorporated under the laws of the Cayman Islands on September 16, 2014, with its registered office
situate at the offices of Codan Trust Company (Cayman) Limited, Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman, KY1-1111,
Cayman Islands (“Merger Sub”); and
(2) Shanda Games
Limited, an exempted company incorporated under the laws of the Cayman Islands on June 12, 2008, with its registered office situate
at the offices of Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman, KY1-1111, Cayman Islands (the “Company”
or “Surviving Corporation” and together with Merger Sub, the “Constituent Companies”).
WHEREAS
(a) Merger Sub
and the Company have agreed to merge (the “Merger”) on the terms and conditions contained or referred to in an Agreement
and Plan of Merger (the “Agreement”) dated April 3, 2015, made between Capitalhold Limited, Merger Sub and the Company,
a copy of which is attached as Appendix I to this Plan of Merger and under the provisions of Part XVI of the Companies Law Cap.
22 (Law 3 of 1961, as consolidated and revised) (the “Companies
Law”) pursuant to which the Merger Sub will merge with and into the Company and cease to exist and the Surviving Corporation
will continue as the Surviving Corporation in the Merger.
(b) This Plan of
Merger is made in accordance with section 233 of the Companies Law.
(c) Terms used
in this Plan of Merger and not otherwise defined in this Plan of Merger shall have the meanings given to them in the Agreement.
WITNESSETH
CONSTITUENT COMPANIES
1. The constituent
companies (as defined in the Companies Law) to the Merger are Merger Sub and the Company.
NAME OF THE SURVIVING
CORPORATION
2. The name of the
surviving corporation (as defined in the Companies Law) shall be Shanda Games Limited.
REGISTERED OFFICE
3. The Surviving
Corporation shall have its registered office at the offices of Codan Trust Company (Cayman) Limited, Cricket Square, Hutchins
Drive, PO Box 2681, Grand Cayman, KY1-1111, Cayman Islands.
AUTHORIZED AND
ISSUED SHARE CAPITAL
4. Immediately prior
to the Effective Date (as defined below) the authorized share capital of Merger Sub was $1,000 divided into 100,000 ordinary shares
of $0.01 par value per share, of which one share has been issued.
5. Immediately prior
to the Effective Date the authorized share capital of the Company was $200,000,000 divided into 16,000,000,000 Class A ordinary
shares of a par value of $0.01 each and 4,000,000,000 Class B ordinary shares of a par value of $0.01 each, of which [·]
Class A ordinary shares and [·] Class B ordinary shares have been issued fully
paid.
6. The authorized
share capital of the Surviving Corporation shall be $1,000 divided into 100,000 ordinary shares of $0.01 par value per share.
7. On the Effective
Date, and in accordance with the terms and conditions of the Agreement:
(a) Each
Share issued and outstanding immediately prior to the Effective Date other than (i) the Excluded Shares and (ii) the Dissenting
Shares shall be cancelled in exchange for the right to receive the Per Share Merger Consideration, being US$3.55 without interest.
(b) Each
of the Excluded Shares issued and outstanding immediately prior to the Effective Date shall be cancelled without payment of any
consideration or distribution therefor.
(c) Each of the
Dissenting Shares of persons who have validly exercised and not withdrawn or lost their right to dissent from the merger pursuant
to Section 238 of the Companies Law shall be exchanged for a payment of the fair value of such shares resulting from the procedure
in Section 238 of the Companies Law.
(d) All
Shares issued and outstanding immediately prior to the Effective Date, including Shares represented by ADSs, shall cease to be
outstanding, shall be cancelled and shall cease to exist.
(e) Each
ordinary share of Merger Sub issued and outstanding immediately prior to the Effective Date shall be converted into one validly
issued and fully paid share of a nominal or par value $0.01 of the Surviving Corporation.
8. On the Effective
Date, the rights and restrictions attaching to ordinary shares of the Surviving Corporation are set out in the Amended and Restated
Memorandum of Association and Articles of Association of the Surviving Corporation in the form attached as Appendix II to this
Plan of Merger.
EFFECTIVE DATE
9. The Merger
shall take effect on [●], 2015 (the “Effective Date”).
PROPERTY
10. On the Effective
Date, the rights, property of every description including choses in action, and the business, undertaking, goodwill, benefits,
immunities and privileges of each of the Constituent Companies shall immediately vest in the Surviving Corporation which shall
be liable for and subject, in the same manner as the Constituent Companies, to all mortgages, charges, or security interests and
all contracts, obligations, claims, debts and liabilities of each of the Constituent Companies.
MEMORANDUM OF ASSOCIATION
AND ARTICLES OF ASSOCIATION
11. The Memorandum
of Association and Articles of Association of the Surviving Corporation shall be amended and restated in the form attached as
Appendix II to this Plan of Merger on the Effective Date.
DIRECTORS BENEFITS
12. There are no
amounts or benefits payable to the directors of the Constituent Companies upon the Merger taking effect.
DIRECTORS OF THE
SURVIVING CORPORATION
13. The names and
addresses of the directors of the Surviving Corporation are as follows:
SECURED CREDITORS
14. Merger Sub has
no secured creditors and has granted no fixed or floating security interests that are outstanding as of immediately prior to the
Merger; and the Company has no secured creditors and has granted no fixed or floating security interests that are outstanding
as at the date of this Plan of Merger.
RIGHT OF TERMINATION
15. This Plan of
Merger may be terminated pursuant to the terms and conditions of the Agreement at any time prior to the Effective Date.
APPROVAL AND AUTHORIZATION
16. This Plan of
Merger has been approved by the board of directors of each of Merger Sub and the Company pursuant to Section 233(3) of the Companies
Law.
17. This Plan of
Merger has been authorized by the shareholders of each of Merger Sub and the Company pursuant to Section 233(6) of the Companies
Law.
COUNTERPARTS
18. This Plan of
Merger may be executed by facsimile and in one or more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
GOVERNING LAW
19. This Plan of Merger
shall be governed by and construed in accordance with the Laws of the Cayman Islands.
For and on behalf of
Capitalcorp Limited:
[Name]
Director
For
and on behalf of the Company:
[Name]
Director
APPENDIX I
(the Agreement)
APPENDIX II
(Amended and Restated
Memorandum of Association and Articles of Association of the Surviving Corporation)
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