FORM OF SERIES A TERM SHEETEN.docx

1、FORM OF SERIES A TERM SHEETENFORM OF SERIES A TERM SHEET-ENOffering TermsCompanyInvestor and/or its affiliates.FoundersInvestmentAmountUS$ in totalInvestmentStructure;SecuritiesThe Investor will purchase certain number of Series A Preferred Shares newly issued by the Company that represent % of the

2、share capital of the Company on a fully-diluted and as-converted basis immediately following the consummation of the transaction contemplated hereby.ValuationA fully-diluted pre-money valuation of US$ (including any and all shares reserved under the Companys employee stock option plan) and a fully-d

3、iluted post-money valuation of $ . The capitalization table of the Company is set forth on Schedule II attached hereto.Bridge LoanLoan AmountThe Investor will purchase certain convertible promissory note (the “Note”) with an aggregate principal amount of US$ .Terms of NoteThe key terms of each Note

4、are as follows:1.Maturity date: months after the closing of the Note financing (the “Note Closing”);2.Interest: simple interest of % per annum (zero interest if the Note is converted into Series A Preferred Shares); interest increased to % per annum upon occurrence of an event of default;3.No prepay

5、ment is allowed;4.Security: pledge of no less than % equity interest held by the Founders in the Company and the Domestic Company; Founders and the Company shall be jointly and severally liable for the obligations under the Note;5.Conversion: Each holder of the Note shall have the right (but not the

6、 obligation) to convert all (or any part of) of the outstanding principal amount of the Note (and, if so elected by such holder, any interest accrued thereon) into Series A Preferred Shares upon the Closing at a per share conversion price equal to (i) % of the per share purchase price for the Series

7、 A Preferred Shares (the “Per Share Price”) if the Closing is consummated within days of the Note Closing, or (ii) % of the Per Share Price if the Closing is consummated upon or after days of the Note Closing;6.Customary events of default including customary cross default provisions.Shares Purchase

8、AgreementRepresentation and WarrantieThe Group Companies and the Founders will make customary representations, warranties, covenants and indemnifications on a joint and several basis.Use ofProceedsThe proceeds will be used for product research and development, business expansion, and working capital

9、 and other purposes as agreed by the Investor.ClosingConditions1.Establishment of an appropriate legal and business structure acceptable to the Investor for the Companys operations, including (i) the execution of a set of customary Control Documents (as defined below) and (ii) the designation of an

10、Investor nominee to hold up to % equity interest in the Domestic Company;2.Execution of labor contract, invention assignment, confidentiality, non-compete and non-solicitation agreement by the Founders and Key Employees as agreed by the Investor with the applicable Group Company;3.Execution of direc

11、tor indemnification agreement between the Company and the director appointed by the Investor (the “Investor Director”);4.Execution of a customary management rights letter in favour of the Investor;5.Approval of transaction by the Investors investment committee;6.Completion of business, finance, and

12、legal due diligence by the Investor and its advisors to their satisfaction;7.All necessary approvals and consents having been obtained from existing shareholders, parties and relevant government authorities;8.Issuance of relevant legal opinions;9.No material adverse effect;10.Submission of a detaile

13、d business plan and budget for the twelve months following the Closing which is acceptable to the Investor;11.Execution of relevant transaction documents (including without limitation Shareholders Agreement, Memorandum and Articles and Share Restriction Agreement etc.) and satisfaction of conditions

14、 precedent contained therein;12.Representations and warranties of the Group Companies and the Founders being true, accurate and complete as of the Closing;13.Other closing conditions identified in the Investors due diligence or otherwise generally applicable to similar transactions.CovenantsThe Comp

15、any will provide ongoing covenants to (i) comply with the US Foreign Corrupt Practices Act, (ii) use of commercially reasonable efforts to avoid PFIC status and minimize the effects of CFC and PFIC status to the extent either occurs, (iii) comply with PRC law in all material respects, including, wit

16、houtlimitation, SAFE Circular 37 and SAFE Circular 7, (iv) file and r gister any equity pledge as contemplated by the transaction documents with the competent governmental authorities, and (v) take such other actions as may reasonably be deemed necessary by the Investor based on its due diligence.Me

17、morandum and ArticlesRights andPreferencesof Series APreferredSharesThe Series A Preferred Shares shall have the rights and preferences as set forth in Schedule I hereto which will be set forth in the Companys memorandum of association and articles of association.Shareholders AgreementBoard ofDirect

18、orsThe Board of Directors of the Company shall consist of directors. The Investor shall have the right to designate at least directors (and 1 observer). The board of directors of any other Group Company shall be similarly composed.Pre-emptiveRights to NewIssuancesAny holder of Series A Preferred Sha

19、res will have a preemptive right to purchase up to its pro rata share (based on its percentage of outstanding Ordinary Shares on an as-if-converted basis) of any securities offered by the Company (subject to customary exemptions) on the same price, terms and conditions as the Company proposes to off

20、er such securities to other potential investors, with a right of oversubscription if any holder of Series A Preferred Shares elects not to purchase its full pro rata share.Informationand InspectionRightsAny holder of Series A Preferred Shares shall receive (a) audited annual consolidated financial s

21、tatements within 120 days after the fiscal year-end, (b) unaudited quarterly financial statements within 45 days from fiscal quarter-end, (c) unaudited monthly financial statements within 30 days from fiscal month-end, (d) annual budget and business plan for the following fiscal year at least 30 day

22、s prior to the prior fiscal years end, and (e) other information in relation to the operation and financials of the Group Companies reasonablyrequested by a holder of Series A Preferred Shares. The Group Companies shall inform each holder of Series A Preferred Shares of any information that could ha

23、ve material adverse effect to the business, operation, inancial, and prospect of the Group Companies within two days of receiving such information. Each holder of Series A Preferred Shares will also be granted with customary inspection rights including access to Company facilities and personnel duri

24、ng normal business hours and with reasonable advance notification.TransferRestrictions;ROFR/Co-SaleUnless otherwise approved by the Investor, the Founders and other holders of Ordinary Shares (excluding holders of Ordinary Shares that have been converted from any Series A Preferred Shares) (the “Ord

25、inary Shareholders”) (if any) may not sell, assign, transfer, pledge, hypothecate, or otherwise grant any interest or right with respect to any and all of their Ordinary Shares (whether owned directly or indirectly through a holding entity, special purpose vehicle, etc.) except for bona fide estate

26、planning purposes or transfer to another entity wholly owned by the Founders prior to the Qualified IPO, provided that the Founders and other Ordinary Shareholders shall remain to be bound by related agreements and remain liable for any breach by the permitted transferee of any provision under relat

27、ed agreements and the permitted transferee shall agree to be bound by related agreements.The Ordinary Shares of the Companys securities held by the Founders and other Ordinary Shareholders (if any) are subject to the holders of Series A Preferred Shares right of first refusal and co-sale right (with

28、 certain customary exceptions) such that the Founders and other Ordinary Shareholders may not sell, transfer or exchange their Ordinary Share (whether owned directly or indirectly through a holding entity, special purpose vehicle, etc.) unless each holder of Series A Preferred Shares has an opportun

29、ity to either purchase the shares (with a right of overallotment if any holder of Series A Preferred Shares elects not to purchase its full pro rata share ) on a pro-rata basis (calculated based on the number of Ordinary Shares held by the related holders of Series A Preferred Shares on an as conver

30、ted basis) or participate in the sale on a pro- rata basis (calculated based on the number of Ordinary Shares held by the related holders of Series A Preferred Shares and the transferring Founder or other Ordinary Shareholders on an as converted basis).RegistrationRightsCustomary registration rights

31、 for U.S. capital market (including no less than 2 demand registration rights and unlimited Form F-3/S-3 and piggyback registration rights) and similar rights for other capital markets. The registration rights shall terminated upon the earlier of (a) when all shares of an Investor are eligible to be

32、 sold without restriction under Rule 144 and (b) the 5th anniversary of the Companys IPO.EmployeeStock OptionPlanImmediately prior to the Closing, % of the Companys fully-diluted share capital will be reserved for issuance pursuant to the Companys employee stock option plan to be adopted after the Clo