Exhibit 3.1

 

THE COMPANIES ACT

COMPANY LIMITED BY SHARES

FOURTH AMENDED AND RESTATED

MEMORANDUM OF ASSOCIATION OF

SHOUTI INC.

 

(adopted by a special resolution dated July 30, 2021, and effective on July 30, 2021)

 

1.

The name of the Company is ShouTi Inc.

 

2.

The Registered Office of the Company shall be at the offices of International Corporation Services Ltd., PO Box 472, 2nd Floor, Harbour Place, 103 South Church Street, George Town, Grand Cayman KY1-1106, Cayman Islands, or at such other place as the Directors may from time to time decide.

 

3.

The objects for which the Company is established are unrestricted.

 

4.

The Company shall have and be capable of exercising all the functions of a natural person of full capacity irrespective of any question of corporate benefit, as provided by Section 27(2) of the Companies Act.

 

5.

Nothing in this Memorandum shall permit the Company to carry on a business for which a licence is required under the laws of the Cayman Islands unless duly licensed.

 

6.

The Company shall not trade in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the Company carried on outside the Cayman Islands; provided that nothing in this clause shall be construed as to prevent the Company effecting and concluding contracts in the Cayman Islands, and exercising in the Cayman Islands all of its powers necessary for the carrying on of its business outside the Cayman Islands.

 

7.

The liability of each member is limited to the amount from time to time unpaid on such member’s shares.

 

8.

The authorised share capital of the Company is US$50,000 divided into (a) 443,298,587 Ordinary Shares of a par value of US$0.0001 each and (b) 56,701,413 Preferred Shares of a par value of US$0.0001 each.

 

9.

The Company may exercise the power contained in the Companies Act to deregister in the Cayman Islands and be registered by way of continuation in another jurisdiction.

 

 

THE COMPANIES ACT

COMPANY LIMITED BY SHARES

FOURTH AMENDED AND RESTATED

ARTICLES OF ASSOCIATION OF

SHOUTI INC.

 

(adopted by a special resolution dated July 30, 2021, and effective on July 30, 2021)

 

Table A

 

The regulations in Table A in the First Schedule to the Law (as defined below) do not apply to the Company.

 

INTERPRETATION

 

1.

Definitions

 

1.1

In these Articles, the following words and expressions shall, where not inconsistent with the context, have the following meanings, respectively:

 

	Additional Ordinary Shares	has the meaning set forth in Article 3.3(d)(i) hereof;
	Articles	these Fourth Amended and Restated Articles of Association, as amended and/or restated from time to time;
	Auditor	the person for the time being performing the duties of auditor of the Company (if any);
	Automatic Conversion Time	has the meaning set forth in Article 3.3(b) hereof;
	Board	the board of directors appointed or elected pursuant to these Articles and acting at a meeting of directors at which there is a quorum or by written resolution in accordance with these Articles;
	BVF	collectively, Biotechnology Value Fund, L.P., Biotechnology Value Fund II, L.P. and Biotechnology Value Trading Fund OS, L.P.
	Capital Account	has the meaning set forth in Article 65.1 hereof;
	Chairman	the chairman of the Board;
	Closing	has the meaning given such term in the Series B Purchase Agreement;
	Code	the U.S. Internal Revenue Code of 1986, as amended;
	Company	the company for which these Articles are approved and confirmed;

 

 

	Conversion Price	has the meaning set forth in Article 3.3(a) hereof;
	Convertible Securities	any bonds, debentures, notes or other evidences of indebtedness, and any warrants, shares or any other securities convertible into, exercisable for, or exchangeable for, Ordinary Shares, but excluding Options;
	Director	a director of the Company;
	Dividend	includes an interim dividend;
	Exempted Securities	has the meaning set forth in Article 3.3(d)(i) hereof;
	Imputed Underpayment Amount	has the meaning set forth in Article 19.4 hereof;
	Interested Transaction	has the meaning set forth in Article 50.4 hereof;
	Law	the Companies Act of the Cayman Islands and every modification, reenactment or revision thereof for the time being in force;
	Liquidation Event	has the meaning set forth in Article 3.2(a) hereof;
	Member	the person registered in the Register of Members as the holder of Shares in the capital of the Company and, when two or more persons are so registered as joint holders of Shares, means the person whose name stands first in the Register of Members as one of such joint holders or all of such persons, as the context so requires;
	Memorandum	the Fourth Amended and Restated Memorandum of Association of the Company, as amended and/or restated from time to time;
	Month or month	calendar month;
	Notice	written notice as further provided in these Articles unless otherwise specifically stated;
	Officer	any person appointed by the Board to hold an office in the Company;
	Options	rights, options or warrants to subscribe for, purchase or otherwise acquire Ordinary Shares or Convertible Securities;
	Ordinary Director	has the meaning set forth in Article 38 hereof;
	Ordinary Share	an ordinary share of US$0.0001 par value in the capital of the Company having the rights attaching to it set out herein;
	Ordinary Resolution	a resolution passed at a general meeting (or, if so specified, a meeting of Members holding a class of Shares) of the Company by a simple majority of the votes cast, or a unanimous written resolution passed by all Members entitled to vote;

 

 

	Original Issue Price	US$2.0313 per Series A+ Preferred Share, and US$4.0483 per Series B Preferred Share, as the case may be, in each case, as adjusted for any share Dividends, combinations, reclassifications or splits with respect to such Share;
	Paid-Up	paid-up or credited as paid-up;
	Preferred Directors	has the meaning set forth in Article 38 hereof;
	Preferred Majority	the holders of at least a majority of the then outstanding Preferred Shares, voting together as a single class on an as-converted basis;
	Preferred Share	a preferred share of any series of US$0.0001 par value in the capital of the Company having the rights attaching to it set out herein;
	Qualified IPO	has the meaning set forth in Article 3.3(b) hereof;
	Redemption Date	the Series A Redemption Date, the Series A+ Redemption Date, and/or the Series B Redemption Date, as the case may be;
	Redemption Price	the Series A Redemption Price, the Series A+ Redemption Price, and/or the Series B Redemption Price, as the case may be;
	Redemption Start Date	has the meaning set forth in Article 3.5(b)(i) hereof;
	Register of Directors and Officers	the register of directors and officers referred to in these Articles;
	Register of Members	the register of Members referred to in these Articles;
	Registered Office	the registered office for the time being of the Company;
	Requisite Preferred Directors	at least one Series B Director, at least one Series A+ Director and at least one Series A Director;
	Seal	the common seal or any official or duplicate seal of the Company;
	Secretary	the person appointed to perform any or all of the duties of secretary of the Company and includes any deputy or assistant secretary and any person appointed by the Board to perform any of the duties of the Secretary;
	Series A Directors	has the meaning set forth in Article 38 hereof;
	Series A Initial Closing Date	April 29, 2019

 

 

	Series A Majority	the holders of a majority of the then outstanding Series A Preferred Shares, voting together as a Series separate class;
	Series A Preferred Share	a Preferred Share designated as a Series A Preferred Share on allotment and issue having the rights attaching to it set out herein;
	Series A Redemption Date	has the meaning set forth in Article 3.5(d)(i) hereof;
	Series A Redemption Notice	has the meaning set forth in Article 3.5(d) ii) hereof;
	Series A Redemption Price	has the meaning set forth in Article 3.5(d)(i) hereof;
	Series A+ Directors	has the meaning set forth in Article 38 hereof;
	Series A/A+ Preferred Shares	collectively, the Series A Preferred Shares and the Series A+ Preferred Shares; and the “Series A/A+ Preferred Share” shall mean any of the Series A Preferred Shares and/or the Series A+ Preferred Shares;
	Series A+ Majority	the holders of at least fifty-one percent (51%) of the then outstanding Series A+ Preferred Shares, voting together as a separate class;
	Series A+ Preferred Share	a Preferred Share designated as a Series A+ Preferred Share on allotment and issue having the rights attaching to it set out herein;
	Series A+ Redemption Date	has the meaning set forth in Article 3.5(c)(i) hereof;
	Series A+ Redemption Date Notice	has the meaning set forth in Article 3.5(c)(ii) hereof;
	Series A/A+ Redemption Price	has the meaning set forth in Article 3.5(c)(ii) hereof;
	Series B Director	has the meaning set forth in Article 38 hereof;
	Series B Majority	the holders of at least seventy-one percent (71%) of the then outstanding Series B Preferred Shares, voting together as a separate class;
	Series B Preferred Share	a Preferred Share designated as a Series B Preferred Share on allotment and issue having the rights attaching to it set out herein;
	Series B Purchase Agreement	the Series B Preferred Share Purchase Agreement dated July 30, 2021, by and among the Company and the other parties set forth therein (as the same may be amended from time to time);
	Series B Redemption Date	has the meaning set forth in Article 3.5(b)(i) hereof;
	Series B Redemption Notice	has the meaning set forth in Article 3.5(b)(ii) hereof;

 

 

	Series B Redemption Price	has the meaning set forth in Article 3.5(b)(i) hereof;
	Share or Shares	share or shares in the capital of the Company and includes a fraction of a share and includes, without limitation, any Ordinary Share and Preferred Share;
	Special Resolution	a resolution passed as such at a general meeting (or, if so specified, a meeting of Members holding a class of Shares) of the Company by a majority of not less than two thirds of the votes cast, as provided in the Law, or a unanimous written resolution passed as such by all Members entitled to vote as provided in Article 30.1 hereof;
	Subsidiary Trade Sale	has the meaning set forth in Article 3.2(c) hereof;
	Withholding Payment	has the meaning set forth in Article 19.4 hereof;
	Written Resolution	a resolution passed in accordance with Article 36 or 58 hereof; and
	Year or year	calendar year.

 

1.2

In these Articles, where not inconsistent with the context:

 

(a)

words denoting the plural number include the singular number and vice versa;

 

(b)

words denoting the masculine gender include the feminine and neuter genders;

 

(c)

words importing persons include companies, associations or bodies of persons whether corporate or not;

 

(d)

the words:

 

(i)

“may” shall be construed as permissive; and

 

(ii)

“shall” shall be construed as imperative;

 

(e)

a reference to statutory provision shall be deemed to include any amendment or re-enactment thereof; and

 

(f)

unless otherwise provided herein, words or expressions defined in the Law shall bear the same meaning in these Articles.

 

1.3

In these Articles expressions referring to writing or its cognates shall, unless the contrary intention appears, include facsimile, printing, lithography, photography, electronic mail and other modes of representing words in visible form.

 

1.4

Headings used in these Articles are for convenience only and are not to be used or relied upon in the construction hereof.

 

1.5

Sections 8 and 19 of the Electronic Transactions Act (as amended) of the Cayman Islands shall not apply.

 

 

SHARES

 

2.

Power to Issue Shares

 

2.1

Subject to the Memorandum and to the provisions of Articles 3 and 4 hereof and without prejudice to any special rights previously conferred on the holders of any existing Shares or class of Shares, the Board shall have the power to allot and issue two classes of Shares of the Company (including the issue or grant of options, warrants and other rights, renounceable or otherwise in respect of Shares) to be designated, respectively, as Ordinary Shares and Preferred Shares. The Preferred Shares may be allotted and issued from time to time in one or more series. The series of Preferred Shares shall be designated prior to their allotment and issue; provided, however, (a) 19,200,000 Preferred Shares are designated “Series A Preferred Shares” as of the adoption of these Articles, (b) 12,799,681 Preferred Shares are hereby designated “Series A+ Preferred Shares” as of the adoption of these Articles, and (c) 24,701,732 Preferred Shares are hereby designated “Series B Preferred Shares” as of the adoption of these Articles. In the event that any Preferred Shares shall be converted pursuant to Article 3.3 hereof, the Preferred Shares so converted shall be redeemed and cancelled and the Members may thereafter take such appropriate action as may be necessary to reduce the authorized number of Preferred Shares accordingly. Further, any Preferred Share acquired by the Company by reason of redemption, repurchase, conversion or otherwise shall be cancelled and the Members may thereafter take such appropriate action as may be necessary to reduce the authorized number of Preferred Shares accordingly.

 

2.2

The Company shall not issue Shares to bearer.

 

3.

Preferred Shares

 

Certain rights, preferences, privileges and limitations of Preferred Shares are as follows:

 

3.1

Dividends. The holders of outstanding Preferred Shares shall be entitled, on a pari passu basis, to participate ratably (on an as if converted to Ordinary Shares basis) in the payment of any Dividends when, as and if declared by the Board on the Ordinary Shares. Such Dividends shall not be cumulative, and no rights shall accrue to the holders of Preferred Shares by reason of the fact that Dividends on such Shares are not declared or paid in any prior year.

 

3.2

Liquidation Preference.

 

(a)

Liquidation Event. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary (a “Liquidation Event”), the holders of Ordinary Shares and Preferred Shares shall, subject to the Law and these Articles, be entitled to receive amounts according to the following arrangements:

 

(i)

The holders of Series B Preferred Shares shall be entitled to receive, on a pari passu basis and prior and in preference to any distribution of the assets or surplus funds of the Company to the holders of Series A/A+ Preferred Shares, Ordinary Shares or any other equity securities of the Company, by reason of their ownership thereof, an amount equal to the Original Issue Price per Series B Preferred Share then held by them, plus all declared but unpaid Dividends with respect to such Series B Preferred Share. If upon the occurrence of a Liquidation Event, the assets and funds of the Company available to be distributed among the holders of Series B Preferred Shares shall be insufficient to permit the payment to the holders of Series B Preferred Shares of the full preferential amount due to them for their Series B Preferred Shares under this Article 3.2(a)(i), the entire assets and funds of the Company legally available for distribution to them shall be distributed ratably among the holders of Series B Preferred Shares in proportion to the preferential amount to which each such holder would otherwise be entitled.

 

 

(ii)

Upon the completion in full of the distribution required to be paid to the holders of Series B Preferred Shares by the preceding Article 3.2(a)(i), the holders of Series A/A+ Preferred Shares shall be entitled to receive, on a pari passu basis and prior and in preference to any distribution of the assets or surplus funds of the Company to the holders of Ordinary Shares or any other equity securities of the Company (excluding the Series B Preferred Shares), by reason of their ownership thereof, an amount equal to the applicable Original Issue Price per Series A/A+ Preferred Share then held by them, plus all declared but unpaid Dividends with respect to such Series A/A+ Preferred Share. If upon the occurrence of a Liquidation Event, the assets and funds of the Company available to be distributed among the holders of Series A/A+ Preferred Shares shall be insufficient to permit the payment to the holders of Series A/A+ Preferred Shares of the full preferential amount due to them for their Series A/A+ Preferred Shares, the entire remaining assets and funds of the Company legally available for distribution to them shall be distributed ratably among the holders of Series A/A+ Preferred Shares in proportion to the preferential amount to which each such holder would otherwise be entitled.

 

(iii)

Upon the completion in full of the distributions required by the preceding Articles 3.2(a)(i) and 3.2(a)(ii), the entire remaining assets and funds of the Company legally available for distribution shall be distributed with equal priority among the holders of Preferred Shares and the holders of Ordinary Shares, pro rata based on the number of Shares held by each such holder, treating for such purpose all Preferred Shares as if they had been converted to Ordinary Shares pursuant to Article 3.3 hereof, until such time as the aggregate amount distributed to the holders of Preferred Shares under Articles 3.2(a)(i), (ii) and (iii) is equal to three (3) times the applicable Original Issue Price per Preferred Share then held by them.

 

(iv)

Upon the completion of the distribution required by the preceding Articles 3.2(a)(i), 3.2(a)(ii) and 3.2(a)(iii), the entire remaining assets and funds of the Company legally available for distribution shall be distributed with equal priority and pro rata among the holders of Ordinary Shares. Notwithstanding the above, for purposes of determining the amount each holder of Preferred Shares is entitled to receive with respect to a Liquidation Event, each such holder of Preferred Shares shall be deemed to have converted (regardless of whether such holder actually converted or not) such holder’s Preferred Shares into Ordinary Shares immediately prior to the Liquidation Event if, as a result of an actual conversion, such holder would receive, in the aggregate, an amount greater than the amount that would be distributed to such holder if such holder did not convert Preferred Shares into Ordinary Shares. If any such holder shall be deemed to have converted Preferred Shares into Ordinary Shares pursuant to this paragraph (iv), then such holder shall not be entitled to receive any distribution that would otherwise be made to holders of Preferred Shares that have not converted (or have not been deemed to have converted) into Ordinary Shares.

 

(b)

Subsidiary Trade Sale. In the event of any Subsidiary Trade Sale, subject to the Law and these Articles, the entirety of the consideration received by the Company for such Subsidiary Trade Sale (net of any retained liabilities associated with the transaction, as determined in good faith by the Directors) that is legally available for distribution shall be distributed by the Company with equal priority among the holders of Preferred Shares and Ordinary Shares, pro rata based on the number of Shares held by such holder, treating for such purpose all Preferred Shares as if they had been converted to Ordinary Shares pursuant to Article 3.3 hereof. The Company shall not have the power to effect a Subsidiary Trade Sale in which the resulting proceeds are not distributed to the holders of Shares in accordance with the foregoing sentence.

 

 

(c)

Certain Definitions. For purposes of this Article 3.2, unless waived in writing by the Series A Majority, the Series A+ Majority and the Series B Majority, a Liquidation Event shall be deemed to be occasioned by, or to include (without in any way limiting the original meaning of Liquidation Event): (i) the acquisition of the Company or of at least fifty percent (50%) of all of the outstanding Shares (on an as-converted basis) of the Company by another entity by means of any transaction or series of related transactions (including, without limitation, any merger, amalgamation, consolidation or share purchase, but excluding any merger effected exclusively for the purpose of changing the domicile of the Company) unless the Company’s shareholders of record as constituted immediately prior to such transaction or series of related transactions will, immediately after such transaction or series of related transactions (by virtue of securities issued as consideration for the Company’s acquisition or sale or otherwise) hold a majority of the voting power of the surviving or acquiring entity (or its parent); (ii) a sale, lease or other disposition (but not including a transfer or lease by pledge or mortgage to a bona fide lender) of all or substantially all of the assets of the Company (or any series of related transactions resulting in such sale, lease or other disposition of all or substantially all of the assets of the Company); or (iii) an exclusive, irrevocable license to all or substantially all of the intellectual property of the Company (or any series of related transactions resulting in such exclusive, irrevocable license to all or substantially all the intellectual property of the Company). A “Subsidiary Trade Sale” shall mean (x) the acquisition of a subsidiary of the Company or of at least fifty percent (50%) of all of the outstanding capital stock (on an as- converted basis) of such subsidiary by another entity by means of any transaction or series of related transactions (including, without limitation, any merger, amalgamation, consolidation or share purchase, but excluding any merger effected exclusively for the purpose of changing the domicile of subsidiary) unless such subsidiary’s shareholder(s) of record as constituted immediately prior to such transaction or series of related transactions will, immediately after such transaction or series of related transactions (by virtue of securities issued as consideration for such subsidiary’s acquisition or sale or otherwise) hold a majority of the voting power of the surviving or acquiring entity (or its parent); (y) a sale, lease or other disposition (but not including a transfer or lease by pledge or mortgage to a bona fide lender) of all or substantially all of the assets of a subsidiary of the Company (or any series of related transactions resulting in such sale, lease or other disposition of all or substantially all of the assets of such subsidiary); or (z) an exclusive, irrevocable license to all or substantially all of the intellectual property of a subsidiary of the Company (or any series of related transactions resulting in such exclusive, irrevocable license to all or substantially all of the intellectual property of such subsidiary), in each case, excluding any transaction or series of related transactions that would otherwise constitute a Liquidation Event. For clarity, any transaction or series of related transactions in which all or substantially all of the value of the Company and its subsidiaries, taken as a whole (as determined in good faith by a majority of the Board of Directors, including at least one Series B Director), is transferred, sold, exclusively licensed or otherwise disposed of, then such transaction or series of related transactions shall not be a Subsidiary Trade Sale, but shall instead constitute a Liquidation Event.

 

(d)

Amount Deemed Paid or Distributed. In any of the events specified in Article 3.2(c) above, if the consideration received by the Company or its shareholders (or any subsidiary of the Company and such subsidiary’s shareholders(s)) is other than cash, its value will be deemed its fair market value as determined (unless otherwise provided for herein) in good faith by the Directors, including the approval of the Requisite Preferred Directors.

 

(e)

Allocation of Contingent Consideration. In the event of a deemed Liquidation Event pursuant to Article 3.2(c)(i), if any portion of the consideration payable to the shareholders of the Company is placed into escrow and/or is payable to the shareholders of the Company subject to contingencies, the definitive agreement with respect to such deemed Liquidation Event shall provide that (a) the portion of such consideration that is not placed in escrow and not subject to any contingencies (the “Initial Consideration”) shall be allocated among the holders of share capital of the Company in accordance with Article 3.2(a) as if the Initial Consideration were the only consideration payable in connection with such deemed Liquidation Event and (b) any additional consideration that becomes payable to the shareholders of the Company upon release from escrow or satisfaction of contingencies shall be allocated among the holders of share capital of the Company in accordance with Article 3.2(a) after taking into account the previous payment of the Initial Consideration as part of the same transaction.

 

 

3.3

Conversion. The holders of Preferred Shares shall have conversion rights as follows:

 

(a)

Right to Convert. Each Preferred Share shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such Share at the office of the Company or any transfer agent for such Share, subject to Article 3.3(g)(i) hereof, into such number of fully-paid and non- assessable Ordinary Shares as is determined by dividing (i) the applicable Original Issue Price by the Conversion Price applicable to such Preferred Share, determined as hereinafter provided, in effect on the date the certificate is surrendered by such holder to the Company or the transfer agent for conversion; provided that such holder may waive such option to convert upon written notice to the Company. The initial “Conversion Price” shall be US$1.6667 per Series A Preferred Share, US$2.0313 per Series A+ Preferred Share, and US$4.0483 per Series B Preferred Share, as the case may be. Such initial Conversion Price shall be subject to adjustment as set forth in this Article 3.3.

 

(b)

Automatic Conversion. Each Preferred Share shall automatically be converted, subject to Article 3.3(g)(i) hereof, into Ordinary Shares at the applicable Conversion Price at the time in effect for such Share immediately upon the earlier of: (i) the consummation of an initial public offering of the Ordinary Shares on an internationally recognized stock exchange (which may include, without limitation, the Hong Kong Exchange, the New York Stock Exchange or the NASDAQ Stock Market, but which shall not include the National Equities Exchange and Quotations of China) at a public offering price per share price that implies a market capitalization of the Company immediately prior to the offering of not less than US$400,000,000, and having an aggregate offering amount of not less than US$60,000,000 (a “Qualified IPO”), provided, however, if the per share price to the public in the Qualified IPO is less than the Original Issue Price for the Series B Preferred Shares in effect on the date of, and immediately prior to, the Qualified IPO, the automatic conversion of the Series B Preferred Shares into the Ordinary Shares pursuant to this Article 3.3(b)(i) shall be subject to the prior consent of the Series B Majority, or (ii) the date specified by the written consent or agreement of the Series A Majority, the Series A+ Majority and the Series B Majority (the earlier of (i) and (ii), the “Automatic Conversion Time”) . Upon such automatic conversion, any declared and unpaid Dividends shall be paid in accordance with the provisions of Article 3.3(c).

 

(c)

Mechanics of Conversion. Before any holder of Preferred Shares shall be entitled to convert the same into Ordinary Shares pursuant to Article 3.3(a) hereof, such holder shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Company or of any transfer agent for the Preferred Shares, and shall give written notice to the Company, at its principal corporate office, of the election to convert the same and shall state therein the name or names in which the certificate or certificates for Ordinary Shares are to be issued. In the event of an automatic conversion pursuant to Article 3.3(b) hereof, the Company shall give written notice to all of the holders of record of Preferred Shares of the Automatic Conversion Time and the place designated for surrender of the certificates representing Preferred Shares. At the Automatic Conversion Time, all then outstanding Preferred Shares shall be converted into Ordinary Shares, which Ordinary Shares shall be deemed to be outstanding of record, automatically and without any further action by the holders of such shares and whether or not the certificate or certificates representing the converted Preferred Shares are surrendered to the Company or its transfer agent. The Company shall, as soon as practicable after receipt of the certificate or certificates in the case of a conversion pursuant to Article 3.3(a) hereof or after the Automatic Conversion Time in the case of a conversion pursuant to Article 3.3(b) hereof, issue and deliver to each applicable holder of Preferred Shares, or to the nominee or nominees of such holder, a certificate or certificates for the number of Ordinary Shares to which such holder shall be entitled as aforesaid and a check payable to the holder in the amount of any declared but unpaid Dividends on the converted Preferred Shares, which Dividends, notwithstanding anything to the contrary in these Articles, shall be payable in cash or in kind (in the event of a share dividend) at such holder’s option. Such conversion may be made in any manner permitted by applicable law, including (without limitation) by redemption and cancellation of the Preferred Shares and issuance of new Ordinary Shares in consideration for them, and shall be deemed to have been made when the corresponding entries have been made in the Register of Members, and the person or persons or entity or entities entitled to receive the Ordinary Shares issuable upon such conversion shall be treated for all purposes as the record holder or holders of such Ordinary Shares as of such date. If the conversion is in connection with an public offering of the Company’s securities, the conversion may, at the option of any holder tendering Preferred Shares for conversion, be conditioned upon the closing of the sale of securities pursuant to such offering, in which event the person or persons or entity or entities entitled to receive the Ordinary Shares upon conversion of the Preferred Shares shall not be deemed to have converted such Preferred Shares until the Register of Members is updated immediately prior to the closing of such sale of securities.

 

 

(d)

Adjustments to Conversion Price for Diluting Issuances.

 

(i)

Special Definition. “Additional Ordinary Shares” shall mean all Ordinary Shares issued (or, pursuant to Article 3.3(d)(iii) hereof, deemed to be issued) by the Company after the date on which these Articles are adopted, other than (the following, collectively, the “Exempted Securities”):

 

(aa)

Ordinary Shares issued or issuable upon conversion of Preferred Shares;

 

(bb)

Ordinary Shares, Options or Convertible Securities issued or issuable as a Dividend or distribution on Preferred Shares or pursuant to any event for which adjustment is made pursuant to Article 3.3(e) or 3.3(f) hereof;

 

(cc)

Ordinary Shares, Options or Convertible Securities issued or issuable to any employee, officer or Director of, or consultant to, the Company or any of its subsidiaries pursuant to a plan, agreement or similar arrangement approved by the Board, including the Requisite Preferred Directors;

 

(dd)

Ordinary Shares or Convertible Securities issued or issuable upon the occurrence of any contingent right or the exercise of any Option, or Ordinary Shares issued or issuable upon the conversion or exchange of any Convertible Security, in each case, that is outstanding on the date of the Closing;

 

(ee)

Ordinary Shares, Options or Convertible Securities issued or issuable to any bank, equipment lessor or other institutional lender pursuant to any debt financing or equipment leasing transaction, in each case as approved by the Board, including the Requisite Preferred Directors;

 

(ff)

Ordinary Shares, Options or Convertible Securities issued or issuable in connection with sponsored research, collaboration, technology license, development, OEM, marketing or other similar agreements or strategic partnerships, in each case as approved by the Board, including the Requisite Preferred Directors, and provided that any such issuance is primarily for reasons other than financing;

 

 

(gg)

Ordinary Shares, Options or Convertible Securities issued or issuable as acquisition consideration pursuant to the acquisition of another entity by the Company by merger, amalgamation, consolidation, scheme of arrangement, purchase of all or substantially all of the assets or capital stock of such entity or other reorganization, each as approved by the Board, including the Requisite Preferred Directors, and provided that any such issuance is primarily for reasons other than financing;

 

(hh)

Preferred Shares issued pursuant to the Series B Purchase Agreement; and

 

(ii)

Ordinary Shares, Options, Convertible Securities or other securities that are expressly determined not to be Additional Ordinary Shares hereunder in writing by the Preferred Majority.

 

(ii)

No Adjustment of Conversion Price. No adjustment in the applicable Conversion Price shall be made in respect of the issuance of Additional Ordinary Shares unless the consideration per share for an Additional Ordinary Share issued or deemed to be issued by the Company is less than the applicable Conversion Price in effect on the date of, and immediately prior to, such issuance, as provided for by Article 3.3(d)(iv) hereof. No adjustment in the applicable Conversion Price otherwise required by this Article 3.3 shall affect any Ordinary Shares issued upon conversion of any Preferred Share prior to such adjustment.

 

(iii)

Deemed Issuance of Additional Ordinary Shares. In the event the Company at any time or from time to time after the date on which the first Series B Preferred Share is issued shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any series of securities entitled to receive any such Options or Convertible Securities, then the maximum number of Ordinary Shares (as set forth in the instrument relating thereto, assuming satisfaction of any conditions to exercisability, convertibility or exchangeability but without regard to any provisions contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities or the exercise of such Options, shall be deemed to be Additional Ordinary Shares issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, provided that Additional Ordinary Shares shall not be deemed to have been issued unless the consideration per share (determined pursuant to Article 3.3(d)(v) hereof) of such Additional Ordinary Shares would be less than the applicable Conversion Price, as provided for by Article 3.3(d)(iv) hereof, in effect on the date of and immediately prior to such issue or record date, as the case may be, and provided further that in any such case in which Additional Ordinary Shares are deemed to be issued:

 

(aa)

no further adjustment in the applicable Conversion Price shall be made upon the subsequent issue of Convertible Securities or Ordinary Shares upon the exercise of such Options or conversion or exchange of such Convertible Securities or upon the subsequent issue of Options for Convertible Securities or Ordinary Shares;

 

(bb)

if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase in the consideration payable to the Company, or decrease in the number of Ordinary Shares issuable, upon the exercise, conversion or exchange thereof, the applicable Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities;

 

 

(cc)

no readjustment pursuant to the immediately preceding paragraph (bb) shall have the effect of increasing the applicable Conversion Price to an amount which exceeds the lower of: (i) the applicable Conversion Price on the original adjustment date or (ii) the applicable Conversion Price that would have resulted from any issuance of Additional Ordinary Shares between the original adjustment date and such readjustment date;

 

(dd)

upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities that shall not have been exercised, the applicable Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto) and any subsequent adjustments based thereon shall, upon such expiration, be recomputed as if:

 

(i)

in the case of Convertible Securities or Options for Ordinary Shares, the only Additional Ordinary Shares issued were the Ordinary Shares, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the Company for the issue of such exercised Options plus the consideration actually received by the Company upon such exercise or for the issue of all such Convertible Securities that were actually converted or exchanged, plus the additional consideration, if any, actually received by the Company upon such conversion or exchange; and

 

(ii)

in the case of Options for Convertible Securities, only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options, and the consideration received by the Company for the Additional Ordinary Shares deemed to have been then issued was the consideration actually received by the Company for the issue of such exercised Options, plus the consideration deemed to have been received by the Company (determined pursuant to Article 3.3(d)(v) hereof) upon the issue of the Convertible Securities with respect to which such Options were actually exercised; and

 

(ee)

if such record date shall have been fixed and such Options or Convertible Securities are not issued on the date fixed therefor, the adjustment previously made in the applicable Conversion Price which became effective on such record date shall be canceled as of the close of business on such record date, and thereafter the applicable Conversion Price shall be adjusted pursuant to this Article 3.3(d)(iii) as of the actual date of their issuance.

 

 

(iv)

Adjustment of the Conversion Price Upon Issuance of Additional Ordinary Shares. In the event the Company shall, at any time after the date on which the first Series B Preferred Share is issued, issue Additional Ordinary Shares (including Additional Ordinary Shares deemed to be issued pursuant to Article 3.3(d)(iii) hereof) without consideration or for a consideration per share less than the applicable Conversion Price in effect on the date of, and immediately prior to, such issuance, then and in such event, such Conversion Price shall be reduced, concurrently with such issuance, to a price determined by multiplying such Conversion Price immediately prior to such issuance by a fraction, the numerator of which shall be the sum of the number of Ordinary Shares outstanding immediately prior to such issue plus the number of Ordinary Shares issuable upon conversion of Preferred Shares and exercise or conversion of all Options and Convertible Securities outstanding immediately prior to such issuance plus the number of Ordinary Shares that the aggregate consideration received by the Company for the total number of Additional Ordinary Shares so issued would purchase at such applicable Conversion Price, and the denominator of which shall be the sum of the number of Ordinary Shares outstanding immediately prior to such issuance plus the number of Ordinary Shares issuable upon conversion of Preferred Shares and exercise or conversion of all Options and Convertible Securities outstanding immediately prior to such issuance plus the number of such Additional Ordinary Shares so issued.

 

(v)

Determination of Consideration. For purposes of this Article 3.3(d), the consideration received by the Company for the issuance of any Additional Ordinary Shares shall be computed as follows:

 

(aa)

Cash and Property. Such consideration shall:

 

(i)

insofar as it consists of cash, be computed at the aggregate amount of cash received by the Company excluding amounts paid or payable for accrued interest or accrued Dividends and excluding any discounts, commissions or placement fees payable by the Company to any underwriter or placement agent in connection with the issuance of any Additional Ordinary Shares;

 

(ii)

insofar as it consists of property other than cash, be computed at the fair value thereof at the time of such issue, as reasonably determined in good faith by the Directors, including the approval of the Requisite Preferred Directors; and

 

(iii)

in the event Additional Ordinary Shares are issued together with other Shares or securities or other assets of the Company for consideration which covers both, be the proportion of such consideration so received for the Additional Ordinary Shares, computed as provided in the immediately preceding paragraphs (i) and (ii), as reasonably determined in good faith by the Directors, including the approval of the Requisite Preferred Directors.

 

(bb)

Options and Convertible Securities. The consideration per share received by the Company for Additional Ordinary Shares deemed to have been issued pursuant to Article 3.3(d)(iii) hereof, relating to Options and Convertible Securities, shall be determined by dividing (i) the total amount, if any, received or receivable by the Company as consideration for the issue of such Options or Convertible Securities (determined in the manner described in the immediately preceding paragraph (aa)), plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities by (ii) the maximum number of Ordinary Shares (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities.

 

 

(iv)

Multiple Closing Dates. In the event the Company shall issue or sell, or shall be deemed to have issued or sold, on more than one date Additional Ordinary Shares that are a part of one transaction or a series of related transactions and that would result in an adjustment to the applicable Conversion Price pursuant to Article 3.3(d)(iv) above, and such issuance dates occur within a period of no more than ninety (90) days from the first such issuance to the final such issuance, then upon the final such issuance the applicable Conversion Price shall be readjusted to give effect to all such issuances as if they had occurred on the closing date of the first such issuance (and without giving effect to any additional adjustments as a result of any such subsequent issuances within such ninety (90) day period).

 

(e)

Adjustments for Share Dividends, Subdivisions or Combinations of Ordinary Shares. In the event the Company at any time after the date on which the first Series B Preferred Share is issued shall declare or pay without consideration any Dividends on the Ordinary Shares payable in Ordinary Shares or in any right to acquire Ordinary Shares, or in the event the outstanding Ordinary Shares shall be subdivided (by share split or otherwise than by payment of a Dividend in Ordinary Shares and without a corresponding adjustment to Preferred Shares), into a greater number of Ordinary Shares, the applicable Conversion Price in effect immediately prior to such dividend, declaration, payment or subdivision shall, concurrently with the effectiveness of any such event, be proportionately decreased. In the event the outstanding Ordinary Shares shall be combined (by reclassification or otherwise) into a lesser number of Ordinary Shares and without a corresponding adjustment to Preferred Shares, the applicable Conversion Price in effect immediately prior to such combination shall, concurrently with the effectiveness of such combination, be proportionately increased.

 

(f)

Adjustments for Reclassification, Exchange and Substitution. Subject to Article 3.2(c) hereof, if the Ordinary Shares issuable upon conversion of Preferred Shares shall be changed into the same or a different number of Shares of any other series of Shares, whether by capital reorganization, reclassification or otherwise (other than a subdivision or combination of Shares provided for in Article 3.3(e) above), then, concurrently with the effectiveness of such reorganization or reclassification, each Preferred Share shall be convertible into, in lieu of the number of Ordinary Shares which the holder of such Preferred Share would otherwise have been entitled to receive, a number of Shares of such other series of Shares which a holder of the number of Ordinary Shares deliverable upon conversion of such Preferred Share immediately before that change would have been entitled to receive in such reorganization or reclassification; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors, including a majority of the Preferred Directors) shall be made in the application of the provisions of this Article 3.3 with respect to the rights and interests thereafter of the holders of Preferred Shares, to the end that the provisions set forth in this Article 3.3 (including provisions with respect to changes in and other adjustments of the applicable Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any stock, securities or other property thereafter deliverable upon the conversion of Preferred Shares.

 

 

(g)

No Fractional Shares and Certificate as to Adjustments.

 

(i)

No fractional Shares shall be issued upon the conversion of any Preferred Shares, and the number of Ordinary Shares to be issued shall be rounded to the nearest whole Share (with one-half being rounded upward). Fractional Shares to be rounded to the nearest whole Share (with one-half being rounded upward) shall be determined on the basis of the total number of Preferred Shares the holder thereof is at the time converting into Ordinary Shares and the number of Ordinary Shares issuable upon such aggregate conversion.

 

(ii)

Upon the occurrence of each adjustment or readjustment of the applicable Conversion Price pursuant to this Article 3.3, the Company, at its expense, shall promptly (but in any event no later than ten (10) days thereafter) compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Preferred Shares a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request at any time of any holder of Preferred Shares and in no event later than ten (10) days thereafter, furnish or cause to be furnished to such holder a like certificate setting forth (A) such adjustment and readjustment, (B) the applicable Conversion Price at the time in effect, and (C) the number of Ordinary Shares and the amount, if any, of other property that at the time would be received upon the conversion of a Preferred Share.

 

(h)

Notices of Record Date. If the Company shall propose at any time:

 

(i)

to declare any Dividend or distribution upon Ordinary Shares, whether in cash, property, Shares or other securities, whether or not a regular cash Dividend and whether or not out of earnings or earned surplus;

 

(ii)

to offer for subscription pro rata to the holders of any class or series of its Shares any additional Shares of any class or series or other rights;

 

(iii)

to effect any reclassification or recapitalization of its Ordinary Shares outstanding involving a change in the Ordinary Shares; or

 

(iv)

to enter into a merger, amalgamation, consolidation, scheme of arrangement or other business combination with or into any other corporation, or sell, lease or convey all or substantially all its property or business, or to liquidate, dissolve or wind up (including any Liquidation Event (which, for avoidance of doubt, includes any deemed Liquidation Event as set forth in Article 3.2(c) hereof));

 

 

then, in connection with each such event, unless such notice is waived in its entirety or the period for notice shortened with the written consent of the Preferred Majority, the Company shall send to the holders of Preferred Shares at least ten (10) days’ prior written notice of the date on which a record shall be taken for such Dividend, distribution or subscription rights (and specifying the date on which the holders of Ordinary Shares shall be entitled thereto) or for determining rights to vote in respect of the matters referred to above in (iii) and (iv).

 

(i)

Reservation of Shares Issuable Upon Conversion. The Company shall at all times reserve and keep available out of its authorised but unissued share capital, solely for the purpose of effecting the conversion of Preferred Shares pursuant to these Articles, such number of Ordinary Shares as shall from time to time be sufficient to effect the conversion of all then outstanding Preferred Shares. If at any time the number of authorised but unissued Ordinary Shares shall not be sufficient to effect the conversion of all then outstanding Preferred Shares, in addition to such other remedies as shall be available to the holder of such Preferred Shares, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorised but unissued Ordinary Shares to such number of Shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite shareholder approval of any necessary amendment to these Articles.

 

(j)

Notice. Any notice required by the provisions of this Article 3.3 to be given to the holders of Preferred Shares shall be given in the same manner set forth in Article 25.

 

3.4

Voting Rights. Each holder of any Preferred Shares shall be entitled to the number of votes equal to that number of Ordinary Shares into which such Preferred Shares could then be converted, and with respect to such vote, such holder shall have full voting rights and powers equal to the voting rights and powers of the holders of Ordinary Shares, and shall be entitled, notwithstanding any provision hereof, to notice of any shareholders’ meeting in accordance with these Articles, and shall be entitled to vote, together with holders of Ordinary Shares, with respect to any question upon which holders of Ordinary Shares have the right to vote. Fractional votes shall not, however, be permitted and any fractional voting rights available on an as converted basis (after aggregating all Ordinary Shares into which the Preferred Shares held by each holder could be converted) shall be rounded to the nearest whole number (with one-half being rounded upward).

 

3.5

Redemption.

 

(a)

Without prejudice to the conversion rights attaching thereto, the Preferred Shares shall not be redeemable at the option of the holder or holders thereof except as expressly provided in this Article 3.5.

 

(b)

The Company shall be obligated to redeem the Series B Preferred Shares as follows:

 

(i)

On or following the date of the seven (7) year anniversary of the Series A Initial Closing Date (the “Redemption Start Date”), each holder of then outstanding Series B Preferred Shares, may require the Company, to the extent it may lawfully do so, to redeem all of the outstanding Series B Preferred Shares held by such holder if, as of the date on which the request for redemption is given by such holder, the Company has failed to consummate: (x) a Qualified IPO; (y) a Liquidation Event (including, for avoidance of doubt, any deemed Liquidation Event as set forth in Article 3.2(c) hereof) with net proceeds to the Company or its shareholders of not less than US$400,000,000; or (z) one or more Subsidiary Trade Sale(s) with aggregate net proceeds to such subsidiary(ies) or its shareholder(s) of not less than US$200,000,000; provided, that the Company shall receive written notice of such election of such holder of then outstanding Series B Preferred Shares (the “Series B Redemption Election Notice”) at least sixty (60) days prior to the date on which such redemption is to occur (such date, the “Series B Redemption Date”). The foregoing right to request redemption of the Series B Preferred Shares hereunder, for clarity, may not be exercised if any of the events described in (x)-(z) in this Article 3.5(b)(i) have occurred by the Redemption Start Date. The price at which each Series B Preferred Share shall be redeemed hereunder shall be US$4.0483 (as adjusted for any share Dividends, combinations, reclassifications or splits with respect to such Shares), plus all declared by unpaid Dividends thereon (the “Series B Redemption Price”).

 

 

(ii)

At least thirty (30) days but no more than sixty (60) days prior to the Series B Redemption Date, the Company shall send a notice (the “Series B Redemption Notice”) to all holders of record of Series B Preferred Shares (including non-electing holders) stating the existence of Series B Redemption Election Notice, the Series B Redemption Price, the Series B Redemption Date, the other mechanics of redemption and notifying any non-electing holders of their right to participate in such redemption.

 

(iii)

On the Series B Redemption Date, the Company shall effect the redemption of all outstanding Series B Preferred Shares requested to be redeemed by paying the Series B Redemption Price in cash in exchange for each such Series B Preferred Share; provided, however, that if on the Series B Redemption Date the Company does not have sufficient funds legally available to redeem all Series B Preferred Shares to be redeemed at the Series B Redemption Date, then it shall so notify such holders and shall redeem such Series B Preferred Shares on a pari passu basis among such holders pro rata (based on the portion of the aggregate Series B Redemption Price payable to such holders) to the extent possible, and shall redeem the remaining Series B Preferred Shares to be redeemed as soon as sufficient funds are legally available.

 

(iv)

On the Series B Redemption Date, each holder of Series B Preferred Shares shall surrender such holder’s certificates representing such shares (or, if such holder alleges that any such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Company to indemnify the Company against any claim that may be made against the Company on account of the alleged loss, theft or destruction of such certificate) to the Company in the manner and at the place designated in the Series B Redemption Notice, and thereupon the Series B Redemption Price of such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof and each surrendered certificate shall be canceled. From and after the Series B Redemption Date, unless there shall have been a default in payment of the applicable Series B Redemption Price or the Company is unable to pay the Series B Redemption Price due to not having sufficient legally available funds, all rights of the holder of such shares as holder of Series B Preferred Shares (except the right to receive the Series B Redemption Price without interest upon surrender of their certificates), shall cease and terminate with respect to such shares; provided that in the event that Series B Preferred Shares are not redeemed due to a default in payment by the Company or because the Company does not have sufficient legally available funds, such Series B Preferred Shares shall remain outstanding and shall be entitled to all of the rights and preferences provided herein until redeemed.

 

 

(v)

In the event of a call for redemption of any Series B Preferred Shares, the conversion rights in Article 3.3 for such Series B Preferred Shares shall terminate as to the shares designated for redemption at the close of business on the Series B Redemption Date, unless default is made in payment of the Series B Redemption Price.

 

(c)

Subject to Article 3.5(e), the Company shall be obligated to redeem the Series A+ Preferred Shares as follows:

 

(i)

On or following the Redemption Start Date, each holder of then outstanding Series A+ Preferred Shares, may require the Company, to the extent it may lawfully do so, to redeem all of the outstanding Series A+ Preferred Shares held by such holder if, as of the date on which the request for redemption is given by such holder, the Company has failed to consummate: (x) a Qualified IPO; (y) a Liquidation Event (including, for avoidance of doubt, any deemed Liquidation Event as set forth in Article 3.2(c) hereof) with net proceeds to the Company or its shareholders of not less than US$300,000,000; or (z) one or more Subsidiary Trade Sale(s) with aggregate net proceeds to such subsidiary(ies) or its shareholder(s) of not less than US$100,000,000; provided that the Company shall receive written notice of such election of such holder of then outstanding Series A+ Preferred Shares (the “Series A+ Redemption Election Notice”) at least sixty (60) days prior to the date on which such redemption is to occur (such date, the “Series A+ Redemption Date”). The foregoing right to request redemption of the Series A+ Preferred Shares hereunder, for clarity, may not be exercised if any of the events described in (x)-(z) in this Article 3.5(c)(i) have occurred by the Redemption Start Date. The price at which each Series A+ Preferred Share shall be redeemed hereunder shall be US$2.0313 (as adjusted for any share Dividends, combinations, reclassifications or splits with respect to such Shares), plus all declared by unpaid Dividends thereon (the “Series A+ Redemption Price”).

 

(ii)

At least thirty (30) days but no more than sixty (60) days prior to the Series A+ Redemption Date, the Company shall send a notice (the “Series A+ Redemption Notice”) to all holders of record of Preferred Shares (including non-electing holders) stating the existence of the Series A+ Redemption Election Notice, the Series A+ Redemption Price, the Series A+ Redemption Date, the other mechanics of redemption and notifying any non-electing holders who are entitled to participate pursuant to these Articles of their right to participate in such redemption.

 

(iii)

On the Series A+ Redemption Date, the Company shall effect the redemption of all outstanding Series A+ Preferred Shares requested to be redeemed by paying the Series A+ Redemption Price in cash in exchange for each such Series A+ Preferred Share; provided, however, that if on the Series A+ Redemption Date the Company does not have sufficient funds legally available to redeem all Series A+ Preferred Shares to be redeemed at the Series A+ Redemption Date, then it shall so notify such holders and shall redeem such Series A+ Preferred Shares on a pari passu basis among such holders pro rata (based on the portion of the aggregate Series A+ Redemption Price payable to such holders) to the extent possible, and shall redeem the remaining Series A+ Preferred Shares to be redeemed as soon as sufficient funds are legally available.

 

(iv)

On the Series A+ Redemption Date, each holder of Series A+ Preferred Shares shall surrender such holder’s certificates representing such shares (or, if such holder alleges that any such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Company to indemnify the Company against any claim that may be made against the Company on account of the alleged loss, theft or destruction of such certificate) to the Company in the manner and at the place designated in the Series A+ Redemption Notice, and thereupon the Series A+ Redemption Price of such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof and each surrendered certificate shall be canceled. From and after the Series A+ Redemption Date, unless there shall have been a default in payment of the applicable Series A+ Redemption Price or the Company is unable to pay the Series A+ Redemption Price due to not having sufficient legally available funds, all rights of the holder of such shares as holder of Series A+ Preferred Shares (except the right to receive the Series A+ Redemption Price without interest upon surrender of their certificates), shall cease and terminate with respect to such shares; provided that in the event that Series A+ Preferred Shares are not redeemed due to a default in payment by the Company or because the Company does not have sufficient legally available funds, such Series A+ Preferred Shares shall remain outstanding and shall be entitled to all of the rights and preferences provided herein until redeemed.

 

 

(v)

In the event of a call for redemption of any Series A+ Preferred Shares, the conversion rights in Article 3.3 for such Series A+ Preferred Shares shall terminate as to the shares designated for redemption at the close of business on the Series A+ Redemption Date, unless default is made in payment of the Series A+ Redemption Price.

 

(d)

Subject to Article 3.5(e) and Article 3.5(f), the Company shall be obligated to redeem the Series A Preferred Shares as follows:

 

(i)

On or following the Redemption Start Date, each holder of then outstanding Series A Preferred Shares, may require the Company, to the extent it may lawfully do so, to redeem all of the outstanding Series A Preferred Shares held by such holder if, as of the date on which the request for redemption is given by such holder, the Company has failed to consummate: (x) a Qualified IPO; (y) a Liquidation Event (including, for avoidance of doubt, any deemed Liquidation Event as set forth in Article 3.2(c) hereof) with net proceeds to the Company or its shareholders of not less than US$60,000,000; or (z) one or more Subsidiary Trade Sale(s) with aggregate net proceeds to such subsidiary(ies) or its shareholder(s) of not less than US$60,000,000; provided that the Company shall receive written notice of such election of such holder of then outstanding Series A Preferred Shares (the “Series A Redemption Election Notice”) at least sixty (60) days prior to the date on which such redemption is to occur (such date, the “Series A Redemption Date”). The foregoing right to request redemption of the Series A Preferred Shares hereunder, for clarity, may not be exercised if any of the events described in (x)-(z) in this Article 3.5(d)(i) have occurred by the Redemption Start Date. The price at which each Series A Preferred Share shall be redeemed hereunder shall be US$1.6667 (as adjusted for any share Dividends, combinations, reclassifications or splits with respect to such Shares), plus all declared by unpaid Dividends thereon (the “Series A Redemption Price”).

 

(ii)

At least thirty (30) days but no more than sixty (60) days prior to the Series A Redemption Date, the Company shall send a notice (the “Series A Redemption Notice”) to all holders of record of Preferred Shares (including non-electing holders) stating the existence of the Series A Redemption Election Notice, the Series A Redemption Price, the Series A Redemption Date, the other mechanics of redemption and notifying any non-electing holders of their right to participate in such redemption.

 

 

(iii)

On the Series A Redemption Date, the Company shall effect the redemption of all outstanding Series A Preferred Shares requested to be redeemed by paying the Series A Redemption Price in cash in exchange for each such Series A Preferred Share; provided, however, that if on the Series A Redemption Date the Company does not have sufficient funds legally available to redeem all Series A Preferred Shares to be redeemed at the Series A Redemption Date, then it shall so notify such holders and shall redeem such Series A Preferred Shares on a pari passu basis among such holders pro rata (based on the portion of the aggregate Series A Redemption Price payable to such holders) to the extent possible, and shall redeem the remaining Series A Preferred Shares to be redeemed as soon as sufficient funds are legally available.

 

(iv)

On the Series A Redemption Date, each holder of Series A Preferred Shares shall surrender such holder’s certificates representing such shares (or, if such holder alleges that any such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Company to indemnify the Company against any claim that may be made against the Company on account of the alleged loss, theft or destruction of such certificate) to the Company in the manner and at the place designated in the Series A Redemption Notice, and thereupon the Series A Redemption Price of such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof and each surrendered certificate shall be canceled. From and after the Series A Redemption Date, unless there shall have been a default in payment of the applicable Series A Redemption Price or the Company is unable to pay the Series A Redemption Price due to not having sufficient legally available funds, all rights of the holder of such shares as holder of Series A Preferred Shares (except the right to receive the Series A Redemption Price without interest upon surrender of their certificates), shall cease and terminate with respect to such shares; provided that in the event that Series A Preferred Shares are not redeemed due to a default in payment by the Company or because the Company does not have sufficient legally available funds, such Series A Preferred Shares shall remain outstanding and shall be entitled to all of the rights and preferences provided herein until redeemed.

 

(v)

In the event of a call for redemption of any Series A Preferred Shares, the conversion rights in Article 3.3 for such Series A Preferred Shares shall terminate as to the shares designated for redemption at the close of business on the Series A Redemption Date, unless default is made in payment of the Series A Redemption Price.

 

(e)

The Series B Preferred Shares shall rank senior to the Series A/A+ Preferred Shares in right of payment with respect to the redemption of such shares. Notwithstanding anything in Article 3.5(b), Article 3.5(c) or Article 3.5(d) to the contrary, if the Company shall have received a redemption request from any holder of Preferred Shares pursuant to Article 3.5(b), Article 3.5(c) or Article 3.5(d), it shall not redeem any Series A/A+ Preferred Shares until all of the Series B Preferred Shares outstanding (excluding any Series B Preferred Shares which the holder thereof elects not to be redeemed pursuant to this Article 3.5) have been redeemed by the Company.

 

(f)

The Series A+ Preferred Shares and the Series A Preferred Shares shall rank junior to the Series B Preferred Shares in right of payment with respect to the redemption of Series A Preferred Shares and Series A+ Preferred Shares. The Series A+ Preferred Shares and the Series A Preferred Shares shall rank pari passu among such shares in right of payment with respect to the redemption of such shares. Notwithstanding anything in Article 3.5(c) or Article 3.5(d) to the contrary, if the Company shall have received a redemption request in respect of Series A+ Preferred Shares pursuant to Article 3.5(c) and a redemption request in respect of Series A Preferred Shares pursuant to Article 3.5(d) but does not have sufficient funds legally available (after redemption in full, in accordance with Article 3.5(e) hereof, of all Series B Preferred Shares) to redeem all Series A+ Preferred Shares and/or Series A Preferred Shares to be redeemed at the applicable Redemption Date, then it shall so notify such holders and shall redeem such Series A+ Preferred shares and Series A Preferred Shares on a pari passu basis among such holders pro rata (based on the portion of the aggregate Redemption Price payable to such holders) to the extent possible, and shall redeem the remaining Series A+ Preferred Shares and Series A Preferred Shares to be redeemed as soon as sufficient funds are legally available.

 

 

3.6

Protective Provisions.

 

(a)

So long as any Preferred Shares are outstanding, the Company shall not take any of the following actions, whether by merger, amalgamation, consolidation, other business combinations, scheme of arrangement, amendment or otherwise, without first obtaining the approval (by vote or written consent) of the Preferred Majority; provided, however, that if any actions of the Company with a consequence of amending, altering or affecting any series of Preferred Shares, or the rights, preferences and privileges of such series of Preferred Shares, in a disproportionate and adverse manner than the effect of such actions on any other series Preferred Shares, written consent of the holders of a majority of such series of Preferred Shares so disproportionately and adversely amended, altered or affected, shall be obtained:

 

(i)

liquidate, dissolve or wind-up the affairs of the Company or any subsidiary of the Company, or effect any merger, consolidation or Liquidation Event (including, for avoidance of doubt, any deemed Liquidation Event as set forth in Article 3.2(c) hereof) of the Company or any subsidiary of the Company;

 

(ii)

amend, alter, or repeal any provision of the Memorandum or these Articles in a manner adverse to the Preferred Shares;

 

(iii)

create, or authorize the creation of, or issue any other security convertible into or exercisable for any equity security having rights, preferences or privileges senior to or on parity with the Preferred Shares, including an increase in the number of authorized Preferred Shares (excluding any issuance of Preferred Shares pursuant to the terms of the Series B Purchase Agreement);

 

(iv)

issue any equity security, or any security convertible into or exercisable for any equity security, having rights, preferences or privileges junior to the Preferred Shares, in each case, other than Exempted Securities or any other issuance approved by the Board, including the affirmative vote of all Preferred Directors;

 

(v)

purchase or redeem any Shares (other than (A) the repurchase of any Ordinary Shares, Options or Convertible Securities from employees, officers, Directors, consultants or other persons who performed services for the Company pursuant to agreements under which the Company has the option to repurchase such Shares at the lower of the original purchase price of such securities and the then- current fair market value thereof upon termination of employment or services, as applicable, or (B) redemptions of Preferred Shares pursuant to Article 3.5 hereof), or pay any Dividend on any Shares (other than Dividends made in accordance with Article 3.1 hereof), in each case, prior to the Preferred Shares; or

 

(vi)

increase or decrease the authorised number of the Directors.

 

 

(b)

So long as any Series B Preferred Shares are outstanding, the Company shall not take any of the following actions, whether by merger, amalgamation, consolidation, other business combinations, scheme of arrangement, amendment or otherwise, without first obtaining the approval (by vote or written consent) of the Series B Majority; provided, however, that this Article 3.6(b) shall not apply to any actions taken in connection with an initial public offering of the Company, a Liquidation Event (including, for avoidance of doubt, any deemed Liquidation Event as set forth in Article 3.2(c) hereof), or a bona fide financing of the Company that does not affect the rights, preferences and privileges of the Series B Preferred Shares in a disproportionate and adverse manner than the effect of such actions on any other series Preferred Shares:

 

(i)

amend, alter, or repeal any provision of the Memorandum or these Articles in a manner adverse to the rights, preferences and privileges of the Series B Preferred Shares; or

 

(ii)

increase the authorized number of Series B Preferred Shares.

 

(c)

So long as the holders of Series A Preferred Shares, the holders of Series A+ Preferred Shares and the holders of Series B Preferred Shares are entitled to elect any Series A Director, any Series A+ Director and any Series B Director, respectively, the Company shall not, without approval of the Board, which approval must include the affirmative vote of the Requisite Preferred Directors:

 

(i)

issue debt securities if the Company’s aggregate indebtedness after such issuance would exceed US$2,500,000;

 

(ii)

make any acquisition of or investment in (whether by merger, consolidation or otherwise) any other person or entity that is not a wholly owned subsidiary;

 

(iii)

create any new subsidiary, or sell, transfer or otherwise dispose of (including without limitation by the issuance of new securities in a subsidiary or rights to such an issuance) any equity interest of any direct or indirect subsidiary of the Company, or permit any direct or indirect subsidiary to sell, lease, transfer, exclusively license or otherwise dispose (in a single transaction or a series of related transactions) of all or substantially all of the assets of such subsidiary;

 

(iv)

appoint the Chief Financial Officer of the Company;

 

(v)

materially change the compensation of the Company’s senior management;

 

(vi)

amend, terminate or make any equity grant under the Company’s equity incentive plan adopted by the Board;

 

(vii)

appoint or change the Auditors of the Company;

 

(viii)

approve the annual budget of the Company (or any significant change relating thereto);

 

(ix)

select the listing venue of the Company’s securities in any public offering; or

 

(x)

sell, assign, out-license, pledge, or encumber material technology or intellectual property controlled by the Company or any of its subsidiaries, other than licenses granted in the ordinary course of business.

 

 

3.7

Waiver. Any of the rights, powers, preferences or privileges of the Series A Preferred Shares (but not, for avoidance of doubt, the limitations or qualifications applicable thereto) set forth herein may be waived on behalf of all holders of Series A Preferred Shares by the affirmative written consent or vote of the holders of a majority of the outstanding Series A Preferred Shares, voting as a separate class. Any of the rights, powers, preferences or privileges of the Series A+ Preferred Shares (but not, for avoidance of doubt, the limitations or qualifications applicable thereto) set forth herein may be waived on behalf of all holders of Series A+ Preferred Shares by the affirmative written consent or vote of the holders of a majority of the outstanding Series A+ Preferred Shares, voting as a separate class. Any of the rights, powers, preferences or privileges of the Series B Preferred Shares (but not, for avoidance of doubt, the limitations or qualifications applicable thereto) set forth herein may be waived on behalf of all holders of Series B Preferred Shares by the affirmative written consent or vote of the Series B Majority. Subject to Article 3.6, any of the rights, powers, preferences or privileges set forth herein granted to the holders of the Preferred Shares as a single class (but not, for avoidance of doubt, the limitations or qualifications applicable thereto) may be waived on behalf of all holders of Preferred Shares by the affirmative written consent or vote of the Preferred Majority.

 

4.

Ordinary Shares.

 

Certain rights, preferences, privileges and limitations of the Ordinary Shares are as follows:

 

4.1

Dividend Provision. Subject to the preferential rights of holders of all series of Shares in the Company at the time outstanding having preferential rights as to Dividends, the holders of the Ordinary Shares shall, subject to the Law and these Articles, be entitled to receive, when, as and if declared by the Directors, out of any assets of the Company legally available therefor, such Dividends as may be declared from time to time by the Directors.

 

4.2

Liquidation. Upon a Liquidation Event, the assets of the Company shall be distributed as provided in Article 3.2 hereof.

 

4.3

Voting Rights. The holder of each Ordinary Share shall have the right to one (1) vote and shall be entitled to notice of any shareholders’ meeting in accordance with these Articles, and shall be entitled to vote upon such matters and in such manner as may be provided for in these Articles.

 

4.4

Right of First Refusal. The Company is hereby unconditionally and irrevocably granted rights of first refusal pursuant to that certain Second Amended and Restated Right of First Refusal and Co-Sale Agreement dated on or about the date of adoption of these Articles, by and among the Company and the other parties named therein, as such may be amended and/or restated from time to time.

 

5.

Redemption and Purchase of Shares.

 

5.1

Subject to the Law and Article 3 hereof, the Company is authorised to issue Shares which are to be redeemed or are liable to be redeemed at the option of the Company or a Member.

 

5.2

The Company is hereby authorised to make payments in respect of the redemption or purchase of its Shares out of capital or out of any other account or fund which can be authorised for this purpose in accordance with the Law.

 

5.3

The redemption price of a redeemable Share, or the method of calculation thereof, shall be fixed by the Directors at or before the time of issue.

 

5.4

Subject to the Law, the Company may purchase any Ordinary Share (including a redeemable Share) registered in the name of a person who is an employee, officer, Director, consultant, advisor, supplier or representative of the Company and who has acquired such Ordinary Shares pursuant to an agreement entered into by the Company with such holder that allows for the repurchase by the Company at the lower of the original purchase price of such securities and the then-current fair market value thereof upon termination of employment or services, as applicable, and upon such repurchase such Ordinary Shares shall be cancelled, it being expressly recognised that the foregoing constitutes the authorization of the manner of purchase of the Share in accordance with the Law. The Company may also purchase any Ordinary Share in accordance with the terms of that certain Second Amended and Restated Right of First Refusal and Co-Sale Agreement dated on or about the date of adoption of these Articles.

 

 

5.5

The redemption price may be paid in any manner authorised by these Articles for the payment of Dividends, including out of capital.

 

5.6

Subject to Article 3 hereof, a delay in payment of the redemption price shall not affect the redemption but, in the case of a delay of more than thirty (30) days, interest shall be paid for the period from the due date until actual payment at a rate which the Directors, after due enquiry, estimate to be representative of the rates being offered by Class A banks in the Cayman Islands for thirty (30) day deposits in the same currency.

 

5.7

Subject to Article 3 hereof, the Directors may exercise as they think fit the powers conferred on the Company by Section 37(5) of the Law (payment out of capital) but only if and to the extent that the redemption could not otherwise be made (or not without making a fresh issue of Shares for this purpose).

 

5.8

Subject as aforesaid, the Directors may determine, as they think fit, all questions that may arise concerning the manner in which the redemption of the Shares shall or may be effected.

 

5.9

As provided by the Law, no Share may be redeemed or purchased by the Company unless it is fully paid-up.

 

6.

Rights Attaching to Shares

 

Subject to Articles 3 and 4 hereof, the Memorandum and any resolution of the Members to the contrary and without prejudice to any special rights previously conferred thereby on the holders of any other Shares or class or series of Shares, the holders of Shares of the Company shall:

 

(a)

be entitled to one (1) vote per Share;

 

(b)

be entitled to Dividends as the Board may from time to time declare;

 

(c)

in the event of a liquidation, winding up or dissolution of the Company, whether voluntary or involuntary or for the purpose of a reorganization or otherwise or upon any distribution of capital, be entitled to the surplus assets of the Company; and

 

(d)

generally be entitled to enjoy all of the rights applicable to that certain class or series of Shares.

 

7.

Calls on Shares

 

7.1

The Board may make such calls as it thinks fit upon the Members in respect of any monies (whether in respect of nominal value or premium) unpaid on the Shares allotted to or held by such Members and, if a call is not paid on or before the day appointed for payment thereof, the Member may at the discretion of the Board be liable to pay the Company interest on the amount of such call at such rate as the Board may determine, from the date when such call was payable up to the actual date of payment. The Board may differentiate between the holders as to the amount of calls to be paid and the times of payment of such calls.

 

 

7.2

The Company may accept from any Member the whole or a part of the amount remaining unpaid on any Shares held by him, although no part of that amount has been called up.

 

7.3

The Company may make arrangements on the issue of Shares for a difference between the Members in the amounts and times of payments of calls on their Shares.

 

8.

Joint and Several Liability to Pay Calls

 

The joint holders of a Share shall be jointly and severally liable to pay all calls in respect thereof.

 

9.

Forfeiture of Shares

 

9.1

If any Member fails to pay, on the day appointed for payment thereof, any call in respect of any Share allotted to or held by such Member, the Board may, at any time thereafter during such time as the call remains unpaid, direct the Secretary to forward such Member a notice in writing in the form, or as near thereto as circumstances admit, of the following:

 

Notice of Liability to Forfeiture for Non-Payment of Call
ShouTi Inc. (the “Company”)

 

You have failed to pay the call of [amount of call] made on the [ ] day of [ ], 20[ ], in respect of the [number] share(s) [number in figures] standing in your name in the Register of Members of the Company, on the [ ] day of [ ], 20[ ], the day appointed for payment of such call. You are hereby notified that unless you pay such call together with interest thereon at the rate of [ ] per annum computed from the said [ ] day of [ ], 20[ ] at the registered office of the Company the share(s) will be liable to be forfeited.

 

Dated this [ ] day of [ ], 20[ ]

 

 

[Signature of Secretary] By Order of the Board

 

9.2

If the requirements of such notice are not complied with, any such Share may at any time thereafter before the payment of such call and the interest due in respect thereof be forfeited by a resolution of the Board to that effect, and such Share shall thereupon become the property of the Company and may be disposed of as the Board shall determine. Without limiting the generality of the foregoing, the disposal may take place by sale, repurchase, redemption or any other method of disposal permitted by and consistent with these Articles and the Law.

 

9.3

A Member whose Share or Shares have been forfeited as aforesaid shall, notwithstanding such forfeiture, be liable to pay to the Company all calls owing on such Share or Shares at the time of the forfeiture and all interest due thereon.

 

9.4

The Board may accept the surrender of any Shares which it is in a position to forfeit on such terms and conditions as may be agreed. Subject to those terms and conditions, a surrendered Share shall be treated as if it had been forfeited.

 

10.

Share Certificates

 

10.1

Every Member shall be entitled to a certificate under the Seal (if any) or a facsimile thereof of the Company or bearing the signature (or a facsimile thereof) of a Director or the Secretary or a person expressly authorised to sign specifying the number and, where appropriate, the class of Shares held by such Member and whether the same are fully paid up and, if not, specifying the amount paid on such Shares. The Board may by resolution determine, either generally or in a particular case, that any or all signatures on certificates may be printed thereon or affixed by mechanical means.

 

 

10.2

If any share certificate shall be proved to the satisfaction of the Board to have been worn out, lost, mislaid, or destroyed the Board may cause a new certificate to be issued and request an indemnity for the lost certificate if it sees fit.

 

10.3

Share certificates may not be issued in bearer form.

 

REGISTRATION OF SHARES

 

11.

Register of Members

 

The Board shall cause to be kept in one or more books a Register of Members which may be kept outside the Cayman Islands at such place as the Directors shall appoint and shall enter therein the following particulars:

 

(a)

the name and address of each Member, the number, and the class of Shares held by such Member and the amount paid or agreed to be considered as paid on such Shares;

 

(b)

the date on which each person was entered in the Register of Members; and

 

(c)

the date on which any person ceased to be a Member.

 

12.

Registered Holder Absolute Owner

 

12.1

The Company shall be entitled to treat the registered holder of any Share as the absolute owner thereof and accordingly shall not be bound to recognise any equitable claim or other claim to, or interest in, such Share on the part of any other person.

 

12.2

No person shall be entitled to recognition by the Company as holding any Share upon any trust and the Company shall not be bound by, or be compelled in any way to recognise, (even when having notice thereof) any equitable, contingent, future or partial interest in any Share or any other right in respect of any Share except an absolute right to the entirety of the Share in the holder. If, notwithstanding this Article 12.2, notice of any trust is at the holder’s request entered in the Register of Members or on a share certificate in respect of a Share, then, except as aforesaid:

 

(a)

such notice shall be deemed to be solely for the holder’s convenience;

 

(b)

the Company shall not be required in any way to recognise any beneficiary, or the beneficiary, of the trust as having an interest in the Share or Shares concerned;

 

(c)

the Company shall not be concerned with the trust in any way, as to the identity or powers of the trustees, the validity, purposes or terms of the trust, the question of whether anything done in relation to the Shares may amount to a breach of trust or otherwise; and

 

(d)

the holder shall keep the Company fully indemnified against any liability or expense which may be incurred or suffered as a direct or indirect consequence of the Company entering notice of the trust in the Register of Members or on a share certificate and continuing to recognise the holder as having an absolute right to the entirety of the Share or Shares concerned.

 

13.

Transfer of Registered Shares

 

13.1

Subject to Article 4.4 hereof, an instrument of transfer shall be in writing in the form of the following, or as near thereto as circumstances admit, or in such other form as the Board may accept:

 

Transfer of a Share or Shares
ShouTi Inc. (the “Company”)

 

 

FOR VALUE RECEIVED___________ [amount], I, [name of transferor] hereby sell, assign and transfer unto [transferee] of [address], [number] of shares of the Company.

 

	DATED this [ ] day of [ ], 20[ ]
	Signed by:		In the presence of:
	Transferor		Witness
	Transferee		Witness

 

13.2

Such instrument of transfer shall be signed by or on behalf of the transferor and transferee, provided that, in the case of a fully paid Share, the Board may accept the instrument signed by or on behalf of the transferor alone. The transferor shall be deemed to remain the holder of such Share until the same has been transferred to the transferee in the Register of Members.

 

13.3

The Board may refuse to recognise any instrument of transfer unless it is accompanied by the certificate in respect of the Shares to which it relates and by such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer. The Board may refuse to recognize any transfer to a party who the Board determines is a competitor of the Company or its subsidiaries or for such other reasonable reasons as the Board may determine.

 

13.4

The joint holders of any Share may transfer such Share to one or more of such joint holders, and the surviving holder or holders of any Share previously held by them jointly with a deceased Member may transfer any such Share to the executors or administrators of such deceased Member.

 

13.5

Notwithstanding any other provisions of these Articles or the terms of any agreement to which a shareholder is a party, no shareholder shall transfer any Shares without the prior written consent of the Board if (a) such transfer would cause the Company to be classified as an association taxable as a C corporation for United States federal income tax purposes, (b) such transfer of Shares would constitute a transaction effected through an “established securities market” within the meaning of the United States Treasury Regulations promulgated under Section 7704 of the Code or otherwise would cause the Company to be a “publicly traded partnership” within the meaning of Section 7704 of the Code, or (c) such transfer would cause there to be more than one hundred (100) shareholders of the Company (as determined under the Treasury Regulations promulgated under Section 7704 of the Code).

 

14.

Transmission of Registered Shares

 

14.1

In the case of the death of a Member, the survivor or survivors where the deceased Member was a joint holder, and the legal personal representatives of the deceased Member where the deceased Member was a sole holder, shall be the only persons recognised by the Company as having any title to the deceased Member’s interest in the Shares. Nothing herein contained shall release the estate of a deceased joint holder from any liability in respect of any Share which had been jointly held by such deceased Member with other persons. Subject to the provisions of Section 39 of the Law, for the purpose of this Article 14.1, legal personal representative means the executor or administrator of a deceased Member or such other person as the Board may, in its absolute discretion, decide as being properly authorised to deal with the Shares of a deceased Member.

 

 

14.2

Any person becoming entitled to a Share in consequence of the death or bankruptcy of any Member may be registered as a Member upon such evidence as the Board may deem sufficient or may elect to nominate some person to be registered as a transferee of such Share, and in such case the person becoming entitled to such Share shall execute in favour of such nominee an instrument of transfer in writing in the form, or as near thereto as circumstances admit, of the following:

 

Transfer by a Person Becoming Entitled on Death/Bankruptcy of a Member
ShouTi Inc. (the “Company”)

 

I/We, having become entitled in consequence of the [death/bankruptcy] of [name and address of deceased Member] to [number] share(s) standing in the Register of Members of the Company in the name of the said [name of deceased/bankrupt Member] instead of being registered myself/ourselves, elect to have [name of transferee] (the “Transferee”) registered as a transferee of such share(s) and I/we do hereby accordingly transfer the said share(s) to the Transferee to hold the same unto the Transferee, his or her executors, administrators and assigns, subject to the conditions on which the same were held at the time of the execution hereof; and the Transferee does hereby agree to take the said share(s) subject to the same conditions.

 

	DATED this [ ] day of [ ], 20[ ]
	Signed by:		In the presence of:
	Transferor		Witness
	Transferee		Witness

 

14.3

On the presentation of the foregoing materials to the Board, accompanied by such evidence as the Board may require to prove the title of the transferor, the transferee shall be registered as a Member. Notwithstanding the foregoing, the Board shall, in any case, have the same right to decline or suspend registration as it would have had in the case of a transfer of the Share by that Member before such Member’s death or bankruptcy, as the case may be.

 

14.4

Where two or more persons are registered as joint holders of a Share or Shares, then in the event of the death of any joint holder or holders the remaining joint holder or holders shall be absolutely entitled to the said Share or Shares and the Company shall recognise no claim in respect of the estate of any joint holder except in the case of the last survivor of such joint holders.

 

ALTERATION OF SHARE CAPITAL

 

15.

Power to Alter Capital

 

15.1

Subject to the Law and these Articles, including Article 3.6 hereof, the Company may from time to time by Ordinary Resolution:

 

(a)

increase its share capital by such sum divided into Shares of such amounts as the resolution shall prescribe;

 

(b)

consolidate and divide all or any of its share capital into Shares of larger amount than its existing Shares;

 

 

(c)

convert all or any of its paid-up Shares into stock, and reconvert that stock into paid-up Shares of any denomination;

 

(d)

subdivide its Shares or any of them into Shares of an amount smaller than that fixed by the Memorandum; or

 

(e)

cancel Shares which at the date of the passing of the resolution have not been taken or agreed to be taken by any person, and diminish the amount of its authorised share capital by the amount of the Shares so cancelled.

 

15.2

Subject to the Law and these Articles, including Articles 3.6 hereof, the Company may from time to time by Special Resolution reduce its share capital.

 

16.

Variation of Rights Attaching to Shares

 

The rights conferred upon the holders of the Shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the Shares of that class, be deemed to be varied by the creation or issue of further Shares ranking senior thereto or pari passu therewith. The provisions of these Articles relating to general meetings shall apply to, to the extent applicable, every class meeting of the holders of one class of Shares except the necessary quorum shall be one or more persons holding or representing by proxy a majority of the issued Shares of the class and any holder of Shares of the class present in person or by proxy may demand a poll. Subject to these Articles, if, at any time, the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may be varied with the written consent of the holders of at least a majority of the issued shares of that class.

 

DIVIDENDS AND CAPITALISATION

 

17.

Dividends

 

17.1

The Board may, subject to these Articles and any direction of the Company in general meeting, declare a Dividend to be paid on Shares in issue pursuant to Articles 3.1 and 4.1 hereof, and such Dividend may be paid in cash or wholly or partly by the distribution of specific assets (which may consist of the shares or securities of any other company) legally available therefor.

 

17.2

All Dividends and distributions shall be declared and paid according to the provisions of Articles 3 and 4 hereof.

 

17.3

Where the Directors determine that a Dividend shall be paid wholly or partly by the distribution of specific assets, the Directors may settle all questions concerning the value of such distribution in accordance with the provisions of Article 3.2(d) hereof.

 

17.4

Subject to Articles 3 and 4 hereof, Dividends may be declared and paid out of profits of the Company, realised or unrealised, or from any reserve set aside from profits which the Directors determine is no longer needed, or not in the same amount. Dividends may also be declared and paid out of share premium account or any other fund or account which can be authorised for this purpose in accordance with the Law.

 

17.5

No unpaid Dividend shall bear interest as against the Company.

 

17.6

Subject to Articles 3 and 4 hereof, the Board may declare and make such other distributions (in cash or in specie) to the Members as may be lawfully made out of the assets of the Company. No unpaid distribution shall bear interest as against the Company.

 

 

17.7

Subject to Article 3.3(h) hereof, the Board may fix any date as the record date for determining the Members entitled to receive any Dividend or other distribution, but, unless so fixed, the record date shall be the date of the Directors’ resolution declaring same.

 

18.

Power to Set Aside Profits

 

18.1

The Board may, before declaring a Dividend, set aside out of the surplus or profits of the Company, such sum as it thinks proper as a reserve to be used to meet contingencies or for equalising Dividends or for any other purpose. Pending application, such sums may be employed in the business of the Company or invested, and need not be kept separate from other assets of the Company. The Directors may also, without placing the same to reserve, carry forward any profit which they decide not to distribute.

 

18.2

Subject to any direction from the Company in general meeting, the Directors may on behalf of the Company exercise all the powers and options conferred on the Company by the Law in regard to the Company’s share premium account.

 

19.

Method of Payment

 

19.1

Any Dividend, interest, or other monies payable in cash in respect of the Shares may be paid by wire transfer or by cheque or draft sent through the post directed to the Member at such Member’s address in the Register of Members, or to such person and to such address as the holder may in writing direct.

 

19.2

In the case of joint holders of Shares, any Dividend, interest or other monies payable in cash in respect of Shares may be paid by wire transfer or by cheque or draft sent through the post directed to the address of the holder first named in the Register of Members, or to such person and to such address as the joint holders may in writing direct. If two or more persons are registered as joint holders of any Shares any one can give an effectual receipt for any Dividend paid in respect of such Shares.

 

19.3

The Board may deduct from the Dividends or distributions payable to any Member all monies due from such Member to the Company on account of calls or otherwise.

 

19.4

The Company shall, to the extent required under applicable tax law, at all times be entitled to make payments with respect to any of the Company’s shareholders in amounts required to discharge any obligation of the Company to withhold from a distribution or make payments to any governmental authority with respect to any foreign or United States federal, state or local tax liability of such shareholder arising as a result of such shareholder’s interest in the Company (a “Withholding Payment”); provided, that the Company shall notify any holder of Preferred Shares prior to deducting and withholding from any amounts otherwise payable to such holder of Preferred Shares and shall cooperate with the holder of Preferred Shares in seeking to reduce or eliminate any such deduction or withholding. Any Withholding Payment made from funds withheld from a distribution will be treated as distributed to such shareholder for all purposes of these Articles. Any “imputed underpayment” within the meaning of Code Section 6225 or similar provisions of state or local law paid by the Company as a result of an adjustment with respect to any Company item, including any interest or penalties with respect to any such adjustment (collectively, an “Imputed Underpayment Amount”), shall be treated as if it were paid by the Company as a Withholding Payment with respect to the appropriate shareholder(s). The Board shall reasonably determine in good faith the portion of an Imputed Underpayment Amount attributable to each shareholder or former shareholder. The portion of the Imputed Underpayment Amount that the Board attributes to a former shareholder of the Company shall be treated as a Withholding Payment with respect to both such former shareholder and such former shareholder’s transferee(s) or assignee(s), as applicable.

 

 

20.

Capitalisation

 

20.1

The Board may resolve to capitalise any sum for the time being standing to the credit of any of the Company’s share premium or other reserve accounts or to the credit of the profit and loss account or otherwise available for distribution by applying such sum in paying up unissued Shares to be allotted as fully paid bonus Shares pro rata to the Members.

 

20.2

The Board may resolve to capitalise any sum for the time being standing to the credit of a reserve account or sums otherwise available for Dividend or distribution by applying such amounts in paying up in full partly paid or nil paid Shares of those Members who would have been entitled to such sums if they were distributed by way of Dividend or distribution.

 

MEETINGS OF MEMBERS

 

21.

Annual General Meetings

 

The Company may (but shall not be obliged to) in each year hold a general meeting as its annual general meeting. The annual general meeting of the Company may be held at such time and place as the Chairman shall appoint.

 

22.

Extraordinary General Meetings

 

22.1

General meetings other than annual general meetings shall be called extraordinary general meetings.

 

22.2

The Chairman or any two (2) Directors or the Secretary or the Company may convene an extraordinary general meeting of the Company whenever in their judgment such a meeting is necessary.

 

23.

Requisitioned General Meetings

 

23.1

The Board shall, on the requisition of Members holding at the date of the deposit of the requisition not less than a majority of the aggregate voting power of all of the Shares (on an as-converted basis) of the Company entitled to attend and vote at general meetings of the Company, forthwith proceed to convene an extraordinary general meeting of the Company. To be effective, the requisition shall state the objects of the meeting, shall be in writing, signed by the requisitionists, and shall be deposited at the Registered Office. The requisition may consist of several documents in like form each signed by one or more requisitionists.

 

23.2

If the Directors do not within twenty-one (21) days from the date of the requisition duly proceed to call an extraordinary general meeting, the requisitionists, or any of them representing more than one half (1/2) of the total voting rights of all of them, may themselves convene an extraordinary general meeting; but any meeting so called shall not be held more than ninety (90) days after the expiration of the above twenty-one (21) day period. An extraordinary general meeting called by requisitionists shall be called in the same manner, as nearly as possible, as that in which general meetings are to be called by the Directors.

 

24.

Notice

 

24.1

Except as otherwise provided in Article 3.3(h) hereof, at least five (5) days’ notice of an annual general meeting shall be given to each Member entitled to attend and vote thereat, stating the date, place and time at which the meeting is to be held and, if different, the record date for determining Members entitled to attend and vote at the general meeting, and, as far as practicable, the other business to be conducted at the meeting.

 

 

24.2

Except as otherwise provided in Article 3.3(h) hereof, at least three (3) days’ notice of an extraordinary general meeting shall be given to each Member entitled to attend and vote thereat, stating the date, place and time at which the meeting is to be held and the general nature of the business to be considered at the meeting, unless such notice is waived either before, at or after such meeting by the Members (or their proxies) holding a majority of the aggregate voting power of all of the Shares (on an as-converted basis) of the Company entitled to attend and vote thereat.

 

24.3

The Board may fix any date as the record date for determining the Members entitled to receive notice of and to vote at any general meeting of the Company but, unless so fixed, as regards the entitlement to receive notice of a meeting or notice of any other matter, the record date shall be the date of dispatch of the notice and, as regards the entitlement to vote at a meeting, and any adjournment thereof, the record date shall be the date of the original meeting.

 

24.4

A general meeting of the Company shall, notwithstanding that it is called on shorter notice than that specified in these Articles or whether or not the notice specified in these Articles has been given, be deemed to have been properly called if it is so agreed by the Members (or their proxies) holding a majority of the aggregate voting power of all of the Shares (on an as-converted basis) of the Company entitled to attend and vote thereat.

 

24.5

The accidental omission to give notice of a general meeting to, or the non-receipt of a notice of a general meeting by, any person entitled to receive notice shall not invalidate the proceedings at that meeting.

 

25.

Giving Notice

 

25.1

A notice may be given by the Company to any Member either by delivering it to such Member in person or by sending it to such Member’s address in the Register of Members or to such other address given for the purpose.

 

25.2

Any notice required to be given to a Member shall, with respect to any Shares held jointly by two or more persons, be given to whichever of such persons is named first in the Register of Members and notice so given shall be sufficient notice to all the holders of such Shares.

 

25.3

Any notice required by these Articles to be given to a Member shall be given in writing and shall be given either personally or by sending it by next-day or second-day courier service, fax, electronic mail or similar means permitted under applicable law to the address of such Member as provided in Article 25.1 above. Where a notice is sent by next-day or second-day courier service, service of the notice shall be deemed to be effected by properly addressing, pre-paying and sending by next-day or second-day service through an internationally-recognized courier a letter containing the notice, with a confirmation of delivery, and to have been effected at the expiration of two days after the letter containing the same is sent as aforesaid. Where a notice is sent by fax or electronic mail, service of the notice shall be deemed to be effected by properly addressing, and sending such notice through a transmitting organization, with a written confirmation of delivery, and to have been effected on the day the same is sent as aforesaid.

 

26.

Postponement of General Meeting

 

The Board may postpone any general meeting called in accordance with the provisions of these Articles provided that notice of postponement is given to each Member before the time for such meeting. Fresh notice of the date, time and place for the postponed meeting shall be given to each member in accordance with the provisions of these Articles.

 

 

27.

Participating in Meetings by Telephone

 

Members may participate in any general meeting by means of such telephone, electronic or other communication facilities as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and participation in such a meeting shall constitute presence in person at such meeting.

 

28.

Quorum at General Meetings

 

28.1

No business shall be transacted at any general meeting unless a quorum is present at the time when the meeting proceeds to business. The holders of a majority of the aggregate voting power of all of the Shares (on an as-converted basis) of the Company entitled to notice of and to attend and vote at such general meeting present in person or by proxy or if a corporation or other non-natural person by its duly authorised representative or proxy shall be a quorum. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum and the votes present may continue to transact business until adjournment.

 

28.2

If within one (1) hour from the time appointed for the meeting a quorum is not present, the meeting shall stand adjourned to the same day one week later, at the same time and place or to such other day, time or place as the Board may determine. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted that might have been transacted at the meeting as originally notified.

 

29.

Chairman to Preside

 

Unless otherwise agreed by a majority of those attending and entitled to vote thereat, the Chairman, if there be one, shall act as chairman at all meetings of the Members at which such person is present. In his absence a chairman shall be appointed or elected by those present at the meeting and entitled to vote.

 

30.

Voting on Resolutions

 

30.1

Except as otherwise required by the provisions of the Law and these Articles, the Ordinary Shares and the Preferred Shares shall vote together as a single class on all matters submitted to a vote of Members. Each Ordinary Share issued and outstanding shall have one (1) vote and each Preferred Share issued and outstanding shall have the number of votes equal to the number of Ordinary Shares into which such Preferred Shares are convertible pursuant to Article 3.3 hereof.

 

30.2

No Member shall be entitled to vote at a general meeting unless such Member has paid all the calls on all Shares held by such Member.

 

30.3

At any general meeting, a resolution put to the vote of the meeting shall be voted upon a show of hands unless before or on the declaration of the result of the show of hands a poll is demanded pursuant to Article 31.1 hereof. Unless a poll is demanded, on a show of hands, every Member present in person or by proxy shall have one vote. On a poll and subject to any rights or restrictions for the time being lawfully attached to any class of Shares and subject to the provisions of these Articles, every Member present in person and every person holding a valid proxy at such meeting shall be entitled to the number of votes as provided in Article 30.1 hereof for each Share of which such person is the holder or for which such person holds a proxy.

 

30.4

At any general meeting if an amendment shall be proposed to any resolution under consideration and the chairman of the meeting shall rule on whether the proposed amendment is out of order, the proceedings on the substantive resolution shall not be invalidated by any error in such ruling.

 

30.5

At any general meeting a declaration by the chairman of the meeting that a question proposed for consideration has been carried unanimously, or by a particular majority, or lost, and an entry to that effect in a book containing the minutes of the proceedings of the Company shall, subject to the provisions of these Articles, be conclusive evidence of that fact.

 

 

31.

Power to Demand a Vote on a Poll

 

31.1

Notwithstanding the foregoing, a poll may be demanded by the chairman of a general meeting or any Member entitled to attend and vote at such meeting.

 

31.2

Where a poll is demanded, subject to any rights or restrictions for the time being lawfully attached to any class of Shares, every person present at such meeting shall have the number of votes as provided in Article 30.1 hereof for each Share of which such person is the holder or for which such person holds a proxy, and such vote shall be counted by ballot as described herein, or in the case of a general meeting at which one or more Members are present by telephone, in such manner as the chairman of the meeting may direct and the result of such poll shall be deemed to be the resolution of the meeting at which the poll was demanded. A person entitled to more than one (1) vote need not use all his votes or cast all the votes he uses in the same way.

 

31.3

A poll demanded for the purpose of electing a chairman of the meeting or on a question of adjournment shall be taken forthwith and a poll demanded on any other question shall be taken in such manner and at such time and place at such meeting as the chairman of the meeting may direct and any business other than that upon which a poll has been demanded may be proceeded with pending the taking of the poll.

 

31.4

Where a vote is taken by poll, each person present and entitled to vote shall be furnished with a ballot paper on which such person shall record his vote in such manner as shall be determined at the meeting having regard to the nature of the question on which the vote is taken, and each ballot paper shall be signed or initialled or otherwise marked so as to identify the voter and the registered holder in the case of a proxy. At the conclusion of the poll, the ballot papers shall be examined and counted by a committee of not less than two (2) Members or proxy holders appointed by the chairman of the meeting for the purpose and the result of the poll shall be declared by the chairman of the meeting.

 

32.

Voting by Joint Holders of Shares

 

In the case of joint holders, the vote of the senior who tenders a vote (whether in person or by proxy) shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members.

 

33.

Instrument of Proxy

 

33.1

An instrument appointing a proxy shall be in writing or transmitted by electronic mail in substantially the following form or such other form as the chairman of the meeting shall accept:

 

Proxy
ShouTi Inc. (the “Company”)

 

I/We, [insert names here], being a Member of the Company with [number] shares, HEREBY APPOINT [name] of [address] or failing him, [name] of [address] to be my/our proxy to vote for me/us at the meeting of the Members held on the [ ] day of [ ], 20[ ] and at any adjournment thereof. (Any restrictions on voting to be inserted here.)

 

Signed this [ ] day of [ ], 20[ ]

 

Member(s)

 

 

33.2

The instrument of proxy shall be signed or, in the case of a transmission by electronic mail, electronically signed in a manner acceptable to the chairman of the meeting, by the appointor or by the appointor’s attorney duly authorised in writing, or if the appointor is a corporation, either under its seal or signed or, in the case of a transmission by electronic mail, electronically signed in a manner acceptable to the chairman of the meeting, by a duly authorised officer or attorney. The instrument of proxy shall be deposited (whether physically or by way of facsimile, email or other electronic means) at the Registered Office or at such other place as is specified for that purpose in the notice convening the meeting, no later than the time for holding the meeting or adjourning the meeting. The chairman of the meeting may in any event, at his or her direction, direct that an instrument of proxy shall be deemed to have been duly deposited. An instrument of proxy that is not deposited in the manner permitted shall be invalid.

 

33.3

A member who is the holder of two or more Shares may appoint more than one proxy to represent him and vote on his behalf.

 

33.4

The decision of the chairman of any general meeting as to the validity of any appointment of a proxy shall be final.

 

33.5

Notwithstanding any other provisions of these Articles, an instrument of proxy may be incorporated within any subscription agreement, voting agreement or other document signed by or on behalf of the Member. In the event that an instrument of proxy is incorporated within any such agreement entered into between the Company and the Member then the above-mentioned provisions as to depositing such instrument of proxy at the Registered Office or elsewhere shall not apply.

 

34.

Representation of Corporate Member

 

34.1

A corporation or other non-natural person that is a Member may, by written instrument, authorize such person or persons as it thinks fit to act as its representative at any meeting of the Members and any person so authorised shall be entitled to exercise the same powers on behalf of the corporation which such person represents as such corporation or other non-natural person could exercise if it were an individual Member, and that Member shall be deemed to be present in person at any such meeting attended by its authorised representative or representatives.

 

34.2

Notwithstanding the foregoing, the chairman of the meeting may accept such assurances as he thinks fit as to the right of any person to attend and vote at general meetings on behalf of a corporation or other non-natural person that is a Member.

 

35.

Adjournment of General Meeting

 

The chairman of a general meeting may, with the consent of the Members at any general meeting at which a quorum is present, and shall if so directed by the meeting, adjourn the meeting. Unless the meeting is adjourned to a specific date, place and time announced at the meeting being adjourned, fresh notice of the date, place and time for the resumption of the adjourned meeting shall be given to each Member entitled to attend and vote thereat, in accordance with these Articles.

 

36.

Written Resolutions of Members

 

36.1

A resolution in writing shall be as valid and effective as if the resolution had been passed at a duly convened and held general meeting of the Company, if it is signed by all Members for the time being entitled to receive notice of and to attend and vote at general meetings.

 

36.2

A resolution in writing may be signed by, or in the case of a Member that is a corporation (whether or not a company within the meaning of the Law) or other non-natural person, on behalf of, all the Members, or all the Members of the relevant class thereof, in as many counterparts as may be necessary.

 

 

36.3

For the purposes of this Article 36, the date of the resolution is the date when the resolution is signed by, or in the case of a Member that is a corporation (whether or not a company within the meaning of the Law) or other non-natural person, on behalf of, the last Member to sign and any reference in any Article to the date of passing of a resolution is, in relation to a resolution made in accordance with this Article 36, a reference to such date.

 

37.

Directors Attendance at General Meetings

 

The Directors of the Company shall be entitled to receive notice of, attend and be heard at any general meeting.

 

DIRECTORS AND OFFICERS

 

38.

Appointment of Directors

 

The Board shall initially consist of nine (9) Directors. So long as any Series B Preferred Shares are outstanding, the holders of Series B Preferred Shares, voting as a separate class, shall be entitled to elect two (2) Directors (the “Series B Directors”) at each meeting or pursuant to each consent of the Members for the election of Directors. So long as any Series A+ Preferred Shares are outstanding, the holders of Series A+ Preferred Shares, voting as a separate class, shall be entitled to elect two (2) Directors (the “Series A+ Directors”) at each meeting or pursuant to each consent of the Members for the election of Directors. So long as any Series A Preferred Shares are outstanding, the holders of Series A Preferred Shares, voting as a separate class, shall be entitled to elect two (2) Directors (the “Series A Directors”, together with the Series B Directors and the Series A+ Directors, the “Preferred Directors”) at each meeting or pursuant to each consent of the Members for the election of Directors. The holders of Ordinary Shares (other than any Ordinary Shares issued upon conversion of the Preferred Shares), voting as a separate class, shall be entitled to elect two (2) Directors (the “Ordinary Directors”) at each meeting or pursuant to each consent of the Members for the election of Directors. The remaining Director(s) (if any) shall be elected by the holders of Ordinary Shares and Preferred Shares, voting together as a single class on an as- converted basis at each meeting or pursuant to each consent of the Members for the election of Directors.

 

39.

Term of Office of Directors

 

An appointment of a Director may be on terms that the Director shall act in such capacity until and unless vacated pursuant to Article 40 hereof. The Directors may from time to time elect and remove a Chairman and determine the period for which he is to hold office. The Chairman shall preside at all meetings of the Directors, but if there be no Chairman, or if at any meeting the Chairman be not present within five (5) minutes after the time appointed for holding the same, the Directors present may choose one of them to be Chairman of the meeting.

 

40.

Vacancy in the Office of Director

 

The office of Director shall be vacated if the Director:

 

(a)

who shall have been elected by a specified group of Members is removed during his or her term of office, either for or without cause, by, and only by, the affirmative vote of the holders of a majority of the Shares of such specified group, given at a special meeting of such Members duly called or by an action by written consent for that purpose;

 

(b)

dies or becomes bankrupt, or makes any arrangement or composition with his creditors generally;

 

(c)

is or becomes of unsound mind or an order for his detention is made under the Mental Health Act of the Cayman Islands or any analogous law of a jurisdiction outside the Cayman Islands; or

 

 

(d)

resigns his office by notice in writing to the Company.

 

Any vacancy in the Board of Directors caused as a result of one or more of the events set out in this Article 40 of any such Director who shall have been elected by a specified group of Members, may be filled by, and only by, the vote of the holders of a majority of the Shares (on an as-converted basis, if applicable) of such specified group given at a special meeting of such Members or by an action by written consent, unless otherwise agreed upon among such Members.

 

41.

Remuneration of Directors

 

The remuneration (if any) of the Directors shall, subject to any direction that may be given by the Company in a general meeting, be determined by the Directors as they may from time to time determine and shall be deemed to accrue from day to day. The Directors may also be paid all travel, hotel and other expenses properly incurred by them in attending and returning from the meetings of the Board, any committee appointed by the Board, general meetings of the Company, or in connection with the business of the Company or their duties as Directors generally.

 

42.

Defect in Appointment of Director

 

All acts done in good faith by the Board or by a committee of the Board or by any person acting as a Director shall, notwithstanding that it be afterwards discovered that there was some defect in the appointment of any Director or person acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a Director.

 

43.

Directors to Manage Business

 

Subject to the provisions of the Law and these Articles and to any directions given by a Special Resolution, the business of the Company shall be managed and conducted by the Board. In managing the business of the Company, the Board may exercise all such powers of the Company as are not, by the Law or by these Articles, required to be exercised by the Company in general meeting subject, nevertheless, to these Articles, the provisions of the Law and to such directions as may be prescribed by the Company in general meeting.

 

44.

Powers of the Board of Directors

 

Without limiting the generality of Article 43 hereof, but subject to Articles 3 and 4 hereof, the Board may:

 

(a)

appoint, suspend, or remove any manager, secretary, clerk, agent or employee of the Company and may fix their remuneration and determine their duties;

 

(b)

subject to Article 3.6(c) hereof, exercise all the powers of the Company to borrow or mortgage or charge or otherwise grant a security interest in its undertaking, property and uncalled capital, or any part thereof, and may issue debentures, debenture stock and other securities whether outright or as security for any debt, liability or obligation of the Company or any third party;

 

(c)

appoint chief executive officer of the Company, who shall, subject to the control of the Board, supervise and administer all of the general business and affairs of the Company;

 

(d)

appoint a person to act as manager of the Company’s day-to-day business and may entrust to and confer upon such manager such powers and duties as it deems appropriate for the transaction or conduct of such business;

 

(e)

by power of attorney, appoint any company, firm, person or body of persons, whether nominated directly or indirectly by the Board, to be an attorney of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Board) and for such period and subject to such conditions as it may think fit and any such power of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Board may think fit and may also authorise any such attorney to sub-delegate all or any of the powers, authorities and discretions so vested in the attorney;

 

 

(f)

procure that the Company pays all expenses incurred in promoting and incorporating the Company;

 

(g)

delegate any of its powers (including the power to sub-delegate) to a committee of one or more persons appointed by the Board and every such committee shall conform to such directions as the Board shall impose on them. Subject to any directions or regulations made by the Directors for this purpose, the meetings and proceedings of any such committee shall be governed by the provisions of these Articles regulating the meetings and proceedings of the Board, including provisions for written resolutions;

 

(h)

delegate any of its powers (including the power to sub-delegate) to any person on such terms and in such manner as the Board sees fit;

 

(i)

present any petition and make any application in connection with the liquidation or reorganisation of the Company;

 

(j)

in connection with the issue of any Share, pay such commission and brokerage as may be permitted by applicable law; and

 

(k)

authorise any company, firm, person or body of persons to act on behalf of the Company for any specific purpose and in connection therewith to execute any agreement, document or instrument on behalf of the Company.

 

In addition, except as otherwise set forth in these Articles, and subject to the terms of any written agreement to which the Company is a party, the Board shall have the power and authority to make all United States tax determinations, elections, and decisions with respect to the Company (including in connection with any tax audit or controversy involving the Company). Items of income, gain, loss, deduction, and credit of the Company shall be allocated solely for United States federal, state, and local income tax purposes among the Company’s shareholders in accordance with Article 65.

 

45.

Register of Directors and Officers

 

45.1

The Board shall cause to be kept in one or more books at the registered office of the Company a Register of Directors and Officers in accordance with the Law and shall enter therein the following particulars with respect to each Director and Officer:

 

(a)

first name and surname; and

 

(b)

address.

 

45.2

The Board shall, within the period of thirty (30) days from the occurrence of:-

 

(a)

any change among its Directors and Officers; or

 

(b)

any change in the particulars contained in the Register of Directors and Officers,

 

cause to be entered on the Register of Directors and Officers the particulars of such change and the date on which such change occurred, and shall notify the Registrar of Companies of any such change that takes place.

 

 

46.

Officers

 

The Officers shall consist of a Secretary and such additional Officers as the Board may determine all of whom shall be deemed to be Officers for the purposes of these Articles.

 

47.

Appointment of Officers

 

The Secretary (and additional Officers, if any) shall be appointed by the Board from time to time.

 

48.

Duties of Officers

 

The Officers shall have such powers and perform such duties in the management, business and affairs of the Company as may be delegated to them by the Board from time to time.

 

49.

Remuneration of Officers

 

Subject to Article 3.6(c) hereof, the Officers shall receive such remuneration as the Board may determine.

 

50.

Conflicts of Interest

 

50.1

Any Director, or any Director’s firm, partner or any company with whom any Director is associated, may act in any capacity for, be employed by or render services to the Company and such Director or such Director’s firm, partner or company shall be entitled to remuneration as if such Director were not a Director. Nothing herein contained shall authorise a Director or Director’s firm, partner or company to act as Auditor to the Company.

 

50.2

A Director who is directly or indirectly interested in a contract or proposed contract or arrangement with the Company shall declare the nature of such interest as required by applicable law.

 

50.3

Following a declaration being made pursuant to this Article 50, and unless disqualified by the chairman of the relevant Board meeting, a Director may vote in respect of any contract or proposed contract or arrangement in which such Director is interested and may be counted in the quorum for such meeting.

 

50.4

In addition to any further restrictions set forth in these Articles, no person shall be disqualified from the office of Director or prevented by such office from contracting with the Company, either as vendor, purchaser or otherwise, nor shall any such contract or any contract or transaction entered into by or on behalf of the Company in which any Director shall be in any way interested (each, an “Interested Transaction”) be or be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company for any profit realized by any such Interested Transaction by reason of such Director holding office or of the fiduciary relation thereby established, so long as the requirements of Section 144 of the General Company Law of the State of Delaware in the United States of America (as the same shall be amended hereafter from time to time, and as the same is interpreted through applicable case law) are satisfied with respect to such Interested Transaction as if the Company were a corporation organized under the laws of the State of Delaware and subject to such Section 144.

 

 

51.

Indemnification and Exculpation of Directors and Officers

 

51.1

To the maximum extent permitted by applicable law, the Directors, Officers and Auditors of the Company and any trustee for the time being acting in relation to any of the affairs of the Company and every former director, officer, auditor or trustee and their respective heirs, executors, administrators, and personal representatives (each of which persons being referred to in this Article 51 as an “indemnified party”) shall be indemnified and held harmless out of the assets of the Company from and against all actions, costs, charges, losses, damages and expenses which they or any of them shall or may incur or sustain by or by reason of any act done, concurred in or omitted in or about the execution of their duty, or supposed duty, or in their respective offices or trusts, and no indemnified party shall be answerable for the acts, receipts, neglects or defaults of the others of them or for joining in any receipts for the sake of conformity, or for any bankers or other persons with whom any moneys or effects belonging to the Company shall or may be lodged or deposited for safe custody, or for insufficiency or deficiency of any security upon which any moneys of or belonging to the Company shall be placed out on or invested, or for any other loss, misfortune or damage which may happen in the execution of their respective offices or trusts, or in relation thereto, provided that this indemnity shall not extend to any matter in respect of any fraud or dishonesty which may attach to any of the said persons. Each Member agrees to waive any claim or right of action such Member might have, whether individually or by or in the right of the Company, against any Director or Officer on account of any action taken by such Director or Officer, or the failure of such Director or Officer to take any action in the performance of his duties with or for the Company, provided that such waiver shall not extend to any matter in respect of any fraud or dishonesty which may attach to such Director or Officer.

 

51.2

The Company may purchase and maintain insurance for the benefit of any Director or Officer of the Company against any liability incurred by him in his capacity as a Director or Officer of the Company or indemnifying such Director or Officer in respect of any loss arising or liability attaching to him by virtue of any rule of law in respect of any negligence, default, breach of duty or breach of trust of which the Director or Officer may be guilty in relation to the Company or any subsidiary thereof.

 

51.3

The indemnification and advancement of expenses provided by or granted under these Articles are not exclusive of any other rights to which the person seeking indemnification or advancement of expenses may be entitled under any agreement, resolution of Members, resolution of disinterested Directors or otherwise, both as to acting in the person’s official capacity and as to acting in another capacity while serving as a Director or Officer of the Company.

 

MEETINGS OF THE BOARD OF DIRECTORS

 

52.

Board Meetings

 

The Board may meet for the transaction of business, adjourn and otherwise regulate its meetings as it sees fit. A resolution put to the vote at a meeting of the Board shall be carried by the affirmative votes of a majority of the votes cast and in the case of an equality of votes the resolution shall fail.

 

53.

Notice of Board Meetings

 

A Director may, and the Secretary on the requisition of a Director shall, at any time summon a meeting of the Board. Notice of a meeting of the Board shall be deemed to be duly given to a Director if it is given to such Director verbally (in person or by telephone) or otherwise communicated or sent to such Director by post, cable, facsimile, electronic mail or other mode of representing words in a legible form at such Director’s last known address or any other address given by such Director to the Company for this purpose.

 

54.

Participation in Meetings by Telephone

 

Directors may participate in any meeting of the Board by means of such telephone, electronic or other communication facilities as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and participation in such a meeting shall constitute presence in person at such meeting.

 

 

55.

Quorum at Board Meetings

 

At all meetings of the Board a majority of the number of Directors elected in accordance with Article 38 hereof (which majority shall include at least one Preferred Director) shall be necessary and sufficient to constitute a quorum for the transaction of business, and the vote of a majority of the Directors present at any meeting at which there is a quorum, shall be the act of the Board, except as may be otherwise specifically provided in the Law, the Memorandum or these Articles. If within half an hour from the time appointed for any meeting of the Board a quorum in not present, the Directors present thereat may adjourn the meeting to the same day in the next week at the same time and place or to such other time or such other place as the Directors may determine and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting, the Directors present shall constitute a quorum.

 

56.

Board to Continue in the Event of Vacancy

 

The Board may act notwithstanding any vacancy in its number.

 

57.

Chairman to Preside

 

Unless otherwise agreed by a majority of the Directors attending, the Chairman shall act as chairman at all meetings of the Board at which such person is present. In his absence a chairman of the meeting shall be appointed or elected by the Directors present at the meeting.

 

58.

Written Resolutions of Directors

 

58.1

Anything which may be done by resolution of the Directors may, without a meeting and without any previous notice being required, be done by resolution in writing signed by, or in the case of a Director that is a corporation whether or not a company within the meaning of the Law, on behalf of, all the Directors.

 

58.2

A resolution in writing may be signed by, or in the case of a Director that is a corporation whether or not a company within the meaning of the Law, on behalf of, all the Directors in as many counterparts as may be necessary.

 

58.3

A resolution in writing made in accordance with this Article is as valid as if it had been passed by the Directors in a directors’ meeting, and any reference in any Article to a meeting at which a resolution is passed or to Directors voting in favour of a resolution shall be construed accordingly.

 

58.4

For the purposes of this Article 58, the date of the resolution is the date when the resolution is signed by, or in the case of a Director that is a corporation whether or not a company within the meaning of the Law, on behalf of, the last Director to sign, and any reference in any Article to the date of passing of a resolution is, in relation to a resolution made in accordance with this Article 58, a reference to such date.

 

59.

Validity of Prior Acts of the Board

 

No regulation or alteration to these Articles made by the Company in general meeting shall invalidate any prior act of the Board which would have been valid if that regulation or alteration had not been made.

 

CORPORATE RECORDS

 

60.

Minutes

 

The Board shall cause minutes to be duly entered in books provided for the purpose:

 

(a)

of all elections and appointments of Officers;

 

 

(b)

of the names of the Directors present at each meeting of the Board and of any committee appointed by the Board; and

 

(c)

of all resolutions and proceedings of general meetings of the Members, meetings of the Board, meetings of managers and meetings of committees appointed by the Board.

 

61.

Register of Mortgages and Charges

 

61.1

The Directors shall cause to be kept the Register of Mortgages and Charges required by the Law.

 

61.2

The Register of Mortgages and Charges shall be open to inspection in accordance with the Law, at the office of the Company on every business day in the Cayman Islands, subject to such reasonable restrictions as the Board may impose, so that not less than two hours in each such business day be allowed for inspection.

 

62.

Form and Use of Seal

 

62.1

The Company may adopt a common seal in such form as the Board may determine. The Board may adopt one or more duplicate seals for use in or outside Cayman; and, if the Directors think fit, a duplicate seal may bear on its face of the name of the country, territory, district or place where it is to be issued.

 

62.2

The Seal (if any) shall only be used by the authority of the Directors or of a committee of the Directors authorised by the Directors in that behalf; and, until otherwise determined by the Directors, the Seal shall be affixed in the presence of a Director or the Secretary or an assistant secretary or some other person authorised for this purpose by the Directors or the committee of Directors.

 

62.3

Notwithstanding the foregoing, the Seal (if any) may without further authority be affixed by way of authentication to any document required to be filed with the Registrar of Companies in the Cayman Islands, and may be so affixed by any Director, Secretary or assistant secretary of the Company or any other person or institution having authority to file the document as aforesaid.

 

ACCOUNTS

 

63.

Books of Account

 

63.1

The Board shall cause to be kept proper records of account with respect to all transactions of the Company and in particular with respect to:

 

(a)

all sums of money received and expended by the Company and the matters in respect of which the receipt and expenditure relates;

 

(b)

all sales and purchases of goods by the Company; and

 

(c)

all assets and liabilities of the Company.

 

63.2

Such records of account shall be kept and proper books of account shall not be deemed to be kept with respect to the matters aforesaid if there are not kept, at such place as the Board thinks fit, such books as are necessary to give a true and fair view of the state of the Company’s affairs and to explain its transactions.

 

63.3

No Member (not being a Director) shall have any right of inspecting any account or book or document of the Company.

 

 

64.

Financial Year End

 

The financial year end of the Company shall be 31st December in each year but, subject to any direction of the Company in general meeting, the Board may from time to time prescribe some other period to be the financial year, provided that the Board may not without the sanction of an Ordinary Resolution prescribe or allow any financial year longer than eighteen months.

 

65.

Allocation of Group Income for United States Income Tax Purposes

 

Notwithstanding any other provision in these Articles, the provisions of this Article 65 apply solely for United States federal, state and local income tax purposes with respect to any taxable periods (or portions thereof) during which the Company is classified as a “partnership” within the meaning of sections 761(a) and 7701(a)(2) of the Code and Treasury Regulations Section 301.7701-3 for United States income tax purposes (and for purposes of any similar or comparable provision of United States state or local law). For clarity, the provisions of this Article 65 shall not apply with respect to any taxable periods (or portions thereof) during which the Company is classified for United States federal income tax purposes as a “corporation” within the meaning of section 7701(a)(3) of the Code and Treasury Regulations Section 301.7701-2(b).

 

65.1

A separate account (each a “Capital Account”) shall be established and maintained for each of the Company’s shareholders in accordance with the provisions of section 704(b) of the Code and the Treasury Regulations thereunder and this Article 65 shall be interpreted consistently therewith. In accordance with the Treasury Regulations, each of the Company’s shareholders shall have a single Capital Account with respect to its ownership interest in the Company, even if such shareholder owns more than once class of Shares or other equity in the Company.

 

65.2

Net profit or net loss of the Company or, to the extent appropriate, items thereof for any relevant period shall be allocated to the Capital Accounts of the shareholders so as to ensure, to the extent possible, that the Capital Account of each of the Company’s shareholders as of the end of such period, is equal to (i) the aggregate distributions that the Company’s shareholders would be entitled to receive if all of the assets of the Company were sold for their asset values, the liabilities of the Company were paid in full (limited, with respect to nonrecourse liabilities, to the book values of the assets securing such liabilities) and the remaining proceeds were distributed in accordance with Article 3.2(a), less (ii) the sum of (x) applicable shareholder’s share of the “partnership minimum gain” and “partner nonrecourse debt minimum gain” and (y) the amount, if any (without duplication of any amount included under clause (x)), that such shareholder is obligated (or is deemed for United States tax purposes to be obligated) to contribute, in its capacity as a shareholder, to the capital of the Company as of the last day of such period. The allocations made pursuant to this Article 65.2 are intended to comply with the provisions of section 704(b) of the Code and the Treasury Regulations thereunder and, in particular, to reflect the Company’s shareholders’ economic interests in the Company, and this Article 65.2 shall be interpreted and applied in a manner consistent with such intention.

 

65.3

If any Company shareholder unexpectedly receives any adjustments, allocations, or distributions described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), Section 1.704-1(b)(2)(ii)(d)(5) or Section 1.704-1(b)(2)(ii)(d)(6), items of income and gain shall be specially allocated to each such shareholder in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, the deficit balance of such shareholder’s Capital Account as quickly as possible. This Section 65.3 is intended to comply with the qualified income offset requirement of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. This Agreement shall be deemed to include “minimum gain chargeback” and “partner nonrecourse debt minimum gain chargeback” provisions within the meaning of the Treasury Regulations under Section 704(b) of the Code. Accordingly, notwithstanding the first sentence of Section 65.2, items of gross income shall be allocated to the shareholders on a priority basis to the extent and in the manner required by such provisions.

 

 

65.4

The allocations set forth in this Section 65.4 (the “Regulatory Allocations”) are intended to comply with certain requirements of the Treasury Regulations. It is the intent of the Company shareholders that, to the extent possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special allocations of other items of Company income, gain, loss or deduction pursuant to this Section 65.4. Therefore, notwithstanding any other provision of Section 65 (other than the Regulatory Allocations), the Board shall make such offsetting special allocations of Company income, gain, loss or deduction in whatever manner it determines appropriate so that, after such offsetting allocations are made, each shareholder’s Capital Account balance is, to the extent possible, equal to the Capital Account balance such shareholder would have had if the Regulatory Allocations were not part of the Agreement and all Company items were allocated pursuant to Section 65.2. In exercising its discretion under this Section 65.4, the Board may take into account future Regulatory Allocations that, although not yet made, are likely to offset other Regulatory Allocations previously made.

 

65.5

All items of income, gain, losses, deduction and credit shall be allocated for United States federal, state and local income tax purposes so as to reflect, in the judgment of the Board, the allocations of corresponding items for Capital Account purposes under Article 65.2, except to the extent otherwise required by section 704(c) of the Code and the Treasury Regulations promulgated thereunder or as required by Law.

 

65.6

If during any year of the Company there is a change in any shareholder’s ownership interest in the Company, the Board shall confer with the United States tax advisors to the Company and, in conformity with such advice, allocate the net profit or net loss to the shareholders so as to take into account the varying interests of the shareholders in the Company in a manner that complies with the provisions of Section 706 of the Code and the Treasury Regulations thereunder.

 

65.7

Without providing prior written notice to the Company and obtaining the prior written consent of the Board, no shareholder will take a position on such shareholder’s United States federal income tax return, in any claim for refund or in any administrative or legal proceedings that is inconsistent with this Article 65 or with any information return filed by the Company and shares with such shareholder.

 

AUDITS

 

66.

Audit

 

Nothing in these Articles shall be construed as making it obligatory to appoint Auditors.

 

67.

Appointment of Auditors

 

67.1

Subject to Article 3.6(c) hereof, the Company may in general meeting appoint Auditors to hold office for such period as the Members may determine.

 

67.2

Whenever there are no Auditors appointed as aforesaid, subject to Article 3.6(c) hereof, the Directors may appoint Auditors to hold office for such period as the Directors may determine or earlier removal from office by the Company in general meeting.

 

67.3

The Auditor may be a Member but no Director, Officer or employee of the Company shall, during his continuance in office, be eligible to act as an Auditor of the Company.

 

68.

Remuneration of Auditors

 

Unless fixed by the Company in general meeting the remuneration of the Auditor shall be as determined by the Directors.

 

 

69.

Duties of Auditor

 

69.1

The Auditor shall make a report to the Members on the accounts examined by him and on every set of financial statements laid before the Company in general meeting, or circulated to Members, pursuant to this Article during the Auditor’s tenure of office.

 

70.

Access to Records

 

70.1

The Auditor shall at all reasonable times have access to the Company’s books, accounts and vouchers and shall be entitled to require from the Company’s Directors and Officers such information and explanations as the Auditor thinks necessary for the performance of the Auditor’s duties and, if the Auditor fails to obtain all the information and explanations which, to the best of his knowledge and belief, are necessary for the purposes of their audit, he shall state that fact in his report to the Members.

 

70.2

The Auditor shall be entitled to attend any general meeting at which any financial statements which have been examined or reported on by him are to be laid before the Company and to make any statement or explanation he may desire with respect to the financial statements.

 

VOLUNTARY WINDING-UP AND DISSOLUTION

 

71.

Winding-Up

 

71.1

Subject to these Articles, including Article 3 hereof, the Company may be voluntarily wound-up by a Special Resolution of the Company.

 

71.2

If the Company shall be wound up the liquidator may, with the sanction of a Special Resolution, divide amongst the Members in specie or in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may, for such purpose, set such value as he deems fair upon any property to be divided as aforesaid and may, subject to these Articles, including Article 3 hereof, determine how such division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like sanction, vest the whole or any part of such assets in the trustees upon such trusts for the benefit of the Members as the liquidator shall think fit, but so that no Member shall be compelled to accept any Shares or other securities or assets whereon there is any liability.

 

CHANGES TO CONSTITUTION

 

72.

Changes to Articles

 

Subject to the Law, the Memorandum and these Articles, including Article 3.6 hereof, the Company may, by Special Resolution, (a) alter or add to these Articles or (b) change its name.

 

73.

Changes to the Memorandum of Association

 

Subject to the Law and these Articles, the Company may from time to time by Special Resolution alter the Memorandum with respect to any objects, powers or other matters specified therein.

 

74.

Discontinuance

 

The Board may exercise all the powers of the Company to transfer by way of continuation the Company to a named country or jurisdiction outside the Cayman Islands pursuant to the Law.

 

 

OTHER

 

75.

Notwithstanding anything in these Articles to the contrary, the parties hereto acknowledge and agree that (a) the name “Sequoia Capital” is commonly used to describe a variety of entities (collectively, the “Sequoia Entities”) that are affiliated by ownership or operational relationship and engaged in a broad range of activities related to investing and securities trading and (b) notwithstanding any other provision of these Articles to the contrary, these Articles shall not be binding on, or restrict the activities of, any (i) Sequoia Entity outside of the Sequoia China Sector Group , (ii) entity primarily engaged in investment and trading in the secondary securities market; (iii) the ultimate beneficial owner of an Sequoia Entity (or its general partner or ultimate general partner) who is a natural Person, and such Person’s relatives (including but without limitation, such Person’s spouse, parents, children, siblings, mother-in-law and father-in-law and brothers and sisters-in-law), (iv) any officer, director or employee of a Sequoia Entity (or its general partner or ultimate general partner) and such Person’s relatives, and (v) for the avoidance of doubt, any portfolio companies of any Sequoia Entity and portfolio companies of any affiliated investment fund or investment vehicle of any Sequoia Entity. For purposes of the foregoing, the “Sequoia China Sector Group” means all Sequoia Entities (whether currently existing or formed in the future) that are principally focused on companies located in, or with connections to, the PRC that are exclusively managed by Sequoia Capital. Notwithstanding anything to the contrary set forth herein, this Article 75 may not be amended or waived without the prior written consent of SCC Venture VII Holdco I, Ltd.

 

 

Exhibit 4.4 

 

SECOND AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT

 

THIS SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (this “Agreement”) is made as of July 30, 2021, by and among ShouTi Inc., an exempted company limited by shares incorporated under the laws of the Cayman Islands (the “Company”), and the investors set forth in Schedule A attached hereto (each, an “Investor” and collectively, the “Investors”).

 

RECITALS

 

A.            Certain of the Investors (the “Existing Investors”) hold Series A preferred shares, par value US$0.0001 per share, of the Company (the “Series A Preferred Shares”) and/or Series A+ preferred shares, par value US$0.0001 per share, of the Company (the “Series A+ Preferred Shares”) and possess registration rights, information rights, rights of first offer, and other rights pursuant to that certain Amended and Restated Investor Rights Agreement dated as of March 11, 2020, by and among the Company and such Existing Investors (the “Prior Agreement”).

 

B.             The Existing Investors are holders of a majority of the then outstanding Registrable Securities (as defined in the Prior Agreement) of the Company, and desire to amend and restate the Prior Agreement in its entirety and to accept the rights created pursuant to this Agreement in lieu of the rights granted to them under the Prior Agreement.

 

C.             The Company and certain of the Investors are parties to that certain Series B Preferred Share Purchase Agreement dated as of the date hereof (the “Purchase Agreement”), pursuant to which such Investors are purchasing a certain number of Series B preferred shares, par value US$0.0001 per share, of the Company (the “Series B Preferred Shares”).

 

D.             It is a condition precedent under the Purchase Agreement that the Company and the Investors enter into this Agreement.

 

NOW, THEREFORE, in consideration of the premises set forth above, the mutual promises and covenants set forth herein and other good and valuable consideration, the Existing Investors hereby agree that the Prior Agreement is hereby amended and restated, and the parties to this Agreement further agree as follows:

 

1.

Interpretation.

 

1.1            Definitions. The following terms shall have the meanings ascribed to them below:

 

“Affiliate” of any Person means any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including without limitation any general partner, limited partner, member, manager, managing member, officer, employee, director or trustee of such Person or any trust for the benefit of any of the foregoing, or any Affiliate of any of the foregoing, or any venture capital fund, or other investment fund, or registered investment company now or hereafter existing that is controlled by one or more general partners, managing members or investment advisers of, or shares the same management company or investment adviser with, such Person. For purposes of this definition, the terms “control”, “controlling”, “controlled by” and “under common control with,” as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct the management or policies of such Person, directly or indirectly, whether through the ownership of voting securities, by agreement, as trustee or executor or otherwise. In the case of each Investor, the term “Affiliate” also includes (v) any shareholder of such Investor, (w) any of such shareholder’s or such Investor’s general partners or limited partners, (x) the fund manager managing or advising such shareholder or such Investor (and general partners, limited partners and officers thereof) and other funds managed or advised by such fund manager, and (y) trusts controlled by or for the benefit of any such Person referred to in (v), (w) or (x), and (z) any fund or holding company formed for investment purposes that is promoted, sponsored, managed, advised or serviced by such Investor.

 

 

“Agreement” has the meaning set forth in the preamble hereof.

 

“Applicable Securities Law” means (i) with respect to any offering of securities in the United States, or any other act or omission within that jurisdiction, the securities laws of the United States, including the Exchange Act and the Securities Act, and any applicable law of any state of the United States and (ii) with respect to any offering of securities in any jurisdiction other than the United States, or any related act or omission in that jurisdiction, the applicable laws of that jurisdiction.

 

“Arbitration Notice” has the meaning set forth in Section 9.4(a) hereof.

 

“Articles” means the Fourth Amended and Restated Memorandum and Articles of Association of the Company adopted on or about the date hereof, as such may be amended and/or restated from time to time.

 

“Board of Directors” means the board of directors of the Company.

 

“Business Opportunity” has the meaning set forth in Section 9.5(c) hereof.

 

“BVF” means, collectively, Biotechnology Value Fund, L.P., Biotechnology Value Fund II, L.P., Biotechnology Value Trading Fund OS, L.P. and their respective Affiliates.

 

“Commission” means (i) with respect to any offering of securities in the United States, the Securities and Exchange Commission of the United States or any other federal agency at the time administering the Securities Act and (ii) with respect to any offering of securities in a jurisdiction other than the United States, the regulatory body of the jurisdiction with authority to supervise and regulate the sale of securities in that jurisdiction.

 

“Company” has the meaning set forth in the preamble hereof.

 

“Competitor” means a Person engaged, directly or indirectly (including through any partnership, limited liability company, corporation, joint venture or similar arrangement (whether now existing or formed hereafter)), in a substantially similar business to the business of the Company or any of its subsidiaries, as conducted or as proposed to be conducted as of the date of determination, and as reasonably determined by the Board of Directors; provided, however, that “Competitor” shall not include any financial investment firm or collective investment vehicle that, together with its Affiliates, holds less than twenty percent (20%) of the outstanding equity of any Competitor and does not, nor do any of its Affiliates, have a right to designate any member of the board of directors or similar governing body of such Competitor; provided further, that for the purposes of Sections 7.1 and 7.2 only, none of ERVC Healthcare IV, L.P., F-Prime Capital Partners Life Sciences Fund VI LP, SCC Venture VII Holdco I, L.P., Hillhouse, BVF, LAV, Surveyor, Cormorant nor any of their respective Affiliates that is an investment fund or other professional investment organization, nor any of their respective Affiliates or their respective partners, officers, or representatives which manage or advise any such investment funds, shall be deemed to be a “Competitor” as a result of any such investment, management or advisory activities.

 

 

“Cormorant” means Cormorant Private Healthcare Fund IV, LP and Cormorant Global Healthcare Master Fund, LP.

 

“Dispute” has the meaning set forth in Section 9.4(a) hereof.

 

“Eight Roads” means ERVC Healthcare IV, L.P. and its Affiliates.

 

“Eight Roads Person” means any Affiliate of Eight Roads and: (i) FIL Limited (“FIL”), a company incorporated in Bermuda, and any subsidiary undertaking of FIL from time to time (FIL and its subsidiary undertakings being the “FIL Group”); (ii) FMR LLC (FMR), a Delaware corporation, and any subsidiary undertaking of FMR from time to time (FMR and its subsidiary undertakings being the “FMR Group”); (iii) any director, officer, employee or shareholder of the FIL Group and/or the FMR Group or members of his family and any company, trust, partnership or other entity formed for his or any of their benefit from time to time (any or all of such individuals and entities being the “Closely Related Shareholders”); (iv) any entity controlled by Closely Related Shareholders where control shall mean the power to direct the management and policies or appoint or remove members of the board of directors or other governing body of the entity, directly or indirectly, whether through the ownership of voting securities, contract or otherwise, and controlled shall be construed accordingly; (v) any affiliate of any member of the FIL Group and/or the FMR Group (where affiliate, for the purposes of this provision only, means any entity controlled by any combination of any Closely Related Shareholders and, for purposes of this provision only, any member of the FIL Group and/or the FMR Group, and includes the officers, partners and directors of any affiliate); (vi) any fund in which any member of the FIL Group and/or the FMR Group or any Closely Related Shareholder is a partner; and (vii) any portfolio company held by any such fund or in which any member of the FIL Group and/or the FMR Group or a Closely Related Shareholder holds a minority investment.

 

“Equity Securities” means any Ordinary Shares or Ordinary Share Equivalents.

 

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

 

“F-Prime” means F-Prime Capital Partners Life Sciences Fund VI LP and its Affiliates.

 

“Form F-1” means Form F-1 promulgated by the Commission under the Securities Act or any substantially similar form then in effect.

 

“Form F-3” means Form F-3 promulgated by the Commission under the Securities Act or any substantially similar form then in effect.

 

 

“Fund Investor” has the meaning set forth in Section 9.5(c) hereof.

 

“Fully Exercising Investor” has the meaning set forth in Section 8.3 hereof.

 

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

 

“Hillhouse” means XX-I SHT Holdings Limited.

 

“Holder Indemnified Party” has the meaning set forth in Section 5.1(a) hereof.

 

“Holders” means any holder of Registrable Securities who is a party to this Agreement.

 

“Immediate Family Member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships, of an individual referred to herein.

 

“Initiating Holders” means, with respect to a written request duly made under Section 2.1 or Section 2.2 to Register any Registrable Securities, the Holders initiating such request.

 

“Investor Director” has the meaning set forth in Section 9.5(c) hereof.

 

“Investors” has the meaning set forth in the preamble hereof.

 

“Issuance Notice” has the meaning set forth in Section 8.2 hereof.

 

“IPO” means an initial public offering by the Company of the Ordinary Shares.

 

“LAV” means LAV Fund VI, L.P. and LAV Fund VI Opportunities, L.P.

 

“Liquidation Event” has the meaning given such term in the Articles, including, for avoidance of doubt, any deemed Liquidation Event as set forth in Article 3.2(c) of the Articles.

 

“Major Holder” means any Holder that, individually or together with such Holder’s Affiliates, holds at least 1,012,500 shares of Registrable Securities (as adjusted for any share split, share dividend, combination, or other recapitalization or reclassification effected after the date hereof).

 

“New Securities” means any Equity Securities; provided, however, that the term “New Securities” does not include any Exempted Securities (as defined in the Articles) or any Equity Securities issued or to be issued in a public offering.

 

“Ordinary Shares” means the ordinary shares, par value US$0.0001 per share, of the Company.

 

“Ordinary Share Equivalents” means warrants, options, rights and other securities exercisable, convertible or exchangeable for the Ordinary Shares or securities exercisable, convertible, or exchangeable, for Ordinary Shares.

 

“Overallotment Notice” has the meaning set forth in Section 8.3 hereof.

 

 

“Partnership Representative” has the meaning set forth in Section 7.7(e) hereof.

 

“Person” means any individual, corporation, partnership, limited partnership, proprietorship, association, limited liability company, firm, trust, estate or other enterprise or entity.

 

“Purchase Agreement” has the meaning set forth in the Recitals hereof.

 

“PRC” means the People’s Republic of China (For purposes of this Agreement, “PRC” does not include Hong Kong, Taiwan or Macau).

 

“PRC Resident Enterprise” has the meaning set forth in Section 7.7(h) hereof.

 

“Preferred Shares” means, collectively, the Series A Preferred Shares, the Series A+ Preferred Shares and the Series B Preferred Shares.

 

“Prior Agreement” has the meaning set forth in the Recitals hereof.

 

“Pro Rata Portion” has the meaning set forth in Section 8.3 hereof.

 

“Qualified IPO” has the meaning given such term in the Articles.

 

“Registrable Securities” means (i) the Ordinary Shares issuable or issued upon conversion of the Preferred Shares, and (ii) any Ordinary Shares issued (or issuable upon the conversion, exchange or exercise of any Ordinary Share Equivalent) as a dividend or other distribution with respect to, or in exchange for, or in replacement of, the shares referenced in (i) above; provided, however, that Registrable Securities shall not include any Ordinary Shares described in (i) or (ii) above which have previously been registered or which have been sold to the public either pursuant to a Registration Statement or Rule 144, or which have been sold in a private transaction in which the transferor’s rights under this Agreement are not validly assigned in accordance with this Agreement.

 

“Registration” means a registration effected by preparing and filing a Registration Statement and the declaration or ordering of the effectiveness of that Registration Statement; and the terms “Register” and “Registered” have meanings concomitant with the foregoing.

 

“Registration Statement” means a registration statement prepared on Form F-1 or Form F-3, as applicable, under the Securities Act, or on any comparable form in connection with registration in a jurisdiction other than the United States.

 

“Restricted Securities” means the securities of the Company required to bear the legend set forth in Section 6.4(b) hereof.

 

“Rule 144” means Rule 144 promulgated by the Commission under the Securities Act, as such rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission.

 

“Securities Act” means the United States Securities Act of 1933, as amended.

 

 

“Selling Expenses” means all underwriting discounts, selling commissions and share transfer taxes applicable to the sale of Registrable Securities.

 

“Sequoia” means SCC Venture VII Holdco I, Ltd., together with its Affiliate successors, assignees and transferees.

 

“Sequoia Entities” has the meaning set forth in Section 9.5(b) hereof.

 

“Series A Preferred Shares” has the meaning set forth in the Recitals hereof.

 

“Series A+ Preferred Shares” has the meaning set forth in the Recitals hereof.

 

“Series B Preferred Shares” has the meaning set forth in the Recitals hereof.

 

“Surveyor” means Citadel Multi-Strategy Equities Master Fund Ltd. and its Affiliates.

 

“TCG” means TCG Crossover Fund I, L.P.

 

“Unsubscribed New Securities” has the meaning set forth in Section 8.3 hereof.

 

“Unsubscribed Pro Rata” has the meaning set forth in Section 8.3 hereof.

 

“Violation” has the meaning set forth in Section 5.1(a) hereof.

 

1.2            Interpretation. For all purposes of this Agreement, except as otherwise expressly provided, (i) the terms defined in this Section 1 shall have the meanings assigned to them in this Section 1 and include the plural as well as the singular; (ii) all accounting terms not otherwise defined herein have the meanings assigned under generally accepted accounting principles; (iii) all references in this Agreement to designated “Sections” and other subdivisions are to the designated Sections and other subdivisions of the body of this Agreement; (iv) pronouns of either gender or neuter shall include, as appropriate, the other pronoun forms; (v) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision; and (vi) all references in this Agreement to designated Schedules, Exhibits and Annexes are to the Schedules, Exhibits and Annexes attached to this Agreement unless explicitly stated otherwise.

 

1.3            Jurisdiction. Certain terms of this Agreement are drafted primarily in contemplation of securities offerings in the United States. The parties recognize, however, the possibility that there may be one or more Registrations in a jurisdiction other than the United States. It is, accordingly, their intention that whenever this Agreement refers to a law or institution of the United States but the parties wish to effectuate a Registration in a different jurisdiction, reference in this Agreement to the laws or institutions of the United States shall be read as referring, mutatis mutandis, to the comparable laws or institutions of the jurisdiction in question.

 

 

2.

Demand Registration.

 

2.1            Registration on Form F-1. Subject to the terms of this Agreement, at any time after the earlier of (a) the fifth anniversary of the date hereof and (b) the date that is six (6) months after the closing of an IPO, the Holders holding at least fifty percent (50%) of Registrable Securities then outstanding may request in writing the Company to effect the Registration on Form F-1 (or any successor form to Form F-1 or any comparable form for Registration) of at least twenty percent (20%) (or a lesser percentage if the anticipated aggregate price to the public from the offering is reasonably expected to exceed US$10,000,000) of such Registrable Securities. The Company shall, subject to Sections 2.3, 2.4 and 2.5 hereof, (a) give written notice of the proposed Registration to all other Holders within fifteen (15) days after such request is given by the Initiating Holders and (b) as soon as reasonably practicable and in any event within sixty (60) days after the date such request is given by the Initiating Holders, cause the Registrable Securities specified in such request, together with any Registrable Securities of any Holder who requests in writing to join such Registration within fifteen (15) days after the Company’s delivery of written notice, to be Registered and/or qualified for sale and distribution in such jurisdiction as the Initiating Holders may reasonably request. The Company shall not be obligated to effect, or to take any action to effect, any Registration pursuant to this Section 2.1: (i) after the Company has effected two (2) Registrations pursuant to this Section 2.1 or (ii) if the Initiating Holders propose to dispose of shares of Registrable Securities that may be immediately registered on Form F-3 pursuant to a request made pursuant to Section 2.2 below. A Registration shall not be counted as “effected” for purposes of this Section 2.1 until such time as the applicable Registration Statement has been declared effective by the Commission, unless the Initiating Holders withdraw their request for such Registration other than as a result of information concerning the business or condition of the Company which is made known to the Initiating Holders after the date on which such Registration was requested, elect not to pay the registration expenses therefor, and forfeit their right to one (1) demand Registration Statement pursuant to Section 4.3 hereof, in which case such withdrawn Registration Statement shall be counted as “effected” for purposes of this Section 2.1.

 

2.2            Registration on Form F-3. Subject to the terms of this Agreement, the Holders holding at least twenty percent (20%) of Registrable Securities then outstanding may request in writing the Company to file a Registration Statement on Form F-3 (or any successor form to Form F-3 or any comparable form for Registration) for a public offering of Registrable Securities for which the reasonably anticipated aggregate price to the public would exceed US$2,000,000 (based on the public market closing price on the date of such request), provided that the Company is entitled to use Form F-3 or a comparable form to Register the requested Registrable Securities. The Company shall, subject to Sections 2.3, 2.4 and 2.5 hereof, (a) promptly give written notice of the proposed Registration to all other Holders within ten (10) days after such request is given by the Initiating Holders and (b) as soon as practicable but in any event within forty-five (45) days, cause the Registrable Securities specified in the request, together with any Registrable Securities of any Holder who requests in writing to join such Registration within fifteen (15) days after the Company’s delivery of written notice, to be Registered and/or qualified for sale and distribution in such jurisdiction as the Initiating Holders may reasonably request. The Company shall not be obligated to effect, or to take any action to effect, any Registration pursuant to this Section 2.2 if the Company has, within the twelve (12)-month period immediately preceding the date of the written request of the Initiating Holders, already effected two (2) Registrations on Form F-3 for the Holders pursuant to this Section 2.2. A Registration shall not be counted as “effected” for purposes of this Section 2.2 until such time as the applicable Registration Statement has been declared effective by the Commission, unless the Initiating Holders withdraw their request for such Registration other than as a result of information concerning the business or condition of the Company which is made known to the Initiating Holders after the date on which such Registration was requested, elect not to pay the registration expenses therefor, in which case such withdrawn Registration Statement shall be counted as “effected” for purposes of this Section 2.2.

 

 

2.3            Rights of Deferral.

 

(a)            The Company shall not be obligated to Register or qualify Registrable Securities pursuant to this Section 2:

 

(i)            in any jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such Registration or qualification, unless the Company is already subject to service of process in such jurisdiction;

 

(ii)            if, within ten (10) days after delivery of any request by the Initiating Holders to Register any Registrable Securities under Section 2.1 or Section 2.2, as the case may be, the Company gives written notice to the Initiating Holders of its bona fide intention to effect the filing for its own account of a Registration Statement with the Commission within ninety (90) days of the date of such notice from the Company (other than a Registration of securities in a transaction under Rule 145 of the Securities Act or an offering solely to employees); provided, however, that the Company is actively employing in good faith commercially reasonable efforts to cause that Registration Statement to become effective; or

 

(iii)            within six (6) months immediately following the effective date of any Registration Statement pertaining to the securities of the Company (other than a Registration of securities in a transaction under Rule 145 of the Securities Act or with respect to an employee benefit plan).

 

(b)            If, after receiving a request from the Initiating Holders pursuant to Section 2.1 or Section 2.2, as the case may be, the Company furnishes to the Initiating Holders a certificate signed by the Chief Executive Officer of the Company stating that, in the good faith judgment of the Board of Directors, it would be seriously detrimental to the Company and its shareholders for a Registration Statement to either become effective or to remain effective for as long as such registration statement otherwise would be required to remain effective, because such action would (i) materially interfere with a significant acquisition, corporate reorganization or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or the Exchange Act, the Company’s obligation to use its reasonable efforts to file a Registration Statement shall be deferred for a period not to exceed ninety (90) days from the receipt of any request duly submitted by the Initiating Holders under Section 2.1 or Section 2.2, as the case may be, to Register Registrable Securities, provided that the Company shall not exercise the right contained in this Section 2.3(b) more than once in any twelve (12)-month period.

 

 

2.4            Underwritten Offerings. If, in connection with a request to Register Registrable Securities under Section 2.1 or Section 2.2, as the case may be, the Initiating Holders seek to distribute such Registrable Securities in an underwriting, they shall so advise the Company as a part of the request, and the Company shall include such information in the written notice to the other Holders described in Sections 2.1 or Section 2.2, as the case may be. In such event, the right of any Holder to include its Registrable Securities in such Registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Initiating Holders holding a majority of the Registrable Securities held by the Initiating Holders (which underwriter or underwriters shall be reasonably acceptable to the Company). Notwithstanding any other provision of this Agreement, if the managing underwriter advises the Company that marketing factors (including, without limitation, the aggregate number of securities requested to be Registered and the general condition of the market) require a limitation of the number of Equity Securities to be underwritten, the underwriters may exclude some or all of the Registrable Securities from the underwriting if so justified after excluding any other Equity Securities from the underwriting. If a limitation of the number of Registrable Securities is required pursuant to this Section 2.4, the number of Registrable Securities that may be included in the underwriting by selling Holders shall be allocated among such Holders, in proportion, as nearly as practicable, to the respective amounts of Registrable Securities which the Holders would otherwise be entitled to include in the Registration or in such other proportion as shall mutually be agreed to by all such selling Holders. Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from the Registration. For purposes of the provision in this Section 2.4 concerning apportionment, for any selling Holder that is a partnership, limited liability company or corporation, the partners, members, retired partners, retired members, stockholders and Affiliates of such Holder, or the estates and Immediate Family Members of any such partners, retired partners, members and retired members and any trusts for the benefit of any of the foregoing Persons, shall be deemed to be a single “selling Holder,” and any pro rata reduction with respect to such “selling Holder” shall be based upon the aggregate number of Registrable Securities owned by all Persons included in such “selling Holder,” as defined in this sentence.

 

2.5            Designation of Joint Counsel. In connection with any Registration under this Section 2, the Initiating Holders holding a majority of the Registrable Securities then held by such Initiating Holders shall mutually agree on counsel to represent the Holders in such Registration.

 

3.

Piggyback Registrations.

 

3.1            Registration of the Company’s Securities. Subject to Section 3.3 hereof, if the Company proposes to Register any of its Equity Securities for cash by or on behalf of itself or for cash for the account of the shareholders of the Company other than the Holders in connection with the public offering of such securities (other than in an Registration pursuant to Section 3.4 hereof), the Company shall promptly, but in any event no less than twenty (20) days prior thereto, give each Holder written notice of such Registration and, upon the written request of any Holder given within twenty (20) days after receipt by such Holder of such notice from the Company, the Company shall include in such Registration any Registrable Securities thereby requested by such Holder.

 

3.2            Right to Terminate Registration. The Company shall have the right to terminate or withdraw any Registration initiated by it under Section 3.1 prior to the effectiveness of such Registration, whether or not any Holder has elected to participate therein. The expenses of such withdrawn Registration shall be borne by the Company in accordance with Section 4.3.

 

 

3.3            Underwriting Requirements.

 

(a)            In connection with any offering involving an underwriting of the Company’s Equity Securities, the Company shall not be required to Register the Registrable Securities of any Holder under this Section 3 unless such Holder’s Registrable Securities are included in the underwriting and such Holder enters into an underwriting agreement in customary form with the underwriters selected by the Company and setting forth such terms for the underwriting as have been agreed upon between the Company and the underwriters. In the event the underwriters advise any Holder seeking Registration of Registrable Securities pursuant to this Section 3 in writing that marketing factors (including, without limitation, the aggregate number of Registrable Securities requested to be Registered, the general condition of the market and the status of the persons proposing to sell securities pursuant to the Registration) require a limitation of the number of Equity Securities to be underwritten, the underwriters may exclude Registrable Securities from the Registration and underwriting if so justified after excluding any other Equity Securities (except for securities to be offered by the Company) from the Registration and underwriting, so long as the amount of Registrable Securities included in such offering is not reduced below thirty (30%) of the total number of securities included in the offering, unless such offering is the IPO, in which case all Registrable Securities may be excluded.

 

(b)            If a limitation on the number of Registrable Securities is required pursuant to paragraph (a) above, the number of Registrable Securities that may be included in the Registration and underwriting by selling Holders shall be allocated among such Holders in proportion, as nearly as practicable, to the respective amounts of Registrable Securities which the Holders would otherwise be entitled to include in the Registration or in such other proportion as shall mutually be agreed to by all such selling Holders. For purposes of the provision in this Section 3.3 concerning apportionment, for any selling Holder that is a partnership, limited liability company or corporation, the partners, members, retired partners, retired members, stockholders and Affiliates of such Holder, or the estates and Immediate Family Members of any such partners, retired partners, members and retired members and any trusts for the benefit of any of the foregoing Persons, shall be deemed to be a single “selling Holder,” and any pro rata reduction with respect to such “selling Holder” shall be based upon the aggregate number of Registrable Securities owned by all Persons included in such “selling Holder,” as defined in this sentence.

 

(c)            If any Holder disapproves of the terms of any underwriting, the Holder may elect to withdraw therefrom by written notice to the Company and the underwriters delivered at least seven (7) days prior to the effective date of the Registration Statement. Any Registrable Securities excluded or withdrawn from the underwriting shall be withdrawn from the Registration.

 

3.4            Exempt Transactions. The Company shall have no obligation to Register any Registrable Securities under this Section 3 in connection with a Registration by the Company (i) relating solely to the sale of securities to participants in a Company share option, share purchase or similar plan, (ii) relating to a corporate reorganization or other transaction under Rule 145 promulgated under the Securities Act (or comparable provision under the laws of another jurisdiction, as applicable) or (iii) on any form that does not include substantially the same information as would be required to be included in a Registration Statement covering the sale of the Registrable Securities.

 

 

4.

Procedures.

 

4.1            Registration Procedures and Obligations. Whenever required under this Agreement to effect the Registration of any Registrable Securities held by the Holders, the Company shall, as expeditiously as possible:

 

(a)            prepare and file with the Commission a Registration Statement with respect to those Registrable Securities and use its reasonable efforts to cause that Registration Statement to become effective, and, upon the request of the Holders holding a majority of the Registrable Securities Registered thereunder, keep the Registration Statement effective for a period that is the shorter of up to one hundred twenty (120) days or until the distribution contemplated in the Registration Statement has been completed; provided, however, that (i) such one hundred twenty (120) day period shall be extended for a period of time equal to the period any Holder refrains from selling any securities included in such Registration at the request of an underwriter of Ordinary Shares (or other securities) of the Company; and (ii) in the case of any Registration of Registrable Securities on Form F-3 which are intended to be offered on a continuous or delayed basis, such one hundred twenty (120) day period shall be extended, if necessary, to keep the Registration Statement effective until all such Registrable Securities are sold;

 

(b)            prepare and file with the Commission amendments and supplements to that Registration Statement and the prospectus used in connection with the Registration Statement as may be necessary to comply with the provisions of Applicable Securities Law with respect to the disposition of all securities covered by the Registration Statement;

 

(c)            furnish to the selling Holders the number of copies of a prospectus, including a preliminary prospectus, as required by Applicable Securities Law, and any other documents as the selling Holders may reasonably request to facilitate the disposition of Registrable Securities owned by them;

 

(d)            use its reasonable efforts to Register and qualify the securities covered by the Registration Statement under the securities laws of any jurisdiction, as reasonably requested by the selling Holders; provided, however, that the Company shall not be required to qualify to do business or file a general consent to service of process in any such jurisdictions unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

 

(e)            in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of the offering, provided that each Holder participating in the underwriting shall also enter into and perform its obligations under such an agreement;

 

(f)            notify each selling Holder, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective by the Commission or a supplement to any prospectus forming a part of such registration statement has been filed with the Commission;

 

 

(g)            notify each selling Holder at any time when a prospectus relating thereto is required to be delivered under Applicable Securities Law or of the happening of any event as a result of which any prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing;

 

(h)            provide a transfer agent and registrar for all Registrable Securities Registered pursuant to the Registration Statement and, where applicable, a CUSIP number for all those Registrable Securities, in each case not later than the effective date of the Registration;

 

(i)            furnish, on the date that such Registrable Securities are delivered to the underwriters for sale, if such Registrable Securities are being sold through underwriters, (i) an opinion, dated the date of the sale, of the counsel representing the Company for the purposes of the Registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, and (ii) a comfort letter dated the date of the sale, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters; and

 

(j)            take all reasonable action necessary to list the Registrable Securities on the s securities are then traded.

 

4.2            Information from Holder. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Agreement with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of such securities as shall be required to effect the Registration of such Holder’s Registrable Securities.

 

4.3            Expenses of Registration. Except as provided below, all expenses, other than Selling Expenses, incurred in connection with Registrations, filings or qualifications pursuant to this Agreement, including, without limitation, all Registration, filing and qualification fees, printers’ and accounting fees, fees and disbursements of counsel for the Company and reasonable fees and expenses of one special counsel for the selling Holders shall be borne by the Company. The Company shall not, however, be required to pay for any expenses of any Registration proceeding begun pursuant to this Agreement if the Registration request is subsequently withdrawn at the request of the Initiating Holders (in which case all participating Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be thereby Registered in the withdrawn Registration), unless the Initiating Holders agree to forfeit their right to one (1) Registration pursuant to Section 2.1 or Section 2.2, as the case may be; provided, however, that if at the time of such withdrawal, the Holders have learned of a material adverse change in the condition, business or prospects of the Company from that known to the Holders at the time of their request and have withdrawn the request with reasonable promptness following disclosure by the Company of such material adverse change, then the Holders shall not be required to pay any of such expenses. All Selling Expenses relating to Registrable Securities Registered pursuant to this Agreement shall be borne and paid by the Holders pro rata on the basis of the number of Registrable Securities Registered on their behalf.

 

 

4.4            Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any Registration pursuant to this Agreement as the result of any controversy that may arise with respect to the interpretation or implementation of this Agreement.

 

5.

Indemnification.

 

5.1            Company Indemnity.

 

(a)            To the extent permitted by law, the Company will indemnify and hold harmless each selling Holder, such Holder’s officers, directors, shareholders, legal counsel and accountants, any underwriter (as defined in the Securities Act) for such Holder and each Person, if any, who controls (as defined in the Securities Act) such Holder or underwriter (each, a “Holder Indemnified Party”) against any losses, claims, damages or liabilities (joint or several) to which they may become subject under Applicable Securities Laws, or any rule or regulation promulgated under Applicable Securities Laws, insofar as such losses, claims, damages or liabilities ( or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (each a “Violation”): (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement of the Company, including any preliminary prospectus, final prospectus or free-writing prospectus contained therein or any amendments or supplements thereto, (ii) any omission or alleged omission to state in the Registration Statement of the Company, including any preliminary prospectus, final prospectus or free-writing prospectus contained therein or any amendments or supplements thereto, a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) any violation or alleged violation by the Company of Applicable Securities Laws, or any rule or regulation promulgated under Applicable Securities Laws. The Company will reimburse each such Holder Indemnified Party for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action.

 

(b)            The indemnity agreement contained in this Section 5.1 shall not apply to amounts paid in settlement of any loss, claim, damage, liability or action if such settlement is effected without the written consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation that occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such Registration by or on behalf of any such Holder Indemnified Party.

 

5.2            Holder Indemnity.

 

(a)            To the extent permitted by law, each selling Holder will, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, shareholders, legal counsel and accountants, any underwriter, any other Holder selling securities in connection with such Registration and each Person, if any, who controls (within the meaning of the Securities Act) the Company, such underwriter or other Holder, against any losses, claims, damages or liabilities (joint or several) to which any of the foregoing Persons may become subject, under Applicable Securities Laws, or any rule or regulation promulgated under Applicable Securities Laws, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by or on behalf of such Holder expressly for use in connection with such Registration; and each such Holder will reimburse any Person intended to be indemnified pursuant to this Section 5.2, for any legal or other expenses reasonably incurred by such Person in connection with investigating or defending any such loss, claim, damage, liability or action.

 

 

(b)            The indemnity contained in this Section 5.2 shall not apply to amounts paid in settlement of any loss, claim, damage, liability or action if such settlement is effected without the written consent of the Holder (which consent shall not be unreasonably withheld), and in no event shall any indemnity under this Section 5.2 exceed the net proceeds (exclusive of any Selling Expenses paid by such Holder relating to Registrable Securities included in the applicable Registration Statement) from the offering received by such Holder, except in the case of fraud by such Holder.

 

5.3            Notice of Indemnification Claim. Promptly after receipt by an indemnified party under Section 5.1 or Section 5.2, as the case may be, of notice of the commencement of any action (including any governmental action) for which such indemnified party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under Section 5.1 or Section 5.2, as the case may be, deliver to the indemnifying party a written notice of the commencement thereof. The indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, and to assume the defense thereof with counsel mutually satisfactory to the parties. An indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if materially prejudicial to the indemnifying party’s ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 5, but the failure to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 5.

 

5.4            Contribution. If any indemnification provided for in Section 5.1 or Section 5.2, as the case may be, is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and of the indemnified party, on the other, in connection with the Violation that resulted in such loss, liability, claim, damage or expense, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided, however, that in no event shall any contribution by a Holder hereunder exceed the net proceeds (exclusive of any Selling Expenses paid by such Holder relating to Registrable Securities included in the applicable Registration Statement) from the offering received by such Holder, except in the case of fraud by such Holder.

 

 

5.5            Underwriting Agreement. Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

 

5.6            Survival. Unless otherwise superseded by an underwriting agreement entered into in connection with the underwritten public offering, the obligations of the Company and Holders under this Section 5 shall survive the completion of any offering of Registrable Securities in a Registration Statement under this Agreement, and otherwise shall survive the termination of this Agreement.

 

6.

Additional Undertakings.

 

6.1            Reports under the Exchange Act. With a view to making available to the Holders the benefits of Rule 144 and any comparable provision of any Applicable Securities Law that may at any time permit a Holder to sell securities of the Company to the public without Registration or pursuant to a Registration on Form F-3 (or any comparable form in a jurisdiction other than the United States), the Company agrees to:

 

(a)            make and keep public information available, as those terms are understood and defined in such Rule 144 (or comparable provision under Applicable Securities Laws in any jurisdiction where the Company’s securities are listed), at all times following ninety (90) days after the effective date of an IPO;

 

(b)            use commercially reasonable efforts to file with the Commission in a timely manner all reports and other documents required of the Company under all Applicable Securities Laws; and

 

(c)            at any time following ninety (90) days after the effective date of the IPO, promptly furnish to any Holder holding Registrable Securities, upon request (i) a written statement by the Company that it has complied with the reporting requirements of all Applicable Securities Laws at any time after it has become subject to such reporting requirements or, at any time after so qualified, that it qualifies as a registrant whose securities may be resold pursuant to Form F-3 (or any form comparable thereto under Applicable Securities Laws of any jurisdiction where the Company’s securities are listed), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents as may be filed by the Company with the Commission and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the Commission that permits the selling of any such securities without Registration or pursuant to such form.

 

 

6.2            Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the then outstanding Registrable Securities, enter into any agreement with any holder or prospective holder of any Equity Securities of the Company that would allow such holder or prospective holder to include such securities in any Registration filed under Section 3, unless under the terms of such agreement such holder or prospective holder may include such Equity Securities in any such Registration only to the extent that the inclusion of such securities will not reduce the amount of the Registrable Securities of the Holders that are included; provided, however, that the limitations under this Section 6.2 shall not apply to any additional Investor who becomes a party to this Agreement in accordance with Section 9.1.

 

6.3            “Market Stand-Off” Agreement. Each Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the IPO and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days or such other period, not to exceed thirty (30) days after the expiration of such one hundred eighty (180) days, as may be requested by the Company or an underwriter to accommodate regulatory restrictions on (A) the publication or other distribution of research reports or (B) analyst recommendations and opinions, including, without limitation, the restrictions contained in applicable FINRA rules, or any successor provisions or amendments thereto), (i) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any Ordinary Shares or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Ordinary Shares or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Ordinary Shares or other securities, in cash or otherwise (provided that such restrictions shall not apply to any transactions (including, without limitation, any swap, hedge or similar agreement or arrangement) or announcements, in each case, relating to shares or securities acquired by the Holder in the IPO or in the open market or other transactions after the consummation of the IPO or that otherwise do not involve or relate to shares of capital stock of the Company owned by a Holder prior to the IPO). The foregoing provisions of this Section 6.3 (a) shall apply only to the IPO, and shall not apply to either the sale of any shares to an underwriter pursuant to an underwriting agreement or the transfer of any shares to any trust for the direct or indirect benefit of the Holder or the Immediate Family Members of the Holder, provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth herein, and provided further that any such transfer shall not involve a disposition for value, and (b) shall be applicable to the Holders only if all officers and directors, and all stockholders, individually owning more than one percent (1 %) of Ordinary Shares outstanding immediately prior to consummation of the IPO (after giving effect to conversion into Ordinary Shares of all outstanding Preferred Shares or other convertible securities of the Company), are subject to the same restrictions. If there is any discretionary waiver, termination or other release from the market stand-off restrictions set out herein of any shareholder’s shares subject to such restrictions at any time during the market stand-off time period, each Investor may sell, transfer or otherwise dispose of an equal percentage of such Investor’s shares originally subject to the market stand-off restrictions. The underwriters in connection with such registration are intended third-party beneficiaries of this Section 6.3 and shall have the right, power, and authority to enforce the provisions hereof as though they were a party hereto. Each Holder further agrees to execute such agreements as may be reasonably requested by the underwriters in connection with such registration that are consistent with this Section 6.3 or that are necessary to give further effect thereto.

 

 

6.4            Restrictions on Transfer.

 

(a)            The Preferred Shares and the Registrable Securities shall not be sold, pledged or otherwise transferred, and the Company shall not recognize any such sale, pledge or transfer, except upon the conditions specified in this Agreement, which conditions are primarily intended to ensure compliance with the provisions of the Securities Act. A transferring Investor will cause any proposed purchaser, pledgee or transferee of the Preferred Shares and the Registrable Securities held by such Investor to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Agreement.

 

(b)            Each certificate representing (i) Registrable Securities, (ii) the Preferred Shares or (iii) any other securities issued in respect of the securities referenced in the clauses (i) and (ii) above, upon any share split, share dividend, recapitalization, merger, consolidation or similar event, shall (unless otherwise permitted by the provisions of Section 6.4(c)) be stamped or otherwise imprinted with a legend in the following form:

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). SUCH SECURITIES MAY NOT BE TRANSFERRED UNLESS (A) A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER OR (B) PURSUANT TO RULE 144, OR (C) IN THE OPINION OF THE COMPANY, REGISTRATION UNDER THE ACT IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT.”

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LOCK-UP PERIOD OF UP TO 180 DAYS FOLLOWING THE EFFECTIVE DATE OF A REGISTRATION STATEMENT OF THE COMPANY FILED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE COMPANY’S INITIAL PUBLIC OFFERING PURSUANT TO SECURITIES LAWS APPLICABLE TO AN OFFERING OF SECURITIES IN A JURISDICTION OTHER THAN THE UNITED STATES, AS SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE COMPANY. SUCH LOCK-UP PERIOD IS BINDING ON TRANSFEREES OF THESE SHARES.”

 

The Investors consent to the Company making a notation in its records and giving instructions to any transfer agent of the Restricted Securities in order to implement the restrictions on transfer set forth in this Section 6.4.

 

 

(c)            The holder of each certificate representing the Restricted Securities, by acceptance thereof, agrees to comply in all respects with the provisions of this Section 6.4. Before any proposed sale, pledge or transfer of any Restricted Securities, unless there is in effect a Registration Statement under the Securities Act covering the proposed transaction, the holder thereof shall give notice to the Company of such holder’s intention to effect such sale, pledge or transfer. Each such notice shall describe the manner and circumstances of the proposed sale, pledge or transfer in sufficient detail and, if reasonably requested by the Company, shall be accompanied at such holder’s expense by either (i) a written opinion of legal counsel who shall, and whose legal opinion shall, be reasonably satisfactory to the Company, addressed to the Company, to the effect that the proposed transaction may be effected without registration under the Securities Act; or (ii) any other evidence reasonably satisfactory to counsel to the Company to the effect that the proposed sale, pledge or transfer of the Restricted Securities may be effected without registration under the Securities Act, whereupon the holder of such Restricted Securities shall be entitled to sell, pledge or transfer such Restricted Securities in accordance with the terms of the notice given by such holder to the Company. The Company will not require such a legal opinion or any other evidence in any transaction in which such holder distributes Restricted Securities to (i) an Affiliate or Immediate Family Member of such holder, or a trust for the benefit of such holder or such holder’s Immediate Family Member, for no consideration; (ii) a partner or retired partner of any holder of Restricted Securities that is a partnership, or a member or former member of any such holder that is a limited liability company; or (iii) in the case of Eight Roads, any transfer of Restricted Securities to any other Eight Roads Person, provided that in each case the transferee agrees in writing to be subject to the terms of this Section 6.4. Each certificate or instrument evidencing the Restricted Securities transferred as above provided shall bear, except if such transfer is made pursuant to Rule 144, the appropriate restrictive legend set forth in Section 6.4(b) hereof, except that such certificate shall not bear such restrictive legend if, in the opinion of counsel for such holder and the Company, such legend is not required in order to establish compliance with any provisions of the Securities Act.

 

(d)            Notwithstanding the foregoing, no Investor shall sell, pledge or otherwise transfer the Preferred Shares, Ordinary Shares or Ordinary Share Equivalents now or subsequently owned or acquired by such Investor to a Competitor. In making any determination with respect to a “Competitor” for purposes of this Section 6.4(d). the Board of Directors shall act reasonably and in good faith. Notwithstanding the foregoing, the Company agrees that (i) no Investor that is a professional investment fund or similar investment organization, or any of any such Investor’s Affiliates that is a professional investment fund or similar investment organization, or any of their respective partners, officers or representatives, or any of the limited partners of such Investor or any of their respective shareholders, shall be considered a “Competitor” for purposes of the foregoing restriction on transfer solely as a result of any such investment, or as a result their ownership of any partnership interest; and (ii) any restrictions on transfer set forth in this Section 6.4 shall in no event apply to, and any Investor’s any rights, preferences and privileges under this Agreement and the other Transaction Documents and with respect to its shares in the Company shall not be impacted as a result of, any transfer by any of such Investor’s or its shareholders’ limited partners of their partnership interest. The covenants set out in this Section 6.4(d) shall expire with respect to an Investor effective immediately upon a Qualified IPO or any other IPO in connection with which all outstanding Preferred Shares held by such Investor are converted into Ordinary Shares.

 

 

6.5            Assignment of Registration Rights and Information Rights. The right to cause the Company to Register Registrable Securities pursuant to this Agreement and the information and inspection rights set forth in Sections 7.1 and 7.2 below may be assigned by a Holder to a transferee or assignee of such securities that is not a Competitor and that (i) is an Affiliate of a Holder, (ii) is an Immediate Family Member of such Holder, or a trust for the benefit of such Holder or such Holder’s Immediate Family Member, (iii) is a partner or retired partner of any Holder that is a partnership, or a member or former member of any Holder that is a limited liability company, (iv) if after such assignment or transfer, the transferee or assignee would be a Major Holder hereunder or (v) in the case of Eight Roads, is another Eight Roads Person, provided that, within a reasonable time after such transfer, (a) the Company is furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; and (b) such transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Agreement. In the event of a transfer or assignment of Registrable Securities that does not satisfy the conditions set forth above, such transfer or assignment shall be deemed null and void and such securities shall no longer be deemed to constitute “Registrable Securities” for purposes of this Agreement.

 

6.6            Termination of Registration Rights. No Holder shall be entitled to exercise any Registration rights provided for in Section 2 or Section 3 hereof following the earlier to occur of: (i) the closing of a Liquidation Event, (ii) the fifth (5^th) anniversary of the consummation of an IPO or (iii) at such time, following an IPO, when all Registrable Securities held by such Holder (and any Affiliate of the Holder with whom such Holder must aggregate its sales under Rule 144) can be sold without limitation and without Registration in compliance with Rule 144 promulgated under the Securities Act.

 

7.

Covenants of the Company.

 

7.1            Information Rights. The Company shall deliver to each Major Holder, provided that the Board of Directors has not reasonably determined that such Major Holder is a Competitor:

 

(a)            as soon as practicable but in any event within one-hundred twenty (120) days after the end of each fiscal year of the Company, a consolidated income statement and statement of cash flows for the Company for such fiscal year and a consolidated balance sheet for the Company as of the end of the fiscal year, all audited and certified by independent certified public accountants of recognized international standing and reputation selected by the Company;

 

(b)            as soon as practicable but in any event within forty-five (45) days after the end of each of the first three quarters of each fiscal year of the Company, a consolidated unaudited income statement and statement of cash flows for such fiscal quarter and a consolidated unaudited balance sheet as of the end of such fiscal quarter;

 

(c)            as soon as practicable but in any event within forty-five (45) days after the end of each of the first three quarters of each fiscal year of the Company, a current capitalization table of the Company, showing the number of shares of each class and series in the outstanding share capital in the Company and securities convertible into or exercisable for shares in the share capital of the Company, including the number of outstanding awards and awards not yet issued but reserved for issuance under the Company’s equity incentive plan;

 

 

(d)            as soon as practicable but in any event thirty (30) days prior to the end of each fiscal year, a budget and a business plan for the next fiscal year prepared on a monthly basis and, promptly after being prepared, any other budgets or revised budgets prepared by the Company; and

 

(e)            in a timely manner, such other information relating to the financial condition, business, prospects, or corporate affairs of the Company and its subsidiaries as any Major Holder may from time to time reasonably request; provided, that the Company shall not be obligated under this Section 7.1(e) to provide information that it reasonably considers to be a trade secret or confidential information or the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel.

 

7.2            Inspection. The Company shall permit each Major Holder (provided that the Board of Directors has not reasonably determined that such Major Holder is a Competitor), at such Major Holder’s expense, to visit and inspect the Company’s properties and examine the Company’s books of account and records and discuss the affairs, finances and accounts of the Company with the Company’s officers, all at such reasonable times as may be requested by such Major Holder upon prior written notice to the Company; provided, however, that the Company shall not be obligated pursuant to this Section 7.2 to provide access to any information that it reasonably considers to be a trade secret or confidential information or the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel.

 

7.3            Confidentiality. Each Investor agrees that such Investor will keep confidential and will not disclose, divulge or use for any purpose any confidential information obtained from the Company pursuant to the terms of this Agreement (including notice of the Company’s intention to file a Registration Statement) or any agreement contemplated hereunder, unless such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of this Section 7.3 by such Investor), (b) is or has been independently developed or conceived by such Investor without use of the Company’s confidential information or (c) is or has been made known or disclosed to such Investor by a third party without a breach of any obligation of confidentiality such third party may have to the Company; provided, however, that an Investor may disclose confidential information (i) to its attorneys, accountants, consultants or other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company; (ii) to any prospective purchaser of any Registrable Securities from such Investor, if such prospective purchaser agrees to be bound by the provisions of this Section 7.3, but only if such prospective purchaser is not a Competitor; (iii) solely with respect to disclosures by an Investor that is an investment fund, to the partners, Affiliates or prospective investors of such Investor on a confidential basis, which disclosures consist of any information for fund and inter-fund reporting purposes or consist of summary financial and business milestone information of the type typically communicated to investors in a venture capital or other investment fund; or (iv) as may otherwise be required by applicable law; provided, that such Investor shall promptly notify the Company in writing of such disclosure and take reasonable steps to minimize the extent of any such required disclosure. Notwithstanding any provision herein to the contrary, any Investor and its representatives shall not be required to give notice to the Company, and shall not be prohibited from disclosing confidential information, to the extent required in connection by a regulatory authority or self-regulatory authority during the course of a routine or periodic examination of the business or operations of such Investor and not specifically directed at the Company or the confidential information of the Company obtained pursuant to this Agreement.

 

 

7.4            Employee Agreements; Consultant Agreement. The Company will cause (i) each Person now or hereafter employed by it or by any subsidiary (or engaged by the Company or any subsidiary as a consultant/independent contractor) with access to confidential information and/or trade secrets to enter into a nondisclosure and proprietary rights assignment agreement; and (ii) to the extent permitted by applicable laws, each executive-level employee to enter into a noncompetition and nonsolicitation agreement, substantially in the form approved by the Board of Directors. The Company will use good faith efforts, and will cause each of its subsidiaries to use good faith efforts, to seek appropriate amendment to any agreement containing such provisions and entered into prior to the date hereof with its and their respective employees and/or consultants/independent contracts in order to harmonize such pre-existing agreements with the form(s) utilized by the Company on the date hereof.

 

7.5            Board Matters. The Company shall reimburse the directors for all reasonable out- of-pocket costs and expenses incurred by such directors in connection with attending meetings of the Board of Directors and other meetings or events attended on behalf of the Company or at the Company’s request.

 

7.6            D&O Insurance. The Company shall use its commercially reasonable efforts to obtain and maintain directors and officers insurance with terms and conditions and in an amount as determined by the Board of Directors.

 

7.7            Certain Tax Covenants.

 

(a)            Tax Status. It is the intention of the parties that, at all times during the Company’s existence, the Company be treated as a partnership, and not as an association taxable as a corporation, for United States federal and state income tax purposes and, neither the Company nor any other party shall take any action or any tax or financial reporting position inconsistent with the Company’s status as a partnership for United States federal and state income tax purposes, except as permitted by the following sentence. The Company shall take such actions, including making an election to be treated as a partnership or refraining from making an election to be treated as a corporation, as may be required to ensure that at all times the Company is classified as partnership for United States federal and state income tax purposes, unless a change of classification of the Company from a partnership to a corporation is (i) in connection with a Qualified IPO, or (ii) approved through the receipt by the Company of the prior written consent of a supermajority (66.67%) of then outstanding Preferred Shares, voting together as a single class on an as-converted basis; provided, that, in each case, the change in classification of the Company from a partnership to a corporation is treated as tax-free transaction to the Company and the Fund Investors for U.S. federal and state income tax purposes. If a change in the status of the Company to a corporation for federal and state income tax purposes in connection with a Qualified IPO cannot be structured as a tax-free transaction, such transaction shall be effectuated utilizing an UP-C structure (or other similar structure) that provides the Fund Investors with no less favorable economics and liquidity rights. Without the prior approval of the Board of Directors, the Company may not form or acquire directly or indirectly any new subsidiary.

 

 

(b)            UBTI. The Company and its officers and directors shall conduct the affairs of the Company and its subsidiaries in a manner that does not cause any Investor or beneficial owner thereof to realize any “unrelated business taxable income” within the meaning of Sections 512 through 514 of the Internal Revenue Code of 1986, as amended (the “Code”), including “unrelated debt finance income” under Section 514 of the Code, or any item of gross income that would be included in determining such Investor’s (or beneficial owner’s) unrelated business taxable income solely as a result of its ownership of shares of the Company.

 

(c)            The Company and its officers and directors shall conduct the affairs of the Company and its subsidiaries in a manner that, in the aggregate, will not cause the Company and its subsidiaries, and will not cause any Investor or beneficial owner thereof, to (i) be treated for United States federal income tax purposes as engaged in a “trade or business within the United States,” within the meaning of Section 864 of the Code, including as a result of the application of Section 897 of the Code, or (ii) recognize income that is treated as “effectively connected with the conduct of a trade or business within the United States” within the meaning of Sections 871, 882 and 897 of the Code (“ECI”), during any taxable year of the Company; provided, however, that this Section 7.7(c) shall not apply to any activities of the Company or any of its subsidiaries that is incorporated or organized in the United States and taxable as a corporation for United States federal income tax purposes that is not a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code (a “Corporate Subsidiary”). In furtherance, and without limiting the foregoing, absent written consent of the Fund Investors, the Company shall not be entitled to own any assets other than equity of one or more entities treated as corporations for U.S. federal income tax purposes or cash and cash equivalents.

 

(d)            Neither the Company nor any of its Subsidiaries shall participate in any transaction that constitutes a “listed transaction” (within the meaning of Section 1.6011-4(b)(2) of the Treasury Regulations.

 

(e)            The Company shall provide to each Investor such information and tax reporting as may be required or reasonably requested by such Investor in order to permit such Investor to comply with such Investor’s tax reporting and filing obligations with respect to the Company (including IRS Form 5471), or in order to withhold tax or to file tax returns and reports or to furnish tax information to any of such Investor’s Affiliates. In addition, the Company shall, for each taxable year in which the Company or any of its subsidiaries is or reasonably may be deemed a “passive foreign investment company” within the meaning of Section 1297 of the Code (any such entity, a “PFIC”), provide the statements and information (including without limitation, a PFIC Annual Information Statement meeting the requirements of Treasury Regulations Section 1.1295-1(g)) necessary to enable each Investor that is a “United States person” within the meaning of Section 7701(a)(30) to make and comply with the requirements of a “Qualified Electing Fund” election pursuant to Section 1295 of the Code or filing a “protective statement” pursuant to Treasury Regulations Section 1.1295-3 with respect to such PFIC. Not in limitation of the foregoing, the Company and its officers and directors shall provide each Investor with (i) an Internal Revenue Service Schedule K-1 (or, to the extent the Company is not required to file a Schedule K-1, any analogous state or local income tax schedule or the equivalent thereof containing relevant information concerning the Company that is required to be filed by United States shareholders) for each taxable year of the Company no later than 60 days after the end of such taxable year and (ii) a good faith estimate of the items to be included on the final IRS Schedule K-1 to Form 1065 to be delivered pursuant to clause (ii) no later than 15 days following the end of such taxable year.

 

 

(f)             Raymond Stevens will be the “Partnership Representative” as described in section 6223 of the Code as in effect by the Bipartisan Budget Act of 2015 (U.S. Public Law 114-74) and shall act at all times in his capacity as such solely at the direction of the Board of Directors. In the event Raymond Stevens elects not to serve, or withdraws from serving, as the Partnership Representative, a new Partnership Representative shall be selected by the Board of Directors. The Partnership Representative shall have such rights, powers and authority conferred upon such person by the Board of Directors. Each Investor hereby agrees (i) to take such actions as may be reasonably required to effect the designation of the Partnership Representative and (ii) to cooperate to provide any information or take such other actions as may be reasonably requested by the Partnership Representative in order to determine whether any Imputed Underpayment Amount (as defined in the Articles) may be modified pursuant to Code Section 6225(c) or similar provisions of state or local law. An Investor’s obligation to comply with this Section 7.7(e) shall survive the transfer, assignment or liquidation of such Investor’s interest in the Company. Notwithstanding any provision to the contrary in this Agreement, neither the Company nor the Partnership Representative shall require any Fund Investor to amend any prior tax returns or file an amended tax return or information statement for a prior taxable period (including pursuant to Section 6225(c)) of the Code), without the prior written approval from such Fund Investor. The Partnership Representative and the Board of Directors shall provide the Investors with regular updates regarding the status of any tax audits, reviews or contests involving the Company or its subsidiaries, including any that could result in an Imputed Underpayment Amount. The Company shall, to the extent such tax audit or similar proceeding (or the settlement, compromise or resolution thereof) in respect of the Company could reasonably be expected to materially disproportionately and adversely affect any of the Fund Investors, (a) permit the applicable Fund Investor to participate in any such proceeding and to retain its own counsel with respect to such proceeding at the Fund Investor’s own expense and (b) not settle, compromise, or otherwise resolve any issues raised in such proceeding without the written consent of the Fund Investor, such consent not to be unreasonably withheld, delayed, or conditioned. The Company shall indemnify and reimburse the Partnership Representative for all out-of-pocket losses and expenses (including legal and accounting fees) incurred solely in his capacity as Partnership Representative, including in connection with any examination or administrative or judicial proceeding.

 

(g)            The Company and the Investors hereto hereby acknowledge and agree to treat the Preferred Shares as equity for all U.S. federal and state income tax purposes.

 

(h)            The Company has not been classified by the PRC tax authority as a “resident enterprise” of China, as defined by Article 2 of the PRC Enterprise Income Tax Law, as amended from time to time (a “PRC Resident Enterprise”). In the event that, during the period in which any Investor or any of its successors or assigns holds shares in the Company, the Company is classified by the PRC tax authority in charge as a PRC Resident Enterprise, the Company shall provide each Investor or its successors or assigns written notice as soon as reasonably practicable. The Company will use its best efforts to arrange its management activities in such a way as to avoid being a PRC Resident Enterprise in each taxable year during the period in which any Investor or any of its successors or assigns holds shares in the Company, including taking such efforts as are deemed prudent under applicable laws; provided, however, that such additional efforts do not cause undue burden on the Company or its officers including but not limited to requiring the officers of the Company to move their residency outside the PRC.

 

 

(i)            The Company shall (i) regularly monitor its activities in relation to the obligations set forth in this Section 7.7, (ii) consult with United States tax advisors experienced in the matters described in this Section 7.7 regarding such activities and compliance, from time to time or upon the request of any Investor, (iii) promptly notify the Investors in writing if it determines if there is a risk that it is not in compliance with the obligations set forth in this Section 7.7 and take steps to comply with such obligations, (iv) not directly engage in any business activities other than those that a reasonably necessary or appropriate in connection with making or maintaining the Company’s investments in one or more subsidiaries that are classified as C corporations for United States federal tax purposes, and (v) upon request by any Investor, provide such information as such Investor may reasonably request to confirm the Company’s compliance with such obligations.

 

7.8            Anti-Corruption Policies. The Company shall provide copies of any anti-corruption policies of the Company or any of its subsidiaries to an Investor upon request for its internal compliance records.

 

7.9            Termination of Covenants. The covenants set forth in this Section 7 (other than each Investor’s confidentiality obligations set forth in Section 7.3 hereof) shall terminate and be of no further force or effect upon the earliest to occur of: (i) immediately prior to the closing of a Qualified IPO, (ii) upon a Liquidation Event or (iii) the date when the Company first becomes subject to the periodic reporting requirements of Sections 12(g) or 15(d) of the Exchange Act (or comparable requirements under the laws of another jurisdiction). Notwithstanding the foregoing, Section 7.3 shall survive any termination of this Agreement.

 

8.

Right of First Offer

 

8.1            General. Subject to the terms and conditions specified in this Section 8, the Company hereby grants to each Investor a right of first offer with respect to any New Securities that the Company may, from time to time, propose to sell and issue. An Investor who chooses to exercise the right of first offer may designate as purchasers under such right itself or any of its Affiliates in such proportions as it deems appropriate; provided, that any such Affiliate is not a Competitor. Each time the Company proposes to offer or sell any New Securities, the Company shall first make an offering of such New Securities to each Investor in accordance with the provisions of this Section 8.

 

8.2            Issuance Notice. The Company shall deliver a written notice (the “Issuance Notice”) to each Investor, stating (i) its bona fide intention to offer such New Securities, (ii) the number of such New Securities to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such New Securities.

 

 

8.3            Participation. Within twenty (20) days after receipt of the Issuance Notice, each Investor may elect to purchase or otherwise acquire, at the price and on the terms specified in the Issuance Notice, up to that portion of such New Securities which equals the proportion that the number of Ordinary Shares ( assuming full conversion and exercise of all convertible or exercisable securities of the Company held by such Investor) then held by such Investor bears to the total number of Ordinary Shares then outstanding ( assuming full conversion and exercise of all convertible or exercisable securities of the Company) (the “Pro Rata Portion”). Upon the expiration of such twenty (20) day period, the Company shall promptly notify in writing (the “Overallotment Notice”) each Investor that elects to purchase all the New Securities available to it ( each, a “Fully Exercising Investor”) of any other Investor’s failure to do likewise. Within ten (10) days after receipt of the Overallotment Notice, each Fully Exercising Investor shall be entitled to purchase or otherwise acquire, in addition to such Investor’s Pro Rata Portion of the New Securities, any New Securities that any Investor had the right to purchase or otherwise acquire pursuant to this Section 8 but which were not so subscribed for by such Investor (in the aggregate, the “Unsubscribed New Securities”); provided, that, in the event the Fully Exercising Investors elect to purchase more than the total number of Unsubscribed New Securities, each Fully Exercising Investor that elects to purchase or otherwise acquire any Unsubscribed New Securities shall have the right to purchase or otherwise acquire that portion of the Unsubscribed New Securities which equals the proportion (the “Unsubscribed Pro Rata”) that the number of Ordinary Shares (assuming full conversion and exercise of all convertible or exercisable securities of the Company held by such Fully Exercising Investor) then held by such Fully Exercising Investor bears to the total number of Ordinary Shares (assuming full conversion and exercise of all convertible or exercisable securities of the Company) then held by all Fully Exercising Investors who wish to purchase or otherwise acquire any Unsubscribed New Securities (with any Unsubscribed New Securities remaining after such initial calculation due to any Fully Exercising Investor not electing to purchase its full Unsubscribed Pro Rata being apportioned to the Fully Exercising Investors that elect to purchase more than their Unsubscribed Pro Rata on a prorated basis), unless another method of apportionment is mutually agreed to by the Fully Exercising Investors.

 

8.4            Sale by the Company. The Company may, during the sixty (60) day period following the expiration of the periods provided in Section 8.3 hereof, offer the remaining unsubscribed portion of the New Securities to any Person or Persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Issuance Notice. If the Company does not enter into an agreement for the sale of the New Securities within such period, or if the transactions contemplated by such agreement are not consummated within sixty (60) days of the execution of any such agreement, the right provided hereunder shall be deemed to be revived and such New Securities shall not be offered unless first reoffered to the Investors in accordance herewith.

 

8.5            Termination of Right of First Offer. The right of first offer set forth in this Section 8 shall terminate and be of no further force and effect upon the earliest to occur of: (i) immediately prior to the closing of a Qualified IPO or (ii) the date when the Company first becomes subject to the periodic reporting requirements of Sections 12(g) or 15(d) of the Exchange Act (or comparable requirements under the laws of another jurisdiction).

 

 

9.

Miscellaneous.

 

9.1            Additional Investors. Notwithstanding anything to the contrary contained herein, if the Company issues additional Preferred Shares after the date hereof, any purchaser of such Preferred Shares may become a party to this Agreement by executing and delivering to the Company an additional counterpart signature page to this Agreement and thereafter shall be deemed an “Investor” for all purposes hereunder and Schedule A hereto shall be amended by the Company to add information regarding additional “Investors” and parties to this Agreement or to modify the information set forth therein.

 

9.2            Successors and Assigns. The provisions of this Agreement and the rights and obligations of the parties hereunder shall inure to the benefit of, and be binding upon, the respective successors and assigns of the parties. For the avoidance of doubt, this Agreement and the rights and obligations therein may be assigned or transferred by any Investor to its Affiliates. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

9.3            Governing Law. This Agreement shall be governed by, and shall be construed and enforced in accordance with, the laws of the State of California, without regard to conflicts of laws principles.

 

9.4            Dispute Resolution.

 

(a)            Any dispute, controversy or claim (each, a “Dispute”) arising out of or relating to this Agreement, or the interpretation, breach, termination, validity or invalidity thereof, shall be referred to arbitration upon the demand of either party to the dispute with notice (the “Arbitration Notice”) to the other.

 

(b)            The Dispute shall be settled by arbitration in San Francisco, California by the American Arbitration Association (the “AAA”) in accordance with the UNCITRAL Arbitration Rules then in effect. There shall be one (1) arbitrator. The AAA’s Administrative Review Council shall select the arbitrator, who shall be qualified to practice law in California.

 

(c)            The arbitral proceedings shall be conducted in English. To the extent that the UNCITRAL Arbitration Rules are in conflict with the provisions of this Section, including the provisions concerning the appointment of the arbitrators, the provisions of this Section shall prevail.

 

(d)            Each party to the arbitration shall cooperate with each other party to the arbitration in making full disclosure of and providing complete access to all information and documents requested by such other party in connection with such arbitral proceedings, subject only to any confidentiality obligations binding on such party.

 

(e)            The award of the arbitral tribunal shall be final and binding upon the parties thereto, and the prevailing party may apply to a court of competent jurisdiction for enforcement of such award.

 

 

(f)            The arbitral tribunal shall decide any Dispute submitted by the parties to the arbitration strictly in accordance with the substantive laws of California (without regard to principles of conflict of laws thereunder) and shall not apply any other substantive law.

 

(g)            Any party to the Dispute shall be entitled to seek preliminary injunctive relief, if possible, from any court of competent jurisdiction pending the constitution of the arbitral tribunal.

 

(h)            During the course of the arbitral tribunal’s adjudication of the Dispute, this Agreement shall continue to be performed except with respect to the part in dispute and under adjudication.

 

9.5            Publicity.

 

(a)            None of the Company, its affiliates, the Investors or any of their respective representatives shall knowingly use the name of an Investor (or any Affiliate, affiliated entities, partners or employees of an Investor, nor any trade name, trademark, trade device, service mark, symbol or any abbreviation, contraction or simulation thereof owned by an Investor or any of its Affiliates (with respect to Hillhouse, including “Hillhouse”, “”, “Gaoling”, “Gao Ling”, “Lei Zhang”, “”) in any written or oral communications to third parties (to the extent not previously issued or made in accordance with this Agreement), including marketing materials or, presentations, including and news releases, without the prior written consent of such Investor. For the avoidance of doubt, the Company and each other Investor shall be permitted to disclose, and each Investor consents to the disclosure of, such Investor’s name and its investment in the Company (a) as requested by a governmental or similar authority or required by law, legal process, regulation (including filings for federal, foreign and state securities and other laws in connection with the offering of interests in and the making of investments by the Company) or the rules of any self-regulatory organization, (b) to third party service providers of the Company or its affiliates, including legal counsel, accountants, brokers, lenders or other counterparties or service providers in the ordinary course of the Company’s business and to other participants in transactions or potential transactions with the Company and (c) to other investors (including prospective investors) in the Company or strategic partners or prospective acquirers of the Company; provided, however, that the Company agrees that it will not submit any portion of a filing under federal, foreign or state securities and other laws in connection with the offering of interests in and the making of investments by the Company that includes reference to an Investor and/or the director of the Company appointed by such Investor without first providing such Investor with a reasonable period in which to review such filing and implementing any reasonable comments provided by such Investor. Any press release issued by the Company, or any other public announcement made, on or after the Closing (as defined in the Purchase Agreement) shall not disclose or divulge any of the terms of the transactions contemplated by the Purchase Agreement, and the final form of any such press release shall be approved (such approval not to be unreasonably withheld, conditioned or delayed) in writing by the Investors holding a majority of the Series B Preferred Shares issued pursuant to the Purchase Agreement; provided, that the name of any Investor or any Affiliate of an Investor may not be issued in any such press release or public announcement without the prior written consent of such Investor (such consent not to be unreasonably withheld, conditioned or delayed).

 

 

(b)            Notwithstanding the foregoing or anything to the contrary contained herein, the parties hereto acknowledge and agree that (a) the name “Sequoia Capital” is commonly used to describe a variety of entities (collectively, the “Sequoia Entities”) that are affiliated by ownership or operational relationship and engaged in a broad range of activities related to investing and securities trading and (b) notwithstanding any other provision of this Agreement to the contrary, this Agreement shall not be binding on, or restrict the activities of, any (i) Sequoia Entity outside of the Sequoia China Sector Group, (ii) entity primarily engaged in investment and trading in the secondary securities market; (iii) the ultimate beneficial owner of an Sequoia Entity (or its general partner or ultimate general partner) who is a natural Person, and such Person’s relatives (including but without limitation, such Person’s spouse, parents, children, siblings, mother-in-law and father-in-law and brothers and sisters-in-law), (iv) any officer, director or employee of a Sequoia Entity (or its general partner or ultimate general partner) and such Person’s relatives, and (v) for the avoidance of doubt, any portfolio companies of any Sequoia Entity and portfolio companies of any affiliated investment fund or investment vehicle of any Sequoia Entity. For purposes of the foregoing, the “Sequoia China Sector Group” means all Sequoia Entities (whether currently existing or formed in the future) that are principally focused on companies located in, or with connections to, the PRC that are exclusively managed by Sequoia Capital. Notwithstanding anything to the contrary set forth herein, this Section 9.5(b) may not be amended or waived without the prior written consent of SCC Venture VII Holdco I, Ltd.

 

(c)            Notwithstanding the foregoing or anything to the contrary contained herein, the parties hereto acknowledge that certain of the Investors, including but not limited to Hillhouse, Sequoia, Eight Roads, F-Prime, BVF, TCG, LAV and Surveyor, are a professional investment fund or similar investment organization (each, a “Fund Investor”), and their respective Affiliates (including investment funds, persons or accounts under the management of each such Fund Investor or its respective Affiliates) engage in hedge fund investment and private equity investment businesses. Each Fund Investor and its Affiliates shall have the right to, and shall have no duty hereunder to refrain from, continue to carry on its normal course of business activities as professional investors. Such Fund Investor and its Affiliates may from time to time have information on or knowledge of a business opportunity that the Company or its subsidiaries are financially able to undertake, is from its nature in the line or lines of the Company’s or its subsidiaries’ existing or prospective business and is a practical advantage to it, and is one in which the Company or its subsidiaries have an interest or reasonable expectancy (the “Business Opportunity”). Such Business Opportunity may or may not be within the knowledge of the Preferred Director (as defined in the Articles) appointed by such Fund Investor (each, respectively, an “Investor Director”). The parties hereto agree, and shall procure that each of the Company and its subsidiaries agrees that the Investor Director(s) shall not be under any duty to disclose any Business Opportunity to the Company or its subsidiaries, or be under any duty to permit the Company or its subsidiaries to participate in any Business Opportunity, or to otherwise be under any duty to help the Company take advantage of any Business Opportunity, and hereby waives, to the extent permitted by applicable law, any claim based on the corporate opportunity doctrine or otherwise in any interest or expectancy of the Company in any Business Opportunity which interest or expectancy that could limit such Fund Investor’s ability to benefit from information related to an actual or potential Business Opportunity or that would require such Fund Investor or its respective Investor Director to disclose any such Business Opportunity to the Company or its subsidiaries or offer any Business Opportunity to the Company or its subsidiaries, in each case, except to the extent such matter or opportunity is presented to, or acquired, created or developed by, or otherwise comes into the possession of, such Investor Director’s capacity as a director of the Company; provided, however, that nothing in this Section 9.5(c) shall release (a) an Investor Director from any breach of his or her fiduciary duty to the Company, or (b) any such Fund Investor or its respective Investor Director from any breach of Section 7.3 hereof or improper use of any confidential information, knowledge or data concerning or relating to the business, corporate or financial affairs of the Company and its subsidiaries.

 

 

9.6            Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

9.7            Notices. Any notice required or permitted pursuant to this Agreement shall be given in writing and shall be given either personally or by sending it by next-day or second-day 29 courier service, fax, electronic mail or similar means to the address as shown below the signature of such party on the signature page of this Agreement (or at such other address as such party may designate by ten (10) days’ advance written notice to the other parties to this Agreement given in accordance with this Section 9.7). Where a notice is sent by next-day or second-day courier service, service of the notice shall be deemed to be effected by properly addressing, pre-paying and sending by next-day or second-day service through an internationally-recognized courier a letter containing the notice, with a confirmation of delivery, and to have been effected at the expiration of two (2) days after the letter containing the same is sent as aforesaid. Where a notice is sent by fax or electronic mail, service of the notice shall be deemed to be effected by properly addressing and sending such notice through a transmitting organization, with a written confirmation of delivery, and to have been effected on the day the same is sent as aforesaid.

 

9.8            Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

 

9.9            Attorneys’ Fees. If any dispute among the parties to this Agreement results in litigation, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including, without limitation, such reasonable fees and expenses of attorneys and accountants, that shall include, without limitation, all fees, costs and expenses of appeals.

 

9.10          Entire Agreement; Amendments and Waivers. This Agreement (including the Schedules and Exhibits hereto) constitutes the full and entire understanding and agreement among the parties with regard to the subject matter hereof. Upon the effectiveness of this Agreement, the Prior Agreement shall be deemed amended and restated and superseded and replaced in its entirety by this Agreement, and shall be of no further force or effect. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Holders of a majority of the then outstanding Registrable Securities; provided, however, that any purchaser of the Preferred Shares after the date hereof pursuant to the Purchase Agreement may become a party to this Agreement pursuant to Section 9.1 hereof without written consent of any Holder under this Section 9.10; provided, further, however, that any amendment or waiver that affects an Investor in a disproportionate and adverse manner than the effect of such amendment or waiver on any other Investor shall require the written consent of the Investor so disproportionately and adversely affected. Any amendment or waiver so effected shall be binding upon the Company, the Investors and all of their respective successors and assigns whether or not such party, successor or assignee entered into or approved such amendment or waiver.

 

 

9.11          Enforceability; Severability. The parties hereto agree that each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law. If any provision of this Agreement shall nevertheless be held to be prohibited by or invalid under applicable law, (a) such provision shall be effective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement and (b) the parties shall, to the extent permissible by applicable law, amend this Agreement, or enter into a voting trust agreement under which the Shares shall be transferred to the voting trust created thereby, so as to make effective and enforceable the intent of this Agreement.

 

9.12          Delays or Omissions: Remedies Cumulative. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party hereunder, upon any breach, default or noncompliance by another party under this Agreement, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character on any party’s part of any breach, default or noncompliance under the Agreement or any waiver on such party’s part of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, by law, or otherwise afforded to parties hereunder, shall be cumulative and not alternative.

 

9.13          Aggregation of Shares. All shares of Registrable Securities held or acquired by Affiliated entities (including Affiliated venture capital funds) or Persons shall be aggregated for the purpose of determining the availability of any rights under this Agreement.

 

[Signature Pages Follow]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

 

 

	COMPANY:
	ShouTi Inc.
	By:	/s/ Raymond Stevens
	Name: Raymond Stevens
	Title: Director

 

	Address:	611 Gateway Blvd. Suite 223
		South San Francisco, CA 94080

 

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

 

 

	INVESTOR:
	ERVC Healthcare IV, L.P.
	By: ERVC Healthcare Advisors IV, L.P., its General Partner
	By: Eight Roads GP as General Partner
	By:	/s/ Driaan Viljoen
	Name: Driaan Viljoen
	Title: Director

 

	Address:
	c/o Eight Roads Capital Advisors (Hong Kong) Limited
	Address:	Suite 2201, Level 22,
		Two Pacific Place,
		88 Queensway, Admiralty,
		Hong Kong
	Attention: Mr. Daniel Auerbach
	Telephone: +852 2629 2800
	Fax: +852 2509 0371
	E-mail: Daniel.Auerbach@eightroads.com

 

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

 

 

	INVESTOR:
	F-Prime Capital Partners Life Sciences Fund VI LP
	By:	F-Prime Capital Partners Life Sciences
		Advisors Fund VI LP, its general partner
	By:	Impresa Holdings LLC, its general partner
	By:	Impresa Management LLC, its managing member

 

	By:	/s/ Mary Bevelock Pendergast
	Name: Mary Bevelock Pendergast
	Title: Vice President

 

	Address:
	F-Prime Capital
	1 Main Street – 13th Floor
	Cambridge, MA 02142

 

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

 

 

	INVESTOR:
	SCC Venture VII Holdco I, Ltd
	By:	/s/ Ip Siu Wai Eva
	Name: Ip Siu Wai Eva
	Title: Authorized Signatory
	Address: Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1- 1104, Cayman Islands c/o Suite 3613, Two Pacific Place, 88 Queensway, Hong Kong

 

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

 

		INVESTOR:
		QIMING VENTURE PARTNERS VI, L.P.,
		A Cayman Islands exempted limited partnership
			By:	QIMING GP VI, L.P. a Cayman Islands exempted limited partnership
			Its:	General Partner
				By:	QIMING CORPORATE GP VI, LTD, a Cayman Islands exempted company
				Its:	General Partner
				By:	/s/ Ryan Baker
				Its:	Authorized Signatory

 

		Signing Location:	Lahaina, HI, USA
		Signature of Witness:	/s/ Kjersten Baker
		Name of Witness:	Kjersten Baker
		Registered Address:
		PO Box 309, Ugland House
		Grand Cayman, KY1-1104
		Cayman Islands
		Notice Address:
		11100 NE 8th Street
		Suite 200
		Bellevue, Washington 98004
		Attention: Ryan Baker
		Phone: (425) 709-0772
		Fax: (425) 709-0798

 

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

 

		INVESTOR:
		QIMING MANAGING DIRECTORS FUND VI, L.P., a Cayman Islands exempted limited partnership

 

		By:	QIMING CORPORATE GP VI, LTD., a Cayman Islands exempted limited partnership
		Its:	General Partner
			By:	/s/ Ryan Baker
			Its:	Authorized Signatory

 

		Signing Location:	Lahaina, HI, USA
		Signature of Witness:	/s/ Kjersten Baker
		Name of Witness:	Kjersten Baker
		Registered Address:
		PO Box 309, Ugland House
		Grand Cayman, KY1-1104
		Cayman Islands
		Notice Address:
		11100 NE 8th Street
		Suite 200
		Bellevue, Washington 98004
		Attention: Ryan Baker
		Phone: (425) 709-0772
		Fax: (425) 709-0798

 

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

  

		INVESTOR:
		WaZi PharmaTech Healthcare Fund I L.P.
		By:	/s/ Edward Hu
			Edward Hu
			Authorized Signatory
		Address: 288 Fute Zhong Road, Waigaoqiao Free Trade Zone, Shanghai 200131, China

  

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

  

		INVESTOR:
		XX-I SHT Holdings Limited
		By:	/s/ Colm John O’Connell
		Name:	Colm John O’Connell
		Title:	Director
		Address: 89 Nexus Way, Camana Bay, PO Box 31106, Grand Cayman KY1-1205, Cayman Islands

  

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

  

		INVESTOR:
		TF ShouTi Ltd.
		By:	/s/ Chiang Chen Hsiu-lien
		Name:	Chiang Chen Hsiu-lien
		Title:	Director
		Registered Address: Trinity Chambers, PO Box 4301, Road Town, Tortola, British Virgin Islands
		Contact Address: Unit 705, Tower 1, 88 Keyuan Road, German Center, Pudong New District, Sanghai 201203, China Att: Tingting Zhang
		Email: tingting.zhang@tfcapital.net
		Phone: 86 21 5019 8835

 

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

 

		INVESTOR:
		CG&H Investments, LLC
		By:	/s/ Jim Kindler
		Name:	Jim Kindler
		Title:	Manager

Address:

3 Embarcadero Center, 20th Floor San Francisco, CA 94111 USA

 

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

  

		INVESTOR:
		Schrödinger, Inc.
		By:	/s/ Ramy Farid
		Name:	Ramy Farid
		Title:	President and Chief Executive Officer

 

Address:

120 West 45th Street, 17th Floor New York, NY 10036

 

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

 

		INVESTOR:
		BIOTECHNOLOGY VALUE FUND, L.P.
		By:	/s/ Mark Lampert
		Name:	Mark Lampert
		Title: Chief Executive Officer, BVF I GP LLC, itself General Partner of Biotechnology Value Fund, L.P.
		BIOTECHNOLOGY VALUE FUND II, L.P.
		By:	/s/ Mark Lampert
		Name:	Mark Lampert
		Title: Chief Executive Officer, BVF II GP LLC, itself General Partner of Biotechnology Value Fund II, L.P.
		BIOTECHNOLOGY VALUE TRADING FUND OS, L.P.
		By:	/s/ Mark Lampert
		Name:	Mark Lampert
		Title: President BVF Inc., General Partner of BVF Partners L.P., itself sold member of BVF Partners OS Ltd., itself GP of Biotechnology Value Trading Fund OS, L.P.
		Address:	44 Montgomery Street 40th Floor San Francisco CA 94104

 

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

  

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

 

		INVESTOR:
		TCG CROSSOVER FUND I, L.P.
		By: TCG Crossover GP I, LLC
		Its General Partner
		By:	/s/ Chen Yu
		Name:	Chen Yu
		Title:	Managing Member
		Address:
		Jaime Felix
		jfelix@tcgcrossover.com
		228 Hamilton Avenue, 3rd Floor
		Palo Alto, CA 94301
		with a copy on all notices (which copies shall not constitute notice) to:
		Foley & Lardner LLP
		975 Page Mill Road
		Palo Alto, CA 94304-1013
		Attention: Louis Lehot
		Email: llehot@foley.com

 

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

 

		INVESTOR:
		LAV Fund VI, L.P.
		By:	LAV GP VI, L.P.
		Its General Partner
		By:	LAV Corporate VI GP, Ltd.
		Its General Partner
		By:	/s/ Yu Luo
		Name: Yu Luo
		Title: Authorized signatory
		LAV Fund VI Opportunities, L.P.
		By:	LAV GP VI Opportunities, L.P.
		Its General Partner
		By:	LAV Corporate VI GP Opportunities, Ltd.
		Its General Partner
		By:	/s/ Yu Luo
		Name: Yu Luo
		Title: Authorized signatory

		Address:	Room 606-7, St. George’s Building,
		2 Ice House Street, Central, Hong Kong
		Phone number: +852 2303 0923
		Email: LAV-USD-Finance@lavfund.com
		Attention: LAV USD Finance

 

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

 

	INVESTOR:
	CITADEL MULTI-STRATEGY EQUITIES MASTER FUND LTD.
	By: Citadel Advisors LLC, its portfolio manager
	By:	/s/ Michael Weiner
	Name: Michael Weiner
	Title: Authorized signatory
	Address:
	c/o Citadel Advisors LLC
	601 Lexington Avenue
	New York, New York 10022
	Attention: Harry Greenbaum
	Harry.Greenbaum@citadel.com;
	CitadelAgreementNotice@citadel.com;
	With copies to:
	Choate, Hall & Stewart, LLP
	Two International Place
	Boston, MA 02100
	Attention: Brian P. Lenihan and Tobin P. Sullivan
	blenihan@choate.com; tsullivan@choate.com

 

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

 

	INVESTOR:
	Cormorant Private Healthcare Fund IV, LP
	By: Cormorant Private Healthcare GP, LLC
	By:	/s/ Bihua Chen
	Name: Bihua Chen
	Title: Managing Member
	Cormorant Global Healthcare Master Fund, LP
	By: Cormorant Global Healthcare GP, LLC
	By:	/s/ Bihua Chen
	Name: Bihua Chen
	Title: Managing Member
	Address:
	200 Clarendon Street 52nd Floor Boston, MA 02116

 

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

 

	INVESTOR:
	Monashee Solitario Fund LP
	By:	/s/ Jeff Muller
	Name: Jeff Muller
	Title: Authorized Signatory
	DS Liquid Div RVA MON LLC
	By:	/s/ Jeff Muller
	Name: Jeff Muller
	Title: Authorized Signatory
	Address: c/o Monashee Investment
	Management LLC, 75 Park Plaza, 2nd Floor, Boston, MA 02116

 

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

 

	INVESTOR:
	CASDIN PARTNERS MASTER FUND, L.P.
	By: Casdin Partners GP, LLC, its General Partner
	By:	/s/ Kevin O’Brien
	Name: Kevin O’Brien
	Title: General Counsel
	Address: 1350 Avenue of the Americas –
	Suite 2600, New York, NY 10019
	Attn: Fund Accounting
	Email: fundacct@casdincapital.com

 

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

 

	INVESTOR:
	WOODLINE MASTER FUND, LP
	By: Woodline Fund GP LLC, its General Partner
	By:	/s/ Matthew Hooker
	Name: Matthew Hooker
	Title: Managing Member
	Address: 4 Embarcadero Center, Suite 3450
	San Francisco, CA 94111

 

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

 

	INVESTOR:
	Sage Partners Alpha 1 L.P.
	By: Sage Partners Private Fund, as its General Partner
	By:	/s/ Wang Fei
	Name: Wang Fei
	Title: Director
	Address: Room 1801, 18/F, 1 Duddell Street, Central, Hong Kong

 

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

 

	INVESTOR:
	Terra Magnum Fund I LP
	By:	/s/ Sha Wang
	Name: Sha Wang
	Title: Partner
	Address: 4701 Sangamore Rd, Ste 100N – 1018 Bethesda, MD 20816

 

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

 

	INVESTOR:
	Janus Henderson Emerging Markets Fund
	By: Janus Capital Management LLC, its investment advisor
	By:	/s/ Daniel Grana
	Name: Daniel Grana
	Title: Authorized Signatory

 

	Janus Henderson Investment Fund Series I – Janus Henderson Emerging Markets Opportunities Fund
	By: Janus Capital Management LLC, its investment advisor
	By:	/s/ Daniel Grana
	Name: Daniel Grana
	Title: Authorized Signatory

 

	Janus Henderson Fund – Janus Henderson Emerging Markets Fund
	By: Janus Capital Management LLC, its investment advisor
	By:	/s/ Daniel Grana
	Name: Daniel Grana
	Title: Authorized Signatory
	Address:
	Janus Capital Management LLC
	15 Detroit Street
	Denver, CO 80206

 

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

	Attn: Daniel Grana (Email:
	daniel.grana@janushenderson.com)
	Attn: Angela Morton (Email:
	angela.morton@janushenderson.com)
	with a copy, which shall not constitute notice, to:
	Stradley Ronon Stevens & Young, LLP
	2600 One Commerce Square
	Philadelphia, PA 19103
	Attn: Daniel C. Knox
	Email: dknox@stradley.com

 

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

 

	INVESTOR:
	Bacara Holdings Limited
	By:	/s/ Marios Fotiadis
	Name: Marios Fotiadis
	Title: Director
	Address: Palm Jumeirah Frond D villa 38
	PO Box 212735 Dubai, UAE
	Email: marios@cerusadvisors.com

 

	Panormos Holdings Limited
	By:	/s/ Salameh Sweis
	Name: Salameh Sweis
	Title: Director

 

	By:	/s/ Philippe Audi
	Name: Philippe Audi
	Title: Director
	Address: c/o Levant Investment
	Management Limited, 1903 South Tower,
	Emirates Financial Towers, Dubai
	International Financial Center, Dubai, UAE
	Email: salameh.sweis@storkcapital.com and
	philippe.audi@storkcapital.com
	Philippe Audi
	Email: philippe.audi@storkcapital.com
	Address: c/o Levant Investment
	Management Limited, 1903 South Tower,
	Emirates Financial Towers, Dubai
	International Financial Center, Dubai, UAE

  

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Investor Rights Agreement as of the date first above written.

 

	INVESTOR:
	Healthcare Innovation Investment Fund LLC
	By:	/s/ Joseph R. Gentile
	Name: Joseph R. Gentile
	Title: Manager
	Address: SVB Leerink, c/o Steven
	Heineman, General Counsel, One Federal
	St., 37th Floor, Boston MA 02110

 

[ShouTi Inc. - Signature Page to Second Amended and Restated Investor Rights Agreement]

 

 

SCHEDULE A

 

INVESTORS

 

ERVC Healthcare IV, L.P.

 

F-Prime Capital Partners Life Sciences Fund VI LP

 

SCC Venture VII Holdco I, Ltd.

 

Qiming Venture Partners VI, L.P.

 

Qiming Managing Directors Fund VI, L.P.

 

WuXi PharmaTech Healthcare Fund I L.P.

 

XX-I SHT Holdings Limited

 

TF ShouTi Ltd.

 

GC&H Investments, LLC

 

Schrödinger, Inc.

 

Biotechnology Value Fund, L.P.

 

Biotechnology Value Fund II, L.P.

 

Biotechnology Value Trading Fund OS, L.P.

 

TCG Crossover Fund I, L.P.

 

LAV Fund VI, L.P.

 

LAV Fund VI Opportunities, L.P.

 

Citadel Multi-Strategy Equities Master Fund Ltd.

 

Cormorant Private Healthcare Fund IV, LP

 

Cormorant Global Healthcare Master Fund, LP

 

Monashee Solitario Fund LP

 

DS Liquid Div RVA MON LLC

 

CASDIN PARTNERS MASTER FUND, L.P.

 

Woodline Master Fund, LP

 

 

Sage Partners Alpha 1 L.P.

 

Terra Magnum Fund I LP

 

Janus Henderson Emerging Markets Fund

 

Janus Henderson Investment Fund Series I      Janus Henderson Emerging Markets Opportunities Fund

 

Janus Henderson Fund – Janus Henderson Emerging Markets Fund

 

Bacara Holdings Limited

 

Panormos Holding Limited

 

Philippe Audi

 

Healthcare Innovation Investment Fund LLC

 

 

Exhibit 10.2

 

U.S.

 

ShouTi Inc.

 

2019 Equity Incentive Plan

 

Adopted by the Board of Directors: April 18, 2019

Approved by the Shareholders: April 18, 2019

Termination Date: April 17, 2029

 

1.             General.

 

(a)            Eligible Share Award Recipients. Employees, Directors and Consultants are eligible to receive Share Awards.

 

(b)            Available Share Awards. The Plan provides for the grant of the following types of Share Awards: (i) Options, (ii) Share Appreciation Rights, (iii) Restricted Share Awards, (iv) Restricted Share Unit Awards, and (v) Other Share Awards.

 

(c)            Purpose. The Plan, through the granting of Share Awards, is intended to help the Company and its Affiliates to secure and retain the services of eligible award recipients, provide incentives for such persons to exert maximum efforts for the success of the Company and any Affiliate and provide means by which the eligible recipients may benefit from increases in value of the Ordinary Shares.

 

2.             Administration.

 

(a)            Administration by Board. The Board will administer the Plan. The Board may delegate administration of the Plan to a Committee or Committees, as provided in Section 2(c).

 

(b)            Powers of Board. The Board will have the power, subject to, and within the limitations of, the express provisions of the Plan:

 

(i)             To determine from time to time (A) who will be granted Share Awards; (B) when and how each Share Award will be granted; (C) what type of Share Award will be granted; (D) the provisions of each Share Award (which need not be identical), including when a person will be permitted to exercise or otherwise receive cash or Ordinary Shares under the Share Award; (E) the number of Ordinary Shares subject to a Share Award; and (F) the Fair Market Value applicable to a Share Award.

 

(ii)            To construe and interpret the Plan and Share Awards granted under it, and to establish, amend and revoke rules and regulations for administration of the Plan and Share Awards. The Board, in the exercise of these powers, may correct any defect, omission or inconsistency in the Plan or in any Share Award Agreement, in a manner and to the extent it will deem necessary or expedient to make the Plan or Share Award fully effective.

 

(iii)           To settle all controversies regarding the Plan and Share Awards granted under it.

 

(iv)            To accelerate, in whole or in part, the time at which a Share Award may be exercised or vest (or at which cash or Ordinary Shares may be issued).

 

  

(v)             To suspend or terminate the Plan at any time. Except as otherwise provided in the Plan or a Share Award Agreement, suspension or termination of the Plan will not impair a Participant’s rights under his or her then-outstanding Share Award without his or her written consent except as provided in subsection (viii) below.

 

(vi)            To amend the Plan in any respect the Board deems necessary or advisable, subject to the limitations, if any, of applicable law. However, if required by applicable law, and except as provided in Section 9(a) relating to Capitalization Adjustments, the Company will seek shareholder approval of any amendment of the Plan that (A) materially increases the number of Ordinary Shares available for issuance under the Plan, (B) materially expands the class of individuals eligible to receive Share Awards under the Plan, (C) materially increases the benefits accruing to Participants under the Plan, (D) materially reduces the price at which Ordinary Shares may be issued or purchased under the Plan, (E) materially extends the term of the Plan, or (F) materially expands the types of Share Awards available for issuance under the Plan. Except as provided in the Plan (including subsection (viii) below) or a Share Award Agreement, no amendment of the Plan will impair a Participant’s rights under an outstanding Share Award unless (1) the Company requests the consent of the affected Participant, and (2) such Participant consents in writing.

 

(vii)          To submit any amendment to the Plan for shareholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 422 of the Code regarding Incentive Share Options.

 

(viii)         To approve forms of Share Award Agreements for use under the Plan and to amend the terms of any one or more Share Awards, including, but not limited to, amendments to provide terms more favorable to the Participant than previously provided in the Share Award Agreement, subject to any specified limits in the Plan that are not subject to Board discretion; provided however, that a Participant’s rights under any Share Award will not be impaired by any such amendment unless (A) the Company requests the consent of the affected Participant, and (B) such Participant consents in writing. Notwithstanding the foregoing, (1) a Participant’s rights will not be deemed to have been impaired by any such amendment if the Board, in its sole discretion, determines that the amendment, taken as a whole, does not materially impair the Participant’s rights, and (2) subject to the limitations of applicable law, if any, the Board may amend the terms of any one or more Share Awards without the affected Participant’s consent (A) to maintain the tax qualified status of the Share Award (B) to clarify the manner of exemption from, or to bring the Share Award into compliance with, Section 409A or Section 457A of the Code; or (C) to comply with other applicable laws.

 

(ix)           Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Plan or Share Awards.

 

(x)             To adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by Employees, Directors or Consultants who are foreign nationals or employed outside the United States (provided that Board approval will not be necessary for any executive officer of the Company to make immaterial modifications to the Plan or any Share Award Agreement that are required for compliance with the laws of the relevant foreign jurisdiction). Without limiting the generality of the foregoing, the Board specifically is authorized to adopt rules, procedures and subplans, regarding, without limitation, conversion of local currency, obligations to pay payroll tax, determination of beneficiary designation requirements, withholding procedures and handling of share issuances, which may vary according to local requirements.

 

 

(xi)           To effect, with the consent of any adversely affected Participant, (A) the reduction of the exercise, purchase or strike price of any outstanding Share Award; (B) the cancellation of any outstanding Share Award and the grant in substitution therefor of a new (1) Option, (2) Share Appreciation Right, (3) Restricted Share Award, (4) Restricted Share Unit Award, (5) Other Share Award, (6) cash and/or (7) other valuable consideration determined by the Board, in its sole discretion, with any such substituted award (x) covering the same or a different number of Ordinary Shares as the cancelled Share Award and (y) granted under the Plan or another equity or compensatory plan of the Company; or (C) any other action that is treated as a repricing under generally accepted accounting principles.

 

(c)            Delegation to Committee. The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration of the Plan is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to a subcommittee of the Committee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board will thereafter be to the Committee or subcommittee). Any delegation of administrative powers will be reflected in resolutions, not inconsistent with the provisions of the Plan, adopted from time to time by the Board or Committee (as applicable). The Committee may, at any time, abolish the subcommittee and/or revest in the Committee any powers delegated to the subcommittee. The Board may retain the authority to concurrently administer the Plan with the Committee and may, at any time, revest in the Board some or all of the powers previously delegated.

 

(d)            Delegation to an Officer. The Board may delegate to one (1) or more Officers the authority to do one or both of the following: (i) designate Employees who are not Officers to be recipients of Options and SARs (and, to the extent permitted by applicable law, other Share Awards) and, to the extent permitted by applicable law, the terms of such Share Awards, and (ii) determine the number of Ordinary Shares to be subject to such Share Awards granted to such Employees; provided, however, that the Board resolutions regarding such delegation will specify the total number of Ordinary Shares that may be subject to the Share Awards granted by such Officer and that such Officer may not grant a Share Award to himself or herself. Any such Share Awards will be granted on substantially the form of Share Award Agreement most recently approved for use by the Committee or the Board, unless otherwise provided in the resolutions approving the delegation authority. The Board may not delegate authority to an Officer who is acting solely in the capacity of an Officer (and not also as a Director) to determine the Fair Market Value pursuant to Section 13(s) below.

 

(e)            Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board in good faith will not be subject to review by any person and will be final, binding and conclusive on all persons.

 

3.             Shares Subject to the Plan.

 

(a)            Share Reserve.

 

(i)             Subject to Section 9(a) relating to Capitalization Adjustments, the aggregate number of Ordinary Shares that may be issued pursuant to Share Awards from and after the Effective Date will not exceed 1,350,000 Ordinary Shares (the “Share Reserve”). For clarity, the Share Reserve in this Section 3(a) is a limitation on the number of Ordinary Shares that may be issued pursuant to the Plan. Accordingly, this Section 3(a) does not limit the granting of Share Awards except as provided in Section 6(a).

 

 

(b)            Reversion of Shares to the Share Reserve. If a Share Award or any portion thereof (i) expires or otherwise terminates without all of the shares covered by such Share Award having been issued or (ii) is settled in cash (i.e., the Participant receives cash rather than share), such expiration, termination or settlement will not reduce (or otherwise offset) the number of Ordinary Shares that may be available for issuance under the Plan. If any Ordinary Shares issued pursuant to a Share Award are forfeited back to or repurchased by the Company because of the failure to meet a contingency or condition required to vest such shares in the Participant, then the shares that are forfeited or repurchased will revert to and again become available for issuance under the Plan. Any shares reacquired by the Company in satisfaction of tax withholding obligations on a Share Award or as consideration for the exercise or purchase price of a Share Award will again become available for issuance under the Plan.

 

(c)            Source of Shares. The shares issuable under the Plan will be authorized but unissued or reacquired Ordinary Shares, including shares repurchased by the Company on the open market or otherwise.

 

4.             Eligibility.

 

(a)            Eligibility for Specific Share Awards. Share Awards may be granted to Employees, Directors and Consultants.

 

(b)            Consultants. A Consultant will not be eligible for the grant of a Share Award if, at the time of grant, either the offer or sale of the Company’s securities to such Consultant is not exempt under Rule 701 because of the nature of the services that the Consultant is providing to the Company, because the Consultant is not a natural person, or because of any other provision of Rule 701, unless the Company determines that such grant need not comply with the requirements of Rule 701 and will satisfy another exemption under the Securities Act, as applicable, as well as comply with the securities laws of all other relevant jurisdictions.

 

5.             Provisions Relating to Options and Share Appreciation Rights.

 

Each Option or SAR will be in such form and will contain such terms and conditions as the Board deems appropriate. The provisions of separate Options or SARs need not be identical; provided, however, that each Share Award Agreement for Options or SARs will conform to (through incorporation of provisions hereof by reference in the applicable Share Award Agreement or otherwise) the substance of each of the following provisions:

 

(a)            Term. No Option or SAR will be exercisable after the expiration of ten (10) years from the date of its grant or such shorter period specified in the Share Award Agreement.

 

 

(b)            Exercise Price. The exercise or strike price of each Option or SAR granted to a US Participant will be not less than one hundred percent (100%) of the Fair Market Value of the Ordinary Shares subject to the Option or SAR on the date the Share Award is granted. Notwithstanding the foregoing, an Option or SAR may be granted with an exercise or strike price lower than one hundred percent (100%) of the Fair Market Value of the Ordinary Shares subject to the Share Award to a US Participant if such Share Award is granted pursuant to an assumption of or substitution for another option or share appreciation right pursuant to a Corporate Transaction and in a manner consistent with the provisions of Section 409A of the Code and other applicable law. Each SAR will be denominated in Ordinary Share equivalents. The exercise or strike price of each Option or SAR granted to a Participant that is not a U.S. Participant shall be determined by the Board and shall comply with applicable laws. In addition, no Option or SAR may be granted with an exercise or strike price lower than the par value of the Ordinary Shares, if any.

 

(c)            Purchase Price for Options. The purchase price of Ordinary Shares acquired pursuant to the exercise of an Option may be paid, to the extent permitted by applicable law and as determined by the Board in its sole discretion, by any combination of the methods of payment set forth below. Any Ordinary Shares that are not fully paid will be subject to the forfeiture provisions in the Company’s memorandum and articles of association (as amended from time to time). The Board will have the authority to grant Options that do not permit all of the following methods of payment (or otherwise restrict the ability to use certain methods) and to grant Options that require the consent of the Company to use a particular method of payment. The permitted methods of payment are as follows:

 

(i)             by cash, check, bank draft or money order payable to the Company;

 

(ii)            pursuant to a program (developed under Regulation T as promulgated by the U.S. Federal Reserve Board or similar regulations in other applicable jurisdictions, if required for compliance with the laws of the relevant jurisdiction) that, prior to the issuance of the Ordinary Shares subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds;

 

(iii)           by delivery to the Company (either by actual delivery or attestation) of Ordinary Shares;

 

(iv)            if an Option is a Nonstatutory Share Option, by a “net exercise” arrangement pursuant to which the Company will reduce the number of Ordinary Shares issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price; provided, however, that the Company will accept a cash or other payment from the Participant to the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction in the number of whole shares to be issued. Ordinary Shares will no longer be subject to an Option and will not be exercisable thereafter to the extent that (A) shares issuable upon exercise are used to pay the exercise price pursuant to the “net exercise,” (B) shares are delivered to the Participant as a result of such exercise, and (C) shares are withheld to satisfy tax withholding obligations;

 

(v)             according to a deferred payment or similar arrangement with the Optionholder; provided, however, that interest will compound at least annually and will be charged at the minimum rate of interest necessary to avoid (A) the imputation of interest income to the Company and compensation income to the Optionholder under any applicable provisions of the Code, and (B) the classification of the Option as a liability for financial accounting purposes; or

 

(vi)            in any other form of legal consideration that may be acceptable to the Board and specified in the applicable Share Award Agreement.

 

 

(d)            Exercise and Payment of a SAR. To exercise any outstanding SAR, the Participant must provide written notice of exercise to the Company in compliance with the provisions of the Share Award Agreement evidencing such SAR. The appreciation distribution payable on the exercise of a SAR will be not greater than an amount equal to the excess of (A) the aggregate Fair Market Value (on the date of the exercise of the SAR) of a number of Ordinary Shares equal to the number of Ordinary Shares equivalents in which the Participant is vested under such SAR, and with respect to which the Participant is exercising the SAR on such date, over (B) the aggregate strike price of the number of Ordinary Shares equivalents with respect to which the Participant is exercising the SAR on such date. The appreciation distribution may be paid in Ordinary Shares, in cash, in any combination of the two or in any other form of consideration, as determined by the Board and contained in the Share Award Agreement evidencing such SAR.

 

(e)            Transferability of Options and SARs. The Board may, in its sole discretion, impose such limitations on the transferability of Options and SARs as the Board will determine. In the absence of such a determination by the Board to the contrary, the following restrictions on the transferability of Options and SARs will apply:

 

(i)             Restrictions on Transfer. An Option or SAR will not be transferable except by Will or by the laws of descent and distribution (and pursuant to subsections (ii) and (iii) below), and will be exercisable during the lifetime of the Participant only by the Participant. The Board may permit transfer of the Option or SAR in a manner that is not prohibited by applicable tax and securities laws. Except as explicitly provided herein, neither an Option nor a SAR may be transferred for consideration.

 

(ii)            Domestic Relations Orders. Subject to the approval of the Board or a duly authorized Officer, an Option or SAR may be transferred pursuant to the terms of a domestic relations order, official marital settlement agreement or other divorce or separation instrument as permitted by Treasury Regulation 1.421-1(b)(2) or regulations in other applicable jurisdictions.

 

(iii)           Beneficiary Designation. Subject to the approval of the Board or a duly authorized Officer, a Participant may, by delivering written notice to the Company, in a form approved by the Company (or the designated broker), designate a third party who, upon the death of the Participant, will thereafter be entitled to exercise the Option or SAR and receive the Ordinary Shares or other consideration resulting from such exercise. In the absence of such a designation, upon the death of the Participant, the executor or administrator of the Participant’s estate will be entitled to exercise the Option or SAR and receive the Ordinary Shares or other consideration resulting from such exercise. However, the Company may prohibit designation of a beneficiary at any time, including due to any conclusion by the Company that such designation would be inconsistent with the provisions of applicable laws.

 

(f)             Vesting Generally. The total number of Ordinary Shares subject to an Option or SAR may vest and become exercisable in periodic installments that may or may not be equal. The Option or SAR may be subject to such other terms and conditions on the time or times when it may or may not be exercised (which may be based on the satisfaction of performance goals or other criteria) as the Board may deem appropriate. The vesting provisions of individual Options or SARs may vary. The provisions of this Section 5(f) are subject to any Option or SAR provisions governing the minimum number of Ordinary Shares as to which an Option or SAR may be exercised.

 

 

(g)            Termination of Continuous Service. Except as otherwise provided in the applicable Share Award Agreement or other agreement between the Participant and the Company, if a Participant’s Continuous Service terminates (other than for Cause and other than upon the Participant’s death or Disability), the Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Share Award as of the date of termination of Continuous Service) within the period of time ending on the earlier of (i) the date three (3) months following the termination of the Participant’s Continuous Service (or such longer or shorter period specified in the applicable Share Award Agreement, which period will not be less than thirty (30) days if necessary to comply with applicable laws unless such termination is for Cause) and (ii) the expiration of the term of the Option or SAR as set forth in the Share Award Agreement. If, after termination of Continuous Service, the Participant does not exercise his or her Option or SAR within the applicable time frame, the Option or SAR (as applicable) will terminate.

 

(h)             Extension of Termination Date. Except as otherwise provided in the applicable Share Award Agreement or other agreement between the Participant and the Company, if the exercise of an Option or SAR following the termination of the Participant’s Continuous Service (other than for Cause and other than upon the Participant’s death or Disability) would be prohibited at any time solely because the issuance of Ordinary Shares would violate the registration requirements under the Securities Act, then the Option or SAR will terminate on the earlier of (i) the expiration of a total period of time (that need not be consecutive) equal to the applicable post termination exercise period after the termination of the Participant’s Continuous Service during which the exercise of the Option or SAR would not be in violation of such registration requirements, or (ii) the expiration of the term of the Option or SAR as set forth in the applicable Share Award Agreement. In addition, unless otherwise provided in a Participant’s Share Award Agreement, if the sale of any Ordinary Shares received upon exercise of an Option or SAR following the termination of the Participant’s Continuous Service (other than for Cause) would violate the Company’s insider trading policy, then the Option or SAR will terminate on the earlier of (i) the expiration of a period of time (that need not be consecutive) equal to the applicable post-termination exercise period after the termination of the Participant’s Continuous Service during which the sale of the Ordinary Shares received upon exercise of the Option or SAR would not be in violation of the Company’s insider trading policy, or (ii) the expiration of the term of the Option or SAR as set forth in the applicable Share Award Agreement.

 

(i)             Disability of Participant. Except as otherwise provided in the applicable Share Award Agreement or other agreement between the Participant and the Company, if a Participant’s Continuous Service terminates as a result of the Participant’s Disability, the Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Option or SAR as of the date of termination of Continuous Service), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination of Continuous Service (or such longer or shorter period specified in the Share Award Agreement, which period will not be less than six (6) months if necessary to comply with applicable laws), and (ii) the expiration of the term of the Option or SAR as set forth in the Share Award Agreement. If, after termination of Continuous Service, the Participant does not exercise his or her Option or SAR within the applicable time frame, the Option or SAR (as applicable) will terminate.

 

 

(j)             Death of Participant. Except as otherwise provided in the applicable Share Award Agreement or other agreement between the Participant and the Company, if (i) a Participant’s Continuous Service terminates as a result of the Participant’s death, or (ii) the Participant dies within the period (if any) specified in the Share Award Agreement for exercisability after the termination of the Participant’s Continuous Service (for a reason other than death), then the Option or SAR may be exercised (to the extent the Participant was entitled to exercise such Option or SAR as of the date of death) by the Participant’s estate, by a person who acquired the right to exercise the Option or SAR by bequest or inheritance or by a person designated to exercise the Option or SAR upon the Participant’s death, but only within the period ending on the earlier of (i) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the Share Award Agreement, which period will not be less than six (6) months if necessary to comply with applicable laws), and (ii) the expiration of the term of such Option or SAR as set forth in the Share Award Agreement. If, after the Participant’s death, the Option or SAR is not exercised within the applicable time frame, the Option or SAR (as applicable) will terminate.

 

(k)            Termination for Cause. Except as explicitly provided otherwise in a Participant’s Share Award Agreement or other individual written agreement between the Company or any Affiliate and the Participant, if a Participant’s Continuous Service is terminated for Cause, the Option or SAR will terminate immediately upon such Participant’s termination of Continuous Service, and the Participant will be prohibited from exercising his or her Option or SAR from and after the time of such termination of Continuous Service.

 

(l)             Early Exercise of Options. An Option may, but need not, include a provision whereby the Optionholder may elect at any time before the Optionholder’s Continuous Service terminates to exercise the Option as to any part or all of the Ordinary Shares subject to the Option prior to the full vesting of the Option.

 

(m)           Right of Repurchase or Right of First Refusal. The Option or SAR may include a provision whereby the Company may elect to repurchase all or any part of the vested Ordinary Shares acquired by the Participant pursuant to the exercise of the Option or SAR. In addition, the Option or SAR may include a provision whereby the Company may elect to exercise a right of first refusal following receipt of notice from the Participant of the intent to transfer all or any part of the Ordinary Shares received upon the exercise of the Option or SAR. The terms of any repurchase right or right of first refusal will be specified in the Share Award Agreement. The repurchase price for vested Ordinary Shares will be the Fair Market Value of the Ordinary Shares on the date of repurchase. The repurchase price for unvested Ordinary Shares will be the lower of (i) the Fair Market Value of the Ordinary Shares on the date of repurchase or (ii) their original purchase price.

 

 

6.             Provisions of Share Awards Other than Options and SARs.

 

(a)            Restricted Share Awards. Each Restricted Share Award Agreement will be in such form and will contain such terms and conditions as the Board deems appropriate. To the extent consistent with the Company’s memorandum and articles of association (as amended from time to time) and other constitutional and governance documents, at the Board’s election, Ordinary Shares underlying a Restricted Share Award may be held in book entry form subject to the Company’s instructions until any restrictions relating to the Restricted Share Award lapse; and may be evidenced by a certificate, which certificate will be held in such form and manner as determined by the Board. The terms and conditions of Restricted Share Award Agreements may change from time to time, and the terms and conditions of separate Restricted Share Award Agreements need not be identical. Each Restricted Share Award Agreement will conform to (through incorporation of the provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:

 

(i)             Consideration. A Restricted Share Award may be awarded in consideration for (A) cash, check, bank draft or money order payable to the Company, (B) past services to the Company or an Affiliate, or (C) any other form of legal consideration (including future services) that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.

 

(ii)            Vesting. Subject to the “Right of Repurchase” in Section 5(m), Ordinary Shares awarded under the Restricted Share Award Agreement may be subject to forfeiture to the Company in accordance with a vesting schedule to be determined by the Board.

 

(iii)           Termination of Participant’s Continuous Service. If a Participant’s Continuous Service terminates, the Company may receive through a forfeiture condition or a repurchase right, any or all of the Ordinary Shares held by the Participant as of the date of termination of Continuous Service under the terms of the Restricted Share Award Agreement.

 

(iv)            Transferability. Rights to acquire Ordinary Shares under the Restricted Share Award Agreement will be transferable by the Participant only upon such terms and conditions as are set forth in the Restricted Share Award Agreement, as the Board will determine in its sole discretion, so long as Ordinary Shares awarded under the Restricted Share Award Agreement remains subject to the terms of the Restricted Share Award Agreement.

 

(v)             Dividends. A Restricted Share Award Agreement may provide that any dividends paid on Restricted Shares will be subject to the same vesting and forfeiture restrictions as apply to the shares subject to the Restricted Share Award to which they relate.

 

(b)            Restricted Share Unit Awards. Each Restricted Share Unit Award Agreement will be in such form and will contain such terms and conditions as the Board deems appropriate. The terms and conditions of Restricted Share Unit Award Agreements may change from time to time, and the terms and conditions of separate Restricted Share Unit Award Agreements need not be identical. Each Restricted Share Unit Award Agreement will conform to (through incorporation of the provisions hereof by reference in the Agreement or otherwise) the substance of each of the following provisions:

 

(i)             Consideration. At the time of grant of a Restricted Share Unit Award, the Board will determine the consideration, if any, to be paid by the Participant upon delivery of each Ordinary Share subject to the Restricted Share Unit Award. The consideration to be paid (if any) by the Participant for each Ordinary Share subject to a Restricted Share Unit Award may be paid in any form of legal consideration that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.

 

(ii)            Vesting. At the time of the grant of a Restricted Share Unit Award, the Board may impose such restrictions on or conditions to the vesting of the Restricted Share Unit Award as it, in its sole discretion, deems appropriate.

 

(iii)           Payment. A Restricted Share Unit Award may be settled by the delivery of Ordinary Shares, their cash equivalent, any combination thereof or in any other form of consideration, as determined by the Board and contained in the Restricted Share Unit Award Agreement.

 

 

(iv)            Additional Restrictions. At the time of the grant of a Restricted Share Unit Award, the Board, as it deems appropriate, may impose such restrictions or conditions that delay the delivery of the Ordinary Shares (or their cash equivalent) subject to a Restricted Share Unit Award to a time after the vesting of such Restricted Share Unit Award.

 

(v)             Dividend Equivalents. Dividend equivalents may be credited in respect of Ordinary Shares covered by a Restricted Share Unit Award, as determined by the Board and contained in the Restricted Share Unit Award Agreement. At the sole discretion of the Board, such dividend equivalents may be converted into additional Ordinary Shares covered by the Restricted Share Unit Award in such manner as determined by the Board. Any additional shares covered by the Restricted Share Unit Award credited by reason of such dividend equivalents will be subject to all of the same terms and conditions of the underlying Restricted Share Unit Award Agreement to which they relate.

 

(vi)            Termination of Participant’s Continuous Service. Except as otherwise provided in the applicable Restricted Share Unit Award Agreement, such portion of the Restricted Share Unit Award that has not vested will be forfeited upon the Participant’s termination of Continuous Service.

 

(c)            Other Share Awards. Other forms of Share Awards valued in whole or in part by reference to, or otherwise based on, Ordinary Shares, including the appreciation in value thereof (e.g., options or share rights with an exercise price or strike price less than one hundred percent (100%) of the Fair Market Value of the Ordinary Shares at the time of grant) may be granted either alone or in addition to Share Awards provided for under Section 5 and the preceding provisions of this Section 6. Subject to the provisions of the Plan, the Board will have sole and complete authority to determine the persons to whom and the time or times at which such Other Share Awards will be granted, the number of Ordinary Shares (or the cash equivalent thereof) to be granted pursuant to such Other Share Awards and all other terms and conditions of such Other Share Awards.

 

7.             Covenants of the Company.

 

(a)            Availability of Shares. The Company will keep available at all times the number of Ordinary Shares reasonably required to satisfy then-outstanding Share Awards.

 

(b)            Securities Law Compliance. The Company will use commercially reasonable efforts to seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Share Awards and to issue and sell Ordinary Shares upon exercise of the Share Awards; provided, however, that this undertaking will not require the Company to register the Plan, any Share Award or any Ordinary Shares issued or issuable pursuant to any such Share Award under the Securities Act or other applicable securities regulatory scheme. If, after reasonable efforts and at a reasonable cost, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company deems necessary for the lawful issuance and sale of Ordinary Shares under the Plan, the Company will be relieved from any liability for failure to issue and sell Ordinary Shares upon exercise of such Share Awards unless and until such authority is obtained. A Participant will not be eligible for the grant of a Share Award or the subsequent issuance of cash or Ordinary Shares pursuant to the Share Award if such grant or issuance would be in violation of any applicable securities law or any other applicable law or regulation.

 

 

(c)            No Obligation to Notify or Minimize Taxes. The Company will have no duty or obligation to any Participant to advise such holder as to the time or manner of exercising such Share Award. Furthermore, the Company will have no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of a Share Award or a possible period in which the Share Award may not be exercised. The Company has no duty or obligation to minimize the tax consequences of a Share Award to the holder of such Share Award.

 

8.             Miscellaneous.

 

(a)            Use of Proceeds from Sales of Ordinary Share. Proceeds from the sale of Ordinary Shares pursuant to Share Awards will constitute general funds of the Company.

 

(b)            Corporate Action Constituting Grant of Share Awards. Corporate action constituting a grant by the Company of a Share Award to any Participant will be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument, certificate, or letter evidencing the Share Award is communicated to, or actually received or accepted by, the Participant. In the event that the corporate records (e.g., Board consents, resolutions or minutes) documenting the corporate action constituting the grant contain terms (e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those in the Share Award Agreement as a result of a clerical error in the papering of the Share Award Agreement, the corporate records will control and the Participant will have no legally binding right to the incorrect term in the Share Award Agreement.

 

(c)            Shareholder Rights. No Participant will be deemed to be the holder of, or to have any of the rights of a holder with respect to, any Ordinary Shares subject to a Share Award unless and until (i) such Participant has satisfied all requirements for exercise of, or the issuance of Ordinary Shares under, the Share Award pursuant to its terms, and (ii) the issuance of the Ordinary Shares subject to the Share Award has been entered into the books and records of the Company and the register of members of the Company has been accordingly updated.

 

(d)             No Employment or Other Service Rights. Nothing in the Plan, any Share Award Agreement or any other instrument executed thereunder or in connection with any Share Award granted pursuant thereto will confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Share Award was granted or will affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate, or (iii) the service of a Director pursuant to the Company’s memorandum and articles of association (as amended from time to time) and other constitutional and governance documents of the Company or an Affiliate, and any provisions of the applicable laws of the jurisdiction in which the Company or the Affiliate is incorporated, as the case may be.

 

 

(e)            Investment Assurances. The Company may require a Participant, as a condition of exercising or acquiring Ordinary Shares under any Share Award, (i) to give written assurances satisfactory to the Company as to the Participant’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Share Award; and (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Ordinary Shares subject to the Share Award for the Participant’s own account and not with any present intention of selling or otherwise distributing the Ordinary Shares. The foregoing requirements, and any assurances given pursuant to such requirements, will be inoperative if (A) the issuance of the shares upon the exercise or acquisition of Ordinary Shares under the Share Award has been registered under a then currently effective registration statement under the Securities Act, or (B) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws or other applicable laws. The Company may, upon advice of counsel to the Company, place legends on share certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws or other applicable laws, including, but not limited to, legends restricting the transfer of the Ordinary Shares.

 

(f)             Withholding Obligations. Unless prohibited by the terms of a Share Award Agreement, the Company may, in its sole discretion, satisfy any tax withholding obligation relating to a Share Award by any of the following means or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding Ordinary Shares from the Ordinary Shares issued or otherwise issuable to the Participant in connection with the Share Award; provided, however, that no Ordinary Shares are withheld with a value exceeding the minimum amount of tax required to be withheld by law (or such lesser amount as may be necessary to avoid classification of the Share Award as a liability for financial accounting purposes); (iii) withholding cash from a Share Award settled in cash; (iv) withholding payment from any amounts otherwise payable to the Participant; or (v) which may be set forth in the Share Award Agreement.

 

(g)            Electronic Delivery. Any reference herein to a “written” agreement or document will include any agreement or document delivered electronically or posted on the Company’s intranet (or other shared electronic medium controlled by the Company to which the Participant has access).

 

(h)            Deferrals. To the extent permitted by applicable law, the Board, in its sole discretion, may determine that the delivery of Ordinary Shares or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Share Award may be deferred and may establish programs and procedures for deferral elections to be made by Participants. The Board is authorized to make deferrals of Share Awards and determine when, and in what annual percentages, Participants may receive payments, including lump sum payments, following the Participant’s termination of Continuous Service, and implement such other terms and conditions consistent with the provisions of the Plan and in accordance with applicable law.

 

9.             Adjustments upon Changes in Ordinary Share; Other Corporate Events.

 

(a)            Capitalization Adjustments. In the event of a Capitalization Adjustment, the Board will appropriately and proportionately adjust: (i) the class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a), (ii) the class(es) and maximum number of securities that may be issued pursuant to the exercise of Incentive Share Options pursuant to Section 11(a)(i), and (iii) the class(es) and number of securities and price per share of shares subject to outstanding Share Awards. The Board will make such adjustments, and its determination will be final, binding and conclusive.

 

 

(b)            Dissolution or Liquidation. Except as otherwise provided in the Share Award Agreement, in the event of a dissolution or liquidation of the Company, all outstanding Share Awards (other than Share Awards consisting of vested and outstanding Ordinary Shares not subject to a forfeiture condition or the Company’s right of repurchase) will terminate immediately prior to the completion of such dissolution or liquidation, and the Ordinary Shares subject to the Company’s repurchase rights or subject to a forfeiture condition may be repurchased or reacquired by the Company notwithstanding the fact that the holder of such Share Award is providing Continuous Service, provided, however, that the Board may, in its sole discretion, cause some or all Share Awards to become fully vested, exercisable and/or no longer subject to repurchase or forfeiture (to the extent such Share Awards have not previously expired or terminated) before the dissolution or liquidation is completed but contingent on its completion.

 

(c)            Corporate Transactions. The following provisions will apply to Share Awards in the event of a Transaction unless otherwise provided in the Share Award Agreement or any other written agreement between the Company or any Affiliate and the Participant or unless otherwise expressly provided by the Board at the time of grant of a Share Award. In the event of a Transaction, then, notwithstanding any other provision of the Plan, the Board may take one or more of the following actions with respect to Share Awards, contingent upon the closing or completion of the Transaction:

 

(i)             arrange for the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) to assume or continue the Share Award or to substitute a similar share award for the Share Award (including, but not limited to, an award to acquire the same consideration paid to the shareholders of the Company pursuant to the Transaction);

 

(ii)            arrange for the assignment of any reacquisition or repurchase rights held by the Company in respect of Ordinary Shares issued pursuant to the Share Award to the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company);

 

(iii)           accelerate the vesting, in whole or in part, of the Share Award (and, if applicable, the time at which the Share Award may be exercised) to a date prior to the effective time of such Transaction as the Board determines (or, if the Board does not determine such a date, to the date that is five (5) days prior to the effective date of the Transaction), with such Share Award terminating if not exercised (if applicable) at or prior to the effective time of the Transaction; provided, however, that the Board may require Participants to complete and deliver to the Company a notice of exercise before the effective date of a Transaction, which exercise is contingent upon the effectiveness of such Transaction;

 

(iv)            arrange for the lapse, in whole or in part, of any reacquisition or repurchase rights held by the Company with respect to the Share Award;

 

(v)             cancel or arrange for the cancellation of the Share Award, to the extent not vested or not exercised prior to the effective time of the Transaction, in exchange for such cash consideration, if any, as the Board, in its sole discretion, may consider appropriate; and

 

 

(vi)            make a payment, in such form as may be determined by the Board equal to the excess, if any, of (A) the value of the property the Participant would have received upon the exercise of the Share Award immediately prior to the effective time of the Transaction, over (B) any exercise price payable by such holder in connection with such exercise. For clarity, this payment may be zero ($0) if the value of the property is equal to or less than the exercise price. Payments under this provision may be delayed to the same extent that payment of consideration to the holders of the Company’s Ordinary Shares in connection with the Transaction is delayed as a result of escrows, earn outs, holdbacks or any other contingencies.

 

The Board need not take the same action or actions with respect to all Share Awards or portions thereof or with respect to all Participants. The Board may take different actions with respect to the vested and unvested portions of a Share Award.

 

(d)            Change in Control. A Share Award may be subject to additional acceleration of vesting and exercisability upon or after a Change in Control as may be provided in the Share Award Agreement for such Share Award or as may be provided in any other written agreement between the Company or any Affiliate and the Participant, but in the absence of such provision, no such acceleration will occur.

 

10.           Plan Term; Earlier Termination or Suspension of the Plan.

 

(a)            Plan Term. The Board may suspend or terminate the Plan at any time. Unless terminated sooner by the Board, the Plan will automatically terminate on the day before the tenth (10th) anniversary of the earlier of (i) the date the Plan is adopted by the Board, or (ii) the date the Plan is approved by the shareholders of the Company. No Share Awards may be granted under the Plan while the Plan is suspended or after it is terminated.

 

(b)            No Impairment of Rights. Suspension or termination of the Plan will not impair rights and obligations under any Share Award granted while the Plan is in effect except with the written consent of the affected Participant or as otherwise permitted in the Plan.

 

11.           Additional Provisions Applicable to US Participants.

 

(a)            Incentive Share Options.

 

(i)             Subject to Section 9(a) relating to Capitalization Adjustments, the aggregate maximum number of Ordinary Shares that may be issued pursuant to the exercise of Incentive Share Options will be the Share Reserve.

 

(ii)            Incentive Share Options may be granted only to employees of the Company or a “parent corporation” or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and (f) of the Code).

 

(iii)           A Ten Percent Shareholder shall not be granted an Incentive Share Option unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value on the date of grant and the Option is not exercisable after the expiration of five (5) years from the date of grant or such shorter period specified in the Share Award Agreement. “Ten Percent Shareholder” means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) shares possessing more than ten percent (10%) of the total combined voting power of all classes of shares of the Company or any Affiliate.

 

 

(iv)            To the extent that the aggregate Fair Market Value (determined at the time of grant) of Ordinary Shares with respect to which Incentive Share Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and any Affiliates) exceeds one hundred thousand dollars ($100,000) (or such other limit established in the Code) or otherwise does not comply with the rules governing Incentive Share Options, the Options or portions thereof that exceed such limit (according to the order in which they were granted) or otherwise do not comply with such rules will be treated as Nonstatutory Share Options, notwithstanding any contrary provision of the applicable Option Agreement(s).

 

(b)            Compliance with Section 409A of the Code. To the extent that the Board determines that any Share Award granted hereunder is subject to Section 409A of the Code, the Share Award Agreement evidencing such Share Award shall incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code. To the extent applicable, the Plan and Share Award Agreements shall be interpreted in accordance with Section 409A of the Code.

 

12.             Choice of Law.

 

(a)            Governing Law and Jurisdiction. The laws of the Cayman Islands will govern all questions concerning the construction, validity and interpretation of this Plan, without regard to that state’s conflict of laws rules and the courts of the Cayman Islands will have exclusive jurisdiction to determine all questions concerning the construction, validity and interpretation of this Plan.

 

13.             Definitions. As used in the Plan, the following definitions will apply to the capitalized terms indicated below:

 

(a)            “Affiliate” means, at the time of determination, any Subsidiary and any “parent corporation” or “subsidiary corporation” of the Company, as such terms are defined in Sections 424(e) and (f) of the Code. The Board will have the authority to determine the time or times at which “parent corporation” or “subsidiary corporation” status is determined within the foregoing definition.

 

(b)            “Board” means the Board of Directors of the Company.

 

(c)            “Capitalization Adjustment” means any change that is made in, or other events that occur with respect to, the Ordinary Shares subject to the Plan or subject to any Share Award after the Effective Date without the receipt of consideration by the Company through merger, consolidation, reorganization, recapitalization, reincorporation, share dividend, dividend in property other than cash, large nonrecurring cash dividend, share split, reverse share split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure, or any similar equity restructuring transaction. Notwithstanding the foregoing, the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment.

 

(d)            “Cause” will have the meaning ascribed to such term in any written agreement between the Participant and the Company or any Affiliate defining such term and, in the absence of such agreement, such term means, with respect to a Participant, the occurrence of any of the following events: (i) such Participant’s commission of any felony or any crime involving fraud, dishonesty or moral turpitude under the laws of any applicable jurisdiction; (ii) such Participant’s attempted commission of, or participation in, a fraud or act of dishonesty against the Company or any Affiliate; (iii) such Participant’s intentional, material violation of any contract or agreement between the Participant and the Company or any Affiliate or of any statutory duty owed to the Company or any Affiliate; (iv) such Participant’s unauthorized use or disclosure of the Company’s or any Affiliate’s confidential information or trade secrets; or (v) such Participant’s gross misconduct. The determination that a termination of the Participant’s Continuous Service is either for Cause or without Cause will be made by the Board, in its sole discretion. Any determination by the Board that the Continuous Service of a Participant was terminated with or without Cause for the purposes of outstanding Share Awards held by such Participant will have no effect upon any determination of the rights or obligations of the Company or any Affiliate or such Participant for any other purpose.

 

 

(e)            “Change in Control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

 

(i)             there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after the consummation of such merger, consolidation or similar transaction, the shareholders of the Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (B) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each case in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such transaction;

 

(ii)            the shareholders of the Company approve or the Board approves a plan of complete dissolution or liquidation of the Company, or a complete dissolution or liquidation of the Company will otherwise occur, except for a liquidation into a parent corporation; or

 

(iii)          there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are Owned by shareholders of the Company in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition.

 

Notwithstanding the foregoing definition or any other provision of this Plan, (A) the term Change in Control will not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company, and (B) the definition of Change in Control (or any analogous term) in an individual written agreement between the Company or any Affiliate and the Participant will supersede the foregoing definition with respect to Share Awards subject to such agreement; provided, however, that if no definition of Change in Control or any analogous term is set forth in such an individual written agreement, the foregoing definition will apply.

 

(f)            “Code” means the United States Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder.

 

(g)            “Committee” means a committee of one (1) or more Directors to whom authority has been delegated by the Board in accordance with Section 2(c).

 

 

(h)            “Company” means ShouTi Inc., an exempted company incorporated in the Cayman Islands.

 

(i)             “Consultant” means any person, including an advisor, who is (i) engaged by the Company or an Affiliate to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors of an Affiliate and is compensated for such services. However, service solely as a Director or as a member of the board of directors of an Affiliate, or payment of a fee for such service, will not cause a person to be considered a “Consultant” for purposes of the Plan.

 

(j)             “Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Director or Consultant or a change in the Entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate, will not terminate a Participant’s Continuous Service; provided, however, that if the Entity for which a Participant is rendering services ceases to qualify as an Affiliate, as determined by the Board in its sole discretion, such Participant’s Continuous Service will be considered to have terminated on the date such Entity ceases to qualify as an Affiliate. For example, a change in status from an Employee of the Company to a Consultant of an Affiliate or to a Director or a member of the board of directors of an Affiliate will not constitute an interruption of Continuous Service. To the extent permitted by law, the Board or the chief executive officer of the Company, in that party’s sole discretion, may determine whether Continuous Service will be considered interrupted in the case of (i) any leave of absence approved by the Board or chief executive officer, including sick leave, military leave or any other personal leave, or (ii) transfers between the Company, an Affiliate, or their successors. Notwithstanding the foregoing, a leave of absence will be treated as Continuous Service for purposes of vesting in a Share Award only to such extent as may be provided in the Company’s leave of absence policy, in the written terms of any leave of absence agreement or policy applicable to the Participant, or as otherwise required by law.

 

(k)            “Corporate Transaction” means the consummation, in a single transaction or in a series of related transactions, of any one or more of the following events:

 

(i)             a sale or other disposition of all or substantially all, as determined by the Board in its sole discretion, of the consolidated assets of the Company and its Subsidiaries;

 

(ii)            a sale or other disposition of at least ninety percent (90%) of the outstanding securities of the Company;

 

(iii)           a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or

 

(iv)            a merger, consolidation or similar transaction following which the Company is the surviving corporation but the Ordinary Shares outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.

 

(l)            “Director” means a member of the Board.

 

 

(m)           “Disability” means, with respect to a Participant, the inability of such Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than twelve (12) months, and will be determined by the Board on the basis of such medical evidence as the Board deems warranted under the circumstances.

 

(n)            “Effective Date” means the effective date of this Plan, which is the earlier of (i) the date that this Plan is first approved by the Company’s shareholders, and (ii) the date this Plan is adopted by the Board.

 

(o)            “Employee” means any person employed by the Company or an Affiliate. However, service solely as a Director or as a member of the board of directors of an Affiliate, or payment of a fee for such services, will not cause a person to be considered an “Employee” for purposes of the Plan.

 

(p)            “Entity” means a corporation, partnership, limited liability company or other entity.

 

(q)            “Exchange Act” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

(r)            “Fair Market Value” means, as of any date, the value of the Ordinary Shares determined by the Board.

 

(s)            “Incentive Share Option” means an Option that is intended to be, and that qualifies as, an “incentive stock option” within the meaning of Section 422 of the Code.

 

(t)             “Nonstatutory Share Option” means any Option that does not qualify as an “incentive stock option” within the meaning of Section 422 of the Code.

 

(u)            “Officer” means any person designated by the Company as an officer.

 

(v)             “Option” means an option to purchase Ordinary Shares granted pursuant to the Plan.

 

(w)            “Option Agreement” means a written agreement between the Company and an Optionholder evidencing the terms and conditions of an Option grant. Each Option Agreement will be subject to the terms and conditions of the Plan.

 

(x)            “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.

 

(y)            “Ordinary Shares” means ordinary shares par value US$0.0001 each in the Company.

 

(z)            “Other Share Award” means an award based in whole or in part by reference to the Ordinary Shares which is granted pursuant to the terms and conditions of Section 6(c).

 

(aa)          “Other Share Award Agreement” means a written agreement between the Company and a holder of an Other Share Award evidencing the terms and conditions of an Other Share Award grant. Each Other Share Award Agreement will be subject to the terms and conditions of the Plan.

 

 

(bb)          “Own,” “Owned,” “Owner,” “Ownership” means a person or Entity will be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities.

 

(cc)          “Participant” means a person to whom a Share Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Share Award.

 

(dd)          “Plan” means this ShouTi Inc. 2019 Equity Incentive Plan.

 

(ee)          “Restricted Share Award” means an award of Ordinary Shares which is granted pursuant to the terms and conditions of Section 6(a).

 

(ff)           “Restricted Share Award Agreement” means a written agreement between the Company and a holder of a Restricted Share Award evidencing the terms and conditions of a Restricted Share Award grant. Each Restricted Share Award Agreement will be subject to the terms and conditions of the Plan.

 

(gg)         “Restricted Share Unit Award” means a right to receive Ordinary Shares which is granted pursuant to the terms and conditions of Section 6(b).

 

(hh)         “Restricted Share Unit Award Agreement” means a written agreement between the Company and a holder of a Restricted Share Unit Award evidencing the terms and conditions of a Restricted Share Unit Award grant. Each Restricted Share Unit Award Agreement will be subject to the terms and conditions of the Plan.

 

(ii)           “Rule 405” means Rule 405 promulgated under the Securities Act.

 

(jj)           “Rule 701” means Rule 701 promulgated under the Securities Act.

 

(kk)        “Securities Act” means the United States Securities Act of 1933, as amended.

 

(ll)           “Share Appreciation Right” or “SAR” means a right to receive the appreciation on Ordinary Shares that is granted pursuant to the terms and conditions of Section 5.

 

(mm)       “Share Appreciation Right Agreement” means a written agreement between the Company and a holder of a Share Appreciation Right evidencing the terms and conditions of a Share Appreciation Right grant. Each Share Appreciation Right Agreement will be subject to the terms and conditions of the Plan.

 

(nn)         “Share Award” means any right to receive Ordinary Shares granted under the Plan, including an Option, a Restricted Share Award, a Restricted Share Unit Award, a Share Appreciation Right or any Other Share Award.

 

(oo)          “Share Award Agreement” means a written agreement between the Company and a Participant evidencing the terms and conditions of a Share Award grant. Each Share Award Agreement will be subject to the terms and conditions of the Plan.

 

 

(pp)          “Subsidiary” means, with respect to the Company, (i) any corporation of which more than fifty percent (50%) of the outstanding capital share having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, share of any other class or classes of such corporation will have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability company or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than fifty percent (50%) .

 

(qq)          “Transaction” means a Corporate Transaction or a Change in Control.

 

(rr)          “US” means the United States.

 

(ss)          “US Participant” means a Participant that is either a US resident or a US taxpayer.

 

 

ShouTi Inc.
Option Grant Notice
(2019 Equity Incentive Plan)

 

ShouTi Inc. (the “Company”), pursuant to its 2019 Equity Incentive Plan (the “Plan”), hereby grants to Optionholder an option to purchase the number of shares in the capital of the Company set forth below (this “Option”). This Option is subject to all of the terms and conditions as set forth herein and in the US Option Agreement, the Plan, and the Notice of Exercise, all of which are attached hereto and incorporated herein in their entirety. Capitalized terms not explicitly defined herein but defined in the Plan or the US Option Agreement will have the same definitions as in the Plan or the US Option Agreement. If there is any conflict between the terms herein and the Plan, the terms of the Plan will control.

 

Optionholder:
Date of Grant:
Vesting Commencement Date:
Number of Ordinary Shares Subject to Option:
Exercise Price (US$ Per Share):
Total Exercise Price (US$):
Expiration Date:

 

Type of Grant:		¨	Incentive Share Option1	¨	Nonstatutory Share Option
Exercise Schedule:		¨	Same as Vesting Schedule	¨	Early Exercise Permitted

 

Vesting Schedule:

[EXAMPLE: 25% of the shares shall vest on the first anniversary of the Vesting Commencement Date; the balance of the shares vest in a series of thirty-six (36) successive equal monthly installments measured from the first anniversary of the Vesting Commencement Date, provided that the Optionholder continues to provide Continuous Services (as defined in the Plan) to the Company as of any each relevant vesting date.]

 

Payment:		By one or a combination of the following methods (as such methods are described in the US Option Agreement):
		x	By cash or check
		¨	Pursuant to a Regulation T Program if the Shares are publicly traded
		¨	By delivery of already-owned shares if the Shares are publicly traded
		¨	By net exercise2

 

Additional Terms/Acknowledgements: The undersigned Optionholder acknowledges receipt of, and understands and agrees to, this Option Grant Notice, the US Option Agreement and the Plan. Optionholder acknowledges and agrees that this Option Grant Notice and the US Option Agreement may not be modified, amended or revised except in writing signed by Optionholder and a duly authorized officer of the Company. Optionholder further acknowledges that as of the Date of Grant, this Option Grant Notice, the US Option Agreement, and the Plan set forth the entire understanding between Optionholder and the Company regarding the acquisition of shares of the Company and supersede all prior oral and written agreements, promises and/or representations on that subject with the exception of (i) options previously granted and delivered to Optionholder under the Plan, and (ii) the agreement between the Optionholder and the Company listed below only.

 

Other Agreements:

 

ShouTi Inc.			Optionholder:
By:
Name:			Signature
Title:

 

Date:

Date:

 

Attachments: US Option Agreement, 2019 Equity Incentive Plan and Notice of Exercise

 

¹ If this is an Incentive Share Option, it (plus other outstanding Incentive Share Options) cannot be first exercisable for more than US$100,000 in value (measured by exercise price) in any calendar year. Any excess over US$100,000 is a Nonstatutory Share Option.

² An Incentive Share Option may not be exercised by a net exercise arrangement.

 

 

Attachment I

 

ShouTi Inc.

2019 Equity Incentive Plan

 

US Option Agreement

 

Pursuant to your Option Grant Notice (“Grant Notice”) and this US Option Agreement, ShouTi Inc. (the “Company”) has granted you an Option under its 2019 Equity Incentive Plan (the “Plan”) to purchase the number of Ordinary Shares indicated in your Grant Notice at the exercise price indicated in your Grant Notice. The Option is granted to you effective as of the date of grant set forth in the Grant Notice (the “Date of Grant”). If there is any conflict between the terms in this US Option Agreement and the Plan, the terms of the Plan will control. Capitalized terms not explicitly defined in this US Option Agreement or in the Grant Notice but defined in the Plan will have the same definitions as in the Plan.

 

The details of your Option, in addition to those set forth in the Grant Notice and the Plan, are as follows:

 

Vesting. Your Option will vest as provided in your Grant Notice. Vesting will cease upon the termination of your Continuous Service.

 

Number of Shares and Exercise Price. The number of Ordinary Shares subject to your Option and your exercise price per share in your Grant Notice will be adjusted for Capitalization Adjustments.

 

Exercise Restriction for Non-Exempt Employees. If you are an Employee eligible for overtime compensation under the Fair Labor Standards Act of 1938, as amended (that is, a “Non-Exempt Employee”), and except as otherwise provided in the Plan, you may not exercise your Option until you have completed at least six (6) months of Continuous Service measured from the Date of Grant.

 

Exercise prior to Vesting (“Early Exercise”). If permitted in your Grant Notice (i.e., the “Exercise Schedule” indicates “Early Exercise Permitted”) and subject to the provisions of your Option, you may elect at any time that is both (i) during the period of your Continuous Service and (ii) during the term of your Option, to exercise all or part of your Option, including the unvested portion of your Option; provided, however, that:

 

a partial exercise of your Option will be deemed to cover first vested Ordinary Shares and then the earliest vesting installment of unvested Ordinary Shares;

 

any Ordinary Shares so purchased from installments that have not vested as of the date of exercise will be subject to the purchase option in favor of the Company as described in the Company’s form of Early Exercise Share Purchase Agreement;

 

you will enter into the Company’s form of Early Exercise Share Purchase Agreement with a vesting schedule that will result in the same vesting as if no early exercise had occurred; and

 

if your Option is an Incentive Share Option, then, to the extent that the aggregate Fair Market Value (determined at the Date of Grant) of the Ordinary Shares with respect to which your Option plus all other Incentive Share Options you hold are exercisable for the first time by you during any calendar year (under all plans of the Company and its Affiliates) exceeds one hundred thousand dollars ($100,000), your Option(s) or portions thereof that exceed such limit (according to the order in which they were granted) will be treated as Nonstatutory Share Options.

 

 

Method of Payment. You must pay the full amount of the exercise price for the shares you wish to exercise. You may pay the exercise price in cash or by check, bank draft or money order payable to the Company or in any other manner permitted by your Grant Notice, which may include one or more of the following:

 

Provided that at the time of exercise the Ordinary Shares are publicly traded, pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of Ordinary Shares, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds. This manner of payment is also known as a “broker-assisted exercise”, “same day sale”, or “sell to cover”.

 

Provided that at the time of exercise the Ordinary Shares are publicly traded, by delivery to the Company (either by actual delivery or attestation) of already-owned Ordinary Shares that are owned free and clear of any liens, claims, encumbrances or security interests, and that are valued at Fair Market Value on the date of exercise. “Delivery” for these purposes, in the sole discretion of the Company at the time you exercise your Option, will include delivery to the Company of your attestation of ownership of such Ordinary Shares in a form approved by the Company. You may not exercise your Option by delivery to the Company of Ordinary Shares if doing so would violate the provisions of any law, regulation or agreement restricting the redemption of the Company’s shares.

 

If this Option is a Nonstatutory Share Option, subject to the consent of the Company at the time of exercise, by a “net exercise” arrangement pursuant to which the Company will reduce the number of Ordinary Shares issued upon exercise of your Option by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price. You must pay any remaining balance of the aggregate exercise price not satisfied by the “net exercise” in cash or other permitted form of payment. Ordinary Shares will no longer be outstanding under your Option and will not be exercisable thereafter if those shares (i) are used to pay the exercise price pursuant to the “net exercise,” (ii) are delivered to you as a result of such exercise, and (iii) are withheld to satisfy your tax withholding obligations.

 

Whole Shares. You may exercise your Option only for a whole number of Ordinary Shares.

 

Securities Law Compliance. In no event may you exercise your Option unless the Ordinary Shares issuable upon such exercise are then registered under the Securities Act or under the applicable laws of another jurisdiction under which such securities may be listed, or if not registered, the Company has determined that such exercise and the issuance of the shares would be exempt from the registration requirements of the Securities Act. The exercise of your Option also must comply with all other applicable laws and regulations governing your Option, including those of the United States, the Cayman Islands and your country of residence, and you may not exercise your Option if the Company determines that such exercise would not be in material compliance with such laws and regulations (including any restrictions on exercise required for compliance with Treas. Reg. 1.401(k)-1(d)(3), if applicable). You understand that the Company is under no obligation to register or qualify the Ordinary Shares with any securities commission (including U.S. Securities and Exchange Commission) or to seek approval or clearance from any governmental authority for the issuance or sale of the shares. Further, you agree that the Company shall have unilateral authority to amend the Plan and the Agreement without your consent to the extent necessary to comply with securities or other laws applicable to issuance of shares.

 

Term. You may not exercise your Option before the Date of Grant or after the expiration of the Option’s term. The term of your Option expires, subject to the provisions of Section 5(h) of the Plan, upon the earliest of the following:

 

immediately upon the termination of your Continuous Service for Cause;

 

 

three (3) months after the termination of your Continuous Service for any reason other than Cause, your Disability or your death (except as otherwise provided in Section 8(d) below); provided, however, that if during any part of such three (3) month period your Option is not exercisable solely because of the condition set forth in the Section above relating to “Securities Law Compliance,” your Option will not expire until the earlier of the Expiration Date or until it has been exercisable for an aggregate period of three (3) months after the termination of your Continuous Service; provided further, if (i) you are a Non-Exempt Employee, (ii) your Continuous Service terminates within six (6) months after the Date of Grant, and (iii) you have vested in a portion of your Option at the time of your termination of Continuous Service, your Option will not expire until the earlier of (x) the later of (A) the date that is seven (7) months after the Date of Grant, and (B) the date that is three (3) months after the termination of your Continuous Service, and (y) the Expiration Date;

 

twelve (12) months after the termination of your Continuous Service due to your Disability (except as otherwise provided in Section 8(d)) below;

 

eighteen (18) months after your death if you die either during your Continuous Service

 

within three (3) months after your Continuous Service terminates for any reason other than Cause or your death or Disability;

 

the Expiration Date indicated in your Grant Notice; or

 

the day before the tenth (10th) anniversary of the Date of Grant.

 

If your Option is an Incentive Share Option, note that to obtain the federal income tax advantages associated with an Incentive Share Option, the Code requires that at all times beginning on the Date of Grant and ending on the day three (3) months before the date of your Option’s exercise, you must be an employee of the Company or an Affiliate, except in the event of your death or Disability. The Company has provided for extended exercisability of your Option under certain circumstances for your benefit but cannot guarantee that your Option will necessarily be treated as an Incentive Share Option if you continue to provide services to the Company or an Affiliate as a Consultant or Director after your employment terminates or if you otherwise exercise your Option more than three (3) months after the date your employment with the Company or an Affiliate terminates.

 

Exercise.

 

You may exercise the vested portion of your Option (and the unvested portion of your Option if your Grant Notice so permits) during its term by (i) delivering a Notice of Exercise (in a form designated by the Company) or completing such other documents and/or procedures designated by the Company for exercise and (ii) paying the exercise price and any applicable withholding taxes to the Company’s Secretary, share plan administrator, or such other person as the Company may designate, together with such additional documents as the Company may then require.

 

By exercising your Option you agree that, as a condition to any exercise of your Option, the Company may require you to enter into an arrangement providing for the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (i) the exercise of your Option, (ii) the lapse of any substantial risk of forfeiture to which the Ordinary Shares are subject at the time of exercise, or (iii) the disposition of Ordinary Shares acquired upon such exercise.

 

If your Option is an Incentive Share Option, by exercising your Option you agree that you will notify the Company in writing within fifteen (15) days after the date of any disposition of any of the Ordinary Shares issued upon exercise of your Option that occurs within two (2) years after the Date of Grant or within one (1) year after such Ordinary Shares are transferred upon exercise of your Option.

 

 

By exercising your Option you agree that you will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to any Ordinary Shares or other securities of the Company held by you, for a period of one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act or under the applicable laws of another jurisdiction under which such securities may be listed or such longer period as the underwriters or the Company will request to facilitate compliance with FINRA Rule 2711 or NYSE Member Rule 472 or any successor or similar rule or regulation (the “Lock-Up Period”); provided, however, that nothing contained in this section will prevent the exercise of a repurchase option, if any, in favor of the Company during the Lock-Up Period. You further agree to execute and deliver such other agreements as may be reasonably requested by the Company or any underwriters of the Company’s shares that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to your Ordinary Shares until the end of such period. You also agree that any transferee of any Ordinary Shares or other securities) of the Company held by you will be bound by this Section 9(d). The underwriters of the Company’s shares are intended third party beneficiaries of this Section 9(d) and will have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

 

You agree, with effect from the date of the exercise of your Option, to be bound by the terms of any and all Shareholders Agreements as if the same were set forth herein and will observe and discharge the terms and conditions of such Shareholders Agreements in all respects as if you had been a party thereto, and you shall be deemed to be comprised in the expressions “the holder of Ordinary Shares” and the “parties” as therein mentioned. By exercising your Option you agree that, as a condition to any exercise of your Option, the Company may require you to execute and deliver a deed of adherence to any Shareholders Agreement and require you to represent and warrant that you have the capacity to enter into, exercise your rights and lawfully perform and comply with the terms of any Shareholders Agreement; and that your obligations under any Shareholders Agreement are valid and binding upon you. The agreement set forth in this Section 9(e) is supplemental to and, except only where the context does not so admit, shall be construed as one and interpreted in accordance with any Shareholders Agreement and subject only to the agreements and variations herein expressly agreed and declared. All other conditions, covenants, provisions, powers and terms contained or subsisting in any Shareholders Agreement shall remain in full force and effect and shall be read and construed and be enforceable as if the agreements and variations herein were inserted therein by way of addition or substitution, as the case may be, and nothing herein shall affect or impair any Shareholders Agreement or its enforceability. For purposes of this US Option Agreement, the “Shareholders Agreement(s)” shall mean any and all agreements between the Company and all or certain shareholders of the Company that may be entered into from time to time, and/or one or more agreements among the Company, you and other parties thereto in such form determined from time to time by the Company in its sole discretion, that include terms and conditions that provide or impose in respect of the Company and/or any shareholders restrictions and obligations with respect to the transfer or voting of equity securities of the Company and such other terms and conditions as the Board may require, if any, including any amendment or supplement to or restatement of any such agreement from time to time.

 

Transferability. Except as otherwise provided in this Section 10, your Option is not transferable, except by Will or by the laws of descent and distribution, and is exercisable during your life only by you.

 

Certain Trusts. Upon receiving written permission from the Board or its duly authorized designee, you may transfer your Option to a trust if you are considered to be the sole beneficial owner (determined under Section 671 of the Code and applicable state law) while the Option is held in the trust. You and the trustee must enter into transfer and other agreements required by the Company.

 

 

Domestic Relations Orders. Upon receiving written permission from the Board or its duly authorized designee, and provided that you and the designated transferee enter into transfer and other agreements required by the Company, you may transfer your Option pursuant to the terms of a domestic relations order, official marital settlement agreement or other divorce or separation instrument as permitted by Treasury Regulation 1.421-1(b)(2) that contains the information required by the Company to effectuate the transfer. You are encouraged to discuss the proposed terms of any division of this Option with the Company prior to finalizing the domestic relations order or marital settlement agreement to help ensure the required information is contained within the domestic relations order or marital settlement agreement. If this Option is an Incentive Share Option, this Option may be deemed to be a Nonstatutory Share Option as a result of such transfer.

 

Beneficiary Designation. Upon receiving written permission from the Board or its duly authorized designee, you may, by delivering written notice to the Company, in a form approved by the Company and any broker designated by the Company to handle option exercises, designate a third party who, on your death, will thereafter be entitled to exercise this Option and receive the Ordinary Shares or other consideration resulting from such exercise. In the absence of such a designation, your executor or administrator of your estate will be entitled to exercise this Option and receive, on behalf of your estate, the Ordinary Shares or other consideration resulting from such exercise.

 

Right of First Refusal. Ordinary Shares that you acquire upon exercise of your Option are subject to any right of first refusal that may be described in the Company’s memorandum or articles of association or other constitutional or governance documents (including any Shareholders Agreement) in effect at such time the Company elects to exercise its right. Any Company right of first refusal will expire on the first date upon which then Ordinary Shares (or any other securities issued in exchange for or upon conversion of the Ordinary Shares) is listed (or approved for listing) upon notice of issuance on a national securities exchange or quotation system.

 

Right of Repurchase. To the extent provided in the Company’s memorandum or articles of association or other constitutional or governance documents (including any Shareholders Agreement) in effect at such time the Company elects to exercise its right, the Company will have the right to repurchase all or any part of the Ordinary Shares you acquire pursuant to the exercise of your Option.

 

Option not a Service Contract. Your Option is not an employment or service contract, and nothing in your Option will be deemed to create in any way whatsoever any obligation on your part to continue in the employ of, or as a provider of services to, the Company or an Affiliate, or of the Company or an Affiliate to continue your employment or to continue to engage you to provide services. In addition, nothing in your Option will obligate the Company or an Affiliate, their respective shareholders, boards of directors, officers or employees to continue any relationship that you might have as a Director or, a member of the board of directors of, or a Consultant, for the Company or an Affiliate.

 

Withholding Obligations.

 

At the time you exercise your Option, in whole or in part, and at any time thereafter as requested by the Company, you hereby authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for (including by means of a “same day sale” pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or an Affiliate, if any, which arise in connection with the exercise of your Option.

 

 

If this Option is a Nonstatutory Share Option, then upon your request and subject to approval by the Company, and compliance with any applicable legal conditions or restrictions, the Company may withhold from fully vested Ordinary Shares otherwise issuable to you upon the exercise of your Option a number of whole Ordinary Shares hare having a Fair Market Value, determined by the Company as of the date of exercise, not in excess of the minimum amount of tax required to be withheld by law (or such lower amount as may be necessary to avoid classification of your Option as a liability for financial accounting purposes). If the date of determination of any tax withholding obligation is deferred to a date later than the date of exercise of your Option, share withholding pursuant to the preceding sentence shall not be permitted unless you make a proper and timely election under Section 83(b) of the Code, covering the aggregate number of Ordinary Shares acquired upon such exercise with respect to which such determination is otherwise deferred, to accelerate the determination of such tax withholding obligation to the date of exercise of your Option. Notwithstanding the filing of such election, Ordinary Shares shall be withheld solely from fully vested Ordinary Shares determined as of the date of exercise of your Option that are otherwise issuable to you upon such exercise. Any adverse consequences to you arising in connection with such share withholding procedure shall be your sole responsibility.

 

You may not exercise your Option unless the tax withholding obligations of the Company and/or any Affiliate are satisfied. Accordingly, you may not be able to exercise your Option when desired even though your Option is vested, and the Company will have no obligation to issue any Ordinary Shares (or any certificate therefor) or release such Ordinary Shares from any escrow provided for herein, if applicable, unless such obligations are satisfied.

 

Tax Consequences. You hereby agree that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes your tax liabilities. You will not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates related to tax liabilities arising from your Option or your other compensation. In particular, you acknowledge that this Option is exempt from Section 409A of the Code only if the exercise price per share specified in the Grant Notice is at least equal to the “fair market value” per Ordinary Share on the Date of Grant and there is no other impermissible deferral of compensation associated with the Option. Because the Ordinary Shares are not traded on an established securities market, the Fair Market Value is determined by the Board, perhaps in consultation with an independent valuation firm retained by the Company. You acknowledge that there is no guarantee that the Internal Revenue Service will agree with the valuation as determined by the Board, and you will not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates in the event that the Internal Revenue Service asserts that the valuation determined by the Board is less than the “fair market value” as subsequently determined by the Internal Revenue Service.

 

Personal Data. You understand that your Employer, if applicable, the Company, and/or its Affiliates hold certain personal information about you, including but not limited to your name, home address, telephone number, date of birth, social security or equivalent tax identification number, salary, nationality, job title, and details of your Option (the “Personal Data”). Certain Personal Data may also constitute “Sensitive Personal Data” or similar classification under applicable local law and be subject to additional restrictions on collection, processing and use of the same under such laws. Such data include but are not limited to Personal Data and any changes thereto, and other appropriate personal and financial data about you. You hereby provide express consent to the Company or its Affiliates to collect, hold, and process any such Personal Data and Sensitive Personal Data. You also hereby provide express consent to the Company and/or its Affiliates to transfer any such Personal Data and Sensitive Personal Data outside the country in which you are employed or retained, including transfers to the United States. The legal persons for whom such Personal Data are intended are the Company, any broker company, registered office provider, or professional adviser providing services to the Company in connection with the administration of the Plan or the Company. You have been informed of your right to access and correct your Personal Data and/or Sensitive Personal Data by applying to the Company representative identified on the Grant Notice.

 

 

Additional Acknowledgements. You hereby consent and acknowledge that:

 

Participation in the Plan is voluntary and therefore you must accept the terms and conditions of the Plan and this US Option Agreement as a condition to participating in the Plan and receipt of your Option.

 

The Plan is discretionary in nature and the Company can amend, cancel, or terminate it at any time in its sole discretion.

 

Your Option and any other Share Awards under the Plan are voluntary and occasional and do not create any contractual or other right to receive future awards or other benefits in lieu of future awards, even if similar awards have been granted repeatedly in the past.

 

All determinations with respect to any such future awards, including, but not limited to, the time or times when such awards are made, the size of such awards and performance and other conditions applied to the awards, will be at the sole discretion of the Company.

 

The value of your Option is an extraordinary item of compensation, which is outside the scope of your employment, service contract or consulting agreement, if any. This Share Award shall not form part of any past, current or future entitlement to remuneration or benefits which you may have under any contract of employment, service contract or consulting agreement with the Company or Affiliate nor form any part of any such contract of employment, service contract or consulting agreement between you and the Company or any Affiliate.

 

Your Option, and any income derived therefrom are a potential bonus payment not paid in lieu of any cash salary compensation and not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any termination, severance, resignation, redundancy, end of service payments, bonuses, long-service awards, life or accident insurance benefits, pension or retirement benefits or similar payments.

 

In the event of the involuntary termination of your Continuous Service, your eligibility to receive payments under this Share Award or the Plan in respect of the unvested portion of your Share Award, if any, will terminate effective as of the date that you are no longer actively employed or retained regardless of any reasonable notice period mandated under local law, except as expressly provided in this US Option Agreement.

 

The future value of your Option is unknown and cannot be predicted with certainty. You do not have, and will not assert, any claim or entitlement to compensation, indemnity or damages arising from the termination of your Option or diminution in value of your Option and you irrevocably release the Company, its Affiliates and, if applicable, your Employer, if different from the Company or any Affiliate, from any such claim that may arise.

 

For purposes of this US Option Agreement, your Continuous Service will be considered terminated as of the date you are no longer actively providing services to the Company or an Affiliate (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), and unless otherwise expressly provided in the Agreement or determined by the Company, (i) your right to vest in the Option under the Plan, if any, will terminate as of such date and will not be extended by any notice period (e.g., your period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any); and (ii) the period (if any) during which you may exercise the Option after such termination of your Continuous Service will commence on the date you cease to actively provide services and will not be extended by any notice period mandated under employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any; the Board or its duly authorized designee shall have the exclusive discretion to determine when you are no longer actively providing services for purposes of your Option (including whether you may still be considered to be providing services while on a leave of absence).

 

 

Neither the Company, the Employer nor any Affiliate of the Company shall be liable for any foreign exchange rate fluctuation that may affect the value of the Option or of any amounts due to you pursuant to the exercise of the Option or the subsequent sale of any Ordinary Shares acquired upon exercise.

 

The Plan and this US Option Agreement set forth the entire understanding between you, the Company and any Affiliate regarding your Option and supersedes all prior oral and written agreements pertaining to your Option.

 

Notices. Any notices provided for in your Option, this US Option Agreement or the Plan will be given in writing (including electronically) and will be deemed effectively given upon receipt or, in the case of notices delivered by mail by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the last address you provided to the Company. The Company may, in its sole discretion, decide to deliver any documents related to participation in the Plan, this US Option Agreement and your Option by electronic means or to request your consent to participate in the Plan by electronic means. By accepting your Option, you consent to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

 

Governing Plan Document. Your Option is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your Option, and is further subject to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and adopted pursuant to the Plan. If there is any conflict between the provisions of your Option and those of the Plan, the provisions of the Plan will control.

 

Effect on Other Employee Benefit Plans. The value of the Option will not be included as compensation, earnings, salaries, or other similar terms used when calculating your benefits under any employee benefit plan sponsored by the Company or any Affiliate, except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend, modify, or terminate any of the Company’s or any Affiliate’s employee benefit plans.

 

Voting Rights. You will not have voting or any other rights as a shareholder of the Company with respect to the shares to be issued pursuant to this US Option Agreement. Nothing contained in this US Option Agreement, and no action taken pursuant to its provisions, will create or be construed to create a trust of any kind or a fiduciary relationship between you and the Company or any other person.

 

Severability. If all or any part of this US Option Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity will not invalidate any portion of this US Option Agreement or the Plan not declared to be unlawful or invalid. Any Section of this US Option Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

 

Waiver. You acknowledge that a waiver by the Company of breach of any provision of the US Option Agreement shall not operate or be construed as a waiver of any other provision of the US Option Agreement, or of any subsequent breach of the US Option Agreement.

 

Governing Law. The grant of the Option and the provisions of this US Option Agreement are governed by, and subject to, the laws of the Cayman Islands, without regard to the conflict of law provisions. You and the Company each hereby irrevocably submit to the non-exclusive jurisdiction of the courts of the Cayman Islands.

 

 

Language. If you have received this US Option Agreement, or any other document related to the Option and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

 

Imposition of Other Requirements. The Company reserves the right to impose other requirements on your participation in the Plan, on the Option and on any Ordinary Shares purchased upon exercise of the Option, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require you to provide additional information and documentation and / or sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

 

Miscellaneous.

 

The rights and obligations of the Company under your Option will be transferable to any one or more persons or entities, and all covenants and agreements hereunder will inure to the benefit of, and be enforceable by the Company’s successors and assigns.

 

You agree upon request to execute any further documents or instruments necessary or desirable in the sole determination of the Company to carry out the purposes or intent of your Option.

 

You acknowledge and agree that you have reviewed this US Option Agreement and the Plan in their entirety, have had an opportunity to obtain the advice of counsel prior to executing and accepting your Option, and fully understand all provisions of this US Option Agreement, the Plan and your Option.

 

This US Option Agreement will be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

 

All obligations of the Company under the Plan and this US Option Agreement will be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

 

*          *          *

 

This US Option Agreement will be deemed to be signed by you upon the signing by you of the Option Grant Notice to which it is attached.

 

 

Attachment II

 

2019 Equity Incentive Plan

 

 

Attachment III

 

Notice of Exercise

 

ShouTi Inc.

 

		Date of Exercise: _______________

 

Ladies and Gentlemen:

 

This constitutes notice under my Option that I elect to purchase the number of Ordinary Shares of ShouTi Inc. (the “Company”) for the price set forth below (all amounts are in US dollars).

 

Type of option (check one):	Incentive  ¨	Nonstatutory  ¨
Option dated:	_______________
Number of Ordinary Shares as to which option is exercised:	_______________
Certificates to be issued in name of:	_______________
Total exercise price:	$______________
Cash, check, bank draft or money order delivered herewith:	$______________
Regulation T Program (cashless exercise):	$______________
Value of ________ shares of the Company delivered herewith3:	$______________
Value of ________ shares of the Company pursuant to net exercise4:	$______________

 

By this exercise, I agree (i) to provide such additional documents as you may require pursuant to the terms of the ShouTi Inc. 2019 Equity Incentive Plan, (ii) to provide for the payment by me to you (in the manner designated by you) of your withholding obligation, if any, relating to the exercise of this Option, and (iii) if this exercise relates to an incentive share option, to notify you in writing within fifteen (15) days after the date of any disposition of any of the shares of the Company issued upon exercise of this Option that occurs within two (2) years after the date of grant of this Option or within one (1) year after such shares are issued upon exercise of this Option.

 

I hereby make the following certifications and representations with respect to the number of shares of the Company listed above (the “Shares”), which are being acquired by me for my own account upon exercise of this Option as set forth above:

 

3

Shares must meet the public trading requirements set forth in the option. Shares must be valued in accordance with the terms of the option being exercised, and must be owned free and clear of any liens, claims, encumbrances or security interests. Certificates must be endorsed or accompanied by an executed assignment separate from certificate.

4

ShouTi Inc. must have established net exercise procedures at the time of exercise in order to utilize this payment

 

 

I acknowledge that the Shares have not been registered or qualified under the Securities Act of 1933 as amended (the “Securities Act”), or other applicable securities laws on the ground that the sale of the Shares is exempt from such registration or qualification. I further acknowledge that the Shares are deemed to constitute “restricted securities” under Rule 701 and Rule 144 promulgated under the Securities Act. I warrant and represent to the Company that I have no present intention of distributing or selling said Shares, except as permitted under the Securities Act and any other applicable securities laws and any applicable state securities laws and applicable securities laws of any other jurisdiction.

 

I further acknowledge that I will not be able to resell the Shares for at least ninety (90) days after the shares of the Company becomes publicly traded (i.e., subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934) under Rule 701 and that more restrictive conditions apply to affiliates of the Company under Rule 144.

 

I further acknowledge that all certificates representing any of the Shares subject to the provisions of this Option shall have endorsed thereon appropriate legends reflecting the foregoing limitations, as well as any legends reflecting restrictions pursuant to the Company’s memorandum and articles of association and other constitutional and governance documents (including any Shareholder Agreements) and/or applicable securities laws.

 

I further agree that, if required by the Company (or a representative of the underwriters) in connection with the first underwritten registration of the offering of any securities of the Company under the Securities Act or under the applicable laws of another jurisdiction under which such securities may be listed, I will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any shares or other securities of the Company for a period of one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act or under the applicable laws of another jurisdiction under which such securities may be listed, or such longer period as necessary to permit compliance with NASD Rule 2711 or NYSE Member Rule 472 and similar rules and regulations (the “Lock-Up Period”). I further agree to execute and deliver such other agreements as may be reasonably requested by the Company and/or any underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such period.

 

	Very truly yours,
	Address:

 

 

ShouTi Inc.
PRC Option Grant Notice
(2019 Equity Incentive Plan)

 

ShouTi Inc. (the “Company”), pursuant to its 2019 Equity Incentive Plan (the “Plan”), hereby grants to Optionholder an option to purchase the number of shares in the capital of the Company set forth below (this “Option”). This Option is subject to all of the terms and conditions as set forth herein and in the PRC Option Agreement, the Plan, and the PRC Notice of Exercise, all of which are attached hereto and incorporated herein in their entirety. Capitalized terms not explicitly defined herein but defined in the Plan or the PRC Option Agreement will have the same definitions as in the Plan or the PRC Option Agreement. If there is any conflict between the terms herein and the Plan, the terms of the Plan will control.

 

Optionholder:
Date of Grant:
Vesting Commencement Date:
Number of Ordinary Shares Subject to Option:
Exercise Price (US$ Per Share):
Total Exercise Price (US$):
Expiration Date*:
* Actual term of this Option is subject to Section 4 of the PRC Option Agreement.

 

Exercise:

Cashless sell-all exercise only.

 

Vesting Schedule:

[EXAMPLE: 25% of the shares shall vest on the first anniversary of the Vesting Commencement Date; the balance of the shares vest in a series of thirty-six (36) successive equal monthly installments measured from the first anniversary of the Vesting Commencement Date, provided that the Optionholder continues to provide Continuous Services (as defined in the Plan) to the Company as of any each relevant date.]

 

Additional Terms/Acknowledgements: The undersigned Optionholder acknowledges receipt of, and understands and agrees to, this PRC Option Grant Notice, the PRC Option Agreement and the Plan. Optionholder further acknowledges he/she has been given an opportunity to consult legal and tax advisers with respect to all matters relating to this Option, and understands and acknowledges that the granting and exercise of this Option are governed by a complex body of securities and tax laws that may impact Optionholder’s ability to exercise this Option or to receive or sell the Shares following such exercise. Optionholder acknowledges and agrees that this PRC Option Grant Notice and the PRC Option Agreement may not be modified, amended or revised except in writing signed by Optionholder and a duly authorized officer of the Company. Optionholder further acknowledges that as of the Date of Grant, this PRC Option Grant Notice, the PRC Option Agreement, and the Plan set forth the entire understanding between Optionholder and the Company regarding this Option and supersede all prior oral and written agreements, promises and/or representations on that subject with the exception of (i) options previously granted and delivered to Optionholder under the Plan, and (ii) the following agreements only:

 

Other Agreements:

 

ShouTi Inc.			Optionholder:
By:
Name:			Signature
Title:
Date:			Date:

 

Attachments: PRC Option Agreement, 2019 Equity Incentive Plan and PRC Notice of Exercise

 

 

Attachment I

 

ShouTi Inc.
2019 Equity Incentive Plan

 

PRC Option Agreement

 

Pursuant to your PRC Option Grant Notice (“Grant Notice”) and this PRC Option Agreement, ShouTi Inc. (the “Company”) has granted you an Option under its 2019 Equity Incentive Plan (the “Plan”) to purchase the number of the Company’s Ordinary Shares (the “Shares”) indicated in your Grant Notice at the exercise price indicated in your Grant Notice. The Option is granted to you effective as of the date of grant set forth in the Grant Notice (the “Date of Grant”). If there is any conflict between the terms in this PRC Option Agreement and the Plan, the terms of the Plan will control. Capitalized terms not explicitly defined in this PRC Option Agreement or in the Grant Notice but defined in the Plan will have the same definitions as in the Plan.

 

The details of your Option are as follows:

 

Vesting. Subject to the limitations contained herein, your Option will vest as provided in your Grant Notice, provided that vesting will cease upon the termination of your Continuous Service.

 

Number of Shares and Exercise Price. The number of Shares subject to your Option and your exercise price per share (in United States dollars) referenced in your Grant Notice may be adjusted from time to time for Capitalization Adjustments.

 

Whole Shares. You may exercise your Option only for a whole number of Shares.

 

Term. Subject always to compliance with Sections 5, 8 and 9 below, you may only exercise your Option during its term, which commences on the Date of Grant and expires upon the earliest of the following:

 

a.

immediately upon the termination of your Continuous Service for Cause;

 

§

three (3) months after the termination of your Continuous Service for any reason other than Cause, Disability or death;

 

§

twelve (12) months after the termination of your Continuous Service due to your Disability;

 

§

eighteen (18) months after your death if you die either during your Continuous Service

 

§

within three (3) months after your Continuous Service terminates for any reason other than Cause or your death or Disability;

 

§

the Expiration Date indicated in your Grant Notice; or

 

§

the day before the tenth (10th) anniversary of the Date of Grant;

 

 

provided, however, that (i) if your Option and/or the shares to be issued upon exercise of your Option cannot be registered under applicable laws (including, without limitation, SAFE Circular 37 (as defined below) and SAFE Circular 7 (as defined below) and their successor regulations) (the “Requisite Registration”), the Company may, in the Board’s sole discretion, extend the term of your Option to a date after the completion of the Requisite Registration on which your Option may be exercised, provided that in no event shall the term of your Option exceed ten (10) years from the date of its grant, and (ii) if the Company has not completed the Requisite Registration before a Change in Control, the Company may, in the Board’s sole discretion, cancel your Option in connection with such Change in Control and, in exchange for a full release by you of the Company, pay you an amount equal to the excess of (x) the fair market value (as determined by the Board in good faith in its sole discretion) of the exercisable and vested portion of your Option over (y) the sum of the aggregate exercise price of the exercisable and vested portion of your Option and all applicable taxes, fees or other amounts required to be paid or withheld in connection with such payment. Any amounts payable to you by the Company (or your employer) with respect to the cancellation of your Option are payable to you in local currency, based upon the local currency to United States dollar exchange rate used by the financial institution engaged by the Company to facilitate the payment in connection with such cancellation or such other reasonable exchange rate determined by the Board in its discretion. As used herein, “SAFE Circular 37” means shall mean the Notice on Relevant Issues Concerning Foreign Exchange Administration for Domestic Residents to Engage in Overseas Financing and Round Trip Investment via Special Purpose Companies issued by the State Administration of Foreign Exchange of the People’s Republic of China on July 4, 2014; and “SAFE Circular 7” means the Circular of the State Administration of Foreign Exchange on Issues concerning the Administration of Foreign Exchange Used for Domestic Individuals’ Participation in Equity Incentive Plans of Companies Listed Overseas promulgated by the State Administration of Foreign Exchange of the People’s Republic of China and effective as of February 15, 2012.

 

Cashless Sell-All Exercise.

 

You may exercise the vested portion of your Option during its term by delivering a PRC Notice of Exercise (in a form designated by the Company) to the administrator of the Plan, or to such other person as the Company may designate, during regular business hours, together with such additional documents as the Company may then require to effect a cashless sell-all exercise. The Company will provide the forms necessary to make such a cashless sell-all exercise.

 

Unless otherwise agreed in writing with the Company, your Option may only be exercised after the completion of the Requisite Registration and the vested portion of your Option is exercised in a cashless sell-all transaction in accordance with the terms of this Section 5 and such other terms and conditions as may be imposed by the Company in order to ensure full compliance with all applicable tax, securities, employment, foreign exchange and other laws and regulations in the United States, the People’s Republic of China (the “PRC”) and any other applicable jurisdiction including, without limitation, compliance with Section 9 below to the extent applicable at the time of exercise.

 

All amounts referenced in this PRC Option Agreement and your Grant Notice are denominated in United States dollars. Any amounts payable to you by the Company (or your employer) with respect to the cashless sell-all exercise of the Option hereunder are payable to you in local currency, based upon the local currency to United States dollar exchange rate used by the financial institution engaged by the Company to facilitate the exercise of your Option or such other reasonable exchange rate determined by the Board in its discretion. Your exercise will be effective when the PRC Notice of Exercise is received by the Company. If someone else wants to exercise your Option after your death or disability, that person must prove to the Company’s satisfaction that he or she is entitled to do so.

 

Upon receipt of the PRC Notice of Exercise and all other documentation required pursuant to this Section 5, the Company shall effect a cashless sell-all transaction pursuant to which the proceeds of sale shall be remitted to you in the PRC by the Company (or an Affiliate, including your employer if different from the Company) representing a cash payment equal to the excess of: (i) the net sale proceeds, over (ii) the sum of the aggregate exercise price of your Option and all applicable taxes, exchange fees or other amounts required to be paid or withheld in connection with the exercise of your Option.

 

 

Notwithstanding anything to the contrary contained in this PRC Option Agreement or the PRC Notice of Exercise, you may not exercise your Option unless the Shares covered by your Option are then registered under the Securities Act (or under the applicable laws of another jurisdiction under which the Shares may be registered) or, if such Shares are not then so registered, the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Securities Act (or under the applicable laws of another jurisdiction under which the Shares may be registered). The exercise of your Option also must comply with other applicable laws and regulations governing your Option, including those of the United States and your country of residence, and you may not exercise your Option if the Company determines that such exercise would not be in material compliance with such laws and regulations. You understand that the Company is under no obligation to register or qualify the Shares with any securities regulatory authority in any jurisdiction or to seek approval or clearance from any governmental authority for the issuance or sale of the shares. Further, you agree that the Company shall have unilateral authority to amend the Plan and this PRC Option Agreement without your consent to the extent necessary to comply with securities or other laws applicable to issuance of shares.

 

By exercising your Option you agree to take all steps to comply, and to assist the Company and its Affiliates to enable each of them to comply, with all applicable laws and regulations including, without limitation, those implemented by the China Securities Regulatory Commission, the State Administration for Foreign Exchange, the State Administration for Taxation and any other PRC government authorities (the “PRC Authorities”) or any specific request made by the PRC Authorities in relation to the fulfillment of any reporting, filing, registration and approval requirements imposed on the Company or any Affiliate. You further agree to execute and deliver such other agreements or documents, and to fulfill any reporting, filing, registration and approval requirements, as may be required by the PRC Authorities and/or reasonably requested by the Company or an Affiliate.

 

By exercising your Option you agree that you shall not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to, any Shares or other securities of the Company held by you, for a period of one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act or under the applicable laws of another jurisdiction under which the Shares may be registered, or such longer period as the underwriters or the Company will request to facilitate compliance with FINRA Rule 2711 or NYSE Member Rule 472 or any successor or similar rules or regulations (the “Lock-Up Period”); provided, however, that nothing contained in this Section 5(g) shall prevent the exercise of a repurchase option, if any, in favor of the Company during the Lock-Up Period. You further agree to execute and deliver such other agreements as may be reasonably requested by the Company and/or any underwriter(s) of the Company’s shares that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to your Shares or other securities until the end of such period. The underwriters of the Company’s shares are intended third party beneficiaries of this Section 5(g) and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

 

You agree, with effect from the date of the exercise of your Option, to be bound by the terms of any and all Shareholders Agreements as if the same were set forth herein and will observe and discharge the terms and conditions of such Shareholders Agreements in all respects as if you had been a party thereto, and you shall be deemed to be comprised in the expressions “the holder of Ordinary Shares” and the “parties” as therein mentioned. By exercising your Option you agree that, as a condition to any exercise of your Option, the Company may require you to execute and deliver a deed of adherence to any Shareholders Agreement and require you to represent and warrant that you have the capacity to enter into, exercise your rights and lawfully perform and comply with the terms of any Shareholders Agreement; and that your obligations under any Shareholders Agreement are valid and binding upon you. The agreement set forth in this Section 5(h) is supplemental to and, except only where the context does not so admit, shall be construed as one and interpreted in accordance with any Shareholders Agreement and subject only to the agreements and variations herein expressly agreed and declared. All other conditions, covenants, provisions, powers and terms contained or subsisting in any Shareholders Agreement shall remain in full force and effect and shall be read and construed and be enforceable as if the agreements and variations herein were inserted therein by way of addition or substitution, as the case may be, and nothing herein shall affect or impair any Shareholders Agreement or its enforceability. For purposes of this PRC Option Agreement, the “Shareholders Agreement(s)” shall mean any and all agreements between the Company and all or certain shareholders of the Company that may be entered into from time to time, and/or one or more agreements among the Company, you and other parties thereto in such form determined from time to time by the Company in its sole discretion, that include terms and conditions that provide or impose in respect of the Company and/or any shareholders restrictions and obligations with respect to the transfer or voting of equity securities of the Company and such other terms and conditions as the Board may require, if any, including any amendment or supplement to or restatement of any such agreement from time to time.

 

 

Transferability. Your Option is not transferable, except by Will or by the laws of descent and distribution, and is exercisable during your life only by you. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you may designate a third party who, in the event of your death, shall thereafter be entitled to exercise your Option.

 

Option not a Service Contract. Your Option is not an employment or service contract, and nothing in your Option shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of, or as a provider of services to, the Company or an Affiliate, or of the Company or an Affiliate to continue your employment or to continue to engage you to provide services. In addition, nothing in your Option shall obligate the Company or an Affiliate, their respective shareholders, Boards of Directors, Officers or Employees to continue any relationship that you might have as a Director of, a member of the board of directors of, or a Consultant, for the Company or an Affiliate.

 

Withholding Obligations. In order to permit the Company to effect the cashless sell-all exercise of your Option pursuant to Sections 5 above, at the time you exercise your Option, or at any time thereafter as requested by the Company, and to the maximum extent permitted by law, you hereby authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or an Affiliate, if any, which arise in connection with the exercise of your Option.

 

Compliance with Law. Notwithstanding any other term of this PRC Option Agreement, the Company, its Affiliates and you will comply at all times with the laws and regulations of the United States and the PRC in relation to the grant of your Option and the exercise of your Option under Section 5 above, including without limitation any applicable anti-money laundering, anti-bribery and anti-corruption laws. Notwithstanding any other term of this PRC Option Agreement, in the event that the laws and regulations of the United States or the PRC at any time including but not limited to the time of exercise prohibit the grant of your Option, the exercise of your Option or the receipt of the net sale proceeds pursuant to Section 5 above, then to the extent the laws and regulations of the United States and the PRC permit the Company to preserve the economic value that may be generated by this Option, the Company may, in its sole discretion (but without any obligation), take such steps or course of action to provide or maintain the benefit of your Option as contemplated by this PRC Option Agreement (or provide benefits to you that are substantially equivalent thereto), subject to the completion, execution and delivery of any agreement or document, and compliance with any reporting, filing, registration or approval process required to be undertaken by you, the Company, an Affiliate or any third party to ensure material compliance with all applicable laws and regulations including, without limitation, those of the PRC Authorities.

 

Tax Consequences. You hereby agree that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes your tax liabilities. You shall not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates related to tax liabilities arising from your Option or your other compensation.

 

 

Personal Data. You understand that your Employer, if applicable, the Company, and/or its Affiliates hold certain personal information about you, including but not limited to your name, home address, telephone number, date of birth, social security or equivalent tax identification number, salary, nationality, job title, and details of your Option (the “Personal Data”). Certain Personal Data may also constitute “Sensitive Personal Data” or similar classification under applicable local law and be subject to additional restrictions on collection, processing and use of the same under such laws. Such data include but are not limited to Personal Data and any changes thereto, and other appropriate personal and financial data about you. You hereby provide express consent to the Company or its Affiliates to collect, hold, and process any such Personal Data and Sensitive Personal Data. You also hereby provide express consent to the Company and/or its Affiliates to transfer any such Personal Data and Sensitive Personal Data outside the country in which you are employed or retained, including transfers to the United States. The legal persons for whom such Personal Data are intended are the Company, any broker company, registered office provider, or professional advisor providing services to the Company in connection with the administration of the Plan or the Company. You have been informed of your right to access and correct your Personal Data and/or Sensitive Personal Data by applying to the Company representative identified on the Grant Notice.

 

Additional Acknowledgements. You hereby consent and acknowledge that:

 

Participation in the Plan is voluntary and therefore you must accept the terms and conditions of the Plan and this PRC Option Agreement as a condition to participating in the Plan and receipt of your Option.

 

The Plan is discretionary in nature and the Company can amend, cancel, or terminate it at any time in its sole discretion.

 

Your Option and any other awards under the Plan are voluntary and occasional and do not create any contractual or other right to receive future awards or other benefits in lieu of future awards, even if similar awards have been granted repeatedly in the past.

 

All determinations with respect to any such future awards, including, but not limited to, the time or times when such awards are made, the number of Shares, and performance and other conditions applied to the awards, will be at the sole discretion of the Company.

 

Your Option is an extraordinary item of compensation, which is outside the scope of your employment, service contract or consulting agreement, if any. Your Option shall not form part of any past, current or future entitlement to remuneration or benefits which you may have under any contract of employment, service contract or consulting agreement with the Company or any Affiliate nor form any part of any such contract of employment, service contract or consulting agreement between you and the Company or any Affiliate.

 

Your Option, or any income derived therefrom is a potential bonus payment not paid in lieu of any cash salary compensation and not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any termination, severance, resignation, redundancy, end of service payments, bonuses, long-service awards, life or accident insurance benefits, pension or retirement benefits or similar payments.

 

In the event of the involuntary termination of your Continuous Service, your eligibility to receive payments under your Option or the Plan, if any, will terminate effective as of the date that you are no longer actively employed or retained regardless of any reasonable notice period mandated under local law, except as expressly provided in this PRC Option Agreement.

 

The future value of the Shares is unknown and cannot be predicted with certainty. You do not have, and will not assert, any claim or entitlement to compensation, indemnity or damages arising from the termination of your Option or diminution in value of any cash payment you receive upon the cashless sell-all exercise of your Option, and you irrevocably release the Company, its Affiliates and, if applicable, your Employer, if different from the Company or any Affiliate, from any such claim that may arise.

 

 

You understand and acknowledge that the Plan, this PRC Option Agreement, the Grant Notice and the PRC Notice of Exercise are written in English and to the extent one or more of such documents are translated into a language other than English, the English language version shall prevail.

 

Notices. Any notices provided for in your Option, this PRC Option Agreement or the Plan will be given in writing (including electronically) and will be deemed effectively given upon receipt or, in the case of notices delivered by mail by the Company to you, five (5) days after deposit in the mail, postage prepaid, addressed to you at the last address you provided to the Company. The Company may, in its sole discretion, decide to deliver any documents related to participation in the Plan, this PRC Option Agreement and your Option by electronic means or to request your consent to participate in the Plan by electronic means. By accepting your Option, you consent to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

 

Governing Plan Document. Your Option is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your Option, and is further subject to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of this PRC Option Agreement and those of the Plan, the provisions of the Plan shall control.

 

Severability. If all or any part of this PRC Option Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity will not invalidate any portion of this PRC Option Agreement or the Plan not declared to be unlawful or invalid. Any Section of this PRC Option Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

 

Waiver. You acknowledge that a waiver by the Company of breach of any provision of the PRC Option Agreement shall not operate or be construed as a waiver of any other provision of the PRC Option Agreement, or of any subsequent breach of the PRC Option Agreement.

 

Governing Law and Dispute Resolution. The grant of the Option and the provisions of this PRC Option Agreement are governed by, and subject to, the laws of the Cayman Islands, without regard to the conflict of law provisions. All and any of the disputes arising from and in connection with this PRC Option Agreement shall be referred to the Hong Kong International Arbitration Centre (“HKIAC”) for binding arbitration in Hong Kong by a sole arbitrator in accordance with the rules then in effect of the HKIAC. The parties shall jointly select the sole arbitrator. If the parties fail to reach an agreement on the arbitrator, such an arbitrator shall be appointed by the Chairman of HKIAC. The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any competent court having jurisdiction. The parties to the arbitration shall each pay an equal share of the costs and expenses of such arbitration, and each party shall separately pay for its respective counsel fees and expenses; provided, however, that the prevailing party, if any, in any such arbitration shall be entitled to recover from the non-prevailing party its reasonable costs and attorney fees.

 

Language. If you have received this PRC Option Agreement, or any other document related to the Option and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

 

Imposition of Other Requirements. The Company reserves the right to impose other requirements on your participation in the Plan and on the Option, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require you to provide additional information and documentation and / or sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

 

 

Miscellaneous.

 

You agree upon request to execute any further documents or instruments necessary or desirable in the sole determination of the Company to carry out the purposes or intent of your Option.

 

You acknowledge and agree that you have reviewed this PRC Option Agreement and the Plan in their entirety, have had an opportunity to obtain the advice of counsel prior to executing and accepting your Option, and fully understand all provisions of this PRC Option Agreement, the Plan and your Option. You further acknowledge that the Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding your participation in the Plan, or your acquisition or sale of the underlying Ordinary Shares.

 

This PRC Option Agreement will be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

 

All obligations of the Company under the Plan and this PRC Option Agreement will be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

 

*      *      *

 

This PRC Option Agreement will be deemed to be signed by you upon the signing by you of the Share Option Grant Notice to which it is attached.

 

 

Attachment II

 

ShouTi Inc.

2019 Equity Incentive Plan

 

 

Attachment III

 

PRC Notice of Exercise

 

ShouTi Inc.

 

		Date of Exercise: _______________

 

Ladies and Gentlemen:

 

This constitutes notice under my Option that I elect to exercise my Option in a cashless sell-all transaction with respect to the number of Ordinary Shares of ShouTi Inc. (the “Company”) for the price set forth below.

 

Option dated:	_______________
Number of Ordinary Shares as to which option is exercised:	_______________
Total exercise price:	US$______________

 

By this exercise, I agree (i) to provide such additional documents as you may require pursuant to the terms of the ShouTi Inc. 2019 Equity Incentive Plan and the PRC Option Agreement, (ii) take such other steps as may be required by the Company to ensure compliance with applicable law in relation to the exercise of my Option, and (iii) to your withholding from any payment to me with respect to the exercise of this Option of any and all amounts relating to the exercise price of the shares subject to this Option, and all applicable tax, foreign exchange fees and other withholdings in accordance with the PRC Option Agreement.

 

	Very truly yours,
	Address:

 

 

ShouTi Inc.

 

International Option Grant Notice
(2019 Equity Incentive Plan)

 

ShouTi Inc. (the “Company”), pursuant to its 2019 Equity Incentive Plan (the “Plan”), hereby grants to Optionholder an option to purchase the number of shares in the capital of the Company set forth below (this “Option”). This Option is subject to all of the terms and conditions as set forth herein and in the International Option Agreement, the Plan, and the International Notice of Exercise, all of which are attached hereto and incorporated herein in their entirety. Capitalized terms not explicitly defined herein but defined in the Plan or the International Option Agreement will have the same definitions as in the Plan or the International Option Agreement. If there is any conflict between the terms herein and the Plan, the terms of the Plan will control.

 

Optionholder:
Date of Grant:
Vesting Commencement Date:
Number of Ordinary Shares Subject to Option:
Exercise Price (US$ Per Share):
Total Exercise Price (US$):
Expiration Date:

 

Exercise Schedule:

x    Same as Vesting Schedule

 

Vesting Schedule:

[EXAMPLE: 25% of the shares shall vest on the first anniversary of the Vesting Commencement Date; the balance of the shares vest in a series of thirty-six (36) successive equal monthly installments measured from the first anniversary of the Vesting Commencement Date, provided that the Optionholder continues to provide Continuous Services (as defined in the Plan) to the Company as of each relevant vesting date.]

 

Payment:

By one or a combination of the following methods (as such methods are described in the International Option Agreement):

 

x

By cash or check

 

x

Pursuant to a Regulation T Program if the Shares are publicly traded

 

¨

By delivery of already-owned shares if the Shares are publicly traded

 

¨

Subject to consent of the Company at exercise, by net exercise

 

Additional Terms/Acknowledgements: The undersigned Optionholder acknowledges receipt of, and understands and agrees to, this International Option Grant Notice, the International Option Agreement and the Plan. Optionholder acknowledges and agrees that this International Option Grant Notice and the International Option Agreement may not be modified, amended or revised except in writing signed by Optionholder and a duly authorized officer of the Company. Optionholder further acknowledges that as of the Date of Grant, this International Option Grant Notice, the International Option Agreement, and the Plan set forth the entire understanding between Optionholder and the Company regarding the acquisition of shares of the Company and supersede all prior oral and written agreements, promises and/or representations on that subject with the exception of (i) options previously granted and delivered to Optionholder under the Plan, and (ii) the agreement between the Optionholder and the Company listed below only.

 

Other Agreements:

 

ShouTi Inc.			Optionholder:
By:
Name:			Signature
Title:
Date:			Date:

 

 

Attachments: International Option Agreement, 2019 Equity Incentive Plan and International Notice of Exercise

 

 

Attachment I

 

ShouTi Inc.

2019 Equity Incentive Plan

 

International Option Agreement

 

Pursuant to your Option Grant Notice (“Grant Notice”) and this International Option Agreement, ShouTi Inc. (the “Company”) has granted you an Option under its 2019 Equity Incentive Plan (the “Plan”) to purchase the number of the Company’s Ordinary Shares indicated in your Grant Notice at the exercise price indicated in your Grant Notice. The Option is granted to you effective as of the date of grant set forth in the Grant Notice (the “Date of Grant”). If there is any conflict between the terms in this International Option Agreement and the Plan, the terms of the Plan will control. Capitalized terms not explicitly defined in this International Option Agreement or in the Grant Notice but defined in the Plan will have the same definitions as in the Plan.

 

The details of your Option, in addition to those set forth in the Grant Notice and the Plan, are as follows:

 

Vesting. Your Option will vest as provided in your Grant Notice. Vesting will cease upon the termination of your Continuous Service.

 

Number of Shares and Exercise Price. The number of Ordinary Shares subject to your Option and your exercise price per share in your Grant Notice will be adjusted for Capitalization Adjustments.

 

Exercise prior to Vesting (“Early Exercise”). This Option may not be exercised prior to vesting.

 

Method of Payment. You must pay the full amount of the exercise price, including any applicable Withholding Taxes (as defined in Section 14(a) below) for the portion of the vested Option you wish to exercise. Subject to any limitations applicable to you under applicable law, you may pay the exercise price in cash or by check, bank draft or money order payable to the Company or in any other manner permitted by your Grant Notice, which may include one or more of the following:

 

Provided that at the time of exercise the Ordinary Shares are publicly traded, pursuant to a program (developed under Regulation T as promulgated by the U.S. Federal Reserve Board or similar regulations in other applicable jurisdictions, if required for compliance with the laws of the relevant jurisdiction) that, prior to the issuance of Ordinary Shares, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price and any applicable Withholding Taxes to the Company from the sales proceeds. This manner of payment is also known as a “broker-assisted exercise”, “same day sale”, or “sell to cover”.

 

Provided that at the time of exercise the Ordinary Shares are publicly traded, by delivery to the Company (either by actual delivery or attestation) of already-owned Ordinary Shares that are owned free and clear of any liens, claims, encumbrances or security interests, and that are valued at Fair Market Value on the date of exercise. “Delivery” for these purposes, in the sole discretion of the Company at the time you exercise your Option, will include delivery to the Company of your attestation of ownership of such Ordinary Shares in a form approved by the Company. You may not exercise your Option by delivery to the Company of Ordinary Shares if doing so would violate the provisions of any law, regulation or agreement restricting the redemption of the Company’s shares.

 

Subject to the consent of the Company at the time of exercise, by a “net exercise” arrangement pursuant to which the Company will reduce the number of Ordinary Shares issued upon exercise of your Option by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price. You must pay any remaining balance of the aggregate exercise price not satisfied by the “net exercise” in cash or other permitted form of payment. Ordinary Shares will no longer be outstanding under your Option and will not be exercisable thereafter if those shares (i) are used to pay the exercise price pursuant to the “net exercise,” (ii) are delivered to you as a result of such exercise, and (iii) are withheld to satisfy your obligations for Withholding Taxes.

 

 

Whole Shares. You may exercise your Option only for a whole number of Ordinary Shares.

 

Securities Law Compliance. Notwithstanding anything to the contrary contained herein, you may not exercise your Option unless the Shares issuable upon such exercise are then registered under the Securities Act or, if such Shares are not then so registered, the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Securities Act. The exercise of your Option also must comply with other applicable laws and regulations governing your Option, including those of the United States, the Cayman Islands and your country of residence, and you may not exercise your Option if the Company determines that such exercise would not be in material compliance with such laws and regulations. You understand that the Company is under no obligation to register or qualify the Ordinary Shares with any securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the shares. Further, you agree that the Company shall have unilateral authority to amend the Plan and the Agreement without your consent to the extent necessary to comply with securities or other laws applicable to issuance of shares.

 

Term. You may not exercise your Option before the Date of Grant or after the expiration of the Option’s term. The term of your Option expires, subject to the provisions of Section 5(h) of the Plan, upon the earliest of the following:

 

immediately upon the termination of your Continuous Service for Cause;

 

three (3) months after the termination of your Continuous Service for any reason other than Cause, your Disability or your death; provided, however, that if during any part of such three (3) month period your Option is not exercisable solely because of the condition set forth in the Section above relating to “Securities Law Compliance,” your Option will not expire until the earlier of the Expiration Date or until it has been exercisable for an aggregate period of three (3) months after the termination of your Continuous Service provided further, if during any part of such three (3) month period, the sale of any Ordinary Shares received upon exercise of your Option would violate the Company’s insider trading policy, then your Option will not expire until the earlier of the Expiration Date or until it has been exercisable for an aggregate period of three (3) months after the termination of your Continuous Service during which the sale of the Ordinary Shares received upon exercise of your Option would not be in violation of the Company’s insider trading policy;

 

twelve (12) months after the termination of your Continuous Service due to your Disability below;

 

eighteen (18) months after your death if you die either during your Continuous Service

 

within three (3) months after your Continuous Service terminates for any reason other than Cause or your death or Disability;

 

the Expiration Date indicated in your Grant Notice; or

 

the day before the tenth (10th) anniversary of the Date of Grant.

 

 

Exercise.

 

You may exercise the vested portion of your Option during its term by (i) delivering a Notice of Exercise (in a form designated by the Company) or completing such other documents and/or procedures designated by the Company for exercise and (ii) paying the exercise price and any applicable Withholding Taxes to the Company’s share plan administrator, or to such other person as the Company may designate, together with such additional documents as the Company may then require.

  

By exercising your Option you agree that, as a condition to any exercise of your Option, the Company may require you to enter into an arrangement providing for the payment by you to the Company of any Withholding Taxes of the Company arising by reason of (i) the exercise of your Option, (ii) the lapse of any substantial risk of forfeiture to which the Ordinary Shares are subject at the time of exercise, or (iii) the disposition of Ordinary Shares acquired upon such exercise.

 

You agree, with effect from the date of the exercise of your Option, to be bound by the terms of any and all Shareholders Agreements as if the same were set forth herein and will observe and discharge the terms and conditions of such Shareholders Agreements in all respects as if you had been a party thereto, and you shall be deemed to be comprised in the expressions “the holder of Ordinary Shares” and the “parties” as therein mentioned. By exercising your Option you agree that, as a condition to any exercise of your Option, the Company may require you to execute and deliver a deed of adherence to any Shareholders Agreement and require you to represent and warrant that you have the capacity to enter into, exercise your rights and lawfully perform and comply with the terms of any Shareholders Agreement; and that your obligations under any Shareholders Agreement are valid and binding upon you. The agreement set forth in this Section 8(c) is supplemental to and, except only where the context does not so admit, shall be construed as one and interpreted in accordance with any Shareholders Agreement and subject only to the agreements and variations herein expressly agreed and declared. All other conditions, covenants, provisions, powers and terms contained or subsisting in any Shareholders Agreement shall remain in full force and effect and shall be read and construed and be enforceable as if the agreements and variations herein were inserted therein by way of addition or substitution, as the case may be, and nothing herein shall affect or impair any Shareholders Agreement or its enforceability. For purposes of this International Option Agreement, the “Shareholders Agreement(s)” shall mean any and all agreements between the Company and all or certain shareholders of the Company that may be entered into from time to time, and/or one or more agreements among the Company, you and other parties thereto in such form determined from time to time by the Company in its sole discretion, that include terms and conditions that provide or impose in respect of the Company and/or any shareholders restrictions and obligations with respect to the transfer or voting of equity securities of the Company and such other terms and conditions as the Board may require, if any, including any amendment or supplement to or restatement of any such agreement from time to time.

 

Market Stand Off. By exercising your Option you agree that you will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to any Ordinary Shares or other securities of the Company held by you, for a period of one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act or under the applicable laws of another jurisdiction under which such securities may be listed, or such longer period as the underwriters or the Company will request to facilitate compliance with FINRA Rule 2711 or NYSE Member Rule 472 or any successor or similar rules or regulations (the “Lock-Up Period”); provided, however, that nothing contained in this Section 9 will prevent the exercise of a repurchase option, if any, in favor of the Company during the Lock-Up Period. You further agree to execute and deliver such other agreements as may be reasonably requested by the Company or any underwriters of the Company’s shares that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to your Ordinary Shares or other securities of the Company until the end of such period. You also agree that any transferee of any Ordinary Shares (or other securities) of the Company held by you will be bound by this Section 9. The underwriters of the Company’s shares are intended third party beneficiaries of this Section 9 and will have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

 

 

Transferability. Except as otherwise provided in this Section 10, your Option is not transferable, except by Will or by the laws of descent and distribution, and is exercisable during your life only by you. Upon receiving written permission from the Board or its duly authorized designee, you may, by delivering written notice to the Company, in a form approved by the Company and any broker designated by the Company to handle option exercises, designate a third party who, on your death, will thereafter be entitled to exercise this Option and receive the Ordinary Shares or other consideration resulting from such exercise. In the absence of such a designation, your executor or administrator of your estate will be entitled to exercise this Option and receive, on behalf of your estate, the Ordinary Shares or other consideration resulting from such exercise.

  

Right of First Refusal. Ordinary Shares that you acquire upon exercise of your Option are subject to any right of first refusal that may be described in the Company’s memorandum or articles of association or other constitutional or governance documents (including any Shareholder Agreement) in effect at such time the Company elects to exercise its right. Any Company right of first refusal will expire on the first date upon which then Ordinary Shares (or any other securities issued in exchange for or upon conversion of the Ordinary Shares) is listed (or approved for listing) upon notice of issuance on a securities exchange or quotation system.

 

Right of Repurchase. To the extent provided in the Company’s memorandum and articles of association or other constitutional or governance documents (including any Shareholder Agreement) in effect at such time the Company elects to exercise its right, the Company will have the right to repurchase all or any part of the Ordinary Shares you acquire pursuant to the exercise of your Option.

 

Option not a Service Contract. Your Option is not an employment or service contract, and nothing in your Option will be deemed to create in any way whatsoever any obligation on your part to continue in the employ of, or as a provider of services to, the Company or an Affiliate, or of the Company or an Affiliate to continue your employment or to continue to engage you to provide services. In addition, nothing in your Option will obligate the Company or an Affiliate, their respective shareholders, boards of directors, officers or employees to continue any relationship that you might have as a Director of, a member of the board of directors of, or a Consultant, for the Company or an Affiliate.

 

Withholding Obligations.

 

You acknowledge that, regardless of any action taken by the Company or, if different, your employer (the “Employer”) the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to your participation in the Plan and legally applicable to you (“Withholding Taxes”), is and remains your responsibility and may exceed the amount actually withheld by the Company or the Employer. You further acknowledge that the Company and/or the Employer make no representations or undertakings regarding the treatment of any Withholding Taxes in connection with any aspect of your Option, including, but not limited to, the grant, vesting or exercise of the Option, the subsequent sale of Ordinary Shares acquired pursuant to such exercise and the receipt of any dividends. Further, if you are subject to Withholding Taxes in more than one jurisdiction between the Date of Grant and the date of any relevant taxable or tax withholding event, as applicable, you acknowledge that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Withholding Taxes in more than one jurisdiction.

 

Prior to the relevant taxable or tax withholding event, as applicable, you agree to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Withholding Taxes. In this regard, you authorize the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to all Withholding Taxes by withholding from payroll and any other amounts payable to you, including any proceeds due to you from the sale of Ordinary Shares acquired at exercise of the Option either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization) without further consent.

 

 

Upon your request and subject to approval by the Company and compliance with any applicable legal conditions or restrictions, the Company may withhold from fully vested Ordinary Shares otherwise issuable to you upon the exercise of your Option a number of whole Ordinary Shares having a Fair Market Value, determined by the Company as of the date of exercise, not in excess of the minimum amount of tax required to be withheld by law (or such lower amount as may be necessary to avoid classification of your Option as a liability for financial accounting purposes).

  

You may not exercise your Option unless all obligations of the Company and/or any Affiliate for Withholding Taxes are satisfied. Accordingly, you may not be able to exercise your Option when desired even though your Option is vested, and the Company will have no obligation to issue any Ordinary Shares (or any certificate therefor) unless such obligations are satisfied.

 

Tax Consequences. You hereby agree that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes your tax liabilities. You will not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates related to tax liabilities arising from your Option or your other compensation. In particular, you acknowledge that this Option is exempt from Section 409A of the Code only if the exercise price per share specified in the Grant Notice is at least equal to the “fair market value” per Ordinary Share on the Date of Grant and there is no other impermissible deferral of compensation associated with the Option.

 

Personal Data. You understand that your Employer, if applicable, the Company, and/or its Affiliates hold certain personal information about you, including but not limited to your name, home address, telephone number, date of birth, social security or equivalent tax identification number, salary, nationality, job title, and details of your Option (the “Personal Data”). Certain Personal Data may also constitute “Sensitive Personal Data” or similar classification under applicable local law and be subject to additional restrictions on collection, processing and use of the same under such laws. Such data include but are not limited to Personal Data and any changes thereto, and other appropriate personal and financial data about you. You hereby provide express consent to the Company or its Affiliates to collect, hold, and process any such Personal Data and Sensitive Personal Data. You also hereby provide express consent to the Company and/or its Affiliates to transfer any such Personal Data and Sensitive Personal Data outside the country in which you are employed or retained, including transfers to the United States. The legal persons for whom such Personal Data are intended are the Company, any broker company, registered office provider, or professional adviser providing services to the Company in connection with the administration of the Plan or the Company. You have been informed of your right to access and correct your Personal Data and/or Sensitive Personal Data by applying to the Company representative identified on the Grant Notice.

 

Additional Acknowledgements. You hereby consent and acknowledge that:

 

Participation in the Plan is voluntary and therefore you must accept the terms and conditions of the Plan and this International Option Agreement as a condition to participating in the Plan and receipt of your Option.

 

The Plan is discretionary in nature and the Company can amend, cancel, or terminate it at any time in its sole discretion.

 

Your Option and any other Share Awards under the Plan are voluntary and occasional and do not create any contractual or other right to receive future awards or other benefits in lieu of future awards, even if similar awards have been granted repeatedly in the past.

 

 

All determinations with respect to any such future awards, including, but not limited to, the time or times when such awards are made, the size of such awards and performance and other conditions applied to the awards, will be at the sole discretion of the Company.

 

The value of your Option is an extraordinary item of compensation, which is outside the scope of your employment, service contract or consulting agreement, if any. This Share Award shall not form part of any past, current or future entitlement to remuneration or benefits which you may have under any contract of employment, service contract or consulting agreement with the Company or any Affiliate nor form any part of any such contract of employment, service contract or consulting agreement between you and the Company or any Affiliate.

  

Your Option, and any income derived therefrom are a potential bonus payment not paid in lieu of any cash salary compensation and not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any termination, severance, resignation, redundancy, end of service payments, bonuses, long-service awards, life or accident insurance benefits, pension or retirement benefits or similar payments.

 

In the event of the involuntary termination of your Continuous Service, your eligibility to receive payments under this Share Award or the Plan in respect of the unvested portion of your Share Award, if any, will terminate effective as of the date that you are no longer actively employed or retained regardless of any reasonable notice period mandated under local law, except as expressly provided in this International Option Agreement.

 

The future value of your Option is unknown and cannot be predicted with certainty. You do not have, and will not assert, any claim or entitlement to compensation, indemnity or damages arising from the termination of your Option or diminution in value of your Option and you irrevocably release the Company, its Affiliates and, if applicable, your Employer, if different from the Company or any Affiliate, from any such claim that may arise.

 

For purposes of this International Option Agreement, your Continuous Service will be considered terminated as of the date you are no longer actively providing services to the Company or an Affiliate (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), and unless otherwise expressly provided in the Agreement or determined by the Company, (i) your right to vest in the Option under the Plan, if any, will terminate as of such date and will not be extended by any notice period (e.g., your period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any); and (ii) the period (if any) during which you may exercise the Option after such termination of your Continuous Service will commence on the date you cease to actively provide services and will not be extended by any notice period mandated under employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any; the Board or its duly authorized designee shall have the exclusive discretion to determine when you are no longer actively providing services for purposes of your Option (including whether you may still be considered to be providing services while on a leave of absence).

 

Neither the Company, the Employer nor any Affiliate of the Company shall be liable for any foreign exchange rate fluctuation that may affect the value of the Option or of any amounts due to you pursuant to the exercise of the Option or the subsequent sale of any Ordinary Shares acquired upon exercise.

 

The Plan and this International Option Agreement set forth the entire understanding between you, the Company and any Affiliate regarding your Option and supersedes all prior oral and written agreements pertaining to your Option.

 

 

Notices. Any notices provided for in your Option, this International Option Agreement or the Plan will be given in writing (including electronically) and will be deemed effectively given upon receipt or, in the case of notices delivered by mail by the Company to you, five (5) days after deposit in the mail, postage prepaid, addressed to you at the last address you provided to the Company. The Company may, in its sole discretion, decide to deliver any documents related to participation in the Plan, this International Option Agreement and your Option by electronic means or to request your consent to participate in the Plan by electronic means. By accepting your Option, you consent to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

  

Governing Plan Document. Your Option is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your Option, and is further subject to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and adopted pursuant to the Plan. If there is any conflict between the provisions of this International Option Agreement and those of the Plan, the provisions of the Plan will control.

 

Effect on Other Employee Benefit Plans. The value of the Option will not be included as compensation, earnings, salaries, or other similar terms used when calculating your benefits under any employee benefit plan sponsored by the Company or any Affiliate, except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend, modify, or terminate any of the Company’s or any Affiliate’s employee benefit plans.

 

Voting Rights. You will not have voting or any other rights as a shareholder of the Company with respect to the shares to be issued pursuant to this International Option Agreement. Nothing contained in this International Option Agreement, and no action taken pursuant to its provisions, will create or be construed to create a trust of any kind or a fiduciary relationship between you and the Company or any other person.

 

Severability. If all or any part of this International Option Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity will not invalidate any portion of this International Option Agreement or the Plan not declared to be unlawful or invalid. Any Section of this International Option Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

 

Waiver. You acknowledge that a waiver by the Company of breach of any provision of the International Option Agreement shall not operate or be construed as a waiver of any other provision of the International Option Agreement, or of any subsequent breach of the International Option Agreement.

 

Governing Law. The grant of the Option and the provisions of this International Option Agreement are governed by, and subject to, the laws of the Cayman Islands, without regard to the conflict of law provisions. You and the Company each hereby irrevocably submit to the non-exclusive jurisdiction of the courts of the Cayman Islands.

 

Language. If you have received this International Option Agreement, or any other document related to the Option and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

 

Imposition of Other Requirements. The Company reserves the right to impose other requirements on your participation in the Plan, on the Option and on any Ordinary Shares purchased upon exercise of the Option, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require you to provide additional information and documentation and / or sign any additional agreements or undertakings that may be necessary to accomplish the foregoing, including without limitation, at the sole discretion of the Company, requiring you to execute a counterpart signature page and agreement to be bound by any Shareholder Agreement and requiring you to execute an irrevocable proxy and power of attorney authorizing an officer or director of the Company to vote all of your Ordinary Shares (in circumstances where such Ordinary Shares carry voting rights, for example class meetings) and take certain other actions with respect to your Ordinary Shares in his or her sole discretion.

 

 

Miscellaneous.

  

The rights and obligations of the Company under your Option will be transferable to any one or more persons or entities, and all covenants and agreements hereunder will inure to the benefit of, and be enforceable by the Company’s successors and assigns.

 

You agree upon request to execute any further documents or instruments necessary or desirable in the sole determination of the Company to carry out the purposes or intent of your Option.

 

You acknowledge and agree that you have reviewed this International Option Agreement and the Plan in their entirety, have had an opportunity to obtain the advice of counsel prior to executing and accepting your Option, and fully understand all provisions of this International Option Agreement, the Plan and your Option. You further acknowledge that the Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding your participation in the Plan, or your acquisition or sale of the underlying Ordinary Shares.

 

This International Option Agreement will be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

 

All obligations of the Company under the Plan and this International Option Agreement will be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

 

*      *      *

 

This International Option Agreement will be deemed to be signed by you upon the signing by you of the Share Option Grant Notice to which it is attached.

 

 

Attachment II

  

2019 Equity Incentive Plan

 

 

 

Attachment III

  

International Notice of Exercise

 

ShouTi Inc.
____________________________
____________________________		Date of Exercise: _______________

  

Ladies and Gentlemen:

 

This constitutes notice under my Option that I elect to purchase the number of Ordinary Shares of ShouTi Inc. (the “Company”) for the price set forth below (all amounts are in US dollars).

 

Option dated:	_______________
Number of Ordinary Shares  as to which option is exercised:	_______________
Certificates to be issued in name of:	_______________
Total exercise price:	US$______________
Cash, check, bank draft or money order delivered herewith:	US$______________
Regulation T Program (cashless exercise):	US$______________
Value of ________ shares of the Company delivered herewith5:	US$______________
Value of ________ shares of the Company pursuant to net exercise6:	US$______________

 

By this exercise, I agree (i) to provide such additional documents as you may require pursuant to the terms of the ShouTi Inc. 2019 Equity Incentive Plan, and (ii) to provide for the payment by me to you (in the manner designated by you) of your withholding obligation, if any, relating to the exercise of this Option.

 

I hereby make the following certifications and representations with respect to the number of shares of the Company listed above (the “Shares”), which are being acquired by me for my own account upon exercise of this Option as set forth above:

 

I acknowledge that the Shares have not been registered or qualified under the U.S. Securities Act of 1933 as amended (the “Securities Act”), or other applicable securities laws on the ground that the sale of the Shares is exempt from such registration or qualification. I further acknowledge that the Shares are deemed to constitute “restricted securities” under Rule 701 and Rule 144 promulgated under the Securities Act. I warrant and represent to the Company that I have no present intention of distributing or selling said Shares, except as permitted under the Securities Act and any applicable state securities laws and applicable securities laws of any other jurisdiction.

 

⁵ Shares must meet the public trading requirements set forth in the option. Shares must be valued in accordance with the terms of the option being exercised, and must be owned free and clear of any liens, claims, encumbrances or security interests. Certificates must be endorsed or accompanied by an executed assignment separate from certificate.

⁶ ShouTi Inc. must have established net exercise procedures at the time of exercise in order to utilize this payment method.

 

 

I further acknowledge that I will not be able to resell the Shares for at least ninety (90) days after the shares of the Company becomes publicly traded (i.e., subject to the reporting requirements of Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934) under Rule 701 and that more restrictive conditions apply to affiliates of the Company under Rule 144.

 

I further acknowledge that all certificates representing any of the Shares subject to the provisions of this Option shall have endorsed thereon appropriate legends reflecting the foregoing limitations, as well as any legends reflecting restrictions pursuant to the Company’s memorandum and articles of association and other constitutional and governance documents (including any Shareholder Agreements) and/or applicable securities laws.

 

I further acknowledge that the International Option Agreement contains condition to the exercise of this Option which must be satisfied in order to exercise this Option.

 

I further agree that, if required by the Company (or a representative of the underwriters) in connection with the first underwritten registration of the offering of any securities of the Company under the Securities Act or under the applicable laws of another jurisdiction under which such securities may be listed, I will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any shares or other securities of the Company for a period of one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act or under the applicable laws of another jurisdiction under which such securities may be listed, or such longer period as necessary to permit compliance with NASD Rule 2711 or NYSE Member Rule 472 and similar rules and regulations (the “Lock-Up Period”). I further agree to execute and deliver such other agreements as may be reasonably requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such period.

 

	Very truly yours,
	Address:

 

 

ShouTi Inc.

International Option Grant Notice
(2019 Equity Incentive Plan)

 

ShouTi Inc. (the “Company”), pursuant to its 2019 Equity Incentive Plan (the “Plan”), hereby grants to Optionholder an option to purchase the number of shares in the capital of the Company set forth below (this “Option”). This Option is subject to all of the terms and conditions as set forth herein and in the International Option Agreement, the Plan, and the International Notice of Exercise, all of which are attached hereto and incorporated herein in their entirety. Capitalized terms not explicitly defined herein but defined in the Plan or the International Option Agreement will have the same definitions as in the Plan or the International Option Agreement. If there is any conflict between the terms herein and the Plan, the terms of the Plan will control.

 

Optionholder:
Date of Grant:
Vesting Commencement Date:
Number of Ordinary Shares Subject to Option:
Exercise Price (US$ Per Share):
Total Exercise Price (US$):
Expiration Date:

 

Exercise Schedule:

x Same as Vesting Schedule

 

Vesting Schedule:

[EXAMPLE: 25% of the shares shall vest on the first anniversary of the Vesting Commencement Date; the balance of the shares vest in a series of thirty-six (36) successive equal monthly installments measured from the first anniversary of the Vesting Commencement Date, provided that the Optionholder continues to provide Continuous Services (as defined in the Plan) to the Company as of each relevant vesting date.]

 

Payment:

By one or a combination of the following methods (as such methods are described in the International Option Agreement):

 

x    By cash or check

x    Pursuant to a Regulation T Program if the Shares are publicly traded

¨     By delivery of already-owned shares if the Shares are publicly traded

¨ Subject to consent of the Company at exercise, by net exercise

  

Additional Terms/Acknowledgements: The undersigned Optionholder acknowledges receipt of, and understands and agrees to, this International Option Grant Notice, the International Option Agreement and the Plan. Optionholder acknowledges and agrees that this International Option Grant Notice and the International Option Agreement may not be modified, amended or revised except in writing signed by Optionholder and a duly authorized officer of the Company. Optionholder further acknowledges that as of the Date of Grant, this International Option Grant Notice, the International Option Agreement, and the Plan set forth the entire understanding between Optionholder and the Company regarding the acquisition of shares of the Company and supersede all prior oral and written agreements, promises and/or representations on that subject with the exception of (i) options previously granted and delivered to Optionholder under the Plan, and (ii) the agreement between the Optionholder and the Company listed below only.

  

Other Agreements:
ShouTi Inc.			Optionholder:
By:
Name:			Signature
Title:
Date:			Date:

  

Attachments: International Option Agreement, 2019 Equity Incentive Plan and International Notice of Exercise

 

 

Attachment I

 

ShouTi Inc.

2019 Equity Incentive Plan

 

International Option Agreement

 

Pursuant to your Option Grant Notice (“Grant Notice”) and this International Option Agreement, ShouTi Inc. (the “Company”) has granted you an Option under its 2019 Equity Incentive Plan (the “Plan”) to purchase the number of the Company’s Ordinary Shares indicated in your Grant Notice at the exercise price indicated in your Grant Notice. The Option is granted to you effective as of the date of grant set forth in the Grant Notice (the “Date of Grant”). If there is any conflict between the terms in this International Option Agreement and the Plan, the terms of the Plan will control. Capitalized terms not explicitly defined in this International Option Agreement or in the Grant Notice but defined in the Plan will have the same definitions as in the Plan.

 

The details of your Option, in addition to those set forth in the Grant Notice and the Plan, are as follows:

 

Vesting. Your Option will vest as provided in your Grant Notice. Vesting will cease upon the termination of your Continuous Service.

 

Number of Shares and Exercise Price. The number of Ordinary Shares subject to your Option and your exercise price per share in your Grant Notice will be adjusted for Capitalization Adjustments.

 

Exercise prior to Vesting (“Early Exercise”). This Option may not be exercised prior to vesting.

 

Method of Payment. You must pay the full amount of the exercise price, including any applicable Withholding Taxes (as defined in Section 14(a) below) for the portion of the vested Option you wish to exercise. Subject to any limitations applicable to you under applicable law, you may pay the exercise price in cash or by check, bank draft or money order payable to the Company or in any other manner permitted by your Grant Notice, which may include one or more of the following:

 

Provided that at the time of exercise the Ordinary Shares are publicly traded, pursuant to a program (developed under Regulation T as promulgated by the U.S. Federal Reserve Board or similar regulations in other applicable jurisdictions, if required for compliance with the laws of the relevant jurisdiction) that, prior to the issuance of Ordinary Shares, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price and any applicable Withholding Taxes to the Company from the sales proceeds. This manner of payment is also known as a “broker-assisted exercise”, “same day sale”, or “sell to cover”.

 

Provided that at the time of exercise the Ordinary Shares are publicly traded, by delivery to the Company (either by actual delivery or attestation) of already-owned Ordinary Shares that are owned free and clear of any liens, claims, encumbrances or security interests, and that are valued at Fair Market Value on the date of exercise. “Delivery” for these purposes, in the sole discretion of the Company at the time you exercise your Option, will include delivery to the Company of your attestation of ownership of such Ordinary Shares in a form approved by the Company. You may not exercise your Option by delivery to the Company of Ordinary Shares if doing so would violate the provisions of any law, regulation or agreement restricting the redemption of the Company’s shares.

 

Subject to the consent of the Company at the time of exercise, by a “net exercise” arrangement pursuant to which the Company will reduce the number of Ordinary Shares issued upon exercise of your Option by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price. You must pay any remaining balance of the aggregate exercise price not satisfied by the “net exercise” in cash or other permitted form of payment. Ordinary Shares will no longer be outstanding under your Option and will not be exercisable thereafter if those shares (i) are used to pay the exercise price pursuant to the “net exercise,” (ii) are delivered to you as a result of such exercise, and (iii) are withheld to satisfy your obligations for Withholding Taxes.

 

 

Whole Shares. You may exercise your Option only for a whole number of Ordinary Shares.

 

Securities Law Compliance. Notwithstanding anything to the contrary contained herein, you may not exercise your Option unless the Shares issuable upon such exercise are then registered under the Securities Act or, if such Shares are not then so registered, the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Securities Act. The exercise of your Option also must comply with other applicable laws and regulations governing your Option, including those of the United States, the Cayman Islands and your country of residence, and you may not exercise your Option if the Company determines that such exercise would not be in material compliance with such laws and regulations. You understand that the Company is under no obligation to register or qualify the Ordinary Shares with any securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the shares. Further, you agree that the Company shall have unilateral authority to amend the Plan and the Agreement without your consent to the extent necessary to comply with securities or other laws applicable to issuance of shares.

 

Term. You may not exercise your Option before the Date of Grant or after the expiration of the Option’s term. The term of your Option expires, subject to the provisions of Section 5(h) of the Plan, upon the earliest of the following:

 

immediately upon the termination of your Continuous Service for Cause;

 

three (3) months after the termination of your Continuous Service for any reason other than Cause, your Disability or your death; provided, however, that if during any part of such three (3) month period your Option is not exercisable solely because of the condition set forth in the Section above relating to “Securities Law Compliance,” your Option will not expire until the earlier of the Expiration Date or until it has been exercisable for an aggregate period of three (3) months after the termination of your Continuous Service provided further, if during any part of such three (3) month period, the sale of any Ordinary Shares received upon exercise of your Option would violate the Company’s insider trading policy, then your Option will not expire until the earlier of the Expiration Date or until it has been exercisable for an aggregate period of three (3) months after the termination of your Continuous Service during which the sale of the Ordinary Shares received upon exercise of your Option would not be in violation of the Company’s insider trading policy;

 

twelve (12) months after the termination of your Continuous Service due to your Disability below;

 

eighteen (18) months after your death if you die either during your Continuous Service

 

within three (3) months after your Continuous Service terminates for any reason other than Cause or your death or Disability;

 

the Expiration Date indicated in your Grant Notice; or

 

the day before the tenth (10th) anniversary of the Date of Grant.

 

 

Exercise.

 

You may exercise the vested portion of your Option during its term by (i) delivering a Notice of Exercise (in a form designated by the Company) or completing such other documents and/or procedures designated by the Company for exercise and (ii) paying the exercise price and any applicable Withholding Taxes to the Company’s share plan administrator, or to such other person as the Company may designate, together with such additional documents as the Company may then require.

  

By exercising your Option you agree that, as a condition to any exercise of your Option, the Company may require you to enter into an arrangement providing for the payment by you to the Company of any Withholding Taxes of the Company arising by reason of (i) the exercise of your Option, (ii) the lapse of any substantial risk of forfeiture to which the Ordinary Shares are subject at the time of exercise, or (iii) the disposition of Ordinary Shares acquired upon such exercise.

 

You agree, with effect from the date of the exercise of your Option, to be bound by the terms of any and all Shareholders Agreements as if the same were set forth herein and will observe and discharge the terms and conditions of such Shareholders Agreements in all respects as if you had been a party thereto, and you shall be deemed to be comprised in the expressions “the holder of Ordinary Shares” and the “parties” as therein mentioned. By exercising your Option you agree that, as a condition to any exercise of your Option, the Company may require you to execute and deliver a deed of adherence to any Shareholders Agreement and require you to represent and warrant that you have the capacity to enter into, exercise your rights and lawfully perform and comply with the terms of any Shareholders Agreement; and that your obligations under any Shareholders Agreement are valid and binding upon you. The agreement set forth in this Section 8(c) is supplemental to and, except only where the context does not so admit, shall be construed as one and interpreted in accordance with any Shareholders Agreement and subject only to the agreements and variations herein expressly agreed and declared. All other conditions, covenants, provisions, powers and terms contained or subsisting in any Shareholders Agreement shall remain in full force and effect and shall be read and construed and be enforceable as if the agreements and variations herein were inserted therein by way of addition or substitution, as the case may be, and nothing herein shall affect or impair any Shareholders Agreement or its enforceability. For purposes of this International Option Agreement, the “Shareholders Agreement(s)” shall mean any and all agreements between the Company and all or certain shareholders of the Company that may be entered into from time to time, and/or one or more agreements among the Company, you and other parties thereto in such form determined from time to time by the Company in its sole discretion, that include terms and conditions that provide or impose in respect of the Company and/or any shareholders restrictions and obligations with respect to the transfer or voting of equity securities of the Company and such other terms and conditions as the Board may require, if any, including any amendment or supplement to or restatement of any such agreement from time to time.

 

Market Stand Off. By exercising your Option you agree that you will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to any Ordinary Shares or other securities of the Company held by you, for a period of one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act or under the applicable laws of another jurisdiction under which such securities may be listed, or such longer period as the underwriters or the Company will request to facilitate compliance with FINRA Rule 2711 or NYSE Member Rule 472 or any successor or similar rules or regulations (the “Lock-Up Period”); provided, however, that nothing contained in this Section 9 will prevent the exercise of a repurchase option, if any, in favor of the Company during the Lock-Up Period. You further agree to execute and deliver such other agreements as may be reasonably requested by the Company or any underwriters of the Company’s shares that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to your Ordinary Shares or other securities of the Company until the end of such period. You also agree that any transferee of any Ordinary Shares (or other securities) of the Company held by you will be bound by this Section 9. The underwriters of the Company’s shares are intended third party beneficiaries of this Section 9 and will have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

 

 

Transferability. Except as otherwise provided in this Section 10, your Option is not transferable, except by Will or by the laws of descent and distribution, and is exercisable during your life only by you. Upon receiving written permission from the Board or its duly authorized designee, you may, by delivering written notice to the Company, in a form approved by the Company and any broker designated by the Company to handle option exercises, designate a third party who, on your death, will thereafter be entitled to exercise this Option and receive the Ordinary Shares or other consideration resulting from such exercise. In the absence of such a designation, your executor or administrator of your estate will be entitled to exercise this Option and receive, on behalf of your estate, the Ordinary Shares or other consideration resulting from such exercise.

  

Right of First Refusal. Ordinary Shares that you acquire upon exercise of your Option are subject to any right of first refusal that may be described in the Company’s memorandum or articles of association or other constitutional or governance documents (including any Shareholder Agreement) in effect at such time the Company elects to exercise its right. Any Company right of first refusal will expire on the first date upon which then Ordinary Shares (or any other securities issued in exchange for or upon conversion of the Ordinary Shares) is listed (or approved for listing) upon notice of issuance on a securities exchange or quotation system.

 

Right of Repurchase. To the extent provided in the Company’s memorandum and articles of association or other constitutional or governance documents (including any Shareholder Agreement) in effect at such time the Company elects to exercise its right, the Company will have the right to repurchase all or any part of the Ordinary Shares you acquire pursuant to the exercise of your Option.

 

Option not a Service Contract. Your Option is not an employment or service contract, and nothing in your Option will be deemed to create in any way whatsoever any obligation on your part to continue in the employ of, or as a provider of services to, the Company or an Affiliate, or of the Company or an Affiliate to continue your employment or to continue to engage you to provide services. In addition, nothing in your Option will obligate the Company or an Affiliate, their respective shareholders, boards of directors, officers or employees to continue any relationship that you might have as a Director of, a member of the board of directors of, or a Consultant, for the Company or an Affiliate.

 

Withholding Obligations.

 

You acknowledge that, regardless of any action taken by the Company or, if different, your employer (the “Employer”) the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to your participation in the Plan and legally applicable to you (“Withholding Taxes”), is and remains your responsibility and may exceed the amount actually withheld by the Company or the Employer. You further acknowledge that the Company and/or the Employer make no representations or undertakings regarding the treatment of any Withholding Taxes in connection with any aspect of your Option, including, but not limited to, the grant, vesting or exercise of the Option, the subsequent sale of Ordinary Shares acquired pursuant to such exercise and the receipt of any dividends. Further, if you are subject to Withholding Taxes in more than one jurisdiction between the Date of Grant and the date of any relevant taxable or tax withholding event, as applicable, you acknowledge that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Withholding Taxes in more than one jurisdiction.

 

Prior to the relevant taxable or tax withholding event, as applicable, you agree to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Withholding Taxes. In this regard, you authorize the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to all Withholding Taxes by withholding from payroll and any other amounts payable to you, including any proceeds due to you from the sale of Ordinary Shares acquired at exercise of the Option either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization) without further consent.

 

 

Upon your request and subject to approval by the Company and compliance with any applicable legal conditions or restrictions, the Company may withhold from fully vested Ordinary Shares otherwise issuable to you upon the exercise of your Option a number of whole Ordinary Shares having a Fair Market Value, determined by the Company as of the date of exercise, not in excess of the minimum amount of tax required to be withheld by law (or such lower amount as may be necessary to avoid classification of your Option as a liability for financial accounting purposes).

 

You may not exercise your Option unless all obligations of the Company and/or any Affiliate for Withholding Taxes are satisfied. Accordingly, you may not be able to exercise your Option when desired even though your Option is vested, and the Company will have no obligation to issue any Ordinary Shares (or any certificate therefor) unless such obligations are satisfied.

 

Tax Consequences. You hereby agree that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes your tax liabilities. You will not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates related to tax liabilities arising from your Option or your other compensation. In particular, you acknowledge that this Option is exempt from Section 409A of the Code only if the exercise price per share specified in the Grant Notice is at least equal to the “fair market value” per Ordinary Share on the Date of Grant and there is no other impermissible deferral of compensation associated with the Option.

 

Personal Data. You understand that your Employer, if applicable, the Company, and/or its Affiliates hold certain personal information about you, including but not limited to your name, home address, telephone number, date of birth, social security or equivalent tax identification number, salary, nationality, job title, and details of your Option (the “Personal Data”). Certain Personal Data may also constitute “Sensitive Personal Data” or similar classification under applicable local law and be subject to additional restrictions on collection, processing and use of the same under such laws. Such data include but are not limited to Personal Data and any changes thereto, and other appropriate personal and financial data about you. You hereby provide express consent to the Company or its Affiliates to collect, hold, and process any such Personal Data and Sensitive Personal Data. You also hereby provide express consent to the Company and/or its Affiliates to transfer any such Personal Data and Sensitive Personal Data outside the country in which you are employed or retained, including transfers to the United States. The legal persons for whom such Personal Data are intended are the Company, any broker company, registered office provider, or professional adviser providing services to the Company in connection with the administration of the Plan or the Company. You have been informed of your right to access and correct your Personal Data and/or Sensitive Personal Data by applying to the Company representative identified on the Grant Notice.

 

Additional Acknowledgements. You hereby consent and acknowledge that:

 

Participation in the Plan is voluntary and therefore you must accept the terms and conditions of the Plan and this International Option Agreement as a condition to participating in the Plan and receipt of your Option.

 

The Plan is discretionary in nature and the Company can amend, cancel, or terminate it at any time in its sole discretion.

 

Your Option and any other Share Awards under the Plan are voluntary and occasional and do not create any contractual or other right to receive future awards or other benefits in lieu of future awards, even if similar awards have been granted repeatedly in the past.

 

 

All determinations with respect to any such future awards, including, but not limited to, the time or times when such awards are made, the size of such awards and performance and other conditions applied to the awards, will be at the sole discretion of the Company.

 

The value of your Option is an extraordinary item of compensation, which is outside the scope of your employment, service contract or consulting agreement, if any. This Share Award shall not form part of any past, current or future entitlement to remuneration or benefits which you may have under any contract of employment, service contract or consulting agreement with the Company or any Affiliate nor form any part of any such contract of employment, service contract or consulting agreement between you and the Company or any Affiliate.

 

Your Option, and any income derived therefrom are a potential bonus payment not paid in lieu of any cash salary compensation and not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any termination, severance, resignation, redundancy, end of service payments, bonuses, long-service awards, life or accident insurance benefits, pension or retirement benefits or similar payments.

 

In the event of the involuntary termination of your Continuous Service, your eligibility to receive payments under this Share Award or the Plan in respect of the unvested portion of your Share Award, if any, will terminate effective as of the date that you are no longer actively employed or retained regardless of any reasonable notice period mandated under local law, except as expressly provided in this International Option Agreement.

 

The future value of your Option is unknown and cannot be predicted with certainty. You do not have, and will not assert, any claim or entitlement to compensation, indemnity or damages arising from the termination of your Option or diminution in value of your Option and you irrevocably release the Company, its Affiliates and, if applicable, your Employer, if different from the Company or any Affiliate, from any such claim that may arise.

 

For purposes of this International Option Agreement, your Continuous Service will be considered terminated as of the date you are no longer actively providing services to the Company or an Affiliate (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), and unless otherwise expressly provided in the Agreement or determined by the Company, (i) your right to vest in the Option under the Plan, if any, will terminate as of such date and will not be extended by any notice period (e.g., your period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any); and (ii) the period (if any) during which you may exercise the Option after such termination of your Continuous Service will commence on the date you cease to actively provide services and will not be extended by any notice period mandated under employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any; the Board or its duly authorized designee shall have the exclusive discretion to determine when you are no longer actively providing services for purposes of your Option (including whether you may still be considered to be providing services while on a leave of absence).

 

Neither the Company, the Employer nor any Affiliate of the Company shall be liable for any foreign exchange rate fluctuation that may affect the value of the Option or of any amounts due to you pursuant to the exercise of the Option or the subsequent sale of any Ordinary Shares acquired upon exercise.

 

The Plan and this International Option Agreement set forth the entire understanding between you, the Company and any Affiliate regarding your Option and supersedes all prior oral and written agreements pertaining to your Option.

 

 

Notices. Any notices provided for in your Option, this International Option Agreement or the Plan will be given in writing (including electronically) and will be deemed effectively given upon receipt or, in the case of notices delivered by mail by the Company to you, five (5) days after deposit in the mail, postage prepaid, addressed to you at the last address you provided to the Company. The Company may, in its sole discretion, decide to deliver any documents related to participation in the Plan, this International Option Agreement and your Option by electronic means or to request your consent to participate in the Plan by electronic means. By accepting your Option, you consent to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

 

Governing Plan Document. Your Option is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your Option, and is further subject to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and adopted pursuant to the Plan. If there is any conflict between the provisions of this International Option Agreement and those of the Plan, the provisions of the Plan will control.

 

Effect on Other Employee Benefit Plans. The value of the Option will not be included as compensation, earnings, salaries, or other similar terms used when calculating your benefits under any employee benefit plan sponsored by the Company or any Affiliate, except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend, modify, or terminate any of the Company’s or any Affiliate’s employee benefit plans.

 

Voting Rights. You will not have voting or any other rights as a shareholder of the Company with respect to the shares to be issued pursuant to this International Option Agreement. Nothing contained in this International Option Agreement, and no action taken pursuant to its provisions, will create or be construed to create a trust of any kind or a fiduciary relationship between you and the Company or any other person.

 

Severability. If all or any part of this International Option Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity will not invalidate any portion of this International Option Agreement or the Plan not declared to be unlawful or invalid. Any Section of this International Option Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

 

Waiver. You acknowledge that a waiver by the Company of breach of any provision of the International Option Agreement shall not operate or be construed as a waiver of any other provision of the International Option Agreement, or of any subsequent breach of the International Option Agreement.

 

Governing Law. The grant of the Option and the provisions of this International Option Agreement are governed by, and subject to, the laws of the Cayman Islands, without regard to the conflict of law provisions. You and the Company each hereby irrevocably submit to the non-exclusive jurisdiction of the courts of the Cayman Islands.

 

Language. If you have received this International Option Agreement, or any other document related to the Option and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

 

 

Imposition of Other Requirements. The Company reserves the right to impose other requirements on your participation in the Plan, on the Option and on any Ordinary Shares purchased upon exercise of the Option, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require you to provide additional information and documentation and / or sign any additional agreements or undertakings that may be necessary to accomplish the foregoing, including without limitation, at the sole discretion of the Company, requiring you to execute a counterpart signature page and agreement to be bound by any Shareholder Agreement and requiring you to execute an irrevocable proxy and power of attorney authorizing an officer or director of the Company to vote all of your Ordinary Shares (in circumstances where such Ordinary Shares carry voting rights, for example class meetings) and take certain other actions with respect to your Ordinary Shares in his or her sole discretion.

 

Miscellaneous.

 

The rights and obligations of the Company under your Option will be transferable to any one or more persons or entities, and all covenants and agreements hereunder will inure to the benefit of, and be enforceable by the Company’s successors and assigns.

 

You agree upon request to execute any further documents or instruments necessary or desirable in the sole determination of the Company to carry out the purposes or intent of your Option.

 

You acknowledge and agree that you have reviewed this International Option Agreement and the Plan in their entirety, have had an opportunity to obtain the advice of counsel prior to executing and accepting your Option, and fully understand all provisions of this International Option Agreement, the Plan and your Option. You further acknowledge that the Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding your participation in the Plan, or your acquisition or sale of the underlying Ordinary Shares.

 

This International Option Agreement will be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

 

All obligations of the Company under the Plan and this International Option Agreement will be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

 

*      *      *

 

This International Option Agreement will be deemed to be signed by you upon
the signing by you of the Share Option Grant Notice to which it is attached.

 

Attachment II

 

2019 Equity Incentive Plan

 

 

Attachment III

 

International Notice of Exercise

 

ShouTi Inc.
____________________________
____________________________		Date of Exercise: _______________

 

Ladies and Gentlemen:

 

This constitutes notice under my Option that I elect to purchase the number of Ordinary Shares of ShouTi Inc. (the “Company”) for the price set forth below (all amounts are in US dollars).

 

Option dated:	_______________
Number of Ordinary Shares  as to which option is exercised:	_______________
Certificates to be issued in name of:	_______________
Total exercise price:	US$______________
Cash, check, bank draft or money order delivered herewith:	US$______________
Regulation T Program (cashless exercise):	US$______________
Value of ________ shares of the Company delivered herewith7:	US$______________
Value of ________ shares of the Company pursuant to net exercise8:	US$______________

 

By this exercise, I agree (i) to provide such additional documents as you may require pursuant to the terms of the ShouTi Inc. 2019 Equity Incentive Plan, and (ii) to provide for the payment by me to you (in the manner designated by you) of your withholding obligation, if any, relating to the exercise of this Option.

 

I hereby make the following certifications and representations with respect to the number of shares of the Company listed above (the “Shares”), which are being acquired by me for my own account upon exercise of this Option as set forth above:

 

I acknowledge that the Shares have not been registered or qualified under the U.S. Securities Act of 1933 as amended (the “Securities Act”), or other applicable securities laws on the ground that the sale of the Shares is exempt from such registration or qualification. I further acknowledge that the Shares are deemed to constitute “restricted securities” under Rule 701 and Rule 144 promulgated under the Securities Act. I warrant and represent to the Company that I have no present intention of distributing or selling said Shares, except as permitted under the Securities Act and any applicable state securities laws and applicable securities laws of any other jurisdiction.

 

⁷       Shares must meet the public trading requirements set forth in the option. Shares must be valued in accordance with the terms of the option being exercised, and must be owned free and clear of any liens, claims, encumbrances or security interests. Certificates must be endorsed or accompanied by an executed assignment separate from certificate.

⁸       ShouTi Inc. must have established net exercise procedures at the time of exercise in order to utilize this payment method.

 

 

I further acknowledge that I will not be able to resell the Shares for at least ninety (90) days after the shares of the Company becomes publicly traded (i.e., subject to the reporting requirements of Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934) under Rule 701 and that more restrictive conditions apply to affiliates of the Company under Rule 144.

 

I further acknowledge that all certificates representing any of the Shares subject to the provisions of this Option shall have endorsed thereon appropriate legends reflecting the foregoing limitations, as well as any legends reflecting restrictions pursuant to the Company’s memorandum and articles of association and other constitutional and governance documents (including any Shareholder Agreements) and/or applicable securities laws.

 

I further acknowledge that the International Option Agreement contains condition to the exercise of this Option which must be satisfied in order to exercise this Option.

 

I further agree that, if required by the Company (or a representative of the underwriters) in connection with the first underwritten registration of the offering of any securities of the Company under the Securities Act or under the applicable laws of another jurisdiction under which such securities may be listed, I will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any shares or other securities of the Company for a period of one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act or under the applicable laws of another jurisdiction under which such securities may be listed, or such longer period as necessary to permit compliance with NASD Rule 2711 or NYSE Member Rule 472 and similar rules and regulations (the “Lock-Up Period”). I further agree to execute and deliver such other agreements as may be reasonably requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such period.

 

	Very truly yours,
	Address:

 

 

Exhibit 10.5

 

SHOUTI INC.

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

for

 

RAYMOND STEVENS

 

This Executive Employment Agreement (this “Agreement”), is made and entered into effective as of May 16, 2019 (the “Effective Date”), by and between Raymond Stevens (“Employee”) and ShouTi Inc., a Delaware corporation (the “Company”).

 

1.             Employment by the Company.

 

1.1           Position. Employee shall serve as the Company’s Chief Executive Officer, reporting directly to the Company’s Board of Directors (the “Board”) and to the Board of Directors (the “Parent Board”) of the Company’s parent, ShouTi Inc., a Cayman Islands exempted company (the “Cayman Parent”). During the term of Employee’s employment with the Company, Employee will devote Employee’s best efforts and all of Employee’s business time and attention to the business of the Company, except as permitted in Section 7 of this Agreement and excluding approved vacation periods and reasonable periods of illness or other incapacities permitted by the Company’s general employment policies. Employee further agrees not to usurp, for Employee’s own personal benefit or gain, any opportunities in the Company’s line of business. Employee shall be expected to work on a full-time basis and travel as part of Employee’s position.

 

1.2           Start Date. The Company and Employee acknowledge and agree that Employee’s start date with the Company began on May 16, 2019 (the “Start Date”).

 

1.3          Duties and Location. Employee shall perform such duties as are customarily associated with the position of Chief Executive Officer, and such other duties as are assigned to Employee by the Board. Employee’s primary office locations shall be the Company’s facilities in California and Shanghai, China, or at such other locations as mutually agreed. Subject to the terms of this Agreement and applicable law, the Company reserves the right to reasonably require Employee to perform Employee’s duties at places other than Employee’s primary office location from time to time and to require reasonable business travel.

 

1.4           Board Membership. As of the Effective Date, Employee shall have been appointed to serve as a member of the Board. For so long as Employee remains the Chief Executive Officer of the Company, the Board will nominate Employee for re-election as a member of the Board. Employee shall serve as a director on the Board without additional compensation. Upon ceasing being Chief Executive Officer of the Company for any reason, Employee shall immediately resign from the Board and the board of directors of any of the Company’s subsidiaries.

 

1.5           Policies and Procedures. The employment relationship between the parties shall be governed by the general employment policies and practices of the Company, including any Employee Handbook adopted by the Company, as well as by all other rules and policies applicable to the Company’s professional employees, except that when the terms of this Agreement differ from or are in conflict with the Company’s general employment policies or practices, this Agreement shall control.

 

 

1.6           At-Will Employment. Employee’s employment relationship with the Company is at-will. Either the Company or Employee shall have the right to terminate the employment relationship at any time, with or without Cause (as defined below) or advance notice. Should a Company policy exist now or in the future which contradicts this at-will provision, this at-will provision controls the relationship between Employee and the Company. The at-will nature of Employee’s employment may only be changed in an express written agreement signed by Employee and a duly authorized officer of the Board. Nothing in this Agreement is intended to modify the at-will employment relationship between the Company and Employee.

 

2.             Compensation.

 

2.1          Base Salary. For services to be rendered hereunder, for the years ending on each of the first and second anniversaries of Employee’s Start Date, Employee shall be paid a base annual salary at the rate of $400,000 (the “Base Salary”), less all required and applicable standard payroll deductions and withholdings for federal and state taxes and for any authorized voluntary deductions and payable in accordance with the Company’s regular payroll schedule. Employee’s Base Salary shall be reviewed at least annually by the Compensation Committee of the Board (the “Compensation Committee”).

 

2.2           Sign-On Bonus. Employee shall receive a one-time bonus (the “Sign-On Bonus”) in the amount of $83,000, less standard payroll deductions and withholdings, which will be paid in a lump sum by the Company on the first regular payroll date following the date this Agreement is fully executed.

 

2.3           Annual Bonus. Beginning in with the twelve-month period ending May 15, 2021, then for the period beginning May 16, 2021 and ending December 31, 2021, and then for the period beginning January 1, 2022 and ending December 31, 2022 and for each twelve-month period ending December 31 thereafter, Employee will be eligible for an annual target bonus (the “Annual Bonus”) equal to thirty-three percent (33%) of Employee’s then current Base Salary at a “meeting expectations” level of achievement (the “Target Bonus Amount”). The actual Annual Bonus may be as high as fifty-five percent (55%) of Employee’s then current Base Salary at an “exceeding expectations” level of achievement. The Annual Bonus for the period ending December 31, 2021 shall be prorated to match the portion of the year to which it applies. Whether Employee receives an Annual Bonus for any given year, and the amount of any such Annual Bonus, will be determined in the good faith reasonable discretion of the Board, which determination will be based upon the Company’s and Employee’s achievement of objectives and milestones. The Company’s and Employee’s objectives and milestones will be established on an annual basis by the Board (or Compensation Committee thereof) in consultation with the Employee, which objectives and milestones may provide for payments above and below target based on the level of performance achievement. No Annual Bonus is guaranteed and, in addition to the other conditions for earning such compensation, and except as provided for in Section 8 below, Employee must remain an employee in good standing of the Company on the date the Annual Bonus is paid in order to be eligible for and earn any Annual Bonus. For the twelve month period ending May 15, 2020, Employee will not be eligible for an Annual Bonus, but will receive the Sign-On Bonus instead.

 

 

3.           Standard Company Benefits. Employee shall, in accordance with Company policy and the terms and conditions of the applicable Company benefit plan documents, be eligible to participate in the benefit and fringe benefit programs provided by the Company to its executive officers and other employees from time to time. Except as provided below in this Section 3, Employee shall also be entitled to paid sick leave, paid time off, and holidays as outlined in the Company’s employment policies, and as otherwise required by applicable law. Employee shall also be entitled to all other holiday and paid time off generally available to other executives of the Company. Any such benefits shall be subject to the terms and conditions of the governing benefit plans and policies, as well as the Company’s policies and may be changed by the Company in its discretion.

 

4.            Expenses / Legal Fees. The Company will reimburse Employee for reasonable travel, entertainment or other expenses incurred by Employee in furtherance or in connection with the performance of Employee’s duties hereunder, in accordance with applicable law and the Company’s expense reimbursement policy as in effect from time to time. Additionally, upon presentation of appropriate documentation, the Company shall reimburse Employee’s reasonable counsel fees incurred in connection with the negotiation and documentation of this Agreement (the “Legal Fees”); provided however, that in no event shall the Company’s payment obligations with regard to the Legal Fees exceed $15,000 in the aggregate.

 

5.            Equity.

 

5.1           Options. The Company will recommend to its Compensation Committee that Employee be granted an option to purchase 100,000 Ordinary Shares of the Cayman Parent (the “Option”). Grant of the Option is subject to the approval of the Parent Board. If granted, the Option shall vest over four years of Employee’s continuous service with the Company, with twenty-five percent (25%) of the shares subject to the Option grant becoming vested on the first year anniversary of the Start Date, and the remaining shares becoming vested in equal monthly installments over the following thirty-six (36) months of Employee’s continuous service. The exercise price of the Option, as well as all other matters related to the Option, will be governed by and subject to the terms and conditions set forth in the Cayman Parent’s 2019 Equity Incentive Plan (the “Equity Plan”), and the stock option agreement Employee will be required to electronically accept.

 

6.            Proprietary Information Obligations.

 

6.1          Proprietary Information Agreement. As a condition of employment, Employee shall execute and abide by the Company’s standard form of Employee Confidential Information and Invention Assignment Agreement (the “CIIAA”).

 

 

6.2          Third-Party Agreements and Information. Employee represents and warrants that Employee’s employment by the Company does not conflict with any prior employment or consulting agreement or other agreement with any third party, and that Employee will perform Employee’s duties to the Company without violating any such agreement. Employee represents and warrants that Employee does not possess confidential information arising out of prior employment, consulting, or other third party relationships, that would be used in connection with Employee’s employment by the Company, except as expressly authorized by that third party. During Employee’s employment by the Company, Employee will use in the performance of Employee’s duties only information that is generally known and used by persons with training and experience comparable to Employee’s own, common knowledge in the industry, otherwise legally in the public domain, or obtained or developed by the Company or by Employee in the course of Employee’s work for the Company. In addition, Employee represents that Employee has disclosed to the Company in writing any agreement Employee may have with any third party (e.g., a former employer) which may limit Employee’s ability to perform Employee’s duties to the Company, or which could present a conflict of interest with the Company, including but not limited to disclosure (and a copy) of any contractual restrictions on solicitations or competitive activities.

 

7.            Outside Activities and Non-Competition During Employment.

 

7.1          Outside Activities. Throughout Employee’s employment with the Company, Employee may engage in civic and not-for-profit activities so long as such activities do not interfere with the performance of Employee’s duties hereunder or present a conflict of interest with the Company or its affiliates. Subject to the restrictions set forth herein, and only with prior written disclosure to and consent of the Board (which consent will not be unreasonably withheld), Employee may engage in other types of business or public activities. The Board may rescind such consent, if the Board determines, in its sole discretion, that such activities compromise or threaten to compromise the Company’s or its affiliates’ business interests or conflict with Employee’s duties to the Company or its affiliates. Notwithstanding the foregoing, Employee shall be permitted to continue his activities for University of Southern California, iHuman Institute/ShanghaiTech University, Danaher and Bird Rock Bio; provided that the time commitment relating thereto remains substantially the same as in the recent past, and that such activities do not compromise the Company’s business interests or conflict with Employee’s duties to the Company.

 

7.2           Non-Competition During Employment. Throughout Employee’s employment with the Company, Employee will not, without the express written consent of the Board, directly or indirectly serve as an officer, director, stockholder, employee, partner, proprietor, investor, joint ventures, associate, representative or consultant of any person or entity engaged in, or planning or preparing to engage in, business activity competitive with any line of business engaged in (or planned to be engaged in) by the Company or its affiliates; provided, however, that Employee may purchase or otherwise acquire up to (but not more than) one percent (1%) of any class of securities of any enterprise (without participating in the activities of such enterprise) if such securities are listed on any national or regional securities exchange. In addition, Employee will be subject to certain restrictions (including restrictions continuing after Employee’s employment ends) outlined in the terms of the CIIAA.

 

 

8.            Termination of Employment; Severance and Change in Control Benefits.

 

8.1          Termination Without Cause or Resignation for Good Reason Unrelated to Change in Control. In the event Employee’s employment with the Company is terminated by the Company without Cause (as defined below), and other than as a result of Employee’s death or Disability (as defined below), or Employee resigns for Good Reason, in either case, at any time except during the Change in Control Period (as defined below), then provided such termination constitutes a “separation from service” (as defined under Treasury Regulation Section 1.409A-1(h), without regard to any alternative definition thereunder, a “Separation from Service”), and provided that Employee satisfies the Release Requirement in Section 9 below, and remains in compliance with the terms of this Agreement and the CIIAA, the Company shall provide Employee with the following “Severance Benefits”:

 

8.1.1       Severance Payments. Employee shall receive severance pay in the form of continuation of Employee’s final monthly Base Salary for a period of six (6) months (or, if either the Company or the Cayman Parent is then publicly traded, then for a period of twelve (12) months)) following termination, subject to required and voluntarily authorized payroll deductions and federal and state tax withholdings (the “Severance Payments”). Subject to Section 10 below, the Severance Payments shall be made on the Company’s regular payroll schedule in effect following Employee’s Separation from Service date; provided, however that any such payments that are otherwise scheduled to be made prior to the Release Effective Date (as defined below) shall instead accrue and be made on the first regular payroll date following the Release Effective Date. For such purposes, Employee’s final Base Salary will be calculated prior to giving effect to any reduction in Base Salary that would give rise to Employee’s right to resign for Good Reason.

 

8.1.2      Target Bonus / Prior Year Bonus. Employee shall also receive an amount equal to one-half (1/2) of the Target Bonus Amount for the year in which the Separation from Service occurs (or, if either the Company or the Cayman Parent is then publicly-traded, then equal to 100% of the Target Bonus Amount), payable in a lump sum within sixty (60) days following the Separation from Service date and subject to required and voluntarily authorized payroll deductions and federal and state tax withholdings (the “Termination Bonus”). For clarity, if such termination occurs prior to May 15, 2020, Employee’s Target Bonus Amount shall be deemed to be the amount of the Sign-On Bonus. In addition, if Employee’s Separation from Service occurs prior to Employee’s receipt of an Annual Bonus payment for the completed calendar year that immediately precedes the calendar year of the Separation from Service, Employee shall also receive an Annual Bonus payment for such preceding calendar year, pursuant to the conditions of Section 2.3 above (the “Prior Year Bonus”).  The Prior Year Bonus shall be paid, subject to required and voluntarily authorized payroll deductions and federal and state tax withholdings, in the calendar year following the year to which the Annual Bonus payment relates, at the same time as the annual bonuses for such calendar year are generally paid to other executives; provided, however that if such payment date is prior to the Release Effective Date (as defined below), the Prior Year Bonus shall instead accrue and be made on the first regular payroll date following the Release Effective Date.

 

8.1.3      Health Care Continuation Coverage Payments.

 

(i)           COBRA Premiums. If Employee timely elects continued coverage under COBRA, the Company will reimburse Employee’s COBRA premiums to continue Employee’s coverage (including coverage for Employee’s eligible dependents, if applicable) (“COBRA Premiums”) through the period starting on the Separation from Service date and ending six (6) months (or if either the Company or the Cayman Parent is then publicly-traded, then twelve (12) months) after the Separation from Service date (the “COBRA Premium Period”); provided, however, that the Company’s provision of such COBRA Premium benefits will immediately cease if during the COBRA Premium Period Employee becomes eligible for group health insurance coverage through a new employer or Employee ceases to be eligible for COBRA continuation coverage for any reason, including plan termination. In the event Employee becomes covered under another employer’s group health plan or otherwise ceases to be eligible for COBRA during the COBRA Premium Period, Employee must immediately notify the Company, in writing, of such event.

 

 

(ii)         Special Cash Payments in Lieu of COBRA Premiums. Notwithstanding the foregoing, if the Company determines, in its sole discretion, that it cannot pay the COBRA Premiums without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), regardless of whether Employee or Employee’s dependents elect or are eligible for COBRA coverage, the Company instead shall pay to Employee, on the first day of each calendar month following the Separation from Service date, a fully taxable cash payment equal to the applicable COBRA premiums for that month (including the amount of COBRA premiums for Employee’s eligible dependents), subject to applicable federal and state tax withholdings and required or voluntarily authorized deductions (such amount, the “Special Cash Payment”), for the remainder of the COBRA Premium Period. Employee may, but is not obligated to, use such Special Cash Payments toward the cost of COBRA premiums or toward premium costs under an individual health plan.

 

8.1.4      Equity Acceleration. Notwithstanding anything to the contrary set forth in the Equity Plan, any other equity incentive plans or any award agreement, effective as of Employee’s Separation from Service date, the vesting and exercisability of the unvested time-based equity awards then held by Employee shall accelerate as if Employee had provided an additional six (6) months (or, if either the Company or the Cayman Parent is then publicly-traded, then twelve (12) months), of continued services following the Separation from Service date (with monthly pro rated vesting during the first year of service), and each such equity award shall remain exercisable, if applicable, following Employee’s Separation from Service as set forth in the applicable equity award documents. With respect to any performance-based vesting equity award, such award shall continue to be governed in all respects by the terms of the applicable equity award documents.

 

8.2          Termination Without Cause or Resignation for Good Reason During Change in Control Period. In the event Employee’s employment with the Company is terminated by the Company without Cause (and other than as a result of Employee’s death or Disability) at any time during the Change in Control Period, or Employee resigns for Good Reason at any time during the Change in Control Period, in lieu of (and not additional to) the Severance Benefits described in Section 8.1, and provided that Employee satisfies the Release Requirement in Section 9 below and remains in compliance with the terms of this Agreement and the CIIAA, the Company shall instead provide Employee with the following “CIC Severance Benefits”. For the avoidance of doubt: (i) in no event will Employee be entitled to severance benefits under both Section 8.1 and this Section 8.2, and (ii) if the Company has commenced providing Severance Benefits to Employee under Section 8.1 prior to the date that Employee becomes eligible to receive CIC Severance Benefits under this Section 8.2, the Severance Benefits previously provided to Employee under Section 8.1 of this Agreement shall reduce the CIC Severance Benefits provided under this Section 8.2:

 

 

8.2.1      CIC Severance Payment. Employee shall receive a severance pay in an amount equal to Employee’s final annual Base Salary plus Employee’s final Target Bonus Amount (which, for purposes of this Section 8.2, shall be equal to the Sign-On Bonus if such termination event occurs prior to May 15, 2020), subject to required and voluntarily authorized payroll deductions and federal and state tax withholdings (the “CIC Severance Payments”). Subject to Section 10 below, the CIC Severance Payments shall be made on the Company’s regular payroll schedule over the period of twelve (12) months following Employee’s Separation from Service date; provided, however that any such payments that are otherwise scheduled to be made prior to the Release Effective Date (as defined below) shall instead accrue and be made on the first regular payroll date following the Release Effective Date. For such purposes, Employee’s final Base Salary and Target Bonus Amount will be calculated prior to giving effect to any reduction in Base Salary that would give rise to Employee’s right to resign for Good Reason.

 

8.2.2       CIC Health Care Continuation Coverage Payments.

 

(i)           COBRA Premiums. If Employee timely elects continued coverage under COBRA, the Company will reimburse Employee’s COBRA premiums to continue Employee’s coverage (including coverage for Employee’s eligible dependents, if applicable) (“CIC COBRA Premiums”) through the period starting on the Separation from Service date and ending twelve (12) months after the Separation from Service date (the “CIC COBRA Premium Period”); provided, however, that the Company’s provision of such CIC COBRA Premium benefits will immediately cease if during the CIC COBRA Premium Period, Employee becomes eligible for group health insurance coverage through a new employer or Employee ceases to be eligible for COBRA continuation coverage for any reason, including plan termination. In the event Employee becomes covered under another employer’s group health plan or otherwise ceases to be eligible for COBRA during the CIC COBRA Premium Period, Employee must immediately notify the Company, in writing, of such event.

 

(ii)         Special Cash Payments in Lieu of CIC COBRA Premiums. Notwithstanding the foregoing, if the Company determines, in its sole discretion, that it cannot pay the CIC COBRA Premiums without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), regardless of whether Employee or Employee’s dependents elect or are eligible for COBRA coverage, the Company instead shall pay to Employee, on the first day of each calendar month following the Separation from Service date, a fully taxable cash payment equal to the applicable COBRA premiums for that month (including the amount of COBRA premiums for Employee’s eligible dependents), subject to applicable federal and state tax withholdings (such amount, the “Special CIC Cash Payment”), for the remainder of the CIC COBRA Premium Period. Employee may, but is not obligated to, use such Special CIC Cash Payments toward the cost of COBRA premiums.

 

 

8.2.3       Prior Year Bonus. If Employee’s Separation from Service occurs prior to Employee’s receipt of an Annual Bonus payment for the completed calendar year that immediately precedes the calendar year of the Separation from Service, Employee shall also receive the Prior Year Bonus.  The Prior Year Bonus shall be paid, subject to required and voluntarily authorized payroll deductions and federal and state tax withholdings, in the calendar year following the year to which the Annual Bonus payment relates, at the same time as the annual bonuses for such calendar year are generally paid to other executives; provided, however that if such payment date is prior to the Release Effective Date (as defined below), the Prior Year Bonus shall instead accrue and be made on the first regular payroll date following the Release Effective Date.

 

8.2.4      Equity Acceleration. Notwithstanding anything to the contrary set forth in the Equity Plan, any other equity incentive plans or any award agreement, effective as of Employee’s employment Separation from Service date that occurs during the Change in Control Period, the vesting and exercisability of all equity awards then held by Employee shall accelerate such that all shares become immediately vested and, if applicable, exercisable by Employee upon such Separation from Service and shall remain exercisable (if such award is capable of being exercised) following Employee’s Separation from Service as set forth in the applicable equity award documents, with any performance-based equity awards accelerating at the “target” level of achievement.

 

8.3          Termination for Death or Disability. In the event Employee’s employment with the Company is terminated due to Employee’s death or Disability at any time, in lieu of (and not additional to) the Severance Benefits and CIC Severance Benefits described in Sections 8.1 and 8.2 above, and provided that Employee or his heirs or estate satisfies the Release Requirement in Section 9 below and remains in compliance with the terms of this Agreement and the CIIAA, Employee (or his heirs or estate) shall receive the prorated amount of the Target Bonus Amount for the year in which the Separation from Service occurs equal to the product of (i) and (ii), where (i) is the product of (a) Employee’s final Base Salary (but before giving effect to any reduction in Base Salary that would give rise to Employee’s right to resign for Good Reason) and (b) the percentage to achieve a Target Bonus Amount set forth in Section 2.3 above and where (ii) is (a) the number of days elapsed in the calendar year prior to the date on which the Separation from Service occurs divided by (b) 365 plus the Prior Year Bonus (if applicable), pursuant to the terms and conditions of Section 8.1.2 above (the “Death or Disability Benefits”). Notwithstanding the foregoing, Employee will not be entitled to the payments described in this Section 8.3 if Employee’s death or Disability is due to suicide or to Employee’s participation in an activity involving a significant risk of personal injury or death.

 

8.4          Termination for Cause; Resignation Without Good Reason. Employee will not be eligible for, or entitled to any severance benefits, including (without limitation) the Severance Benefits and CIC Severance Benefits listed in Sections 8.1 and 8.2 above, or the Death and Disability Benefits listed in Section 8.3, if the Company terminates Employee’s employment for Cause or Employee resigns Employee’s employment without Good Reason.

 

 

9.           Conditions to Receipt of Severance Benefits and CIC Severance Benefits. To be eligible for any of the Severance Benefits, CIC Severance Benefits or Death or Disability Benefits pursuant to Sections 8.1, 8.2, or 8.3 above, Employee must satisfy the following release requirement (the “Release Requirement”): return to the Company a signed and dated general release of all known and unknown claims in a separation agreement acceptable to the Company (the “Release”), which shall among other things include a mutual non-disparagement provision, but will not release Employee’s right to severance benefits (pursuant to the terms and conditions of Section 8 of this Agreement), or to indemnification against third party claims (pursuant to any written indemnification agreement with the Company to which Employee is a party, the charter, bylaws, or operating agreements of the Company, or under applicable law), and will not increase the scope or duration of any post-employment restrictions on Employee’s activities, within the applicable deadline set forth therein, but in no event later than forty-five (45) calendar days following Employee’s Separation from Service date, and permit the Release to become effective and irrevocable in accordance with its terms (such effective date of the Release, the “Release Effective Date”). No Severance Benefits, CIC Severance Benefits or Death or Disability Benefits will be paid hereunder prior to the Release Effective Date. Accordingly, if Employee breaches the preceding sentence and/or refuses to sign and deliver to the Company an executed Release or signs and delivers to the Company the Release but exercises Employee’s right, if any, under applicable law to revoke the Release (or any portion thereof), then Employee will not be entitled to any severance, payment or benefit under this Agreement.

 

10.           Section 409A. It is intended that all of the severance benefits and other payments payable under this Agreement satisfy, to the greatest extent possible, the exemptions from the application of Code Section 409A provided under Treasury Regulations 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9), and this Agreement will be construed to the greatest extent possible as consistent with those provisions, and to the extent not so exempt, this Agreement (and any definitions hereunder) will be construed in a manner that complies with Section 409A. For purposes of Code Section 409A (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), Employee’s right to receive any installment payments under this Agreement (whether Severance Payments, CIC Severance Payments, Death or Disability Payments, reimbursements or otherwise) shall be treated as a right to receive a series of separate payments and, accordingly, each installment payment hereunder shall at all times be considered a separate and distinct payment. Notwithstanding any provision to the contrary in this Agreement, if Employee is deemed by the Company at the time of Employee’s Separation from Service to be a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i), and if any of the payments upon Separation from Service set forth herein and/or under any other agreement with the Company are deemed to be “deferred compensation”, then to the extent delayed commencement of any portion of such payments is required in order to avoid a prohibited distribution under Code Section 409A(a)(2)(B)(i) and the related adverse taxation under Section 409A, such payments shall not be provided to Employee prior to the earliest of (i) the expiration of the six-month and one day period measured from the date of Employee’s Separation from Service with the Company, (ii) the date of Employee’s death or (iii) such earlier date as permitted under Section 409A without the imposition of adverse taxation. Upon the first business day following the expiration of such applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this Section shall be paid in a lump sum to Employee, and any remaining payments due shall be paid as otherwise provided herein or in the applicable agreement. No interest shall be due on any amounts so deferred. If the Company determines that any Severance Benefits or CIC Severance Benefits provided under this Agreement constitutes “deferred compensation” under Section 409A, and if necessary to avoid taxation under Section 409A, for purposes of determining the schedule for payment of the severance benefits, the effective date of the Release will not be deemed to have occurred any earlier than the sixtieth (60th) date following the Separation From Service, regardless of when the Release actually becomes effective. In addition to the above, to the extent required to comply with Section 409A and the applicable regulations and guidance issued thereunder, if the applicable deadline for Employee to execute (and not revoke) the applicable Release spans two calendar years, payment of the applicable Severance Benefit, CIC Severance Benefits, or Death or Disability Benefits shall not commence until the beginning of the second calendar year. To the extent required to avoid accelerated taxation and/or tax penalties under Code Section 409A, amounts reimbursable to Employee under this Agreement shall be paid to Employee on or before the last day of the year following the year in which the expense was incurred and the amount of expenses eligible for reimbursement (and in-kind benefits provided to Employee) during any one year may not effect amounts reimbursable or provided in any subsequent year. The Company makes no representation that any or all of the payments described in this Agreement will be exempt from or comply with Code Section 409A and makes no undertaking to preclude Code Section 409A from applying to any such payment.

 

 

11.           Section 280G; Limitations on Payment.

 

11.1           If any payment or benefit Employee will or may receive from the Company or otherwise (a “280G Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then any such 280G Payment provided pursuant to this Agreement (a “Payment”) shall be equal to the Reduced Amount. The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment (after reduction) being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever amount (i.e., the amount determined by clause (x) or by clause (y)), after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in Employee’s receipt, on an after-tax basis, of the greater economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in a Payment is required pursuant to the preceding sentence and the Reduced Amount is determined pursuant to clause (x) of the preceding sentence, the reduction shall occur in the manner (the “Reduction Method”) that results in the greatest economic benefit for Employee. If more than one method of reduction will result in the same economic benefit, the items so reduced will be reduced pro rata (the “Pro Rata Reduction Method”).

 

11.2           Notwithstanding any provision of Section 11.1 to the contrary, if the Reduction Method or the Pro Rata Reduction Method would result in any portion of the Payment being subject to taxes pursuant to Section 409A that would not otherwise be subject to taxes pursuant to Section 409A, then the Reduction Method and/or the Pro Rata Reduction Method, as the case may be, shall be modified so as to avoid the imposition of taxes pursuant to Section 409A as follows: (A) as a first priority, the modification shall preserve to the greatest extent possible, the greatest economic benefit for Employee as determined on an after-tax basis; (B) as a second priority, Payments that are contingent on future events (e.g., being terminated without Cause), shall be reduced (or eliminated) before Payments that are not contingent on future events; and (C) as a third priority, Payments that are “deferred compensation” within the meaning of Section 409A shall be reduced (or eliminated) before Payments that are not deferred compensation within the meaning of Section 409A.

 

 

11.3         Unless Employee and the Company agree on an alternative accounting firm or law firm, the accounting firm engaged by the Company for general tax compliance purposes as of the day prior to the effective date of the Change in Control transaction shall perform the foregoing calculations. If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the Change in Control transaction, the Company shall appoint a nationally recognized accounting or law firm to make the determinations required by this Section 11. The Company shall bear all expenses with respect to the determinations by such accounting or law firm required to be made hereunder. The Company shall use commercially reasonable efforts to cause the accounting or law firm engaged to make the determinations hereunder to provide its calculations, together with detailed supporting documentation, to Employee and the Company within fifteen (15) calendar days after the date on which Employee’s right to a 280G Payment becomes reasonably likely to occur (if requested at that time by Employee or the Company) or such other time as requested by Employee or the Company.

 

11.4          If Employee receives a Payment for which the Reduced Amount was determined pursuant to clause (x) of Section 11.1 and the Internal Revenue Service determines thereafter that some portion of the Payment is subject to the Excise Tax, Employee agrees to promptly return to the Company a sufficient amount of the Payment (after reduction pursuant to clause (x) of Section 11.1) so that no portion of the remaining Payment is subject to the Excise Tax. For the avoidance of doubt, if the Reduced Amount was determined pursuant to clause (y) of Section 11.1, Employee shall have no obligation to return any portion of the Payment pursuant to the preceding sentence.

 

12.           Definitions.

 

12.1          Cause. For purposes of this Agreement, “Cause” means the occurrence of any one or more of the following: (i) Employee’s conviction of or plea of guilty or nolo contendere to any felony or a crime of moral turpitude; (ii) Employee’s willful and continued refusal to follow lawful and reasonable written instructions of the Board or lawful and reasonable written policies and regulations of the Company or its affiliates; (iii) Employee’s willful and continued refusal to faithfully and diligently perform the assigned duties of Employee’s employment with the Company or its affiliates; (iv) fraudulent conduct by Employee; (v) willful misconduct by Employee that materially injures the Company or any affiliate or materially injures the reputation, character and standing of the Company or any affiliate; or (vi) material injury to the Company based on Employee’s willful and material breach of this Agreement, the CIIAA, or any written Company policies. An event described in Section 12.1(ii) through Section 12.1(vi) herein shall not be treated as “Cause” until after Employee has been given written notice of such event, failure, conduct or breach and Employee fails to cure such event, failure, conduct or breach within 30 calendar days from such written notice; provided, however, that such 30-day cure period shall not be required if the event, failure, conduct or breach is reasonably determined to be incapable of being cured by the Company.

 

12.2          Change in Control. For purposes of this Agreement, “Change in Control” shall have the meaning described in the Cayman Parent’s 2019 Equity Incentive Plan.

 

 

12.3           Change in Control Period. For purposes of this Agreement, “Change in Control Period” means the time period commencing three (3) months before the effective date of a Change in Control and ending on the date that is twelve (12) months after the effective date of a Change in Control.

 

12.4           Disability. For purposes of this Agreement, “Disability” means the inability of Employee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months.

 

12.5           Good Reason. For purposes of this Agreement, Employee shall have “Good Reason” for resignation from employment with the Company if any of the following actions are taken by the Company without Employee’s prior written consent: (i) a reduction in Employee’s Base Salary, unless in the same percentage as a salary reduction program applicable generally to the Company’s senior executives; (ii) a material reduction in Employee’s duties, responsibilities or authority, including removal of requirement to report to anyone other than the Board or the Parent Board; (iii) the material breach by the Company of this Agreement; or (iv) the relocation of Employee’s principal place of employment to a place that increases Employee’s one-way commute by more than twenty-five (25) miles as compared to Employee’s then-current principal place of employment immediately prior to such relocation. In order for Employee to resign for Good Reason, each of the following requirements must be met: (A) Employee must provide written notice to the Board within ninety (90) calendar days after Employee’s first knowledge of the event giving rise to Good Reason setting forth the basis for Employee’s resignation, (B) Employee must allow the Company at least thirty (30) calendar days from receipt of such written notice to cure such event, (C) such event is not reasonably cured by the Company within such 30 calendar day period (the “Cure Period”), and (D) Employee must resign in writing from all positions Employee then holds with the Company not later than ninety (90) calendar days after the expiration of the Cure Period.

 

13.           Dispute Resolution/Agreement to Arbitrate Claims. To ensure the rapid and economical resolution of disputes that may arise in connection with Employee’s employment with the Company, Employee and the Company agree that any and all disputes, claims, or causes of action, in law or equity, including but not limited to statutory claims, arising from or relating to the enforcement, breach, performance, or interpretation of this Agreement, Employee’s employment with the Company, or the termination of Employee’s employment from the Company, will be resolved pursuant to the Federal Arbitration Act, 9 U.S.C. §1, et seq. and to the fullest extent permitted by law, by final, binding and confidential arbitration. Except as provided below, the Company and Employee agree that confidential arbitration is the exclusive, final and biding method for resolving all such claims.

 

13.1       Claims Covered By this Agreement. Disputes that are subject to arbitration under this Agreement include, but are not limited to, claims for wages or other compensation due, including claims for overtime; meal or rest break claims; claims for breach of any contract or covenant (express or implied); tort claims, including, but not limited to claims for defamation, intentional infliction of emotional distress, invasion of privacy, and all negligence-based claims; personal injury claims; claims for discrimination, harassment and/or retaliation in employment including, but no limited to claims under the California Fair Employment and Housing Act, the California Labor Code, claims arising under Title VII of the Civil Rights Act of 1964, the Fair Labor Standards Act, the Equal Pay Act, the Employee Retirement Income Security Act, the California Family Rights Act of 1964, the Family and Medical Leave Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Older Worker Benefit Protection Act, the Sarbanes-Oxley Act, all as they may have been amended from time to time, claims for misclassification, and claims for violation of common law or any other federal, state, or local laws relating to employment or separation from employment or benefits associated with employment or separation for employment.

 

 

13.2       Claims Not Covered By this Agreement. Claims for workers’ compensation, unemployment insurance, claims for injunctive relief, and claims under California Private Attorneys General Act of 2004, as amended, are not covered by this Agreement. Nothing in this Agreement is intended to prevent Employee from filing an administrative claim with the Equal Employment Opportunity Commission or the California Department of Fair Employment and Housing. Moreover, both Employee and the Company may bring an action in any court of competent jurisdiction to compel arbitration under this Agreement and/or enforce and arbitration award.

 

13.3       Arbitration Rules and Procedures. The arbitration is to be conducted in or near the city in which Employee is or was last employed by the Company by JAMS, Inc. (“JAMS”) or its successors before a mutually selected single neutral arbitrator, under JAMS’ then applicable rules and procedures for employment disputes (which will be provided to Employee upon request); provided that the arbitrator shall: (i) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law; and (ii) issue a written arbitration decision including the arbitrator’s essential findings and conclusions on which the award was based and a statement of the award. Employee and the Company shall be entitled to all rights and remedies that either would be entitled to pursue in a court of law. Questions of whether a claim is subject to arbitration under this Agreement shall be decided by the arbitrator. Likewise, procedural questions which grow out of the dispute and bear on the final disposition are also matters for the arbitrator. To the maximum extent permitted by applicable law, all claims, disputes, or causes of action under this section, whether by Employee or the Company, must be brought in an individual capacity, and shall not be brought as a plaintiff (or claimant) or class member in any purported class or representative proceeding, nor joined or consolidated with the claims of any other person or entity. The Arbitrator may not consolidate the claims of more than one person or entity, and may not preside over any form of representative or class proceeding. Both Employee and the Company acknowledge that by agreeing to this arbitration procedure, they waive the right to resolve any such dispute through a trial by jury or judge or administrative proceeding. The Company shall pay all filing fees in excess of those which would be required if the dispute were decided in a court of law (that is, costs that are unique to arbitration) and shall pay the arbitrator’s fee. Each party shall pay the fees of its attorneys, the expenses of its witnesses, and any other costs and expenses that the party incurs in connection with the arbitration; provided that an arbitrator may award attorneys’ fees to the prevailing party, if the arbitrator determines in its sole discretion that such an award is permitted by applicable law. Any dispute as to whether a cost is unique to arbitration will be exclusively resolved by the arbitrator. Both the Employee and the Company have the right to be represented by legal counsel at any arbitration proceeding. The arbitration proceedings will be confidential to the extent permitted by law. Employee and the Company will maintain all information and documents exchanged in connection with and in the course of the arbitration as confidential, except to the extent the disclosure of such information or documentation is necessary to enforce any award or challenge any award as permitted by the applicable law.

 

 

13.4.       No Change in At-Will Employment. This agreement to arbitrate claims is not a contract of employment, expressed or implied, and Employee and the Company acknowledge that Employee’s employment with the Company is at-will and that this agreement does not change the “at-will” status of Employee’s employment. BOTH EMPLOYEE AND THE COMPANY ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE TERMS OF SECTION 13, AGREEMENT TO ARBITRATE CLAIMS, AND AGREE TO BE BOUND BY ITS TERMS.

 

14.          General Provisions.

 

14.1          Notices. Any notices provided must be in writing and will be deemed effective upon the earlier of personal delivery (including personal delivery by email upon confirmation of receipt) or the next day after sending by overnight carrier, to the Company at its primary office location and to Employee at the address as listed on the Company payroll.

 

14.2          Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction to the extent possible in keeping with the intent of the Company and the Employee (“the Parties”).

 

14.3          Waiver. Any waiver of any breach of any provisions of this Agreement must be in writing to be effective, and it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.

 

14.4          Complete Agreement. This Agreement, together with the CIIAA, constitutes the entire agreement between Employee and the Company with regard to the subject matter hereof and is the complete, final, and exclusive embodiment of the Company’s and Employee’s agreement with regard to this subject matter. This Agreement is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises, warranties or representations. It cannot be modified or amended except in a writing signed by a duly authorized officer of the Company, with the exception of those changes expressly reserved to the Company’s discretion in this Agreement.

 

14.5          Counterparts. This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but both of which taken together will constitute one and the same Agreement.

 

14.6           Headings. The headings of the sections hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to affect the meaning thereof.

 

 

14.7           Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by Employee and the Company, and their respective successors, assigns, heirs, executors and administrators, except that Employee may not assign any of Employee’s duties hereunder and Employee may not assign any of Employee’s rights hereunder without the written consent of the Company, which shall not be withheld unreasonably.

 

14.8           Tax Withholding. All payments and awards contemplated or made pursuant to this Agreement will be subject to withholdings of applicable taxes in compliance with all relevant laws and regulations of all appropriate government authorities. Employee acknowledges and agrees that the Company has neither made any assurances nor any guarantees concerning the tax treatment of any payments or awards contemplated by or made pursuant to this Agreement. Employee has had the opportunity to retain a tax and financial advisor and fully understands the tax and economic consequences of all payments and awards made pursuant to this Agreement.

 

14.9           Choice of Law. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the laws of the State of California.

 

In Witness Whereof, the Parties have executed this Agreement to become effective as of the Effective Date written above.

 

	ShouTi Inc., a Delaware corporation
	By:	/s/ Weimin Lin
		Weimin Liu
		Attorney-in-fact
	Employee
	/s/ Raymond Stevens
	Raymond Stevens

 

 

Exhibit 10.6 

 

SHOUTI INC.

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

for

 

JUN YOON

 

This Executive Employment Agreement (this “Agreement”), is made and entered into effective as of May 1, 2019 (the “Effective Date”), by and between Jun Yoon (“Employee”) and ShouTi Inc., a Delaware corporation (the “Company”).

 

1.              Employment by the Company.

 

1.1            Position. Employee shall serve as the Company’s Chief Operation Officer, reporting the Company’s Chief Executive Officer. During the term of Employee’s employment with the Company, Employee will devote Employee’s best efforts and all of Employee’s business time and attention to the business of the Company, except as permitted in Section 7 of this Agreement and excluding approved vacation periods and reasonable periods of illness or other incapacities permitted by the Company’s general employment policies. Employee further agrees not to usurp, for Employee’s own personal benefit or gain, any opportunities in the Company’s line of business. Employee shall be expected to work on a full-time basis and travel as part of Employee’s position.

 

1.2            Start Date. The Company and Employee acknowledge and agree that Employee’s start date with the Company began on April 29, 2019 (the “Start Date”).

 

1.3            Duties and Location. Employee shall perform such duties as are customarily associated with the position of Chief Operation Officer, and such other duties as are assigned to Employee by the Company’s Board of Directors (the “Board”). Employee’s primary office locations shall be the Company’s facilities in California and Shanghai, China, or at such other locations as mutually agreed. Subject to the terms of this Agreement and applicable law, the Company reserves the right to reasonably require Employee to perform Employee’s duties at places other than Employee’s primary office location from time to time and to require reasonable business travel.

 

1.4            Board Membership. As of the Effective Date, Employee shall have been appointed to serve as a member of the Board. For so long as Employee remains the Chief Operation Officer of the Company, the Board will nominate Employee for re-election as a member of the Board. Employee shall serve as a director on the Board without additional compensation. Upon ceasing being Chief Operation Officer of the Company for any reason, Employee shall immediately resign from the Board and the board of directors of any of the Company’s affiliates.

 

1.5            Policies and Procedures. The employment relationship between the parties shall be governed by the general employment policies and practices of the Company, including any Employee Handbook adopted by the Company, as well as by all other rules and policies applicable to the Company’s professional employees, except that when the terms of this Agreement differ from or are in conflict with the Company’s general employment policies or practices, this Agreement shall control.

 

 

1.6            At-Will Employment. Employee’s employment relationship with the Company is at-will. Either the Company or Employee shall have the right to terminate the employment relationship at any time, with or without Cause (as defined below) or advance notice. Should a Company policy exist now or in the future which contradicts this at-will provision, this at-will provision controls the relationship between Employee and the Company. The at-will nature of Employee’s employment may only be changed in an express written agreement signed by Employee and a duly authorized officer of the Board. Nothing in this Agreement is intended to modify the at-will employment relationship between the Company and Employee.

 

2.              Compensation.

 

2.1            Base Salary. For services to be rendered hereunder, for the years ending on each of the first and second anniversaries of Employee’s Start Date, Employee shall be paid a base annual salary at the rate of $295,000 (the “Base Salary”), less all required and applicable standard payroll deductions and withholdings for federal and state taxes and for any authorized voluntary deductions and payable in accordance with the Company’s regular payroll schedule. Employee’s Base Salary shall be reviewed at least annually by the Compensation Committee (the “Compensation Committee”) of the Board of Directors of the Company’s parent, ShouTi Inc., a Cayman Islands exempted company (the “Cayman Parent”).

 

2.2            Annual Bonus. Beginning in with the twelve-month period ending December 31, 2021 and for each twelve-month period ending December 31 thereafter, Employee will be eligible for an annual target bonus (the “Annual Bonus”) equal to twenty-five percent (25%) of Employee’s then current Base Salary at a “meeting expectations” level of achievement (the “Target Bonus Amount”). The actual Annual Bonus may be as high as thirty-five percent (35%) of Employee’s then current Base Salary at an “exceeding expectations” level of achievement. Whether Employee receives an Annual Bonus for any given year, and the amount of any such Annual Bonus, will be determined in the good faith reasonable discretion of the Board, which determination will be based upon the Company’s and Employee’s achievement of objectives and milestones. The Company’s and Employee’s objectives and milestones will be established on an annual basis by the Board (or Compensation Committee thereof) in consultation with the Employee, which objectives and milestones may provide for payments above and below target based on the level of performance achievement. No Annual Bonus is guaranteed and, in addition to the other conditions for earning such compensation, and except as provided for in Section 8 below, Employee must remain an employee in good standing of the Company on the date the Annual Bonus is paid in order to be eligible for and earn any Annual Bonus.

 

3.              Standard Company Benefits. Employee shall, in accordance with Company policy and the terms and conditions of the applicable Company benefit plan documents, be eligible to participate in the benefit and fringe benefit programs provided by the Company to its executive officers and other employees from time to time. Except as provided below in this Section 3, Employee shall also be entitled to paid sick leave, paid time off, and holidays as outlined in the Company’s employment policies, and as otherwise required by applicable law. Employee shall also be entitled to all other holiday and paid time off generally available to other executives of the Company. Any such benefits shall be subject to the terms and conditions of the governing benefit plans and policies, as well as the Company’s policies and may be changed by the Company in its discretion.

 

 

4.              Expenses. The Company will reimburse Employee for reasonable travel, entertainment or other expenses incurred by Employee in furtherance or in connection with the performance of Employee’s duties hereunder, in accordance with applicable law and the Company’s expense reimbursement policy as in effect from time to time.

 

5.              Equity.

 

5.1            Options. The Company will recommend to the Compensation Committee that Employee be granted an option to purchase 100,000 Ordinary Shares of the Cayman Parent (the “Option”). Grant of the Option is subject to the approval of the Parent Board. If granted, the Option shall vest over four years of Employee’s continuous service with the Company, with twenty-five percent (25%) of the shares subject to the Option grant becoming vested on the first year anniversary of the Start Date, and the remaining shares becoming vested in equal monthly installments over the following thirty-six (36) months of Employee’s continuous service. The exercise price of the Option, as well as all other matters related to the Option, will be governed by and subject to the terms and conditions set forth in the Cayman Parent’s 2019 Equity Incentive Plan (the “Equity Plan”), and the stock option agreement Employee will be required to electronically accept.

 

6.              Proprietary Information Obligations.

 

6.1            Proprietary Information Agreement. As a condition of employment, Employee shall execute and abide by the Company’s standard form of Employee Confidential Information and Invention Assignment Agreement (the “CIIAA”).

 

6.2            Third-Party Agreements and Information. Employee represents and warrants that Employee’s employment by the Company does not conflict with any prior employment or consulting agreement or other agreement with any third party, and that Employee will perform Employee’s duties to the Company without violating any such agreement. Employee represents and warrants that Employee does not possess confidential information arising out of prior employment, consulting, or other third party relationships, that would be used in connection with Employee’s employment by the Company, except as expressly authorized by that third party. During Employee’s employment by the Company, Employee will use in the performance of Employee’s duties only information that is generally known and used by persons with training and experience comparable to Employee’s own, common knowledge in the industry, otherwise legally in the public domain, or obtained or developed by the Company or by Employee in the course of Employee’s work for the Company. In addition, Employee represents that Employee has disclosed to the Company in writing any agreement Employee may have with any third party (e.g., a former employer) which may limit Employee’s ability to perform Employee’s duties to the Company, or which could present a conflict of interest with the Company, including but not limited to disclosure (and a copy) of any contractual restrictions on solicitations or competitive activities.

 

 

7.              Outside Activities and Non-Competition During Employment.

 

7.1            Outside Activities. Throughout Employee’s employment with the Company, Employee may engage in civic and not-for-profit activities so long as such activities do not interfere with the performance of Employee’s duties hereunder or present a conflict of interest with the Company or its affiliates. Subject to the restrictions set forth herein, and only with prior written disclosure to and consent of the Board (which consent will not be unreasonably withheld), Employee may engage in other types of business or public activities. The Board may rescind such consent, if the Board determines, in its sole discretion, that such activities compromise or threaten to compromise the Company’s or its affiliates’ business interests or conflict with Employee’s duties to the Company or its affiliates.

 

7.2            Non-Competition During Employment. Throughout Employee’s employment with the Company, Employee will not, without the express written consent of the Board, directly or indirectly serve as an officer, director, stockholder, employee, partner, proprietor, investor, joint ventures, associate, representative or consultant of any person or entity engaged in, or planning or preparing to engage in, business activity competitive with any line of business engaged in (or planned to be engaged in) by the Company or its affiliates; provided, however, that Employee may purchase or otherwise acquire up to (but not more than) one percent (1%) of any class of securities of any enterprise (without participating in the activities of such enterprise) if such securities are listed on any national or regional securities exchange. In addition, Employee will be subject to certain restrictions (including restrictions continuing after Employee’s employment ends) outlined in the terms of the CIIAA.

 

8.              Termination of Employment; Severance and Change in Control Benefits.

 

8.1            Termination Without Cause or Resignation for Good Reason Unrelated to Change in Control. In the event Employee’s employment with the Company is terminated by the Company without Cause (as defined below), and other than as a result of Employee’s death or Disability (as defined below), or Employee resigns for Good Reason, in either case, at any time except during the Change in Control Period (as defined below), then provided such termination constitutes a “separation from service” (as defined under Treasury Regulation Section 1.409A-1(h), without regard to any alternative definition thereunder, a “Separation from Service”), and provided that Employee satisfies the Release Requirement in Section 9 below, and remains in compliance with the terms of this Agreement and the CIIAA, the Company shall provide Employee with the following “Severance Benefits”:

 

8.1.1            Severance Payments. Employee shall receive severance pay in the form of continuation of Employee’s final monthly Base Salary for a period of six (6) months (or, if either the Company or the Cayman Parent is then publicly traded, then for a period of twelve (12) months)) following termination, subject to required and voluntarily authorized payroll deductions and federal and state tax withholdings (the “Severance Payments”). Subject to Section 10 below, the Severance Payments shall be made on the Company’s regular payroll schedule in effect following Employee’s Separation from Service date; provided, however that any such payments that are otherwise scheduled to be made prior to the Release Effective Date (as defined below) shall instead accrue and be made on the first regular payroll date following the Release Effective Date. For such purposes, Employee’s final Base Salary will be calculated prior to giving effect to any reduction in Base Salary that would give rise to Employee’s right to resign for Good Reason.

 

 

8.1.2            Target Bonus / Prior Year Bonus. Employee shall also receive an amount equal to one-half (1/2) of the Target Bonus Amount for the year in which the Separation from Service occurs (or, if either the Company or the Cayman Parent is then publicly-traded, then equal to 100% of the Target Bonus Amount), payable in a lump sum within sixty (60) days following the Separation from Service date and subject to required and voluntarily authorized payroll deductions and federal and state tax withholdings (the “Termination Bonus”). In addition, if Employee’s Separation from Service occurs prior to Employee’s receipt of an Annual Bonus payment for the completed calendar year that immediately precedes the calendar year of the Separation from Service, Employee shall also receive an Annual Bonus payment for such preceding calendar year, pursuant to the conditions of Section 2.2 above (the “Prior Year Bonus”).  The Prior Year Bonus shall be paid, subject to required and voluntarily authorized payroll deductions and federal and state tax withholdings, in the calendar year following the year to which the Annual Bonus payment relates, at the same time as the annual bonuses for such calendar year are generally paid to other executives; provided, however that if such payment date is prior to the Release Effective Date (as defined below), the Prior Year Bonus shall instead accrue and be made on the first regular payroll date following the Release Effective Date.

 

8.1.3            Health Care Continuation Coverage Payments.

 

(i)            COBRA Premiums. If Employee timely elects continued coverage under COBRA, the Company will reimburse Employee’s COBRA premiums to continue Employee’s coverage (including coverage for Employee’s eligible dependents, if applicable) (“COBRA Premiums”) through the period starting on the Separation from Service date and ending six (6) months (or if either the Company or the Cayman Parent is then publicly-traded, then twelve (12) months) after the Separation from Service date (the “COBRA Premium Period”); provided, however, that the Company’s provision of such COBRA Premium benefits will immediately cease if during the COBRA Premium Period Employee becomes eligible for group health insurance coverage through a new employer or Employee ceases to be eligible for COBRA continuation coverage for any reason, including plan termination. In the event Employee becomes covered under another employer’s group health plan or otherwise ceases to be eligible for COBRA during the COBRA Premium Period, Employee must immediately notify the Company, in writing, of such event.

 

(ii)          Special Cash Payments in Lieu of COBRA Premiums. Notwithstanding the foregoing, if the Company determines, in its sole discretion, that it cannot pay the COBRA Premiums without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), regardless of whether Employee or Employee’s dependents elect or are eligible for COBRA coverage, the Company instead shall pay to Employee, on the first day of each calendar month following the Separation from Service date, a fully taxable cash payment equal to the applicable COBRA premiums for that month (including the amount of COBRA premiums for Employee’s eligible dependents), subject to applicable federal and state tax withholdings and required or voluntarily authorized deductions (such amount, the “Special Cash Payment”), for the remainder of the COBRA Premium Period. Employee may, but is not obligated to, use such Special Cash Payments toward the cost of COBRA premiums or toward premium costs under an individual health plan.

 

 

8.1.4            Equity Acceleration. Notwithstanding anything to the contrary set forth in the Equity Plan, any other equity incentive plans or any award agreement, effective as of Employee’s Separation from Service date, the vesting and exercisability of the unvested time-based equity awards then held by Employee shall accelerate as if Employee had provided an additional six (6) months (or, if either the Company or the Cayman Parent is then publicly-traded, then twelve (12) months), of continued services following the Separation from Service date (with monthly pro rated vesting during the first year of service), and each such equity award shall remain exercisable, if applicable, following Employee’s Separation from Service as set forth in the applicable equity award documents. With respect to any performance-based vesting equity award, such award shall continue to be governed in all respects by the terms of the applicable equity award documents.

 

8.2            Termination Without Cause or Resignation for Good Reason During Change in Control Period. In the event Employee’s employment with the Company is terminated by the Company without Cause (and other than as a result of Employee’s death or Disability) at any time during the Change in Control Period, or Employee resigns for Good Reason at any time during the Change in Control Period, in lieu of (and not additional to) the Severance Benefits described in Section 8.1, and provided that Employee satisfies the Release Requirement in Section 9 below and remains in compliance with the terms of this Agreement and the CIIAA, the Company shall instead provide Employee with the following “CIC Severance Benefits”. For the avoidance of doubt: (i) in no event will Employee be entitled to severance benefits under both Section 8.1 and this Section 8.2, and (ii) if the Company has commenced providing Severance Benefits to Employee under Section 8.1 prior to the date that Employee becomes eligible to receive CIC Severance Benefits under this Section 8.2, the Severance Benefits previously provided to Employee under Section 8.1 of this Agreement shall reduce the CIC Severance Benefits provided under this Section 8.2:

 

8.2.1            CIC Severance Payment. Employee shall receive a severance pay in an amount equal to Employee’s final annual Base Salary plus Employee’s final Target Bonus Amount, subject to required and voluntarily authorized payroll deductions and federal and state tax withholdings (the “CIC Severance Payments”). Subject to Section 10 below, the CIC Severance Payments shall be made on the Company’s regular payroll schedule over the period of twelve (12) months following Employee’s Separation from Service date; provided, however that any such payments that are otherwise scheduled to be made prior to the Release Effective Date (as defined below) shall instead accrue and be made on the first regular payroll date following the Release Effective Date. For such purposes, Employee’s final Base Salary and Target Bonus Amount will be calculated prior to giving effect to any reduction in Base Salary that would give rise to Employee’s right to resign for Good Reason.

 

 

8.2.2            CIC Health Care Continuation Coverage Payments.

 

(i)            COBRA Premiums. If Employee timely elects continued coverage under COBRA, the Company will reimburse Employee’s COBRA premiums to continue Employee’s coverage (including coverage for Employee’s eligible dependents, if applicable) (“CIC COBRA Premiums”) through the period starting on the Separation from Service date and ending twelve (12) months after the Separation from Service date (the “CIC COBRA Premium Period”); provided, however, that the Company’s provision of such CIC COBRA Premium benefits will immediately cease if during the CIC COBRA Premium Period, Employee becomes eligible for group health insurance coverage through a new employer or Employee ceases to be eligible for COBRA continuation coverage for any reason, including plan termination. In the event Employee becomes covered under another employer’s group health plan or otherwise ceases to be eligible for COBRA during the CIC COBRA Premium Period, Employee must immediately notify the Company, in writing, of such event.

 

(ii)          Special Cash Payments in Lieu of CIC COBRA Premiums. Notwithstanding the foregoing, if the Company determines, in its sole discretion, that it cannot pay the CIC COBRA Premiums without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), regardless of whether Employee or Employee’s dependents elect or are eligible for COBRA coverage, the Company instead shall pay to Employee, on the first day of each calendar month following the Separation from Service date, a fully taxable cash payment equal to the applicable COBRA premiums for that month (including the amount of COBRA premiums for Employee’s eligible dependents), subject to applicable federal and state tax withholdings (such amount, the “Special CIC Cash Payment”), for the remainder of the CIC COBRA Premium Period. Employee may, but is not obligated to, use such Special CIC Cash Payments toward the cost of COBRA premiums.

 

8.2.3            Prior Year Bonus. If Employee’s Separation from Service occurs prior to Employee’s receipt of an Annual Bonus payment for the completed calendar year that immediately precedes the calendar year of the Separation from Service, Employee shall also receive the Prior Year Bonus.  The Prior Year Bonus shall be paid, subject to required and voluntarily authorized payroll deductions and federal and state tax withholdings, in the calendar year following the year to which the Annual Bonus payment relates, at the same time as the annual bonuses for such calendar year are generally paid to other executives; provided, however that if such payment date is prior to the Release Effective Date (as defined below), the Prior Year Bonus shall instead accrue and be made on the first regular payroll date following the Release Effective Date.

 

8.2.4            Equity Acceleration. Notwithstanding anything to the contrary set forth in the Equity Plan, any other equity incentive plans or any award agreement, effective as of Employee’s employment Separation from Service date that occurs during the Change in Control Period, the vesting and exercisability of all equity awards then held by Employee shall accelerate such that all shares become immediately vested and, if applicable, exercisable by Employee upon such Separation from Service and shall remain exercisable (if such award is capable of being exercised) following Employee’s Separation from Service as set forth in the applicable equity award documents, with any performance-based equity awards accelerating at the “target” level of achievement.

 

 

8.3            Termination for Death or Disability. In the event Employee’s employment with the Company is terminated due to Employee’s death or Disability at any time, in lieu of (and not additional to) the Severance Benefits and CIC Severance Benefits described in Sections 8.1 and 8.2 above, and provided that Employee or his heirs or estate satisfies the Release Requirement in Section 9 below and remains in compliance with the terms of this Agreement and the CIIAA, Employee (or his heirs or estate) shall receive the prorated amount of the Target Bonus Amount for the year in which the Separation from Service occurs equal to the product of (i) and (ii), where (i) is the product of (a) Employee’s final Base Salary (but before giving effect to any reduction in Base Salary that would give rise to Employee’s right to resign for Good Reason) and (b) the percentage to achieve a Target Bonus Amount set forth in Section 2.3 above and where (ii) is (a) the number of days elapsed in the calendar year prior to the date on which the Separation from Service occurs divided by (b) 365 plus the Prior Year Bonus (if applicable), pursuant to the terms and conditions of Section 8.1.2 above (the “Death or Disability Benefits”). Notwithstanding the foregoing, Employee will not be entitled to the payments described in this Section 8.3 if Employee’s death or Disability is due to suicide or to Employee’s participation in an activity involving a significant risk of personal injury or death.

 

8.4            Termination for Cause; Resignation Without Good Reason. Employee will not be eligible for, or entitled to any severance benefits, including (without limitation) the Severance Benefits and CIC Severance Benefits listed in Sections 8.1 and 8.2 above, or the Death and Disability Benefits listed in Section 8.3, if the Company terminates Employee’s employment for Cause or Employee resigns Employee’s employment without Good Reason.

 

9.              Conditions to Receipt of Severance Benefits and CIC Severance Benefits. To be eligible for any of the Severance Benefits, CIC Severance Benefits or Death or Disability Benefits pursuant to Sections 8.1, 8.2, or 8.3 above, Employee must satisfy the following release requirement (the “Release Requirement”): return to the Company a signed and dated general release of all known and unknown claims in a separation agreement acceptable to the Company (the “Release”), which shall among other things include a mutual non-disparagement provision, but will not release Employee’s right to severance benefits (pursuant to the terms and conditions of Section 8 of this Agreement), or to indemnification against third party claims (pursuant to any written indemnification agreement with the Company to which Employee is a party, the charter, bylaws, or operating agreements of the Company, or under applicable law), and will not increase the scope or duration of any post-employment restrictions on Employee’s activities, within the applicable deadline set forth therein, but in no event later than forty-five (45) calendar days following Employee’s Separation from Service date, and permit the Release to become effective and irrevocable in accordance with its terms (such effective date of the Release, the “Release Effective Date”). No Severance Benefits, CIC Severance Benefits or Death or Disability Benefits will be paid hereunder prior to the Release Effective Date. Accordingly, if Employee breaches the preceding sentence and/or refuses to sign and deliver to the Company an executed Release or signs and delivers to the Company the Release but exercises Employee’s right, if any, under applicable law to revoke the Release (or any portion thereof), then Employee will not be entitled to any severance, payment or benefit under this Agreement.

 

 

10.            Section 409A. It is intended that all of the severance benefits and other payments payable under this Agreement satisfy, to the greatest extent possible, the exemptions from the application of Code Section 409A provided under Treasury Regulations 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9), and this Agreement will be construed to the greatest extent possible as consistent with those provisions, and to the extent not so exempt, this Agreement (and any definitions hereunder) will be construed in a manner that complies with Section 409A. For purposes of Code Section 409A (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), Employee’s right to receive any installment payments under this Agreement (whether Severance Payments, CIC Severance Payments, Death or Disability Payments, reimbursements or otherwise) shall be treated as a right to receive a series of separate payments and, accordingly, each installment payment hereunder shall at all times be considered a separate and distinct payment. Notwithstanding any provision to the contrary in this Agreement, if Employee is deemed by the Company at the time of Employee’s Separation from Service to be a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i), and if any of the payments upon Separation from Service set forth herein and/or under any other agreement with the Company are deemed to be “deferred compensation”, then to the extent delayed commencement of any portion of such payments is required in order to avoid a prohibited distribution under Code Section 409A(a)(2)(B)(i) and the related adverse taxation under Section 409A, such payments shall not be provided to Employee prior to the earliest of (i) the expiration of the six-month and one day period measured from the date of Employee’s Separation from Service with the Company, (ii) the date of Employee’s death or (iii) such earlier date as permitted under Section 409A without the imposition of adverse taxation. Upon the first business day following the expiration of such applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this Section shall be paid in a lump sum to Employee, and any remaining payments due shall be paid as otherwise provided herein or in the applicable agreement. No interest shall be due on any amounts so deferred. If the Company determines that any Severance Benefits or CIC Severance Benefits provided under this Agreement constitutes “deferred compensation” under Section 409A, and if necessary to avoid taxation under Section 409A, for purposes of determining the schedule for payment of the severance benefits, the effective date of the Release will not be deemed to have occurred any earlier than the sixtieth (60th) date following the Separation From Service, regardless of when the Release actually becomes effective. In addition to the above, to the extent required to comply with Section 409A and the applicable regulations and guidance issued thereunder, if the applicable deadline for Employee to execute (and not revoke) the applicable Release spans two calendar years, payment of the applicable Severance Benefit, CIC Severance Benefits, or Death or Disability Benefits shall not commence until the beginning of the second calendar year. To the extent required to avoid accelerated taxation and/or tax penalties under Code Section 409A, amounts reimbursable to Employee under this Agreement shall be paid to Employee on or before the last day of the year following the year in which the expense was incurred and the amount of expenses eligible for reimbursement (and in-kind benefits provided to Employee) during any one year may not effect amounts reimbursable or provided in any subsequent year. The Company makes no representation that any or all of the payments described in this Agreement will be exempt from or comply with Code Section 409A and makes no undertaking to preclude Code Section 409A from applying to any such payment.

 

 

11.            Section 280G; Limitations on Payment.

 

11.1            If any payment or benefit Employee will or may receive from the Company or otherwise (a “280G Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then any such 280G Payment provided pursuant to this Agreement (a “Payment”) shall be equal to the Reduced Amount. The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment (after reduction) being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever amount (i.e., the amount determined by clause (x) or by clause (y)), after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in Employee’s receipt, on an after-tax basis, of the greater economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in a Payment is required pursuant to the preceding sentence and the Reduced Amount is determined pursuant to clause (x) of the preceding sentence, the reduction shall occur in the manner (the “Reduction Method”) that results in the greatest economic benefit for Employee. If more than one method of reduction will result in the same economic benefit, the items so reduced will be reduced pro rata (the “Pro Rata Reduction Method”).

 

11.2            Notwithstanding any provision of Section 11.1 to the contrary, if the Reduction Method or the Pro Rata Reduction Method would result in any portion of the Payment being subject to taxes pursuant to Section 409A that would not otherwise be subject to taxes pursuant to Section 409A, then the Reduction Method and/or the Pro Rata Reduction Method, as the case may be, shall be modified so as to avoid the imposition of taxes pursuant to Section 409A as follows: (A) as a first priority, the modification shall preserve to the greatest extent possible, the greatest economic benefit for Employee as determined on an after-tax basis; (B) as a second priority, Payments that are contingent on future events (e.g., being terminated without Cause), shall be reduced (or eliminated) before Payments that are not contingent on future events; and (C) as a third priority, Payments that are “deferred compensation” within the meaning of Section 409A shall be reduced (or eliminated) before Payments that are not deferred compensation within the meaning of Section 409A.

 

11.3            Unless Employee and the Company agree on an alternative accounting firm or law firm, the accounting firm engaged by the Company for general tax compliance purposes as of the day prior to the effective date of the Change in Control transaction shall perform the foregoing calculations. If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the Change in Control transaction, the Company shall appoint a nationally recognized accounting or law firm to make the determinations required by this Section 11. The Company shall bear all expenses with respect to the determinations by such accounting or law firm required to be made hereunder. The Company shall use commercially reasonable efforts to cause the accounting or law firm engaged to make the determinations hereunder to provide its calculations, together with detailed supporting documentation, to Employee and the Company within fifteen (15) calendar days after the date on which Employee’s right to a 280G Payment becomes reasonably likely to occur (if requested at that time by Employee or the Company) or such other time as requested by Employee or the Company.

 

11.4            If Employee receives a Payment for which the Reduced Amount was determined pursuant to clause (x) of Section 11.1 and the Internal Revenue Service determines thereafter that some portion of the Payment is subject to the Excise Tax, Employee agrees to promptly return to the Company a sufficient amount of the Payment (after reduction pursuant to clause (x) of Section 11.1) so that no portion of the remaining Payment is subject to the Excise Tax. For the avoidance of doubt, if the Reduced Amount was determined pursuant to clause (y) of Section 11.1, Employee shall have no obligation to return any portion of the Payment pursuant to the preceding sentence.

 

 

12.            Definitions.

 

12.1            Cause. For purposes of this Agreement, “Cause” means the occurrence of any one or more of the following: (i) Employee’s conviction of or plea of guilty or nolo contendere to any felony or a crime of moral turpitude; (ii) Employee’s willful and continued refusal to follow lawful and reasonable written instructions of the Board or lawful and reasonable written policies and regulations of the Company or its affiliates; (iii) Employee’s willful and continued refusal to faithfully and diligently perform the assigned duties of Employee’s employment with the Company or its affiliates; (iv) fraudulent conduct by Employee; (v) willful misconduct by Employee that materially injures the Company or any affiliate or materially injures the reputation, character and standing of the Company or any affiliate; or (vi) material injury to the Company based on Employee’s willful and material breach of this Agreement, the CIIAA, or any written Company policies. An event described in Section 12.1(ii) through Section 12.1(vi) herein shall not be treated as “Cause” until after Employee has been given written notice of such event, failure, conduct or breach and Employee fails to cure such event, failure, conduct or breach within 30 calendar days from such written notice; provided, however, that such 30-day cure period shall not be required if the event, failure, conduct or breach is reasonably determined to be incapable of being cured by the Company.

 

12.2            Change in Control. For purposes of this Agreement, “Change in Control” shall have the meaning described in the Cayman Parent’s 2019 Equity Incentive Plan.

 

12.3            Change in Control Period. For purposes of this Agreement, “Change in Control Period” means the time period commencing three (3) months before the effective date of a Change in Control and ending on the date that is twelve (12) months after the effective date of a Change in Control.

 

12.4            Disability. For purposes of this Agreement, “Disability” means the inability of Employee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months.

 

12.5            Good Reason. For purposes of this Agreement, Employee shall have “Good Reason” for resignation from employment with the Company if any of the following actions are taken by the Company without Employee’s prior written consent: (i) a reduction in Employee’s Base Salary, unless in the same percentage as a salary reduction program applicable generally to the Company’s senior executives; (ii) a material reduction in Employee’s duties, responsibilities or authority, including removal of requirement to report to anyone other than the Board or the Parent Board; (iii) the material breach by the Company of this Agreement; or (iv) the relocation of Employee’s principal place of employment to a place that increases Employee’s one-way commute by more than twenty-five (25) miles as compared to Employee’s then-current principal place of employment immediately prior to such relocation. In order for Employee to resign for Good Reason, each of the following requirements must be met: (A) Employee must provide written notice to the Board within ninety (90) calendar days after Employee’s first knowledge of the event giving rise to Good Reason setting forth the basis for Employee’s resignation, (B) Employee must allow the Company at least thirty (30) calendar days from receipt of such written notice to cure such event, (C) such event is not reasonably cured by the Company within such 30 calendar day period (the “Cure Period”), and (D) Employee must resign in writing from all positions Employee then holds with the Company not later than ninety (90) calendar days after the expiration of the Cure Period.

 

 

13.            Dispute Resolution/Agreement to Arbitrate Claims. To ensure the rapid and economical resolution of disputes that may arise in connection with Employee’s employment with the Company, Employee and the Company agree that any and all disputes, claims, or causes of action, in law or equity, including but not limited to statutory claims, arising from or relating to the enforcement, breach, performance, or interpretation of this Agreement, Employee’s employment with the Company, or the termination of Employee’s employment from the Company, will be resolved pursuant to the Federal Arbitration Act, 9 U.S.C. §1, et seq. and to the fullest extent permitted by law, by final, binding and confidential arbitration. Except as provided below, the Company and Employee agree that confidential arbitration is the exclusive, final and biding method for resolving all such claims.

 

13.1            Claims Covered By this Agreement. Disputes that are subject to arbitration under this Agreement include, but are not limited to, claims for wages or other compensation due, including claims for overtime; meal or rest break claims; claims for breach of any contract or covenant (express or implied); tort claims, including, but not limited to claims for defamation, intentional infliction of emotional distress, invasion of privacy, and all negligence-based claims; personal injury claims; claims for discrimination, harassment and/or retaliation in employment including, but no limited to claims under the California Fair Employment and Housing Act, the California Labor Code, claims arising under Title VII of the Civil Rights Act of 1964, the Fair Labor Standards Act, the Equal Pay Act, the Employee Retirement Income Security Act, the California Family Rights Act of 1964, the Family and Medical Leave Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Older Worker Benefit Protection Act, the Sarbanes-Oxley Act, all as they may have been amended from time to time, claims for misclassification, and claims for violation of common law or any other federal, state, or local laws relating to employment or separation from employment or benefits associated with employment or separation for employment.

 

13.2            Claims Not Covered By this Agreement. Claims for workers’ compensation, unemployment insurance, claims for injunctive relief, and claims under California Private Attorneys General Act of 2004, as amended, are not covered by this Agreement. Nothing in this Agreement is intended to prevent Employee from filing an administrative claim with the Equal Employment Opportunity Commission or the California Department of Fair Employment and Housing. Moreover, both Employee and the Company may bring an action in any court of competent jurisdiction to compel arbitration under this Agreement and/or enforce and arbitration award.

 

 

13.3            Arbitration Rules and Procedures. The arbitration is to be conducted in or near the city in which Employee is or was last employed by the Company by JAMS, Inc. (“JAMS”) or its successors before a mutually selected single neutral arbitrator, under JAMS’ then applicable rules and procedures for employment disputes (which will be provided to Employee upon request); provided that the arbitrator shall: (i) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law; and (ii) issue a written arbitration decision including the arbitrator’s essential findings and conclusions on which the award was based and a statement of the award. Employee and the Company shall be entitled to all rights and remedies that either would be entitled to pursue in a court of law. Questions of whether a claim is subject to arbitration under this Agreement shall be decided by the arbitrator. Likewise, procedural questions which grow out of the dispute and bear on the final disposition are also matters for the arbitrator. To the maximum extent permitted by applicable law, all claims, disputes, or causes of action under this section, whether by Employee or the Company, must be brought in an individual capacity, and shall not be brought as a plaintiff (or claimant) or class member in any purported class or representative proceeding, nor joined or consolidated with the claims of any other person or entity. The Arbitrator may not consolidate the claims of more than one person or entity, and may not preside over any form of representative or class proceeding. Both Employee and the Company acknowledge that by agreeing to this arbitration procedure, they waive the right to resolve any such dispute through a trial by jury or judge or administrative proceeding. The Company shall pay all filing fees in excess of those which would be required if the dispute were decided in a court of law (that is, costs that are unique to arbitration) and shall pay the arbitrator’s fee. Each party shall pay the fees of its attorneys, the expenses of its witnesses, and any other costs and expenses that the party incurs in connection with the arbitration; provided that an arbitrator may award attorneys’ fees to the prevailing party, if the arbitrator determines in its sole discretion that such an award is permitted by applicable law. Any dispute as to whether a cost is unique to arbitration will be exclusively resolved by the arbitrator. Both the Employee and the Company have the right to be represented by legal counsel at any arbitration proceeding. The arbitration proceedings will be confidential to the extent permitted by law. Employee and the Company will maintain all information and documents exchanged in connection with and in the course of the arbitration as confidential, except to the extent the disclosure of such information or documentation is necessary to enforce any award or challenge any award as permitted by the applicable law.

 

13.4.           No Change in At-Will Employment. This agreement to arbitrate claims is not a contract of employment, expressed or implied, and Employee and the Company acknowledge that Employee’s employment with the Company is at-will and that this agreement does not change the “at-will” status of Employee’s employment. BOTH EMPLOYEE AND THE COMPANY ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE TERMS OF SECTION 13, AGREEMENT TO ARBITRATE CLAIMS, AND AGREE TO BE BOUND BY ITS TERMS.

 

14.            General Provisions.

 

14.1            Notices. Any notices provided must be in writing and will be deemed effective upon the earlier of personal delivery (including personal delivery by email upon confirmation of receipt) or the next day after sending by overnight carrier, to the Company at its primary office location and to Employee at the address as listed on the Company payroll.

 

14.2            Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction to the extent possible in keeping with the intent of the Company and the Employee (“the Parties”).

 

 

14.3            Waiver. Any waiver of any breach of any provisions of this Agreement must be in writing to be effective, and it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.

 

14.4            Complete Agreement. This Agreement, together with the CIIAA, constitutes the entire agreement between Employee and the Company with regard to the subject matter hereof and is the complete, final, and exclusive embodiment of the Company’s and Employee’s agreement with regard to this subject matter. This Agreement is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises, warranties or representations. It cannot be modified or amended except in a writing signed by a duly authorized officer of the Company, with the exception of those changes expressly reserved to the Company’s discretion in this Agreement.

 

14.5            Counterparts. This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but both of which taken together will constitute one and the same Agreement.

 

14.6            Headings. The headings of the sections hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to affect the meaning thereof.

 

14.7            Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by Employee and the Company, and their respective successors, assigns, heirs, executors and administrators, except that Employee may not assign any of Employee’s duties hereunder and Employee may not assign any of Employee’s rights hereunder without the written consent of the Company, which shall not be withheld unreasonably.

 

14.8            Tax Withholding. All payments and awards contemplated or made pursuant to this Agreement will be subject to withholdings of applicable taxes in compliance with all relevant laws and regulations of all appropriate government authorities. Employee acknowledges and agrees that the Company has neither made any assurances nor any guarantees concerning the tax treatment of any payments or awards contemplated by or made pursuant to this Agreement. Employee has had the opportunity to retain a tax and financial advisor and fully understands the tax and economic consequences of all payments and awards made pursuant to this Agreement.

 

14.9            Choice of Law. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the laws of the State of California.

 

 

In Witness Whereof, the Parties have executed this Agreement to become effective as of the Effective Date written above.

 

	ShouTi Inc., a Delaware corporation
	By:	/s/Raymond Stevens
		Raymond Stevens
		CEO
	Employee
	/s/Jun Yoon
	Jun Yoon

 

 

 

Exhibit 10.7

 

 

April 19, 2021

 

Mark Bach, M.D.

E-mail: [***]

 

Re:

Offer of Employment

 

Dear Dr. Bach:

 

ShouTi Inc., a Delaware corporation (the “Company”), is pleased to offer you employment on the terms and conditions set forth in this letter agreement (the “Agreement”).

 

1.            Employment by the Company.

 

1.1            Position. You will serve as the Company’s Chief Medical Officer, reporting the Company’s Chief Executive Officer (“CEO”). During the term of your employment with the Company, you will devote your best efforts and all of your business time and attention to the business of the Company, except as permitted in Section 7 of this Agreement and excluding approved vacation periods and reasonable periods of illness or other incapacities permitted by the Company’s general employment policies. You further agree not to usurp, for your own personal benefit or gain, any opportunities in the Company’s line of business. You will be expected to work on a full-time basis and travel as part of your position.

 

1.2            Start Date. The Company and you acknowledge and agree that your start date with the Company will begin on or before June 21, 2021 (such actual start date, the “Start Date”).

 

1.3            Duties and Location. As Chief Medical Officer, you will be responsible for the management and operations of the Company’s clinical programs and perform such other duties that are customarily associated with the position of Chief Medical Officer, as assigned to you from time to time by the Company’s Board of Directors (the “Board”). Your primary office locations shall be your home office in New Jersey and the Company’s facilities in Shanghai, China, or at such other locations as mutually agreed. Subject to the terms of this Agreement and applicable law, the Company reserves the right to reasonably require you to perform your duties at places other than your primary office location from time to time and to require reasonable business travel. Should “shelter in place” policies or similar safety measures be implemented in your primary office locations pursuant to the applicable laws and regulations, you will be permitted to continue working remotely from your primary residence until such policies or measures are no longer in force (or an exemption applies to you and the Company) and the Company reasonably determines that it is safe for normal travel and work conditions to resume.

 

 

1.4            Policies and Procedures. The employment relationship between you and the Company will be governed by the general employment policies and practices of the Company, including any Employee Handbook adopted by the Company, as well as by all other rules and policies applicable to the Company’s professional employees, except that when the terms of this Agreement differ from or are in conflict with the Company’s general employment policies or practices, this Agreement shall control.

 

1.5            At-Will Employment. Your employment relationship with the Company is at-will. Either the Company or you shall have the right to terminate the employment relationship at any time, with or without Cause (as defined below) or advance notice. Should a Company policy exist now or in the future which contradicts this at-will provision, this at-will provision controls the relationship between you and the Company. The at-will nature of your employment may only be changed in an express written agreement signed by you and a duly authorized officer of the Board. Nothing in this Agreement is intended to modify the at-will employment relationship between the Company and you.

 

2.            Compensation.

 

2.1            Base Salary. For services to be rendered hereunder, for the years ending on each of the first and second anniversaries of your Start Date, you shall be paid a base annual salary at the rate of $455,000 (the “Base Salary”), less all required and applicable standard payroll deductions and withholdings for federal and state taxes and for any authorized voluntary deductions and payable in accordance with the Company’s regular payroll schedule. Your Base Salary shall be reviewed at least annually by the Compensation Committee (the “Compensation Committee”) of the Board of Directors of the Company’s parent (the “Parent Board”), ShouTi Inc., a Cayman Islands exempted company (the “Cayman Parent”).

 

2.2            Annual Bonus. You will be eligible for an annual target bonus (the “Annual Bonus”) each calendar year equal to thirty-five percent (35%) of your then current Base Salary at a “meeting expectations” level of achievement (the “Target Bonus Amount”), which shall be prorated based on the number of days you are actually employed during the calendar year. Whether you receive an Annual Bonus for any given year, and the amount of any such Annual Bonus, will be determined in the good faith reasonable discretion of the Board, which determination will be based upon the Company’s and your achievement of objectives and milestones. The Company’s and your objectives and milestones will be established on an annual basis by the Parent Board (or Compensation Committee thereof) in consultation with you, which objectives and milestones may provide for payments above and below target based on the level of performance achievement. Promptly following your Start Date, the CEO will review with you the specific objectives and milestones against which you will be evaluated in the current calendar year. The Company will pay you the Annual Bonus, if any, by no later than March 15 of each calendar year. No Annual Bonus is guaranteed and, in addition to the other conditions for earning such compensation, and except as provided for in Section 8 below, you must remain an employee in good standing of the Company on the date the Annual Bonus is paid in order to be eligible for and earn any Annual Bonus.

 

 

2.3            Signing Bonus. You will receive a one-time signing bonus in the amount of $66,000 (the “Signing Bonus”), subject to applicable payroll deductions and withholdings. The Signing Bonus will be paid to you as an advance in a single lump sum on the first regularly-scheduled payroll date after your Start Date, and is provided to you prior to your earning such Signing Bonus. You will not earn the Signing Bonus unless you remain continuously employed with the Company through the one-year anniversary of your Start Date. If your employment terminates under any circumstances before such one-year anniversary date, you agree to repay the Signing Bonus to the Company in full.

 

3.            Standard Company Benefits. You will, in accordance with Company policy and the terms and conditions of the applicable Company benefit plan documents, be eligible to participate in the benefit and fringe benefit programs provided by the Company to its executive officers and other employees from time to time. Except as provided below in this Section 3, you will be entitled to paid sick leave, paid time off, and holidays as outlined in the Company’s employment policies, and as otherwise required by applicable law. You will also be entitled to all other holiday and paid time off generally available to other executives of the Company. Any such benefits shall be subject to the terms and conditions of the governing benefit plans and policies, as well as the Company’s policies and may be changed by the Company in its discretion.

 

4.            Expenses. The Company will reimburse you for reasonable travel, entertainment or other expenses incurred by you in furtherance or in connection with the performance of your duties hereunder, in accordance with applicable law and the Company’s expense reimbursement policy as in effect from time to time. The Company will reimburse you for reasonable and documented legal fees incurred by you in connection with the negotiation and execution of this Agreement and related documents in an amount not to exceed $5,000.

 

5.            Equity.

 

5.1            Options. The Company will recommend to the Compensation Committee that you be granted an option to purchase 581,610 Ordinary Shares of the Cayman Parent (the “Option”). Grant of the Option is subject to the approval of the Parent Board at a meeting as soon as practicable following the Start Date. When granted, the Option shall vest over four years of your continuous service with the Company, with twenty-five percent (25%) of the shares subject to the Option grant becoming vested on the first year anniversary of the Start Date, and the remaining shares becoming vested in equal monthly installments over the following thirty-six (36) months of your continuous service. The exercise price of the Option, as well as all other matters related to the Option, will be governed by and subject to the terms and conditions set forth in the Cayman Parent’s 2019 Equity Incentive Plan (the “Equity Plan”), and the stock option agreement you will be required to electronically accept.

 

 

6.            Proprietary Information Obligations.

 

6.1            Proprietary Information Agreement. As a condition of employment, you shall execute and abide by the Company’s standard Confidential Information and Invention Assignment Agreement (the “CIIAA”).

 

6.2            Third-Party Agreements and Information. You represent and warrant that your employment by the Company does not conflict with any prior employment or consulting agreement or other agreement with any third party, and that you will perform your duties to the Company without violating any such agreement. You represent and warrant that you do not possess confidential information arising out of prior employment, consulting, or other third party relationships, that would be used in connection with your employment by the Company, except as expressly authorized by that third party. During your employment by the Company, you will use in the performance of your duties only information that is generally known and used by persons with training and experience comparable to your own, common knowledge in the industry, otherwise legally in the public domain, or obtained or developed by the Company or by you in the course of your work for the Company. In addition, you represent that you have disclosed to the Company in writing any agreement you may have with any third party (e.g., a former employer) which may limit your ability to perform your duties to the Company, or which could present a conflict of interest with the Company, including but not limited to disclosure (and a copy) of any contractual restrictions on solicitations or competitive activities.

 

7.            Outside Activities and Non-Competition During Employment.

 

7.1            Outside Activities. Throughout your employment with the Company, you may engage in civic and not-for-profit activities so long as such activities do not interfere with the performance of your duties hereunder or present a conflict of interest with the Company or its affiliates. Subject to the restrictions set forth herein, and only with prior written disclosure to and consent of the Board (which consent will not be unreasonably withheld), you may engage in other types of business or public activities. The Board may rescind such consent, if the Board determines, in its sole discretion, that such activities compromise or threaten to compromise the Company’s or its affiliates’ business interests or conflict with your duties to the Company or its affiliates.

 

7.2            Non-Competition During Employment. Throughout your employment with the Company, you will not, without the express written consent of the Board, directly or indirectly serve as an officer, director, stockholder, employee, partner, proprietor, investor, joint ventures, associate, representative or consultant of any person or entity engaged in, or planning or preparing to engage in, business activity competitive with any line of business engaged in (or planned to be engaged in) by the Company or its affiliates; provided, however, that you may purchase or otherwise acquire up to (but not more than) one percent (1%) of any class of securities of any enterprise (without participating in the activities of such enterprise) if such securities are listed on any national or regional securities exchange. In addition, you will be subject to certain restrictions (including restrictions continuing after your employment ends) outlined in the terms of the CIIAA.

 

 

8.            Termination of Employment; Severance and Change in Control Benefits.

 

8.1            Termination Without Cause or Resignation for Good Reason Unrelated to Change in Control. In the event your employment with the Company is terminated by the Company without Cause (as defined below), and other than as a result of your death or Disability (as defined below), or you resign for Good Reason, in either case, at any time except during the Change in Control Period (as defined below), then provided such termination constitutes a “separation from service” (as defined under Treasury Regulation Section 1.409A-1(h), without regard to any alternative definition thereunder, a “Separation from Service”), and provided that you satisfy the Release Requirement in Section 9 below, and remain in compliance with the terms of this Agreement and the CIIAA, the Company shall provide you with the following “Severance Benefits”:

 

8.1.1            Severance Payments. You will receive severance pay in the form of continuation of your final monthly Base Salary for a period of six (6) months following termination, subject to required and voluntarily authorized payroll deductions and federal and state tax withholdings (the “Severance Payments”). Subject to Section 10 below, the Severance Payments shall be made on the Company’s regular payroll schedule in effect following your Separation from Service date; provided, however that any such payments that are otherwise scheduled to be made prior to the Release Effective Date (as defined below) shall instead accrue and be made on the first regular payroll date following the Release Effective Date. For such purposes, your final Base Salary will be calculated prior to giving effect to any reduction in Base Salary that would give rise to your right to resign for Good Reason.

 

8.1.2            Prior Year Bonus. If your Separation from Service occurs prior to your receipt of an Annual Bonus payment for the completed calendar year that immediately precedes the calendar year of the Separation from Service, you will also receive an Annual Bonus payment for such preceding calendar year, pursuant to the conditions of Section 2.2 above (the “Prior Year Bonus”).  The Prior Year Bonus shall be paid, subject to required and voluntarily authorized payroll deductions and federal and state tax withholdings, in the calendar year following the year to which the Annual Bonus payment relates, at the same time as the annual bonuses for such calendar year are generally paid to other executives; provided, however that if such payment date is prior to the Release Effective Date, the Prior Year Bonus shall instead accrue and be made on the first regular payroll date following the Release Effective Date.

 

8.1.3            Health Care Continuation Coverage Payments.

 

(i)            COBRA Premiums. If you timely elect continued coverage under COBRA, the Company will reimburse your COBRA premiums to continue your coverage (including coverage for your eligible dependents, if applicable) (“COBRA Premiums”) through the period starting on the Separation from Service date and ending six (6) months after the Separation from Service date (the “COBRA Premium Period”); provided, however, that the Company’s provision of such COBRA Premium benefits will immediately cease if during the COBRA Premium Period you becomes eligible for group health insurance coverage through a new employer or you cease to be eligible for COBRA continuation coverage for any reason, including plan termination. In the event you become covered under another employer’s group health plan or otherwise cease to be eligible for COBRA during the COBRA Premium Period, you must immediately notify the Company, in writing, of such event.

 

 

(ii)            Special Cash Payments in Lieu of COBRA Premiums. Notwithstanding the foregoing, if the Company determines, in its sole discretion, that it cannot pay the COBRA Premiums without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), regardless of whether you or your dependents elect or are eligible for COBRA coverage, the Company instead shall pay to you, on the first day of each calendar month following the Separation from Service date, a fully taxable cash payment equal to the applicable COBRA premiums for that month (including the amount of COBRA premiums for your eligible dependents), subject to applicable federal and state tax withholdings and required or voluntarily authorized deductions (such amount, the “Special Cash Payment”), for the remainder of the COBRA Premium Period. You may, but are not obligated to, use such Special Cash Payments toward the cost of COBRA premiums or toward premium costs under an individual health plan.

 

8.1.4            Equity Acceleration. Notwithstanding anything to the contrary set forth in the Equity Plan, any other equity incentive plans or any award agreement, effective as of your Separation from Service date, the vesting and exercisability of the unvested time-based equity awards then held by you shall accelerate as if you had provided an additional six (6) months, of continued services following the Separation from Service date (with monthly prorated vesting during the first year of service), and each such equity award shall remain exercisable, if applicable, following your Separation from Service as set forth in the applicable equity award documents. With respect to any performance-based vesting equity award, such award shall continue to be governed in all respects by the terms of the applicable equity award documents.

 

8.2            Termination Without Cause or Resignation for Good Reason During Change in Control Period. In the event your employment with the Company is terminated by the Company without Cause (and other than as a result of your death or Disability), or you resign for Good Reason, in either case, at any time during the Change in Control Period (as defined below), then provided such termination constitutes a “separation from service” (as defined under Treasury Regulation Section 1.409A-1(h), without regard to any alternative definition thereunder, a “Separation from Service”), and provided that you satisfy the Release Requirement in Section 9 below and remain in compliance with the terms of this Agreement and the CIIAA, the Company shall instead provide you with the following “CIC Severance Benefits”:

 

8.2.1            CIC Severance Payment. You will receive a severance payment in an amount equal to your final annual Base Salary plus your final Target Bonus Amount, subject to required and voluntarily authorized payroll deductions and federal and state tax withholdings (the “CIC Severance Payments”). Subject to Section 10 below, the CIC Severance Payments shall be made on the Company’s regular payroll schedule over the period of twelve (12) months following your Separation from Service date; provided, however that any such payments that are otherwise scheduled to be made prior to the Release Effective Date shall instead accrue and be made on the first regular payroll date following the Release Effective Date. For such purposes, your final Base Salary and Target Bonus Amount will be calculated prior to giving effect to any reduction in Base Salary that would give rise to your right to resign for Good Reason.

 

 

8.2.2            CIC Health Care Continuation Coverage Payments.

 

(i)            COBRA Premiums. If you timely elect continued coverage under COBRA, the Company will reimburse your COBRA premiums to continue your coverage (including coverage for your eligible dependents, if applicable) (“CIC COBRA Premiums”) through the period starting on the Separation from Service date and ending twelve (12) months after the Separation from Service date (the “CIC COBRA Premium Period”); provided, however, that the Company’s provision of such CIC COBRA Premium benefits will immediately cease if during the CIC COBRA Premium Period, you become eligible for group health insurance coverage through a new employer or you cease to be eligible for COBRA continuation coverage for any reason, including plan termination. In the event you become covered under another employer’s group health plan or otherwise cease to be eligible for COBRA during the CIC COBRA Premium Period, you must immediately notify the Company, in writing, of such event.

 

(ii)            Special Cash Payments in Lieu of CIC COBRA Premiums. Notwithstanding the foregoing, if the Company determines, in its sole discretion, that it cannot pay the CIC COBRA Premiums without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), regardless of whether you or your dependents elect or are eligible for COBRA coverage, the Company instead shall pay to you, on the first day of each calendar month following the Separation from Service date, a fully taxable cash payment equal to the applicable COBRA premiums for that month (including the amount of COBRA premiums for your eligible dependents), subject to applicable federal and state tax withholdings (such amount, the “Special CIC Cash Payment”), for the remainder of the CIC COBRA Premium Period. You may, but are not obligated to, use such Special CIC Cash Payments toward the cost of COBRA premiums.

 

8.2.3            Prior Year Bonus. If your Separation from Service occurs prior to your receipt of an Annual Bonus payment for the completed calendar year that immediately precedes the calendar year of the Separation from Service, you shall also receive the Prior Year Bonus.  The Prior Year Bonus shall be paid, subject to required and voluntarily authorized payroll deductions and federal and state tax withholdings, in the calendar year following the year to which the Annual Bonus payment relates, at the same time as the annual bonuses for such calendar year are generally paid to other executives; provided, however that if such payment date is prior to the Release Effective Date, the Prior Year Bonus shall instead accrue and be made on the first regular payroll date following the Release Effective Date.

 

8.2.4            Equity Acceleration. Notwithstanding anything to the contrary set forth in the Equity Plan, any other equity incentive plans or any award agreement, effective as of your employment Separation from Service date that occurs during the Change in Control Period, the vesting and exercisability of all equity awards then held by you shall accelerate such that all shares become immediately vested and, if applicable, exercisable by you upon such Separation from Service and shall remain exercisable (if such award is capable of being exercised) following your Separation from Service as set forth in the applicable equity award documents, with any performance-based equity awards accelerating at the “target” level of achievement.

 

 

8.3            Termination for Death or Disability. In the event your employment with the Company is terminated due to your death or Disability at any time, in lieu of (and not additional to) the Severance Benefits and CIC Severance Benefits described in Sections 8.1 and 8.2 above, and provided that you or your heirs or estate satisfies the Release Requirement in Section 9 below and remains in compliance with the terms of this Agreement and the CIIAA, you (or your heirs or estate) shall receive the prorated amount of the Target Bonus Amount for the year in which the Separation from Service occurs equal to the product of (i) and (ii), where (i) is the product of (a) your final Base Salary (but before giving effect to any reduction in Base Salary that would give rise to your right to resign for Good Reason) and (b) the percentage to achieve a Target Bonus Amount set forth in Section 2.2 above and where (ii) is (a) the number of days elapsed in the calendar year prior to the date on which the Separation from Service occurs divided by (b) 365 plus the Prior Year Bonus (if applicable), pursuant to the terms and conditions of Section 8.1.2 above (the “Death or Disability Benefits”). Notwithstanding the foregoing, you will not be entitled to the payments described in this Section 8.3 if your death or Disability is due to suicide or to your participation in an activity involving a significant risk of personal injury or death.

 

8.4            Termination for Cause; Resignation Without Good Reason. You will not be eligible for, or entitled to any severance benefits, including (without limitation) the Severance Benefits and CIC Severance Benefits listed in Sections 8.1 and 8.2 above, or the Death and Disability Benefits listed in Section 8.3, if the Company terminates your employment for Cause or you resign your employment without Good Reason.

 

9.            Conditions to Receipt of Severance Benefits and CIC Severance Benefits. To be eligible for any of the Severance Benefits, CIC Severance Benefits or Death or Disability Benefits pursuant to Sections 8.1, 8.2 or 8.3 above, you must satisfy the following release requirement (the “Release Requirement”): return to the Company a signed and dated general release of all known and unknown claims in a separation agreement acceptable to the Company (the “Release”), which shall among other things include a mutual non-disparagement provision, but will not release your right to severance benefits (pursuant to the terms and conditions of Section 8 of this Agreement), or to indemnification against third party claims (pursuant to any written indemnification agreement with the Company to which you are a party, the charter, bylaws, or operating agreements of the Company, or under applicable law), and will not increase the scope or duration of any post-employment restrictions on your activities, within the applicable deadline set forth therein, but in no event later than forty-five (45) calendar days following your Separation from Service date, and permit the Release to become effective and irrevocable in accordance with its terms (such effective date of the Release, the “Release Effective Date”). No Severance Benefits, CIC Severance Benefits or Death or Disability Benefits will be paid hereunder prior to the Release Effective Date. Accordingly, if you breach the preceding sentence and/or refuses to sign and deliver to the Company an executed Release or signs and delivers to the Company the Release but exercise your right, if any, under applicable law to revoke the Release (or any portion thereof), then you will not be entitled to any severance, payment or benefit under this Agreement.

 

 

10.            Section 409A. It is intended that all of the severance benefits and other payments payable under this Agreement satisfy, to the greatest extent possible, the exemptions from the application of Code Section 409A provided under Treasury Regulations 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9), and this Agreement will be construed to the greatest extent possible as consistent with those provisions, and to the extent not so exempt, this Agreement (and any definitions hereunder) will be construed in a manner that complies with Section 409A. For purposes of Code Section 409A (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), your right to receive any installment payments under this Agreement (whether Severance Benefits, CIC Severance Payments, Death or Disability Payments, reimbursements or otherwise) shall be treated as a right to receive a series of separate payments and, accordingly, each installment payment hereunder shall at all times be considered a separate and distinct payment. Notwithstanding any provision to the contrary in this Agreement, if you are deemed by the Company at the time of your Separation from Service to be a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i), and if any of the payments upon Separation from Service set forth herein and/or under any other agreement with the Company are deemed to be “deferred compensation”, then to the extent delayed commencement of any portion of such payments is required in order to avoid a prohibited distribution under Code Section 409A(a)(2)(B)(i) and the related adverse taxation under Section 409A, such payments shall not be provided to you prior to the earliest of (i) the expiration of the six-month and one day period measured from the date of your Separation from Service with the Company, (ii) the date of your death or (iii) such earlier date as permitted under Section 409A without the imposition of adverse taxation. Upon the first business day following the expiration of such applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this Section shall be paid in a lump sum to you, and any remaining payments due shall be paid as otherwise provided herein or in the applicable agreement. No interest shall be due on any amounts so deferred. If the Company determines that any Severance Benefits or CIC Severance Benefits provided under this Agreement constitutes “deferred compensation” under Section 409A, and if necessary to avoid taxation under Section 409A, for purposes of determining the schedule for payment of the severance benefits, the effective date of the Release will not be deemed to have occurred any earlier than the sixtieth (60th) date following the Separation From Service, regardless of when the Release actually becomes effective. In addition to the above, to the extent required to comply with Section 409A and the applicable regulations and guidance issued thereunder, if the applicable deadline for you to execute (and not revoke) the applicable Release spans two calendar years, payment of the applicable Severance Benefits, CIC Severance Benefits or Death or Disability Benefits shall not commence until the beginning of the second calendar year. To the extent required to avoid accelerated taxation and/or tax penalties under Code Section 409A, amounts reimbursable to you under this Agreement shall be paid to you on or before the last day of the year following the year in which the expense was incurred and the amount of expenses eligible for reimbursement (and in-kind benefits provided to you) during any one year may not effect amounts reimbursable or provided in any subsequent year. The Company makes no representation that any or all of the payments described in this Agreement will be exempt from or comply with Code Section 409A and makes no undertaking to preclude Code Section 409A from applying to any such payment.

 

11.            Section 280G; Limitations on Payment.

 

11.1            If any payment or benefit you will or may receive from the Company or otherwise (a “280G Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then any such 280G Payment provided pursuant to this Agreement (a “Payment”) shall be equal to the Reduced Amount. The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment (after reduction) being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever amount (i.e., the amount determined by clause (x) or by clause (y)), after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in your receipt, on an after-tax basis, of the greater economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in a Payment is required pursuant to the preceding sentence and the Reduced Amount is determined pursuant to clause (x) of the preceding sentence, the reduction shall occur in the manner (the “Reduction Method”) that results in the greatest economic benefit for you. If more than one method of reduction will result in the same economic benefit, the items so reduced will be reduced pro rata (the “Pro Rata Reduction Method”).

 

 

11.2            Notwithstanding any provision of Section 11.1 to the contrary, if the Reduction Method or the Pro Rata Reduction Method would result in any portion of the Payment being subject to taxes pursuant to Section 409A that would not otherwise be subject to taxes pursuant to Section 409A, then the Reduction Method and/or the Pro Rata Reduction Method, as the case may be, shall be modified so as to avoid the imposition of taxes pursuant to Section 409A as follows: (A) as a first priority, the modification shall preserve to the greatest extent possible, the greatest economic benefit for you as determined on an after-tax basis; (B) as a second priority, Payments that are contingent on future events (e.g., being terminated without Cause), shall be reduced (or eliminated) before Payments that are not contingent on future events; and (C) as a third priority, Payments that are “deferred compensation” within the meaning of Section 409A shall be reduced (or eliminated) before Payments that are not deferred compensation within the meaning of Section 409A.

 

11.3            Unless you and the Company agree on an alternative accounting firm or law firm, the accounting firm engaged by the Company for general tax compliance purposes as of the day prior to the effective date of the Change in Control transaction shall perform the foregoing calculations. If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the Change in Control transaction, the Company shall appoint a nationally recognized accounting or law firm to make the determinations required by this Section 11. The Company shall bear all expenses with respect to the determinations by such accounting or law firm required to be made hereunder. The Company shall use commercially reasonable efforts to cause the accounting or law firm engaged to make the determinations hereunder to provide its calculations, together with detailed supporting documentation, to you and the Company within fifteen (15) calendar days after the date on which your right to a 280G Payment becomes reasonably likely to occur (if requested at that time by you or the Company) or such other time as requested by you or the Company.

 

11.4            If you receive a Payment for which the Reduced Amount was determined pursuant to clause (x) of Section 11.1 and the Internal Revenue Service determines thereafter that some portion of the Payment is subject to the Excise Tax, you agree to promptly return to the Company a sufficient amount of the Payment (after reduction pursuant to clause (x) of Section 11.1) so that no portion of the remaining Payment is subject to the Excise Tax. For the avoidance of doubt, if the Reduced Amount was determined pursuant to clause (y) of Section 11.1, you shall have no obligation to return any portion of the Payment pursuant to the preceding sentence.

 

 

12.            Definitions.

 

12.1            Cause. For purposes of this Agreement, “Cause” means the occurrence of any one or more of the following: (i) your conviction of or plea of guilty or nolo contendere to any felony or a crime of moral turpitude; (ii) your willful and continued refusal to follow lawful and reasonable written instructions of the Board or lawful and reasonable written policies and regulations of the Company or its affiliates; (iii) your willful and continued refusal to faithfully and diligently perform the assigned duties of your employment with the Company or its affiliates; (iv) any act or omission that, in the Board’s good faith opinion, constitutes fraudulent conduct by you; (v) willful misconduct by you that materially injures the Company or any affiliate or materially injures the reputation, character and standing of the Company or any affiliate; or (vi) material injury to the Company based on your willful and material breach of this Agreement, the CIIAA, or any written Company policies. An event described in Section 12.1(ii) through Section 12.1(vi) herein shall not be treated as “Cause” until after you have been given written notice of such event, failure, conduct or breach where such written notice describes with particularity the alleged event, failure, conduct or breach and you fail to cure such event, failure, conduct or breach within 30 calendar days from such written notice; provided, however, that such 30-day cure period shall not be required if the event, failure, conduct or breach is reasonably determined to be incapable of being cured by the Company.

 

12.2            Change in Control. For purposes of this Agreement, “Change in Control” shall have the meaning described in the Cayman Parent’s 2019 Equity Incentive Plan.

 

12.3            Change in Control Period. For purposes of this Agreement, “Change in Control Period” means the time period commencing three (3) months before the effective date of a Change in Control and ending on the date that is twelve (12) months after the effective date of a Change in Control.

 

12.4            Disability. For purposes of this Agreement, “Disability” means the inability of you to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months.

 

12.5            Good Reason. For purposes of this Agreement, you shall have “Good Reason” for resignation from employment with the Company if any of the following actions are taken by the Company without your prior written consent: (i) a reduction in your Base Salary, unless in the same percentage as a salary reduction program applicable generally to the Company’s senior executives; (ii) a material reduction in your duties, responsibilities, title or authority, including removal of the requirement to report to anyone other than the CEO, Board or the Parent Board; (iii) the material breach by the Company of this Agreement; or (iv) the relocation of your principal place of employment to a place that increases your one-way commute by more than twenty-five (25) miles as compared to your then-current principal place of employment immediately prior to such relocation. In order for you to resign for Good Reason, each of the following requirements must be met: (A) you must provide written notice to the Board within ninety (90) calendar days after your first knowledge of the event giving rise to Good Reason setting forth the basis for your resignation, (B) you must allow the Company at least thirty (30) calendar days from receipt of such written notice to cure such event, (C) such event is not reasonably cured by the Company within such 30 calendar day period (the “Cure Period”), and (D) you must resign in writing from all positions you then hold with the Company not later than ninety (90) calendar days after the expiration of the Cure Period.

 

 

13.            Dispute Resolution/Agreement to Arbitrate Claims. To ensure the rapid and economical resolution of disputes that may arise in connection with your employment with the Company, you and the Company agree that any and all disputes, claims, or causes of action, in law or equity, including but not limited to statutory claims, arising from or relating to the enforcement, breach, performance, or interpretation of this Agreement, your employment with the Company, or the termination of your employment from the Company, will be resolved pursuant to the Federal Arbitration Act, 9 U.S.C. §1, et seq. and to the fullest extent permitted by law, by final, binding and confidential arbitration. Except as provided below, the Company and you agree that confidential arbitration is the exclusive, final and biding method for resolving all such claims.

 

13.1      Claims Covered By this Agreement. Disputes that are subject to arbitration under this Agreement include, but are not limited to, claims for wages or other compensation due, including claims for overtime; meal or rest break claims; claims for breach of any contract or covenant (express or implied); tort claims, including, but not limited to claims for defamation, intentional infliction of emotional distress, invasion of privacy, and all negligence-based claims; personal injury claims; claims for discrimination, harassment and/or retaliation in employment including, but no limited to claims under the California Fair Employment and Housing Act, the California Labor Code, claims arising under Title VII of the Civil Rights Act of 1964, the Fair Labor Standards Act, the Equal Pay Act, the Employee Retirement Income Security Act, the California Family Rights Act of 1964, the Family and Medical Leave Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Older Worker Benefit Protection Act, the Sarbanes-Oxley Act, all as they may have been amended from time to time, claims for misclassification, and claims for violation of common law or any other federal, state, or local laws relating to employment or separation from employment or benefits associated with employment or separation for employment.

 

13.2      Claims Not Covered By this Agreement. Claims for workers’ compensation, unemployment insurance, claims for injunctive relief, and claims under California Private Attorneys General Act of 2004, as amended, are not covered by this Agreement. Nothing in this Agreement is intended to prevent you from filing an administrative claim with the Equal Employment Opportunity Commission or the California Department of Fair Employment and Housing. Moreover, both you and the Company may bring an action in any court of competent jurisdiction to compel arbitration under this Agreement and/or enforce and arbitration award.

 

 

13.3      Arbitration Rules and Procedures. The arbitration is to be conducted in San Francisco, California by JAMS, Inc. (“JAMS”) or its successors before a mutually selected single neutral arbitrator, under JAMS’ then applicable rules and procedures for employment disputes (which will be provided to you upon request); provided that the arbitrator shall: (i) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law; and (ii) issue a written arbitration decision including the arbitrator’s essential findings and conclusions on which the award was based and a statement of the award. you and the Company shall be entitled to all rights and remedies that either would be entitled to pursue in a court of law. Questions of whether a claim is subject to arbitration under this Agreement shall be decided by the arbitrator. Likewise, procedural questions which grow out of the dispute and bear on the final disposition are also matters for the arbitrator. To the maximum extent permitted by applicable law, all claims, disputes, or causes of action under this section, whether by you or the Company, must be brought in an individual capacity, and shall not be brought as a plaintiff (or claimant) or class member in any purported class or representative proceeding, nor joined or consolidated with the claims of any other person or entity. The Arbitrator may not consolidate the claims of more than one person or entity, and may not preside over any form of representative or class proceeding. Both you and the Company acknowledge that by agreeing to this arbitration procedure, they waive the right to resolve any such dispute through a trial by jury or judge or administrative proceeding. The Company shall pay all filing fees in excess of those which would be required if the dispute were decided in a court of law (that is, costs that are unique to arbitration) and shall pay the arbitrator’s fee. Each party shall pay the fees of its attorneys, the expenses of its witnesses, and any other costs and expenses that the party incurs in connection with the arbitration; provided that an arbitrator may award attorneys’ fees to the prevailing party, if the arbitrator determines in its sole discretion that such an award is permitted by applicable law. Any dispute as to whether a cost is unique to arbitration will be exclusively resolved by the arbitrator. Both you and the Company have the right to be represented by legal counsel at any arbitration proceeding. The arbitration proceedings will be confidential to the extent permitted by law. you and the Company will maintain all information and documents exchanged in connection with and in the course of the arbitration as confidential, except to the extent the disclosure of such information or documentation is necessary to enforce any award or challenge any award as permitted by the applicable law.

 

13.4.      No Change in At-Will Employment. This agreement to arbitrate claims is not a contract of employment, expressed or implied, and you and the Company acknowledge that your employment with the Company is at-will and that this agreement does not change the “at-will” status of your employment. BOTH EMPLOYEE AND THE COMPANY ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE TERMS OF SECTION 13, AGREEMENT TO ARBITRATE CLAIMS, AND AGREE TO BE BOUND BY ITS TERMS.

 

14.            General Provisions.

 

14.1            Notices. Any notices provided must be in writing and will be deemed effective upon the earlier of personal delivery (including personal delivery by email upon confirmation of receipt) or the next day after sending by overnight carrier, to the Company at its primary office location and to you at the address as listed on the Company payroll.

 

14.2            Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction to the extent possible in keeping with the intent of the Company and you (“the Parties”).

 

14.3            Waiver. Any waiver of any breach of any provisions of this Agreement must be in writing to be effective, and it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.

 

 

14.4            Complete Agreement. This Agreement, together with the CIIAA, constitutes the entire agreement between you and the Company with regard to the subject matter hereof and is the complete, final, and exclusive embodiment of the Company’s and your agreement with regard to this subject matter. This Agreement is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises, warranties or representations. It cannot be modified or amended except in a writing signed by a duly authorized officer of the Company, with the exception of those changes expressly reserved to the Company’s discretion in this Agreement.

 

14.5            Counterparts. This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but both of which taken together will constitute one and the same Agreement.

 

14.6            Headings. The headings of the sections hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to affect the meaning thereof.

 

14.7            Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by you and the Company, and their respective successors, assigns, heirs, executors and administrators, except that you may not assign any of your duties hereunder and you may not assign any of your rights hereunder without the written consent of the Company, which shall not be withheld unreasonably.

 

14.8            Tax Withholding. All payments and awards contemplated or made pursuant to this Agreement will be subject to withholdings of applicable taxes in compliance with all relevant laws and regulations of all appropriate government authorities. You acknowledge and agree that the Company has neither made any assurances nor any guarantees concerning the tax treatment of any payments or awards contemplated by or made pursuant to this Agreement. You have had the opportunity to retain a tax and financial advisor and fully understands the tax and economic consequences of all payments and awards made pursuant to this Agreement.

 

14.9            Choice of Law. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the laws of the State of California.

 

This offer is subject to satisfactory proof of your identity and right to work in the United States and other applicable pre-employment screenings. We look forward to having you join us. If you have any questions about this Agreement, please do not hesitate to call me.

 

[Signature Page Follows]

 

 

Sincerely,

 

ShouTi Inc., a Delaware corporation

 

/s/ Raymond Stevens

Raymond Stevens, Ph.D.

Chief Executive Officer

 

Accepted and agreed:

 

/s/ Mark Bach

Dr. Mark Bach

 

Date: 4/22/2021

 

 

Exhibit 10.8

 

 

 

April 23, 2021

 

Melita Sun Jung

Email: [***]

 

Re:       Amended and Restated Offer of Employment

 

Dear Melita:

 

As you know, ShouTi Inc., a Delaware corporation (the “Company”), entered into an employment offer letter with you on February 14, 2021 (the “Offer Letter”). You and the Company hereby agree to amend and restate the Offer Letter. The terms and conditions set forth in this letter agreement (the “Agreement”) shall become effective as of the date hereof, and shall supersede and replace the terms and conditions set forth in the Offer Letter.

 

1.            Employment by the Company.

 

1.1            Position. You will serve as the Company’s Chief Business Officer, reporting the Company’s Chief Executive Officer. During the term of your employment with the Company, you will devote your best efforts and all of your business time and attention to the business of the Company, except as permitted in Section 7 of this Agreement and excluding approved vacation periods and reasonable periods of illness or other incapacities permitted by the Company’s general employment policies. You further agree not to usurp, for your own personal benefit or gain, any opportunities in the Company’s line of business. You will be expected to work on a full-time basis and travel as part of your position.

 

1.2            Start Date. The Company and you agree that your start date with the Company is expected to begin on May 6, 2021 (the “Start Date”).

 

1.3            Duties and Location. You will perform such duties as are customarily associated with the position of Chief Business Officer, and such other duties as are assigned to you by the Company’s Board of Directors (the “Board”). Your primary office locations shall be the Company’s facilities in California, or at such other locations as mutually agreed. Subject to the terms of this Agreement and applicable law, the Company reserves the right to reasonably require you to perform your duties at places other than your primary office location from time to time and to require reasonable business travel.

 

 

1.4          Policies and Procedures. The employment relationship between you and the Company will be governed by the general employment policies and practices of the Company, including any Employee Handbook adopted by the Company, as well as by all other rules and policies applicable to the Company’s professional employees, except that when the terms of this Agreement differ from or are in conflict with the Company’s general employment policies or practices, this Agreement shall control.

 

1.5            At-Will Employment. Your employment relationship with the Company is at-will. Either the Company or you shall have the right to terminate the employment relationship at any time, with or without Cause (as defined below) or advance notice. Should a Company policy exist now or in the future which contradicts this at-will provision, this at-will provision controls the relationship between you and the Company. The at-will nature of your employment may only be changed in an express written agreement signed by you and a duly authorized officer of the Board. Nothing in this Agreement is intended to modify the at-will employment relationship between the Company and you.

 

2.            Compensation.

 

2.1            Base Salary. For services to be rendered hereunder, for the years ending on each of the first and second anniversaries of your Start Date, you shall be paid a base annual salary at the rate of $375,000 (the “Base Salary”), less all required and applicable standard payroll deductions and withholdings for federal and state taxes and for any authorized voluntary deductions and payable in accordance with the Company’s regular payroll schedule. Your Base Salary shall be reviewed at least annually by the Compensation Committee (the “Compensation Committee”) of the Board of Directors of the Company’s parent (the “Parent Board”), ShouTi Inc., a Cayman Islands exempted company (the “Cayman Parent”).

 

2.2           Annual Bonus. You will be eligible for an annual target bonus (the “Annual Bonus”) each calendar year equal to thirty-five percent (35%) of your then current Base Salary at a “meeting expectations” level of achievement (the “Target Bonus Amount”), which shall be prorated based on the number of days you are actually employed during the calendar year. Whether you receive an Annual Bonus for any given year, and the amount of any such Annual Bonus, will be determined in the good faith reasonable discretion of the Board, which determination will be based upon the Company’s and your achievement of objectives and milestones. The Company’s and your objectives and milestones will be established on an annual basis by the Parent Board (or Compensation Committee thereof) in consultation with you, which objectives and milestones may provide for payments above and below target based on the level of performance achievement. The Company will pay you the Annual Bonus, if any, by no later than March 15 of each calendar year. No Annual Bonus is guaranteed and, in addition to the other conditions for earning such compensation, and except as provided for in Section 8 below, you must remain an employee in good standing of the Company on the date the Annual Bonus is paid in order to be eligible for and earn any Annual Bonus.

 

2.3           Signing Bonus. You will also receive a one-time signing bonus in the amount of $75,000 (the “Signing Bonus”), subject to applicable payroll deductions and withholdings. The Signing Bonus will be paid to you as an advance in a single lump sum on the first regularly-scheduled payroll date after your Start Date, and is provided to you prior to your earning of such Signing Bonus. You will not earn the Signing Bonus unless you remain actively and continuously employed with the Company through the one-year anniversary of your Start Date. If your employment terminates under any circumstances before such one-year anniversary date, you agree to repay the Signing Bonus to the Company in full.

 

 

3.           Standard Company Benefits. You will, in accordance with Company policy and the terms and conditions of the applicable Company benefit plan documents, be eligible to participate in the benefit and fringe benefit programs provided by the Company to its executive officers and other employees from time to time. Except as provided below in this Section 3, you will be entitled to paid sick leave, paid time off, and holidays as outlined in the Company’s employment policies, and as otherwise required by applicable law. You will also be entitled to all other holiday and paid time off generally available to other executives of the Company. Any such benefits shall be subject to the terms and conditions of the governing benefit plans and policies, as well as the Company’s policies and may be changed by the Company in its discretion.

 

4.           Expenses. The Company will reimburse you for reasonable travel, entertainment or other expenses incurred by you in furtherance or in connection with the performance of your duties hereunder, in accordance with applicable law and the Company’s expense reimbursement policy as in effect from time to time.

 

5.            Equity.

 

5.1           Options. The Company will recommend to the Compensation Committee that you be granted an option to purchase 465,290 Ordinary Shares of the Cayman Parent (the “Option”). Grant of the Option is subject to the approval of the Parent Board. If granted, the Option shall vest over four years of your continuous service with the Company, with twenty-five percent (25%) of the shares subject to the Option grant becoming vested on the first year anniversary of the Start Date, and the remaining shares becoming vested in equal monthly installments over the following thirty-six (36) months of your continuous service. The exercise price of the Option, as well as all other matters related to the Option, will be governed by and subject to the terms and conditions set forth in the Cayman Parent’s 2019 Equity Incentive Plan (the “Equity Plan”), and the stock option agreement you will be required to electronically accept.

 

6.            Proprietary Information Obligations.

 

6.1           Proprietary Information Agreement. As a condition of employment, you shall execute and abide by the Company’s standard Confidential Information and Invention Assignment Agreement (the “CIIAA”).

 

6.2            Third-Party Agreements and Information. You represent and warrant that your employment by the Company does not conflict with any prior employment or consulting agreement or other agreement with any third party, and that you will perform your duties to the Company without violating any such agreement. You represent and warrant that you do not possess confidential information arising out of prior employment, consulting, or other third party relationships, that would be used in connection with your employment by the Company, except as expressly authorized by that third party. During your employment by the Company, you will use in the performance of your duties only information that is generally known and used by persons with training and experience comparable to your own, common knowledge in the industry, otherwise legally in the public domain, or obtained or developed by the Company or by you in the course of your work for the Company. In addition, you represent that you have disclosed to the Company in writing any agreement you may have with any third party (e.g., a former employer) which may limit your ability to perform your duties to the Company, or which could present a conflict of interest with the Company, including but not limited to disclosure (and a copy) of any contractual restrictions on solicitations or competitive activities.

 

 

7.            Outside Activities and Non-Competition During Employment.

 

7.1            Outside Activities. Throughout your employment with the Company, you may engage in civic and not-for-profit activities so long as such activities do not interfere with the performance of your duties hereunder or present a conflict of interest with the Company or its affiliates. Subject to the restrictions set forth herein, and only with prior written disclosure to and consent of the Board (which consent will not be unreasonably withheld), you may engage in other types of business or public activities. The Board may rescind such consent, if the Board determines, in its sole discretion, that such activities compromise or threaten to compromise the Company’s or its affiliates’ business interests or conflict with your duties to the Company or its affiliates.

 

7.2           Non-Competition During Employment. Throughout your employment with the Company, you will not, without the express written consent of the Board, directly or indirectly serve as an officer, director, stockholder, employee, partner, proprietor, investor, joint ventures, associate, representative or consultant of any person or entity engaged in, or planning or preparing to engage in, business activity competitive with any line of business engaged in (or planned to be engaged in) by the Company or its affiliates; provided, however, that you may purchase or otherwise acquire up to (but not more than) one percent (1%) of any class of securities of any enterprise (without participating in the activities of such enterprise) if such securities are listed on any national or regional securities exchange. In addition, you will be subject to certain restrictions (including restrictions continuing after your employment ends) outlined in the terms of the CIIAA. Notwithstanding the foregoing, you may assume outside board duties with prior disclosure and approval of the Company, which approval shall not be unreasonably withheld, as long as the business activity is not directly competitive with any line of business of the Company or its affiliates.

 

8.            Termination of Employment; Severance and Change in Control Benefits.

 

8.1            Termination Without Cause or Resignation for Good Reason Unrelated to Change in Control. In the event your employment with the Company is terminated by the Company without Cause (as defined below), and other than as a result of your death or Disability (as defined below), or you resign for Good Reason, in either case, at any time except during the Change in Control Period (as defined below), then provided such termination constitutes a “separation from service” (as defined under Treasury Regulation Section 1.409A-1(h), without regard to any alternative definition thereunder, a “Separation from Service”), and provided that you satisfy the Release Requirement in Section 9 below, and remain in compliance with the terms of this Agreement and the CIIAA, the Company shall provide you with the following “Severance Benefits”:

 

 

8.1.1          Severance Payments. You will receive severance pay in the form of continuation of your final monthly Base Salary for a period of six (6) months following termination, subject to required and voluntarily authorized payroll deductions and federal and state tax withholdings (the “Severance Payments”). Subject to Section 10 below, the Severance Payments shall be made on the Company’s regular payroll schedule in effect following your Separation from Service date; provided, however that any such payments that are otherwise scheduled to be made prior to the Release Effective Date (as defined below) shall instead accrue and be made on the first regular payroll date following the Release Effective Date. For such purposes, your final Base Salary will be calculated prior to giving effect to any reduction in Base Salary that would give rise to your right to resign for Good Reason.

 

8.1.2         Prior Year Bonus. If your Separation from Service occurs prior to your receipt of an Annual Bonus payment for the completed calendar year that immediately precedes the calendar year of the Separation from Service, you will also receive an Annual Bonus payment for such preceding calendar year, pursuant to the conditions of Section 2.2 above (the “Prior Year Bonus”).  The Prior Year Bonus shall be paid, subject to required and voluntarily authorized payroll deductions and federal and state tax withholdings, in the calendar year following the year to which the Annual Bonus payment relates, at the same time as the annual bonuses for such calendar year are generally paid to other executives; provided, however that if such payment date is prior to the Release Effective Date (as defined below), the Prior Year Bonus shall instead accrue and be made on the first regular payroll date following the Release Effective Date.

 

8.1.3          Health Care Continuation Coverage Payments.

 

(i)             COBRA Premiums. If you timely elect continued coverage under COBRA, the Company will reimburse your COBRA premiums to continue your coverage (including coverage for your eligible dependents, if applicable) (“COBRA Premiums”) through the period starting on the Separation from Service date and ending six (6) months after the Separation from Service date (the “COBRA Premium Period”); provided, however, that the Company’s provision of such COBRA Premium benefits will immediately cease if during the COBRA Premium Period you becomes eligible for group health insurance coverage through a new employer or you cease to be eligible for COBRA continuation coverage for any reason, including plan termination. In the event you become covered under another employer’s group health plan or otherwise cease to be eligible for COBRA during the COBRA Premium Period, you must immediately notify the Company, in writing, of such event.

 

(ii)            Special Cash Payments in Lieu of COBRA Premiums. Notwithstanding the foregoing, if the Company determines, in its sole discretion, that it cannot pay the COBRA Premiums without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), regardless of whether you or your dependents elect or are eligible for COBRA coverage, the Company instead shall pay to you, on the first day of each calendar month following the Separation from Service date, a fully taxable cash payment equal to the applicable COBRA premiums for that month (including the amount of COBRA premiums for your eligible dependents), subject to applicable federal and state tax withholdings and required or voluntarily authorized deductions (such amount, the “Special Cash Payment”), for the remainder of the COBRA Premium Period. You may, but are not obligated to, use such Special Cash Payments toward the cost of COBRA premiums or toward premium costs under an individual health plan.

 

 

8.1.4          Equity Acceleration. Notwithstanding anything to the contrary set forth in the Equity Plan, any other equity incentive plans or any award agreement, effective as of your Separation from Service date, the vesting and exercisability of the unvested time-based equity awards then held by you shall accelerate as if you had provided an additional six (6) months, of continued services following the Separation from Service date (with monthly prorated vesting during the first year of service), and each such equity award shall remain exercisable, if applicable, following your Separation from Service as set forth in the applicable equity award documents. With respect to any performance-based vesting equity award, such award shall continue to be governed in all respects by the terms of the applicable equity award documents.

 

8.2          Termination Without Cause or Resignation for Good Reason During Change in Control Period. In the event your employment with the Company is terminated by the Company without Cause (and other than as a result of your death or Disability), or you resign for Good Reason, in either case, at any time during the Change in Control Period (as defined below), then provided such termination constitutes a “separation from service” (as defined under Treasury Regulation Section 1.409A-1(h), without regard to any alternative definition thereunder, a “Separation from Service”), and provided that you satisfy the Release Requirement in Section 9 below and remain in compliance with the terms of this Agreement and the CIIAA, the Company shall instead provide you with the following “CIC Severance Benefits”:

 

8.2.1          CIC Severance Payment. You will receive a severance pay in an amount equal to your final annual Base Salary plus your final Target Bonus Amount, subject to required and voluntarily authorized payroll deductions and federal and state tax withholdings (the “CIC Severance Payments”). Subject to Section 10 below, the CIC Severance Payments shall be made on the Company’s regular payroll schedule over the period of twelve (12) months following your Separation from Service date; provided, however that any such payments that are otherwise scheduled to be made prior to the Release Effective Date shall instead accrue and be made on the first regular payroll date following the Release Effective Date. For such purposes, your final Base Salary and Target Bonus Amount will be calculated prior to giving effect to any reduction in Base Salary that would give rise to your right to resign for Good Reason.

 

8.2.2          CIC Health Care Continuation Coverage Payments.

 

(i)             COBRA Premiums. If you timely elect continued coverage under COBRA, the Company will reimburse your COBRA premiums to continue your coverage (including coverage for your eligible dependents, if applicable) (“CIC COBRA Premiums”) through the period starting on the Separation from Service date and ending twelve (12) months after the Separation from Service date (the “CIC COBRA Premium Period”); provided, however, that the Company’s provision of such CIC COBRA Premium benefits will immediately cease if during the CIC COBRA Premium Period, you become eligible for group health insurance coverage through a new employer or you cease to be eligible for COBRA continuation coverage for any reason, including plan termination. In the event you become covered under another employer’s group health plan or otherwise cease to be eligible for COBRA during the CIC COBRA Premium Period, you must immediately notify the Company, in writing, of such event.

 

 

(ii)             Special Cash Payments in Lieu of CIC COBRA Premiums. Notwithstanding the foregoing, if the Company determines, in its sole discretion, that it cannot pay the CIC COBRA Premiums without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), regardless of whether you or your dependents elect or are eligible for COBRA coverage, the Company instead shall pay to you, on the first day of each calendar month following the Separation from Service date, a fully taxable cash payment equal to the applicable COBRA premiums for that month (including the amount of COBRA premiums for your eligible dependents), subject to applicable federal and state tax withholdings (such amount, the “Special CIC Cash Payment”), for the remainder of the CIC COBRA Premium Period. You may, but are not obligated to, use such Special CIC Cash Payments toward the cost of COBRA premiums.

 

8.2.3          Prior Year Bonus. If your Separation from Service occurs prior to your receipt of an Annual Bonus payment for the completed calendar year that immediately precedes the calendar year of the Separation from Service, you shall also receive the Prior Year Bonus.  The Prior Year Bonus shall be paid, subject to required and voluntarily authorized payroll deductions and federal and state tax withholdings, in the calendar year following the year to which the Annual Bonus payment relates, at the same time as the annual bonuses for such calendar year are generally paid to other executives; provided, however that if such payment date is prior to the Release Effective Date, the Prior Year Bonus shall instead accrue and be made on the first regular payroll date following the Release Effective Date.

 

8.2.4          Equity Acceleration. Notwithstanding anything to the contrary set forth in the Equity Plan, any other equity incentive plans or any award agreement, effective as of your employment Separation from Service date that occurs during the Change in Control Period, the vesting and exercisability of all equity awards then held by you shall accelerate such that all shares become immediately vested and, if applicable, exercisable by you upon such Separation from Service and shall remain exercisable (if such award is capable of being exercised) following your Separation from Service as set forth in the applicable equity award documents, with any performance-based equity awards accelerating at the “target” level of achievement.

 

8.3           Termination for Death or Disability. In the event your employment with the Company is terminated due to your death or Disability at any time, in lieu of (and not additional to) the Severance Benefits and CIC Severance Benefits described in Sections 8.1 and 8.2 above, and provided that you or your heirs or estate satisfies the Release Requirement in Section 9 below and remains in compliance with the terms of this Agreement and the CIIAA, you (or your heirs or estate) shall receive the prorated amount of the Target Bonus Amount for the year in which the Separation from Service occurs equal to the product of (i) and (ii), where (i) is the product of (a) your final Base Salary (but before giving effect to any reduction in Base Salary that would give rise to your right to resign for Good Reason) and (b) the percentage to achieve a Target Bonus Amount set forth in Section 2.2 above and where (ii) is (a) the number of days elapsed in the calendar year prior to the date on which the Separation from Service occurs divided by (b) 365 plus the Prior Year Bonus (if applicable), pursuant to the terms and conditions of Sections 8.1.2 and 8.2.3 above (the “Death or Disability Benefits”). Notwithstanding the foregoing, you will not be entitled to the payments described in this Section 8.3 if your death or Disability is due to suicide or to your participation in an activity involving a significant risk of personal injury or death.

 

 

8.4            Termination for Cause; Resignation Without Good Reason. You will not be eligible for, or entitled to any severance benefits, including (without limitation) the Severance Benefits and CIC Severance Benefits listed in Sections 8.1 and 8.2 above, or the Death and Disability Benefits listed in Section 8.3, if the Company terminates your employment for Cause or you resign your employment without Good Reason.

 

9.            Conditions to Receipt of Severance Benefits and CIC Severance Benefits. To be eligible for any of the Severance Benefits, CIC Severance Benefits or Death or Disability Benefits pursuant to Sections 8.1, 8.2 or 8.3 above, you must satisfy the following release requirement (the “Release Requirement”): return to the Company a signed and dated general release of all known and unknown claims in a separation agreement acceptable to the Company (the “Release”), which shall among other things include a mutual non-disparagement provision, but will not release your right to severance benefits (pursuant to the terms and conditions of Section 8 of this Agreement), or to indemnification against third party claims (pursuant to any written indemnification agreement with the Company to which you are a party, the charter, bylaws, or operating agreements of the Company, or under applicable law), and will not increase the scope or duration of any post-employment restrictions on your activities, within the applicable deadline set forth therein, but in no event later than forty-five (45) calendar days following your Separation from Service date, and permit the Release to become effective and irrevocable in accordance with its terms (such effective date of the Release, the “Release Effective Date”). No Severance Benefits, CIC Severance Benefits or Death or Disability Benefits will be paid hereunder prior to the Release Effective Date. Accordingly, if you breach the preceding sentence and/or refuse to sign and deliver to the Company an executed Release or sign and deliver to the Company the Release but exercise your right, if any, under applicable law to revoke the Release (or any portion thereof), then you will not be entitled to any severance, payment or benefit under this Agreement.

 

10.            Section 409A. It is intended that all of the severance benefits and other payments payable under this Agreement satisfy, to the greatest extent possible, the exemptions from the application of Code Section 409A provided under Treasury Regulations 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9), and this Agreement will be construed to the greatest extent possible as consistent with those provisions, and to the extent not so exempt, this Agreement (and any definitions hereunder) will be construed in a manner that complies with Section 409A. For purposes of Code Section 409A (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), your right to receive any installment payments under this Agreement (whether Severance Benefits, CIC Severance Payments, Death or Disability Payments, reimbursements or otherwise) shall be treated as a right to receive a series of separate payments and, accordingly, each installment payment hereunder shall at all times be considered a separate and distinct payment. Notwithstanding any provision to the contrary in this Agreement, if you are deemed by the Company at the time of your Separation from Service to be a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i), and if any of the payments upon Separation from Service set forth herein and/or under any other agreement with the Company are deemed to be “deferred compensation”, then to the extent delayed commencement of any portion of such payments is required in order to avoid a prohibited distribution under Code Section 409A(a)(2)(B)(i) and the related adverse taxation under Section 409A, such payments shall not be provided to you prior to the earliest of (i) the expiration of the six-month and one day period measured from the date of your Separation from Service with the Company, (ii) the date of your death or (iii) such earlier date as permitted under Section 409A without the imposition of adverse taxation. Upon the first business day following the expiration of such applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this Section shall be paid in a lump sum to you, and any remaining payments due shall be paid as otherwise provided herein or in the applicable agreement. No interest shall be due on any amounts so deferred. If the Company determines that any Severance Benefits or CIC Severance Benefits provided under this Agreement constitutes “deferred compensation” under Section 409A, and if necessary to avoid taxation under Section 409A, for purposes of determining the schedule for payment of the severance benefits, the effective date of the Release will not be deemed to have occurred any earlier than the sixtieth (60th) date following the Separation From Service, regardless of when the Release actually becomes effective. In addition to the above, to the extent required to comply with Section 409A and the applicable regulations and guidance issued thereunder, if the applicable deadline for you to execute (and not revoke) the applicable Release spans two calendar years, payment of the applicable Severance Benefits, CIC Severance Benefits or Death or Disability Benefits shall not commence until the beginning of the second calendar year. To the extent required to avoid accelerated taxation and/or tax penalties under Code Section 409A, amounts reimbursable to you under this Agreement shall be paid to you on or before the last day of the year following the year in which the expense was incurred and the amount of expenses eligible for reimbursement (and in-kind benefits provided to you) during any one year may not effect amounts reimbursable or provided in any subsequent year. The Company makes no representation that any or all of the payments described in this Agreement will be exempt from or comply with Code Section 409A and makes no undertaking to preclude Code Section 409A from applying to any such payment.

 

 

11.            Section 280G; Limitations on Payment.

 

11.1            If any payment or benefit you will or may receive from the Company or otherwise (a “280G Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then any such 280G Payment provided pursuant to this Agreement (a “Payment”) shall be equal to the Reduced Amount. The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment (after reduction) being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever amount (i.e., the amount determined by clause (x) or by clause (y)), after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in your receipt, on an after-tax basis, of the greater economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in a Payment is required pursuant to the preceding sentence and the Reduced Amount is determined pursuant to clause (x) of the preceding sentence, the reduction shall occur in the manner (the “Reduction Method”) that results in the greatest economic benefit for you. If more than one method of reduction will result in the same economic benefit, the items so reduced will be reduced pro rata (the “Pro Rata Reduction Method”).

 

11.2            Notwithstanding any provision of Section 11.1 to the contrary, if the Reduction Method or the Pro Rata Reduction Method would result in any portion of the Payment being subject to taxes pursuant to Section 409A that would not otherwise be subject to taxes pursuant to Section 409A, then the Reduction Method and/or the Pro Rata Reduction Method, as the case may be, shall be modified so as to avoid the imposition of taxes pursuant to Section 409A as follows: (A) as a first priority, the modification shall preserve to the greatest extent possible, the greatest economic benefit for you as determined on an after-tax basis; (B) as a second priority, Payments that are contingent on future events (e.g., being terminated without Cause), shall be reduced (or eliminated) before Payments that are not contingent on future events; and (C) as a third priority, Payments that are “deferred compensation” within the meaning of Section 409A shall be reduced (or eliminated) before Payments that are not deferred compensation within the meaning of Section 409A.

 

 

11.3            Unless you and the Company agree on an alternative accounting firm or law firm, the accounting firm engaged by the Company for general tax compliance purposes as of the day prior to the effective date of the Change in Control transaction shall perform the foregoing calculations. If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the Change in Control transaction, the Company shall appoint a nationally recognized accounting or law firm to make the determinations required by this Section 11. The Company shall bear all expenses with respect to the determinations by such accounting or law firm required to be made hereunder. The Company shall use commercially reasonable efforts to cause the accounting or law firm engaged to make the determinations hereunder to provide its calculations, together with detailed supporting documentation, to you and the Company within fifteen (15) calendar days after the date on which your right to a 280G Payment becomes reasonably likely to occur (if requested at that time by you or the Company) or such other time as requested by you or the Company.

 

11.4            If you receive a Payment for which the Reduced Amount was determined pursuant to clause (x) of Section 11.1 and the Internal Revenue Service determines thereafter that some portion of the Payment is subject to the Excise Tax, you agree to promptly return to the Company a sufficient amount of the Payment (after reduction pursuant to clause (x) of Section 11.1) so that no portion of the remaining Payment is subject to the Excise Tax. For the avoidance of doubt, if the Reduced Amount was determined pursuant to clause (y) of Section 11.1, you shall have no obligation to return any portion of the Payment pursuant to the preceding sentence.

 

12.            Definitions.

 

12.1            Cause. For purposes of this Agreement, “Cause” means the occurrence of any one or more of the following: (i) your conviction of or plea of guilty or nolo contendere to any felony or a crime of moral turpitude; (ii) your willful and continued refusal to follow lawful and reasonable written instructions of the Board or lawful and reasonable written policies and regulations of the Company or its affiliates; (iii) your willful and continued refusal to faithfully and diligently perform the assigned duties of your employment with the Company or its affiliates; (iv) any act or omission that, in the Board’s good faith opinion, constitutes fraudulent conduct by you; (v) willful misconduct by you that materially injures the Company or any affiliate or materially injures the reputation, character and standing of the Company or any affiliate; or (vi) material injury to the Company based on your willful and material breach of this Agreement, the CIIAA, or any written Company policies. An event described in Section 12.1(ii) through Section 12.1(vi) herein shall not be treated as “Cause” until after you have been given written notice of such event, failure, conduct or breach and you fail to cure such event, failure, conduct or breach within 30 calendar days from such written notice; provided, however, that such 30-day cure period shall not be required if the event, failure, conduct or breach is reasonably determined to be incapable of being cured by the Company.

 

 

12.2            Change in Control. For purposes of this Agreement, “Change in Control” shall have the meaning described in the Cayman Parent’s 2019 Equity Incentive Plan.

 

12.3            Change in Control Period. For purposes of this Agreement, “Change in Control Period” means the time period commencing three (3) months before the effective date of a Change in Control and ending on the date that is twelve (12) months after the effective date of a Change in Control.

 

12.4            Disability. For purposes of this Agreement, “Disability” means the inability of you to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months.

 

12.5            Good Reason. For purposes of this Agreement, you shall have “Good Reason” for resignation from employment with the Company if any of the following actions are taken by the Company without your prior written consent: (i) a reduction in your Base Salary, unless in the same percentage as a salary reduction program applicable generally to the Company’s senior executives; (ii) a material reduction in your duties, responsibilities or authority, including removal of requirement to report to anyone other than the CEO, the Board or the Parent Board; (iii) the material breach by the Company of this Agreement; or (iv) the relocation of your principal place of employment to a place that increases your one-way commute by more than twenty-five (25) miles as compared to your then-current principal place of employment immediately prior to such relocation. In order for you to resign for Good Reason, each of the following requirements must be met: (A) you must provide written notice to the Board within ninety (90) calendar days after your first knowledge of the event giving rise to Good Reason setting forth the basis for your resignation, (B) you must allow the Company at least thirty (30) calendar days from receipt of such written notice to cure such event, (C) such event is not reasonably cured by the Company within such 30 calendar day period (the “Cure Period”), and (D) you must resign in writing from all positions you then hold with the Company not later than ninety (90) calendar days after the expiration of the Cure Period.

 

13.            Dispute Resolution/Agreement to Arbitrate Claims. To ensure the rapid and economical resolution of disputes that may arise in connection with your employment with the Company, you and the Company agree that any and all disputes, claims, or causes of action, in law or equity, including but not limited to statutory claims, arising from or relating to the enforcement, breach, performance, or interpretation of this Agreement, your employment with the Company, or the termination of your employment from the Company, will be resolved pursuant to the Federal Arbitration Act, 9 U.S.C. §1, et seq. and to the fullest extent permitted by law, by final, binding and confidential arbitration. Except as provided below, the Company and you agree that confidential arbitration is the exclusive, final and biding method for resolving all such claims.

 

 

13.1         Claims Covered By this Agreement. Disputes that are subject to arbitration under this Agreement include, but are not limited to, claims for wages or other compensation due, including claims for overtime; meal or rest break claims; claims for breach of any contract or covenant (express or implied); tort claims, including, but not limited to claims for defamation, intentional infliction of emotional distress, invasion of privacy, and all negligence-based claims; personal injury claims; claims for discrimination, harassment and/or retaliation in employment including, but no limited to claims under the California Fair Employment and Housing Act, the California Labor Code, claims arising under Title VII of the Civil Rights Act of 1964, the Fair Labor Standards Act, the Equal Pay Act, the Employee Retirement Income Security Act, the California Family Rights Act of 1964, the Family and Medical Leave Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Older Worker Benefit Protection Act, the Sarbanes-Oxley Act, all as they may have been amended from time to time, claims for misclassification, and claims for violation of common law or any other federal, state, or local laws relating to employment or separation from employment or benefits associated with employment or separation for employment.

 

13.2         Claims Not Covered By this Agreement. Claims for workers’ compensation, unemployment insurance, claims for injunctive relief, and claims under California Private Attorneys General Act of 2004, as amended, are not covered by this Agreement. Nothing in this Agreement is intended to prevent you from filing an administrative claim with the Equal Employment Opportunity Commission or the California Department of Fair Employment and Housing. Moreover, both you and the Company may bring an action in any court of competent jurisdiction to compel arbitration under this Agreement and/or enforce and arbitration award.

 

13.3         Arbitration Rules and Procedures. The arbitration is to be conducted in San Francisco, California by JAMS, Inc. (“JAMS”) or its successors before a mutually selected single neutral arbitrator, under JAMS’ then applicable rules and procedures for employment disputes (which will be provided to you upon request); provided that the arbitrator shall: (i) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law; and (ii) issue a written arbitration decision including the arbitrator’s essential findings and conclusions on which the award was based and a statement of the award. you and the Company shall be entitled to all rights and remedies that either would be entitled to pursue in a court of law. Questions of whether a claim is subject to arbitration under this Agreement shall be decided by the arbitrator. Likewise, procedural questions which grow out of the dispute and bear on the final disposition are also matters for the arbitrator. To the maximum extent permitted by applicable law, all claims, disputes, or causes of action under this section, whether by you or the Company, must be brought in an individual capacity, and shall not be brought as a plaintiff (or claimant) or class member in any purported class or representative proceeding, nor joined or consolidated with the claims of any other person or entity. The Arbitrator may not consolidate the claims of more than one person or entity, and may not preside over any form of representative or class proceeding. Both you and the Company acknowledge that by agreeing to this arbitration procedure, they waive the right to resolve any such dispute through a trial by jury or judge or administrative proceeding. The Company shall pay all filing fees in excess of those which would be required if the dispute were decided in a court of law (that is, costs that are unique to arbitration) and shall pay the arbitrator’s fee. Each party shall pay the fees of its attorneys, the expenses of its witnesses, and any other costs and expenses that the party incurs in connection with the arbitration; provided that an arbitrator may award attorneys’ fees to the prevailing party, if the arbitrator determines in its sole discretion that such an award is permitted by applicable law. Any dispute as to whether a cost is unique to arbitration will be exclusively resolved by the arbitrator. Both you and the Company have the right to be represented by legal counsel at any arbitration proceeding. The arbitration proceedings will be confidential to the extent permitted by law. you and the Company will maintain all information and documents exchanged in connection with and in the course of the arbitration as confidential, except to the extent the disclosure of such information or documentation is necessary to enforce any award or challenge any award as permitted by the applicable law.

 

 

13.4.         No Change in At-Will Employment. This agreement to arbitrate claims is not a contract of employment, expressed or implied, and you and the Company acknowledge that your employment with the Company is at-will and that this agreement does not change the “at-will” status of your employment. BOTH EMPLOYEE AND THE COMPANY ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE TERMS OF SECTION 13, AGREEMENT TO ARBITRATE CLAIMS, AND AGREE TO BE BOUND BY ITS TERMS.

 

14.            General Provisions.

 

14.1            Notices. Any notices provided must be in writing and will be deemed effective upon the earlier of personal delivery (including personal delivery by email upon confirmation of receipt) or the next day after sending by overnight carrier, to the Company at its primary office location and to you at the address as listed on the Company payroll.

 

14.2            Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction to the extent possible in keeping with the intent of the Company and you (“the Parties”).

 

14.3            Waiver. Any waiver of any breach of any provisions of this Agreement must be in writing to be effective, and it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.

 

14.4            Complete Agreement. This Agreement, together with the CIIAA, constitutes the entire agreement between you and the Company with regard to the subject matter hereof and is the complete, final, and exclusive embodiment of the Company’s and your agreement with regard to this subject matter. It supersedes any other agreements (including but not limited to, the Offer Letter) or promises made to you by anyone, whether oral or written. This Agreement is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises, warranties or representations. It cannot be modified or amended except in a writing signed by a duly authorized officer of the Company, with the exception of those changes expressly reserved to the Company’s discretion in this Agreement.

 

 

14.5            Counterparts. This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but both of which taken together will constitute one and the same Agreement.

 

14.6            Headings. The headings of the sections hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to affect the meaning thereof.

 

14.7            Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by you and the Company, and their respective successors, assigns, heirs, executors and administrators, except that you may not assign any of your duties hereunder and you may not assign any of your rights hereunder without the written consent of the Company, which shall not be withheld unreasonably.

 

14.8            Tax Withholding. All payments and awards contemplated or made pursuant to this Agreement will be subject to withholdings of applicable taxes in compliance with all relevant laws and regulations of all appropriate government authorities. You acknowledge and agree that the Company has neither made any assurances nor any guarantees concerning the tax treatment of any payments or awards contemplated by or made pursuant to this Agreement. You have had the opportunity to retain a tax and financial advisor and fully understands the tax and economic consequences of all payments and awards made pursuant to this Agreement.

 

14.9            Choice of Law. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the laws of the State of California.

 

This offer is subject to satisfactory proof of your identity and right to work in the United States and other applicable pre-employment screenings. We look forward to having you join us. If you have any questions about this Agreement, please do not hesitate to call me.

 

[Signature Page Follows]

 

 

Sincerely,
ShouTi Inc., a Delaware corporation
/s/ Raymond Stevens
Raymond Stevens, Ph.D.
Chief Executive Officer
Accepted and agreed:
s/ Melita Sun Jung
Melita Sun Jung
Date:	4/27/2021

 

Exhibit 10.9

 

 

November 24, 2021

 

Ding Ding, Ph.D.

E-mail: [***]

 

Re:	Offer of Employment

 

Dear Ding Ding:

 

ShouTi Inc., a Delaware corporation (the “Company”), is pleased to offer you employment on the terms and conditions set forth in this letter agreement (the “Agreement”).

 

1.            Employment by the Company.

 

1.1            Position. You will serve as the Company’s Chief Financial Officer, reporting the Company’s Chief Executive Officer. During the term of your employment with the Company, you will devote your best efforts and all of your business time and attention to the business of the Company, except as permitted in Section 7 of this Agreement and excluding approved vacation periods and reasonable periods of illness or other incapacities permitted by the Company’s general employment policies. You further agree not to usurp, for your own personal benefit or gain, any opportunities in the Company’s line of business. You will be expected to work on a full-time basis and travel as part of your position.

 

1.2            Start Date. The Company and you agree that your start date with the Company is expected to begin on December 8, 2021 or any earlier date as mutually agreed between the Company and you (such actual start date, the “Start Date”).

 

1.3            Duties and Location. You will perform such duties as are customarily associated with the position of Chief Financial Officer (including but not limited to those as set out in Appendix 1 of this Agreement, and such other duties as are assigned to you by the Company’s Board of Directors (the “Board”). Your primary office locations shall be your home office in New York and the Company’s facilities in Shanghai, China, or at such other locations as mutually agreed. Subject to the terms of this Agreement and applicable law, the Company reserves the right to reasonably require you to perform your duties at places other than your primary office location from time to time and to require reasonable business travel.

 

1.4            Policies and Procedures. The employment relationship between you and the Company will be governed by the general employment policies and practices of the Company, including any Employee Handbook adopted by the Company, as well as by all other rules and policies applicable to the Company’s professional employees, except that when the terms of this Agreement differ from or are in conflict with the Company’s general employment policies or practices, this Agreement shall control.

 

 

1.5            At-Will Employment. Your employment relationship with the Company is at-will. Either the Company or you shall have the right to terminate the employment relationship at any time, with or without Cause (as defined below) or advance notice. Should a Company policy exist now or in the future which contradicts this at-will provision, this at-will provision controls the relationship between you and the Company. The at-will nature of your employment may only be changed in an express written agreement signed by you and a duly authorized officer of the Board. Nothing in this Agreement is intended to modify the at-will employment relationship between the Company and you.

 

2.            Compensation.

 

2.1           Base Salary. For services to be rendered hereunder, for the years ending on each of the first and second anniversaries of your Start Date, you shall be paid a base annual salary at the rate of $455,000 (the “Base Salary”), less all required and applicable standard payroll deductions and withholdings for federal and state taxes and for any authorized voluntary deductions and payable in accordance with the Company’s regular payroll schedule. Your Base Salary shall be reviewed at least annually by the Compensation Committee (the “Compensation Committee”) of the Board of Directors (the “Parent Board”) of the Company’s parent, ShouTi Inc., a Cayman Islands exempted company (the “Cayman Parent”).

 

2.2           Annual Bonus. You will be eligible for an annual target bonus (the “Annual Bonus”) each calendar year equal to thirty-five percent (35%) of your then current Base Salary at a “meeting expectations” level of achievement (the “Target Bonus Amount”), which shall be prorated based on the number of days you are actually employed during the calendar year. Whether you receive an Annual Bonus for any given year, and the amount of any such Annual Bonus, will be determined in the good faith reasonable discretion of the Board, which determination will be based upon the Company’s and your achievement of objectives and milestones. The Company’s and your objectives and milestones will be established on an annual basis by the Parent Board (or Compensation Committee thereof) in consultation with you, which objectives and milestones may provide for payments above and below target based on the level of performance achievement. No Annual Bonus is guaranteed and, in addition to the other conditions for earning such compensation, and except as provided for in Section 8 below, you must remain an employee in good standing of the Company on the date the Annual Bonus is paid in order to be eligible for and earn any Annual Bonus.

 

2.3           Signing Bonus. You will receive a one-time signing bonus in the amount of $100,000 (the “Signing Bonus”), subject to applicable payroll deductions and withholdings. The Signing Bonus will be paid to you as an advance in a single lump sum on the first regularly-scheduled payroll date after your Start Date, and is provided to you prior to your earning such Signing Bonus. You will not earn the Signing Bonus unless you remain continuously employed with the Company through the one-year anniversary of your Start Date. If your employment terminates under any circumstances before such one-year anniversary date, you agree to repay the Signing Bonus to the Company in full.

 

 

3.            Standard Company Benefits. You will, in accordance with Company policy and the terms and conditions of the applicable Company benefit plan documents, be eligible to participate in the benefit and fringe benefit programs provided by the Company to its executive officers and other employees from time to time. Except as provided below in this Section 3, you will be entitled to paid sick leave, paid time off, and holidays as outlined in the Company’s employment policies, and as otherwise required by applicable law. You will also be entitled to all other holiday and paid time off generally available to other executives of the Company. Any such benefits shall be subject to the terms and conditions of the governing benefit plans and policies, as well as the Company’s policies and may be changed by the Company in its discretion. Moreover, the Company will reimburse you all reasonable expenses incurred by you for your relocation from your current home base in Shanghai to New York, including but not limited to expenses and penalties for early termination of the lease of your apartment in China, up to an aggregate amount of $60,000. Any reimbursements will be paid to you within thirty (30) days after the date you submit receipts for the expenses, provided you submit those receipts within thirty (30) days after you incur the expense.

 

4.            Expenses. The Company will reimburse you for reasonable travel, entertainment or other expenses incurred by you in furtherance or in connection with the performance of your duties hereunder, in accordance with applicable law and the Company’s expense reimbursement policy as in effect from time to time, including but not limited to all reasonable expenses incurred during business travel outside of New York, your home office (like housing, meal and transportation cost incurred during extended business trips in China). For the avoidance of doubt, the following are examples of reasonable travel expenses: (a) business class travel for international business trips and for business trips between the East Coast and West Cost of the USA; (b) hotel rate of US$200 to US$400 per day for business trips in China; (c) hotel rate of below US$500 per day for business trips within the US (except in peak seasons or during unusual period (e.g. JP Morgan Healthcare Week in San Francisco)); and (d) taxi / Uber expenses during business trips outside New York.

 

5.            Equity.

 

5.1            Options. The Company will recommend to the Compensation Committee that you be granted an option to purchase 925,000 Ordinary Shares of the Cayman Parent (the “Option”). Grant of the Option is subject to the approval of the Parent Board. If granted, the Option shall vest over four years of your continuous service with the Company, with twenty-five percent (25%) of the shares subject to the Option grant becoming vested on the first year anniversary of the Start Date, and the remaining shares becoming vested in equal monthly installments over the following thirty-six (36) months of your continuous service. The exercise price of the Option, as well as all other matters related to the Option, will be governed by and subject to the terms and conditions set forth in the Cayman Parent’s 2019 Equity Incentive Plan (the “Equity Plan”), and the stock option agreement you will be required to electronically accept.

 

6.            Proprietary Information Obligations.

 

6.1            Proprietary Information Agreement. As a condition of employment, you shall execute and abide by the Company’s standard Confidential Information and Invention Assignment Agreement (the “CIIAA”).

 

 

6.2            Third-Party Agreements and Information. You represent and warrant that your employment by the Company does not conflict with any prior employment or consulting agreement or other agreement with any third party, and that you will perform your duties to the Company without violating any such agreement. You represent and warrant that you do not possess confidential information arising out of prior employment, consulting, or other third party relationships, that would be used in connection with your employment by the Company, except as expressly authorized by that third party. During your employment by the Company, you will use in the performance of your duties only information that is generally known and used by persons with training and experience comparable to your own, common knowledge in the industry, otherwise legally in the public domain, or obtained or developed by the Company or by you in the course of your work for the Company. In addition, you represent that you have disclosed to the Company in writing any agreement you may have with any third party (e.g., a former employer) which may limit your ability to perform your duties to the Company, or which could present a conflict of interest with the Company, including but not limited to disclosure (and a copy) of any contractual restrictions on solicitations or competitive activities.

 

7.            Outside Activities and Non-Competition During Employment.

 

7.1           Outside Activities. Throughout your employment with the Company, you may engage in civic and not-for-profit activities so long as such activities do not interfere with the performance of your duties hereunder or present a conflict of interest with the Company or its affiliates. Subject to the restrictions set forth herein, and only with prior written disclosure to and consent of the Board (which consent will not be unreasonably withheld), you may engage in other types of business or public activities. The Board may rescind such consent, if the Board determines, in its sole discretion, that such activities compromise or threaten to compromise the Company’s or its affiliates’ business interests or conflict with your duties to the Company or its affiliates.

 

7.2           Non-Competition During Employment. Throughout your employment with the Company, you will not, without the express written consent of the Board, directly or indirectly serve as an officer, director, stockholder, employee, partner, proprietor, investor, joint ventures, associate, representative or consultant of any person or entity engaged in, or planning or preparing to engage in, business activity competitive with any line of business engaged in (or planned to be engaged in) by the Company or its affiliates; provided, however, that you may purchase or otherwise acquire up to (but not more than) one percent (1%) of any class of securities of any enterprise (without participating in the activities of such enterprise) if such securities are listed on any national or regional securities exchange. In addition, you will be subject to certain restrictions (including restrictions continuing after your employment ends) outlined in the terms of the CIIAA.

 

8.            Termination of Employment; Severance and Change in Control Benefits.

 

8.1            Termination Without Cause or Resignation for Good Reason Unrelated to Change in Control. In the event your employment with the Company is terminated by the Company without Cause (as defined below), and other than as a result of your death or Disability (as defined below), or you resign for Good Reason, in either case, at any time except during the Change in Control Period (as defined below), then provided such termination constitutes a “separation from service” (as defined under Treasury Regulation Section 1.409A-1(h), without regard to any alternative definition thereunder, a “Separation from Service”), and provided that you satisfy the Release Requirement in Section 9 below, and remain in compliance with the terms of this Agreement and the CIIAA, the Company shall provide you with the following “Severance Benefits”:

 

 

8.1.1       Severance Payments. You will receive severance pay in the form of continuation of your final monthly Base Salary for a period of six (6) months following termination, subject to required and voluntarily authorized payroll deductions and federal and state tax withholdings (the “Severance Payments”). Subject to Section 10 below, the Severance Payments shall be made on the Company’s regular payroll schedule in effect following your Separation from Service date; provided, however that any such payments that are otherwise scheduled to be made prior to the Release Effective Date (as defined below) shall instead accrue and be made on the first regular payroll date following the Release Effective Date. For such purposes, your final Base Salary will be calculated prior to giving effect to any reduction in Base Salary that would give rise to your right to resign for Good Reason.

 

8.1.2       Prior Year Bonus. If your Separation from Service occurs prior to your receipt of an Annual Bonus payment for the completed calendar year that immediately precedes the calendar year of the Separation from Service, you will also receive an Annual Bonus payment for such preceding calendar year, pursuant to the conditions of Section 2.2 above (the “Prior Year Bonus”). The Prior Year Bonus shall be paid, subject to required and voluntarily authorized payroll deductions and federal and state tax withholdings, in the calendar year following the year to which the Annual Bonus payment relates, at the same time as the annual bonuses for such calendar year are generally paid to other executives; provided, however that if such payment date is prior to the Release Effective Date (as defined below), the Prior Year Bonus shall instead accrue and be made on the first regular payroll date following the Release Effective Date.

 

8.1.3       Health Care Continuation Coverage Payments.

 

(i)            COBRA Premiums. If you timely elect continued coverage under COBRA, the Company will reimburse your COBRA premiums to continue your coverage (including coverage for your eligible dependents, if applicable) (“COBRA Premiums”) through the period starting on the Separation from Service date and ending six (6) months after the Separation from Service date (the “COBRA Premium Period”); provided, however, that the Company’s provision of such COBRA Premium benefits will immediately cease if during the COBRA Premium Period you becomes eligible for group health insurance coverage through a new employer or you cease to be eligible for COBRA continuation coverage for any reason, including plan termination. In the event you become covered under another employer’s group health plan or otherwise cease to be eligible for COBRA during the COBRA Premium Period, you must immediately notify the Company, in writing, of such event.

 

(ii)            Special Cash Payments in Lieu of COBRA Premiums. Notwithstanding the foregoing, if the Company determines, in its sole discretion, that it cannot pay the COBRA Premiums without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), regardless of whether you or your dependents elect or are eligible for COBRA coverage, the Company instead shall pay to you, on the first day of each calendar month following the Separation from Service date, a fully taxable cash payment equal to the applicable COBRA premiums for that month (including the amount of COBRA premiums for your eligible dependents), subject to applicable federal and state tax withholdings and required or voluntarily authorized deductions (such amount, the “Special Cash Payment”), for the remainder of the COBRA Premium Period. You may, but are not obligated to, use such Special Cash Payments toward the cost of COBRA premiums or toward premium costs under an individual health plan.

 

 

8.1.4            Equity Acceleration. Notwithstanding anything to the contrary set forth in the Equity Plan, any other equity incentive plans or any award agreement, effective as of your Separation from Service date, the vesting and exercisability of the unvested time-based equity awards then held by you shall accelerate as if you had provided an additional six (6) months, of continued services following the Separation from Service date (with monthly prorated vesting during the first year of service), and each such equity award shall remain exercisable, if applicable, following your Separation from Service as set forth in the applicable equity award documents. With respect to any performance-based vesting equity award, such award shall continue to be governed in all respects by the terms of the applicable equity award documents.

 

8.2           Termination Without Cause or Resignation for Good Reason During Change in Control Period. In the event your employment with the Company is terminated by the Company without Cause (and other than as a result of your death or Disability), or you resign for Good Reason, in either case, at any time during the Change in Control Period (as defined below), then provided such termination constitutes a “separation from service” (as defined under Treasury Regulation Section 1.409A-1(h), without regard to any alternative definition thereunder, a “Separation from Service”), and provided that you satisfy the Release Requirement in Section 9 below and remain in compliance with the terms of this Agreement and the CIIAA, the Company shall instead provide you with the following “CIC Severance Benefits”:

 

8.2.1       CIC Severance Payment. You will receive a severance pay in an amount equal to your final annual Base Salary plus your final Target Bonus Amount, subject to required and voluntarily authorized payroll deductions and federal and state tax withholdings (the “CIC Severance Payments”). Subject to Section 10 below, the CIC Severance Payments shall be made on the Company’s regular payroll schedule over the period of twelve (12) months following your Separation from Service date; provided, however that any such payments that are otherwise scheduled to be made prior to the Release Effective Date shall instead accrue and be made on the first regular payroll date following the Release Effective Date. For such purposes, your final Base Salary and Target Bonus Amount will be calculated prior to giving effect to any reduction in Base Salary that would give rise to your right to resign for Good Reason.

 

8.2.2       CIC Health Care Continuation Coverage Payments.

 

(i)            COBRA Premiums. If you timely elect continued coverage under COBRA, the Company will reimburse your COBRA premiums to continue your coverage (including coverage for your eligible dependents, if applicable) (“CIC COBRA Premiums”) through the period starting on the Separation from Service date and ending twelve (12) months after the Separation from Service date (the “CIC COBRA Premium Period”); provided, however, that the Company’s provision of such CIC COBRA Premium benefits will immediately cease if during the CIC COBRA Premium Period, you become eligible for group health insurance coverage through a new employer or you cease to be eligible for COBRA continuation coverage for any reason, including plan termination. In the event you become covered under another employer’s group health plan or otherwise cease to be eligible for COBRA during the CIC COBRA Premium Period, you must immediately notify the Company, in writing, of such event.

 

 

(ii)            Special Cash Payments in Lieu of CIC COBRA Premiums. Notwithstanding the foregoing, if the Company determines, in its sole discretion, that it cannot pay the CIC COBRA Premiums without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), regardless of whether you or your dependents elect or are eligible for COBRA coverage, the Company instead shall pay to you, on the first day of each calendar month following the Separation from Service date, a fully taxable cash payment equal to the applicable COBRA premiums for that month (including the amount of COBRA premiums for your eligible dependents), subject to applicable federal and state tax withholdings (such amount, the “Special CIC Cash Payment”), for the remainder of the CIC COBRA Premium Period. You may, but are not obligated to, use such Special CIC Cash Payments toward the cost of COBRA premiums.

 

8.2.3       Prior Year Bonus. If your Separation from Service occurs prior to your receipt of an Annual Bonus payment for the completed calendar year that immediately precedes the calendar year of the Separation from Service, you shall also receive the Prior Year Bonus. The Prior Year Bonus shall be paid, subject to required and voluntarily authorized payroll deductions and federal and state tax withholdings, in the calendar year following the year to which the Annual Bonus payment relates, at the same time as the annual bonuses for such calendar year are generally paid to other executives; provided, however that if such payment date is prior to the Release Effective Date, the Prior Year Bonus shall instead accrue and be made on the first regular payroll date following the Release Effective Date.

 

8.2.4       Equity Acceleration. Notwithstanding anything to the contrary set forth in the Equity Plan, any other equity incentive plans or any award agreement, effective as of your employment Separation from Service date that occurs during the Change in Control Period, the vesting and exercisability of all equity awards then held by you shall accelerate such that all shares become immediately vested and, if applicable, exercisable by you upon such Separation from Service and shall remain exercisable (if such award is capable of being exercised) following your Separation from Service as set forth in the applicable equity award documents, with any performance-based equity awards accelerating at the “target” level of achievement.

 

8.3          Termination for Death or Disability. In the event your employment with the Company is terminated due to your death or Disability at any time, in lieu of (and not additional to) the Severance Benefits and CIC Severance Benefits described in Sections 8.1 and 8.2 above, and provided that you or your heirs or estate satisfies the Release Requirement in Section 9 below and remains in compliance with the terms of this Agreement and the CIIAA, you (or your heirs or estate) shall receive the prorated amount of the Target Bonus Amount for the year in which the Separation from Service occurs equal to the product of (i) and (ii), where (i) is the product of (a) your final Base Salary (but before giving effect to any reduction in Base Salary that would give rise to your right to resign for Good Reason) and (b) the percentage to achieve a Target Bonus Amount set forth in Section 2.2 above and where (ii) is (a) the number of days elapsed in the calendar year prior to the date on which the Separation from Service occurs divided by (b) 365 plus the Prior Year Bonus (if applicable), pursuant to the terms and conditions of Sections 8.1.2 and 8.2.3 above (the “Death or Disability Benefits”). Notwithstanding the foregoing, you will not be entitled to the payments described in this Section 8.3 if your death or Disability is due to suicide or to your participation in an activity involving a significant risk of personal injury or death.

 

 

8.4            Termination for Cause; Resignation Without Good Reason. You will not be eligible for, or entitled to any severance benefits, including (without limitation) the Severance Benefits and CIC Severance Benefits listed in Sections 8.1 and 8.2 above, or the Death and Disability Benefits listed in Section 8.3, if the Company terminates your employment for Cause or you resign your employment without Good Reason.

 

9.            Conditions to Receipt of Severance Benefits and CIC Severance Benefits. To be eligible for any of the Severance Benefits, CIC Severance Benefits or Death or Disability Benefits pursuant to Sections 8.1, 8.2 or 8.3 above, you must satisfy the following release requirement (the “Release Requirement”): return to the Company a signed and dated general release of all known and unknown claims in a separation agreement acceptable to the Company (the “Release”), which shall among other things include a mutual non-disparagement provision, but will not release your right to severance benefits (pursuant to the terms and conditions of Section 8 of this Agreement), or to indemnification against third party claims (pursuant to any written indemnification agreement with the Company to which you are a party, the charter, bylaws, or operating agreements of the Company, or under applicable law), and will not increase the scope or duration of any post-employment restrictions on your activities, within the applicable deadline set forth therein, but in no event later than forty-five (45) calendar days following your Separation from Service date, and permit the Release to become effective and irrevocable in accordance with its terms (such effective date of the Release, the “Release Effective Date”). No Severance Benefits, CIC Severance Benefits or Death or Disability Benefits will be paid hereunder prior to the Release Effective Date. Accordingly, if you breach the preceding sentence and/or refuse to sign and deliver to the Company an executed Release or sign and deliver to the Company the Release but exercise your right, if any, under applicable law to revoke the Release (or any portion thereof), then you will not be entitled to any severance, payment or benefit under this Agreement.

 

 

10.            Section 409A. It is intended that all of the severance benefits and other payments payable under this Agreement satisfy, to the greatest extent possible, the exemptions from the application of Code Section 409A provided under Treasury Regulations 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9), and this Agreement will be construed to the greatest extent possible as consistent with those provisions, and to the extent not so exempt, this Agreement (and any definitions hereunder) will be construed in a manner that complies with Section 409A. For purposes of Code Section 409A (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), your right to receive any installment payments under this Agreement (whether Severance Benefits, CIC Severance Payments, Death or Disability Payments, reimbursements or otherwise) shall be treated as a right to receive a series of separate payments and, accordingly, each installment payment hereunder shall at all times be considered a separate and distinct payment. Notwithstanding any provision to the contrary in this Agreement, if you are deemed by the Company at the time of your Separation from Service to be a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i), and if any of the payments upon Separation from Service set forth herein and/or under any other agreement with the Company are deemed to be “deferred compensation”, then to the extent delayed commencement of any portion of such payments is required in order to avoid a prohibited distribution under Code Section 409A(a)(2)(B)(i) and the related adverse taxation under Section 409A, such payments shall not be provided to you prior to the earliest of (i) the expiration of the six-month and one day period measured from the date of your Separation from Service with the Company, (ii) the date of your death or (iii) such earlier date as permitted under Section 409A without the imposition of adverse taxation. Upon the first business day following the expiration of such applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this Section shall be paid in a lump sum to you, and any remaining payments due shall be paid as otherwise provided herein or in the applicable agreement. No interest shall be due on any amounts so deferred. If the Company determines that any Severance Benefits or CIC Severance Benefits provided under this Agreement constitutes “deferred compensation” under Section 409A, and if necessary to avoid taxation under Section 409A, for purposes of determining the schedule for payment of the severance benefits, the effective date of the Release will not be deemed to have occurred any earlier than the sixtieth (60th) date following the Separation From Service, regardless of when the Release actually becomes effective. In addition to the above, to the extent required to comply with Section 409A and the applicable regulations and guidance issued thereunder, if the applicable deadline for you to execute (and not revoke) the applicable Release spans two calendar years, payment of the applicable Severance Benefits, CIC Severance Benefits or Death or Disability Benefits shall not commence until the beginning of the second calendar year. To the extent required to avoid accelerated taxation and/or tax penalties under Code Section 409A, amounts reimbursable to you under this Agreement shall be paid to you on or before the last day of the year following the year in which the expense was incurred and the amount of expenses eligible for reimbursement (and in-kind benefits provided to you) during any one year may not effect amounts reimbursable or provided in any subsequent year. The Company makes no representation that any or all of the payments described in this Agreement will be exempt from or comply with Code Section 409A and makes no undertaking to preclude Code Section 409A from applying to any such payment.

 

11.           Section 280G; Limitations on Payment.

 

11.1            If any payment or benefit you will or may receive from the Company or otherwise (a “280G Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then any such 280G Payment provided pursuant to this Agreement (a “Payment”) shall be equal to the Reduced Amount. The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment (after reduction) being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever amount (i.e., the amount determined by clause (x) or by clause (y)), after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in your receipt, on an after-tax basis, of the greater economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in a Payment is required pursuant to the preceding sentence and the Reduced Amount is determined pursuant to clause (x) of the preceding sentence, the reduction shall occur in the manner (the “Reduction Method”) that results in the greatest economic benefit for you. If more than one method of reduction will result in the same economic benefit, the items so reduced will be reduced pro rata (the “Pro Rata Reduction Method”).

 

 

11.2            Notwithstanding any provision of Section 11.1 to the contrary, if the Reduction Method or the Pro Rata Reduction Method would result in any portion of the Payment being subject to taxes pursuant to Section 409A that would not otherwise be subject to taxes pursuant to Section 409A, then the Reduction Method and/or the Pro Rata Reduction Method, as the case may be, shall be modified so as to avoid the imposition of taxes pursuant to Section 409A as follows: (A) as a first priority, the modification shall preserve to the greatest extent possible, the greatest economic benefit for you as determined on an after-tax basis; (B) as a second priority, Payments that are contingent on future events (e.g., being terminated without Cause), shall be reduced (or eliminated) before Payments that are not contingent on future events; and (C) as a third priority, Payments that are “deferred compensation” within the meaning of Section 409A shall be reduced (or eliminated) before Payments that are not deferred compensation within the meaning of Section 409A.

 

11.3            Unless you and the Company agree on an alternative accounting firm or law firm, the accounting firm engaged by the Company for general tax compliance purposes as of the day prior to the effective date of the Change in Control transaction shall perform the foregoing calculations. If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the Change in Control transaction, the Company shall appoint a nationally recognized accounting or law firm to make the determinations required by this Section 11. The Company shall bear all expenses with respect to the determinations by such accounting or law firm required to be made hereunder. The Company shall use commercially reasonable efforts to cause the accounting or law firm engaged to make the determinations hereunder to provide its calculations, together with detailed supporting documentation, to you and the Company within fifteen (15) calendar days after the date on which your right to a 280G Payment becomes reasonably likely to occur (if requested at that time by you or the Company) or such other time as requested by you or the Company.11.3 Unless you and the Company agree on an alternative accounting firm or law firm, the accounting firm engaged by the Company for general tax compliance purposes as of the day prior to the effective date of the Change in Control transaction shall perform the foregoing calculations. If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the Change in Control transaction, the Company shall appoint a nationally recognized accounting or law firm to make the determinations required by this Section 11. The Company shall bear all expenses with respect to the determinations by such accounting or law firm required to be made hereunder. The Company shall use commercially reasonable efforts to cause the accounting or law firm engaged to make the determinations hereunder to provide its calculations, together with detailed supporting documentation, to you and the Company within fifteen (15) calendar days after the date on which your right to a 280G Payment becomes reasonably likely to occur (if requested at that time by you or the Company) or such other time as requested by you or the Company.

 

11.4            If you receive a Payment for which the Reduced Amount was determined pursuant to clause (x) of Section 11.1 and the Internal Revenue Service determines thereafter that some portion of the Payment is subject to the Excise Tax, you agree to promptly return to the Company a sufficient amount of the Payment (after reduction pursuant to clause (x) of Section 11.1) so that no portion of the remaining Payment is subject to the Excise Tax. For the avoidance of doubt, if the Reduced Amount was determined pursuant to clause (y) of Section 11.1, you shall have no obligation to return any portion of the Payment pursuant to the preceding sentence.

 

 

12.            Definitions.

 

12.1            Cause. For purposes of this Agreement, “Cause” means the occurrence of any one or more of the following: (i) your conviction of or plea of guilty or nolo contendere to any felony or a crime of moral turpitude; (ii) your willful and continued refusal to follow lawful and reasonable written instructions of the Board or lawful and reasonable written policies and regulations of the Company or its affiliates; (iii) your willful and continued refusal to faithfully and diligently perform the assigned duties of your employment with the Company or its affiliates; (iv) fraudulent conduct by you; (v) willful misconduct by you that materially injures the Company or any affiliate or materially injures the reputation, character and standing of the Company or any affiliate; or (vi) material injury to the Company based on your willful and material breach of this Agreement, the CIIAA, or any written Company policies. An event described in Section 12.1(ii) through Section 12.1(vi) herein shall not be treated as “Cause” until after you have been given written notice of such event, failure, conduct or breach and you fail to cure such event, failure, conduct or breach within 30 calendar days from such written notice; provided, however, that such 30-day cure period shall not be required if the event, failure, conduct or breach is reasonably determined to be incapable of being cured by the Company.

 

12.2            Change in Control. For purposes of this Agreement, “Change in Control” shall have the meaning described in the Cayman Parent’s 2019 Equity Incentive Plan.

 

12.3            Change in Control Period. For purposes of this Agreement, “Change in Control Period” means the time period commencing three (3) months before the effective date of a Change in Control and ending on the date that is twelve (12) months after the effective date of a Change in Control.

 

12.4            Disability. For purposes of this Agreement, “Disability” means the inability of you to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months.

 

12.5            Good Reason. For purposes of this Agreement, you shall have “Good Reason” for resignation from employment with the Company if any of the following actions are taken by the Company without your prior written consent: (i) a reduction in your Base Salary, unless in the same percentage as a salary reduction program applicable generally to the Company’s senior executives; (ii) a material reduction in your duties, responsibilities or authority, including removal of requirement to report to anyone other than the Board or the Parent Board; (iii) the material breach by the Company of this Agreement; or (iv) the relocation of your principal place of employment to a place that increases your one-way commute by more than twenty-five (25) miles as compared to your then-current principal place of employment immediately prior to such relocation. In order for you to resign for Good Reason, each of the following requirements must be met: (A) you must provide written notice to the Board within ninety (90) calendar days after your first knowledge of the event giving rise to Good Reason setting forth the basis for your resignation, (B) you must allow the Company at least thirty (30) calendar days from receipt of such written notice to cure such event, (C) such event is not reasonably cured by the Company within such 30 calendar day period (the “Cure Period”), and (D) you must resign in writing from all positions you then hold with the Company not later than ninety (90) calendar days after the expiration of the Cure Period.

 

 

13.            Dispute Resolution/Agreement to Arbitrate Claims. To ensure the rapid and economical resolution of disputes that may arise in connection with your employment with the Company, you and the Company agree that any and all disputes, claims, or causes of action, in law or equity, including but not limited to statutory claims, arising from or relating to the enforcement, breach, performance, or interpretation of this Agreement, your employment with the Company, or the termination of your employment from the Company, will be resolved pursuant to the Federal Arbitration Act, 9 U.S.C. §1, et seq. and to the fullest extent permitted by law, by final, binding and confidential arbitration. Except as provided below, the Company and you agree that confidential arbitration is the exclusive, final and biding method for resolving all such claims.

 

13.1            Claims Covered By this Agreement. Disputes that are subject to arbitration under this Agreement include, but are not limited to, claims for wages or other compensation due, including claims for overtime; meal or rest break claims; claims for breach of any contract or covenant (express or implied); tort claims, including, but not limited to claims for defamation, intentional infliction of emotional distress, invasion of privacy, and all negligence-based claims; personal injury claims; claims for discrimination, harassment and/or retaliation in employment including, but no limited to claims under the California Fair Employment and Housing Act, the California Labor Code, claims arising under Title VII of the Civil Rights Act of 1964, the Fair Labor Standards Act, the Equal Pay Act, the Employee Retirement Income Security Act, the California Family Rights Act of 1964, the Family and Medical Leave Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Older Worker Benefit Protection Act, the Sarbanes-Oxley Act, all as they may have been amended from time to time, claims for misclassification, and claims for violation of common law or any other federal, state, or local laws relating to employment or separation from employment or benefits associated with employment or separation for employment.

 

13.2            Claims Not Covered By this Agreement. Claims for workers’ compensation, unemployment insurance, claims for injunctive relief, and claims under California Private Attorneys General Act of 2004, as amended, are not covered by this Agreement. Nothing in this Agreement is intended to prevent you from filing an administrative claim with the Equal Employment Opportunity Commission or the California Department of Fair Employment and Housing. Moreover, both you and the Company may bring an action in any court of competent jurisdiction to compel arbitration under this Agreement and/or enforce and arbitration award.

 

 

13.3            Arbitration Rules and Procedures. The arbitration is to be conducted in San Francisco, California by JAMS, Inc. (“JAMS”) or its successors before a mutually selected single neutral arbitrator, under JAMS’ then applicable rules and procedures for employment disputes (which will be provided to you upon request); provided that the arbitrator shall: (i) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law; and (ii) issue a written arbitration decision including the arbitrator’s essential findings and conclusions on which the award was based and a statement of the award. you and the Company shall be entitled to all rights and remedies that either would be entitled to pursue in a court of law. Questions of whether a claim is subject to arbitration under this Agreement shall be decided by the arbitrator. Likewise, procedural questions which grow out of the dispute and bear on the final disposition are also matters for the arbitrator. To the maximum extent permitted by applicable law, all claims, disputes, or causes of action under this section, whether by you or the Company, must be brought in an individual capacity, and shall not be brought as a plaintiff (or claimant) or class member in any purported class or representative proceeding, nor joined or consolidated with the claims of any other person or entity. The Arbitrator may not consolidate the claims of more than one person or entity, and may not preside over any form of representative or class proceeding. BOTH YOU AND THE COMPANY ACKNOWLEDGE THAT BY AGREEING TO THIS ARBITRATION PROCEDURE, THEY WAIVE THE RIGHT TO RESOLVE ANY SUCH DISPUTE THROUGH A TRIAL BY JURY OR JUDGE OR ADMINISTRATIVE PROCEEDING. The Company shall pay all filing fees in excess of those which would be required if the dispute were decided in a court of law (that is, costs that are unique to arbitration) and shall pay the arbitrator’s fee. Each party shall pay the fees of its attorneys, the expenses of its witnesses, and any other costs and expenses that the party incurs in connection with the arbitration; provided that an arbitrator may award attorneys’ fees to the prevailing party, if the arbitrator determines in its sole discretion that such an award is permitted by applicable law. Any dispute as to whether a cost is unique to arbitration will be exclusively resolved by the arbitrator. Both you and the Company have the right to be represented by legal counsel at any arbitration proceeding. The arbitration proceedings will be confidential to the extent permitted by law. you and the Company will maintain all information and documents exchanged in connection with and in the course of the arbitration as confidential, except to the extent the disclosure of such information or documentation is necessary to enforce any award or challenge any award as permitted by the applicable law.

 

13.4            No Change in At-Will Employment. This agreement to arbitrate claims is not a contract of employment, expressed or implied, and you and the Company acknowledge that your employment with the Company is at-will and that this agreement does not change the “at-will” status of your employment. BOTH EMPLOYEE AND THE COMPANY ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE TERMS OF SECTION 13, AGREEMENT TO ARBITRATE CLAIMS, AND AGREE TO BE BOUND BY ITS TERMS.

 

14.            General Provisions.

 

14.1            Notices. Any notices provided must be in writing and will be deemed effective upon the earlier of personal delivery (including personal delivery by email upon confirmation of receipt) or the next day after sending by overnight carrier, to the Company at its primary office location and to you at the address as listed on the Company payroll.

 

14.2            Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction to the extent possible in keeping with the intent of the Company and you (“the Parties”).

 

 

14.3            Waiver. Any waiver of any breach of any provisions of this Agreement must be in writing to be effective, and it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.

 

14.4            Complete Agreement. This Agreement, together with the CIIAA, constitutes the entire agreement between you and the Company with regard to the subject matter hereof and is the complete, final, and exclusive embodiment of the Company’s and your agreement with regard to this subject matter. This Agreement is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises, warranties or representations. It cannot be modified or amended except in a writing signed by a duly authorized officer of the Company, with the exception of those changes expressly reserved to the Company’s discretion in this Agreement.

 

14.5            Counterparts. This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but both of which taken together will constitute one and the same Agreement.

 

14.6            Headings. The headings of the sections hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to affect the meaning thereof.

 

14.7            Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by you and the Company, and their respective successors, assigns, heirs, executors and administrators, except that you may not assign any of your duties hereunder and you may not assign any of your rights hereunder without the written consent of the Company, which shall not be withheld unreasonably.

 

14.8            Tax Withholding. All payments and awards contemplated or made pursuant to this Agreement will be subject to withholdings of applicable taxes in compliance with all relevant laws and regulations of all appropriate government authorities. You acknowledge and agree that the Company has neither made any assurances nor any guarantees concerning the tax treatment of any payments or awards contemplated by or made pursuant to this Agreement. You have had the opportunity to retain a tax and financial advisor and fully understands the tax and economic consequences of all payments and awards made pursuant to this Agreement.

 

14.9            Choice of Law. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the laws of the State of California.

 

This offer is subject to satisfactory proof of your identity and right to work in the United States and other applicable pre-employment screenings. We look forward to having you join us. If you have any questions about this Agreement, please do not hesitate to call me.

 

[Signature Page Follows]

 

 

Sincerely,

 

ShouTi Inc., a Delaware corporation

 

 

/s/ Raymond Stevens
Raymond Stevens, Ph.D.
Chief Executive Officer

 

Accepted and agreed:

 

/s/ Ding Ding
Ding Ding, Ph.D.

 

Date:

11/24/2021

 

 

Appendix 1

 

Examples of Duties of CFO

 

(a)

Budgeting and financial planning;

 

(b)

All forms of financing and capital market activities;

 

(c)

Investments, M&A and business development (Asia specific leadership and globally in conjunction with CEO, COO, CBO);

 

(d)

Strategic direction and planning (Asia specific leadership and globally in conjunction with C-level executive team);

 

(e)

Post deal integration and alliance management (Asia specific leadership and in conjunction with CBO);

 

(f)

Marketing and communication: investor relations and [public relations (Asia specific leadership and in conjunction with CBO)];

 

(g)

Tax efficiency for the Company (in conjunction with COO and CEO);

 

(h)

Cash management and investment policy (in conjunction with COO and CEO)

 

(i)

Internal control, financial reporting and compliance (in conjunction with COO and Board Audit Committee);

 

(j)

Team building and operations (in conjunction with C-level executive team);

 

(k)

Government relations (Asia specific leadership and in conjunction with C-level executive team);

 

 

Exhibit 10.10

 

EMPLOYMENT CONTRACT

 

THIS EMPLOYMENT CONTRACT (this “Contract”) is entered into by and between the following parties on as of July 22, 2019:

 

A.

Shanghai ShouTi Biotechnology Co., Ltd., a wholly foreign-owned enterprise duly organized and validly existing under the laws of the People’s Republic of China (the “PRC”), with its registered address at Room 5-148, No. 1 South building of JinChuang Mansion, No. 4560 Jinke Road, China (Shanghai) Pilot Free Trade Zone (the “Company”); and

 

B.

Xichen Lin, a US citizen with the passport number [***]. residing at [***] (the “Employee”).

 

The Company and the Employee are herein referred to collectively as the “Parties” and each individually as a “Party”.

 

1.

CONTRACT TERM

 

1.1.

This Contract shall be a fixed-term employment contract. The term of this Contract shall commence on July 22, 2019 (the “Commencement Date”) and end on July 22, 2022 (the “Term”), unless this Contract is terminated earlier in accordance with its terms.

 

1.2.

The Company does not recognize any of the Employee’s years of service (if any) with the Employee’s previous employer(s). The Parties hereby agree that the Company is not in any way responsible or liable for any claims or rights that the Employee may have against the Employee’s previous employer(s) (if any), and the Employee may not raise any claims or demands against the Company that arose from or are related to the relationship with the Employee’s previous employer(s).

 

1.3.

The Contract term includes a probationary period of three (3) months running from the Commencement Date. During the probationary period, the Employee must satisfy the following necessary conditions of employment: (i) satisfactorily performing the job duties specified in Annex A to this Contract and satisfying the work requirements and conditions of employment specified in Annex A, in addition to any requirements or conditions provided in any offer letter and/or recruitment advertisements; (ii) fulfilling all the representations, warranties, and undertakings listed in Article 4 hereof; (iii) satisfactorily passing any background check; (iv) providing valid original or notarized copies or the Employee’s educational diplomas if so requested by the Company; and (v) complying fully with all Company rules, regulations and policies, any non-compliance will be deemed as a failure to meet the conditions of employment irrespective of the gravity of the breach.

 

2.

POSITION, DUTIES, AND LOCATION OF WORK

 

2.1.

The Employee will hold the position of President and General Manager. The Employee will engage in work as set forth in the job description attached hereto as Annex A. The Employee agrees that the Company may reasonably transfer the Employee to a different job position on a temporary or permanent basis pursuant to its business or operational requirements and in line with the Employee’s professional, technical or physical abilities and work performance.

 

2.2.

The Employee will perform all duties hereunder in good faith and to the best of the Employee’s ability. The Employee agrees to devote all working time, attention and energies to the business of the Company and to be available at all reasonable times to perform such work as the Company may require. The Employee may not in any way act against the interests of the Company. The Employee shall always conduct himself in the best interest of the Company.

 

 

2.3.

The Employee will primarily be based in Shanghai, but will engage in travel as part of the Employee’s work.

 

2.4.

The Employee hereby agrees that the Company may arrange for the Employee to work from home or at the Company’s office site, depending on factors such as the Company’s business needs and the characteristics of the Employee’s job position and function. If the Employee is arranged to mainly work at home, the Company may request the Employee to go to the office to attend meetings, report to the Employee’s supervisor or handle other assignments or business at any time and the Company reserves the right to change the Employee’s main work site.

 

2.5.

The Company may, within reason, reassign the Employee to another branch office or liaison office of the Company, or temporarily second the Employee to other locations, in accordance with business needs and to the extent permissible by law. The Employee may also be required and hereby agrees to travel to such places (whether within or outside the PRC) and in such manner and on such occasions as the Company may from time to time designate, or attend such training (either in the PRC or elsewhere) as the Company may determine.

 

3.

REMUNERATION AND SOCIAL INSURANCE

 

3.1.

The Employee’s annual base pay is RMB 1,400,000 before the deduction of payable tax and the Employee’s portion of social insurance, housing fund and other required contributions, if any. The Company may adjust the Employee’s annual base pay as it implements new wage systems or adjusts wage levels. The Employee will be paid twelve (12) monthly pays for each calendar year.

 

3.2.

The Company shall have full discretion to decide any bonus (in addition to the Employee’s base pay) paid to the Employee. Such bonus is based upon the Employee’s performance of meeting objectives that are mutually agreed upon by the Employee and the Company. In addition, such bonus is subject to the terms and conditions of the Company’s bonus plan currently in force. Specifics of the plan will be introduced to the Employee during the orientation. The Company shall have sole discretion to decide whether a bonus shall be paid to the Employee, such bonus shall not be regarded as a contractual entitlement under any circumstances and shall not constitute any promise of paying other annual bonus.

 

3.3.

The Company will withhold individual income tax and the Employee’s portion of social insurance, housing fund and any other required contributions from the Employee’s remuneration as required by PRC laws and regulations. The Company will, in accordance with applicable laws and regulations, pay the social insurance and housing fund contributions that it is required to bear.

 

3.4.

The Company may utilize a third party agency to handle payroll matters.

 

3.5.

The Company will reimburse reasonable business expenses incurred by the Employee in relation to work performed. Such expenses must be directly and solely in relation to work performed for and on behalf of the Company, and should be necessary in order to complete the Employee’s job duties. Such reimbursements are subject to the Employee providing relevant receipts or invoices documenting the expenses incurred, with brief explanation of the reason for such expenses.

 

 

4.

REPRESENTATIONS, WARRANTIES, AND UNDERTAKINGS

 

4.1.

The Employee hereby represents, warrants, and undertakes the following:

 

(a)

that the Employee acknowledges in writing having received Company policies provided by the Company such as the Employee Handbook and will execute and agree to abide by any additional agreements provided by the Company;

 

(b)

that as of the Commencement Date and through the term of this Contract, the Employee is not employed by any other entity, that the Employee’s employment by the Company under the Contract does not violate any contractual or statutory obligations of the Employee (including but not limited to non-compete restrictions or any other type of restrictive covenant), and that the Employee has full capacity to enter into the Contract;

 

(c)

that the Employee possesses and/or will fully cooperate with the Company in obtaining the governmental permits/registrations necessary to be employed by and have social insurance and housing fund contributions made by the Company at the location specified in Article 2.3 or any location to which the Employee may be assigned in accordance with Article 2.5;

 

(d)

that the Employee possesses the professional qualifications, licenses, and/or permits necessary to perform the job duties set out in the Contract and that the Employee will maintain such qualifications, licenses, and/or permits throughout the term of the Contract;

 

(e)

that all information and data the Employee provided to the Company during the recruitment process and/or will provide at any point during the term of employment, including but not limited to any information and data, e.g., the Employee own personal particulars, education, qualifications, work experience and other relevant details, stated on the Employee’s resume or provided during interviews with the Company, are true and correct, and at the request of the Company, the Employee shall provide original copies of documents related to the Employee’s recruitment or qualifications;

 

(f)

that the Employee consents to reasonable third party or Company investigations of the Employee’s background and qualifications both prior to the Commencement Date and during the Contract term as may be necessary. and that the Employee will cooperate with such investigations;

 

(g)

that on or before the Commencement Date, the Employee will provide or already has provided the Company with a document signed by the Employee’s previous employer as proof that the Employee’s previous employment relationship has been terminated or has ended; and

 

(h)

that the Employee is in good health as of the Commencement Date and, if requested by the Company, prior to the Commencement Date, the Employee will submit to a medical examination at a hospital/clinic designated by the Company. The results of such medical examination shall be available to the Company, satisfy the reasonable and legal requirements of the Company and be consistent with the Employee’s representation of good health.

 

4.2.

The Company has entered into this Contract in reliance of the representations made by the Employee. If the Employee is found having violated any of the representations, warranties and undertakings under the items (b), (d) or (e) of Article 4.1, the Employee will be considered to have used deception to cause this Contract to be concluded, and the Company will thus be entitled to terminate this Contract immediately, having relied upon those representations.

 

 

5.

WORK CONDITIONS, WORKING HOURS AND LEAVE

 

5.1.

The Company will provide the Employee with work conditions, labour protection, and protection against occupational hazards that conform to PRC laws and regulations.

 

5.2.

The Employee will be entitled to fifteen (15) days annual leave, plus all national holidays in the PRC in each calendar year. Annual leave entitlement will be prorated in accordance with actual working period in such calendar year. The Employee shall take the whole of his/her annual leave entitlement in respect of a calendar year within such calendar year. If this is not possible due to working reasons, the Employee may, with the written approval of his/her immediate supervisor or the legal representative of the Company, take deferred annual leave in the following calendar year.

 

5.3.

The Employee is subject to standard working hours system. Standard working hours during the workdays are from 9:00 am to 6:00 pm, Monday to Friday, and the lunch break is one (1) hour per day. The Company’s hours of work shall not exceed eight (8) hours per day or forty-four (44) hours per week. The Employee shall devote sufficient time to his/her work and finish all his/her work properly and promptly.

 

If the Employee’s position has already been approved to work under a working hours system different from the standard working hours system or if the Company in the future obtains such approval, the Employee hereby agrees to automatically be subject to that alternative working hours system. The Employee hereby agrees to provide any assistance necessary for and fully cooperate with the Company in its application for the Employee to work under the alternative working hours system. If no such approval is obtained, the Employee shall work overtime only if the Employee is so instructed by the supervising manager or the Employee obtains written approval from the supervising manager to work ove1iime.

 

5.4.

If the Employee needs more than three (3) day’s leave because of illness or a non-work related injury, the Employee must provide the Company with a written note, letter, certificate or other form of written documentation from a qualified licensed doctor of a public hospital as evidence of the Employee’s non-work-related illness or injury.

 

The Company has the right to require the Employee to provide any other reasonable relevant supporting medical documents (such as medical records, hospital registration, receipts, and invoices) or to undergo a second medical check with another hospital designated by the Company at the expense of the Company (and the Company can designate a HR personnel or another member of the Company to accompany the Employee to go through the second medical check). In case of discrepancy, the written note, letter, certificate or other type of written documentation from the Company-appointed hospital shall serve as the final evidence of the Employee’s non-work-related illness or injury. If the Employee fails to provide such written evidence to the Company or refuses to submit to a medical examination by a Company appointed hospital or refuses to be accompanied by a colleague to conduct the second medical check, any leave taken will not be recognized by the Company and will be .considered an unexcused leave of absence, for which the Company will deduct from the Employee’s monthly base pay an amount proportional to the unexcused leave taken, or deducted from the Employee’s annual leave entitlement and, if the annual leave entitlement for the year has already been completely used, then a proportional deduction will be made from the Employee’s monthly base pay.

 

 

5.5.

During the statutory medical treatment period, the Employee’s sick leave pay shall be paid at the minimum rate allowed under applicable laws and regulations, unless the Company’s rules and regulations provide otherwise.

 

6.

PERSONAL CONDUCT, BEHAVIOR AND DISCIPLINE

 

6.1.

The Employee hereby confirms receipt of a copy of the Company’s applicable rules and policies. If the Employee has not received a copy of such rules and policies then the Employee shall immediately obtain a copy from the Company’s Human Resources department.

 

6.2.

The Employee agrees to observe and comply with all rules, regulations, trade clearance policy, procedural practices and arrangements of the Company (specified in the Employee Handbook) and in other labor rules and regulations of the Company (collectively, the “Employee Rules”) as they may be amended (whether by way of internal memorandum or otherwise) from time to time. The Employee shall be required to sign acknowledgement of the terms and conditions in the Employee Handbook and Employee Rules on the Commencement Date or (if the Employee Handbook and/or Employee Rules are not in existence on the Commencement Date) on the date of adoption by Company of its initial Employee Handbook and Employee Rules. The Company may reward and discipline the Employee in accordance with such rules and regulations. This Contract (including its Exhibits), the Employee Handbook and Employee Rules contain terms and conditions of the whole agreement between the Employee and the Company relating to the Employee’s employment with the Company. Where there is any inconsistency between the terms of the Employee Handbook or Employee Rules and this Contract, the terms of this Contract shall prevail.

 

6.3.

The Company retains the right to formulate, change, modify, suspend, interpret or cancel, through statutory procedures, in whole or in part, the provisions of the Employee Handbook or Employee Rules.

 

6.4.

The Employee must faithfully and fully implement instructions or resolutions from supervisors, the board of directors of the Company and/or the parent company of the Company.

 

6.5.

During the term of employment, the Employee shall not engage in any business for the Employee’s own account or on the account of third parties (including but not limited to any business competitor of the Company and/or any of its affiliates) and shall not accept any position in any private or public organizations without the written consent of the Company; and likewise the Employee agrees to devote the whole of the Employee’s time and attention during normal working hours and at such other times as are reasonably necessary to the service of the Company. The Employee may not sit on any board of directors, or be a director of any public company without prior approval from the Company. The Employee may not have any outside interests which could compromise the Company in any way, or would impair or impact on the Employee’s work performance. The Employee shall abide by the Company’s conflict of interest policy at all times during employment.

 

6.6.

The Employee agrees to make every effort to maintain and protect the reputation of the Company, its related entities and their businesses, products, directors, officers, employees, and agents. The Employee hereby agrees not to disparage or make any defamatory statements either verbally or in writing to the media, in a public forum including in all forms of social media not limited to social networking sites, all other internet postings including blogs about the Company and its related entities or their businesses, products, directors, officers, employees, and agents (or persons representing them in their official capacity) or engage in any activities that could be anticipated to harm or result in any damage to the Company’s or its related entities’ reputation, operations, or relationships with current or prospective customers, suppliers or employees and will not encourage, instruct, induce or assist any other person to do so.

 

 

6.7.

The Employee agrees to comply with all applicable laws, regulations, and governmental orders of China (as well as any laws, regulations, or governmental orders of the United States of America with extra-territorial application, including but not limited to the Foreign Corrupt Practices Act), now or hereafter in effect, relating to the Employee’s employment by the Company. Without limiting the generality of the foregoing, the Employee represents and warrants that the Employee has not, and shall not at any time during the Employee’s employment with the Company, pay, give, or offer or promise to pay or give. any money or any other thing of value. directly or indirectly, to, or for the benefit of: (i) any government official. political party. candidate for political office or public international organization; or (ii) any other person, firm, corporation or other entity, with knowledge that some or all of that money or other thing of value will be paid, given, offered or promised to a government official, political party, candidate for political office, or public international organization, for the purpose of obtaining or retaining any business, or to obtain any other unfair advantage, in connection with the Company’s business.

 

6.8.

The Employee acknowledges that the Company’s products, and all technical data pertaining to those products, may be subject to export controls under the laws and regulations of China, and the United States of America. During the employment with the Company. the Employee shall comply strictly with all such export controls, and, without limiting the generality of this clause, the Employee shall not export, re-export, transfer or divert any of the Company products, and technical data pertaining to such Company products, or any direct product thereof to any destination, end-use or end-user that is prohibited or restricted under United States export control laws and regulations, except as specifically authorized by the United States Department of Commerce. The obligations under this clause shall survive the expiration or termination of this Contract.

 

6.9.

If the Employee violates any provision under Articles 6.2, 6.4, 6.5, 6.6, 6.7 and 6.8, the Employee will be considered to have seriously violated the Company’s rules and regulations, and the Company will be entitled to terminate this Contract immediately without severance. In addition, the Employee shall compensate the Company for the losses incurred by it due to the Employee’s violation of Article 6.

 

7.

TERMINATION OF THE CONTRACT

 

7.1.

The Company may terminate the Contract on any ground and in any circumstance allowable under the law, and shall provide prior notice or pay in lieu of notice to the Employee if and as required under the law.

 

7.2.

During the probationary period, if the Employee fails to fulfil the necessary conditions of employment listed in Article 1.3 hereof, the Employee will be considered “to have been proved during the probationary period not to meet the conditions for employment.” Under such a circumstance, the Company shall have the right to terminate this Contract without prior notice, and without payment of severance.

 

7.3.

The Company may terminate the Contract if the Employee needs to convalesce after suffering a non-work-related illness or injury and, at the end of the Employee’s statutory medical treatment period, cannot engage in the Employee’s original work or in other suitable work arranged by the Company. The Company is under no obligation to create a new job position for the Employee in this situation. During the medical treatment period, the Company has the right to hire another individual to fulfil the Employee’s job duties. The Company reserves the right to assign the Employee to a suitable and available alternative position upon the Employee’s return, should the Employee’s original job position have been filled by other Company employees or otherwise. If the Employee is not able to return to the Employee’s work or no suitable alternative position is available after the expiration of the statutory medical treatment period, then the Employee will be considered as “being unable to engage in the Employee’s original work or in other work arranged by the employer”.

 

 

7.4.

The Company may terminate the Contract in accordance with the law if the Employee is “incompetent” (meaning that the Employee (i) is unable to fulfill the Employee’s duties or performance goals as set out in the Contract, in other agreements between the Parties, in board of directors resolutions or management plans, or in relevant Company policies strictly in accordance with the management’s instructions, and/or (ii) is unable to fulfill the Employee’s duties at the level generally expected of Company employees in a similar job or persons employed from outside to perform a similar type of work), and “remains incompetent” after undergoing the usual training for the Employee’s assigned position (such training may consist placing the Employee on a performance improvement plan) or after assignment to another post (which need not carry responsibilities, a grade or a pay level equivalent to those of the original post) within the Company. In addition, if the Employee is “incompetent” but refuses or fails to participate in any performance improvement plan arranged for the Employee, or job adjustment provided by the Company, the Employee will be deemed to “remain incompetent”, and the Company may terminate this Contract in accordance with the law.

 

7.5.

If there is a major change in the objective circumstances upon which this Contract is concluded causing the Contract to no longer be performable as originally intended, then, to make the Contract performable, the Company may in its discretion offer the Employee either: (a) an existing alternative job (if an appropriate alternative job is available which may be at a different level of seniority and/or pay); or (b) putting the Employee on leave of absence and paying a basic living allowance (instead of full salary), which will be equal to the statutory local minimum wage in the location where the Contract is performed. If the Employee refuses the aforesaid offer or docs not respond within fifteen 15 calendar days after receipt of the offer, then the Parties will be deemed to have failed to reach an agreement on amending the Contract to make it performable, and the Company may terminate this Contract.

 

Major changes in objective circumstances shall include but are not limited to the Company undergoing reorganization or restructuring (including but not limited to the elimination of job functions or positions), or experiencing production and operational difficulties that genuinely necessitate staff reduction, relocation, asset transfer, merger through absorption or closure of departments or offices.

 

7.6.

The Company reserves the right to require the Employee not to attend work or engage in any of the Employee’s duties of employment at any point during this Contract, including during any notice period, and may suspend the Employee during any investigation for breach of discipline or violation of the law. During any period where the Employee is instructed not to attend work, the Employee shall be deemed to have first been put on annual leave. The Employee will only receive base pay (as stated in Article 3.1 of this Contract) and statutory benefits during any period of leave; all other additional compensation and benefits including but not limited to any bonus and commission will not accrue in relation to the leave period.

 

7.7.

The Employee is required to provide at least thirty (30) days’ prior written notice to resign from the Employee’s position with the Company. The Company has the right to withhold issuing proof of termination and/or undertaking any other termination procedures until the full notice period has been completed. The Company may waive the Employee’s notice period if requested or if otherwise deemed necessary. Any waiver will be at the discretion of the Company.

 

 

7.8.

The Employee agrees that, at the time of leaving the employment of the Company for whatever reason, the Employee will deliver to the person designated by the Company (and will not keep in the Employee’s possession, custody or control or deliver to anyone else) all Company property, including but not limited to any and all Company chops (including without limitation the Company’s official chop, contract chop, financial chop, and any other chops belonging to the Company or any affiliated or related entity of the Company), Company-provided computer and/or laptop, car, cell phone, blackberry, and other devices, keys, badges, Company bank cards, cash advances, contracts, records, data, notes, reports, proposals, lists, correspondence, business information, client information, specifications, drawings, blueprints, sketches, inventions, copyrightable works, materials, equipment and any other documents or property belonging to the Company, its successors or assignees or their clients, customers or licensees and all reproductions or summaries of any of the aforementioned items in whatever format, whether or not they contain confidential information. The above items must be returned in a state acceptable to the Company, without damage or deletion of content. The Employee agrees that all of the foregoing, except for third party information, will remain the Company’s property at all times. Payment of the severance (if any) is expressly conditioned on the return of all Company property in acceptable form and completion of the handover procedure, and the Company reserves the right to deduct the value of any and all such unreturned or damaged Company property from any payment (such as settlement payment) payable to the Employee to the extent allowed by law.

 

8.

LIABILITY FOR BREACH OF CONTRACT AND COMPENSATION

 

8.1.

If either Party breaches the Contract, thereby causing the other Party to suffer damage, the Party in breach will be liable to pay compensation to the non-breaching Party for such damage.

 

8.2.

To the extent permitted by law, the Company reserves the right to deduct from the Employee’s pay an amount equivalent to the damages suffered by the Company as a result of the Employee’s breach of: (i) this Contract; (ii) any of the Company’s rules, regulations, or policies; or (iii) any instructions from the management of the Company and/or the resolutions of the board of directors of the Company, as well as any other action of the Employee that causes the Company to suffer direct monetary damages or loss.

 

9.

PROTECTION OF INFORMATION AND INTELLECTUAL PROPERTY

 

9.1.

As a condition of employment by the Company, the Employee shall enter into a Confidentiality, Inventions Assignment, Non-Competition and Non-Solicitation Agreement in the form attached to this Contract as Annex B with the Company on the same date as this Contract.

 

10.

MISCELLANEOUS PROVISIONS

 

10.1.

The Employee consents that the Company shall electronically and manually hold and process any data it collects, stores or processes which relates to the Employee, in the course of his/her employment and during the course of any non-compete period, for the purposes of the administration and management of its employees and its business and for compliance with applicable procedures, laws and regulations. It may also be necessary for the Company to forward such data to other offices they may have within or outside the PRC, including but not limited to the USA, where such data shall be stored and/or processed by the received offices, and the Employee consents to them of doing so as may be necessary from time to time.

 

 

10.2.

This Contract shall come into effect when it is signed by the parties and after all of the following conditions have been satisfied or waived at the sole discretion of the Company:

 

(a)

the Employee has promised that he/she is at liberty to take up employment with the Company and perform all the obligations set out in this Contract without limitation and without breaching any obligations or duties which he/she owes to a third party;

 

(b)

the Employee has obtained all necessary regulatory registrations. filings on and/or approvals for the performance of his/her duties with the Company. such as the PRC work permit, the official termination letter issued by the former employer(s) etc.

 

10.3.

By signing this Contract, the Employee hereby acknowledges that the Company has truthfully informed the Employee as to the content of the work, working conditions, place of work, occupational hazards, safety conditions, and salary compensation.

 

10.4.

The Employee acknowledges and agrees both prior to and during the Employee’s employment with the Company. to the collection, maintenance, use and transfer of the Employee’s personal information by the Company for human resources management, background checks, investigations, and other legitimate employment/business related purposes within and outside of the PRC. Specifically, and in addition to the foregoing, the Employee acknowledges and agrees that the Company may transfer the Employee’s personal information to its affiliated companies or vendors inside and outside the PRC for employee benefits processing and other human resources management related purposes. Personal data will be collected only for lawful and relevant purposes and all practicable steps will be taken to ensure that personal data held by the Company is accurate. If there is any change in the Employee’s personal information collected by the Company, the Employee is responsible to report such changes to the Company in a timely manner. The Company will take all practicable steps to ensure the security of the personal data and to avoid unauthorized or accidental access, or other use.

 

10.5.

The contents of the Company’s IT resources and communications systems are Company property. Therefore, employees should have no expectation of privacy in any message, files, data, document, facsimile, telephone conversation, social media post conversation or message, or any other kind of information or communications transmitted to, received or printed from, or stored or recorded on Company electronic information and communications systems. The Company reserves the right to monitor, intercept and review, without further notice, employee activities using Company IT resources and communications systems and the Employee acknowledges and consents to such monitoring by the Employee’s use of such resources and systems.

 

10.6.

Both Parties hereby acknowledge and agree that any written notice served on the other Party, either in person or posted to the Party’s address as specified in the header of this Contract (unless a Party has notified the other Party in writing of a change in address, in which case notice should be served to such Party at the last updated address), shall be deemed as valid and effective notice. Notice served in person shall be deemed effective on the clay of delivery; and notice served by post shall be deemed effective on the day following the posting. Notice may also be effectively served through e-mail or other electronic messaging system, and will be deemed as effectively served on the day of transmission. Employee notice to the Company should be addressed to Human Resources.

 

10.7.

Except as otherwise provided herein, any amendment to the terms of this Contract shall be made in writing and must have the agreement of both Parties. In the event that any term hereof conflicts with the rules and regulations of the Company, this Contract will prevail. Any matters that have not been addressed in the Contract will be handled in accordance with the rules and regulations of the Company.

 

 

10.8.

This Contract is the entire agreement between the Parties and supersedes any and all prior oral and written agreements between the Parties, except as may be specified herein.

 

10.9.

If any Article or portion of any Article of this Contract should ever be determined to be unenforceable, it is agreed that this will not affect the enforceability of the remainder of this Contract.

 

10.10.

Any waiver by the Company of a breach of any provision of the Contract by the Employee shall not operate or be construed as a waiver by the Company of any subsequent breach of such provision or any other provision hereof.

 

10.11.

This Contract shall be governed by PRC law. In the event that an employment dispute arises between the Employee and the Company, the Parties will first try to resolve the dispute through consultation, and if this fails, either Party may submit the dispute to the exclusive jurisdiction of the local employment dispute arbitration tribunal proximate to the Company’s registered address, and if either Party is not satisfied with the arbitration decision, such Party may submit the dispute to the people’s court proximate to the Company’s registered address. Notwithstanding the foregoing, the Parties agree that in certain cases, where permissible by law, either Party may submit a claim directly to the exclusive jurisdiction of the court proximate to the Company’s registered address.

 

10.12.

This Contract is executed in the English and Chinese languages. Both language versions shall be equally valid.

 

10.13.

This Contract shall become effective and binding on the latest date signed below.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF the Parties have executed this Contract on the date first set forth above.

 

The Company
For and on behalf of Shanghai ShouTi Biotechnology Co., Ltd. (chop)
/s/ Raymond Stevens
Signature
Raymond Stevens
Name
Legal Representative
Title
The Employee
/s/ Xichen Lin
Signature
Xichen Lin
Name

 

 

ANNEX A

 

JOB DESCRIPTION

 

AND

 

CONDITIONS OF EMPLOYMENT

 

1.

Perform duties that are normally associated with the Employee’s position of President and General Manager.

 

2.

Perform any other duties the Employee may be instructed to carry out by the Company from time to time that are reasonably within the scope of the Employee’s job position and work capabilities.

 

 

ANNEX B

 

CONFIDENTIALITY, INVENTIONS ASSIGNMENT, NON-COMPETITION AND NON-SOLICITATION AGREEMENT

 

 

CONFIDENTIALITY, INVENTIONS ASSIGNMENT, NON-COMPETITION AND NON-SOLICITATION AGREEMENT

 

This CONFIDENTIALITY, INVENTIONS ASSIGNMENT, NON-COMPETITION AND NON-SOLICITATION AGREEMENT (this “Agreement”) is made and entered into as of July 22, 2019 (“Effective Date”), by and between Shanghai ShouTi Biotechnology Co., Ltd. (the “Company”), a limited liability company organized and existing under the laws of People’s Republic of China (“China” or the “PRC”), and the undersigned individual (the “Employee”). Unless the context otherwise requires, the term “Company” in this Agreement shall also include all subsidiary, parent or related corporations of the Company.

 

AGREEMENT

 

The Employee acknowledges that the Employee’s employment by the Company creates a relationship of confidence and trust between the Employee and the Company with respect to all Confidential Information (as defined below) of the Company.

 

In consideration and as a condition of the Employee’s employment by the Company, the compensation paid to and the benefits received by the Employee, the sufficiency of which is hereby acknowledged, the Employee is hereby agrees as follows:

 

1.

Confidential Information

 

(a)

Confidentiality. Except as herein provided, the Employee agrees that during the term of his or her employment with the Company and thereafter, he or she (i) shall keep Confidential Information (as defined below) in confidence and shall not directly or indirectly, use, divulge, publish or otherwise disclose or allow to be disclosed any aspect of Confidential Information without the Company’s prior written consent; (ii) shall refrain from any action or conduct which might reasonably or foreseeably be expected to compromise the confidentiality or proprietary nature of the Confidential Information; and (iii) shall follow recommendations made by the Board of Directors, officers or supervisors of the Company from time to time regarding Confidential Information. “Confidential Information” includes, but is not limited to, inventions (as defined in Section 3(b) below), trade secrets, confidential information, knowledge or data of the Company, or any of its clients, customers, consultants, shareholders, licensees, licensors, vendors or affiliates, that the Employee may produce, obtain or otherwise acquire or have access to during the course of his or her employment by the Company (whether before or after the date of this Agreement), including but not limited to: business plans, records, and affairs; customer files and lists; special customer matters; sales practices; methods and techniques; merchandising concepts, strategies and plans; sources of supply and vendors; special business relationships with vendors, agents, and brokers; promotional materials and information; financial matters; mergers; acquisitions; equipment, technologies and processes; selective personnel matters; inventions; developments; product specifications; procedures; pricing information; intellectual property; know-how; technical data; software programs; algorithms; operations and production costs; processes; designs; formulas; ideas; plans; devices; materials; and other similar matters which are confidential. All Confidential Information and all tangible materials containing Confidential Information are and shall remain the sole property of the Company. The Employee agrees that the Company is not obligated to pay any compensation for any of his obligations under this Section 1.

 

 

(b)

Limitation. The Employee shall have no obligation under this Agreement to maintain in confidence any information (i) that is in the public domain at the time of disclosure, (ii) that used to be Confidential Information, but subsequently enters the public domain other than by breach of the Employee’s obligations hereunder or by breach of another person’s or entity’s confidentiality obligations, or (iii) that is shown by documentary evidence to have been known by the Employee prior to disclosure to the Employee by the Company.

 

(c)

Former Employer Information. The Employee agrees that he or she has not and will not, during the term of his or her employment, (i) improperly use or disclose any proprietary information or trade secrets of any former employer or other person or entity with which the Employee has an agreement or duty to keep in confidence information acquired by the Employee, if any, or (ii) bring onto the premises of the Company any document or confidential or proprietary information belonging to such employer, person or entity unless consented to in writing by such employer, person or entity. The Employee will indemnify the Company and hold it harmless from and against all claims, liabilities, damages and expenses, including reasonable attorneys’ fees and costs of suit, arising out of or in connection with any violation of the foregoing.

 

(d)

Third Party Information. The Employee recognizes that the Company may have received, and in the future may receive, from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. The Employee agrees that the Employee owes the Company and such third parties, during the Employee’s employment by the Company and thereafter, a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person or firm and to use it in a manner consistent with, and for the limited purposes permitted by, the Company’s agreement with such third party.

 

(e)

Conflicting Activities. While employed by the Company, the Employee will not work as an employee or consultant of any other organization or engage in any other activities which conflict with the obligations to the Company, without the express prior written approval of the Company.

 

2.

Return of Confidential Material

 

In the event of the Employee’s termination of employment with Company for any reason whatsoever, the Employee agrees promptly to surrender and deliver to Company all records, materials, equipment, drawings, documents and data of any nature pertaining to any Confidential Information or to his or her employment, and the Employee will not retain or take with him or her any tangible materials or electronically stored data, containing or pertaining to any Confidential Information that the Employee may produce, acquire or obtain access to during the course of his or her employment.

 

3.

Inventions

 

(a)

Inventions Retained and Licensed. The Employee has attached hereto, as Exhibit 1, a list describing all inventions, discoveries, ideas, original works of authorship, development, improvements, technical methods, know-how, and trade secrets which were made by the Employee prior to his employment with the Company (collectively referred to as “Prior Inventions”), which belong to the Employee, relate to the Company’s proposed business, products or research and development, and are not assigned to the Company hereunder. Or if no such list is attached, the Employee represents that there are no such Prior Inventions. If in the course of the Employee’s employment with the Company, the Employee incorporates into a Company product, process, or machine a Prior Invention owned by the Employee or in which the Employee has an interest, the Company is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license to make, have made, modify, use and sell such Prior Invention as part of or in connection with such product, process, or machine.

 

 

(b)

Assignment of Inventions. The Employee hereby acknowledges and agrees that the Company shall have a complete, absolute and exclusive right, title, and interest in and for any and all inventions, discoveries, ideas, designs, copyrightable works, original works of authorship, developments, improvements, concepts, technical methods, know-how, trade secrets, and other productions or items containing intellectual properties of any nature, whether or not patentable or otherwise registrable under the laws of any countries, and whether or not reduced to practice, made or conceived by the Employee, whether solely by the Employee or jointly with others, (a) during the period of the Employee’s employment with the Company, (i) that relate in any manner to the actual or demonstrably anticipated business, work, or research and development of the Company, its affiliates or subsidiaries, or (ii) that are developed in whole or in part on the Company’s time or using the Company’s equipment, supplies, facilities or Confidential Information, or (iii) that result from or are suggested by any task assigned to the Employee or any work performed by the Employee for or on behalf of the Company, its affiliates or subsidiaries, or within the scope of the Employee’s duties and responsibilities with the Company, its affiliates or subsidiaries, and (b) within three (3) year after termination of the Employee’s employment with the Company that are related to any of the Employee’s activities during the term of the Employee’s employment with the Company (collectively referred to as “Inventions”). In the event that the Employee has any right or title to or interest in any Inventions, the Employee hereby assigns such right, title or interest to the Company. In the event that the Employee cannot assign any right or title to or interest in any Inventions to the Company, he/her hereby grants the Company an exclusive, royalty-free, assignable, irrevocable and worldwide license (including the right to sublicense through multilayered sublicensing) to exercise such right, title and interest that the Employee cannot assign to the Company. If the Employee can neither assign nor license to the Company any right, title or interest he/she may have to or in any Inventions, the Employee hereby irrevocably waives his right to assert and agrees that he/she will never assert any claims against the Company or any Company’s successor with respect to such right, title or interest that the Employee can neither assign nor license to the Company. The Employee hereby waives any moral rights to which he/she may have to the Inventions.

 

(c)

Disclosure of Inventions and Records. The Employee agrees that in connection with any Invention, (i) the Employee shall promptly disclose such Invention in writing to his immediate supervisor at the Company (which disclosure shall be received in confidence by the Company), with a copy to the Chief Executive Officer of the Company, regardless of whether the Employee believes the Invention is protected by the PRC Patent Law, the PRC Copyright Law or any other laws and regulations, in order to permit the Company to claim rights to which it may be entitled under this Agreement; and (ii) the Employee shall, at the Company’s request, promptly execute a written assignment of the title in relation to any Invention to the Company, and the Employee will preserve any such Invention as Confidential Information of the Company. The Employee agrees to keep and maintain adequate and current written records of all Inventions and sign his name thereon during the term of his employment with the Company. The records will be in the form of notes, sketches, drawings, and any other format or manner, which may be specified by the Company from time to time. The records will be available to and remain the exclusive and sole property of the Company at all times.

 

 

(d)

Patent and Copyright Registrations. The Employee agrees to assist the Company, or its designee, at the Company’s expense, in every proper way to secure the Company’s rights in the Inventions and any copyright, patents, mask work rights or other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments which the Company shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, mask work rights or other intellectual property rights relating thereto. The Employee further agrees that his obligation to execute or cause to be executed. when it is in his power to do so, any such instrument or papers shall continue after the termination of this Agreement. If the Company is pursuing any application for any PRC or foreign patents or copyright registrations covering Inventions or original works of authorship assigned to the Company as above, then the Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as his agent and attorney in fact, to act for and on the Employee’s behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent or copyright registrations thereon with the same legal force and effect as if executed by the Employee.

 

(e)

Reward, Remuneration and Other Rights. The Employee hereby agrees that the Company will reward him/her for his Inventions in accordance with the policies of the Company on rewards for employee inventions. The Company will pay reward to the Employee within three (3) months from the date of patent issue, of which the reward for an invention patent amounts to RMB3,000 and the rewards for a utility model patent or a design patent amounts to RMB1,000. The Company will pay one-time remuneration to the Employee within six (6) months from the date of patent issue, of which the remuneration for an invention patent or a utility model patent amounts to RMB3,000 and the remuneration for a design patent amounts to RMB1,000, unless otherwise agreed in writing by and between the Company and the Employee. The Employee understands that such reward, remuneration, as well as the salary and other compensation the Company pays in accordance with his Employment Contract with the Company constitute all the reward and remuneration the Employee is entitled to for the Inventions (including but not limited to the “reward” and “reasonable remuneration” set forth in Article 16 of the PRC Patent Law). The Employee hereby irrevocably waives any claim against the Company for any other reward or remuneration for any Inventions, regardless of whether the Company implements or licenses such Inventions or whether the Company makes any profit or receives any royalty payment or license fees from such Inventions. The Employee hereby also irrevocably waives any residual rights (including but not limited to the right of first refusal under the PRC Contract Law) to the Inventions that the Employee may have when the Company sells, transfers or otherwise disposes of the Inventions.

 

 

4.

Non-Competition Obligation

 

In consideration of the receipt by the Employee of Confidential Information and that the work of the Employee involves commercial secrets of the Company, the Employee agrees to perform the obligations set forth in this Clause, which obligations the Employee recognizes are applicable to the Employee under the applicable laws and regulations (including without limitation the Employment contract Law of the People’s Republic of China). The Employee agrees that during his employment with the Company, he/she will not engage directly or indirectly, whether as an employee, consultant, or in any other capacity, in any other business (including the Employee’s own business), which involves the development, management, or sale of technologies or products that are the same as or similar to those developed, managed, or sold by the Company or in any other business that involves any services the same as or similar to those provided by the Company.

 

The Employee further agrees not to, in the capacity of employee, advisor or otherwise, directly or indirectly participate in the development, operation or sale of any technology or products or business (including his own business) identical or similar to the technology or products the Employee develops, operates or sells before leaving his office or be engaged in other services identical or similar to the services the Employee actually provides before leaving his office within two (2) years after the release or termination of the employment between the Employee and the Company (the “Non-Compete Period”). During the Non-Compete Period, the Employee shall continue to perform the non-compete obligations hereunder, and the Company agrees to pay compensations to the Employees on a monthly basis in an amount equal to thirty percent (30%) of the average monthly salary of the Employee in the twelve-month period immediately prior to the termination of his employment on the tenth (10th) clay of the next calendar month. If the Employee has only been employed by the Company for less than a year, then the average monthly salary of the Employee shall be calculated by the actual length of his/her employment. The Company may withhold individual income tax for the Employee if required by the applicable laws and regulations. The Employee agrees that the compensation is sufficient and reasonable. Notwithstanding the foregoing, the Employee hereby agrees that the Company shall have the right to decide in its sole discretion to exempt the Employee from the non-compete obligations at any time and pay compensation for any elapsed non-compete period to the Employee as required by law, and the Company will not pay any additional consideration for such obligations for the remainder of the period. After termination of the employment but before the Company making the payment of the compensation, the Employee shall provide the Company with the letter of employment issued by the new employer (including the new employer’s contact details and the statements of the social insurance payment) or the original copy of an valid un-employment certificate issued by the local labour and social insurance department which has jurisdiction over the Employee’s registered domicile, valid postal address, telephone number and the bank account number of the Employee to receive the economic compensation. If the Employee changes his/her employer, the Employee shall provide the Company the supporting documentary evidence of the new employer. If the Employee fails to provide the aforesaid documents, the Company is entitled to suspend the payment of the economic compensation to the Employee without releasing the Employee’s duty of non-competition.

 

5.

Non-solicitation Obligation

 

The Employee agrees that during his employment with the Company and for three (3) years following termination of his employment for any reason, he or she will not either for the Employee himself/herself or for any other person or entity (i) directly or indirectly, or attempt to solicit, induce, recruit or encourage any of the Company’s employees to leave their employment, or take away such employees; or (ii) directly or indirectly solicit the business of any client or customer of the Company (other than on behalf of the Company), or directly or indirectly induce or influence the client or customer of the Company for them to restrict or cancel the business relationship with the Company. The Employee hereby agrees that the Company is not obligated to pay additional consideration for this non-solicitation obligation.

 

 

6.

Remedies for Violation

 

The Employee hereby acknowledges that the Employee’s obligations set forth in this Agreement are reasonable and necessary to protect the legitimate interests of the Company. In the event that the Employee breaches the obligations of confidentiality and non-competition under this Agreement, the Employee agrees that he/she shall compensate the Company for any damages the Company suffers as a result of the Employee’s breach. The Employee acknowledges that any violation of this Agreement will cause substantial and irreparable harm to the Company so that monetary damages alone would not be an adequate remedy for such violation. Therefore, if the Company reasonably believes that any actual or threatened breach of this Agreement has taken place or will take place, the Company is entitled to, in addition to any other remedies it may have, injunctive or any other equitable relief to enforce this Agreement.

 

7.

Effectiveness of Agreement

 

In the event it is determined by a court of competent jurisdiction or a duly empanelled arbitral tribunal that any provision of this Agreement is unenforceable by reason of its extending for too great a period of time, over too large a geographic area, or over too great a range of activities, then such provision should be interpreted to extend over only the maximum period of time, geographic area, or range of activities as to which it may be enforceable.

 

8.

Notification of New Employer

 

In the event that the Employee leaves the Company’s employ, the Employee hereby agrees and promises that he/she will, and agrees that the Company can, notify the Employee’s new employer of the Employee’s rights and obligations under this Agreement.

 

9.

Representations

 

The Employee agrees to execute any proper oath or verify any proper document required to carry out or evidence compliance with the terms of this Agreement. The Employee represents that his or her performance of all the terms of this Agreement, and as an employee of the Company, will not breach any agreement to keep in confidence proprietary information acquired by the Employee in confidence or in trust prior to the Employee’s retention by the Company. The Employee has not entered into, and the Employee agrees that he or she will not enter into, any oral or written agreement in conflict with this Agreement.

 

10.

Dispute Resolution

 

Any claim, controversy or dispute arising from the execution of, or in connection with, this Agreement shall be submitted to a competent People’s Court in the place where the Company is formed, unless otherwise required by the applicable laws or regulations.

 

11.

Governing Law

 

This Agreement will be governed by the laws of the PRC.

 

12.

Entire Agreement

 

This Agreement sets forth the entire agreement and understanding between the Company and the Employee relating to the subject matter herein and merges all prior discussions and agreements between the parties with respect that subject matter. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing signed by the parties. Any subsequent change(s) in the Employee’s duties, salary or compensation will not affect the validity or scope of this Agreement.

 

 

13.

Severability

 

If one or more of the provisions in this Agreement are deemed void by law, then the remaining provisions will continue in full force and effect.

 

14.

Successors and Assigns

 

This Agreement will be binding upon the Employee’s heirs, executors, administrators and other legal representatives and will be for the benefit of the Company, its successors, and its assigns. The Company may assign any of its rights and obligations under this Agreement. No other party to this Agreement may assign, whether voluntarily or by operation of law, any of its rights and obligations under this Agreement, except with the prior written consent of the Company.

 

15.

Counterparts

 

This Agreement may be signed in two counterparts, each of which shall be deemed an original and both of which shall together constitute one and the same instrument.

 

[Signatures page follows]

 

 

IN WITNESS WHEREOF, the Company and the Employee have caused this Agreement to be executed on the date first written above in two (2) originals.

 

(Shanghai ShouTi Biotechnology Co., Ltd.)
(Signature):	/s/ Raymond Stevens
(Name):	Raymond Stevens
(Title):	Legal Representative
(Signature):	/s/ Xichen Lin
(Name):	Xichen Lin

 

 

EXHIBIT 1

 

LIST OF PRIOR INVENTIONS AND ORIGINAL WORKS OF AUTHORSHIP

 

(Title)		(Date)		(Identifying Number or Brief Description)

 

 

 

Exhibit 10.11

 

EMPLOYMENT CONTRACT

 

THIS EMPLOYMENT CONTRACT (this “Contract”) is entered into by and between the following parties on as of May 11, 2021：

 

A.

Shanghai Basecamp Biotechnology Co., Ltd., a wholly foreign-owned enterprise duly organized and validly existing under the laws of the People’s Republic of China (the “PRC”), with its registered address at Room 5-123 and 5-129, No.1 South building of JinChuang Mansion, No. 4560 Jinke Road, China (Shanghai) Pilot Free Trade Zone (the “Company”); and

 

B.

Yingli Ma, a PRC citizen with the PRC ID Card number [***], residing at [***] (the “Employee”).

 

The Company and the Employee are herein referred to collectively as the “Parties” and each individually as a “Party”.

 

1.

CONTRACT TERM

 

1.1.

This Contract shall be a fixed-term employment contract. The term of this Contract shall commence on May 11, 2021 (the “Commencement Date”) and end on May 10, 2024 (the “Term”), unless this Contract is terminated earlier in accordance with its terms.

 

1.2.

The Company does not recognize any of the Employee’s years of service (if any) with the Employee’s previous employer(s). The Parties hereby agree that the Company is not in any way responsible or liable for any claims or rights that the Employee may have against the Employee’s previous employer(s) (if any), and the Employee may not raise any claims or demands against the Company that arose from or are related to the relationship with the Employee’s previous employer(s).

 

1.3.

The Contract term includes a probationary period of three (3) months running from the Commencement Date. During the probationary period, the Employee must satisfy the following necessary conditions of employment: (i) satisfactorily performing the job duties specified in Annex A to this Contract and satisfying the work requirements and conditions of employment specified in Annex A, in addition to any requirements or conditions provided in any offer letter and/or recruitment advertisements; (ii) fulfilling all the representations, warranties, and undertakings listed in Article 4 hereof; (iii) satisfactorily passing any background check; (iv) providing valid original or notarized copies of the Employee’s educational diplomas if so requested by the Company; and (v) complying fully with all Company rules, regulations and policies, any non-compliance will be deemed as a failure to meet the conditions of employment irrespective of the gravity of the breach.

 

2.

POSITION, DUTIES, AND LOCATION OF WORK

 

2.1.

The Employee will hold the position of President and General Manager. The Employee will engage in work as set forth in the job description attached hereto as Annex A. The Employee agrees that the Company may reasonably transfer the Employee to a different job position on a temporary or permanent basis pursuant to its business or operational requirements and in line with the Employee’s professional, technical or physical abilities and work performance.

 

2.2.

The Employee will perform all duties hereunder in good faith and to the best of the Employee’s ability. The Employee agrees to devote all working time, attention and energies to the business of the Company and to be available at all reasonable times to perform such work as the Company may require. The Employee may not in any way act against the interests of the Company. The Employee shall always conduct himself in the best interest of the Company.

 

 

2.3.

The Employee will primarily be based in Shanghai, but will engage in travel as part of the Employee’s work.

 

2.4.

The Employee hereby agrees that the Company may arrange for the Employee to work from home or at the Company's office site, depending on factors such as the Company’s business needs and the characteristics of the Employee's job position and function.  If the Employee is arranged to mainly work at home, the Company may request the Employee to go to the office to attend meetings, report to the Employee's supervisor or handle other assignments or business at any time and the Company reserves the right to change the Employee's main work site.

 

2.5.

The Company may, within reason, reassign the Employee to another branch office or liaison office of the Company, or temporarily second the Employee to other locations, in accordance with business needs and to the extent permissible by law. The Employee may also be required and hereby agrees to travel to such places (whether within or outside the PRC) and in such manner and on such occasions as the Company may from time to time designate, or attend such training (either in the PRC or elsewhere) as the Company may determine.

 

3.

REMUNERATION AND SOCIAL INSURANCE

 

3.1.

The Employee’s annual base pay is RMB 2,448,000 before the deduction of payable tax and the Employee’s portion of social insurance, housing fund and other required contributions, if any. The Company may adjust the Employee’s annual base pay as it implements new wage systems or adjusts wage levels. The Employee will be paid twelve (12) monthly pays for each calendar year.

 

3.2.

The Company operates a discretionary bonus structure to reward and incentivize employees. The Employee may be considered eligible for bonus in accordance with this structure. The Employee will only be eligible to receive a bonus if the Employee satisfies the criteria of any bonus plan under the Company's bonus structure. The decision whether to pay a bonus, its amount, and the timing of payment (if any) shall be at the absolute discretion of the Company and conditioned upon satisfactory achievement of performance objectives set for the Employee by the Company. The Company may in its sole discretion elect to pay to the Employee variable and non-recurrent bonus in accordance with the Company's compensation policy, at an annual target amount equal to 25% of the Employee's base pay, provided that the amount of any discretionary bonus awarded to Employ for calendar year 2021 shall be prorated based on the actual number of days that the Employee works for the Company during calendar year 2021. The Employee will only be eligible to be considered for a bonus if the Employee is still employed by the Company and not within any period of notice of termination on the payment date, as the primary purpose of the bonus is to incentivize the Employee to remain with the Company. Receipt of a bonus in one year is not a guarantee of future bonus or similar bonus amount.

 

3.3.

The Company will withhold individual income tax and the Employee’s portion of social insurance, housing fund and any other required contributions from the Employee’s remuneration as required by PRC laws and regulations. The Company will, in accordance with applicable laws and regulations, pay the social insurance and housing fund contributions that it is required to bear.

 

3.4.

The Company may utilize a third party agency to handle payroll matters.

 

3.5.

The Company will reimburse reasonable business expenses incurred by the Employee in relation to work performed. Such expenses must be directly and solely in relation to work performed for and on behalf of the Company, and should be necessary in order to complete the Employee’s job duties. Such reimbursements are subject to the Employee providing relevant receipts or invoices documenting the expenses incurred, with brief explanation of the reason for such expenses.

 

 

4.

REPRESENTATIONS, WARRANTIES, AND UNDERTAKINGS

 

4.1.

The Employee hereby represents, warrants, and undertakes the following:

 

(a)

that the Employee acknowledges in writing having received Company policies provided by the Company such as the Employee Handbook and will execute and agree to abide by any additional agreements provided by the Company;

 

(b)

that as of the Commencement Date and through the term of this Contract, the Employee is not employed by any other entity, that the Employee’s employment by the Company under the Contract does not violate any contractual or statutory obligations of the Employee (including but not limited to non-compete restrictions or any other type of restrictive covenant), and that the Employee has full capacity to enter into the Contract;

 

(c)

that the Employee possesses and/or will fully cooperate with the Company in obtaining the governmental permits/registrations necessary to be employed by and have social insurance and housing fund contributions made by the Company at the location specified in Article 2.3 or any location to which the Employee may be assigned in accordance with Article 2.5;

 

(d)

that the Employee possesses the professional qualifications, licenses, and/or permits necessary to perform the job duties set out in the Contract and that the Employee will maintain such qualifications, licenses, and/or permits throughout the term of the Contract;

 

(e)

that all information and data the Employee provided to the Company during the recruitment process and/or will provide at any point during the term of employment, including but not limited to any information and data, e.g., the Employee own personal particulars, education, qualifications, work experience and other relevant details, stated on the Employee’s resume or provided during interviews with the Company, are true and correct, and at the request of the Company, the Employee shall provide original copies of documents related to the Employee’s recruitment or qualifications;

 

(f)

that the Employee consents to reasonable third party or Company investigations of the Employee’s background and qualifications both prior to the Commencement Date and during the Contract term as may be necessary, and that the Employee will cooperate with such investigations;

 

(g)

that on or before the Commencement Date, the Employee will provide or already has provided the Company with a document signed by the Employee’s previous employer as proof that the Employee’s previous employment relationship has been terminated or has ended; and

 

(h)

that the Employee is in good health as of the Commencement Date and, if requested by the Company, prior to the Commencement Date, the Employee will submit to a medical examination at a hospital/clinic designated by the Company. The results of such medical examination shall be available to the Company, satisfy the reasonable and legal requirements of the Company and be consistent with the Employee’s representation of good health.

 

4.2.

The Company has entered into this Contract in reliance of the representations made by the Employee. If the Employee is found having violated any of the representations, warranties and undertakings under the items (b), (d) or (e) of Article 4.1, the Employee will be considered to have used deception to cause this Contract to be concluded, and the Company will thus be entitled to terminate this Contract immediately, having relied upon those representations.

 

 

5.

WORK CONDITIONS, WORKING HOURS AND LEAVE

 

5.1.

The Company will provide the Employee with work conditions, labour protection, and protection against occupational hazards that conform to PRC laws and regulations.

 

5.2.

The Employee will be entitled to fifteen (15) days annual leave, plus all national holidays in the PRC in each calendar year. Annual leave entitlement will be prorated in accordance with actual working period in such calendar year. The Employee shall take the whole of his/her annual leave entitlement in respect of a calendar year within such calendar year. If this is not possible due to working reasons, the Employee may, with the written approval of his/her immediate supervisor or the legal representative of the Company, take deferred annual leave in the following calendar year.

 

5.3.

The Employee is subject to standard working hours system. Standard working hours during the workdays are from 9:00 am to 6:00 pm, Monday to Friday, and the lunch break is one (1) hour per day. The Company’s hours of work shall not exceed eight (8) hours per day or forty-four (44) hours per week. The Employee shall devote sufficient time to his/her work and finish all his/her work properly and promptly.

 

If the Employee’s position has already been approved to work under a working hours system different from the standard working hours system or if the Company in the future obtains such approval, the Employee hereby agrees to automatically be subject to that alternative working hours system. The Employee hereby agrees to provide any assistance necessary for and fully cooperate with the Company in its application for the Employee to work under the alternative working hours system. If no such approval is obtained, the Employee shall work overtime only if the Employee is so instructed by the supervising manager or the Employee obtains written approval from the supervising manager to work overtime.

 

5.4.

If the Employee needs more than three (3) day’s leave because of illness or a non-work related injury, the Employee must provide the Company with a written note, letter, certificate or other form of written documentation from a qualified licensed doctor of a public hospital as evidence of the Employee’s non-work-related illness or injury.

 

The Company has the right to require the Employee to provide any other reasonable relevant supporting medical documents (such as medical records, hospital registration, receipts, and invoices) or to undergo a second medical check with another hospital designated by the Company at the expense of the Company (and the Company can designate a HR personnel or another member of the Company to accompany the Employee to go through the second medical check). In case of discrepancy, the written note, letter, certificate or other type of written documentation from the Company-appointed hospital shall serve as the final evidence of the Employee’s non-work-related illness or injury. If the Employee fails to provide such written evidence to the Company or refuses to submit to a medical examination by a Company appointed hospital or refuses to be accompanied by a colleague to conduct the second medical check, any leave taken will not be recognized by the Company and will be considered an unexcused leave of absence, for which the Company will deduct from the Employee’s monthly base pay an amount proportional to the unexcused leave taken, or deducted from the Employee’s annual leave entitlement and, if the annual leave entitlement for the year has already been completely used, then a proportional deduction will be made from the Employee’s monthly base pay.

 

 

5.5.

During the statutory medical treatment period, the Employee’s sick leave pay shall be paid at the minimum rate allowed under applicable laws and regulations, unless the Company’s rules and regulations provide otherwise.

 

6.

PERSONAL CONDUCT, BEHAVIOR AND DISCIPLINE

 

6.1.

The Employee hereby confirms receipt of a copy of the Company’s applicable rules and policies. If the Employee has not received a copy of such rules and policies then the Employee shall immediately obtain a copy from the Company’s Human Resources department.

 

6.2.

The Employee agrees to observe and comply with all rules, regulations, trade clearance policy, procedural practices and arrangements of the Company (specified in the Employee Handbook) and in other labor rules and regulations of the Company (collectively, the “Employee Rules”) as they may be amended (whether by way of internal memorandum or otherwise) from time to time. The Employee shall be required to sign acknowledgement of the terms and conditions in the Employee Handbook and Employee Rules on the Commencement Date or (if the Employee Handbook and/or Employee Rules are not in existence on the Commencement Date) on the date of adoption by Company of its initial Employee Handbook and Employee Rules. The Company may reward and discipline the Employee in accordance with such rules and regulations. This Contract (including its Exhibits), the Employee Handbook and Employee Rules contain terms and conditions of the whole agreement between the Employee and the Company relating to the Employee’s employment with the Company. Where there is any inconsistency between the terms of the Employee Handbook or Employee Rules and this Contract, the terms of this Contract shall prevail.

 

6.3.

The Company retains the right to formulate, change, modify, suspend, interpret or cancel, through statutory procedures, in whole or in part, the provisions of the Employee Handbook or Employee Rules.

 

6.4.

The Employee must faithfully and fully implement instructions or resolutions from supervisors, the board of directors of the Company and/or the parent company of the Company.

 

6.5.

During the term of employment, the Employee shall not engage in any business for the Employee’s own account or on the account of third parties (including but not limited to any business competitor of the Company and/or any of its affiliates) and shall not accept any position in any private or public organizations without the written consent of the Company; and likewise the Employee agrees to devote the whole of the Employee’s time and attention during normal working hours and at such other times as are reasonably necessary to the service of the Company. The Employee may not sit on any board of directors, or be a director of any public company without prior approval from the Company. The Employee may not have any outside interests which could compromise the Company in any way, or would impair or impact on the Employee’s work performance. The Employee shall abide by the Company's conflict of interest policy at all times during employment.

 

6.6.

The Employee agrees to make every effort to maintain and protect the reputation of the Company, its related entities and their businesses, products, directors, officers, employees, and agents. The Employee hereby agrees not to disparage or make any defamatory statements either verbally or in writing to the media, in a public forum including in all forms of social media not limited to social networking sites, all other internet postings including blogs about the Company and its related entities or their businesses, products, directors, officers, employees, and agents (or persons representing them in their official capacity) or engage in any activities that could be anticipated to harm or result in any damage to the Company’s or its related entities’ reputation, operations, or relationships with current or prospective customers, suppliers or employees and will not encourage, instruct, induce or assist any other person to do so.

 

 

6.7.

The Employee agrees to comply with all applicable laws, regulations, and governmental orders of China (as well as any laws, regulations, or governmental orders of the United States of America with extra-territorial application, including but not limited to the Foreign Corrupt Practices Act), now or hereafter in effect, relating to the Employee’s employment by the Company. Without limiting the generality of the foregoing, the Employee represents and warrants that the Employee has not, and shall not at any time during the Employee’s employment with the Company, pay, give, or offer or promise to pay or give, any money or any other thing of value, directly or indirectly, to, or for the benefit of: (i) any government official, political party, candidate for political office or public international organization; or (ii) any other person, firm, corporation or other entity, with knowledge that some or all of that money or other thing of value will be paid, given, offered or promised to a government official, political party, candidate for political office, or public international organization, for the purpose of obtaining or retaining any business, or to obtain any other unfair advantage, in connection with the Company’s business.

 

6.8.

The Employee acknowledges that the Company’s products, and all technical data pertaining to those products, may be subject to export controls under the laws and regulations of China, and the United States of America. During the employment with the Company, the Employee shall comply strictly with all such export controls, and, without limiting the generality of this clause, the Employee shall not export, re-export, transfer or divert any of the Company products, and technical data pertaining to such Company products, or any direct product thereof to any destination, end-use or end-user that is prohibited or restricted under United States export control laws and regulations, except as specifically authorized by the United States Department of Commerce. The obligations under this clause shall survive the expiration or termination of this Contract.

 

6.9.

If the Employee violates any provision under Articles 6.2, 6.4, 6.5, 6.6, 6.7 and 6.8, the Employee will be considered to have seriously violated the Company’s rules and regulations, and the Company will be entitled to terminate this Contract immediately without severance. In addition, the Employee shall compensate the Company for the losses incurred by it due to the Employee’s violation of Article 6.

 

7.

TERMINATION OF THE CONTRACT

 

7.1.

The Company may terminate the Contract on any ground and in any circumstance allowable under the law, and shall provide prior notice or pay in lieu of notice to the Employee if and as required under the law.

 

7.2.

During the probationary period, if the Employee fails to fulfil the necessary conditions of employment listed in Article 1.3 hereof, the Employee will be considered “to have been proved during the probationary period not to meet the conditions for employment.” Under such a circumstance, the Company shall have the right to terminate this Contract without prior notice, and without payment of severance.

 

7.3.

The Company may terminate the Contract if the Employee needs to convalesce after suffering a non-work-related illness or injury and, at the end of the Employee’s statutory medical treatment period, cannot engage in the Employee’s original work or in other suitable work arranged by the Company. The Company is under no obligation to create a new job position for the Employee in this situation. During the medical treatment period, the Company has the right to hire another individual to fulfil the Employee’s job duties. The Company reserves the right to assign the Employee to a suitable and available alternative position upon the Employee’s return, should the Employee’s original job position have been filled by other Company employees or otherwise. If the Employee is not able to return to the Employee’s work or no suitable alternative position is available after the expiration of the statutory medical treatment period, then the Employee will be considered as “being unable to engage in the Employee’s original work or in other work arranged by the employer”.

  

 

7.4.

The Company may terminate the Contract in accordance with the law if the Employee is “incompetent” (meaning that the Employee (i) is unable to fulfill the Employee’s duties or performance goals as set out in the Contract, in other agreements between the Parties, in board of directors resolutions or management plans, or in relevant Company policies strictly in accordance with the management’s instructions, and/or (ii) is unable to fulfill the Employee’s duties at the level generally expected of Company employees in a similar job or persons employed from outside to perform a similar type of work), and “remains incompetent” after undergoing the usual training for the Employee’s assigned position (such training may consist placing the Employee on a performance improvement plan) or after assignment to another post (which need not carry responsibilities, a grade or a pay level equivalent to those of the original post) within the Company. In addition, if the Employee is “incompetent” but refuses or fails to participate in any performance improvement plan arranged for the Employee, or job adjustment provided by the Company, the Employee will be deemed to “remain incompetent”, and the Company may terminate this Contract in accordance with the law.

 

7.5.

If there is a major change in the objective circumstances upon which this Contract is concluded causing the Contract to no longer be performable as originally intended, then, to make the Contract performable, the Company may in its discretion offer the Employee either: (a) an existing alternative job (if an appropriate alternative job is available which may be at a different level of seniority and/or pay); or (b) putting the Employee on leave of absence and paying a basic living allowance (instead of full salary), which will be equal to the statutory local minimum wage in the location where the Contract is performed. If the Employee refuses the aforesaid offer or does not respond within fifteen 15 calendar days after receipt of the offer, then the Parties will be deemed to have failed to reach an agreement on amending the Contract to make it performable, and the Company may terminate this Contract.

 

Major changes in objective circumstances shall include but are not limited to the Company undergoing reorganization or restructuring (including but not limited to the elimination of job functions or positions), or experiencing production and operational difficulties that genuinely necessitate staff reduction, relocation, asset transfer, merger through absorption or closure of departments or offices.

 

7.6.

The Company reserves the right to require the Employee not to attend work or engage in any of the Employee’s duties of employment at any point during this Contract, including during any notice period, and may suspend the Employee during any investigation for breach of discipline or violation of the law. During any period where the Employee is instructed not to attend work, the Employee shall be deemed to have first been put on annual leave. The Employee will only receive base pay (as stated in Article 3.1 of this Contract) and statutory benefits during any period of leave; all other additional compensation and benefits including but not limited to any bonus and commission will not accrue in relation to the leave period.

 

7.7.

The Employee is required to provide at least thirty (30) days’ prior written notice to resign from the Employee’s position with the Company. The Company has the right to withhold issuing proof of termination and/or undertaking any other termination procedures until the full notice period has been completed. The Company may waive the Employee’s notice period if requested or if otherwise deemed necessary. Any waiver will be at the discretion of the Company.

 

7.8.

The Employee agrees that, at the time of leaving the employment of the Company for whatever reason, the Employee will deliver to the person designated by the Company (and will not keep in the Employee’s possession, custody or control or deliver to anyone else) all Company property, including but not limited to any and all Company chops (including without limitation the Company’s official chop, contract chop, financial chop, and any other chops belonging to the Company or any affiliated or related entity of the Company), Company-provided computer and/or laptop, car, cell phone, blackberry, and other devices, keys, badges, Company bank cards, cash advances, contracts, records, data, notes, reports, proposals, lists, correspondence, business information, client information, specifications, drawings, blueprints, sketches, inventions, copyrightable works, materials, equipment and any other documents or property belonging to the Company, its successors or assignees or their clients, customers or licensees and all reproductions or summaries of any of the aforementioned items in whatever format, whether or not they contain confidential information. The above items must be returned in a state acceptable to the Company, without damage or deletion of content. The Employee agrees that all of the foregoing, except for third party information, will remain the Company’s property at all times. Payment of the severance (if any) is expressly conditioned on the return of all Company property in acceptable form and completion of the handover procedure, and the Company reserves the right to deduct the value of any and all such unreturned or damaged Company property from any payment (such as settlement payment) payable to the Employee to the extent allowed by law.

 

 

8.

LIABILITY FOR BREACH OF CONTRACT AND COMPENSATION

 

8.1.

If either Party breaches the Contract, thereby causing the other Party to suffer damage, the Party in breach will be liable to pay compensation to the non-breaching Party for such damage.

 

8.2.

To the extent permitted by law, the Company reserves the right to deduct from the Employee’s pay an amount equivalent to the damages suffered by the Company as a result of the Employee’s breach of: (i) this Contract; (ii) any of the Company’s rules, regulations, or policies; or (iii) any instructions from the management of the Company and/or the resolutions of the board of directors of the Company, as well as any other action of the Employee that causes the Company to suffer direct monetary damages or loss.

 

9.

PROTECTION OF INFORMATION AND INTELLECTUAL PROPERTY

 

9.1.

As a condition of employment by the Company, the Employee shall enter into a Confidentiality, Inventions Assignment, Non-Competition and Non-Solicitation Agreement in the form attached to this Contract as Annex B with the Company on the same date as this Contract.

 

10.

MISCELLANEOUS PROVISIONS

 

10.1.

The Employee consents that the Company shall electronically and manually hold and process any data it collects, stores or processes which relates to the Employee, in the course of his/her employment and during the course of any non-compete period, for the purposes of the administration and management of its employees and its business and for compliance with applicable procedures, laws and regulations. It may also be necessary for the Company to forward such data to other offices they may have within or outside the PRC, including but not limited to the USA, where such data shall be stored and/or processed by the received offices, and the Employee consents to them of doing so as may be necessary from time to time.

 

10.2.

This Contract shall come into effect when it is signed by the parties and after all of the following conditions have been satisfied or waived at the sole discretion of the Company:

 

(a)

the Employee has promised that he/she is at liberty to take up employment with the Company and perform all the obligations set out in this Contract without limitation and without breaching any obligations or duties which he/she owes to a third party;

 

(b)

the Employee has obtained all necessary regulatory registrations, filings on and/or approvals for the performance of his/her duties with the Company, such as the PRC work permit, the official termination letter issued by the former employer(s) etc.

 

 

10.3.

By signing this Contract, the Employee hereby acknowledges that the Company has truthfully informed the Employee as to the content of the work, working conditions, place of work, occupational hazards, safety conditions, and salary compensation.

 

10.4.

The Employee acknowledges and agrees both prior to and during the Employee’s employment with the Company, to the collection, maintenance, use and transfer of the Employee’s personal information by the Company for human resources management, background checks, investigations, and other legitimate employment/business related purposes within and outside of the PRC. Specifically, and in addition to the foregoing, the Employee acknowledges and agrees that the Company may transfer the Employee’s personal information to its affiliated companies or vendors inside and outside the PRC for employee benefits processing and other human resources management related purposes. Personal data will be collected only for lawful and relevant purposes and all practicable steps will be taken to ensure that personal data held by the Company is accurate. If there is any change in the Employee’s personal information collected by the Company, the Employee is responsible to report such changes to the Company in a timely manner. The Company will take all practicable steps to ensure the security of the personal data and to avoid unauthorized or accidental access, or other use.

 

10.5.

The contents of the Company’s IT resources and communications systems are Company property. Therefore, employees should have no expectation of privacy in any message, files, data, document, facsimile, telephone conversation, social media post conversation or message, or any other kind of information or communications transmitted to, received or printed from, or stored or recorded on Company electronic information and communications systems. The Company reserves the right to monitor, intercept and review, without further notice, employee activities using Company IT resources and communications systems and the Employee acknowledges and consents to such monitoring by the Employee’s use of such resources and systems.

 

10.6.

Both Parties hereby acknowledge and agree that any written notice served on the other Party, either in person or posted to the Party’s address as specified in the header of this Contract (unless a Party has notified the other Party in writing of a change in address, in which case notice should be served to such Party at the last updated address), shall be deemed as valid and effective notice. Notice served in person shall be deemed effective on the day of delivery; and notice served by post shall be deemed effective on the day following the posting. Notice may also be effectively served through e-mail or other electronic messaging system, and will be deemed as effectively served on the day of transmission. Employee notice to the Company should be addressed to Human Resources.

 

10.7.

Except as otherwise provided herein, any amendment to the terms of this Contract shall be made in writing and must have the agreement of both Parties. In the event that any term hereof conflicts with the rules and regulations of the Company, this Contract will prevail. Any matters that have not been addressed in the Contract will be handled in accordance with the rules and regulations of the Company.

 

10.8.

This Contract is the entire agreement between the Parties and supersedes any and all prior oral and written agreements between the Parties, except as may be specified herein.

 

10.9.

If any Article or portion of any Article of this Contract should ever be determined to be unenforceable, it is agreed that this will not affect the enforceability of the remainder of this Contract.

 

10.10.

Any waiver by the Company of a breach of any provision of the Contract by the Employee shall not operate or be construed as a waiver by the Company of any subsequent breach of such provision or any other provision hereof.

 

 

10.11.

This Contract shall be governed by PRC law. In the event that an employment dispute arises between the Employee and the Company, the Parties will first try to resolve the dispute through consultation, and if this fails, either Party may submit the dispute to the exclusive jurisdiction of the local employment dispute arbitration tribunal proximate to the Company’s registered address, and if either Party is not satisfied with the arbitration decision, such Party may submit the dispute to the people’s court proximate to the Company’s registered address. Notwithstanding the foregoing, the Parties agree that in certain cases, where permissible by law, either Party may submit a claim directly to the exclusive jurisdiction of the court proximate to the Company’s registered address.

 

10.12.

This Contract is executed in the English and Chinese languages. Both language versions shall be equally valid.

 

10.13.

This Contract shall become effective and binding on the latest date signed below.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF the Parties have executed this Contract on the date first set forth above.

 

The Company

 

For and on behalf of Shanghai Basecamp Biotechnology Co., Ltd. (chop) 

 

/s/ Raymond Stevens
Signature

 

Raymond Stevens

Name

 

Legal Representative

Title 

 

The Employee 

 

/s/ Yingli Ma
Signature

 

Yingli Ma

Name

 

 

ANNEX A

JOB DESCRIPTION
AND
CONDITIONS OF EMPLOYMENT

 

1.

Perform duties that are normally associated with the Employee’s position of President and General Manager.

 

2.

Perform any other duties the Employee may be instructed to carry out by the Company from time to time that are reasonably within the scope of the Employee’s job position and work capabilities.

 

  

ANNEX B

Confidentiality, Inventions Assignment, Non-Competition and Non-Solicitation Agreement 

 

 

CONFIDENTIALITY, INVENTIONS ASSIGNMENT, NON-COMPETITION AND NON-SOLICITATION AGREEMENT

 

This CONFIDENTIALITY, INVENTIONS ASSIGNMENT, NON-COMPETITION AND NON-SOLICITATION AGREEMENT (this “Agreement”) is made and entered into as of May 11, 2021 (“Effective Date”), by and between Shanghai Basecamp Biotechnology Co., Ltd. (the “Company”), a limited liability company organized and existing under the laws of People’s Republic of China (“China” or the “PRC”), and the undersigned individual (the “Employee”). Unless the context otherwise requires, the term “Company” in this Agreement shall also include all subsidiary, parent or related corporations of the Company.

 

AGREEMENT

 

The Employee acknowledges that the Employee’s employment by the Company creates a relationship of confidence and trust between the Employee and the Company with respect to all Confidential Information (as defined below) of the Company.

 

In consideration and as a condition of the Employee’s employment by the Company, the compensation paid to and the benefits received by the Employee, the sufficiency of which is hereby acknowledged, the Employee is hereby agrees as follows:

 

1.

Confidential Information

 

(a)

Confidentiality. Except as herein provided, the Employee agrees that during the term of his or her employment with the Company and thereafter, he or she (i) shall keep Confidential Information (as defined below) in confidence and shall not directly or indirectly, use, divulge, publish or otherwise disclose or allow to be disclosed any aspect of Confidential Information without the Company’s prior written consent; (ii) shall refrain from any action or conduct which might reasonably or foreseeably be expected to compromise the confidentiality or proprietary nature of the Confidential Information; and (iii) shall follow recommendations made by the Board of Directors, officers or supervisors of the Company from time to time regarding Confidential Information. “Confidential Information” includes, but is not limited to, inventions (as defined in Section 3(b) below), trade secrets, confidential information, knowledge or data of the Company, or any of its clients, customers, consultants, shareholders, licensees, licensors, vendors or affiliates, that the Employee may produce, obtain or otherwise acquire or have access to during the course of his or her employment by the Company (whether before or after the date of this Agreement), including but not limited to: business plans, records, and affairs; customer files and lists; special customer matters; sales practices; methods and techniques; merchandising concepts, strategies and plans; sources of supply and vendors; special business relationships with vendors, agents, and brokers; promotional materials and information; financial matters; mergers; acquisitions; equipment, technologies and processes; selective personnel matters; inventions; developments; product specifications; procedures; pricing information; intellectual property; know-how; technical data; software programs; algorithms; operations and production costs; processes; designs; formulas; ideas; plans; devices; materials; and other similar matters which are confidential. All Confidential Information and all tangible materials containing Confidential Information are and shall remain the sole property of the Company. The Employee agrees that the Company is not obligated to pay any compensation for any of his obligations under this Section 1.

 

(b)

Limitation. The Employee shall have no obligation under this Agreement to maintain in confidence any information (i) that is in the public domain at the time of disclosure, (ii) that used to be Confidential Information, but subsequently enters the public domain other than by breach of the Employee’s obligations hereunder or by breach of another person’s or entity’s confidentiality obligations, or (iii) that is shown by documentary evidence to have been known by the Employee prior to disclosure to the Employee by the Company.

 

 

(c)

Former Employer Information. The Employee agrees that he or she has not and will not, during the term of his or her employment, (i) improperly use or disclose any proprietary information or trade secrets of any former employer or other person or entity with which the Employee has an agreement or duty to keep in confidence information acquired by the Employee, if any, or (ii) bring onto the premises of the Company any document or confidential or proprietary information belonging to such employer, person or entity unless consented to in writing by such employer, person or entity. The Employee will indemnify the Company and hold it harmless from and against all claims, liabilities, damages and expenses, including reasonable attorneys’ fees and costs of suit, arising out of or in connection with any violation of the foregoing.

 

(d)

Third Party Information. The Employee recognizes that the Company may have received, and in the future may receive, from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. The Employee agrees that the Employee owes the Company and such third parties, during the Employee’s employment by the Company and thereafter, a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person or firm and to use it in a manner consistent with, and for the limited purposes permitted by, the Company’s agreement with such third party.

 

(e)

Conflicting Activities. While employed by the Company, the Employee will not work as an employee or consultant of any other organization or engage in any other activities which conflict with the obligations to the Company, without the express prior written approval of the Company.

 

2.

Return of Confidential Material

 

In the event of the Employee’s termination of employment with Company for any reason whatsoever, the Employee agrees promptly to surrender and deliver to Company all records, materials, equipment, drawings, documents and data of any nature pertaining to any Confidential Information or to his or her employment, and the Employee will not retain or take with him or her any tangible materials or electronically stored data, containing or pertaining to any Confidential Information that the Employee may produce, acquire or obtain access to during the course of his or her employment.

 

3.

Inventions

 

(a)

Inventions Retained and Licensed. The Employee has attached hereto, as Exhibit 1, a list describing all inventions, discoveries, ideas, original works of authorship, development, improvements, technical methods, know-how, and trade secrets which were made by the Employee prior to his employment with the Company (collectively referred to as “Prior Inventions”), which belong to the Employee, relate to the Company’s proposed business, products or research and development, and are not assigned to the Company hereunder. Or if no such list is attached, the Employee represents that there are no such Prior Inventions. If in the course of the Employee’s employment with the Company, the Employee incorporates into a Company product, process, or machine a Prior Invention owned by the Employee or in which the Employee has an interest, the Company is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license to make, have made, modify, use and sell such Prior Invention as part of or in connection with such product, process, or machine.

 

 

(b)

Assignment of Inventions. The Employee hereby acknowledges and agrees that the Company shall have a complete, absolute and exclusive right, title, and interest in and for any and all inventions, discoveries, ideas, designs, copyrightable works, original works of authorship, developments, improvements, concepts, technical methods, know-how, trade secrets, and other productions or items containing intellectual properties of any nature, whether or not patentable or otherwise registrable under the laws of any countries, and whether or not reduced to practice, made or conceived by the Employee, whether solely by the Employee or jointly with others, (a) during the period of the Employee’s employment with the Company, (i) that relate in any manner to the actual or demonstrably anticipated business, work, or research and development of the Company, its affiliates or subsidiaries, or (ii) that are developed in whole or in part on the Company’s time or using the Company’s equipment, supplies, facilities or Confidential Information, or (iii) that result from or are suggested by any task assigned to the Employee or any work performed by the Employee for or on behalf of the Company, its affiliates or subsidiaries, or within the scope of the Employee’s duties and responsibilities with the Company, its affiliates or subsidiaries, and (b) within three (3) year after termination of the Employee’s employment with the Company that are related to any of the Employee’s activities during the term of the Employee’s employment with the Company (collectively referred to as “Inventions”). In the event that the Employee has any right or title to or interest in any Inventions, the Employee hereby assigns such right, title or interest to the Company. In the event that the Employee cannot assign any right or title to or interest in any Inventions to the Company, he/her hereby grants the Company an exclusive, royalty-free, assignable, irrevocable and worldwide license (including the right to sublicense through multilayered sublicensing) to exercise such right, title and interest that the Employee cannot assign to the Company. If the Employee can neither assign nor license to the Company any right, title or interest he/she may have to or in any Inventions, the Employee hereby irrevocably waives his right to assert and agrees that he/she will never assert any claims against the Company or any Company’s successor with respect to such right, title or interest that the Employee can neither assign nor license to the Company. The Employee hereby waives any moral rights to which he/she may have to the Inventions.

 

(c)

Disclosure of Inventions and Records. The Employee agrees that in connection with any Invention, (i) the Employee shall promptly disclose such Invention in writing to his immediate supervisor at the Company (which disclosure shall be received in confidence by the Company), with a copy to the Chief Executive Officer of the Company, regardless of whether the Employee believes the Invention is protected by the PRC Patent Law, the PRC Copyright Law or any other laws and regulations, in order to permit the Company to claim rights to which it may be entitled under this Agreement; and (ii) the Employee shall, at the Company’s request, promptly execute a written assignment of the title in relation to any Invention to the Company, and the Employee will preserve any such Invention as Confidential Information of the Company. The Employee agrees to keep and maintain adequate and current written records of all Inventions and sign his name thereon during the term of his employment with the Company. The records will be in the form of notes, sketches, drawings, and any other format or manner, which may be specified by the Company from time to time. The records will be available to and remain the exclusive and sole property of the Company at all times.

 

 

(d)

Patent and Copyright Registrations. The Employee agrees to assist the Company, or its designee, at the Company’s expense, in every proper way to secure the Company’s rights in the Inventions and any copyright, patents, mask work rights or other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments which the Company shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, mask work rights or other intellectual property rights relating thereto. The Employee further agrees that his obligation to execute or cause to be executed, when it is in his power to do so, any such instrument or papers shall continue after the termination of this Agreement. If the Company is pursuing any application for any PRC or foreign patents or copyright registrations covering Inventions or original works of authorship assigned to the Company as above, then the Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as his agent and attorney in fact, to act for and on the Employee’s behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent or copyright registrations thereon with the same legal force and effect as if executed by the Employee.

 

(e)

Reward, Remuneration and Other Rights. The Employee hereby agrees that the Company will reward him/her for his Inventions in accordance with the policies of the Company on rewards for employee inventions. The Company will pay reward to the Employee within three (3) months from the date of patent issue, of which the reward for an invention patent amounts to RMB3,000 and the rewards for a utility model patent or a design patent amounts to RMB1,000. The Company will pay one-time remuneration to the Employee within six (6) months from the date of patent issue, of which the remuneration for an invention patent or a utility model patent amounts to RMB3,000 and the remuneration for a design patent amounts to RMB1,000, unless otherwise agreed in writing by and between the Company and the Employee. The Employee understands that such reward, remuneration, as well as the salary and other compensation the Company pays in accordance with his Employment Contract with the Company constitute all the reward and remuneration the Employee is entitled to for the Inventions (including but not limited to the “reward” and “reasonable remuneration” set forth in Article 16 of the PRC Patent Law). The Employee hereby irrevocably waives any claim against the Company for any other reward or remuneration for any Inventions, regardless of whether the Company implements or licenses such Inventions or whether the Company makes any profit or receives any royalty payment or license fees from such Inventions. The Employee hereby also irrevocably waives any residual rights (including but not limited to the right of first refusal under the PRC Contract Law) to the Inventions that the Employee may have when the Company sells, transfers or otherwise disposes of the Inventions.

 

4.

Noncompetition Obligation

 

In consideration of the receipt by the Employee of Confidential Information and that the work of the Employee involves commercial secrets of the Company, the Employee agrees to perform the obligations set forth in this Clause, which obligations the Employee recognizes are applicable to the Employee under the applicable laws and regulations (including without limitation the Employment contract Law of the People’s Republic of China). The Employee agrees that during his employment with the Company, he/she will not engage directly or indirectly, whether as an employee, consultant, or in any other capacity, in any other business (including the Employee’s own business), which involves the development, management, or sale of technologies or products that are the same as or similar to those developed, managed, or sold by the Company or in any other business that involves any services the same as or similar to those provided by the Company.

 

 

The Employee further agrees not to, in the capacity of employee, advisor or otherwise, directly or indirectly participate in the development, operation or sale of any technology or products or business (including his own business) identical or similar to the technology or products the Employee develops, operates or sells before leaving his office or be engaged in other services identical or similar to the services the Employee actually provides before leaving his office within two (2) years after the release or termination of the employment between the Employee and the Company (the “Non-Compete Period”).  During the Non-Compete Period, the Employee shall continue to perform the non-compete obligations hereunder, and the Company agrees to pay compensations to the Employees on a monthly basis in an amount equal to thirty percent (30%) of the average monthly salary of the Employee in the twelve-month period immediately prior to the termination of his employment on the tenth (10th) day of the next calendar month. If the Employee has only been employed by the Company for less than a year, then the average monthly salary of the Employee shall be calculated by the actual length of his/her employment. The Company may withhold individual income tax for the Employee if required by the applicable laws and regulations. The Employee agrees that the compensation is sufficient and reasonable.  Notwithstanding the foregoing, the Employee hereby agrees that the Company shall have the right to decide in its sole discretion to exempt the Employee from the non-compete obligations at any time and pay compensation for any elapsed non-compete period to the Employee as required by law, and the Company will not pay any additional consideration for such obligations for the remainder of the period. After termination of the employment but before the Company making the payment of the compensation, the Employee shall provide the Company with the letter of employment issued by the new employer (including the new employer's contact details and the statements of the social insurance payment) or the original copy of an valid un-employment certificate issued by the local labour and social insurance department which has jurisdiction over the Employee’s registered domicile, valid postal address, telephone number and the bank account number of the Employee to receive the economic compensation. If the Employee changes his/her employer, the Employee shall provide the Company the supporting documentary evidence of the new employer. If the Employee fails to provide the aforesaid documents, the Company is entitled to suspend the payment of the economic compensation to the Employee without releasing the Employee’s duty of non-competition.

 

5.

Non-solicitation Obligation

 

The Employee agrees that during his employment with the Company and for three (3) years following termination of his employment for any reason, he or she will not either for the Employee himself/herself or for any other person or entity (i) directly or indirectly, or attempt to solicit, induce, recruit or encourage any of the Company’s employees to leave their employment, or take away such employees; or (ii) directly or indirectly solicit the business of any client or customer of the Company (other than on behalf of the Company), or directly or indirectly induce or influence the client or customer of the Company for them to restrict or cancel the business relationship with the Company. The Employee hereby agrees that the Company is not obligated to pay additional consideration for this non-solicitation obligation.

 

6.

Remedies for Violation

 

The Employee hereby acknowledges that the Employee’s obligations set forth in this Agreement are reasonable and necessary to protect the legitimate interests of the Company. In the event that the Employee breaches the obligations of confidentiality and non-competition under this Agreement, the Employee agrees that he/she shall compensate the Company for any damages the Company suffers as a result of the Employee’s breach. The Employee acknowledges that any violation of this Agreement will cause substantial and irreparable harm to the Company so that monetary damages alone would not be an adequate remedy for such violation. Therefore, if the Company reasonably believes that any actual or threatened breach of this Agreement has taken place or will take place, the Company is entitled to, in addition to any other remedies it may have, injunctive or any other equitable relief to enforce this Agreement.

 

 

7.

Effectiveness of Agreement

 

In the event it is determined by a court of competent jurisdiction or a duly empanelled arbitral tribunal that any provision of this Agreement is unenforceable by reason of its extending for too great a period of time, over too large a geographic area, or over too great a range of activities, then such provision should be interpreted to extend over only the maximum period of time, geographic area, or range of activities as to which it may be enforceable.

 

8.

Notification of New Employer

 

In the event that the Employee leaves the Company’s employ, the Employee hereby agrees and promises that he/she will, and agrees that the Company can, notify the Employee’s new employer of the Employee’s rights and obligations under this Agreement.

 

9.

Representations

 

The Employee agrees to execute any proper oath or verify any proper document required to carry out or evidence compliance with the terms of this Agreement. The Employee represents that his or her performance of all the terms of this Agreement, and as an employee of the Company, will not breach any agreement to keep in confidence proprietary information acquired by the Employee in confidence or in trust prior to the Employee’s retention by the Company. The Employee has not entered into, and the Employee agrees that he or she will not enter into, any oral or written agreement in conflict with this Agreement.

 

10.

Dispute Resolution

 

Any claim, controversy or dispute arising from the execution of, or in connection with, this Agreement shall be submitted to a competent People’s Court in the place where the Company is formed, unless otherwise required by the applicable laws or regulations.

 

11.

Governing Law

 

This Agreement will be governed by the laws of the PRC.

 

12.

Entire Agreement

 

This Agreement sets forth the entire agreement and understanding between the Company and the Employee relating to the subject matter herein and merges all prior discussions and agreements between the parties with respect that subject matter. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing signed by the parties. Any subsequent change(s) in the Employee’s duties, salary or compensation will not affect the validity or scope of this Agreement.

 

13.

Severability

 

If one or more of the provisions in this Agreement are deemed void by law, then the remaining provisions will continue in full force and effect.

 

14.

Successors and Assigns

 

This Agreement will be binding upon the Employee’s heirs, executors, administrators and other legal representatives and will be for the benefit of the Company, its successors, and its assigns. The Company may assign any of its rights and obligations under this Agreement. No other party to this Agreement may assign, whether voluntarily or by operation of law, any of its rights and obligations under this Agreement, except with the prior written consent of the Company.

 

15.

Counterparts

 

This Agreement may be signed in two counterparts, each of which shall be deemed an original and both of which shall together constitute one and the same instrument.

 

[Signatures page follows]

 

 

IN WITNESS WHEREOF, the Company and the Employee have caused this Agreement to be executed on the date first written above in two (2) originals.

 

(Shanghai Basecamp Biotechnology Co., Ltd.) 

 

(Signature)：	/s/ Raymond Stevens
(Name)：	Raymond Stevens
(Title)：	Legal Representative

 

(Signature)：	/s/ Yingli Ma
(Name)：	Yingli Ma

 

  

EXHIBIT 1

LIST OF PRIOR INVENTIONS AND ORIGINAL WORKS OF AUTHORSHIP

 

(Title)	(Date)	(Identifying Number or Brief Description)

 

 

 

 

Exhibit 10.12

 

December 10th, 2021

 

Daniel Welch

[***]

[***]

 

Dear Dan:

 

We are delighted that you have agreed to join the Board of Directors (the “Board”) of ShouTi Inc. (the “Company”) and to serve as the Chairman of the Board. This letter sets forth the agreement between you and the Company regarding your Board membership (the “Agreement”):

 

1.            Appointment as Board Member. Your service as a Board member will be effective as of the date the requisite Board and shareholder approvals of your appointment are obtained and will be subject to and in accordance with the applicable provisions of the laws of the Cayman Islands and the Company’s Amended and Restated Memorandum and Articles of Association (as may be amended from time to time).

 

2.            Appointment as Chairman of the Board. You will be appointed as the Chairman of the Board, which appointment will be effective as of the date of the Board resolutions appointing you to serve as the Chairman and for the period so long as you are appointed to serve as such capacity by the Board.

 

3.            Compensation.

 

a.            You will be paid a fixed fee of US$160,000 per fiscal year, as compensation for services performed as a member of the Board (the “Board Service Fee”). The Board Service Fee shall be payable in equal quarterly installments, payable in arrears on the last day of each fiscal quarter in which the service occurred (beginning with the fiscal quarter during which your Board service commences), and prorated for any partial quarters served. As additional consideration for services performed as the Chairman of the Board, you will be eligible for a separate fee of up to US$64,000 per fiscal year (the “Board Chair Service Fee”). Whether you receive a Board Chair Service Fee for any given fiscal year, and the amount of any such Board Chair Service Fee, will be determined in the sole discretion of the Board (or the Compensation Committee of the Board), which determination will be based upon the Company’s and the Board’s objectives and milestones as established by the Board. The Board Chair Service Fee, if any, will be a lump sum payment paid to you promptly after the Board (or the Compensation Committee of the Board) determines the amount of such Board Chair Service Fee following the end of the fiscal year to which such fee is applicable, and you must remain the Chair of the Board on the date the Board Chair Service Fee is paid in order to be eligible for such fee. Both the Board Service Fee and the Board Chair Service Fee shall be subject to review from time to time at the discretion of the Board, including in connection with the Company’s preparation for its initial public offering.

 

 

b.            In addition, subject to approval by the Board, you will be granted an initial nonstatutory option to purchase 1,179,122 ordinary shares of the Company (the “Option”). The Option will be governed by a separate option agreement and the Amended and Restated ShouTi Inc. 2019 Equity Incentive Plan, as may be amended (the “Plan”). The exercise price per share will be equal to the fair market value per share of the Company’s ordinary shares on the grant date of the Option, as determined by the Board. As more fully set forth in your option agreement and the Plan, one-third (1/3rd) of the ordinary shares subject to the Option will vest one (1) year after the vesting commencement date, with the balance of the ordinary shares subject to such Option vesting in a series of twenty-four (24) successive equal monthly installments subject to your continued service to the Company.

 

4.            Confidentiality.

 

a.            In your capacity as a director of the Company and/or a member of any committee of the Board (if applicable), you will be expected not to use or disclose any confidential information, including, but not limited to, trade secrets of any current and/or former employer or other person or entity to whom you have an obligation of confidentiality. Rather, you will be expected to use only information that is generally known and used by persons with training and experience comparable to your own, that is common knowledge in the industry or otherwise legally in the public domain, or that is otherwise provided or developed by the Company.

 

b.            In addition, during the term of your services as a director and/or a member of any committee of the Board (if applicable) and after termination of such services, you will not disclose any Company confidential proprietary information, or any information of a third party provided to you by the Company, which includes but is not limited to, all non-public tangible and intangible manifestations regarding patents, copyrights, trademarks, trade secrets, technology, inventions, works of authorship, business plans, data or any other confidential knowledge without the prior written consent of the Company.

 

5.            Miscellaneous. Each payment to you pursuant to this Agreement shall be subject to withholding of any applicable taxes required to be withheld from such payment. This Agreement, and all disputes arising under or related to it, shall be governed by the substantive law of the State of California. This Agreement, and the rights and obligations of you and the Company hereunder, shall inure to the benefit of and shall be binding upon, you, your heirs and representatives, and upon the Company and the Company’s successors and assigns. This Agreement may not be assigned. Any assignment in contravention of this Section shall be null and void. In the event that any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior and contemporaneous conflicting agreements, promises, covenants, arrangements, understandings, communications, representations or warranties, whether oral or written, by any party hereto (or representative of either party hereto). No provision of this Agreement may be modified, amended, waived or discharged unless such waiver, modification, amendment or discharge is agreed to in writing and signed by you and a duly authorized disinterested member of the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

 

 

6.            Termination. This Agreement shall automatically terminate upon the earlier of (i) immediately before the consummation of the Company’s initial public offering (in which case we expect non-employee Board compensation to be set forth in a separate compensation policy consistent with publicly-traded companies and commensurate with the services provided by the Board member), or (ii) three (3) years after your commencement of service as a member of the Board; provided, however, that the termination of this Agreement shall not terminate your service as a member of the Board which service shall terminate or expire in accordance with the applicable provisions of the laws of the Cayman Islands and the Company’s Amended and Restated Memorandum and Articles of Association (as may be amended from time to time).

 

If the foregoing correctly conforms to your understanding of the agreement between you and the Company, please sign and date the enclosed copy of this letter and return it to us.

 

Very truly yours,

 

ShouTi Inc.

 

/s/ Raymond Stevens
Raymond Stevens, Ph.D.
Chief Executive Officer

 

Accepted and agreed:

 

/s/ Daniel Welch
Daniel Welch

Date: 12/10/2021

 

 

Exhibit 10.14

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.

 

COLLABORATION AGREEMENT

 

This Collaboration Agreement (the “Agreement”) is effective as of October 9, 2020 (the “Effective Date”) by and between Schrödinger, LLC, a Delaware limited liability company, having an address of 120 West 45th Street, 17th Floor, New York, New York 10036 (“Schrödinger”), and Lhotse Bio, Inc., a Delaware corporation having an address of 611 Gateway Blvd Suite 223, South San Francisco, CA 94080 (“Lhotse”). Each of Schrödinger and Lhotse may hereinafter be referred to as a “party” to this Agreement or collectively as the “parties”.

 

Whereas, ShouTi Inc., a Delaware corporation and an affiliate of Lhotse (“ShouTi”), and Schrödinger are parties to that certain letter agreement dated October 5, 2019 by and among ShouTi, Schrödinger, Annapurna Bio, Inc. and Gasherbrum Bio, Inc. (the “2019 Letter Agreement”) concerning, among other things, a drug discovery collaboration aimed at discovering and developing novel, orally bioavailable, small molecule inhibitors of Lysophosphatidic acid receptor 1 (the “Target”), in anticipation of the entry of this Agreement upon formation of Lhotse;

 

Whereas, concurrently with the execution and delivery of this Agreement, ShouTi, Lhotse and Schrödinger are entering into an Assignment and Assumption Agreement, under which ShouTi assigns to Lhotse, and Lhotse assumes from ShouTi, all ShouTi’s rights and obligations under the 2019 Letter Agreement; and

 

Whereas, Lhotse and Schrödinger desire to enter into a drug discovery collaboration aimed at discovering and developing novel, orally bioavailable, small molecule inhibitors of the Target, on the terms and subject to the conditions set forth herein.

 

Now, Therefore, in consideration of the foregoing premises and the mutual covenants contained herein, the parties agree as follows:

 

1.

Definitions

 

1.1            “Affiliate” shall mean any company or entity that directly or indirectly, through one or more intermediaries, is controlled by, controlling, or under common control with a party hereto. The term “control”, for purposes of this definition, means the ownership of more than fifty percent (50%) of the equity (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) entitled to vote regarding composition of the board of directors or other body entitled to direct the affairs of a party or the power to direct or cause the direction of the management and policies of a party, whether through the ownership of voting securities, by contract or otherwise, and “controlled by” and “under common control with” shall have correlative meanings. For clarity, as of the Effective Date, Schrödinger, Inc. is an Affiliate of Schrödinger, LLC.

 

1.2            “Collaboration Invention” shall have the meaning provided in Section 3.1.

 

 

1.3            “Collaboration Compound” shall mean (a) any chemical compound identified, generated, developed or discovered by Schrödinger or its Affiliates on behalf of Lhotse, either solely or jointly with Lhotse, during the Term in accordance with the Work Plan and the terms of this Agreement, and (b) all salts, hydrates, solvates, esters, metabolites, intermediates, stereoisomers, polymorphs, and any derivatives or modifications of any of the compound set forth in the foregoing clause (a), in each case of (a) and (b) that are directed to and inhibit the Target as its mechanism of action.

 

1.4            “Collaboration Product” shall mean any pharmaceutical product that contains a Collaboration Compound as an active ingredient, alone or in combination with one or more other active ingredients, in any formulations, dosage forms, strengths and delivery modes.

 

1.5            “Confidential Information” shall mean the terms of this Agreement and any confidential or proprietary information of a party or its Affiliates, including, without limitation, information related to Collaboration Inventions or Results, and any other information relating to any techniques, technology, practices, trade secrets, inventions (whether or not patentable), methods, knowledge, know-how, skill, experience, test data, results (including pharmacological, toxicological and clinical test data and results), analytical and quality control data, results or descriptions, software, technology, compounds, compositions of matter, cells, cell lines, assays and physical, biological or chemical material, whether in oral, written, graphic or electronic form; in each case which is disclosed or furnished to the other party.

 

1.6            “Control” shall mean a party’s possession of the ability to grant the other party hereto a license, sublicense or other access to such party’s Intellectual Property in accordance with the terms of this Agreement, without such party being obligated to pay any additional fees (unless the party in the position of being a potential sublicensee of such Intellectual Property is willing to pay such additional fees) to or violating the terms of any agreement or other contractual arrangement it has with any Third Party as a result thereof.

 

1.7            “DC Milestone” shall mean the initiation of GLP toxicology studies with respect to the relevant compound by Lhotse (or any of its Affiliates), any of Lhotse’s (or any of its Affiliates’) collaboration partners or any Third Party performing services on behalf of Lhotse (or any of its Affiliates).

 

1.8            “FDA” shall mean the U.S. Food and Drug Administration and its successor.

 

1.9            “Fully Diluted” shall have the meaning provided in Section 2.2.

 

1.10          “GLP” shall mean, with respect to a particular activity or non-clinical study conducted by or on behalf of a party, that such activity or non-clinical study was conducted in accordance with “good laboratory practices” as set forth in 21 C.F.R. Part 58, the United States Animal Welfare Act, the International Conference on Harmonization’s (“ICH”) Guideline on Nonclinical Safety Studies for the Conduct of Human Clinical Trials for Pharmaceuticals or the ICH Guideline on Safety Pharmacology Studies for Human Pharmaceuticals.

 

1.11          “Indemnifying Party” shall have the meaning provided in Section 7.2.

 

 

1.12          “Initiation” of a clinical trial shall mean the dosing for the first human patient enrolled in such clinical trial.

 

1.13          “Intellectual Property” shall mean all rights in any intellectual property or industrial property now known or hereafter recognized anywhere in the world, including the following: (i) patents, Collaboration Inventions (whether or not patentable), and all applications or registrations in any jurisdiction pertaining to the foregoing, including all provisional applications, reissues, continuations, divisions, continuations-in-part, utility models, renewals or extensions thereof; (ii) trade secrets, including confidential and other non-public information with respect to business or scientific activities, and the right in any jurisdiction to limit the use or disclosure thereof; (iii) copyrights or similar rights in writings, designs, mask works, or other works of authorship, and registrations or applications for registrations of copyrights in any jurisdiction; (iv) trademarks and service marks (registered or unregistered), trade dress, trade names, and other names and slogans embodying business or product goodwill or indications of origin, and all applications or registrations in any jurisdiction pertaining to the foregoing; and all goodwill associated therewith; and (v) Internet Web sites, domain names and registrations or applications for registration thereof. Examples of property that typically embody Intellectual Property include, without limitation, software programs (in source and object code forms), algorithms, methods, computer-generated models based on the analysis of structure-activity relationships, and proprietary databases.

 

1.14          “JSC” shall have the meaning provided in Section 2.3(a).

 

1.15          “Lhotse Indemnified Party” shall have the meaning provided in Section 7.1.

 

1.16          “Lhotse Background Intellectual Property” shall mean Intellectual Property possessed, owned or Controlled by Lhotse prior to or independent of this Agreement. For clarity, the Lhotse Background Intellectual Property excludes Schrödinger Intellectual Property and Schrödinger Improvements (defined in Section 3.1(d) below).

 

1.17          “Liabilities” shall have the meaning provided in Section 7.1.

 

1.18          “Materials” shall have the meaning provided in Section 2.8.

 

1.19          “Net Sales” shall mean the gross amount received by Lhotse, its Affiliates, licensees or sublicensees for sale of the Collaboration Product to independent Third Parties during each calendar quarter less the following amounts incurred or paid by the selling party with respect to the sale of the Collaboration Product: (a) [***]; (b) [***]; (c) [***]; (d) [***]; (e) [***].

 

If a Collaboration Product is sold in a country or region in combination with another active pharmaceutical ingredient or component that is not a Collaboration Compound, then Net Sales, for the purposes of determining royalty payments on the combination, shall be calculated using one of the following alternative methods:

 

(x)             by [***], during the relevant reporting period, of the Collaboration Product that contains the Collaboration Compound as its only active ingredient when sold separately in such country or region, and [***], during the relevant reporting period, of the other active ingredients or components in the combination when sold separately in such country or region; or

 

 

(y)             if no such separate sales in such country or region are made of the Collaboration Product that contains the Collaboration Compound as its only active ingredient or any of the other active ingredients or components in such combination during the relevant reporting period, Net Sales, for the purposes of determining royalty payments on the combination, shall be calculated using the above formula (i.e., [***]) where [***] of the Collaboration Product that contains the Collaboration Compound as its only active ingredient when sold separately in such country or region, and [***] of the other active ingredients or components in the combination when sold separately in such country or region, as reasonably estimated by the selling party.

 

1.20          “NDA” shall mean a New Drug Application, as defined in the U.S. Food, Drug and Cosmetic Act and applicable regulations promulgated thereunder by the FDA.

 

1.21          “Non-Disclosure Agreement” shall have the meaning provided in Section 5.1.

 

1.22          “Phase 2 Clinical Trial” shall mean a study of a pharmaceutical product in human patients to determine initial efficacy and dose range and/or regimen finding before embarking on Phase 3 Clinical Trials, as further defined in 21 C.F.R. 312.21(b), as amended from time to time, or the corresponding foreign regulations.

 

1.23          “Phase 3 Clinical Trial” shall mean a pivotal study of a pharmaceutical product in human patients with a defined dose (or a set of defined doses) designed to ascertain efficacy and safety of such product for the purpose of enabling the preparation and submission of NDA to the FDA or corresponding foreign regulatory authorities, as further defined in 21 C.F.R. 312.21(c), as amended from time to time, or the corresponding foreign regulations

 

1.24          “Program” shall have the meaning provided in Section 2.1.

 

1.25          “Quarter” shall have the meaning provided in Section 2.8.

 

1.26          “Results” shall have the meaning provided in Section 2.5.

 

1.27          “Royalty Term” shall have the meaning provided in Section 2.10(b).

 

1.28          “Schrödinger Indemnified Party” shall have the meaning provided in Section 7.2.

 

1.29          “Schrödinger Intellectual Property” shall mean the Intellectual Property embodied in the Schrödinger Technology, Schrödinger Knowhow and Schrödinger Library.

 

1.30          “Schrödinger Knowhow” shall mean the proprietary techniques, methods, workflows and knowhow of Schrödinger and its licensors that are employed by Schrödinger to perform its services under the Program or that are necessary or reasonably useful for Lhotse to conduct the activities assigned to Lhotse under the Program.

 

1.31          “Schrödinger Library” shall mean the compilation prepared by Schrödinger of lead- and drug-like compounds that are offered commercially by Third Party suppliers.

 

1.32          “Schrödinger Technology” shall mean the proprietary software, programs, tools and technology possessed, owned or Controlled by Schrödinger.

 

 

1.33          “Term” shall have the meaning provided in Section 6.1.

 

1.34          “Third Party” shall mean any entity other than Schrödinger or Lhotse or their respective Affiliates.

 

1.35          “Work Plan” shall mean the written plan for the activities to be conducted by the parties hereunder. The initial Work Plan has been agreed upon in writing by the parties as of the Effective Date and is attached hereto as Exhibit A. Any amendments or revisions to the Work Plan shall be mutually agreed upon by the parties in writing.

 

1.36          “Valid Claim” shall mean a claim of (a) any issued and unexpired patent that has not been held unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and has not been admitted to be invalid or unenforceable through abandonment, reissue, disclaimer or otherwise; or (b) any pending patent application that has not been pending for more than [***] ([***])[***] from its earliest priority date.

 

1.37          “Work Product” shall mean the tangible work product delivered by Schrödinger to Lhotse in connection with Schrödinger’s performance of its obligations under the Work Plan. The “Work Product” excludes the Schrödinger Intellectual Property and Schrödinger Improvements.

 

2.

Conduct of the Collaboration

 

2.1            Collaboration. During the Term (defined in Section 6.1 below) of this Agreement, the parties agree to conduct a collaborative drug discovery project aimed at discovering and developing novel and orally available small molecule inhibitors of the Target (the “Program”) in accordance with the Work Plan and the terms of this Agreement. Generally, Schrödinger agrees to provide computational modeling and design support, and Lhotse agrees to provide day-to-day chemistry and biology support. Lhotse acknowledges and agrees that Schrödinger’s ability to perform its obligations depends upon Lhotse’s fulfillment of its obligations as set forth in this Agreement, including reasonably cooperating with Schrödinger and providing Schrödinger with accurate information and data in a reasonable and timely manner during the collaboration. Schrödinger will not be responsible for any deficiency or delay in performing its obligations as set forth in this Agreement to the extent such deficiency or delay results from Lhotse’s failure to fulfill its obligations as set forth in this Agreement. Notwithstanding the foregoing, the parties acknowledge the experimental nature of the collaboration, and neither party shall have any liability to the other with respect to such party’s failure to produce a specific substantive result.

 

2.2            Assignment. Reserved.

 

 

2.3            Joint Steering Committee; Technical Leads.

 

(a)            Within [***] ([***]) [***] after the Effective Date, the parties shall form a joint steering committee (the “JSC”), which shall be responsible for the general oversight of the research carried out hereunder, including without limitation: (i) reviewing the goals, strategy, milestone events, Results of the Work Plan (set forth in Exhibit A) and the activities performed thereunder, (ii) recommending and approving changes to the Work Plan; (iii) assigning relative priorities in the Work Plan; (iv) terminating any specific activities under the Work Plan; (v) determining whether the events constituting the DC Milestone have occurred; (vi) whether to continue pursuing the Program with respect to the Target; and (vii) resolving any disagreements between the parties concerning the research and development activities carried out under this Agreement. Each party shall designate [***], [***] of whom shall be authorized to make decisions on behalf of the designating party and shall have significant experience and expertise in the research and development of pharmaceutical compounds. Each party shall have the right, at any time, to designate by written notice to the other party, a replacement for any of such party’s [***] on the JSC. The JSC shall endeavor to work by consensus. Decisions of the JSC shall be made in writing and be included in an amendment to the Work Plan. Where consensus cannot be reached or unanimity is not achieved, the disputed matter shall be referred to the relevant senior management of the Parties who shall promptly meet and endeavor to come to an agreement in a timely manner. The JSC will notify the relevant senior management of the parties in writing that a milestone event has occurred no later than [***] ([***]) [***] after making such a determination, which determination shall be made by the JSC as soon as possible after the occurrence of such event. The JSC shall meet at such times as the members deem appropriate to perform the duties of the JSC.

 

(b)            Technical Leads: Lhotse’s technical lead will be [***], who will facilitate communications between the parties in the course of the activities contemplated by this Article 2. Schrödinger shall also assign a technical lead for the collaboration. The Technical Leads shall meet in person or by teleconference or videoconference at least quarterly to discuss technical aspects of the activities contemplated by this Agreement. For clarity, a technical lead may also serve on the JSC.

 

2.4            Performance Standards. Each party shall perform the activities specifically assigned to it under the Work Plan at its sole cost and expense. Each party shall conduct its activities under the Work Plan in good scientific manner, and in compliance in all material respects with the requirements of applicable laws and regulations, to attempt to achieve its objectives efficiently and expeditiously. Each party shall contribute such personnel and resources as are reasonably necessary to carry out the activities to be performed by such party pursuant to the Work Plan. In conformity with standard pharmaceutical and biotechnology industry practices and the terms and conditions of this Agreement, each party shall prepare and maintain, or shall cause to be prepared and maintained, complete and accurate written records, accounts, notes, reports and data with respect to activities conducted pursuant to the Work Plan.

 

2.5            Results. Each party shall keep the other party fully informed as to (a) all discoveries and technical developments (including, without limitation, any Collaboration Inventions) and (b) any and all information, data and results that, with respect to all of the items specified in (a) and (b), relate to the Target and/or any small molecule compound directed thereto made or obtained from conducting the Program activities assigned to it under the Work Plan (collectively, the “Results”) which disclosure shall include, without limitation, copies of relevant summaries and reports including a report of the Virtual Screen Results as defined in Section 3.1 below. Nothing herein shall require either party to disclose information received from a Third Party that remains subject to bona fide confidentiality obligations. All information and reports disclosed hereunder shall be subject to Articles 3 and 5.

 

 

2.6            Exclusivity. During the Term of this Agreement, or, if longer, during any period not to exceed [***] ([***]) [***] from the date of achievement of the DC Milestone in which any relevant compound having activity against the Target and identified in connection with services performed by Schrödinger under the Program is in “active development” by Lhotse, Target Exclusivity (defined below) shall apply. For purposes of this Section 2.6, a compound shall cease to be in “active development” if it is not the subject of pre-clinical and/or clinical drug development activities by Lhotse for a consecutive period of [***] ([***]) [***]. “Target Exclusivity” means Schrödinger shall not design, research, develop, or commercialize compounds or conduct virtual screens of compounds that directly and primarily inhibit the Target, whether on its or its’ Affiliates’ own behalf or on behalf of any Third Party. For clarity, the foregoing exclusivity obligation shall not apply to the following services and activities: (a) [***], (b) [***], (c) [***], (d) [***] (e) and (f) [***].

 

2.7            Materials Transfer. In order to facilitate the Program and provided the receiving party has consented, either party may provide to the other party certain biological materials or chemical compounds including, but not limited to, the Target, ligands known to interact with the Target, protein crystals relating to the Target and reagents (collectively, “Materials”) Controlled by the supplying party (other than under this Agreement) for use by the other party in furtherance of the Program. Except as expressly provided under this Agreement, all such Materials delivered to the other party will remain the sole property of the supplying party, will be used only in furtherance of the Program and solely under the control of the other party, will not be used or delivered to or for the benefit of any Third Party without the prior written consent of the supplying party, and will not be used in research or testing involving human subjects except as permitted by applicable law. The Materials, if any, supplied under this Section 2.7 must be used with prudence and appropriate caution in any experimental work, because not all of their characteristics may be known.

 

2.8            Active Program Payments. Lhotse shall notify Schrödinger in writing by the last day of each three (3) consecutive month period (“Quarter”) beginning September 1, 2020 as to whether Schrödinger should continue performing under the Work Plan during the following Quarter, subject to agreement by Schrödinger, and shall make a payment of [***] (“Active Program Payment”) to Schrödinger as full consideration for such performance. Such payment shall be due and payable in advance as of the last day of the Quarter. The parties agree and acknowledge that such notice was deemed to have been given by Lhotse and agreed upon by Schrödinger as of August 31, 2020 for the Quarter beginning September 1, 2020 such that an Active Program Payment is due and payable. If Lhotse fails to provide such notice or make such payment, Schrödinger may cease performing services under this Agreement without any liability or further obligation whatsoever to Lhotse or any Affiliate of Lhotse resulting from such cessation of services.

 

2.9            Milestone Payments. Lhotse shall pay to Schrödinger the following milestone payments upon the first achievement of the corresponding milestone event set forth in the table below for any Collaboration Product. Lhotse shall promptly notify Schrödinger upon the first achievement of any milestone event set forth in this Section 2.9 and shall pay to Schrödinger the corresponding milestone payment within [***] ([***]) [***] after the first achievement of such milestone event. Each milestone payment set forth herein shall be due and payable only once, regardless of how many times such milestone event is achieved and/or the number of Collaboration Products that achieve such milestone event. The aggregate milestone payments under this Section 2.9(a) shall not exceed seventeen million dollars (US$17,000,000).

 

 

Milestone Events for the Collaboration Product	Milestone Payment
1)     [***]	[***]
2)     [***]	[***]
3)     [***]	[***]
4)     [***]	[***]
Total	$17,000,000

 

2.10          Royalty Payments.

 

(a)            In addition, Lhotse shall make [***] royalty payments to Schrödinger on the worldwide Net Sales of each Collaboration Product, as calculated by multiplying the applicable royalty rate set forth in the table below by the corresponding amount of annual worldwide Net Sales of each Collaboration Product in the applicable calendar year.

 

For that portion of annual worldwide Net Sale of each Collaboration Product		Royalty Rate
1)     less than or equal to	[***]	[***]
2)     greater than but less than or equal to	[***]	[***]
3)    greater than	[***]	[***]

 

(b)            Royalty Term. Lhotse’s obligation to pay royalties pursuant to this Section 2.10 shall continue, on a Collaboration Product-by-Collaboration Product and country-by-country basis, until the later of (i) the expiration of the last-to-expire Valid Claim of any patent owned by Lhotse that covers the composition of matter of the Collaboration Compound contained in such Collaboration Product in such country and (ii) expiration of any applicable regulatory, pediatric, orphan drug or data exclusivity with respect to such Collaboration Product and (iii) or [***] ([***]) [***] after the first commercial sale of such Collaboration Product in such country (the “Royalty Term”).

 

(c)            Royalty Conditions. The royalties under this Section 2.10 shall be subject to the following conditions:

 

(i)            only one (1) royalty shall be due with respect to each unit of Collaboration Product, without regard to whether there is more than one Valid Claim covering such Collaboration Product;

 

(ii)           no royalties shall be due upon the sale or transfer of the Collaboration Product among Lhotse, its Affiliates, licensees and sublicensees, but in such cases the royalty shall be due and calculated upon Lhotse’s, its Affiliate’s, licensee’s or sublicensee’s Net Sales of Collaboration Product to any independent Third Party;

 

 

(iii)          the Net Sales of the Collaboration Product sold in a country after the expiration of the Royalty Term for such Collaboration Product in such country shall not be included in the calculation of worldwide annual Net Sales to determine the applicable royalty tiers.

 

(d)            Royalty Reductions.

 

(i)             If a Collaboration Product is sold in a country during the applicable Royalty Term at a time when there is a generic equivalent (i.e. the same composition of matter as the Collaboration Product) also being sold in such country, then the royalty rate applicable to the Net Sales of such Collaboration Product in such country during such time shall be reduced by [***] ([***]) of the average royalty rate otherwise applicable to the Net Sales for such Collaboration Product under Section 2.10(a); provided, however, that the average royalty rate after such reduction shall not be less than [***] ([***]).

 

(ii)           If Lhotse, its Affiliate, licensees or sublicensee obtains a license to any patent or know-how owned or controlled by a Third Party in order to develop, manufacture or commercialize the Collaboration Product, then Lhotse shall have the right to deduct, from the royalty payment that would otherwise have been due pursuant to this Section 2.10, an amount equal to [***] ([***]) of the amount paid by Lhotse, its Affiliate, licensee or sublicensee to such Third Party pursuant to such license; provided, however, that the deduction taken under of this Section 2.10(d)(ii) shall not exceed [***] ([***]) of the royalties that would otherwise due [***] and that the average royalty rate after such deduction shall not be less than [***]%.

 

(e)            Royalty Report and Payment. Within [***] ([***]) [***] after the end of [***], commencing with the first commercial sale of any Collaboration Product anywhere in the world, Lhotse shall provide Schrödinger with a royalty report that contains the following information for the applicable [***], on a Collaboration Product-by-Collaboration Product and country-by-country basis: (i) the amount of gross sales of the Collaboration Product, (ii) a calculation of Net Sales of the Collaboration Product, (iii) a calculation of the royalty payment due on such Net Sales, and (iv) the exchange rate for such country. Concurrent with the delivery of the applicable [***] report, Lhotse shall pay Schrödinger within the royalties owed with respect to the Net Sales of the Collaboration Product for such [***].

 

2.11          Currency; Exchange Rate. All payments to be made by Lhotse to Schrödinger under this Agreement shall be made in US dollars by bank wire transfer in immediately available funds to a bank account designated by written notice from Schrödinger. The rate of exchange to be used in computing the amount of currency equivalent in US dollars shall be made at the average of the closing exchange rates reported in The Wall Street Journal (U.S., Eastern Edition) for the first, middle and last business days of the applicable reporting period for the payment due.

 

2.12          Blocked Currency. If the conversion of a local currency in a country into US dollars or transfer of funds out of a country becomes materially restricted, forbidden or substantially delayed due to applicable laws, then Lhotse shall promptly notify Schrödinger and amounts accrued in such country may be paid by Lhotse in local currency into an account in a local bank designated by Schrödinger, unless the Parties otherwise agree.

 

 

2.13          Taxes.

 

(a)            Taxes on Income. Each Party shall be solely responsible for the payment of all taxes imposed on its share of income arising directly or indirectly from the activities of the Parties under this Agreement. For clarity, all payment amounts set forth herein are on a pre-tax basis.

 

(b)            Tax Cooperation. The Parties agree to cooperate with one another and use reasonable efforts to avoid or reduce tax withholding or similar obligations in respect of milestone, royalty and other payments made under this Agreement. To the extent Lhotse is required to deduct and withhold taxes on any payment to Schrödinger, Lhotse shall deduct those taxes from the remittable payment, pay the taxes to the proper tax authority in a timely manner, and promptly send proof of payment to Schrödinger. Schrödinger shall provide Lhotse any tax forms that may be reasonably necessary in order for Lhotse to not withhold tax or to withhold tax at a reduced rate under an applicable bilateral income tax treaty. Schrödinger shall use reasonable efforts to provide any such tax forms to Lhotse in advance of the due date. At the request and expense of Schrödinger, Lhotse shall provide reasonable assistance to enable the recovery, to the extent permitted by applicable law, of withholding taxes or similar obligations resulting from payments made under this Agreement.

 

2.14          Financial Records and Audit. Lhotse shall maintain complete and accurate records in sufficient detail to permit Schrödinger to confirm the accuracy of Net Sales reported by Lhotse under this Agreement. Upon at least [***] ([***]) [***] prior notice, such records shall be open for examination, during regular business hours, for a period of [***] ([***]) [***] from the creation of individual records, and not more often than [***], by an independent certified public accountant selected by Schrödinger and reasonably acceptable to Lhotse, for the sole purpose of verifying for Schrödinger the accuracy of the financial reports provided by Lhotse under this Agreement. Schrödinger shall bear the cost of such audit unless such audit reveals an underpayment by Lhotse of more than [***] ([***]) of the amount actually due for the time period being audited, in which case Lhotse shall reimburse Schrödinger for the costs of such audit. Lhotse shall pay to Schrödinger any underpayment discovered by such audit within [***] ([***]) [***] after the accountant’s report. If the audit reveals an overpayment by Lhotse, then Lhotse may take a credit for such overpayment against any future payments due to Schrödinger (if there will be no future payment due, then Schrödinger shall promptly refund such amount to Lhotse).

 

3.

Intellectual Property

 

3.1            Ownership of Collaboration Inventions, Virtual Screen Results and Work Product Generally.

 

(a)            Each party shall promptly notify the other party in writing and in reasonable detail of all inventions and discoveries, whether patentable or not, that constitute composition of matter or method of use or manufacture Intellectual Property (i.e., compounds and/or compound classes designed in silico or otherwise), including any improvement, modification or enhancement of any of the foregoing, directed to the Target that are conceived of or developed by the parties or on behalf of the parties in the course of conducting the activities under the Work Plan, whether developed solely by Lhotse or Schrödinger or jointly, and regardless of whether actually reduced to practice during the Term (each a “Collaboration Invention”). Lhotse shall solely own any Collaboration Invention regardless of inventorship. The inventorship of any Collaboration Invention shall be determined in accordance with United States patent law. For the avoidance of doubt, Collaboration Inventions do not include any Schrödinger Improvements.

 

 

(b)            “Virtual Screen Results” are herein defined as the information and data generated by Schrödinger in the course of using the Schrödinger Technology to perform virtual screens for Lhotse with respect to the Target, indicating that one or more commercially available compounds is predicted to have activity against such Target. For clarity, Virtual Screen Results do not include any of the commercially available compounds or structures, including any compounds or structures which are included in the Schrödinger Library, or any Schrödinger Technology which are used to generate or are otherwise referenced in such information or data. As between the parties all Intellectual Property associated with Virtual Screen Results shall be solely owned by Lhotse. Notwithstanding the foregoing or anything in this Agreement to the contrary, after Schrödinger’s exclusivity obligations with respect to the Target under Section 2.6 have concluded and/or if the JSC decides not to pursue the Program with respect to the Target, Schrödinger is and shall be permitted to perform virtual screens (and improve, modify or enhance such screens) with respect to the Target (either internally for its own benefit or with or for the benefit of one or more Third Parties) using the same compound library to perform such virtual screens as it previously used to generate the Virtual Screen Results in respect of the Target for Lhotse and, consequently, to generate the same or similar results as it previously generated for Lhotse hereunder, provided that in doing so, Schrödinger shall not (either internally for its own benefit or with or for the benefit of any Third Party) use, share, reference or disclose any Lhotse Confidential Information, including the fact that it generated the same or similar Virtual Screen Results for Lhotse in respect of such Target.

 

(c)            Except for the licenses granted pursuant to Section 3.4, each party to this Agreement shall retain all right, title, and interest (collectively, “Rights”) in any Intellectual Property that was owned by such party prior to the Effective Date or developed independently of this Agreement.

 

(d)            As between Lhotse and Schrödinger, Lhotse does and shall own (i) all Rights in the Confidential Information disclosed by Lhotse to Schrödinger hereunder, the Lhotse Background Intellectual Property, Collaboration Inventions, Virtual Screen Results (subject to Section 3.1(b) above) and Work Product and (ii) all Rights in any improvement, modification, or enhancement of any of the foregoing made by either party or by their or their respective Affiliates’ employees, agents or consultants (collectively with the Intellectual Property embodied therein, the “Lhotse Improvements”). As between Schrödinger and Lhotse, Schrödinger does and shall own (i) all Rights in the Confidential Information disclosed by Schrödinger to Lhotse hereunder and the Schrödinger Intellectual Property, and (ii) all Rights in any improvement, modification, or enhancement of any of the foregoing made by either party or their or their respective Affiliates’ employees, agents or consultants (collectively with the Intellectual Property embodied therein, the “Schrödinger Improvements”).

 

 

(e)            Schrödinger hereby assigns and transfers, and to the extent that it cannot presently assign or transfer, shall assign and transfer, to Lhotse all of its Rights in and to any Collaboration Inventions, Virtual Screen Results (subject to Section 3.1(b) above), Work Product and Lhotse Improvements, and agrees to take, and to cause its employees, agents and consultants to take, all further acts reasonably required to evidence such assignment and transfer to Lhotse. Schrödinger hereby appoints Lhotse as its attorney-in-fact to sign such documents as Lhotse deems necessary for Lhotse to effect the transfer of ownership of the Intellectual Property referenced in this clause (e) belonging to Lhotse if Lhotse is unable, after reasonable inquiry, to obtain Schrödinger’s (or its employee’s or agent’s) signature on such a document. All Collaboration Inventions, Virtual Screen Results, Work Product and Lhotse Improvements shall be deemed Confidential Information of Lhotse and Schrödinger shall be deemed the receiving party of such information.

 

(f)             Lhotse hereby assigns and transfers, and to the extent that it cannot presently assign or transfer, shall assign and transfer and, as applicable, shall cause its Affiliates to assign and transfer, to Schrödinger all of its and, as applicable, its Affiliates’, Rights in and to any Schrödinger Improvements, and agrees to take, and to cause its and its Affiliates’ employees, agents and consultants, as applicable, to take, all further acts reasonably required to evidence such assignment and transfer to Schrödinger. Lhotse hereby appoints Schrödinger as its attorney-in-fact to sign such documents as Schrödinger deems necessary for Schrödinger to effect the transfer of ownership of the Intellectual Property referenced in this clause (f) belonging to Schrödinger if Schrödinger is unable, after reasonable inquiry, to obtain Lhotse’s (or its or its Affiliates’ employee’s or agent’s) signature on such a document. All Schrödinger Improvements shall be deemed Confidential Information of Schrödinger and Lhotse shall be deemed the receiving party of such information.

 

3.2            Patent Prosecution and Maintenance. Each party shall be responsible, in its sole discretion and at its sole cost, for the filing, prosecution, maintenance and enforcement of patent rights, copyrights and other proprietary rights claiming or directed to inventions owned solely by such party, if any. With respect to any Collaboration Invention, Lhotse shall be responsible for preparing, filing and prosecuting any patent applications or other appropriate filings and maintaining any patents, copyrights or other similar rights issued thereon.

 

3.3            Cooperation. Each party shall provide such assistance as may reasonably be required for the other party to secure, perfect, maintain and enforce the other party’s rights in its Intellectual Property in connection with this Agreement. Reasonable assistance includes executing and delivering the documents reasonably necessary for the other party to secure, perfect, maintain or enforce its rights in such Intellectual Property (including documents to assign rights, to apply for patent protection, or to register a copyright), responding to reasonable requests for information pertinent thereto and ensuring Affiliates, as applicable, cooperate to achieve the goals set forth in this Section 3.3; provided, however, that in each of the foregoing cases, the party requesting the assistance shall be required to reimburse the assisting party’s reasonable out-of-pocket expenses incurred in connection therewith.

 

3.4            License.

 

(a)            Subject to the terms and conditions of this Agreement, Schrödinger hereby grants to Lhotse a fully paid-up, non-exclusive, royalty-free, worldwide license to use (i) the Results provided by Schrödinger under the Work Plan and (ii) (A) the Schrödinger Knowhow and (B) the Schrödinger Improvements consisting of improvements, modifications or enhancements to Schrödinger Knowhow, in each case of (A) and (B) that are necessary or reasonably useful for Lhotse to conduct the activities assigned to it under the Work Plan, solely for purposes of conducting such activities during the Term.

 

 

(b)            Subject to the terms and conditions of this Agreement, Lhotse hereby grants to Schrödinger a fully paid-up, non-exclusive, royalty-free, worldwide license to use (i) the Results provided by Lhotse under the Work Plan, (ii) Lhotse Background Intellectual Property, (iii) Lhotse Improvements and (iv) Collaboration Inventions, Work Product and Virtual Screen Results, in each case of (i) to (iv), that are necessary or reasonably useful to conduct the activities assigned to Schrödinger under the Work Plan, solely for purposes of conducting such activities during the Term. Further and notwithstanding the definition of “Control” in Section 1.4 above, Lhotse agrees to use reasonable efforts to obtain for Schrödinger licenses and any other rights to any Intellectual Property of an Affiliate, Third Party collaboration partner (e.g., University of Southern California) or Third Party service provider of Lhotse or its Affiliates participating in the Program that relates to (a) the Target or (b) the Intellectual Property contributed by such Affiliate, Third Party collaboration partner or Third Party service provider that is necessary or reasonably useful for Schrödinger to conduct the activities assigned to Schrödinger under the Work Plan (collectively, the “Other Intellectual Property”). Lhotse acknowledges and agrees that it is the Parties’ understanding hereunder that Lhotse or an Affiliate, as applicable, will obtain for or on behalf of Schrödinger rights to “Other Intellectual Property” without any additional fees imposed on Schrödinger by Lhotse or a Third Party or a Lhotse Affiliate if the Other Intellectual Property is necessary or reasonably useful for Schrödinger to conduct the activities assigned to Schrödinger under the Work Plan.

 

(c)            All rights in and to Intellectual Property not expressly granted by Lhotse or Schrödinger under this Agreement are reserved to its owner. Nothing in this Agreement will be deemed to weaken or waive any rights of either party related to the protection of trade secrets.

 

4.

Representations and Warranties

 

4.1            Representations and Warranties. Each party represents and warrants to the other the following during the Term: (a) it is duly organized and validly existing under the laws of its jurisdiction of incorporation or formation, and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof; (b) it is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder, and the person or persons executing this Agreement on its behalf has been duly authorized to do so by all requisite corporate action; (c) this Agreement is legally binding upon it, enforceable in accordance with its terms; and (d) the execution, delivery and performance of this Agreement by it does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any material, applicable law or regulation of any court, governmental body or administrative or other agency having jurisdiction over it (such laws and regulations collectively, “Applicable Laws”).

 

4.2            Disclaimer. THE SERVICES, TECHNOLOGY AND MATERIALS PROVIDED BY EACH PARTY HEREUNDER ARE PROVIDED “AS IS” AND, EXCEPT FOR THE WARRANTIES EXPRESSLY SET FORTH IN SECTION 4.1, EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, WHETHER EXPRESS, STATUTORY OR IMPLIED, INCLUDING WITHOUT LIMITATION (A) THE WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES, AND (B) WARRANTIES, IF ANY, ARISING FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES.

 

 

4.3            Limitation of Liability. EXCEPT FOR BREACH OF CONFIDENTIALITY OBLIGATIONS UNDER ARTICLE 5 AND SUBJECT TO THE LAST SENTENCE OF THIS SECTION 4.3, (A) NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT, OR ANY LICENSE GRANTED HEREUNDER (INCLUDING WITHOUT LIMITATION DAMAGES FOR LOST BUSINESS OR PROFITS, LOSS OF DATA OR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES), EVEN IF ADVISED OF THE POSSIBILITY THEREOF; AND (B) EACH PARTY’S ENTIRE AGGREGATE LIABILITY UNDER RELATING TO THIS AGREEMENT, FOR ANY REASON(S) AND UPON ANY CAUSES(S) OF ACTION WHATSOEVER, SHALL NOT EXCEED FIVE HUNDRED THOUSAND DOLLARS ($500,000). NOTWITHSTANDING THE FOREGOING, SCHRÖDINGER’S ENTIRE AGGREGATE LIABILITY UNDER OR RELATING TO A BREACH OF ITS EXCLUSIVITY OBLIGATIONS UNDER SECTION 2.6 OF THIS AGREEMENT SHALL NOT EXCEED ONE MILLION DOLLARS ($1,000,000).

 

4.4            Liability for Affiliates. Notwithstanding anything to the contrary herein, each party shall be responsible and fully liable for any acts and omissions of its Affiliates (and such Affiliates’ employees, agents and consultants, as applicable) in connection with such Affiliates’ performance on behalf of or for such party under this Agreement as if such acts and omissions had been executed by such party itself.

 

5.

Confidentiality

 

5.1            Confidentiality. Except to the extent expressly authorized by this Agreement or otherwise agreed in writing by the parties, the parties agree that, during the Term of this Agreement and for [***] ([***]) [***] thereafter, the receiving party shall keep confidential and shall not publish or otherwise disclose and shall not use for any purpose other than as expressly provided for in this Agreement any Confidential Information furnished to it by the disclosing party from the date of that certain mutual non-disclosure agreement between ShouTi LLC (the predecessor-in-interest of ShouTi) and Schrödinger dated June 10, 2016 (the “Non-Disclosure Agreement”) through the end of the Term of this Agreement. Each party may use Confidential Information of the other party only to the extent necessary to accomplish the purposes of this Agreement. Each party will use at least the same standard of care as it uses to protect proprietary or confidential information of its own to ensure that its employees, agents, consultants and other representatives do not disclose or make any unauthorized use of the other party’s Confidential Information. Each party will promptly notify the other upon discovery of any unauthorized use or disclosure of the other party’s Confidential Information.

 

 

5.2            Exceptions. Confidential Information shall not include any information which the receiving party can prove by competent written evidence: (a) is now, or hereafter becomes, other than through a breach of the confidentiality obligations set forth herein on the part of the receiving party, generally known or available; (b) is known by the receiving party at the time of receiving such information, as reasonably evidenced by its records; (c) is hereafter furnished to the receiving party by a Third Party, as a matter of right and without restriction on disclosure; or (d) information independently developed by the receiving party as evidenced by written documentation or other reasonable evidentiary means.

 

5.3            Publicity. Subject to Sections 5.4 and 5.5 below, neither party shall disclose any terms or conditions of this Agreement to any Third Party without the prior consent of the other party; provided, however, that after execution of this Agreement, either party may issue a press release announcing the collaboration subject to the other party’s written approval of the content of such press release.

 

5.4            Legally Required Disclosure. Notwithstanding the foregoing, each party shall have the right to disclose the other party’s Confidential Information and the terms and conditions of this Agreement to the extent such disclosure is required by applicable laws and regulations; provided that such party shall promptly notify the other party of such legally required disclosure and reasonably cooperate with the other party to obtain a protective order limiting or restricting the required disclosure.

 

5.5            Terms of Agreement - Permitted Disclosure. The parties agree that the terms of this Agreement (including all exhibits hereto) are confidential between the parties and shall not be disclosed to Third Parties. Notwithstanding the foregoing, a party is permitted to disclose of the terms of this Agreement to (i) representatives and Affiliates of each party who reasonably have a need to know for the purposes of this Agreement; or (ii) auditors, potential and current investors and acquirers, attorneys, advisors and similar persons of each party who have a need to know for purposes of corporate and legal compliance, diligence, audits and similar activities; provided however that any such persons are bound by reasonable obligations of confidentiality in connection with any disclosure of the terms of this Agreement.

 

5.6            Independent Development. It is understood that the parties may have performed, and may continue to perform, independent development relating to the Confidential Information or proprietary information received thereunder. The parties hereto agree that neither this Agreement nor the receipt of any Confidential Information or proprietary information shall limit either party’s independent development or right to use the skills, knowledge, experience and information which such party has acquired in the course of the Program, so long as in doing so (i) Schrödinger shall not use Lhotse’s Confidential Information and (ii) Lhotse shall not use Schrödinger’s Confidential Information.

 

6.

Term and Termination

 

6.1            Term of the Agreement. The term of this Agreement shall commence on the Effective Date and, unless earlier terminated in accordance with this Article 6, continue for three (3) years thereafter (such period, the “Term”). This Agreement may be extended upon mutual, written agreement of the parties.

 

 

6.2            Termination for Cause. Each party shall have the right to terminate this Agreement upon [***] ([***]) [***] prior written notice to the other upon the occurrence of either of the following events: (a) upon or after the bankruptcy, insolvency, dissolution or winding up of the other party (other than a dissolution or winding up for the purpose of reconstruction or amalgamation); or (b) upon or after the breach of any material provision of this Agreement by the other party if the breaching party has not cured such breach within the [***] ([***]) [***] period following written notice of termination by the non-breaching party.

 

6.3            Effect of Termination; Surviving Obligations. Expiration or termination of this Agreement shall not relieve the parties of any obligation accruing prior to such expiration or termination. Except as set forth below or elsewhere in this Agreement, the obligations (including without limitation obligations to grant equity to Schrödinger hereunder and under any other applicable agreements in connection with the Program) and rights of the parties under Sections 2.6, 2.9, 2.10, 3.1, 3.2, 3.3, 4.2, 4.3, 4.4 and Articles 5, 6, 7, and 8 shall survive expiration or termination of this Agreement. Upon the disclosing party’s written request provided within [***] ([***]) [***] following the expiration or termination of this Agreement, each party shall deliver to the other party any and all Confidential Information of the other party in its possession. The exercise by either party hereto of a termination right provided for under this Agreement shall not, in and of itself, give rise to the payment of damages or any other form of compensation or relief to the other party with respect thereto. Subject to the preceding sentence, termination of this Agreement shall not preclude either party from claiming any other damages, compensation or relief that it may be entitled to upon such termination.

 

7.

Indemnification

 

7.1            Indemnification.

 

(a)            Schrödinger hereby agrees to defend, indemnify and hold harmless Lhotse, its Affiliates and its and their respective employees, officers, directors and agents (each, a “Lhotse Indemnified Party”) from and against any and all claim, liability, loss, damage, cost, and expense, including reasonable attorneys’ fees (collectively, “Liabilities”), which the Lhotse Indemnified Party may incur, suffer or be required to pay resulting from or arising in connection with any Third Party action or claim based upon (i) the gross negligence or willful misconduct of Schrödinger hereunder or (ii) the breach by Schrödinger of any of its material obligations, representations or warranties set forth in this Agreement (which includes the Work Plan) or (iii) the infringement of such Third Party’s Intellectual Property Rights by the Schrödinger Technology or Schrödinger Knowhow used by Schrödinger in the performance of its obligations under this Agreement. Notwithstanding the foregoing, Schrödinger shall have no obligation under this Agreement to indemnify, defend or hold harmless any Lhotse Indemnified Party with respect to claims, demands, costs or judgments which result from willful misconduct or grossly negligent acts or omissions of Lhotse, its Affiliates or any of Lhotse’s or Lhotse’s Affiliates’ respective employees, officers, directors or agents or Liabilities for which Lhotse indemnifies Schrödinger hereunder.

 

 

(b)            Lhotse hereby agrees to defend, indemnify and hold harmless Schrödinger, its Affiliates and its and their respective employees, officers, directors and agents (each, a “Schrödinger Indemnified Party”) from and against any and all Liabilities which the Schrödinger Indemnified Party may incur, suffer or be required to pay resulting from or arising in connection with any Third Party action or claim based upon (i) the gross negligence or willful misconduct of Lhotse or its Affiliates hereunder or (ii) the breach by Lhotse of any of its material obligations, representations or warranties set forth in this Agreement (which includes the Work Plan) or (iii) the development, manufacture, use, handling, storage, sale or other disposition of any product resulting from the Program by Lhotse, its Affiliates or sublicensees (other than Schrödinger). Notwithstanding the foregoing, Lhotse shall have no obligation under this Agreement to indemnify, defend or hold harmless any Schrödinger Indemnified Party with respect to claims, demands, costs or judgments which result from willful misconduct or grossly negligent acts or omissions of Schrödinger, its Affiliates or any of Schrödinger’s or Schrödinger’s Affiliates’ respective employees, officers, directors or agents or Liabilities for which Schrödinger indemnifies Lhotse hereunder.

 

7.2            Control of Defense. In the event a party seeks indemnification under Section 7.1, it shall inform the other party (the “Indemnifying Party”) of a claim as soon as reasonably practicable after it receives notice of the claim, shall permit the Indemnifying Party to assume direction and control of the defense of the claim (including the right to settle the claim solely for monetary consideration), and shall cooperate as reasonably requested (at the expense of the Indemnifying Party) in the defense of the claim.

 

8.

General Provisions

 

8.1            Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, excluding its conflicts of laws principles.

 

8.2            Dispute Resolution. The parties recognize that disputes as to certain matters may from time to time arise which relate to either party’s rights and/or obligations hereunder. To resolve such disputes, the parties agree to follow the procedures set forth in this Section 8.2 if and when such a dispute arises between the parties. If any claim, dispute, or controversy of whatever nature arising out of or relating to this Agreement arises between the parties and the parties cannot resolve the dispute within [***] ([***]) [***] of a written request by either party to the other party, the parties agree to hold a meeting, attended by the [***] of Lhotse and the [***] of Schrödinger, to attempt in good faith to negotiate a resolution of the dispute (such [***], collectively, the “Executives”). If the Executives are unable to resolve such dispute within [***] ([***]) [***], then such dispute shall be resolved by binding arbitration administered by [***] in New York in accordance to its then current arbitration rules. The number of arbitrators shall be [***] ([***]), [***] of whom [***] selected by Lhotse, [***] of whom [***] selected by Schrödinger and [***] of whom [***] selected by Lhotse and Schrödinger (or by the other [***] ([***]) arbitrators if the parties cannot agree within [***] ([***]) [***] of selecting the other [***] ([***]) arbitrators). The arbitration shall be conducted in the English language. Any arbitration proceeding shall be brought in New York in accordance with the Rules of the [***] unless the parties agree in writing to conduct the arbitration in another location and under different arbitration rules. The arbitration decision shall be binding upon the parties. The decision of the arbitrators shall be executory, and the prevailing party may enter such decision in any court having competent jurisdiction. Each party shall have the right to institute judicial proceedings against the other party or anyone acting by, through or under such other party (including the right to seek and to obtain injunctive relief) solely to enforce the instituting party’s arbitration rights or the decision of the arbitrators. Nothing in this Agreement shall be deemed as preventing either party from seeking injunctive relief (other provisional remedy) from any court of competent jurisdiction as necessary to protect such party’s interests.

 

 

8.3            Entire Agreement; Modification. This Agreement (including all exhibits and attachments hereto) is both a final expression of the parties’ agreement and a complete and exclusive statement with respect to all of its terms. This Agreement supersedes all prior and contemporaneous agreements and communications, whether oral, written or otherwise, concerning any and all matters contained herein, including, without limitation, the Non-Disclosure Agreement (except insofar as the Non-Disclosure Agreement applies to confidential information of a party disclosed prior to the Effective Date of this Agreement) and the 2019 Letter Agreement (except insofar as the 2019 Letter Agreement applies to rights and obligations of the parties arisen prior to the Effective Date of this Agreement). No rights or licenses with respect to any intellectual property of either party are granted or deemed granted hereunder or in connection herewith, other than those rights expressly granted in this Agreement. This Agreement may only be amended, modified or supplemented in a writing expressly stated for such purpose and signed by the parties to this Agreement. In the event of any conflict between the terms of this Agreement and any exhibit, the terms of this Agreement shall take precedence.

 

8.4            Non-Waiver. The failure of a party to insist upon strict performance of any provision of this Agreement or to exercise any right arising out of this Agreement shall neither impair that provision or right nor constitute a waiver of that provision or right, in whole or in part, in that instance or in any other instance. Any waiver by a party of a particular provision or right shall be in writing, shall be as to a particular matter and, if applicable, for a particular period of time and shall be signed by such party.

 

8.5            Assignment. Except as expressly provided hereunder, neither this Agreement nor any rights or obligations hereunder may be assigned or otherwise transferred by either party without the prior written consent of the other party (which consent shall not be unreasonably withheld); provided, however, that either party may assign this Agreement and its rights and obligations hereunder without the other party’s consent (a) to an Affiliate, (b) in connection with the transfer or sale of all or substantially all of the business of such party to which this Agreement relates to a Third Party, whether by merger, sale of stock, sale of assets or otherwise, or (c) in connection with any consolidation or merger effected exclusively to change the domicile of such party. In the event of such a permitted assignment, the parties to this Agreement shall not acquire by such transaction any access to Intellectual Property of any Third Party or which was not already included in the Intellectual Property licensed hereunder prior to such transaction, unless the agreements related to such transaction explicitly specify otherwise. The rights and obligations of the parties under this Agreement shall be binding upon and inure to the benefit of the successors and permitted assigns of the parties. Any assignment not in accordance with this Agreement shall be void and of no effect.

 

8.6            No Third Party Beneficiaries. This Agreement is neither expressly nor impliedly made for the benefit of any party other than those executing it.

 

8.7            Severability. If, for any reason, any part of this Agreement is adjudicated invalid, unenforceable or illegal by a court of competent jurisdiction, such adjudication shall not affect or impair, in whole or in part, the validity, enforceability or legality of any remaining portions of this Agreement. All remaining portions shall remain in full force and effect as if the original Agreement had been executed without the invalidated, unenforceable or illegal part.

 

 

8.8            Notices. Any notice to be given under this Agreement must be in writing and delivered either in person, by any method of mail (postage prepaid) requiring return receipt, or by overnight courier or facsimile confirmed thereafter by any of the foregoing, to the party to be notified at its address(es) given below, or at any address such party has previously designated by prior written notice to the other. Notice shall be deemed sufficiently given for all purposes upon the earlier of: (a) the date of actual receipt; (b) if mailed, three calendar days after the date of postmark; or (c) if delivered by overnight courier, the next business day the overnight courier regularly makes deliveries.

 

If to Schrödinger, notices must be addressed to:

 

Schrödinger, LLC

120 West 45th Street, 17th Floor

New York, New York 10036

Attention: President

Facsimile: 212 295 5801

 

With a copy to the General Counsel at the above address.

 

If to Lhotse, notices must be addressed to:

 

c/o ShouTi Inc.

611 Gateway Blvd, Suite 223

South San Francisco, CA 94080

Attention: Chief Executive Officer

Telephone: (628) 229-9277

 

8.9            Force Majeure. Each party shall be excused from liability for the failure or delay in performance of any obligation under this Agreement by reason of any event beyond such party’s reasonable control including but not limited to Acts of God, fire, flood, explosion, earthquake, or other natural forces, war, civil unrest, accident, destruction or other casualty, any lack or failure of transportation facilities, any lack or failure of supply of raw materials, any strike or labor disturbance, or any other event similar to those enumerated above. Such excuse from liability shall be effective (a) only to the extent and duration of the event(s) causing the failure or delay in performance and (b) provided that the party relying on this Section has not caused such event(s) to occur and that the party takes all reasonable steps necessary under the circumstances to mitigate the effects of the applicable force majeure event. Notice of a party’s failure or delay in performance due to force majeure must be given to the other party within [***] ([***]) [***] after its occurrence. All delivery dates under this Agreement that have been affected by force majeure shall be tolled for the duration of such force majeure. In no event shall any party be required to prevent or settle any labor disturbance or dispute. Notwithstanding the foregoing, should the event(s) of force majeure suffered by a party extend beyond a [***] ([***]) [***] period, the other party may then terminate this Agreement by written notice to the non-performing party, with the consequences of such termination as set forth in Section 6.4.

 

 

8.10          Independent Contractors. Each party acknowledges and agrees that such party’s services hereunder are performed on a non-exclusive basis, except as otherwise set forth explicitly in this Agreement (including Section 2.6). Each party shall have the right to perform similar services for, or undertake similar collaborations with, parties other than the other party. This Agreement does not provide, and shall not be construed to provide, any Third Parties with any remedy, claim, cause of action or privilege. Nothing in this Agreement shall be construed as creating an employer-employee or agency relationship.

 

8.11          Headings. The headings of clauses contained in this Agreement preceding the text of the articles, sections and subsections hereof are inserted solely for convenience and ease of reference only and shall not constitute any part of this Agreement, or have any effect on its interpretation or construction.

 

8.12          Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original document, and all of which, together with this writing, shall be deemed one instrument.

 

8.13          Construction. Except where the context otherwise requires, wherever used, the singular will include the plural, the plural the singular, the use of any gender will be applicable to all genders, and the word “or” is used in the inclusive sense (and/or). Whenever this Agreement refers to a number of days, unless otherwise specified, such number refers to calendar days. The captions of this Agreement are for convenience of reference only and in no way define, describe, extend or limit the scope or intent of this Agreement or the intent of any provision contained in this Agreement. The term “including” as used herein shall be deemed to be followed by the phrase “without limitation” or like expression. The term “will” as used herein means shall. References to “Article,” “Section” or “Exhibit” are references to the numbered sections of this Agreement and the exhibits attached to this Agreement, unless expressly stated otherwise. Except where the context otherwise requires, references to this “Agreement” shall include the exhibits attached to this Agreement. The language of this Agreement shall be deemed to be the language mutually chosen by the parties and no rule of strict construction will be applied against either party hereto.

 

 

In Witness Whereof, the parties hereto have duly executed this Collaboration Agreement as of the Effective Date.

 

Lhotse Bio, Inc.			Schrödinger, LLC, By Its Sole Member,
			Schrödinger, Inc.
By:	/s/ Raymond Stevens		By:	/s/ Cony D’Cruz
Name:	Raymond Stevens		Name:	Cony D’Cruz
Title:	Chief Executive Officer		Title:	Executive VP & Chief Business Officer

 

 

EXHIBIT A

 

Work Plan

 

[***]

 

 

Exhibit 10.15

 

SHANGHAI PREMISES
LEASE CONTRACT

 

 

Important Notice

 

1. This Contract applies to issues in respect of pre-lease of commercial housing situated within the administrative jurisdiction and of such premises the rent of which is determined by related parties by means of negotiation on the reasonable market value basis, which both kinds of properties or premises exclude any publicly-owned residence property leased in return for a rent provided by Shanghai Municipal Government, public welfare premises which are for non-residence purposes, leased as appropriate administratively allocated, and which are built with investment by related government, as well as such privately-owned premises the lease of which have been made prior to the implementation of the Regulations of Shanghai Municipal Government on Premises Lease (hereinafter referred to as “the Regulations”), in return for a rent as specified by Shanghai Municipal Government.

 

2. The pre-lease as referred to hereinabove is only allowed to be made in respect of such commercial housing as is built by related property developers, and for which commercial housing a pre-sales permit has been duly obtained, except for any commercial housing which has been pre-sold by related property developers; provided, however, no pre-lease may be made by any pre-buyer of commercial housing.

 

3. The terms of “FOR LEASE” and “FOR PRE-LEASE” as appearing herein are for indicative purposes, denoting that related provisions or clauses marked with such terms apply to lease or pre-lease, as indicated respectively. When this Agreement following this notes part is used as a premises lease agreement, only those provisions marked with the word “Lease” will be included and adopted as integral part of such lease agreement; likewise, when used a commercial housing pre-lease contract, only those provisions marked with the word “Pre-lease” of the Model Agreement, as well as provisions in respect of “Pre-lease Related Issues” as set out in the Supplemental Provisions (Additional Terms and Conditions), may be included and adopted as integral parts of the pre-lease contract intended to be concluded. The remaining provisions or clauses without the mark ( ) followed shall be included in a related agreement or contract as general terms which apply to issues in respect of both lease and pre-lease.

 

4. In case this Contract is to be used for intended pre-lease of commercial housing, the Parties to such pre-lease shall, after related property developer has followed required the original registration of real estate and acquired a real estate ownership certificate, upon completion of built of such commercial housing enter into and execute a Commercial Housing Use and Delivery Form. All terms and conditions in respect of the Pre-lease Agreement previously made by the Parties shall have been fully fulfilled upon the Commercial Housing Use and Delivery Form enters into effect.

 

5. This Contract serves as the Model Text for Premises Pre-lease (for trail implementation), which is prepared by Shanghai Administration of Property and Land Recourses and Shanghai Municipal Bureau for Industry and Commerce, in accordance with the Regulations of Shanghai Municipal Government on Premises Lease. The terms and conditions contained herein are indicative and the parties to the lease may choose to adopt them or any of them. For the matters not covered in this Contract, the Parties may enter into a supplementary agreement through negotiation.

 

6. Prior to execution of this Contract, the Landlord is required to present to the Tenant its real estate ownership and land use right certificate or other related ownership certificate, and the property developer shall present to the pre-lessee the pre-sale permit duly obtained. Each party to the intended pre-lease shall verify the identity certificate of the other and provide the other its own identity certificate. If the premises are leased to migrants, the landlord shall also show the Premises Lease Public Security Permit issued by the local public security department.

 

 

7. Related parties concerned shall, within fifteen (15) days upon execution of this Contract, follow related formalities of registration of lease agreement for purposes of putting on file. Especially, for premises lease, related parties to such lease shall go through related formalities with the real estate exchange center or the Farm system filing office, which is established for the place where such leased premises is located, and apply for a certificate of premises lease registration and recording; in the case of pre-lease of commercial housing intended only for non-locals or overseas residents, related formalities shall be followed with Shanghai Municipal Real Estate Exchange Center for putting such pre-lease on file; in the event of pre-lease of commercial housing intended only for locals or nationals, related formalities shall be followed with appropriate Real Estate Exchange Center established for the place where such pre-leased premises is located, for putting such pre-lease on file. After the pre-leased commercial premises are completed and obtains the real estate title certificate, the parties will sign a pre-leased commercial premises handover form, and then register and file the lease with the real estate exchange or the farm system acceptance office where the premises are located, and receive the lease contract registration and filing certificate. After the lease contract has been registered and filed, it can defend against any third party in the event of repeated pre-leases, leases, transfer of the title of the premises during the lease term, or disposition after being mortgaged.

 

8. In case only one party intends to apply for registration of lease contract for putting on file while the other is unwilling to cooperate therewith as requested, such party intending to apply for registration thereof may independently go through related formalities for registration for putting on file, by presenting the lease agreement in question, its valid identification certificate, as well as other related instruments.

 

9. The deposit is to secure the performance of this Contract. The establishment and amount of the deposit may be stipulated by the Landlord and the Tenant in the contract when the premises are leased. The amount of the deposit shall be agreed upon by the Parties to the lease. Upon termination of the lease, the deposit, after deducting the relevant costs and expenses payable by the Landlord as specified in the contract, shall be refunded to the Tenant.

 

10. This Model Contract may be available, on a cost basis, at the Real Estate Exchange Center or Farm System Filing Office, at Shanghai municipal level or the place, county where the related premises is located. The parties shall read this Contract carefully and understand the contents of each provision carefully before using the form of this Contract.

 

11. This Contract serves only as a model text for reference by related parties.

 

12. Where the leasehold hereunder is established under the help of agency or brokerage, related parties to a lease shall require such brokerage or broker to sign on the last signature page hereof.

 

 

Shanghai Premises Lease Contract

 

(Contract No.:             )

 

BETWEEN:

 

Landlord (Party A): Shanghai Changtai Business Management Co., Ltd.

 

[For Lease]

 

Tenant (Party B): Shanghai ShouTi Biotechnology Co., Ltd.

 

THIS CONTRACT is made and entered into by and between Party A and Party B, through mutual friendly negotiation based on the principles of equality, voluntariness, fairness and good faith, regarding the lease by Party A to Party B of the real property which Party A is entitled to lease, in accordance with the Contract Law of the People’s Republic of China and the Regulations of Shanghai Municipality for Premises Lease (hereinafter as “Regulations”), with the terms and conditions as follows.

 

Article 1 Details of the Premises

 

1.1.

The Premises to be leased by Party A to Party B are located at Unit 02, 5th Floor, No. 1, Lane 2889, Jinke Road, Pudong New Area, Shanghai (“Premises”). The gross floor area (GFA) of the Premises is 550.51 square meters (the area is subject to the actual measurement report issued by the government authority). The Premises shall be used as office; the type of the Premises is an office building, and the building structure of the Premises is a reinforced concrete structure. A floor plan of the Premises is attached hereto as Appendix A. It is acknowledged that Party A has presented to Party B the followings:

 

[For Lease] Real Estate Title Certificate/Real Property Title Certificate: [Certificate No.: Shanghai (2016) Pudong Real Property No. 019457].

 

1.2.

The leasehold is established between Party A, as the owner of the real property of the Premises, and Party B.

 

1.3.

The scope, conditions and requirements for use of the shared or common parts of the Premises, the status of the existing decorations, fixtures and equipment, and the contents, standards, as well as other issues in respect of those decorations and fixtures to be added by Party B with the consent of Party A, are set out in appendices attached hereto respectively. Both Parties agree that the aforesaid Appendices shall become the basis for the acceptance of the Premises, when the Premises is delivered by Party A to Party B and when returned by Party B to Party A upon termination of this Contract.

 

1.4.

Refer to the Supplemental Provisions hereof for details.

 

Article 2 Purpose

 

2.1.

Party B undertakes to Party A that the Premises leased hereunder is to be used as office room and Party B will comply with any and all related applicable provisions concerning the premises use and property management of the State and Shanghai Municipal Government.

 

 

2.2.

Party B hereby warrants that during the Lease Term, no change will be made to the mutually agreed usage of the Premises without prior written consent of Party A and, if required by applicable laws and regulations, the approval from relevant competent authorities after due process of examination and approval thereby,.

 

Article 3 Handover Date and Lease Term

 

3.1.

Both Parties agree that Party A shall deliver to Party B the Premises on the date of July 16, 2021. The lease term of the Premises shall be from September 16, 2021 to September 15, 2023 (refer to Article 2.1 of the Supplementary Provisions for details).

 

3.2.

Upon expiry of the Lease Term, Party A shall have the right to repossess the Premises, and Party B shall return the Premises to Party A on time. Where Party B intends to renew the lease hereunder, it shall deliver a written request to Party A at least six (6) months prior to expiration of the Lease Term and shall, subject to Party A’s consent, sign a renewal contract.

 

3.3.

Refer to the Supplemental Provisions hereof for details.

 

Article 4 Rent, Method and Time Limit of Payment

 

4.1.

The Parties agree that the rent for this Premises shall be RMB (refer to the Supplemental Provisions hereof for details) per day per square meter of GFA and the rent is fixed within (refer to the Supplemental Provisions hereof for details) months. The terms for adjustment of the rent are set out by the Parties in the Supplemental Provisions (refer to Article 3.1 of the Supplemental Provisions for details).

 

4.2.

The rent shall be paid by Party B to Party A on or before the 25th day of each month. Party B shall pay a penalty to Party A at 0.05% of the amount in arrears for each overdue day if the payable rent becomes overdue.

 

4.3.

The rent shall be paid by Party B as follows: (refer to Article 3.2 of Supplemental Provisions hereof for details).

 

Article 5 Deposit and Other Fees

 

5.1.

Upon receiving the Deposit, Party A shall issue a receipt to Party B. Upon termination of this lease, the Deposit, as received by Party A hereunder, after offsetting the amounts due and payable by Party B hereunder, shall be refunded to Party B without interest.

 

5.2.

All costs and fees relating to the use of the Premises incurred during the Lease Term, such as water, electricity, communication, equipment, property management, air-conditioning service during non-business hours, parking and energy service, shall be borne by Party B.

 

5.3.

The rules of calculation or allocation, the payment method and time limit of payment for the aforesaid fees and expenses borne by Party B shall be: (refer to the Supplementary Provisions for details).

 

Article 6 Requirements for Use and Responsibility for Maintenance of the Premises

 

6.1.

During the Lease Term, Party B shall notify promptly Party A to repair or make good any damage or failure occurred to the Premises or its attached facilities whenever such damage or failure comes to his attention; Party A shall within seven (7) days upon receipt of such notice from Party B, make appropriate correction or repair; otherwise, Party B may make such repair on behalf of Party A, and the reasonable costs thereof shall be borne by Party A.

 

 

6.2.

During the Lease Term, Party B shall reasonably use and take proper care of the Premises and any fixtures therein. Party B shall be liable for making repair of any damage to or failure in the Premises or any fixtures therein (other than normal tear and wear) caused by misuse or unreasonable use by Party B. If Party B refuses to make repair upon request of Party A, Party A may make repair on behalf of Party B, and the reasonable costs thereof shall be borne by Party B.

 

6.3.

Party A shall ensure the normal usable and safe conditions of the Premises and all fixtures therein during the Lease Term. Party A shall notify Party B of any scheduled inspection and/or maintenance on the Premises seven (7) days in advance. During the course of inspection and maintenance, Party B shall provide cooperation for that purpose. Party A shall minimize the impact of such inspection and maintenance on Party B’s use of the Premises.

 

6.4.

Except for the decorations, fixtures and equipment listed in Appendix C hereto, if Party B intends to add any decoration, fixture or equipment, it shall obtain the prior written consent of Party A; if such addition shall be subject to the examination and approval of the competent authority according to the applicable laws and regulations, Party B shall obtain the approval from the competent authority in advance. The ownership of such added fixtures and equipment, made by Party B, as well as maintenance responsibilities thereof shall be otherwise provided in writing agreement between Party A and Party B.

 

6.5.

Refer to the Supplemental Provisions hereof for details.

 

Article 7 Conditions of the Returned Premises

 

7.1.

Unless Party A consents to the renewal hereof intended by Party B, Party B shall return the Premises to Party A upon expiration of the Lease Term. If Party B fails to do so without consent from Party A, Party B shall pay to Party A the occupancy fee for the Premises equal to RMB (refer to the Supplementary Provisions for details)            per square meter.

 

7.2.

The Premises returned by Party B shall be restored to the original conditions when the Premises was delivered. The intended return of the Premises shall be subject to due inspection and acceptance by Party A, and in the event of acceptance by Party A of intended return, each party shall pay up any and all amounts that shall be borne by such party respectively.

 

7.3.

Refer to the Supplemental Provisions hereof for details.

 

Article 8 Sublease, Assignment and Exchange

 

8.1.

Except as Party A consents to sublease by Party B as provided for in the Supplemental Provisions hereof, Party B, during the entire lease term hereof, may not sublease a part of the Premises to any third party unless a prior written consent has been obtained from party A.

 

8.2.

For any intended sublease of this Premises, Party B shall sign a sublease contract with the related sub-lessee in writing, and shall file such sublease with the Real Estate Exchange at the place where the Premises are located in accordance with relevant regulations.

 

8.3.

During the Lease Term, any sublease of the Premises by Party B to any third party or the exchange of the Premises by Party B with the premises leased by others, is subject to a prior written consent of Party A. Upon completion of such sublease or exchange, the assignee of the lease or the person with whom Party B exchanges premises shall enter into a contract whereby the lessee is changed and the changed lessee agrees to perform the terms and conditions contained herein.

 

8.4.

Refer to the Supplemental Provisions hereof for details.

 

 

Article 9 Conditions for Termination

 

9.1.

Both Parties agree that this Contract shall be terminated and neither Party is liable to the other Party upon occurrence of any of the following circumstances during the Lease Term:

 

(i)

The right to use the land occupied by the Premises is withdrawn prior to the expiry date according to law;

 

(ii)

The Premises are requisitioned for public interest according to law;

 

(iii)

The Premises are listed in the scope of demolition and relocation for the needs of urban construction according to law;

 

(iv)

The Premises are damaged, destroyed or assessed as a dangerous property;

 

9.2.

It is agreed that, under any of the following circumstances, either Party may notify the other in writing to terminate this Contract. The breaching Party shall pay liquidated damages equal to (refer to the Supplemental Provisions hereof for details) times of the monthly rent to the non-breaching Party; if the non-breaching Party suffers losses more than the liquidated damages, the breaching Party shall also indemnify the non-breaching Party the difference between the losses and the liquidated damages.

 

(i)

Failure on the part of Party A to deliver the premises as scheduled and the failure continues for a period of seven (7) days upon request by Party B for delivery;

 

(ii)

The Premises delivered by Party A fail to conform to the stipulations hereof, thus frustrating the lease purpose described herein; or the Premises delivered by Party A are defective, thus threatening the safety of Party B;

 

(iii)

Party B changes the purpose of the Premises without written consent of Party A;

 

(iv)

The main structure of the Premises is damaged due to any reason of Party B;

 

(v)

Party B sublets the Premises, or assigns the right of rent regarding the Premises or exchanges with others their respective leased premises without the prior consent of Party A;

 

(vi)

Failure by Party B to pay due rent for a period of one (1) month aggregately.

 

9.4.

Refer to the Supplemental Provisions hereof for details.

 

Article 10 Liabilities for Breach

 

10.1.

Party A shall be held liable for compensation for any loss suffered or sustained by Party B as a result of failure of Party A to inform Party B that the Premises has been mortgaged or transfer of title to the Premises is restricted.

 

10.2.

Party A shall be liable for compensation for any property damage or bodily injury caused to Party B as a result of damage to the Premises caused by reason of failure of Party A to perform the repair and/or maintenance responsibilities set forth herein, during the Lease Term.

 

10.3.

If Party B fits out or adds fixtures in the Premises without the prior written consent of Party A or beyond the scope or requirement accepted by Party A in writing, Party A may demand Party B to make restitution of the Premises and pay compensation.

 

10.4.

Refer to the Supplemental Provisions hereof for details.

 

 

Article 11 Miscellaneous

 

11.1.

If Party A intends to mortgage the Premises during the Lease Term, it shall give a written notice to Party B.

 

11.2.

This Contract shall become effective as of being duly signed and sealed by both Parties.

 

11.3.

Any matter not covered herein shall be specified in the supplementary provisions reached by the Parties through friendly negotiation. The Supplemental Provisions and the appendices hereto are the integral parts of this Contract. The printed words or provisions hereof and those words inserted in the blank space intentionally left in this Contract, its Supplemental Provisions, as well as appendices attached hereto shall have same force. If there is any conflict between any supplementary provision or appendix and this Contract, the supplementary provision and the appendix shall prevail.

 

11.4.

Each Party has understood its rights, obligations and responsibilities hereunder when this Contract is entered into, and agrees to strictly comply with the terms and conditions of this Contract. If either Party breaches this Contract, the other Party is entitled to claim against the breaching Party for damages in accordance with this Contract.

 

11.5.

This Contract shall be governed by and construed in accordance with the laws of the People’s Republic of China. Any dispute arising from or in connection with the performance of this Contract shall be resolved between both Parties through mutual friendly negotiation; if no successful settlement can be reached through negotiation, the second option indicated below will be used by the Parties to resolve the dispute:

 

(i)

Submit to Shanghai Arbitration Commission for arbitration;

 

(ii)

File an action before the people’s court where the Premises are located.

 

11.6.

This Contract, together with its appendices attached hereto, are made and executed in five counterparts. Each Party shall keep two counterparts respectively, and the remaining one counterpart shall be filed with Shanghai Pudong New Area Real Estate Exchange Center. All counterparts hereof shall have the equal legal effect.

 

11.7.

Refer to the Supplemental Provisions hereof for details.

 

 

Supplementary Provisions

 

In accordance with Article 11.3 of the Shanghai Premises Lease Contract entered into by the Parties (hereinafter referred to as “This Contract”), the Parties hereby enter into the Supplemental Provisions with respect to the following matters (hereinafter referred to as “Supplementary Provisions”). These Supplementary Provisions, the body of the Contract and all annexes and appendices hereto are collectively referred to as the “This Contract”. In case of any consistence between the body of the Contract and these Supplementary Provisions or any annex or appendix hereto, these Supplementary Provisions and the annex or appendix hereto shall prevail.

 

(Paste Here)	(Perforated Rider Seal Here)

 

1.

Definitions

 

For the purpose of this Contract, the following terms shall have the meaning defined below, unless it is otherwise required in the context:

 

1.1.

“Handover Date” shall mean the date of July 16, 2021 as agreed upon by both Parties in Article 3.1 of this Contract.

 

1.2.

“Commencement Date” shall mean the date of September 16, 2021, or another date stipulated herein, or another date agreed upon by both Parties in writing.

 

1.3.

“Lease Term” shall mean the period from the Commencement Date to the date of termination of this Contract.

 

1.4.

Party B shall comply with the tenant decoration guidelines and the Building’s tenant manual, as well as other rules regarding the Premises and the public areas and public facilities formulated and/or amended from time to time by the property manager and/or Party A. Such guidelines, manual, rules and the updates and amendments notified by the property manager and/or Party A to Party B in writing from time to time shall be incorporated herein and become an integral part of this Contract.

 

1.5.

Party B agrees that, the floor number of the Premises as described in Article 1.1 of this Contract is solely designated by Party A and may not be the same as the actual floor. If the said number is different to the actual floor number, Party B will not make any claim or any other demand against Party A due to such difference.

 

1.6.

Party A has the right to hold or organize, or permit others to hold or organize any ceremonies, exhibitions, merchandise displays or promotional activities in any public area of the Building at the time, conditions and period it deems appropriate. For the purpose of this Contract, “Public Area” means that the public area of the Building that Party A grants Party B a non-exclusive right shared with other tenants, for Party B to access the Premises and use the Premises only, subject to the terms and conditions of this Contract. The property manager and/or Party A shall have the right to reasonably limit the scope of use mentioned above.

 

1.7.

The Premises are the property located at Unit 02, 5th Floor, Block A, Chamtime Plaza, No. 1, Lane 2889, Jinke Road, Pudong New Area.

 

2.

Supplemental Provision to Article 3 “Handover Date and Lease Term” of this ContractBoth Parties agree that the Commencement Date shall be the date of September 16, 2021. The Lease Term shall be 24 months, from September 16, 2021 to September 15, 2023.

 

2.2.

If Party A fails to hand over the Premises to Party B on the Handover Date, Party B agrees to give Party A a 30-day grace period. In this case, the decoration period and/or Lease Term shall be extended according to the number of days extended by Party A. After the grace period, if Party A still fails to hand over the Premises to Party B, Party A shall give Party B an extra day of rent-free period for each day of delay. If the handover is delayed for more than 90 days, Party B may choose to terminate this Contract, and Party A shall refund the Deposit (without interest) paid by Party B within 30 days upon early termination of this Contract.

 

 

If Party B does not choose to terminate this Contract, Party A may continue to negotiate with Party B to postpone the Handover Date after the 90-day grace period until Party A finally hands over the Premises to Party B.

 

If Party B fails to sign this Contract or fails to pay the Deposit as specified in Article 4.1 hereof on time, Party A is not obliged to give Party B the rent-free period mentioned above.

 

If Party B fails to go through the formalities for inspection and acceptance of the Premises on the Handover Date, the expiry date of the decoration period and the rent-free period and the starting date of the Lease Term specified herein shall remain unchanged, and the days of the period from the Handover Date to the date of completion of the said formalities shall be deducted from Party B’s decoration period (if any) and the Lease Term. Party A shall have the right to charge Party B the management fee, overtime air-conditioning fee and other fees from the starting date of the Decoration Period in accordance with this Contract.

 

2.3.

Handover Procedures and Standards:

 

2.3.1.

Party B shall inspect and accept the Premises together with Party A on the Handover Date. After the acceptance, both Parties shall sign a leased commercial premises handover form and go through the handover formalities.

 

2.3.2.

Party A guarantees that on the Handover Date, Chamtime Plaza (including the Building, elevator halls and stairwells, etc.) has passed the inspection and commissioning required by the applicable laws and regulations, and Party A has obtained the permit and license required for the lease and operations of the office building under the laws and regulations. In addition, Party A will comply with the land, building and property laws and regulations and maintain such permit and license full force and effect throughout the License Term.

 

2.3.3.

For details of Party A’s handover standards, please refer to Appendix C. If the Premises fail to meet the handover standards, it shall be treated as Party A’s delay in handover and Party A shall make remedy.

 

2.3.4.

Party B shall commence the decoration in the Premises after the completion of handover procedures, and its decoration works shall comply with this Contract and the rules regarding decoration provided by Party A and/or the property manager.

 

If Party B intends to do the decoration in advance and Party A agrees so in writing, the date when Party B enters into the Premises shall be deemed as the Handover Date and it shall be deemed that Party A has handed over the Premises.

 

2.4.

Decoration period and the rates of fees during the decoration period:

 

2.4.1.

Party A agrees to grant Party B a two-month decoration period from July 16, 2021 to September 15, 2021. Except exemption of the rent the decoration period, Party B shall perform all its obligations under this Contract, including but not limited to the due and payable property management fee, electricity bill, energy service fee, air conditioning fee beyond the normal business hours (if any), any tax and/or charge payable by Party B related to the Premises and all other fees and expenses incurred from Party B’s use of the Premises, from the Handover Date.

 

 

2.4.2.

During the decoration period, the property management fee shall be reduced by 50%, i.e. RMB [16.00] per month per square meter of GFA; however, if Party B starts its office operations in the Premises during the decoration period, 100% property management fee shall be paid by Party B from the date when Party B starts its office operations in the Premises.

 

2.5.

Renewal and Rent Adjustment. If Party B intends to renew the lease after the Lease Term, it shall give a written notice of its intention of renewal to Party A at least six (6) months prior to the expiration of the Lease Term, and Party B must rent the Premises in whole during the renewal term. Party A has sole absolute discretion to approve or disapprove the renewal, while Party B has the priority to renew the lease under the equivalent conditions. The rent and lease terms and conditions during the renewal term will be agreed upon by the Parties according to the market conditions and a renewal lease contract will be signed. If Party B does not give a notice in accordance with the agreements mentioned above, it shall be deemed as a waiver of renewal.

 

3.

Supplemental Provision to Article 4 “Rent, Terms and Time Limit of Payment” of this Contract

 

3.1.

Price of Rent and Monthly Rent:

 

3.1.1.

Party B shall, on the Commencement Date (other than the Decoration Period), pay the rent of the month thereof to Party A. The price of rent is RMB [6.30] per day per square meter of GFA (“Daily Rent”). The monthly rent shall be calculated according to the following formulas:

 

Monthly Rent (RMB [105,491.48]) = Daily Rent (RMB [6.30]) × 365 days / 12 months × GFA of the Premises (550.51 m²)

 

3.1.2.

The rent of the Premises is fixed during the Lease Term (i.e. from September 16, 2021 to September 15, 2023).

 

3.2.

The rent shall be paid by Party B as follows:

 

3.2.1.

The rent and the property management fee for the first month shall be paid prior to the Handover Date, and subsequently, the monthly rent shall be paid on or before the 25th day of previous month in advance. Party A shall issue a valid invoice for the payment to Party B within five (5) business days upon receiving the payment from Party B.

 

3.2.2.

Party B shall remit the monthly rent to Party A’s account below within the time limit according to Article 3.2.1 hereof and provide a proof of payment by fax or any other means acceptable to Party A on the date of payment:

 

RMB Account:

 

Account Name: Shanghai Changtai Business Management Co., Ltd.

 

Bank: Industrial and Commercial Bank of China, Shanghai Baoshan Sub-branch

 

Account Number: 1001233329005614092

 

3.2.3.

Party B may also make payment by other means designated by Party A from time to time. All charges incurred from the payment shall be borne by Party B.

 

3.3.

If Party B delays payment, it shall pay 0.05% of the overdue amount on a daily basis as a late fee.

 

 

3.4.

Both Parties hereby confirm that the rent payable by Party B to Party A hereunder is exclusive of property management fee, electricity bill, energy service fee, air conditioning fee beyond the normal business hours (if any), all taxes and charges payable by Party B related to the Premises and all other fees and expenses incurred from Party B’s use of the Premises.

 

4.

Supplemental Provision or Amendment to Article 5 “Deposit and Other Fees” of this Contract

 

4.1.

Deposit:

 

4.1.1.

The Deposit under this Contract shall equal to the sum of the rents and the property management fees for three months, i.e. RMB [369,323.40] (“Deposit”).

 

Both parties confirm that, as the lease deposit under the Letter of Intent, Party B has paid Party A the rent for one (1) month, i.e. RMB [105,491.48] plus the property management fee for one (1) month, i.e. RMB [17,616.32] , total RMB [123,107.80]. After the signing of this contract, the lease deposit will be automatically converted to a part of the deposit under this contract.

 

Party B has wired the corresponding deposit to the following account of Party A by wire transfer in accordance with the time limit specified in this supplementary provisions and has provided the corresponding proof of payment by fax or other methods approved by Party A on the payment day:

 

The above rent for one (1) month rent shall be paid to the following RMB account: Account Name: Shanghai Changtai Business Management Co., Ltd.

 

Bank: Industrial and Commercial Bank of China, Shanghai Baoshan Sub-branch Account Number: 1001233329005614092

 

The above property management fee for one (1) month shall be paid to the following RMB account:

 

Account Name: Shanghai Changtai Business Management Co., Ltd.

 

Bank: China Minsheng Bank Shanghai Caohejing Sub-branch

 

Account Number: 694622009

 

Within 7 days after the execution of this Contract or prior to the Handover Date specified in Article 1.1 hereof, whichever is earlier, Party B shall pay the sum of rents for two (2) months, i.e. RMB [210,982.96] plus the sum of property management fees for two (2) months, i.e. RMB [35,232.64], total RMB [246,215.60].

 

Party B shall remit the Deposit to Party A’s accounts below respectively within the time limit specified herein and provide a proof of payment by fax or any other means acceptable to Party A on the date of payment:

 

The sum of rents for two (2) months shall be paid to the following RMB account:

 

Account Name: Shanghai Changtai Business Management Co., Ltd.

 

Bank: Industrial and Commercial Bank of China, Shanghai Baoshan Sub-branch

 

Account Number: 1001233329005614092

 

The sum of property management fees for two (2) months shall be paid to the following RMB account:

 

Account Name: Shanghai Changtai Business Management Co., Ltd.

 

Bank: China Minsheng Bank Shanghai Caohejing Sub-branch

 

Account Number: 694622009

 

 

4.1.2.

If Party B violates any provision of this Contract within the term of this Agreement, Party A has the right to deduct any amounts payable by Party B (including but not limited to rent, property management fee, overtime air-conditioning fee and other fees), liquidated damages and/or indemnification for Party A’s damages caused by Party B or its employees, agents, or visitors/customers, from the Deposit. If the balance of the Deposit in Party A’s account is less than the amount specified in this Article 4.1.2 due to such deduction and/or compensation, Party B shall pay the difference to Party A within 3 business days upon receipt of a written notice from Party A. However, Party B shall not use the Deposit to offset any other payable amounts, including but not limited to the monthly rent, property management fee or other fees payable by Party B.

 

4.1.3.

Upon expiration of this Contract, if Party A confirms that Party B has returned the Premises and the parking lot and fully paid the due and payable amounts, Party A shall refund the Deposit in full (without interest) within one month. If Party B fails to pay any payable amount, Party A shall have the right to deduct such amount from the Deposit, and shall have the right to recover the deficiency (if any) from Party B, or shall refund the balance (if any) to Party B (without interest).

 

4.1.4.

Party B shall not transfer the Deposit to any third party as a security for its debts to the third party.

 

4.1.5.

Party B shall maintain the Deposit in the amount specified in Article 4.1.1 hereof during the Lease Term.

 

4.2.

Property Management Fee. The property management fee shall be RMB [32.00] per month per square meter of GFA. The monthly property management fee shall be RMB [17,616.32]. The monthly property management fee shall be paid on or before the 25th day of the previous month in advance. Party A reserves the right to uniformly adjust the property management fees of Changtai Plaza based on actual conditions.

 

Party B shall remit the deposit for the property management fee and the monthly property management fee to Party A’s account below (or another account designated by Party A) within the time limit specified herein and provide a proof of payment by fax or any other means acceptable to Party A on the date of payment:

 

RMB Account:

 

Account Name: Shanghai Changtai Business Management Co., Ltd.

 

Bank: China Minsheng Bank Shanghai Caohejing Sub-branch

 

Account Number: 694622009

 

4.3.

Electricity Bill. Party B shall pay electricity bill and other utilities and corresponding energy service fee according to the actual consumption of electricity showed in the separately installed electricity meter.

 

4.4.

Overtime air-conditioning fee.

 

4.4.1.

The “non-business hours” referred to in Article 5.2 of this Contract shall mean any time except 8:30 AM - 7:00 PM Monday to Friday and 8:30AM – 13:00PM Saturday, and Sundays, statutory holidays and any other breaks as the government advises business enterprises and public institutions to implement. If Party B requests the air-conditioning service during non-business hours, it shall submit a written request to Party A or the property manager at least one business day in advance and shall pay the fees for the period supplying the air-conditioning service as requested. The overtime air-conditioning fee shall be paid together with the property management fee for the next month. Refer to the property management service manual for the rate of air-conditioning service during non-business hours, which should be RMB380.00/hours/floor.

 

 

4.5.

The costs of energies (including electricity, air-conditioning fee and energy service fee, etc.) actually consumed by Party B shall be borne by Party B. Such costs shall be calculated and allocated as follows:

 

4.5.1.

For the costs not measured by separate meters and other unforeseen expenses, they shall be determined by Party A or its designated property manager with a reasonable method, such as leased area, office hours, or overtime work hours.

 

4.5.2.

Other fees and charges assessed by the laws and government regulations on the use of the Premises shall be paid according to the laws or regulations.

 

4.6.

Party B hereby confirms that, if it fails to pay any other amount due and payable hereunder as scheduled, Party A and the property manager shall have the right to recover Party B from the delinquent amount and charge a late fee (according to Article 9.2 of these Supplementary Provisions) against Party B.

 

5.

Supplementary Provisions or Amendment to Article 5 “Use Requirements and Maintenance Responsibilities” of This Contract

 

5.1.

Party A’s responsibility for maintenance of the Premises is limited to the main structural part of the Premises, public areas and public facilities, and the fixtures in the Premises provided by Party A that have not been modified or added by Party B. For the avoidance of doubt, unless otherwise stipulated in this Contract, during the Lease Term, Party B’s responsibility for maintenance and replacement includes but is not limited to the following:

 

(i)

The fixtures and equipment (including but not limited to air-conditioning system, power expansion equipment, fire alarm device and sprinkler system) in the Premises provided by Party A and modified by Party B;

 

(ii)

The consumables provided by Party A;

 

(iii)

The facilities furnished by Party B.

 

The “fixtures” referred to herein shall mean the fixtures listed in Appendix C attached to this Contract.

 

If Party B becomes aware that there is any damage to or failure in the fittings, facilities or equipment in the Premises and listed in Appendix C attached hereto, it shall promptly give a notice requesting Party A or the property manager to repair, and shall not repair it by itself without prior authorization (provided that, in some urgent cases, Party B may make certain necessary interim repair to the extent that such repair is for the purpose of mitigating immediate damages or risks to any property or employee of Party B). Party B shall be liable for any damages, personal injury and property losses resulting from any repair and maintenance conducted by Party B or its employees or agents on any damage to or failure in the Premises or any fittings, facilities or equipment listed in Appendix C attached hereto. If it is impossible for Party A or the property manager to make repair within 24 hours upon receiving the notice from Party B, due to the special nature of the damage or failure, additional time shall be granted to Party A or the property manager necessary for making or completing the repair.

 

 

5.2.

Entry inspection (supplementing Article 6.3 of this Contract). If Party A or the property manager hired by Party A has to enter the Premises for maintenance, environmental sanitation, anti-theft, fire prevention, disaster prevention, rescue or other management purposes of the Building, Party A shall notify Party B in writing at least 24 hours in advance, except in the event of any emergency, in which case, Party A shall notify Party B promptly afterwards (for emergency arrangement, refer to Article 11.1 of these Supplementary Provisions).

 

5.3.

All costs and expenses incurred from the matters mentioned in Article 6.4 of this Contract shall be borne by Party B, but Party A shall give necessary assistance to Party B in obtaining relevant approvals. The equipment and facilities added by Party B shall remain the property of Party B, and Party A is not responsible for maintenance of such equipment and facilities. Upon request of Party B, Party A shall assist Party B in repair, and the reasonable costs for such repair shall be borne by Party B. In this case, Party B shall cooperate with and support Party A’s operations.

 

All costs and expenses incurred from the decoration, fixtures or equipment added by Party B, including but not limited to costs of fit-out, addition and modification, costs of equipment and materials, as well as all taxes and government charges incurred therefrom, shall be solely borne by Party B.

 

5.4.

Civilized Construction. In view of the different move-in date of the tenants, in order to ensure the normal business environment of the tenants who move into the Building before Party B, Party B shall carry out decoration works during the decoration hours specified by Party A and in the manner of civilized construction. Party B shall not pile up construction materials or tools on the public passage or any place outside the Premises. If Party B violates this provision, it shall indemnify Party A or other tenants against all losses and damages resulting therefrom.

 

5.5.

Liabilities for the acts of third parties. If any sub-tenant, sub-lessee, employee, worker, customer, visitor, servant, agent or licensee of Party B, or any person permitted by Party B explicitly or impliedly to use or occupy the Premises commits any breach of contract, negligence or default, it shall be deemed as Party B’s breach, negligence or default and Party B shall be liable for it. For the avoidance of doubt, Party B shall indemnify Party A against and hold Party A harmless from any personal injury or property loss or damage to Party A and/or the property manager or any other person directly or indirectly caused by any of the following accidents resulting from any fault of Party B:

 

(i)

Failure or improper maintenance in any appliance, electric device or electric cable in the Premises;

 

(ii)

Blockage or damage to any water pipe or water closet in the Premises (if any);

 

(iii)

Spreading of fire or smoke in the Premises;

 

(iv)

Damage to any public area in the Building by Party B.

 

5.6.

Party A is not liable for any damage of Party B caused by any of the following events when Party B is using the Premises during the Lease Term:

 

5.6.1.

Natural disaster or any other force majeure;

 

5.6.2.

Damage caused by pest, theft, robbery or any other criminal offense;

 

5.6.3.

Any disaster not caused by Party A’s willful misconduct or negligence;

 

5.6.4.

Interruption in supply of water, electricity or gas caused by the normal maintenance or first-aid repair of the Building or adjacent unit;

 

5.6.5.

Any damage caused by any other tenant;

 

 

5.7.

Engineering and Fit-out Works:

 

When carrying the decoration or fit-out works, Party B shall comply with this Contract, the tenant decoration guidelines and the tenant manual and other regulations and rules regarding decoration or fit-out developed and/or amended by Party A and/or the property manager from time to time.

 

If Party B violates this Contract, the tenant decoration guidelines and the tenant manual and other regulations and rules regarding decoration or fit-out developed and/or amended by Party A and/or the property manager from time to time, it shall be liable for all consequences arising therefrom, including but not limited to the costs and expenses of removal, addition and modification required by the government authorities. In addition, Party B shall indemnify Party A against all losses, claims, expenses and actions resulting from Party B’s violation of this provision. If Party B fails to do so, Party A shall have the right to deduct and collect such costs and expenses from the Deposit, and recover the deficiency (if any) from Party B.

 

5.8.

If any government authority imposes any rectification requirement on the decorations performed or completed by Party A according to Party B’s requirements or the decorations performed or completed by Party B in the Premises (including but not limited to firefighting facilities) at any time during the Lease Term, Party B shall make correction as required by the government authority. All liabilities and costs incurred from such correction shall be solely borne by Party B, including but not limited to any liabilities and costs caused from its influence on the tenants of adjacent units. Party A is not liable for such liabilities and costs.

 

5.9.

Partition and Decoration. If Party B needs to partition and decorate the Premises, it shall provide Party A with a copy of the design and construction drawings 14 days before construction. If Party A has reviewed and approved it, Party B shall sign a decoration commitment letter to Party A.

 

5.10.

Party B shall strictly comply with the Decoration Code and the User Manual.

 

6.

Supplementary Provisions or Amendment to Article 7 “Conditions of Returned Premises” of This Contract

 

6.1.

Party B shall return the Premises to Party A no later than 5:30 PM on the date of termination of this Contract. If Party B fails to return the Premises within the time limit without Party A’s prior written consent, from the day next to the date of termination of this Contract to the date of actual return of the Premises, Party B shall pay Party A the occupancy fee at two times of the Daily Rent specified in Article 3.1.1, the property management fee and other fees due and payable by Party B for the use of the Premises. If Party B’s delay to vacate the Premises causes other damages to Party A, Party B shall also indemnify Party A against such damages. However, payment of the occupancy fee, property management fee and damages shall not be construed as renewal or continuation of the lease.

 

6.2.

Upon expiration of the Lease Term or early termination of this Contract, Party B shall immediately restore the Premises and all fixtures, fittings and equipment in the Premises to the original conditions according to the standards of Chamtime Plaza, and after it is inspected and confirmed by Party A (but Party A shall not unreasonably withhold or delay the inspection and confirmation), Party B shall return the Premises in good and leaseable conditions (other than normal wear and tear) to Party A. Both Parties may also agree to keep any interior decoration, fit-out or fitting in the Premises, but Party A shall not be required to make any compensation to Party B. Party B undertakes that, regardless of the termination of this Contract due to whatever reason, Party B will not claim any compensation against Party A, including the compensation for any decoration or fit-out in the Premises or any facility added by Party B after the Premises are handed over to Party B.

 

 

6.3.

If Party B fails to return the Premises to Party A upon expiration of the Lease Term or early termination of this Contract, in addition to receiving from Party B, from the date next to the date of termination of this Contract and on a daily basis, the occupancy fee (at two times of the Daily Rent specified in Article 3.1.1), the property management fee (on a daily basis at the rate of the then daily property management fee) and other fees, Party A shall also have the right to open the locks of the Premises and replace the locks and keys of the Premises three (3) days after expiration or early termination (as the case may be) of this Contract at the presence of Chinese notary public or Chinese lawyer as witness, and remove all items out of the Premises, including but not limited to furniture, fixtures and other additions, and vacate and repossess the Premises. The costs of removal, notarization fee or attorney’s fee shall be solely borne by Party B. Party A is not liable for any damages or Party B’s losses resulting therefrom. For the items left by Party B in the Premises, Party A shall have the right to charge a storage fee against Party B, and shall also have the right to, by the means it considers appropriate, sell, transfer, discard or otherwise dispose of such items and use the proceeds therefrom (if any) to offset any amounts owed by Party B to Party A and indemnify Party A against all damages actually incurred or to be incurred from such event. However, at no events Party A shall pay any amount or make compensation to Party B for such items.

 

6.4.

If Party B fails to return the Premises in accordance with the provisions of this Contract, Party A shall have the right to take all necessary actions to make the return of the Premises comply with the provisions of this Contract or the applicable laws and regulations at the costs of Party B. In addition, Party B shall pay the occupancy fee, property management fees and other fees in accordance with Article 6.3 hereof to Party A according to the days that Party A spends to make the return of the Premises comply with the provisions of this Contract and the applicable laws and regulations. If Party B fails to return the Premises in accordance with the provisions of this Contract and causes other damages to Party A (including but not limited to Party A’s acquirable interests of leasing the Premises to any third party, and the liquidated damages paid by Party A under any other lease contract arising from delay to hand over the Premises to another tenant due to the delay in return hereunder), Party B shall also indemnify Party A against such damages.

 

6.5.

If Party B uses the address of the Premises as the registered address of Party B’s for the corporation registration or other relevant licenses, approvals or permits, Party B shall provide the proof showing that the registered address has been changed to another address when Party B returns the Premises. If Party B fails to comply with the provisions above, Party A has the right to temporarily retain Party B’s Deposit until the change registration of Party B’s registered address has been completed. If Party A has refunded the Deposit and then finds that Party B failed to actually handle or complete the cancel or change the registration in which the address of the Premises is used as the registered address or business address, it shall be deemed as Party B’s breach, and Party A has the right to charge liquidated damages against Party B equal to the sum of monthly rents for two months.

 

7.

Supplementary Provisions or Amendment to Article 8 “Sublease, Assignment and Exchange” of This Contract

 

7.1.

Sublease.

 

7.1.1.

Without the written consent of Party A, Party B shall not transfer, sublease or otherwise leave the possession of the Premises or any part thereof, whether by subletting, permitting, lending, sharing or any other way, resulting any third party to obtain the use or possession of the Premises or any part thereof, regardless of whether such use or possession is paid rent or other forms of consideration. If Party B violates this provision, Party A shall have the right to intermediately terminate this Contract, repossess the Premises and hold Party B responsible for the breach.

 

7.1.2.

If Party B obtains Party A’s written consent to sublease/subletting, Party B shall procure its sub-tenant/sub-lessee to comply with this Contract and the rules and regulations established by Party A, and be jointly and severally liable for the obligations of the sub-tenant/sub-lessee under this Contract and the sublease/subletting contract.

 

 

7.1.3.

In case of subleasing/subletting the Premises with Party A’s written consent, the sublease/subletting contract shall meet the following requirements:

 

7.1.3.1.

The expiry date of the sublease/subletting contract shall not be later than the expiry date of this Contract; otherwise, the excessive period shall be invalid, and Party A shall have the right to repossess the Premises from Party B and/or its sub-lessee upon expiration of the Lease Term of this Contract.

 

7.1.3.2.

During the sublease/subletting term, in addition to the rights and obligations under the sublease/subletting contract, Party B shall continue performing its obligations under this Contract and shall be jointly and severally liable for the obligations of the sub-tenant/sub-lessee.

 

7.1.3.3.

During the sublease/subletting term, the sublease/subletting contract shall be modified, terminated or expired accordingly upon modification, termination or expiration of this Contract.

 

8.

Supplementary Provisions or Amendment to Article 9 “Conditions for Termination” of This Contract

 

8.1.

The Parties agree to amend Article 9.2 of this Contract as follows:

 

Both Parties agree that the non-breaching Party may terminate this Contract by giving a written notice to the breaching Party upon occurrence of any of the following circumstances. In addition to requesting the breaching party to pay the liquidated damages, the non-breaching Party reserves the right to claim damages against the breaching Party for the losses suffered by the non-breaching Party as a result of such early off-lease by the breaching Party. The liquidated damages shall be equal to the sum of the Deposit plus 50% of the rent during the period from the date of the lease termination by the breaching Party and the expiry date of the Lease Term.

 

8.2.

Both Parties agree to add the following provisions after Article 9.2.6 of this Contract:

 

8.2.1.

Party B fails to pay the Deposit and/or defaults any amount due and payable under Article 5.2 of this Contract for more than one month;

 

8.2.2.

Party B changes the structure of the Premises without Party A’s written consent;

 

8.2.3.

Party B uses the Premises for any illegal purpose;

 

8.2.4.

Party B hinders or endangers any other tenant in the Building and fails to make effective remedy;

 

8.2.5.

Either Party breaches any provision of this Contract and fails to make remedy within the time period specified in the written notice of the non-breaching Party or in this Contract, whichever is longer;

 

8.2.6.

Party B damages any public facility in the Building or damages the overall image of the Building, and refuses to make compensation;

 

8.2.7.

Party B is voluntarily or involuntarily bankrupt, or any person applies to the court for liquidation of Party B and the court has accepted such application for bankruptcy and liquidation of Party B, other than liquidation for the purpose of reorganization or merger and with the written consent of Party A;

 

8.2.8.

Any other circumstances caused by either Party and thereby the other Party may early terminate this Contract in accordance with the laws and regulations;

 

 

8.2.9.

Failure to complete the delivery procedures within seven days after the Handover Date defined in Article 1.1 of these Supplementary Provisions above due to the reason of Party B.

 

8.3.

Both Parties agree that the damage, loss of or hazard to the Premises as mentioned in Article 9.1.4 of this Contract refers to any damage, loss of or hazard to the Premises not caused by Party B or its employees, agents, or visitors/customers. If the damage to or hazard on the Premises can be eliminated within 14 days upon occurrence or identification of such damage or hazard, and the reasonable business operation in the Premises and the services provided in the Building for the Premises can be reinstated within 14 days upon occurrence or identification of such damage or hazard, this Contract shall not be terminated; provided, however, Party B is not required to pay the rent during the period under such influence.

 

8.4.

Upon occurrence of the following event after the effective date of this Contract, Party B shall have the right to terminate this Contract on the date specified in the written notice sent to Party A. Party A shall refund the Deposit in full upon receiving the notice from Party B, and Party B shall not be liable for any compensation to Party A:

 

8.4.1.

The Premises cannot be used and leased for the intended purpose within the time period reasonably required by Party B, not due to Party B’s willful misconduct or gross negligence (i.e. any event of force majeure).

 

9.

Supplementary Provisions or Amendment to Article 10 “Liabilities for Breach of Contract” of This Contract

 

9.1.

During the Lease Term, either Party shall not terminate this Contract without reasonable cause. If either Party unreasonably terminates this Contract during the Lease Term, it shall be deemed as a material breach by the breaching Party. In this case, the liquidated damages shall be equal to the sum of the Deposit plus 50% of the rent during the period from the date of the lease termination by the breaching Party and the expiry date of the Lease Term. In addition, the non-breaching Party reserves the right to claim damages against the breaching Party for the termination of this Contract.

 

9.2.

If Party B is late to pay any amount due and payable under this Contract (including but not limited to rent, Deposit, property management fee, other costs or liquidated damages, or damages), Party B shall pay a late fee to Party A at 0.05% of the defaulted amount on a daily basis. If Party B’s delay in payment exceeds 30 days, Party A may cut off the supply of water, electricity and any other utilities, or obstruct Party B from further using the Premises, and all consequences arising therefrom shall be solely borne by Party B. However, if Party A unreasonably stops the supply of water, electricity or any other utilities or obstructs Party B from using the Premises, all consequences arising therefrom shall be borne by Party A.

 

9.3.

Party B’s special obligations:

 

9.3.1.

Except for the designation and nameplate uniformly designed and provided by Party A or the property manager, Party B shall not install or display any advertisements, light boxes, bulletin boards, signs, decorations, flags, posters or other materials in the Premises facing outside the Premises, or outside the Premises, or on any place in any area visible outside the Building, or any public part or the Premises. If Party B violates the provisions above, Party A and/or the property manager shall have the right to remove such installed or displayed advertisements, light boxes, bulletin boards, signs, decorations, flags, posters or other materials, and all costs incurred therefrom shall be borne by Party B.

 

9.3.2.

In the Premises, Party B shall not engage in or permit or acquiesce any illegal or immoral activities, or religious activities or other activities that Party A deems inappropriate, or activities that are unwelcome to other tenants or others, or activities that interfere with or would interfere with other tenants or others’ normal use and access to the common parts of the Building or other premises in the Building.

 

 

9.3.3.

Unless otherwise agreed by Party A in writing, Party B may only use the name of the Building in its business address, and may not use the name or mark of the Building in its business or in any other way.

 

10.

Supplementary Provisions or Amendment to Article 11 “Miscellaneous” of This Contract

 

10.1.

Article 11.2 of this Contract shall be amended as follows:

 

The Chinese execution version of this Contract shall prevail. This Contract, together with its appendices attached hereto, shall be made and executed in five counterparts. Party A and Party B shall keep two counterparts respectively, and the rest will be temporarily kept by Party A for the filing of the lease. Upon termination of this Contract (including early termination or expiration of the Lease Term, etc.), Party A may apply for cancellation of the filing of this Lease Contract.

 

10.2.

Party B shall provide Party A with copies of the following documents (and check with the originals thereof for accuracy) on or before the date when this Contract is signed:

 

10.2.1.

Its company registration certificate and other incorporation approval documents.

 

10.2.2.

Its business registration certificate/business license.

 

10.2.3.

Other company documents related to the use of the company seal or the authorization of the signatory of this Contract.

 

10.2.4.

THE ID card or passport (photocopy) of the authorized signatory of this Contract.

 

10.3.

Both Parties agree that if these Supplementary Provisions conflict or are inconsistent with this Contract, the Supplementary Provisions shall prevail.

 

10.4.

The attorney’s fees of each Party related to this Contract shall be borne by each Party respectively. The stamp duty imposed on this Contract and the pre-lease/lease filing fee with respect to this Contract charged by the competent real property administration authority shall be borne by each Party respectively according to the applicable regulations.

 

11.

Excess to the Premises

 

11.1.

Party A and the property manager and their respective employees may, by giving a prior notice to Party B, access the Premises to conduct inspection or take appropriate actions for the purpose of maintenance, repair, sanitation, security, firefighting or person rescue of or in the Premises. Party A and the property manager and their respective employees shall use best efforts to give a notice to Party B at least one (1) day in advance, and shall take actions to minimize adverse effect on Party B’s operations in the Premises. In the event of any emergency whereby it is impossible to give a prior notice to Party B, Party A and the property manager and their respective employees may access the Premises to conduct inspection and taking necessary actions without prior approval of Party B, but shall contact with Party B promptly thereafter.

 

11.2.

Party A may lead potential assignee, new tenant or any other person interested, accompanied by Party B’s persons, to visit the Premises at any reasonable time within six (6) months prior to the expiration of the Lease Term, by giving a notice to Party B at least one day in advance; provided, however, Party A shall minimize the adverse effect of such activities upon Party B’s operations in the Premises.

 

 

11.3.

Where Party A accesses the Premises in accordance this provision, Party B shall provide reasonable assistance to Party A.

 

12.

Parking Space

 

12.1.

If Party B rents any parking spaces during the Lease Term subject to the availability of the parking spaces. The rent for underground unfixed parking spaces is RMB [750.00] per month per parking space.

 

12.2.

Party A reserves the right to adjust the rate of the rent of parking spaces at Chamtime Plaza according to the actual conditions.

 

13.

Other Matters

 

13.1.

Party A shall keep the facilities and equipment of Chamtime Plaza (including but not limited to air-conditioning system, water supply system, drainage system, lighting equipment, wire and cable facilities) in good conditions (except for normal wear and tear).

 

13.2.

Balcony on the same floor: Party B confirms that the Premises do not include the balcony on the same floor of the Premises, and Party B shall cooperate with the property manager of the Building in the daily cleaning, maintenance and repair of the balcony. If Party B intends to use such balcony, both Parties will negotiate and enter into a contract separately. If Party A uses the balcony on the same floor of the Premises, it will coordinate with Party B in advance and will not affect Party B’s normal office operations.

 

14.

Insurances

 

14.1.

Party A will purchase insurances only for the risks of the Premises and name the owner of the Premises as the beneficiary in such insurances. In event of any insured event, all insurance benefits paid by the insurer shall belong to Party A or the owner of the Premises. Neither any property losses caused to Party B nor any personal injuries caused to Party B’s staff as a result of such insured events shall entitle Party B to request to share any of such insurance benefits. Party B may, at its own costs, apply for property insurance for the properties or other items in the Premises, as well as employee health insurance and third party liability insurance.

 

14.2.

Party B shall not engage in and permit other parties to engage in any activity which may cause the insurances for the Premises to become invalid in whole or in part, or cause increase of insurance premium. If Party A is required to reinsure or its insurance premiums is increased due to Party B’s violation of the provisions of this Contract, Party B shall reimburse Party A for its reasonable costs.

 

15.

Waiver, Partial Validity and Nonexclusive Remedy

 

15.1.

Where Party A knows that Party B has breached this Contract and accepts the rent, it shall not be deemed as Party A’s waiver in respect of Party B’s breach. If Party A desires to waive any right under this Contract, such waiver shall be evidenced by written signature of Party A. In the event that the rent or any other amount paid by Party B is not sufficient, even if Party A has received such insufficient payment made by Party B, it will not affect the Party A’s right to recover the insufficient amount of the rent or any delinquent amount from Party B, nor it will affect the Party A’s right to take other actions in accordance with this Contract or the laws.

 

15.2.

If any provision of this Contract is held invalid, illegal, the invalidity or illegality of such provision will not affect the validity and legality of other provisions of this Contract.

 

15.3.

The rights and remedies of the Parties hereunder will not exclude or replace their respective rights and remedies under any applicable laws. If either Party breaches this Contract, the other Party may exercise or resort to any and all rights and remedies under this Contract and/or under all applicable laws, till all losses and damages of the other Party are fully compensated.

 

 

15.4.

Party B hereby agrees and acknowledges that, unless otherwise stipulated herein, Party B does not have any priority to lease or any similar right to the Premises (including priority to lease the Premises or any part thereof, or any other leaseable unit in the Building). Except as otherwise stipulated herein, if any laws or regulations give Party B any other priority or any priority to lease or any similar right to the Premises (including the priority to lease the Premises or any part thereof, or any other leaseable unit in the Building), Party B hereby expressly waives such priority, any priority to lease and similar rights.

 

The Parties hereby expressly agree that Party A may, with its own discretion, sell or mortgage the Premises during the term of this Contract, and may with its own discretion sell or otherwise dispose of the Premises at the price agreed upon with the mortgagee, without prior notice to or consultation with Party B. Party B hereby expressly agrees that it irrevocably and unconditionally waives its right to receive any notice and its right of first refusal to Party A’s mortgage and otherwise disposal of the Premises according to the provision above.

 

15.5.

Party A shall have the right to sell, rent, lease, transfer, divide, use or dispose of the Building or any part thereof in any way, or to set up mortgage or encumbrance (including naming right) on the Building or any part thereof, and shall have the right to assign its rights and interests under this Contract (including but not limited to assignment of the Deposit for the Premises) without Party B’s consent, to allow any person other than a party to this Contract to use or occupy the Building or any part thereof or assume or enjoy any and all rights and interests of Party A under this Contract. Party B shall not raise any objection to Party A’s above-mentioned actions, or bring a lawsuit against Party A for any breach of this Contract by the new owner for any compensation (including claim for the Deposit), provided that the new owner has acknowledged and recognized the rights of Party B under this Contract. In addition, Party A has the exclusive right to change the name of the Building at any time.

 

16.

Matters Not Covered

 

16.1.

Any matters not covered in this Contract may be determined by the Parties in a supplementary agreement through friendly negotiation.

 

17.

Notice

 

All notices and other communications required hereunder shall be in writing and sent to the following address or fax number by mail or fax:

 

Party A:	Shanghai Changtai Business Management Co., Ltd.		Party B:	Shanghai ShouTi Biotechnology Co., Ltd.
Attention:	Wu Liqun		Attention:	Song Qizhong
Address:	No. 369 Chuanqiao Road, Pudong New Area, Shanghai		Address:	Room 803, Building C, Lane 2889, Jinke Rd, Pudong New Area, Shanghai
Zip Code:	201206		Zip Code:	201203
Fax:	[***]		Fax:

 

The delivery date of any such notice shall be determined according to following principles:

 

(i)

Courier’s service, express delivery or expedited delivery: on the day of delivery;

 

 

(ii)

Mail: the 12th day after it is sent by air registered mail;

 

(iii)

Fax: the 1st business day after it is transmitted.

 

During the term of this Contract, if either Party changes its mailing address, it shall promptly give a written notice to the other Party.

 

18.

Undertakings

 

18.1.

Before signing this Contract, Party B has carefully read and understood the relevant documents provided by Party A to Party B relating to the Premises for signing this Contract, i.e. Appendix A: Floor Plan of the Premises; Appendix C: Status of Existing Decorations, Fixtures and Equipment, and Agreement Regarding the Decorations and Fixtures to be added by Party B with the Consent of Party A; the Memorandum. Party B also undertakes that it will comply with all provisions of these documents.

 

19.

Others

 

19.1.

Subject to the property management rules and regulations, Party B have the right to access the Premises 24 hours a day, 365 days a year.

 

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Appendix A

 

Layout Plan of the Premises (for informational purpose only)

 

(Paste Here)         (	Perforated Rider Seal Here)

 

 

 

 

 

Appendix B

 

Usage Scope, Conditions and Requirements for Use of the Shared or Common Parts of the Premises

 

(Paste Here)	(Perforated Rider Seal Here)

 

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Appendix C

 

Status of Existing Decorations, Fixtures and Equipment, and

 

Agreement Regarding the Decorations and Fixtures to be added by Party B with the Consent of Party A

 

(Paste Here)	(Perforated Rider Seal Here)

 

Handover Standards

 

1) Party A shall provide and install the mineral wool board ceiling required for the ceiling of the 5th floor of Block A, keel and lamps (grid fluorescent lamp), lattice raised floor, central air-conditioning system, fire-fighting system, smoke detector and spray. Party B shall bear the cost for the transformation of ceiling and electromechanical systems (including: strong and weak current systems, air conditioning and drainage systems, fire protection systems, etc.)

 

2) All latex painted walls (white) (except for the elevator hall and the glass curtain wall).

 

3) Party A will provide electric curtains.

 

 

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Landlord (Party A):	Tenant (Party B):
Shanghai Changtai Business Management Co., Ltd.	Shanghai ShouTi Biotechnology Co., Ltd.
Nationality:	Nationality: US
Legal Representative:	Legal Representative:
Registration Certificate/ID Card No.:	Registration Certificate/ID Card No.:
Address:	Address:
Zip Code:	Zip Code: 201203
Tel.:	Tel.:
Authorized Representative:	Authorized Representative:
Signature and/or Seal: /s/ Shanghai Changtai Business Management Co., Ltd.	Signature and/or Seal: /s/ Raymond Stevens
Date of Signature: 6/22/2021	Date of Signature: 6/22/2021
Signed at:	Signed at:

 

 

 

Exhibit 21.1

 

Name of Subsidiary	Jurisdiction of Incorporation or Organization
Annapurna Bio Pty Limited	Australia
Annapurna Bio, Inc.	Delaware
Basecamp Bio Hong Kong Limited	Hong Kong
Basecamp Bio Inc.	Cayman Islands
Basecamp Bio USA Inc.	Delaware
Gasherbrum Bio, Inc.	Delaware
Lhotse Bio, Inc.	Delaware
Shanghai Basecamp Biotechnology Co., Ltd. (上海倍勘生物技术有限公司)	People’s Republic of China
Shanghai ShouTi Biotechnology Co., Ltd.      (上海硕迪生物技术有限公司)	People’s Republic of China
ShouTi Hong Kong Limited	Hong Kong
ShouTi Inc.	Delaware