Chapter 285 Sunset Clause
War begins when you want it to, but it doesn't end when you want it to - that's what the Italians say.

There was no extreme pressure game of stabbing each other in the back. The rehearsed blitzkrieg on Poland actually ran headlong into the Maginot Line. The war situation was not what General Wang wanted to see from the beginning.

It was clearly another cold and silent night, but he seemed to hear a voice whispering in his ear: You are easier to beat than the Italians.

"So what you're saying is that Grapefruit shouldn't have been given the veto power."

The conference room of the combat command center was as busy as yesterday. The workplace elites were looking for any weapons to defend the front line. General Wang Yuanting Yuezhi sat in his office listening to the battle reports from the front line and giving instructions.

He looked like a calm and composed general, but unfortunately, the words that came out of his mouth made him lose his bearings instinctively, and he ended up making a big mistake.

Jin Xiu remained calm and silent. In just two days, she was completely numb. If you think it's my fault, then it's my fault.

There is no such thing as having both in this world. The original design of the "double veto power" ensured the maximum balanced deterrence of the two shareholders, Banana Entertainment and Grapefruit Capital, against Panda TV.

But isn’t the premise that rules are rules that they must be followed?

"After all, Xie Jingxing made his debut through mergers and acquisitions. There is no one in the country who is better at managing corporate management structures than him. Whether or not he has a 'veto power' does not affect the overall situation. He has already thought about this day."

Prince Wang was not stupid. He quickly realized that it was his own fault that caused his subordinates to suffer so much. He tried to make amends by saying, "Let's postpone tomorrow's interim board meeting. I should be able to give Zhou Hongyi a heads-up. What do you think?"

"Don't just say postpone. Invite Mr. Zhou to send the finance department to check the year-end financial situation. All business departments of the company have relevant performance reports to do, so they have to be busy during this period. The board meeting can be held in ten days or half a month."

Jin Xiu's confidence in his general fell to the bottom, and he taught him how to carry out the order like a child.

"He wants to remove me from my position as CEO, but he cannot remove me from my position as chairman. We can also use our 'veto power' to elect a new CEO in disguise."

Prince Wang skipped the embarrassing topic and continued, "So what is their purpose in doing this? Or can we use this to fight back at the shareholders' meeting?"

"Sunset clause." Jin Xiu said an English term lightly.

Prince Wang frowned and thought: "Hasn't the AB equity structure not been started yet?"

"After the next round of financing, which is the C round, Panda TV will automatically activate the AB equity structure combined with the sunset clause. During your tenure as CEO, the preferred shares you hold will have ten times the super voting rights."

Jin Xiu paused and emphasized: "After you no longer serve as CEO or Panda TV goes public for three years, the sunset clause will automatically take effect, the company's equity structure will return to a single equity structure with one share and one vote, and the super voting rights will be invalidated."

“This sunset clause applies to both time and events, and it starts when you become CEO.”

It is foreseeable that with the rapid development and accelerated financing of Panda TV, the equity structure will inevitably be diluted and diluted again and become extremely dispersed, and then follow the AB share structure route of Internet companies such as Alibaba, Didi, and New DAE.

So she designed a complete power framework from the beginning, citing the sunset clause that has gradually emerged in recent years, to help Banana Entertainment set corresponding development nodes.

Let's be frank. There is no need to carry out a large number of interest exchanges like Liu Qing of Didi did in order to cram all investors into a BVI framework to integrate an effective AB equity structure. The situation where investors run away on the eve of JD.com's IPO because they are dissatisfied with the equity structure will be completely eliminated.

But everything is relative. The sunset clause itself is the product of a compromise between investors and founders on equity, and everyone discusses it.

During a company's rapid development phase, investors will suffer some losses and give up their own rights in order to concentrate dispersed equity to accomplish big things. Often the founder who serves as CEO is the agent of concentrated power.

By the time the company is successfully listed and its business is stable, the founders who hold super voting rights have not doubled their equity returns. Having power but no money will obviously make it easy for them to use their power to enrich themselves. Therefore, they must surrender their super voting rights and restore equal voting rights. This is what a time-based sunset clause is.

The logic for the CEO position is the same. Not holding an important position cannot be highly consistent with the overall interests of the company, and the super voting rights will of course be invalidated, which is an event-type sunset clause.

This may not seem like a big deal at first glance, but the problem is that Grapefruit Capital is a seed round investor and Xie Jingxing is also a co-founder, so there are also corresponding sunset clauses.

When Panda TV's next round of financing automatically triggers the AB equity structure, Xiyou will have the priority right to match the follow-up investment, and the shares held will automatically be converted into preferred shares, with an additional board seat.

The sun sets, everything is over, but there is one person who refuses to leave!
Banana Entertainment's super voting rights are automatically invalidated, while Grapefruit's super voting rights take effect. It's really chilling.

"Xie Jingxing has also resigned as a co-founder. Isn't his sunset clause an event-based one?"

General Wang was so angry that his hands were shaking. Now he had thought it all through. Removing him from the CEO position was just one part of Xie Jingxing's evil ambition!
First, we need to discuss the "veto power" over financing. After all, Grapefruit is equivalent to an original shareholder. It is reasonable for it to have a veto power to protect its own rights and interests, and no one can say no.

Then he frivolously agrees to the sunset clause which is good for everyone, and when he gets what he wants, he secretly collects evidence for rebellion, and when the time is right, he gets rid of his CEO position, triggers the sunset clause and gets rid of his super voting rights, and then he monopolizes the super voting rights and completely seizes Panda TV.

During this process, Xiyou's veto power over major financing matters blocked his possibility of resistance. As long as he did not resign as CEO, he could veto the C round of financing indefinitely.

Without the C round of financing, he cannot trigger the super voting rights of AB shares, and he will not be able to use delaying tactics and "take office with illness" to use the super voting rights to keep the CEO position.

"His sunset clause also adapts to events and time, but the event-based principle is that he can serve as a director. In the next round of financing, Xiyou triggers the preferred stock agreement and will add a board seat, which is just right for him."

Jin Xiu was silent for a long time, then spoke softly with a complicated tone. Prince Wang used his trembling left hand to press the base of his right hand to relieve the numbness in his palm. His chest rose and fell, and his face turned red.

At that time, Xie Jingxing said that he was busy with work. Anyway, he was just an investor who provided money and ideas, and the specific management of the company still depended on Mr. Wang, so he only signed a time-based sunset clause.

He was thinking that he couldn't let this inhuman capital animal drive up the company's valuation and run away with the mess, so he specifically asked Grapefruit Capital to prioritize matching the follow-up investment price in the C round to provide a bottom line for the new lead investor, and then use the sunset clause associated with the board seats to restrict the other party to the Panda TV chariot and keep it within a controllable range.

"Stupid, I'm so stupid, I'm so fucking stupid!"

Prince Wang's lips trembled, and he closed his bloodshot eyes. He held his head with both hands and tried to suppress his emotions, and a muffled sound came out from between his teeth.

Jin Xiu was stunned for a moment, her eyes slightly red, she stood up dejectedly, walked forward and patted his shoulder.

Although Mr. Wang is not an excellent founder, he at least has ideas and is willing to put them into action, but he is so vulnerable.

She was also a weak person who was plotted to death. The perfect rules only existed on paper and were torn to pieces before they could be realized in reality.

Everyone knows how to arrange and combine the terms, clauses and agreements to maximize their own benefits. We are all professionals, so it's nothing great!
It’s just that you have a better eye for projects, better luck, and better timing.

Jin Xiu used to look at her colleagues who were standing on the top of the mountain in this way. She invested in Himalaya and several star projects, so at least she was standing on the mountainside.

Oh, are you qualified to say something that is outrageous in the world?

Facts have proven that, as God knows, she is just a drop in the ocean and doesn't deserve it.

…………

The sky is clear and cloudless.

A flight landed at the Shanghai airport. More than a dozen men and women in formal attire, along with a short, fair-skinned, bespectacled, gentle middle-aged man, got into the plane-welcoming convoy and headed straight for the Panda TV headquarters.

"He's from Wanda, the boss in charge of Wanda Finance, Mr. Qu."

"It's time to compete with each other. It seems that Boss Wang is still stronger. Yunshan Group doesn't have any financial business, so Boss Xie has to open up the territory and fill this business himself. The difference is obvious."

"If you say so, since ancient times, which emperor who maintained the status quo can compare with the founding emperor who conquered the world? How glorious is it to cry and go home to ask for support from your father? After the young ones are beaten, the old ones will come. Mr. Xie is definitely the protagonist Xiao Yan. Don't despise the young and poor!"

"Which village is Xiao Yan from? Don't look down on the poor young man. Xiao Xie is so rich, but he is still poor. He is so greedy that he wants to rob the company. If you ask me, he is not as good as Mr. Wang. If you keep nagging me, spit out the iPhone 5s you got as a prize at the annual meeting! You have to fight against the people who feed you. This is the same principle wherever you go."

"Alright, alright, stop complaining. Why are you two little brats worrying about a fight between gods? Do they care about the company and affect your decision to eat 9.9 BBQ rice takeout tonight?"

The supervisor interrupted the argument between two gossiping colleagues and walked into the meeting room holding a stack of freshly printed contracts that smelled of ink. The FA team, composed of Wanda's legal and investment backbones, will provide financial and financing services to Panda TV and Banana Entertainment.

…………

At Grapefruit Capital, Mr. He Chuan rolled his eyes and looked up at the sky and yawned, struggling to decide whether to go downstairs to have a drink of Starbucks to refresh himself or use the coffee beans provided by the company's tea room to make his own food.

"Uh, you, Xiao Zhou, go downstairs and buy some coffee. We have everything. You can choose whatever you want to drink."

In the end, he chose not to do anything and still had enough food and clothing, but he would have to spend more money. Fortunately, his girlfriend only wanted big things such as a house, children, and a marriage certificate, so he had plenty of freedom over his salary.

Zhou Wei came back with two large paper bags and delivered coffee to each colleague's workstation one by one.

Boss He Chuan happily walked out of his private office and came to the public office area: "Come, let me tell you something."

"Mr. He, please take a seat."

The pulleys of the chairs made a sound, and several people in the group gathered together to listen to the young boss's teachings. Zhou Weihan smiled and gave up his chair.

He Chuan patted his shoulder with relief and said, "Take a seat. The Panda TV project is progressing well. They can delay the interim board meeting as they wish. We will raise our demands as usual and follow through with legal procedures when our obligations are due."

"One more thing. Our investor relations may be affected. Please keep confidentiality in mind. If you have any questions, please report them to me directly. Please note that I mean any questions. Do not go to colleagues in other departments."

"Finally, Xiao Zhou, you should focus on the financial situation of Panda TV, mainly the cash flow and company equity. If you have any questions, ask your friends for help."

"If there is no doubt, then so be it. The Panda TV project is related to the strategic layout of our entire pan-entertainment investment map. Our media team's CEO Miao Nan has not made any moves since joining the company. We cannot hold them back and affect other teams."

He Chuan's summary was also a warning. Things were going too smoothly. It felt like the son of the richest man would be shattered at the slightest touch and had no power to resist. It would not be good if young people became arrogant and conceited because of this.

(End of this chapter)