Baidu
Annual Report 2016

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Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549Form 20-F(Mark One) ☐REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934or ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2016.or ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Forthe transition period from to or ☐SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934Dateof event requiring this shell company reportCommission file number: 000-51469Baidu, Inc.(Exact name of Registrant as specified in its charter)N/A(Translation of Registrant’s name into English)Cayman Islands(Jurisdiction of incorporation or organization)Baidu CampusNo. 10 Shangdi 10th StreetHaidian District, Beijing 100085The People’s Republic of China(Address of principal executive offices)Jennifer Xinzhe Li, Chief Financial OfficerTelephone: +(86 10) 5992-8888Email: ir@baidu.comFacsimile: +(86 10) 5992-0000Baidu CampusNo. 10 Shangdi 10th Street,Haidian District, Beijing 100085The People’s Republic of China(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)Securities registered or to be registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which RegisteredAmerican depositary shares (ten American depositary shares representing one Class Aordinary share, par value US$0.00005 per share) The NASDAQ Stock Market LLC(The NASDAQ Global Select Market)Class A ordinary shares, par value US$0.00005 per share* The NASDAQ Stock Market LLC(The NASDAQ Global Select Market) *Not for trading, but only in connection with the listing on The NASDAQ Global Select Market of American depositary shares.Securities registered or to be registered pursuant to Section 12(g) of the Act:None(Title of Class)Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:None(Title of Class)Indicate the number of outstanding shares of each of the Issuer’s classes of capital or common stock as of the close of the period covered by the annual report.27,325,551 Class A ordinary shares and 7,401,254 Class B ordinary shares, par value US$0.00005 per share, as of December 31, 2016.Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of1934. Yes ☐ No ☒Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and postedpursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post suchfiles). Yes ☒ No ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” inRule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP ☒ International Financial Reporting Standards as issued by the InternationalAccounting Standards Board ☐ Other ☐ If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐Item 18 ☐If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent tothe distribution of securities under a plan confirmed by a court. Yes ☐ No ☐ Table of ContentsTABLE OF CONTENTS INTRODUCTION 1 FORWARD-LOOKING INFORMATION 1 PART I 2 Item 1. Identity of Directors, Senior Management and Advisers 2 Item 2. Offer Statistics and Expected Timetable 2 Item 3. Key Information 2 Item 4. Information on the Company 43 Item 4A. Unresolved Staff Comments 80 Item 5. Operating and Financial Review and Prospects 80 Item 6. Directors, Senior Management and Employees 110 Item 7. Major Shareholders and Related Party Transactions 119 Item 8. Financial Information 120 Item 9. The Offer and Listing 121 Item 10. Additional Information 122 Item 11. Quantitative and Qualitative Disclosures about Market Risk 131 Item 12. Description of Securities Other than Equity Securities 131 PART II 133 Item 13. Defaults, Dividend Arrearages and Delinquencies 133 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds 133 Item 15. Controls and Procedures 133 Item 16A. Audit Committee Financial Expert 134 Item 16B. Code of Ethics 134 Item 16C. Principal Accountant Fees and Services 134 Item 16D. Exemptions from the Listing Standards for Audit Committees 135 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 135 Item 16F. Change in Registrant’s Certifying Accountant 135 Item 16G. Corporate Governance 135 Item 16H. Mine Safety Disclosure 135 PART III 136 Item 17. Financial Statements 136 Item 18. Financial Statements 136 Item 19. Exhibits 136 SIGNATURES 143 i Table of ContentsINTRODUCTIONIn this annual report, except where the context otherwise requires and for purposes of this annual report only: • “we,” “us,” “our company,” “our,” or “Baidu” refers to Baidu, Inc., its subsidiaries, and, in the context of describing our operations andconsolidated financial information, our consolidated affiliated entities in China, including but not limited to Beijing Baidu Netcom ScienceTechnology Co., Ltd., or Baidu Netcom; • “user traffic” or “traffic” refers generally to page views and the reach of a website, with “page views” measuring the number of web pages viewedby internet users over a specified period of time except that multiple page views of the same page viewed by the same user on the same day arecounted only once, and “reach” measuring the number of internet users and typically expressed as the percentage of all internet users who visit agiven website; • “China” or “PRC” refers to the People’s Republic of China, and solely for the purpose of this annual report, excluding Taiwan, Hong Kong andMacau; • “shares” or “ordinary shares” refers to our ordinary shares, which include both Class A ordinary shares and Class B ordinary shares; • “ADSs” refers to our American depositary shares, and we effected a change of the ADS to Class A ordinary share ratio from 1 ADS representing 1Class A ordinary share to 10 ADSs representing 1 Class A ordinary share on May 12, 2010, which has the same effect as a 10-for-1 ADS split; • “U.S. GAAP” refers to generally accepted accounting principles in the United States; • “RMB” or “Renminbi” refers to the legal currency of China; • “$”, “dollars”, “US$” or “U.S. dollars” refers to the legal currency of the United States; and • all discrepancies in any table between the amounts identified as total amounts and the sum of the amounts listed therein are due to rounding.FORWARD-LOOKING INFORMATIONThis annual report on Form 20-F contains forward-looking statements that reflect our current expectations and views of future events. These statementsare made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statementsby terminology such as “may,” “will,” “expect,” “anticipate,” “future,” “intend,” “plan,” “believe,” “estimate,” “is/are likely to” or other similar expressions.We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believemay affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include, but are not limitedto: • our growth strategies; • our future business development, results of operations and financial condition; • our ability to attract and retain users and customers and generate revenue and profit from our customers; • our ability to retain key personnel and attract new talent; • competition in the internet search, online marketing and other businesses in which we engage; • the outcome of ongoing or any future litigation, including those relating to intellectual property rights; and 1 Table of Contents • PRC governmental regulations and policies relating to the internet, internet search and online marketing and the implementation of a corporatestructure involving variable interest entities in China.We would like to caution you not to place undue reliance on these forward-looking statements and you should read these statements in conjunctionwith the risk factors disclosed in “Item 3D. Key Information—Risk Factors.” Those risks are not exhaustive. We operate in a rapidly evolving environment.New risks emerge from time to time and it is impossible for our management to predict all risk factors, nor can we assess the impact of all factors on ourbusiness or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in any forward-lookingstatement. We do not undertake any obligation to update or revise the forward-looking statements except as required under applicable law.PART I Item 1.Identity of Directors, Senior Management and AdvisersNot applicable. Item 2.Offer Statistics and Expected TimetableNot applicable. Item 3.Key Information A.Selected Financial DataThe following table presents the selected consolidated financial information for our company. The selected consolidated statements of comprehensiveincome data for the three years ended December 31, 2014, 2015 and 2016 and the consolidated balance sheets data as of December 31, 2015 and 2016 havebeen derived from our audited consolidated financial statements, which are included in this annual report beginning on page F-1. The selected consolidatedstatements of comprehensive income data for the years ended December 31, 2012 and 2013 and the selected consolidated balance sheets data as ofDecember 31, 2012, 2013 and 2014 have been derived from our audited consolidated financial statements for the years ended December 31, 2012, 2013 and2014, which are not included in this annual report, with certain adjustment being made to the selected consolidated balance sheet data as of December 31,2013 as a result of our exchange of shares in Qunar Cayman Islands Limited, or Qunar, with Ctrip.com International, Ltd., or Ctrip. Our historical results donot necessarily indicate results expected for any future periods. The selected consolidated financial data should be read in conjunction with, and are qualifiedin their entirety by reference to, our audited consolidated financial statements and related notes and “Item 5. Operating and Financial Review and Prospects”below. Our audited consolidated financial statements are prepared and presented in accordance with U.S. GAAP. 2 Table of Contents For the Years Ended December 31, 2012 2013 2014 2015 2016 RMB RMB RMB RMB RMB US$ (In thousands except per share and per ADS data) Consolidated Statements of Comprehensive Income Data Revenues: Online marketing services 22,245,643 31,802,219 48,495,215 64,037,006 64,525,115 9,293,550 Others 60,383 141,705 557,103 2,344,723 6,024,249 867,672 Total revenues 22,306,026 31,943,924 49,052,318 66,381,729 70,549,364 10,161,222 Operating costs and expenses: Cost of revenues (6,448,545) (11,471,839) (18,885,450) (27,458,030) (35,278,945) (5,081,225) Selling, general and administrative (2,501,336) (5,173,533) (10,382,142) (17,076,383) (15,070,586) (2,170,616) Research and development (2,304,825) (4,106,832) (6,980,962) (10,175,762) (10,150,753) (1,462,013) Total operating costs and expenses (11,254,706) (20,752,204) (36,248,554) (54,710,175) (60,500,284) (8,713,854) Operating profit 11,051,320 11,191,720 12,803,764 11,671,554 10,049,080 1,447,368 Interest income 866,465 1,308,542 1,992,818 2,362,632 2,341,631 337,265 Interest expense (107,857) (447,084) (628,571) (1,041,394) (1,157,562) (166,724) Income (loss) from equity method investments (294,229) 22,578 (19,943) 3,867 (1,025,727) (147,735) Other income, net, including exchange gains or losses 449,738 140,951 336,338 24,909,964 4,301,785 619,586 Income before income taxes 11,965,437 12,216,707 14,484,406 37,906,623 14,509,207 2,089,760 Income taxes (1,574,159) (1,828,930) (2,231,172) (5,474,377) (2,913,594) (419,645) Net income 10,391,278 10,387,777 12,253,234 32,432,246 11,595,613 1,670,115 Less: Net loss attributable to non-controlling interests (64,750) (162,880) (943,698) (1,231,927) (36,656) (5,280) Net income attributable to Baidu, Inc. 10,456,028 10,550,657 13,196,932 33,664,173 11,632,269 1,675,395 Earnings per share for Class A and Class B ordinary shares(1) Basic 298.62 300.66 374.88 954.56 319.47 46.01 Diluted 298.29 300.23 373.43 951.49 318.62 45.89 Earnings per ADS (1 Class A ordinary share is represented by 10ADSs) Basic 29.86 30.07 37.49 95.46 31.95 4.60 Diluted 29.83 30.02 37.34 95.15 31.86 4.59 (1)As holders of Class A and Class B ordinary shares have the same dividend right and the same participation right in our undistributed earnings, the basic and diluted net incomeper Class A ordinary share and Class B ordinary share are the same for all the periods presented during which there were two classes of ordinary shares. The weightedaverage number of ordinary shares represents the sum of the weighted average number of Class A and Class B ordinary shares. Please see “Earnings Per Share” under Note17 to our audited consolidated financial statements included in this annual report for additional information regarding the computation of the per share amounts and theweighted average numbers of Class A and Class B ordinary shares. 3 Table of Contents As of December 31, 2012 2013 2014 2015 2016 RMB RMB RMB RMB RMB US$ (In thousands) Consolidated Balance Sheets Data: Cash and cash equivalents 11,880,632 9,691,797 13,852,725 9,959,932 10,898,463 1,569,705 Restricted cash 395,029 259,533 413,010 95,997 317,521 45,733 Short-term investments 20,604,223 27,481,642 42,698,831 57,969,242 78,943,065 11,370,166 Goodwill 3,877,564 16,864,350 17,418,895 15,395,573 15,342,096 2,209,721 Long-term investments, net 803,499 1,259,473 3,544,923 37,958,591 45,690,363 6,580,781 Total assets 45,668,890 70,357,365 99,118,062 147,853,308 181,997,391 26,213,076 Total liabilities 18,453,765 30,320,538 45,065,679 63,637,592 84,254,996 12,135,243 Total Baidu, Inc. shareholders’ equity 26,055,229 37,796,492 51,072,424 80,255,663 92,273,542 13,290,154 Total equity 26,181,842 40,036,827 52,157,881 80,267,837 92,250,419 13,286,824 Exchange Rate InformationOur business is primarily conducted in China and almost all of our revenues are denominated in RMB. However, periodic reports made to shareholderswill include current period amounts translated into U.S. dollars using the then current exchange rates, for the convenience of the readers. The conversion ofRMB into U.S. dollars in this annual report is based on the exchange rate set forth in the H.10 statistical release of the Board of Governors of the FederalReserve System. Unless otherwise noted, all translations from RMB to U.S. dollars and from U.S. dollars to RMB in this annual report were made at a rate ofRMB6.9430 to US$1.00, the exchange rate in effect as of December 30, 2016. We make no representation that any RMB or U.S. dollar amounts could havebeen, or could be, converted into U.S. dollars or RMB, as the case may be, at any particular rate, or at all. The PRC government imposes control over itsforeign currency reserves in part through direct regulation of the conversion of RMB into foreign exchange and through restrictions on foreign trade. OnMarch 24, 2017, the noon buying rate was RMB6.8803 to US$1.00.The following table sets forth information concerning exchange rates between the RMB and the U.S. dollar for the periods indicated. Exchange Rate Period Period-End Average Low High (RMB per U.S. Dollar) 2012 6.2301 6.2990 6.3879 6.2221 2013 6.0537 6.1412 6.2438 6.0537 2014 6.2046 6.1704 6.2591 6.0402 2015 6.4778 6.2869 6.4896 6.1870 2016 6.9430 6.6549 6.9580 6.4480 September 6.6685 6.6702 6.6790 6.6600 October 6.7735 6.7303 6.7819 6.6685 November 6.8837 6.8402 6.9195 6.7534 December 6.9430 6.9198 6.9580 6.8771 2017 January 6.8768 6.8907 6.9575 6.8360 February 6.8665 6.8694 6.8821 6.8517 March (through March 24, 2017) 6.8803 6.8976 6.9132 6.8785 Source: Federal Reserve Statistical Release (1)Annual averages are calculated using the average of month-end rates of the relevant year. Monthly averages are calculated using the average of thedaily rates during the relevant period. 4 Table of ContentsB.Capitalization and IndebtednessNot applicable. C.Reasons for the Offer and Use of ProceedsNot applicable. D.Risk FactorsRisks Related to Our BusinessIf we fail to retain existing customers or attract new customers for our online marketing services, our business, results of operations and growth prospectscould be seriously harmed.We generate substantially all of our revenues from online marketing services, a substantial majority of which are derived from our pay-for-performance,or P4P, services. Our online marketing customers will not continue to do business with us if their investment does not generate sales leads and ultimatelyconsumers, or if we do not deliver their web pages in an appropriate and effective manner. Our P4P customers may choose to discontinue their business withus, which are not subject to fixed-term contracts. In addition, third parties may develop and use certain technologies to block the display of our customers’advertisements and other marketing products on our Baidu platform, which may in turn cause us to lose customers and adversely affect our results ofoperations. Furthermore, as our auction-based P4P services enable our customers to bid for priority placement of their paid sponsored links, we may losecustomers if they find the bidding mechanism not cost effective or otherwise not attractive. Additionally, if our users do not increase their search frequencieson our platform, or our content ecosystem fails to offer rich and quality content that meets users’ tastes and preferences, or our users spend more time with orotherwise satisfy their search demands on competing platforms, or we otherwise experience user traffic decline due to any reason, it would be difficult for usto attract new customers or retain existing customers. Failure to retain our existing customers or attract new customers for our online marketing services couldseriously harm our business, results of operations and growth prospects.In recent years, our revenues from online advertising have increased. We believe our large user base and traffic provide advertisers with a broad reachand optimal monetization results. However, we cannot assure you that we will be able to continue to attract new advertisers or retain our existing advertisers.If our advertisers determine that their expenditures on our platform do not generate expected returns, they may allocate a portion or all of their advertisingbudgets to other advertising channels, such as television, outdoor media and other online marketing platforms, and reduce or discontinue business with us.Since most of our advertisers are not bound by long-term contracts, they may amend or terminate advertising arrangements with us easily without incurringliabilities. Failure to retain existing advertisers or attract new ones to advertise on our platform may materially and adversely affect our business, financialcondition, results of operations and prospects.We have in the past removed, and may in the future again remove, questionable paid search listings of some customers to ensure the quality andreliability of our search results. Such removal, whether temporary or permanent, may cause the affected customers to discontinue their business with us. Wealso examine the relevant business licenses and bank accounts of prospective customers prior to business engagement, as a quality control measure. Inaddition, since early May 2016, we have taken steps to implement measures requested by PRC regulatory authorities, such as modifying paid search practicesand limiting the amount of displays. We have also proactively implemented numerous additional measures to deliver a better user experience and build asafer and more trustworthy platform for users, including turning down customers who do not meet our new requirements, creating a customer credibilityranking system and weighing customer credibility more highly in the ranking algorithm, reducing the number of sponsored links, and making upgrades toour user feedback system and user 5 Table of Contentsprotection programs. Such measures have had a negative impact on the number of customers and our revenues in the short term. PRC regulations on onlinemarketing services are evolving, and uncertainties remain with respect to the implementation of and compliance with new regulations that may emerge,which in turn may have a material adverse impact on our business, results of operations and growth prospects.If online marketing does not further grow in China, our ability to increase revenue and profitability could be materially and adversely affected.While the internet has developed to a more advanced stage in China, customers have many channels to do online marketing and promotion. As usersmay not spend as much time on internet search products as they used to, many current and potential customers may not use internet search products as theirone of the main online marketing channels to promote their products and services, and thus may not allocate a significant portion of their marketing budgetsto online marketing through internet search products such as our P4P services, as compared to other methods of online marketing. Our ability to increaserevenue and profitability from online marketing on PC and mobile internet may be adversely impacted by a number of factors, many of which are beyond ourcontrol, including: • difficulties associated with developing a larger user base with demographic characteristics attractive to online marketing customers andmaintaining and increasing user engagement; • increased competition and potential re-allocation of marketing budgets and downward pressure on online marketing prices; • higher customer acquisition costs due in part to the limited experience of small to medium-sized enterprises, or SMEs, with the internet as amarketing channel or due to competition; • ineffectiveness of our online marketing delivery, tracking and reporting systems; and • decreased use of internet or online marketing in China.Our business depends on a strong brand, and if we are not able to maintain and enhance our brand, our business and results of operations may be harmed.We believe that our brand “Baidu” has contributed significantly to the success of our business. We also believe that maintaining and enhancing the“Baidu” brand is critical to increasing the number of our users, customers, Baidu Union members and content providers. We have conducted variousmarketing and brand promotion activities, but we cannot assure you that these activities will achieve the brand promotion effect expected by us. If we fail tomaintain and further promote the “Baidu” brand, or if we incur excessive expenses in this effort, our business and results of operations may be materially andadversely affected.In addition, any negative publicity about our company, our products and services, our employees, our business practices, or our search results or theplatform to which our search results link, regardless of its veracity, could harm our brand image and in turn adversely affect our business and results ofoperations. We cannot assure you that we will be able to defuse negative publicity to the satisfaction of our investors, users, customers and business partners.From time to time, there have been negative publicities about our company and our business practice, which adversely affected our public image andreputation during the period of certain intense negative publicities. For example, in 2016, Chinese media reported that a Chinese college student had diedfrom cancer following unsuccessful treatment received at a hospital that the student had found through a paid search listing on Baidu. The negative publicitysurrounding this incident has resulted in significant adverse impact on our public image and reputation. Intense negative publicities may divert ourmanagement’s attention and may adversely impact our business. We cannot assure you that our brand, public image and reputation will not be materially andadversely affected in the future. 6 Table of ContentsWe face significant competition and may suffer from loss of users and customers as a result.We face significant competition in almost every aspect of our business, including competition from other companies that seek to provide internetsearch services to users and provide online marketing services to customers, as well as other companies that provide transaction or internet video services. Inthe Chinese internet market, our main competitors include China-based internet companies, such as Tencent, Alibaba, Sohu, Qihoo 360 and ByteDance. Wecompete with these entities for both users and customers on the basis of user traffic, quality (relevance), user experience of the search results, availability andease of use of products and services, the number of customers, distribution channels and the number of associated third-party websites/wapsites. Fortransaction services, our primary competitors include China-based internet companies such as Meituan-Dianping, Elema, Koubei, AutoNavi, Alipay andWeixin Pay. For iQiyi, our primary competitors include companies that operate online video websites in China, such as Youku-Tudou and Tencent Video.Some of our competitors have significant financial resources, long operating histories and are experienced in attracting and retaining their users,accommodating their users’ habits and preferences and managing customers. They may use their experience and resources to compete with us in a variety ofways, including competing for users and their time, customers, distributors, content, strategic partners and networks of third-party websites/wapsites,investing more heavily in research and development and making investments and acquisitions. If any of our competitors provides comparable or betterChinese language search experience, transaction services or internet video services, our user traffic could decline significantly. Additionally, if the channelsthat we use to distribute services or products to our users and customers are no longer available to us, we may experience a decline in user traffic. Any suchdecline in traffic could weaken our brand and result in loss of users and customers, which could have a material and adverse effect on our results ofoperations.We also face competition from other types of advertising media, such as newspapers, magazines, yellow pages, billboards, other forms of outdoormedia, television, radio and mobile applications. Large companies in China generally allocate, and may continue to allocate, a limited portion of theirbudgets to online marketing, as opposed to traditional advertising and other forms of advertising media. If these companies do not devote a larger portion oftheir marketing budgets to online marketing services provided by us, or if our existing customers reduce the amount they spend on online marketing, ourresults of operations and growth prospects could be adversely affected.If our expansions into new businesses are not successful, our future results of operations and growth prospects may be materially and adversely affected.As part of our growth strategy, we enter into new businesses from time to time by leveraging our large internet user base to generate additional revenuestreams and through our development of new business lines or strategic investments in or acquisitions of other businesses. Expansions into new businessesmay present operating, marketing and compliance challenges that differ from those that we currently encounter. If we cannot address new challenges andprovide exceptional quality services, we may not be able to compete effectively. As a result, we may not be able to recover costs incurred for investing in,developing and marketing new businesses, and may not achieve profitability from these businesses. In that case, our future results of operations and growthprospects may be materially and adversely affected. In addition, we may encounter regulatory uncertainties related to new business we enter into.If we fail to continue to innovate and provide products, services and high-quality internet experience that attract and retain users, we may not be able togenerate sufficient user traffic to remain competitive.Our success depends on providing products and services to attract users and enable users to have a high-quality internet experience. In order to attractand retain users and compete against our competitors, we must continue to invest significant resources in research and development to enhance our internetsearch technology, artificial intelligence (AI) and autonomous driving technology improve our existing products and services and introduce additional high-quality products and services. If we are unable to anticipate user preferences or industry changes, or if we are unable to enhance the quality of our productsand services on a timely basis or fail 7 Table of Contentsto provide sufficient content, we may suffer a decline in the size of our user base. Our results of operations may also suffer if our innovations do not respondto the needs of our users, are not appropriately timed with market opportunities or are not effectively brought to market. As search technology, AI and newforms of devices and applications continue to develop, we may expend significant resources in research and development and strategic investments andacquisitions in order to remain competitive.If our content ecosystem fails to continually offer quality content in a cost effective manner, we may experience declines in user traffic and userengagement, our business and results of operations may be harmed.We operate a content ecosystem consisting of our core search products, iQiyi, Baidu Maps, Baidu Post Bar, Baidu Knows, Baidu Encyclopedia,Baijiahao, Baidu Newsfeed and various other products. The success of our content ecosystem depends on our ability to attract content owners to contributequality content to our platform by leveraging our user traffic and enhance user engagement through provision of attractive content, so as to create a virtuouscycle. We have relied and will continue to rely on third parties for part of the content offered in our content ecosystem. As the competition for quality contentbecomes increasingly intense in China, we cannot assure you that we will be able to manage our content acquisition costs effectively and generate sufficientrevenues to outpace future increase in content spending. We may also be unable to renew some of our content licensing agreements upon their expiration ortermination and any renewal of the content licensing agreements may involve higher costs or less favorable terms. If we are not able to license popularpremium content on commercially reasonable terms or renew our content licensing agreement, our financial condition and results of operations may bematerially and adversely affected. In addition, we have users contribute their originally produced content to our various products, such as Baidu Post Bar,Baidu Knows and Baidu Encyclopedia, and we also invite self-media professionals to set up Baijiahao accounts on our platform and publish their content onour platform. If these parties fail to develop and maintain high-quality and engaging content, if our desired premium content becomes exclusive to ourcompetitors, or if a large number of our existing relationships are terminated, the attractiveness of our content offerings to users may be severely impaired. Ifwe are unable to offer content that meets users’ tastes and preferences on a continuing basis and in a cost effective manner, our user experience maydeteriorate, we may suffer from reduced user traffic, our business and results of operations may be harmed.Our expansion into financial services may subject us to regulatory, credit, operational and reputational risks, each of which may have a material adverseeffect on our business, results of operations and financial condition.We began to provide financial services in China in recent years. Our financial services mainly include Baidu Consumer Credit, through which we offereducation loans and consumer financing in industry sectors such as travel, beauty, home decoration and home rentals.PRC laws and regulations concerning the internet finance industry, particularly those governing credit lending, are evolving. Although we have takencareful measures to comply with the laws and regulations that are applicable to the financial services that we offer, the PRC government authorities maypromulgate new policies, rules and regulations regulating the internet finance industry. If our financial services, especially our innovative solutions, weredeemed to violate any PRC laws or regulations, our business, financial conditions and results of operations may be materially and adversely affected. Wecannot assure you that our practices would not be deemed to violate any PRC laws or regulations. Moreover, developments in the internet finance industrymay lead to changes in PRC laws, regulations and policies or in the interpretation and application of existing laws, regulations and policies that may limit orrestrict online consumer financing services like those we offer, which could materially and adversely affect our business and operations. Furthermore, wecannot rule out the possibility that the PRC government will institute a new licensing regime covering our financial services in the future. If such a licensingregime were introduced, we cannot assure you that we would be able to obtain any newly required license in a timely manner, or at all, which couldmaterially and adversely affect our business and impede our ability to continue our operations. 8 Table of ContentsAs part of our financial services, we have adopted what we believe to be a new approach to credit risk management, through leveraging our big dataand computing analytical capabilities, and have taken various other measures to monitor and limit credit risks. However, the risk of nonpayment of loans isinherent in the finance business, and we are subject to credit risks resulting from defaults by consumers. While we employ statistical modelling and big datato carefully assess credit risks, credit risks are exacerbated in microcredit and consumer financing because there is relatively limited information availableabout the credit histories of the borrowers. There can be no assurances that our credit assessment and risk management are or will be sufficient to result inlower delinquencies. As we expand into new sub-sectors of consumer financing, our limited operational experience and lack of familiarity with the new areasmay render our risk management less effective, thus exacerbating our credit risks. Furthermore, our ability to manage the quality and the associated creditrisks of our loan portfolio may have significant impact on our results of operations. Deterioration in the overall quality of loan portfolio and increasedexposure to credit risks may occur due to a variety of reasons, including factors beyond our control, such as a slowdown in the growth of the PRC or globaleconomies or a liquidity or credit crisis in the PRC or global financial sectors, which may adversely affect the liquidity of our borrowers or their ability torepay or roll over their debt. Any significant deterioration in the asset quality of our financial services business and significant increase in associated creditrisks may have a material adverse effect on our business, results of operations and financial condition.Our financial services business also faces additional operational risks with respect to illegal or fraudulent activities, such as illegally accessing andusing another’s Baidu Wallet account, and providing false credit and other information or creating fictitious or “phantom” transactions with collaborators inorder to obtain loans from us. Although we have implemented various measures to detect and reduce the occurrence of illegal or fraudulent activities, therecan be no assurance that such measures will be effective in combating fraudulent activities. Significant increases in illegal or fraudulent activity couldnegatively impact our brand and reputation, lead us to take additional steps to reduce such risks, and cause us to incur additional expenses and costs, whichmay adversely affect our business, results of operations and financial condition.Negative publicity about our partners, outsourced service providers or other counterparties, such as negative publicity about their debt collectionpractices and any failure by them to adequately protect the information of borrowers, to comply with applicable laws and regulations or to otherwise meetrequired quality and service standards could harm our reputation. Furthermore, any negative development in the internet finance industry, such asbankruptcies of companies providing similar services, or negative perception of the industry as a whole, could compromise our image, undermine the trustand credibility we have established and impose a negative impact on our business and results of operations.If we fail to keep up with rapid changes in technologies and user behavior, our future success may be adversely affected.Our future success will depend on our ability to respond to rapidly changing technologies, adapt our products and services to evolving industrystandards and improve the performance and reliability of our products and services. Our failure to adapt to such changes could harm our business. In addition,changes in user behavior resulting from technological developments may also adversely affect us. For example, the number of people accessing the internetthrough mobile devices, including mobile phones, tablets, digital assistants and other hand-held devices, and television set-top devices, has increased inrecent years, and we expect this trend to continue while 4G/5G and more advanced mobile communications technologies are broadly implemented. If we failto develop products and technologies that are compatible with all mobile devices and operating systems, or if the products and services we develop are notwidely accepted and used by users of various mobile devices and operating systems, our position in the mobile internet market may be adversely affected. Inaddition, the widespread adoption of new internet, networking or telecommunications technologies or other technological changes could require substantialexpenditures to modify or integrate our products, services or infrastructure. If we fail to keep up with rapid technological changes to remain competitive, orconsequently fail to retain users with products and service of exceptional quality, our future success may be adversely affected. 9 Table of ContentsInterruption or failure of our own information technology and communications systems or those of third-party service providers we rely upon could impairour ability to provide products and services, which could damage our reputation and harm our results of operations.Our ability to provide products and services depends on the continuing operation of our information technology and communications systems. Anydamage to or failure of our systems could interrupt our services. Service interruptions could reduce our revenue and profit and damage our brand if oursystems are perceived to be unreliable. Our systems are vulnerable to damage or interruption as a result of terrorist attacks, wars, earthquakes, floods, fires,power loss, telecommunications failures, undetected errors or “bugs” in our software, computer viruses, interruptions in access to our platform through the useof “denial of service” or similar attacks, hacking or other attempts to harm our systems, and similar events. Some of our systems are not fully redundant, andour disaster recovery planning does not account for all possible scenarios. In February 2017, the service of Mobile Baidu was inaccessible to users for forty-three minutes due to a system failure, which adversely affected our user experience then.Our servers, which are hosted at third-party or our own internet data centers, are vulnerable to break-ins, sabotage and vandalism. The occurrence ofnatural disasters or closure of an internet data center by a third-party provider without adequate notice could result in lengthy service interruptions. Inaddition, our domain names are resolved into internet protocol (IP) addresses by systems of third-party domain name registrars and registries. Anyinterruptions or failures of those service providers’ systems, which are beyond our control, could significantly disrupt our own services. If we experiencefrequent or persistent system failures on our platform, whether due to interruptions and failures of our own information technology and communicationssystems or those of third-party service providers that we rely upon, our reputation and brand could be severely harmed. The steps we take to increase thereliability and redundancy of our systems may cause us to incur heavy costs and reduce our operating margin, and may not be successful in reducing thefrequency or duration of service interruptions.More people are using devices other than personal computers to access the internet. If users do not widely adopt versions of our search technology,products and services developed for these devices, our business could be adversely affected.The number of people who access the internet through devices other than personal computers, including mobile phones, smartphones, handheldcomputers, smart home devices and other smart devices, is increasing dramatically. The varying display sizes, functionality, and memory associated withsome alternative devices may require us to tailor the user experience and interfaces to those devices and the versions of our products and services developedfor these devices may not be compelling to users, manufacturers, or distributors of devices. Each manufacturer or distributor may establish unique technicalstandards for its devices, and our products and services may not work or be accessible on these devices. Some manufacturers may also elect not to include ourproducts on their devices. In addition, search queries are increasingly being conducted through apps and services tailored to particular devices. A shift in userbehavior to perform search queries on other devices or apps rather than a search engine could affect our share of the search market over time. As new devicesand new platforms are continually being released, it is difficult to predict the future channels to access search. We may encounter challenges in developingversions of our products and services for use on these alternative devices, and we may need to devote significant resources to the creation, support, andmaintenance of our products and services tailored for such devices. If we are unable to attract and retain a substantial number of alternative devicemanufacturers, distributors, and users to adopt and use our products and services, or if we are slow to develop products and technologies that are morecompatible with alternative devices, we may fail to capture a significant share of an increasingly important portion of the market for online services, whichcould adversely affect our business.We may not be able to manage our expanding operations effectively.We have significantly expanded our operations in recent years. We expect this expansion trend to continue as we grow our user and customer base andexplore new opportunities. To manage the further expansion of our 10 Table of Contentsbusiness and growth of our operations and personnel, we need to continually improve our operational and financial systems, procedures and controls, andexpand, train, manage and maintain good relations with our growing employee base. We have experienced labor disputes in the past. Although these disputeswere resolved promptly, we cannot assure you that there will not be any new labor dispute in the future. In addition, we must maintain and expand ourrelationships with other websites, internet companies and other third parties. Our current and future personnel, systems, procedures and controls may not beadequate to support our expanding operations.We may face intellectual property infringement claims and other related claims that could be time-consuming and costly to defend and may result in anadverse impact over our operations.Internet, technology and media companies are frequently involved in litigation based on allegations of infringement of intellectual property rights,unfair competition, invasion of privacy, defamation and other violations of other parties’ rights. The validity, enforceability and scope of protection ofintellectual property in internet-related industries, particularly in China, are uncertain and still evolving. As we face increasing competition and as litigationbecomes more common in China in resolving commercial disputes, we face a higher risk of being the subject of intellectual property infringement claims. Wemay be subject to administrative actions brought by the PRC State Copyright Bureau and in the most severe scenario criminal prosecution for allegedcopyright infringement, and as a result may be subject to fines and other penalties and be required to discontinue infringing activities. Furthermore, as weexpand our operations outside of China, we may be subject to claims brought against us in jurisdictions outside of China.Our search products and services link to materials in which third parties may claim ownership of trademarks, copyrights or other rights. Our audio andvideo player, Baidu Media Player, enables users to play multimedia files, which may be protected by copyright or other intellectual property rights. Inaddition, as we adopt new technologies and roll out new products and services, we face the risk of being subject to intellectual property infringement claimsthat may arise from our use of new technologies and provision of new products and services. Our products and services including those based on cloudcomputing technology, such as Baidu Netdisk, Baidu WenKu and Baidu Post Bar, allow our users to upload, store and share documents, images, audios andvideos on our servers, or share, link to or otherwise provide access to contents from other websites, and we also operate distribution platforms wherebydevelopers can upload, share and sell their applications or games to users. Although we have made commercially reasonable efforts to request users ordevelopers to comply with applicable intellectual property laws, we cannot ensure that all of our users or developers have the rights to upload or share thesecontents or applications. In addition, we have been and may continue to be subject to copyright or trademark infringement and other related claims from timeto time, in China and internationally.We have been making continuous efforts to keep ourselves informed of and to comply with all applicable laws and regulations affecting our business.However, PRC laws and regulations are evolving, and uncertainties still exist with respect to the legal standards as well as the judicial interpretation of thestandards for determining liabilities of internet search and other internet service providers for providing links to contents on third-party websites that infringeupon others’ copyrights or hosting such contents, or providing information storage space, file sharing technology or other internet services that are used byinternet users to disseminate such contents. The Supreme People’s Court of China promulgated a judicial interpretation on infringement of the right ofdissemination through internet in December 2012. This judicial interpretation, like certain court rulings and certain other judicial interpretations, providethat the courts will place the burden on internet service providers to remove not only links or contents that have been specifically mentioned in the notices ofinfringement from right holders, but also links or contents they “should have known” to contain infringing content. The interpretation further provides thatwhere an internet service provider has directly obtained economic benefits from any contents made available by an internet user, it has a higher duty of carewith respect to internet users’ infringement of third-party copyrights. A guidance on the trial of audio/video sharing copyright disputes promulgated by theHigher People’s Court of Beijing in December 2012 provides that where an internet service provider has directly obtained economic benefits from anyaudio/video contents made available by an internet 11 Table of Contentsuser who has no authorization for sharing such contents, the internet service provider shall be presumed to be at fault. These interpretations could subject usand other internet service providers to significant administrative burdens and litigation risks.We conduct our business operations primarily in China. There might be claims that we are subject to U.S. copyright laws, including the legal standardsfor determining indirect liability for copyright infringement, although we believe such claims are without merits. We cannot assure you that we will not besubject to copyright infringement lawsuits or other proceedings in the U.S. or elsewhere in the future.Intellectual property litigation is expensive and time-consuming and could divert resources and management attention from the operations of ourbusiness. We are currently named as defendant in certain copyright infringement suits in connection with Baidu Netdisk, Baidu Post Bar, Mobile Baidu,iQiyi and certain other products or services. See “Item 8.A. Financial Information—Consolidated Statements and Other Financial Information—LegalProceedings.” There is no guarantee that the courts will accept our defenses and rule in our favor. If there is a successful claim of infringement, we may berequired to discontinue the infringing activities, pay substantial fines and damages and/or enter into royalty or license agreements that may not be availableon commercially acceptable terms, if at all. Our failure to obtain a license of the rights on a timely basis could harm our business. Any intellectual propertylitigation by third parties and/or negative publicity alleging our intellectual property infringement could have an adverse effect on our business, reputation,financial condition or results of operations. To address the risks relating to intellectual property infringement, we may have to substantially modify, limit orterminate some of our search services. Any such change could materially affect user experience and in turn have an adverse impact on our business.We have been and may again be subject to claims and investigations based on the content found on our platform, the results in our paid search listings orother products and services we offer.In addition to the content developed by ourselves and posted on our platform, our users are free to post information on Baidu Post Bar, Baidu Knows,Baidu Encyclopedia, Baidu WenKu and other sections of our platform, and our P4P customers may create text-based descriptions, image descriptions andother phrases to be used as text, image or keywords in our search listings, and users can also use our personal cloud computing service, Baidu Netdisk, toupload, store and share documents, images, audios and videos on our cloud servers. We have been and may continue to be subject to claims andinvestigations for intellectual property infringement, defamation, negligence or other legal theories based on the content found on our platform, the results inour paid search listings or our other products and services, which, with or without merit, may result in diversion of management attention and financialresources and negative publicity on our brand and reputation. See “Item 8.A. Financial Information—Consolidated Statements and Other FinancialInformation—Legal Proceedings.” Furthermore, if the content posted on our platform or found, stored or shared through our other products and servicescontains information that government authorities find objectionable, our platform or relevant products or services may be shut down and we may be subjectto other penalties. See “—Risks Related to Doing Business in China—Regulation and censorship of information disseminated over the internet in China mayadversely affect our business, and subject us to liability for information displayed on or linked to our platform and negative publicity in internationalmedia.”We have been, and in the future may again be, subject to claims, investigations or negative publicity based on the results in our paid search listings.Claims have been filed against us after we allowed certain customers to register keywords containing trademarks, trade names or brand names owned byothers and displayed links to such customers’ websites in our paid search listings. While we maintain a database of certain well-known trademarks andcontinually update our system algorithms and functions aiming at preventing customers from submitting a keyword containing the well-known trademarksthat are owned by others, it is not possible for us to completely prevent our customers from bidding on keywords that contain trademarks, trade names orbrand names owned by others. In 2016, PRC regulatory authorities required that we take several remedial measures, including: (i) immediately modifying ourpractice of providing online marketing services to medical, 12 Table of Contentspharmaceutical, health care and other similar businesses, and refraining from providing online marketing services to medical organizations that do not haverequisite qualifications from competent regulatory authorities; (ii) modifying our existing auction-based paid search practices, indicating clearly paid searchresults and the associated risks, and limiting the percentage of marketing information to no more than 30% on each web page; and (iii) establishing andenhancing user protection mechanisms and establishing a system to compensate users harmed by fraudulent marketing information. Such measures have hada negative impact on the number of customers and our revenues in the short term. In addition, there has been negative publicity about fraudulent informationin our paid search listings. Although we have been continually enhancing our technology, control and oversight to prevent fraudulent websites, web pagesand information from our paid search listings, there is no guarantee that the measures we have taken are effective at all times. Claims, investigations andnegative publicity based on the results in our paid search listings, regardless of their merit, may divert management attention, severely disrupt our operations,adversely affect our results of operations and harm our reputation.Our business may be adversely affected if we were found to have failed to fulfill the additional obligations under the new online advertising rules.Although the PRC Advertising Law has not specified “paid search results” as a form of advertising, the Interim Administration Measures of InternetAdvertising, or the Internet Advertising Measures, which was promulgated by the State Administration for Industry and Commerce and became effective onSeptember 1, 2016, characterizes “paid search results” as a form of internet advertising from the perspective of regulating online advertising business.Pursuant to the Internet Advertising Measures, we are subject to additional legal obligations to monitor our P4P customers’ listings on our website during thecourse of our provision of P4P services. For example, we must examine, verify and record identity information of our P4P customers, such as name, addressand contact information, and maintain an updated verification of such information on a regular basis. Moreover, we must examine supporting documentationprovided by our P4P customers. Where a special government review is required for specific categories of advertisements before posting, we must confirm thatthe review has been performed and approval has been obtained. If the content of the advertisement is inconsistent with the supporting documentation, or thesupporting documentation is incomplete, the advertisement cannot be published. Failure to comply with these obligations may subject us to fines and otheradministrative penalties. If advertisements shown on our platform are in violation of relevant PRC advertising laws and regulations, or if the supportingdocumentation and government approvals provided to us by our P4P customers in connection with the advertising content are not complete or accurate, wemay be subject to legal liabilities and our reputation could be harmed. See “Item 4.B. Information on the Company—Business Overview—Regulations—Regulations on Advertisements and Online Advertising.”We may be subject to patent infringement claims with respect to our P4P platform.Our technologies and business methods, including those relating to our P4P platform, may be subject to third-party claims or rights that limit orprevent their use. In June 2005, we applied for a patent in China for our P4P platform, but our application was rejected on the ground that it is not patentable.Certain U.S.-based companies, including Overture Services Inc., have been granted patents in the United States relating to P4P platforms and similar businessmethods and related technologies. While we believe that we are not subject to U.S. patent laws since we conduct our business operations primarily in China,we cannot assure you that U.S. patent laws would not be applicable to our business operations, or that holders of patents relating to a P4P platform would notseek to enforce such patents against us in the United States or China.Many parties are actively developing and seeking protection for internet-related technologies, including patent protection. They may hold patentsissued or pending that relate to certain aspects of our technologies, products, business methods or services. Any patent infringement claims, regardless of theirmerits, could be time-consuming and costly to us. If we were sued for patent infringement claims with respect to our P4P platform and 13 Table of Contentswere found to infringe upon the patents and were not able to adopt non-infringing technologies, we may be severely limited in our ability to operate our P4Pplatform, which would have a material and adverse effect on our results of operations and prospects.Our business may be adversely affected by third-party software applications or practices that interfere with our receipt of information from, or provision ofinformation to, our users, which may impair our users’ experience.Our business may be adversely affected by third-party malicious or unintentional software applications that make changes to our users’ computers andinterfere with our products and services. These software applications may change our users’ internet experience by hijacking queries to our platform, alteringor replacing our search results, or otherwise interfering with our ability to connect with our users. The interference often occurs without disclosure to orconsent from users, resulting in a negative experience, which users may associate with our platform. These software applications may be difficult to remove ordisable, may reinstall themselves and may circumvent other applications’ efforts to block or remove them.In addition, our business may be adversely affected by the practices of third-party website owners, content providers and developers which interferewith our ability to crawl and index their web pages and contents including applications. The ability to provide a superior user experience is critical to oursuccess. If we are unable to successfully combat malicious third-party software applications that interfere with our products and services, our reputation maybe harmed. If a significant number of website owners, content providers and developers prevent us from indexing and including their high-quality web pagesand contents including applications in our search results, or if we cannot effectively combat web spam from low-quality and irrelevant content websites, thequality of our search results may be impaired, which may damage our reputation and deter our current and potential users from using our products andservices.We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position.We rely on a combination of copyright, trademark and trade secret laws, as well as nondisclosure agreements and other methods to protect ourintellectual property rights. The protection of intellectual property rights in China may not be as effective as those in the United States or other countries. Thesteps we have taken may be inadequate to prevent the misappropriation of our technology. Reverse engineering, unauthorized copying or othermisappropriation of our technologies could enable third parties to benefit from our technologies without paying us. Moreover, unauthorized use of ourtechnology could enable our competitors to offer products and services that compete with ours, which could harm our business and competitive position. Wehave in the past resorted to litigation to enforce our intellectual property rights, and may have to do so from time to time in the future. There is no guaranteethat the competent courts will accept our claims and rule in our favor. Such litigation may result in substantial costs and diversion of resources andmanagement attention.Our success depends on the continuing and collaborative efforts of our management team and other key personnel, and our business may be disrupted if welose their services and are not able to find their successors in a timely manner.Our success depends heavily upon the continuing services of our management team, in particular our chairman and chief executive officer, RobinYanhong Li. If one or more of our executives or other key personnel are unable or unwilling to continue in their present positions and we are not able to findtheir successors in a timely manner, and our business may be disrupted and our financial condition and results of operations may be adversely affected.Competition for management and key personnel is intense, the pool of qualified candidates is 14 Table of Contentslimited, and we may not be able to retain the services of our executives or key personnel, or attract and retain experienced executives or key personnel in thefuture.If any of our executives or other key personnel joins a competitor or forms a competing company, we may not be able to successfully retain customers,distributors, know-how and key personnel. Each of our executive officers and key employees has entered into an employment agreement with us, containingconfidentiality and non-competition provisions. If any disputes arise between any of our executives or key personnel and us, we cannot assure you the extentto which any of these agreements may be enforced.We rely on highly skilled personnel. If we are unable to retain or motivate them or hire additional qualified personnel, we may not be able to groweffectively.Our performance and future success depend on the talents and efforts of highly skilled individuals. We will need to continue to identify, hire, develop,motivate and retain highly skilled personnel for all areas of our organization and business operations. Competition in the internet industry for qualifiedemployees is intense. Our continued ability to compete effectively depends on our ability to attract new employees and to retain and motivate our existingemployees. As competition in the internet industry intensifies, it may be more difficult for us to hire, motivate and retain highly skilled personnel. If we donot succeed in attracting additional highly skilled personnel or retaining or motivating our existing personnel, we may be unable to grow effectively.Our strategy of investments and acquiring complementary businesses and assets may fail.As part of our business strategy, we have pursued, and intend to continue to pursue, selective strategic investments and acquisitions of businesses andassets that complement our existing business and help us execute our growth strategies. For example, we invested in Ctrip by exchanging our shares in Qunarfor shares of Ctrip and subscribed for additional Ctrip shares in 2015 and 2016. We intend to make other strategic investments and acquisitions in the futureif suitable opportunities arise. Investments and acquisitions involve uncertainties and risks, including: • potential ongoing financial obligations and unforeseen or hidden liabilities, including liability for infringement of third-party copyrights orother intellectual property; • failure to achieve the intended objectives, benefits or revenue-enhancing opportunities; • costs and difficulties of integrating acquired businesses and managing a larger business; • potentially significant goodwill impairment charges; • high acquisition and financing costs; • possible loss of key employees of a target business; • potential claims or litigation regarding our board’s exercise of its duty of care and other duties required under applicable law in connection withany of our significant acquisitions or investments approved by the board; • diversion of resources and management attention; and • in the case of acquisitions of businesses or assets outside of China, the need to integrate operations across different business cultures andlanguages and to address the particular economic, currency, political, and regulatory risks associated with specific countries.Any failure to address these risks successfully may have a material and adverse effect on our financial condition and results of operations. Investmentsand acquisitions may require a significant amount of capital 15 Table of Contentsinvestment, which would decrease the amount of cash available for working capital or capital expenditures. In addition, if we use our equity securities to payfor investments and acquisitions, we may dilute the value of our ADSs and the underlying ordinary shares. If we borrow funds to finance investments andacquisitions, such debt instruments may contain restrictive covenants that could, among other things, restrict us from distributing dividends. Moreover,acquisitions may also generate significant amortization expenses related to intangible assets. We may also incur impairment charges to earnings forinvestments and acquired businesses and assets which are determined to be impaired, and recognize the proportional share of the net losses of the investees tothe extent of the amount of the investments for the equity method investments.We are subject to risks and uncertainties faced by companies in a rapidly evolving industry.We operate in the rapidly evolving internet industry, which makes it difficult to predict our future results of operations. Accordingly, you shouldconsider our future prospects in light of the risks and uncertainties experienced by companies in evolving industries. Some of these risks and uncertaintiesrelate to our ability to: • maintain our leading position in the Chinese language internet search market; • offer attractive, useful and innovative products and services to attract and retain a larger user base; • attract users’ continuing use of internet search services; • retain existing customers and attract additional customers and increase spending per customer; • upgrade our technology to support increased traffic and expanded product and service offerings; • further enhance our brand; • respond to competitive market conditions; • respond to evolving user preferences or industry changes; • respond to changes in the regulatory environment and manage legal risks, including those associated with intellectual property rights; • maintain effective control of our costs and expenses; • execute our strategic investments and acquisitions and post-acquisition integrations effectively; • attract, retain and motivate qualified personnel and maintain good relations with a young and growing work force; and • build profitable operations in new markets and other overseas internet markets we have entered into.If we are unsuccessful in addressing any of these risks and uncertainties, our business may be materially and adversely affected.Our historical growth rate may not be indicative of our future growth rate.We have experienced substantial growth in recent years. Our total revenues grew at a compound annual growth rate of 33.4% from 2012 to 2016. Ourgrowth was driven in part by the growth in China’s internet and online marketing industries, which may not be indicative of future growth or be sustainable.Our past growth rate may not be indicative of our future growth rate.Our indebtedness could adversely affect our financial condition and our ability to obtain additional capital on reasonable terms when necessary.As of December 31, 2016, we had an aggregate of US$6.4 billion of outstanding indebtedness that will mature between 2017 and 2025 and we mayincur additional indebtedness in the future. Our current and future 16 Table of Contentsdebt requires us to dedicate a portion of our cash flow to service interest and principal payments and may limit our ability to engage in other transactions. Ourability to pay interest and repay the principal for our indebtedness is dependent upon our ability to manage our business operations, generate sufficient cashflows to service such debt and the other factors discussed in this section. There can be no assurance that we will be able to manage any of these riskssuccessfully.We may require additional capital to support our business growth or to respond to business opportunities, challenges or unforeseen circumstances. Ourability to obtain additional capital, if and when required, will depend on our business plans, investor demand, our operating performance, the condition ofthe capital markets, and other factors, and our indebtedness may limit our ability to borrow additional funds. We may have difficulty incurring new debt onterms that we would consider to be commercially reasonable, if at all. In addition, we may also need to refinance a portion of our outstanding debt as itmatures. There is a risk that we may not be able to refinance existing debt or that the terms of any refinancing may not be as favorable as the terms of ourexisting debt.Our results of operations may fluctuate, which makes our results difficult to predict and could cause our results to fall short of expectations.Our results of operations may fluctuate as a result of a number of factors, many of which are beyond our control. For these reasons, comparing ourresults of operations on a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication of our futureperformance. Our quarterly and annual revenues and costs and expenses as a percentage of our revenues may be significantly different from our historical orprojected figures. Our results of operations in future quarters may fall below expectations. Any of these events could cause the price of our ADSs to fall. Anyof the risk factors listed in this “Risk Factors” section, and in particular the following factors, could cause our results of operations to fluctuate from quarter toquarter: • general economic conditions in China and economic conditions specific to the internet, internet search and online marketing industries; • our ability to continue to attract users to our platform despite the emergence of mobile applications and other services; • our ability to attract additional customers and increase spending per customer; • the announcement or introduction of new or enhanced products and services by us or our competitors; • the amount and timing of operating costs and capital expenditures related to the maintenance and expansion of our businesses, operations andinfrastructure; • the results of our acquisitions of, or investments in, other businesses or assets; • PRC regulations or government actions pertaining to activities on the internet, including various forms of entertainment, online payment andactivities otherwise affecting our online marketing customers, and those relating to the products and services we provide; • unforeseen events, such as negative publicity arising from widespread media coverage and other sources and labor disputes; and • geopolitical events, natural disasters or epidemics.Because of the rapid growth of our business, our historical results of operations may not be useful to you in predicting our future results of operations.Our user traffic tends to be seasonal. For example, we generally experience less user traffic during public holidays and other special event periods in China. Inaddition, advertising and other marketing spending in China has historically been cyclical, reflecting overall economic conditions as well as budgeting andbuying patterns. As we continue to grow, we expect that the cyclicality and seasonality in our business may cause our results of operations to fluctuate. 17 Table of ContentsA severe and prolonged global economic recession and the slowdown in the Chinese economy may adversely affect our business, results of operations andfinancial condition.The global macroeconomic environment is facing challenges, including the escalation of the European sovereign debt crisis since 2011, the end ofquantitative easing by the U.S. Federal Reserve and the economic slowdown in the Eurozone in 2014. The growth of the Chinese economy has slowed since2012 and such slowdown may continue. According to the National Bureau of Statistics of China, China’s gross domestic product (GDP) growth slowed to6.7% in 2016. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies adopted by the central banks andfinancial authorities of some of the world’s leading economies, including the United States and China. There have been concerns over unrest and terroristthreats in the Middle East, Africa, Ukraine and Syria. There have also been concerns about the tensions in the relationship between China and other countries,including surrounding Asian countries, which may potentially lead to foreign investors closing down their business or withdrawing their investment in Chinaand thus exiting the China market, and other economic effects. Economic conditions in China are sensitive to global economic conditions, as well as changesin domestic economic and political policies and the expected or perceived overall economic growth rate in China. Any prolonged slowdown in the global orChinese economy may have a negative impact on our business, results of operations and financial condition, and continued turbulence in the internationalmarkets may adversely affect our ability to access the capital markets to meet liquidity needs. Our customers may reduce or delay spending with us, while wemay have difficulty expanding our customer base fast enough, or at all, to offset the impact of decreased spending by our existing customers. In addition, tothe extent we offer credit to any customer and the customer experiences financial difficulties due to the economic slowdown, we could have difficultycollecting payment from the customer.Because we rely to a large extent on distributors in providing our online marketing services, failure to retain key distributors or attract additionaldistributors could materially and adversely affect our business. Moreover, there is no assurance that our direct sales model in some key geographicmarkets will continue to be successful.Online marketing is at a development stage in China and is not as widely accepted by or available to businesses in China as in the United States. As aresult, we rely, to a large extent, on a nationwide distribution network of third-party distributors for our sales to, and collection of payment from, ourcustomers. If our distributors do not provide quality services to our customers or otherwise breach their contracts with our customers, we may lose customersand our results of operations may be materially and adversely affected. Since most of our distributors are not bound by long-term contracts, we cannot assureyou that we will continue to maintain favorable relationships with them. If we fail to retain our key distributors or attract additional distributors on terms thatare commercially reasonable, our business and results of operations could be materially and adversely affected.We have transitioned to using our direct sales force to serve customers in some key geographic markets, such as Beijing, Shanghai, Suzhou and majorcities in Guangdong Province. There is no assurance that our direct sales model in those markets will continue to be successful. If we fail to maintain anadequate direct sales force, retain existing customers and continue to attract new customers in those markets, our business, results of operations and prospectscould be materially and adversely affected.We rely on our Baidu Union members for a significant portion of our revenues. If we fail to retain existing Baidu Union members or attract additionalmembers, our revenue growth and profitability may be adversely affected.We pay Baidu Union members a portion of our revenues based on click-throughs by users of Baidu Union members’ properties. Some of our BaiduUnion members, however, may compete with us in one or more areas of our business. Therefore, they may decide in the future to terminate their relationshipswith us. If our Baidu Union members decide to use a competitor’s or their own internet search services, our user traffic may decline, which 18 Table of Contentsmay adversely affect our revenues. If we fail to attract additional Baidu Union members, our revenue growth may be adversely affected. In addition, if wehave to share a larger portion of our revenues to retain existing Baidu Union members or attract additional members, our profitability may be adverselyaffected.There is no assurance that our expansions into services provided by Baidu Nuomi and Baidu Deliveries will be successful.Baidu Nuomi and Baidu Deliveries are important components of our transaction services. We have limited experiences in operating these services, aswe started to participate in the relevant market in recent years. The success of Baidu Nuomi and Baidu Deliveries depends on our ability to: • respond to the changes in the rapidly developing market in China; • adopt a business model or adapt the existing model to meet the marketing demands; • expand the selection, price and popularity of local deals available on our platform; • acquire new users who purchase local deals on our platform, and retain our existing users and have them continue to purchase local deals on ourplatform; • attract new local merchants and retain existing local merchants to offer more local deals on our platform; • attract, train and retain qualified personnel, particularly management, technical, marketing, sales and customer service personnel with expertisethat we need for our transaction services; • combat fraudulent or fictitious transactions, such as those aiming to artificially inflate the third-party sellers’ or service providers’ ratings on ourplatform and obtain sales-based monetary incentives provided by our platform; and • effectively compete with other companies that are currently in, or may in the future enter the businesses of providing transaction services.We operate Baidu Nuomi and Baidu Deliveries in a highly competitive market. The players in this market may compete with us in a variety of ways,including adopting more aggressive pricing policies, devoting greater resources to marketing and promotional campaigns, investing more heavily in researchand development, and making acquisitions for the expansion of their products and services. Increased competition such as the price war in the market mayforce us to lower the price we charge local merchants or provide more subsidized discounts to users, and require us to increase our marketing and promotionalefforts and capital commitment, which would negatively affect our profitability. There can be no assurance that we will be able to compete effectively againstcurrent or future competitors, and such competitive pressures may have an adverse impact on our business, financial condition and results of operations.Our overseas operations may not be successful.We have launched products and services in local languages to internet users in several countries. It is uncertain when the operation will becomeprofitable, if at all. In particular, we rely on local telecommunication operators and service providers to provide us with network services and data centerhosting services, and our systems for these international products and services are not redundant across different regions and data centers. Any interruption tothe internet infrastructure or any data center may render our products and services in the region unavailable.We face certain risks inherent in doing business internationally, including: • difficulties in developing, staffing and simultaneously managing a foreign operation as a result of distance, language and cultural differences; 19 Table of Contents • challenges in formulating effective local sales and marketing strategies targeting users from various jurisdictions and cultures, who have adiverse range of preferences and demands; • challenges in identifying appropriate local business partners and establishing and maintaining good working relationships with them; • dependence on local platforms in marketing our international products and services overseas; • challenges in selecting suitable geographical regions for international business; • longer customer payment cycles; • currency exchange rate fluctuations; • political or social unrest or economic instability; • compliance with applicable foreign laws and regulations and unexpected changes in laws or regulations; • exposure to different tax jurisdictions that may subject us to greater fluctuations in our effective tax rate and potentially adverse taxconsequences; and • increased costs associated with doing business in foreign jurisdictions.One or more of these factors could harm our overseas operations and consequently, could harm our overall results of operations.If we are unable to adapt or expand our existing technology infrastructure to accommodate greater traffic, content or additional customer requirements,our business may be harmed.Our Baidu platform regularly serves a large number of users and customers and delivers a large number of daily page views. Our technologyinfrastructure is highly complex and may not provide satisfactory service in the future, especially as the number of users and customers increases. We may berequired to upgrade our technology infrastructure to keep up with the increasing traffic on our Baidu platform, such as increasing the capacity of our serversand the sophistication of our software. If we fail to adapt our technology infrastructure to accommodate greater traffic or customer requirements, our users andcustomers may become dissatisfied with our services and switch to our competitors’ websites, which could harm our business.If we fail to detect fraudulent click-throughs, our customers’ confidence in us could be damaged and our revenues could decline.We are exposed to the risk of click-through fraud on our paid search results. Click-through fraud occurs when a person clicks paid search results for areason other than to view the underlying content of search results. Although our anti-spam algorithms and tools can identify and respond to spam web pagesquickly and effectively and thus capture and prevent some fraudulent click-throughs, there is no assurance that our anti-spam technology is able to detectand stop all fraudulent click-throughs. If we fail to detect fraudulent clicks or otherwise are unable to prevent this fraudulent activity, the affected customersmay experience a reduced return on investments, or ROI, in our online marketing services and lose confidence in the integrity of our systems, and we mayhave to issue refunds to our customers. If this happens, we may be unable to retain existing customers or attract new customers for our online marketingservices, and our online marketing revenues could decline. In addition, affected customers may also file legal actions against us claiming that we have over-charged or failed to refund them. Any such claims or similar claims, regardless of their merits, could be time-consuming and costly for us to defend againstand could also adversely affect our brand and our customers’ confidence in the integrity of our systems. We experienced a number of incidents involvingfraudulent click-throughs in recent years. Although the amount of revenue involved in these incidents was immaterial, such cases of fraudulent click-throughs, if occurring on a large-scale and widespread manner, may damage the reputation of our search ecosystem. 20 Table of ContentsThe successful operation of our business depends upon the performance and reliability of the internet infrastructure and fixed telecommunicationsnetworks in China.Our business depends on the performance and reliability of the internet infrastructure in China. Almost all access to the internet is maintained throughstate-owned telecommunication operators under the administrative control and regulatory supervision of the Ministry of Industry and InformationTechnology, or the MIIT. In addition, the national networks in China are connected to the internet through international gateways controlled by the PRCgovernment. These international gateways are the only channels through which a domestic user can connect to the internet. It is unpredictable whether amore sophisticated internet infrastructure will be developed in China. We may not have access to alternative networks in the event of disruptions, failures orother problems with China’s internet infrastructure. In addition, the internet infrastructure in China may not support the demands associated with continuedgrowth in internet usage.We rely heavily on China Telecommunications Corporation, or China Telecom, China United Network Communications Group Company Limited, orChina Unicom, and China Mobile Communications Corporation, or China Mobile, to provide us with network services and data center hosting services. Wehave entered into contracts with various local branches or subsidiaries of China Telecom, China Unicom and China Mobile to obtain data communicationscapacity. We have limited access to alternative services in the event of disruptions, failures or other problems with the fixed telecommunications networks ofthese companies, or if these companies otherwise fail to provide the services. Any unscheduled service interruption could damage our reputation and result ina decrease in our revenues. Furthermore, we have no control over the costs of the services provided by these telecommunication companies. If the prices thatwe pay for telecommunications and internet services rise significantly, our gross margins could be adversely affected. In addition, if internet access fees orother charges to internet users increase, our user traffic may decrease, which in turn may harm our revenues.Failure of information security and privacy concerns could subject us to penalties, damage our reputation and brand, and harm our business and results ofoperations.The internet industry is facing significant challenges regarding information security and privacy, including the storage, transmission and sharing ofconfidential information. We transmit and store over our systems confidential and private information of our users, customers, distributors and Baidu Unionmembers, such as personal information, including names, accounts, user IDs and passwords, and payment or transaction related information.We are required by PRC law to ensure the confidentiality, integrity, availability and authenticity of the information of our users, customers, distributorsand Baidu Union members, which is also essential to maintain their confidence in our online products and services. We have adopted strict informationsecurity policies and deployed advanced measures to implement the policies, including, among others, advanced encryption technologies. However,advances in technology, increased level of sophistication and diversity of our products and services, increased level of expertise of hackers, new discoveriesin the field of cryptography or others could still result in a compromise or breach of the measures that we use. Because of our leading market position in theinternet industry in China, we believe we are a particularly attractive target for security breaches and hacking attacks. We have experienced in the past, andmay experience in the future, such attacks. In December 2012, the Standing Committee of the PRC National People’s Congress promulgated the Decision onStrengthening Network Information Protection, or the Network Information Protection Decision, to enhance the legal protection of information security andprivacy on the internet. The Network Information Protection Decision also requires internet operators to take measures to ensure confidentiality ofinformation of users. In July 2013, the MIIT promulgated the Provisions on Protection of Personal Information of Telecommunication and Internet Users toregulate the collection and use of users’ personal information in the provision of telecommunication service and internet information service in China. InNovember 2016, the Standing Committee of the National People’s Congress promulgated the PRC Cyber Security Law, which requires, among others, thatnetwork operators take security measures to protect the network from unauthorized interference, damage and unauthorized access and 21 Table of Contentsprevent data from being divulged, stolen or tampered with. Significant capital, managerial and human resources are required to comply with legalrequirements, enhance information security and to address any issues caused by security failures. If we are unable to protect our systems, hence theinformation stored in our systems, from unauthorized access, use, disclosure, disruption, modification or destruction, such problems or security breachescould cause loss or give rise to our liabilities to the owners of confidential information, such as our users, customers, distributors and Baidu Union members,subject us to penalties imposed by administrative authorities, and disrupt our operations. In addition, complying with various laws and regulations couldcause us to incur substantial costs or require us to change our business practices, including our data practices, in a manner adverse to our business.Furthermore, concerns have been expressed from time to time about whether our products, services or processes could compromise the privacy of usersand others. Concerns about our practices with regard to the collection, use, disclosure, or security of personal information or other privacy related matters, andany negative publicity on our information safety or privacy protection mechanism and policy, even if unfounded, could damage our reputation and brandand adversely affect our business and results of operations.If we fail to maintain an effective system of internal control over financial reporting, we may lose investor confidence in the reliability of our financialstatements.We are subject to reporting obligations under the U.S. securities laws. The SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, adoptedrules requiring every public company to include a management report on the company’s internal control over financial reporting in its annual report, whichcontains management’s assessment of the effectiveness of our internal control over financial reporting. In addition, an independent registered publicaccounting firm must attest to and report on the effectiveness of our internal control over financial reporting. We have been subject to these requirementssince the fiscal year ended December 31, 2006.Our management has concluded that our internal control over financial reporting was effective as of December 31, 2016. See “Item 15. Controls andProcedures.” Our independent registered public accounting firm has issued an attestation report, which has concluded that our internal control over financialreporting was effective in all material aspects as of December 31, 2016. However, if we fail to maintain effective internal control over financial reporting inthe future, our management and our independent registered public accounting firm may not be able to conclude that we have effective internal control overfinancial reporting at a reasonable assurance level. This could in turn result in loss of investor confidence in the reliability of our financial statements andnegatively impact the trading price of our ADSs. Furthermore, we have incurred and anticipate that we will continue to incur considerable costs, managementtime and other resources in an effort to comply with Section 404 and other requirements of the Sarbanes-Oxley Act.We have limited business insurance coverage.The insurance industry in China is still at a development stage. Insurance companies in China offer limited business insurance products. We do nothave any business liability or disruption insurance coverage for our operations in China. Any business disruption may result in our incurring substantial costsand the diversion of our resources.We face risks related to health epidemics, severe weather conditions and other outbreaks.Our business could be adversely affected by the effects of avian influenza, severe acute respiratory syndrome (SARS), the influenza A virus, Ebolavirus, severe weather conditions or other epidemic or outbreak. Health or other government regulations adopted in response to an epidemic, severe weatherconditions such as 22 Table of Contentssnow storm, flood or hazardous air pollution, or other outbreaks may require temporary closure of our offices or internet cafes where many users access ourplatform. Such closures may disrupt our business operations and adversely affect our results of operations.Risks Related to Our Corporate StructurePRC laws and regulations governing our businesses and the validity of certain of our contractual arrangements are uncertain. If we are found to be inviolation, we could be subject to sanctions. In addition, changes in PRC laws and regulations or changes in interpretations thereof may materially andadversely affect our business.The PRC government restricts or imposes conditions on foreign investment in internet, value-added telecommunication-based online advertising,online audio and video services and mobile application distribution businesses. We and our PRC subsidiaries are considered foreign persons or foreign-invested enterprises under PRC foreign investment related laws. As a result, we and our PRC subsidiaries are subject to PRC legal restrictions on orconditions for foreign ownership of internet, value-added telecommunication-based online advertising, online audio and video services and mobileapplication distribution businesses. Due to these restrictions and conditions, we operate our platform and conduct value-added telecommunication-basedonline advertising, online audio and video services and mobile application distribution businesses in China through our consolidated affiliated entities. Asall the nominee shareholders of our consolidated affiliated entities are either PRC citizens or PRC domestic enterprises, these entities are therefore consideredas PRC domestic enterprises under PRC law. The “nominee shareholders” refer to those shareholders who have pledged their equity interest in ourconsolidated affiliated entities to us and entered into exclusive equity purchase and transfer option agreements with us as part of the contractualarrangements. Our contractual arrangements with our consolidated affiliated entities and the nominee shareholders allow us to have the power to direct theactivities of these entities that most significantly impact their economic performance. These contractual arrangements demonstrate our ability and intentionto continue to exercise the ability to absorb substantially all of the profits and the expected losses of the affiliated entities. In 2014, 2015 and 2016, wederived approximately 27%, 31% and 35% of our total revenues, respectively, from our consolidated affiliated entities through contractual arrangements.There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws andregulations governing our business, or the enforcement and performance of our contractual arrangements with our consolidated affiliated entities, includingbut not limited to Baidu Netcom and the nominee shareholders. These laws and regulations may be subject to change, and their official interpretation andenforcement may involve substantial uncertainty. New laws and regulations that affect existing and proposed future businesses may also be appliedretroactively.Although we believe we comply with current PRC laws and regulations, we cannot assure you that the PRC government would agree that ourcontractual arrangements comply with PRC licensing, registration or other regulatory requirements, with existing policies or with requirements or policiesthat may be adopted in the future. The PRC government has broad discretion in determining penalties for violations of laws and regulations. If the PRCgovernment determines that we do not comply with applicable law, it could revoke our business and operating licenses, require us to discontinue or restrictour operations, restrict our right to collect revenues, block our websites, require us to restructure our operations, impose additional conditions or requirementswith which we may not be able to comply, impose restrictions on our business operations or on our customers, or take other regulatory or enforcement actionsagainst us that could be harmful to our business. Any of these or similar occurrences could significantly disrupt our business operations or restrict us fromconducting a substantial portion of our business operations, which could materially and adversely affect our business, financial condition and results ofoperations. If any of these occurrences results in our inability to direct the activities of any of our consolidated affiliated entities that most significantlyimpact its economic performance, and/or our failure to receive the economic benefits from any of our consolidated affiliated entities, we may not be able toconsolidate the entity in our consolidated financial statements in accordance with U.S. GAAP. 23 Table of ContentsOur contractual arrangements with our consolidated affiliated entities in China and the individual nominee shareholders may not be as effective inproviding control over these entities as direct ownership.Since PRC law restricts or imposes conditions on foreign equity ownership in internet, value-added telecommunication-based online advertising,online audio and video services and mobile application distribution companies in China, we operate our platform and conduct our value-addedtelecommunication-based online advertising, online audio and video services and mobile application distribution businesses through our consolidatedaffiliated entities in China. We have no equity interest in any of these entities and must rely on contractual arrangements to control and operate thebusinesses and assets held by our consolidated affiliated entities, including the domain names and trademarks that have been transferred from our subsidiariesto our consolidated affiliated entities in accordance with requirements of PRC law. These contractual arrangements may not be as effective in providingcontrol over these entities as direct ownership. For example, our consolidated affiliated entities and the individual nominee shareholders could breach theircontractual arrangements with us by, among other things, failing to operate our business, such as using the domain names and trademarks our subsidiarieshave transferred to them or maintaining our platform, in an acceptable manner or taking other actions that are detrimental to our interests. If our consolidatedaffiliated entities or the individual nominee shareholders fail to perform their obligations under these contractual arrangements, we may have to incursubstantial costs to enforce such arrangements, and rely on legal remedies under PRC law, including contract remedies, which may not be sufficient oreffective. If we are unable to enforce these contractual arrangements, or if we suffer significant delay or other obstacles in the process of enforcing thesecontractual arrangements, we may not be able to have the power to direct the activities that most significantly affect the economic performance of ourconsolidated affiliated entities, and we may lose control over the assets owned by our consolidated affiliated entities, including our Baidu.com domain nameand website, and any other domain names and websites we have access to may not attract a large number of users and customers at the same level asBaidu.com. As a result, our ability to conduct our business may be materially and adversely affected, and we may not be able to consolidate the financialresults of the relevant affiliated entities into our consolidated financial statements in accordance with U.S. GAAP, which may materially and adversely affectour results of operations and damage our reputation. In addition, we are in the process of updating the registration of new nominee shareholders of someconsolidated affiliated entities with PRC governmental authorities, and we may not be able to claim against any third parties who acquire equity interests ingood faith in the relevant consolidated affiliated entities from the original nominee shareholders before the new nominee shareholders are registered.Our contractual arrangements with our consolidated affiliated entities in China may result in adverse tax consequences to us.As a result of our corporate structure and the contractual arrangements between our subsidiaries and each of our consolidated affiliated entities inChina, we are subject to VAT at a rate of 6% as a result of the VAT reform program on both revenues generated by our consolidated affiliated entities’operations in China and revenues derived from our subsidiaries’ contractual arrangements with these consolidated affiliated entities. Where our consolidatedaffiliated entity is qualified as a VAT general taxpayer, the VAT charged by our subsidiaries on the revenues obtained from such consolidated affiliatedentity based on the contractual arrangement between our subsidiaries and such consolidated affiliated entity will constitute input VAT for the consolidatedaffiliated entity, and will be creditable against output VAT arising in connection with VAT taxable activities carried out by the consolidated affiliated entity.See “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Taxation” for more information on the VAT reform program. Moreover,we would be subject to adverse tax consequences if the PRC tax authorities were to determine that the contracts between our subsidiaries and theseconsolidated affiliated entities were not on an arm’s-length basis and therefore constituted a favorable transfer pricing. Under the PRC Enterprise Income TaxLaw, or the EIT Law, an enterprise must submit its annual tax return together with information on related-party transactions to the PRC tax authorities. ThePRC tax authorities may impose reasonable adjustments on taxation if they have identified any related party transactions that are inconsistent witharm’s-length principles. For example, the PRC tax authorities could request that our consolidated affiliated entities adjust their taxable income upward forPRC tax purposes. Such adjustment could 24 Table of Contentsadversely affect us by increasing our consolidated affiliated entities’ tax expenses without reducing our subsidiaries’ tax expenses, which could subject ourconsolidated affiliated entities to interest due on late payments and other penalties for under-payment of taxes.We may have exposure to greater than anticipated tax liabilities.We are subject to enterprise income tax, or EIT, business tax, VAT, and other taxes in many provinces and cities in China and our tax structure issubject to review by various local tax authorities. The determination of our provision for income tax and other tax liabilities requires significant judgment. Inthe ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. For example, if our P4Pservice is classified as a form of advertisement distribution service, we may be required to pay a cultural business construction fee, which is a 3% surcharge inaddition to the applicable value-added tax. In addition, if this classification of P4P services were to be retroactively applied, we might be subject tosanctions, including payment of delinquent fees and fines for the revenues generated from our P4P services prior to the classification. Moreover, under theEIT Law, the PRC tax authorities may impose reasonable adjustments on taxation if they have identified any related party transactions that are inconsistentwith arm’s-length principles. Particularly, the State Administration of Tax issued a Public Notice, or Public Notice 16, on March 18, 2015, to further regulateand strengthen the transfer pricing administration on outbound payments by a PRC enterprise to its overseas related parties. In addition to emphasizing thatoutbound payments by a PRC enterprise to its overseas related parties must comply with arm’s-length principles, Public Notice 16 specifies certaincircumstances whereby such payments are not deductible for the purpose of the enterprise income tax of the PRC enterprise, including payments to anoverseas related party which does not undertake any function, bear any risk or has no substantial operation or activities, payments for services which do notenable the PRC enterprise to obtain direct or indirect economic benefits, or for services that are unrelated to the functions and risks borne by the PRCenterprise, or relate to the protection of the investment interests of the direct or indirect investor of the PRC enterprise, or for services that have already beenpurchased from a third party or undertaken by the PRC enterprise itself, and royalties paid to an overseas related party which only owns the legal rights of theintangible assets but has no contribution to the creation of such intangible assets. Although we believe all our related party transactions, including allpayments by our PRC subsidiaries and consolidated affiliated entities to our non-PRC entities, are made on an arm’s-length basis and our estimates arereasonable, the ultimate decisions by the relevant tax authorities may differ from the amounts recorded in our financial statements and may materially affectour financial results in the period or periods for which such determination is made.The individual nominee shareholders of our consolidated affiliated entities may have potential conflicts of interest with us, which may adversely affect ourbusiness. We do not have any arrangements in place to address such potential conflicts.We have designated individuals who are PRC nationals to be the nominee shareholders of our consolidated affiliated entities in China. For example,Robin Yanhong Li, our chairman, chief executive officer and co-founder, is also the principal nominee shareholder of Baidu Netcom, which is our principalconsolidated affiliated entity.Although the individual nominee shareholders are contractually obligated to act in good faith and in our best interest, they may still have potentialconflicts of interest with us. For example, some individual nominee shareholders of our consolidated affiliated entities do not have a significant equity stakein our company other than the share options granted to them. We cannot assure you that when conflicts of interest arise, any or all of these individuals willact in the best interests of our company or such conflicts will be resolved in our favor. In addition, these individuals may breach, cause our consolidatedaffiliated entities to breach or refuse to renew, the existing contractual arrangements with us. Currently, we do not have any arrangements to address potentialconflicts of interest between these individuals and our company, except that we could exercise our transfer option under the exclusive equity purchase andtransfer option agreement with the relevant individual nomine shareholder to request him/her to transfer all of his/her equity ownership in the relevantconsolidated affiliated 25 Table of Contentsentity to a PRC entity or individual designated by us. We rely on Mr. Robin Yanhong Li, who is also a director of our company, to abide by the CaymanIslands law, which provides that directors owe a fiduciary duty to the company, and those who are also directors or officers of our PRC subsidiaries to abideby PRC law, which provides that directors and officers owe a fiduciary duty to the company. Such fiduciary duty requires directors and/or officers to act ingood faith and in the best interests of the company and not to use their positions for personal gains. There are, however, no specific provisions under theCayman Islands or PRC law on how to address potential conflicts of interest. If we cannot resolve any conflict of interest or dispute between us and theindividual nominee shareholders of our consolidated affiliated entities, we would have to rely on legal proceedings, which could disrupt our business,distract management and subject us to substantial uncertainty as to the outcome of any such legal proceedings.We may be unable to collect long-term loans to the nominee shareholders of our consolidated affiliated entities in China.As of the date of this annual report, we have made long-term loans in an aggregate principal amount of RMB7.7 billion (US$1.1 billion) to thenominee shareholders of our consolidated affiliated entities. We extended these loans to enable the nominee shareholders to fund the capitalization of theseentities. Certain of our consolidated affiliated entities are currently going through governmental registrations and filings in connection with their recentincrease of registered capital, which we anticipate will be completed in the next few months, and the increased portion of the registered capital will be fundedpromptly afterwards. We may in the future provide additional loans to the nominee shareholders of our consolidated affiliated entities in China in connectionwith any increase in their capitalization to the extent necessary and permissible under applicable law. Our ability to ultimately collect these loans willdepend on the profitability of these consolidated affiliated entities and their operational needs, which are uncertain.We are in the process of registering the pledges of equity interests by nominee shareholders of some of our consolidated affiliated entities, and we may notbe able to enforce the equity pledges against any third parties who acquire the equity interests in good faith in the relevant consolidated affiliated entitiesbefore the pledges are registered.The nominee shareholders of each of our consolidated affiliated entities have pledged all of their equity interests in the relevant consolidated affiliatedentities to our subsidiaries pursuant to equity pledge agreements under the contractual arrangements. An equity pledge agreement becomes effective amongthe parties upon execution. However, according to the PRC Property Rights Law, an equity pledge is not perfected as a security property right unless it isregistered with the relevant local administration for industry and commerce. We are in the process of registering the pledge relating to Baidu Netcom, as wellas certain other consolidated affiliated entities, relating to recent increases of their registered capital and equity interest transfer, which we anticipate will becompleted in the next few months. Prior to the completion of the registration, we may not be able to successfully enforce the equity pledge against any thirdparties who have acquired property right interests in good faith in the equity interests in the relevant consolidated affiliated entities.Risks Related to Doing Business in ChinaChanges in China’s economic, political or social conditions or government policies could have a material and adverse effect on our businessand operations.Most of our business operations are conducted in China. Accordingly, our business, results of operations, financial condition and prospects are affectedby economic, political and social conditions in China generally and by continued economic growth in China as a whole.China’s economy differs from the economies of most developed countries in many respects, including the level of government involvement, level ofdevelopment, growth rate, control of foreign exchange and allocation 26 Table of Contentsof resources. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction ofstate ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productiveassets in China is still owned by the government. In addition, the Chinese government continues to play a significant role in regulating industrydevelopment. The Chinese government also exercises significant control over China’s economic growth through allocating resources, controlling payment offoreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies.Growth of China’s economy has been uneven, both geographically and among various sectors of the economy, and the growth of the Chinese economyhas slowed down since 2012. Some of the government measures may benefit the overall Chinese economy, but may have a negative effect on us. Forexample, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in taxregulations. Any stimulus measures designed to boost the Chinese economy may contribute to higher inflation, which could adversely affect our results ofoperations and financial condition. For example, certain operating costs and expenses, such as employee compensation and office operating expenses, mayincrease as a result of higher inflation. Additionally, because a substantial portion of our assets consists of cash and cash equivalents and short-terminvestments, high inflation could significantly reduce the value and purchasing power of these assets.Uncertainties with respect to the PRC legal system could adversely affect us.We conduct our business primarily through our subsidiaries and consolidated affiliated entities in China. Our operations in China are governed byPRC laws and regulations. Our subsidiaries are generally subject to laws and regulations applicable to foreign investments in China. The PRC legal system isbased on written statutes. Prior court decisions may be cited for reference but have limited precedential value.PRC laws and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China for the past decades.However, China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently cover all aspects ofeconomic activities in China. In particular, because these laws and regulations are relatively new, and because of the limited volume of published decisionsand their nonbinding nature, the interpretation and enforcement of these laws and regulations involve uncertainties.Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or atall. As a result, we may not be aware of our potential violation of these policies and rules. In addition, any litigation in China may be protracted and result insubstantial costs and diversion of resources and management attention.We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet and related business and companies.The PRC government regulates the internet and related industry extensively, including foreign ownership of, and the licensing and permitrequirements pertaining to, companies in the internet industry. These internet-related laws and regulations are relatively new and evolving, and theirinterpretation and enforcement involve significant uncertainty. As a result, under certain circumstances it may be difficult to determine what actions oromissions may be deemed to be violations of applicable laws and regulations. Issues, risks and uncertainties relating to PRC government regulation of theinternet industry include, but are not limited to, the following: • We only have contractual control over our websites. We do not own the websites due to the restriction of foreign investment in businessesproviding value-added telecommunications services in China, including online information services. • The licensing requirements relating to the internet business in China are uncertain and evolving. This means that permits, licenses or operationsat some of our PRC subsidiaries and consolidated affiliated 27 Table of Contents entities may be subject to challenge, or we may not be able to obtain or renew certain permits or licenses, including without limitation, a Value-Added Telecommunication Business Operating License, which is issued by the MIIT, an Internet News License, which is issued by the StateCouncil News Office, a Short Messaging Service Access Code Certificate, which is issued by the MIIT, an Online Audio/Video ProgramTransmission License, which is issued by the State Administration of Press Publication, Radio, Film and Television, or the SAPPRFT, a Radioand Television Program Production License, which is issued by the SAPPRFT, a Surveying and Mapping Qualification Certificate for internetmap services, which is issued by the National Administration of Surveying, Mapping and Geo-information, an Internet Culture Business Permitwith the permitted scope of business covering online game operation and online game virtual currency issuance or trading, which is issued bythe Ministry of Culture, an Internet Publication License, which is issued by the SAPPRFT, a Payment Service Permit, which is issued by thePeople’s Bank of China, a Qualification Certificate for Internet Drug Information Services, which is issued by provincial branch of the State Foodand Drug Administration, and a China Air Transport Sales Agency Services Certificate, which is issued by China Air Transport Association.Failure to obtain or renew these permits and licenses may significantly disrupt our business, or subject us to sanctions, requirements to increasecapital or other conditions or enforcement, or compromise enforceability of related contractual arrangements, or have other harmful effects on us. • New laws and regulations may be promulgated to regulate internet activities, including online advertising and online payment. Other aspects ofour online operations may be regulated in the future. If these new laws and regulations are promulgated, additional licenses may be required forour online operations. If our operations do not comply with these new regulations at the time they become effective, or if we fail to obtain anylicenses required under these new laws and regulations, we could be subject to penalties.We provide value-added telecommunications services through our consolidated affiliated entities, which hold the required licenses. In July 2006, theMIIT issued the Notice of the Ministry of Industry and Information Technology on Intensifying the Administration of Foreign Investment in Value-AddedTelecommunications Services. This notice prohibits domestic telecommunication service providers from leasing, transferring or selling telecommunicationbusiness operating licenses to any foreign investor in any form, or providing any resources, sites or facilities to any foreign investor for their illegal operationof a telecommunication business in China. According to this notice, either the holder of a Value-Added Telecommunication Business Operating License orits shareholders must directly own the domain names and trademarks used by the license holder in its provision of value-added telecommunications services.The notice also requires each license holder to have the necessary facilities, including servers, for its approved business operations and to maintain thesefacilities in the regions covered by its license. Baidu Netcom and Beijing BaiduPay Science and Technology Co., Ltd., or BaiduPay, our consolidatedaffiliated entities, own the necessary domain names and trademarks, including pending trademark applications and have the necessary personnel andfacilities to operate our websites.We operate application and mobile game platforms through certain of our consolidated affiliated entities. In September 2009, the GAPP (currentlyknown as the SAPPRFT) together with several other government agencies issued a notice, or the Circular 13, prohibiting foreign investors from participatingin online game operating businesses in China. Circular 13 expressly prohibits foreign investors from gaining control over or participating in PRC operatingcompanies’ online game operations through indirect means, such as establishing joint venture companies, entering into contractual arrangements with orproviding technical support to the operating companies, or through a disguised form. Other government agencies that also have the authority to regulateonline game operations in China, such as the Ministry of Culture and the MIIT, did not join the GAPP in issuing the Circular 13. Due to the ambiguity amongvarious regulations on online games and a lack of interpretations from the relevant PRC authorities governing online game operations, it is uncertain whetherPRC authorities would consider our relevant contractual arrangements to be foreign investment in online game operation businesses. While we are not awareof any online game companies that use contractual arrangements similar to ours having been penalized or ordered to terminate operation by PRC authoritiesclaiming that the contractual 28 Table of Contentsarrangements constitute control over, or participation in, the operation of online game operations through indirect means, it is unclear whether and how thevarious regulations of the PRC authorities might be interpreted or implemented in the future. If our relevant contractual arrangements were deemed to be“indirect means” or “disguised form” under the Circular 13, the relevant contractual arrangements may be challenged by the SAPPRFT or other governmentalauthorities. If our operation of mobile game platforms were found to be in violation of the Circular 13, the SAPPRFT, in conjunction with relevant regulatoryauthorities, would have the power to investigate and deal with such violations, including in the most serious cases, suspending or revoking the relevantlicenses and registrations.As we enter into new businesses, we may encounter additional regulatory uncertainties. For example, it remains unclear whether the provision of onlinepayment services by BaiduPay will require BaiduPay to apply for a Value-Added Telecommunication Business Operating License for “online dataprocessing and transaction processing businesses” as provided in the Catalog of Telecommunication Businesses promulgated by the MIIT. However, BaiduNetcom, parent company of BaiduPay, has received a Trans-Regional Value-Added Telecommunication Business Operating License with a permittedoperation scope covering online data processing and transaction processing businesses. Baidu Netcom plans to submit an application to allow its subsidiaryBaiduPay to operate online data processing and transaction processing businesses in 2017. Another example, the current PRC legal framework on traffic andtransportation does not cover autonomous cars or autonomous driving. Therefore, it remains uncertain what additional compliance requirements we need tomeet in order to undertake a public road testing of our autonomous driving cars in China. There is also no guarantee that the public road testing of ourautonomous driving cars in other locations fully complies with local laws and regulations. If our public road testing is deemed by local enforcementauthority as a violation of the applicable traffic and transportation laws, we may have to suspend the testing, and the progress of our research anddevelopment of autonomous cars may be adversely affected.The interpretation and application of existing PRC laws, regulations and policies and possible new laws, regulations or policies relating to the internetindustry have created substantial uncertainties regarding the legality of existing and future foreign investments in, and the businesses and activities of,internet businesses in China, including our business.Substantial uncertainties exist with respect to the enactment timetable, interpretation and implementation of draft PRC Foreign Investment Law and howit may impact the viability of our current corporate structure, corporate governance and business operations.The Ministry of Commerce published a discussion draft of the proposed Foreign Investment Law in January 2015 aiming to, upon its enactment,replace the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreignCooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillaryregulations. The draft Foreign Investment Law embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in linewith prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. Whilethe Ministry of Commerce solicited comments on the draft, substantial uncertainties exist with respect to its enactment timetable, interpretation andimplementation. The draft Foreign Investment Law, if enacted as proposed, may materially impact the viability of our current corporate structure, corporategovernance and business operations in many aspects.Among other things, the draft Foreign Investment Law expands the definition of foreign investment and introduces the principle of “actual control” indetermining whether a company should be treated as a foreign-invested enterprise, or an FIE. According to the definition set forth in the draft, FIEs refer toenterprises established in China pursuant to PRC law that are solely or partially invested by foreign investors. The draft specifically provides that entitiesestablished in China (without direct foreign equity ownership) but “controlled” by foreign investors, through contract or trust for example, will be treated asFIEs. Once an entity falls within the 29 Table of Contentsdefinition of FIE, it may be subject to foreign investment “restrictions” or “prohibitions” set forth in a “negative list” to be separately issued by the StateCouncil later. If an FIE proposes to conduct business in an industry subject to foreign investment “restrictions” in the “negative list,” the FIE must gothrough a market entry clearance by the Ministry of Commerce before being established. If an FIE proposes to conduct business in an industry subject toforeign investment “prohibitions” in the “negative list,” it must not engage in the business. However, an FIE, during the market entry clearance process, mayapply in writing to be treated as a PRC domestic enterprise if its foreign investor(s) is/are ultimately “controlled” by PRC government authorities and itsaffiliates and/or PRC citizens. In this connection, “control” is broadly defined in the draft to cover the following summarized categories: (i) holding 50% ofmore of the voting rights of the subject entity; (ii) holding less than 50% of the voting rights of the subject entity but having the power to secure at least 50%of the seats on the board or other equivalent decision making bodies, or having the voting power to exert material influence on the board, the shareholders’meeting or other equivalent decision making bodies; or (iii) having the power to exert decisive influence, via contractual or trust arrangements, over thesubject entity’s operations, financial matters or other key aspects of business operations.The “variable interest entity” structure, or VIE structure, has been adopted by many PRC-based companies, including us, to obtain necessary licensesand permits in the industries that are currently subject to foreign investment restrictions in China. See “—Risks Related to Our Corporate Structure” and“Item 4.C. Information on the Company—Organizational Structure—Contractual Arrangements with Our Consolidated Affiliated Entities and the NomineeShareholders.” Under the draft Foreign Investment Law, variable interest entities that are controlled via contractual arrangement would also be deemed asFIEs, if they are ultimately “controlled” by foreign investors. Therefore, for any companies with a VIE structure in an industry category that is included in the“negative list” as restricted industry, the VIE structure may be deemed legitimate only if the ultimate controlling person(s) is/are of PRC nationality (eitherPRC government authorities and its affiliates or PRC citizens). Conversely, if the actual controlling person(s) is/are of foreign nationalities, then the variableinterest entities will be treated as FIEs and any operation in the industry category on the “negative list” without market entry clearance may be considered asillegal.Through our dual-class share structure, Mr. Robin Yanhong Li, our chairman, chief executive officer and principal shareholder, a PRC citizen,possessed and controlled 54.3% of the voting power of our company as of February 28, 2017. The draft Foreign Investment Law has not taken a position onwhat actions will be taken with respect to the existing companies with a VIE structure, whether or not these companies are controlled by Chinese parties.Moreover, it is uncertain whether the internet, value-added telecommunication-based online advertising, online audio and video services and mobileapplication distribution businesses, in which our variable interest entities operate, will be subject to the foreign investment restrictions or prohibitions setforth in the “negative list” to be issued. If the enacted version of the Foreign Investment Law and the final “negative list” mandate further actions, such asMinistry of Commerce market entry clearance, to be completed by companies with existing VIE structure like us, we face uncertainties as to whether suchclearance can be timely obtained, or at all.The draft Foreign Investment Law, if enacted as proposed, may also materially impact our corporate governance practice and increase our compliancecosts. For instance, the draft Foreign Investment Law imposes stringent ad hoc and periodic information reporting requirements on foreign investors and theapplicable FIEs.Regulation and censorship of information disseminated over the internet in China may adversely affect our business, and subject us to liability forinformation displayed on or linked to our websites and negative publicity in international media.The PRC government has adopted regulations governing internet access and distribution of news and other information over the internet. Under theseregulations, internet content providers and internet publishers are prohibited from posting or displaying over the internet content that, among other things,violates PRC laws and regulations, impairs the national dignity of China, contains terrorism or extremism content, or is reactionary, obscene, superstitious,fraudulent or defamatory. Failure to comply with these requirements may result in the 30 Table of Contentsrevocation of licenses to provide internet content and other licenses and the closure of the concerned websites. In the past, failure to comply with theserequirements has resulted in the closure of certain websites. The website operator may also be held liable for the censored information displayed on or linkedto the website.In particular, the MIIT has published regulations that subject website operators to potential liability for content displayed on their websites and theactions of users and others using their systems, including liability for violations of PRC laws and regulations prohibiting the dissemination of contentdeemed to be socially destabilizing. The Ministry of Public Security has the authority to order any local internet service provider to block any internetwebsite at its sole discretion. From time to time, the Ministry of Public Security has stopped the dissemination over the internet of information which itbelieves to be socially destabilizing. The State Secrecy Bureau is also authorized to block any website it deems to be leaking state secrets or failing to meetthe relevant regulations relating to the protection of state secrets in the dissemination of online information. Furthermore, we are required to report anysuspicious content to relevant governmental authorities, and to undergo computer security inspections. If we fail to implement the relevant safeguardsagainst security breaches, our websites may be shut down and our business and ICP licenses may be revoked.The Anti-Terrorism Law, which took effect on January 1, 2016, further requires internet service providers to verify the identity of their users, and to notprovide services to anyone whose identity is unclear or who declines verification. Although the identity verification requirements are already embodied insome internet related regulations, the Anti-Terrorism Law extends these requirements to all types of internet services. The internet service providers are alsorequired to provide technical interfaces, decryption and other technical support and assistance for the competent departments to prevent and investigateterrorist activities.Although we attempt to monitor the content in our search results and on our online communities such as Baidu Post Bar, we are not able to control orrestrict the content of other internet content providers linked to or accessible through our websites, or content generated or placed on our Baidu Post Barmessage boards or our other online communities by our users. To the extent that PRC regulatory authorities find any content displayed on our websitesillegal, they may require us to limit or eliminate the dissemination of such information on our websites. To the extent that PRC regulatory authorities findany content displayed on our websites objectionable, they may suggest that we limit or eliminate the dissemination of such information on our websites. Ifthird-party websites linked to or accessible through our websites conduct unlawful activities such as online gambling on their websites, PRC regulatoryauthorities may require us to report such unlawful activities to relevant authorities and to remove the links to such websites, or they may suspend or shutdown the operation of these third-party websites. PRC regulatory authorities may also temporarily block access to certain websites for a period of time forreasons beyond our control. Any of these actions may reduce our user traffic and adversely affect our business. In addition, we may be subject to penalties forviolations of those regulations arising from information displayed on or linked to our websites, including a suspension or shutdown of our online operations.Moreover, our compliance with PRC regulations governing internet access and distribution of news and other information over the internet maysubject us to negative publicity or even legal actions outside of China. In May 2011, eight New York residents filed a lawsuit against us before the U.S.District Court for the Southern District of New York accusing us of aiding Chinese censorship in violation of the U.S. Constitution. In March 2014, the U.S.District Court for the Southern District of New York granted our motion for judgment on the pleadings based upon the First Amendment to the U.S.Constitution and dismissed the plaintiffs’ complaint in its entirety. Even though we have won the case, our reputation may be adversely affected among usersand investors outside of China.The discontinuation of any of the preferential income tax treatments currently available to us in the PRC could have a material and adverse effect on ourresult of operations and financial condition.Pursuant to the EIT Law, as further clarified by subsequent tax regulations implementing the EIT Law, foreign-invested enterprises and domesticenterprises are subject to EIT at a uniform rate of 25%. Certain 31 Table of Contentsenterprises may still benefit from a preferential tax rate of 15% under the EIT Law if they qualify as “High and New Technology Enterprises stronglysupported by the state,” subject to certain general factors described in the EIT Law and the related regulations.A number of our PRC subsidiaries and consolidated affiliated entities, such as Baidu Online Network Technology (Beijing) Co., Ltd., or Baidu Online,and Baidu Netcom are entitled to enjoy a preferential tax rate of 15% due to their qualification as “High and New Technology Enterprise,” which has a termof three years. If any or some of these PRC subsidiaries and consolidated affiliated entities fail to maintain the “High and New Technology Enterprise”qualification, their applicable EIT rate will be up to 25%. Furthermore, Baidu Online was entitled to a preferential income tax rate of 10% from 2013 to 2015due to its “Key Software Enterprise” status designated by the relevant government authorities. Baidu China was also entitled to a preferential income tax rateof 10% for 2015 due to its “Key Software Enterprise” status designated by the relevant government authorities. Both Baidu Online and Baidu China will filewith the local tax authority for the preferential tax rate of 10% for a “Key Software Enterprise” for 2016 before the end of May 2017, and will be subject torelevant governmental authorities’ assessment. However, there is no assurance that Baidu Online and Baidu China will continue to enjoy the preferential taxrate as a “Key Software Enterprise.” See “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Taxation—PRC Enterprise IncomeTax.”The discontinuation of any of the above-mentioned preferential income tax treatments currently available to us in the PRC could have a material andadverse effect on our result of operations and financial condition. We cannot assure you that we will be able to maintain our current effective tax rate in thefuture.If our PRC subsidiaries declare and distribute dividends to their respective offshore parent companies, we will be required to pay more taxes, which couldhave a material and adverse effect on our result of operations.Under the EIT Law and related regulations, dividends, interests, rent or royalties payable by a foreign-invested enterprise, such as our PRC subsidiaries,to any of its foreign non-resident enterprise investors, and proceeds from any such foreign enterprise investor’s disposition of assets (after deducting the netvalue of such assets) are subject to a 10% withholding tax, unless the foreign enterprise investor’s jurisdiction of incorporation has a tax treaty with Chinathat provides for a reduced rate of withholding tax. Undistributed profits earned by foreign-invested enterprises prior to January 1, 2008 are exempted fromany withholding tax. The British Virgin Islands, where Baidu Holdings Limited, the direct parent company of our PRC subsidiaries Baidu Online and BaiduInternational Technology (Shenzhen) Co., Ltd., or Baidu International, is incorporated, does not have such a tax treaty with China. Hong Kong has a taxarrangement with China that provides for a 5% withholding tax on dividends subject to certain conditions and requirements, such as the requirement that theHong Kong resident enterprise own at least 25% of the PRC enterprise distributing the dividend at all times within the 12-month period immediatelypreceding the distribution of dividends and be a “beneficial owner” of the dividends. For example, Baidu (Hong Kong) Limited, which directly owns ourPRC subsidiaries Baidu China and Baidu Times, is incorporated in Hong Kong. However, if Baidu (Hong Kong) Limited is not considered to be thebeneficial owner of dividends paid to it by Baidu China and Baidu Times under the tax circulars promulgated in February and October 2009, such dividendswould be subject to withholding tax at a rate of 10%. See “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Taxation—PRCEnterprise Income Tax.” If our PRC subsidiaries declare and distribute profits earned after January 1, 2008 to us in the future, such payments will be subjectto withholding tax, which will increase our tax liability and reduce the amount of cash available to our company.We may be deemed a PRC resident enterprise under the EIT Law, which could subject us to PRC taxation on our global income, and which may have amaterial and adverse effect on our results of operations.Under the EIT Law and related regulations, an enterprise established outside of the PRC with “de facto management body” within the PRC isconsidered a PRC resident enterprise and is subject to the EIT at the rate of 25% on its worldwide income as well as PRC EIT reporting obligations. Therelated regulations define the term 32 Table of Contents“de facto management body” as “the establishment that exercises substantial and overall management and control over the production, business, personnel,accounts and properties of an enterprise.” The State Administration of Taxation issued a SAT Circular 82 in April 2009, which provides certain specificcriteria for determining whether the “de facto management body” of a Chinese-controlled overseas-incorporated enterprise is located in China. The StateAdministration of Taxation issued additional rules to provide more guidance on the implementation of SAT Circular 82 in July 2011, and issued anamendment to SAT Circular 82 delegating the authority to its provincial branches to determine whether a Chinese-controlled overseas-incorporatedenterprise should be considered a PRC resident enterprise, in January 2014. See “Item 5.A. Operating and Financial Review and Prospects—OperatingResults—Taxation—PRC Enterprise Income Tax.” Although the SAT Circular 82, the additional guidance and amendment apply only to overseas registeredenterprises controlled by PRC enterprises, not to those controlled by PRC individuals or foreigners, the criteria set forth in SAT Circular 82 may reflect theState Administration of Taxation’s general position on how the “de facto management body” test should be applied in determining the tax resident status ofoffshore enterprises, regardless of whether they are controlled by PRC enterprises or individuals. If we are deemed a PRC resident enterprise, we may besubject to the EIT at 25% on our global income, except that the dividends we receive from our PRC subsidiaries may be exempt from the EIT to the extentsuch dividends are deemed as “dividends among qualified PRC resident enterprises.” If we are deemed a PRC resident enterprise and earn income other thandividends from our PRC subsidiaries, a 25% EIT on our global income could significantly increase our tax burden and materially and adversely affect ourcash flow and profitability.Under PRC tax laws, dividends payable by us and gains on the disposition of our shares or ADSs may be subject to PRC taxation.If we are considered a PRC resident enterprise under the EIT Law, our shareholders and ADS holders who are deemed non-resident enterprises may besubject to the EIT at the rate of 10% upon the dividends payable by us or upon any gains realized from the transfer of our shares or ADSs, if such income isdeemed derived from China, provided that (i) such foreign enterprise investor has no establishment or premises in China, or (ii) it has establishment orpremises in China but its income derived from China has no real connection with such establishment or premises. If we are required under the EIT Law towithhold PRC income tax on our dividends payable to our non-PRC resident enterprise shareholders and ADS holders, or if any gains realized from thetransfer of our shares or ADSs by our non-PRC resident enterprise shareholders and ADS holders are subject to the EIT, your investment in our shares or ADSscould be materially and adversely affected.Furthermore, if we are considered a PRC resident enterprise and relevant PRC tax authorities consider dividends we pay with respect to our shares orADSs and the gains realized from the transfer of our shares or ADSs to be income derived from sources within the PRC, it is possible that such dividends andgains earned by non-resident individuals may be subject to PRC individual income tax at a rate of 20%. If we are required under PRC tax laws to withholdPRC income tax on dividends payable to our non-PRC investors that are non-resident individuals or if you are required to pay PRC income tax on thetransfer of our shares or ADSs, the value of your investment in our shares or ADSs may be materially and adversely affected.Our subsidiaries and consolidated affiliated entities in China are subject to restrictions on paying dividends and making other payments to our holdingcompany.Baidu, Inc. is our holding company incorporated in the Cayman Islands. As a result of the holding company structure, it currently relies on dividendpayments from our subsidiaries in China. However, PRC regulations currently permit payment of dividends only out of accumulated profits, as determined inaccordance with PRC accounting standards and regulations. Our subsidiaries and consolidated affiliated entities in China are also required to set aside aportion of their after-tax profits according to PRC accounting standards and regulations to fund certain reserve funds. The PRC government also imposescontrols on the conversion of RMB into foreign currencies and the remittance of foreign currencies out of China. We may experience difficulties incompleting the administrative procedures necessary to obtain and remit foreign currency. See “—Governmental control of 33 Table of Contentscurrency conversion may affect the value of your investment.” Furthermore, if our subsidiaries or consolidated affiliated entities in China incur debt on theirown in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. If our subsidiaries and consolidatedaffiliated entities in China are unable to pay dividends or make other payments to us, we may be unable to pay dividends on our ordinary shares and ADSs.Governmental control of currency conversion may affect the value of your investment.The PRC government imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of foreign currencyout of China. We receive most of our revenues in RMB. Under our current structure, our income at the Cayman Islands holding company level will primarilybe derived from dividend payments from our PRC subsidiaries. Shortages in the availability of foreign currency may restrict the ability of our PRCsubsidiaries and consolidated affiliated entities to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreigncurrency denominated obligations. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions,interest payments and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from the State Administration ofForeign Exchange, or SAFE, by complying with certain procedural requirements. However, approval from appropriate government authorities is requiredwhere RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreigncurrencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreignexchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay dividends inforeign currencies to our shareholders or ADS holders.PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion maydelay or prevent us from making loans to our PRC subsidiaries or consolidated affiliated entities, or making additional capital contributions to our PRCsubsidiaries, which could adversely affect our ability to fund and expand our business.Baidu, Inc. is our offshore holding company conducting operations in China through our PRC subsidiaries and consolidated affiliated entities. We maymake loans to our PRC subsidiaries and consolidated affiliated entities, or we may make additional capital contributions to our PRC subsidiaries. Loans byBaidu, Inc. or any of our offshore subsidiaries to our PRC subsidiaries, which are treated as foreign-invested enterprises under PRC law, are subject to PRCregulations and foreign exchange loan registrations. Such loans to any of our PRC subsidiaries to finance their activities cannot exceed statutory limits andmust be registered with the local counterpart of SAFE. The statutory limit for the total amount of foreign debts of a foreign-invested enterprise is thedifference between the amount of total investment as approved by the Ministry of Commerce or its local counterpart and the amount of registered capital ofsuch foreign-invested enterprise. Any medium or long-term loans by Baidu, Inc. or any of our offshore subsidiaries to our consolidated affiliated entities,which are domestic PRC entities, must be approved by the National Development and Reform Commission and SAFE, or their relevant local counterparts. Wemay also decide to finance our PRC subsidiaries by means of capital contributions. These capital contributions must be approved by the Ministry ofCommerce or its local counterpart. Meanwhile, we are not likely to finance the activities of our consolidated affiliated entities by means of capitalcontributions given the PRC legal restrictions on foreign ownership of internet, value-added telecommunication-based online advertising, online audio andvideo services and mobile application distribution businesses.In June 2016, SAFE promulgated SAFE Circular No. 16, which removed certain restrictions previously provided under several SAFE circulars,including SAFE Circular No. 142, in respect of conversion by a foreign-invested enterprise of foreign currency registered capital into RMB and use of suchRMB capital. However, SAFE Circular No. 16 continues to prohibit foreign-invested enterprises from, among other things, using RMB fund converted fromits foreign exchange capitals for expenditure beyond its business scope, and providing loans to non-affiliated enterprises except as permitted in the businessscope. 34 Table of ContentsIn light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies,including SAFE Circulars referred to above, we cannot assure you that we will be able to complete the necessary government registrations or obtain thenecessary government approvals on a timely basis, if at all, with respect to future loans by us to our PRC subsidiaries or consolidated affiliated entities oradditional capital contributions by us to our PRC subsidiaries, and conversion of such loans or capital contributions into RMB. If we fail to complete suchregistrations or obtain such approvals, our ability to capitalize or otherwise fund our PRC operations may be negatively affected, which could adverselyaffect our ability to fund and expand our business.PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may limit our ability to inject capital into our PRCsubsidiaries, limit our subsidiaries’ ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us.The Notice on Issues Relating to the Administration of Foreign Exchange in Fund-Raising and Round-Trip Investment Activities of DomesticResidents Conducted via Offshore Special Purpose Companies, or SAFE Circular No. 75, and a series of implementation rules and guidance issued by SAFE,including the circular relating to operating procedures that came into effect in July 2011, require PRC residents and PRC corporate entities to register withlocal branches of SAFE in connection with their direct or indirect offshore investment in an overseas special purpose vehicle, or SPV, for the purposes ofoverseas equity financing activities, and to update such registration in the event of any significant changes with respect to that offshore company. SAFEpromulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing andRoundtrip Investment through Special Purpose Vehicles, or SAFE Circular No. 37, on July 4, 2014, which replaced the SAFE Circular No. 75. SAFE CircularNo. 37 requires PRC residents to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity,for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interests in domestic enterprises or offshoreassets or interests, referred to in SAFE Circular No. 37 as a “special purpose vehicle.” The term “control” under SAFE Circular No. 37 is broadly defined as theoperation rights, beneficiary rights or decision-making rights acquired by the PRC residents in the offshore special purpose vehicles or PRC companies bysuch means as acquisition, trust, proxy, voting rights, repurchase, convertible bonds or other arrangements. SAFE Circular No. 37 further requires amendmentto the registration in the event of any changes with respect to the basic information of the special purpose vehicle, such as changes in a PRC residentindividual shareholder, name or operation period; or any significant changes with respect to the special purpose vehicle, such as increase or decrease ofcapital contributed by PRC individuals, share transfer or exchange, merger, division or other material event. If the shareholders of the offshore holdingcompany who are PRC residents do not complete their registration with the local SAFE branches, the PRC subsidiaries may be prohibited from distributingtheir profits and proceeds from any reduction in capital, share transfer or liquidation to the offshore company, and the offshore company may be restricted inits ability to contribute additional capital to its PRC subsidiaries. Moreover, failure to comply with SAFE registration and amendment requirements describedabove could result in liability under PRC law for evasion of applicable foreign exchange restrictions. On February 28, 2015, SAFE promulgated a Notice onFurther Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which became effective on June 1,2015. In accordance with SAFE Notice 13, entities and individuals are required to apply for foreign exchange registration of foreign direct investment andoverseas direct investment, including those required under the SAFE Circular No. 37, with qualified banks, instead of SAFE. The qualified banks, under thesupervision of SAFE, directly examine the applications and conduct the registration.We have notified holders of ordinary shares of our company whom we know are PRC residents to register with the local SAFE branch and update theirregistrations as required under the SAFE regulations described above. We are aware that Mr. Robin Yanhong Li, our chairman, chief executive officer andprincipal shareholder, who is a PRC resident, has registered with the relevant local SAFE branch. We, however, cannot provide any assurances that all of ourshareholders who are PRC residents will file all applicable registrations or update previously filed registrations as required by these SAFE regulations. Thefailure or inability of our PRC 35 Table of Contentsresident shareholders to comply with the registration procedures may subject the PRC resident shareholders to fines and legal sanctions, restrict our cross-border investment activities, or limit our PRC subsidiaries’ ability to distribute dividends to or obtain foreign exchange-dominated loans from our company.As it is uncertain how the SAFE regulations described above will be interpreted or implemented, we cannot predict how these regulations will affectour business operations or future strategy. For example, we may be subject to more stringent review and approval process with respect to our foreignexchange activities, such as remittance of dividends and foreign currency-denominated borrowings, which may adversely affect our results of operations andfinancial condition. In addition, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owners of such company will be ableto obtain the necessary approvals or complete the necessary filings and registrations required by the SAFE regulations. This may restrict our ability toimplement our acquisition strategy and could adversely affect our business and prospects.Failure to comply with PRC regulations regarding the registration requirements for employee stock ownership plans or share option plans may subject thePRC plan participants or us to fines and other legal or administrative sanctions.In February 2012, SAFE promulgated the Notices on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating inStock Incentive Plan of Overseas Publicly-Listed Company, or the Stock Option Rule, replacing the earlier rules promulgated in March 2007. Under theStock Option Rule, PRC residents who are granted stock options by an overseas publicly listed company are required, through a PRC agent or PRCsubsidiary of such overseas publicly listed company, to register with SAFE and complete certain other procedures. We and our PRC resident employees whohave been granted stock options are subject to these regulations. We have designated our PRC subsidiary Baidu Online to handle the registration and otherprocedures required by the Stock Option Rule. If we or our PRC optionees fail to comply with these regulations in the future, we or our PRC optionees andtheir local employers may be subject to fines and legal sanctions.PRC regulations establish complex procedures for some acquisitions conducted by foreign investors, which could make it more difficult for us to pursuegrowth through acquisitions in China.The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, adopted by six PRC regulatory agencies in August 2006and amended in June 2009, among other things, established additional procedures and requirements that could make merger and acquisition activities byforeign investors more time-consuming and complex. In addition, the Implementing Rules Concerning Security Review on the Mergers and Acquisitions byForeign Investors of Domestic Enterprises, issued by the Ministry of Commerce in August 2011, specify that mergers and acquisitions by foreign investorsinvolved in “an industry related to national security” are subject to strict review by the Ministry of Commerce, and prohibit any activities attempting tobypass such security review, including by structuring the transaction through a proxy or contractual control arrangement. We believe that our business is notin an industry related to national security, but we cannot preclude the possibility that the Ministry of Commerce or other government agencies may publishexplanations contrary to our understanding or broaden the scope of such security reviews in the future, in which case our future acquisitions in the PRC,including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited. Moreover, the Anti-Monopoly Law requires that the Ministry of Commerce be notified in advance of any concentration of undertaking if certain filing thresholds are triggered.We may grow our business in part by directly acquiring complementary businesses in China. Complying with the requirements of the laws and regulationsmentioned above and other PRC regulations to complete such transactions could be time-consuming, and any required approval processes, includingobtaining approval from the Ministry of Commerce, may delay or inhibit our ability to complete such transactions, which could affect our ability to expandour business or maintain our market share. Our ability to expand our business or maintain or expand our market share through future acquisitions would assuch be materially and adversely affected. 36 Table of ContentsOur auditor is located in China, a jurisdiction where PCAOB is currently unable to conduct inspections without the approval of the PRC authorities, andas such, investors may be deprived of the benefits of such inspection.Our independent registered public accounting firm that issues the audit reports included in our annual reports filed with the SEC, as an auditor ofcompanies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board (United States), orPCAOB, is required by the laws of the United States to undergo regular inspections by PCAOB to assess its compliance with the laws of the United States andprofessional standards. Our auditor is located in China, a jurisdiction where PCAOB is currently unable to conduct inspections without the approval of thePRC authorities. In May 2013, PCAOB announced that it had entered into a Memorandum of Understanding on Enforcement Cooperation with the ChinaSecurities Regulation Commission, or the CSRC, and the Ministry of Finance, which establishes a cooperative framework between the parties for theproduction and exchange of audit documents relevant to investigations undertaken by PCAOB, the CSRC or the Ministry of Finance in the United States andthe PRC, respectively. PCAOB continues to be in discussions with the CSRC and the Ministry of Finance to permit joint inspections in the PRC of auditfirms that are registered with PCAOB and audit Chinese companies that trade on U.S. exchanges.Inspections of other firms that PCAOB has conducted outside of China have identified deficiencies in those firms’ audit procedures and quality controlprocedures, which may be addressed as part of the inspection process to improve future audit quality. The inability of PCAOB to conduct inspections ofindependent registered public accounting firms operating in China makes it more difficult to evaluate the effectiveness of our auditor’s audit procedures orquality control procedures. As a result, investors may be deprived of the benefits of PCAOB inspections.Proceedings instituted by the SEC against certain PRC-based accounting firms, including our independent registered public accounting firm, could resultin financial statements being determined to not be in compliance with the requirements of the Securities Exchange Act of 1934, as amended, or theExchange Act.In December 2012, the SEC brought administrative proceedings against five accounting firms in China, including our independent registered publicaccounting firm, alleging that they had refused to produce audit work papers and other documents related to certain other China-based companies underinvestigation by the SEC. On January 22, 2014, an initial administrative law decision was issued, censuring these accounting firms and suspending four ofthese firms from practicing before the SEC for a period of six months. The decision is neither final nor legally effective unless and until reviewed andapproved by the SEC. On February 12, 2014, four of these PRC-based accounting firms appealed to the SEC against this decision. In February 2015, each ofthe four PRC-based accounting firms agreed to a censure and to pay a fine to the SEC to settle the dispute and avoid suspension of their ability to practicebefore the SEC. The settlement requires the firms to follow detailed procedures to seek to provide the SEC with access to Chinese firms’ audit documents viathe CSRC. If the firms do not follow these procedures, the SEC could impose penalties such as suspensions, or it could restart the administrative proceedings.In the event that the SEC restarts the administrative proceedings, depending upon the final outcome, listed companies in the United States with majorPRC operations may find it difficult or impossible to retain auditors in respect of their operations in the PRC, which could result in financial statements beingdetermined to not be in compliance with the requirements of the Exchange Act, including possible delisting. Moreover, any negative news about theproceedings against these audit firms may cause investor uncertainty regarding China-based, United States-listed companies and the market price of ourADSs may be adversely affected.If our independent registered public accounting firm were denied, even temporarily, the ability to practice before the SEC and we were unable to timelyfind another registered public accounting firm to audit and issue an opinion on our financial statements, our financial statements could be determined not tobe in compliance with 37 Table of Contentsthe requirements of the Exchange Act. Such a determination could ultimately lead to our delisting from the NASDAQ Global Select Market or deregistrationfrom the SEC, or both, which would substantially reduce or effectively terminate the trading of our ADSs in the United States.Fluctuation in the value of the RMB may have a material and adverse effect on your investment.The value of the RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in China’s politicaland economic conditions and foreign exchange policies. The conversion of RMB into foreign currencies, including U.S. dollars, is based on rates set by thePeople’s Bank of China. The PRC government allowed the RMB to appreciate by more than 20% against the U.S. dollar between July 2005 and July 2008.Between July 2008 and June 2010, this appreciation halted and the exchange rate between the RMB and the U.S. dollar remained within a narrow band.Since June 2010, the RMB has fluctuated against the U.S. dollar, at times significantly and unpredictably, and in recent years the RMB has depreciatedsignificantly against the U.S. dollar. Since October 1, 2016, the RMB has joined the International Monetary Fund (IMF)’s basket of currencies that make upthe Special Drawing Right (SDR), along with the U.S. dollar, the Euro, the Japanese yen and the British pound. In the fourth quarter of 2016, the RMB hasdepreciated significantly in the backdrop of a surging U.S. dollar and persistent capital outflows of China. With the development of the foreign exchangemarket and progress towards interest rate liberalization and Renminbi internationalization, the PRC government may in the future announce further changesto the exchange rate system and there is no guarantee that the RMB will not appreciate or depreciate significantly in value against the U.S. dollar in thefuture. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in thefuture.Our revenues and costs are mostly denominated in RMB. Any significant revaluation of RMB may materially and adversely affect our cash flows,revenues, earnings and financial position, and the value of, and any dividends payable on, our ADSs in U.S. dollars. For example, an appreciation of RMBagainst the U.S. dollar would make any new RMB denominated investments or expenditures more costly to us, to the extent that we need to convertU.S. dollars into RMB for such purposes. An appreciation of RMB against the U.S. dollar would also result in foreign currency translation losses for financialreporting purposes when we translate our U.S. dollar denominated financial assets into RMB, as RMB is our reporting currency, and foreign exchange lossesreported in earnings for certain RMB denominated loans that overseas entities borrowed from our PRC entities. Conversely, a significant depreciation of theRMB against the U.S. dollar may significantly reduce our earnings translated in the U.S. dollars, which in turn could adversely affect the price of our ADSs.Additionally, a depreciation of RMB against the U.S. dollar would result in foreign currency translation losses for financial reporting purposes when wetranslate our U.S. dollar denominated notes and other indebtedness into RMB, as RMB is our reporting currency.We face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies. Enhancedscrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future.Pursuant to the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises, or Circular698, issued by the State Administration of Taxation, which became effective retroactively as of January 1, 2008, where a non-resident enterprise investortransfers equity interests in a PRC resident enterprise indirectly by way of disposing of equity interests in an overseas holding company, the non-residententerprise investor, being the transferor, may be subject to PRC enterprise income tax, if the indirect transfer is considered to be an abusive use of companystructure without reasonable commercial purposes. As a result, gains derived from such indirect transfer may be subject to PRC withholding tax at the rate ofup to 10%. In addition, the PRC resident enterprise may be required to provide necessary assistance to support the enforcement of Circular 698.On February 3, 2015, the State Administration of Tax issued a Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer ofProperties by Non-Tax Resident Enterprises, or Public Notice 7. 38 Table of ContentsPublic Notice 7 has introduced a new tax regime that is significantly different from that under Circular 698. Public Notice 7 extends its tax jurisdiction to notonly indirect transfers set forth under Circular 698 but also transactions involving transfer of other taxable assets, through the offshore transfer of a foreignintermediate holding company. In addition, Public Notice 7 provides clearer criteria than Circular 698 on how to assess reasonable commercial purposes andhas introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. Public Notice 7 alsobrings challenges to both the foreign transferor and transferee (or other person who is obligated to pay for the transfer) of the taxable assets. Where anon-resident enterprise conducts an “indirect transfer” by transferring the taxable assets indirectly by disposing of the equity interests of an overseas holdingcompany, the non-resident enterprise being the transferor, or the transferee, or the PRC entity which directly owned the taxable assets may report to therelevant tax authority such indirect transfer. Using a “substance over form” principle, the PRC tax authority may re-characterize such indirect transfer as adirect transfer of the equity interests in the PRC tax resident enterprise and other properties in China. As a result, gains derived from such indirect transfer maybe subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicabletaxes, currently at a rate of up to 10% for the transfer of equity interests in a PRC resident enterprise. Both the transferor and the transferee may be subject topenalties under PRC tax laws if the transferee fails to withhold the taxes and the transferor fails to pay the taxes.We face uncertainties with respect to the reporting and consequences of private equity financing transactions, share exchange or other transactionsinvolving the transfer of shares in our company by investors that are non-PRC resident enterprises, or sale or purchase of shares in other non-PRC residentcompanies or other taxable assets by us. Our company and other non-resident enterprises in our group may be subject to filing obligations or being taxed ifour company and other non-resident enterprises in our group are transferors in such transactions, and may be subject to withholding obligations if ourcompany and other non-resident enterprises in our group are transferees in such transactions, under Circular 698 and Public Notice 7. For the transfer of sharesin our company by investors that are non-PRC resident enterprises, our PRC subsidiaries may be requested to assist in the filing under Circular 698 andPublic Notice 7. As a result, we may be required to expend valuable resources to comply with Circular 698 and Public Notice 7 or to request the relevanttransferors from whom we purchase taxable assets to comply with these circulars, or to establish that our company and other non-resident enterprises in ourgroup should not be taxed under these circulars. The PRC tax authorities have the discretion under Circular 698 and Public Notice 7 to make adjustments tothe taxable capital gains based on the difference between the fair value of the taxable assets transferred and the cost of investment. If the PRC tax authoritiesmake adjustments to the taxable income of the transactions under Circular 698 and Public Notice 7, our income tax costs associated with such transactionswill be increased, which may have an adverse effect on our financial condition and results of operations. We have made acquisitions in the past and mayconduct additional acquisitions in the future. We cannot assure you that the PRC tax authorities will not, at their discretion, adjust any capital gains andimpose tax return filing obligations on us or require us to provide assistance to them for the investigation of any transactions we were involved in.Heightened scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in thefuture.Risks Related to Our ADSsThe trading price of our ADSs has been volatile and may continue to be volatile regardless of our operating performance.The trading price of our ADSs has been and may continue to be subject to wide fluctuations. The market price for our ADSs may continue to be volatileand subject to wide fluctuations in response to factors including the following: • actual or anticipated fluctuations in our quarterly results of operations; • changes in financial estimates by securities research analysts; • conditions in internet search and online marketing markets; 39 Table of Contents • changes in the operating performance or market valuations of other internet search or internet companies; • announcements by us or our competitors or other internet companies of new products, acquisitions, strategic partnerships, joint ventures orcapital commitments; • addition or departure of key personnel; • fluctuations of exchange rates between RMB and the U.S. dollar; • litigation, government investigation or other legal or regulatory proceeding; and • general economic or political conditions in China or elsewhere in the world.In addition, the stock market in general, and the market prices for internet-related companies and companies with operations in China in particular,have experienced volatility that often has been unrelated to the operating performance of such companies. The securities of some China-based companiesthat have listed their securities in the United States have experienced significant volatility since their initial public offerings in recent years, including, insome cases, substantial declines in the trading prices of their securities. The trading performances of these companies’ securities after their offerings mayaffect the attitudes of investors towards Chinese companies listed in the United States in general, which consequently may impact the trading performance ofour ADSs, regardless of our actual operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices orfraudulent accounting, corporate structure or other matters of other Chinese companies may also negatively affect the attitudes of investors towards Chinesecompanies in general, including us, regardless of whether we have engaged in any inappropriate activities. In particular, the global financial crisis and theensuing economic recessions in many countries have contributed and may continue to contribute to extreme volatility in the global stock markets. Thesebroad market and industry fluctuations may adversely affect the market price of our ADSs. Volatility or a lack of positive performance in our ADS price mayalso adversely affect our ability to retain key employees, most of whom have been granted options or other equity incentives.Substantial future sales or the perception of sales of our ADSs in the public market could cause the price of our ADSs to decline.Sales of our ADSs in the public market, or the perception that these sales could occur, could cause the market price of our ADSs to decline. Such salesalso might make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate. If any existingshareholder or shareholders sell a substantial amount of ADSs, the prevailing market price for our ADSs could be adversely affected. In addition, if we pay forour future acquisitions in whole or in part with additionally issued ordinary shares, your ownership interests in our company would be diluted and this, inturn, could have a material and adverse effect on the price of our ADSs.You may not have the same voting rights as the holders of our ordinary shares and may not receive voting materials in time to be able to exercise your rightto vote.Except as described in this annual report and in the deposit agreement, holders of our ADSs will not be able to exercise voting rights attached to theshares evidenced by our ADSs on an individual basis. Holders of our ADSs will appoint the depositary or its nominee as their representative to exercise thevoting rights attached to the shares represented by the ADSs. You may not receive voting materials in time to instruct the depositary to vote, and it is possiblethat you, or persons who hold their ADSs through brokers, dealers or other third parties, will not have the opportunity to exercise a right to vote. Upon ourwritten request, the depositary will mail to you a shareholder meeting notice which contains, among other things, a statement as to the manner in which yourvoting instructions may be given, including an express indication that such instructions may be given or deemed given to the depositary to give adiscretionary proxy to a person designated by us if no instructions are received 40 Table of Contentsby the depositary from you on or before the response date established by the depositary. However, no voting instruction will be deemed given and no suchdiscretionary proxy will be given with respect to any matter as to which we inform the depositary that (i) we do not wish such proxy given, (ii) substantialopposition exists, or (iii) such matter materially and adversely affects the rights of shareholders.You may not be able to participate in rights offerings and may experience dilution of your holdings as a result.We may from time to time distribute rights to our shareholders, including rights to acquire our securities. Under the deposit agreement for the ADSs, thedepositary will not offer those rights to ADS holders unless both the rights and the underlying securities to be distributed to ADS holders are either registeredunder the Securities Act of 1933, or exempt from registration under the Securities Act with respect to all holders of ADSs. We are under no obligation to file aregistration statement with respect to any such rights or underlying securities or to endeavor to cause such a registration statement to be declared effective. Inaddition, we may not be able to take advantage of any exemptions from registration under the Securities Act. Accordingly, holders of our ADSs may beunable to participate in our rights offerings and may experience dilution in their holdings as a result.You may be subject to limitations on transfer of your ADSs.Your ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time whenit deems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSsgenerally when our books or the books of the depositary are closed, or at any time if we or the depositary deems it advisable to do so because of anyrequirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.You may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited, because we areincorporated under Cayman Islands law, conduct most of our operations in China and all of our executive officers reside outside of the United States.We are incorporated in the Cayman Islands, and conduct most of our operations in China through our subsidiaries and consolidated affiliated entitiesin China. All of our executive officers and a majority of our directors reside outside of the United States and some or all of the assets of these persons arelocated outside of the United States. As a result, it may not be possible to effect service of process within the United States or elsewhere outside of Chinaupon our executive officers, including with respect to matters arising under U.S. federal securities laws or applicable state securities laws.It may also be difficult or impossible for you to bring an action against us or against our directors and executive officers in the Cayman Islands or inChina in the event that you believe that your rights have been infringed under the securities laws or otherwise. Even if you are successful in bringing anaction of this kind, the laws of the Cayman Islands and of China may render you unable to enforce a judgment against our assets or the assets of our directorsand executive officers. There is no statutory recognition in the Cayman Islands of judgments obtained in the United States, although the courts of theCayman Islands will generally recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits.Moreover, our PRC counsel has advised us that the PRC does not have treaties with the United States or many other countries providing for the reciprocalrecognition and enforcement of judgment of courts.Our corporate affairs are governed by our memorandum and articles of association and by the Companies Law (2016 Revision) and common law of theCayman Islands. The rights of shareholders to take legal action against our directors and us, actions by minority shareholders and the fiduciaryresponsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law ofthe Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, which haspersuasive, but not binding, authority on a court 41 Table of Contentsin the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are not as clearly established as theywould be under statutes or judicial precedents in the United States. In particular, the Cayman Islands has a less developed body of securities laws as comparedto the United States, and provides significantly less protection to investors. In addition, Cayman Islands companies may not have standing to initiate ashareholder derivative action before the federal courts of the United States.As a result of all of the above, our public shareholders may have more difficulty in protecting their interests through actions against our management,directors or major shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.Our dual-class ordinary share structure with different voting rights could discourage others from pursuing any change of control transactions that holdersof our Class A ordinary shares and ADSs may view as beneficial.Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to one vote pershare, while holders of Class B ordinary shares are entitled to ten votes per share. We issued Class A ordinary shares represented by our ADSs in our initialpublic offering. Our co-founder, chairman and chief executive officer, Robin Yanhong Li, who acquired our shares prior to our initial public offering, holdsour Class B ordinary shares. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof, while Class Aordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon any transfer of Class B ordinary shares by a holder thereof toany person or entity which is not an affiliate (as defined in our memorandum and articles of association) of such holder, such Class B ordinary shares will beautomatically and immediately converted into the equal number of Class A ordinary shares. In addition, if at any time Robin Yanhong Li and his affiliatescollectively own less than 5% of the total number of the issued and outstanding Class B ordinary shares, each issued and outstanding Class B ordinary sharewill be automatically and immediately converted into one Class A ordinary share, and we shall not issue any Class B ordinary shares thereafter.Due to the disparate voting powers attached to these two classes, certain shareholders have significant voting power over matters requiring shareholderapproval, including election of directors and significant corporate transactions, such as a merger or sale of our company or our assets. This concentratedcontrol could discourage or prevent others from pursuing any potential merger, takeover or other change of control transactions with our company, whichcould deprive our shareholders and ADS holders of an opportunity to receive a premium for their shares or ADSs as part of a sale of our company and mightreduce the price of our ADSs.Our articles of association contain anti-takeover provisions that could adversely affect the rights of holders of our ordinary shares and ADSs.Our articles of association include certain provisions that could limit the ability of others to acquire control of our company, and therefore may deprivethe holders of our ordinary shares and ADSs of the opportunity to sell their ordinary shares or ADSs at a premium over the prevailing market price bydiscouraging third parties from seeking to obtain control of our company in a tender offer or similar transactions. These provisions include the following: • A dual-class ordinary share structure. • Our board of directors has the authority, without approval by the shareholders, to issue up to a total of 10,000,000 preferred shares in one or moreseries. Our board of directors may establish the number of shares to be included in each such series and may fix the designations, preferences,powers and other rights of the shares of a series of preferred shares. • Our board of directors has the right to elect directors to fill a vacancy created by the increase of the board of directors or the resignation, death orremoval of a director, which prevents shareholders from having the sole right to fill vacancies on our board of directors. 42 Table of ContentsWe may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequence to U.S. Holders of ourADSs or ordinary shares.A non-U.S. corporation, such as our own, will be considered a passive foreign investment company, or “PFIC”, for any taxable year if either (i) at least75% of its gross income is passive income or (ii) at least 50% of the value of its assets (based on an average of the quarterly values of the assets during ataxable year) is attributable to assets that produce or are held for the production of passive income. The value of our assets is generally determined byreference to the market price of the ADSs and ordinary shares, which may fluctuate considerably. In addition, because there are uncertainties in theapplication of the relevant rules and because PFIC status is a fact-intensive determination made on an annual basis, no assurance may be given with respect toour PFIC status for the current or any future taxable year.Although under certain interpretations of how one determines what portion of goodwill and certain other assets are treated as “passive,” we may havebeen a PFIC for 2015, we believe under more reasonable approaches for our circumstances, based on the market price of our ADSs and ordinary shares, thevalue of our assets, and the composition of our assets and income, that we were not a PFIC for our taxable year ended December 31, 2015. In addition, we donot believe that we were a PFIC for our taxable year ended December 31, 2016 even under the least favorable interpretations of what portion of goodwill andcertain other assets are treated as “passive.” However, given the lack of authority and the highly factual nature of the analyses, no assurance can be given. Wedo not expect to be a PFIC for our taxable year ending December 31, 2017 or for the foreseeable future. However, our PFIC status for the current taxable yearending December 31, 2017 will not be determinable until the close of the taxable year, and, accordingly, there is no guarantee that we will not be a PFIC forthe current taxable year (or any future taxable year).If we were treated as a PFIC for any taxable year during which a U.S. Holder (defined below) held an ADS or an ordinary share, certain adverseU.S. federal income tax consequences could apply to the U.S. Holder. See “Item 10.E. Additional Information—Taxation—United States Federal Income TaxConsiderations—Passive Foreign Investment Company.” Item 4.Information on the Company A.History and Development of the CompanyWe were incorporated in the Cayman Islands in January 2000. Since our inception, we have conducted our operations in China principally throughBaidu Online, our wholly owned subsidiary in Beijing, China. Since June 2001, we also have conducted part of our operations in China through BaiduNetcom, a consolidated affiliated entity in Beijing, China, which holds the licenses and approvals necessary to operate our platform and provide value-addedtelecommunication-based online advertising services. In more recent years, we have established additional subsidiaries inside and outside of China andassisted in establishing additional PRC consolidated affiliated entities to conduct part of our operations.On August 5, 2005, we listed our ADSs on The NASDAQ National Market (later renamed The NASDAQ Global Market) under the symbol “BIDU”. Weand certain selling shareholders of our company completed the initial public offering of 4,604,224 ADSs, each then representing one Class A ordinary share,on August 10, 2005. On May 12, 2010, we effected a change of the ADS to Class A ordinary share ratio from 1 ADS representing 1 Class A ordinary share to10 ADSs representing 1 Class A ordinary share. The ratio change has the same effect as a 10-for-1 ADS split. Our ADSs are currently traded on The NASDAQGlobal Select Market.In December 2008, our shareholders approved our name change from Baidu.com, Inc. to Baidu, Inc. In November 2009, we moved into our newcorporate headquarters, which we name as Baidu Campus. Our principal executive offices are located at Baidu Campus, No. 10 Shangdi 10th Street, HaidianDistrict, Beijing 100085, the People’s Republic of China. Our telephone number at this address is +86 (10) 5992-8888. 43 Table of ContentsIn November 2012, we obtained the controlling interest in Qiyi.com, Inc., or iQiyi, a prior equity method investee, and have since then consolidated itsfinancial results into our consolidated financial statements. In May 2013, we acquired the online video business of PPStream Inc., or PPS, and have merged itwith iQiyi and have since then consolidated its financial results into our consolidated financial statements. In the first quarter of 2017, iQiyi completed theissuance of certain convertible notes to a group of investors for an aggregate investment amount of US$1.53 billion, and we invested US$300 million in iQiyias part of the note issuance.In October 2013, we acquired 100% equity interest of 91 Wireless from NetDragon Websoft Inc., or NetDragon, and the other shareholders of 91Wireless, and have since then consolidated its financial results into our consolidated financial statements.We consolidated the financial results of Qunar, an online travel services provider, in our consolidated financial statements from July 2011 to October2015. In July 2011, we acquired a majority stake in Qunar. In November 1, 2013, Qunar listed its ADSs, each representing three Class B ordinary shares ofQunar, on NASDAQ in connection with its initial public offering. In October 2015, we completed a share exchange transaction with Ctrip, in which weexchanged 178,702,519 Class A ordinary shares and 11,450,000 Class B ordinary shares in Qunar for 11,488,381 newly-issued ordinary shares of Ctrip, at anexchange ratio of 0.725 Ctrip ADSs per Qunar ADS. As a result of the transaction, we have ceased consolidating the financial results of Qunar, and we havebecome a major shareholder of Ctrip since October 2015. We subsequently acquired additional ordinary shares of Ctrip in 2016. B.Business OverviewWe are the leading Chinese language internet search provider. As a technology-based media company, we aim to provide the best and most equitableway for people to find what they are looking for. We provide our users with many channels to access information and services. In addition to servingindividual internet search users, we provide an effective platform for businesses to reach potential customers.Our business currently consists of three segments, namely, search services, transaction services and iQiyi. Search services are keyword-based marketingservices targeted at and triggered by internet users’ search queries, which mainly include our P4P services and other online marketing services. Transactionservices include Baidu Nuomi, Baidu Deliveries, Baidu Mobile Game, Baidu Wallet, Baidu Maps and others. iQiyi is an online video platform with a contentlibrary that includes licensed movies, television series, cartoons, variety shows and other programs.Our Baidu.com website is the largest website in China and the fourth largest website globally, as measured by average daily visitors and page viewsduring the three-month period ended December 31, 2016, according to Alexa.com, an internet analytics firm. In addition, our “Baidu” brand is one of thehighest ranking brands in China in BrandZ Top 50 Most Valuable Chinese Brands 2016, a study published by Millward Brown Optimor, a brand strategyresearch company.We conduct our operations primarily in China. Revenues generated from our operations in China accounted for approximately 99.5%, 98.9% and97.8% of our total revenues in 2014, 2015 and 2016, respectively.We serve four types of online participants:Users. We offer Chinese language search on our Baidu platform that enables users to find relevant information online, including web pages, news,images, documents and multimedia files, through links provided on our website. We also offer transaction platforms, such as Nuomi.com, to connect onlineand offline services provided by third-parties. We provide a broad range of products and services to enrich user experience, including search services,transaction services and iQiyi. Our products and services can be accessed through PCs and mobile devices. We aspire to provide the best experience to ourusers. To this end, we have invested in advanced technology such as artificial intelligence and deep learning. 44 Table of ContentsCustomers. We deliver online marketing services to a diverse customer base operating in a variety of industries. In 2016, we had approximately982,000 active online marketing customers. Consistent with previously reported numbers, the number of active online marketing customers excluded thosefor our group-buying and delivery related businesses. Our online marketing customers consist of SMEs throughout China, large domestic companies andChinese divisions and subsidiaries of large, multinational companies. We have a diverse customer base in terms of industries and geographical locations. Ourdefined industries in which our customers operate include retail and ecommerce, local services, medical and healthcare, network service, financial services,education, online games, transportation, construction and decoration, and business services. Customers in our top five industries contributed approximately50% of our total online marketing revenues in 2016. Although we have customers located throughout China, we have a more active and larger customer basein coastal regions, reflecting the current general economic demographics in China.Customers for our transaction services primarily consist of merchants that act as service providers on our transaction platforms, such as Nuomi.com. Themerchants that operate on our transaction platforms mainly cover businesses such as restaurants, hotels and cinemas.Customers for iQiyi primarily consist of advertisers, who are counted as part of our online marketing customers and subscription users of online videocontents.We reach and serve our customers through our direct sales force as well as a network of third-party distributors across China. As many of our customersare SMEs, we use distributors to help us identify potential SME customers, collect payments and assist SMEs in setting up accounts with us and using ouronline marketing services. We have also engaged third-party agencies to identify and reach potential customers outside of China. Customers use our productsand services through PCs and mobile devices. Mobile revenues accounted for 63.2% of our total revenues for 2016.Since early May 2016, we have been implementing measures to improve customer quality and foster a healthy environment to enhance user experienceand drive long-term sustainable growth. We have taken proactive measures requiring all customers on our platform to submit ICP licenses and verifyenterprise bank accounts. The implementation of new and stricter regulations on online marketing and our self-imposed proactive measures will have a short-term impact on our business. We believe these measures will be beneficial in the long term, and we remain confident in our long-term outlook, underpinnedby our fundamental value proposition of search and our ongoing investments in technology.Baidu Union Members. Baidu Union consists of a large number of third-party web content, software and mobile application providers. Baidu Unionmembers can display on their properties our customers’ promotional links that match the content of such members’ properties. Some Baidu Union membersalso embed some of our products and services into their properties. We allow Baidu Union members to provide high-quality and relevant search results totheir users without the cost of building and maintaining advanced search capabilities in-house and to monetize their traffic through revenue sharingarrangements with us. We reward Baidu Union members by sharing with these members revenues as a percentage of total revenues recognized by us. Becausewe have implemented measures to deliver a better user experience and build a safer and more trustworthy platform for users since May 2016, the revenuecontributed by Baidu Union members slightly decreased in 2016.Content Providers. Our content providers mainly consist of video copyright holders, map data owners, apps owners who list their apps on our app storefor users to download, users who contribute their valuable and copyrighted content to our products, and self-media authors such as those who publish theircontent through Baijiahao accounts. These content providers contribute rich contents and resources to our content ecosystem, and in return we provide abroad platform for them to present their content. If we generate revenue from utilizing third-party contents, we will purchase these contents or share revenuewith the content providers based on the terms of pre-agreed contracts. 45 Table of ContentsSearch ServicesSearch Products and Services for UsersWe focus on offering products and services that enable our users to find relevant information quickly and easily. We offer our main products andservices to users through Baidu.com free of charge generally. These products and services can be accessed through PCs, mobile and other non-mobile devices.Baidu Web Search. Baidu’s web search allows users to locate information through search queries. After typing a search query, users generally receive alist of ranked search results, which may include our customers’ content presented in a specific format. Users can then access the desired information byexamining the returned search snippets, or clicking on the hypertext links displayed in the search results. The number of average monthly active users ofmobile search, defined as users who used the service at least once in a given month, was approximately 665 million for December 2016, an increase of 1.7%over the corresponding period in the prior year.We have integrated many features into our web search system to help users easily access the right information out of a huge number of web pages. TheBaidu web search includes, but not limited to, the following features: • Query Suggestion—based on the keywords in users’ search queries and their search history, we recommend related topics (such as books,historical figures, movies and games) that may be of interest to users in order to unleash their potential demands. With our machine learning andbig data analytics technologies, we predict the queries that the users may need later on and display them in the dropdown list under the searchbox. • Instant Search—returns search results when a user is typing a search query to speed up the search process and save time, by leveraging on ourinnovative asynchronous pre-fetch technology and big data prediction capability. • In-depth Answers—provides relevant and in-depth answers to search inquiries using our deep learning technology to locate, summarize andintegrate relevant information from massive data. • Rich Content—by analyzing users’ intention and the content of search pages, provides users with more structural and in-depth data in thesnippets of search results. For example, we directly display answers, marked in red, in the search result snippets for Q&A-type query; we directlydisplay valuable sub-links and images in search result snippets. • Scene-based Search—provides users with an information and service aggregation of different aspects of one query. Users may access richresources more conveniently and enjoy the immersive experience. • Recommendation for Web Search—recommends interesting results (such as books, music, novels, movies, and games) to enhance userengagements and satisfaction. We have developed sophisticated algorithms and launched several innovative features including entity-collectionrecommendation, post-click keywords recommendation, interactive recommendation, task-oriented recommendation and knowledge graph-based recommendation. • HTTPS Connection—has significantly advanced the security of our products by protecting the information and privacy of our PC and mobileusers through HTTPS protocols. • English Language Resources—addresses the ever-growing needs among our users to search English language resources by providing a wealth ofhigh-quality English webpage data. To improve the English search experience of our users, we made significant improvements to our Englishquery understanding and English web result ranking. We also leverage our Baidu machine translation technology to present users with Chinesetranslations of English snippets and webpages. 46 Table of ContentsIn order to improve mobile user experience, we have also undertaken a series of product innovations and developments, including but not limited to,the following features: • Enriched Services—are connected with our mobile search function, such as takeout delivery, movie ticket bookings, hotel reservations, flightbookings, home services and other types of local lifestyle services, which expand the usefulness of our search services. We also select andrecommend suitable services to users based on their interest, location, time of the day and other mobile situational traits in order to improve userexperience. • Multi-modal Search—allows users to obtain accurate, fast and rich search results by simply talking to the PC or mobile device, or by taking oruploading a picture. As methods through which users express their requests become more diversified, the interaction between search engines andusers is also expanding to include multi-media input and output models such as text, voice and images. Multi-media interactive search providesusers with a more convenient, diverse and imaginative mobile search experience. • Colloquial Language Understanding—provides higher quality search results using semantic analyzing technology in response to increasinglycolloquial voice inputs from users. • Results from Mobile Applications—complements resources from traditional web pages. Our mobile search can obtain and present uniqueinformation in mobile applications. Users can view search results from mobile applications and launch such applications directly, if they arealready installed on the mobile device, or download such mobile applications. • Re-formatting of Search Results—allows us to improve the mobile viewing experience and information gathering efficiency of users byprocessing and re-formatting search results into compatible and easy-to-read content for mobile device users. • Newsfeed for users—Newsfeed provides users with personalized newsfeed to meet their personal interests reflected in their past online behaviors,such as search and browsing, and their demographics. Newsfeed brings users fresh, tailored content, creating a virtuous cycle of contentpush-and-pull. Newsfeed complements our core search products and existing content ecosystem, and contributes strongly to user loyalty.Baidu Image Search. Baidu Image Search enables users to search for images on the internet by term queries or various categories and offers advancedfeatures, such as search by image file type and search within a designated website or web page. Baidu Image Search is accessible through both web page andmobile device. Baidu Image Search also allows users to search information on an image or search other similar images by allowing users to upload an imageor enter its uniform resource locator (URL).Baidu Post Bar. Baidu Post Bar is a social media platform that attracts users through topics of common interest. Users post text, image, audio andvideo content and reply to original content, thus forming social networks around topics of discussions. Baidu Post Bar draws new users through closeintegration with search and user-generated content. Baidu Post Bar has become a leading platform for celebrity fans, online game players, online novelreaders and virtual local communities as well as a platform that reflects current cultural trends.Baidu Knows. Baidu Knows provides users with a query-based searchable community to share knowledge and experiences. Through Baidu Knows,registered users can post specific questions for other users to respond as well as respond to questions posted by others. Baidu Knows is accessible throughboth web page and mobile application. Baidu users can also search, read and browse questions and answers contributed by registered users of Baidu Knows.Baidu Knows has also invited institutional and personal experts in many fields such as medical care, maternal and child health, education, finance and law toaddress users’ questions.Baidu Encyclopedia. Baidu Encyclopedia is an evolving encyclopedia compiled by registered users. Registered users can share their knowledge byadding new terms and new content in Baidu Encyclopedia. Baidu 47 Table of ContentsEncyclopedia’s contents are generated by registered users who are experts in their respective fields, including medical care and studio arts. Baidu users canalso search, read and browse all terms and content contributed by registered users of Baidu Encyclopedia. Baidu Encyclopedia has produced a number ofcharacteristic columns, such as Encyclopedia of Intangible Cultural Heritage, Digital Museum, Recorder of History, etc., which aim to meet the high-qualitycontent requirements of users.Baidu WenKu. Baidu WenKu is an online document sharing platform, through which registered users of our Baidu platform can search, browse or read,by categories, documents in various formats such as Microsoft WORD, PDF and Microsoft Excel. Baidu WenKu also allows registered users to uploaddocuments to and download from this user-created documents database. Taking advantage of big data and artificial intelligence technology, Baidu WenKuactively recommends content and provides personalized resources to enable our users to easily find what they are looking for.Hao123.com. Hao123.com is a popular Chinese website directory navigation site in China.Mobile Baidu. As one of our flagship mobile applications, Mobile Baidu, formerly named Baidu Mobile Search, enables users to access our search,news-feed contents and services using mobile devices, including WAP-enabled mobile phones. Mobile Baidu supports text, voice and image search to betterserve users of mobile devices. The updated Mobile Baidu app features enhanced voice input, improved news-feed display and a more personalized mobilehome page.Baidu Mobile Assistant. Baidu Mobile Assistant is a mobile application marketplace designed for Android mobile devices. The platform offers anextensive and diversified array of applications, and selects and recommends high-quality applications based on big data analytics. Baidu Mobile Assistantpresents contents of applications to users, helping them to find the most suitable applications. Baidu Mobile Assistant helps improve users’ phonemanagement, allowing users to download, upgrade, manage and delete applications easily and conveniently. Additionally, Baidu Mobile Assistant helpsusers connect to shared WiFi hotspots, optimize device memory and clean junk files.Baidu Mobile Guardian. Baidu Mobile Guardian is a comprehensive phone security software, using mobile anti-virus technology. It can provide userswith free system optimization, mobile handset accelerator, garbage data cleaning, system vulnerability defense, virus sweeper, data privacy, harassing phoneintercept, secure payment and other features. Throughout 2016, Baidu Mobile Guardian was recognized as one of the top-ranked players by AV-Test, anauthoritative international testing organization.Duer. Duer is an intelligent personal virtual assistant that provides secretarial search service to users. Duer provides high-quality personal assistantservices such as performing tasks, information seeking, answering questions and casual chatting through conversational/voice user interface. Itsimplementation leverages our search, natural language processing and speech technologies, as well as image recognition and other machine learningtechnologies.Baijiahao. Baijiahao is a platform for content owners to publish contents and manage their fans. Baijiahao not only supports various content formats,including characters, pictures, graphs, video, live broadcast, augmented reality and virtual reality, but also provides smart writing assistant and copyrightsprotection to content owners. The contents gathered in Baijiahao are integrated with users, personalized search results. In addition, Baijiahao can helpcontent owners to interact with their fans and arrange marketing campaigns.Search Products and Services for CustomersWe focus on providing customers with cost-effective and targeted marketing solutions. We generate a large majority of our revenues from onlinemarketing services, including online marketing services based on search queries, contextuals, audience attributes, media and placement attributes and onlinemarketing services of other forms. Our online marketing services generally comprise text links, images, multimedia files and interactive forms. 48 Table of ContentsOnline Marketing Services Based on Search QueriesOnline marketing services based on search queries are keyword-based marketing services targeted at and triggered by internet users’ search queries,which include our P4P services and other search query–based online marketing services, for example, BrandZone. Typically, a P4P customer pays us whenusers click on one of its website links on Baidu search result pages or Baidu Union members’ properties, while a Brand-Link customer pays us based on theduration of the placement on Baidu search result pages. Users could reach our P4P sponsored links and Brand-Link on either mobile or non-mobile devices.P4P. Our auction-based P4P services enable our customers to bid for priority placement of their paid sponsored links. Our P4P platform enables ourcustomers to reach users who search for information related to their products or services. Customers may use our automated online tools to create text/image-based advertisement of their web pages and bid on keywords that trigger the display of their web page information and links. Our P4P platform features anautomated online sign-up process that allows customers to activate and manage their accounts at any time.Our P4P platform is an online marketplace that introduces internet search users to customers who bid for priority placement of paid sponsored links inthe search results. Links to customers’ websites are ranked according to a comprehensive ranking index, calculated based on the quality factor of a sponsoredlink for a search query in addition to the price bid on that keyword. The quality factor of a sponsored link for a search query is determined based on therelevance, quality, customer reviews, credibility of customers and certain other factors. The relevance is determined based on our analysis of past search andclick-through results. Our P4P online marketing customers may choose to set a daily limit on the amount spent and may also choose to target only usersaccessing our website from specified regions in China and/or during specific time period of the day.Phoenix Nest, one of our current online marketing systems, is designed to improve relevance in paid search and increase value for customers, thusdriving monetization efficiency. We have made enhancements continually to our Phoenix Nest platform. We have opened online marketing on mobile searchto all customers to allow them to promote their products and services. In order to help customers achieve better ROI from mobile search campaigns, weprovide a series of special management tools in Phoenix Nest, including upgraded site building tool such as SiteApp for enhanced user experience, onlinechatting tool for better user engagement, mobile statistics analysis tool for enhanced conversion tracking, and performance reporting for managing campaigneffectiveness. We have provided additional geo-targeting options in Phoenix Nest to enable customers to engage in city-level and distance proximitybidding. Moreover, we have launched Phoenix Nest App (Android and iOS) allowing customers to manage their online marketing anywhere and anytime.Leveraging on our ability to precisely recognize the search intent of users and matching the intent with the website content of the customers, our dynamicmarketing solutions (Products Ads) present marketing content in varying formats, including living images, product discount information, and photo andtextual illustrations of specific merchandise.In 2016, we further upgraded Phoenix Nest by incorporating artificial intelligence technology. Using big data to analyze internet users’ intentions andscenarios, we can recommend personalized products and services, and stimulate demands of internet users, which increases our customers’ website traffic.Since we can identify internet users’ demands and also understand our customers’ business, we are able to provide intelligent and creative services byautomatically generating creative ideas that directly respond to the needs of internet users and thus achieve fully automated machine writing of customermarketing materials.Local Express. Local Express provides merchants with a turn-key solution to easily participate in our online marketing and transaction services,without high start-up costs or the need for infrastructure investment. Local Express merchant accounts can be accessed by users via search, Baidu Maps andBaidu Nuomi. Local Express helps local merchants to reach users more effectively.Baidu Newsfeed. Baidu Newsfeed can help customers precisely target the right newsfeed users based on their personal interests reflected in their pastonline behaviors, such as search and browsing, and their 49 Table of Contentsdemographics, and deliver in-feed ads to target users. Appearing below the Baidu search box in Mobile Baidu, Baidu Newsfeed complements our core searchproducts and existing content ecosystem and enables us to access alternative advertisers, such as real estate customers. The news-feed platform has grownrapidly since its launch in May 2016, in terms of content volume, user numbers and average user time spent. Baidu Newsfeed, together with P4P services andLocal Express, offers our customers a complete and integrated marketing solution and builds a full marketing closed loop from stimulating and guidingdemands to promoting transformation.BrandZone. BrandZone is our flagship branding display marketing product. The marketing message for a customer can integrate text description,image and video, and appear in a prominent position of the search result page. The display position for BrandZone includes not only our web search but alsovarious vertical search products, such as Baidu Knows and Baidu Image Search. BrandZone allows the brand image of an advertiser to be displayed in all thevertical search products in a structured and uniform manner.Aladdin. Aladdin is a form of commercialization of our Baidu data open platform. Based on our analysis of user search needs, we collaborate withvertical websites, who supply us with high quality and structured data for our inclusion in the search results to our users, and in return receive high-qualityuser traffic generated by us. We generate revenues from Aladdin service typically based on the duration of contract, while some customers pay us based onthe number of clicks on our customers’ links that we help to generate.Online Marketing Services Based on Contextuals, Audience Attributes, Media and Placement AttributesOnline marketing services based on contextuals, audience attributes, media and placement attributes refer to our programmatic marketing servicetransaction system, which is composed of four part: supply-side platform (SSP); demand-side platform (DSP); Baidu exchange service platform (BES); anddata-management platform (DMP).SSP covers media resources of Baidu and third-party Baidu Union members. SSP intelligently manages media advertising space inventory andoptimizes marketing spending by analyzing matching content, target audience and characteristics of different media and platforms. SSP has connected moreadvertising resources through technological upgrades. SSP currently supports a number of main-stream media formats, including textual links, images, openscreen, interstitial, banner, information flow and video. SSP also supports native advertisement placement.DSP is an integrated sales service platform for advertisers and advertising agents, providing programmatic media buy service. DSP supports PC web,WAP, in-app, and in-stream traffic multi-screen advertisement placement. DSP also supports the advertisement placement of standard creativity, intelligentcreativity and customized creativity, as well as multiple payment methods including CPT, CPM, CPC and CPA.BES is a traffic transaction platform that combines DSP with media resources, by leveraging the traffic advantage and big-data capabilities of BES. BESautomatically conducts the ad-media buy process on behalf of advertisers using a digital platform, i.e. a programmatic buy process. The primary method forconducting such programmatic buy process is real time bidding, or RTB, which secures advertisement display opportunities in a very short period of time bybidding on the target audience. In addition to RTB, we also support programmatic premium buying (PPB) and guaranteed delivery (GD) methods. PPB targetsspecific high-quality media resources and engages in programmatic buy only after reaching agreement on the terms of the purchase with the advertisers. GD isconducted based on the agreed-upon price and time period reached by both sides to the transaction.DMP collects data from the various parties in a programmatic buy process and stores, integrates, analyzes and optimizes such data. DMP integrates datafrom advertisers, Baidu and third-party DMPs, which cover searches, offline visits, target audience tags, sequential placements and crowd portraits, in order toimprove the effectiveness and accuracy of DSP. 50 Table of ContentsOther Search Products and Services for CustomersBaidu Cloud. Baidu Cloud is a cloud computing platform that offers IaaS (Infrastructure as a Service), PaaS (Platform as a Service) and SaaS (Softwareas a Service) to enterprise customers and developers to build, test and deploy applications on our scalable and reliable infrastructure. Baidu Cloud is based onthe same cloud computing technology that supports our search and marketing system. Baidu Cloud provides a comprehensive set of product services, such asIaaS-like computing, storage and network, PaaS-like security, database, data analysis, multimedia, mobile application development, IOT, marketing cloudand AI platform. SaaS, serving as marketing cloud, enables our customers to buy applications as they need.Transaction ServicesWe offer products and services that enable or facilitate our users and customers to conduct online and offline transactions.Baidu Nuomi. Baidu Nuomi offers multiple services and products to its users, including entertainment (such as film, transportation ticketing andtourism), dining, hotel reservation, health and beauty services. Baidu Nuomi users can access the services through Nuomi.com, Baidu Nuomi’s mobileapplication and additional channels such as Mobile Baidu and Baidu Maps.Baidu Nuomi is part of our services ecosystem, and is integrated with Baidu Search and Baidu Maps, which helps provide more user services, includingsupporting Baidu Search and Baidu Maps. Baidu Nuomi supports Baidu Search with richer, more localized results, enhancing mobile search’s role. BaiduNuomi supports Baidu Maps by contributing a large number of points of interest, and has added advanced, AI-driven features such as customized restaurantand retail store recommendations.Baidu Deliveries. Baidu Deliveries, formerly branded as Baidu Takeout Delivery, is an online platform on which users can order food deliveries from awide range of quality restaurants and vendors. Leveraging our map, big data, artificial intelligence and other technology capabilities, Baidu Deliveries is ableto provide users with personalized restaurant selection as well as reliable deliveries through our proprietary Intelligent Real-time Delivery Network system. Inaddition to food, Baidu Deliveries has also expanded its delivery services into other product categories, such as grocery stores, convenience stores, flowershops, as well as other on-demand courier related services. When accessing from mobile devices, users can search for restaurants or other local merchantsbased on their locations.Baidu Wallet. Baidu Wallet, formerly branded as BaiduPay, provides online and mobile payment services and enables our users to complete a closedloop transaction in a seamless manner. Through integration with Baidu and third-party products, Baidu Wallet fulfills payment in a wide array of scenarios,including purchases of movie tickets, services provided by Baidu Nuomi, Baidu Deliveries and daily commutes. Baidu Wallet has continued to grow,reaching 100 million activated accounts as of December 31, 2016.Baidu Consumer Credit. Baidu Consumer Credit offers education loans and consumer financing in industry sectors such as travel, beauty, homedecoration and home rentals, through partnership with a large number of educational institutions and other companies and merchants. We are creating aninnovative platform to provide internet financial services, which give our users more convenience and faster approval, with the help of our AI-based riskcontrol technologies including facial and fingerprint recognition, optical character recognition (OCR) of identification documents, and live detection.Baidu Wealth Management. We aim to provide more fair, more creditworthy and more transparent wealth management service to investors byleveraging our strengths in big data and technology. For our customers, we analyze their risk profiles using our own artificial intelligence technology. Forinvestment products, we use Baidu data analytical capabilities to more holistically analyze their potential risks and returns. Furthermore, we have establisheda team of experienced wealth management professionals to serve our customers. 51 Table of ContentsBaidu Maps. In 2016, Baidu Maps data is mainly collected by ourselves, complemented by third-party suppliers and web information. Baidu Mapsprovides users with services relating to locations, routes, and local merchants on their PCs and mobile devices in both offline and online modes. Baidu Mapsfor mobile devices (Baidu Mobile Maps) increasingly serves as a gateway for users to conduct local searches. Baidu Maps also provides indoor maps for largeshopping malls. In addition to Mainland China, Baidu Maps coverage has expanded to over 200 countries and regions to serve Chinese travelers overseas. Ithas an open platform that integrates location-based services from third-party partners. Baidu Maps also works with developers and provides open mapservices to third-party apps and websites. The number of monthly active users of Baidu Mobile Maps, defined as users who used the service at least once in agiven month, was approximately 341 million for December 2016, an increase of 13% over the corresponding period in the prior year.Baidu Mobile Game. Baidu Mobile Game platform collaborates with Chinese and international licensed content providers to provide a diverse arrayof licensed and healthy games to users, hosting dedicated mobile channels and up-to-date licensed games, and has attracted a large community of mobilegame players. Our platform connects users with game content providers and we share revenues from game operations with game developers on our platform.Baidu Netdisk. Baidu Netdisk, our personal cloud computing service, allows users to upload documents, images, audios and videos to its cloud servers,stores the uploaded data with security control and provides real-time back-ups, and making the data accessible across different devices including tablets,smartphones and desktops. Users can also share their data through Baidu Netdisk. In 2016, Baidu Netdisk launched super membership services and a series ofnew member benefits.International Products and Services. We offer numerous mobile products and services for emerging and developed markets around the world. Oursmartphone applications for overseas markets include DU Battery Saver, DU Speed Booster, ES File Explorer, Photo Wonder, Simeji Japanese input method,and others. In early 2016, we introduced our mobile advertising platform DU Ad Platform to Android developers outside of China. DU Ad Platform is nowavailable for developers in approximately 200 countries and regions worldwide.iQiyiiQiyi and PPS. Established in April 2010, iQiyi is a leading online video platform in China, streaming both licensed and self-made movies, televisionseries, variety shows, cartoons and other contents, which are either produced by iQiyi or provided by content providers under licensing arrangements. iQiyi isdedicated to serving Chinese users with the best possible online video experience, along with various services, such as reading, gaming, social network,movie ticketing, live streaming and e-commerce business. iQiyi provides online community services to facilitate user communication and interaction. Userscan search and watch ad-supported iQiyi.com videos free of charge. Paying subscribers can enjoy premium services on iQiyi, including ad-free videostreaming and access to premium content. In May 2013, we acquired the online video business of PPS and have merged PPS with iQiyi. Following the merger,PPS has operated as a sub-brand of iQiyi. iQiyi’s mobile application maintained its industry leadership with 125 million daily active users, 480 millionmonthly active users, and 335 billion minutes monthly user time in December 2016, according to Alexa.com, an internet analytics firm.Sales and DistributionWe offer search and transaction services directly and through our distribution network. We have direct sales presence in Beijing, Shanghai, Suzhou andmajor cities in Guangdong Province, covering the major regional markets for our online marketing services.Our search service distributors provide numerous services, including identifying customers, collecting payments, assisting customers in setting upaccounts with us, suggesting keywords to maximize ROI and 52 Table of Contentsengaging in other marketing and educational services aimed at acquiring customers. We offer discounts to distributors as consideration for their services. Wehave relied on distributors for several reasons. Our P4P customer base in China is geographically diverse and fragmented, as many of our P4P customers areSMEs located in different regions in China. Moreover, SMEs are generally less experienced with online marketing as compared to large companies andtherefore benefit from the extensive services provided by distributors. Finally, secure online payment and credit card systems are in early stages ofdevelopment in China. Distributors serve as an important channel to reach SME customers throughout China and collect payments from them. We offer ouronline marketing services to medium and large corporate customers through third-party agencies and our direct sales force. We have also engaged third-partyagencies to identify and reach the potential customers outside of China.Transaction services reach customers and promote our transaction services via distributors in most cities because customers in these areas aregeographically diverse and fragmented. Our distributors identify customers and assist customers to set up accounts in order to improve market share andpenetrate rate in these areas. We also provide transaction services directly in several first and second tier cities based on the high population concentrationand well-constructed infrastructure.MarketingWe focus on continually improving the quality of our products and services, as we believe satisfied users and customers are more likely to recommendour products and services to others. Through these efforts and the increased use of internet in China, we have built our brand with modest marketingexpenditures.We have implemented a number of marketing initiatives designed to promote our brand awareness among potential users, customers and Baidu Unionmembers. In addition to our brand positioning in the market, we have also initiated a series of marketing activities to promote our products and technologiesamong existing and potential users and customers. In the Baidu World Conference held in September 2016, we showcased Baidu artificial intelligenceplatform, “Baidu Brain,” and its key functions, and announced that we would open its key capabilities and underlying technologies to developers andenterprises. At the Wuzhen Internet Conference held in November 2016, we operated the first experience station for Baidu autonomous driving cars anddemonstrated the technology capacities and concepts of Baidu autonomous driving cars. In November 2016, we held Baidu Moments Sales Summit andpublished a new Baidu commercial brand “powered by intelligence” and promoted our Baidu Newsfeed advertisement strategy. At the ABC Summit held onNovember 30, 2016, we introduced the ABC concept of future information technology development, i.e., AI, big data, and cloud computing.CompetitionThe internet search, transaction service and internet video service industries in China are rapidly evolving and highly competitive.For internet search, our primary competitors include U.S.-based internet search providers providing Chinese language internet search services andChina-based internet companies. We compete with these entities for both users and customers on the basis of user traffic, quality (relevance) and safety anduser experience of search results, availability and ease of use of products and services, the number of customers, distribution channels and the number ofassociated third-party websites. We also face competition from traditional advertising media.U.S.-based Internet Search Providers. U.S.-based internet search providers such as Google have a strong global presence, well established brand names,more users and customers and significantly greater financial resources than we do. We may also continue to face competition from other existing competitorsand new entrants in the Chinese language search market. 53 Table of ContentsChina-based Internet Companies. Chinese internet companies, such as Alibaba, Tencent, Sohu, Qihoo 360 and ByteDance, offer a broad range ofonline services, including search services. These companies have widely recognized brand names in China and significant financial resources. We competewith these portals primarily for user traffic, user time, display advertisement and online marketing.Other Advertising Media. Other advertising media, such as newspapers, yellow pages, magazines, billboards, other forms of outdoor media, television,radio and mobile applications compete for a share of our customers’ marketing budgets. Large enterprises currently spend a relatively small percentage oftheir marketing budgets on online marketing as compared to other advertising media.For transaction services, our primary competitors include China-based internet companies such as Meituan-Dianping, Elema, Koubei, AutoNavi,Alipay and Weixin Pay. We leverage our user traffic, product design and various market campaigns to enhance users’ reliance on our platforms and services.For iQiyi, our primary competitors include companies that operate online video websites in China, such as Youku-Tudou and Tencent Video. Wecompete with these market players for both users and advertisers primarily on the basis of user base and demographics, quality and quantity of video content,brand name and user experience.TechnologyWe operate four research labs under the umbrella of Baidu Research, the Augmented Reality (AR) Lab, the Silicon Valley Artificial Intelligence (AI)Lab, the Beijing Deep Learning Lab and the Beijing Big Data Lab. We established the Baidu Institute of Deep Learning, currently known as the Beijing DeepLearning Lab, in January 2013. We opened the Silicon Valley AI Lab in May 2014, enhancing our research and development capabilities in Silicon Valley.In August 2014, we and the United Nation announced and started strategic cooperation and jointly established the Big Data Lab. In January 2017, weannounced the establishment of our AR Lab focusing on augmented reality technology.In 2015, our autonomous driving project at the Beijing Deep Learning Lab reached a key milestone by completing rigorous fully autonomous testsunder a variety of complex environmental conditions. We have been recognized as one of the leading AI innovators globally after investing in AI for manyyears. In 2016, we established our Autonomous Driving Business Unit.We have developed a proprietary technological infrastructure which consists of technologies for web search, mobile, P4P, targetizement, large-scalesystems, AI and autonomous driving technology. Our established infrastructure serves as the backbone for both our PC and mobile platforms.Web Search TechnologyOur web search is powered by a set of advanced technologies including, among others, the following:Link Analysis. Link analysis is a technique that determines the importance of a web page by evaluating the combination of the anchor texts and thenumber of web pages linked to that web page. We treat a link from web page A to web page B as a “vote” by page A in favor of page B. The subject of the“vote” is described in the anchor texts of that link. The more “votes” a web page gets, the higher the importance.Ranking. We compare search queries with the content of web pages to help determine relevance. We have significantly improved the relevancy andfreshness of ranking using our machine learning modules to analyze the rich internet and user interaction data and prioritize the search results. For example,our technology determines the proximity of individual search terms to each other on a given web page, and prioritizes results where the search terms are neareach other. Other aspects of a page’s content are also considered. We have innovatively applied our machine learning technology to better understand thesemantics beyond simple text of the keywords 54 Table of Contentsinputted by our users, allowing us to provide more relevant search results to users. Starting from 2013, we applied deep learning technology in our searchranking system, and such technology is playing an increasingly important role in search.Information Extraction. We extract information from a web page using high performance algorithms and information extraction techniques. Ourtechniques enable us to understand web page content, delete extraneous data, build link structures, identify duplicate and junk pages and decide whether toinclude or exclude a web page based on its quality. Our techniques can process millions of web pages quickly. In addition, our anti-spam algorithms andtools can identify and respond to spam web pages quickly and effectively.Web Crawling. Our powerful computer clusters and intelligent scheduling algorithms allow us to crawl web pages efficiently. We can easily scale upour system to collect an ever-growing number of Chinese web pages. Our spider technology enables us to refresh web indices at intervals ranging from everyfew minutes to every few weeks. We set the index refresh frequency based on our knowledge of internet search users’ needs and the nature of the information.For example, our news index is typically updated every five minutes, and can be as frequent as every minute, throughout the day given the importance oftimely information for news. We also mine multimedia and other forms of files from web page repositories.Knowledge Graph. We build our knowledge graph by extracting and aggregating the content from multiple sources and classify them into billions ofentities, where each entity is a well-defined structure data, consisting of various attributes and operations. We also developed applied technology based onour knowledge graph that uses existing data and generates rich new knowledge to satisfy the demands of users. Our knowledge graph provides powerfulconnection between entities and online services in a wide range of areas.Natural Language Processing. We analyze and understand user queries and web pages by using various natural language processing techniques,including, among others, word segmentation, named entity recognition, entity linking, syntax and semantic analysis, sentiment analysis, summarization,generation, paraphrasing and language dependent encoding, all of which enhance the accuracy of our search results. For Q&A type searches, we providerelevant and in-depth answers to search inquiries by using our deep analysis and learning technology to locate, summarize and consolidate relevantinformation from massive data. For voice search, we understand user queries via context-aware analysis and provide answers via dialogue management andgeneration technologies. For feed recommendation, we model both users and contents from a variety of semantic perspectives to improve the accuracy anddiversity of recommendations.Multimedia Technologies. We work on developing intelligent algorithms and systems to better understand human spoken languages, identify audiocontents, and recognize the meaning of images and videos. These technologies will enable users to access information in a most natural way, and help oursearch engine better organize the vast amount of multimedia contents on the web. For example, our speech recognition technology has been applied to ourmobile search on smartphones, and our face recognition technology has been applied to generate relevant photos when a person is searched. We have alsolaunched similar image search engine, which can recognize the object and scene in the image that users want to search for and return an image that containsthe most similar object and scene.Aladdin aims at discovering useful information of the “Hidden Web,” which usually refers to the invisible database of the numerous websites and thepart of the internet that traditional search engine technology may not be able to index. The resulted Aladdin platform enriches our search index and henceprovides richer search results to our users. Our Aladdin platform, which not only provides a better and faster way to integrate new “hidden web” informationinto our search index, but also revolutionizes the search result presentation of the search result page.MIP (Mobile Instant Pages) is a set of open technical standards applying to mobile webpages, which accelerates the loading of mobile webpages byadopting MIP-HTML norms, MIP-JS operating environment and MIP-Cache system. When mobile websites use this backend technology, the speed at whichthey can be visited 55 Table of Contentsfrom both Baidu Search and Baidu Newsfeed is improved significantly. This not only enhances user experience, but also increases websites’ page visit traffic.Nearly one billion webpages have adopted this technology to optimize user experience in China.P4P TechnologyOur P4P platform serves billions of relevant, targeted sponsored links each day based on search terms users enter or content they view on the web page.Our key P4P technology includes:P4P Auction System. We use a web-based auction system to enable customers to bid for positions and automatically deliver relevant, targetedpromotional links on Baidu’s properties and Baidu Union members’ properties. The system starts by screening the relevance between the sponsored links anda particular query. Our intelligent ranking system takes into consideration the quality factor of a sponsored link for a search query in addition to the price bidon the keyword. The quality factor of a sponsored link for a search query is determined based on the relevance and certain other factors. The relevance isdetermined based on the analysis of past search and click-through results. Links to customers’ websites are ranked according to a comprehensive rankingindex, calculated based on both the quality factor of a sponsored link for a search query and the price bid on that keyword. We employ a dynamic mechanismin determining the minimum bidding price for each keyword.Phoenix Nest is designed to generate more relevant results. Phoenix Nest helps customers more easily find users’ favorite search terms to bid on, andprovides customers with more tools for budget management and more data for the effective measurement of ROI. We have been continually improving ourclick-through rate, or CTR, estimation technology. For example, we have introduced deep neutral network, or DNN, technology into our CTR estimation. Wehave also developed a new generation Phoenix Nest deep learning network CTR estimation modeling system, which enables the estimation of clicks ondifferent combinations of advertisement materials and significantly improved the timeliness of the model estimations. In 2016, we were the first to introduceFPGA (Field-Programmable Gate Array) into CTR model-based online services to optimize the click-through rates in online marketing, which hassignificantly improved users experience.Generative Triggering Model, which includes query rewrite and auto-trigger technologies, has broken the status quo where traditional index-trigger isunduly restricted by literal meaning, and instead formed a sophisticated set of real-time sequence deep learning system to fully understand the search intentof users, enabling more accurate match between search intents and search results. We continue to enrich our business knowledge database in order to betterunderstand the search intent of our users, and to present dynamic results in order to satisfy user demand, enhancing the realization of long-tail website flow.P4P Billing System. We record every click and charge customers a fee by multiplying the number of clicks by the cost per click. Our system is designedto detect fraudulent clicks based on factors such as click patterns and timestamps. This system also computes the amount a Baidu Union member or adistributor should be paid. The billing information is integrated with our internal Oracle ERP financial system.P4P Customer Service System. This system offers data and tools to analyze data for our customers to evaluate and optimize the performance of ouronline marketing services provided to them. Through this system, our customers can also manage information relating to online marketing services such astheir budgets and time periods for the services.ProTheme Contextual Promotion Technology. Our ProTheme technology employs techniques that consider factors such as theme finding, keywordanalysis, word frequency and the overall link structure of the web to analyze the content of individual web pages and to match sponsored links in our P4Pplatform to the web pages almost instantaneously. With this targeting technology, we can automatically provide contextually relevant promotional links. Forexample, our technology can provide links offering tickets to fans of a specific sports team or a news story about that team. 56 Table of ContentsTargetizement TechnologyOur targetizement technology matches our customers’ promotional links with their targeted internet users. Our automatic algorithm can analyze auser’s audience attributes based on his or her past search experience and display promotional links that the user may be interested in viewing.Large-Scale Systems and TechnologiesLarge Size Cluster Management. In order to provide highly efficient and stable search services, we have developed an automated management platformfor large size clusters. The platform enables us to intelligently manage and allocate resources and automatically debug and relocate services, therebyallowing tens of thousands of different source requests on the Baidu search engine and other non-search business to function stably across multiple internetdata centers and thousands of servers.Storage. We have developed an efficient, distributed and structured storage system to support our search services. Our storage system supports PB-levelholistic, sequential data storage, and ten thousand times of real-time processing per second per device. Our storage system also has dynamic data attributeaddition and subtraction function and historical data management capability.Distributed Computing System. We have developed our proxy computing system, a comprehensive set of ultra-large scale distributed computer system,to increase the utility rate of idle resources, providing a strong base support for our core operations. Our proxy computing system has realized variousdistributed computing software stacks, such as resource isolation, resource distribution, computing modeling and application framework, and supportscommonly used computing modules such as MapReduce, Spark, Stream and WebService.Indexing Technology. Our indexing technology supports billions of daily search requests on over tens of thousands of servers located across multipleinternet data centers of different network operators. Through our indexing technology, we have been able to index over one hundred billion of web pageswithout utilizing additional resources and have improved the freshness of indexed information.Artificial Intelligence (AI)We have been investing in AI for many years and have been recognized as one of the leading AI innovators globally. AI enables computers to simulatethe working mechanisms of human brains, and to learn and be trained with extremely complicated models. The core AI technology is AI supercomputer,which is a super-speed heterogeneous computing cluster designed for AI-based applications and has integrated heterogeneous computing server, GPU Boxand FPGA, among others developed by us in house. Currently, our AI mainly comprises three types of technologies, namely, parameter, sample and featuretraining, computing capabilities (servers and GPU clusters) and big data (webpages, search data, image and video data and locating data). Integrating thesethree types of AI technologies, we are able to apply AI into areas such as natural language processing, speech recognition, image recognition processing, userportrait and other capabilities. Our Conversational Interfaces has been recognized by MIT Technology Review as one of the ten breakthrough technologiesin 2016. Our AI has now been applied to Baidu Search, Duer, Autonomous Driving Car, Baidu Cloud and other products.From September 2016, we open-sourced our AI platform “PaddlePaddle” to the developer community, providing access to Baidu technology in areasof voice and image recognition, natural language processing, and machine learning. PaddlePaddle is accessible to developers from all over the world andthus promotes the popular use of AI. 57 Table of ContentsAutonomous Driving CarWe believe autonomous driving is an important area for future growth where AI has helped us take an early lead. With the goal of achieving Level 4Autonomy, i.e., fully autonomous driving, we have leveraged our technical accumulation in AI and deep learning, and developed some industry-leadingtechnologies in the autonomous driving car field, including environment sensing, behavior prediction, planning control, operation system, high precisionlocalization, high precision map and system safety. In 2016, our autonomous driving cars completed multiple urban public road testings in a number oflocations in China and California.Intellectual PropertyWe rely on a combination of trademark, copyright and trade secret protection laws in China and other jurisdictions, as well as confidentialityprocedures and contractual provisions to protect our intellectual property and our brand. We have 2,421 issued patents in China covering invention, utilitymodel and design, and intend to apply for more patents to protect our core technologies and intellectual property. We also enter into confidentiality,non-compete and invention assignment agreements with our employees and consultants and nondisclosure agreements with selected third parties. “ ”, ourcompany’s name “Baidu” in Chinese, has been recognized as a well-known trademark in China by the Trademark Office under the State Administration forIndustry and Commerce. In addition to owning “ ”, and the related logos, we have applied for registration of various other trademarks. We also haveregistered certain trademarks in the United States, Brazil, Hong Kong, Japan, Singapore, South Korea, Indonesia, the European Union and several otherjurisdictions. In addition, we have registered our domain name Baidu.com and certain other websites with China National Network Information Center, orCNNIC. We have also successfully registered .Baidu top-level domain names with the Internet Corporation for Assigned Names and Numbers (ICANN).Internet, technology and media companies are frequently involved in litigation based on allegations of infringement or other violations of intellectualproperty rights. Furthermore, the application of laws governing intellectual property rights in China and abroad is uncertain and evolving and could involvesubstantial risks to us. See “Item 3.D. Key Information—Risk Factors—Risks Related to Our Business—We may face intellectual property infringementclaims and other related claims that could be time-consuming and costly to defend and may result in an adverse impact over our operations” and “—We maybe subject to patent infringement claims with respect to our P4P platform.”RegulationsThe PRC government extensively regulates the telecommunications industry, including the internet sector. The State Council, the MIIT and otherrelevant government authorities have promulgated an extensive regulatory scheme governing internet-related services. This section summarizes the principalPRC laws and regulations relating to our business.In the opinion of Han Kun Law Offices, our PRC legal counsel, (i) the ownership structure relating to our consolidated affiliated entities complies withcurrent PRC laws and regulations; (ii) subject to the disclosure and risks disclosed under “Item 3.D. Key Information—Risk Factors—Risks Related to OurCorporate Structure,” “—Risks Related to Doing Business in China” and “—Regulations” our contractual arrangements with our consolidated affiliatedentities and the nominee shareholders are valid and binding on all parties to these arrangements and do not violate current PRC laws or regulations; and(iii) subject to the disclosure and risks disclosed under “Item 3.D. Key Information—Risk Factors—Risks Related to Our Corporate Structure,” “—RisksRelated to Doing Business in China” and “—Regulations” the business operations of our consolidated affiliated entities, as described herein, comply withcurrent PRC laws and regulations in all material respects.China’s internet industry, online advertising market and e-commerce market are evolving. There are substantial uncertainties regarding theinterpretation and application of existing or proposed PRC laws and 58 Table of Contentsregulations. We cannot assure you that the PRC regulatory authorities would find that our corporate structure and our business operations comply with PRClaws and regulations. If the PRC government finds us to be in violation of PRC laws and regulations, we may be required to pay fines and penalties, obtaincertain licenses or permits and change, suspend or discontinue our business operations until we comply with applicable PRC laws and regulations.Regulations on Value-Added Telecommunications Services and Internet Content ServicesInternet content services. The Telecommunications Regulations promulgated by the PRC State Council in September 2000 categorize alltelecommunication businesses in the PRC as either basic or value-added. Internet content services, or ICP services, are classified as value-addedtelecommunication businesses. Pursuant to the Telecommunications Regulations, commercial operators of value-added telecommunications services mustfirst obtain an operating license from the MIIT or its provincial level counterparts. The Administrative Measures on Internet Information Services, alsopromulgated by the PRC State Council in September 2000, require companies engaged in the provision of commercial internet content services to obtain anICP license from the relevant government authorities before providing any commercial internet content services within the PRC. “Commercial internetcontent services” generally refer to provision of information service through public telecommunication network or internet for a fee. The Catalog ofClassification of Telecommunications Services promulgated by the MIIT in December 2015 and taking effect from March 1, 2016 further divides ICPservices into information publication platform and delivery services, information search and inquiry services, information communities platform services,instant message services, and information securities and management services. We do not believe our P4P services conducted by our certain PRC subsidiariesare categorized as part of internet content services that require an ICP license under these regulations. Although Baidu Online conducts part of the P4Pbusiness by, among other things, examining and filtering P4P keywords, interacting with potential P4P customers, engaging in sales activities with ourcustomers, P4P search results are displayed on the websites operated by Baidu Netcom, including Baidu.com. Baidu Netcom, as the owner of our domainname Baidu.com and holder of the necessary licenses and approvals, such as an ICP license, operates the website to list P4P search results and display othermarketing and advertising content as an online advertising service provider.The Administrative Measures for Telecommunication Business Operating License, promulgated by the MIIT with latest amendments becomingeffective in April 2009, set forth the types of licenses required for value-added telecommunications services and the qualifications and procedures forobtaining such licenses. For example, a value-added telecommunications service operator providing commercial value-added services in multiple provincesis required to obtain an inter-regional license, whereas a value-added telecommunications service operator providing the same services in one province isrequired to obtain a local license.Content regulation. National security considerations are an important factor in the regulation of internet content in China. The National People’sCongress, the PRC’s national legislature, has enacted laws with respect to maintaining the security of internet operation and internet content. Under theselaws and applicable regulations, violators may be subject to penalties, including criminal sanctions, for internet content that: • opposes the fundamental principles stated in the PRC constitution; • compromises national security, divulges state secrets, subverts state power or damages national unity; • harms the dignity or interests of the state; • incites ethnic hatred or racial discrimination or damages inter-ethnic unity; • undermines the PRC’s religious policy or propagates heretical teachings or feudal superstitions; • disseminates rumors, disturbs social order or disrupts social stability; • disseminates obscenity or pornography, encourages gambling, violence, murder or fear or incites the commission of a crime; 59 Table of Contents • insults or slanders a third party or infringes upon the lawful rights and interests of a third party; or • is otherwise prohibited by law or administrative regulations.ICP operators are required to monitor their websites, including electronic bulletin boards. They may not post or disseminate any content that fallswithin the prohibited categories and must remove any such content from their websites. The PRC government may shut down the websites of ICP licenseholders that violate any of the above-mentioned content restrictions and revoke their ICP licenses.Restrictions on Foreign Ownership in Value-Added Telecommunications ServicesPursuant to the Provisions on Administration of Foreign-Invested Telecommunications Enterprises, promulgated by the PRC State Council with latestamendments becoming effective in September 2008, the ultimate foreign equity ownership in a value-added telecommunications service provider must notexceed 50%. However, the Guidance Catalog of Industries for Foreign Investment, as recently amended in 2015, allows a foreign investor to own more than50% of the total equity interest in an e-commerce business. The MIIT further released an announcement in June 2015 to remove the restriction on foreignequity for “online data processing and transaction processing businesses” as provided in the Catalog of Telecommunication Businesses promulgated by theMIIT. In order to acquire any equity interest in a value-added telecommunication business in China, a foreign investor must satisfy a number of stringentperformance and operational experience requirements, including demonstrating a good track records and experience in operating value-addedtelecommunication business overseas. Foreign investors that meet these requirements must obtain approvals from the MIIT and the Ministry of Commerce (orthe Ministry of Commerce’s authorized local counterparts), which retain considerable discretion in granting approvals. According to publicly availableinformation, the PRC government has issued telecommunication business operating licenses to only a limited number of foreign-invested companies. Webelieve that it would be impracticable for us to acquire any equity interest in our consolidated affiliated entities without diverting management attention andresources. Moreover, we believe that our contractual arrangements with these entities and the individual nominee shareholders provide us with sufficient andeffective control over these entities. Accordingly, we currently do not plan to acquire any equity interest in any of these entities.A Notice on Intensifying the Administration of Foreign Investment in Value-Added Telecommunications Services, issued by the MIIT in July 2006,prohibits domestic telecommunication service providers from leasing, transferring or selling telecommunication business operating licenses to any foreigninvestor in any form, or providing any resources, sites or facilities to any foreign investor for their illegal operation of a telecommunication business inChina. Pursuant to this notice, either the holder of a Value-Added Telecommunication Business Operating License or its shareholders must directly own thedomain names and trademarks used by such license holders in their provision of value-added telecommunications services. The notice further requires eachlicense holder to have the necessary facilities, including servers, for its approved business operations and to maintain the facilities in the regions covered byits license. If a license holder fails to comply with the requirements in the notice and cure such non-compliance, the MIIT or its local counterparts have thediscretion to take measures against such license holders, including revoking their Value-Added Telecommunication Business Operating Licenses.Due to the restrictions under these PRC regulations, we operate our websites mainly through our PRC consolidated affiliated entities, such as BaiduNetcom, and operate an online payment platform through BaiduPay. Baidu Netcom and BaiduPay are our PRC consolidated affiliated entities, and areconsidered domestic PRC entities under PRC law given that the nominee shareholders are PRC citizens or PRC entities.Each of Baidu Netcom, BaiduPay and some of our other PRC consolidated affiliated entities holds a Value-Added Telecommunication BusinessOperating License. In compliance with the Notice of the MIIT on Intensifying the Administration of Foreign Investment in Value-AddedTelecommunications Services, Baidu 60 Table of ContentsNetcom and BaiduPay, our consolidated affiliated entities, own the necessary domain names and trademarks, including pending trademark applications andhave the necessary personnel and facilities to operate our websites. It remains unclear whether the provision of online payment services by BaiduPay willrequire BaiduPay to apply for a Value-Added Telecommunication Business Operating License for “online data processing and transaction processingbusinesses” as provided in the Catalog of Telecommunication Businesses promulgated by the MIIT, although in practice many companies conducting suchbusiness do not apply for such license. Baidu Netcom, parent company of BaiduPay, has received a Trans-Regional Value-Added TelecommunicationBusiness Operating License with the permitted operation scope covering online data processing and transaction processing businesses. Baidu Netcom plansto submit an application to allow its subsidiary BaiduPay to operate online data processing and transaction processing businesses in 2017.Regulations on Mobile Internet ApplicationsOn August 1, 2016, the State Internet Information Office promulgated the Administrative Provisions on Mobile Internet Application InformationServices, or the Mobile Application Administrative Provisions. Pursuant to the Mobile Application Administrative Provisions, mobile internet applicationrefers to application software that runs on mobile smart devices providing information services after being pre-installed, downloaded or embedded throughother means. Mobile internet application providers refer to the owners or operators of mobile internet applications. Internet application stores refer toplatforms which provide services related to online browsing, searching and downloading of application software and releasing of development tools andproducts through the internet.Pursuant to the Mobile Application Administrative Provisions, an internet application program provider must verify a user’s mobile phone number andother identity information under the principle of mandatory real name registration at the back-office end and voluntary real name display at the front-officeend. An internet application provider must not enable functions that can collect a user’s geographical location information, access user’s contact list, activatethe camera or recorder of the user’s mobile smart device or other functions irrelevant to its services, nor is it allowed to conduct bundle installations ofirrelevant application programs, unless it has clearly indicated to the user and obtained the user’s consent on such functions and application programs. Inrespect of an internet application store service provider, the Mobile Application Administrative Provisions requires that, among others, it must file a recordwith the local authority within 30 days after it rolls out the internet application store service online. It must also examine the authenticity, security andlegality of internet application providers on its platform, establish a system to monitor application providers’ credit and file a record of such information withrelevant governmental authorities. If an application provider violates the regulations, the internet application store service provider must take measures tostop the violations, including warning, suspension of release, withdrawal of the application from the platform, keeping a record and reporting the incident tothe relevant governmental authorities.In December 2016, the MIIT promulgated the Interim Measures on the Administration of Pre-Installation and Distribution of Applications for MobileSmart Terminals to enhance the administration of mobile applications. The Interim Measures require, among others, that mobile phone manufacturers andinternet information service providers shall ensure that a mobile application, as well as its ancillary resource files, configuration files and user data can beuninstalled by a user on a convenient basis, unless it is a basic function software, which refers to a software that supports the normal functioning of hardwareand operating system of a mobile smart device. The Interim Measures will come into effect on July 1, 2017.Regulations on Internet Information Search ServiceIn June 2016, the State Internet Information Office promulgated the Administrative Provisions on Internet Information Search Services, or the SearchServices Administrative Provisions, which took effect on August 1, 2016. Pursuant to the Search Services Administrative Provisions, internet informationsearch service refers to the service whereby users can search for information that is collected from the internet and processed by computer 61 Table of Contentstechnology. The Search Services Administrative Provisions requires that an internet information search service provider must not publish any information orcontents prohibited by law in the form of links, abstracts, snapshots, associative words, related search or recommendations or otherwise. If an internetinformation search service provider identifies any search results that contain any information, website or application that is prohibited by law, it must stopdisplaying the search results, record and report it to the relevant governmental authority. In addition, an internet information search service provider isprohibited from seeking illegitimate interest by means of unauthorized disconnection of links, or provision of search results containing false information. Ifan internet information search service provider engages in paid search services, it must examine and verify the qualifications of its customers of the paidsearch services, specify the maximum percentage of search results as paid search results on a webpage, clearly distinguish paid search results from naturalsearch results, and notably identify the paid search information item by item.Regulations on News DisplayDisplaying news on a website and disseminating news through the internet are highly regulated in the PRC. The Provisional Measures forAdministrating Internet Websites Carrying on the News Displaying Business, jointly promulgated by the State Council News Office and the MIIT inNovember 2000, require an ICP operator (other than a government authorized news unit) to obtain State Council News Office approval to post news on itswebsite or disseminate news through the internet. Furthermore, the disseminated news must come from government-approved sources pursuant to contractsbetween the ICP operator and the sources, copies of which must be filed with the relevant government authorities.In September 2005, the State Council News Office and the MIIT jointly issued the Provisions on the Administration of Internet News InformationServices, requiring internet news information service organizations to provide services as approved by the State Council News Office, subject to annualinspection under the provisions. Pursuant to the provisions, no internet news information service organizations may take the form of a foreign-investedenterprise, whether a joint venture or a wholly foreign-owned enterprise, and no cooperation between internet news information service organizations andforeign-invested enterprises is allowed prior to the security evaluation by the State Council News Office.Baidu Netcom obtained the Internet News License, which permits it to publish internet news pursuant to the relevant PRC laws and regulations, inDecember 2006, and had the license renewed in June 2010. The Internet News License is subject to annual inspection by relevant government authorities.Regulations on Internet Drug Information ServicesAccording to the Measures for the Administration of Internet Drug Information Services, issued by the State Food and Drug Administration in July2004, an ICP operator publishing drug-related information must obtain a qualification certificate from the State Food and Drug Administration or itsprovincial level counterpart.Baidu Netcom obtained the Qualification Certificate for Internet Drug Information Services, which permits it to publish drug-related information on itswebsite, in November 2007, and had the certificate renewed in September 2012. We have several other entities in our group that have obtained theQualification Certificate for Internet Drug Information Services.Regulations on Internet Culture ActivitiesThe amended Internet Culture Administration Measures, promulgated by the Ministry of Culture and becoming effective in April 2011, require ICPoperators engaging in “internet culture activities” to obtain a permit from the Ministry of Culture. The “internet culture activities” include, among otherthings, online dissemination of internet cultural products (such as audio-video products, games, performances of plays or programs, works of art and cartoons)and the production, reproduction, importation, distribution and broadcasting 62 Table of Contentsof internet cultural products. Imported internet cultural products are subject to content review by the Ministry of Culture before they are disseminated online,while domestic internet cultural products must be filed with the local branch of the Ministry of Culture within 30 days following the online dissemination.Service providers are also required to conduct self-review of the content of internet cultural products before they are put on internet or submitted to theMinistry of Culture for approvals or filings. Baidu Netcom was granted an Internet Culture Business Permit in April 2007, which was renewed again inNovember 2013. Some other entities in our group were also granted an Internet Culture Business Permit.The Several Suggestions on the Development and Administration of the Internet Music, issued by the Ministry of Culture and becoming effective inNovember 2006, reiterate the requirement for the internet service provider to obtain the Internet Culture Business Permit to carry on any business of internetmusic products. In addition, foreign investors are prohibited from engaging in the internet culture business operation.Furthermore, the Notice on Strengthening and Improving the Content Review of Online Music, issued by Ministry of Culture in August 2009, providesthat only “internet culture operating entities” approved by the Ministry of Culture may engage in the production, release, dissemination (includingproviding direct links to music products) and importation of online music products. Internet culture operating entities should establish strict self-monitoringsystem of online music content and set up special department in charge of such monitoring. In October 2015, the Ministry of Culture promulgated a notice,which took effect on January 1, 2016, to further strengthen its regulation over online music, including requiring online platform allowing users to uploadself-created or performed music to set up real-time monitoring system and requiring the online music service providers to make quarterly filings ofinformation related to their content self-review with the local counterpart of the Ministry of Culture from April 1, 2016.Regulations on Internet PublishingOn February 4, 2016, the State Administration of Press, Publication, Radio, Film and Television, or the SAPPRFT, and the MIIT jointly issued theAdministrative Provisions on Internet Publishing Services, or the Internet Publishing Regulation, which took effect on March 10, 2016 and replaced theInterim Provisions for the Administration of Internet Publishing promulgated in 2002. The Internet Publishing Regulation requires that any entity engaged inprovision of online publications to the public via information network shall obtain an Internet Publication License, which will have a term of five years, fromthe SAPPRFT. Online publications refer to digital works with editing, production, processing and other publishing features, provided to the public viainformation network, which mainly include: (i) informative and thoughtful text, pictures, maps, games, animation, audio and video digitizing books andother original digital works in fields such as literature, art and science; (ii) digital works consistent with the content of published books, newspapers,periodicals, audio-visual products and electronic publications; (iii) the network literature database or other digital works formed through aforementionedworks by selecting, organizing, compiling and other means; and (iv) other types of digital works determined by the SAPPRFT. The servers and storagefacilities used by internet publishers must be located within the territory of the PRC. The Internet Publishing Regulation also requires internet serviceproviders providing manual intervention search ranking, advertising, promotion and other services to customers providing internet publishing services, shallcheck and examine the Internet Publication Licenses obtained by their customers and business scope of such licenses. Certain entities in our group haveobtained the Internet Publication Licenses.Regulations on Broadcasting Audio/Video Programs through the InternetIn December 2007, the State Administration of Radio, Film and Television, or the SARFT (currently known as SAPPRFT) and the MIIT jointlypromulgated the Rules for the Administration of Internet Audio and Video Program Services, commonly known as “Document 56”, which took effect onJanuary 31, 2008. Pursuant to the Document 56, an online audio/video service provider must obtain an Online Audio/Video Program Transmission 63 Table of ContentsLicense, which has a term of three years, and operate in accordance with the scope of business as stipulated in the license. Furthermore, Document 56 requiresall online audio/video service providers to be either wholly state-owned or state-controlled. According to some official answers to press inquiries publishedon the SARFT’s website in February 2008, officials from the SARFT and the MIIT clarified that online audio/video service providers that already had beenoperating lawfully prior to the issuance of Document 56 may re-register and continue to operate without becoming state-owned or controlled, provided thatthe providers have not engaged in any unlawful activities. This exemption will not be granted to online audio/video service providers established afterDocument 56 was issued. In addition, foreign-invested enterprises are not allowed to engage in the above-mentioned businesses.The PRC government has also promulgated a series of special regulatory measures governing live-streaming services. In November 2016, the StateInternet Information Office promulgated the Administrative Provisions on Internet Live-streaming Service, which took effect on December 1, 2016. Pursuantto the Administrative Provisions, internet live-streaming service refers to continuous publishing of real-time information to the public on internet by meansof video, audio, graphics, text or other forms, and an internet live-streaming service provider refers to an operator of the platform providing internetlive-streaming service. In accordance with the administrative provisions, an internet live-streaming service provider must verify and register the identityinformation of publishers of live-streaming programs and users on its platform, and file the identity information of the publishers with the local governmentalauthority for record. Any internet live-streaming service provider engaging in news service must obtain internet news information service qualification andoperate within the permitted scope of such qualification. In September 2016, the SAPPRFT issued a Circular on Strengthening Administration of Live-streaming Service of Network Audio/Video Programs. Pursuant to the circular, any entity that intends to engage in live audio/video broadcasting of majorpolitical, military, economic, social, cultural or sport events or activities, or live audio/video broadcasting of general social or cultural groups activities,general sporting events or other organizational events must obtain an Online Audio/Video Program Transmission License with permitted operation scopecovering the above business activities. Any entity or individual without qualification is prohibited from broadcasting live audio/radio programs on news,variety show, sports, interviews, commentary or other forms of programs through online live-streaming platform or online live broadcasting booth, nor arethey permitted to start a live broadcasting channel for any audio or radio programs. In addition, no entity or individual other than licensed radio stations ortelevision stations are allowed to use “radio station,” “television station,” “broadcasting station,” “TV” or other descriptive terms exclusive to television andradio broadcasting organizations to engage in any business on the internet without approval.Baidu Netcom has renewed its Online Audio/Video Program Transmission License, which remains valid until July 2018. iQiyi has an OnlineAudio/Video Program Transmission License that is valid until October 2018. Another entity in our group has an Online Audio/Video Program TransmissionLicense that is valid until March 2017, and the entity is in the process of renewing such license.Regulations on Payment Services by Non-financial InstitutionsPursuant to the People’s Bank of China’s Measures Concerning Payment Services by Non-financial Institutions, which took effect in September 2010,and its implementation rules, non-financial institutions that have been providing monetary transfer services as an intermediary between payees and payers,including online payment, issuance and acceptance of prepaid card or bank card, and other payment services as specified by the People’s Bank of China,must obtain a license from the People’s Bank of China prior to September 1, 2011, in order to continue providing monetary transfer services. BaiduPayapplied for the license after the regulations mentioned above were promulgated and prior to September 1, 2011, and was granted the license for onlinepayment in July 2013.In addition, in December 2015, the People’s Bank of China promulgated the Administrative Measures on the Online Payment Business of Non-BankPayment Institutions, or the Measures on Online Payment Business. The Measures on Online Payment Business requires payment institutions to comply withthe “Know Your Client” principle and establish a client identification mechanism. Payment institutions shall register and verify 64 Table of Contentsreal-name and basic identification of clients that open account with them. In addition, the Measures on Online Payment Business categorizes online paymentaccounts of individuals into three types, with each type subject to particular use of purposes and different limits on the amounts that can be paid from theaccounts. Individuals that pass more verifications are entitled to open accounts that are allowed be used for more purposes and have higher caps on theamount payable through these accounts. For example, an individual client whose identity is verified by the payment institution or by a partner authorized bythe payment institution face to face, or whose basic identity information is subject to multiple cross-validation by at least five legal and safe externalchannels in a non-face-to-face manner, may open Type-III payment accounts, the balance in which may be used for consumption, account transfers, andprocurement of financial products. The accumulative amount of balance payment transactions through all payment accounts of the individual shall notexceed RMB200,000 (US$28,806) during a year (excluding account transfers from the payment account to the client’s same-name bank account). Anindividual client that passes the verification of basic identity information in a non-face-to-face manner through at least one legal and safe external channeland opening a payment account with the institution for the first time may open a Type-I payment account, the balance in which may be used for consumptionand account transfers only. The accumulative amount of balance payment transactions through such payment account shall not exceed RMB1,000 (US$144)(including account transfer from the payment account to the client’s same-name bank account), from the date of the opening of the account.In April 2016, the General Office of the State Council issued the Implementing Scheme for Special Rectification of Internet Financial Risks, whichreiterates that a non-bank payment institution must not misappropriate or possess clients’ reserves, and instead it must open a reserve account with thePeople’s Bank of China or a qualified commercial bank. In addition, a non-bank payment institution must not use schemes to carry out inter-bank clearingbusiness in a disguised form. Instead, a non-bank payment institution must operate inter-bank payment business through the inter-bank clearing system of thePeople’s Bank of China or a qualified clearing institution.In January 2017, the General Office of the People’s Bank of China issued a Notice on Matters regarding Centralized Deposit and Management ofClient’s Reserves of Payment Institutions. Pursuant to the notice, commencing from April 17, 2017, a non-bank payment institution must deposit a certainpercentage of its clients’ reserve that it collects into a special deposit account and no interest will accrue on the deposited amount. The People’s Bank ofChina will determine the deposit percentage for a non-bank payment institution based on the category of payment business, risk control and complianceratings of the non-bank payment institution. The deposit percentage ranges from 12% to 20% for an operator of online payment business, 10% to 18% for anoperator of bank card bill acceptance and clearance business and 16% to 24% for an operator of issuance and acceptance of pre-paid card business. If anentity engages in more than one type of payment businesses, the highest of the respective deposit percentages applicable to each payment business of thisentity will apply.Regulations relating to Consumer Finance and MicrocreditWe currently engage in consumer finance business by providing microcredit services to our customers through two of our subsidiaries. The Guidanceon the Pilot Establishment of Microcredit Companies, jointly promulgated by the China Banking Regulatory Commission and the People’s Bank of China in2008, allows provincial governments to approve the establishment of microcredit companies on a trial basis. Following this guidance, many provincialgovernments in China, including that of Shanghai and Chongqing, promulgated local implementing rules on the administration of local microcreditcompanies. The implementing rules issued by the Shanghai and Chongqing municipal governments provide that the sources of funds of a microcreditcompany must be limited to the capital contributions paid by its shareholders, monetary donations, and loans provided by no more than two bankingfinancial institutions. The Shanghai Financial Services Office, the regulatory entity for microcredit companies in Shanghai, together with other localgovernment authorities in Shanghai issued additional administrative measures regulating microcredit companies in Shanghai, which require the paid capitalcontribution of a newly established microcredit company must be no less than RMB200 million (US$28.8 million), and provide that the authorities inShanghai will provide additional supports to microcredit 65 Table of Contentscompanies that are established by the large-scale internet services enterprises and mainly engage in internet microcredit business. In addition, pursuant to acircular issued by the Chongqing Financial Works Office, the regulatory entity for microcredit companies in Chongqing, the authorities in Chongqing havepermitted certain qualified microcredit companies to conduct a cross-region microcredit business on the internet. We engage in microcredit businessesthrough two subsidiaries in Shanghai and Chongqing, both of which have obtained special approval for establishment of a microcredit company from thelocal governmental authorities.Regulations on Platform Services relating to Sales of Securities Investment FundWe provide wealth management services through a variety of investment products, including, among others, securities investment fund. In accordancewith the Interim Provisions on the Administration of the Business Operations of Securities Investment Fund Distributors through Third-Party E-CommercePlatforms issued by the CSRC in March 2013, a third-party e-commerce platform for securities investment fund sales refers to the information systemproviding supporting services for online trading activities between fund investors and fund distributors. To qualify as an operator of third-party e-commerceplatform, an entity must satisfy a series of conditions, including, among others, that (i) it must be a PRC-incorporated entity with its website accessible withinChina; (ii) it must obtain a license for the relevant telecommunication business for more than three years; (iii) it must have a sound credibility record withoutbeing subject to any substantial administrative or criminal penalty in the past three years. Pursuant to the interim provisions, if a third-party e-commerceplatform engages in activities such as opening fund share trading accounts, publicizing and promoting the fund, processing subscription and redemption offund shares, or providing investment consultation or complaint settlement services relating to the fund, the operator of the platform will be deemed asconducting securities investment fund sales business, and therefore must obtain a license for fund sales business. As we provide third-party platform servicesto our customers and securities investment fund distributors on our wealth management platform and do not provide fund sales-related services specified inthe interim provisions, we believe we do not engage in securities investment fund sales business and therefore are in compliance with relevant requirements.Regulations on Internet Map ServicesAccording to the Administrative Rules of Surveying Qualification Certificate, as amended by the National Administration of Surveying, Mapping andGeo-information (formerly known as the State Bureau of Surveying and Mapping) in August 2014, the provision of internet map services by anynon-surveying and mapping enterprise is subject to the approval of the National Administration of Surveying, Mapping and Geo-information and requires aSurveying and Mapping Qualification Certificate. Internet maps refer to maps called or transmitted through internet. Pursuant to the Notice on FurtherStrengthening the Administration of Internet Map Services Qualification issued by the National Administration of Surveying, Mapping and Geo-informationin December 2011, any entity without applying for a Surveying and Mapping Qualification Certificate for internet map services is prohibited from providingany internet map services. Baidu Netcom currently provides online traffic information inquiry services as well as internet map services and has obtained aSurveying and Mapping Qualification Certificate for internet map services. Another entity in our group has also obtained the Surveying and MappingQualification Certificate.Regulations on Online GamesPursuant to the Administrative Provisions on Internet Publishing Services and the Circular on Mobile Game Publishing Service, the online gamesservices provided on our websites by our online game operator partners may be deemed as a type of “online publication service” provided by us, and we maybe required to obtain an Internet Publication License from the SAPPRFT. Beijing Perusal and another entity in our group have obtained the InternetPublication Licenses. The required approval by the SAPPRFT of each online game provided on our websites is handled by our online game operator partners.In June 2010, the Ministry of Culture promulgated the Interim Administration Measures of Online Games. In accordance with these measures, an ICPservice provider operating online games, must obtain an Internet 66 Table of ContentsCulture Business Permit. Baidu Netcom and some other entities in our group have obtained an Internet Culture Business Permit for operating online games.These measures also specify that the Ministry of Culture is responsible for the censorship of imported online games and the filing of records of domesticonline games. The procedures for the filing of records of domestic online games must be conducted with the Ministry of Culture within 30 days after thecommencement date of the online operation of these online games or the occurrence date of any material alteration of these online games. The approval by orfiling with the Ministry of Culture of each online game provided on our websites has been handled primarily by our online game operator partners.In September 2009, the GAPP (currently known as the SAPPRFT) together with several other government agencies issued a Circular 13, whichexplicitly prohibits foreign investors from participating in online game operating businesses through wholly-owned enterprises, equity joint ventures orcooperative joint ventures in China. The Circular 13 expressly prohibits foreign investors from gaining control over or participating in PRC operatingcompanies’ online game operations through indirect means, such as establishing joint venture companies, entering into contractual arrangements with orproviding technical support to the operating companies, or through a disguised form, such as incorporating user registration, user account management orpayment through game cards into online game platforms that are ultimately controlled or owned by foreign investors. We offer online games provided by ourgame operator partners on our websites owned and operated by our consolidated affiliated entities. We have also acquired 91 Wireless, which operates twoleading smartphone application distribution platforms in China as well as a mobile game platform through its consolidated affiliated entities. If ourcontractual arrangements were deemed to be “indirect means” or “disguised form” under the Circular 13, our relevant contractual arrangements may bechallenged by the SAPPRFT or other governmental authorities. If we were found to be in violation of the Circular 13 to operate our online game platform, theSAPPRFT, in conjunction with relevant regulatory authorities, would have the power to investigate and deal with such violations, including in the mostserious cases, suspending and revoking the relevant licenses and registrations.Regulations on Online Game Virtual CurrencyThe Interim Administration Measures of Online Games require companies that (i) issue online game virtual currency (including prepaid cards and/orpre-payment or prepaid card points), or (ii) offer online game virtual currency transaction services to apply for the Internet Culture Business Permit fromprovincial branches of the Ministry of Culture. The regulations prohibit companies that issue online game virtual currency from providing services thatwould enable the trading of such virtual currency. Any company that fails to submit the requisite application will be subject to sanctions, including but notlimited to termination of operation, confiscation of incomes and fines. The regulations also prohibit online game operators from allocating virtual items orvirtual currency to players based on random selection through lucky draw, wager or lottery that involves cash or virtual currency directly paid by the players.In addition, companies that issue online game virtual currency must comply with certain specific requirements, for example, online games virtual currencycan only be used for products and services related to the issuance company’s own online games. Pursuant to an Circular issued by the Ministry of Culture inDecember 2016, which will take effect on May 1, 2017, an online game operator must not allow online game virtual currency to exchange for legal currencyor items, except in the case of termination of online game operation where the online game operator may refund the balance of online game virtual currencyto players in the form of legal currency or in other means acceptable to the players. Moreover, pursuant to the circular, regulations applicable to online gamevirtual currency also apply to such other virtual items where the virtual items are issued by the online game operator, can be exchangeable for other virtualitems or value-added services related to the games, and can be purchased with legal currency or online game virtual currency or exchanged for with onlinegame virtual currency. Baidu Netcom and some other entities in our group have obtained the Internet Culture Business Permit for issuing online game virtualcurrency. 67 Table of ContentsRegulations on Advertisements and Online AdvertisingThe PRC government regulates advertising, including online advertising, principally through the State Administration for Industry and Commerce.The PRC Advertising Law, as recently amended in April 2015, outlines the regulatory framework for the advertising industry, and allows foreign investors toown up to all equity interests in PRC advertising companies.We conduct our value-added telecommunication-based online advertising business through Baidu Netcom, which is one of our consolidated affiliatedentities in China and holds a business license that covers value-added telecommunication-based online advertising in its business scope. Our subsidiariesBaidu Times and Baidu China have also expanded their respective business license to cover advertising in their respective business scope.Advertisers, advertising operators and advertising distributors are required by PRC advertising laws and regulations to ensure that the contents of theadvertisements they prepare or distribute are true and in full compliance with applicable laws and regulations. For example, pursuant to PRC AdvertisingLaw, advertisements must not contain, among other prohibited contents, terms such as “the state-level”, “the highest grade”, “the best” or other similar words.In addition, where a special government review is required for certain categories of advertisements before publishing, the advertisers, advertising operatorsand advertising distributors are obligated to confirm that such review has been performed and the relevant approval has been obtained. Pursuant to the PRCAdvertising Law, the use of internet to distribute advertisements shall not affect the normal use of the internet by users. Particularly, advertisementsdistributed on internet pages such as pop-up advertisements shall be indicated with conspicuous mark for close to ensure the close of such advertisements byone click. Where internet information service providers know or should know that illegal advertisements are distributed using their services, they shallprevent such advertisements from being distributed.In addition to the above regulations, the Internet Advertising Measures also sets forth certain compliance requirements for online advertisingbusinesses. For example, search engine service provider must indicate paid search results as an advertisement and distinguish paid search results from naturalsearch results on their websites. Advertising operators and distributors of internet advertisement must examine, verify and record identity information, such asname, address and contact information, of advertisers, and maintain an updated verification record on a regular basis. Moreover, advertising operators andadvertising distributors must examine supporting documentation provided by advertisers and verify the contents of the advertisements against supportingdocuments before publishing. If the contents of advertisements are inconsistent with the supporting documentation, or the supporting documentation isincomplete, advertising operators and distributors must refrain from providing design, production, agency or publishing services. The Internet AdvertisingMeasures also prohibits the following activities: (i) providing or using applications and hardware to block, filter, skip over, tamper with, or cover up lawfuladvertisements; (ii) using network access, network equipment and applications to disrupt the normal transmission of lawful advertisements or adding oruploading advertisements without authorization; and (iii) harming the interests of a third party by using fake statistics or traffic data.Violation of these regulations may result in penalties, including fines, confiscation of advertising income, orders to cease dissemination of theadvertisements and orders to publish an advertisement correcting the misleading information. In the case of serious violations, the State Administration forIndustry and Commerce or its local branches may force the violator to terminate its advertising operation or even revoke its business license. Furthermore,advertisers, advertising operators or advertising distributors may be subject to civil liability if they infringe on the legal rights and interests of third parties.Tort Liability LawIn accordance with the PRC Tort Liability Law, which became effective in July 2010, internet users and internet service providers bear tortiousliabilities in the event that they infringe upon other persons’ rights and interests through the internet. Where an internet user conducts tortious acts throughinternet services, the infringed person has the right to request the internet service provider take necessary actions such as deleting 68 Table of Contentscontents, screening and de-linking. Failing to take necessary actions after being informed, the internet service provider will be subject to joint and severalliabilities with the internet user with regard to the additional damages incurred. Where an internet service provider knows that an internet user is infringingupon other persons’ rights and interests through its internet service but fails to take necessary actions, it is jointly and severally liable with the internet user.Regulations on Intellectual Property RightsChina has adopted legislation governing intellectual property rights, including patents, copyrights, trademarks, and domain names.Patent. The PRC Patent Law provides for patentable inventions, utility models and designs, which must meet three conditions: novelty, inventivenessand practical applicability. The State Intellectual Property Office under the State Council is responsible for examining and approving patent applications. Apatent is valid for a term of twenty years in the case of an invention and a term of ten years in the case of utility models and designs.Copyright. The PRC Copyright Law and its implementation rules extend copyright protection to products disseminated over the internet and computersoftware. There is a voluntary registration system administered by the China Copyright Protection Center. Creators of protected works enjoy personal andproperty rights, including, among others, the right of disseminating the works through information network.Pursuant to the relevant PRC regulations, rules and interpretations, ICP operators will be jointly liable with the infringer if they (i) participate in, assistin or abet infringing activities committed by any other person through the internet, (ii) are or should be aware of the infringing activities committed by theirwebsite users through the internet, or (iii) fail to remove infringing content or take other action to eliminate infringing consequences after receiving awarning with evidence of such infringing activities from the copyright holder. The court will determine whether an internet service provider should haveknown of their internet users’ infringing activities based on how obvious the infringing activities are by taking into consideration a number of factors,including (i) the information management capabilities that the provider should have based on the possibility that the services provided by it may triggerinfringing acts, (ii) the degree of obviousness of the infringing content, (iii) whether it has taken the initiative to select, edit, modify or recommend thecontents involved, (iv) whether it has taken positive and reasonable measures against infringing acts, and (v) whether it has set up convenient programs toreceive notices of infringement and made timely and reasonable responses to the notices. Where an internet service provider has directly obtained economicbenefits from any contents made available by an internet user, it shall have a higher duty of care with respect to the internet user’s act of infringement ofothers’ copyrights. Advertisements placed for or other benefits particularly connected with specific contents may be deemed as direct economic benefits fromsuch contents, but general advertising fees or service fees charged by an internet service provider for its internet services will not be included. In addition,where an ICP operator is clearly aware of the infringement of certain content against another’s copyright through the internet, or fails to take measures toremove relevant contents upon receipt of the copyright holder’s notice, and as a result, it damages the public interest, the ICP operator could be ordered tostop the tortious act and be subject to other administrative penalties such as confiscation of illegal income and fines. An ICP operator is also required toretain all infringement notices for a minimum of six months and to record the content, display time and IP addresses or the domain names related to theinfringement for a minimum of 60 days.An internet service provider may be exempted from liabilities for providing links to infringing or illegal content or providing other internet serviceswhich are used by its users to infringe others’ copyright, if it does not know and does not have constructive knowledge that such content is infringing uponother parties’ rights or is illegal. However, if the legitimate owner of the content notifies the internet service provider and requests removal of the links to theinfringing content, the internet service provider would be deemed to have constructive knowledge upon receipt of such notification, but would be exemptedfrom liabilities if it removes or disconnects 69 Table of Contentsthe links to the infringing content at the request of the legitimate owner. At the request of the alleged infringer, the internet service provider shouldimmediately restore links to content previously disconnected upon receipt of initial non-infringing evidence.We have adopted measures to mitigate copyright infringement risks. For example, our policy is to remove links to web pages and materials uploadedby the users if we know these web pages or materials contain materials that infringe upon third-party rights or if we are notified by the legitimate copyrightholder of the infringement with proper evidence.Software Products. The Computer Software Copyright Registration Measures promulgated by the China Copyright Office on February 20, 2002,regulates software copyright registration, exclusive licensing contracts of software copyright and transfer agreements. Although such registration is notmandatory under PRC law, software copyright owners are encouraged to go through the registration process and registered software may receive betterprotection.Trademark. The PRC Trademark Law and its implementation rules protect registered trademarks. The Trademark Office under the State Administrationfor Industry and Commerce handles trademark registrations and grants a term of ten years to registered trademarks. Trademark license agreements must befiled with the Trademark Office for record. “ ” is recognized as a well-known trademark in China by the Trademark Office under the State Administrationfor Industry and Commerce. In addition to owning “ ” and the related logos, we have applied for registration of various other trademarks.Domain name. Domain names are protected under the Administrative Measures on the Internet Domain Names promulgated by the MIIT in November2004. The MIIT is the major regulatory body responsible for the administration of the PRC internet domain names, under supervision of which the ChinaInternet Network Information Center, or CNNIC, is responsible for the daily administration of .cn domain names and Chinese domain names. We haveregistered Baidu.cn, Baidu.com.cn, hao123.com and certain other domain names with CNNIC.Regulations on Information SecurityThe National People’s Congress has enacted legislation that prohibits use of the internet that breaches the public security, disseminates sociallydestabilizing content or leaks state secrets. Breach of public security includes breach of national security and infringement on legal rights and interests of thestate, society or citizens. Socially destabilizing content includes any content that incites defiance or violations of PRC laws or regulations or subversion ofthe PRC government or its political system, spreads socially disruptive rumors or involves cult activities, superstition, obscenities, pornography, gambling orviolence. State secrets are defined broadly to include information concerning PRC national defense, state affairs and other matters as determined by the PRCauthorities.Pursuant to applicable regulations, ICP operators must complete mandatory security filing procedures and regularly update information security andcensorship systems for their websites with local public security authorities, and must also report any public dissemination of prohibited content.On December 27, 2015, the Standing Committee of the National People’s Congress promulgated Anti-Terrorism Law, which took effect on January 1,2016. According to the Anti-Terrorism Law, telecommunication service operators or internet service providers shall (i) carry out pertinent anti-terrorismpublicity and education to society; (ii) provide technical interfaces, decryption and other technical support and assistance for the competent departments toprevent and investigate terrorist activities; (iii) implement network security, information monitoring systems as well as safety and technical preventionmeasures to avoid the dissemination of terrorism information, delete the terrorism information, immediately halt its dissemination, keep relevant 70 Table of Contentsrecords and report to the competent departments once the terrorism information is discovered; and (iv) examine customer identities before providing services.Any violation of the Anti-Terrorism Law may result in severe penalties, including substantial fines.In November 2016, the Standing Committee of the National People’s Congress promulgated the Cyber Security Law, which will become effective onJune 1, 2017. In accordance with the Cyber Security Law, network operators must comply with applicable laws and regulations and fulfill their obligations tosafeguard network security in conducting business and providing services. Network service providers must take technical and other necessary measures asrequired by laws, regulations and mandatory requirements to safeguard the operation of networks, respond to network security effectively, prevent illegal andcriminal activities, and maintain the integrity, confidentiality and usability of network data.In addition, the State Secrecy Bureau has issued provisions authorizing the blocking of access to any website it deems to be leaking state secrets orfailing to comply with the relevant legislation regarding the protection of state secrets during online information distribution. Specifically, internetcompanies in China with bulletin boards, chat rooms or similar services must apply for specific approval prior to operating such services.Furthermore, the Provisions on Technological Measures for Internet Security Protection, promulgated by the Ministry of Public Security, require allICP operators to keep records of certain information about its users (including user registration information, log-in and log-out time, IP address, content andtime of posts by users) for at least 60 days and submit the above information as required by laws and regulations. The Network Information ProtectionDecision states that ICP operators must request identity information from users when ICP operators provide information publication services to the users. IfICP operators come across prohibited information, they must immediately cease the transmission of such information, delete the information, keep relevantrecords, and report to relevant government authorities.Baidu Netcom, BaiduPay and some other entities in our group are ICP operators, and are therefore subject to the regulations relating to informationsecurity. They have taken measures to comply with these regulations. They are registered with the relevant government authority in accordance with themandatory registration requirement. Baidu Netcom’s policy is to remove links to web pages which to its knowledge contain information that would be inviolation of PRC laws or regulations. In addition, we monitor our websites to ensure our compliance with the above-mentioned laws and regulations.Regulations on Internet PrivacyThe PRC Constitution states that PRC law protects the freedom and privacy of communications of citizens and prohibits infringement of these rights.In recent years, PRC government authorities have enacted legislation on internet use to protect personal information from any unauthorized disclosure. TheNetwork Information Protection Decision provides that electronic information that identifies a citizen or involves privacy of any citizen is protected by lawand must not be unlawfully collected or provided to others. ICP operators collecting or using personal electronic information of citizens must specify thepurposes, manners and scopes of information collection and uses, obtain consent of the relevant citizens, and keep the collected personal informationconfidential. ICP operators are prohibited from disclosing, tampering with, damaging, selling or illegally providing others with, collected personalinformation. ICP operators are required to take technical and other measures to prevent the collected personal information from any unauthorized disclosure,damage or loss. The Administrative Measures on Internet Information Services prohibit an ICP operator from insulting or slandering a third party orinfringing upon the lawful rights and interests of a third party. Pursuant to the Internet Electronic Messaging Service Administrative Measures, ICP operatorsthat provide electronic messaging services must keep users’ personal information confidential and must not disclose the personal information to any thirdparty without the users’ consent or unless required by law. According to the Provisions on Protection of Personal Information of Telecommunication andInternet Users, telecommunication business operators and ICP operators are responsible for the security of the personal information of users they collect or usein the course of their 71 Table of Contentsprovision of services. Without obtaining the consent from the users, telecommunication business operators and ICP operators may not collect or use the users’personal information. The personal information collected or used in the course of provision of services by the telecommunication business operators or ICPoperators must be kept in strict confidence, and may not be divulged, tampered with or damaged, and may not be sold or illegally provided to others. The ICPoperators are required to take certain measures to prevent any divulge, damage, tamper or loss of users’ personal information. In accordance with the CyberSecurity Law, network operators must not collect personal information irrelevant to their services. In the event of any unauthorized disclosure, damage or lossof collected personal information, network operators must take immediate remedial measures, notify the affected users and report the incidents to the relevantauthorities in a timely manner. If any user knows that a network operator illegally collects and uses his or her personal information in violation of laws,regulations or any agreement with the user, or the collected and stored personal information is inaccurate or wrong, the user has the right to request thenetwork operator to delete or correct the relevant collected personal information. We collect and use our users’ personal information only if our users givetheir informed consent, and we believe we have taken appropriate measures to protect the security of our users’ personal information.The relevant telecommunications authorities are further authorized to order ICP operators to rectify unauthorized disclosure. ICP operators are subjectto legal liability, including warnings, fines, confiscation of illegal gains, revocation of licenses or filings, closing of the relevant websites, administrativepunishment, criminal liabilities, or civil liabilities, if they violate relevant provisions on internet privacy. Pursuant to the Ninth Amendment to the CriminalLaw issued by the Standing Committee of the National People’s Congress in August 2015 and becoming effective in November 2015, any ICP provider thatfails to fulfill the obligations related to internet information security administration as required by applicable laws and refuses to rectify upon orders, will besubject to criminal liability for (i) any dissemination of illegal information in large scale; (ii) any severe effect due to the leakage of the client’s information;(iii) any serious loss of evidence of criminal activities; or (iv) other severe situations, and any individual or entity that (i) sells or provides personalinformation to others unlawfully, or (ii) steals or illegally obtains any personal information, will be subject to criminal liability in severe situations. The PRCgovernment, however, has the power and authority to order ICP operators to turn over personal information if an internet user posts any prohibited content orengages in illegal activities on the internet.Regulations on Foreign ExchangeForeign Currency ExchangePursuant to the Foreign Currency Administration Rules, as amended, and various regulations issued by SAFE and other relevant PRC governmentauthorities, RMB is freely convertible to the extent of current account items, such as trade related receipts and payments, interest and dividends. Capitalaccount items, such as direct equity investments, loans and repatriation of investment, unless expressly exempted by laws and regulations, still require priorapproval from SAFE or its provincial branch for conversion of RMB into a foreign currency, such as U.S. dollars, and remittance of the foreign currencyoutside of the PRC. After a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13,became effective on June 1, 2015, instead of applying for approvals regarding foreign exchange registrations of foreign direct investment and overseas directinvestment from SAFE, entities and individuals will be required to apply for such foreign exchange registrations from qualified banks. The qualified banks,under the supervision of SAFE, directly examine the applications and conduct the registration.Payments for transactions that take place within the PRC must be made in RMB. Foreign currency revenues received by PRC companies may berepatriated into China or retained outside of China in accordance with requirements and terms specified by SAFE.Dividend DistributionWholly foreign-owned enterprises and Sino-foreign equity joint ventures in the PRC may pay dividends only out of their accumulated profits, if any,as determined in accordance with PRC accounting standards and 72 Table of Contentsregulations. Additionally, these foreign-invested enterprises may not pay dividends unless they set aside at least 10% of their respective accumulated profitsafter tax each year, if any, to fund certain reserve funds, until such time as the accumulative amount of such fund reaches 50% of the enterprise’s registeredcapital. In addition, these companies also may allocate a portion of their after-tax profits based on PRC accounting standards to employee welfare and bonusfunds at their discretion. These reserves are not distributable as cash dividends.Foreign Exchange Registration of Offshore Investment by PRC ResidentsPursuant to SAFE’s Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents to Engage in Financing and InboundInvestment via Overseas Special Purpose Vehicles, or SAFE Circular No. 75, issued in October 2005, and a series of implementation rules and guidance,including the circular relating to operating procedures that came into effect in July 2011, PRC residents, including PRC resident natural persons or PRCcompanies, must register with local branches of SAFE in connection with their direct or indirect offshore investment in an overseas special purpose vehicle,or SPV, for the purposes of overseas equity financing activities, and to update such registration in the event of any significant changes with respect to thatoffshore company. SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investmentand Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular No. 37, on July 4, 2014, which replaced the SAFE CircularNo. 75. SAFE Circular No. 37 requires PRC residents to register with local branches of SAFE in connection with their direct establishment or indirect controlof an offshore entity, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interests in domesticenterprises or offshore assets or interests, referred to in SAFE No. Circular No. 37 as a “special purpose vehicle.” The term “control” under SAFE CircularNo. 37 is broadly defined as the operation rights, beneficiary rights or decision-making rights acquired by the PRC residents in the offshore special purposevehicles or PRC companies by such means as acquisition, trust, proxy, voting rights, repurchase, convertible bonds or other arrangements. SAFE CircularNo. 37 further requires amendment to the registration in the event of any changes with respect to the basic information of the special purpose vehicle, such aschanges in a PRC resident individual shareholder, name or operation period; or any significant changes with respect to the special purpose vehicle, such asincrease or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event. If the shareholders of theoffshore holding company who are PRC residents do not complete their registration with the local SAFE branches, the PRC subsidiaries may be prohibitedfrom distributing their profits and proceeds from any reduction in capital, share transfer or liquidation to the offshore company, and the offshore companymay be restricted in its ability to contribute additional capital to its PRC subsidiaries. Moreover, failure to comply with SAFE registration and amendmentrequirements described above could result in liability under PRC law for evasion of applicable foreign exchange restrictions. We have notified holders ofordinary shares of our company whom we know are PRC residents to register with the local SAFE branch and update their registrations as required under theSAFE regulations described above. After SAFE Notice 13 became effective on June 1, 2015, entities and individuals are required to apply for foreignexchange registration of foreign direct investment and overseas direct investment, including those required under the SAFE Circular No. 37, with qualifiedbanks, instead of SAFE. The qualified banks, under the supervision of SAFE, directly examine the applications and conduct the registration. We are awarethat Mr. Robin Yanhong Li, our chairman, chief executive officer and principal shareholder, who is a PRC resident, has registered with the relevant localSAFE branch. We, however, cannot provide any assurances that all of our shareholders who are PRC residents will file all applicable registrations or updatepreviously filed registrations as required by these SAFE regulations. The failure or inability of our PRC resident shareholders to comply with the registrationprocedures may subject the PRC resident shareholders to fines and legal sanctions, restrict our cross-border investment activities, or limit our PRCsubsidiaries’ ability to distribute dividends to or obtain foreign exchange-dominated loans from our company.In February 2012, SAFE promulgated the Notices on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating inStock Incentive Plan of Overseas Publicly-Listed Company, or the Stock Option Rule, replacing the earlier rules promulgated in March 2007. Under theStock 73 Table of ContentsOption Rule, PRC residents who are granted stock options by an overseas publicly listed company are required, through a PRC agent or PRC subsidiary ofsuch overseas publicly listed company, to register with SAFE and complete certain other procedures. We and our PRC resident employees who have beengranted stock options are subject to these regulations. We have designated our PRC subsidiary Baidu Online to handle the registration and other proceduresrequired by the Stock Option Rule. Failure of the option holders to complete their SAFE registrations may subject these PRC employees to fines and legalsanctions and may also limit the ability of the overseas publicly listed company to contribute additional capital into its PRC subsidiary and limit the PRCsubsidiary’s ability to distribute dividends.Regulations on LaborThe Labor Contract Law, which became effective in January 2008, and its implementation rules, impose more restrictions on employers and have beendeemed to increase labor costs for employers, compared to the Labor Law, which became effective in January 1995. For example, pursuant to the LaborContract Law, an employer is obliged to sign labor contract with unlimited term with an employee if the employer continues to hire the employee after theexpiration of two consecutive fixed-term labor contracts. The employer has to compensate the employee upon the expiration of a fixed-term labor contract,unless the employee refuses to renew such contract on terms the same as or more favorable to the employee than those contained in the expired contract. Theemployer also has to indemnify an employee if the employer terminates a labor contract without a cause permitted by law. In addition, under the Regulationson Paid Annual Leave for Employees, which became effective in January 2008, employees who have served more than one year for an employer are entitledto a paid vacation ranging from 5 to 15 days per year, depending on their length of service. Employees who waive such vacation time at the request ofemployers must be compensated for three times their regular salaries for each waived vacation day.Regulations on TaxationFor a discussion of applicable PRC tax regulations, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Taxation.” C.Organizational StructureThe following is a list of our principal subsidiaries and consolidated affiliated entities as of the date of this annual report on Form 20-F: Name Place of Formation RelationshipBaidu Holdings Limited British Virgin Islands Wholly owned subsidiaryBaidu (Hong Kong) Limited Hong Kong Wholly owned subsidiaryBaidu Online Network Technology (Beijing) Co., Ltd. China Wholly owned subsidiaryBaidu (China) Co., Ltd. China Wholly owned subsidiaryBaidu.com Times Technology (Beijing) Co., Ltd. China Wholly owned subsidiaryBaidu International Technology (Shenzhen) Co., Ltd. China Wholly owned subsidiaryBeijing Baidu Netcom Science Technology Co., Ltd. China Consolidated affiliated entityBeijing Perusal Technology Co., Ltd. China Consolidated affiliated entityBeijing BaiduPay Science and Technology Co., Ltd. China Consolidated affiliated entityQiyi.com, Inc. Cayman Islands Majority-owned subsidiary91 Wireless Websoft Limited Cayman Islands Wholly owned subsidiary 74 Table of ContentsThe following diagram illustrates our corporate structure, including our principal subsidiaries and consolidated affiliated entities as of the date of thisannual report on Form 20-F: *The diagram above omits the names of subsidiaries and consolidated affiliated entities that are insignificant individually and in the aggregate.(1)Beijing Baidu Netcom Science Technology Co., Ltd. is 99.5% owned by Mr. Robin Yanhong Li, our chairman and chief executive officer, and 0.5% owned by Mr. HailongXiang, an employee of ours. Please see “Item 6.E. Directors, Senior Management and Employees—Share Ownership” for Mr. Robin Yanhong Li’s beneficial ownership in ourcompany. Mr. Hailong Xiang’s beneficial ownership of our company is less than 1% of our total outstanding shares.(2)Beijing Perusal Technology Co., Ltd. is 50% owned by Mr. Xiaodong Wang and 50% owned by Mr. Zhixiang Liang. Both Mr. Xiaodong Wang and Mr. Zhixiang Liang areemployees of ours, and their respective beneficial ownership in our company is less than 1% of our total outstanding shares.(3)Beijing BaiduPay Science and Technology Co., Ltd. is 54.8% owned by Beijing Baidu Netcom Science Technology Co., Ltd., 5.4% owned by Mr. Zhixiang Liang and 39.8%owned by another consolidated affiliated entity controlled by us.Contractual Arrangements with Our Consolidated Affiliated Entities and the Nominee ShareholdersPRC laws and regulations restrict and impose conditions on foreign investment in internet, value-added telecommunication-based online advertising,online audio and video services and mobile application distribution businesses. Accordingly, we operate these businesses in China through our consolidatedaffiliated entities. We have entered into a series of contractual arrangements with our consolidated affiliated entities and the nominee shareholders of ourconsolidated affiliated entities. These contractual arrangements enable us to: • receive substantially all of the economic benefits from our consolidated affiliated entities in consideration for the services provided by oursubsidiaries; • exercise effective control over our consolidated affiliated entities; and • hold an exclusive option to purchase all or part of the equity interests in our consolidated affiliated entities when and to the extent permitted byPRC law. 75 Table of ContentsWe do not have any equity interests in our consolidated affiliated entities. However, as a result of contractual arrangements, we have effective controlover and are considered the primary beneficiary of these companies, and we have consolidated the financial results of these companies in our consolidatedfinancial statements. If our consolidated affiliated entities or the nominee shareholders fail to perform their respective obligations under the contractualarrangements, we could be limited in our ability to enforce the contractual arrangements that give us effective control over our consolidated affiliatedentities. Further, if we are unable to maintain effective control, we would not be able to continue to consolidate the financial results of our consolidatedaffiliated entities in our financial statements. In 2014, 2015 and 2016, we derived approximately 27%, 31% and 35% of our total revenues, respectively, fromour consolidated affiliated entities through contractual arrangements. For a detailed description of the regulatory environment that necessitates the adoptionof our corporate structure, see “Item 4.B. Information on the Company—Business Overview—Regulations.” For a detailed description of the risks associatedwith our corporate structure, see “Item 3.D. Key Information—Risk Factors—Risks Related to Our Corporate Structure.”Contractual Arrangements relating to Baidu Netcom, Beijing Perusal and BaiduPayThe following is a summary of the material provisions of the agreements among (i) our wholly-owned PRC subsidiary, Baidu Online, (ii) each of BaiduNetcom, Beijing Perusal and BaiduPay, our principal consolidated affiliated entities, and (iii) the nominee shareholders of these consolidated affiliatedentities.Exclusive Technology Consulting and Services AgreementPursuant to the exclusive technology consulting and services agreement between Baidu Online and Baidu Netcom, Baidu Online has the exclusiveright to provide to Baidu Netcom technology consulting and services related to, among other things, the maintenance of servers, software development,design of advertisements, and e-commerce technical services. Baidu Online owns the intellectual property rights resulting from the performance of thisagreement. Baidu Netcom agrees to pay a monthly service fee to Baidu Online based on the formula as provided in the agreement in exchange for thetechnology consulting and services provided by Baidu Online. Under the agreement, the monthly service fee is equal to the product of the standard monthlyfee for page view per thousand times multiplied by the actual times of page view for the month divided by 1,000. Baidu Online has the right to adjust theservice fees at its sole discretion without the consent of Baidu Netcom. The agreement will be in effect for an unlimited term, until the term of business of oneparty expires and extension is denied by the relevant approval authorities.The exclusive technology consulting and services agreement between Baidu Online and each of Beijing Perusal and BaiduPay contains substantiallythe same terms as those between Baidu Online and Baidu Netcom described above, except that the service fee under the exclusive technology consulting andservices agreement with BaiduPay is calculated and paid on a quarterly basis. Each of the agreements shall be in effect for an unlimited term, until the term ofbusiness of one party expires and extension is denied by the relevant approval authorities.In 2014, 2015 and 2016, Baidu Netcom only paid an insignificant amount of service fees to Baidu Online due to Baidu Netcom’s accumulated lossposition. Beijing Perusal did not pay any service fees to Baidu Online due to Beijing Perusal’s operating loss in 2014, 2015 and 2016. BaiduPay has not paidany service fees to Baidu Online due to BaiduPay’s break-even or loss position since its inception.Operating AgreementPursuant to the operating agreement by and among Baidu Online, Baidu Netcom and the nominee shareholders of Baidu Netcom, Baidu Onlineprovides guidance and instructions on Baidu Netcom’s daily operations and financial affairs. Baidu Online has the right to appoint senior executives ofBaidu Netcom. The nominee shareholders of Baidu Netcom must appoint candidates recommended by Baidu Online as their 76 Table of Contentsrepresentatives on Baidu Netcom’s board of directors. In addition, Baidu Online agrees to guarantee Baidu Netcom’s performance under any agreements orarrangements relating to Baidu Netcom’s business arrangements with any third party. Baidu Netcom agrees that without the prior consent of Baidu Online,Baidu Netcom will not engage in any transactions that could materially affect the assets, liabilities, rights or operations of Baidu Netcom, including, withoutlimitation, incurrence or assumption of any indebtedness, sale or purchase of any assets or rights, incurrence of any encumbrance on any of its assets orintellectual property rights in favor of a third party or transfer of any agreements relating to its business operation to any third party. The agreement shall bein effect for an unlimited term, until the term of business of one party expires and extension is denied by the relevant approval authorities.The operating agreement by and among Baidu Online, each of Beijing Perusal and BaiduPay and the respective nominee shareholders containssubstantially the same terms as those described above. Each of the agreements shall be in effect for an unlimited term, until the term of business of one partyexpires and extension is denied by the relevant approval authorities.License AgreementsBaidu Online and Baidu Netcom have entered into a software license agreement and a web layout copyright license agreement. Pursuant to theselicense agreements, Baidu Online has granted to Baidu Netcom the right to use, including but not limited to, a software license and a web layout copyrightlicense. Baidu Netcom may only use the licenses in its own business operations. Baidu Online has the right to adjust the service fees at its sole discretion. Thesoftware license agreement and web layout copyright license agreement have been renewed and are in effect for an unlimited term, until the term of businessof one party expires and extension is denied by the relevant approval authorities.The web layout copyright license agreements that Baidu Online has entered into with each of Beijing Perusal and BaiduPay contain substantially thesame terms as the one between Baidu Online and Baidu Netcom described above. Each of the agreements is in effect for an unlimited term, until the term ofbusiness of one party expires and extension is denied by the relevant approval authorities.Exclusive Equity Purchase and Transfer Option AgreementPursuant to the exclusive equity purchase and transfer option agreement by and among Baidu Online, Baidu Netcom and the nominee shareholders ofBaidu Netcom, the nominee shareholders of Baidu Netcom have irrevocably granted Baidu Online an exclusive option to purchase, or require any of thenominee shareholders of Baidu Netcom to transfer to another person designated by Baidu Online, to the extent permitted under PRC law, all or part of theequity interests in Baidu Netcom for the cost of the initial contributions to the registered capital corresponding to the purchased equity interest or theminimum amount of consideration permitted by applicable PRC law. The nominee shareholders shall remit to Baidu Online any amount that is paid by BaiduOnline or its designated person in connection with the purchased equity interest after deducting taxes and fees incurred from the transfer of the purchasedequity interest. Baidu Online has sole discretion to decide when to exercise the option, whether in part or in full. Any and all dividends and other capitaldistributions from Baidu Netcom to the nominee shareholders shall be paid to Baidu Online in full. Baidu Online shall provide unlimited financial support toBaidu Netcom, if Baidu Netcom shall become in need of any form of reasonable financial support in the normal operation of business. If Baidu Netcom wereto incur any loss and as a result cannot repay any loans from Baidu Online, Baidu Online shall unconditionally forgive any such loans to Baidu Netcomgiven that Baidu Netcom provides sufficient proof for its loss and incapacity to repay. The agreement shall terminate upon the nominee shareholders ofBaidu Netcom have transferred all their equity interests in Baidu Netcom to Baidu Online or its designated person or upon expiration of the term of businessof Baidu Online or Baidu Netcom.The exclusive equity purchase and transfer option agreement by and among Baidu Online, each of Beijing Perusal and BaiduPay and the respectivenominee shareholders contains substantially the same terms as those 77 Table of Contentsdescribed above. Each of the agreements shall terminate upon the nominee shareholders of Beijing Perusal or BaiduPay have transferred all their equityinterests in Beijing Perusal or BaiduPay, as the case may be, to Baidu Online or its designated person or upon expiration of the term of business of BaiduOnline or the relevant consolidated affiliated entity.Loan AgreementsPursuant to loan agreements between Baidu Online and the nominee shareholders of Baidu Netcom, Baidu Online provided interest-free loans with anaggregate amount of RMB2.2 billion (US$312.7 million) to the nominee shareholders of Baidu Netcom solely for the latter to fund the capitalization ofBaidu Netcom. The loans can be repaid only with the proceeds from sale of the nominee shareholders’ equity interest in Baidu Netcom to Baidu Online or itsdesignated person. The term of each loan is ten years from the date of the agreement and can be extended with the written consent of both parties beforeexpiration. With some of the loan agreements amended and renewed, the earliest will expire on January 17, 2027.The loan agreements between Baidu Online and the nominee shareholders of Beijing Perusal and BaiduPay contain substantially the same terms asthose described above, except that the amount of loans extended to the nominee shareholders is RMB3.2 billion (US$460.5 million) and RMB216.7 million(US$31.2 million), respectively. The term of the loans will expire on June 19, 2026 and October 17, 2026, respectively, and can be extended with the writtenconsent of both parties before expiration.Proxy Agreement/Power of AttorneyPursuant to the proxy agreement between Baidu Online and the nominee shareholders of Baidu Netcom, the nominee shareholders of Baidu Netcomagree to entrust all the rights to exercise their voting power and any other rights as shareholders of Baidu Netcom to the person(s) designated by BaiduOnline. Each of the nominee shareholders of Baidu Netcom has executed an irrevocable power of attorney to appoint the person(s) designated by BaiduOnline as his/her attorney-in-fact to vote on his/her behalf on all matters requiring shareholder approval. The proxy agreement shall be in effect for anunlimited term unless terminated in writing by Baidu Online. The power of attorney shall be in effect for as long as the nominee shareholders of BaiduNetcom hold any equity interests in Baidu Netcom.Each of the proxy agreements and powers of attorney between Baidu Online and the nominee shareholders of Beijing Perusal and BaiduPay containssubstantially the same terms as those described above. Each of the proxy agreements shall be in effect for an unlimited term unless terminated in writing byBaidu Online. Each of the powers of attorney shall be in effect for as long as the relevant nominee shareholder of Beijing Perusal or BaiduPay holds anyequity interests in Beijing Perusal or BaiduPay, as the case may be.Equity Pledge AgreementPursuant to the equity pledge agreement between Baidu Online and the nominee shareholders of Baidu Netcom, the nominee shareholders of BaiduNetcom have pledged all of their equity interests in Baidu Netcom to Baidu Online to guarantee their obligations under the loan agreement and BaiduNetcom’s performance of its obligations under the exclusive technology consulting and service agreement. If Baidu Netcom or the nominee shareholdersbreach their respective contractual obligations, Baidu Online, as the pledgee, will be entitled to certain rights, including the right to sell the pledged equityinterests. The nominee shareholders of Baidu Netcom agree not to dispose of the pledged equity interests or take any actions that would prejudice BaiduOnline’s interest. The equity pledge will expire two years after expiration of the term of or the fulfillment by Baidu Netcom and the nominee shareholders oftheir respective obligations under the exclusive technology consulting and service agreement and the loan agreement. 78 Table of ContentsEach of the equity pledge agreements between Baidu Online and the nominee shareholders of Beijing Perusal and BaiduPay contains substantially thesame terms as those described above.We are in the process of perfecting the equity pledges of Baidu Netcom and BaiduPay described above by registration with the relevant localadministration for industry and commerce as required for a property right under the PRC Property Rights Law, due to a recent increase in the registeredcapital.Through the design of the aforementioned agreements, the nominee shareholders of these affiliated entities effectively assigned their full voting rightsto Baidu Online, which gives Baidu Online the power to direct the activities that most significantly impact the affiliated entities’ economic performance.Baidu Online obtains the ability to approve decisions made by the affiliated entities and the ability to acquire the equity interests in the affiliated entitieswhen permitted by PRC law. Baidu Online is obligated to absorb a majority of the expected losses from the affiliated entities’ activities through providingunlimited financial support to the affiliated entities and is entitled to receive a majority of residual returns from the affiliated entities through the exclusivetechnology consulting and service fees. As a result of these contractual arrangements, Baidu Online is determined to be the primary beneficiary of theseaffiliated entities. Despite the lack of technical majority ownership, there exists a parent-subsidiary relationship between us and these affiliated entitiesthrough these contractual arrangements, and we consolidate these affiliated entities through Baidu Online.We have also entered into contractual arrangements with several other affiliated entities and their respective nominee shareholders through oursubsidiaries other than Baidu Online, which results in these subsidiaries being the primary beneficiary of the relevant affiliated entities. As a result of thesecontractual arrangements, there exists a parent-subsidiary relationship between us and the relevant affiliated entities, and we consolidate these affiliatedentities through subsidiaries besides Baidu Online. D.Property, Plant and EquipmentOur corporate headquarters, Baidu Campus, is located in Shangdi, an area designated by the Beijing municipal government as the center of the city’sinformation technology industry. We also own another office building, Baidu Science Park, in Beijing. Besides Beijing, we own and occupy office buildingsin Shanghai and Shenzhen.We also lease some offices in Beijing, Tokyo (Japan), California (USA), Thailand, Brazil, Egypt, Indonesia and many other cities in China.We host our servers in China at the internet data centers of China Telecom, China Unicom and China Mobile in ten selected cities in China, and wealso have content delivery network locations in various cities across China. We plan to deploy two additional data centers in 2017. We also have a datacenter of our own in Shanxi and plan to build another one in Beijing, the first stage of which was completed in the first half of 2016.In December 2011, we commenced construction of an office building in Shenzhen, which will serve as our international center in Southern China. Ourcapital expenditure in connection with the construction of this office building in Shenzhen was RMB128.3 million (US$18.5 million) in 2016. We currentlyexpect to complete the planned construction in 2018.In September 2012, we commenced construction of Shanxi Cloud Computing Center, which will serve as one of our internet data centers in China. Ourcapital expenditure in connection with the construction of Shanxi Cloud Computing Center was RMB324.6 million (US$46.8 million) in 2016. We expect tofully complete the planned construction in 2018.In April 2014, we commenced construction of part of Beijing Cloud Computing Center, which will serve as our internet data center in Beijing. Ourcapital expenditure in connection with the construction of Beijing Cloud 79 Table of ContentsComputing Center was RMB55.7 million (US$8.0 million) in 2016. We have completed the first phase of construction in 2016, and we are in the process ofplanning the rest of the construction work with the completion date not determinable at this stage.We currently plan to fund these expenditures with our cash, cash equivalents, short-term investments and anticipated cash flow generated from ouroperating activities. Item 4A.Unresolved Staff CommentsNone. Item 5.Operating and Financial Review and ProspectsThe following discussion of our financial condition and results of operations is based upon, and should be read in conjunction with, our auditedconsolidated financial statements and the related notes included in this annual report on Form 20-F. This report contains forward-looking statements. See“Forward-Looking Information.” In evaluating our business, you should carefully consider the information provided under the caption “Item 3.D. KeyInformation—Risk Factors” in this annual report on Form 20-F. We caution you that our businesses and financial performance are subject to substantial risksand uncertainties. A.Operating ResultsOverviewOur operations are primarily based in China, where we derive almost all of our revenues. Total revenues in 2016 were RMB70.5 billion (US$10.2billion), a 6.3% increase over 2015. Operating profit in 2016 was RMB10.0 billion (US$1.4 billion), a 13.9% decrease over 2015. Net income attributable toBaidu, Inc. in 2016 was RMB11.6 billion (US$1.7 billion), a 65.4% decrease over 2015. Mobile revenues accounted for 63.2% of our total revenues in 2016.Our total assets as of December 31, 2016 were RMB182.0 billion (US$26.2 billion), of which cash and cash equivalent amounted to RMB10.9 billion(US$1.6 billion). Our total liabilities as of December 31, 2016 were RMB84.3 billion (US$12.1 billion), accounting for 46.3% of total liabilities and equity.As of December 31, 2016, our retained earnings accumulated to RMB85.7 billion (US$12.3 billion).We consolidated the financial results of Qunar in our consolidated financial statements from July 2011 to October 2015. In July 2011, we acquired amajority stake in Qunar. In October 2015, we completed a share exchange transaction with Ctrip, in which we exchanged 178,702,519 Class A ordinaryshares and 11,450,000 Class B ordinary shares of Qunar for 11,488,381 newly-issued ordinary shares of Ctrip, at an exchange ratio of 0.725 Ctrip ADSs perQunar ADS. As a result of the transaction, we have ceased consolidating the financial results of Qunar since October 2015 and recognized a disposition gainof RMB24.4 billion. We subsequently acquired additional ordinary shares of Ctrip in 2016.Reorganization of Operating SegmentsIn the second quarter of 2015, we reorganized our operating segments from one operating segment into three operating segments, namely searchservices, transaction services and iQiyi. The primary reason for such reorganization is that our chief operating decision maker increasingly assesses theperformance of our company and makes decisions in respect of the allocation of company resources by analyzing the operational results of these threebusiness units separately. We will continually assess the reasonableness of our operating segments because we operate in a rapidly evolving internet industrywith technology trend shifted, and there may be changes in our business strategy accordingly. 80 Table of ContentsRevenuesWe generate revenues from the provision of search services, transaction services and iQiyi. The following table sets forth our revenues by segment, witheach segment revenues including inter-segment revenues: Year ended December 31, 2014 2015 2016 RMB RMB RMB US$ (In thousands, except percentages) Revenues: Search Services 43,727,459 55,667,478 55,375,031 7,975,663 Transaction Services 3,822,456 7,005,941 4,894,486 704,953 iQiyi 2,873,552 5,295,760 11,283,329 1,625,137 Revenue GenerationSearch Services. Search services are keyword-based marketing services targeted at and triggered by internet users’ search queries, which include ourP4P services and other online marketing services, such as BrandZone, Aladdin and mobile application distribution. Search services contribute the largestproportion of our total revenues among our three operating segments.A majority of our revenues from search services are derived from our P4P services. Our P4P platform is an online marketplace that introduces internetsearch users to customers who pay us a fee based on click-throughs for priority placement of their links in the search results. We recognize P4P revenues whena user clicks on a customer’s link in the search results, based on the amount that the customer has agreed to pay for each click-through. The number of onlinemarketing customers and average revenue per customer are considered as primary drivers of our P4P services. We believe our efforts to grow the customerbase, improve customer experience and optimize their marketing budget allocation/spending effectiveness on our P4P platform are expected to drive ourfuture revenue growth.We also provide our customers with other performance-based and display-based online marketing services. For other performance-based onlinemarketing services, our customers pay us based on performance criteria other than click-throughs, such as the number of telephone calls brought to ourcustomers, the number of users registered with our customers, or the number of minimum click-throughs. For display-based online marketing services, ourcustomers pay us based on the duration or the number of display of the advertisement placed on our properties and Baidu Union members’ properties.Our search services have historically been driven by the general increase in our customers’ online marketing budgets. We expect the number of ouronline marketing customers to grow and our customer mix may change. However, we expect our online marketing customer base to remain diverse for theforeseeable future. Any prolonged economic slowdown in China may cause our customers to decrease or delay their online marketing spending and as aresult, hamper our efforts to grow our customer base. Any of these consequences could negatively affect our search service revenues.Our search customers are increasingly seeking marketing solutions with measurable results in order to maximize their ROI. To meet customers’ needs,we will continue to evaluate the effectiveness of our various products and services and adjust the mix of our service offerings to optimize our customers’ ROI.We expect that we will continue to earn a majority of our revenues from our search services.Transaction Services. Transaction services include Baidu Nuomi, Baidu Deliveries, Baidu Mobile Game, Baidu Wallet, Baidu Maps and others.Revenues of transaction services are mainly generated by Baidu Nuomi, Baidu Deliveries and Baidu Mobile Game. 81 Table of ContentsGMV is defined as the value of confirmed orders of products and services, regardless whether the products or services are consumed or delivered. TheGMV of transaction services refer to GMV generated by the Baidu platform through products such as Baidu Nuomi, Baidu Deliveries, Baidu Wallet andBaidu Maps.Baidu Nuomi operates an online local commerce marketplace that connects merchants with users by offering goods and services provided by third-party merchants with discount prices. Baidu Nuomi generates revenue primarily by acting as a marketing agent for local merchants. Baidu Nuomi presents itsrevenue on a net basis, representing the amount billed to registered users less the amount paid to merchants.Baidu Deliveries operates an online platform on which users can place restaurant delivery orders. Baidu Deliveries presents its revenue on a net basis,representing the amount billed to registered users less the amount paid to merchants, to whom we provide online marketing and technology support services.Such revenue is typically a percentage of the transaction amount of orders processed through Baidu Deliveries platform. Baidu Deliveries also generatesdelivery revenue by providing food distribution services to users.Baidu Mobile Game operates a mobile game platform on which registered users can access games provided by third-party game developers. BaiduMobile Game generates revenue primarily by acting as an agent and presents its revenue on a net basis, representing the amount billed to registered users lessthe amount paid to game developers. The business of Baidu Mobile Game will be disposed in 2017 as we entered into an equity transfer agreement with athird-party purchaser in January 2017.iQiyi. iQiyi is an online video platform with a content library that includes copyrighted movies, television series, cartoons, variety shows and otherprograms. iQiyi derives a majority of its revenues from online advertising services. As is customary in the advertising industry in China, iQiyi offerscommissions to third-party advertising agencies and recognizes revenue net of these commissions. iQiyi also derives an increasing portion of its revenuesfrom other sources, such as subscription services and sub-licensing of licensed contents to other online video websites.Revenue CollectionFor most search services, we collect payments both from our customers directly and through our distributors. We require our P4P customers to pay adeposit before using our P4P services and remind them by an automated notice to replenish the accounts after their account balance falls below a designatedamount. We deduct the amount due to us from the deposit paid by a customer when a user clicks on the customer’s link in the search results. In addition, weoffer payment terms to some of our customers other than P4P customers based on their historical marketing placements and credibility. We also offer longerpayment terms to certain qualified distributors, consistent with industry practice.For most transaction services, we collect payments directly from users when they purchase goods or services on our platforms. We settle with merchantsor other third parties in accordance with the terms agreed upon.For most services provided by iQiyi, customers may enter into different payment terms based on their historical marketing placements and credibility.Users are also encouraged to purchase subscription services to get enhanced user experience, and such payments are collected from the users by iQiyi orthrough agents such as China Mobile.As of December 31, 2016, we had accounts receivable of RMB4.1 billion (US$591.9 million), net of allowance of RMB177.4 million (US$25.6million). 82 Table of ContentsOperating Costs and ExpensesOur operating costs and expenses consist of cost of revenues, selling, general and administrative expenses, and research and development expenses.Share-based compensation expenses are allocated among the above three categories of operating costs and expenses, based on the nature of the work of theemployees who have received share-based compensation. Our total operating costs and expenses increased significantly from 2014 to 2016 due to the growthof our business.Cost of RevenuesThe following table sets forth the components of our cost of revenues both in absolute amount and as a percentage of total revenues for the periodsindicated. For the Years Ended December 31, 2014 2015 2016 RMB % RMB % RMB US$ % (In thousands, except percentages) Total revenues 49,052,318 100.0 66,381,729 100.0 70,549,364 10,161,222 100.0 Cost of revenues: Sales tax and surcharges (3,597,763) (7.3) (4,644,357) (7.0) (4,718,468) (679,601) (6.7) Traffic acquisition costs (6,328,155) (12.9) (8,860,861) (13.3) (10,372,516) (1,493,953) (14.7) Bandwidth costs (2,847,770) (5.8) (3,716,747) (5.6) (4,716,416) (679,305) (6.7) Depreciation of servers and other equipment (1,987,690) (4.1) (2,559,623) (3.9) (3,074,893) (442,877) (4.4) Operational costs (2,217,555) (4.5) (3,881,609) (5.9) (4,429,713) (638,011) (6.3) Content costs (1,871,906) (3.8) (3,745,063) (5.6) (7,863,585) (1,132,592) (11.1) Share-based compensation expenses (34,611) (0.1) (49,770) (0.1) (103,354) (14,886) (0.1) Total cost of revenues (18,885,450) (38.5) (27,458,030) (41.4) (35,278,945) (5,081,225) (50.0) Traffic Acquisition Costs. Traffic acquisition costs typically represent the portion of our online marketing revenues that we share with our Baidu Unionmembers. We typically pay a Baidu Union member, based on a pre-agreed arrangement, a portion of the online marketing revenues generated from validclick-throughs by users of that member’s properties.Bandwidth Costs. Bandwidth costs are the fees we pay to telecommunications carriers such as China Telecom and China Unicom fortelecommunications services and for hosting our servers at their internet data centers. We expect our bandwidth costs, as variable costs, to increase with theincreasing number of racks of servers and the increasing traffic on our websites and mobile platform. Our bandwidth costs could also increase if thetelecommunications carriers increase their service charges.Depreciation of Servers and Other Equipment. We include in our cost of revenues depreciation expenses of servers and other computer hardware thatare directly related to our business operations and technical support.Operational Costs. Operational costs include primarily salary and benefit expenses, intangible assets amortization, payment platform charges, deliverycost of Baidu Deliveries and Baidu Nuomi, and other expenses incurred by our operating and technical support personnel. Salary and benefit expensesinclude wages, bonuses, medical insurance, unemployment insurance, pension benefits, employee housing fund and other welfare benefits.Content Costs. Content costs consist primarily of the fees we paid for the licensed content from copyright owners or content distributors, and theamortization of the licensed copyrights for video content. 83 Table of ContentsOperating ExpensesThe following table sets forth the components of our operating expenses both in absolute amount and as a percentage of total revenues for the periodsindicated. For the Years Ended December 31, 2014 2015 2016 RMB % RMB % RMB US$ % (In thousands, except percentages) Total revenues 49,052,318 100.0 66,381,729 100.0 70,549,364 10,161,222 100.0 Cost of revenues (18,885,450) (38.5) (27,458,030) (41.4) (35,278,945) (5,081,225) (50.0) Operating expenses: Selling, general and administrative (10,382,142) (21.2) (17,076,383) (25.7) (15,070,586) (2,170,616) (21.4) Selling and marketing (8,298,558) (16.9) (14,503,787) (21.8) (12,413,245) (1,787,879) (17.6) General and administrative (2,083,584) (4.3) (2,572,596) (3.9) (2,657,341) (382,737) (3.8) Research and development (6,980,962) (14.2) (10,175,762) (15.3) (10,150,753) (1,462,013) (14.4) Total costs and operating expenses (36,248,554) (73.9) (54,710,175) (82.4) (60,500,284) (8,713,854) (85.8) Selling, General and Administrative ExpensesOur selling and marketing expenses primarily consist of promotional and marketing expenses and compensation for our sales and marketing personnel.Our general and administrative expenses consist primarily of salaries and benefits for our general and administrative personnel and fees and expensesfor legal, accounting and other professional services.Research and Development ExpensesResearch and development expenses primarily consist of salaries and benefits for research and development personnel. We expense research anddevelopment costs as they are incurred, except for capitalized software development costs that fulfill the capitalization criteria under Accounting StandardsCodification, or ASC, subtopic 350-40, Intangibles-Goodwill and Other: Internal-Use Software.Share-based Compensation ExpensesBaidu, Inc. grants options and restricted shares to our employees, directors and consultants as share-based compensation awards. As of December 31,2016, there was RMB323.4 million (US$46.6 million) unrecognized share-based compensation cost related to options of Baidu, Inc., which is expected to berecognized over a weighted-average vesting period of 2.8 years. As of December 31, 2016, there was RMB5.4 billion (US$775.1 million) unrecognized share-based compensation cost related to restricted shares, which is expected to be recognized over a weighted-average vesting period of 3.2 years. To the extentthe actual forfeiture rate is different from our original estimate, actual share-based compensation cost related to these awards may be different from ourexpectation.Other subsidiaries also have equity incentive plans granting share-based awards. Total share-based compensation expenses recognized andunrecognized were insignificant, both individually and in the aggregate. 84 Table of ContentsThe following table sets forth the allocation of our share-based compensation expenses both in absolute amount and as a percentage of total share-based compensation expenses among our employees based on the nature of work which they were assigned to perform. For the Year Ended December 31, 2014 2015 2016 RMB % RMB % RMB US$ % (In thousands, except percentages) Allocation of Share-based Compensation Expenses Cost of revenues 34,611 3.6 49,770 3.6 103,354 14,886 5.9 Selling, general and administrative 426,052 44.3 486,760 35.1 429,234 61,823 24.4 Research and development 502,077 52.1 850,588 61.3 1,227,400 176,782 69.7 Total share-based compensation expenses 962,740 100.0 1,387,118 100.0 1,759,988 253,491 100.0 TaxationCayman Islands and BVIWe are not subject to income or capital gain tax under the current laws of the Cayman Islands and the British Virgin Islands. Additionally, none ofthese jurisdictions currently impose a withholding tax on dividends.Hong KongOur subsidiaries in Hong Kong are subject to the uniform tax rate of 16.5%. Under Hong Kong tax law, our subsidiaries in Hong Kong are exemptedfrom income tax on their foreign-derived income and there is no withholding tax in Hong Kong on remittance of dividends.JapanOur subsidiaries in Japan with paid-in capital in excess of JPY100 million are subject to a national corporate income tax rate of 25.5% through March31, 2015, and since April 1, 2015 the income tax rate has been reduced to 23.9%. The subsidiaries with paid-in capital of no more than JPY100 million willbe taxed at a rate of 15% on the first JPY8 million and at 23.9% on the portion over JPY8 million from April 1, 2015. In addition to this national corporateincome tax, our subsidiaries are subject to another national tax called a local corporation tax. Additionally, local income taxes, which are local inhabitanttax, enterprise tax and special local corporation tax, are also imposed on corporate income. The resulting effective corporate income tax rates of our Japanesesubsidiaries range from approximately 34% to 37%.PRC Enterprise Income TaxEffective from January 1, 2008, the PRC’s statutory enterprise income tax, or EIT, rate is 25%. An enterprise may benefit from a preferential tax rate of15% under the EIT Law if it qualifies as a “High and New Technology Enterprise” strongly supported by the state. Pursuant to the Administrative Measureson the Recognition of High and New Technology Enterprises, as amended in January 2016, the provincial counterparts of the Ministry of Science andTechnology, the Ministry of Finance and the State Administration of Taxation make joint determination on whether an enterprise is qualified as a “High andNew Technology Enterprise” under the EIT Law. In making such determination, these government agencies consider, among other factors, ownership of coretechnology, whether the key technology supporting the core products or services fall within the scope of high and new technology strongly supported by thestate as specified in the measures, the ratios of research and development personnel to total personnel, the ratio of research and development expenditures to 85 Table of Contentsannual sales revenues, the ratio of revenues attributed to high and new technology products or services to total revenues, and other measures set forth inrelevant guidance. All enterprises that had been granted the “High and New Technology Enterprise” status before the effectiveness of the EIT Law arerequired to be re-examined in accordance with the measures mentioned above before they can be entitled to the preferential tax rate. A “High and NewTechnology Enterprise” certificate is effective for a period of three years. A number of our PRC subsidiaries and consolidated affiliated entities, such as BaiduOnline and Baidu Netcom, obtained the “High and New Technology Enterprise” certificates. The related tax holiday under such “High and New TechnologyEnterprise” certificates of these entities will expire in 2017, 2018 or 2019.If any entity fails to maintain the “High and New Technology Enterprise” qualification under the EIT Law, their tax rates will increase, which couldhave a material and adverse effect on our results of operations and financial position. Historically, all of the PRC subsidiaries and consolidated affiliatedentities mentioned above successfully re-applied for the certificates when the prior ones expired.An enterprise may benefit from a preferential tax rate of 10% under the EIT law if it qualifies as a “Key Software Enterprise.” Enterprises wishing toenjoy the status of a “Key Software Enterprise” must file required supporting documents with the tax authorities before applying the preferential corporateincome tax rate. These enterprises will be subject to relevant governmental authorities’ assessment each year as to whether they are entitled to the preferentialtax rate of 10%. Baidu Online was entitled to a preferential income tax rate of 10% from 2013 to 2015 due to its “Key Software Enterprise” status. BaiduChina was also entitled to a preferential income tax rate of 10% for 2015 due to its “Key Software Enterprise” status. Prior to May 2016, a “Key SoftwareEnterprise” used to be designated jointly by the National Development and Reform Commission, the MIIT, the Ministry of Commerce, the Ministry ofFinance and the State Administration of Taxation. In May 2016, the four PRC governmental authorities jointly issued a notice, pursuant to which anenterprise may be entitled to the preferential income tax rate of 10% by filing with the local tax authority with supporting documentation proving itsqualifications to be a “Key Software Enterprise” during its annual income tax filing process. The “Key Software Enterprise” status of Baidu Online and BaiduChina for 2016 will be filed with tax authorities before the end of May 2017 and will be subject to relevant governmental authorities’ assessment.If our PRC subsidiaries or consolidated affiliated entities that have enjoyed preferential tax treatment no longer qualify for the treatment, we willconsider available options under applicable law that would enable us to qualify for alternative preferential tax treatment. To the extent we are unable to offsetthe impact of the expiration of existing preferential tax treatment with new tax exemptions, tax incentives or other tax benefits, the expiration of existingpreferential tax treatment may cause our effective tax rate to increase. The amount of income tax payable by our PRC subsidiaries and consolidated affiliatedentities in the future will depend on various factors, including, among other things, the results of operations and taxable income of, and the statutory tax rateapplicable to, each of the entities. Our effective tax rate depends partially on the extent of the relative contribution of each of our subsidiaries andconsolidated affiliated entities to our consolidated taxable income. In 2014, 2015 and 2016, our consolidated effective tax rate was 15.41%, 14.44% and20.08%, respectively.Withholding TaxUnder the EIT Law and its implementation rules, dividends, interests, rent or royalties payable by a foreign-invested enterprise, such as our PRCsubsidiaries, to any of its non-resident enterprise investors, and proceeds from any such non-resident enterprise investor’s disposition of assets (afterdeducting the net value of such assets) shall be subject to a 10% EIT, namely withholding tax, unless the non-resident enterprise investor’s jurisdiction ofincorporation has a tax treaty or arrangement with China that provides for a reduced withholding tax rate or an exemption from withholding tax. The Caishui(2008) No. 1 Notice clarifies that undistributed profits earned by foreign-invested enterprises prior to January 1, 2008 will be exempted from any withholdingtax. 86 Table of ContentsThe British Virgin Islands, where Baidu Holdings Limited, the sole shareholder of certain of our PRC subsidiaries such as Baidu Online, wasincorporated, does not have such a tax treaty with China.Hong Kong, where Baidu (Hong Kong) Limited, our wholly owned subsidiary and the sole shareholder of certain of our PRC subsidiaries such as BaiduTimes and Baidu China, was incorporated, has a tax arrangement with China that provides for a lower withholding tax rate of 5% on dividends subject tocertain conditions and requirements, such as the requirement that the Hong Kong resident enterprise own at least 25% of the PRC enterprise distributing thedividend at all times within the 12-month period immediately preceding the distribution of dividends and be a “beneficial owner” of the dividends. However,pursuant to a SAT Circular 81 issued by the State Administration of Taxation in February 2009, if the relevant PRC tax authorities determine, in theirdiscretion, that a company benefits from the reduced withholding tax rate on dividends due to a structure or arrangement designed for the primary purpose ofobtaining favorable tax treatment, the PRC tax authorities may adjust the preferential tax treatment. Moreover, pursuant to a SAT Circular 601 issued by theState Administration of Taxation in October 2009, a resident of a contracting state will not qualify for the benefits under the tax treaties or arrangements, if itis not the “beneficial owner” with respect to dividend, interest and royalty income. According to SAT Circular 601, a “beneficial owner” shall haveownership and right to dispose of the income or the rights and properties giving rise to the income, and generally engages in substantive business activities.An agent or conduit company will not be regarded as a “beneficial owner” and, therefore, will not qualify for treaty benefits. A conduit company normallyrefers to a company that is set up primarily for the purpose of evading or reducing taxes or transferring or accumulating profits. In August 2015, the StateAdministration of Taxation promulgated the Administrative Measures for Non-Resident Taxpayers to Enjoy Treatments under Tax Treaties, or SAT Circular60, which became effective on November 1, 2015. SAT Circular 60 provides that non-resident enterprises are not required to obtain pre-approval from therelevant tax authority in order to enjoy the reduced withholding tax rate. Instead, non-resident enterprises may, if they determine by self-assessment that theprescribed criteria to enjoy the tax treaty benefits are met, directly apply for the reduced withholding tax rate, and file necessary forms and supportingdocuments when performing tax filings, which will be subject to post-filing examinations by the relevant tax authorities.If our PRC subsidiaries declare and distribute profits earned after January 1, 2008 to us in the future, the dividend payments will be subject towithholding tax, which will increase our tax liability and reduce the amount of cash available to our company.Tax ResidenceUnder the EIT Law and its implementation rules, an enterprise established outside of the PRC with “de facto management body” within the PRC isconsidered a resident enterprise and will be subject to the EIT at the rate of 25% on its worldwide income. The term “de facto management body” refers to“the establishment that exercises substantial and overall management and control over the production, business, personnel, accounts and properties of anenterprise.”Pursuant to SAT Circular 82 issued by the State Administration of Taxation in April 2009, an overseas registered enterprise controlled by a PRCcompany or a PRC company group will be classified as a “resident enterprise” with its “de facto management body” located within China if the followingrequirements are satisfied: (i) the senior management and core management departments in charge of its daily operations are mainly located in the PRC;(ii) its financial and human resources decisions are subject to determination or approval by persons or bodies located in the PRC; (iii) its major assets,accounting books, company seals, and minutes and files of its board and shareholders’ meetings are located or kept in the PRC; and (iv) no less than half ofthe enterprise’s directors or senior management with voting rights reside in the PRC. The State Administration of Taxation issued additional rules to providemore guidance on the implementation of SAT Circular 82 in July 2011, and issued an amendment to SAT Circular 82 delegating the authority to itsprovincial branches to determine whether a Chinese-controlled overseas-incorporated enterprise should be considered a PRC resident enterprise, in January2014. Although the SAT Circular 82, the additional guidance and its amendment only apply to overseas 87 Table of Contentsregistered enterprises controlled by PRC enterprises and not those controlled by PRC individuals or foreigners, the determining criteria set forth in thecircular may reflect the State Administration of Taxation’s general position on how the “de facto management body” test should be applied in determiningthe tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, individuals or foreigners.If our offshore entities are deemed PRC resident enterprises, these entities may be subject to the EIT at the rate of 25% on their global incomes, exceptthat the dividends distributed by our PRC subsidiaries may be exempt from the EIT to the extent such dividends are deemed “dividends among qualifiedresident enterprises.”Should our offshore entities be deemed as PRC resident enterprises, such changes could significantly increase our tax burden and materially andadversely affect our cash flow and profitability.PRC Business Tax and VATIn November 2011, the Ministry of Finance and the State Administration of Taxation jointly issued two circulars setting out the details of the pilotVAT reform program, which change the charge of sales tax from business tax to VAT for certain pilot industries. The VAT reform program initially appliedonly to the pilot industries in Shanghai, and was expanded to eight additional regions, including, among others, Beijing and Guangdong province, in 2012.In August 2013, the program was further expanded nationwide. In May 2016, the pilot program was extended to cover additional industry sectors such asconstruction, real estate, finance and consumer services.With respect to all of our PRC entities for the period immediately prior to the implementation of the VAT reform program, revenues from our servicesare subject to a 5% PRC business tax. Revenues from our online advertising distribution services are subject to an additional 3% cultural businessconstruction fee.Our entities located in Shanghai, Beijing and Guangdong Province fall within the scope of the program and have been recognized as the VAT generaltaxpayers since January 1, 2012, September 1, 2012 and November 1, 2012, respectively, the effective time of the program in each of the regions. Our entitieslocated outside of Shanghai, Beijing and Guangdong Province have been subject to VAT since August 1, 2013. From the applicable effective time onwards,these entities are required to pay VAT instead of business tax for services that are deemed by the relevant tax authorities to be within the pilot industries at arate of 6%. In addition, cultural business construction fee is imposed at the rate of 3% on revenues derived from our online advertising distribution services.PRC Urban Maintenance and Construction Tax and Education SurchargeAny entity, foreign-invested or purely domestic, or individual that is subject to consumption tax, VAT and business tax is also required to pay PRCurban maintenance and construction tax. The rates of urban maintenance and construction tax are 7%, 5% or 1% of the amount of consumption tax, VAT andbusiness tax actually paid depending on where the taxpayer is located. All entities and individuals who pay consumption tax, VAT and business tax are alsorequired to pay education surcharge at a rate of 3%, and local education surcharges at a rate of 2%, of the amount of VAT, business tax and consumption taxactually paid. 88 Table of ContentsResults of OperationsThe following table sets forth a summary of our consolidated results of operations for the periods indicated. The period-to-period comparisons ofresults of operations should not be relied upon as indicative of future performance. For the Years Ended December 31, 2014 2015 2016 RMB RMB RMB US$ (In thousands) Consolidated Statements of Comprehensive Income Data Revenues: Online marketing services 48,495,215 64,037,006 64,525,115 9,293,550 Others 557,103 2,344,723 6,024,249 867,672 Total revenues 49,052,318 66,381,729 70,549,364 10,161,222 Operating costs and expenses:(1) Cost of revenues (18,885,450) (27,458,030) (35,278,945) (5,081,225) Selling, general and administrative (10,382,142) (17,076,383) (15,070,586) (2,170,616) Research and development (6,980,962) (10,175,762) (10,150,753) (1,462,013) Total operating costs and expenses (36,248,554) (54,710,175) (60,500,284) (8,713,854) Operating profit 12,803,764 11,671,554 10,049,080 1,447,368 Interest income 1,992,818 2,362,632 2,341,631 337,265 Interest expense (628,571) (1,041,394) (1,157,562) (166,724) Other income, net, including exchange gains or losses 336,338 24,909,964 4,301,785 619,586 Income / (loss) from equity method investments (19,943) 3,867 (1,025,727) (147,735) Taxation (2,231,172) (5,474,377) (2,913,594) (419,645) Net income 12,253,234 32,432,246 11,595,613 1, 670,115 Less: Net loss attributable to non-controlling interests (943,698) (1,231,927) (36,656) (5,280) Net income attributable to Baidu, Inc. 13,196,932 33,664,173 11,632,269 1,675,395 (1) Share-based compensation expenses: Cost of revenues (34,611) (49,770) (103,354) (14,886) Selling, general and administrative (426,052) (486,760) (429,234) (61,823) Research and development (502,077) (850,588) (1,227,400) (176,782) (962,740) (1,387,118) (1,759,988) (253,491) Year Ended December 31, 2016 Compared to Year Ended December 31, 2015Consolidated revenues. Our total revenues increased by 6.3% from RMB66.4 billion in 2015 to RMB70.5 billion (US$10.2 billion) in 2016. Ouronline marketing revenues increased slightly by 0.8% from RMB64.0 billion in 2015 to RMB64.5 billion (US$9.3 billion) in 2016. The number of our activeonline marketing customers decreased from approximately 1,049,000 in 2015 to approximately 982,000 in 2016 while the average revenue per customerincreased from approximately RMB60,500 in 2015 to approximately RMB65,300 (US$9,405) in 2016. The decrease of our active online marketingcustomers was primarily due to the measures we have implemented since May 2016, which included turning down customers who do not meet our newrequirements, in order to deliver a better user experience and build a safer and more trustworthy 89 Table of Contentsplatform for users. Consistent with previously reported numbers, the number of active online marketing customers and average revenue per customer excludethose for our group-buying and delivery related businesses. The other revenues increased by 156.9% from RMB2.3 billion in 2015 to RMB6.0 billion(US$867.7 million) in 2016, which was mainly due to the growth of subscription services of iQiyi.Consolidated operating costs and expenses. Our consolidated operating costs and expenses increased by 10.6% from RMB54.7 billion in 2015 toRMB60.5 billion (US$8.7 billion) in 2016. This increase was primarily due to the expansion of our business, and in particular the content cost of iQiyi.Cost of Revenues. Our cost of revenues increased by 28.5% from RMB27.5 billion in 2015 to RMB35.3 billion (US$5.1 billion) in 2016. This increasewas primarily due to the following factors: • Traffic Acquisition Costs. Our traffic acquisition costs increased by 17.1% from RMB8.9 billion in 2015 to RMB10.4 billion (US$1.5 billion) in2016. Traffic acquisition costs represent 14.7% of total revenues in 2016, compared to 13.3% in 2015. The increase in our traffic acquisitioncosts mainly reflected the change in the mix of Baidu Union members. • Bandwidth Costs and Depreciation Expenses. Our bandwidth costs increased by 26.9% from RMB3.7 billion in 2015 to RMB4.7 billion(US$679.3 million) in 2016. Our depreciation expenses of servers and other equipment increased by 20.1% from RMB2.6 billion in 2015 toRMB3.1 billion (US$442.9 million) in 2016. The increases in these costs were mainly due to our investment in increasing our networkinfrastructure capacity. • Sales Tax and Surcharges. Our sales tax and surcharges increased by 1.6% from RMB4.6 billion in 2015 to RMB4.7 billion (US$679.6 million)in 2016, in line with the increase in revenues. • Operational Costs. Our operational costs increased by 14.1% from RMB3.9 billion in 2015 to RMB4.4 billion (US$638.0 million) in 2016,primarily due to the increases of delivery cost of Baidu Deliveries and staff-related costs, which were partially offset by the decrease of paymentplatform charges and intangible amortization expenses. • Content Costs. Our content costs increased by 110.0% from RMB3.7 billion in 2015 to RMB7.9 billion (US$1.1 billion) in 2016, primarily dueto the increase in video content costs of iQiyi.Selling, General and Administrative Expenses. Our selling, general and administrative expenses decreased by 11.7% from RMB17.1 billion in 2015 toRMB15.1 billion (US$2.2 billion) in 2016. This decrease was primarily due to the following factors: • Total salaries and benefits and staff-related expenses decreased by 3.2% from RMB4.3 billion in 2015 to RMB4.1 billion (US$594.6 million) in2016, primarily due to the decreased headcount of certain business resulting from the change from the direct sales model to distribution modelduring 2016; • Marketing and promotion expenses decreased by 20.9% from RMB9.8 billion in 2015 to RMB7.8 billion (US$1.1 billion) in 2016, primarilydue to the reduced promotional spending relating to our transaction services; • Total office operating expenses decreased by 22.0% from RMB658.4 million in 2015 to RMB513.6 million (US$74.0 million) in 2016,primarily as a result of reduced office rental expenses as new buildings owned by us went into service; • Share-based compensation expenses allocated to selling, general and administrative expenses decreased by 11.8% from RMB486.8 million in2015 to RMB429.2 million (US$61.8 million) in 2016.Research and Development Expenses. Our research and development expenses remained flat at RMB10.2 billion (US$1.5 billion) in 2016. 90 Table of ContentsOperating profit. As a result of the foregoing, we generated an operating profit of RMB10.0 billion (US$1.4 billion) in 2016, a 13.9% decrease fromRMB11.7 billion in 2015.Other income, net, including exchange gains or losses. Our other income, net, including exchange gains or losses was RMB4.3 billion (US$619.6million) in 2016, compared to RMB24.9 billion in 2015. The other income, net, including exchange gains or losses in 2016, mainly consisted of theinvestment gain recognized as a result of Baidu’s exchange of Uber (Cayman), Ltd., or Uber China, shares with Xiaoju Kuaizhi, Inc., or Didi.Income (loss) from equity method investments. We had loss from equity method investments of RMB1.0 billion (US$147.7 million) in 2016, ascompared to income from equity method investments of RMB3.9 million in 2015 mainly due to the loss pick up of our significant investee, Ctrip.Taxation. Our income tax expenses decreased by 46.8% from RMB5.5 billion in 2015 to RMB2.9 billion (US$419.6 million) in 2016, primarily due tothe significant tax expense recognized in 2015 in relation to our exchange of Qunar shares with Ctrip. The effective tax rate for 2016 was 20.1% as comparedto 14.4% in 2015. Excluding the share exchange transaction impact for the past two years, the effective tax rate was flat year-over-year.Net income attributable to Baidu, Inc. As a result of the foregoing, net income attributable to Baidu, Inc. decreased from RMB33.7 billion in 2015 toRMB11.6 billion (US$1.7 billion) in 2016.Year Ended December 31, 2015 Compared to Year Ended December 31, 2014Consolidated revenues. Our total revenues increased by 35.3% from RMB49.1 billion in 2014 to RMB66.4 billion in 2015. This increase was due to asubstantial increase in our revenues from online marketing services. Our online marketing revenues increased by 32.0% from RMB48.5 billion in 2014 toRMB64.0 billion in 2015. This increase was mainly attributable to the increase in the number of our active online marketing customers from approximately813,000 in 2014 to approximately 1,049,000 in 2015, and the increase in the average revenue per customer from approximately RMB59,400 in 2014 toapproximately RMB60,500 in 2015. Consistent with previously reported numbers, the number of active online marketing customers and average revenue percustomer exclude those for our group-buying related businesses.Consolidated operating costs and expenses. Our consolidated operating costs and expenses increased by 50.9% from RMB36.2 billion in 2014 toRMB54.7 billion in 2015. This increase was primarily due to the expansion of our business, and in particular the expansion of our mobile platform andtransaction related services.Cost of Revenues. Our cost of revenues increased by 45.4% from RMB18.9 billion in 2014 to RMB27.5 billion in 2015. This increase was primarilydue to the following factors: • Traffic Acquisition Costs. Our traffic acquisition costs increased by 40.0% from RMB6.3 billion in 2014 to RMB8.9 billion in 2015. Trafficacquisition costs represent 13.3% of total revenues in 2015, compared to 12.9% in 2014. The increase in our traffic acquisition costs mainlyreflected the increased contribution of Baidu Union members. • Bandwidth Costs and Depreciation Expenses. Our bandwidth costs increased by 30.5% from RMB2.8 billion in 2014 to RMB3.7 billion in2015. Our depreciation expenses of servers and other equipment increased by 28.8% from RMB2.0 billion in 2014 to RMB2.6 billion in 2015.The increases in these costs were mainly due to our investment in increasing our network infrastructure capacity. • Sales Tax and Surcharges. Our sales tax and surcharges increased by 29.1% from RMB3.6 billion in 2014 to RMB4.6 billion in 2015, in linewith the increase in revenues. • Operational Costs. Our operational costs increased by 75.0% from RMB2.2 billion in 2014 to RMB3.9 billion in 2015, primarily due to theincrease of delivery cost of Baidu Nuomi and Baidu Deliveries business, payment platform charges and staff-related costs. 91 Table of Contents • Content Costs. Our content costs increased by 100.1% from RMB1.9 billion in 2014 to RMB3.7 billion in 2015, primarily due to the increase invideo content costs of iQiyi, one of our subsidiaries.Selling, General and Administrative Expenses. Our selling, general and administrative expenses increased by 64.5% from RMB10.4 billion in 2014 toRMB17.1 billion in 2015. This increase was primarily due to the following factors: • Total salaries and benefits and staff-related expenses increased by 31.1% from RMB3.3 billion in 2014 to RMB4.3 billion in 2015, primarily dueto the increased headcount to support our expanded online marketing services during 2015; • Marketing and promotion expenses increased by 98.4% from RMB4.9 billion in 2014 to RMB9.8 billion in 2015, primarily due to the increasedmarketing and promotion activities relating to our transaction services and mobile products; • Total office operating expenses increased by 24.9% from RMB527.0 million in 2014 to RMB658.4 million) in 2015, primarily as a result ofincrease and expansion of our offices; • Total traveling, communication and business development expenses increased by 35.8% from RMB276.5 million in 2014 to RMB375.6 millionin 2015, primarily due to the increased headcount and activities to support our expanded online marketing services; • Share-based compensation expenses allocated to selling, general and administrative expenses increased by 14.2% from RMB426.1 million in2014 to RMB486.8 million in 2015.Research and Development Expenses. Our research and development expenses increased by 45.8% from RMB7.0 billion in 2014 to RMB10.2 billionin 2015, primarily due to the increase in staff-related costs of research and development staff.Operating profit. As a result of the foregoing, we generated an operating profit of RMB11.7 billion in 2015, an 8.8% decrease from RMB12.8 billionin 2014.Other income, net, including exchange gains or losses. Our other income, net, including exchange gains or losses was RMB24.9 billion in 2015,compared to RMB336.3 million in 2014. The other income, net, including exchange gains or losses in 2015 was primarily attributable to the disposition gainof RMB24.4 billion recognized as a result of our exchange of Qunar shares with Ctrip.Income (loss) from equity method investments. We had income from equity method investments of RMB3.9 million in 2015, as compared to loss fromequity method investments of RMB19.9 million in 2014.Taxation. Our income tax expenses increased by 145.4% from RMB2.2 billion in 2014 to RMB5.5 billion in 2015, primarily due to the tax expenserecognized in relation to our exchange of Qunar shares with Ctrip.Net income attributable to Baidu, Inc. As a result of the foregoing, net income attributable to Baidu, Inc. increased from RMB13.2 billion in 2014 toRMB33.7 billion in 2015. 92 Table of ContentsSegment RevenuesThe following table sets forth our revenues by segment and year-over-year change rate for the periods indicated, with each segment revenues includinginter-segment revenues: Year ended December 31, 2014 2015 2016 RMB RMB YoY% RMB US$ YoY% (In thousands, except percentages) Revenues: Search Services 43,727,459 55,667,478 27.3 55,375,031 7,975,663 (0.5) Transaction Services 3,822,456 7,005,941 83.3 4,894,486 704,953 (30.1) iQiyi 2,873,552 5,295,760 84.3 11,283,329 1,625,137 113.1 Search Services. Our search services revenues decreased by 0.5% from RMB55.7 billion in 2015 to RMB55.4 billion (US$8.0 billion) in 2016. Thisdecrease was primarily due to the implementing measures that we have taken to deliver a better user experience and build a safer and more trustworthyplatform for users since May 2016, which had a negative impact on the number of customers and our revenues in the short term. The total number of paidclicks increased by 10.6% from 2015 to 2016.Our search services revenues increased by 27.3% from RMB43.7 billion in 2014 to RMB55.7 billion in 2015. This increase was primarily attributableto the increase in the number of active online marketing customers of our search services and the increase in the average revenue per customer. The totalnumber of paid clicks increased by 34.1% from 2014 to 2015.Transaction Services. Our transaction services revenues decreased by 30.1% from RMB7.0 billion in 2015 to RMB4.9 billion (US$705.0 million) in2016. Since October 2015, we have ceased to consolidate the financial results of Qunar, which was previously part of our transaction services in ourconsolidated financial statements from July 2011 to October 2015. Excluding the impact of Qunar, the revenues of transaction services increased by 32.4%from 2015 to 2016. Excluding the impact of Qunar, the GMV of transaction services increased by 84.2% from 2015 to 2016.Our transaction services revenues increased by 83.3% from RMB3.8 billion in 2014 to RMB7.0 billion in 2015.iQiyi. Our iQiyi revenues increased by 113.1% from RMB5.3 billion in 2015 to RMB11.3 billion (US$1.6 billion) in 2016. This increase was mainlyattributable to the increase in online marketing revenues and subscription services revenues.iQiyi revenues increased by 84.3% from RMB2.9 billion in 2014 to RMB5.3 billion in 2015. This increase was mainly attributable to the increase inonline marketing revenues and subscription services revenues.Segment Operating Costs and ExpensesThe following table sets forth our operating costs and expenses by segment and year-over-year change rate for the periods indicated: Year ended December 31, 2014 2015 2016 RMB RMB YoY% RMB US$ YoY% (In thousands, except percentages) Operating Costs and Expenses: Search Services (23,179,666) (27,549,641) 18.9 (28,222,224) (4,064,845) 2.4 Transaction Services (9,796,434) (20,151,386) 105.7 (17,280,521) (2,488,913) (14.2) iQiyi (3,983,851) (7,679,198) 92.8 (14,048,498) (2,023,404) 82.9 93 Table of ContentsSearch Services. Operating costs and expenses of search services mainly consist of traffic acquisition costs, staff related costs, business tax andsurcharges, depreciation and intangible amortization expenses, bandwidth costs and marketing and promotion expenses.Operating costs and expenses of search services were RMB28.2 billion (US$4.1 billion) in 2016, compared to RMB27.5 billion in 2015. The increasewas primarily due to a 13.9% increase in traffic acquisition costs, a 20.3% increase in depreciation of servers and other equipment, and a 16.9% increase inbandwidth costs partially offset by a 74.8% decrease in payment platform charges, a 24.6% decrease in promotional expenses and a 129.1% decrease in baddebt provision, all compared to the figures in 2015.Operating costs and expenses of search services were RMB27.5 billion in 2015, compared to RMB23.2 billion in 2014. The increase was primarily dueto a 27.4% increase in traffic acquisition costs, a 28.3% increase in staff related costs, a 21.8% increase in business tax and surcharges, and a 15.4% increasein depreciation and intangible amortization expenses, compared to the figures in 2014.Transaction Services. Operating costs and expenses of transaction services mainly consist of marketing and promotion expenses, staff related costs,depreciation and intangible amortization expenses, bandwidth costs, traffic acquisition costs and payment platform charges.Operating costs and expenses of transaction services were RMB17.3 billion (US$2.5 billion) in 2016, compared to RMB20.2 billion in 2015. Thedecrease was primarily a result of a 31.0% decrease in marketing and promotion expenses, 22.3% decrease in staff related costs and a 40.1% decrease inbusiness tax and surcharges, partially offset by a 298.8% increase of delivery cost of Baidu Deliveries and Baidu Nuomi, all compared to the figures in 2015.Operating costs and expenses of transaction services were RMB20.2 billion in 2015, compared to RMB9.8 billion in 2014. The increase was primarilya result of a 157.9% increase in marketing and promotion expenses, a 53.9% increase in staff related costs and a 128.0% increase in traffic acquisition costs,compared to the figures in 2014.iQiyi. Operating costs and expenses of iQiyi mainly consist of content costs, bandwidth costs, staff related costs, marketing and promotion expenses,and business tax and surcharges.Operating costs and expenses of iQiyi were RMB14.0 billion (US$2.0 billion) in 2016, compared to RMB7.7 billion in 2015. The increase wasprimarily due to a 121.7% increase in content costs, a 58.7% increase in bandwidth costs, a 49.0% increase in staff related costs, and an 82.9% increase inbusiness tax and surcharges, compared to the figures in 2015.Operating costs and expenses of iQiyi were RMB7.7 billion in 2015, compared to RMB4.0 billion in 2014. The increase was primarily due to a 136.0%increase in content costs, a 80.5% increase in bandwidth costs, a 44.6% increase in staff related costs, and a 79.8% increase in marketing and promotionexpenses, compared to the figures in 2014.InflationInflation in China has not materially impacted our results of operations. According to the National Bureau of Statistics of China, the annual averagepercent changes in the consumer price index in China for 2014, 2015 and 2016 were 2.0%, 1.4% and 2.0%, respectively. The year-over-year percent changein the consumer price index for January 2015, 2016 and 2017 was increase of 0.8%, 1.8% and 2.5%, respectively. Although we have not been materiallyaffected by inflation in the past, we can provide no assurance that we will not be affected in the future by higher rates of inflation in China. For example,certain operating costs and expenses, such as employee compensation and office operating expenses may increase as a result of higher inflation.Additionally, 94 Table of Contentsbecause a substantial portion of our assets consists of cash and cash equivalents and short-term investments, high inflation could significantly reduce thevalue and purchasing power of these assets. We are not able to hedge our exposure to higher inflation in China.Foreign CurrencyThe average exchange rate between U.S. dollar and RMB has declined from RMB8.2264 per U.S. dollar in July 2005 to RMB6.9198 per U.S. dollar inDecember 2016. As of December 31, 2016, we recorded RMB2.0 billion (US$291.3 million) of net foreign currency translation loss in accumulated othercomprehensive income as a component of shareholders’ equity. We have not hedged exposures to exchange fluctuations using any hedging instruments. Seealso “Item 3.D. Key Information—Risk Factors—Risks Related to Doing Business in China—Fluctuation in the value of the RMB may have a material andadverse effect on your investment.” and “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Foreign Exchange Risk.”Critical Accounting PoliciesWe prepare financial statements in accordance with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect thereported amounts of our assets and liabilities and the disclosure of our contingent assets and liabilities at the end of each fiscal period and the reportedamounts of revenues and expenses during each fiscal period. We continually evaluate these judgments and estimates based on our own historical experience,knowledge and assessment of current business and other conditions, our expectations regarding the future based on available information and assumptionsthat we believe to be reasonable, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since theuse of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accountingpolicies require a higher degree of judgment than others in their application.The selection of critical accounting policies, the judgments and other uncertainties affecting application of those policies and the sensitivity ofreported results to changes in conditions and assumptions are factors that should be considered when reviewing our financial statements. For furtherinformation on our significant accounting policies, see Note 2 to our consolidated financial statements. We believe the following accounting policiesinvolve the most significant judgments and estimates used in the preparation of our financial statements.Consolidation of Affiliated EntitiesIn order to comply with PRC laws and regulations limiting foreign ownership of or imposing conditions on value-added telecommunication services,internet, value-added telecommunication-based online advertising, online audio and video services and mobile application distribution businesses, weoperate our websites and conduct our value-added telecommunication-based online advertising, online audio and video services and mobile applicationdistribution businesses through our affiliated entities in China by means of contractual arrangements. We have entered into certain exclusive agreements withthe affiliated entities through our subsidiaries, which obligate them to absorb a majority of the risk of loss and receive a majority of the residual returns fromthe affiliated entities’ activities. In addition, we have entered into certain agreements with the affiliated entities and the nominee shareholders of affiliatedentities through our subsidiaries, which enable us to direct the activities that most significantly affect the economic performance of the affiliated entities.Based on these contractual arrangements, we consolidate the affiliated entities as required by SEC Regulation SX-3A-02 and ASC topic 810, Consolidation,because we hold all the variable interests of the affiliated entities through the subsidiaries, which are the primary beneficiaries of the affiliated entities. Wewill reconsider the initial determination of whether a legal entity is a consolidated affiliated entity upon certain events listed in ASC 810-10-35-4 occurred.We will also continuously reconsider whether we are the primary beneficiaries of our affiliated entities as facts and circumstances change. See “Item 3.D. KeyInformation—Risk Factors—Risks Related to Our Corporate Structure.” 95 Table of ContentsSegment ReportingWe historically had only one single reportable segment because our chief operating decision maker, or CODM, formerly relied on the consolidatedresults of operations when making decisions on allocating our resources and assessing our performance. Beginning in the quarter ended June 30, 2015, wehave changed our reportable segments as a result of significant growth in our operations and expansion of services to multiple businesses in recent years. Ourchief executive officer, who has been identified as the CODM, reviews the operating results of different service lines in order to allocate resources and assessour performance. Accordingly, the financial statements include segment information which reflects the current composition of the reportable segments inaccordance with ASC topic 280, or ASC 280, Segment Reporting.We have reorganized our operation into three segments since the second quarter of 2015, consisting of the Search Services, Transaction Services andiQiyi. Search Services mainly include our P4P services and other online marketing services. Transaction Services include Baidu Nuomi, Baidu Deliveries,Baidu Mobile Game, Baidu Wallet, Baidu Maps and others. iQiyi is an online video platform with a content library that includes licensed movies, televisionseries, cartoons, variety shows and other programs. We do not allocate any share-based compensation expenses to these segments as the CODM does not usethis information to measure the performance of the operating segments.Revenue RecognitionWe recognize revenues based on the following principles: (1)Performance-based online marketing servicesCost-per-click. Our auction-based P4P platform enables a customer to place its website link and related description on our search result list on thewebsite which could be accessed through personal computers or mobile devices. Customers make bids on keywords based on how much they are willing topay for each click to their listings in the search results listed on our website and the relevance between the keywords and the customer’s businesses. Internetusers’ search of the keyword will trigger the display of the listings. The ranking of the customer’s listing depends on both the bidding price and the listing’srelevance to the keyword searched. Customer pays us only when a user clicks on one of its website links. Other than the auction-based P4P platform, we havecertain vertical platforms from which we generate revenue through pre-determined prices per click. Revenue is recognized when a user clicks on one of thecustomer-sponsored website links, as there is persuasive evidence of an arrangement, the fee is fixed or determinable and collection is reasonably assured, asprescribed by ASC topic 605, or ASC 605, Revenue Recognition.Other performance-based online marketing services. To the extent we provide online marketing services based on performance criteria other thancost-per-click, such as the number of downloads (and user registration) of mobile applications, the number of incremental end users and the total incrementalrevenue generated, revenue is recognized when the specified performance criteria are met together with satisfaction of other applicable revenue recognitioncriteria as prescribed by ASC 605. (2)Display-based online advertising servicesFor display-based online advertising services such as text links, banners, icons or other forms of graphical advertisements in the websites or mobileapplications, we recognize revenue, in accordance with ASC 605, on a pro-rata basis over the contractual term for cost per time advertising arrangementscommencing on the date the customer’s advertisement is displayed on a specified webpage or mobile applications, or on the number of times that theadvertisement has been displayed for cost per thousand impressions advertising arrangements. For certain display-based contractual agreements, we may alsoprovide certain performance guarantees, in which cases revenue is recognized at the later of the completion of the time commitment or performanceguarantee. 96 Table of Contents(3)Revenue-sharing online marketing servicesWe conduct certain online marketing services as an agent, such as Baidu Nuomi and Baidu Deliveries, by offering goods and services supplied bythird-party partners. The revenues from these services are presented on a net basis as we are not the primary obligor in the arrangements in accordance withASC subtopic 605-45, or ASC 605-45, Revenue Recognition: Principal Agent Consideration. We recognize revenue share for provision of onlinepromotional services based on a negotiated amount or a fixed rate representing the amount billed to registered users less the amount paid to third-partypartners, when all the revenue recognition criteria set forth in ASC 605 are met. (4)Subscription servicesWe provide subscription services which require us to stand ready to provide registered users with access to online documents sharing platform,personal cloud computing service and premium content provided by iQiyi. Access to these services are available to subscribers throughout the subscriptionperiod, and revenue is recognized ratably as services are provided over the subscription period. (5)Online marketing services involving Baidu UnionBaidu Union is the program through which we expand distribution of our customers’ sponsored links or advertisements by leveraging traffic of theBaidu Union members’ internet properties. We make payments to Baidu Union members for acquisition of traffic. We recognize gross revenue for the amountof fees we receive from our customers. Payments made to Baidu Union members are included in cost of revenues as traffic acquisition costs. (6)Barter transactionsNonmonetary exchanges of licensed copyrights of video contents.We enter into nonmonetary transactions to exchange online broadcasting rights of licensed copyrights with other online video broadcastingcompanies, or OVBC, from time to time. The exchanged licensed copyrights provide rights for each respective party only to broadcast the licensedcopyrights received on its own website; meanwhile, each party retains the right to continue broadcasting and/or sublicense the rights to the content itsurrendered in the exchange. We account for these nonmonetary exchanges in accordance with ASC topic 845, or ASC 845, Nonmonetary Transactions, andrecord the transaction based on the fair value of the asset surrendered.We estimate the fair value of the contents surrendered by deriving an “average transaction price” using actual cash sublicensing transactions for thesame content with comparable counterparties, when available. The comparability of counterparties is assessed based on a number of factors, includingrelative size and scale, as well as market share of online viewership traffic they generate. In instances when we do not have actual cash sublicensingtransactions for the same content as reference points, the estimates of fair value of the content surrendered is derived using an average transaction price ofcash sub-licenses of content that is similar in nature with comparable counterparties. To assess whether the content is similar in nature to the bartered content,we consider, amongst others, (i) the type and the popularity of the content (i.e. movie, television series); (ii) the geographic origination source of the content;and (iii) the unique visitor statistics for each OVBC.The attributable cost of the barter transaction is recognized as cost of revenues through the amortization of the sublicensing right component of theexclusive licensed copyright, computed using the individual-film-forecast-computation method in accordance with ASC topic 926, or ASC 926,Entertainment—Films. We recognized barter sublicensing revenues of RMB423.8 million (US$61.0 million) and RMB366.25 million and the related costs ofRMB369.2 million (US$53.2 million) and RMB277.82 million for the year ended December 31, 2016 and 2015, respectively. The barter sublicensingrevenues and the related cost of barter sublicensing were insignificant for the year ended December 31, 2014. 97 Table of ContentsOther nonmonetary exchanges.We engage in certain barter transactions other than licensed copyrights of video contents from time to time and in such situations follows the guidanceset forth in ASC 845. While nonmonetary transactions are generally recorded at fair value, if such value is not determinable within reasonable limits, or thetransaction lacks commercial substance, or the transaction is an exchange of a product or property held for sale in the ordinary course of business for aproduct or property to be sold in the same line of business to facilitate sales to customers other than the parties to the exchange, the transaction is recognizedbased on the carrying value of the product or services provided. We also engage in certain advertising barter transactions and follows the guidance set forthin ASC subtopic 605-20, or ASC 605-20, Revenue Recognition: Services. The advertising barter transactions generally are recorded at fair value. If the fairvalue of the advertising surrendered in the barter transaction is not determinable within required limits, the barter transaction is recorded based on thecarrying amount of the advertising surrendered, which is generally nil. The amount of revenues recognized for barter transactions other than licensedcopyrights of video contents was insignificant for each of the years presented. (7)Other revenue recognition related policiesIn accordance with ASC subtopic 605-25, or ASC 605-25, Revenue Recognition: Multiple-Deliverable Revenue Arrangements, for arrangements thatinclude multiple deliverables, primarily for advertisements to be displayed in different spots, placed under different forms and occurred at different times, weevaluate all the deliverables in the arrangement to determine whether they represent separate units of accounting. For the arrangements with deliverable itemsto be considered a separate unit of accounting, we allocate the total consideration of the arrangement based on their relative selling price, with the sellingprice of each deliverable determined using vendor-specific objective evidence of selling price, or VSOE, third-party evidence or TPE of selling price, ormanagement’s best estimate of the selling price, or BESP, and recognize revenue as each deliverable is provided. We consider all reasonably availableinformation in determining the BESP, including both market and entity-specific factors. For the arrangements with all deliverable items to be determined as asingle unit of accounting due to lack of value on a standalone basis or a contingent revenue feature, we recognize the revenue at the point when lastdeliverable item has been provided.We deliver some of our online marketing services to end customers through engaging third party distributors. In this context, we may provide cashincentives to distributors. The cash incentives are accounted for as reduction of revenue in accordance with ASC subtopic 605-50, or ASC 605-50, RevenueRecognition: Customer Payments and Incentives.We provide sales incentives to customers which entitle them to receive reductions in the price of the online marketing services by meeting certaincumulative consumption requirements. We account for these award credits granted to customers in conjunction with a current sale of products or services as amultiple-element arrangement by analogy to ASC 605-25. The consideration allocated to the award credits is recorded as deferred revenue based on theassumption that the customer will purchase the minimum amount of future service necessary to obtain the maximum award credits available. The deferredrevenue is recognized as revenue proportionately as the future services are delivered to the customer or when the award credits expire.We provide certain online marketing services as an agent by offering goods and services provided by third-party partners. We present revenues fromsuch services on a net basis as we are not the primary obligor in the arrangement in accordance with ASC subtopic 605-45, or ASC 605-45, RevenueRecognition: Principal Agent Consideration.Share-based CompensationWe account for share-based compensation in accordance with ASC topic 718, or ASC 718, Compensation-Stock Compensation. We have elected torecognize share-based compensation using the straight-line method for 98 Table of Contentsall share-based awards issued with no performance conditions. For awards with performance conditions, compensation cost is recognized on an acceleratedbasis if it is probable that the performance condition will be achieved.Forfeitures are estimated based on historical experience and are periodically reviewed. Cancellation of an award accompanied by the concurrent grantof a replacement award is accounted for as a modification of the terms of the cancelled award, or the modified awards. The compensation costs associated withthe modified awards are recognized if either the original vesting condition or the new vesting condition is achieved. Total recognized compensation cost forthe awards is at least equal to the fair value of the awards at the grant date unless at the date of the modification the performance or service conditions of theoriginal awards are not expected to be satisfied. The incremental compensation cost is measured as the excess of the fair value of the replacement award overthe fair value of the cancelled award at the cancellation date. Therefore, in relation to the modified award, we recognize share-based compensation over thevesting periods of the replacement award, which comprises (i) the amortization of the incremental portion of share-based compensation over the remainingvesting term, and (ii) any unrecognized compensation cost of the original awards, using either the original term or the new term, whichever results in higherexpenses for each reporting period.We account for share awards issued to non-employees in accordance with the provisions of ASC subtopic 505-50, or ASC 505-50, Equity: Equity-based Payments to Non-Employees. We use the Black-Scholes-Merton option pricing model method to measure the value of options granted tonon-employees at each vesting date to determine the appropriate charge to share-based compensation. ASC 718 also requires share-based compensation to bepresented in the same manner as cash compensation rather than as a separate line item.Income TaxesWe recognize income taxes under the liability method. Deferred income taxes are recognized for differences between the financial reporting and taxbases of assets and liabilities at enacted tax rates in effect for the years in which the differences are expected to reverse. We record valuation allowanceagainst the amount of deferred tax assets that we determine is not more-likely-than-not to be realized. The effect on deferred taxes of a change in tax rates isrecognized in earnings in the period that includes the enactment date. For reconciliation of tax computed by applying the respective statutory income taxrate to pre-tax income, please see “Income taxes” under Note 12 to our audited consolidated financial statements.We comply with the provisions of ASC topic 740, or ASC 740, Income Taxes, in accounting for uncertainty in income taxes. ASC 740 clarified theaccounting for uncertainty in income taxes by prescribing the recognition threshold a tax position is required to meet before being recognized in thefinancial statements. We have elected to classify interest and penalties related to an uncertain tax position (if and when required) as part of income taxexpense in the consolidated statements of comprehensive income. As of and for the years ended December 31, 2014, 2015 and 2016, the amounts ofunrecognized tax benefits as well as interest and penalties associated with uncertainty in income taxes were insignificant.We adopted ASU No. 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes, which require that all deferred tax liabilitiesand assets be classified as noncurrent in the consolidated balance sheet starting from the fourth quarter of 2015 on a retrospective basis.Accounts Receivable, net of AllowanceAccounts receivable are recognized and carried at the original invoiced amount less an allowance for any potential uncollectible amounts. An estimatefor doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred. We generally do not requirecollateral from our customers.We maintain allowances for doubtful accounts for estimated losses resulting from the failure of customers to make payments on time. We review theaccounts receivable on a periodic basis and make general and specific 99 Table of Contentsallowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, we considermany factors, including the age of the balance, the customer’s payment history, its current credit-worthiness and current economic trends.Loan and Interest Receivables, net of AllowanceLoan and interest receivables consist primarily of micro loans to individual borrowers. Loan amounts are recorded at the principal net of allowance forcredit losses relating to micro loans, and include accrued interest receivable as of the balance sheet date. The loan periods granted by us to the borrowersrelating to the micro loans generally range from 1 to 36 months. The cash flows related to micro loans are included in the cash flows from investing activitiescategory in the consolidated statement of cash flows.Allowance for credit losses relating to micro loans represents our best estimate of the losses inherent in the outstanding portfolio of loans. Judgment isrequired to determine the allowance amounts and whether such amounts are adequate to cover potential credit losses, and periodic reviews are performed toensure such amounts continue to reflect the best estimate of the losses inherent in the outstanding portfolio of loans. We consider many factors in assessingthe collectability of the loan receivables, including but not limited to, the age of the amounts due, payment history and, creditworthiness of the borrower,financial conditions of the customer, purposes and terms of the loans and the economic conditions to determine the allowance of credit loss.Impairment of Long-Lived Assets Other Than GoodwillWe evaluate long-lived assets, such as fixed assets and purchased or internally developed intangible assets with finite lives, for impairment wheneverevents or changes in circumstances indicate the carrying value of an asset may not be recoverable in accordance with ASC topic 360, or ASC 360, Property,Plant and Equipment.When such events occur, we assess the recoverability of the assets group based on the undiscounted future cash flow the assets group is expected togenerate and recognize an impairment loss when estimated undiscounted future cash flow expected to result from the use of the assets group plus netproceeds expected from disposition of the assets group, if any, is less than the carrying value of the assets group. If we identify an impairment, we reduce thecarrying amount of the assets group to its estimated fair value based on a discounted cash flow approach or, when available and appropriate, to comparablemarket values. We use estimates and judgments in our impairment tests and if different estimates or judgments had been utilized, the timing or the amount ofany impairment charges could be different. Asset groups to be disposed of would be reported at the lower of the carrying amount or fair value less costs tosell, and no longer depreciated. The assets and liabilities of a disposal group classified as held for sale would be presented separately in the appropriate assetand liability sections of the consolidated balance sheet. The impairment charges of long-lived assets are RMB1.6 million, nil and RMB1.0 million (US$0.1million) for 2014, 2015 and 2016, respectively.Impairment of GoodwillWe assess goodwill for impairment in accordance with ASC subtopic 350-20, or ASC 350-20, Intangibles—Goodwill and Other: Goodwill, whichrequires that goodwill to be tested for impairment at the reporting unit level at least annually and more frequently upon the occurrence of certain events, asdefined by ASC 350-20.As of December 31, 2015 and December 31, 2016, we had three reporting units, consisting of search services, transaction services and iQiyi. Thegoodwill was reassigned to the reporting units affected using a relative fair value allocation approach.We have the option to assess qualitative factors first to determine whether it is necessary to perform the two-step test in accordance with ASC 350-20. Ifwe believe, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, thetwo-step quantitative impairment test described above is required. Otherwise, no further testing is required. In the 100 Table of Contentsqualitative assessment, we consider primary factors such as industry and market considerations, overall financial performance of the reporting unit, and otherspecific information related to the operations. In performing the two-step quantitative impairment test, the first step compares the carrying amount of thereporting unit to the fair value of the reporting unit based on either quoted market prices of the ordinary shares or estimated fair value using a combination ofthe income approach and the market approach. If the fair value of the reporting unit exceeds the carrying value of the reporting unit, goodwill is not impairedand we are not required to perform further testing. If the carrying value of the reporting unit exceeds the fair value of the reporting unit, then we must performthe second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. The fair value of the reporting unit isallocated to its assets and liabilities in a manner similar to a purchase price allocation in order to determine the implied fair value of the reporting unitgoodwill. If the carrying amount of the goodwill is greater than its implied fair value, the excess is recognized as an impairment loss.In 2016, we performed a qualitative assessment for Search Services reporting unit. Based on the requirements of ASC350-20, we evaluated all relevantfactors, including but not limited to macroeconomic conditions, industry and market conditions, financial performance, and our share price. We weighed allfactors in their entirety and concluded that it was not more-likely-than-not the fair value was less than the carrying amount of the reporting unit, and furtherimpairment testing on goodwill was unnecessary as of December 31, 2016. We elected to assess goodwill for impairment using the two-step process forTransaction Service and iQiyi reporting units. Significant management judgment is involved in determining the estimates and assumptions, and actual resultsmay differ from the estimates and assumptions used in valuations. Changes in these estimates and assumptions could materially affect the determination offair value for each reporting unit, which could trigger future impairment. The judgment in estimating the fair value of reporting units includes forecasts offuture cash flows, which are based on our best estimate of future revenue and operating expense growth rates, future capital expenditure and working capitallevel, as well as discount rate determined by Weighted Average Cost of Capital approach and the selection of comparable companies operating in similarbusinesses. We also reviewed marketplace data to assess the reasonableness of our assumptions, such as discount rate, operating margins and working capitallevel. The fair value of Transaction Service and iQiyi exceeded their respective carrying amount, and therefore goodwill related to these reporting units werenot impaired and we were not required to perform further testing.The impairment charges of goodwill are nil for 2014, 2015 and 2016.Impairment of Long-term InvestmentsOur long-term investments consist of cost method investments and equity method investments in privately-held companies, held-to-maturityinvestments with original and remaining maturities of greater than 12 months, and available-for-sale investments.We periodically review our cost method investments and equity method investments for impairment. If we conclude that any of such investments isimpaired, we will assess whether such impairment is other-than-temporary. Factors we consider to make such determination include the performance andfinancial position of the investee as well as other evidence of market value. Such evaluation includes but is not limited to, reviewing the investee’s cashposition, recent financing, projected and historical financial performance, cash flow forecasts and financing needs. An impairment loss is recognized inearnings equal to the excess of the investment’s cost over its fair value at the balance sheet date of the reporting period for which the assessment is made. Thefair value would then become the new cost basis of investment.For long-term held-to-maturity investments, we evaluate whether a decline in fair value below the amortized cost basis is other-than-temporary inaccordance with our policy and ASC topic 320, or ASC 320, Investments—Debt and Equity Securities. When we intend to sell an impaired debt security or itis more-likely-than-not that it will be required to sell prior to recovery of its amortized cost basis, an other-than-temporary 101 Table of Contentsimpairment is deemed to have occurred. In these instances, the other-than-temporary impairment loss is recognized in earnings equal to the entire excess ofthe debt security’s amortized cost basis over its fair value at the balance sheet date of the reporting period for which the assessment is made. When we do notintend to sell an impaired debt security and it is more-likely-than-not that it will not be required to sell prior to recovery of its amortized cost basis, we mustdetermine whether or not it will recover its amortized cost basis. If we conclude that it will not, an other-than-temporary impairment exists and that portion ofthe credit loss is recognized in earnings, while the portion of loss related to all other factors is recognized in other comprehensive income.As available-for-sale investment is reported at fair value, an impairment loss on the long-term available-for-sale securities would be recognized in theconsolidated statements of comprehensive income when the decline in value is determined to be other-than-temporary.The fair value determination, particularly for investments in privately-held companies, requires significant judgment to determine appropriateestimates and assumptions. Changes in these estimates and assumptions could affect the calculation of the fair value of the investments and the determinationof whether any identified impairment is other-than-temporary. If impairment is considered other-than-temporary, we will write down the asset to its fair valueand take the corresponding charge to the consolidated financial statements. The impairment charges of long-term investments are RMB93.4 million,RMB117.0 million and RMB245.3 million (US$35.3 million) for 2014, 2015 and 2016, respectively.Transfers of Financial AssetsWe account for transfers of financial assets in accordance with ASC Topic 860, or ASC 860, Transfers and Servicing. For a transfer of financial assets tobe considered as a sale, the assets would be removed from our consolidated balance sheets. If the conditions for sale required by ASC 860 are not met, thetransfer is considered to be a secured borrowing, the assets remain on the consolidated balance sheets and the sale proceeds are recognized as our liability.Pursuant to ASC 860, the transactions of Baidu Wealth Management do not constitute a sale of the underlying securities for accounting purposes. Weaccount for these transactions as secured borrowings included in “Accounts payable and accrued liabilities” on the consolidated balance sheets, and assetspledged are accounted for as trading securities included in short term investments on the consolidated balance sheets. The cash flows related to purchases andmaturities of trading securities investments are included in the cash flows from investing activities category, and the proceeds and payments related to thesale of financial products are included in the cash flow from financing activities in the consolidated statement of cash flows.Business CombinationWe account for business combinations using the purchase method of accounting in accordance with ASC topic 805, or ASC 805, BusinessCombinations. The purchase method accounting requires that the consideration transferred to be allocated to the assets, including separately identifiableassets and liabilities we acquired, based on their estimated fair values. The consideration transferred in an acquisition is measured as the aggregate of the fairvalues at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations and allcontractual contingencies as of the acquisition date. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilitiesand contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of anynoncontrolling interests. The excess of (i) the total of cost of acquisition, fair value of the noncontrolling interests and acquisition date fair value of anypreviously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree, is recorded as goodwill. If the cost ofacquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in earnings. 102 Table of ContentsIn a business combination achieved in stages, we re-measured our previously held equity interest in the acquiree immediately before obtaining controlat its acquisition-date fair value and the re-measurement gain or loss, if any, is recognized in earnings.The determination and allocation of fair values to the identifiable assets acquired, liabilities assumed and noncontrolling interests is based on variousassumptions and valuation methodologies requiring considerable judgment from management. The most significant variables in these valuations arediscount rates, terminal values, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to determine thecash inflows and outflows. We determine discount rates to be used based on the risk inherent in the related activity’s current business model and industrycomparisons. Terminal values are based on the expected life of assets, forecasted life cycle and forecasted cash flows over that period. B.Liquidity and Capital ResourcesAs of December 31, 2016, our principal source of liquidity was RMB89.8 billion (US$12.9 billion) of cash, cash equivalents and short-terminvestments. Our cash and cash equivalents consist of cash on hand and investments in interest bearing demand deposit accounts, time deposits, moneymarket funds and other liquid investments which have original maturities of three months or less. The short-term investments primarily consist of fixed-rateand adjustable-rate debt investments with original maturity of less than one year. We believe that our current cash, cash equivalents, short-term investmentsand anticipated cash flow from operations will be sufficient to meet our anticipated cash needs, including our cash needs for working capital and capitalexpenditures, for at least the next 12 months. We may, however, require additional cash due to changing business conditions or other future developments,including any investments or acquisitions we may decide to pursue. If our existing cash is insufficient to meet our requirements, we may seek to selladditional equity securities, debt securities or borrow from banks.Furthermore, cash transfers from our PRC subsidiaries to their parent companies outside of China are subject to PRC government control of currencyconversion. Shortages in the availability of foreign currency may restrict the ability of our PRC subsidiaries and consolidated affiliated entities to remitsufficient foreign currency to pay dividends or other payments to their parent companies outside of China or our company, or otherwise satisfy their foreigncurrency denominated obligations. See “Item 3.D. Key Information—Risk Factors—Risks Related to Doing Business in China—Governmental control ofcurrency conversion may affect the value of your investment.” As of December 31, 2016, our PRC subsidiaries and consolidated affiliated entities heldRMB84.0 billion (US$12.1 billion) of cash, cash equivalents and short-term investments, RMB318.3 million (US$45.9 million) of which were in the form offoreign currencies.In December 2014, we entered into two loan agreements with Bank of China (Los Angeles Branch), pursuant to which we borrowed a two-yearunsecured loan of US$150.0 million and a three-year unsecured loan of US$150.0 million. Both loans were intended for our general working capital and witha floating interest rate. In connection with the loan agreements, we entered into two interest swap agreements, pursuant to which the loans will be settled in afixed annual interest rate of 2.31% and 2.45%, respectively, during the respective term of the loans. In December 2016, the loan with a term of two years wasfully repaid when it became due. As of December 31, 2016, we had an outstanding balance of US$150.0 million for the three-year loan, which will be due inDecember 2017.In July 2015, we entered into a loan agreement with Sumitomo Mitsui Banking Corporation, pursuant to which we were entitled to borrow anunsecured US$ denominated loan of US$150.0 million with a floating interest rate for general working capital purposes. In August 2015, we drew downUS$150.0 million with a term of two years under the facility commitment. In connection with the loan agreement, we entered into an interest swap agreement,pursuant to which the loan will be settled with a fixed annual interest rate of 1.41% during the term of the loan. As of December 31, 2016, we had anoutstanding balance of US$150.0 million, which will be due in August 2017. 103 Table of ContentsIn August 2015, we entered into a loan agreement with HSBC, pursuant to which we were entitled to borrow an unsecured US$ denominated loan ofUS$200.0 million, with a fixed annual interest rate of 1.42%, for general working capital purposes. In August 2015, we drew down US$200.0 million with aterm of two years under the facility commitment. As of December 31, 2016, we had an outstanding balance of US$200.0 million, which will be due in August2017.In September 2015, we entered into a banking facility agreement with China Merchants Bank (Shanghai Branch), pursuant to which we were entitled toborrow a RMB denominated loan of RMB100.0 million (US$14.4 million) for one year with a fixed annual interest rate at benchmark one-year lending ratepublished by the People’s Bank of China. The loan was intended for general working capital purposes. In September 2015, we drew down RMB9.9 million(US$1.4 million) with a fixed interest rate of 4.60%. In November and December 2015, the rest of RMB90.1 million (US$13.0 million) was drawn down witha fixed interest rate of 4.35%. By the end of December, 2016, the loan had been fully repaid.In January 2016, iQiyi entered into a banking facility agreement with China Merchants Bank (Beijing Branch), pursuant to which iQiyi was entitled toborrow a RMB denominated loan of RMB200.0 million (US$28.8 million) for one year with a fixed annual interest rate at 95% of benchmark one-yearlending rate published by the People’s Bank of China. The loan was intended for general working capital purposes. In January 2016, iQiyi drew downRMB53.7 million (US$7.7 million) with a fixed interest rate of 4.13%. In February 2016, iQiyi drew down RMB20.5 million (US$3.0 million) with a fixedinterest rate of 4.13%. In December 2016, additional RMB25.8 million (US$3.7 million) was drawn down with a fixed interest rate of 4.13%. As ofDecember 31, 2016, iQiyi had an outstanding balance of RMB100.0 million (US$14.4 million) under the facility, RMB53.7 million (US$7.7 million) ofwhich will be due in January 2017, RMB20.5 million (US$3.0 million) of which will be due in February 2017 and RMB25.8 million (US$3.7 million) ofwhich will be due in December 2017.In June 2016, we entered into a five-year US$2.0 billion revolving syndicated loan agreement with a group of 21 arrangers. The facilities, aUS$1.0 billion five-year unsecured floating rate loan and a US$1.0 billion five-year unsecured revolving facility, were priced at 110 basis points overLIBOR. The use of proceeds of the facilities were intended for general corporate purposes. In June 2016 and November 2016, we drew downUS$500.0 million and US$500.0 million under the facilities, respectively. In connection with the facilities, we entered into three interest rate swapagreements, pursuant to which US$500.0 million of the loans will be settled with a fixed annual interest rate of 2.11%, US$250.0 million of the loans will besettled with a fixed annual interest rate of 2.10%, and US$250.0 million of the loans will be settled with a fixed annual interest rate of 2.78%. As ofDecember 31, 2016, we had an outstanding balance of US$1.0 billion under the two facilities, US$500.0 million of which will be due in June 2021 andUS$500.0 million of which will be due in November 2021.In July 2016, we entered into a banking facility agreement with China Merchants Bank (Beijing Branch), pursuant to which we were entitled to borrowan unsecured RMB denominated loan of RMB200.0 million (US$28.8 million) for one year with a fixed annual interest rate at benchmark one-year lendingrate published by the People’s Bank of China. This facility is reserved for our consumer credit business. In July 2016, we drew down RMB50.0 million(US$7.2 million) with a fixed interest rate of 4.35%. In August 2016, additional RMB80.0 million (US$11.5 million) was drawn down with a fixed interestrate of 4.35%. As of December 31, 2016, we had an outstanding balance of RMB130.0 (US$18.7 million) under the facility agreement, RMB50.0 million(US$7.2 million) of which will be due in July 2017 and RMB80.0 million (US$11.5 million) of which will be due in August 2017.In July 2016, we entered into a banking facility agreement with China Citic Bank (Chongqing Branch), pursuant to which we were entitled to borrowan unsecured RMB denominated loan of RMB150.0 million (US$21.6 million) for one year with interest rate based on Loan Prime Rate (LPR) plus 48.5 basispoints. This facility is reserved for our consumer credit business. In September 2016, we drew down RMB150.0 million 104 Table of Contents(US$21.6 million) with an interest rate of 4.78% under the facility. As of December 31, 2016, we had an outstanding balance of RMB150.0 million (US$21.6million), which will be due in September 2017.In August, 2016, we entered into a banking facility agreement with China Citic Bank (Chongqing Branch), pursuant to which we were entitled toborrow an unsecured RMB denominated loan of RMB150.0 million (US$21.6 million) for one year with interest rate based on LPR plus 26.75 basis points.This facility is reserved for our consumer credit business. In August 2016, we drew down RMB150.0 million (US$21.6 million) with an interest rate of 4.56%under the facility. As of December 31, 2016, we had an outstanding balance of RMB150.0 million (US$21.6 million), which will be due in August 2017.In November 2016, we entered into a loan agreement with International Finance Corporation, pursuant to which we borrowed an unsecured RMBdenominated loan of RMB500.0 million (US$72.0 million) with a term of one year. The loan is intended for our consumer credit business exclusively. InDecember 2016, we drew down RMB500.0 million (US$72.0 million) with a fixed interest rate of 4.92%. As of December 31, 2016, we had an outstandingbalance of RMB500.0 million (US$72.0 million), which will be due in December 2017.In December 2016, we entered into a loan agreement with China Merchants Bank (Shanghai Branch), pursuant to which we borrowed an unsecuredRMB denominated loan of RMB85.0 million (US$12.2 million) with a term of one year. The loan is to be used for our consumer credit business exclusively.In December 2016, we drew down RMB85.0 million (US$12.2 million) with a fixed interest rate of 4.18%. As of December 31, 2016, we had an outstandingbalance of RMB85.0 million (US$12.2 million), which will be due in December 2017.We have conducted the following four rounds of issuances of debt securities, which remain outstanding as of the date of this annual report: • In November 2012, we issued an aggregate of US$1.5 billion senior unsecured notes in two equal tranches, due in 2017 and 2022, with statedannual interest rates of 2.25% and 3.50%, respectively. The net proceeds from the sale of the notes were used for general corporate purposes. Asof December 31, 2016, the total carrying value and estimated fair value of these notes were US$1.5 billion and US$1.5 billion. The estimated fairvalue was based on quoted prices for our publicly-traded debt securities as of December 31, 2016. We are not subject to any financial covenantsor other significant restrictions under the notes. During 2016, we paid an aggregate of US$43.1 million in interest payments related to thesenotes. • In August 2013, we issued an aggregate of US$1.0 billion senior unsecured notes due in 2018, with stated annual interest rate of 3.25%. The netproceeds from the sale of the notes were used for general corporate purposes, including merger and acquisition activities. As of December 31,2016, the total carrying value and estimated fair value of these notes were US$1.0 billion and US$1.0 billion, respectively. The estimated fairvalue was based on quoted prices for our publicly-traded debt securities as of December 31, 2016. We are not subject to any financial covenantsor other significant restrictions under the notes. During 2016, we paid an aggregate of US$32.5 million in interest payments related to thesenotes. • In June 2014, we issued an aggregate of US$1.0 billion senior unsecured notes due in 2019, with stated annual interest rate of 2.75%. The netproceeds from the sale of the notes were used for general corporate purposes. As of December 31, 2016, the total carrying value and estimated fairvalue of these notes were US$1.0 billion and US$1.0 billion, respectively. The estimated fair value was based on quoted prices for our publicly-traded debt securities as of December 31, 2016. We are not subject to any financial covenants or other significant restrictions under the notes.During 2016 we paid an aggregate of US$27.5 million in interest payments related to these notes. • In June 2015, we issued an aggregate of US$750.0 million senior unsecured notes due in 2020, with stated annual interest rate of 3.00%, and anaggregate of US$500.0 million senior unsecured notes due 105 Table of Contents in 2025, with stated annual interest rate of 4.13%. The net proceeds from the sale of the notes were used for general corporate purposes. As ofDecember 31, 2016, the total carrying value and estimated fair value were US$750.0 million and US$753.0 million, respectively, with respect tothe notes due in 2020, and US$500.0 million and US$507.0 million, respectively, with respect to the notes due in 2025. The estimated fairvalues were based on quoted prices for our publicly-traded debt securities as of December 31, 2016. We are not subject to any financialcovenants or other significant restrictions under the notes. During 2016, we paid an aggregate of US$43.1 million in interest payments related tothese notes.We may use the net proceeds from our issuance and sale of the notes to fund the operations of our PRC subsidiaries by making additional capitalcontribution to our existing PRC subsidiaries, injecting capital to establish new PRC subsidiaries and/or providing loans to our PRC subsidiaries. Suchtransfer of funds from Baidu, Inc. or any of our offshore subsidiaries to our PRC subsidiaries is subject to the PRC regulatory restrictions and procedures:(i) capital increase of the existing PRC subsidiaries and establishment of new PRC subsidiaries must be approved by the Ministry of Commerce or its localcounterpart and registered with SAFE or its local counterpart; and (ii) loans to any of our PRC subsidiaries must not exceed the statutory limit, which is thedifference between the amount of total investment as approved by or filed with the Ministry of Commerce or its local counterpart and the amount ofregistered capital of the PRC subsidiary, and must be registered with the local counterpart of SAFE. See “Item 3.D. Key Information—Risk Factors—RisksRelated to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmentalcontrol of currency conversion may delay or prevent us from making loans to our PRC subsidiaries or consolidated affiliated entities, or making additionalcapital contributions to our PRC subsidiaries, which could adversely affect our ability to fund and expand our business.”As of December 31, 2016, we had RMB43.1 billion (US$6.2 billion) in long-term loans and notes payables (including current portion ofRMB8.7 billion (US$1.2 billion)) and had RMB1.1 billion (US$160.6 million) in short-term loans.Cash Flows and Working CapitalAs of December 31, 2014, 2015 and 2016, we had RMB56.6 billion, RMB67.9 billion and RMB89.8 billion (US$12.9 billion) in cash, cashequivalents and short-term investments.The following table sets forth a summary of our cash flows for the years indicated. For the Years Ended December 31, 2014 2015 2016 RMB RMB RMB US$ (In thousands) Net cash generated from operating activities 17,937,175 19,771,122 22,258,297 3,205,861 Net cash used in investing activities (22,467,774) (31,621,128) (35,910,759) (5,172,225) Net cash generated from financing activities 8,611,960 7,778,032 14,446,680 2,080,755 Effect of exchange rate changes on cash 79,567 179,181 144,313 20,785 Net increase (decrease) in cash and cash equivalents 4,160,928 (3,892,793) 938,531 135,176 Cash and cash equivalents at beginning of the period 9,691,797 13,852,725 9,959,932 1,434,529 Cash and cash equivalents at end of the period 13,852,725 9,959,932 10,898,463 1,569,705 106 Table of ContentsOperating ActivitiesNet cash generated from operating activities increased to RMB22.3 billion (US$3.2 billion) in 2016 from RMB19.8 billion in 2015. This increase wasprimarily due to the integrated effect of decrease in net income, as adjusted for share exchange impact, other non-operating items, non-cash items andchanges in working capital.Net cash generated from operating activities increased to RMB19.8 billion in 2015 from RMB17.9 billion in 2014. This increase was primarily due tothe integrated effect of growth in net income, as adjusted for non-cash items and the effects of changes in working capital and other activities.Investing ActivitiesNet cash used in investing activities increased to RMB35.9 billion (US$5.2 billion) in 2016 from RMB31.6 billion in 2015. This increase wasprimarily due to the increased acquisition of intangible assets, investment in loans and purchase of short-term investments. In 2016, we reclassified the netcash from changes in loan receivables from operating activities to investing activities. The impact on the cash flow statement for 2015 was insignificant.Net cash used in investing activities increased to RMB31.6 billion in 2015 from RMB22.5 billion in 2014. This increase was primarily due to theincreased acquisition of fixed assets and intangible assets, purchase of long-term investments and disposal of subsidiaries which resulted in the reduction ofcash balance.Financing ActivitiesNet cash generated from financing activities increased to RMB14.4 billion (US$2.1 billion) in 2016 from RMB7.8 billion in 2015. The increase wasprimarily due to proceeds from sale of financial products and net proceeds from short-term and long-term debt in 2016.Net cash generated from financing activities was RMB7.8 billion in 2015, compared to net cash of RMB8.6 billion generated from financing activitiesin 2014. The decrease was primarily due to the repayment of long-term loans and the payment for share repurchase program, partially offset by the proceedsfrom the non-controlling interest shareholders and proceeds from loans and notes issued in 2015.Capital ExpendituresWe made capital expenditures of RMB4.8 billion, RMB5.2 billion and RMB4.2 billion (US$603.4 million) in 2014, 2015 and 2016, representing9.8%, 7.9% and 5.9% of our total revenues, respectively. In 2016, our capital expenditures were primarily attributable to the purchase of servers, networkequipment and other computer hardware to increase our network infrastructure capacity. We funded our capital expenditures primarily with net cash flowgenerated from operating activities.We commenced construction of office buildings in Shenzhen in December 2011, and Shanxi Cloud Computing Center in September 2012, and weexpect to complete the planned construction of these projects in 2018. We commenced construction of part of the internet data center of Beijing CloudComputing Center in April 2014. The first phase of construction was completed in 2016, and we are in the process of planning the rest of the constructionwork with the completion date not determinable at this stage. See “Item 4.D. Information on the Company—Property, Plant and Equipment” for more detailsof our capital expenditures associated with these projects.Our capital expenditures may increase in the future as our business continues to grow, in connection with the expansion and improvement of ournetwork infrastructure and the construction of additional office buildings and cloud computing based data centers. We currently plan to fund theseexpenditures with our current cash, cash equivalents, short-term investments and anticipated cash flow generated from our operating activities. 107 Table of ContentsHolding Company StructureBaidu, Inc. is a holding company with no operations of its own. We conduct our operations in China primarily through our subsidiaries andconsolidated affiliated entities in China. As a result, although other means are available for us to obtain financing at the holding company level, Baidu, Inc.’sability to pay dividends to the shareholders and to service any debt it may incur may depend upon dividends paid by our PRC subsidiaries and license andservice fees paid by our PRC consolidated affiliated entities. If any of our subsidiaries incurs debt on its own behalf in the future, the instruments governingsuch debt may restrict its ability to pay dividends to Baidu, Inc. In addition, our PRC subsidiaries and consolidated affiliated entities are required to makeappropriations to certain statutory reserve funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies.Our PRC subsidiaries, being foreign-invested enterprises established in China, are required to make appropriations to certain statutory reserves,namely, a general reserve fund, an enterprise expansion fund, a staff welfare fund and a bonus fund, all of which are appropriated from net profit as reported intheir PRC statutory accounts. Each of our PRC subsidiaries is required to allocate at least 10% of its after-tax profits to a general reserve fund until such fundhas reached 50% of its respective registered capital. Appropriations to the enterprise expansion fund and staff welfare and bonus funds are at the discretion ofthe board of directors of the PRC subsidiaries.Our consolidated affiliated entities must make appropriations from their after-tax profits as reported in their PRC statutory accounts tonon-distributable reserve funds, namely a statutory surplus fund, a statutory public welfare fund and a discretionary surplus fund. Each of our consolidatedaffiliated entities is required to allocate at least 10% of its after-tax profits to the statutory surplus fund until such fund has reached 50% of its respectiveregistered capital. Appropriations to the statutory public welfare fund and the discretionary surplus fund are at the discretion of our consolidated affiliatedentities.Under PRC laws and regulations, our PRC subsidiaries and consolidated affiliated entities are subject to certain restrictions with respect to payingdividends or otherwise transferring any of their net assets to us. The amounts restricted include the paid up capital and the statutory reserve funds of our PRCsubsidiaries and the net assets of our consolidated affiliated entities in which we have no legal ownership, totaling approximately RMB7.5 billion,RMB10.6 billion and RMB13.7 billion (US$2.0 billion) as of December 31, 2014, 2015 and 2016, respectively. C.Research and DevelopmentWe have a team of experienced engineers who are mostly based in Beijing, Shanghai, Shenzhen and Sunnyvale, California. We recruit most of ourengineers locally and have established various recruiting and training programs with leading universities in China. We have also recruited experiencedengineers globally. We compete aggressively for engineering talent to help us address challenges such as Chinese language processing, artificial intelligenceand deep learning.In the three years ended December 31, 2014, 2015 and 2016, our research and development expenditures, including share-based compensationexpenses for research and development staff, were RMB7.0 billion, RMB10.2 billion and RMB10.2 billion (US$1.5 billion), representing 14.2%, 15.3% and14.4% of our total revenues for 2014, 2015 and 2016, respectively. Our research and development expenses consist primarily of personnel-related costs. Wehave expensed substantially all of the development costs for the research and development of products and new functionality as incurred, except for certaininternal-use software. D.Trend InformationOther than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the yearended December 31, 2016 that are reasonably likely to have a 108 Table of Contentsmaterial and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information tobe not necessarily indicative of future results of operations or financial conditions. E.Off-Balance Sheet ArrangementsWe have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have notentered into any off-balance sheet derivative instruments. Furthermore, we do not have any retained or contingent interest in assets transferred to anunconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entitythat provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us. F.Contractual ObligationsThe following table sets forth our contractual obligations by specified categories as of December 31, 2016. Payment Due by Period Total Less Than1 Year 1-3 Years 3-5 Years More Than5 Years (In RMB thousands) Long-Term Debt Obligations(1) 48,112,978 9,916,612 15,705,088 13,129,076 9,362,202 Capital Lease Obligations(2) 7,437 7,099 338 — — Operating Lease Obligations(3) 6,023,794 3,018,985 2,229,244 745,448 30,117 Purchase Obligations(4) 10,249,627 7,101,567 1,781,325 387,444 979,291 Total 64,393,836 20,044,263 19,715,995 14,261,968 10,371,610 (1)The long-term debt obligations represent (i) a two-year loan and a three-year loan from Bank of China (Los Angeles Branch), (ii) a two-year loan from Sumitomo Mitsui BankingCorporation, (iii) a two-year loan from Hong Kong and Shanghai Banking Corporation Limited, (iv) senior unsecured notes due in 2017 and 2022, (v) senior unsecured notesdue in 2018, (vi) senior unsecured notes due in 2019, (vii) senior unsecured notes due in 2020, (viii) senior unsecured notes due in 2025, and (ix) a five-year loan underrevolving facility from a syndicated group of 21 lenders. The total interest to be paid for these loans is (i) RMB25.8 million (US$3.7 million), (ii) RMB11.1 million (US$1.6million), (iii) RMB15.0 million (US$2.2 million), (iv) RMB1.2 billion (US$174.4 million), (v) RMB451.3 million (US$65.0 million), (vi) RMB477.3 million (US$68.8 million),(vii) RMB546.8 million (US$78.8 million), (viii) RMB1.2 billion (US$175.3 million) and (ix) RMB764.1 million (US$110.0 million), respectively. Please see “Loans Payable”under Note 10 and “Notes Payable” under Note 11 to our audited consolidated financial statements.(2)Capital lease obligations represent our obligations for leasing servers, and the total amount of interest to be paid is RMB171.1 thousand (US$24.6 thousand).(3)Operating lease obligations represent our obligations for leasing premises and bandwidth.(4)Purchase obligations consist primarily of expenditures in connection with the expansion and improvement of network infrastructure, our plan to build or acquire additional officebuildings and cloud computing-based data centers, and expenditures for video content.Other than the contractual obligations set forth above, we do not have any contractual obligations that are long-term debt obligations, capital (finance)lease obligations, purchase obligations or other long-term liabilities reflected on our balance sheet. 109 Table of ContentsItem 6.Directors, Senior Management and Employees A.Directors and Senior ManagementThe following table sets forth information regarding our executive officers and directors as of the date of this annual report. Directors and Executive Officers Age Position/TitleRobin Yanhong Li 48 Chairman and Chief Executive OfficerQi Lu 55 Vice Chairman, Group President and Chief Operating OfficerJennifer Xinzhe Li 49 Chief Financial OfficerYa-Qin Zhang 51 PresidentHailong Xiang 39 Senior Vice PresidentJames Ding 51 Independent DirectorBrent Callinicos 51 Independent DirectorYuanqing Yang 52 Independent DirectorRobin Yanhong Li is co-founder, chairman and chief executive officer of our company, and oversees our overall strategy and business operations.Mr. Li has been serving as the chairman of our board of directors since our inception in January 2000 and as our chief executive officer since January 2004.Mr. Li served as our president from February 2000 to December 2003. Prior to founding our company, Mr. Li worked as a staff engineer for Infoseek, a pioneerin the internet search engine industry, from July 1997 to December 1999. Mr. Li was a senior consultant for IDD Information Services from May 1994 to June1997. Mr. Li currently serves on the board of New Oriental Education & Technology Group Inc., a NYSE-listed company that provides private educationalservices in China, and on the board of Ctrip.com International, Ltd., a NASDAQ-listed company that provides travel services in China. Mr. Li also acts as thevice chairman of the Internet Society of China (ISC). Mr. Li has also been a vice chairman of All-China Federation of Industry & Commerce since December2012. Mr. Li received a bachelor’s degree in information science from Peking University in China and a master’s degree in computer science from the StateUniversity of New York at Buffalo.Qi Lu joined us in January 2017 as group president and chief operating officer and has served as a director and the vice chairman of the board ofdirectors since February 2017. Dr. Lu is in charge of products, technology, sales, marketing and operations, including our intelligent driving business. Priorto joining us, Dr. Lu most recently served as Microsoft’s global executive vice president and led one of Microsoft’s three business units. Dr. Lu joinedMicrosoft in 2009 as president of its Online Services Group. Earlier in his career, Dr. Lu joined Yahoo! in 1998, later becoming senior vice president incharge of search and advertising technologies, and subsequently executive vice president in 2007. Dr. Lu holds both bachelor and master degrees incomputer science from Fudan University in Shanghai and a Ph.D. in computer science from Carnegie Mellon University. He holds over 40 US patents and hasauthored many papers in his field.Jennifer Xinzhe Li has served as our chief financial officer since March 2008 and is in charge of our overall finance functions. Ms. Li has extensiveexperience in U.S. GAAP reporting and in developing and leading finance and accounting teams before she joined us. Prior to joining Baidu, Ms. Li served ascontroller of General Motors Acceptance Corporation (GMAC)’s North American Operations from 2005 to 2008. Prior to that, Ms. Li worked at GeneralMotors China, where she was responsible for overseeing finance functions of General Motors’ wholly owned and joint venture businesses in China from 2001to 2004, with the last post as its chief financial officer. From 1994 to 2001, she held several other finance positions at General Motors in Canada, the UnitedStates and Singapore. Ms. Li currently serves on the Board of Philip Morris International, Inc. Ms. Li holds an M.B.A. degree from the University of BritishColumbia in Vancouver, B.C., Canada and a bachelor of art degree from Tsinghua University in China.Ya-Qin Zhang joined us in September 2014. He currently serves as president in charge of technology, emerging business, and global businessoperations. Prior to joining us, Dr. Zhang was Microsoft Corporation’s 110 Table of Contentscorporate vice president and the chairman of Microsoft Asia-Pacific R&D Group for a decade, leading Microsoft’s overall research and development efforts inthe Asia-Pacific region. Before joining Microsoft in 1999, Dr. Zhang was a director for the Multimedia Technology Laboratory at Sarnoff Corp. Dr. Zhangcurrently serves on the board of Tarena International, Inc. (NASDAQ: TEDU) and ChinaCache International Holdings Ltd. (NASDAQ: CCIH). Dr. Zhangreceived his bachelor’s and master’s degrees in electrical engineering from the University of Science and Technology of China, and a Ph.D. in electricalengineering from George Washington University.Hailong Xiang has served as our senior vice president since October 2014 and as general manager of our search related business since April 2016. He isin charge of our search related business products and sales force management. Mr. Xiang joined us in February 2005 following our acquisition of ShanghaiQilang, an internet services firm established by Mr. Xiang in 2000. Mr. Xiang received his bachelor’s degree in computer science from East China NormalUniversity.James Ding has served as our independent director since our initial public offering in August 2005. Mr. Ding is currently a general partner andmanaging director of GSR Ventures, an early stage venture fund focusing on technology, media and telecom investment in China. Prior to that, Mr. Dingserved as a co-chairman of the board of directors of AsiaInfo-Linkage Inc., a former NASDAQ-listed company, from July 2010 to January 2014. Prior to that,Mr. Ding served as the chairman of the board of AsiaInfo from April 2003 to July 2010, and a member of the board since AsiaInfo’s inception in 1993.Mr. Ding served as the chief executive officer and president of AsiaInfo from 1999 to 2003 and as senior vice president and chief technology officer ofAsiaInfo from 1993 to 1999. Mr. Ding also serves as an independent director of Huayi Brothers Media Corporation, a ChiNext Shenzhen-listed company.Mr. Ding received a master’s degree in information science from the University of California, Los Angeles and a bachelor’s degree in chemistry from PekingUniversity in China.Brent Callinicos has served as our independent director since October 2015, and as the chairman of our audit committee since April 2016.Mr. Callinicos most recently served as the chief financial officer of Uber Technologies Inc. from September 2013 to March 2015, where he remains anadvisor. Prior to joining Uber, he worked at Google from January 2007 to September 2013, where he last served as vice president, treasurer and chiefaccountant. He also led green energy investments and financial services at Google Inc. From 1992 to 2007, he served in a variety of increasingly senior rolesat Microsoft Corporation, where he last served as corporate vice-president and divisional chief financial officer of the Platforms and Services Division, andoversaw Microsoft’s Worldwide Licensing and Pricing and Microsoft Financing. He currently serves on the board of directors of PVH Corp., a NYSE-listedcompany, and two private companies. From January 2017 to present, he also serves as chief operation officer and chief financial officer of Hyperloop One.Mr. Callinicos is a certified public accountant. Mr. Callinicos received a bachelor’s degree from the University of North Carolina at Chapel Hill and anM.B.A. degree from the Kenan-Flagler School of Business at Chapel Hill.Yuanqing Yang has served as our independent director since October 2015. Mr. Yang is currently the chairman and chief executive officer of LenovoGroup Limited, a Hong Kong-listed company. Mr. Yang joined Lenovo in 1989 and has led the company from the initial China-based PC maker to adiversified global technology leader. In 2011, FinanceAsia named Mr. Yang the Best CEO in China. In 2004 and 2012, Mr. Yang was named one of the“CCTV China Annual Economic Figures.” He was listed on Barron’s list of Best CEOs in 2013, 2014 and 2015. In 2014, Mr. Yang won an EdisonAchievement Award for Innovation. Mr. Yang currently serves as a member of the Chinese People’s Political Consultative Conference. Mr. Yang holds amaster’s degree in computer science from the University of Science and Technology of China. B.CompensationIn 2016, we paid an aggregate of approximately RMB38.9 million (US$5.6 million) in cash compensation and granted options to purchase anaggregate of 27,253 Class A ordinary shares and 9,184 restricted Class A 111 Table of Contentsordinary shares to our executive officers as of the date of this annual report as a group. We also paid an aggregate of approximately RMB0.6 million(US$89.4 thousand) in cash compensation and granted options to purchase an aggregate of 433 restricted Class A ordinary shares to our non-executivedirectors as of the date of this annual report as a group. Our PRC subsidiaries and consolidated affiliated entities are required by law to make contributionsequal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, housing fund, unemployment insurance and otherstatutory benefits. Other than the above-mentioned statutory contributions mandated by applicable PRC law, we have not set aside or accrued any amount toprovide pension, retirement or other similar benefits to our executive officers and directors. No executive officer is entitled to any severance benefits upontermination of his or her employment with our company except as required under applicable PRC law.Our board of directors and shareholders approved the issuance of up to 5,040,000 ordinary shares upon exercise of awards granted under our 2000option plan. Our 2000 option plan terminated in January 2010 upon the expiration of its ten-year term. At the annual general meeting held on December 16,2008, our shareholders approved a 2008 share incentive plan, which has reserved an additional 3,428,777 Class A ordinary shares for awards to be grantedpursuant to its terms. As of December 31, 2016, options to purchase an aggregate of 358,118 Class A ordinary shares and an aggregate of 983,964 restrictedClass A ordinary shares had been granted under the 2008 share incentive plan. 112 Table of ContentsThe following table summarizes, as of December 31, 2016, the outstanding options and restricted Class A ordinary shares that we granted to our currentdirectors and executive officers and to other individuals as a group. Each Class A ordinary share is represented by 10 ADSs. Name Ordinary SharesUnderlyingOutstanding Options Exercise Price(US$/Share) Grant Date Expiration DateRobin Yanhong Li 3,607 133.86 February 11, 2009 February 11, 2019 4,247 1,058.90 January 25, 2011 January 25, 2021 4,515 1,418.30 February 16, 2012 February 16, 2022 10,598 1,083.00 January 31, 2013 January 31, 2023 2,415 1,725.30 February 24, 2014 February 24, 2024 443(1) — February 24, 2014 N/A 11,977 2,146.70 February 11, 2015 February 11, 2025 3,282(1) — February 11, 2015 N/A 43,904 2,069.00 April 16, 2015 April 16, 2025 43,904(1) — April 16, 2015 N/A 2,638 1,582.20 February 25, 2016 February 25, 2026 9,060 1,751.00 October 27, 2016 October 27, 2026 3,532(1) — October 27, 2016 N/AJennifer Xinzhe Li * 1,058.90 January 25, 2011 January 25, 2021 * 1,083.00 January 31, 2013 January 31, 2023 * 1,725.30 February 24, 2014 February 24, 2024 *(1) — February 24, 2014 N/A * 2,146.70 February 11, 2015 February 11, 2025 *(1) — February 11, 2015 N/A * 1,582.20 February 25, 2016 February 25, 2026 * 1,751.00 October 27, 2016 October 27, 2026 *(1) — October 27, 2016 N/AYa-Qin Zhang *(1) — October 29, 2014 N/A * 2,245.50 October 29, 2014 October 29, 2024 * 1,751.00 October 27, 2016 October 27, 2026 *(1) — October 27, 2016 N/AHailong Xiang * 1,501.70 July 21, 2011 July 21, 2021 * 1,418.30 February 16, 2012 February 16, 2022 * 1,083.00 January 31, 2013 January 31, 2023 *(1) — July 18, 2013 N/A * 1,112.00 July 18, 2013 July 18, 2023 *(1) — February 24, 2014 N/A * 1,725.30 February 24, 2014 February 24, 2024 *(1) — October 29, 2014 N/A * 2,245.50 October 29, 2014 October 29, 2024 * 1,582.20 February 25, 2016 February 25, 2026 *(1) — October 27, 2016 N/A * 1,751.00 October 27, 2016 October 27, 2026James Ding *(1) — February 25, 2016 N/ABrent Callinicos *(1) — October 22, 2015 N/A *(1) — February 25, 2016 N/A *(1) — July 28, 2016 N/AYuanqing Yang *(1) — October 22, 2015 N/A *(1) — February 25, 2016 N/AOther individuals as a group 740,366 — — — *The options and restricted shares in aggregate held by each of these directors and officers represent less than 1% of our total outstanding shares.(1)Restricted shares. 113 Table of ContentsThe following paragraphs summarize the key terms of our 2008 share incentive plan adopted on December 16, 2008.2008 Share Incentive PlanTypes of Awards. We may grant the following types of awards under our 2008 share incentive plan: • options; • restricted shares; • restricted share units; and • any other form of awards granted to a participant pursuant to the 2008 plan.Plan Administration. The compensation committee of our board of directors administers our 2008 share incentive plan, but may delegate to acommittee of one or more members of our board of directors the authority to grant or amend awards to participants other than independent directors andexecutive officers. The compensation committee will determine the provisions and terms and conditions of each award grant, including, but not limited to,the exercise price, the grant price or purchase price, any restrictions or limitations on the award, any schedule for lapse of forfeiture restrictions or restrictionson the exercisability of an award, and accelerations or waivers thereof, any provisions related to non-competition and recapture of gain on an award, based ineach case on such considerations as the committee in its sole discretion determines. The compensation committee has the sole power and discretion to cancel,forfeit or surrender an outstanding award (whether or not in exchange for another award or combination or awards).Award Agreement. Awards granted under our 2008 share incentive plan are evidenced by an award agreement that sets forth the terms, conditions andlimitations for each award which may include the term of an award, the provisions applicable in the event the participant’s employment or service ends, andour authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an award.Eligibility. We may grant awards to employees, directors and consultants of our company or any of our related entities, which include our subsidiariesor any entities in which we hold a substantial ownership interest. However, we may grant ISOs only to our employees and employees of our majority-ownedsubsidiaries.Acceleration of Awards upon Corporate Transactions. The outstanding awards will accelerate (i) upon occurrence of a change-of-control corporatetransaction where any person acquires at least 50% of the total combined voting power of our outstanding securities or the incumbent board members nolonger constitute at least 50% of our board, or (ii) upon occurrence of any other change-of-control corporate transaction in which the successor entity doesnot assume our outstanding awards under our 2008 share incentive plan, provided that the plan participant remains an employee, consultant or member of ourboard of directors on the effective date of the corporate transaction. In such event, each outstanding award will become fully exercisable and all forfeiturerestrictions on such award will lapse immediately prior to the specified effective date of the corporate transaction.If the successor entity assumes our outstanding awards and later terminates the grantee’s employment or service without cause within 12 months of thecorporate transaction, or if the grantee resigns voluntarily with good reason, the outstanding awards automatically will become fully vested and exercisable.The compensation committee may also, in its sole discretion, upon or in anticipation of a corporate transaction, accelerate awards, purchase the awards fromthe plan participants, replace the awards, or provide for the payment of the awards in cash.Exercise Price and Term of Awards. The exercise price per share subject to an option may be amended or adjusted in the absolute discretion of thecompensation committee, the determination of which shall be final, 114 Table of Contentsbinding and conclusive. To the extent not prohibited by applicable laws or exchange rules, a downward adjustment of the exercise prices of optionsmentioned in the preceding sentence shall be effective without the approval of our shareholders or the approval of the affected grantees. If we grant an ISO toan employee, who, at the time of that grant, owns shares representing more than 10% of the voting power of all classes of our share capital, the exercise pricecannot be less than 110% of the fair market value of our ordinary shares on the date of that grant. The compensation committee will determine the time ortimes at which an option may be exercised in whole or in part, including exercise prior to vesting. The term may not exceed ten years from the date of thegrant, except that five years is the maximum term of an ISO granted to an employee who holds more than 10% of the voting power of our share capital.Restricted Shares and Restricted Share Units. The compensation committee is also authorized to make awards of restricted shares and restricted shareunits. Except as otherwise determined by the compensation committee at the time of the grant of an award or thereafter, upon termination of employment orservice during the applicable restriction period, restricted shares that are at the time subject to restrictions shall be forfeited or repurchased in accordance withthe respective award agreements.Vesting Schedule. The compensation committee determines, and the award agreement specifies, the vesting schedule of options and other awardsgranted. The compensation committee determines the time or times at which an option may be exercised in whole or in part, including exercise prior tovesting, and also determines any conditions that must be satisfied before all or part of an option may be exercised. At the time of grant for restricted shareunits, the compensation committee specifies the date on which the restricted share units become fully vested and non-forfeitable, and may specify suchconditions to vesting as it deems appropriate.Amendment and Termination. With the approval of our board of directors, the compensation committee may at any time amend, suspend or terminateour 2008 share incentive plan. Amendments to our 2008 share incentive plan are subject to shareholder approval, to the extent required by law, or by stockexchange rules or regulations. Any amendment, suspension or termination of our 2008 share incentive plan must not adversely affect in any material wayawards already granted without written consent of the recipient of such awards. Unless terminated earlier, our 2008 share incentive plan shall continue ineffect for a term of ten years from the date of adoption. C.Board PracticesBoard of DirectorsOur board of directors has five directors. A director is not required to hold any shares in the company by way of qualification. A director may vote withrespect to any contract, proposed contract or arrangement in which he is materially interested. A director may exercise all the powers of the company toborrow money, mortgage its undertakings, property and uncalled capital, and issue debentures or other securities whenever money is borrowed or as securityfor any obligation of the company or of any third party. The remuneration to be paid to the directors is determined by the board of directors. There is no agelimit requirement for directors.Committees of the Board of DirectorsWe have three committees under the board of directors: an audit committee, a compensation committee and a corporate governance and nominatingcommittee. We have adopted a charter for each of the three committees.Audit CommitteeOur audit committee consists of Brent Callinicos, James Ding and Yuanqing Yang, all of whom satisfy the “independence” requirements ofRule 5605(a)(2) of the NASDAQ Stock Market Rules and Rule 10A-3 under the Exchange Act. Our board of directors has determined that Mr. Callinicos is anaudit committee financial expert as defined in the instructions to Item 16A of the Form 20-F. The audit committee oversees our accounting and 115 Table of Contentsfinancial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things: • appointing, retaining and overseeing the work of the independent auditors, including resolving disagreements between the management and theindependent auditors relating to financial reporting; • pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; • reviewing annually the independence and quality control procedures of the independent auditors; • reviewing and approving all proposed related party transactions; • discussing the annual audited financial statements with the management; • meeting separately with the independent auditors to discuss critical accounting policies, management letters, recommendations on internalcontrols, the auditor’s engagement letter and independence letter and other material written communications between the independent auditorsand the management; and • attending to such other matters that are specifically delegated to our audit committee by our board of directors from time to time.In 2016, our audit committee held meetings or passed resolutions by unanimous written consent six times.Compensation CommitteeOur compensation committee consists of James Ding and Yuanqing Yang, all of whom satisfy the “independence” requirements of Rule 5605(a)(2) ofthe NASDAQ Stock Market Rules. The compensation committee assists the board in reviewing and approving our compensation structure, including allforms of compensation relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting while hiscompensation is deliberated. The compensation committee is responsible for, among other things: • reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executiveofficers; • reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors; • reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and • selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’sindependence from management.In 2016, our compensation committee held meetings or passed resolutions by unanimous written consent five times.Corporate Governance and Nominating CommitteeOur corporate governance and nominating committee consists of James Ding and Yuanqing Yang, both of whom satisfy the “independence”requirements of Rule 5605(a) (2) of the NASDAQ Stock Market Rules. The corporate governance and nominating committee assists the board of directors inselecting individuals qualified to become our directors and in determining the composition of the board and its committees. The corporate governance andnominating committee is responsible for, among other things: • recommending to the board nominees for election or re-election to the board or for appointments to fill any vacancies; 116 Table of Contents • reviewing annually the performance of each incumbent director in determining whether to recommend such director for an additional term; • overseeing the board in the board’s annual review of its own performance and the performance of the management; and • considering, preparing and recommending to the board such policies and procedures with respect to corporate governance matters as may berequired or required to be disclosed under the applicable laws or otherwise considered to be material.In 2016, our corporate governance and nominating committee passed resolutions by unanimous written consent once.Terms of Directors and Executive OfficersAll directors hold office until their successors have been duly elected and qualified. None of our directors is subject to a fixed term of office. Inaddition, the service agreements between us and the directors do not provide benefits upon termination of their services. Director nomination is subject to theapproval of our corporate governance and nominating committee. Our shareholders may remove any director by ordinary resolution and may in like mannerappoint another person in his stead. A valid ordinary resolution requires a majority of the votes cast at a shareholder meeting that is duly constituted andmeets the quorum requirement. Officers are elected by and serve at the discretion of the board of directors. D.EmployeesWe had 46,391, 41,467 and 45,887 employees as of December 31, 2014, 2015 and 2016, respectively. As of December 31, 2016, we had 2,594employees in management and administration, 19,562 employees in research and development, 6,442 employees in operation and service, and 17,289employees in sales and marketing. As of December 31, 2016, we had 28,920 employees in Beijing, 16,147 employees outside of Beijing but within China,and 820 employees outside of China. We also hire temporary employees and contractors from time to time. Our employees are not covered by any collectivebargaining agreement. We consider our relations with our employees to be generally good. However, as our operations and employee base further expand, wecannot assure you that we will always be able to maintain good relations with all of our employees. See “Item 3.D. Key Information—Risk Factors—RisksRelated to Our Business—We may not be able to manage our expanding operations effectively.” E.Share OwnershipThe following table sets forth information with respect to the beneficial ownership of our shares as of February 28, 2017 by: • each of our current directors and executive officers; and • each person known to us to own beneficially more than 5% of our shares. 117 Table of ContentsSee “—B. Compensation” for more details on options and restricted shares granted to our directors and executive officers. Shares Beneficially Owned Directors and Executive Officers: Number(1) %(2) Robin Yanhong Li(3) 5,607,622 16.1% Qi Lu * * Jennifer Xinzhe Li * * Ya-Qin Zhang * * Hailong Xiang * * James Ding(4) * * Brent Callinicos * * Yuanqing Yang(5) * * All Directors and Executive Officers as a Group(6) 5,636,595 16.2% Principal Shareholders: Handsome Reward Limited(7) 5,490,000 15.8% Baillie Gifford & Co (Scottish partnership)(8) 2,467,540 7.1% *Less than 1% of our total outstanding Class A ordinary shares and Class B ordinary shares.**Except for James Ding, Yuanqing Yang and Brent Callinicos, the business address of our directors and executive officers is c/o Baidu, Inc., Baidu Campus, No. 10 Shangdi 10thStreet, Haidian District, Beijing 100085, PRC.(1)The number of shares beneficially owned by each named director and executive officer includes the shares beneficially owned by such person, the shares underlying all optionsheld by such person that have vested or will vest within 60 days after February 28, 2017, and restricted shares held by such person that will vest within 60 days after February 28,2017. The options and restricted shares were granted under our 2008 share incentive plan.(2)Percentage of beneficial ownership of each named director and executive officer is based on 34,748,746 ordinary shares (consisting of 27,372,492 Class A ordinary shares and7,376,254 Class B ordinary shares) of our company outstanding as of February 28, 2017, the number of ordinary shares underlying options that have vested or will vest within60 days after February 28, 2017, and the number of restricted shares that will vest within 60 days after February 28, 2017, each as held by such person as of that date.(3)Includes (i) 37,665 Class A Ordinary Shares directly held by Mr. Li on record; (ii) 21,481 Class A ordinary shares in the form of ADSs held in the brokerage account of theadministrator of the issuer’s employee stock option program; (iii) 5,097 restricted Class A Ordinary Shares that had vested as of February 28, 2017; (iv) 53,379 Class A OrdinaryShares issuable upon exercise of options and vesting of restricted shares within 60 days after the date of February 28, 2017; and (v) 5,490,000 Class B Ordinary Shares held byHandsome Reward Limited, a British Virgin Islands company wholly owned and controlled by Mr. Li, and excludes 1,510,000 Class B Ordinary Shares and 49,600 Class AOrdinary Shares in the form of ADSs owned by Melissa Ma, Mr. Li’s wife, of which Mr. Li disclaims beneficial ownership.(4)The business address of Mr. Ding is 56/F, China World Tower 3, No. 1 Jianguomenwai Street, Chaoyang District, Beijing 100004, PRC.(5)The business address of Mr. Yang is c/o Lenovo, No. 6 Shangdi West Road, Haidian District, Beijing 100085, PRC.(6)Includes ordinary shares, ordinary shares issuable upon exercise of options and restricted shares, held by all of our directors and executive officers as a group.(7)Represents 5,490,000 Class B ordinary shares held by Handsome Reward Limited, a British Virgin Island company wholly owned and controlled by Mr. Robin Yanhong Li. Thebusiness address of Handsome Reward Limited is c/o Robin Yanhong Li, Baidu, Inc., Baidu Campus, No. 10 Shangdi 10th Street, Haidian District, Beijing 100085, PRC.(8)Represents 2,467,540 Class A ordinary shares in the form of ADSs held by Baillie Gifford & Co (Scottish partnership), as reported on the Schedule 13G filed by Baillie Gifford &Co (Scottish partnership) on January 13, 2017. The percentage of beneficial ownership was calculated based on the total number of our ordinary shares outstanding as ofFebruary 28, 2017. The address of Baillie Gifford & Co (Scottish partnership) is Calton Square, 1 Greenside Row, Edinburgh EH1 3AN, Scotland, UK.Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to one vote pershare, while holders of Class B ordinary shares are entitled to ten votes per share. We issued Class A ordinary shares represented by our ADSs in our initialpublic offering in 2005. Holders of our Class B ordinary shares may choose to convert their Class B ordinary shares into the same number of Class A ordinaryshares at any time. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. See “Item 3.D. KeyInformation—Risk Factors—Risks Related to Our ADSs—Our dual-class ordinary share structure with different voting rights could discourage others frompursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.” 118 Table of ContentsAs of February 28, 2017, 34,748,746 of our ordinary shares were issued and outstanding. To our knowledge, approximately 79.5% of our totaloutstanding ordinary shares were held by four record shareholders in the United States, including approximately 78.7% held by The Bank of New YorkMellon, the depositary of our ADS program. The number of beneficial owners of our ADSs in the United States is likely to be much larger than the number ofrecord holders of our ordinary shares in the United States. Item 7.Major Shareholders and Related Party Transactions A.Major ShareholdersPlease refer to “Item 6.E. Directors, Senior Management and Employees—Share Ownership.” B.Related Party TransactionsSee “Item 4.C. Information on the Company—Organizational Structure—Contractual Arrangements with Our Consolidated Affiliated Entities and theNominee Shareholders.”Our subsidiaries, consolidated affiliated entities, and the subsidiaries of the consolidated affiliated entities have engaged, during the ordinary course ofbusiness, in a number of customary transactions with each other. All of these inter-company balances have been eliminated in consolidation.As of December 31, 2014, 2015 and 2016, we had RMB50.1 thousand, RMB2.0 billion and RMB356.7 million (US$51.4 million), respectively, duefrom related parties. The decrease of the balance from December 31, 2015 to December 31, 2016 was primarily due to repayment of loans that we hadprovided to certain investees, offset by the increased transactions amount incurred in the ordinary course of business with certain investees that weredetermined to be related parties. The increase of the balance from December 31, 2014 to December 31, 2015 was primarily due to unsettled loans provided tocertain investees and amount incurred by transactions in the ordinary course of business with certain investees that were determined to be related parties. Theamount outstanding as of March 30, 2017 was RMB321.9 million (US$46.4 million).As of December 31, 2014, 2015 and 2016, we had RMB8.4 million, RMB785.9 million and RMB458.7 million (US$66.1 million), respectively, due torelated parties. The decrease of the balance from December 31, 2015 to December 31, 2016 was primarily due to repayment of loans that certain investees hadprovided to us, offset by the increased transactions amount incurred in the ordinary course of business with certain investees that were determined to berelated parties. The increase of the balance from December 31, 2014 to December 31, 2015 was primarily due to an unsettled loan provided by certaininvestee, as well as amount incurred by transactions in the ordinary course of business with certain investees that were determined to be related parties. Theamount outstanding as of March 30, 2017 was RMB359.5 million (US$51.8 million).For the year ended December 31, 2015 and 2016, the related party transactions mainly represented the online marketing services that we provided toCtrip (including Qunar), which was in the total amount of RMB89.2 million and RMB630.8 million (US$90.9 million), respectively.In 2014, 2015 and 2016, with the approval from our board of directors, we reimbursed Mr. Robin Yanhong Li the fees and expenses incurred inconnection with his use of an aircraft beneficially owned by his family member for our business purposes. The hourly rate for use of the aircraft wasdetermined based on an analysis of market rates for the charter of comparable aircrafts. The service charges for the use of the aircraft for 2014, 2015 and 2016were insignificant.In 2014, 2015 and 2016, certain subsidiaries of ours rent an office building owned by the family members of Mr. Hailong Xiang, one of our executiveofficers. The amount of rental expenses for 2014, 2015 and 2016 were insignificant. 119 Table of ContentsShare Options and Restricted Shares GrantsPlease refer to “Item 6.B. Directors, Senior Management and Employees—Compensation.” C.Interests of Experts and CounselNot applicable. Item 8.Financial Information A.Consolidated Statements and Other Financial InformationWe have appended consolidated financial statements filed as part of this annual report.Legal ProceedingsFrom time to time, we have been involved in litigation or other disputes regarding, among other things, copyright and trademark infringement,defamation, unfair competition and labor disputes. Our search results provide links to materials, and our P4P, Baidu Post Bar, Baidu Netdisk, Baidu Nuomi,iQiyi and certain other products or services may contain materials, in which others may allege to own copyrights, trademarks or image rights or which othersmay claim to be defamatory or objectionable. We have received notice letters from third parties asserting copyright infringement, unfair competition,defamation, breach of contract and labor-related claims against us.In 2016, 1,781 complaints were filed against us before various courts in China, the U.S. and Brazil, and the aggregate amount of the damages sought inthese complaints totals approximately RMB496.6 million (US$71.5 million). As of December 31, 2016, 754 cases against us were pending before variouscourts in China, the U.S. and Brazil. The aggregate amount of damages sought under these pending cases is approximately RMB678.3 million(US$97.7 million).For many of these legal proceedings, we are currently unable to estimate the reasonably possible loss or a range of reasonably possible loss as theproceedings are in the early stages, or there is a lack of clear or consistent interpretation of laws specific to the industry-specific complaints among differentjurisdictions. As a result, there is considerable uncertainty regarding the timing or ultimate resolution of such proceedings, which includes eventual loss, fine,penalty or business impact, if any, and therefore, an estimate for the reasonably possible loss or a range of reasonably possible loss cannot be made. Withrespect to the limited number of proceedings for which we are able to estimate the reasonably possible loss or the range of reasonably possible loss, suchestimates are immaterial. However, we believe that such proceedings, individually and in the aggregate, when finally resolved, are not reasonably likely tohave a material and adverse effect on our results of operations, financial position and cash flows.Dividend PolicyBaidu, Inc., our holding company in the Cayman Islands, has never declared or paid any dividends on our ordinary shares, nor do we have any presentplan to pay any cash dividends on our ordinary shares in the foreseeable future. We currently intend to retain most, if not all, of our available funds and anyfuture earnings to operate and expand our business.Our board of directors has complete discretion as to whether to distribute dividends, subject to Cayman Islands law. Even if our board of directorsdecides to pay dividends, the form, frequency and amount of our dividends will depend upon our future operations and earnings, capital requirements andsurplus, financial condition, contractual restrictions and other factors that our board of directors may deem relevant. If we pay any dividends, our depositarywill distribute such dividends to our ADS holders to the same extent as holders of our ordinary shares, subject to the terms of the deposit agreement,including the fees and expenses payable thereunder. Cash dividends on our ordinary shares, if any, will be paid in U.S. dollars. 120 Table of ContentsB.Significant ChangesExcept as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidatedfinancial statements included in this annual report. Item 9.The Offer and Listing A.Offering and Listing DetailsOur ADSs have been listed on The NASDAQ Global Market since August 5, 2005. Our ADSs currently trade on The NASDAQ Global Select Marketunder the symbol “BIDU.” Prior to May 12, 2010, one ADS represented one Class A ordinary share. On May 12, 2010, we effected a change of the ADS toClass A ordinary share ratio from 1 ADS representing 1 Class A ordinary share to 10 ADSs representing 1 Class A ordinary share. The ratio change has thesame effect as a 10-for-1 ADS split.The following table provides the high and low trading prices for our ADSs on NASDAQ for (i) the years 2012, 2013, 2014, 2015 and 2016, (ii) each ofthe four quarters of 2015 and 2016, and (iii) each of the past six full months. Trading Price High Low Annual Highs and Lows 2012 154.15 85.96 2013 181.25 82.98 2014 251.99 140.66 2015 234.67 100.00 2016 201.00 139.61 Quarterly Highs and Lows First Quarter 2015 234.67 199.70 Second Quarter 2015 223.95 188.60 Third Quarter 2015 210.00 100.00 Fourth Quarter 2015 217.97 135.31 First Quarter 2016 193.73 139.61 Second Quarter 2016 201.00 155.28 Third Quarter 2016 197.80 155.28 Fourth Quarter 2016 187.24 159.54 Monthly Highs and Lows September 2016 197.80 171.77 October 2016 187.24 171.89 November 2016 177.35 159.54 December 2016 173.00 160.79 January 2017 183.00 165.82 February 2017 188.54 171.73 March 2017 (through March 30, 2017) 178.86 166.00 B.Plan of DistributionNot applicable. C.MarketsOur ADSs have been listed on NASDAQ since August 5, 2005 under the symbol “BIDU”. 121 Table of ContentsD.Selling ShareholdersNot applicable. E.DilutionNot applicable. F.Expenses of the IssueNot applicable. Item 10.Additional Information A.Share CapitalNot applicable. B.Memorandum and Articles of AssociationThe following are summaries of material provisions of our third amended and restated memorandum and articles of association, as well as theCompanies Law (2016 Revision) insofar as they relate to the material terms of our ordinary shares.Registered Office and ObjectsThe Registered Office of our company is at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104,Cayman Islands or at such other place as our board of directors may from time to time decide. The objects for which our company is established areunrestricted and we have full power and authority to carry out any object not prohibited by the Companies Law (2016 Revision), as amended from time totime, or any other law of the Cayman Islands.Board of DirectorsSee “Item 6.C. Directors, Senior Management and Employees—Board Practices—Board of Directors.”Ordinary SharesGeneral. Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares and Class Bordinary shares have the same rights except for voting and conversion rights. All of our outstanding ordinary shares are fully paid and non-assessable.Certificates representing the ordinary shares are issued in registered form. Our shareholders who are nonresidents of the Cayman Islands may freely hold andvote their shares.Dividends. The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors subject to the CompaniesLaw.Conversion. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares arenot convertible into Class B ordinary shares under any circumstances. Upon any transfer of Class B ordinary shares by a holder thereof to any person or entitywhich is not an affiliate of such holder (as defined in our articles of incorporation), such Class B ordinary shares shall be automatically and immediatelyconverted into the equal number of Class A ordinary shares. In addition, if at any time our chairman and chief executive officer, Robin Yanhong Li, and hisaffiliates collectively own less than 5% of the 122 Table of Contentstotal number of the issued and outstanding Class B ordinary shares, each issued and outstanding Class B ordinary share shall be automatically andimmediately converted into one share of Class A ordinary share, and we shall not issue any Class B ordinary shares thereafter.Voting Rights. All of our shareholders have the right to receive notice of shareholders’ meetings and to attend, speak and vote at such meetings. Inrespect of matters requiring shareholders’ vote, each Class A ordinary share is entitled to one vote, and each Class B ordinary share is entitled to 10 votes. Ashareholder may participate at a shareholders’ meeting in person, by proxy or by telephone conference or other communications equipment by means ofwhich all the shareholders participating in the meeting can communicate with each other. At any shareholders’ meeting, a resolution put to the vote of themeeting shall be decided on a poll conducted by the chairman of the meeting.A quorum for a shareholders’ meeting consists of one or more shareholders holding at least one third of the paid up voting share capital present inperson or by proxy or, if a corporation or other non-natural person, by its duly authorized representative. We shall, if required by the Companies Law, hold ageneral meeting of shareholders as our annual general meeting and shall specify the meeting as such in the notices calling it. Our board of directors may callextraordinary general meetings, and they must on shareholders’ requisition convene an extraordinary general meeting. A shareholder requisition is arequisition of shareholders holding at the date of deposit of the requisition not less than a majority of the voting power represented by the issued shares of ourcompany as at that date carries the right of voting at general meetings of our company. Advance notice of at least five days is required for the convening ofour annual general meeting and other shareholders’ meetings.An ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the ordinary sharescast in a general meeting, while a special resolution requires the affirmative vote of no less than two-thirds of the votes cast attaching to the ordinary sharescast in a general meeting. A special resolution is required for matters such as a change of name. Holders of the ordinary shares may effect certain changes byordinary resolution, including consolidating and dividing all or any of our share capital into shares of larger amount than our existing share capital andcanceling any shares.Transfer of Shares. Subject to the restrictions of our memorandum and articles of association, as applicable, any of our shareholders may transfer any orall of his or her ordinary shares by an instrument of transfer in the usual or common form or any other form approved by our board of directors.Our board of directors may, in their absolute discretion (except with respect to a transfer from a shareholder to its affiliate(s)), decline to register anytransfer of shares without assigning any reason thereof. If our board of directors refuses to register a transfer they shall notify the transferee within two monthsof such refusal. Notwithstanding the foregoing, if a transfer complies with the holder’s transfer obligations and restrictions set forth under applicable law(including but not limited to U.S. securities law provisions related to insider trading) and our articles of association, our board of directors shall promptlyregister such transfer. Further, any director is authorized to confirm in writing addressed to the registered office to authorize a share transfer and to instructthat the register of members be updated accordingly, provided that the transfer complies with the holder’s transfer obligations and restrictions set forth underapplicable law and our articles of association and such holder is not the director who authorizes the transfer or an entity affiliated with such director. Anydirector is authorized to execute a share certificate in respect of such shares for and on behalf of our company.The registration of transfers may be suspended at such time and for such periods as our board of directors may from time to time determine, provided,however, that the registration of transfers shall not be suspended for more than 45 days in any year.Liquidation. On a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of shares), assets available fordistribution among the holders of ordinary shares may be distributed among the holders of the ordinary shares as determined by the liquidator, subject tosanction of a special 123 Table of Contentsresolution of our company. If our assets available for distribution are insufficient to repay all of the paid-up capital, the assets will be distributed so that thelosses are borne by our shareholders proportionately to the capital paid up, or which ought to have been paid up, at the commencement of the winding up onthe shares held by such shareholders respectively.Calls on Shares and Forfeiture of Shares. Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on theirshares in a notice served to such shareholders at least 14 days prior to the specified time and place of payment. The shares that have been called upon andremain unpaid on the specified time are subject to forfeiture.Redemption of Shares. Subject to the provisions of the Companies Law and our articles of association, we may issue shares on terms that are subject toredemption, at our option or at the option of the holders, on such terms and in such manner as our board of directors may determine.Repurchase of Shares. Subject to the provisions of the Companies Law and our articles of association, our board of directors may authorize repurchaseof our shares in accordance with the manner of purchase specified in our articles of association without seeking shareholder approval.Variations of Rights of Shares. All or any of the special rights attached to any class of shares may, subject to the provisions of the Companies Law, bevaried either with the written consent of the holders of a majority of the issued shares of that class or with the sanction of a special resolution passed at ageneral meeting of the holders of the shares of that class.Inspection of Books and Records. No holders of our ordinary shares who is not a director shall have any right of inspecting any of our accounts, booksor documents except as conferred by the Companies Law or authorized by the directors or by us in general meeting. However, we will make this annualreport, which contains our audited financial statements, available to shareholders and ADS holders. See “Item 10.H. Additional Information—Documents onDisplay.”Preferred SharesOur board of directors has the authority, without shareholder approval, to issue up to a total of 10,000,000 shares of preferred shares in one or moreseries. Our board of directors may establish the number of shares to be included in each such series and may set the designations, preferences, powers andother rights of the shares of a series of preferred shares. While the issuance of preferred shares provides us with flexibility in connection with possibleacquisitions or other corporate purposes, it could, among other things, have the effect of delaying, deferring or preventing a change of control transaction andcould adversely affect the market price of our ADSs. We have no current plan to issue any preferred shares. C.Material ContractsWe have not entered into any material contracts other than in the ordinary course of business and other than those described in “Item 4. Information onthe Company” or elsewhere in this annual report on Form 20-F. D.Exchange ControlsSee “Item 4.B. Information on the Company—Business Overview—Regulations—Regulations on Foreign Exchange.” E.TaxationThe following summary of the material Cayman Islands, People’s Republic of China and United States federal income tax consequences of aninvestment in our ADSs or ordinary shares is based upon laws and 124 Table of Contentsrelevant interpretations thereof in effect as of the date of this annual report, all of which are subject to change. This summary does not deal with all possibletax consequences relating to an investment in our ADSs or ordinary shares, such as the tax consequences under state, local and other tax laws.Cayman Islands Tax ConsiderationsAccording to Maples and Calder (Hong Kong) LLP, our Cayman Islands counsel, the Cayman Islands currently levies no taxes on individuals orcorporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxeslikely to be material to us levied by the Government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, orbrought within, the jurisdiction of the Cayman Islands. The Cayman Islands is not party to any double tax treaties that are applicable to any payments madeto or by our company. There are no exchange control regulations or currency restrictions in the Cayman Islands.People’s Republic of China Tax ConsiderationsIf we are considered a PRC resident enterprise under the EIT Law, our shareholders and ADS holders who are deemed non-resident enterprises may besubject to the 10% EIT on the dividends payable by us or any gains realized from the transfer of our shares or ADSs, if such income is deemed derived fromChina, provided that (i) such foreign enterprise investor has no establishment or premises in China, or (ii) it has establishment or premises in China but itsincome derived from China has no real connection with such establishment or premises. Furthermore, if we are considered a PRC resident enterprise andrelevant PRC tax authorities consider the dividends we pay with respect to our shares or ADSs and the gains realized from the transfer of our shares or ADSs tobe income derived from sources within the PRC, it is also possible that such dividends and gains earned by non-resident individuals may be subject to the20% PRC individual income tax. It is uncertain whether, if we are considered a PRC resident enterprise, holders of our shares or ADSs would be able to claimthe benefit of tax treaties or arrangements entered into between China and other jurisdictions.If we are required under the PRC tax law to withhold PRC income tax on our dividends payable to our non-PRC resident shareholders and ADSholders, or if any gains realized from the transfer of our shares or ADSs by our non-PRC resident shareholders and ADS holders are subject to the EIT or theindividual income tax, your investment in our shares or ADSs could be materially and adversely affected.United States Federal Income Tax ConsiderationsThe following discussion is a summary of U.S. federal income tax considerations under present law of the ownership and disposition of the ADSs orordinary shares. This summary applies only to investors that are U.S. Holders (as defined below) and that hold the ADSs or ordinary shares as capital assets.This discussion is based on the tax laws of the United States as in effect on the date of this annual report on Form 20-F and on U.S. Treasury regulations ineffect or, in some cases, proposed, as of the date of this annual report on Form 20-F, as well as judicial and administrative interpretations thereof available onor before such date. All of the foregoing authorities are subject to change, which change could apply retroactively and could affect the tax considerationsdescribed below.The following discussion does not deal with the tax consequences to any particular investor or to persons in special tax situations such as: • banks; • financial institutions; • insurance companies; • broker dealers; 125 Table of Contents • persons that elect to mark their securities to market; • tax-exempt entities; • persons liable for the alternative minimum tax; • regulated investment companies; • certain expatriates or former long-term residents of the United States; • governments or agencies or instrumentalities thereof; • persons holding an ADS or ordinary share as part of a straddle, hedging, conversion or integrated transaction; • persons that actually or constructively own 10% or more of our voting shares; • persons whose functional currency is other than the U.S. dollar; or • persons who acquired ADSs or ordinary shares pursuant to the exercise of any employee share option or otherwise as consideration.U.S. Holders are urged to consult their tax advisors about the application of the U.S. federal tax rules to their particular circumstances as well as thestate, local and foreign tax consequences to them of ownership and disposition of ADSs or ordinary shares.The discussion below of the U.S. federal income tax consequences will apply if you are a “U.S. Holder.” You are a “U.S. Holder” if you are thebeneficial owner of ADSs or ordinary shares and you are, for U.S. federal income tax purposes, • a citizen or individual resident of the United States; • a corporation (or other entity subject to tax as a corporation for U.S. federal income tax purposes) that is created or organized in or under the lawsof the United States, any State or the District of Columbia; • an estate whose income is subject to U.S. federal income taxation regardless of its source; or • a trust that (i) is subject to the supervision of a court within the United States and the control of one or more United States persons or (ii) has avalid election in effect under applicable U.S. Treasury regulations to be treated as a United States person.This discussion does not consider the tax treatment of partnerships or other pass-through entities that hold the ADSs or ordinary shares, or of personswho hold the ADSs or ordinary shares through such entities. If a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) isthe beneficial owner of the ADSs or ordinary shares, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status ofthe partner and the activities of the partnership.The discussion below assumes that the representations contained in the deposit agreement are true and that the obligations in the deposit agreementand any related agreement will be complied with in accordance with their terms. If you hold ADSs, you will be treated as the holder of the underlyingordinary shares represented by those ADSs for U.S. federal income tax purposes.This discussion does not address any aspect of U.S. federal non-income tax laws, such as gift or estate tax laws, or state, local or non-U.S. tax laws. Wehave not sought, and will not seek, a ruling from the Internal Revenue Service (the “IRS”), or an opinion as to any U.S. federal income tax consequencedescribed herein. The IRS may disagree with the discussion herein, and its determination may be upheld by a court.Taxation of Dividends and Other Distributions on the ADSs or Ordinary SharesSubject to the passive foreign investment company rules discussed below, the gross amount of all our distributions to you with respect to the ADSs orordinary shares will be included in your gross income as 126 Table of Contentsdividend income on the date of receipt by the depositary, in the case of ADSs, or by you, in the case of ordinary shares, but only to the extent that thedistribution is paid out of our current or accumulated earnings and profits (computed under U.S. federal income tax principles). Because we do not intend todetermine our earnings and profits on the basis of U.S. federal income tax principles, any distribution paid will generally be treated as a “dividend” for U.S.federal income tax purposes. Dividends paid by us will not be eligible for the dividends-received deduction allowed to corporations in respect of dividendsreceived from U.S. corporations.With respect to non-corporate U.S. Holders (including individual U.S. Holders), dividends may be taxed at the lower applicable capital gains rateprovided that (i) the ADSs or ordinary shares are readily tradable on an established securities market in the United States or we are eligible for the benefit ofthe income tax treaty between the United States and the PRC, (ii) we are not a passive foreign investment company (as discussed below) for either our taxableyear in which the dividend was paid or for the preceding taxable year, (iii) certain holding period requirements are met, and (iv) such non-corporateU.S. Holders are not under an obligation to make related payments with respect to positions in substantially similar or related property. For this purpose,ADSs listed on the NASDAQ Global Select Market will generally be considered to be readily tradable on an established securities market in the United States.You should consult your tax advisor regarding the availability of the lower rate for dividends paid with respect to our ADSs or ordinary shares.For U.S. foreign tax credit purposes, dividends paid on the ADSs or ordinary shares generally will be treated as income from foreign sources andgenerally will constitute passive category income. If PRC withholding taxes apply to dividends paid to you with respect to the ADSs or ordinary shares, youmay be able to obtain a reduced rate of PRC withholding taxes under the income tax treaty between the United States and the PRC if certain requirements aremet. In addition, subject to certain conditions and limitations, PRC withholding taxes on dividends that are non-refundable under the income tax treatybetween the United States and the PRC may be treated as foreign taxes eligible for credit against your U.S. federal income tax liability. If you do not elect toclaim a foreign tax credit, you may instead claim a deduction for U.S. federal income tax purposes in respect of such withholding, but only for a year in whichyou elect to do so for all creditable foreign income taxes. You should consult your tax advisor regarding the creditability of any PRC tax.Sale, Exchange or Other Disposition of the ADSs or ordinary sharesSubject to the passive foreign investment company rules discussed below, you will recognize gain or loss on any sale, exchange or other taxabledisposition of an ADS or ordinary share equal to the difference between the amount realized for the ADS or ordinary share and your tax basis in the ADS orordinary share. The gain or loss will generally be capital gain or loss. If you are a non-corporate U.S. Holder, including an individual U.S. Holder, who hasheld the ADS or ordinary share for more than one year, you will generally be eligible for reduced tax rates. The deductibility of capital losses is subject tolimitations. Any such gain or loss that you recognize will generally be treated as U.S. source income or loss for foreign tax credit limitation purposes, whichwill generally limit the availability of foreign tax credits. However, in the event we are deemed to be a PRC “resident enterprise” under PRC tax law, we maybe eligible for the benefits of the income tax treaty between the United States and the PRC. In such event, if PRC tax were to be imposed on any gain from thedisposition of the ADSs or ordinary shares, a U.S. Holder that is eligible for the benefits of the income tax treaty between the United States and the PRC mayelect to treat such gain as PRC source income. U.S. Holders should consult their tax advisors regarding the creditability of any PRC tax.Passive Foreign Investment CompanyA non-U.S. corporation, such as our own, is considered a passive foreign investment company or “PFIC” for any taxable year if either (i) at least 75% ofits gross income is passive income, or (ii) at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year)is attributable to assets that produce or are held for the production of passive income (the “asset test”). We will be treated as owning our proportionate shareof the assets and earning our proportionate share of the income of any other corporation in 127 Table of Contentswhich we own, directly or indirectly, more than 25% (by value) of the shares. Although the law in this regard is not entirely clear, we treat our variableinterest entities as being owned by us for United States federal income tax purposes because we control their management decisions and we are entitled tosubstantially all of their economic benefits and, as a result, we consolidate their results of operations in our consolidated U.S. GAAP financial statements. If itwere determined, however, that we are not the owner of our variable interest entities for United States federal income tax purposes, we would likely be treatedas a PFIC for our taxable year ended December 31, 2017 and for subsequent taxable years.Although under certain interpretations of how one determines what portion of goodwill and certain other assets are treated as “passive”, we may havebeen a PFIC for 2015, we believe under more reasonable approaches for our circumstances, based on the market price of our ADSs and ordinary shares, thevalue of our assets, and the composition of our assets and income, that we were not a PFIC for our taxable year ended December 31, 2015. However, given thelack of authority and the highly factual nature of the analyses, no assurance can be given. We do not expect to be a PFIC for our taxable year endingDecember 31, 2017 or for the foreseeable future. In addition, we do not believe that we were a PFIC for our taxable year ended December 31, 2016 even underthe least favorable interpretations of what portion of goodwill and certain other assets are treated as “passive.” However, our PFIC status for the currenttaxable year ending December 31, 2017 will not be determinable until the close of the taxable year, and, accordingly, there is no guarantee that we will notbe a PFIC for the current taxable year (or any future taxable year).We must make a separate determination each year as to whether we are a PFIC. As a result, our PFIC status may change. In particular, because the totalvalue of our assets for purposes of the asset test will generally be calculated using the market price of the ADSs and ordinary shares, our PFIC status willdepend in large part on the market price of the ADSs and ordinary shares, which may fluctuate considerably. Accordingly, fluctuations in the market price ofthe ADSs and ordinary shares may result in our being a PFIC for any year. If we are a PFIC for any year during which you hold the ADSs or ordinary shares, wewill generally continue to be treated as a PFIC for all succeeding years during which you hold such ADSs or ordinary shares. However, if we cease to be aPFIC, provided that you have not made a mark-to-market election, as described below, you may avoid some of the adverse effects of the PFIC regime bymaking a deemed sale election with respect to the ADSs or ordinary shares, as applicable.If we are a PFIC for any taxable year during which you hold ADSs or ordinary shares, you will be subject to special tax rules with respect to any “excessdistribution” that you receive and any gain you realize from a sale or other disposition (including a pledge) of the ADSs or ordinary shares, unless you make amark-to-market election as discussed below. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions youreceived during the shorter of the three preceding taxable years or your holding period for the ADSs or ordinary shares will be treated as an excessdistribution. Under these special tax rules: • the excess distribution or gain will be allocated ratably over your holding period for the ADSs or ordinary shares, • the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we became a PFIC, will be treated asordinary income, and • the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for you for such year and wouldbe increased by an additional tax equal to interest on the resulting tax deemed deferred with respect to each such other taxable year.The tax liability for amounts allocated to years prior to the year of disposition or “excess distribution” cannot be offset by any net operating losses forsuch years, and gains (but not losses) realized on the sale of the ADSs or ordinary shares cannot be treated as capital, even if you hold the ADSs or ordinaryshares as capital assets.Alternatively, a U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election for such stock of a PFIC to electout of the tax treatment discussed in the two preceding 128 Table of Contentsparagraphs. The mark-to-market election is available only for “marketable stock,” which is stock that is traded in other than de minimis quantities on at least15 days during each calendar quarter, or “regularly traded,” on a qualified exchange or other market, as defined in applicable Treasury regulations. We expectthat the ADSs will continue to be listed on the NASDAQ Global Select Market, which is a qualified exchange for these purposes, and, consequently,assuming that the ADSs are regularly traded, if you are a holder of ADSs, it is expected that the mark-to-market election would be available to you were we tobecome a PFIC. However, a mark-to-market election may not be made with respect to our ordinary shares as they are not marketable stock. If you make a validmark-to-market election for the ADSs, you will include in income each year an amount equal to the excess, if any, of the fair market value of the ADSs as ofthe close of your taxable year over your adjusted basis in such ADSs. You are allowed a deduction for the excess, if any, of the adjusted basis of the ADSsover their fair market value as of the close of the taxable year. Such deductions, however, are allowable only to the extent of any net mark-to-market gains onthe ADSs included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as well as gain on the actualsale or other disposition of the ADSs, are treated as ordinary income. Ordinary loss treatment also applies to the deductible portion of any mark-to-market losson the ADSs, as well as to any loss realized on the actual sale or disposition of the ADSs, to the extent that the amount of such loss does not exceed the netmark-to-market gains previously included for such ADSs. Your basis in the ADSs will be adjusted to reflect any such income or loss amounts. If you makesuch a mark-to-market election, tax rules that apply to distributions by corporations which are not PFICs would apply to distributions by us (except that thelower applicable capital gains rate would not apply).Because, as a technical matter, a mark-to-market election cannot be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to besubject to the general PFIC rules described above with respect to such U.S. Holder’s indirect interest in any investments held by us that are treated as anequity interest in a PFIC for United States federal income tax purposes.Alternatively, a U.S. Holder may avoid the PFIC tax consequences described above in respect to its ADSs and ordinary shares by making a timely“qualified electing fund,” or QEF, election. To comply with the requirements of a QEF election, a U.S. Holder must receive certain information from us.Because we do not intend to provide such information, however, such election will not be available to you with respect to the ADSs or ordinary shares.If you hold ADSs or ordinary shares in any year in which we are a PFIC, you will be required to file an annual information report containing suchinformation as the U.S. Treasury may require.You are urged to consult your tax advisor regarding the application of the PFIC rules to your investment in ADSs or ordinary shares.Medicare TaxAn additional 3.8% tax is imposed on a portion or all of the net investment income of certain individuals with a modified adjusted gross income ofover $200,000 (or $250,000 in the case of joint filers or $125,000 in the case of married individuals filing separately) and on the undistributed netinvestment income of certain estates and trusts. For these purposes, “net investment income” generally includes interest, dividends (including dividends paidwith respect to the ADSs or ordinary shares), annuities, royalties, rents, net gain attributable to the disposition of property not held in a trade or business(including net gain from the sale, exchange or other taxable disposition of an ADS or ordinary share) and certain other income, reduced by any deductionsproperly allocable to such income or net gain. U.S. Holders are urged to consult their tax advisors regarding the applicability of this tax to their income andgains in respect of an investment in the ADSs or ordinary shares.Information Reporting and Backup WithholdingDividend payments with respect to ADSs or ordinary shares and proceeds from the sale, exchange or redemption of ADSs or ordinary shares may besubject to information reporting to the IRS and possible U.S. 129 Table of Contentsbackup withholding. Backup withholding will not apply to you, however, if you furnish a correct taxpayer identification number and make any otherrequired certification or that are otherwise exempt from backup withholding. U.S. Holders that are required to establish their exempt status generally mustprovide such certification on IRS Form W-9. You should consult your tax advisor regarding the application of the U.S. information reporting and backupwithholding rules.Backup withholding is not an additional tax. Amounts withheld as backup withholding can be credited against your U.S. federal income tax liability,and you may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with theIRS and furnishing any required information in a timely manner.Individual U.S. Holders and certain entities may be required to submit to the IRS certain information with respect to his or her beneficial ownership ofthe ADSs or ordinary shares, if such ADSs or ordinary shares are not held on his or her behalf by a financial institution. This law also imposes penalties if anindividual U.S. Holder is required to submit such information to the IRS and fails to do so. F.Dividends and Paying AgentsNot applicable. G.Statement by ExpertsNot applicable. H.Documents on DisplayWe previously filed with the SEC our registration statement on Form F-1, as amended and prospectus under the Securities Act of 1933, with respect toour ordinary shares. We have also previously filed with the SEC our registration statement on Form F-3 with respect to the sale of debt securities by ourcompany on a continuous basis, a prospectus under the Securities Act with respect to our issuance of US$1.5 billion senior unsecured notes in two equaltranches, due in 2017 and 2022 with stated interest rates of 2.25% and 3.50%, respectively, a prospectus under the Securities Act with respect to our issuanceof US$1.0 billion senior unsecured notes due in 2018 with stated interest rate of 3.25%, a prospectus under the Securities Act with respect to our issuance ofUS$1.0 billion senior unsecured notes due in 2019 with stated interest rate of 2.75%, and a prospectus under the Securities Act with respect to our issuance ofUS$1.25 billion senior unsecured notes in two tranches consisting of US$750 million notes due in 2020 with stated interest rate of 3.00% andUS$500 million notes due in 2025 with stated interest rate of 4.125%.We are subject to the periodic reporting and other informational requirements of the Exchange Act. Under the Exchange Act, we are required to filereports and other information with the SEC. Specifically, we are required to file annually a Form 20-F within four months after the end of each fiscal year,which is December 31. Copies of reports and other information, when so filed, may be inspected without charge and may be obtained at prescribed rates at thepublic reference facilities maintained by the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. The public may obtain information regardingthe Washington, D.C. Public Reference Room by calling the Commission at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov thatcontains reports, proxy and information statements, and other information regarding registrants that make electronic filings with the SEC using its EDGARsystem. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterly reports and proxystatements, and officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained inSection 16 of the Exchange Act.We will furnish The Bank of New York Mellon, the depositary of our ADSs, with our annual reports, which will include a review of operations andannual audited consolidated financial statements prepared in conformity 130 Table of Contentswith U.S. GAAP, and all notices of shareholders’ meetings and other reports and communications that are made generally available to our shareholders. Thedepositary will make such notices, reports and communications available to holders of ADSs and, upon our request, will mail to all record holders of ADSsthe information contained in any notice of a shareholders’ meeting received by the depositary from us.In accordance with NASDAQ Stock Market Rule 5250(d), we will post this annual report on Form 20-F on our website at http://ir.baidu.com. Inaddition, we will provide hardcopies of our annual report free of charge to shareholders and ADS holders upon request. I.Subsidiary InformationNot applicable. Item 11.Quantitative and Qualitative Disclosures about Market RiskInterest Rate RiskOur exposure to interest rate risk primarily relates to excess cash invested in short-term instruments with original maturities of less than a year.Investments in both fixed rate and floating rate interest earning instruments carry a degree of interest rate risk. Fixed rate securities may have their fair marketvalue adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in partto these factors, our future investment income may fall short of expectations due to changes in interest rates, or we may suffer losses in principal if we have tosell securities which have declined in market value due to changes in interest rates. We have not been, and do not expect to be, exposed to material interestrate risks, and therefore have not used any derivative financial instruments to manage our interest risk exposure, other than interest swap agreements enteredinto in connection with the loan agreement with Bank of China (Los Angeles Branch) dated December 2014, the loan agreement with Sumitomo MitsuiBanking Corporation dated July 2015 and the loan agreement with a group of 21 arrangers dated June 2016. See “Item 5.B. Operating and Financial Reviewand Prospects—Liquidity and Capital Resources.”Foreign Exchange RiskMost of our revenues and costs are denominated in RMB, while a portion of our cash and cash equivalents, short-term financial assets, long-terminvestments, long-term loans payable and notes payable are denominated in U.S. dollars. Our exposure to foreign exchange risk primarily relates to thosefinancial assets and financial liabilities denominated in U.S. dollars. Any significant revaluation of RMB against the U.S. dollar may materially affect ourearnings and financial position, and the value of, and any dividends payable on, our ADS in U.S. dollars. See “Item 3.D. Key Information—Risk Factors—Risks Related to Doing Business in China—Fluctuation in the value of the RMB may have a material and adverse effect on your investment.” In addition, wecommenced operation in Japan in late 2007. To the extent we need to make capital injections into our Japan operation by converting U.S. dollars intoJapanese Yen, we will be exposed to the fluctuations in the exchange rate between the U.S. dollar and the Japanese Yen. We have not hedged exposuresdenominated in foreign currencies using any derivative financial instruments.The RMB depreciated by 6.70% against the U.S. dollar in 2016. A hypothetical 10% increase in the exchange rate of the U.S. dollar against the RMBwould have resulted in an increase of RMB4.3 billion (US$621.4 million) in the value of our U.S. dollar-denominated long-term loans payable and notespayable at December 31, 2016. Item 12.Description of Securities Other than Equity Securities A.Debt SecuritiesNot applicable. 131 Table of ContentsB.Warrants and RightsNot applicable. C.Other SecuritiesNot applicable. D.American Depositary SharesFees and Charges Our ADS holders May Have to PayThe Bank of New York Mellon, the depositary of our ADS program, collects its fees for delivery and surrender of ADSs directly from investorsdepositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for makingdistributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. Thedepositary may collect its annual fee for depositary services by deductions from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may generally refuse to provide fee-attracting services until its fees for those servicesare paid. The depositary’s corporate trust office at which the ADSs will be administered is located at 101 Barclay Street, New York, New York 10286. Thedepositary’s principal executive office is located at 225 Liberty Street, 21st Floor, New York, New York 10286. Persons depositing or withdrawing shares must pay: For:US$5.00 (or less) per 1,000 ADSs (or portion of 1,000 ADSs) • Issuance of ADSs, including issuances resulting from a distribution ofshares or rights or other propertyUS$0.05 (or less) per ADS • Cancellation of ADSs for the purpose of withdrawal, including if thedeposit agreement terminatesUS$0.02 (or less) per ADS • Any cash distribution to registered ADS holdersA fee equivalent to the fee that would be payable if securities distributed hadbeen shares and the shares had been deposited for issuance of ADSs • Distribution of securities distributed to holders of depositedsecurities which are distributed by the depositary to registered ADSholdersUS$0.02 (or less) per ADS per calendar year (if the depositary has not collectedany cash distribution fee during that year) • Depositary servicesExpenses of the depositary • Cable, telex and facsimile transmissions (when expressly provided inthe deposit agreement) • Converting foreign currency to U.S. dollarsRegistration or transfer fees • Transfer and registration of shares on our share register to or from thename of the depositary or its agent when you deposit or withdrawsharesTaxes and other governmental charges the depositary or the custodian have topay on any ADS or share underlying an ADS, for example, stock transfertaxes, stamp duty or withholding taxes • As necessaryAny charges incurred by the depositary or its agents for servicing the depositedsecurities • As necessary 132 Table of ContentsFees and Other Payments Made by the Depositary to UsThe depositary has agreed to reimburse us annually for our expenses incurred in connection with investor relationship programs and any other programrelated to our ADS facility and the travel expense of our key personnel in connection with such programs. The depositary has also agreed to provideadditional payments to us based on the applicable performance indicators relating to our ADS facility. There are limits on the amount of expenses for whichthe depositary will reimburse us, but the amount of reimbursement available to us is not necessarily tied to the amount of fees the depositary collects frominvestors. In 2017, we received approximately US$4.2 million (after tax) reimbursement from the depositary for our expenses incurred in connection withinvestor relationship programs related to the ADS facility and the travel expense of our key personnel in connection with such programs.PART II Item 13.Defaults, Dividend Arrearages and DelinquenciesNone. Item 14.Material Modifications to the Rights of Security Holders and Use of ProceedsNone. Item 15.Controls and ProceduresEvaluation of Disclosure Controls and ProceduresOur management, with the participation of our chief executive officer and chief financial officer, has performed an evaluation of the effectiveness ofour disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report, as requiredby Rule 13a-15(b) under the Exchange Act.Based upon that evaluation, our management has concluded that, as of December 31, 2016, our disclosure controls and procedures were effective inensuring that the information required to be disclosed by us in the reports that we file and furnish under the Exchange Act was recorded, processed,summarized and reported, within the time periods specified in the SEC’s rules and forms, and that the information required to be disclosed by us in the reportsthat we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chieffinancial officer, to allow timely decisions regarding required disclosure.Management’s Annual Report on Internal Control over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) underthe Exchange Act. Our management evaluated the effectiveness of our internal control over financial reporting, as required by Rule 13a-15(c) of theExchange Act, based on criteria established in the framework in Internal Control-Integrated Framework (2013) issued by the Committee of SponsoringOrganizations of the Treadway Commission. Based on this evaluation, our management has concluded that our internal control over financial reporting waseffective as of December 31, 2016.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of anyevaluation of effectiveness of our internal control over financial reporting to future periods are subject to the risk that controls may become inadequatebecause of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. 133 Table of ContentsOur independent registered public accounting firm, Ernst & Young Hua Ming LLP, has audited the effectiveness of our internal control over financialreporting as of December 31, 2016, as stated in its report, which appears on page F-2 of this annual report on Form 20-F.Changes in Internal Control over Financial ReportingThere were no changes in our internal controls over financial reporting that occurred during the period covered by this annual report on Form 20-F thathave materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 16A.Audit Committee Financial ExpertOur board of directors has determined that Mr. Brent Callinicos, an independent director (under the standards set forth in NASDAQ Stock Market Rule5605(a)(2) and Rule 10A-3 under the Exchange Act) and chairman of our audit committee, is an audit committee financial expert. Item 16B.Code of EthicsOur board of directors adopted a code of business conduct and ethics that applies to our directors, officers, employees and advisors in July 2005. Wehave posted a copy of our code of business conduct and ethics on our website at http://ir.baidu.com. Item 16C.Principal Accountant Fees and ServicesThe following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by Ernst &Young Hua Ming LLP, our principal external auditors, for the periods indicated. 2015 2016 Audit fees(1) US$3,673,825 US$2,677,284 Audit-related fees(2) US$229,184 US$284,664 Tax fees(3) US$52,355 US$30,502 (1)“Audit fees” means the aggregate fees billed in each of the fiscal years listed for professional services rendered by our principal auditors for the audit ofour annual financial statements and assistance with and review of documents filed with the SEC. In 2015 and 2016, the audit refers to financial auditand audit pursuant to Section 404 of the Sarbanes-Oxley Act of 2002.(2)“Audit-related fees” means fees billed in 2015 and 2016 for professional services rendered by our principal auditors associated with certain duediligence projects.(3)“Tax fees” means the aggregate fees billed in each of the fiscal years listed for professional services rendered by our principal auditors for taxcompliance, tax advice, and tax planning. In 2015 and 2016, the tax fees refer to fees paid to our principal auditors for reviewing the compliance of ourtax documentation and providing tax advices.All audit and non-audit services provided by our independent auditors must be pre-approved by our audit committee. Our audit committee has adopteda combination of two approaches in pre-approving proposed services: general pre-approval and specific pre-approval. With general approval, proposedservices are pre-approved without consideration of specific case-by-case services; with specific approval, proposed services require the specific pre-approvalof the audit committee. Unless a type of service has received general pre-approval, it will require specific pre-approval by our audit committee. Any proposedservices exceeding pre-approved cost levels or budgeted amounts will also require specific pre-approval by our audit committee. 134 Table of ContentsAll requests or applications for services to be provided by our independent auditors that do not require specific approval by our audit committee willbe submitted to our chief financial officer and must include a detailed description of the services to be rendered. The chief financial officer will determinewhether such services are included within the list of services that have received the general pre-approval of the audit committee. The audit committee will beinformed on a timely basis of any such services. Requests or applications to provide services that require specific approval by our audit committee will besubmitted to the audit committee by both our independent auditors and our chief financial officer and must include a joint statement as to whether, in theirview, the request or application is consistent with the SEC’s rules on auditor independence. Item 16D.Exemptions from the Listing Standards for Audit CommitteesNot applicable. Item 16E.Purchases of Equity Securities by the Issuer and Affiliated PurchasersOn October 22, 2015, our board of directors authorized a share repurchase program, under which we may repurchase up to US$2.0 billion of our ADSsor ordinary shares over 24 months from October 22, 2015 through October 21, 2017. The share repurchase program was publicly announced on October 29,2015.We did not conduct any repurchase under this program in 2016.The table below is a summary of the shares repurchased by us in 2017. All shares were repurchased in the open market pursuant to the share repurchaseprogram announced on October 29, 2015. Period TotalNumberof ADSsPurchased AveragePricePaid PerADS Total Numberof ADSsPurchased asPart of thePubliclyAnnouncedPlan ApproximateDollar Value ofADSs that MayYet Be PurchasedUnder the Plan March 1 – March 29 687,610 $169.41 687,610 $1,883,512,951 Total 687,610 $169.41 687,610 $1,883,512,951 Item 16F.Change in Registrant’s Certifying AccountantNot applicable. Item 16G.Corporate GovernanceNASDAQ Stock Market Rule 5620 requires each issuer to hold an annual meeting of shareholders no later than one year after the end of the issuer’sfiscal year-end. However, NASDAQ Stock Market Rule 5615(a)(3) permits foreign private issuers like us to follow “home country practice” in certaincorporate governance matters. Maples and Calder (Hong Kong) LLP, our Cayman Islands counsel, has provided a letter to the NASDAQ Stock Marketcertifying that under Cayman Islands law, we are not required to hold annual shareholder meetings every year. We follow home country practice with respectto annual meetings and did not hold an annual meeting of shareholders in 2016. We may, however, hold annual shareholder meetings in the future if there aresignificant issues that require shareholders’ approvals.Other than the annual meeting practice described above, there are no significant differences between our corporate governance practices and thosefollowed by U.S. domestic companies under NASDAQ Stock Market Rules. Item 16H.Mine Safety DisclosureNot applicable. 135 Table of ContentsPART III Item 17.Financial StatementsWe have elected to provide financial statements pursuant to Item 18. Item 18.Financial StatementsThe consolidated financial statements of Baidu, Inc., its subsidiaries and its consolidated affiliated entities are included at the end of this annual report. Item 19.Exhibits ExhibitNumber Description of Document 1.1 Third Amended and Restated Memorandum and Articles of Association of the Registrant (incorporated by reference to Exhibit 99.2 ofForm 6-K furnished with the Securities and Exchange Commission on December 17, 2008) 2.1 Registrant’s Specimen American Depositary Receipt (incorporated by reference to Exhibit 1 of the prospectus filed with the Securitiesand Exchange Commission on January 5, 2009 pursuant to Rule 424(b)(3) under the Securities Act) 2.2 Registrant’s Specimen Certificate for Class A Ordinary Shares (incorporated by reference to Exhibit 4.2 of Amendment No. 5 to ourRegistration Statement on Form F-1 (file no. 333-126534) filed with the Securities and Exchange Commission on August 2, 2005) 2.3 Form of Deposit Agreement among the Registrant, the depositary and holder of the American Depositary Receipts (incorporated byreference to Exhibit 4.3 to our Registration Statement on Form F-1 (file no. 333-126534) filed with the Securities and ExchangeCommission on July 12, 2005) 2.4 Indenture, dated November 28, 2012 between the Registrant and The Bank of New York Mellon, as trustee (incorporated by referenceto Exhibit 4.1 to Form 6-K furnished with the Securities and Exchange Commission on November 28, 2012) 2.5 First Supplemental Indenture dated November 28, 2012 between the Registrant and The Bank of New York Mellon, as trustee(incorporated by reference to Exhibit 4.2 to Form 6-K furnished with the Securities and Exchange Commission on November 28, 2012) 2.6 Form of 2.250% Notes due 2017 (incorporated by reference to Exhibit 4.2 to Form 6-K furnished with the Securities and ExchangeCommission on November 28, 2012) 2.7 Form of 3.500% Notes due 2022 (incorporated by reference to Exhibit 4.2 to Form 6-K furnished with the Securities and ExchangeCommission on November 28, 2012) 2.8 Second Supplemental Indenture dated August 6, 2013 between the Registrant and The Bank of New York Mellon, as trustee(incorporated by reference to Exhibit 4.5 to Form 6-K furnished with the Securities and Exchange Commission on August 6, 2013) 2.9 Form of 3.250% Notes due 2018 (incorporated by reference to Exhibit 4.5 to Form 6-K furnished with the Securities and ExchangeCommission on August 6, 2013) 2.10 Third Supplemental Indenture dated June 9, 2014 between the Registrant and The Bank of New York Mellon, as trustee (incorporatedby reference to Exhibit 4.5 to Form 6-K furnished with the Securities and Exchange Commission on June 9, 2014) 2.11 Form of 2.750% Notes due 2019 (incorporated by reference to Exhibit 4.5 to Form 6-K furnished with the Securities and ExchangeCommission on June 9, 2014) 136 Table of ContentsExhibitNumber Description of Document 2.12 Fourth Supplemental Indenture dated June 30, 2015 between the Registrant and The Bank of New York Mellon, as trustee(incorporated by reference to Exhibit 4.1 to Form 6-K furnished with the Securities and Exchange Commission on July 2, 2015) 2.13 Form of 3.00% Notes due 2020 (incorporated by reference to Exhibit 4.1 to Form 6-K furnished with the Securities and ExchangeCommission on July 2, 2015) 2.14 Form of 4.125% Notes due 2025 (incorporated by reference to Exhibit 4.1 to Form 6-K furnished with the Securities and ExchangeCommission on July 2, 2015) 4.1 2000 Option Plan (amended and restated effective December 16, 2008) (incorporated by reference to Exhibit 99.3 of Form 6-Kfurnished with the Securities and Exchange Commission on December 17, 2008) 4.2 2008 Share Incentive Plan (incorporated by reference to Exhibit 99.4 of Form 6-K furnished with the Securities and ExchangeCommission on December 17, 2008) 4.3 Form of Indemnification Agreement between the Registrant and the Registrant’s directors (incorporated by reference to Exhibit 10.3 ofour Registration Statement on Form F-1 (file no. 333-126534) filed with the Securities and Exchange Commission on July 12, 2005) 4.4 Form of Employment Agreement between the Registrant and an Executive Officer of the Registrant (incorporated by reference toExhibit 10.4 of our Registration Statement on Form F-1 (file no. 333-126534) filed with the Securities and Exchange Commission onJuly 12, 2005) 4.5 Translation of Exclusive Technology Consulting and Services Agreement dated March 22, 2005 between Baidu Online and BaiduNetcom and the supplementary agreement dated April 22, 2010 (incorporated by reference to Exhibit 4.6 of our Annual Report on Form20-F filed with the Securities and Exchange Commission on March 29, 2012) 4.6 Translation of Operating Agreement dated March 22, 2005 between Baidu Online and Baidu Netcom (incorporated by reference toExhibit 99.4 of our Registration Statement on Form F-1 (file no. 333-126534) filed with the Securities and Exchange Commission onJuly 12, 2005) 4.7 Translation of Software License Agreement dated March 22, 2005 between Baidu Online and Baidu Netcom (incorporated by referenceto Exhibit 99.5 of our Registration Statement on Form F-1 (file no. 333-126534) filed with the Securities and Exchange Commission onJuly 12, 2005) 4.8 Translation of Web Layout Copyright License Agreement dated March 1, 2004 between Baidu Online and Baidu Netcom and thesupplementary agreement dated August 9, 2004 (incorporated by reference to Exhibit 99.8 of our Registration Statement on Form F-1(file no. 333-126534) filed with the Securities and Exchange Commission on July 12, 2005) 4.9 Translation of Proxy Agreement dated August 9, 2004 among Baidu Online, Baidu Netcom, Robin Yanhong Li and Eric Yong Xu(incorporated by reference to Exhibit 99.9 of our Registration Statement on Form F-1 (file no. 333-126534) filed with the Securities andExchange Commission on July 12, 2005) 4.10 Translation of the form of Technology Consulting and Services Agreement between Baidu Online and a consolidated affiliated PRCentity (incorporated by reference to Exhibit 4.19 of our Annual Report on Form 20-F filed with the Securities and ExchangeCommission on June 5, 2008) 4.11 Translation of the form of Operating Agreement between Baidu Online and a consolidated affiliated PRC entity (incorporated byreference to Exhibit 4.20 of our Annual Report on Form 20-F filed with the Securities and Exchange Commission on June 5, 2008) 137 Table of ContentsExhibitNumber Description of Document 4.12 Translation of the form of Web Layout Copyright License Agreement between Baidu Online and a consolidated affiliated PRC entity(incorporated by reference to Exhibit 4.21 of our Annual Report on Form 20-F filed with the Securities and Exchange Commission onJune 5, 2008) 4.13 Translation of the form of Proxy Agreement among Baidu Online, a consolidated affiliated PRC entity and the shareholders of theconsolidated affiliated PRC entity (incorporated by reference to Exhibit 4.22 of our Annual Report on Form 20-F filed with theSecurities and Exchange Commission on June 5, 2008) 4.14 Translation of the form of Equity Pledge Agreement between Baidu Online and the shareholder of a consolidated affiliated PRC entity(incorporated by reference to Exhibit 4.23 of our Annual Report on Form 20-F filed with the Securities and Exchange Commission onJune 5, 2008) 4.15 Translation of the form of Exclusive Equity Purchase and Transfer Option Agreement between Baidu Online and the shareholder of aconsolidated affiliated PRC entity (incorporated by reference to Exhibit 4.24 of our Annual Report on Form 20-F filed with theSecurities and Exchange Commission on June 5, 2008) 4.16 Translation of the form of Loan Agreement between Baidu Online and the shareholder of a consolidated affiliated PRC entity(incorporated by reference to Exhibit 4.25 of our Annual Report on Form 20-F filed with the Securities and Exchange Commission onJune 5, 2008) 4.17 Translation of the Supplementary Agreement to Exclusive Technology Consulting and Services Agreement dated June 23, 2006between Baidu Online and Beijing Perusal, dated as of April 22, 2010 (incorporated by reference to Exhibit 4.25 of our Annual Reporton Form 20-F filed with the Securities and Exchange Commission on March 29, 2012) 4.18 Translation of the Web Layout Copyright License Agreement dated June 23, 2006 between Baidu Online and Beijing Perusal(incorporated by reference to Exhibit 4.27 of our Annual Report on Form 20-F filed with the Securities and Exchange Commission onMarch 29, 2011) 4.19 Translation of the Technology Consulting and Services Agreement dated February 28, 2008 between Baidu Online and BaiduPay andthe supplementary agreement dated April 22, 2010 (incorporated by reference to Exhibit 4.33 of our Annual Report on Form 20-F filedwith the Securities and Exchange Commission on March 29, 2011) 4.20 Translation of the Web Layout Copyright License Agreement dated February 28, 2008 between Baidu Online and BaiduPay(incorporated by reference to Exhibit 4.35 of our Annual Report on Form 20-F filed with the Securities and Exchange Commission onMarch 29, 2011) 4.21 Translation of the supplementary agreements, dated March 11, 2010 and April 22, 2010 to the Software License Agreement datedMarch 22, 2005 between Baidu Online and Baidu Netcom (incorporated by reference to Exhibit 4.48 of our Annual Report on Form20-F filed with the Securities and Exchange Commission on March 29, 2011) 4.22 Translation of the supplementary agreement dated March 1, 2010 to the Web Layout Copyright License Agreement dated March 1,2004 between Baidu Online and Baidu Netcom and the supplementary agreement dated August 9, 2004 (incorporated by reference toExhibit 4.50 of our Annual Report on Form 20-F filed with the Securities and Exchange Commission on March 29, 2011) 4.23 Translation of the supplementary agreement dated April 22, 2010 to the Operating Agreement dated March 22, 2005 between BaiduOnline and Baidu Netcom (incorporated by reference to Exhibit 4.51 of our Annual Report on Form 20-F filed with the Securities andExchange Commission on March 29, 2011) 138 Table of ContentsExhibitNumber Description of Document 4.24 Translation of the supplementary agreement to the Loan Agreement among Robin Yanhong Li, Baidu Netcom and Baidu Online datedSeptember 6, 2011 (incorporated by reference to Exhibit 4.65 of our Annual Report on Form 20-F filed with the Securities andExchange Commission on March 29, 2012) 4.25 Translation of the supplementary agreement to the Software License Agreement between Baidu Online and Baidu Netcom datedJanuary 30, 2011 (incorporated by reference to Exhibit 4.68 of our Annual Report on Form 20-F filed with the Securities and ExchangeCommission on March 29, 2012) 4.26 Translation of the supplementary agreement to the Web Layout Copyright License Agreement between Baidu Online and BaiduNetcom dated January 30, 2011 (incorporated by reference to Exhibit 4.69 of our Annual Report on Form 20-F filed with the Securitiesand Exchange Commission on March 29, 2012) 4.27 Translation of Supplementary Agreement among Baidu Online, BaiduPay, Baidu Netcom and Hu Cai dated September 6, 2011(incorporated by reference to Exhibit 4.79 of our Annual Report on Form 20-F filed with the Securities and Exchange Commission onMarch 29, 2012) 4.28 Translation of the Supplementary Agreement to Exclusive Technology Consulting and Services Agreement between Baidu Online andBaiduPay dated September 6, 2011 (incorporated by reference to Exhibit 4.80 of our Annual Report on Form 20-F filed with theSecurities and Exchange Commission on March 29, 2012) 4.29 Translation of the Supplementary Agreement to Web Layout Copyright License Agreement between Baidu Online and BaiduPay datedSeptember 6, 2011 (incorporated by reference to Exhibit 4.74 of our Annual Report on Form 20-F filed with the Securities andExchange Commission on March 27, 2013) 4.30 Translation of the supplementary agreement to the Web Layout Copyright License Agreement between Baidu Online and BaiduNetcom dated August 15, 2013 (incorporated by reference to Exhibit 4.64 of our Annual Report on Form 20-F filed with the Securitiesand Exchange Commission on March 28, 2014) 4.31 Translation of the supplementary agreement to the Software License Agreement between Baidu Online and Baidu Netcom datedAugust 15, 2013 (incorporated by reference to Exhibit 4.65 of our Annual Report on Form 20-F filed with the Securities and ExchangeCommission on March 28, 2014) 4.32 Translation of the supplementary agreement to the Web Layout Copyright License Agreement between Baidu Online and BeijingPerusal dated August 15, 2013 (incorporated by reference to Exhibit 4.66 of our Annual Report on Form 20-F filed with the Securitiesand Exchange Commission on March 28, 2014) 4.33 Translation of the supplementary agreement to the Web Layout Copyright License Agreement between Baidu Online and BaiduPaydated August 15, 2013 (incorporated by reference to Exhibit 4.67 of our Annual Report on Form 20-F filed with the Securities andExchange Commission on March 28, 2014) 4.34* Translation of the Termination Agreements among Baidu Online, Beijing Perusal, Jiping Liu and Yazhu Zhang, former individualshareholders of Beijing Perusal, dated March 15, 2016 and May 3, 2016, respectively 4.35* Translation of the Amended and Restated Loan Agreements between Baidu Online and Zhixiang Liang, and between Baidu Online andXiaodong Wang, both dated June 20, 2016 139 Table of ContentsExhibitNumber Description of Document 4.36* Translation of the Equity Transfer Agreements between Jiping Liu and Zhixiang Liang, between Jiping Liu and Xiaodong Wang, andbetween Yazhu Zhang and Xiaodong Wang, all dated May 3, 2016 4.37* Translation of Proxy Agreement among Zhixiang Liang and Baidu Online and of Proxy Agreement among Xiaodong Wang and BaiduOnline, both dated May 3, 2016 4.38* Translation of the Operating Agreement among Baidu Online, Beijing Perusal, Zhixiang Liang, and Xiaodong Wang, dated May 3,2016 4.39* Translation of the Amended and Restated Equity Pledge Agreements between Baidu Online and Zhixiang Liang, and between BaiduOnline and Xiaodong Wang, both dated June 20, 2016 4.40* Translation of the Amended and Restated Exclusive Equity Purchase and Transfer Option Agreements among Baidu Online, ZhixiangLiang and Beijing Perusal, and among Baidu Online, Xiaodong Wang and Beijing Perusal, both dated June 20, 2016 4.41* Translation of Irrevocable Power of Attorney issued by Zhixiang Liang, the individual shareholder of Beijing Perusal, dated May 3,2016 4.42* Translation of Irrevocable Power of Attorney issued by Xiaodong Wang, the individual shareholder of Beijing Perusal, dated May 3,2016 4.43* Translation of the Termination Agreement of Current Control Contracts among Baidu Online, Baidu Netcom, Robin Yanhong Li andZhan Wang dated June 13, 2016 4.44* Translation of the Amended and Restated Loan Agreement between Baidu Online and Hailong Xiang dated January 18, 2017 4.45* Translation of the Amended and Restated Loan Agreement between Baidu Online and Yanhong Li dated January 18, 2017 4.46* Translation of the Equity Transfer Agreement between Zhan Wang and Hailong Xiang dated June 13, 2016 4.47* Translation of the Proxy Agreement among Robin Yanhong Li, Hailong Xiang and Baidu Online dated June 13, 2016 4.48* Translation of the Operating Agreement among Baidu Online, Baidu Netcom, Robin Yanhong Li, Hailong Xiang dated June 13, 2016 4.49* Translation of the Amended and Restated Equity Pledge Agreement between Baidu Online and Hailong Xiang dated January 18, 2017 4.50* Translation of the Amended and Restated Equity Pledge Agreement between Baidu Online and Yanhong Li dated January 18, 2017 4.51* Translation of the Amended and Restated Exclusive Equity Purchase and Transfer Option Agreement among Baidu Online, HailongXiang and Baidu Netcom dated January 18, 2017 4.52* Translation of the Amended and Restated Exclusive Equity Purchase and Transfer Option Agreement among Baidu Online, YanhongLi and Baidu Netcom dated January 18, 2017 4.53* Translation of Irrevocable Power of Attorney issued by Robin Yanhong Li, an individual shareholder of Baidu Netcom, dated June 13,2016 4.54* Translation of Irrevocable Power of Attorney issued by Hailong Xiang, an individual shareholder of Baidu Netcom, dated June 13,2016 140 Table of ContentsExhibitNumber Description of Document 4.55* Translation of the Termination of Power of Attorney issued by Zhixiang Liang to Zhan Wang, dated October 18, 2016 4.56* Translation of Irrevocable Power of Attorney issued by Zhixiang Liang, the individual shareholder of BaiduPay, dated October 18,2016 4.57* Translation of Acceptance of the Irrevocable Power of Attorney by Hailong Xiang, dated October 18, 2016 4.58* Translation of the Amended and Restated Equity Pledge Agreement between Baidu Online and Zhixiang Liang, dated October 18,2016 4.59* Translation of the Amended and Restated Exclusive Equity Purchase and Transfer Option Agreement between Baidu Online, ZhixiangLiang and BaiduPay, dated October 18, 2016 4.60* Translation of the Amended and Restated Loan Agreement between Baidu Online and Zhixiang Liang, dated October 18, 2016 4.61* Translation of the Amended and Restated Operating Agreement among Baidu Online, BaiduPay, Zhixiang Liang, Baidu Netcom, andAn Yi Heng Tong (Beijing) Co., Ltd., dated October 18, 2016 4.62 Loan Agreement between Baidu, Inc. and Bank of China, Los Angeles Branch dated December 9, 2014 (incorporated by reference toExhibit 4.73 of our Annual Report on Form 20-F filed with the Securities and Exchange Commission on March 27, 2015) 4.63 Share Exchange Agreement among Baidu, Inc., Baidu Holdings Limited and Ctrip.com International, Ltd. dated October 24, 2015(incorporated by reference to Exhibit 2 of our Report on Schedule 13D filed with the Securities and Exchange Commission with respectto Ctrip.com International, Ltd. on November 5, 2015) 4.64 Standstill Agreement between Baidu, Inc. and Ctrip.com International, Ltd. dated October 26, 2015 (incorporated by reference toExhibit 3 of our Report on Schedule 13D filed with the Securities and Exchange Commission with respect to Ctrip.com International,Ltd. on November 5, 2015) 4.65 Registration Rights Agreement between Baidu Holdings Limited and Ctrip.com International, Ltd. dated October 26, 2015(incorporated by reference to Exhibit 4 of our Report on Schedule 13D filed with the Securities and Exchange Commission with respectto Ctrip.com International, Ltd. on November 5, 2015) 4.66 Facility Agreement between Baidu, Inc. and Sumitomo Mitsui Banking Corporation dated July 17, 2015 (incorporated by reference toExhibit 4.68 of our Annual Report on Form 20-F filed with the Securities and Exchange Commission on April 8, 2016) 4.67 Facility Agreement between Baidu, Inc. and The Hong Kong and Shanghai Banking Corporation Limited dated August 25, 2015(incorporated by reference to Exhibit 4.69 of our Annual Report on Form 20-F filed with the Securities and Exchange Commission onApril 8, 2016) 4.68* US$2,000,000,000 Facilities Agreement between the Registrant and other parties thereto dated June 8, 2016 4.69* Note Purchase Agreement among Qiyi.com, Inc., Baidu Holdings Limited and other parties thereto dated January 11, 2017 8.1* List of Principal Subsidiaries and Consolidated Affiliated Entities 141 Table of ContentsExhibitNumber Description of Document 11.1 Code of Business Conduct and Ethics (incorporated by reference to Exhibit 99.14 of our Registration Statement on Form F-1 (file no.333-126534) filed with the Securities and Exchange Commission on July 12, 2005) 12.1* Certification by Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 12.2* Certification by Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 13.1** Certification by Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 13.2** Certification by Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 15.1* Consent of Maples and Calder (Hong Kong) LLP 15.2* Consent of Han Kun Law Offices 15.3* Consent of Ernst & Young Hua Ming LLP 101.INS* XBRL Instance Document 101.SCH* XBRL Taxonomy Extension Schema Document 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* XBRL Taxonomy Extension Label Linkbase Document 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document *Filed herewith**Furnished herewith 142 Table of ContentsSIGNATURESThe registrant hereby certifies that it meets all of the requirements for filing its annual report on Form 20-F and that it has duly caused and authorizedthe undersigned to sign this annual report on its behalf. Baidu, Inc.By: /s/ Robin Yanhong Li Name: Robin Yanhong LiTitle: Chairman and Chief Executive Officer Date: March 31, 2017 143 Table of ContentsBAIDU, INC.INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page(s) Reports of Independent Registered Public Accounting Firm F-2 – F-3 Consolidated Balance Sheets as of December 31, 2015 and 2016 F-4 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2014, 2015 and 2016 F-5 Consolidated Statements of Cash Flows for the Years Ended December 31, 2014, 2015 and 2016 F-6 – F-7 Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2014, 2015 and 2016 F-8 Notes to the Consolidated Financial Statements F-9 – F-64 F-1 Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe Board of Directors and Shareholders of Baidu, Inc.We have audited the accompanying consolidated balance sheets of Baidu, Inc. (the “Company”) as of December 31, 2016 and 2015, and the relatedconsolidated statements of comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2016.These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statementsbased on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion.In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Baidu, Inc. atDecember 31, 2016 and 2015, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31,2016, in conformity with U.S. generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Baidu, Inc.’s internal controlover financial reporting as of December 31, 2016, based on criteria established in Internal Control-Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 31, 2017 expressed an unqualified opinion thereon./s/ Ernst & Young Hua Ming LLPBeijing, The People’s Republic of ChinaMarch 31, 2017 F-2 Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe Board of Directors and Shareholders of Baidu, Inc.We have audited Baidu, Inc.’s internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control-IntegratedFramework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Baidu, Inc.’smanagement is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal controlover financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is toexpress an opinion on the company’s internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all materialrespects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testingand evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considerednecessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.In our opinion, Baidu, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on theCOSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheetsof Baidu, Inc. as of December 31, 2016 and 2015, and the related consolidated statements of comprehensive income, shareholders’ equity, and cash flows foreach of the three years in the period ended December 31, 2016 of Baidu, Inc., and our report dated March 31, 2017 expressed an unqualified opinion thereon./s/ Ernst & Young Hua Ming LLPBeijing, The People’s Republic of ChinaMarch 31, 2017 F-3 Table of ContentsBAIDU, INC.CONSOLIDATED BALANCE SHEETS(Amounts in thousands of Renminbi (“RMB”), and in thousands of U.S. Dollars (“US$”), except for number of shares and per share data) As of December 31, Notes 2015 2016 2016 RMB RMB US$ ASSETS Current assets: Cash and cash equivalents 9,959,932 10,898,463 1,569,705 Restricted cash 95,997 317,521 45,733 Short-term investments 4 57,969,242 78,943,065 11,370,166 Accounts receivable, net of allowance of RMB189,563 and RMB177,401 (US$25,551) for 2015 and 2016, respectively 5 3,926,986 4,109,324 591,866 Loans and interest receivable, current portion net of allowances of RMB8,945 and RMB48,722 (US$7,017) for 2015 and2016, respectively 227,107 1,800,397 259,311 Amounts due from related parties 19 1,940,559 345,594 49,776 Other current assets, net 6 4,113,840 3,344,516 481,710 Total current assets 78,233,663 99,758,880 14,368,267 Non-current assets: Fixed assets, net 7 10,627,127 11,294,348 1,626,724 Intangible assets, net 8 3,334,619 3,872,227 557,718 Goodwill 8 15,395,573 15,342,096 2,209,721 Long-term investments, net 4 37,958,591 45,690,363 6,580,781 Deferred tax assets, net 12 1,008,174 1,100,230 158,466 Loans and interest receivable, non current portion net of allowances of nil and RMB69,457 (US$10,004) for 2015 and2016, respectively 122,093 2,708,817 390,151 Amounts due from related parties 19 9,725 11,153 1,606 Other non-current assets 1,163,743 2,219,277 319,642 Total non-current assets 69,619,645 82,238,511 11,844,809 Total assets 147,853,308 181,997,391 26,213,076 LIABILITIES AND EQUITY Current liabilities (including amounts of the consolidated VIEs without recourse to the primary beneficiaries ofRMB14,391,610 and RMB20,914,589 (US$3,012,327) as of December 31, 2015 and 2016, respectively): 1 Short-term loans 10 100,000 1,115,000 160,593 Accounts payable and accrued liabilities 9 17,840,192 28,654,086 4,127,047 Customer advances and deposits 5,420,230 6,031,681 868,743 Deferred revenue 375,672 596,460 85,908 Deferred income 559,855 566,104 81,536 Long-term loans, current portion 10 974,820 3,468,296 499,539 Notes payable, current portion 11 — 5,203,315 749,433 Amounts due to related parties 19 785,945 458,687 66,065 Capital lease obligation 46,088 8,416 1,212 Total current liabilities 26,102,802 46,102,045 6,640,076 Non-current liabilities (including amounts of the consolidated VIEs without recourse to the primary beneficiaries ofRMB2,718,124 and RMB1,107,864 (US$159,566) as of December 31, 2015 and 2016, respectively): 1 Deferred income 17,413 27,828 4,008 Long-term loans 10 3,239,676 6,822,109 982,588 Notes payable 11 30,702,116 27,648,477 3,982,209 Deferred tax liabilities 12 3,441,290 3,589,235 516,957 Capital lease obligation 8,435 348 50 Other non-current liabilities 125,860 64,954 9,355 Total non-current liabilities 37,534,790 38,152,951 5,495,167 Total liabilities 63,637,592 84,254,996 12,135,243 Commitments and contingencies 14 Redeemable noncontrolling interests 15 3,947,879 5,491,976 791,009 Equity Class A ordinary shares, par value US$0.00005 per share, 825,000,000 shares authorized, and 27,113,541 shares and27,325,551 shares issued and outstanding as at December 31, 2015 and 2016, respectively 16 12 12 2 Class B ordinary shares, par value US$0.00005 per share, 35,400,000 shares authorized, and 7,492,921 shares and7,401,254 shares issued and outstanding as at December 31, 2015 and 2016, respectively 16 3 3 — Additional paid-in capital 6,402,349 8,322,787 1,198,731 Retained earnings 16 74,659,355 85,733,706 12,348,222 Accumulated other comprehensive loss 16 (806,056) (1,782,966) (256,801) Total Baidu, Inc. shareholders’ equity 80,255,663 92,273,542 13,290,154 Noncontrolling interests 12,174 (23,123) (3,330) Total equity 80,267,837 92,250,419 13,286,824 Total liabilities, redeemable noncontrolling interests and equity 147,853,308 181,997,391 26,213,076 The accompanying notes are an integral part of the consolidated financial statements. F-4 Table of ContentsBAIDU, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(Amounts in thousands of Renminbi (“RMB”), and in thousands of U.S. Dollars (“US$”), except for number of shares and per share (or ADS) data) For the Years Ended December 31, Notes 2014 2015 2016 2016 RMB RMB RMB US$ Revenues: Online marketing services 48,495,215 64,037,006 64,525,115 9,293,550 Others 557,103 2,344,723 6,024,249 867,672 Total revenues 49,052,318 66,381,729 70,549,364 10,161,222 Operating costs and expenses: Cost of revenues (18,885,450) (27,458,030) (35,278,945) (5,081,225) Selling, general and administrative (10,382,142) (17,076,383) (15,070,586) (2,170,616) Research and development (6,980,962) (10,175,762) (10,150,753) (1,462,013) Total operating costs and expenses (36,248,554) (54,710,175) (60,500,284) (8,713,854) Operating profit 12,803,764 11,671,554 10,049,080 1,447,368 Other income: Interest income 1,992,818 2,362,632 2,341,631 337,265 Interest expense (628,571) (1,041,394) (1,157,562) (166,724) Foreign exchange income, net 75,780 181,802 508,312 73,212 Income (loss) from equity method investments 4 (19,943) 3,867 (1,025,727) (147,735) Others, net 4 260,558 24,728,162 3,793,473 546,374 Total other income, net 1,680,642 26,235,069 4,460,127 642,392 Income before income taxes 14,484,406 37,906,623 14,509,207 2,089,760 Income taxes 12 (2,231,172) (5,474,377) (2,913,594) (419,645) Net income 12,253,234 32,432,246 11,595,613 1,670,115 Net loss attributable to noncontrolling interests 943,698 1,231,927 36,656 5,280 Net income attributable to Baidu, Inc. 13,196,932 33,664,173 11,632,269 1,675,395 Earnings per share for Class A and Class B ordinary shares: 17 Basic 374.88 954.56 319.47 46.01 Diluted 373.43 951.49 318.62 45.89 Earnings per ADS (1 Class A ordinary share equals 10 ADSs): 17 Basic 37.49 95.46 31.95 4.60 Diluted 37.34 95.15 31.86 4.59 Weighted average number of Class A and Class B ordinary shares outstanding: Basic 35,062,466 34,921,782 34,665,238 34,665,238 Diluted 35,198,474 35,034,470 34,757,086 34,757,086 Other comprehensive loss: 16 Foreign currency translation adjustment (422,925) (644,896) (589,870) (84,959) Unrealized gains (losses) on available-for-sale investments, net of reclassification (17,698) 294,559 (60,393) (8,698) Other comprehensive loss, net of tax (440,623) (350,337) (650,263) (93,657) Comprehensive income 11,812,611 32,081,909 10,945,350 1,576,458 Comprehensive loss (income) attributable to noncontrolling interests and redeemablenoncontrolling interests 923,545 1,055,726 (289,991) (41,767) Comprehensive income attributable to Baidu, Inc. 12,736,156 33,137,635 10,655,359 1,534,691 The accompanying notes are an integral part of the consolidated financial statements. F-5 Table of ContentsBAIDU, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in thousands of Renminbi (“RMB”), and in thousands of U.S. Dollars (“US$”)) For the Years Ended December 31, 2014 2015 2016 2016 RMB RMB RMB US$ Cash flows from operating activities: Net income 12,253,234 32,432,246 11,595,613 1,670,115 Adjustments to reconcile net income to net cash generated from operatingactivities: Depreciation of fixed assets and computer parts 2,223,907 2,886,254 3,451,422 497,108 Gain on disposal of fixed assets (24,395) (24,233) (83,641) (12,047) Amortization of intangible assets and licensed copyrights 1,748,387 2,974,658 4,876,135 702,310 Deferred income tax, net (693,448) 2,260,739 (13,561) (1,953) Share-based compensation 962,740 1,387,118 1,759,988 253,491 Provision for doubtful accounts 77,472 246,878 268,564 38,681 Investment income (1,932,046) (2,709,222) (4,971,008) (715,974) Net gain from step-acquisition and settlement of pre-existingrelationship (75,229) — — — Assets impairment 95,049 116,978 421,395 60,694 Loss (income) from equity method investments 19,943 (3,867) 1,025,727 147,735 Gain on disposal of subsidiaries — (24,435,554) (1,246,617) (179,550) Other non-cash expenses (income) 32,435 52,959 (463,372) (66,739) Changes in operating assets and liabilities, net of effects of acquisitions anddisposals: Restricted cash (51,077) (1,555,178) (221,524) (31,906) Accounts receivable (1,462,086) (868,564) (238,198) (34,308) Other assets (1,628,737) (1,736,825) 236,106 34,006 Amounts due from related parties 370,970 (795,977) 1,593,537 229,517 Customer advances and deposits 1,313,806 1,468,595 646,444 93,107 Accounts payable and accrued liabilities 5,028,890 7,179,338 3,711,093 534,509 Deferred revenue (61,790) 210,763 220,788 31,800 Deferred income 104,391 19,099 16,664 2,400 Amounts due to related parties (365,241) 664,917 (327,258) (47,135) Net cash generated from operating activities 17,937,175 19,771,122 22,258,297 3,205,861 Cash flows from investing activities: Acquisition of fixed assets (4,827,163) (5,229,616) (4,189,187) (603,368) Acquisition of computer parts (4,302) (20,634) (25,894) (3,730) Proceeds from disposal of fixed assets 20,422 33,271 55,180 7,948 Acquisition of businesses, net of cash acquired (Note 3) (328,891) (332,679) — — Disposal of subsidiaries and business — (3,541,228) 274,715 39,567 Acquisition of intangible assets (1,563,746) (2,492,855) (6,294,473) (906,593) Capitalization of software costs — (31,351) (214) (31) Purchases of held-to-maturity investments (55,356,781) (50,207,364) (47,633,880) (6,860,706) Maturities of held-to-maturity investments 37,449,747 51,961,778 46,143,249 6,646,010 Purchases of available-for-sale investments (78,033,523) (126,155,824) (182,342,203) (26,262,740) Sales and maturities of available-for-sale investments 81,931,252 110,652,993 173,820,615 25,035,378 Purchases of other long-term investments (1,777,331) (5,940,309) (4,005,136) (576,860) Sales of other long-term investments 22,362 23,141 303,398 43,698 Cash distribution from long-term investments 180 8,233 4,892 705 Micro loan origination and disbursement — (451,578) (7,920,321) (1,140,764) Principal payments received on micro loans — 102,894 3,555,655 512,121 Purchases of trading investments — — (8,968,318) (1,291,707) Maturities of trading investments — — 1,311,163 188,847 Net cash used in investing activities (22,467,774) (31,621,128) (35,910,759) (5,172,225) F-6 Table of ContentsBAIDU, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)(Amounts in thousands of Renminbi (“RMB”), and in thousands of U.S. Dollars (“US$”)) For the Years Ended December 31, 2014 2015 2016 2016 RMB RMB RMB US$ Cash flows from financing activities: Restricted cash (served) released as collateral for borrowings (102,400) 102,400 — — Proceeds from issuance of subsidiaries’ shares 1,846,819 3,527,945 660,773 95,171 Payments to acquire subsidiaries’ shares from noncontrolling interests (622,961) — — — Proceeds from short-term loans 92,432 100,000 3,252,472 468,453 Repayments of short-term loans — (84,850) (1,940,642) (279,511) Proceeds from long-term loans 1,807,646 2,161,701 6,633,228 955,384 Repayments of long-term loans (347,659) (2,173,010) (1,041,720) (150,039) Net proceeds from sale of financial products — — 10,425,507 1,501,587 Payments on financial products — — (3,666,561) (528,095) Payment of dividends by a subsidiary to noncontrolling interests (337,964) — — — Proceeds from issuance of notes payable 6,156,016 10,354,491 — — Payments of capital lease obligation (72,817) (58,837) (52,508) (7,563) Repurchase of ordinary shares — (6,376,964) — — Proceeds from exercise of share options 192,848 225,156 176,131 25,368 Net cash generated from financing activities 8,611,960 7,778,032 14,446,680 2,080,755 Effect of exchange rate changes on cash and cash equivalents 79,567 179,181 144,313 20,785 Net increase (decrease) in cash and cash equivalents 4,160,928 (3,892,793) 938,531 135,176 Cash and cash equivalents at beginning of the year 9,691,797 13,852,725 9,959,932 1,434,529 Cash and cash equivalents at end of the year 13,852,725 9,959,932 10,898,463 1,569,705 Supplemental disclosures: Interests paid 592,759 867,039 1,110,657 159,968 Income taxes paid 2,798,040 2,763,119 2,402,114 345,976 Non-cash investing and financing activities: Capital lease obligation 94,336 6,081 6,750 972 Acquisition of fixed assets included in accounts payable and accrued liabilities 1,131,870 1,028,171 903,000 130,059 Acquisition of other non-current assets included in accounts payable and accruedliabilities 39,437 44,215 36,753 5,294 Non-cash acquisitions of investments 75,229 24,431,441 2,963,425 426,822 The accompanying notes are an integral part of the consolidated financial statements. F-7 Table of ContentsBAIDU, INC.CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY(Amounts in thousands of Renminbi (“RMB”), and in thousands of U.S. Dollars (“US$”), except for number of shares) Attributable to Baidu, Inc. Noncontrollinginterests Totalshareholders’equity Ordinary shares Additional paid-incapital Retainedearnings Accumulated othercomprehensiveincome (loss) Number of shares Amount RMB RMB RMB RMB RMB RMB Balances at December 31, 2013 35,030,373 15 3,058,142 34,557,077 181,258 2,240,335 40,036,827 Net income — — — 13,196,932 (943,698) 12,253,234 Other comprehensive income (loss) — — — — (460,776) 20,153 (440,623) Business combination — — — — — 150,000 150,000 Acquisition of subsidiaries’ redeemableshares from noncontrollingshareholders — — (406,285) — — (216,676) (622,961) Accretion of redeemable noncontrollinginterests — — — (52,683) — — (52,683) Dividends distribution by a subsidiary — — — — — (337,964) (337,964) Exercise of share-based awards 75,863 — 199,773 — — 8,033 207,806 Share-based compensation — — 798,971 — — 160,274 959,245 Issuance of subsidiary shares — — — — — 5,000 5,000 Balances at December 31, 2014 35,106,236 15 3,650,601 47,701,326 (279,518) 1,085,457 52,157,881 Net income — — — 33,664,173 — (1,231,927) 32,432,246 Other comprehensive income (loss) — — — — (526,538) 34,130 (492,408) Business combination — — 3,384 — — 7,551 10,935 Issuance of subsidiary shares — — 975,679 — — 959,391 1,935,070 Issuance of convertible notes by adisposed subsidiary — — 278,316 — — 281,259 559,575 Exercise of share-based awards 103,952 — 254,003 — — 24,571 278,574 Share-based compensation — — 1,240,366 — — 143,355 1,383,721 Accretion of redeemable noncontrollinginterests — — — (329,180) — — (329,180) Repurchase and retirement of ordinaryshares (603,726) — — (6,376,964) — (6,376,964) Disposal of subsidiaries — — — — — (1,291,613) (1,291,613) Balances at December 31, 2015 34,606,462 15 6,402,349 74,659,355 (806,056) 12,174 80,267,837 Net income — — — 11,632,269 — (36,656) 11,595,613 Other comprehensive income (loss) — — — — (976,910) 1,239 (975,671) Exercise of share-based awards 120,343 — 172,747 — — — 172,747 Share-based compensation — — 1,747,691 — — 120 1,747,811 Accretion of redeemable noncontrollinginterests — — — (557,918) — — (557,918) Balances at December 31, 2016 34,726,805 15 8,322,787 85,733,706 (1,782,966) (23,123) 92,250,419 Balances at December 31, 2016, in US$ 2 1,198,731 12,348,222 (256,801) (3,330) 13,286,824 The accompanying notes are an integral part of the consolidated financial statements. F-8 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 20161. ORGANIZATION, CONSOLIDATION AND PRESENTATION OF FINANCIAL STATEMENTSBaidu, Inc. (“Baidu” or the “Company”) was incorporated under the laws of the Cayman Islands on January 18, 2000.As of December 31, 2016, the Company has subsidiaries incorporated in countries and jurisdictions including the People’s Republic of China (“PRC”), HongKong, Japan, Cayman Islands and British Virgin Islands (“BVI”). As of December 31, 2016, the Company also effectively controls a number of variableinterest entities (“VIEs”) through the Primary Beneficiaries, as defined below. The VIEs include: • Beijing Baidu Netcom Science Technology Co., Ltd. (“Baidu Netcom”), controlled through Baidu Online Network Technology (Beijing) Co., Ltd.(“Baidu Online”), one of the Company’s wholly-owned subsidiaries; • Beijing Perusal Technology Co., Ltd. (“Beijing Perusal”), controlled through Baidu Online; and • Beijing BaiduPay Science and Technology Co., Ltd. (“BaiduPay”), controlled through Baidu Online; and • Other VIEs controlled through Primary Beneficiaries other than Baidu Online.The Company, its subsidiaries, VIEs and subsidiaries of the VIEs are hereinafter collectively referred to as the “Group”. The Group offers internet searchsolutions and online marketing solutions, operates an online payment platform which enables users to make payments online, develops and markets scalableweb/mobile application software and provides related services, offers transaction services and conducts online advertising business through online videocontents broadcasting. The Group’s principal geographic market is in the PRC. The Company does not conduct any substantive operations of its own, butconducts its primary business operations through its subsidiaries and VIEs in the PRC.PRC laws and regulations prohibit or restrict foreign ownership of internet content, advertising, audio and video services, and mobile application distributionbusinesses. To comply with these foreign ownership restrictions, the Group operates its websites and primarily provides services subject to such restriction inthe PRC through the VIEs, the PRC legal entities that were established or whose equity shares were held by the individuals authorized by the Group. Thepaid-in capital of the VIEs was mainly funded by the Group through loans extended to the authorized individuals who were the shareholders of the VIEs. TheGroup has entered into proxy agreements or power of attorney and exclusive equity purchase option agreement with the VIEs and nominee shareholders ofthe VIEs through the Group’s subsidiaries (“Primary Beneficiaries”), which give the Primary Beneficiaries the power to direct the activities that mostsignificantly affect the economic performance of the VIEs and to acquire the equity interests in the VIEs when permitted by the PRC laws, respectively.Certain exclusive agreements have been entered into with the VIEs through the Primary Beneficiaries or their wholly-owned subsidiaries in the PRC, whichobligate the Primary Beneficiaries to absorb a majority of the risk of loss from the VIEs’ activities and entitle the Primary Beneficiaries to receive a majorityof their residual returns. In addition, the Group has entered into certain agreements with the shareholders of the VIEs through the Primary Beneficiaries ortheir wholly-owned subsidiaries in the PRC, including loan agreements for the paid-in capital of the VIEs and share pledge agreements for the equity interestsin the VIEs held by the shareholders of the VIEs.Despite the lack of technical majority ownership, there exists a parent-subsidiary relationship between the Primary Beneficiaries and the VIEs through theaforementioned agreements with the shareholders of the VIEs. The shareholders of the VIEs effectively assigned all of their voting rights underlying theirequity interest in the VIEs to the Primary Beneficiaries. In addition, through the other exclusive agreements, which consist of operating agreements,technology consulting and services agreements and license agreements, the Primary F-9 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 Beneficiaries, by themselves or their wholly-owned subsidiaries in the PRC, demonstrate their ability and intention to continue to exercise the ability toabsorb substantially all of the profits and all of the expected losses of the VIEs. The VIEs are subject to operating risks, which determine the variability of theCompany’s interest in those entities. Based on these contractual arrangements, the Company consolidates the VIEs as required by SEC Regulation S-X Rule3A-02 and Accounting Standards Codification (“ASC”) topic 810 (“ASC 810”), Consolidation, because the Company holds all the variable interests of theVIEs through the Primary Beneficiaries.Unrecognized revenue-producing assets held by the VIEs include certain internet content provisions and other licenses, domain names and trademarks. Theinternet content provisions and other licenses, which are held by the VIEs that provide the relevant services, are required under relevant PRC laws, rules andregulations for the operation of Internet businesses in the PRC, and therefore are integral to the Company’s operations.The principal terms of the agreements entered into amongst the VIEs, their respective shareholders and the Primary Beneficiaries are further described below.Loan AgreementsPursuant to loan agreements amongst the shareholders of Baidu Netcom and Baidu Online, Baidu Online provided interest-free loans with an aggregateamount of RMB890.00 million (US$128.19 million) to the shareholders of Baidu Netcom solely for the latter to fund the capitalization of Baidu Netcom.The loans can be repaid only with the proceeds from sale of the shareholders’ equity interest in Baidu Netcom to Baidu Online or its designated person. Theterms of the loan agreements will expire on December 30, 2025 at the earliest and can be extended with the written consent of both parties before itsexpiration.Each of the loan agreements amongst Baidu Online and the respective shareholders of Beijing Perusal and BaiduPay contains substantially the same terms asthose described above, except that the amount of the loans extended to the respective shareholders is RMB3.20 billion (US$460.45 million) and RMB216.72million (US$31.21 million), respectively. The term of the loan agreements will expire on June 19, 2026 and October 17, 2026, respectively, and can beextended with the written consent of both parties before its expiration.Exclusive Equity Purchase and Transfer Option AgreementPursuant to the exclusive equity purchase and transfer option agreement amongst the shareholders of Baidu Netcom, Baidu Netcom and Baidu Online, theshareholders of Baidu Netcom irrevocably granted Baidu Online or its designated person(s) an exclusive option to purchase, to the extent permitted underPRC law, all or part of the equity interests in Baidu Netcom for the cost of the initial contributions to the registered capital or the minimum amount ofconsideration permitted by applicable PRC law. The shareholders should remit to Baidu Online any amount that is paid by Baidu Online or its designatedperson(s) in connection with the purchased equity interest. Baidu Online or its designated person(s) have sole discretion to decide when to exercise theoption, whether in part or in full. Any and all dividends and other capital distributions from Baidu Netcom to its shareholders should be paid to Baidu Onlinein full amount. Baidu Online would provide unlimited financial support to Baidu Netcom if, in the normal operation of business, Baidu Netcom wouldbecome in need of any form of reasonable financial support. If Baidu Netcom were to incur any loss and as a result cannot repay any loans from Baidu Online,Baidu Online should unconditionally forgive any such loans to Baidu Netcom given that Baidu Netcom provides sufficient proof for its loss and incapacityto repay. The agreement will terminate when the shareholders of Baidu Netcom have transferred all their equity interests in Baidu Netcom to Baidu Online orits designated person(s) or upon expiration of the term of business of Baidu Online or Baidu Netcom. F-10 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 Each of the exclusive equity purchase and transfer option agreements amongst Baidu Online and Beijing Perusal, BaiduPay and their respective shareholderscontains substantially the same terms as those described above. Each of the agreements will terminate upon the shareholders of Beijing Perusal or BaiduPayhave transferred all their equity interests in Beijing Perusal or BaiduPay, as the case may be, to Baidu Online or its designated person(s) or upon expiration ofthe term of business of Baidu Online, Beijing Perusal or BaiduPay.Proxy Agreement/Power of AttorneyPursuant to the proxy agreement between Baidu Online and the shareholders of Baidu Netcom, the shareholders of Baidu Netcom agreed to entrust all therights to exercise their voting power and any other rights as shareholders of Baidu Netcom to the person(s) designated by Baidu Online. The shareholders ofBaidu Netcom have each executed an irrevocable power of attorney to appoint the person(s) designated by Baidu Online as their attorney-in-fact to vote ontheir behalf on all matters requiring shareholder approval. The proxy agreement would be in effect for an unlimited term unless terminated in writing byBaidu Online earlier. The power of attorney would be in effect for as long as the shareholders of Baidu Netcom hold any equity interests in Baidu Netcom.Each of the proxy agreements amongst Baidu Online and the shareholders of Beijing Perusal and BaiduPay contains substantially the same terms as thosedescribed above. Each of the proxy agreements will be in effect for an unlimited term unless terminated in writing by Baidu Online. Each of the powers ofattorney will be in effect for as long as the shareholder of Beijing Perusal or BaiduPay holds any equity interests in Beijing Perusal or BaiduPay, as the casemay be.Operating AgreementPursuant to the operating agreement amongst Baidu Online, Baidu Netcom and the shareholders of Baidu Netcom, Baidu Online provides guidance andinstructions on Baidu Netcom’s daily operations and financial affairs. Baidu Online has the power to appoint senior executives of Baidu Netcom. Theshareholders of Baidu Netcom must appoint the candidates recommended by Baidu Online as their representatives on Baidu Netcom’s board of directors. Inaddition, Baidu Online agrees to guarantee Baidu Netcom’s performance under any agreements or arrangements relating to Baidu Netcom’s businessarrangements with any third party. In return, Baidu Netcom agrees that without the prior consent of Baidu Online, Baidu Netcom will not engage in anytransactions that could materially affect the assets, liabilities, rights or operations of Baidu Netcom, including, without limitation, incurrence or assumptionof any indebtedness, sale or purchase of any assets or rights, incurrence of any encumbrance on any of its assets or intellectual property rights in favor of athird party or transfer of any agreements relating to its business operation to any third party. The agreement will be in effect for an unlimited term, until theterm of business of Baidu Online or Baidu Netcom expires and extension is denied by the relevant approval authorities.Each of the operating agreements amongst Baidu Online and Beijing Perusal, BaiduPay and their respective shareholders contains substantially the sameterms as those described above. Each of the agreements will be in effect for an unlimited term, until the term of business of Baidu Online, Beijing Perusal orBaiduPay expires and extension is denied by the relevant approval authorities.Exclusive Technology Consulting and Services AgreementPursuant to the exclusive technology consulting and services agreement between Baidu Online and Baidu Netcom, Baidu Online has the exclusive right toprovide to Baidu Netcom technology consulting and services related to, among other things, the maintenance of servers, software development, design ofadvertisements, and F-11 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 e-commerce technical services. Baidu Online owns the intellectual property rights resulting from the performance of this agreement. Baidu Netcom pays amonthly service fee to Baidu Online based upon a pre-agreed formula as defined in the agreement. Baidu Online has the right to adjust the service fees at itssole discretion without the consent of Baidu Netcom. The agreement will be in effect for an unlimited term, until the term of business of one party expires andextension is denied by the relevant approval authorities.Each of the exclusive technology consulting and services agreements between Baidu Online and Beijing Perusal and between Baidu Online and BaiduPaycontains substantially the same terms as those described above, except for the formula calculating the service fees. Baidu Netcom and Beijing Perusal shouldpay Baidu Online a monthly service fee equal to the product of the standard monthly fee for page view per thousand times multiplied by the actual times ofpage view for the month divided by 1,000; and the agreement between Baidu Online and BaiduPay does not provide a formula to calculate the quarterly fee,as BaiduPay has yet to achieve profitability. Each of the agreements will be in effect for an unlimited term, until the term of business of one party expires andextension is denied by the relevant approval authorities.License AgreementsBaidu Online and Baidu Netcom entered into a software license agreement and a web layout copyright license agreement (collectively, the “LicenseAgreements”). Pursuant to the License Agreements between Baidu Online and Baidu Netcom, Baidu Online has granted to Baidu Netcom the right to use(including but not limited to) a software license and a web layout copyright license. Baidu Netcom may only use the licenses in its own business operations.Baidu Online has the right to adjust the service fees at its sole discretion. The software license agreement and web layout copyright license agreement wererenewed since their original expiration and would be in effect for an unlimited term, until the term of business of one party expires and extension is denied bythe relevant approval authorities.Baidu Online entered into web layout copyright license agreements with both Beijing Perusal and BaiduPay. Each of the license agreements between BaiduOnline and Beijing Perusal and between Baidu Online and BaiduPay contains substantially the same terms as those described above. Each of the web layoutcopyright license agreements was renewed since original expiration and would be in effect for an unlimited term, until the term of business of one partyexpires and extension is denied by the relevant approval authorities.Equity Pledge AgreementPursuant to the equity pledge agreement between Baidu Online and the shareholders of Baidu Netcom, the shareholders of Baidu Netcom pledged all of theirequity interests in Baidu Netcom to Baidu Online to guarantee their obligations under the loan agreement and Baidu Netcom’s performance of its obligationsunder the exclusive technology consulting and services agreement. If Baidu Netcom or its shareholders breach their respective contractual obligations, BaiduOnline, as the pledgee, will be entitled to certain rights, including the right to sell the pledged equity interests. The shareholders of Baidu Netcom agreed notto dispose of the pledged equity interests or take any actions that would prejudice Baidu Online’s interest. The equity pledge agreement will expire two yearsafter expiration of the term or the fulfillment by Baidu Netcom and its shareholders of their respective obligations under the exclusive technology consultingand services agreement and the loan agreement.Each of the equity pledge agreements amongst Baidu Online and the respective shareholders of Beijing Perusal and BaiduPay contains substantially thesame terms, including term period, as those described above. F-12 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 The equity pledges of BaiduPay described above are in the process of perfecting by registration with the relevant local administration for industry andcommerce as required for a property right under the PRC Property Rights Law, due to recent increases in registered capital.Through the design of the aforementioned agreements, the shareholders of the VIEs effectively assigned their full voting rights to Baidu Online, which givesBaidu Online the power to direct the activities that most significantly impact the VIEs’ economic performance. Baidu Online obtains the ability to approvedecisions made by the VIEs and the ability to acquire the equity interests in the VIEs when permitted by PRC law. Baidu Online is obligated to absorb amajority of the expected losses from the VIEs’ activities through providing unlimited financial support to the VIEs and is entitled to receive a majority ofresidual returns from the VIEs through the exclusive technology consulting and service fees. As a result of these contractual agreements, Baidu Online isdetermined to be the primary beneficiary of the VIEs. Despite the lack of technical majority ownership, there exists a parent-subsidiary relationship betweenthe Company and the VIEs through these contractual agreements, and the Company consolidates the VIEs through Baidu Online.There are similar agreements entered into by Primary Beneficiaries besides Baidu Online with their VIEs and the respective shareholders, which resulted in aparent-subsidiary relationship between the Company and these VIEs.In the opinion of the Company’s legal counsel, (i) the ownership structure relating to the VIEs of the Company is in compliance with existing PRC laws andregulations; and (ii) the contractual arrangements with the VIEs and their shareholders are valid, binding and enforceable, and will not result in any violationof PRC laws or regulations currently in effect.However, uncertainties in the PRC legal system could cause the Company’s current ownership structure to be found in violation of any existing and/or futurePRC laws or regulations and could limit the Company’s ability, through the Primary Beneficiaries, to enforce its rights under these contractual arrangements.Furthermore, shareholders of the VIEs may have interests that are different with those of the Company, which could potentially increase the risk that theywould seek to act in contrary to the terms of the aforementioned agreements.In addition, if the current structure or any of the contractual arrangements were found to be in violation of any existing or future PRC law, the Company maybe subject to penalties, which may include but not be limited to, the cancellation or revocation of the Company’s business and operating licenses, beingrequired to restructure the Company’s operations or discontinue the Company’s operating activities. The imposition of any of these or other penalties mayresult in a material and adverse effect on the Company’s ability to conduct its operations. In such case, the Company may not be able to operate or control theVIEs, which may result in deconsolidation of the VIEs. F-13 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 The following tables set forth the financial statement balances and amounts of the VIEs and their subsidiaries were included in the consolidated financialstatements after the elimination of intercompany balances and transactions among VIEs and their subsidiaries within the Group: As of December 31, 2015 2016 2016 RMB RMB US$ (In thousands) Assets Current Cash and cash equivalents 4,723,964 3,087,230 444,654 Short-term investments 2,453,680 6,660,861 959,364 Accounts receivable, net 2,881,902 3,851,220 554,691 Others 3,413,409 3,247,152 467,687 13,472,955 16,846,463 2,426,396 Non-current Fixed assets, net 1,829,170 1,437,596 207,057 Long-term investments, net 2,802,774 4,615,850 664,821 Others 1,838,240 3,833,368 552,119 6,470,184 9,886,814 1,423,997 Total 19,943,139 26,733,277 3,850,393 Third-party liabilities Current Accounts payable and accrued liabilities 10,680,518 12,695,344 1,828,510 Customer advances and deposits 1,367,536 1,653,538 238,159 Others 2,343,556 6,565,707 945,658 14,391,610 20,914,589 3,012,327 Non-current 2,718,124 1,107,864 159,566 Total 17,109,734 22,022,453 3,171,893 Inter-company liabilities* Inter-company payable to subsidiaries for technology consulting and service fees 2,702,300 2,096,020 301,890 Others 1,271,024 2,729,302 393,101 Total 3,973,324 4,825,322 694,991 For the years ended December 31, 2014 2015 2016 2016 RMB RMB RMB US$ (In thousands) Total revenues 13,166,712 20,668,198 24,602,805 3,543,541 Net loss (352,125) (4,398,409) (463,610) (66,774) Net cash provided by operating activities 1,392,039 3,563,049 2,736,579 394,149 Net cash used in investing activities (2,430,505) (7,024,700) (9,470,988) (1,364,106) Net cash provided by financing activities 1,778,444 5,935,317 5,097,675 734,218 *Inter-company liabilities represent payable balances of each VIE due to its Primary Beneficiary. Amounts payable to other non-VIE subsidiaries within theGroup were included in third party liabilities. F-14 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 As of December 31, 2016, there was no pledge or collateralization of the VIEs’ assets other than aforementioned equity pledge agreements. The amount of thenet liabilities of the VIEs was RMB114.50 million (US$16.49 million) as of December 31, 2016. The creditors of the VIEs’ third-party liabilities did not haverecourse to the general credit of the Primary Beneficiaries in normal course of business. The Company did not provide or intend to provide financial or othersupports not previously contractually required to the VIEs during the years presented.Basis of PresentationThe consolidated financial statements are prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”).Principles of ConsolidationThe consolidated financial statements include the financial statements of the Company, its subsidiaries, VIEs and subsidiaries of the VIEs. All inter-companytransactions and balances between the Company, its subsidiaries, VIEs and subsidiaries of the VIEs are eliminated upon consolidation. The Companyincluded the results of operations of acquired businesses from the respective dates of acquisition.Use of EstimatesThe preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts ofrevenues and expenses during the period. Management evaluates estimates, including those related to the accounts receivable allowances, credit lossallowance for micro loan receivables, fair values of options to purchase the Company’s or its subsidiaries’ ordinary shares, fair values of certain debt andequity investments, amortization and net realizable value of licensed copyrights, impairment of long-lived assets, long-term investments and goodwill, thepurchase price allocation and fair value of noncontrolling interests with respect to business combinations and acquisition of equity method investees, anddeferred tax valuation allowance, redeemable noncontrolling interests among others. Management bases the estimates on historical experience and onvarious other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets andliabilities. Actual results could differ from these estimates.Comparative InformationCertain items in the consolidated financial statements have been adjusted to conform with the current year’s presentation to facilitate comparison.Currency Translation for Financial Statements PresentationTranslations of amounts from RMB into US$ for the convenience of the reader have been calculated at the exchange rate of RMB6.9430 per US$1.00 onDecember 30, 2016, the last business day in fiscal year 2016, as published on the website of the United States Federal Reserve Board. No representation ismade that the RMB amounts could have been, or could be, converted into U.S. dollars at such rate. F-15 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESForeign CurrencyThe Company’s functional currency is the US$. The Company’s subsidiaries, VIEs and subsidiaries of the VIEs determine their functional currencies based onthe criteria of ASC topic 830 (“ASC 830”), Foreign Currency Matters. The Company uses the RMB as its reporting currency. The Company uses the averageexchange rate for the year and the exchange rate at the balance sheet date to translate its operating results and financial position, respectively. Anytranslation gains (losses) are recorded in other comprehensive income (loss). Transactions denominated in foreign currencies are translated into the functionalcurrency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functionalcurrency at the exchange rates prevailing at the balance sheet date. Exchange gains and losses are included in earnings as a component of other income.Segment ReportingThe Company historically had only one single reportable segment because the Company’s chief operating decision maker (“CODM”) formerly relied on theconsolidated results of operations when making decisions on allocating resources and assessing performance of the Company. Beginning in the quarterended June 30, 2015, the Company changed its reportable segments as a result of significant growth in the Company’s operations and expansion of servicesto multiple businesses in recent years. The Company’s chief executive officer, who has been identified as the CODM, now reviews the operating results ofdifferent service lines in order to allocate resources and assess the Company’s performance. Accordingly, the financial statements include segmentinformation which reflects the current composition of the reportable segments in accordance with ASC topic 280 (“ASC 280”), Segment Reporting.Business CombinationsThe Company accounts for its business combinations using the purchase method of accounting in accordance with ASC topic 805 (“ASC 805”), BusinessCombinations. The purchase method of accounting requires that the consideration transferred to be allocated to the assets, including separately identifiableassets and liabilities the Company acquired, based on their estimated fair values. The consideration transferred in an acquisition is measured as the aggregateof the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations andall contractual contingencies as of the acquisition date. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets,liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of anynoncontrolling interests. The excess of (i) the total of cost of acquisition, fair value of the noncontrolling interests and acquisition date fair value of anypreviously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree, is recorded as goodwill. If the cost ofacquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in earnings.In a business combination achieved in stages, the Company remeasures its previously held equity interest in the acquiree immediately before obtainingcontrol at its acquisition-date fair value and the re-measurement gain or loss, if any, is recognized in earnings.The determination and allocation of fair values to the identifiable assets acquired, liabilities assumed and noncontrolling interests is based on variousassumptions and valuation methodologies requiring considerable judgment from management. The most significant variables in these valuations arediscount rates, terminal F-16 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 values, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to determine the cash inflows andoutflows. The Company determines discount rates to be used based on the risk inherent in the related activity’s current business model and industrycomparisons. Terminal values are based on the expected life of assets, forecasted life cycle and forecasted cash flows over that period.Cash and Cash EquivalentsCash and cash equivalentsCash and cash equivalents primarily consist of cash, money market funds investment, investments in interest bearing demand deposit accounts, time deposits,and highly liquid investments with original maturities of three months or less from the date of purchase and are stated at cost which approximates their fairvalue.Restricted cashRestricted cash mainly consists of the cash reserved in escrow accounts for the remaining payments in relation to compensation for post-combinationservices, and the cash balances deposited at certain banks as online payment service deposits.Accounts Receivable, net of allowanceAccounts receivable are recognized and carried at the original invoiced amount less an allowance for any potential uncollectible amounts. An estimate fordoubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred. The Company generally does notrequire collateral from its customers.The Company maintains allowances for doubtful accounts for estimated losses resulting from the failure of customers to make payments on time. TheCompany reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability ofindividual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of thebalance, the customer’s payment history, its current credit-worthiness and current economic trends.Receivables from Online Payment Agencies, net of allowanceReceivables from online payment agencies are cash due from the third-party online payment service providers for clearing transactions. The cash was paid ordeposited by customers or users through these online payment agencies for services provided by the Company. The Company carefully considers andmonitors the credit worthiness of the third-party payment service providers used. An allowance for doubtful accounts is recorded in the period in which a lossis determined to be probable. Receivable balances are written off after all collection efforts have been exhausted. The balances are included in “Other currentassets, net” on the consolidated balance sheets. As of December 31, 2015 and 2016, no allowance for doubtful accounts was provided for the receivables fromonline payment agencies.Loan and Interest Receivables, net of allowanceLoan and interest receivables consist primarily of micro loans to individual borrowers. Such amounts are recorded at the principal net of allowance for creditlosses relating to micro loans, and include accrued interest receivable as of the balance sheet date. The loan periods granted by the Company to the borrowersrelated to the F-17 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 micro loans generally range from one month to thirty-six months. The cash flows related to micro loans are included within the cash flows from investingactivities category in the consolidated statement of cash flows.Allowance for credit losses relating to micro loans represent the Company’s best estimate of the losses inherent in the outstanding portfolio of loans.Judgment is required to determine the allowance amounts and whether such amounts are adequate to cover potential credit losses, and periodic reviews areperformed to ensure such amounts continue to reflect the best estimate of the losses inherent in the outstanding portfolio of debts. The Company considersmany factors in assessing the collectability of the loan receivables including, but not limited to, the age of the amounts due, the borrower’s payment history,creditworthiness, financial conditions of the customers, purposes and terms of the loans, and the economic conditions to determine the allowance of creditloss.InvestmentsShort-term investmentsAll highly liquid investments with original maturities of greater than three months, but less than twelve months, are classified as short-term investments.Investments that are expected to be realized in cash during the next twelve months are also included in short-term investments. The Company accounts forshort-term investments in accordance with ASC topic 320 (“ASC 320”), Investments – Debt and Equity Securities. The Company classifies the short-terminvestments in debt and equity securities as “held-to-maturity”, “trading” or “available-for-sale”, whose classification determines the respective accountingmethods stipulated by ASC 320. Dividend and interest income, including amortization of the premium and discount arising at acquisition, for all categoriesof investments in securities are included in earnings. Any realized gains or losses on the sale of the short-term investments are determined on a specificidentification method, and such gains and losses are reflected in earnings during the period in which gains or losses are realized.The securities that the Company has the positive intent and the ability to hold to maturity are classified as held-to-maturity securities and stated at amortizedcost. For individual securities classified as held-to-maturity securities, the Company evaluates whether a decline in fair value below the amortized cost basisis other-than-temporary in accordance with the Company’s policy and ASC 320. When the Company intends to sell an impaired debt security or it is more-likely-than-not that it will be required to sell prior to recovery of its amortized cost basis, an other-than-temporary impairment is deemed to have occurred. Inthese instances, the other-than-temporary impairment loss is recognized in earnings equal to the entire excess of the debt security’s amortized cost basis overits fair value at the balance sheet date of the reporting period for which the assessment is made. When the Company does not intend to sell an impaired debtsecurity and it is more-likely-than-not that it will not be required to sell prior to recovery of its amortized cost basis, the Company must determine whether ornot it will recover its amortized cost basis. If the Company concludes that it will not, an other-than-temporary impairment exists and that portion of the creditloss is recognized in earnings, while the portion of loss related to all other factors is recognized in other comprehensive income.The securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities. Unrealized holdinggains and losses for trading securities are included in earnings.Investments not classified as trading or as held-to-maturity are classified as available-for-sale securities. Available-for-sale investments are reported at fairvalue, with unrealized gains and losses recorded in accumulated other comprehensive income (loss). Realized gains or losses are included in earnings duringthe period in which the gain or loss is realized. An impairment loss on the available-for-sale securities is recognized in the consolidated statements ofcomprehensive income when the decline in value is determined to be other-than-temporary. F-18 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 Long-term investmentsThe Company’s long-term investments consist of cost method investments, equity method investments, held-to-maturity investments with original andremaining maturities of greater than 12 months, and available-for-sale investments.In accordance with ASC subtopic 325-20 (“ASC 325-20”), Investments-Other: Cost Method Investments, the Company carries at cost its investments ininvestees which do not have readily determinable fair value and the Company does not have significant influence. The Company only adjusts for other-than-temporary declines in fair value and distributions of earnings that exceed the Company’s share of earnings since its investment. Management regularlyevaluates the impairment of the cost method investments based on performance and financial position of the investee as well as other evidence of marketvalue. Such evaluation includes, but is not limited to, reviewing the investee’s cash position, recent financing, projected and historical financial performance,cash flow forecasts and financing needs. An impairment loss is recognized in earnings equal to the excess of the investment’s cost over its fair value at thebalance sheet date of the reporting period for which the assessment is made. The fair value would then become the new cost basis of investment.Investments in entities in which the Company can exercise significant influence but does not own a majority equity interest or control are accounted forusing the equity method of accounting in accordance with ASC topic 323 (“ASC 323”), Investments-Equity Method and Joint Ventures. Under the equitymethod, the Company initially records its investment at cost and the difference between the cost of the equity investee and the fair value of the underlyingequity in the net assets of the equity investee is recognized as equity method goodwill, which is included in the equity method investment on theconsolidated balance sheets. The Company subsequently adjusts the carrying amount of its investment to recognize the Company’s proportionate share ofeach equity investee’s net income or loss into earnings after the date of investment. The Company will discontinue applying the equity method if aninvestment (and additional financial supports to the investee, if any) has been reduced to zero. If the Company is not required to advance additional funds toan investee and the equity-method investment in ordinary shares is reduced to zero, the Company would recognize losses based on its percentage of theinvestment with the same liquidation preference for further investments made with a higher liquidation preference than ordinary shares. Such losses are firstapplied to those investments of a lower liquidation preference before being further applied to the investments of a higher liquidation preference. TheCompany evaluates the equity method investments for impairment under ASC 323. An impairment loss on the equity method investments is recognized inearnings when the decline in value is determined to be other-than-temporary.Long-term held-to-maturity investments and long-term available-for-sale investments are measured in the same manner as short-term held-to-maturityinvestments and short-term available-for-sale investments, respectively.Transfers of Financial AssetsThe Company accounts for transfers of financial assets in accordance with ASC Topic 860 (“ASC 860”), Transfers and Servicing. For a transfer of financialassets to be considered as a sale, the assets would be removed from the Company’s consolidated balance sheets. If the conditions for sale required by ASC860 are not met, the transfer is considered to be a secured borrowing, the assets remain on the consolidated balance sheets and the sale proceeds arerecognized as the Company’s liability.Pursuant to ASC 860, the transactions of Baidu Wealth Management do not constitute a sale of the underlying securities for accounting purposes. TheCompany accounts these transactions as secured borrowings included in “Accounts payable and accrued liabilities” on the consolidated balance sheets, andassets pledged are accounted for as trading securities included in short term investments on the consolidated balance sheets. The cash flows F-19 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 related to purchases and maturities of trading securities investments are included within the cash flows from investing activities category, and the proceedsand payments related to the sale of financial products are included within the cash flow from financing activities in the consolidated statement of cash flows.Fair Value Measurements of Financial InstrumentsFinancial instruments are in the form of cash and cash equivalents, restricted cash, short-term investments, accounts receivable, loan and interest receivables,amounts due from and due to related parties, other receivables, long-term investments, short-term loans, accounts payable and accrued liabilities, customeradvances and deposits, derivative instruments, capital lease obligation, notes payable and long-term loans. The carrying amounts of these financialinstruments, except for long-term cost method investments, long-term equity method investments, long-term available-for-sale investments, long-term held-to-maturity investments, derivative instruments, notes payable and long-term loans, approximate their fair values because of their generally short maturities.Available-for-sale investments and derivative instruments were adjusted to fair value at each reporting date. The carrying amounts of long-term held-to-maturity investments and long-term loans approximate their fair values due to the fact that the related interest rates approximate rates currently offered byfinancial institutions for similar debt instruments of comparable maturities. The fair value of notes payable is either extracted directly from the quoted marketprice or evaluated using an equivalent market interest rate for a similar bond without a conversion option with the assistance of a third party valuation firm.Research, Development and Computer SoftwareCapitalization of software developed for internal useThe Company capitalized certain internal use software development costs in accordance with ASC subtopic 350-40 (“ASC 350-40”), Intangibles-Goodwilland Other: Internal-Use Software, amounting to nil, RMB32.73 million and RMB4.02 million (US$579.26 thousand) for the years ended December 31,2014, 2015 and 2016, respectively. The Company capitalizes certain costs relating to software acquired, developed, or modified solely to meet theCompany’s internal requirements and for which there are no substantive plans to market the software. These costs mainly include payroll and payroll-relatedcosts for employees who are directly associated with and who devote time to the internal-use software projects during the application development stage.Capitalized internal-use software costs are included in “Intangible assets, net”. The amortization expense for capitalized software costs amounted toRMB28.24 million, RMB13.24 million and RMB6.74 million (US$970.52 thousand) for the years ended December 31, 2014, 2015 and 2016, respectively.The unamortized amount of capitalized internal use software development costs was RMB32.73 million and RMB30.01 million (US$4.32 million) as ofDecember 31, 2015 and 2016, respectively.Research and development expensesResearch and development expenses consist primarily of personnel-related costs. The Company expensed substantially all development costs incurred in theresearch and development of new products and new functionality added to the existing products except for certain internal use software development costs. F-20 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 Fixed AssetsFixed assets are stated at cost less accumulated depreciation. Depreciation is recorded on a straight-line basis over the shorter of the estimated useful lives ofthe assets or the term of the related lease, as follows: Office building – 45 yearsOffice building related facility, machinery and equipment – 15 yearsComputer equipment – 3 or 5 yearsOffice equipment – 3 or 5 yearsVehicles – 5 yearsLeasehold improvements – over the shorter of lease terms or estimated useful lives ofthe assetsFixed assets have no estimated residual value except for the office building and its related facility, machinery and equipment, which have an estimatedresidual value of 4% of the cost.Repair and maintenance costs are charged to expense as incurred, whereas the cost of renewals and betterments that extend the useful life of fixed assets arecapitalized as additions to the related assets. Retirements, sales and disposals of assets are recorded by removing the cost and accumulated depreciation fromthe asset and accumulated depreciation accounts with any resulting gain or loss reflected in earnings.All direct and indirect costs that are related to the construction of fixed assets and incurred before the assets are ready for their intended use are capitalized asconstruction in progress. Construction in progress is transferred to specific fixed assets items and depreciation of these assets commences when they are readyfor their intended use.Interest costs are capitalized if they are incurred during the acquisition, construction or production of a qualifying asset and such costs could have beenavoided if expenditures for the assets have not been made. Capitalization of interest costs commences when the activities to prepare the asset are in progressand expenditures and borrowing costs are being incurred. Interest costs are capitalized until the assets are ready for their intended use. Interest costscapitalized for the years ended December 31, 2014, 2015 and 2016 were insignificant.Licensed Copyrights of Video ContentThe current and non-current portions of licensed copyrights of video content are recorded in “Other current assets, net” or “Intangible assets, net”,respectively, at the lower of amortized cost or net realizable value. In accordance with ASC topic 920 (“ASC 920”), Entertainment-Broadcasters, costsincurred in purchased copyrights of video content are capitalized and amortized over the shorter of the license period or projected useful life of the videocontent. Any licensed copyrights that do not meet the criteria to be recorded are included in the commitments disclosure. The Company amortizes thelicensed copyrights in “Cost of revenues” on an accelerated or on a straight line basis, as appropriate. If expectations of the usefulness of a video content arerevised downward, the unamortized cost is written down to the estimated net realizable value. A write-down from unamortized cost to a lower estimated netrealizable value establishes a new cost basis.Goodwill and Intangible AssetsGoodwillThe Company assesses goodwill for impairment in accordance with ASC subtopic 350-20 (“ASC 350-20”), Intangibles – Goodwill and Other: Goodwill,which requires that goodwill to be tested for impairment at the reporting unit level at least annually and more frequently upon the occurrence of certainevents, as defined by ASC 350-20. F-21 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 As of December 31, 2016, the Company had three reporting units, representing Search Services, Transaction Services and online video business (“iQiyi”).The Company has the option to assess qualitative factors first to determine whether it is necessary to perform the two-step test in accordance with ASC 350-20. If the Company believes, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of the reporting unit is less than itscarrying amount, the two-step quantitative impairment test described above is required. Otherwise, no further testing is required. In the qualitativeassessment, the Company considers primary factors such as industry and market considerations, overall financial performance of the reporting unit, and otherspecific information related to the operations. In performing the two-step quantitative impairment test, the first step compares the carrying amount of thereporting unit to the fair value of the reporting unit based on either quoted market prices of the ordinary shares or estimated fair value using a combination ofthe income approach and the market approach. If the fair value of the reporting unit exceeds the carrying value of the reporting unit, goodwill is not impairedand the Company is not required to perform further testing. If the carrying value of the reporting unit exceeds the fair value of the reporting unit, then theCompany must perform the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. The fair value ofthe reporting unit is allocated to its assets and liabilities in a manner similar to a purchase price allocation in order to determine the implied fair value of thereporting unit goodwill. If the carrying amount of the goodwill is greater than its implied fair value, the excess is recognized as an impairment loss.The Company performed a qualitative assessment for the Search Services reporting unit. Based on the requirements of ASC 350-20, the Company evaluatedall relevant factors including, but not limited to, macroeconomic conditions, industry and market conditions, financial performance, and the share price of theCompany. The Company weighed all factors in their entirety and concluded that it was not more-likely-than-not the fair value was less than the carryingamount of each of the reporting units, and further impairment testing on goodwill was unnecessary as of December 31, 2016.The Company elected to assess goodwill for impairment using the two-step process for Transaction Services and iQiyi reporting units. Significantmanagement judgment is involved in determining these estimates and assumptions, and actual results may differ from those used in valuations. Changes inthese estimates and assumptions could materially affect the determination of fair value for each reporting unit which could trigger future impairment. Thejudgment in estimating the fair value of reporting units includes forecasts of future cash flows, which are based on our best estimate of future revenue andoperating expenses growth rates, future capital expenditure and working capital level, as well as discount rate determined by Weighted Average Cost ofCapital approach and the selection of comparable companies operating in similar businesses. The Company also reviewed marketplace data to assess thereasonableness of assumptions such as discount rate, operating margins, and working capital level. The fair value of Transaction Services and iQiyi exceededtheir carrying amounts, and therefore goodwill related to these reporting units were not impaired and the Company was not required to perform furthertesting.Intangible assetsIntangible assets with finite lives are carried at cost less accumulated amortization. Land use rights are amortized using a straight-line method over the shorterof their estimated economic lives or the terms of the related land use right contracts. All other intangible assets with finite lives except for the sublicensingrights obtained from barter transactions and certain licensed copyrights are amortized using the straight-line method over the estimated economic lives. F-22 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 Intangible assets have weighted average economic lives from the date of purchase as follows: Land use rights – 50 yearsCustomer relationships – 3.3 yearsSoftware – 4.1 yearsTrademarks – 10.0 yearsUser list – 3.5 yearsLicensed copyrights of video contents – 3.2 yearsOthers – 5.9 yearsIntangible assets with an indefinite useful life are not amortized and are tested for impairment annually or more frequently if events or changes incircumstances indicate that they might be impaired in accordance with ASC subtopic 350-30 (“ASC 350-30”), Intangibles-Goodwill and Other: GeneralIntangibles Other than Goodwill.Impairment of Long-Lived Assets Other Than GoodwillThe Company evaluates long-lived assets, such as fixed assets and purchased or internally developed intangible assets with finite lives, for impairmentwhenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable in accordance with ASC topic 360 (“ASC 360”),Property, Plant and Equipment. When such events occur, the Company assesses the recoverability of the asset group based on the undiscounted future cashflow the asset group is expected to generate and recognizes an impairment loss when estimated undiscounted future cash flow expected to result from the useof the asset group plus net proceeds expected from disposition of the asset group, if any, is less than the carrying value of the asset group. If the Companyidentifies an impairment, the Company reduces the carrying amount of the asset group to its estimated fair value based on a discounted cash flow approachor, when available and appropriate, to comparable market values. The Company uses estimates and judgments in its impairment tests and if differentestimates or judgments had been utilized, the timing or the amount of any impairment charges could be different. Asset groups to be disposed of would bereported at the lower of the carrying amount or fair value less costs to sell, and no longer depreciated. The assets and liabilities of a disposal group classifiedas held for sale would be presented separately in the appropriate asset and liability sections of the consolidated balance sheets.Revenue RecognitionThe Company recognizes revenue in accordance with ASC topic 605 (“ASC 605”), Revenue Recognition. Revenue is recognized when the following fourrevenue recognition criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been provided, (iii) theselling price is fixed or determinable, and (iv) collectability is reasonably assured.Performance-based online marketing servicesCost-per-clickThe Company’s auction-based pay-for-performance (“P4P”) platform enables a customer to place its website link and related description on the Company’ssearch result list on the website which could be accessed through personal computer or mobile devices. Customers make bids on keywords based on howmuch they are willing to pay for each click to their listings in the search results listed on the Company’s website and the relevance between the keywords andthe customer’s businesses. Internet users’ search of the keyword will trigger the display of the listings. The ranking of the customer’s listing depends on boththe bidding price and the listing’s F-23 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 relevance to the keyword searched. Customers pay the Company only when a user clicks on one of its website links. Other than the auction-based P4Pplatform, the Company has certain vertical platforms from which it generates revenue through pre-determined prices per click. Revenue is recognized whenall of the revenue recognition criteria set forth in ASC 605 are met, which is generally when a user clicks on one of the customer-sponsored website links.Other performance-based online marketing servicesTo the extent the Company provides online marketing services based on performance criteria other than cost-per-click, such as the number of downloads (anduser registration) of mobile applications, the number of incremental end users and the total incremental revenue generated, revenue is recognized when thespecified performance criteria are met together with satisfaction of other applicable revenue recognition criteria as prescribed by ASC 605.Display-based online advertising servicesFor display-based online advertising services such as text links, banners, icons or other forms of graphical advertisements in the websites or mobileapplications, the Company recognizes revenue in accordance with ASC 605, on a pro-rata basis over the contractual term for cost per time advertisingarrangements commencing on the date the customer’s advertisement is displayed on a specified webpage or mobile applications, or on the number of timesthat the advertisement has been displayed for cost per thousand impressions advertising arrangements. For certain display-based contractual agreements, theCompany may also provide certain performance guarantees, in which cases revenue is recognized at the later of the completion of the time commitment orperformance guarantee.Revenue-sharing servicesThe Company provides certain services as an agent by offering goods and services provided by third-party partners. The revenues from such services arepresented on a net basis as the Company is not the primary obligor in the arrangement in accordance with ASC subtopic 605-45 (“ASC 605-45”), RevenueRecognition: Principal Agent Consideration. The Company recognizes revenue share for provision of online promotional services based on a negotiatedamount or a fixed rate representing the amount billed to registered users less the amount paid to third-party partners, when all the revenue recognition criteriaset forth in ASC 605 are met.Online game servicesThe Company operates online game platforms on which registered users can access games provided by third-party game developers. The rights andobligations of each party to the arrangement indicate that the Company is acting as an agent because the game developer is the primary obligor in thearrangement in accordance with ASC 605-45. The Company recognizes the shared revenue from these online promotional services, on a net basis, based onthe ratios pre-determined with the online game developers when all the revenue recognition criteria set forth in ASC 605 are met, which is generally when theuser purchases virtual currencies issued by the game developers.Services provided by Baidu NuomiThe Company generates revenue from services as a marketing agent by offering goods and services provided by third-party merchant partners at a discountthrough the website or mobile application that connects merchants to users. The Company presents revenue on a net basis, representing the amount billed toregistered users less the amount paid to merchants, in accordance with ASC 605-45. The Company acts as an agent rather than as the F-24 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 principal in the delivery of the products or services as it does not assume the risks and rewards of ownership of products nor is it responsible for the actualfulfillment of services. Both of these are the responsibilities of the merchants. The Company recognizes revenue when all of the criteria prescribed in ASC605 are met, which is generally when the merchants provide the services or when the products are delivered to the users. Since the Company’s paying usershave the ability to request for a full refund before redemption for the products or services offered by the merchants, the underlying sale from which theCompany earns the related commission revenue as an agent is not culminated until its paying users actually redeem.Services provided by Baidu DeliveriesThe Company generates revenue from takeout delivery services as a marketing agent by offering foods, drinks and snacks provided by third-party merchantpartners at a discount through the website or mobile application that connects merchants to users. The Company presents revenue on a net basis, representingthe amount billed to registered users less the amount paid to merchants, in accordance with ASC 605-45. The Company acts as an agent rather than as theprincipal in the delivery of the products or services as it does not assume the risks and rewards of ownership of products nor is it responsible for the actualfulfillment of services. Both of these are the responsibilities of the merchants. The Company recognizes revenue when all of the criteria prescribed inASC 605 are met, which is generally when the foods, drinks or snacks are delivered to the users.The Company also provides delivery services and charges a fee to users if the merchants do not provide such services. The Company recognizes delivery feesfrom users as part of its takeout delivery services revenue. The costs for providing the delivery services are included in cost of revenues.Subscription servicesThe Company provides subscription services which requires the Company to stand ready to provide registered users with access to online documents sharingplatform, personal cloud computing service and premium content provided by iQiyi. Access to these services are available to subscribers throughout thesubscription period, and revenue is recognized ratably as services are provided over the subscription period.Online marketing services involving Baidu UnionBaidu Union is the program through which the Company expands distribution of its customers’ sponsored links or advertisements by leveraging traffic of theBaidu Union members’ internet properties. The Company makes payments to Baidu Union members for acquisition of traffic. The Company recognizes grossrevenue for the amount of fees it receives from its customers. Payments made to Baidu Union members are included in cost of revenues as traffic acquisitioncosts.Barter transactionsNonmonetary exchanges of licensed copyrights of video contentsThe Company enters into nonmonetary transactions to exchange online broadcasting rights of licensed copyrights with other online video broadcastingcompanies (“OVBC”) from time to time. The exchanged licensed copyrights provide rights for each respective party only to broadcast the licensedcopyrights received on its own website; meanwhile, each party retains the right to continue broadcasting and/or sublicense the rights to the content itsurrendered in the exchange. The Company accounts for these nonmonetary exchanges in accordance with ASC topic 845 (“ASC 845”), NonmonetaryTransactions, and records the transaction based on the fair value of the asset surrendered. F-25 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 The Company estimates the fair value of the contents surrendered by deriving an “average transaction price” using actual cash sublicensing transactions forthe same content with comparable counterparties, when available. The comparability of counterparties is assessed based on a number of factors, includingrelative size and scale, as well as market share of online viewership traffic they generate. In instances when the Company does not have actual cashsublicensing transactions for the same content as reference points, the estimates of fair value of the content surrendered is derived using an averagetransaction price of cash sub-licenses of content that is similar in nature with comparable counterparties. To assess whether the content is similar in nature tothe bartered content, the Company considers, amongst others, (i) the type and the popularity of the content (i.e. movie, television series); (ii) the geographicorigination source of the content; and (iii) the unique visitor statistics for each OVBC.The attributable cost of the barter transaction is recognized as cost of revenues through the amortization of the sublicensing right component of the exclusivelicensed copyright, computed using the individual-film-forecast-computation method in accordance with ASC topic 926 (“ASC 926”), Entertainment –Films. The Company recognized barter sublicensing revenues of RMB366.25 million and RMB423.80 million (US$61.04 million) and related costs ofRMB277.82 million and RMB369.24 million (US$53.18 million) for the years ended December 31, 2015 and 2016, respectively. The barter sublicensingrevenues and the related cost of barter sublicensing revenues were insignificant for the year ended December 31, 2014.Other nonmonetary exchangesThe Company engages in certain barter transactions other than licensed copyrights of video contents from time to time and in such situations follows theguidance set forth in ASC 845. While nonmonetary transactions are generally recorded at fair value, if such value is not determinable within reasonablelimits, or the transaction lacks commercial substance, or the transaction is an exchange of a product or property held for sale in the ordinary course ofbusiness for a product or property to be sold in the same line of business to facilitate sales to customers other than the parties to the exchange, the transactionis recognized based on the carrying value of the product or services provided. The Company also engages in certain advertising barter transactions andfollows the guidance set forth in ASC subtopic 605-20 (“ASC 605-20”), Revenue Recognition: Services. The advertising barter transactions generally arerecorded at fair value. If the fair value of the advertising surrendered in the barter transaction is not determinable within required limits, the barter transactionis recorded based on the carrying amount of the advertising surrendered, which is generally nil. The amount of revenues recognized for barter transactionsother than licensed copyrights of video contents was insignificant for each of the years presented.Other revenue recognition related policiesIn accordance with ASC subtopic 605-25 (“ASC 605-25”), Revenue Recognition: Multiple-Deliverable Revenue Arrangements, for arrangements that includemultiple deliverables, primarily for advertisements to be displayed in different spots, placed under different forms and occur at different time, the Companywould evaluate all the deliverables in the arrangement to determine whether they represent separate units of accounting. For the arrangements withdeliverable items to be considered a separate unit of accounting, the Company allocates the total consideration of the arrangements based on their relativeselling price, with the selling price of each deliverable determined using vendor-specific objective evidence (“VSOE”) of selling price, third-party evidence(“TPE”) of selling price, or management’s best estimate of the selling price (“BESP”), and recognizes revenue as each service deliverable is provided. TheCompany considers all reasonably available information in determining the BESP, including both market and entity-specific factors. For the arrangementswith deliverable items to be determined as a single unit of accounting due to lack of value on a standalone basis or a contingent revenue feature, theCompany recognizes the revenue at the point of last deliverable item has been provided. F-26 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 The Company delivers some of its online marketing services to end customers through engaging third-party distributors. In this context, the Company mayprovide cash incentives to distributors. The cash incentives are accounted for as reduction of revenue in accordance with ASC subtopic 605-50 (“ASC 605-50”), Revenue Recognition: Customer Payments and Incentives.The Company provides sales incentives to customers which entitle them to receive reductions in the price of the online marketing services by meeting certaincumulative consumption requirements. The Company accounts for these award credits granted to customers in conjunction with a current sale of products orservices as a multiple-element arrangement by analogy to ASC 605-25. The consideration allocated to the award credits is recorded as deferred revenue,based on the assumption that the customer will purchase the minimum amount of future service necessary to obtain the maximum award credits available.The deferred revenue is recognized as revenue proportionately as the future services are delivered to the customer or when the award credits expire.The Company provides coupons and credits to the end users in certain businesses, including services provided by Baidu Nuomi and Baidu Deliveries, forexpanding market share. The coupons and credits can be used to reduce the purchase price or to redeem for gifts. Coupons issued to end users as a result of aconcurrent sale are recognized as reductions of the corresponding revenue in accordance with ASC 605-50. Coupons issued to end users for free and withoutconcurrent sales are recognized as advertising and promotional expenses upon the actual usage of the coupons. Credits provided to end users for redeeminggifts in the future are accrued as advertising and promotional expenses upon issuance.Cost of RevenuesCost of revenues consists primarily of sales taxes (including business tax and value-added tax) and surcharges, traffic acquisition costs, bandwidth costs,depreciation, content costs, payroll and related costs of operations.The Company incurs sales taxes and surcharges in connection with the provision of online marketing services, technical and consultative service feescharged by its subsidiaries to VIEs and other taxable services in the PRC. In accordance with ASC 605-45, the Company includes the sales tax and surchargesincurred on its online marketing revenues in cost of revenues. The sales tax and surcharges in cost of revenues for the years ended December 31, 2014, 2015and 2016 were RMB3.60 billion, RMB4.64 billion and RMB4.72 billion (US$679.60 million), respectively. Traffic acquisition costs represent the amountspaid or payable to Baidu Union members who direct search queries to the Company’s websites or distribute the Company’s customers’ paid links throughtheir properties. These payments are primarily based on revenue sharing arrangements under which the Company pays its Baidu Union members and otherbusiness partners a percentage of the fees it earns from its online marketing customers.Advertising and Promotional ExpensesAdvertising and promotional expenses, including advertisements through various forms of media and kinds of marketing and promotional activities, areincluded in “Selling, general and administrative expense” in the consolidated statements of comprehensive income and are expensed when incurred.Advertising and promotional expenses for the years ended December 31, 2014, 2015 and 2016 were RMB4.93 billion, RMB9.80 billion and RMB7.74billion (US$1.12 billion), respectively.Government SubsidiesGovernment subsidies primarily consist of financial subsidies received from provincial and local governments for operating a business in their jurisdictionsand compliance with specific policies promoted by the local F-27 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 governments. For certain government subsidies, there are no defined rules and regulations to govern the criteria necessary for companies to receive suchbenefits, and the amount of financial subsidy is determined at the discretion of the relevant government authorities. The government subsidies of non-operating nature with no further conditions to be met are recorded as non-operating income in “Other income, net” when received. The government subsidieswith certain operating conditions are recorded as liabilities when received and will be recorded as operating income when the conditions are met.LeasesLeases are classified as either capital or operating leases. Leases that transfer substantially all the benefits and risks incidental to the ownership of assets areaccounted for as capital leases as if there was an acquisition of an asset and incurrence of an obligation at the inception of the lease. All other leases areaccounted for as operating leases wherein rental payments are expensed as incurred.Income TaxesThe Company recognizes income taxes under the liability method. Deferred income taxes are recognized for differences between the financial reporting andtax bases of assets and liabilities at enacted tax rates in effect for the years in which the differences are expected to reverse. The Company records a valuationallowance against the amount of deferred tax assets that it determines is not more-likely-than-not to be realized. The effect on deferred taxes of a change intax rates is recognized in earnings in the period that includes the enactment date.The Company applies the provisions of ASC topic 740 (“ASC 740”), Income Taxes, in accounting for uncertainty in income taxes. ASC 740 clarified theaccounting for uncertainty in income taxes by prescribing the recognition threshold a tax position is required to meet before being recognized in thefinancial statements. The Company has elected to classify interest and penalties related to an uncertain tax position (if and when required) as part of incometax expense in the consolidated statements of comprehensive income. As of and for the years ended December 31, 2014, 2015 and 2016, the amounts ofunrecognized tax benefits as well as interest and penalties associated with uncertainty in income taxes were insignificant.The Company early adopted ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which required that all deferredtax liabilities and assets be classified as noncurrent in the consolidated balance sheet since the fourth quarter of 2015 on a retrospective basis.Share-based CompensationThe Company accounts for share-based compensation in accordance with ASC topic 718 (“ASC 718”), Compensation-Stock Compensation. The Companyhas elected to recognize share-based compensation using the straight-line method for all share-based awards issued with no performance conditions. Forawards with performance conditions, compensation cost is recognized on an accelerated basis if it is probable that the performance condition will beachieved.Forfeitures are estimated based on historical experience and are periodically reviewed. Cancellation of an award accompanied by the concurrent grant of areplacement award is accounted for as a modification of the terms of the cancelled award (“modified awards”). The compensation costs associated with themodified awards are recognized if either the original vesting condition or the new vesting condition is achieved. Total recognized compensation cost for theawards is at least equal to the fair value of the awards at the grant date unless at the date of the modification the performance or service conditions of theoriginal awards are not expected to be satisfied. The incremental compensation cost is measured as the excess of the fair value of the replacement award F-28 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 over the fair value of the cancelled award at the cancellation date. Therefore, in relation to the modified awards, the Company recognizes share-basedcompensation over the vesting periods of the replacement award, which comprises, (i) the amortization of the incremental portion of share-basedcompensation over the remaining vesting term and (ii) any unrecognized compensation cost of the original award, using either the original term or the newterm, whichever results in higher expenses for each reporting period.The Company accounts for share awards issued to non-employees in accordance with the provisions of ASC subtopic 505-50 (“ASC 505-50”), Equity:Equity-based Payments to Non-Employees. The Company uses the Black-Scholes-Merton option pricing model method to measure the value of optionsgranted to non-employees at each vesting date to determine the appropriate charge to share-based compensation. ASC 718 requires share-basedcompensation to be presented in the same manner as cash compensation rather than as a separate line item.Earnings Per Share (“EPS”)The Company computes earnings per Class A and Class B ordinary shares in accordance with ASC topic 260 (“ASC 260”), Earnings Per Share, using thetwo-class method. Under the provisions of ASC 260, basic net income per share is computed using the weighted average number of ordinary sharesoutstanding during the period except that it does not include unvested ordinary shares subject to repurchase or cancellation. The Company accounts for theaccretion of the redeemable noncontrolling interests in the calculation of income available to ordinary shareholders of the Company used in the earnings pershare calculation.Diluted net income per share is computed using the weighted average number of ordinary shares and, if dilutive, potential ordinary shares outstanding duringthe period. Potentially dilutive securities have been excluded from the computation of diluted net income per share if their inclusion is anti-dilutive.Potential ordinary shares consist of the incremental ordinary shares issuable upon the exercise of stock options, restricted shares subject to forfeiture, andcontracts that may be settled in the Company’s stock or cash. The dilutive effect of outstanding stock options and restricted shares is reflected in dilutedearnings per share by application of the treasury stock method. The computation of the diluted net income per share of Class A ordinary shares assumes theconversion of Class B ordinary shares, while the diluted net income per share of Class B ordinary shares does not assume the conversion of such shares.The liquidation and dividend rights of the holders of the Company’s Class A and Class B ordinary shares are identical, except with respect to voting rights.As a result, and in accordance with ASC 260, the undistributed earnings for each year are allocated based on the contractual participation rights of theClass A and Class B ordinary shares as if the earnings for the year had been distributed. As the liquidation and dividend rights are identical, the undistributedearnings are allocated on a proportionate basis. Further, as the conversion of Class B ordinary shares is assumed in the computation of the diluted net incomeper share of Class A ordinary shares, the undistributed earnings are equal to net income for that computation.For the purposes of calculating the Company’s basic and diluted earnings per Class A and Class B ordinary shares, the ordinary shares relating to the optionsthat were exercised are assumed to have been outstanding from the date of exercise of such options.ContingenciesThe Company records accruals for certain of its outstanding legal proceedings or claims when it is probable that a liability will be incurred and the amount ofloss can be reasonably estimated. The Company evaluates, on a F-29 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 quarterly basis, developments in legal proceedings or claims that could affect the amount of any accrual, as well as any developments that would make a losscontingency both probable and reasonably estimable. The Company discloses the amount of the accrual if it is material.When a loss contingency is not both probable and estimable, the Company does not record an accrued liability but discloses the nature and the amount of theclaim, if material. However, if the loss (or an additional loss in excess of the accrual) is at least reasonably possible, then the Company discloses an estimateof the loss or range of loss, if such estimate can be made and material, or states that such estimate is immaterial if it can be estimated but immaterial, ordiscloses that an estimate cannot be made. The assessment of whether a loss is probable or reasonably possible, and whether the loss or a range of loss isestimable, often involves complex judgments about future events. Management is often unable to estimate the loss or a range of loss, particularly where(i) the damages sought are indeterminate, (ii) the proceedings are in the early stages, or (iii) there is a lack of clear or consistent interpretation of laws specificto the industry-specific complaints among different jurisdictions. In such cases, there is considerable uncertainty regarding the timing or ultimate resolutionof such matters, including eventual loss, fine, penalty or business impact, if any.Concentration of RisksConcentration of credit riskFinancial instruments that potentially subject the Company to significant concentration of credit risk primarily consist of cash and cash equivalents,restricted cash, short-term investments, accounts receivable, amounts due from related parties and loans receivables. As of December 31, 2016, the Companyhas RMB90.16 billion (US$12.99 billion) in cash and cash equivalents, restricted cash, and short-term investments, 90.22% and 9.78% of which are held byfinancial institutions in the PRC and international financial institutions outside of the PRC, respectively. The Company’s total cash and cash equivalents,restricted cash, and short-term investments held at China Merchants Bank, Bank of China and China Construction Bank exceeded 10%, representing 33.79%,19.53% and 16.40% of the Company’s total cash and cash equivalents, restricted cash, and short-term investments as of December 31, 2016, respectively.PRC state-owned banks, such as Bank of China, are subject to a series of risk control regulatory standards, and PRC bank regulatory authorities areempowered to take over the operation and management when any of those banks faces a material credit crisis. The Company does not foresee substantialcredit risk with respect to cash and cash equivalents, restricted cash and short-term investments held at the PRC state-owned banks. Meanwhile, China doesnot have an official deposit insurance program, nor does it have an agency similar to what was the Federal Deposit Insurance Corporation (FDIC) in the U.S.In the event of bankruptcy of one of the financial institutions in which the Company has deposits or investments, it may be unlikely to claim its deposits orinvestments back in full. The Company selected reputable international financial institutions with high rating rates to place its foreign currencies. TheCompany regularly monitors the rating of the international financial institutions to avoid any potential defaults. There has been no recent history of defaultin relation to these financial institutions.Accounts receivable are typically unsecured and derived from revenue earned from customers and agents in China, which are exposed to credit risk. The riskis mitigated by credit evaluations the Company performs on its customers and its ongoing monitoring process of outstanding balances. The Companymaintains reserves for estimated credit losses and these losses have generally been within its expectations. As of December 31, 2016 and 2015, the Companyhad no single customer with a receivable balance exceeding 10% of the total accounts receivable balance. F-30 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 No customer or any Baidu Union member generated greater than 10% of total revenues in any of the years presented.Amounts due from related parties are typically unsecured and repayable on demand. In evaluating the collectability of the amounts due from related partiesbalance, the Company considers many factors, including the related parties’ repayment history and their credit-worthiness. An allowance for doubtfulaccounts is made when collection of the full amount is no longer probable.Business and economic risksThe Company participates in a dynamic high technology industry and believes that changes in any of the following areas could have a material adverseeffect on the Company’s future financial position, results of operations or cash flows: changes in the overall demand for services and products; changes inbusiness offerings; competitive pressures due to new entrants; advances and new trends in new technologies and industry standards; changes in bandwidthsuppliers; changes in certain strategic relationships or customer relationships; regulatory considerations; copyright regulations; and risks associated with theCompany’s ability to attract and retain employees necessary to support its growth.The Company’s operations could be adversely affected by significant political, economic and social uncertainties in the PRC.Currency convertibility riskSubstantially all of the Company’s businesses are transacted in RMB, which is not freely convertible into foreign currencies. All foreign exchangetransactions take place either through Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by thePeople’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions requires submitting a paymentapplication form together with suppliers’ invoices, shipping documents and signed contracts.Foreign currency exchange rate riskThe functional currency and the reporting currency of the Company are the US$ and RMB, respectively. The Company’s exposure to foreign currencyexchange rate risk primarily relates to cash and cash equivalents, short-term investments, long-term investments and notes payable denominated in the US$.On June 19, 2010, the People’s Bank of China announced the end of the RMB’s de facto peg to the US$, a policy which was instituted in late 2008 in theface of the global financial crisis, to further reform the RMB exchange rate regime and to enhance the RMB’s exchange rate flexibility. On March 15, 2014,the People’s Bank of China announced the widening of the daily trading band for RMB against US$. The appreciation of the US$ against RMB wasapproximately 7.18% in 2016. Most of revenues and costs of the Company are denominated in RMB, while a portion of cash and cash equivalents, short-termfinancial assets, investments and notes payable are denominated in U.S. dollars. Any significant revaluation of RMB may materially and adversely affect theCompany’s cash flows, revenues, earnings and financial position, and the value of, and any dividends payable on, the ADS in US$.Derivative InstrumentsASC topic 815 (“ASC 815”), Derivatives and Hedging, requires all contracts which meet the definition of a derivative to be recognized on the balance sheetas either assets or liabilities and recorded at fair value. Changes in the fair value of derivative financial instruments are either recognized periodically inearnings or in other F-31 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 comprehensive income depending on the use of the derivative and whether it qualifies for hedge accounting. Changes in fair values of derivatives notqualified as hedges are reported in earnings. The estimated fair values of derivative instruments are determined at discrete points in time based on the relevantmarket information. These estimates are calculated with reference to the market rates using industry standard valuation techniques. The fair value of thederivative instruments held by the Company was insignificant for all years presented.Recent Accounting PronouncementsIn May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers. ASU2014-09 supersedes the revenue recognition requirements in ASC 605, and requires entities to recognize revenue when it transfers promised goods or servicesto customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 isoriginally effective for the annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. ASU 2015-14, Revenue from Contracts with Customers, defers the effective date of ASU 2014-09 by one year. As a result, ASU 2014-09 is effective for annual reportingperiods beginning after December 15, 2017 and interim periods therein. Early adoption is permitted to the original effective date. The Company currentlyanticipates adopting the new standard effective January 1, 2018, using the modified retrospective method. The cumulative effect of initially applying theguidance will be recognized at the date of initial application. The Company is still in the process of completing a detailed analysis of the impact thisguidance will have on its consolidated financial statements and related disclosures.In January 2016, the FASB issued ASU No. 2016-01 (“ASU 2016-01”), Financial Instruments. ASU 2016-01 requires equity investments (except thoseaccounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fairvalue recognized in net income. An entity may choose to measure equity investments that do not have readily determinable fair values at cost minusimpairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the sameissuer. ASU 2016-01 also simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitativeassessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fairvalue. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2017, including interim periods within thosefiscal years. Early adoption is permitted. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statementsIn February 2016, the FASB issued ASU No. 2016-02 (“ASU 2016-02”), Leases. ASU 2016-02 specifies the accounting for leases. For operating leases, ASU2016-02 requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balancesheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on agenerally straight-line basis. ASU 2016-02 is effective for public business entities for annual reporting periods and interim periods within those yearsbeginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of adopting this standard on itsconsolidated financial statements.In June 2016, the FASB issued ASU No. 2016-13 (“ASU 2016-13”), Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses onFinancial Instruments. ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. The standard will replace“incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will berequired to record allowances rather than reduce the carrying amount, as they do today under the F-32 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 other-than-temporary impairment model. The standard is effective for public business entities for annual periods beginning after December 15, 2019, andinterim periods therein. Early adoption is permitted. The Company is currently evaluating the impact of adopting this standard on its consolidated financialstatementsIn November 2016, the FASB issued Accounting Standards Update No. 2016-18 (“ASU 2016-18”), Statement of Cash Flows (Topic 230): Restricted Cash.ASU 2016-18 requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents whenreconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This standard is effective for public business entitiesin the first quarter of 2018. Early adoption is permitted. The Company is currently evaluating the effect that this guidance will have on our consolidatedfinancial statements and related disclosures.In January 2017, the FASB issued Accounting Standards Update No. 2017-04(“ASU 2017-04”), Intangibles – Goodwill and Other (Topic 350): Simplifyingthe Test for Goodwill Impairment. ASU 2017-04 eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairmentcharge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. This standard iseffective for public business entities in the first quarter of 2020. Early adoption is permitted. The Company is currently evaluating the effect that thisguidance will have on our consolidated financial statements and related disclosures.3. BUSINESS COMBINATIONSBusiness Combinations in 2016:No business combinations occurred during the year ended December 31, 2016.Business Combinations in 2015:During the year ended December 31, 2015, the Company completed two business combinations, which the Company expected to complement its existingbusinesses and achieve significant synergies. The total purchase consideration was RMB331.95 million. The acquired entities were considered insignificant,both individually and in aggregate. The results of the acquired entities’ operations have been included in the Company’s consolidated financial statementssince their respective dates of acquisition.Neither the results of operations since the acquisition dates nor the pro forma results of operations of the acquirees were presented because the effects of thesebusiness combinations, both individually and in aggregate, were not significant to the Company’s consolidated results of operations.Business Combinations in 2014:During the year ended December 31, 2014, the Company completed several business combinations, which the Company expected to complement its existingbusinesses and achieve significant synergies. The acquired entities were considered insignificant, both individually and in aggregate. The results of theacquired entities’ operations have been included in the Company’s consolidated financial statements since their respective dates of acquisition.The Company completed the valuations necessary to assess the fair values of the tangible and intangible assets acquired and liabilities assumed and the fairvalue of noncontrolling interests, resulting from which the amount of goodwill was determined and recognized as of the respective acquisition dates. Thefollowing table F-33 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 summarizes the estimated aggregate fair values of the assets acquired, liabilities assumed and the noncontrolling interests as of the respective dates ofacquisition: RMB (In thousands) Purchase consideration 398,410 Net assets acquired, excluding intangible assets and the related deferred tax liabilities (95,961) Intangible assets, net 249,452 Deferred tax liabilities, non-current (67,945) Pre-existing equity interests (91,677) Noncontrolling interests (150,000) Goodwill 554,541 Goodwill, which is not tax deductible, is primarily attributable to the synergies expected to be achieved from the acquisitions.4. INVESTMENTSShort-term InvestmentsAs of December 31, 2016, all of the short-term held-to-maturity investments were time deposits in commercial banks with maturities of less than one year. Theshort-term available-for-sale investments are debt securities with maturities of less than one year purchased from commercial banks and other financialinstitutions, and equity securities of a publicly listed company. The short-term trading investments are debt securities the Company intends to trade withinone year.During the years ended December 31, 2014, 2015 and 2016, the Company recorded interest income from its short-term investments of RMB1.81 billion,RMB2.20 billion and RMB2.32 billion (US$334.78 million) in the consolidated statements of comprehensive income, respectively.Long-term InvestmentsThe Company’s long-term investments consist of cost method investments, equity method investments, held-to-maturity investments with original andremaining maturities of greater than 12 months and available-for-sale investments.Cost method investmentsThe carrying amount of cost method investments was RMB7.30 billion and RMB12.94 billion (US$1.86 billion) as of December 31, 2015 and 2016,respectively. The Company’s investments in preferred shares of the investees are not considered in-substance common stock since these preferred sharescontain terms such as dividend and liquidation preferences over the ordinary shares of the investees. In addition, the preferred shares do not have mandatoryredemption features nor readily determinable fair values. As a result, these investments in preferred shares are accounted for under the cost method.In 2016, the Company exchanged its equity shares of Uber (Cayman), Ltd. (“Uber China”), with Xiaoju Kuaizhi, Inc. (“Didi”), a China based ridesharingcompany,upon the merger of the two companies. The Company recognized a total gain of RMB1.99 billion (US$287.02 million) in “Other income, net”, andthe retained investment in Didi was accounted for as a cost method investment. F-34 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 Equity method investmentsEquity Investment in Ctrip.com International, Ltd. (“Ctrip”) On October 26, 2015, the Company completed a share exchange transaction with Ctrip (“Ctriptransaction”), a company engaged in the online travelling business. The Company exchanged its beneficially owned 178,702,519 Class A ordinary sharesand 11,450,000 Class B ordinary shares of its majority-owned subsidiary Qunar Cayman Islands Limited (“Qunar”) in exchange for 11,488,381 newly-issuedordinary shares of Ctrip. The Company recognized a total gain of RMB24.42 billion from the Ctrip transaction in “Other income, net” in the consolidatedstatements of comprehensive income for the year ended December 31, 2015. In 2016, further shares were acquired by the Company, and as of December 31,2016 the Company held 20.49% of Ctrip’s outstanding shares. The Company accounts for the investment in Ctrip as an equity method investment inaccordance with ASC 323 due to its significant influence over the entity.The following tables set forth the summarized financial information of Ctrip: As of September 30,* 2015 2016 2016 RMB RMB US$ (In thousands) Current assets 25,750,458 52,222,057 7,521,541 Non-current assets 23,500,517 83,336,195 12,002,909 Current liabilities 18,873,779 33,173,779 4,778,018 Non-current liabilities 17,492,002 31,127,826 4,483,339 Noncontrolling interests 1,063,306 3,678,212 529,773 For the twelve monthsendedSeptember 30,* 2014 2015 2016 2016 RMB RMB RMB US$ (In thousands) Total revenues 7,280,123 10,484,967 17,641,715 2,540,935 Gross profit 4,962,670 7,072,995 12,668,586 1,824,656 Income (loss) from operations 433,052 (115,056) (1,680,672) (242,067) Net income 625,520 2,052,526 (2,176,932) (313,543) Net income attributable to the investees 728,644 2,207,503 (2,000,291) (288,102) *The Company adopted one-quarter lag in reporting its share of equity income in CtripDuring the year ended December 31, 2016, the Company derecognized a group of assets sold to a third party and deconsolidated several subsidiaries due tothe loss of a controlling equity interest in the subsidiary or substantive participating rights granted to other minority shareholders of the subsidiaries. Anaggregate gain of RMB1.42 billion (US$204.32 million) was recognized in “Other income, net” during the year ended December 31, 2016 accordingly. TheCompany’s retained interest in these subsidiaries were accounted for as equity method investments. Fair values of investments retained were estimated byusing the income approach or market approach. Inputs used in these methodologies primarily included future cash flows, discount rate, and the selection ofcomparable companies operating in similar businesses. The transactions with these equity investees are aggregately disclosed in Note 19.As of December 31, 2015 and 2016, the Company held several other equity method investments besides Ctrip through its subsidiaries or VIEs, all of whichwere accounted for under the equity method since the Company can exercise significant influence but does not own a majority equity interest in or controlthem. The carrying amount F-35 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 of all of the equity method investments was RMB28.54 billion and RMB32.26 billion (US$4.65 billion) as of December 31, 2015 and 2016, respectively.The Company excluded the summarized information for these other equity method investments, as the other equity investees were insignificant for all theyears presented.Long-term held-to-maturity investments were time deposits in commercial banks with original and remaining maturities of greater than one year. The held-to-maturity investments are stated at amortized cost. Long-term available-for-sale equity investments represent investments in the equity securities of publiclylisted companies. As the Company does not have significant influence over the investees, the investments were classified as available-for-sale and reported atfair value.The methodology used in the determination of fair values for held-to-maturity investments and available-for-sale investments were summarized in Note 21.The total impairment charges on long-term investments were RMB93.42 million, RMB116.98 million and RMB245.33 million (US$35.33 million) for theyears ended December 31, 2014, 2015 and 2016, respectively.The short-term held-to-maturity debt investments as well as the short-term available-for-sale investments will mature within one year; whereas the long-termheld-to-maturity debt investments as well as the long-term available-for-sale debt investments will mature after one year through two years. As of December 31, 2015 Cost orAmortizedcost Grossunrecognizedholdinggains Grossunrecognizedholdinglosses Grossunrealizedgains Grossunrealizedlosses Fairvalue RMB RMB RMB RMB RMB RMB (In thousands) Short-term investments Held-to-maturity investments Fixed-rate investments 36,942,840 197,848 (6,592) 37,134,096 Available-for-sale investments Fixed-rate debt investments 6,872,077 86,322 6,958,399 Adjustable-rate debt investments 13,137,500 187,885 13,325,385 Equity investments 600,543 142,075 742,618 Long-term investments: Held-to-maturity investments Fixed-rate investments 1,838,953 (32,507) 1,806,446 Available-for-sale investments Equity investments 322,269 (45,304) 276,965 F-36 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 As of December 31, 2016 Cost orAmortizedcost Grossunrecognizedholdinggains Grossunrecognizedholdinglosses Grossunrealizedgains Grossunrealizedlosses Fairvalue Fairvalue RMB RMB RMB RMB RMB RMB US$ (In thousands) Short-term investments Held-to-maturity investments Fixed-rate investments 41,802,170 70,018 (3,547) 41,868,641 6,030,339 Available-for-sale investments Fixed-rate debt investments 14,352,711 31,197 (6,052) 14,377,856 2,070,842 Adjustable-rate debt investments 14,673,620 313,196 14,986,816 2,158,550 Equity investments 32,899 (4,112) 28,787 4,146 Trading securities 7,685,697 61,739 7,747,436 1,115,863 Long-term investments: Available-for-sale investments Equity investments 527,596 (31,084) 496,512 71,513 5. ACCOUNTS RECEIVABLE As of December 31, 2015 2016 2016 RMB RMB US$ (In thousands) Accounts receivable 4,116,549 4,286,725 617,417 Allowance for doubtful accounts (189,563) (177,401) (25,551) 3,926,986 4,109,324 591,866 The movements in the allowance for doubtful accounts were as follows: 2014 2015 2016 2016 RMB RMB RMB US$ (In thousands) Balance as of January 1 43,814 93,877 189,563 27,303 Amounts charged to expenses 50,063 115,261 39,568 5,699 Amounts written off — (19,575) (51,730) (7,451) Balance as of December 31 93,877 189,563 177,401 25,551 F-37 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 6. OTHER CURRENT ASSETS As of December 31, 2015 2016 2016 RMB RMB US$ (In thousands) Prepaid expenses 339,264 389,182 56,054 Advances to suppliers 1,953,717 922,621 132,885 Tax prepayments 3,074 52,500 7,562 Receivables from online payment agencies 318,528 409,912 59,040 Deposits 380,152 238,559 34,360 Purchased copyrights 432,730 593,301 85,453 Others 686,375 738,441 106,356 4,113,840 3,344,516 481,710 7. FIXED ASSETS As of December 31, 2015 2016 2016 RMB RMB US$ (In thousands) Computer equipment 12,520,942 15,192,502 2,188,175 Office building 3,094,551 3,247,212 467,696 Office building related facility, machinery and equipment 1,593,090 1,772,428 255,283 Vehicles 31,450 45,267 6,520 Office equipment 433,144 546,442 78,704 Leasehold improvements 302,304 315,745 45,477 Construction in progress 682,314 755,037 108,747 18,657,795 21,874,633 3,150,602 Accumulated depreciation (8,030,668) (10,580,285) (1,523,878) 10,627,127 11,294,348 1,626,724 The Company obtained certain computer servers and equipment by entering into capital leases. The gross amount and the accumulated depreciation of theseservers and equipment were RMB224.71million and RMB174.63million, respectively, as of December 31, 2015 and RMB220.78 million (US$31.80 million)and RMB209.73 million (US$30.21 million), respectively, as of December 31, 2016. Future minimum lease payments of RMB7.44 million are payable in theamounts of RMB7.10 million, RMB0.34 million, nil, nil and nil in 2017, 2018, 2019, 2020, and 2021, respectively.Depreciation expense of the fixed assets, including assets under capital leases, was RMB2.19 billion, RMB2.87 billion and RMB3.43 billion (US$493.90million) for the years ended December 31, 2014, 2015 and 2016, respectively. The Company recognized impairment loss on fixed assets of nil, nil and nil forthe years ended December 31, 2014, 2015 and 2016, respectively. F-38 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 8. GOODWILL AND INTANGIBLE ASSETSGoodwillAs of December 31, 2014, the Company had three reporting units, consisting of Qunar, iQiyi, and the rest of the Group. Immediately upon the change insegment reporting in the quarter ended June 30, 2015, there were four reporting units representing Search Services, Qunar, iQiyi, and Transaction Servicesexcluding Qunar. The goodwill was reassigned to the reporting units affected using a relative fair value allocation approach. However, as more fullydescribed in Note 4, subsequent to the share exchange transaction with Ctrip the Company no longer controls Qunar. Accordingly, Qunar was no longer areporting unit and the goodwill balance related to Qunar was derecognized. As a result, there were three reporting units as of December 31, 2015 and 2016.The changes in carrying amount of goodwill for each reporting unit before June 30, 2015 were as follow: Baidu Qunar iQiyi Total RMB RMB RMB RMB (In thousands) Balance at December 31, 2013 11,283,149 2,293,007 3,288,194 16,864,350 Goodwill acquired 566,628 — (12,087) 554,541 Foreign currency translation adjustment 4 — — 4 Balance at December 31, 2014 11,849,781 2,293,007 3,276,107 17,418,895 Goodwill acquired 269,679 — — 269,679 Balance before reorganization at June 30, 2015 12,119,460 2,293,007 3,276,107 17,688,574 The changes in carrying amount of goodwill for each reporting unit after June 30, 2015 were as follow: SearchServices TransactionServicesexcludingQunar Qunar iQiyi Total RMB RMB RMB RMB RMB (In thousands) Balance after reorganization at June 30, 2015 10,822,664 1,296,796 2,293,007 3,276,107 17,688,574 Goodwill disposed in Ctrip transaction (Note 4) — — (2,293,007) — (2,293,007) Foreign currency translation adjustment 6 — — — 6 Balance at December 31, 2015 10,822,670 1,296,796 — 3,276,107 15,395,573 Goodwill disposed (37,781) (15,706) — — (53,487) Foreign currency translation adjustment 10 — — — 10 Balance at December 31, 2016 10,784,899 1,281,090 — 3,276,107 15,342,096 Balance at December 31, 2016, in US$ 1,553,348 184,515 — 471,858 2,209,721 F-39 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 Intangible AssetsFinite-lived intangible assets As of December 31, 2015 Gross carryingvalue Accumulatedamortization Net carryingvalue RMB RMB RMB (In thousands) Land use right 464,165 (44,428) 419,737 Customer relationships 472,013 (364,310) 107,703 Software 513,470 (352,099) 161,371 Trademarks 613,032 (144,983) 468,049 User list 699,872 (497,283) 202,589 Licensed copyrights of video contents 3,039,164 (1,478,285) 1,560,879 Others 776,522 (375,797) 400,725 6,578,238 (3,257,185) 3,321,053 As of December 31, 2016 Gross carryingvalue Accumulatedamortization Net carryingvalue Netcarryingvalue RMB RMB RMB US$ (In thousands) Land use right 464,165 (53,711) 410,454 59,119 Customer relationships 463,061 (462,239) 822 118 Software 536,085 (416,268) 119,817 17,257 Trademarks 596,332 (205,098) 391,234 56,350 User list 698,960 (657,288) 41,672 6,002 Licensed copyrights of video contents 5,608,338 (2,993,166) 2,615,172 376,663 Others 730,508 (451,965) 278,543 40,119 9,097,449 (5,239,735) 3,857,714 555,628 The Company recognized impairment loss on intangible assets of RMB1.63 million, nil and RMB0.82 million (US$118.38 thousand) for the years endedDecember 31, 2014, 2015 and 2016, respectively. Amortization expense of intangible assets for the years ended December 31, 2014, 2015 and 2016 wasRMB1.59 billion, RMB2.50 billion and RMB4.66 billion (US$670.56 million), respectively. Estimated amortization expense relating to the existingintangible assets with finite lives for each of the next five years is as follows: RMB US$ (In thousands) For the years ending December 31, 2017 1,294,079 186,386 2018 918,017 132,222 2019 467,234 67,296 2020 329,390 47,442 2021 204,624 29,472 F-40 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 Indefinite-lived intangible assets As of December 31, 2015 2016 2016 RMB RMB US$ (In thousands) Domain names 9,360 9,360 1,348 Trademarks 4,206 5,153 742 13,566 14,513 2,090 9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES As of December 31, 2015 2016 2016 RMB RMB US$ (In thousands) Accrued payroll and welfare 1,629,794 1,444,600 208,066 Tax payable 334,058 793,476 114,284 Interest payable 127,799 101,656 14,642 Users’ and distributors’ deposits 888,098 659,858 95,039 Purchase of fixed assets and spare parts 1,495,958 1,208,378 174,043 Traffic acquisition costs 1,852,949 1,968,206 283,481 Bandwidth costs 1,080,657 1,353,090 194,885 Content acquisition costs 1,821,217 3,360,291 483,983 Funds collected on behalf of service providers 1,640,460 1,606,328 231,359 Payable to merchants 801,282 468,637 67,498 Secured borrowings — 6,758,946 973,491 Accrued other operating expenses 5,112,984 6,482,215 933,633 Others 1,054,936 2,448,405 352,643 17,840,192 28,654,086 4,127,047 10. LOANS PAYABLEShort-term LoansOn September 22, 2015, the Company entered into a banking facility agreement with China Merchants Bank (Shanghai Branch), pursuant to which theCompany is entitled to borrow a RMB denominated loan of RMB100.00 million (US$14.40 million) for one year with a fixed annual interest rate atbenchmark one-year lending rate published by People’s Bank of China. The loan is intended for the general working capital purposes. In September 2015,the Company drew down RMB9.90 million (US$1.43 million) with a fixed interest rate of 4.60%. In November and December 2015, the remaining ofRMB90.10 million (US$12.98 million) was drawn down with a fixed interest rate of 4.35%. The loan was fully repaid when it became due beforeDecember 31, 2016. F-41 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 On July 11, 2016, the Company entered into a banking facility agreement with China Merchants Bank (Beijing Branch), pursuant to which the Company isentitled to borrow an unsecured RMB denominated loan of RMB200.00 million (US$28.81 million) for one year with a fixed annual interest rate atbenchmark one-year lending rate published by People’s Bank of China. This facility is reserved for the consumer credit business. On July 19, 2016, theCompany drew down RMB50.00 million (US$7.20 million) with a fixed interest rate of 4.35%. On August 8, 2016, additional RMB80.00 million (US$11.52million) was drawn down with a fixed interest rate of 4.35%.On July 11, 2016, the Company entered into a banking facility agreement with China Citic Bank (Chongqing Branch), pursuant to which the Company isentitled to borrow an unsecured RMB denominated loan of RMB150.00 million (US$21.60 million) for one year with interest rate based on Loan Prime Rate(“LPR”) plus 48.50 basis points. This facility is reserved for the consumer credit business. On September 23, 2016, the Company drew down RMB150 million(US$21.60 million) with an interest rate of 4.78% under the facility commitment.On August 12, 2016, the Company entered into a banking facility agreement with China Citic Bank (Chongqing Branch), pursuant to which the Company isentitled to borrow an unsecured RMB denominated loan of RMB150.00 million (US$21.60 million) for one year with interest rate based on LPR plus 26.75basis points. This facility is reserved for the consumer credit business. On August 16, 2016, the Company drew down RMB150.00 million (US$21.60 million)with an interest rate of 4.56% under the facility commitment.On January 22, 2016, iQiyi entered into a banking facility agreement with China Merchants Bank (Beijing Branch), pursuant to which iQiyi is entitled toborrow a RMB denominated loan of RMB200.00 million (US$28.81 million) for one year with a fixed annual interest rate at 95% of benchmark one-yearlending rate published by the People’s Bank of China. The loan is intended for general working capital purposes. On January 29, 2016, iQiyi drew downRMB53.70 million (US$7.73 million) with a fixed interest rate of 4.13%. On February 26, 2016, iQiyi drew down RMB20.50 million (US$2.95 million) witha fixed interest rate of 4.13%. On December 14, 2016, additional RMB25.80 million (US$3.72 million) was drawn down with a fixed interest rate of 4.13%.On November 17, 2016, the Company entered into a loan agreement with International Finance Corporation, pursuant to which the Company is entitled toborrowed an unsecured RMB denominated loans of RMB500.00 million (US$72.01 million) with a term of one year, and to be used for the consumer creditbusiness exclusively. On December 9, 2016, the Company drew down RMB500.00 million (US$72.01 million) with a fixed interest rate of 4.92%.On December 19, 2016, the Company entered into a loan agreement with China Merchants Bank (Shanghai Branch), pursuant to which the Company isentitled to borrowed an unsecured RMB denominated loans of RMB85.00 million (US$12.24 million) with a term of one year. Pursuant to the agreement theloan shall be used by Company for the consumer credit business exclusively. On December 19, 2016, the Company drew down RMB85.00 million(US$12.24 million) with a fixed interest rate of 4.18%.Long-term LoansOn December 9, 2014, the Company entered into two loan agreements with Bank of China (Los Angeles Branch), pursuant to which the Company borrowedtwo unsecured US$ denominated loans of RMB1.04 billion (US$150.00 million) with a term of two years and RMB1.04 billion (US$150.00 million) with aterm of three F-42 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 years. Both loans are intended for the general working capital of the Company and have a floating interest rate. In connection with the loan agreements, theCompany entered into two interest swap agreements, pursuant to which the loans will be settled with a fixed annual interest rate of 2.31% and 2.45%,respectively, during the respective term of the loans. On December 9, 2016, the loan with a term of two years was fully repaid when it became due. Theremaining balance of the loan with a term of three years was classified to “Long-term loans, current portion” as current liability.On July 17, 2015, the Company entered into a loan agreement with Sumitomo Mitsui Banking Corporation, pursuant to which the Company is entitled toborrow an unsecured US$ denominated loan of RMB1.04 billion (US$150.00 million) with a floating interest rate. The loan is intended for the generalworking capital of the Company. On August 10, 2015, the Company drew down RMB1.04 billion (US$150.00 million) with a term of two years under thefacility commitment. In connection with the loan agreement, the Company entered into an interest swap agreement, pursuant to which the loan will be settledwith a fixed annual interest rate of 1.41% during the term of the loan. Amount repayable within twelve months was classified to “Long-term loans, currentportion” as current liability.On August 25, 2015, the Company entered into a loan agreement with HSBC, pursuant to which the Company is entitled to borrow an unsecured US$denominated loan of RMB1.39 billion (US$200.00 million) with a fixed annual interest rate of 1.42%. The loan is intended for the general working capital ofthe Company. On August 28, 2015, the Company drew down RMB1.39 billion (US$200.00 million) with a term of two years under the facility commitment.The amount repayable within twelve months was classified to “Long-term loans, current portion” as current liability.On June 8, 2016, the Company entered into a five-year revolving syndicated loan agreement with a group of 21 arrangers, pursuant to which the Company isentitled to borrow an unsecured US$ denominated floating rate loan of RMB6.94 billion (US$1.00 billion) with a term of five years and to borrow anunsecured US$ denominated revolving loan of RMB6.94 billion (US$1.00 billion) for five years. The facility is intended for the general working capital ofthe Company. On June 22, 2016, the Company drew down RMB3.46 billion (US$500.00 million) under the facility commitment. On November 25, 2016, theCompany drew down an additional RMB1.74 billion (US$250.00 million) under the facility commitment. On November 26, 2016, an additional RMB1.74billion (US$250.00 million) was drawn down under the facility commitment. In connection with the facility agreements, the Company entered into threeinterest rate swap agreements, pursuant to which the loans will be settled with a fixed annual interest rate of 2.11%, 2.10% and 2.78% respectively, during therespective term of the loans.The interest rate swap agreements met the definition of a derivative in accordance with ASC 815. The fair value of the derivatives related to the interest rateswap agreements were insignificant for the years ended December 31, 2014, 2015 and 2016.11. NOTES PAYABLEOn November 28, 2012, the Company issued and sold two tranches of unsecured senior notes: (i) an aggregate principal amount of US$750.00 million whichwill mature on November 28, 2017 (the “2017 Notes”), and (ii) an aggregate principal amount of US$750.00 million which will mature on November 28,2022 (the “2022 Notes”). On August 6, 2013, the Company issued and publicly sold another tranche of unsecured senior notes with an aggregate principalamount of US$1.00 billion which will mature on August 6, 2018 (the “2018 Notes”). On June 9, 2014, the Company issued and publicly sold the fourthtranche of unsecured senior notes with an aggregate principal amount of US$1.00 billion which will mature on June 9, 2019 (the “2019 Notes”). On F-43 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 June 30, 2015, the Company issued and publicly sold two tranches of unsecured senior notes: (i) an aggregate principal amount of US$750.00 million whichwill mature on June 30, 2020 (the “2020 Notes”), and (ii) an aggregate principal amount of US$500.00 million which will mature on June 30, 2025 (the“2025 Notes”).The 2017 Notes, 2018 Notes, 2019 Notes, 2020 Notes, 2022 Notes and 2025 Notes are collectively referred to as the “Notes”.The 2017 Notes bear interest at the rate of 2.25% per annum and the 2022 Notes bear interest at the rate of 3.50% per annum. Interest is payable semi-annually in arrears on and of each year, beginning on May 28, 2013. The 2018 Notes bear interest at the rate of 3.25% per annum. Interest is payable semi-annually in arrears on and of each year, beginning on February 6, 2014. The 2019 Notes bear interest at the rate of 2.75% per annum. Interest is payable semi-annually in arrears on and of each year, beginning on December 9, 2014. The 2020 Notes bear interest at the rate of 3.00% per annum and the 2025 Notesbear interest at the rate of 4.13% per annum. Interest is payable semi-annually in arrears on and of each year, beginning on December 30, 2015. At maturity,the Notes are payable at their principal amount plus accrued and unpaid interest thereon.The net proceeds from the Notes, which will be used for general corporate purposes, were RMB6.19 billion, RMB7.75 billion and nil for the years endedDecember 31, 2014, 2015 and 2016, respectively.The Notes do not contain any financial covenants or other significant restrictions. In addition, the Notes are unsecured and rank lower than any securedobligation of the Group and have the same liquidation priority as any other unsecured liabilities of the Group, but senior to those expressly subordinatedobligations, if any. The Company may, at its discretion, redeem all or any portion of the Notes at any time, at the principal amount plus any unpaid interest.As of December 31, 2016, the Company does not intend to redeem any portion of the Notes prior to the stated maturity dates. The Company has theobligation to redeem the Notes if a change in control occurs as defined in the indenture of the Notes.The Notes were issued at a discount amounting to RMB 74.36 million (US$ 10.71 million). The issuance costs of RMB 149.59 million (US$ 21.55 million)were presented as a direct deduction from the principal amount of the Notes on the consolidated balance sheets. Both the discount and the issuance costs areamortized as interest expense using the effective interest rate method through the maturity dates of the Notes. The effective interest rate was 2.36%, 3.39%,3.00%, 3.13%, 3.59% and 4.22% for the 2017 Notes, the 2018 Notes, the 2019 Notes, the 2020 Notes, the 2022 Notes and the 2025 Notes, respectively.The principal amount and unamortized discount and debt issuance costs as of December 31, 2015 and 2016 were as follows: As of December 31, 2015 2016 2016 RMB RMB US$ (In thousands) Principal amount 30,869,300 32,987,800 4,751,231 Unamortized discount and debt issuance costs (167,184) (136,008) (19,589) 30,702,116 32,851,792 4,731,642 F-44 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 The following table summarizes the aggregate required repayments of the principal amounts of the Company’s long-term debts, including the notes payableand loans payable (Note 10), in the succeeding five years and thereafter: RMB US$ (In thousands) For the years ending December 31, 2017 8,678,750 1,250,000 2018 6,943,000 1,000,000 2019 6,943,000 1,000,000 2020 5,207,250 750,000 2021 6,943,000 1,000,000 Thereafter 8,678,750 1,250,000 12. INCOME TAXESCayman Islands and BVIUnder the current laws of the Cayman Islands and BVI, the Company is not subject to tax on income or capital gains. Additionally, upon payments ofdividends by the Company to its shareholders, neither Cayman Islands nor BVI withholding tax will be imposed.Hong KongUnder the Hong Kong tax laws, subsidiaries in Hong Kong are subject to the Hong Kong profits tax rate at 16.5% and they may be exempted from income taxon their foreign-derived income and there are no withholding taxes in Hong Kong on remittance of dividends.JapanUnder the Japan tax laws, a company with paid-in capital in excess of JPY100 million was subject to a national corporate income tax rate of 25.5% up toMarch 31, 2015 and from April 1, 2015 the income tax rate has been reduced to 23.9%. A company with paid-in capital equal to JPY100 million or less willbe taxed at a tax rate of 15% on the first JPY8 million and at 23.9% on the portion over JPY8 million from April 1, 2015. Local income taxes, which are localinhabitant tax and enterprise tax, are also imposed on corporate income. The resulting effective corporate income tax rates of the Company’s Japanesesubsidiaries range from approximately 34% to 37%.ChinaEffective from January 1, 2008, the PRC’s statutory, Enterprise Income Tax (“EIT”) rate is 25%. Preferential EIT rates at 15% and 10% are available forqualified “High and New Technology Enterprises” (“HNTEs”) and “Key Software Enterprise” (“KSE”). The HNTE certificate is effective for a period of 3years and the KSE is subject to relevant governmental authorities’ assessment annually based on self-assessment supporting documents filed with the taxauthorities each year.Baidu Online enjoyed a reduced tax rate of 10% as a qualified KSE in 2014 and 2015. Baidu China also enjoyed a reduced tax rate of 10% as qualified KSEin 2015. Certain other PRC subsidiaries and VIEs, including Baidu Netcom, are qualified HNTEs and enjoy a reduced tax rate of 15% for the years presented,which will expire in F-45 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 2017, 2018 or 2019. An entity must file required supporting documents with the tax authorities before using the preferential rates. Whether the entity isentitled to enjoy preferential rate as a KSE is subject to relevant governmental authorities’ assessment each year. An entity could re-apply for the HNTEcertificate when the prior certificate expires. Historically, all of the Company’s subsidiaries and VIEs successfully re-applied for the certificates when the priorones expired.A certificate for the current year might be obtained in the following year as a result of the stringent inspection and approval process by the governmentalauthorities. The Company would record an income tax reversal in the year when the certificate is obtained for the over-paid or over-accrued provisional tax inconnection with the grant of a more favorable tax rate for the prior year.Under the current EIT Law, dividends for earnings derived from January 1, 2008 and onwards paid by PRC entities to any of their foreign non-residententerprise investors are subject to a 10% withholding tax. A lower tax rate will be applied if tax treaty or arrangement benefits are available. Under the taxarrangement between the PRC and Hong Kong, the reduced withholding tax rate for dividends paid by PRC entities is 5% provided the Hong Kong investorsmeet the requirements as stipulated by relevant PRC tax regulations, such as the beneficiary owner test. Capital gains derived from PRC are also subject to a10% PRC withholding tax.Moreover, the current EIT Law treats enterprises established outside of China with “effective management and control” located in China as PRC residententerprises for tax purposes. The term “effective management and control” is generally defined as exercising overall management and control over thebusiness, personnel, accounting, properties, etc. of an enterprise. The Company, if considered a PRC resident enterprise for tax purposes, would be subject tothe PRC Enterprise Income Tax at the rate of 25% on its worldwide income for the period after January 1, 2008. As of December 31, 2016, the Company hasnot accrued for PRC tax on such basis. The Company will continue to monitor its tax status.Income (loss) before income taxes consists of: For the years ended December 31, 2014 2015 2016 2016 RMB RMB RMB US$ (In thousands) PRC 17,783,174 16,877,599 18,193,808 2,620,453 Non-PRC (3,298,768) 21,029,024 (3,684,601) (530,693) 14,484,406 37,906,623 14,509,207 2,089,760 Except for the investment related gain recognized, the pre-tax losses from non-PRC operations consist primarily of operating costs, administration expenses,interest expenses and share-based compensation expenses. F-46 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 Income taxes consist of: For the years ended December 31, 2014 2015 2016 2016 RMB RMB RMB US$ (In thousands) Current income tax 2,942,173 3,213,638 3,461,853 498,612 Income tax refund due to reduced tax rate (17,553) — (534,698) (77,013) Adjustments of deferred tax assets due to change in tax rates 28,146 79,947 (12,085) (1,741) Deferred income tax (benefit) expense (721,594) 2,180,792 (1,476) (213) 2,231,172 5,474,377 2,913,594 419,645 The reconciliation of the actual income taxes to the amount of tax computed by applying the aforementioned statutory income tax rate to pre-tax income isas follows: For the years ended December 31, 2014 2015 2016 2016 RMB RMB RMB US$ (In thousands, except for per share data) Expected taxation at PRC statutory tax rate 3,587,693 9,476,656 3,627,302 522,441 Effect of differing tax rates in different jurisdictions 676,663 (5,253,700) 735,566 105,944 Non-taxable income (12,504) (65,411) (73,226) (10,547) Non-deductible expenses 123,245 165,264 114,534 16,496 Research and development super-deduction (538,305) (767,858) (725,800) (104,537) Effect of PRC preferential tax rates and tax holiday (1,897,184) (1,547,392) (1,851,421) (266,660) Effect of tax rate changes on deferred taxes 28,146 79,947 (12,085) (1,741) Over-accrued EIT for previous years (153,121) (248,673) (519,631) (74,842) PRC withholding tax — 2,470,733 282,838 40,737 Addition to valuation allowance 416,539 1,164,811 1,335,517 192,354 Taxation for the year 2,231,172 5,474,377 2,913,594 419,645 Effective tax rate 15.41% 14.44% 20.08% 20.08% Effect of preferential tax rates inside the PRC on basic earnings per Class A and Class Bordinary share 53.61 44.31 53.41 7.69 F-47 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 The tax effects of temporary differences that gave rise to the deferred tax balances at December 31, 2015 and 2016 are as follows: As of December 31, 2015 2016 2016 RMB RMB US$ (In thousands) Deferred tax assets: Provision for doubtful receivables 120,612 137,901 19,862 Accrued expenses, payroll and others 1,745,810 2,715,136 391,061 Fixed assets depreciation 19,659 26,421 3,805 Net operating loss carry-forward 1,320,496 1,727,031 248,744 Less: valuation allowance (2,198,403) (3,506,259) (505,006) Deferred tax assets, net 1,008,174 1,100,230 158,466 As of December 31, 2015 2016 2016 RMB RMB US$ (In thousands) Deferred tax liabilities: Long-lived assets arising from acquisitions 359,531 248,251 35,756 Withholding tax on PRC subsidiaries’ undistributed earnings 592,719 632,859 91,151 Withholding tax on capital gains derived from PRC 2,489,040 2,708,125 390,050 3,441,290 3,589,235 516,957 As of December 31, 2016, the Company had net losses of approximately RMB16.50 billion (US$2.38 billion) deriving from entities in the PRC, Hong Kongand Japan. The net loss in the PRC and Japan can be carried forward for five years and nine years, respectively, to offset future net profit for income taxpurposes. The net loss of entities in the PRC and Japan will begin to expire in 2018, if not utilized. The net loss in Hong Kong can be carried forward withoutan expiration date.The Company evaluated its income tax uncertainty under ASC 740. ASC 740 clarifies the accounting for uncertainty in income taxes by prescribing therecognition threshold a tax position is required to meet before being recognized in the financial statements. The Company elects to classify interest andpenalties related to an uncertain tax position, if and when required, as part of income tax expense in the consolidated statements of comprehensive income.As of and for the years ended December 31, 2015 and 2016, there was no significant impacts from tax uncertainty on the Company’s financial position andresult of operations. The Company does not expect the amount of unrecognized tax benefits would increase significantly in the next 12 months. In general,the PRC tax authorities have up to five years to conduct examinations of the tax filings of the Company’s PRC subsidiaries. Accordingly, the PRCsubsidiaries’ tax years of 2012 through 2016 remain open to examination by the respective tax authorities. The Company may also be subject to theexaminations of the tax filings in other jurisdictions, which are not material to the consolidated financial statements.The Company accrued withholding tax of RMB580.72 million for the potential remittance of earnings from the PRC subsidiaries to their offshore parentcompanies in the form of dividend distribution as of December 31, 2013, because the Company believes that the underlying dividends will be distributed inthe future considering future merger and acquisition activities. The Company did not provide for additional deferred income taxes and foreign withholdingtaxes on the undistributed earnings of foreign subsidiaries in 2014, 2015 and 2016 on the F-48 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 basis of its intent to permanently reinvest foreign subsidiaries’ earnings. As of December 31 2016, the total amount of undistributed earnings from the PRCsubsidiaries for which no withholding tax has been accrued was RMB89.52 billion (US$12.89 billion). Determination of the amount of unrecognizeddeferred tax liability related to these earnings is not practicable. In the case of its VIEs in the PRC, undistributed earnings were insignificant as of each of thebalance sheet dates.13. EMPLOYEE DEFINED CONTRIBUTION PLANFull time employees of the Group in the PRC participate in a government mandated multi-employer defined contribution plan pursuant to which certainpension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. Chinese laborregulations require that the Group make contributions to the government for these benefits based on certain percentages of the employees’ salaries. TheCompany has no legal obligation for the benefits beyond the contributions. The total amounts for such employee benefits, which were expensed as incurred,were RMB1.64 billion, RMB2.23 billion and RMB2.29 billion (US$329.61 million) for the years ended December 31, 2014, 2015 and 2016, respectively.14. COMMITMENTS AND CONTINGENCIESCapital CommitmentsThe Company’s capital commitments primarily relate to commitments in connection with the expansion and improvement of its network infrastructure andits plan to build additional office buildings and cloud computing based data centers. Total capital commitments contracted but not yet reflected in thefinancial statements amounted to RMB 1.23 billion (US$177.16 million) as of December 31, 2016. All of the commitments relating to the networkinfrastructure are to be fulfilled in 2021 and the commitments relating to the office building and cloud computing based data centers will be settled ininstallments as various stages of the construction plan are completed in the next four to six years.Operating Lease CommitmentsThe Company leases facilities in the PRC under non-cancelable operating leases expiring on different dates. Payments under operating leases are expensedon a straight-line basis over the periods of the respective leases. Total rental expense for offices was RMB525.31 million, RMB647.09 million andRMB494.37 million (US$71.20 million) for the years ended December 31, 2014, 2015 and 2016, respectively. Total operating lease expense for Internet DataCentre (“IDC”) facilities was RMB2.85 billion, RMB3.72 billion and RMB4.72 billion (US$679.82 million) for the years ended December 31, 2014, 2015and 2016 respectively.Future minimum payments under non-cancelable operating leases with initial terms of one-year or more consist of the following as of December 31, 2016: RMB US$ (In thousands) 2017 3,018,986 434,824 2018 1,390,004 200,202 2019 839,240 120,876 2020 569,100 81,967 2021 176,348 25,399 Thereafter 30,117 4,338 6,023,795 867,606 F-49 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 The Group’s lease arrangements have no renewal options, rent escalation clauses and restriction or contingent rents.Commitments for Licensed CopyrightsThe Company enters into non-cancelable licensing agreements with third-party vendors to acquire licensed copyrights of video contents for its online videoplatform.Future minimum payments under non-cancelable licensing agreements consist of the following as of December 31, 2016: RMB US$ (In thousands) 2017 5,990,656 862,835 2018 1,489,234 214,495 2019 200,348 28,856 2020 196,718 28,333 2021 164,425 23,682 Thereafter 979,291 141,047 9,020,672 1,299,248 GuaranteesThe Company accounts for guarantees in accordance with ASC topic 460 (“ASC 460”), Guarantees. Accordingly, the Company evaluates its guarantees ifany to determine whether (a) the guarantee is specifically excluded from the scope of ASC 460, (b) the guarantee is subject to ASC 460 disclosurerequirements only, but not subject to the initial recognition and measurement provisions, or (c) the guarantee is required to be recorded in the financialstatements at fair value.The corporate by-laws require that the Company indemnify its officers and directors, as well as those who act as directors and officers of other entities at theCompany’s request, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceedingsarising out of their services to the Company. In addition, the Company entered into separate indemnification agreements with each director and eachexecutive officer of the Company that provide for indemnification of these directors and officers under similar circumstances and under additionalcircumstances. The indemnification obligations are more fully described in the by-laws and the indemnification agreements. The Company purchasesstandard directors and officers insurance to cover claims or a portion of the claims made against its directors and officers. Since a maximum obligation is notexplicitly stated in the Company’s by-laws or in the indemnification agreements and will depend on the facts and circumstances that arise out of any futureclaims, the overall maximum amount of the obligations cannot be reasonably estimated.Historically, the Company was not required to make payments related to these obligations, and the fair value for these obligations was nil on theconsolidated balance sheets as of December 31, 2015 and 2016.LitigationThe Group was involved in certain cases pending in various PRC and U.S. courts and arbitration as of December 31, 2016. These cases include copyrightinfringement cases, unfair competition cases, and defamation F-50 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 cases, among others. Adverse results in these lawsuits may include awards of damages and may also result in, or even compel, a change in the Company’sbusiness practices, which could result in a loss of revenue or otherwise harm the business of the Company.For many proceedings, the Company is currently unable to estimate the reasonably possible loss or a range of reasonably possible losses as the proceedingsare in the early stages, and/or there is a lack of clear or consistent interpretation of laws specific to the industry-specific complaints among differentjurisdictions. As a result, there is considerable uncertainty regarding the timing or ultimate resolution of such matters, which includes eventual loss, fine,penalty or business impact, if any, and therefore, an estimate for the reasonably possible loss or a range of reasonably possible losses cannot be made.However, the Company believes that such matters, individually and in the aggregate, when finally resolved, are not reasonably likely to have a materialadverse effect on the Company’s consolidated results of operations, financial position and cash flows. With respect to the limited number of proceedings forwhich the Company was able to estimate the reasonably possible losses or the range of reasonably possible losses, such estimated loss amounts wereinsignificant.15. REDEEMABLE NONCONTROLLING INTERESTS 2014 2015 2016 RMB RMB RMB US$ (In thousands) Balance as of January 1 — 1,894,502 3,947,879 568,613 Other comprehensive income — 142,071 325,408 46,869 Issuance of subsidiary shares 1,841,819 1,582,126 660,771 95,170 Accretion of redeemable noncontrolling interests 52,683 329,180 557,918 80,357 Balance as of December 31 1,894,502 3,947,879 5,491,976 791,009 On November 14, 2014, iQiyi completed a round of preferred shares financing. The new preferred shareholders acquired 13.42% of the then outstandingequity interest of iQiyi for a total consideration of US$300.00 million.On October 1, 2015, Xiaodu Life Technology Ltd (“Xiaodu”), a wholly-owned subsidiary of the Company primarily engaged in the business of takeoutdelivery services, issued 250,000,000 preferred shares to certain shareholders for a total consideration of US$250.00 million. On May 31, 2016, Xiaoduissued an additional 42,105,264 preferred shares to certain other shareholders for a total consideration of US$100.00 million. The consideration has beenfully paid by shareholders at September 30, 2016. As the preferred shares could be redeemed by such shareholders upon the occurrence of certain events thatare not solely within the control of Xiaodu, these preferred shares are accounted for as redeemable noncontrolling interests.The Company accounts for the changes in accretion to the redemption value in accordance with ASC topic 480 (“ASC 480”), Distinguishing Liabilities fromEquity. The Company elects to use the effective interest method for the changes of redemption value over the period from the date of issuance to the earliestredemption date of the noncontrolling interest.16. SHAREHOLDERS’ EQUITYOrdinary SharesThe authorized share capital consisted of 870,400,000 ordinary shares at a par value of US$0.00005 per share, of which 825,000,000 shares were designatedas Class A ordinary shares, 35,400,000 as Class B ordinary shares, F-51 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 and 10,000,000 shares designated as preferred shares. The rights of the holders of Class A and Class B ordinary shares are identical, except with respect tovoting and conversion rights. Each share of Class A ordinary shares is entitled to one vote per share and is not convertible into Class B ordinary shares underany circumstances. Each share of Class B ordinary shares is entitled to ten votes per share and is convertible into one Class A ordinary share at any time bythe holder thereof. Upon any transfer of Class B ordinary shares by the holder thereof to any person or entity that is not an affiliate of such holder, such ClassB ordinary shares would be automatically converted into an equal number of Class A ordinary shares. The number of Class B ordinary shares transferred toClass A ordinary shares was 45,000, nil and 91,667 in the years ended December 31, 2014, 2015 and 2016, respectively.As of December 31, 2016, there were 27,325,551 and 7,401,254 Class A and Class B ordinary shares outstanding, respectively. As of December 31, 2015 and2016, there were no preferred shares issued and outstanding.On July 30, 2015, the Company announced a share repurchase program in which the Company proposed to acquire up to an aggregate of US$1.00 billion ofits shares over the next 12 months. On October 29, 2015, the Company announced another share repurchase program under which the Company proposed toacquire up to an aggregate of US$2.00 billion of its shares over the next 24 months in the open market or through privately negotiated transactions,depending on market conditions and in accordance with applicable rules and regulations. The Company repurchased 603,726 and 0 Class A ordinary sharesfrom the open market with an aggregate purchase price of US$990.16 million and nil during the years ended December 31, 2015 and 2016. The repurchasedshares were cancelled under Cayman Islands law upon repurchase and the difference between the par value and the repurchase price was debited to retainedearnings.Retained EarningsIn accordance with the Regulations on Enterprises with Foreign Investment of China and their articles of association, the Company’s PRC subsidiaries, beingforeign invested enterprises established in China, are required to make appropriations to certain statutory reserves, namely a general reserve fund, anenterprise expansion fund, a staff welfare fund and a bonus fund, all of which are appropriated from net profit as reported in their PRC statutory accounts.Each of the Company’s PRC subsidiaries is required to allocate at least 10% of its after-tax profits to a general reserve fund until such fund has reached 50%of its respective registered capital. Appropriations to the enterprise expansion fund and staff welfare and bonus funds are at the discretion of the Company’ssubsidiaries.In accordance with the China Company Laws, the Company’s VIEs must make appropriations from their after-tax profits as reported in their PRC statutoryaccounts to non-distributable reserve funds, namely a statutory surplus fund, a statutory public welfare fund and a discretionary surplus fund. Each of theCompany’s VIEs is required to allocate at least 10% of its after-tax profits to the statutory surplus fund until such fund has reached 50% of its respectiveregistered capital. Appropriations to the statutory public welfare fund and the discretionary surplus fund are made at the discretion of the Company’s VIEs.General reserve and statutory surplus funds are restricted to set-off against losses, expansion of production and operation and increasing registered capital ofthe respective company. Staff welfare and bonus fund and statutory public welfare funds are restricted to capital expenditures for the collective welfare ofemployees. The reserves F-52 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 are not allowed to be transferred to the Company in terms of cash dividends, loans or advances, nor are they allowed for distribution except under liquidation. As of December 31, 2015 2016 2016 RMB RMB US$ (In thousands) PRC statutory reserve funds 417,911 441,391 63,574 Unreserved retained earnings 74,241,444 85,292,315 12,284,648 Total retained earnings 74,659,355 85,733,706 12,348,222 Under PRC laws and regulations, there are restrictions on the Company’s PRC subsidiaries and VIEs with respect to transferring certain of their net assets tothe Company either in the form of dividends, loans, or advances. Amounts of net assets restricted include paid in capital and statutory reserve funds of theCompany’s PRC subsidiaries and the net assets of the VIEs in which the Company has no legal ownership, totaling RMB10.58 billion and RMB13.70 billion(US$1.97 billion) as of December 31, 2015 and 2016, respectively.Furthermore, cash transfers from the Company’s PRC subsidiaries to their parent companies outside of China are subject to PRC government control ofcurrency conversion. Shortages in the availability of foreign currency may restrict the ability of the PRC subsidiaries and consolidated affiliated entities toremit sufficient foreign currency to pay dividends or other payments to the Company, or otherwise satisfy their foreign currency denominated obligations. F-53 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 Accumulated Other Comprehensive Income (Loss)The changes in accumulated other comprehensive income (loss) by component, net of tax, were as follows: Foreigncurrencytranslationadjustment Unrealizedgains onavailable-for-saleinvestments Total RMB RMB RMB (In thousands) Balance at December 31, 2013 158,355 22,903 181,258 Other comprehensive income (loss) before reclassification (422,925) 27,327 (395,598) Amounts reclassified from accumulated other comprehensive income — (45,025) (45,025) Net current-period other comprehensive loss (422,925) (17,698) (440,623) Other comprehensive income attribute to noncontrolling interests and redeemable noncontrolling interests (20,153) — (20,153) Balance at December 31, 2014 (284,723) 5,205 (279,518) Other comprehensive income (loss) before reclassification (644,896) 489,010 (155,886) Amounts reclassified from accumulated other comprehensive income — (194,451) (194,451) Net current-period other comprehensive income (loss) (644,896) 294,559 (350,337) Other comprehensive income attribute to noncontrolling interests and redeemable noncontrolling interests (176,201) — (176,201) Balance at December 31, 2015 (1,105,820) 299,764 (806,056) Other comprehensive income (loss) before reclassification (589,870) 480,102 (109,768) Amounts reclassified from accumulated other comprehensive income — (540,495) (540,495) Net current-period other comprehensive loss (589,870) (60,393) (650,263) Other comprehensive income attribute to noncontrolling interests and redeemable noncontrolling interests (326,640) (7) (326,647) Balance at December 31, 2016 (2,022,330) 239,364 (1,782,966) Balance at December 31, 2016, in US$ (291,277) 34,476 (256,801) The amounts reclassified out of accumulated other comprehensive income represent realized gains on the available-for-sale investments upon their sales,which were then recorded in “Other income, net” in the consolidated statements of comprehensive income. The amounts reclassified were determined on thebasis of specific identification. F-54 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 The following table sets forth the tax effect allocated to each component of other comprehensive income for the years ended December 31, 2015 and 2016: For the years ended December 31, 2014 2015 2016 2016 RMB RMB RMB US$ (In thousands) Unrealized gains on available-for-sale investments Unrealized holding gains (losses) during the year 1,680 (68,303) (119,708) (17,242) Reclassified for gains realized — 28,885 110,418 15,904 Net unrealized gains (losses) 1,680 (39,418) (9,290) (1,338) Other comprehensive income (loss) 1,680 (39,418) (9,290) (1,338) 17. EARNINGS PER SHARE (“EPS”)A reconciliation of net income attributable to Baidu, Inc. in the consolidated statements of comprehensive income to the numerator for the computation ofbasic and diluted per share for the years ended December 31, 2014, 2015 and 2016 is as follows: For the years ended December 31, 2014 2015 2016 2016 RMB RMB RMB US$ (In thousands) Net income attributable to Baidu, Inc. 13,196,932 33,664,173 11,632,269 1,675,395 Accretion of the redeemable noncontrolling interests (52,683) (329,180) (557,918) (80,357) Numerator for EPS computation 13,144,249 33,334,993 11,074,351 1,595,038 F-55 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 The following table sets forth the computation of basic and diluted net income attributable to Baidu, Inc. per share for Class A and Class B ordinary shares. For the years ended December 31, 2014 2015 2016 Class A Class B Class A Class B Class A Class A Class B Class B RMB RMB RMB RMB RMB US$ RMB US$ (In thousands, except for number of shares, per share and per ADS data) Earnings per share – basic: Numerator Allocation of net income attributable to Baidu, Inc. 10,328,517 2,815,732 26,182,538 7,152,455 8,709,905 1,254,487 2,364,446 340,551 Denominator Weighted average ordinary shares outstanding 27,551,463 7,511,003 27,428,861 7,492,921 27,263,984 27,263,984 7,401,254 7,401,254 Denominator used for earnings per share 27,551,463 7,511,003 27,428,861 7,492,921 27,263,984 27,263,984 7,401,254 7,401,254 Earnings per share – basic 374.88 374.88 954.56 954.56 319.47 46.01 319.47 46.01 Earnings per share – diluted: Numerator Allocation of net income attributable to Baidu, Inc. fordiluted computation 10,339,397 2,804,852 26,205,544 7,129,449 8,716,163 1,255,388 2,358,188 339,650 Reallocation of net income attributable to Baidu, Inc. as aresult of conversion of Class B to Class A shares 2,804,852 — 7,129,449 — 2,358,188 339,650 — — Allocation of net income attributable to Baidu, Inc. 13,144,249 2,804,852 33,334,993 7,129,449 11,074,351 1,595,038 2,358,188 339,650 Denominator Weighted average ordinary shares outstanding 27,551,463 7,511,003 27,428,861 7,492,921 27,263,984 27,263,984 7,401,254 7,401,254 Conversion of Class B to Class A ordinary shares 7,511,003 — 7,492,921 — 7,401,254 7,401,254 — — Share-based awards 136,008 — 112,688 — 91,848 91,848 — — Denominator used for earnings per share 35,198,474 7,511,003 35,034,470 7,492,921 34,757,086 34,757,086 7,401,254 7,401,254 Earnings per share – diluted 373.43 373.43 951.49 951.49 318.62 45.89 318.62 45.89 Earnings per ADS: Denominator used for earnings per ADS – basic 275,514,630 274,288,610 272,639,840 272,639,840 Denominator used for earnings per ADS – diluted 351,984,740 350,344,700 347,570,860 347,570,860 Earnings per ADS – basic 37.49 95.46 31.95 4.60 Earnings per ADS – diluted 37.34 95.15 31.86 4.59 The Company did not include certain stock options and restricted shares in the computation of diluted earnings per share for the years ended December 31,2014, 2015 and 2016 because those stock options and restricted shares were anti-dilutive for earnings per share for the respective years.18. SHARE-BASED AWARDS PLANBaidu, Inc.Incentive compensation plansIn December 2008, the Company adopted a share incentive plan (the “2008 Plan”), which provides for the granting of share incentives, including incentiveshare options (“ISOs”), restricted shares and any other form of award pursuant to the 2008 Plan, to members of the board, employees and consultants of theCompany. However, the Company may grant ISOs only to its employees. The Company reserved 3,428,777 ordinary shares for issuance under the 2008 Plan,which will expire in the year 2018. The vesting schedule, time and condition to F-56 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 exercise options will be determined by the compensation committee. The term of the options may not exceed ten years from the date of the grant, except thatfive years is the maximum term of an ISO granted to an employee who holds more than 10% of the voting power of the Company’s share capital.Under the 2008 Plan, share options are subject to vesting schedules varying from two to four years, the exercise price of an option may be amended oradjusted at the discretion of the compensation committee, the determination of which would be final, binding and conclusive. To the extent not prohibitedby applicable laws or exchange rules, a downward adjustment of the exercise prices would be effective without the approval of the Company’s shareholdersor the approval of the affected grantees. If the Company grants an ISO to an employee who, at the time of that grant, owns shares representing more than 10%of the voting power of all classes of the Company’s share capital, the exercise price cannot be less than 110% of the fair market value of the Company’sordinary shares on the date of that grant.Starting from February 15, 2006, the Company granted restricted Class A ordinary shares of the Company (“Restricted Shares”). Terms for the RestrictedShares are the same as share options except that Restricted Shares do not require exercise and have a two to four years vesting term.Share optionsThe following table summarizes the option activity for the year ended December 31, 2016: Numberof shares Weightedaverageexerciseprice(US$) Weightedaverageremainingcontractuallife (Years) Aggregateintrinsicvalue (US$ inthousands) Share options Outstanding, December 31, 2015 220,165 1,437.70 7.55 115,458 Granted 50,409 1,684.20 Exercised (26,933) 1,011.90 Expired/Cancelled (31) 1,067.00 Forfeited (12,371) 1,505.80 Outstanding, December 31, 2016 231,239 1,537.40 7.25 61,621 Vested and expected to vest at December 31, 2016 205,508 1,507.80 7.12 58,927 Exercisable at December 31, 2016 114,141 1,279.30 6.06 51,362 The aggregate intrinsic value in the table above represents the difference between the Company’s closing stock price on the last trading day in 2016 and theexercise price.Total intrinsic value of options exercised for the years ended December 31, 2014, 2015 and 2016 was RMB224.80 million, RMB199.88 million andRMB142.57 million (US$20.53 million), respectively. The total fair value of options vested during the years ended December 31, 2014, 2015 and 2016 wasRMB149.22 million, RMB149.00 million and RMB 224.94 million (US$32.40 million), respectively.As of December 31, 2016, there was RMB323.43 million (US$46.58 million) unrecognized share-based compensation cost related to share options. Thatdeferred cost is expected to be recognized over a weighted-average vesting period of 2.8 years. To the extent the actual forfeiture rate is different from theoriginal estimate, actual share-based compensation costs related to these awards may be different from expectation. F-57 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 The fair value of each option award was estimated on the date of grant using the Black-Scholes-Merton valuation model. The volatility assumption wasestimated based on historical volatility of the Company’s share price applying the guidance provided by ASC 718. Assumptions of the expected term werebased on the vesting and contractual terms and employee demographics. The risk-free rate for periods within the contractual life of the option is based on theU.S. Treasury yield curve in effect at the time of grant.The following table presents the assumptions used to estimate the fair values of the share options granted in the years presented: 2014 2015 2016 Risk-free interest rate 1.52%~1.77% 1.31%~1.36% 1.13%~1.47% Dividend yield — — — Expected volatility range 40.96%~41.59% 40.04%~40.57% 38.91%~40.09% Weighted average expected volatility 41.36% 40.21% 39.37% Expected life (in years) 4.57 5.02~5.13 5.75~5.92 In addition, the Company recognizes share-based compensation expense net of an estimated forfeiture rate and therefore only recognizes compensation costfor those shares expected to vest over the service period of the award. The estimation of the forfeiture rate is primarily based on historical experience ofemployee turnover. To the extent the Company revises this estimate in the future, the share-based payments could be materially impacted in the year ofrevision, as well as in the following years.The exercise price of options granted during the years 2014, 2015 and 2016 equaled the market price of the ordinary shares on the grant date. The weighted-average grant-date fair value of options granted during the years 2014, 2015, and 2016 was US$755.00, US$790.00, and US$ 659.70, respectively.Restricted sharesRestricted shares activity for the year ended December 31, 2016 was as follows: Numberof shares Weightedaverage grantdate fairvalue (US$) Restricted shares Unvested, December 31, 2015 344,534 1,853.50 Granted 526,960 1,755.90 Vested (93,409) 1,716.50 Cancelled (242) 1,743.10 Forfeited (70,572) 1,831.50 Unvested, December 31, 2016 707,271 1,800.70 The total fair value of the restricted shares vested during the years ended December 31, 2014, 2015 and 2016 was RMB324.41 million, RMB700.66 million,RMB1.11 billion (US$160.34 million), respectively. The weighted-average grant-date fair value of the restricted shares granted during the years 2014, 2015,and 2016 was US$1,815.60, US$1,979.30, and US$1,755.90, respectively.As of December 31, 2016, there was RMB5.38 billion (US$775.05 million) unrecognized share-based compensation cost related to restricted shares. Thatdeferred cost will be recognized over a weighted-average F-58 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 vesting period of 3.23 years. To the extent the actual forfeiture rate is different from the original estimate, actual share-based compensation costs related tothese awards may be different from expectation.SubsidiariesThe Company’s subsidiaries also have equity incentive plans granting share-based awards. Total share-based compensation expenses recognized andunrecognized were insignificant, both individually and in aggregate, for the year ended December 31, 2016.The following table summarizes the total share-based compensation cost recognized by the Group: For the years ended December 31, 2014 2015 2016 2016 RMB RMB RMB US$ (In thousands) Expensed as cost of revenues 34,611 49,770 103,354 14,886 Expensed as selling, general and administrative 426,052 486,760 429,234 61,823 Expensed as research and development 502,077 850,588 1,227,400 176,782 Capitalized as part of internal-used software — 1,381 214 31 19. RELATED PARTY TRANSACTIONSThe related party transactions mainly represented online marketing services provided by the Company to Ctrip (including Qunar), the total transactionamounts for the years ended December 31, 2015 and 2016 was RMB89.24 million and RMB630.76 million (US$90.85 million), respectively. Other relatedparty transactions, including the reimbursements to Mr. Robin Yanhong Li’s use of an aircraft beneficially owned by his family member for the Company’sbusiness purposes and the rental expense for an office building owned by the family members of an executive officer, were insignificant for each of the yearspresented.As of December 31, 2015 and 2016, amounts due from/due to related parties were as follows: As of December 31, 2015 2016 2016 RMB RMB US$ (In thousands) Amounts due from related parties, current: Qunar (i) 1,869,380 24,985 3,599 Ctrip (ii) 30,950 286,533 41,269 Other related parties (ii) 40,229 34,076 4,908 Total 1,940,559 345,594 49,776 Amounts due from related parties, non-current: Other related parties (iii) 9,725 11,153 1,606 Amounts due to related parties, current: Qunar (iv) 711,433 274,968 39,604 Ctrip 6,966 124,705 17,961 Other related parties 67,546 59,014 8,500 Total 785,945 458,687 66,065 (i)The balance as of December 31, 2015 mainly represents short-term interest-bearing loans of RMB1,774.00 million provided by the Company to Qunar,which was a majority-owned subsidiary of the Company prior F-59 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 to October 26, 2015 and became a majority-owned subsidiary of Ctrip on December 31, 2015. These loans were fully repaid in March 2016.(ii)Balances in connection with services provided between the Company and its equity method investees arose in the ordinary course of business.(iii)The balances mainly represent rental deposits paid in advance to the related party of one of the executive officers. Pursuant to the rental agreements,certain subsidiaries of the Company rent an office building owned by the family members of the executive officer.(iv)The balance as of December 31, 2015 mainly represents a short-term interest-bearing loan provided by Qunar to the Company of US$100.00 million inOctober 2015. The loan was fully repaid in March 2016.20. SEGMENT REPORTINGThe operations of the Company are organized into three segments, consisting of Search Services, Transaction Services, and iQiyi. Search Services arekeyword-based marketing services targeted at and triggered by internet user’s search queries, which mainly include P4P services and other online marketingservices. Transaction Services include Baidu Nuomi, Baidu Deliveries, Baidu Mobile Game, Baidu Wallet, Baidu Map and others. iQiyi represents the onlinevideo business.The Company derives the results of the segments directly from its internal management reporting system. The CODM measures the performance of eachsegment based on metrics of revenue and earnings from operations and uses these results to evaluate the performance of, and to allocate resources to, each ofthe segments. The Company does not allocate any share-based compensation expenses to its segments as the CODM does not use this information to measurethe performance of the operating segments. Because substantially all of the Group’s long-lived assets and revenues are located in and derived from the PRC,geographical segments are not presented.The table below provides a summary of the Group’s operating segment results for the years ended December 31, 2014, 2015 and 2016. For the years ended December 31, 2014 2015 2016 2016 RMB RMB RMB US$ (In thousands) Search Services Revenues 43,727,459 55,667,478 55,375,031 7,975,663 Operating profit 20,547,793 28,117,837 27,152,807 3,910,818 Transaction Services Revenues 3,822,456 7,005,941 4,894,486 704,953 Operating loss (5,973,978) (13,145,445) (12,386,035) (1,783,960) iQiyi Revenues 2,873,552 5,295,760 11,283,329 1,625,137 Operating loss (1,110,299) (2,383,438) (2,765,169) (398,267) Inter-segment Revenues (1,371,149) (1,587,450) (1,003,482) (144,531) Operating profit (loss) 302,988 469,718 (192,535) (27,732) Segment operating profit 13,766,504 13,058,672 11,809,068 1,700,859 Unallocated expenses (962,740) (1,387,118) (1,759,988) (253,491) Group consolidated operating profit 12,803,764 11,671,554 10,049,080 1,447,368 F-60 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 21. FAIR VALUE MEASUREMENTASC topic 820 (“ASC 820”), Fair Value Measurements and Disclosures, establishes a three-tier fair value hierarchy, which prioritizes the inputs used inmeasuring fair value as follows:Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active marketsLevel 2 – Include other inputs that are directly or indirectly observable in the marketplaceLevel 3 – Unobservable inputs which are supported by little or no market activityASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) costapproach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets orliabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on thevalue indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required toreplace an asset.Assets and Liabilities Measured or Disclosed at Fair ValueIn accordance with ASC 820, the Company measures available-for-sale investments and trading investments at fair value on a recurring basis. The fair valueof time deposits are determined based on the prevailing interest rates in the market. The fair values of the Company’s held-to-maturity investments asdisclosed are determined based on the discounted cash flow model using the discount curve of market interest rates. The fair value of the Company’savailable-for-sale debt investments and trading investments are measured using the income approach, based on quoted market interest rates of similarinstruments and other significant inputs derived from or corroborated by observable market data. The fair values of the Company’s available-for-sale equityinvestments in the equity securities of publicly listed companies are measured using quoted market prices.The Company measures certain financial assets, including equity method investments and cost method investments, at fair value on a nonrecurring basis onlyif an impairment charge were to be recognized. The Company’s non-financial assets, such as intangible assets, goodwill and fixed assets, would be measuredat fair value only if they were determined to be impaired on an other-than-temporary basis.The fair value of the long-term notes payable is disclosed using quoted market price. F-61 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 Assets and liabilities measured or disclosed at fair value are summarized below: Fair value measurement or disclosureat December 31, 2015 using Total fairvalue atDecember 31,2015 Quoted pricesin activemarkets foridenticalassets(Level 1) Significant otherobservableinputs(Level 2) Significantunobservableinputs (Level 3) Total losses RMB RMB RMB RMB RMB (In thousands) Fair value disclosure (Notes 2 and 4) Cash equivalents Time deposits 678,000 678,000 Money market fund 608,353 608,353 Short-term investmentsHeld-to-maturity investments Fixed-rate investments 37,134,096 37,134,096 Long-term investmentsHeld-to-maturity investments Fixed-rate investments 1,806,446 1,806,446 Long-term notes payable 30,714,586 30,714,586 Fair value measurements Recurring Short-term investmentsAvailable-for-sale investments Fixed-rate debt investments 6,958,399 6,958,399 Adjustable-rate debt investments 13,325,385 13,325,385 Equity investments 742,618 742,618 Long-term investmentsAvailable-for-sale investments Equity investments 276,965 276,965 Non-recurring Long-term investments — — — — (116,978) Total assets measured at fair value 21,303,367 1,019,583 20,283,784 — (116,978) F-62 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 In 2015, the value of a cost method investment was written down to zero, as a result of declining financial performance and a change in the businesscircumstances of the investee. The corresponding impairment charge incurred was recorded in earnings for the year then ended. Fair value measurement or disclosureat December 31, 2016 using Total fair value atDecember 31, 2016 Quoted prices inactive marketsfor identicalassets (Level 1) Significant otherobservableinputs(Level 2) Significantunobservableinputs (Level 3) Total losses RMB US$ RMB RMB RMB RMB US$ (In thousands) Fair value disclosure (Notes 2 and 4) Cash equivalents Time deposits 1,674,172 241,131 1,674,172 Money market fund 4,419,206 636,498 4,419,206 Short-term investmentsHeld-to-maturity investments Fixed-rate investments 41,868,641 6,030,339 41,868,641 Long-term notes payable 33,252,561 4,789,365 33,252,561 Fair value measurements Recurring Short-term investmentsAvailable-for-sale investments Fixed-rate debt investments 14,377,856 2,070,842 14,377,856 Adjustable-rate debt investments 14,986,816 2,158,550 14,986,816 Equity investments 28,787 4,146 28,787 Trading securities 7,747,436 1,115,863 7,747,436 Long-term investments Available-for-saleinvestments Equity investments 496,512 71,513 496,512 Non-recurring Long-term investments — — — — — (150,745) (21,712) Intangible assets (822) (118) Total assets measured at fair value 37,637,407 5,420,914 525,299 37,112,108 — (151,567) (21,830) In 2016, the value of certain cost method investments and an equity method investment were written down to zero, as a result of declining financialperformance and a change in the business circumstances of the investee. The corresponding impairment charges incurred were recorded in earnings for theyear then ended. F-63 Table of ContentsBAIDU, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2014, 2015 and 2016 22. SUBSEQUENT EVENTSDisposal of Baidu Mobile Game BusinessOn January 13, 2017, the Company entered into an agreement with two third-party companies, for the disposition of the Company’s mobile game business fora total purchase price of approximately RMB1.20 billion (US$172.69 million) in cash.Issuance of Convertible NoteOn January 25, 2017, iQiyi issued US$1.53 billion convertible notes (the “iQiyi Notes”) in a private placement, among which US$300.00 million waspurchased by the Company and the rest US$1.23 billion was purchased by external investors. The iQiyi Notes bear interest at a coupon rate of 1.5% perannum with a maturity date of January 25, 2018, and can be converted into preferred shares in a qualified financing or at the iQiyi’s election. The proceedswill be used for general working capital purpose.Share Repurchase ProgramIn March 2017, the Company started the share repurchase program announced on October 29, 2015. Until March 29, 2017, the Company repurchased 68,761Class A ordinary shares from the open market at an aggregated purchase price of US$116.49 million. The repurchased shares will be cancelled under CaymanIsland law upon repurchase and the difference between the par value and the repurchase price will be debited to retained earnings. F-64 Exhibit 4.34Termination AgreementThis Termination Agreement (this “Agreement”) is entered into as of May 3, 2016 in Beijing, the People’s Republic of China (“PRC,” for purposes of thisAgreement, excluding Hong Kong, Macau and Taiwan) by and among:Party A: Baidu Online Network Technology (Beijing) Co., Ltd., a WFOE duly organized and validly current under the PRC laws, with its registered addressat 3/F, Baidu Plaza, No. 10 Shangdi 10th Street, Haidian District, BeijingParty B: Beijing Perusal Technology Co., Ltd., a limited liability company duly organized and validly current under the PRC laws, with its registeredaddress at A2 2F No. 17 Building Zhongguancun Software Park, 8 East Bei Wang Road (W), Haidian District, BeijingParty C: Jiping Liu, a PRC citizen, ID No.: , and Yazhu Zhang, a PRC citizen, ID No.:In this Agreement, each of the Parties above are collectively referred to as the “Parties,” individually as a “Party,” and mutually as the “Other Parties.”WHEREAS (1)Each Party executed the documents listed in Exhibit 1 (collectively the “Control Documents”) prior to the date hereof; (2)Party C is the shareholder of Party B, holding in aggregate 100% of the equity interests in Party B, of which Jiping Liu holds 80% and Yazhu Zhangholds 20% of Party B; (3)Jiping Liu executed a Capital Contribution Transfer Agreement dated May 3, 2016 with Zhixiang Liang and Xiaodong Wang, to transfer 50% of theequity interests in Party B to Zhixiang Liang and 30% to Xiaodong Wang; Yazhu Zhang executed a Capital Contribution Transfer Agreement datedMay 3, 2016 with Xiaodong Wang to transfer the 20% equity interests it holds in Party B to Xiaodong Wang; and (4)Each Party agrees to terminate all of the Control Documents as agreed herein.Upon friendly consultation, the Parties agree as follows: 1.Termination of Control Documents 1.1The Parties hereby irrevocably agree and acknowledge that each of the Control Documents shall terminate and cease to have any effect as of the datehereof. 1 1.2As of the date hereof, each Party will cease to enjoy any of its rights under all and/or any of the Control Documents, and cease to fulfill any of itsobligations under all and/or any of the Control Documents; provided, however that (1) the rights and obligations already exercised and fulfilled by theParties based on the current Control Documents shall remain valid; (2) Party C will remain obliged to repay the entire loan already paid by Party A toParty C in accordance with the Amended and Restated Loan Agreement 5; and (3) in connection with the equity of Party B pledged by Party C to PartyA under the current Control Documents, Party A, Party B and Party C shall file an application to the competent AIC where Party B is domiciled withinfifteen (15) working days after the date hereof to go through the registration procedures to release the pledge on the equity. 1.3Except otherwise provided in the above Section 1.2, each of the Parties hereby irrevocably and unconditionally waive any dispute, claim, demand,right, obligation, liability, action, contract or cause of action of any kind or nature it had, has or may have against the Other Parties hereto, arisingdirectly or indirectly in connection with or as a result of all and/or any of the current Control Documents. 1.4Without prejudice to the generality of the above Sections 1.2 and 1.3, as of the date hereof, each of the Parties hereby waives any commitment, debt,claim, demand, obligation and liability of any sort or nature that such Party or any of its successors, heirs, assigns or estate executors had, has or mayhave against the Other Parties hereto and their respective current and past directors, officers, employees, counsels and agents, affiliates of the forgoingpersons and the respective successors and assigns of each of the foregoing, arising in connection with or as a result of the current Control Documents,including claims and cause of action at law or equity, whether initiated or not, absolute or contingent, known or unknown. 2.Representations and Warranties 2.1Mutual Representations and Warranties. Each of the Parties represents and warrants to the Other Parties that:(1) it has full legal right, power and authority to execute this Agreement and all contracts and documents to which it is a party as mentioned herein, andthe execution of this Agreement truly reflects its intention;(2) its execution and performance of this Agreement will not constitute a breach of any organizational document to which it is a party or by which it isbound, any agreement executed or permit obtained by it, or result in its breach of or any need to obtain any judgment, ruling, order or consent issuedby a court, government authority or regulatory body; and 2 (3) it has obtained all consents, approvals and authorizations necessary for its valid execution of this Agreement, all contracts and documents to whichit is a party as mentioned herein, and for its compliance with and performance of its obligations hereunder and thereunder. 3.Covenants 3.1To smoothly terminate the rights and obligations under the current Control Documents, each party shall execute all documents and take all actions thatare necessary or appropriate, actively assist the Other Parties in obtaining relevant government approvals and/or registration documents and go throughrelevant termination procedures. 4.Dissolution and Termination of Agreement 4.1Except for the circumstances expressly provided herein, the Parties agree that this Agreement may be dissolved or terminated:(1) by all the Parties through negotiation, all expenses and losses thus incurred shall be borne by all the Parties respectively.(2) by the non-defaulting Party if the purpose of this Agreement cannot be realized due to a Party’s breach of its obligations hereunder. 5.Liabilities for Breach and Indemnification 5.1Any Party is deemed in breach of this Agreement if it violates or fails to perform any of its representations, warranties, covenants, obligations andliabilities set forth herein. 5.2Unless otherwise specifically agreed herein, any Party in breach of this Agreement shall indemnify the non-defaulting Parties for any cost, liabilities orany loss incurred (including without limitation any interest and lawyer’s fees payable or lost as a result of such breach). The total amount of indemnitypaid by the defaulting Party to the non-defaulting Parties shall be the loss incurred by such breach. 6.Governing Law and Dispute Resolution 6.1The conclusion, validity, interpretation, performance and resolution of disputes hereunder shall be governed by and construed in accordance with thelaws of the PRC. 6.2All disputes arising from the performance of this Agreement or in connection with this Agreement shall be resolved by the Parties through amicableconsultation. 3 6.3Any Party may submit the dispute to China International Economic and Trade Arbitration Commission (“CIETAC”) for arbitration in Beijing inaccordance with its then effective arbitration rules and procedures. The arbitral tribunal consists of three arbitrators appointed in accordance with thearbitration rules, one designated by the claimant, one by the respondent and the third arbitrator shall be appointed by the previous two arbitrators afterconsultation or by the CIETAC. The arbitration shall be conducted in confidential manner and in Chinese. The arbitral award shall be final andbinding upon both Parties. 6.4During the arbitration, except the matters under dispute and pending arbitration, each Party shall continue to exercise its other rights and fulfill itsother obligations hereunder. 7.Confidentiality 7.1The Parties shall be obliged to keep confidential this Agreement and matters relating to this Agreement and none of the Parties may disclose any matterrelating hereto to a third party other than the Parties hereto without the written consent of the Other Parties, except for a disclosure:(1) to the auditor, lawyer and such other staff engaged in the ordinary course of business, provided that such persons must be subject to aconfidentiality obligation with respect to any information relating to this Agreement that is acquired during such engagement; and(2) that relates to the materials and documents that may be otherwise accessible from a public source, or pursuant to an express requirement from a law,regulation or relevant stock exchange authority. 8.Miscellaneous 8.1This Agreement shall become effective upon signed by all the Parties. 8.2The Parties may amend or modify this Agreement upon consultation among the Parties. Any such amendment or modification must be made in writingand become effective upon signed by all the Parties. 8.3Should any provision hereof be held invalid or unenforceable, such provision shall be deemed absent without affecting the validity of the otherprovisions hereof, and the Parties shall negotiate to seek a new provision to the extent permissible by law to ensure that the intent of the originalprovision can be realized to the maximum extent. 8.4Unless otherwise provided herein, no failure or delay in exercising any right, power or privilege hereunder by a Party shall constitute its waiver of suchright, power or privilege, nor shall single or partial exercise of such right, power or privilege preclude the exercise of any other right, power andprivilege. 4 8.5This Agreement is made in four counterparts, one for each Party, and all counterparts shall be equally binding.[Remainder of the page intentionally left blank] 5 IN WITNESS WHEREOF, each party hereto has executed or caused this Termination Agreement to be duly executed by its authorized representative on itsbehalf with immediate effect as of the date first written above.Baidu Online Network Technology (Beijing) Co., Ltd. (stamp) Signature: /s/ Zhan WangName: Zhan WangTitle: Legal RepresentativeSignature page of Termination Agreement 6 IN WITNESS WHEREOF, each party hereto has executed or caused this Termination Agreement to be duly executed by its authorized representative on itsbehalf with immediate effect as of the date first written above.Beijing Perusal Technology Co., Ltd. Signature: /s/ Zhan WangName: Zhan WangTitle: Legal RepresentativeSignature page of Termination Agreement 7 IN WITNESS WHEREOF, each party hereto has executed or caused this Termination Agreement to be duly executed by its authorized representative on itsbehalf with immediate effect as of the date first written above.Jiping Liu Signature: /s/ Jiping LiuSignature page of Termination Agreement 8 IN WITNESS WHEREOF, each party hereto has executed or caused this Termination Agreement to be duly executed by its authorized representative on itsbehalf with immediate effect as of the date first written above.Yazhu Zhang Signature: /s/ Yazhu ZhangSignature page of Termination Agreement 9 Exhibit 1Schedule of Control Documents No. Document Name Parties Execution Date1 Business Operating Agreement Baidu Online Network Technology (Beijing)Co., Ltd., Beijing Perusal Technology Co., Ltd.,Jiping Liu and Yazhu Zhang June 23, 20062 Supplemental Articles to Business OperatingAgreement Baidu Online Network Technology (Beijing)Co., Ltd., Beijing Perusal Technology Co., Ltd.,Jiping Liu and Yazhu Zhang April 22, 20103 Amended and Restated Loan Agreement 5 Baidu Online Network Technology (Beijing)Co., Ltd. and Jiping Liu December 16, 20154 Amended and Restated Loan Agreement 5 Baidu Online Network Technology (Beijing)Co., Ltd. and Yazhu Zhang December 16, 20155 Amended and Restated Exclusive EquityPurchase and Transfer Option Agreement 5 Baidu Online Network Technology (Beijing)Co., Ltd., Jiping Liu and Beijing PerusalTechnology Co., Ltd. December 16, 20156 Amended and Restated Exclusive EquityPurchase and Transfer Option Agreement 5 Baidu Online Network Technology (Beijing)Co., Ltd., Yazhu Zhao and Beijing PerusalTechnology Co., Ltd. December 16, 20157 Voting Proxy Agreement Baidu Online Network Technology (Beijing)Co., Ltd., Jiping Liu and Yazhu Zhang June 23, 2006 10 No. Document Name Parties Execution Date8 Voting Proxy Agreement Baidu Online Network Technology (Beijing)Co., Ltd., Jiping Liu and Yazhu Zhang May 17, 20089 Amended and Restated Equity Pledge Contract 5 Baidu Online Network Technology (Beijing)Co., Ltd. and Jiping Liu December 16, 201510 Amended and Restated Equity Pledge Contract 5 Baidu Online Network Technology (Beijing)Co., Ltd. and Yazhu Zhang December 16, 201511 Sections 1.2, 1.3, 1.4, 1.5, 1.6 and 1.7 ofSupplementary Agreement Baidu Online Network Technology (Beijing)Co., Ltd., Beijing Perusal Technology Co., Ltd.,Jiping Liu and Yazhu Zhang September 6, 201112 Power of Attorney Jiping Liu June 23, 200613 Power of Attorney Yazhu Zhang June 23, 2006 11 Termination AgreementThis Termination Agreement (this “Agreement”) is entered into as of March 15, 2016 in Beijing, the People’s Republic of China (“PRC,” for purposes of thisAgreement, excluding Hong Kong Macau and Taiwan) by and among:Party A: Baidu Online Network Technology (Beijing) Co., Ltd., a WFOE duly organized and validly existing under the PRC laws, with its registeredaddress at 3/F, Baidu Plaza, No. 10 Shangdi 10th Street, Haidian District, BeijingParty B: Beijing Perusal Technology Co., Ltd., a limited liability company duly organized and validly existing under the PRC laws, with its registeredaddress at A2 2F No. 17 Building Zhongguancun Software Park, 8 East Bei Wang Road (W), Haidian District, BeijingParty C: Jiping Liu, a PRC citizen, ID No.: , and Yazhu Zhang, a PRC citizen, ID No.:In this Agreement, each of the Parties above are collectively referred to as the “Parties,” individually as a “Party,” and mutually as the “Other Parties.”WHEREAS (1)Each Party executed the documents listed in Exhibit 1 (collectively the “Control Documents”) prior to the date hereof; and (2)Each Party agrees to terminate all of the Control Documents as agreed herein.Upon friendly consultation, the Parties agree as follows: 1.Termination of Control Documents 1.1The Parties hereby irrevocably agree and acknowledge that each of the Control Documents shall terminate and cease to have any effect as of the datehereof. 1.2As of the date hereof, each Party will cease to enjoy any of its rights under all and/or any of the Control Documents, and cease to fulfill any of itsobligations under all and/or any of the Control Documents; the Control Documents shall cease to be binding on the Parties. The Parties shall restore tothe state prior to the execution of the Control Documents by sticking to the principles of fairness, reasonableness and honesty. 1.3Except otherwise provided in the above Section 1.2, each of the Parties hereby irrevocably and unconditionally waive any dispute, claim, demand,right, obligation, liability, action, contract or cause of action of any kind or nature it had, has or may have against the Other Parties hereto, arisingdirectly or indirectly in connection with or as a result of all and/or any of the Control Documents. 12 1.4Without prejudice to the generality of the above Sections 1.2 and 1.3, as of the date hereof, each of the Parties hereby waives any commitment, debt,claim, demand, obligation and liability of any sort or nature that such Party or any of its successors, heirs, assigns or estate executors had, has or mayhave against the Other Parties hereto and their respective current and past directors, officers, employees, counsels and agents, affiliates of the forgoingpersons and the respective successors and assigns of each of the foregoing, arising in connection with or as a result of the Control Documents,including claims and cause of action at law or equity, whether initiated or not, absolute or contingent, known or unknown. 2.Representations and Warranties 2.1Mutual Representations and Warranties. Each of the Parties represents and warrants to the Other Parties that:(1) it has full legal right, power and authority to execute this Agreement and all contracts and documents to which it is a party as mentioned herein, andthe execution of this Agreement truly reflects its intention;(2) its execution and performance of this Agreement will not constitute a breach of any organizational document to which it is a party or by which it isbound, any agreement executed or permit obtained by it, or result in its breach of or any need to obtain any judgment, ruling, order or consent issuedby a court, government authority or regulatory body; and(3) it has obtained all consents, approvals and authorizations necessary for its valid execution of this Agreement, all contracts and documents to whichit is a party as mentioned herein, and for its compliance with and performance of its obligations hereunder and thereunder. 3.Covenants 3.1To smoothly terminate the rights and obligations under the Control Documents, each party shall execute all documents and take all actions that arenecessary or appropriate, actively assist the Other Parties in obtaining relevant government approvals and/or registration documents and go throughrelevant termination procedures. 4.Dissolution and Termination of Agreement 4.1Except for the circumstances expressly provided herein, the Parties agree that this Agreement may be dissolved or terminated: 13 (1) by all the Parties through negotiation, all expenses and losses thus incurred shall be borne by all the Parties respectively.(2) by the non-defaulting Party if the purpose of this Agreement cannot be realized due to a Party’s breach of its obligations hereunder. 5.Liabilities for Breach and Indemnification 5.1Any Party is deemed in breach of this Agreement if it violates or fails to perform any of its representations, warranties, covenants, obligations andliabilities set forth herein. 5.2Unless otherwise specifically agreed herein, any Party in breach of this Agreement shall indemnify the non-defaulting Parties for any cost, liabilities orany loss incurred (including without limitation any interest and lawyer’s fees payable or lost as a result of such breach). The total amount of indemnitypaid by the defaulting Party to the non-defaulting Parties shall be the loss incurred by such breach. 6.Governing Law and Dispute Resolution 6.1The conclusion, validity, interpretation, performance and resolution of disputes hereunder shall be governed by and construed in accordance with thelaws of the PRC. 6.2All disputes arising from the performance of this Agreement or in connection with this Agreement shall be resolved by the Parties through amicableconsultation. 6.3Any Party may submit the dispute to China International Economic and Trade Arbitration Commission (“CIETAC”) for arbitration in Beijing inaccordance with its then effective arbitration rules and procedures. The arbitral tribunal consists of three arbitrators appointed in accordance with thearbitration rules, one designated by the claimant, one by the respondent and the third arbitrator shall be appointed by the previous two arbitrators afterconsultation or by the CIETAC. The arbitration shall be conducted in confidential manner and in Chinese. The arbitral award shall be final andbinding upon both Parties. 6.4During the arbitration, except the matters under dispute and pending arbitration, each Party shall continue to exercise its other rights and fulfill itsother obligations hereunder. 7.Confidentiality 7.1The Parties shall be obliged to keep confidential this Agreement and matters relating to this Agreement and none of the Parties may disclose any matterrelating hereto to a third party other than the Parties hereto without the written consent of the Other Parties, except for a disclosure: 14 (1) to the auditor, lawyer and such other staff engaged in the ordinary course of business, provided that such persons must be subject to aconfidentiality obligation with respect to any information relating to this Agreement that is acquired during such engagement; and(2) that relates to the materials and documents that may be otherwise accessible from a public source, or pursuant to an express requirement from a law,regulation or relevant stock exchange authority. 8.Miscellaneous 8.1This Agreement shall become effective upon signed by all the Parties. 8.2The Parties may amend or modify this Agreement upon consultation among the Parties. Any such amendment or modification must be made in writingand become effective upon signed by all the Parties. 8.3Should any provision hereof be held invalid or unenforceable, such provision shall be deemed absent without affecting the validity of the otherprovisions hereof, and the Parties shall negotiate to seek a new provision to the extent permissible by law to ensure that the intent of the originalprovision can be realized to the maximum extent. 8.4Unless otherwise provided herein, no failure or delay in exercising any right, power or privilege hereunder by a Party shall constitute its waiver of suchright, power or privilege, nor shall single or partial exercise of such right, power or privilege preclude the exercise of any other right, power andprivilege. 8.5This Agreement is made in four counterparts, one for each Party, and all counterparts shall be equally binding.[Remainder of the page intentionally left blank] 15 IN WITNESS WHEREOF, each party hereto has executed or caused this Termination Agreement to be duly executed by its authorized representative on itsbehalf with immediate effect as of the date first written above.Baidu Online Network Technology (Beijing) Co., Ltd. (stamp) Signature: /s/ Zhan WangName: Zhan WangTitle: Legal RepresentativeSignature page of Termination Agreement 16 IN WITNESS WHEREOF, each party hereto has executed or caused this Termination Agreement to be duly executed by its authorized representative on itsbehalf with immediate effect as of the date first written above.Beijing Perusal Technology Co., Ltd. Signature: /s/ Zhan WangName: Zhan WangTitle: Legal RepresentativeSignature page of Termination Agreement 17 IN WITNESS WHEREOF, each party hereto has executed or caused this Termination Agreement to be duly executed by its authorized representative on itsbehalf with immediate effect as of the date first written above.Jiping Liu Signature: /s/ Jiping LiuSignature page of Termination Agreement 18 IN WITNESS WHEREOF, each party hereto has executed or caused this Termination Agreement to be duly executed by its authorized representative on itsbehalf with immediate effect as of the date first written above.Yazhu Zhang Signature: /s/ Yazhu ZhangSignature page of Termination Agreement 19 Exhibit 1Schedule of Control Documents No. Document Name Parties Execution Date1 Amended and Restated Loan Agreement 6 Baidu Online Network Technology (Beijing)Co., Ltd. and Jiping Liu March 1, 20162 Amended and Restated Loan Agreement 6 Baidu Online Network Technology (Beijing)Co., Ltd. and Yazhu Zhang March 1, 20163 Amended and Restated Exclusive EquityPurchase and Transfer Option Agreement 6 Baidu Online Network Technology (Beijing)Co., Ltd., Jiping Liu and Beijing PerusalTechnology Co., Ltd. March 1, 20164 Amended and Restated Exclusive EquityPurchase and Transfer Option Agreement 6 Baidu Online Network Technology (Beijing)Co., Ltd., Yazhu Zhao and Beijing PerusalTechnology Co., Ltd. March 1, 20165 Amended and Restated Equity Pledge Contract6 Baidu Online Network Technology (Beijing)Co., Ltd. and Jiping Liu March 1, 20166 Amended and Restated Equity Pledge Contract6 Baidu Online Network Technology (Beijing)Co., Ltd. and Yazhu Zhang March 1, 20167 Payment Instruction Letter Jiping Liu March 1, 20168 Payment Instruction Letter Yazhu Zhang March 1, 2016 20 Exhibit 4.35Amended and Restated Loan AgreementThis Amended and Restated Loan Agreement (this “Agreement”) is entered into on June 20, 2016 in Beijing, by and between:Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Registered Address: 3/F, No. 10 Shangdi 10th Street, Haidian District, BeijingParty B: Xiaodong WangID Card No.:WHEREAS, 1.Party A is a foreign invested enterprise incorporated under the laws of the PRC, 2.Party B is a Chinese citizen, holding 50% of equity interests of Beijing Perusal Technology Co., Ltd. (“Perusal”), and is the shareholder ofPerusal; 3.On May 3, 2016, Party A provided Party B with an interest-free loan of RMB1.02344 billion (RMB1,023,440,000), used towards the investmentin Perusal. With regards to such loan, Party A and Party B signed a Loan Agreement (the “Original Loan Agreement”) on May 3, 2016. 4.The Parties propose to amend and restate the Original Loan Agreement as expressed herein.Party A and Party B, through friendly consultation, agree as follows: 1.In accordance with the terms and conditions of this Agreement, Party A agrees to provide an interest-free loan in the amount of RMB1.59844billion yuan (RMB1,598,440,000) to Party B, and Party B agrees to accept such loan. 2.Party B confirms the receipt of such loan and has applied part of such loan equal to RMB 645,940,000 toward payment of transfer price toacquire the equity interests of Perusal, and the remaining RMB952,500,000 will be used to pay the newly increased registered capital of Perusalsubscribed by it. 3.The term of the loan under this Agreement shall commence on the date Party B receives such loan to the date 10 years from the execution of thisAgreement, which may be extended upon mutual written consent of the Parties. During the term of the loan or the extended term of the loan,Party A has the right to cause the loan to be due immediately by written notice, and require Party B to repay the loan in accordance to thisAgreement in the event any of the following circumstances occur to Party B: (1)Party B leaves or is dismissed from Party A or an affiliated company of Party A; (2)Party B’s death, lack or limitation of civil capacity; (3)Party B engages in criminal act or is involved in criminal activities; (4)Any third party files a claim against Party B that exceeds RMB100,000; or 1 (5)Subject to the laws of the PRC, Party A or a person designated by Party A is permitted to invest in Perusal to conduct internet informationservice business, value-added telecommunication business and other business, and Party A has issued a written notice relating to theequity purchase of Perusal to Party B pursuant to the provisions of the Exclusive Equity Purchase and Transfer Agreement mentioned inArticle 4 hereof, to exercise the option. 4.The parties herein agree and confirm that, to the extent and within the scope permitted by the laws of the PRC, Party A shall have the right butnot the obligation to purchase or designate other persons (including natural person, legal entity or any other entity) to purchase the equityinterests of Perusal held by Party B in whole or in part (hereinafter referred to as “Option Right”), but Party A shall issue a written notice topurchase equity interests to Party B. Upon Party A’s issuance of a written notice to exercise such Option, Party B shall, in accordance with PartyA’s wishes and instructions, immediately transfer all of its equity interests in Perusal to Party A or other persons as designated by Party A at theoriginal investment price (“Original Investment Price”) or at another price agreed upon by Party A where the law otherwise requires. The Partieshereby agree and acknowledge, when Party A exercises its Option Right, if in accordance with the applicable laws at the time, the lowest price ofthe equity interests permitted is higher than the Original Investment Price, then the subscription price of Party A or other persons designated byParty A shall be the lowest price permitted by the laws. The parties agree to execute the Exclusive Equity Purchase and Transfer Agreement withrespect to the above. 5.The parties herein agree and confirm that Party B may repay the loan only by the following methods: the borrower (or his successors orassignees) shall, to the extent permissible by the PRC laws and as required by Party A’s written notice, transfer the equity interest in Perusal toParty A or its designated person and use the proceeds to repay the loan when the loan is due and Party A gives a written notice, or throughanother method as mutually agreed by the parties herein. 6.The Parties herein agree and confirm that this loan is an interest-free loan unless there are different provisions in this Agreement. But if the loanis due and Party B has to transfer his equity interests in Perusal to Party A or its designated person and the proceeds exceed the loan principal dueto the legal requirement or other reasons, Party B agrees to pay such excess amount over the principal of proceeds, net of the individual incometax and other taxes and fees payable by Party B, to Party A at its decision to the extent permissible by the law. 7.The parties agree and confirm that Party B shall be deemed to have completed his obligations under this Agreement only if all of the followingrequirements are met: (1)Party B has transferred all his equity interests in Perusal to Party A and/or its designated person; and (2)Party B has repaid the total amount of proceeds from the equity interest transfer or the maximum amount (including principal and themaximum interests as permitted by the applicable laws at the time) permitted by applicable laws to Party A. 8.To secure the performance of debt under this Agreement, Party B agrees to pledge all of his equity interests in Perusal to Party A (the “EquityPledge”). The parties agree to execute an equity pledge agreement for the above matters. 2 9.Party A hereby represents and warrants to Party B that, as of the execution date of this Agreement: (1)Party A is a wholly foreign-owned enterprise incorporated and validly existing under the laws of the PRC; (2)Party A has the right to execute and perform this Agreement. The execution and performance by Party A of this agreement comply withits business scope, Articles or other institutional documents, and Party A has taken necessary actions to get all necessary and appropriateapprovals and authorizations; (3)The principal of the loan to Party B is legally owned by Party A; (4)The execution and performance of this Agreement by Party A does not violate any law, regulation, approval, authorization, notice orother governmental document by which it is bound or affected, or any agreement between Party A and any third party, or any promisemade by Party A to a third party; and (5)This Agreement, once executed, shall constitute a legal, valid and enforceable obligations of Party A. 10.Party B hereby represents and warrants to Party A that, from the execution date of this agreement until this Agreement terminates: (1)Perusal is a limited liability company incorporated and validly existing under the laws of the PRC and Party B is the legal holder of theequity interest of Perusal; (2)Party B has the right to execute and perform this Agreement. The execution and performance by Party B of this Agreement comply withits business scope, Articles or other institutional documents, and Party B has taken necessary actions to obtain all necessary andappropriate approvals and authorizations; (3)The execution and performance of this Agreement by Party B does not violate any law, regulation, approval, authorization, notice orother governmental document by which it is bound or affected, or any agreement between Party B and any third party, or any promisemade by Party B to a third party; (4)This Agreement, once executed, shall constitute a legal, valid and enforceable obligation of Party B; (5)Party B has paid contribution in full for the equity interests he holds in Perusal in accordance with applicable laws and regulations; (6)Except pursuant to the provisions stipulated in the equity pledge agreement and exclusive equity purchase and transfer optionagreement, Party B did not create any mortgage, pledge or other security over his equity interest in Perusal, make any offer to a thirdparty to transfer his equity, make acceptance for the offer to a third party to purchase his equity, or execute any agreement with a thirdparty to transfer his equity; (7)There are no pending or potential disputes, litigation, arbitration, administrative proceedings or other legal proceedings in connectionwith the equity interests of Perusal held by Party B; (8)Perusal has completed all necessary governmental approvals, licenses, registrations and filings. 11.Party B undertakes, during the term of this Agreement: (1)not to sell, transfer, pledge or otherwise dispose of his equity interests or other interests in Perusal, nor to allow the creation of any othersecurity interest over his equity interests without the prior written consent of Party A, except pledges or other rights created for thebenefit of Party A; 3 (2)not to vote for, support or execute any shareholder resolutions at Perusal’s shareholder’s meetings that permit the sale, transfer, pledge orother disposal of, or the creation of any other security interest on, any of his legal or beneficiary equity interests without the prior writtenconsent of Party A, except those made to Party A; (3)not to vote for, support or execute any shareholder resolutions at Perusal’s shareholder meetings that permit Perusal to merge or combinewith, or acquire or invest in, any person without Party A’s prior written consent; (4)to promptly inform Party A of any pending or threatened litigation, arbitration or administrative proceeding relating to the equityinterests of Perusal; (5)to execute all necessary or appropriate documents, take all necessary or appropriate actions and bring all necessary or appropriatelawsuits or make all necessary and appropriate defenses against all claims in order to maintain his ownership of equity interests inPerusal; (6)to refrain from any act and/or omission that may materially affect the assets, business and liabilities of Perusal without the prior writtenconsent of Party A; (7)to appoint any person nominated by Party A as executive director of Perusal, upon Party A’s request; (8)in connection with Party A’s exercise of the subscription right provided hereunder, to transfer promptly and unconditionally all equityinterests in Perusal held by Party B to Party A and/or its designated person, to the extent and within the scope permissible under the lawsof the PRC; (9)not to request Perusal to distribute dividends or profits to it; (10)once Party B transfers his equity interest in Perusal to Party A or its designated person, to repay the consideration he receives as theprincipal and the interests or capital use cost to Party A to the extent permitted under the laws of the PRC; (11)to strictly comply with the terms of this Agreement, perform the obligations under this Agreement, and refrain from any act or omissionthat suffices to affect the validity and enforceability of this Agreement. 12.Party B, as the shareholder of Perusal, undertakes to cause Perusal, during the term of this Agreement: (1)not to supplement, amend or modify its articles of association, or increase or decrease its registered capital, or to change its capitalstructure in any form without the prior written consent of Party A; (2)to maintain its existence and handle matters prudently and affectively according to good financial and business rules and practices; (3)not to sell, transfer, mortgage or otherwise dispose of, nor to permit the creation of any other security interest on, any of its legal orbeneficial interests in its assets, business or income without the prior written consent of Party A, at any time as of the date of thisAgreement; (4)not to incur, succeed, guarantee or permit the existence of any liabilities without the prior written consent of Party A, except theliabilities (i) arising from the ordinary or day-to-day course of business, rather than through Party B; and (ii) disclosed to Party A orapproved by Party A in writing; 4 (5)to operate all businesses on a continued basis and maintain the value of its assets; (6)not to execute any material contracts (for the purpose of this item, a contract will be deemed material if its value exceeds RMB[100,000]) without the prior written consent of Party A, other than those executed during the ordinary course of business; (7)to provide all information about its operations and financial affairs at Party A’s request; (8)not to merge or combine with, acquire or invest in, any other person without the prior written consent of Party A; (9)not to distribute dividends to the shareholders in any way without the prior written consent of Party A, and upon Party A’s request, topromptly distribute all distributable profits to the shareholders. (10)to promptly inform Party A of any pending or threatened litigation, arbitration or administrative proceeding relating to its assets,business or revenue; (11)to execute all necessary or appropriate documents, take all necessary or appropriate actions and bring all necessary or appropriatelawsuits or make all necessary and appropriate defenses against all claims in order to maintain tis ownership of its assets; (12)to strictly comply with the terms of the Exclusive Technology Service Agreement (“Service Agreement”) entered into between Perusaland Party A and other agreements, duly perform its obligations under the Service Agreement and such other agreements, and refrain fromany act or omission that suffice to affect the validity and enforceability of the Service Agreement. 13.This Agreement shall be binding on, and only for the benefits of, all parties hereto and their respective successors and assignees. Without priorwritten consent of Party A, Party B shall not transfer, pledge or otherwise assign any of its rights, interests or obligations hereunder. 14.Party B agrees that Party A may assign its rights and obligations hereunder to a third party by a written notice to Party B when it considersnecessary. No further consent from Party B is required for such transfer. 15.The execution, validity, interpretation, performance, amendment, termination and dispute resolution of this Agreement are governed by the lawsof the PRC. 16.Arbitration (1)Both Parties shall strive to settle any dispute, conflicts, or claims arising from the interpretation or performance (including any issuerelating to the existence, validity and termination) of this Agreement through friendly consultation. In case no settlement can be reachedwithin thirty (30) days after one party requests for settlement, any party can submit such matter to China International Economic andTrade Arbitration Commission (the “CIETAC”) in accordance with its then-current rules at the time of application. The arbitration awardshall be final and conclusive and binding upon the Parties. (2)The arbitration shall take place in Beijing. (3)The arbitration language shall be Chinese. 5 17.This Agreement shall become effective on the date of execution. Both Parties agree that the terms and conditions of this Agreement shall beeffective as of the date on which Party B receives the loan, and shall expire as of the date on which both Parties complete their obligationshereunder. 18.Party B shall not terminate or revoke this Agreement under any circumstances unless (a) Party A commits a gross negligence, fraud, or othermaterial misconduct; or (b) upon Party A’s bankruptcy. 19.This Agreement shall not be amended or modified without the written consent of the Parties hereto. Any matters not agreed upon in thisAgreement may be supplemented by all Parties through the execution of a written agreement. The above amendments, modifications,supplements and any attachment of this Agreement shall be integral parts of this Agreement. 20.This Agreement constitutes the entire agreement of the Parties with respect to the subject matter herein and supersedes and replaces all priorverbal and written agreements and understandings between the Parties. 21.This Agreement is severable. The invalidity or unenforceability of any one clause shall not affect the validity or enforceability of other clausesherein. 22.Each Party shall protect the confidentiality of information concerning the other Party’s business, operation, financial situation or otherconfidential information obtained under this Agreement or during the performance of this Agreement. 23.Any obligation that is incurred or becomes due before the expiration or early termination of this Agreement shall survive such expiration or earlytermination. Section 15, 16, and 22 shall survive the termination of this Agreement. 24.This Agreement shall be executed in two counterparts, and each Party shall hold one counterpart. Both counterparts shall have the same legaleffect.[No text below] 6 [No text on this page]IN WITNESS WHEREOF, each party hereto has executed or caused this Agreement to be duly executed by its legal or authorized representative on itsbehalf as of the date first written above.Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Legal representative/authorized representative: /s/ Hailong XiangCompany seal: /s/ Baidu Online Network Technology (Beijing) Co., Ltd.Party B: Xiaodong WangSignature: /s/ Xiaodong Wang 7 Amended and Restated Loan AgreementThis Amended and Restated Loan Agreement (this “Agreement”) is entered into on June 20, 2016 in Beijing, by and between:Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Registered Address: 3/F, No. 10 Shangdi 10th Street, Haidian District, BeijingParty B: Zhixiang LiangID Card No.:WHEREAS, 1.Party A is a foreign invested enterprise incorporated under the laws of the PRC, 2.Party B is a Chinese citizen, holding 50% of equity interests of Beijing Perusal Technology Co., Ltd. (“Perusal”), and is the shareholder ofPerusal; 3.On May 3, 2016, Party A provided Party B with an interest-free loan of RMB 1.02344 billion (1,023,440,000) yuan, used towards the investmentin Perusal. With regards to such loan, Party A and Party B signed a Loan Agreement (the “Original Loan Agreement”) on May 3, 2016. 4.The Parties propose to amend and restate the Original Loan Agreement as expressed herein. PartyA and Party B, through friendly consultation, agree as follows: 1.In accordance with the terms and conditions of this Agreement, Party A agrees to provide an interest-free loan in the amount of RMB1.59844billion yuan (RMB1,598,440,000) to Party B, and Party B agrees to accept such loan. 2.Party B confirms the receipt of such loan and has applied part of such loan equal to RMB645,940,000 toward payment of transfer price toacquire the equity interests of Perusal, and the remaining RMB952,500,000 will be used to pay the newly increased registered capital of Perusalsubscribed by it. 3.The term of the loan under this Agreement shall commence on the date Party B receives such loan to the date 10 years from the execution of thisAgreement, which may be extended upon mutual written consent of the Parties. During the term of the loan or the extended term of the loan,Party A has the right to cause the loan to be due immediately by written notice, and require Party B to repay the loan in accordance to thisAgreement in the event any of the following circumstances occur to Party B: (1)Party B leaves or is dismissed from Party A or an affiliated company of Party A; (2)Party B’s death, lack or limitation of civil capacity; (3)Party B engages in criminal act or is involved in criminal activities; (4)Any third party files a claim against Party B that exceeds RMB100,000; or 8 (5)Subject to the laws of the PRC, Party A or a person designated by Party A is permitted to invest in Perusal to conduct internet informationservice business, value-added telecommunication business and other business, and Party A has issued a written notice relating to theequity purchase of Perusal to Party B pursuant to the provisions of the Exclusive Equity Purchase and Transfer Option Agreementmentioned in Article 4 hereof, to exercise the option. 4.The parties herein agree and confirm that, to the extent and within the scope permitted by the laws of the PRC, Party A shall have the right butnot the obligation to purchase or designate other persons (including natural person, legal entity or any other entity) to purchase the equityinterests of Perusal held by Party B in whole or in part (hereinafter referred to as “Option Right”), but Party A shall issue a written notice topurchase equity interests to Party B. Upon Party A’s issuance of a written notice to exercise such Option, Party B shall, in accordance with PartyA’s wishes and instructions, immediately transfer all of its equity interests in Perusal to Party A or other persons as designated by Party A at theoriginal investment price (“Original Investment Price”) or at another price agreed upon by Party A where the law otherwise requires. The Partieshereby agree and acknowledge, when Party A exercises its Option Right, if in accordance with the applicable laws at the time, the lowest price ofthe equity interests permitted is higher than the Original Investment Price, then the subscription price of Party A or other persons designated byParty A shall be the lowest price permitted by the laws. The parties agree to execute the Exclusive Equity Purchase and Transfer OptionAgreement with respect to the above. 5.The parties herein agree and confirm that Party B may repay the loan only by the following methods: the borrower (or his successors orassignees) shall, to the extent permissible by the PRC laws and as required by Party A’s written notice, transfer the equity interest in Perusal toParty A or its designated person and use the proceeds to repay the loan when the loan is due and Party A gives a written notice, or throughanother method as mutually agreed by the parties herein. 6.The Parties herein agree and confirm that this loan is an interest-free loan unless there are different provisions in this Agreement. But if the loanis due and Party B has to transfer his equity interests in Perusal to Party A or its designated person and the proceeds exceed the loan principal dueto the legal requirement or other reasons, Party B agrees to pay such excess amount over the principal of proceeds, net of the individual incometax and other taxes and fees payable by Party B, to Party A at its decision to the extent permissible by the law. 7.The parties agree and confirm that Party B shall be deemed to have completed his obligations under this Agreement only if all of the followingrequirements are met: (1)Party B has transferred all his equity interests in Perusal to Party A and/or its designated person; and (2)Party B has repaid the total amount of proceeds from the equity interest transfer or the maximum amount (including principal and themaximum interests as permitted by the applicable laws at the time) permitted by applicable laws to Party A. 8.To secure the performance of debt under this Agreement, Party B agrees to pledge all of his equity interests in Perusal to Party A (the “EquityPledge”). The parties agree to execute an equity pledge agreement for the above matters. 9 9.Party A hereby represents and warrants to Party B that, as of the execution date of this Agreement: (1)Party A is a wholly foreign-owned enterprise incorporated and validly existing under the laws of the PRC; (2)Party A has the right to execute and perform this Agreement. The execution and performance by Party A of this agreement comply withits business scope, Articles or other institutional documents, and Party A has taken necessary actions to get all necessary and appropriateapprovals and authorizations; (3)The principal of the loan to Party B is legally owned by Party A; (4)The execution and performance of this Agreement by Party A does not violate any law, regulation, approval, authorization, notice orother governmental document by which it is bound or affected, or any agreement between Party A and any third party, or any promisemade by Party A to a third party; and (5)This Agreement, once executed, shall constitute a legal, valid and enforceable obligations of Party A. 10.Party B hereby represents and warrants to Party A that, from the execution date of this agreement until this Agreement terminates: (1)Perusal is a limited liability company incorporated and validly existing under the laws of the PRC and Party B is the legal holder of theequity interest of Perusal; (2)Party B has the right to execute and perform this Agreement. The execution and performance by Party B of this Agreement comply withits business scope, Articles or other institutional documents, and Party B has taken necessary actions to obtain all necessary andappropriate approvals and authorizations; (3)The execution and performance of this Agreement by Party B does not violate any law, regulation, approval, authorization, notice orother governmental document by which it is bound or affected, or any agreement between Party B and any third party, or any promisemade by Party B to a third party; (4)This Agreement, once executed, shall constitute a legal, valid and enforceable obligation of Party B; (5)Party B has paid contribution in full for the equity interests he holds in Perusal in accordance with applicable laws and regulations; (6)Except pursuant to the provisions stipulated in the equity pledge agreement and exclusive equity purchase and transfer optionagreement, Party B did not create any mortgage, pledge or other security over his equity interest in Perusal, make any offer to a thirdparty to transfer his equity, make acceptance for the offer to a third party to purchase his equity, or execute any agreement with a thirdparty to transfer his equity; (7)There are no pending or potential disputes, litigation, arbitration, administrative proceedings or other legal proceedings in connectionwith the equity interests of Perusal held by Party B; (8)Perusal has completed all necessary governmental approvals, licenses, registrations and filings. 11.Party B undertakes, during the term of this Agreement: (1)not to sell, transfer, pledge or otherwise dispose of his equity interests or other interests in Perusal, nor to allow the creation of any othersecurity interest over his equity interests without the prior written consent of Party A, except pledges or other rights created for thebenefit of Party A; 10 (2)not to vote for, support or execute any shareholder resolutions at Perusal’s shareholder’s meetings that permit the sale, transfer, pledge orother disposal of, or the creation of any other security interest on, any of his legal or beneficiary equity interests without the prior writtenconsent of Party A, except those made to Party A; (3)not to vote for, support or execute any shareholder resolutions at Perusal’s shareholder meetings that permit Perusal to merge or combinewith, or acquire or invest in, any person without Party A’s prior written consent; (4)to promptly inform Party A of any pending or threatened litigation, arbitration or administrative proceeding relating to the equityinterests of Perusal; (5)to execute all necessary or appropriate documents, take all necessary or appropriate actions and bring all necessary or appropriatelawsuits or make all necessary and appropriate defenses against all claims in order to maintain his ownership of equity interests inPerusal; (6)to refrain from any act and/or omission that may materially affect the assets, business and liabilities of Perusal without the prior writtenconsent of Party A; (7)to appoint any person nominated by Party A as executive director of Perusal, upon Party A’s request; (8)in connection with Party A’s exercise of the subscription right provided hereunder, to transfer promptly and unconditionally all equityinterests in Perusal held by Party B to Party A and/or its designated person, to the extent and within the scope permissible under the lawsof the PRC; (9)not to request Perusal to distribute dividends or profits to it; (10)once Party B transfers his equity interest in Perusal to Party A or its designated person, to repay the consideration he receives as theprincipal and the interests or capital use cost to Party A to the extent permitted under the laws of the PRC; (11)to strictly comply with the terms of this Agreement, perform the obligations under this Agreement, and refrain from any act or omissionthat suffices to affect the validity and enforceability of this Agreement. 12.Party B, as the shareholder of Perusal, undertakes to cause Perusal, during the term of this Agreement: (1)not to supplement, amend or modify its articles of association, or increase or decrease its registered capital, or to change its capitalstructure in any form without the prior written consent of Party A; (2)to maintain its existence and handle matters prudently and affectively according to good financial and business rules and practices; (3)not to sell, transfer, mortgage or otherwise dispose of, nor to permit the creation of any other security interest on, any of its legal orbeneficial interests in its assets, business or income without the prior written consent of Party A, at any time as of the date of thisAgreement; (4)not to incur, succeed, guarantee or permit the existence of any liabilities without the prior written consent of Party A, except theliabilities (i) arising from the ordinary or day-to-day course of business, rather than through Party B; and (ii) disclosed to Party A orapproved by Party A in writing; 11 (5)to operate all businesses on a continued basis and maintain the value of its assets; (6)not to execute any material contracts (for the purpose of this item, a contract will be deemed material if its value exceeds RMB[100,000]) without the prior written consent of Party A, other than those executed during the ordinary course of business; (7)to provide all information about its operations and financial affairs at Party A’s request; (8)not to merge or combine with, acquire or invest in, any other person without the prior written consent of Party A; (9)not to distribute dividends to the shareholders in any way without the prior written consent of Party A, and upon Party A’s request, topromptly distribute all distributable profits to the shareholders. (10)to promptly inform Party A of any pending or threatened litigation, arbitration or administrative proceeding relating to its assets,business or revenue; (11)to execute all necessary or appropriate documents, take all necessary or appropriate actions and bring all necessary or appropriatelawsuits or make all necessary and appropriate defenses against all claims in order to maintain tis ownership of its assets; (12)to strictly comply with the terms of the Exclusive Technology Service Agreement (“Service Agreement”) entered into between Perusaland Party A and other agreements, duly perform its obligations under the Service Agreement and such other agreements, and refrain fromany act or omission that suffice to affect the validity and enforceability of the Service Agreement. 13.This Agreement shall be binding on, and only for the benefits of, all parties hereto and their respective successors and assignees. Without priorwritten consent of Party A, Party B shall not transfer, pledge or otherwise assign any of its rights, interests or obligations hereunder. 14.Party B agrees that Party A may assign its rights and obligations hereunder to a third party by a written notice to Party B when it considersnecessary. No further consent from Party B is required for such transfer. 15.The execution, validity, interpretation, performance, amendment, termination and dispute resolution of this Agreement are governed by the lawsof the PRC. 16.Arbitration (1)Both Parties shall strive to settle any dispute, conflicts, or claims arising from the interpretation or performance (including any issuerelating to the existence, validity and termination) of this Agreement through friendly consultation. In case no settlement can be reachedwithin thirty (30) days after one party requests for settlement, any party can submit such matter to China International Economic andTrade Arbitration Commission (the “CIETAC”) in accordance with its then-current rules at the time of application. The arbitration awardshall be final and conclusive and binding upon the Parties. (2)The arbitration shall take place in Beijing. (3)The arbitration language shall be Chinese. 12 17.This Agreement shall become effective on the date of execution. Both Parties agree that the terms and conditions of this Agreement shall beeffective as of the date on which Party B receives the loan, and shall expire as of the date on which both Parties complete their obligationshereunder. 18.Party B shall not terminate or revoke this Agreement under any circumstances unless (a) Party A commits a gross negligence, fraud, or othermaterial misconduct; or (b) upon Party A’s bankruptcy. 19.This Agreement shall not be amended or modified without the written consent of the Parties hereto. Any matters not agreed upon in thisAgreement may be supplemented by all Parties through the execution of a written agreement. The above amendments, modifications,supplements and any attachment of this Agreement shall be integral parts of this Agreement. 20.This Agreement constitutes the entire agreement of the Parties with respect to the subject matter herein and supersedes and replaces all priorverbal and written agreements and understandings between the Parties. 21.This Agreement is severable. The invalidity or unenforceability of any one clause shall not affect the validity or enforceability of other clausesherein. 22.Each Party shall protect the confidentiality of information concerning the other Party’s business, operation, financial situation or otherconfidential information obtained under this Agreement or during the performance of this Agreement. 23.Any obligation that is incurred or becomes due before the expiration or early termination of this Agreement shall survive such expiration or earlytermination. Section 15, 16, and 22 shall survive the termination of this Agreement. 24.This Agreement shall be executed in two counterparts, and each Party shall hold one counterpart. Both counterparts shall have the same legaleffect.[No text below] 13 [No text on this page]IN WITNESS WHEREOF, each party hereto has executed or caused this Agreement to be duly executed by its legal or authorized representative on itsbehalf as of the date first written above.Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Legal representative/authorized representative: /s/ Hailong XiangCompany seal: /s/ Baidu Online Network Technology (Beijing) Co., Ltd.Party B: Zhixiang LiangSignature: /s/ Zhixiang Liang 14 Exhibit 4.36Equity Transfer AgreementThis Equity Transfer Agreement (this “Agreement”) is entered into as of May 3, 2016 in Beijing, PRC by and between:Party A: Jiping Liu (Transferor)ID No.:Address:Party B: Zhixiang Liang (Transferee)ID No.:Address:The Parties above are collectively referred to as the “Parties,” individually as a “Party.”WHEREAS (1)Party A holds 80% equity interests in Beijing Perusal Technology Co., Ltd. (the “Company”), representing a capital contribution of RMB100,400; (2)Party A is willing to transfer to Party B part of its capital contribution in the Company amounting to RMB627,500,000, representing 50% equityinterests of the Company (the “Subject Equity”); and (3)Party B intends to accept the transfer of the Subject Equity.Upon friendly consultation, the Parties agree as follows: 1.Transfer of Target Equity 1.1Party A agrees to transfer to Party B, and Party B agrees to accept the transfer of, 50% of the equity interests it holds in the Company, at a price ofRMB645,940,000 (the “Transfer Price”). 1.2Party B agrees to pay the Transfer Price to Party A in one lump sum within three months after this Agreement takes effect. 1.3The Parties shall take all necessary actions and execute all necessary documents to complete the procedures for shareholder change registration,including but not limited to filing a change application to the AIC, amending the Company’s articles of association, and going through relevantchange registration procedures. 1.4The closing date of the equity transfer shall be the date on which the AIC change registration procedures are completed. As of the closing date Party Awill cease to own, and Party B will become a shareholder of the Company and start to own, the Subject Equity and all rights and interests affiliatedtherewith, and Party B shall exercise its rights and fulfill its obligations and duties in accordance with the Company’s articles of association. 1 2.WarrantiesParty A warrants that the equity interests it intends to transfer to Party B are legally owned by Party A and Party A has full right of disposal on suchequity. Party A further guarantees that the equity transferred is free of any mortgage, pledge or guarantee or any claims from any third party. otherwiseall liabilities thus arising shall be borne by Party A. 3.Expenses, Costs and TaxesAll costs and taxes incurred by the Parties in connection with the execution and performance of this Agreement shall be borne by the Partiesrespectively; all expenses relating to registration shall be borne by the Company. 4.Liabilities for BreachIf either Party materially breaches any provision provided hereunder, the non-defaulting Party may terminate this Agreement and claim damagesagainst the defaulting Party. This Article will not affect any other right entitled by either Party in accordance with the law. 5.Governing Law and Dispute Resolution 5.1The conclusion, validity, interpretation, performance, amendment and termination of this Agreement as well as the resolution of disputes hereundershall be governed by the laws of the People’s Republic of China. 5.2Any disputes arising from the interpretation and performance of the terms hereunder shall first be resolved by the Parties through consultation in goodfaith. In case of a failure to reach an agreement to resolve a dispute between the Parties within thirty (30) days after a Party makes the request ofconsultation in writing, either Party may submit the dispute to China International Economic and Trade Arbitration Commission for arbitration inaccordance with its then effective arbitration rules. The arbitration shall be held in Beijing. The arbitral award shall be final and binding upon bothParties. 5.3In the occurrence of any dispute arising as a result of interpretation and performance of this Agreement or during the process of arbitration, each Partyshall continue to exercise its other rights and fulfill its other obligations hereunder. 6.Miscellaneous 6.1The Parties may amend and supplement this Agreement in writing. The agreements to amend and/or supplement this Agreement between the Partiesconstitute integral parts of this Agreement and shall have equal legal effect as this Agreement. 6.2Should any one or more provisions hereunder be held invalid, void or unenforceable in any respect in accordance with any law or regulation, thevalidity, legality or enforceability of the other provisions hereof will not be affected or prejudiced in any respect. The Parties shall negotiate in faith toseek to replace such invalid, void or unenforceable provision(s) with valid one(s) to the maximum extent permissible by the law and closest to theexpectations of the Parties, to accomplish an economic effect as similar as possible. 2 6.3This Agreement shall be concluded as of the date on which both Parties affix their signatures and seals, and shall become effective as of the date onwhich the approval authority renders its approval till the date on which both Parties complete their respective obligations hereunder. 6.4This Agreement is made in five counterparts, one for each Party, one retained by the Company and the other two shall be filed to relevant approvalauthority for record. All counterparts shall be equally binding.[Remainder of the page intentionally left blank] 3 (Signature page of the Equity Transfer Agreement)IN WITNESS WHEREOF, each party hereto has executed this Equity Transfer Agreement as of the date first written above.Party A: Jiping Liu Signature: /s/ Jiping LiuParty B: Zhixiang Liang Signature: /s/ Zhixiang Liang 4 Equity Transfer AgreementThis Equity Transfer Agreement (this “Agreement”) is entered into as of May 3, 2016 in Beijing, PRC by and between:Party A: Jiping Liu (Transferor)ID No.:Address: 201 Block N, Portofino Lake Garden, Shahe, Nanshan District, Shenzhen, Guangdong ProvinceParty B: Xiaodong Wang (Transferee)ID No.:Address:The Parties above are collectively referred to as the “Parties,” individually as a “Party.”WHEREAS (1)Party A holds 80% equity interests in Beijing Perusal Technology Co., Ltd. (the “Company”), representing a capital contribution of RMB100,400; (2)Party A is willing to transfer to Party B part of its capital contribution in the Company amounting to RMB376,500,000, representing 30% equityinterests of the Company (the “Subject Equity”); and (3)Party B intends to accept the transfer of the Subject Equity.Upon friendly consultation, the Parties agree as follows: 1.Transfer of Target Equity 1.1Party A agrees to transfer to Party B, and Party B agrees to accept the transfer of, 30% of the equity interests it holds in the Company, at a price ofRMB387,560,000 (the “Transfer Price”). 1.2Party B agrees to pay the Transfer Price to Party A in one lump sum within three months after this Agreement takes effect. 1.3The Parties shall take all necessary actions and execute all necessary documents to complete the procedures for shareholder change registration,including but not limited to filing a change application to the AIC, amending the Company’s articles of association, and going through relevantchange registration procedures. 1.4The closing date of the equity transfer shall be the date on which the AIC change registration procedures are completed. As of the closing date Party Awill cease to own, and Party B will become a shareholder of the Company and start to own, the Subject Equity and all rights and interests affiliatedtherewith, and Party B shall exercise its rights and fulfill its obligations and duties in accordance with the Company’s articles of association. 5 2.WarrantiesParty A warrants that the equity interests it intends to transfer to Party B are legally owned by Party A and Party A has full right of disposal on suchequity. Party A further guarantees that the equity transferred is free of any mortgage, pledge or guarantee or any claims from any third party. otherwiseall liabilities thus arising shall be borne by Party A. 3.Expenses, Costs and TaxesAll costs and taxes incurred by the Parties in connection with the execution and performance of this Agreement shall be borne by the Partiesrespectively; all expenses relating to registration shall be borne by the Company. 4.Liabilities for BreachIf either Party materially breaches any provision provided hereunder, the non-defaulting Party may terminate this Agreement and claim damagesagainst the defaulting Party. This Article will not affect any other right entitled by either Party in accordance with the law. 5.Governing Law and Dispute Resolution 5.1The conclusion, validity, interpretation, performance, amendment and termination of this Agreement as well as the resolution of disputes hereundershall be governed by the laws of the People’s Republic of China. 5.2Any disputes arising from the interpretation and performance of the terms hereunder shall first be resolved by the Parties through consultation in goodfaith. In case of a failure to reach an agreement to resolve a dispute between the Parties within thirty (30) days after a Party makes the request ofconsultation in writing, either Party may submit the dispute to China International Economic and Trade Arbitration Commission for arbitration inaccordance with its then effective arbitration rules. The arbitration shall be held in Beijing. The arbitral award shall be final and binding upon bothParties. 5.3In the occurrence of any dispute arising as a result of interpretation and performance of this Agreement or during the process of arbitration, each Partyshall continue to exercise its other rights and fulfill its other obligations hereunder. 6.Miscellaneous 6.1The Parties may amend and supplement this Agreement in writing. The agreements to amend and/or supplement this Agreement between the Partiesconstitute integral parts of this Agreement and shall have equal legal effect as this Agreement. 6.2Should any one or more provisions hereunder be held invalid, void or unenforceable in any respect in accordance with any law or regulation, thevalidity, legality or enforceability of the other provisions hereof will not be affected or prejudiced in any respect. The Parties shall negotiate in faith toseek to replace such invalid, void or unenforceable provision(s) with valid one(s) to the maximum extent permissible by the law and closest to theexpectations of the Parties, to accomplish an economic effect as similar as possible. 6 6.3This Agreement shall be concluded as of the date on which both Parties affix their signatures and seals, and shall become effective as of the date onwhich the approval authority renders its approval till the date on which both Parties complete their respective obligations hereunder. 6.4This Agreement is made in five counterparts, one for each Party, one retained by the Company and the other two shall be filed to relevant approvalauthority for record. All counterparts shall be equally binding.[Remainder of the page intentionally left blank] 7 [Signature page of the Equity Transfer Agreement]IN WITNESS WHEREOF, each party hereto has executed this Equity Transfer Agreement as of the date first written above.Party A: Jiping Liu Signature: /s/ Jiping LiuParty B: Xiaodong Wang Signature: /s/ Xiaodong Wang 8 Equity Transfer AgreementThis Equity Transfer Agreement (this “Agreement”) is entered into as of May 3, 2016 in Beijing, PRC by and between:Party A: Yazhu Zhang (Transferor)ID No.:Address: 201 Block N, Portofino Lake Garden, Shahe, Nanshan District, Shenzhen, Guangdong ProvinceParty B: Xiaodong Wang (Transferee)ID No.:Address:The Parties above are collectively referred to as the “Parties,” individually as a “Party.”WHEREAS (1)Party A holds 20% equity interests in Beijing Perusal Technology Co., Ltd. (the “Company”), representing a capital contribution of RMB25,100 (the“Subject Equity”); and (2)Party A is willing to transfer to Party B, and Party B intends to accept the transfer of the Subject Equity.Upon friendly consultation, the Parties agree as follows: 1.Transfer of Target Equity 1.1Party A agrees to transfer to Party B, and Party B agrees to accept the transfer of, 20% of the equity interests it holds in the Company, at a price ofRMB258,380,000 (the “Transfer Price”). 1.2Party B agrees to pay the Transfer Price to Party A in one lump sum within three months after this Agreement takes effect. 1.3The Parties shall take all necessary actions and execute all necessary documents to complete the procedures for shareholder change registration,including but not limited to filing a change application to the AIC, amending the Company’s articles of association, and going through relevantchange registration procedures. 1.4The closing date of the equity transfer shall be the date on which the AIC change registration procedures are completed. As of the closing date Party Awill cease to own, and Party B will become a shareholder of the Company and start to own, the Subject Equity and all rights and interests affiliatedtherewith, and Party B shall exercise its rights and fulfill its obligations and duties in accordance with the Company’s articles of association. 9 2.WarrantiesParty A warrants that the equity interests it intends to transfer to Party B are legally owned by Party A and Party A has full right of disposal on suchequity. Party A further guarantees that the equity transferred is free of any mortgage, pledge or guarantee or any claims from any third party. otherwiseall liabilities thus arising shall be borne by Party A. 3.Expenses, Costs and TaxesAll costs and taxes incurred by the Parties in connection with the execution and performance of this Agreement shall be borne by the Partiesrespectively; all expenses relating to registration shall be borne by the Company. 4.Liabilities for BreachIf either Party materially breaches any provision provided hereunder, the non-defaulting Party may terminate this Agreement and claim damagesagainst the defaulting Party. This Article will not affect any other right entitled by either Party in accordance with the law. 5.Governing Law and Dispute Resolution 5.1The conclusion, validity, interpretation, performance, amendment and termination of this Agreement as well as the resolution of disputes hereundershall be governed by the laws of the People’s Republic of China. 5.2Any disputes arising from the interpretation and performance of the terms hereunder shall first be resolved by the Parties through consultation in goodfaith. In case of a failure to reach an agreement to resolve a dispute between the Parties within thirty (30) days after a Party makes the request ofconsultation in writing, either Party may submit the dispute to China International Economic and Trade Arbitration Commission for arbitration inaccordance with its then effective arbitration rules. The arbitration shall be held in Beijing. The arbitral award shall be final and binding upon bothParties. 5.3In the occurrence of any dispute arising as a result of interpretation and performance of this Agreement or during the process of arbitration, each Partyshall continue to exercise its other rights and fulfill its other obligations hereunder. 6.Miscellaneous 6.1The Parties may amend and supplement this Agreement in writing. The agreements to amend and/or supplement this Agreement between the Partiesconstitute integral parts of this Agreement and shall have equal legal effect as this Agreement. 6.2Should any one or more provisions hereunder be held invalid, void or unenforceable in any respect in accordance with any law or regulation, thevalidity, legality or enforceability of the other provisions hereof will not be affected or prejudiced in any respect. The Parties shall negotiate in faith toseek to replace such invalid, void or unenforceable provision(s) with valid one(s) to the maximum extent permissible by the law and closest to theexpectations of the Parties, to accomplish an economic effect as similar as possible. 10 6.3This Agreement shall be concluded as of the date on which both Parties affix their signatures and seals, and shall become effective as of the date onwhich the approval authority renders its approval till the date on which both Parties complete their respective obligations hereunder. 6.4This Agreement is made in five counterparts, one for each Party, one retained by the Company and the other two shall be filed to relevant approvalauthority for record. All counterparts shall be equally binding.[Remainder of the page intentionally left blank] 11 [Signature page of the Equity Transfer Agreement]IN WITNESS WHEREOF, each party hereto has executed this Equity Transfer Agreement as of the date first written above.Party A: Yazhu Zhang Signature: /s/ Yazhu ZhangParty B: Xiaodong Wang Signature: /s/ Xiaodong Wang 12 Exhibit 4.37Voting Proxy AgreementThis Voting Proxy Agreement (this “Agreement”) is entered into as of May 3, 2016 in Beijing, the People’s Republic of China (“PRC,” for purposes of thisAgreement, excluding Hong Kong Macau and Taiwan) by and between:Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Registered Address: Baidu Plaza, No. 10 Shangdi 10th Street, Haidian District, BeijingParty B: Zhixiang LiangID No.:WHEREAS 1.Party B, a PRC citizen, is a shareholder of Beijing Perusal Technology Co., Ltd. (“Perusal”), and owns 50% of the equity interests in Perusal as of thedate hereof (“Party B’s Equity”). 2.Party B agrees to entrust a PRC company or individual designated by Party A, and Party A agrees to accept such entrustment, based on the terms andsubject to the conditions set forth herein, to exercise his rights as a shareholder of Perusal on his behalf. NOW,THEREFORE, the parties to this Agreement hereby agree as follows: 1.Party B hereby agrees to irrevocably entrust the entity or individual designated by Party A to exercise on his behalf all shareholder’s voting rights andother shareholder’s rights empowered by the law and Perusal’s articles of association at the shareholders’ meeting of Perusal, including, but not limitedto, with respect to the sale, transfer, pledge or disposal of all or part of Party B’s equity interests in Perusal and the appointment and election ofdirectors and chairman of Perusal at the shareholders’ meetings of Perusal as the authorized representative of Perusal’s shareholder. 2.Party A agrees to designate an entity or individual permissible by relevant applicable law to accept the entrustment by Party B granted in Article 1 ofthis Agreement, and such entity or individual shall exercise Party B’s voting rights and other shareholder’s rights on behalf of Party B pursuant to thisAgreement. 3.Party B hereby acknowledges that, regardless how his equity interests in Perusal will change, he shall entrust the entity or individual designated byParty A with all of his shareholder’s voting rights and other shareholder’s rights. If Party B transfers his equity interests in Perusal to any individual orcompany other than Baidu, Inc., Party A, or the individuals or entities designated by Party A (each, a “Transferee”), Party B shall cause suchTransferee to, concurrently with the execution of the equity transfer documents, sign an agreement with the same terms and conditions as thisAgreement to entrust the person designated by Party A with the shareholder’s voting rights and other shareholder’s rights of the Transferee. 4.Party B hereby acknowledges that if Party A withdraws the appointment of the relevant entity or individual to whom Party B has entrusted hisshareholder’s voting rights and other shareholder’s rights, he will withdraw his entrustment and authorization to such entity or individual andauthorize another entity or individual designated by Party A to exercise his shareholder’s voting rights and other shareholder’s rights at theshareholders’ meeting of Perusal. 1 5.This Agreement is executed by the Parties or their respective legal or authorized representatives as of the date first written above and becomes effectiveon the same day. 6.This Agreement shall remain permanently valid unless early terminated by Party A in writing. If any Party’s operating term expires within the validterm of this Agreement, such Party shall renew its operating term in time to enable this Agreement to continue to be valid and implemented. If a Party’sapplication to renew its operating term fails to obtain the approval or consent of any competent authority, this Agreement shall terminate at the expiryof such Party’s operating term, unless such Party has transferred its rights and obligations pursuant to Article 10 hereof. 7.This Agreement shall remain valid for so long as Party B continues to hold any equity interest in Perusal. Throughout the term of this Agreement,unless otherwise provided by law, Party B shall in no case cancel, early terminate or revoke this Agreement. notwithstanding the foregoing, Party Ashall be entitled to terminate this Agreement at any time by sending a written notice to Party B thirty (30) days in advance. 8.Any amendment to, and/or cancellation of, this Agreement shall be agreed by the Parties in writing. Any amendment and supplementary agreementhereto duly executed by both Parties is an integral part of, and shall be equally binding with, this Agreement. 9.Should any provision hereof be rendered invalid or unenforceable due to its inconsistency with relevant law, such provision shall be deemed invalidonly to the extent governed by such law without affecting the validity of the other provisions hereof. 10.All notices or other correspondences required to be sent by any Party hereunder shall be written in Chinese and delivered to the following addresses ofthe other Parties or other addresses designated and notified to such Party from time to time via personal delivery, mail or fax. The notices shall bedeemed to have been duly served (a) upon sent if sent by personal delivery, (b) on the tenth (10th) day after the post-prepaid registered airmail is sent(shown on the postmark) if sent by mail, or on the fourth day after the notice is handed to an internationally recognized express delivery service; and(c) at the time of receipt shown on the transmission acknowledgement if sent via fax.Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Address: 3F Baidu Plaza, No. 10 Shangdi 10th Street, Haidian District, BeijingAttn: Zhan WangFax: 010-59927435Tel: 010-59925049Party B: Zhixiang LiangAddress: Baidu Plaza, No. 10 Shangdi 10th Street, Haidian District, BeijingFax: 010-59928888Tel: 010-59927435 2 11.Except with Party A’s prior written consent, Party B shall not transfer its rights and obligations hereunder to any third party. Party B hereby agrees thatParty A may assign its rights and obligations under this Agreement as Party A sees fit, in which case Party A only needs to give a written notice to PartyB and no further consent of Party B is required. 12.Both Parties acknowledge and confirm that any oral or written information exchanged between the Parties in connection with this Agreement areconfidential, and both Parties shall keep all such information confidential and not disclose any such information to any third person, except for theinformation: (a) that is known or will be known by the public (not due to a discretional disclosure by the Party receiving such information); (b) that isrequired to be disclosed by applicable law or rules or regulations of a stock exchange; or (c) that needs to be disclosed to a Party’s legal or financialadvisor in connection with the transaction contemplated hereby, provided that such advisor shall be subject to a confidential obligation similar to thatprovided in this Article). A disclosure by any staff or agency engaged by any Party shall be deemed a disclosure made by such Party, and such Partyshall take the responsibilities for breach. This Article shall survive any invalidity, amendment, termination, dissolution or unenforceability of thisAgreement for any reason whatsoever. 13. (1)The formation, validity, interpretation, performance, amendment and termination of and settlement of disputes under this Agreement shall begoverned by the laws of the PRC. (2)Any dispute arising in connection with the interpretation and performance of the provisions of this Agreement shall first be resolved by theParties in good faith through negotiations. In case no resolution can be reached by the Parties, any Party may refer such dispute to ChinaInternational Economic and Trade Arbitration Commission for arbitration in accordance with its then effective arbitration rules. The arbitrationshall be held in Beijing and the language used shall be Chinese. The arbitral award shall be final and binding upon both Parties. 14.This Agreement, once effective, constitutes the entire agreement and understanding between the Parties with respect to the matters contained herein,and fully supersedes all prior oral and written agreements and understandings between the Parties with respect to the matters contained herein. 15.This Agreement is made in duplicate, one for each Party, and both counterparts shall be equally binding.[No text below] 3 [This page contains no body text]IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the date first written above.Party A: Baidu Online Network Technology (Beijing) Co., Ltd. (company seal) Signature: /s/ Zhan WangName: Zhan WangTitle: Legal RepresentativeParty B: Zhixiang Liang Signature: /s/ Zhixiang Liang 4 Voting Proxy AgreementThis Voting Proxy Agreement (this “Agreement”) is entered into as of May 3, 2016 in Beijing, the People’s Republic of China (“PRC,” for purposes of thisAgreement, excluding Hong Kong, Macau and Taiwan) by and between:Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Registered Address: Baidu Plaza, No. 10 Shangdi 10th Street, Haidian District, BeijingParty B: Xiaodong WangID No.:WHEREAS 1.Party B, a PRC citizen, is a shareholder of Beijing Perusal Technology Co., Ltd. (“Perusal”), and owns 50% of the equity interests in Perusal as of thedate hereof (“Party B’s Equity”). 2.Party B agrees to entrust a PRC company or individual designated by Party A, and Party A agrees to accept such entrustment, based on the terms andsubject to the conditions set forth herein, to exercise his rights as a shareholder of Perusal on his behalf.NOW, THEREFORE, the parties to this Agreement hereby agree as follows: 1.Party B hereby agrees to irrevocably entrust the entity or individual designated by Party A to exercise on his behalf all shareholder’s voting rights andother shareholder’s rights empowered by the law and Perusal’s articles of association at the shareholders’ meeting of Perusal, including, but not limitedto, with respect to the sale, transfer, pledge or disposal of all or part of Party B’s equity interests in Perusal and the appointment and election ofdirectors and chairman of Perusal at the shareholders’ meetings of Perusal as the authorized representative of Perusal’s shareholder. 2.Party A agrees to designate an entity or individual permissible by relevant applicable law to accept the entrustment by Party B granted in Article 1 ofthis Agreement, and such entity or individual shall exercise Party B’s voting rights and other shareholder’s rights on behalf of Party B pursuant to thisAgreement. 3.Party B hereby acknowledges that, regardless how his equity interests in Perusal will change, he shall entrust the entity or individual designated byParty A with all of his shareholder’s voting rights and other shareholder’s rights. If Party B transfers his equity interests in Perusal to any individual orcompany other than Baidu, Inc., Party A, or the individuals or entities designated by Party A (each, a “Transferee”), Party B shall cause such Transfereeto, concurrently with the execution of the equity transfer documents, sign an agreement with the same terms and conditions as this Agreement toentrust the person designated by Party A with the shareholder’s voting rights and other shareholder’s rights of the Transferee. 4.Party B hereby acknowledges that if Party A withdraws the appointment of the relevant entity or individual to whom Party B has entrusted hisshareholder’s voting rights and other shareholder’s rights, he will withdraw his entrustment and authorization to such entity or individual andauthorize another entity or individual designated by Party A to exercise his shareholder’s voting rights and other shareholder’s rights at theshareholders’ meeting of Perusal. 5 5.This Agreement is executed by the Parties or their respective legal or authorized representatives as of the date first written above and becomes effectiveon the same day. 6.This Agreement shall remain permanently valid unless early terminated by Party A in writing. If any Party’s operating term expires within the validterm of this Agreement, such Party shall renew its operating term in time to enable this Agreement to continue to be valid and implemented. If a Party’sapplication to renew its operating term fails to obtain the approval or consent of any competent authority, this Agreement shall terminate at the expiryof such Party’s operating term, unless such Party has transferred its rights and obligations pursuant to Article 10 hereof. 7.This Agreement shall remain valid for so long as Party B continues to hold any equity interest in Perusal. Throughout the term of this Agreement,unless otherwise provided by law, Party B shall in no case cancel, early terminate or revoke this Agreement. notwithstanding the foregoing, Party Ashall be entitled to terminate this Agreement at any time by sending a written notice to Party B thirty (30) days in advance. 8.Any amendment to, and/or cancellation of, this Agreement shall be agreed by the Parties in writing. Any amendment and supplementary agreementhereto duly executed by both Parties is an integral part of, and shall be equally binding with, this Agreement. 9.Should any provision hereof be rendered invalid or unenforceable due to its inconsistency with relevant law, such provision shall be deemed invalidonly to the extent governed by such law without affecting the validity of the other provisions hereof. 10.All notices or other correspondences required to be sent by any Party hereunder shall be written in Chinese and delivered to the following addresses ofthe other Parties or other addresses designated and notified to such Party from time to time via personal delivery, mail or fax. The notices shall bedeemed to have been duly served (a) upon sent if sent by personal delivery, (b) on the tenth (10th) day after the post-prepaid registered airmail is sent(shown on the postmark) if sent by mail, or on the fourth day after the notice is handed to an internationally recognized express delivery service; and(c) at the time of receipt shown on the transmission acknowledgement if sent via fax.Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Address: 3F Baidu Plaza, No. 10 Shangdi 10th Street, Haidian District, BeijingAttn: Zhan WangFax: 010-59927435Tel: 010-59925049Party B: Xiaodong WangAddress:Fax: 010-59927435Tel: 010-59928888 6 11.Except with Party A’s prior written consent, Party B shall not transfer its rights and obligations hereunder to any third party. Party B hereby agrees thatParty A may transfer its rights and obligations hereunder to any third party as it deems needed. Party A may only need to send a written notice to PartyB at the time of such transfer and does not need to obtain Party B’s consent with respect to such transfer. 12.Both Parties acknowledge and confirm that any oral or written information exchanged between the Parties in connection with this Agreement shallbelong to confidential information, and both Parties shall keep all such information confidential and not disclose any such information to any thirdperson, except the information: (a) that is known or will be known by the public (not due to a discretional disclosure by the Party receiving suchinformation); (b) that is required to be disclosed by applicable law or rules or regulations of a stock exchange; or (c) that needs to be disclosed to aParty’s legal or financial advisor in connection with the transaction contemplated hereby, provided that such advisor shall be subject to a confidentialobligation similar to that provided in this Article). A disclosure by any staff or agency engaged by any Party shall be deemed a disclosure made bysuch Party, and such Party shall take the responsibilities for breach. This Article shall survive any invalidity, amendment, termination, dissolution orinoperability of this Agreement for any reason whatsoever. 13. (1)The formation, validity, interpretation, performance, amendment and termination of and settlement of disputes under this Agreement shall begoverned by the laws of the PRC. (2)Any dispute arising in connection with the interpretation and performance of the provisions of this Agreement shall first be resolved by theParties in good faith through negotiations. In case no resolution can be reached by the Parties, any Party may refer such dispute to ChinaInternational Economic and Trade Arbitration Commission for arbitration in accordance with its then effective arbitration rules. The arbitrationshall be held in Beijing and the language used shall be Chinese. The arbitral award shall be final and binding upon both Parties. 14.This Agreement, once becoming effective, constitutes the entire agreement and understanding between the Parties with respect to the matters containedherein, and fully supersedes all prior oral and written agreements and understandings between the Parties with respect to the matters contained herein. 15.This Agreement is made in duplicate, one for each Party, and both counterparts shall be equally binding.[No text below] 7 [This page contains no body text]IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the date first written above.Party A: Baidu Online Network Technology (Beijing) Co., Ltd. (company seal) Signature: /s/ Zhan WangName: Zhan WangTitle: Legal RepresentativeParty B: Xiaodong Wang Signature: /s/ Xiaodong Wang 8 Exhibit 4.38Business Operating AgreementThis Business Operating Agreement (this “Agreement”) is entered into as of May 3, 2016 in Beijing, the People’s Republic of China (“PRC,” for purposes ofthis Agreement, excluding Hong Kong Macau and Taiwan) by and among:Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Registered Address: 3/F., Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingParty B: Beijing Perusal Technology Co., Ltd.Registered Address: A2 2/F No. 17 Building Zhongguancun Software Park, 8 East Bei Wang Road (W), Haidian District, BeijingParty C: Zhixiang Liang, a PRC citizen, ID No.: , andParty D: Xiaodong Wang, a PRC citizen, ID No.: .WHEREAS: 1.Party A is a wholly foreign-owned enterprise duly incorporated and validly existing under the laws of the PRC, which has the technology expertise andpractical experience in the development and design of computer software, and also has rich experience and a team of professionals specializing ininformation technology and service; 2.Party B is a limited liability company duly incorporated and validly existing under PRC law, which may carry out Internet information service andsuch other value-added telecommunication business with the approval of Beijing Communications Administration, and may carry out Internetadvertising business with the approval of Beijing Administration for Industry and Commerce (AIC); 3.Party C and Party D are shareholders of Party B, in which Party C and Party D respectively own 50% of the equity interests in Party B; 4.Party A has established a business relationship with Party B by entering into an Exclusive Technology Consulting and Services Agreement andsupplementary articles thereto ( the “Services Agreement”), a Web Layout Copyright License Agreement, a Trademark License Agreement and aDomain Name License Agreement; and 5.Pursuant to the above-mentioned agreements between Party A and Party B, Party B shall pay certain sums of money to Party A, and the daily operationsof Party B will have a material effect on Party B’s ability to pay such account payable to Party A;NOW THEREFORE, through negotiations, all parties to this Agreement hereby agree as follows: 1.Party A agrees, subject to the satisfaction of the relevant provisions herein by Party B, to be the guarantor of Party B in the contracts, agreements ortransactions entered into between Party B and any third party in connection with Party B’s business and operations, to provide full guarantees for theperformance of such contracts, agreements or transactions by Party B. As counter-guarantee, Party B agrees to pledge the accounts receivable in itsoperations and all of its assets to Party A. According to the aforesaid guarantee arrangement, Party A, when necessary, is willing to enter into writtenguarantee contracts with Party B’s counterparties to assume the guarantor’s liabilities. Party B, Party C and Party D shall take all necessary actions(including, but not limited to, executing the relevant documents and filing the relevant registrations) to carry out the counter-guarantee arrangementwith Party A. 1 2.In consideration of the requirements of Article 1 hereof and to ensure the performance of the various business agreements between Party A and Party Band the payment by Party B of the amounts payable to Party A thereunder, Party B, together with its shareholders Party C and Party D, hereby jointlyagree that, without Party A’s prior written consent, Party B shall not engage in any transaction that may materially affect its assets, liabilities, rights oroperations (except that Party B may, in the ordinary course of its business, enter into business contracts or agreements, sell or purchase assets and createliens in favor of relevant counter parties as required by law.), including, but not limited to, the following: 2.1To borrow money from any third party or assume any debt; 2.2To sell to or acquire from any third party any asset or rights, including, but not limited to, any intellectual property rights; 2.3To provide guarantee for any third party using its assets or intellectual property rights as collaterals; or 2.4To assign to any third party its business contracts. 3.In order to ensure the performance of the various business agreements between Party A and Party B and the payment by Party B of the amounts payableto Party A thereunder, Party B, together with its shareholders Party C and Party D, hereby jointly agree to accept advice and guidance provided byParty A from time to time relating to its corporate policies on matters such as employment and dismissal of employees, daily operations andmanagement, and financial management. 4.Party B, together with its shareholders Party C and Party D, hereby jointly agree that Party C and Party D shall appoint candidates recommended byParty A as directors of Party B, and Party B shall appoint Party A’s senior executive officers recommended by Party A as its president, chief financialofficer and other senior executive officers. If any of the above-mentioned senior executive officers of Party A leaves Party A, whether voluntarily or as aresult of dismissal by Party A, he or she shall also lose his/her right to hold any position at Party B, and Party B shall appoint other senior executiveofficers of Party A recommended by Party A to fill such a position. The persons recommended by Party A in accordance with this Article 4 shall complywith the legal requirements regarding the qualifications of directors, presidents, chief financial officers, and other senior executive officers. 5.Party B, together with its shareholders Party C and Party D, hereby jointly agree and confirm that Party B shall first seek a guarantee from Party A ifParty B needs any guarantee for its performance of any of its contracts or for any borrowing for working capital purposes in the course of its operations.In such cases, Party A shall have the obligation to provide the appropriate guarantee to Party B at Party A’s sole discretion. 2 6.In the event that any of the agreements between Party A and Party B terminates or expires, Party A shall have the right, but not the obligation, toterminate all agreements between Party A and Party B including, but not limited to, the Services Agreement. 7.Any amendment or supplement to this Agreement shall be made in writing. The amendment or supplement duly executed by all parties shall form anintegral part of this Agreement and shall have the same legal effect as this Agreement. 8.Should any provision of this Agreement be held invalid or unenforceable because of inconsistency with applicable laws, such provision shall beinvalid or unenforceable only to the extent of such applicable laws without affecting the validity or enforceability of the remainder of this Agreement. 9.None of Party B, Party C and Party D shall assign its rights and obligations under this Agreement to any third party without the prior written consent ofParty A. Party B, Party C and Party D hereby agree that Party A may assign its rights and obligations under this Agreement as Party A sees fit, in whichcase Party A only needs to give a written notice to Party B, Party C and Party D and no further consent of Party B, Party C and Party D is required. 10.Each party acknowledges and confirms that any oral or written materials exchanged pursuant to this Agreement are confidential. Each party shall keepconfidential all such materials and not disclose any such materials to any third party without the prior written consent from the other party except inthe following situations: (a) such materials are or will become known by the public (through no fault of the receiving party); (b) any materials asrequired to be disclosed by the applicable laws or rules of the stock exchange; or (c) any materials disclosed by each party to its legal or financialadvisors relating to the transactions contemplated by this Agreement, and such legal or financial advisors shall comply with the confidentialityprovisions set forth in this Article 10. Any disclosure of confidential information by the personnel of any party or by the entity engaged by such partyshall be deemed as a disclosure by such party, and such party shall be liable for the breach under this Agreement. This Article 10 shall survive theinvalidity, cancellation, termination or unenforceability of this Agreement for any reason. 11.This Agreement shall be governed by and interpreted in accordance with the laws of the PRC. 12.Any dispute arising in connection with the interpretation and performance of the provisions of this Agreement shall be resolved by the parties in goodfaith through negotiations. In case no resolution can be reached by the parties through negotiations, either party may refer such dispute to the ChinaInternational Economic and Trade Arbitration Commission (the “CIETAC”) for arbitration in accordance with CIETAC’s arbitration rules then ineffect. The seat of arbitration shall be in Beijing, and the language of the proceedings shall be Chinese. The arbitral award shall be final and bindingupon both of the Parties. 3 13.This Agreement shall be executed by a duly authorized representative of each party and become effective as of the date first written above. 14.Once effective, this Agreement shall constitute the entire agreement of the parties hereto with respect to the subject matters hereof and supersede allprior oral and written agreements and understandings by the parties with respect to the subject matters hereof. 15.This Agreement shall remain permanently valid unless early terminated as expressly agreed in this Agreement or decided by Party A in writing. If theduration of operation (including any extension thereof) of Party A or Party B is expired or terminated for other reasons within the aforesaid term of thisAgreement, such Party shall renew its duration of operation in time to enable this Agreement to continue to be valid and implemented. If a Party’sapplication to renew its duration of operation fails to obtain the approval or consent of any competent authority, this Agreement shall be terminatedsimultaneously. 16.During the term of this Agreement, none of Party B, Party C and Party D may early terminate or dissolve this Agreement unless Party A commits a grossnegligence or fraud toward Party B. Notwithstanding the foregoing, Party A shall have the right to terminate this Agreement at any time by issuing athirty (30) days’ prior written notice to Party B, Party C and Party D. 17.All notices or other correspondences required to be sent by any Party hereunder shall be written in Chinese and delivered to the following addresses ofthe other Parties or other addresses designated and notified to such Party from time to time via personal delivery, registered mail, post prepaid mail,recognized express delivery service or fax. The notices shall be deemed to have been duly served (a) upon sent if sent by personal delivery, (b) on thetenth (10th) day after the post-prepaid registered airmail is sent (shown on the postmark) if sent by mail, or on the fourth day after the notice is handedto an internationally recognized express delivery service; and (c) at the time of receipt shown on the transmission acknowledgement if sent via fax.Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Address: 3F Baidu Plaza, No. 10 Shangdi 10th Street, Haidian District, BeijingAttn: Zhan WangFax: 010-59927435Tel: 010-59925049Party B: Beijing Perusal Technology Co., Ltd.Address: A2 2F No. 17 Building Zhongguancun Software Park, 8 East Bei WangRoad (W), Haidian District, BeijingAttn: Zhan WangFax: 010-59927435Tel: 010-59925049Party C:Address: Baidu Plaza, No. 10 Shangdi 10th Street, Haidian District, BeijingAttn: Zhixiang LiangFax: 010-59927435Tel: 010-59928888 4 Party D:Address: Baidu Plaza, No. 10 Shangdi 10th Street, Haidian District, BeijingAttn: Xiaodong WangFax: 010-59927435Tel: 010-59928888 18.This Agreement is made in four originals, with each party holding one original. All originals shall have the same legal effect.[No text below on this page] 5 [This pages contains no body text]IN WITNESS THEREOF, each party hereto has caused this Agreement to be duly executed by himself/herself or a duly authorized representative on itsbehalf as of the date first written above.Party A: Baidu Online Network Technology (Beijing) Co., Ltd. (company seal) Signature: /s/ Zhan WangName: Zhan WangTitle: Legal RepresentativeParty B: Beijing Perusal Technology Co., Ltd. Signature: /s/ Zhan WangName: Zhan WangTitle: Legal RepresentativeParty C:Zhixiang Liang Signature: /s/ Zhixiang LiangParty D:Xiaodong Wang Signature: /s/ Xiaodong Wang 6 Exhibit 4.39AMENDED AND RESTATED EQUITY PLEDGE AGREEMENTThis Amended and Restated Equity Pledge Agreement (this “Agreement”) is entered into in Beijing, PRC by the following parties on June 20, 2016:Pledgee:Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Address: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingPledgor:Party B: Zhixiang LiangID No.:WHEREAS:1. Party A is a wholly foreign-owned enterprise registered in Beijing, the People’s Republic of China (the “PRC”).2. Party B is a citizen of the PRC owning 50% equity interests in Beijing Perusal Technology Co., Ltd. (“Perusal”), a limited liability company registered inBeijing, the PRC.3. Party A and Party B entered into an Amended and Restated Loan Agreement dated June 20, 2016, whereby Party B obtains a loan (the “LoanArrangement”) up to a total amount of RMB1,598,440,000 (the “Loan”), of which Party B pledges his equity interests for RMB1,580,000,000.4. Party A and Perusal entered into an Exclusive Technology Consulting and Services Agreement dated June 23, 2006 with infinite term (the “ServicesAgreement”), pursuant to which Perusal shall pay Party A technical consulting and services fee (the “Service Fees”) for the technology consulting andservices provided by Party A.5. In order to ensure that Party B will perform its obligations under the Loan Agreement and Party A will be able to collect Service Fees from Perusal, Party Bagrees to pledge all his equity interest in Perusal as security for performance of his obligations under the Loan Agreement and for the Service Fees. Party A(the “Pledgee”) and Party B (the “Pledgor”) intend to enter into this Agreement to specify their respective rights and obligations in respect of such pledge.NOW THEREFORE, the Pledgee and the Pledgor agree as follows through negotiations and to be bound hereby: 1 1.DefinitionsUnless otherwise provided in this Agreement, the following terms shall have the following meanings:1.1 “Pledge”: refers to the full content of Article 2 hereunder.1.2 “Equity Interest”: refers to all of the equity interest in Perusal legally held by the Pledgor.1.3 “Rate of Pledge”: refers to the ratio between the value of the Pledge under this Agreement and the total amount of the Service Fees and the Loan.1.4 “Term of Pledge”: refers to the period provided for under Article 3.2 hereunder.1.5 “Principal Agreement”: refers to the Services Agreements and the agreements under the Loan Arrangement.1.6 “Event of Default”: refers to any event listed in Article 7.1 hereunder.1.7 “Notice of Default”: refers to the notice of default issued by the Pledgee in accordance with this Agreement. 2.PledgeThe Pledgor will pledge all of his Equity Interest in Perusal to the Pledgee as security for (i) all his obligations under the Loan Arrangement and (ii) all theobligations of Perusal under the Services Agreement. For purpose of this Agreement, “Pledge” refers to the right of the Pledgee to be entitled to priority inreceiving payment in the form of the Equity Interest based on the conversion value thereof, or from the proceeds from the auction or sale of the EquityInterest pledged by the Pledgor to the Pledgee. 3.Rate of Pledge and Term of Pledge3.1 Rate of the PledgeThe rate of the Pledge shall be approximately 100%.3.2 Term of the Pledge3.2.1 The Pledge shall take effect as of the date when the pledge of the Equity Interest is recorded in the Register of Shareholders of Perusal and when thepledge is registered with the Administration for Industry and Commerce and shall remain in effect until two (2) years after the obligations under the PrincipalAgreement will have been fulfilled.3.2.2 During the term of the Pledge, the Pledgee shall be entitled to dispose of the pledged assets in accordance with this Agreement in the event that thePledgor does not perform his obligations under the Loan Arrangement or Perusal does not perform his obligations under the Services Agreement. 2 4.Physical Possession of Documents4.1 During the term of the Pledge under this Agreement, the Pledgor shall deliver the physical possession of his Certificate of Capital Contribution and theRegister of Shareholders of Perusal to the Pledgee within one (1) week from the date of this Agreement.4.2 The Pledgee shall be entitled to receive dividends from the Equity Interest.4.3 The Pledge under this Agreement will be recorded in the Register of Shareholders of Perusal (See Appendix I) after the execution of this Agreement. 5.Representations and Warranties of the Pledgor5.1 The Pledgor is the legal owner of the Equity Interest pledged and has adopted shareholders’ resolutions to approve the Pledge (See Appendix II).5.2 Except for the benefit of the Pledgee, the Pledgor has not pledged the Equity Interest or created other encumbrance on the Equity Interest. 6.Covenants of the Pledgor6.1 During the term of this Agreement, the Pledgor covenants to the Pledgee for its benefit that the Pledgor shall:6.1.1 not transfer or assign the Equity Interest, create or permit the existence of any other pledges which may have an adverse effect on the rights or benefitsof the Pledgee without prior written consent of the Pledgee;6.1.2 comply with and implement the laws and regulations with respect to the pledge of rights; present to the Pledgee the notices, orders or suggestions withrespect to the Pledge issued or made by relevant government authorities within five (5) days upon receiving such notices, orders or suggestions; comply withsuch notices, orders or suggestions or, alternatively, at the reasonable request of the Pledgee or with consent from the Pledgee, raise objection to such notices,orders or suggestions;6.1.3 timely notify the Pledgee of any events or any notices received which may affect the Pledgor’s right to all or any part of the Equity Interest, and anyevents or any received notices which may change the Pledgor’s warranties and obligations under this Agreement or affect the Pledgor’s performance of itsobligations under this Agreement.6.2 The Pledgor agrees that the Pledgee’s right to the Pledge obtained from this Agreement shall not be suspended or inhibited by any legal procedureinitiated by the Pledgor or any successors of the Pledgor or any person authorized by the Pledgor or any other person. 3 6.3 The Pledgor promises to the Pledgee that in order to protect or perfect the security for the payment of the Loan and the Services Fees, the Pledgor shallexecute in good faith and cause other parties who have interests in the Pledge to execute, all title certificates and contracts and/or to perform any otheractions (and cause other parties who have interests to take action) as required by the Pledgee and facilitate the exercise of the rights and authorization vestedin the Pledgee under this Agreement.6.4 The Pledgor promises to the Pledgee that he/she will execute all amendment documents (if applicable and necessary) in connection with the certificate ofthe Equity Interest with the Pledgee or its designated person (being a natural person or a legal entity) and, within a reasonable period, provide to the Pledgeeall notices, orders and decisions about the Pledge as the Pledgee deems necessary.6.5 The Pledgor promises to the Pledgee that he/she will comply with and perform all the guarantees, covenants, warranties, representations and conditionsfor the benefit of the Pledgee. The Pledgor shall compensate the Pledgee for all losses suffered by the Pledgee because of the Pledgor’s failure to perform inwhole or in part its guarantees, covenants, warranties, representations and conditions.6.6 During the term of this Agreement, the Pledgor will not perform any action/non-action which may affect the value of the Equity Interest to maintain orincrease the value. The Pledgor shall timely notify the Pledgee of any events, which may decrease the value of the Equity Interest or affect the Pledgor’sperformance of the obligations under this Agreement, and shall provide security satisfactory to the Pledgee of the decreased value of the Equity Interest uponthe Pledgee’s request.6.7 Under the permission of the applied laws or regulations, the Pledgor shall use his/her best efforts to cooperate with all the registration, record or otherprocedures relating to the Pledge as required by relevant laws and regulations. 7.Event of Default7.1 Each of the following events shall be regarded as an Event of Default: 7.1.1Pledgor fails to perform his obligations under the Loan Arrangement and supplementary agreements;7.1.2 Perusal fails to pay the Services Fees in due course in full amount or perform other obligations under the Services Agreements;7.1.3 Any representation or warranty made by the Pledgor in Article 5 hereof contains material misleading statements or errors and/or the Pledgor breachesany warranty in Article 5 hereof; 7.1.4The Pledgor breaches the covenants under Article 6 hereof; 7.1.5The Pledgor breaches any other provision of this Agreement; 4 7.1.6 The Pledgor waives the pledged Equity Interest or transfers or assigns the pledged Equity Interest without prior written consent from the Pledgee;7.1.7 Any of the Pledgor’s external loans, guaranties, compensations, undertakings or other obligations (1) is required to be repaid or performed prior to thescheduled due date because of a default; or (2) is due but cannot be repaid or performed as scheduled, causing the Pledgee to believe that the Pledgor’sability to perform the obligations hereunder has been affected; 7.1.8Perusal is incapable of repaying its general debts or other debts;7.1.9 This Agreement becomes illegal or the Pledgor is not capable of continuing to perform the obligations hereunder due to any reason other than a forcemajeure event;7.1.10 There have been adverse changes to the properties owned by the Pledgor, causing the Pledgee to believe that the capability of the Pledgor to performthe obligations hereunder has been affected;7.1.11 The successor or custodian of Perusal only partially performs or refuses to perform the payment obligation under the Services Agreements; and 7.1.12The breach of the other provisions of this Agreement by the Pledgor due to his act or omission.7.2 The Pledgor shall immediately give a written notice to the Pledgee if the Pledgor knows or discovers that any event specified under Article 7.1 hereof orany event that may result in the foregoing events has occurred.7.3 Unless an event of default under Article 7.1 hereof has been solved to the Pledgee’s satisfaction, the Pledgee, at any time when the event of default occursor at any time thereafter, may give a written Notice of Default to the Pledgor, requiring the Pledgor to immediately make full payment of the outstandingamount under the Loan Arrangement or under the Services Agreements or requesting to exercise the Pledge in accordance with Article 8 hereof. 8.Exercise of the Pledge8.1 The Pledgor shall not transfer or assign the Equity Interest without prior written approval from the Pledgee prior to the full performance of his obligationsunder the Loan Arrangement and supplementary agreement and full payment of all Service Fees under the Services Agreements, whichever is later.8.2 The Pledgee shall give a Notice of Default to the Pledgor when the Pledgee exercises the Pledge.8.3 Subject to Article 7.3, the Pledgee may exercise the Pledge when the Pledgee gives a Notice of Default in accordance with Article 7.3 or at any timethereafter. 5 8.4 The Pledgee is entitled to priority in receiving payment in the form of all or part of the Equity Interest based on the conversion value thereof, or from theproceeds from the auction or sale of all or part of the Equity Interest in accordance with legal procedure, until the outstanding debt and all other payables ofthe Pledgor under Loan Arrangement and Services Agreements are repaid.8.5 The Pledgor shall not hinder the Pledgee from exercising the Pledge in accordance with this Agreement and shall give necessary assistance so that thePledgee could fully exercise its Pledge. 9.Assignment9.1 The Pledgor shall not assign or transfer its rights and obligations hereunder without prior consent from the Pledgee.9.2 This Agreement shall be binding upon the Pledgor and his successors and be binding on the Pledgee and each of its successors and permitted assigns.9.3 To the extent permitted by law, the Pledgee may transfer or assign any or all of its rights and obligations under the Loan Arrangement and supplementaryagreements to any person (natural person or legal entity) designated by it at any time. In that case, the assignee shall have the same rights and obligations asthose of the Pledgee as if the assignee were an original party hereto. When the Pledgee transfers or assigns the rights and obligations under the ServicesAgreement, Loan Arrangement and supplementary agreements, it is only required to provide a written notice to the Pledgor, and at the request of the Pledgee,the Pledgor shall execute the relevant agreements and/or documents with respect to such transfer or assignment.9.4 After the Pledgee has been changed as a result of a transfer or an assignment, the new parties to the Pledge shall execute a new pledge contract. 10.Effectiveness and TermThis Agreement is executed on the date first set forth above and becomes effective from the date when the pledge is recorded on Perusal’s Register ofShareholders. 11.TerminationThis Agreement shall terminate when the loan under the Loan Arrangement and the Services Fees under the Services Agreement have been fully repaid andthe Pledgor no longer has any outstanding obligations under the Loan Arrangement and Perusal no longer has any outstanding obligations under theServices Agreements. Thereafter, the Pledgee shall cancel or terminate this Agreement as soon as reasonably practicable. 6 12.Fees and Other Charges12.1 The Pledgor shall be responsible for all of the fees and actual expenses in relation to this Agreement including, but not limited to, legal fees, productioncosts, stamp tax and any other taxes and charges. If the Pledgee pays the relevant taxes in accordance with the laws, the Pledgor shall fully indemnify thePledgee for such taxes paid by the Pledgee.12.2 In the event that the Pledgee has to make a claim against the Pledgor by any means as a result of the Pledgor’s failure to pay any tax or expense payableby the Pledgor under this Agreement, the Pledgor shall be responsible for all the expenses arising from such claim (including but not limited to any taxes,handling fees, management fees, litigation fees, attorney’s fees, and various insurance premiums in connection with the disposition of the Pledge). 13.Force Majeure13.1 Force Majeure, which includes but is not limited to acts of governments, changes of law, acts of God, fires, explosions, typhoons, floods, earthquake,tides, lightning or war, refers to any unforeseen event that is beyond a party’s reasonable control and cannot be prevented with reasonable care. However, anyinsufficiency of creditworthiness, capital or financing shall not be regarded as an event beyond a party’s reasonable control. The affected party by ForceMajeure shall promptly notify the other party of such event resulting in exemption.13.2 In the event that the affected party is delayed or prevented from performing its obligations under this Agreement by Force Majeure, and only to theextent of such delay and prevention, the affected party shall not be liable for obligations under this Agreement. The affected party shall take appropriatemeasures to minimize or remove the effects of Force Majeure and attempt to resume performance of the obligations that were delayed or prevented by theevent of Force Majeure. After the event of Force Majeure is removed, both Parties agree to resume the performance of this Agreement using their best efforts. 14.ConfidentialityThe Parties acknowledge and confirm that all the oral and written materials exchanged relating to this Agreement are confidential. Each party must keep suchmaterials confidential and cannot disclose such materials to any other third party without the other party’s prior written approval, unless: (a) the public knowsor will know the materials (not due of the disclosure by the receiving party); (b) the disclosed materials are required by law or stock exchange rules to bedisclosed; or (c) materials relating to the transactions under this Agreement are disclosed to the Parties’ legal or financial advisors, who must keep themconfidential as well. Disclosure of the confidential information by employees or institutions hired by the Parties is deemed as an act by the Parties, therefore,subjecting them to liability. 15.Dispute Resolution15.1 This Agreement shall be governed by and construed in accordance with PRC law.15.2 The Parties shall strive to settle any dispute arising from the interpretation or performance of this Agreement through friendly consultation. In case nosettlement can be reached through consultation, each party can submit such matter to the China International Economic and Trade Arbitration Commission(“CIETAC”) for arbitration. The arbitration shall follow the current rules of CIETAC, the arbitration proceedings shall be conducted in Chinese and shall takeplace in Beijing, PRC. The arbitration award shall be final and binding upon the Parties. 7 16.NoticeAny notice which is given by the Parties hereto for the purpose of performing the rights and obligations hereunder shall be in writing. If such notice isdelivered personally, the time of notice is the time when such notice actually reaches the addressee; where such notice is transmitted by telex or facsimile, thenotice time is the time when such notice is transmitted. If such notice does not reach the addressee on a business day or reaches the addressee after businesshours, the next business day following such day is the date of notice. The delivery place is the address first written above for each of the Parties hereto or theaddress advised by such party in writing, including facsimile and telex, from time to time. Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Address: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingTelephone: 010-59928888Party B: Zhixiang LiangAddress: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingTelephone: 010-59928888 17.Entire AgreementNotwithstanding provisions in Article 10 hereof, the Parties agree that this Agreement constitutes the entire agreement of the Parties hereto with respect to thesubject matters herein upon its effectiveness and supersedes and replaces all prior oral and/or written agreements and understandings relating to the subjectmatters of this Agreement. 18.SeverabilityShould any provision of this Agreement be held invalid or unenforceable because of inconsistency with applicable laws, such provision shall be invalid orunenforceable only to the extent of such applicable laws without affecting the validity or enforceability of the remainder of this Agreement. 19.AppendicesThe appendices to this Agreement shall constitute an integral part of this Agreement. 8 20.Amendment or Supplement20.1 The Parties may amend or supplement this Agreement by written agreement. The amendments or supplements to this Agreement duly executed by bothParties shall form an integral part of this Agreement and shall have the same legal effect as this Agreement.20.2 This Agreement and any amendments, modifications, supplements, additions or changes hereto shall be in writing and shall be effective upon beingexecuted and sealed by the Parties hereto. 21.CounterpartsThis Agreement is made in Chinese in two originals, with each Party holding one original. Both originals have the same legal effect.[no text below] 9 [This page contains no body text]IN WITNESS WHEREOF, each Party has caused this Agreement to be executed by himself/herself, its legal representative or its duly authorizedrepresentative as of the date first written above. Party A: Baidu Online Network Technology (Beijing) Co., Ltd. /s/: Hailong Xiang Seal of Baidu Online Network Technology (Beijing) Co., Ltd. Party B: Zhixiang Liang /s/: Zhixiang Liang 10 Appendices: I.Register of Shareholders of Beijing Perusal Technology Co., Ltd. II.Resolutions of the Shareholders’ Meeting of Beijing Perusal Technology Co., Ltd. 11 Appendix IRegister of shareholders of Beijing Perusal Technology Co., Ltd. Name of the Shareholder: Zhixiang LiangID number: Residence Contribution Amount: RMB1.58 billionPercentage of Share Capital: 50%Number of the certificate ofcapital contribution: Name of the Shareholder: Xiaodong WangID number: Residence Contribution Amount: RMB1.58 billionPercentage of Share Capital: 50%Number of the certificate ofcapital contribution: Zhixiang Liang holds 50% equity interests in Beijing Perusal Technology Co., Ltd., the entirety of which has been pledged to Baidu Online NetworkTechnology (Beijing) Co., Ltd.Xiaodong Wang holds 50% equity interests in Beijing Perusal Technology Co., Ltd., the entirety of which has been pledged to Baidu Online NetworkTechnology (Beijing) Co., Ltd.Baidu Online Network Technology (Beijing) Co., Ltd. is the pledgee of 100% of the equity interests in Beijing Perusal Technology Co., Ltd. Beijing Perusal Technology Co., Ltd.Signature: /s/ Hailong XiangName: Hailong XiangTitle: Legal representativeStamp:Date: June 20, 2016 12 Appendix IIResolutions of the Shareholders’ Meetingof Beijing Perusal Technology Co., Ltd.In respect of the Amended and Restated Equity Pledge Agreement dated June 20, 2016 between the shareholders of Beijing Perusal Technology Co., Ltd. (the“Company”) and Beijing Online Network Technology (Beijing) Co., Ltd., a resolution is unanimously adopted at the shareholders’ meeting of the Companythat:It is approved that the shareholders of the Company pledge all of their equity interest in the Company to Baidu Online Network Technology (Beijing) Co.,Ltd.The resolution was signed and delivered on June 20, 2016 by the undersigned shareholders. Shareholder: Zhixiang Liang/s/: Zhixiang LiangXiaodong Wang/s/: Xiaodong Wang 13 AMENDED AND RESTATED EQUITY PLEDGE AGREEMENTThis Amended and Restated Equity Pledge Agreement (this “Agreement”) is entered into in Beijing, PRC by the following parties on June 20, 2016: Pledgee: Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Address: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingPledgor: Party B: Xiaodong WangID No.: WHEREAS:1. Party A is a wholly foreign-owned enterprise registered in Beijing, the People’s Republic of China (the “PRC”).2. Party B is a citizen of the PRC owning 50% equity interests in Beijing Perusal Technology Co., Ltd. (“Perusal”), a limited liability company registered inBeijing, the PRC.3. Party A and Party B entered into an Amended and Restated Loan Agreement dated June 20, 2016, whereby Party B obtains a loan (the “LoanArrangement”) up to a total amount of RMB1,598,440,000 (the “Loan”), of which Party B pledges his equity interests for RMB1,580,000,000.4. Party A and Perusal entered into an Exclusive Technology Consulting and Services Agreement dated June 23, 2006 with infinite term (the “ServicesAgreement”), pursuant to which Perusal shall pay Party A technical consulting and services fee (the “Service Fees”) for the technology consulting andservices provided by Party A.5. In order to ensure that Party B will perform its obligations under the Loan Agreement and Party A will be able to collect Service Fees from Perusal, Party Bagrees to pledge all his equity interest in Perusal as security for performance of his obligations under the Loan Agreement and for the Service Fees. Party A(the “Pledgee”) and Party B (the “Pledgor”) intend to enter into this Agreement to specify their respective rights and obligations in respect of such pledge. 14 NOW THEREFORE, the Pledgee and the Pledgor agree as follows through negotiations and to be bound hereby: 1.DefinitionsUnless otherwise provided in this Agreement, the following terms shall have the following meanings:1.1 “Pledge”: refers to the full content of Article 2 hereunder.1.2 “Equity Interest”: refers to all of the equity interest in Perusal legally held by the Pledgor.1.3 “Rate of Pledge”: refers to the ratio between the value of the Pledge under this Agreement and the total amount of the Service Fees and the Loan.1.4 “Term of Pledge”: refers to the period provided for under Article 3.2 hereunder.1.5 “Principal Agreement”: refers to the Services Agreements and the agreements under the Loan Arrangement.1.6 “Event of Default”: refers to any event listed in Article 7.1 hereunder.1.7 “Notice of Default”: refers to the notice of default issued by the Pledgee in accordance with this Agreement. 2.PledgeThe Pledgor will pledge all of his Equity Interest in Perusal to the Pledgee as security for (i) all his obligations under the Loan Arrangement and (ii) all theobligations of Perusal under the Services Agreement. For purpose of this Agreement, “Pledge” refers to the right of the Pledgee to be entitled to priority inreceiving payment in the form of the Equity Interest based on the conversion value thereof, or from the proceeds from the auction or sale of the EquityInterest pledged by the Pledgor to the Pledgee. 3.Rate of Pledge and Term of Pledge3.1 Rate of the PledgeThe rate of the Pledge shall be approximately 100%.3.2 Term of the Pledge3.2.1 The Pledge shall take effect as of the date when the pledge of the Equity Interest is recorded in the Register of Shareholders of Perusal and when thepledge is registered with the Administration for Industry and Commerce and shall remain in effect until two (2) years after the obligations under the PrincipalAgreement will have been fulfilled.3.2.2 During the term of the Pledge, the Pledgee shall be entitled to dispose of the pledged assets in accordance with this Agreement in the event that thePledgor does not perform his obligations under the Loan Arrangement or Perusal does not perform his obligations under the Services Agreement. 15 4.Physical Possession of Documents4.1 During the term of the Pledge under this Agreement, the Pledgor shall deliver the physical possession of his Certificate of Capital Contribution and theRegister of Shareholders of Perusal to the Pledgee within one (1) week from the date of this Agreement.4.2 The Pledgee shall be entitled to receive dividends from the Equity Interest.4.3 The Pledge under this Agreement will be recorded in the Register of Shareholders of Perusal (See Appendix I) after the execution of this Agreement. 5.Representations and Warranties of the Pledgor5.1 The Pledgor is the legal owner of the Equity Interest pledged and has adopted shareholders’ resolutions to approve the Pledge (See Appendix II).5.2 Except for the benefit of the Pledgee, the Pledgor has not pledged the Equity Interest or created other encumbrance on the Equity Interest. 6.Covenants of the Pledgor6.1 During the term of this Agreement, the Pledgor covenants to the Pledgee for its benefit that the Pledgor shall:6.1.1 not transfer or assign the Equity Interest, create or permit the existence of any other pledges which may have an adverse effect on the rights or benefitsof the Pledgee without prior written consent of the Pledgee;6.1.2 comply with and implement the laws and regulations with respect to the pledge of rights; present to the Pledgee the notices, orders or suggestions withrespect to the Pledge issued or made by relevant government authorities within five (5) days upon receiving such notices, orders or suggestions; comply withsuch notices, orders or suggestions or, alternatively, at the reasonable request of the Pledgee or with consent from the Pledgee, raise objection to such notices,orders or suggestions;6.1.3 timely notify the Pledgee of any events or any notices received which may affect the Pledgor’s right to all or any part of the Equity Interest, and anyevents or any received notices which may change the Pledgor’s warranties and obligations under this Agreement or affect the Pledgor’s performance of itsobligations under this Agreement.6.2 The Pledgor agrees that the Pledgee’s right to the Pledge obtained from this Agreement shall not be suspended or inhibited by any legal procedureinitiated by the Pledgor or any successors of the Pledgor or any person authorized by the Pledgor or any other person. 16 6.3 The Pledgor promises to the Pledgee that in order to protect or perfect the security for the payment of the Loan and the Services Fees, the Pledgor shallexecute in good faith and cause other parties who have interests in the Pledge to execute, all title certificates and contracts and/or to perform any otheractions (and cause other parties who have interests to take action) as required by the Pledgee and facilitate the exercise of the rights and authorization vestedin the Pledgee under this Agreement.6.4 The Pledgor promises to the Pledgee that he/she will execute all amendment documents (if applicable and necessary) in connection with the certificate ofthe Equity Interest with the Pledgee or its designated person (being a natural person or a legal entity) and, within a reasonable period, provide to the Pledgeeall notices, orders and decisions about the Pledge as the Pledgee deems necessary.6.5 The Pledgor promises to the Pledgee that he/she will comply with and perform all the guarantees, covenants, warranties, representations and conditionsfor the benefit of the Pledgee. The Pledgor shall compensate the Pledgee for all losses suffered by the Pledgee because of the Pledgor’s failure to perform inwhole or in part its guarantees, covenants, warranties, representations and conditions.6.6 During the term of this Agreement, the Pledgor will not perform any action/non-action which may affect the value of the Equity Interest to maintain orincrease the value. The Pledgor shall timely notify the Pledgee of any events, which may decrease the value of the Equity Interest or affect the Pledgor’sperformance of the obligations under this Agreement, and shall provide security satisfactory to the Pledgee of the decreased value of the Equity Interest uponthe Pledgee’s request.6.7 Under the permission of the applied laws or regulations, the Pledgor shall use his/her best efforts to cooperate with all the registration, record or otherprocedures relating to the Pledge as required by relevant laws and regulations. 7.Event of Default7.1 Each of the following events shall be regarded as an Event of Default:7.1.1 Pledgor fails to perform his obligations under the Loan Arrangement and supplementary agreements;7.1.2 Perusal fails to pay the Services Fees in due course in full amount or perform other obligations under the Services Agreements;7.1.3 Any representation or warranty made by the Pledgor in Article 5 hereof contains material misleading statements or errors and/or the Pledgor breachesany warranty in Article 5 hereof;7.1.4 The Pledgor breaches the covenants under Article 6 hereof;7.1.5 The Pledgor breaches any other provision of this Agreement; 17 7.1.6 The Pledgor waives the pledged Equity Interest or transfers or assigns the pledged Equity Interest without prior written consent from the Pledgee;7.1.7 Any of the Pledgor’s external loans, guaranties, compensations, undertakings or other obligations (1) is required to be repaid or performed prior to thescheduled due date because of a default; or (2) is due but cannot be repaid or performed as scheduled, causing the Pledgee to believe that the Pledgor’sability to perform the obligations hereunder has been affected; 7.1.8Perusal is incapable of repaying its general debts or other debts;7.1.9 This Agreement becomes illegal or the Pledgor is not capable of continuing to perform the obligations hereunder due to any reason other than a forcemajeure event;7.1.10 There have been adverse changes to the properties owned by the Pledgor, causing the Pledgee to believe that the capability of the Pledgor to performthe obligations hereunder has been affected;7.1.11 The successor or custodian of Perusal only partially performs or refuses to perform the payment obligation under the Services Agreements; and 7.1.12The breach of the other provisions of this Agreement by the Pledgor due to his act or omission.7.2 The Pledgor shall immediately give a written notice to the Pledgee if the Pledgor knows or discovers that any event specified under Article 7.1 hereof orany event that may result in the foregoing events has occurred.7.3 Unless an event of default under Article 7.1 hereof has been solved to the Pledgee’s satisfaction, the Pledgee, at any time when the event of default occursor at any time thereafter, may give a written Notice of Default to the Pledgor, requiring the Pledgor to immediately make full payment of the outstandingamount under the Loan Arrangement or under the Services Agreements or requesting to exercise the Pledge in accordance with Article 8 hereof. 8.Exercise of the Pledge8.1 The Pledgor shall not transfer or assign the Equity Interest without prior written approval from the Pledgee prior to the full performance of his obligationsunder the Loan Arrangement and supplementary agreement and full payment of all Service Fees under the Services Agreements, whichever is later.8.2 The Pledgee shall give a Notice of Default to the Pledgor when the Pledgee exercises the Pledge.8.3 Subject to Article 7.3, the Pledgee may exercise the Pledge when the Pledgee gives a Notice of Default in accordance with Article 7.3 or at any timethereafter. 18 8.4 The Pledgee is entitled to priority in receiving payment in the form of all or part of the Equity Interest based on the conversion value thereof, or from theproceeds from the auction or sale of all or part of the Equity Interest in accordance with legal procedure, until the outstanding debt and all other payables ofthe Pledgor under Loan Arrangement and Services Agreements are repaid.8.5 The Pledgor shall not hinder the Pledgee from exercising the Pledge in accordance with this Agreement and shall give necessary assistance so that thePledgee could fully exercise its Pledge. 9.Assignment9.1 The Pledgor shall not assign or transfer its rights and obligations hereunder without prior consent from the Pledgee.9.2 This Agreement shall be binding upon the Pledgor and his successors and be binding on the Pledgee and each of its successors and permitted assigns.9.3 To the extent permitted by law, the Pledgee may transfer or assign any or all of its rights and obligations under the Loan Arrangement and supplementaryagreements to any person (natural person or legal entity) designated by it at any time. In that case, the assignee shall have the same rights and obligations asthose of the Pledgee as if the assignee were an original party hereto. When the Pledgee transfers or assigns the rights and obligations under the ServicesAgreement, Loan Arrangement and supplementary agreements, it is only required to provide a written notice to the Pledgor, and at the request of the Pledgee,the Pledgor shall execute the relevant agreements and/or documents with respect to such transfer or assignment.9.4 After the Pledgee has been changed as a result of a transfer or an assignment, the new parties to the Pledge shall execute a new pledge contract. 10.Effectiveness and TermThis Agreement is executed on the date first set forth above and becomes effective from the date when the pledge is recorded on Perusal’s Register ofShareholders. 11.TerminationThis Agreement shall terminate when the loan under the Loan Arrangement and the Services Fees under the Services Agreement have been fully repaid andthe Pledgor no longer has any outstanding obligations under the Loan Arrangement and Perusal no longer has any outstanding obligations under theServices Agreements. Thereafter, the Pledgee shall cancel or terminate this Agreement as soon as reasonably practicable. 19 12.Fees and Other Charges12.1 [The Pledgor] shall be responsible for all of the fees and actual expenses in relation to this Agreement including, but not limited to, legal fees,production costs, stamp tax and any other taxes and charges. If the Pledgee pays the relevant taxes in accordance with the laws, the Pledgor shall fullyindemnify the Pledgee for such taxes paid by the Pledgee.12.2 In the event that the Pledgee has to make a claim against the Pledgor by any means as a result of the Pledgor’s failure to pay any tax or expense payableby the Pledgor under this Agreement, the Pledgor shall be responsible for all the expenses arising from such claim (including but not limited to any taxes,handling fees, management fees, litigation fees, attorney’s fees, and various insurance premiums in connection with the disposition of the Pledge). 13.Force Majeure13.1 Force Majeure, which includes but is not limited to acts of governments, changes of law, acts of God, fires, explosions, typhoons, floods, earthquake,tides, lightning or war, refers to any unforeseen event that is beyond a party’s reasonable control and cannot be prevented with reasonable care. However, anyinsufficiency of creditworthiness, capital or financing shall not be regarded as an event beyond a party’s reasonable control. The affected party by ForceMajeure shall promptly notify the other party of such event resulting in exemption.13.2 In the event that the affected party is delayed or prevented from performing its obligations under this Agreement by Force Majeure, and only to theextent of such delay and prevention, the affected party shall not be liable for obligations under this Agreement. The affected party shall take appropriatemeasures to minimize or remove the effects of Force Majeure and attempt to resume performance of the obligations that were delayed or prevented by theevent of Force Majeure. After the event of Force Majeure is removed, both Parties agree to resume the performance of this Agreement using their best efforts. 14.ConfidentialityThe Parties acknowledge and confirm that all the oral and written materials exchanged relating to this Agreement are confidential. Each party must keep suchmaterials confidential and cannot disclose such materials to any other third party without the other party’s prior written approval, unless: (a) the public knowsor will know the materials (not due of the disclosure by the receiving party); (b) the disclosed materials are required by law or stock exchange rules to bedisclosed; or (c) materials relating to the transactions under this Agreement are disclosed to the Parties’ legal or financial advisors, who must keep themconfidential as well. Disclosure of the confidential information by employees or institutions hired by the Parties is deemed as an act by the Parties, therefore,subjecting them to liability. 15.Dispute Resolution15.1 This Agreement shall be governed by and construed in accordance with PRC law.15.2 The Parties shall strive to settle any dispute arising from the interpretation or performance of this Agreement through friendly consultation. In case nosettlement can be reached through consultation, each party can submit such matter to the China International Economic and Trade Arbitration Commission(“CIETAC”) for arbitration. The arbitration shall follow the current rules of CIETAC, the arbitration proceedings shall be conducted in Chinese and shall takeplace in Beijing, PRC. The arbitration award shall be final and binding upon the Parties. 20 16.NoticeAny notice which is given by the Parties hereto for the purpose of performing the rights and obligations hereunder shall be in writing. If such notice isdelivered personally, the time of notice is the time when such notice actually reaches the addressee; where such notice is transmitted by telex or facsimile, thenotice time is the time when such notice is transmitted. If such notice does not reach the addressee on a business day or reaches the addressee after businesshours, the next business day following such day is the date of notice. The delivery place is the address first written above for each of the Parties hereto or theaddress advised by such party in writing, including facsimile and telex, from time to time. Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Address: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingTelephone: 010-59928888Party B: Xiaodong WangAddress: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingTelephone: 010-59928888 17.Entire AgreementNotwithstanding provisions in Article 10 hereof, the Parties agree that this Agreement constitutes the entire agreement of the Parties hereto with respect to thesubject matters herein upon its effectiveness and supersedes and replaces all prior oral and/or written agreements and understandings relating to the subjectmatters of this Agreement. 18.SeverabilityShould any provision of this Agreement be held invalid or unenforceable because of inconsistency with applicable laws, such provision shall be invalid orunenforceable only to the extent of such applicable laws without affecting the validity or enforceability of the remainder of this Agreement. 19.AppendicesThe appendices to this Agreement shall constitute an integral part of this Agreement. 21 20.Amendment or Supplement20.1 The Parties may amend or supplement this Agreement by written agreement. The amendments or supplements to this Agreement duly executed by bothParties shall form an integral part of this Agreement and shall have the same legal effect as this Agreement.20.2 This Agreement and any amendments, modifications, supplements, additions or changes hereto shall be in writing and shall be effective upon beingexecuted and sealed by the Parties hereto. 21.CounterpartsThis Agreement is made in Chinese in two originals, with each Party holding one original. Both originals have the same legal effect.[no text below] 22 [This page contains no body text]IN WITNESS WHEREOF, each Party has caused this Agreement to be executed by himself/herself, its legal representative or its duly authorizedrepresentative as of the date first written above. Party A: Baidu Online Network Technology (Beijing) Co., Ltd./s/: Hailong XiangSeal of Baidu Online Network Technology (Beijing) Co., Ltd.Party B: Xiaodong Wang/s/: Xiaodong Wang 23 Appendices: I.Register of Shareholders of Beijing Perusal Technology Co., Ltd. II.Resolutions of the Shareholders’ Meeting of Beijing Perusal Technology Co., Ltd. 24 Appendix IRegister of shareholders of Beijing Perusal Technology Co., Ltd. Name of the Shareholder: Zhixiang LiangID number: Residence Contribution Amount: RMB1.58 billionPercentage of Share Capital: 50%Number of the certificate ofcapital contribution: Name of the Shareholder: Xiaodong WangID number: Residence Contribution Amount: RMB1.58 billionPercentage of Share Capital: 50%Number of the certificate ofcapital contribution: Zhixiang Liang holds 50% equity interests in Beijing Perusal Technology Co., Ltd., the entirety of which has been pledged to Baidu Online NetworkTechnology (Beijing) Co., Ltd.Xiaodong Wang holds 50% equity interests in Beijing Perusal Technology Co., Ltd., the entirety of which has been pledged to Baidu Online NetworkTechnology (Beijing) Co., Ltd.Baidu Online Network Technology (Beijing) Co., Ltd. is the pledgee of 100% of the equity interests in Beijing Perusal Technology Co., Ltd. Beijing Perusal Technology Co., Ltd.Signature: /s/ Hailong XiangName: Hailong XiangTitle: Legal representativeStamp:Date: June 20, 2016 25 Appendix IIResolutions of the Shareholders’ Meeting of Beijing Perusal Technology Co., Ltd.In respect of the Amended and Restated Equity Pledge Agreement dated June 20, 2016 between the shareholders of Beijing Perusal Technology Co., Ltd. (the“Company”) and Beijing Online Network Technology (Beijing) Co., Ltd., a resolution is unanimously adopted at the shareholders’ meeting of the Companythat:It is approved that the shareholders of the Company pledge all of their equity interest in the Company to Baidu Online Network Technology (Beijing) Co.,Ltd.The resolution was signed and delivered on June 20, 2016 by the undersigned shareholders. Shareholder: Zhixiang Liang/s/: Zhixiang LiangXiaodong Wang/s/: Xiaodong Wang 26 Exhibit 4.40Amended And Restated Exclusive Equity Purchase and Transfer Option AgreementThis Amended and Restated Exclusive Equity Purchase and Transfer Option Agreement (this “Agreement”) is entered into by and among the followingparties in Beijing, PRC on June 20, 2016: Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Address: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingParty B: Zhixiang LiangID No.: Party C: Beijing Perusal Technology Co., Ltd.Address: A2 2/F No. 17 Building Zhongguancun Software Park, 8 East Bei Wang Road (W), Haidian District, BeijingIn this Agreement, Party A, Party B and Party C are called collectively as the “Parties” and each of them is a “Party.”WHEREAS:1. Party A, is a wholly foreign-owned enterprise incorporated under the laws of the People’s Republic of China (the “PRC”), which has technology expertiseand practical experience in computer software development and design, and also has rich experience and human resources in information technology andservices;2. Party C, a liability limited company incorporated in the PRC, carries out the business of value-added telecommunication services such as Internetinformation services;3. Party B is a shareholder of Party C, owning 50% equity interests in Party C (the “Equity Interest”);4. Party A and Party B entered into an Amended and Restated Loan Agreement dated June 20, 2016, whereby Party B obtains an interest-free loan up toRMB1,598,440,000 (the “Loan Arrangement”) in connection with his investment in Party C;5. Party A and Party C entered into a series of agreement on June 23, 2006, including the Exclusive Technology Consulting and Service Agreement (the“Services Agreements”); and6. Party A and Party B entered into an Amended and Restated Equity Pledge Agreement (the “Equity Pledge Agreement”) dated June 20, 2016; 1 NOW, THEREFORE, the Parties agree as follows through negotiations and to be bound hereby: 1.Purchase and Sale of Equity Interest1.1 Granting of RightsParty B hereby irrevocably grants to Party A an option to purchase or cause any one or more designated persons (“Designated Persons”) to purchase, to theextent permitted under PRC law, according to the steps determined by Party A, at the price specified in Article 1.3 of this Agreement, and at any time fromParty B (the “Transferor”), a portion or all of the equity interests held by Party B in Party C (the “Option”). No Option shall be granted to any third partyother than Party A and/or the Designated Persons. Party C hereby agrees to granting of the Option by Party B to Party A and/or the Designated Persons. Forpurpose of this Section 1.1 and this Agreement, “person” means individual, corporation, joint venture, partnership, enterprise, trust or unincorporatedorganization.1.2 Exercise StepsSubject to PRC law and regulations, Party A and/or the Designated Persons may exercise the Option by issuing a written notice (the “Option Notice”) to theTransferor, specifying the equity interest to be purchased from the Transferor (the “Purchased Equity Interest”) and the manner of such purchase.1.3 Purchase Price1.3.1 If Party A exercises the Option, the purchase price of the Purchased Equity Interest (“Purchase Price”) shall be equal to the actual paid-in capital paidby the Transferor for the Purchased Equity Interest, unless then applicable PRC laws and regulations require appraisal of the Purchased Equity Interest orstipulate other restrictions on the Purchase price.1.3.2 If the applicable PRC laws require appraisal of the Purchased Equity Interest or stipulate other restrictions on the Purchase Price at the time that Party Aexercises the Option, the Parties agree that the Purchase Price shall be set at the lowest price permissible under applicable law.1.4 Transfer of the Purchased Equity InterestAt each exercise of the Option:1.4.1 The Transferor shall, in accordance the terms and conditions of this Agreement and the Option Notice in connection with the Purchased Equity Interest,enter into an equity transfer agreement with Party A and/or the Designated Persons (as applicable) for each transfer in a substance and form satisfactory toParty A;1.4.2 The Transferor shall execute all other requisite contracts, agreements or documents, obtain all requisite government approvals and consents, and take allnecessary actions to unconditionally transfer the valid ownership of the Purchased Equity Interest to Party A and/or the Designated Persons free of anysecurity interest, and cause Party A and/or the Designated Persons to be the registered owner(s) of the Purchased Equity Interest. For purpose of thisSection 1.4.2 and this Agreement, “Security Interest” includes without limitation guaranty, mortgage, pledge, third-party right or interest, any share option,right of acquisition, right of first refusal, right of set-off, ownership retention or other security arrangements. However, it does not include any security interestarising under the Equity Pledge Agreement. 2 1.5 PaymentPayment manner of the Purchase Price shall be determined through negotiations between Party A and/or the Designated Persons and the Transferor inaccordance with then applicable laws at the exercise of the Option. The Parties hereby agree that, subject to applicable laws, Transferor shall repay to Party Aany amount that is paid by Party A and/or the Designated Persons to the Transferor in connection with the Purchased Equity Interest (which amount may benet of any tax and other fees paid by the Transferor in connection with the proposed transaction contemplated under the transfer agreement). 2.Covenants Relating to the Equity Interest2.1 Covenants Relating to Party CParty B and Party C hereby covenant, in relation to Party C:2.1.1 Not to supplement, amend or modify Party C’s articles of association in any way, or to increase or decrease its registered capital, or to change itsregistered capital structure in any way without Party A’s prior written consent;2.1.2 To maintain the corporate existence of Party C and operate its business and deal with matters prudently and effectively according to good financial andbusiness rules and practices;2.1.3 Not to sell, transfer, mortgage or otherwise dispose of, or permit any other security interest to be created on, any of Party C’s assets, business or legal orbeneficial interests in its revenue at any time after the signing of this Agreement without Party A’s prior written consent;2.1.4 Not to incur, succeed to, guarantee or permit the existence of any liability, without Party A’s prior written consent, except (i) liabilities arising from thenormal course of business, but not arising from loans; and (ii) liabilities disclosed to Party A and approved by Party A in writing;2.1.5 To operate persistently all the business in the normal course of business to maintain the value of Party C’s assets, and not to commit any act or omissionthat would affect its operations and asset value;2.1.6 Without prior written consent by Party A, not to enter into any material agreement, other than agreements entered into in Party C’s normal course ofbusiness (for purpose of this paragraph, an agreement will be deemed material if its value exceeds RMB500,000);2.1.7 Not to provide loans or credit to any person without Party A’s prior written consent;2.1.8 To provide all information relating to Party C’s operations and financial conditions upon the request of Party A; 3 2.1.9 To purchase and maintain insurance from insurance companies accepted by Party A. The amount and category of the insurance shall be the same asthose of the insurance normally procured by companies engaged in similar businesses and possessing similar properties or assets in the area where Party C islocated;2.1.10 Not to merge or consolidate with, or acquire or invest in, any person without Party A’s prior written consent;2.1.11 To promptly notify Party A of any pending or threatened suit, arbitration or administrative proceedings concerning Party C’s assets, business orrevenue;2.1.12 To execute all necessary or appropriate documents, take all necessary or appropriate actions and to bring all necessary or appropriate claims or to makeall necessary and appropriate defenses against all claims in order for Party C to maintain the ownership over all its assets;2.1.13 Not to distribute dividends to Party C’s shareholders in any way without Party A’s prior written consent. However, Party C shall promptly distribute allor part of its distributable profits to its shareholders upon Party A’s request;2.1.14 At the request of Party A, to appoint persons nominated by Party A to be executive directors of Party C;2.2 Covenants Relating to the TransferorParty B hereby covenants:2.2.1 Not to sell, transfer, mortgage or otherwise dispose of, or allow any other security interest to be created on, the legal or beneficial interest in the EquityInterest at any time after the signing of this Agreement without Party A’s prior written consent, other than the pledge created on the Transferor’s EquityInterest in accordance with the Equity Pledge Agreement;2.2.2 Without Party A’s prior written consent, not to vote for or sign any shareholders’ resolution at Party C’s shareholders’ meetings to approve the sale,transfer, mortgage or disposition in any other manner of, or the creation of any other security interest on, any legal or beneficial interest in the Equity Interest,except to or for the benefit of Party A or its designated persons;2.2.3 Without Party A’s prior written consent, not to vote for or sign any shareholders’ resolution at Party C’s shareholders’ meetings to approve Party C’smerger or consolidation with, acquisition of or investment in, any person;2.2.4 To promptly notify Party A of any pending or threatened suit, arbitration or administrative proceedings concerning the Equity Interest owned by it; 4 2.2.5 To execute all necessary or appropriate documents, to take all necessary or appropriate actions and to bring all necessary or appropriate claims or tomake all necessary and appropriate defenses against all claims in order to maintain his ownership over the Equity Interest;2.2.6 At the request of Party A, to appoint persons nominated by Party A to be executive directors of Party C;2.2.7 At any time upon the request of Party A, to transfer its Equity Interest immediately and unconditionally to the representative designated by Party A, andwaive its preemptive right with respect to the transfer of equity interest by the other shareholder of Party C;2.2.8 To fully comply with the provisions of this Agreement and the other agreements entered into jointly or respectively by and among the Transferor, PartyC and Party A, perform all obligations under these agreements and not commit any act or omission that would affect the validity and enforceability of theseagreements; and2.2.9 To transfer to Party A all dividends and any other form of profit distributed to it by Party C.2.3 Covenants Relating to Party AParty A hereby covenants:2.3.1 If Party C needs any loan or other capital support in its business, under acceptable and reasonable scope, Party A shall provide such capital supportwithout imposing any condition or restriction; and2.3.2 If Party C cannot repay the loan from Party A as loss incurred and has sufficient evidence to prove, Party A agrees that it will unconditionally give up itsright to require Party C to repay the loan. 3.Representations and WarrantiesAs of the date of this Agreement and each transfer date, each of the Transferor and Party C hereby represents and warrants to Party A as follows:3.1 It has the power and authority to execute and deliver this Agreement, and any equity transfer agreement (the “Transfer Agreement”) to which it is a partyfor each transfer of the Purchased Equity under this Agreement and to perform its obligations under this Agreement and any Transfer Agreement. Onceexecuted, this Agreement and any Transfer Agreement to which it is party will constitute a legal, valid and binding obligation of it enforceable against it inaccordance with its terms;3.2 The execution, delivery and performance of this Agreement or any Transfer Agreement by it will not: (i) violate any relevant PRC laws and regulations;(ii) conflict with its articles of association or other organizational documents; (iii) violate or constitute a default under any contract or instrument to which itis party or that binds upon it; (iv) violate any condition for the grant and/or continued effectiveness of any permit or approval granted to it; or (v) cause anypermit or approval granted to it to be suspended, cancelled or attached with additional conditions; 5 3.3 Party C has good and marketable ownership interest in all of its assets and has not created any security interest on the said assets;3.4 Party C has no outstanding liabilities, except (i) liabilities arising in its normal course of business; and (ii) liabilities disclosed to Party A and approvedby Party A in writing;3.5 There are currently no existing, pending or threatened litigations, arbitrations or administrative proceedings related to the Equity Interest, Party C’s assetsor Party C; and3.6 The Transferor has good and marketable ownership interest in the Equity Interest and has not created any security interest on such Equity Interest, otherthan the security interest pursuant to the Equity Pledge Agreement. 4.Assignment of Agreement4.1 Party B and Party C shall not assign their rights and obligations under this Agreement to any third party without the prior written consent of Party A.4.2 Party B and Party C hereby agree that Party A may assign all its rights and obligation under this Agreement to a third party as Party A sees fit, in whichcase Party A only needs to give a written notice to Party B and Party C and no further consent of Party B or Party C is required. 5.Effectiveness and Term5.1 This Agreement shall be effective as of the date first set forth above.5.2 This Agreement shall come into force when it is duly executed by each of the Parties and expires when all Equity Interest held by Party B is transferred toParty A and/or Designated Persons in accordance with this Agreement.5.3 If the duration of operation (including any extension thereof) of Party A or Party C is expired or terminated for other reasons within the term set forth inArticle 5.2, this Agreement shall be terminated simultaneously, except in the situation where Party A has assigned its rights and obligations in accordancewith Article 4.2 hereof. 6.Applicable Law and Dispute Resolution6.1 Applicable LawThe formation, validity, interpretation and performance of and resolution of any dispute arising from this Agreement shall be protected and governed by thelaws of the PRC. 6 6.2Dispute ResolutionAny dispute arising in connection with the interpretation and performance of the provisions of this Agreement shall be resolved by the Parties in good faiththrough negotiations. In case no resolution can be reached by the Parties within thirty (30) days after either party makes a request for dispute resolutionthrough negotiations, either party may refer such dispute to China International Economic and Trade Arbitration Commission (“CIETAC”) for arbitration inaccordance with CIETAC’s arbitration rules then in effect. The seat of arbitration shall be Beijing and language of proceedings shall be Chinese. The arbitralaward shall be final and binding upon the Parties. 7.Taxes and ExpensesEvery Party shall, in accordance with PRC laws, bear any and all transfer and registration taxes, expenses and charges incurred by or levied on it with respectto the preparation and execution of this Agreement and each Transfer Agreement and the consummation of the transactions contemplated under thisAgreement and each Transfer Agreement. 8.NoticesAny notice or other communication forms which is given by the parties hereto shall be in Chinese and delivered personally to the addresses listed as below orthe addresses designated by the Parties. The notice time which is deemed as the time when the notice actually reaches the addressee follows: (a) the noticetime of the notice delivered personally shall be the day when the person conducts the delivery; (b) the notice time of the notice delivered as mail shall be thetenth (10th) day following the mailing date of the registered mail by air (marked by seal) or shall be the fourth (4th) day following the day handing tointernally recognized delivery services organizations; and (c) the notice time of the notice delivered by facsimile shall be the acceptance time on the deliveryconfirmation. Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Address: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingFacsimile: 010-59928888Telephone: 010-59928888Party B: Zhixiang LiangAddress: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingFacsimile: 010-59927435Telephone: 010-59928888Party C: Beijing Perusal Technology Co., Ltd.Address: A2 2/F No. 17 Building Zhongguancun Software Park, 8 East Bei Wang Road (W), Haidian District, BeijingFacsimile: 010-59927435Telephone: 010-59928888 7 9.ConfidentialityThe Parties acknowledge and confirm any oral or written materials exchanged by the Parties in connection with this Agreement are confidential. The Partiesshall maintain the confidentiality of all such materials. Without the written approval by the other Parties, any Party shall not disclose to any third party anyrelevant materials, but the following circumstances shall be excluded: a.Materials that are or will become known by the public (through no fault of the receiving party); b.Materials required to be disclosed by the applicable laws or rules of the stock exchange; and c.Materials disclosed by each Party to its legal or financial advisors relating the transactions contemplated by this Agreement, and such legal orfinancial advisors shall comply with the confidentiality provisions similar to this article.The disclosure of information by the staff or consultants of any party shall be deemed as disclosure by the party itself. This Article 9 shall survive anyinvalidity, termination, expiration or unenforceability of this Agreement. 10.Further AssurancesThe Parties agree to promptly execute documents and take further actions that are reasonably required for, or beneficial to, the purpose of performing theprovisions and carrying out the intent of this Agreement. 11.Miscellaneous11.1 Amendment, Modification or SupplementAny amendment or supplement to this Agreement shall be made by the Parties in writing. The amendments or supplements duly executed by each Party shallbe deemed as a part of this Agreement and shall have the same legal effect as this Agreement. 11.2Entire AgreementNotwithstanding Article 5 of this Agreement, the Parties acknowledge that once this Agreement becomes effective, it shall constitute the entire agreement ofthe Parties with respect to the subject matters hereof and shall supersede all prior oral and/or written agreements and understandings by the Parties withrespect to the subject matters hereof. 8 11.3SeverabilityIf any provision of this Agreement is judged to be invalid, illegal or unenforceable in any respect according to any applicable law or regulation, the validity,legality and enforceability of the other provisions hereof shall not be affected or impaired in any way. The Parties shall, through good-faith negotiations,replace those invalid, illegal or unenforceable provisions with valid provisions that may bring about economic effects as similar as possible to those fromsuch invalid, illegal or unenforceable provisions.11.4 HeadingsThe headings contained in this Agreement are for the convenience of reference only and shall not be used for the interpretation or explanation or otherwiseaffect the meaning of the provisions of this Agreement.11.5 Language and counterpartsThis Agreement is executed in Chinese in three originals; each Party holds one original and each original has the same legal effect.11.6 SuccessorThis Agreement shall bind upon and inure to the benefit of the successors and permitted assigns of each Party.11.7 SurvivalAny obligation arising from or becoming due under this Agreement before its expiration or premature termination shall survive such expiration or prematuretermination. Articles 6, 8 and 9 and this Article 11.7 shall survive the termination of this Agreement.11.8 WaiverAny Party may waive the terms and conditions of this Agreement by a written instrument signed by the Parties. Any waiver by a Party to a breach by the otherParties in a specific situation shall not be construed as a waiver to any similar breach by the other Parties in other situations.[No text below] 9 [This page contains no body text]IN WITNESS WHEREOF, each Party has caused this Agreement to be executed by himself/herself, its legal representative or its duly authorizedrepresentative as of the date first written above. Party A: Baidu Online Network Technology (Beijing) Co., Ltd. /s/: Hailong XiangSeal of Baidu Online Network Technology (Beijing) Co., Ltd.Party B: Zhixiang Liang/s/: Zhixiang LiangParty C: Beijing Perusal Technology Co., Ltd./s/: Hailong XiangSeal of Beijing Perusal Technology Co., Ltd. 10 Amended and Restated Exclusive Equity Purchase and Transfer Option AgreementThis Amended and Restated Exclusive Equity Purchase and Transfer Option Agreement (this “Agreement”) is entered into by and among the followingparties in Beijing, PRC on June 20, 2016: Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Address: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingParty B: Xiaodong WangID No.: Party C: Beijing Perusal Technology Co., Ltd.Address: A2 2/F No. 17 Building Zhongguancun Software Park, 8 East Bei Wang Road (W), Haidian District, BeijingIn this Agreement, Party A, Party B and Party C are called collectively as the “Parties” and each of them is a “Party.”WHEREAS:1. Party A, is a wholly foreign-owned enterprise incorporated under the laws of the People’s Republic of China (the “PRC”), which has technology expertiseand practical experience in computer software development and design, and also has rich experience and human resources in information technology andservices;2. Party C, a liability limited company incorporated in the PRC, carries out the business of value-added telecommunication services such as Internetinformation services;3. Party B is a shareholder of Party C, owning 50% equity interests in Party C (the “Equity Interest”);4. Party A and Party B entered into an Amended and Restated Loan Agreement dated June 20, 2016, whereby Party B obtains an interest-free loan up toRMB1,598,440,000 (the “Loan Arrangement”) in connection with his investment in Party C;5. Party A and Party C entered into a series of agreement on June 23, 2006, including the Exclusive Technology Consulting and Service Agreement (the“Services Agreements”); and6. Party A and Party B entered into an Amended and Restated Equity Pledge Agreement (the “Equity Pledge Agreement”) dated June 20, 2016; 11 NOW, THEREFORE, the Parties agree as follows through negotiations and to be bound hereby: 1.Purchase and Sale of Equity Interest1.1 Granting of RightsParty B hereby irrevocably grants to Party A an option to purchase or cause any one or more designated persons (“Designated Persons”) to purchase, to theextent permitted under PRC law, according to the steps determined by Party A, at the price specified in Article 1.3 of this Agreement, and at any time fromParty B (the “Transferor”), a portion or all of the equity interests held by Party B in Party C (the “Option”). No Option shall be granted to any third partyother than Party A and/or the Designated Persons. Party C hereby agrees to granting of the Option by Party B to Party A and/or the Designated Persons. Forpurpose of this Section 1.1 and this Agreement, “person” means individual, corporation, joint venture, partnership, enterprise, trust or unincorporatedorganization.1.2 Exercise StepsSubject to PRC law and regulations, Party A and/or the Designated Persons may exercise the Option by issuing a written notice (the “Option Notice”) to theTransferor, specifying the equity interest to be purchased from the Transferor (the “Purchased Equity Interest”) and the manner of such purchase.1.3 Purchase Price1.3.1 If Party A exercises the Option, the purchase price of the Purchased Equity Interest (“Purchase Price”) shall be equal to the actual paid-in capital paidby the Transferor for the Purchased Equity Interest, unless then applicable PRC laws and regulations require appraisal of the Purchased Equity Interest orstipulate other restrictions on the Purchase price.1.3.2 If the applicable PRC laws require appraisal of the Purchased Equity Interest or stipulate other restrictions on the Purchase Price at the time that Party Aexercises the Option, the Parties agree that the Purchase Price shall be set at the lowest price permissible under applicable law.1.4 Transfer of the Purchased Equity InterestAt each exercise of the Option:1.4.1 The Transferor shall, in accordance the terms and conditions of this Agreement and the Option Notice in connection with the Purchased Equity Interest,enter into an equity transfer agreement with Party A and/or the Designated Persons (as applicable) for each transfer in a substance and form satisfactory toParty A;1.4.2 The Transferor shall execute all other requisite contracts, agreements or documents, obtain all requisite government approvals and consents, and take allnecessary actions to unconditionally transfer the valid ownership of the Purchased Equity Interest to Party A and/or the Designated Persons free of anysecurity interest, and cause Party A and/or the Designated Persons to be the registered owner(s) of the Purchased Equity Interest. For purpose of thisSection 1.4.2 and this Agreement, “Security Interest” includes without limitation guaranty, mortgage, pledge, third-party right or interest, any share option,right of acquisition, right of first refusal, right of set-off, ownership retention or other security arrangements. However, it does not include any security interestarising under the Equity Pledge Agreement. 12 1.5 PaymentPayment manner of the Purchase Price shall be determined through negotiations between Party A and/or the Designated Persons and the Transferor inaccordance with then applicable laws at the exercise of the Option. The Parties hereby agree that, subject to applicable laws, Transferor shall repay to Party Aany amount that is paid by Party A and/or the Designated Persons to the Transferor in connection with the Purchased Equity Interest (which amount may benet of any tax and other fees paid by the Transferor in connection with the proposed transaction contemplated under the transfer agreement). 2.Covenants Relating to the Equity Interest2.1 Covenants Relating to Party CParty B and Party C hereby covenant, in relation to Party C:2.1.1 Not to supplement, amend or modify Party C’s articles of association in any way, or to increase or decrease its registered capital, or to change itsregistered capital structure in any way without Party A’s prior written consent;2.1.2 To maintain the corporate existence of Party C and operate its business and deal with matters prudently and effectively according to good financial andbusiness rules and practices;2.1.3 Not to sell, transfer, mortgage or otherwise dispose of, or permit any other security interest to be created on, any of Party C’s assets, business or legal orbeneficial interests in its revenue at any time after the signing of this Agreement without Party A’s prior written consent;2.1.4 Not to incur, succeed to, guarantee or permit the existence of any liability, without Party A’s prior written consent, except (i) liabilities arising from thenormal course of business, but not arising from loans; and (ii) liabilities disclosed to Party A and approved by Party A in writing;2.1.5 To operate persistently all the business in the normal course of business to maintain the value of Party C’s assets, and not to commit any act or omissionthat would affect its operations and asset value;2.1.6 Without prior written consent by Party A, not to enter into any material agreement, other than agreements entered into in Party C’s normal course ofbusiness (for purpose of this paragraph, an agreement will be deemed material if its value exceeds RMB500,000);2.1.7 Not to provide loans or credit to any person without Party A’s prior written consent;2.1.8 To provide all information relating to Party C’s operations and financial conditions upon the request of Party A; 13 2.1.9 To purchase and maintain insurance from insurance companies accepted by Party A. The amount and category of the insurance shall be the same asthose of the insurance normally procured by companies engaged in similar businesses and possessing similar properties or assets in the area where Party C islocated;2.1.10 Not to merge or consolidate with, or acquire or invest in, any person without Party A’s prior written consent;2.1.11 To promptly notify Party A of any pending or threatened suit, arbitration or administrative proceedings concerning Party C’s assets, business orrevenue;2.1.12 To execute all necessary or appropriate documents, take all necessary or appropriate actions and to bring all necessary or appropriate claims or to makeall necessary and appropriate defenses against all claims in order for Party C to maintain the ownership over all its assets;2.1.13 Not to distribute dividends to Party C’s shareholders in any way without Party A’s prior written consent. However, Party C shall promptly distribute allor part of its distributable profits to its shareholders upon Party A’s request;2.1.14 At the request of Party A, to appoint persons nominated by Party A to be executive directors of Party C;2.2 Covenants Relating to the TransferorParty B hereby covenants:2.2.1 Not to sell, transfer, mortgage or otherwise dispose of, or allow any other security interest to be created on, the legal or beneficial interest in the EquityInterest at any time after the signing of this Agreement without Party A’s prior written consent, other than the pledge created on the Transferor’s EquityInterest in accordance with the Equity Pledge Agreement;2.2.2 Without Party A’s prior written consent, not to vote for or sign any shareholders’ resolution at Party C’s shareholders’ meetings to approve the sale,transfer, mortgage or disposition in any other manner of, or the creation of any other security interest on, any legal or beneficial interest in the Equity Interest,except to or for the benefit of Party A or its designated persons;2.2.3 Without Party A’s prior written consent, not to vote for or sign any shareholders’ resolution at Party C’s shareholders’ meetings to approve Party C’smerger or consolidation with, acquisition of or investment in, any person;2.2.4 To promptly notify Party A of any pending or threatened suit, arbitration or administrative proceedings concerning the Equity Interest owned by it; 14 2.2.5 To execute all necessary or appropriate documents, to take all necessary or appropriate actions and to bring all necessary or appropriate claims or tomake all necessary and appropriate defenses against all claims in order to maintain his ownership over the Equity Interest;2.2.6 At the request of Party A, to appoint persons nominated by Party A to be executive directors of Party C;2.2.7 At any time upon the request of Party A, to transfer its Equity Interest immediately and unconditionally to the representative designated by Party A, andwaive its preemptive right with respect to the transfer of equity interest by the other shareholder of Party C;2.2.8 To fully comply with the provisions of this Agreement and the other agreements entered into jointly or respectively by and among the Transferor, PartyC and Party A, perform all obligations under these agreements and not commit any act or omission that would affect the validity and enforceability of theseagreements; and2.2.9 To transfer to Party A all dividends and any other form of profit distributed to it by Party C.2.3 Covenants Relating to Party AParty A hereby covenants:2.3.1 If Party C needs any loan or other capital support in its business, under acceptable and reasonable scope, Party A shall provide such capital supportwithout imposing any condition or restriction; and2.3.2 If Party C cannot repay the loan from Party A as loss incurred and has sufficient evidence to prove, Party A agrees that it will unconditionally give up itsright to require Party C to repay the loan. 3.Representations and WarrantiesAs of the date of this Agreement and each transfer date, each of the Transferor and Party C hereby represents and warrants to Party A as follows:3.1 It has the power and authority to execute and deliver this Agreement, and any equity transfer agreement (the “Transfer Agreement”) to which it is a partyfor each transfer of the Purchased Equity under this Agreement and to perform its obligations under this Agreement and any Transfer Agreement. Onceexecuted, this Agreement and any Transfer Agreement to which it is party will constitute a legal, valid and binding obligation of it enforceable against it inaccordance with its terms;3.2 The execution, delivery and performance of this Agreement or any Transfer Agreement by it will not: (i) violate any relevant PRC laws and regulations;(ii) conflict with its articles of association or other organizational documents; (iii) violate or constitute a default under any contract or instrument to which itis party or that binds upon it; (iv) violate any condition for the grant and/or continued effectiveness of any permit or approval granted to it; or (v) cause anypermit or approval granted to it to be suspended, cancelled or attached with additional conditions; 15 3.3 Party C has good and marketable ownership interest in all of its assets and has not created any security interest on the said assets;3.4 Party C has no outstanding liabilities, except (i) liabilities arising in its normal course of business; and (ii) liabilities disclosed to Party A and approvedby Party A in writing;3.5 There are currently no existing, pending or threatened litigations, arbitrations or administrative proceedings related to the Equity Interest, Party C’s assetsor Party C; and3.6 The Transferor has good and marketable ownership interest in the Equity Interest and has not created any security interest on such Equity Interest, otherthan the security interest pursuant to the Equity Pledge Agreement. 4.Assignment of Agreement4.1 Party B and Party C shall not assign their rights and obligations under this Agreement to any third party without the prior written consent of Party A.4.2 Party B and Party C hereby agree that Party A may assign all its rights and obligation under this Agreement to a third party as Party A sees fit, in whichcase Party A only needs to give a written notice to Party B and Party C and no further consent of Party B or Party C is required. 5.Effectiveness and Term5.1 This Agreement shall be effective as of the date first set forth above.5.2 This Agreement shall come into force when it is duly executed by each of the Parties and expires when all Equity Interest held by Party B is transferred toParty A and/or Designated Persons in accordance with this Agreement.5.3 If the duration of operation (including any extension thereof) of Party A or Party C is expired or terminated for other reasons within the term set forth inArticle 5.2, this Agreement shall be terminated simultaneously, except in the situation where Party A has assigned its rights and obligations in accordancewith Article 4.2 hereof. 6.Applicable Law and Dispute Resolution6.1 Applicable LawThe formation, validity, interpretation and performance of and resolution of any dispute arising from this Agreement shall be protected and governed by thelaws of the PRC. 16 6.2 Dispute ResolutionAny dispute arising in connection with the interpretation and performance of the provisions of this Agreement shall be resolved by the Parties in good faiththrough negotiations. In case no resolution can be reached by the Parties within thirty (30) days after either party makes a request for dispute resolutionthrough negotiations, either party may refer such dispute to China International Economic and Trade Arbitration Commission (“CIETAC”) for arbitration inaccordance with CIETAC’s arbitration rules then in effect. The seat of arbitration shall be Beijing and language of proceedings shall be Chinese. The arbitralaward shall be final and binding upon the Parties. 7.Taxes and ExpensesEvery Party shall, in accordance with PRC laws, bear any and all transfer and registration taxes, expenses and charges incurred by or levied on it with respectto the preparation and execution of this Agreement and each Transfer Agreement and the consummation of the transactions contemplated under thisAgreement and each Transfer Agreement. 8.NoticesAny notice or other communication forms which is given by the parties hereto shall be in Chinese and delivered personally to the addresses listed as below orthe addresses designated by the Parties. The notice time which is deemed as the time when the notice actually reaches the addressee follows: (a) the noticetime of the notice delivered personally shall be the day when the person conducts the delivery; (b) the notice time of the notice delivered as mail shall be thetenth (10th) day following the mailing date of the registered mail by air (marked by seal) or shall be the fourth (4th) day following the day handing tointernally recognized delivery services organizations; and (c) the notice time of the notice delivered by facsimile shall be the acceptance time on the deliveryconfirmation. Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Address: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingFacsimile: 010-59928888Telephone: 010-59928888Party B: Xiaodong WangAddress: Room 1806 288 Fengyang Road, Huangpu District, ShanghaiFacsimile: 010-59927435Telephone: 010-59928888Party C: Beijing Perusal Technology Co., Ltd.Address: A2 2/F No. 17 Building Zhongguancun Software Park, 8 East Bei Wang Road (W), Haidian District, BeijingFacsimile: 010-59927435Telephone: 010-59928888 17 9.ConfidentialityThe Parties acknowledge and confirm any oral or written materials exchanged by the Parties in connection with this Agreement are confidential. The Partiesshall maintain the confidentiality of all such materials. Without the written approval by the other Parties, any Party shall not disclose to any third party anyrelevant materials, but the following circumstances shall be excluded: a.Materials that are or will become known by the public (through no fault of the receiving party); b.Materials required to be disclosed by the applicable laws or rules of the stock exchange; and c.Materials disclosed by each Party to its legal or financial advisors relating the transactions contemplated by this Agreement, and such legal orfinancial advisors shall comply with the confidentiality provisions similar to this article.The disclosure of information by the staff or consultants of any party shall be deemed as disclosure by the party itself. This Article 9 shall survive anyinvalidity, termination, expiration or unenforceability of this Agreement. 10.Further AssurancesThe Parties agree to promptly execute documents and take further actions that are reasonably required for, or beneficial to, the purpose of performing theprovisions and carrying out the intent of this Agreement. 11.Miscellaneous11.1 Amendment, Modification or SupplementAny amendment or supplement to this Agreement shall be made by the Parties in writing. The amendments or supplements duly executed by each Party shallbe deemed as a part of this Agreement and shall have the same legal effect as this Agreement. 11.2Entire AgreementNotwithstanding Article 5 of this Agreement, the Parties acknowledge that once this Agreement becomes effective, it shall constitute the entire agreement ofthe Parties with respect to the subject matters hereof and shall supersede all prior oral and/or written agreements and understandings by the Parties withrespect to the subject matters hereof. 18 11.3SeverabilityIf any provision of this Agreement is judged to be invalid, illegal or unenforceable in any respect according to any applicable law or regulation, the validity,legality and enforceability of the other provisions hereof shall not be affected or impaired in any way. The Parties shall, through good-faith negotiations,replace those invalid, illegal or unenforceable provisions with valid provisions that may bring about economic effects as similar as possible to those fromsuch invalid, illegal or unenforceable provisions.11.4 HeadingsThe headings contained in this Agreement are for the convenience of reference only and shall not be used for the interpretation or explanation or otherwiseaffect the meaning of the provisions of this Agreement.11.5 Language and counterpartsThis Agreement is executed in Chinese in three originals; each Party holds one original and each original has the same legal effect.11.6 SuccessorThis Agreement shall bind upon and inure to the benefit of the successors and permitted assigns of each Party.11.7 SurvivalAny obligation arising from or becoming due under this Agreement before its expiration or premature termination shall survive such expiration or prematuretermination. Articles 6, 8 and 9 and this Article 11.7 shall survive the termination of this Agreement.11.8 WaiverAny Party may waive the terms and conditions of this Agreement by a written instrument signed by the Parties. Any waiver by a Party to a breach by the otherParties in a specific situation shall not be construed as a waiver to any similar breach by the other Parties in other situations.[No text below] 19 [This page contains no body text]IN WITNESS WHEREOF, each Party has caused this Agreement to be executed by himself/herself, its legal representative or its duly authorizedrepresentative as of the date first written above. Party A: Baidu Online Network Technology (Beijing) Co.,Ltd./s/: Hailong XiangSeal of Baidu Online Network Technology (Beijing) Co., Ltd.Party B: Xiaodong Wang/s/: Xiaodong WangParty C: Beijing Perusal Technology Co., Ltd./s/: Hailong XiangSeal of Beijing Perusal Technology Co., Ltd. 20 Exhibit 4.41Irrevocable Power of AttorneyI, Zhixiang Liang, citizen of the People’s Republic of China (the “ PRC”) with ID No. , being the shareholder holding 50% equity interests of BeijingPerusal Technology Co., Ltd. (“Perusal”), hereby irrevocably appoint Hailong Xiang with the following powers and rights during the term of this Power ofAttorney, with respect to my current and future equity interests in Perusal (“My Equity”):I hereby appoint Hailong Xiang as my sole and exclusive agent, to exercise, on my behalf, all voting rights of shareholder in accordance with PRC laws andPerusal’s Articles of Association at the shareholders’ meetings of Perusal, including but not limited to the right to sell or transfer any or all of equity interestsof Perusal held by me and to designate and appoint the general manager of Perusal as my authorized representative on the shareholders’ meeting of Perusal.The authorization and appointment are conditioned on that Hailong Xiang is acting as an employee of Baidu Online Network Technology (Beijing) Co., Ltd(“Baidu Online”) and Baidu Online approves the authorization and appointment. Once Hailong Xiang loses his title or position in Baidu Online or BaiduOnline notifies me to terminate the authorization and appointment, I will withdraw the authorization and appointment immediately and designate/authorizethe other individual nominated by Baidu Online to exercise the full voting rights on my behalf at the shareholders’ meetings of Perusal.Unless otherwise expressly provided herein, this Power of Attorney is irrevocable and continues to have effect as of the date hereof so long as I hold equityinterests in Perusal. Signature: /s/ Zhixiang LiangDate: May 3, 2016 1 Exhibit 4.42Irrevocable Power of AttorneyI, Xiaodong Wang, citizen of the People’s Republic of China (the “ PRC”) with ID No. , being the shareholder holding 50% equity interests of BeijingPerusal Technology Co., Ltd. (“Perusal”), hereby irrevocably appoint Hailong Xiang with the following powers and rights during the term of this Power ofAttorney, with respect to my current and future equity interests in Perusal (“My Equity”):I hereby appoint Hailong Xiang as my sole and exclusive agent, to exercise, on my behalf, all voting rights of shareholder in accordance with PRC laws andPerusal’s Articles at the shareholders’ meetings of Perusal, including but not limited to the right to sell or transfer any or all of equity interests of Perusal heldby me and to designate and appoint the general manager of Perusal as my authorized representative on the shareholders’ meeting of Perusal.The authorization and appointment are conditioned on that Hailong Xiang is acting as an employee of Baidu Online Network Technology (Beijing) Co., Ltd(“Baidu Online”) and Baidu Online approves the authorization and appointment. Once Hailong Xiang loses his title or position in Baidu Online or BaiduOnline notifies me of the termination of the authorization and appointment, I will withdraw the authorization and appointment immediately anddesignate/authorize the other individual nominated by Baidu Online to exercise the full voting rights on my behalf at the shareholders’ meetings of Perusal.Unless otherwise expressly provided herein, this Power of Attorney is irrevocable and continues to have effect as of the date hereof so long as I hold equityinterests in Perusal. Signature: /s/ Xiaodong WangDate: May 3, 2016 1 Exhibit 4.43Termination Agreement of Current Control DocumentsThis Termination Agreement of Current Control Documents (this “Agreement”) is entered into as of June 13, 2016 in Beijing by and among:Party A: Baidu Online Network Technology (Beijing) Co., Ltd., a Wholly Foreign Owned Enterprise duly organized and validly existing under the PRClaws, with its registered address at 3/F, Baidu Plaza, No. 10 Shangdi 10th Street, Haidian District, BeijingParty B: Beijing Baidu Netcom Science Technology Co., Ltd., a limited liability company duly organized and validly existing under the PRC laws, with itsregistered address at 2/F, Baidu Plaza, No. 10 Shangdi 10th Street, Haidian District, BeijingParty C: Yanhong Li, a PRC citizen, ID No.: , andParty D: Zhan Wang, a PRC citizen, ID No.:In this Agreement, each of the Parties above are collectively referred to as the “Parties,” and individually as a “Party.”WHEREAS (1)All the Parties hereto executed an Updated Agreement to Business Operating Agreement and its Supplementary Agreement dated August 26, 2011, asattached hereto as Appendix 1 (the “Updated Agreement”); (2)Party A, Party C and Party D executed a Voting Proxy Agreement dated August 26, 2011, as attached hereto as Appendix 2 (the “Proxy Agreement”); (3)All the Parties hereto executed a Supplementary Agreement dated on September 6, 2011, as attached hereto as Appendix 3 (the “SupplementaryAgreement”); (4)Party A, Party B and Party D executed an Amended and Restated Exclusive Equity Purchase and Transfer Option Agreement dated December 31, 2015,as attached hereto as Appendix 4 (the “Option Agreement”); (5)Party A and Party D executed an Amended and Restated Equity Pledge Agreement dated December 31, 2015, as attached hereto as Appendix 5 (the“Pledge Agreement”); (6)Party A and Party D executed an Amended and Restated Loan Agreement dated December 31, 2015, as attached hereto as Appendix 6 (the “LoanAgreement”);All the above agreements are collectively referred as the “Current Control Documents”; 1 (7)Pursuant to the Current Control Documents, Party D, as required by Party A and Party B, has transferred all of its equity interests in Party B to thepermitted assigns of Party A and Party B, and agreed to pay the entire transfer price of the equity interest to Party A; and (8)Each Party agrees to terminate all of the current Control Documents as agreed herein.Upon friendly consultation, the Parties agree as follows: 1.Termination of Current Control Documents 1.1All the Parties hereby irrevocably agree and acknowledge that the Updated Agreement shall terminate and cease to have any effect as of the datehereof. 1.2Party A, Party C and Party D hereby irrevocably agree and acknowledge that the Proxy Agreement shall terminate and cease to have any effect as of thedate hereof. 1.3All the Parties hereby irrevocably agree and acknowledge that the Supplementary Agreement shall terminate and cease to have any effect as of the datehereof. 1.4Party A, Party B and Party D hereby irrevocably agree and acknowledge that the Option Agreement shall terminate and cease to have any effect as ofthe date hereof. 1.5Party A and Party D hereby irrevocably agree and acknowledge that the Pledge Agreement shall terminate and cease to have any effect as of the datehereof, and the Parties shall immediately apply to competent AIC to handle registration for release of the pledge. 1.6Party A and Party D hereby irrevocably agree and acknowledge that the Loan Agreement shall terminate and cease to have any effect as of the datehereof. 1.7As of the date hereof, each Party will cease to enjoy any of its rights under the Current Control Documents, and cease to fulfill any of its obligationsunder the Current Control Documents. 1.8Each of the Parties hereby irrevocably and unconditionally waives any dispute, claim, demand, right, obligation, liability, action, contract or cause ofaction of any kind or nature it had, has or may have against the Other Parties hereto, arising directly or indirectly in connection with or as a result of theCurrent Control Documents. 2 1.9Without prejudice to the generality of the above Sections 1.2 and 1.3, as of the date hereof, each of the Parties hereby waives any commitment, debt,claim, demand, obligation and liability of any sort or nature that such Party or any of its successors, heirs, assigns or estate executors had, has or mayhave against the other Parties hereto and their respective current and past directors, officers, employees, counsels and agents, affiliates of the forgoingpersons and the respective successors and assigns of each of the foregoing, arising in connection with or as a result of the Current Control Documents,including claims and cause of action at law or equity, whether initiated or not, absolute or contingent, known or unknown. 2.Consideration 2.1The Parties understand the precondition for the above Article 1 to become effective is that Party D has executed relevant equity transfer document asrequired by Party A and Party B to transfer all of its equity interests in Party B to a transferee accepted by Party A and Party B, and agreed to pay theentire transfer price of such equity transfer to Party A (in such manner as Party D designating the transferee in writing to pay the transfer price directlyto Party A’s account), and Party A has received such transfer price in full amount. 3.Representations and WarrantiesAs of the date hereof, each of the Parties hereby represents and warrants to the other Parties, jointly and severally, that: 3.1it has obtained necessary authorizations to execute this Agreement; its execution and performance of this Agreement will not constitute a conflict,limitation or breach of any law, regulation or agreement by which it is bound or affected; 3.2this Agreement, once executed, constitutes a legal, valid and binding obligation of it, enforceable against it in accordance with the provisions hereof;and 3.3there are no litigations, arbitrations or legal, administrative or other proceedings or government investigations relating to the subject matters hereof. 4.Covenants 4.1To smoothly terminate the rights and obligations under the Current Control Documents, each party shall execute all documents and take all actionsthat are necessary or appropriate, actively assist the other Parties in obtaining relevant government approvals and/or registration documents and gothrough relevant termination procedures. 3 5.Liabilities for Breach 5.1Any Party who is in breach of this Agreements and thus renders this Agreement not performable in whole or in part shall take the liabilities for breachand indemnify the other Parties for any loss thus incurred. 6.Confidentiality 6.1The Parties acknowledge and confirm any oral or written materials exchanged by the Parties in connection with this Agreement are confidential. TheParties shall maintain the confidentiality of all such materials. Without the written approval by the other Parties, no Party shall disclose to any thirdparty any relevant materials, but the following circumstances shall be excluded: (a) materials that are or will become known by the public (through nofault of the receiving party); (b) materials required to be disclosed by the applicable laws or rules; and (c) materials disclosed by each Party to itspotential investors, legal or financial advisors relating the transactions contemplated by this Agreement, and such investors, legal or financial advisorsshall comply with the confidentiality provisions similar to this article. The disclosure of information by the staff or consultants of any party shall bedeemed as disclosure by the Party itself. This Article 6 shall survive any termination of this Agreement for any reason whatsoever. 7.Governing Law and Dispute Resolution 7.1The conclusion, validity, interpretation, performance, amendment and resolution of disputes hereunder shall be governed by the laws of the PRC. 7.2All controversies, claims, disputes arising from the interpretation or performance of this Agreement, or in case of breach, termination or invalidity, shallfirst be resolved by the Parties through amicable consultation. In case no resolution can be reached by the Parties within thirty (30) days after eitherparty makes a written request for dispute resolution through negotiations, either party may refer such dispute to China International Economic andTrade Arbitration Commission (“CIETAC”) for arbitration in accordance with CIETAC’s arbitration rules then in effect. The seat of arbitration shall beBeijing. The arbitral award shall be final and binding upon the Parties. The arbitration cost shall be decided by the arbitral award. 7.3During the arbitration, except the matters under dispute and pending arbitration, each Party shall continue to exercise its other rights and fulfill itsother obligations hereunder. 8.Miscellaneous 8.1This Agreement shall become effective upon signed by all the Parties. 4 8.2This Agreement is made in four counterparts, one for each Party, and all counterparts shall be equally binding. 8.3The Parties may amend or supplement this Agreement with a written agreement. Any such amendment and/or supplement is an integral part of, andshall be equally binding as this Agreement. 8.4The invalidity of any provision hereof shall not affect the validity of the other provisions hereof.[Remainder of the page intentionally left blank] 5 IN WITNESS WHEREOF, each party hereto has caused this Agreement to be executed by its duly authorized representative on its behalf as of the date firstwritten above.Party A:Baidu Online Network Technology (Beijing) Co., Ltd. (stamp) Signature: /s/ Hailong XiangName: Title: Legal RepresentativeParty B:Beijing Baidu Netcom Science Technology Co., Ltd. (stamp) Signature: /s/ Zhixiang LiangName: Title:Party C:Yanhong Li Signature: /s/ Yanhong LiParty D:Zhan Wang Signature: /s/ Zhan Wang 6 Exhibit 4.44Amended and Restated Loan AgreementThis Amended and Restated Loan Agreement (this “Agreement”) is entered into on January 18, 2017 in Beijing, by and between: Party A:Baidu Online Network Technology (Beijing) Co., Ltd.Registered Address: 3/F, No. 10 Shangdi 10th Street, Haidian District, Beijing Party B:Hailong XiangID Card No.:Residence:WHEREAS, 1.Party A is a wholly foreign-owned enterprise incorporated under the laws of the People’s Republic of China (PRC); and 2.Party B, a Chinese citizen, is the shareholder of Beijing Baidu Netcom Science Technology Co., Ltd. (“Baidu Netcom”); 3.Party A and Party B have entered into a series of loan agreements (collectively the “Original Loan Agreement”) listed in Appendix 1 hereof, andboth Parties hereto now agree to execute this Agreement to amend and restate the Original Loan Agreements. This Agreement shall supersedeand replace the Original Loan Agreements as of the effective time provided herein.Party A and Party B, through friendly consultation, agree as follows: 1.In accordance with the terms and conditions of this Agreement, the Parties acknowledge that Party B has obtained from Party A, and Party Aagrees to accept, an interest-free loan in an aggregate amount of RMB10.8564 million yuan (RMB10,856,400). 2.Party B confirms the receipt of such loan and has applied the entirety of such loan toward the payment of its subscribed contribution in BaiduNetcom. 3.The term of the loan under this Agreement shall commence on the date Party B receives such loan to the date 10 years from the execution of thisAgreement, which may be extended upon mutual written consent of the Parties. During the term of the loan or the extended term of the loan,Party A has the right to cause the loan to be due immediately by written notice, and require Party B to repay the loan in accordance to thisAgreement in the event any of the following circumstances occur to Party B: (1)Party B leaves or is dismissed from Party A or an affiliated company of Party A; (2)Party B dies, loses civil capacity or with limited civil capacity; (3)Party B engages in criminal act or is involved in criminal activities; (4)Any third party files a claim against Party B that exceeds RMB100,000; or (5)Subject to the laws of the PRC, Party A or a person designated by Party A is permitted to invest in Baidu Netcom to conduct internetinformation service business, value-added telecommunication business and other business, and Party A has issued a written noticerelating to the equity purchase of Baidu Netcom to Party B pursuant to the provisions of the Exclusive Equity Purchase and TransferOption Agreement mentioned in article 4 hereof, to exercise the option. 1 4.The parties herein agree and confirm that, to the extent and within the scope permitted by the laws of the PRC, Party A shall have the right butnot the obligation to purchase or designate other persons (including natural person, legal entity or any other entity) to purchase the equityinterests of Baidu Netcom held by Party B in whole or in part (hereinafter referred to as “Option Right”), but Party A shall issue a written noticeto purchase equity interests to Party B. Upon Party A’s issuance of a written notice to exercise such Option, Party B shall, in accordance withParty A’s wishes and instructions, immediately transfer all of its equity interests in Baidu Netcom to Party A or other persons as designated byParty A at the original investment price (“Original Investment Price”) or at another price agreed upon by Party A where the law otherwiserequires. The Parties hereby agree and acknowledge, when Party A exercises its Option Right, if in accordance with the applicable laws at thetime, the lowest price of the equity interests permitted is higher than the Original Investment Price, then the subscription price of Party A or otherpersons designated by Party A shall be the lowest price permitted by the laws. The parties agree to execute the Exclusive Equity Purchase andTransfer Option Agreement with respect to the above. 5.The parties herein agree and confirm that Party B may repay the loan only by the following methods: the borrower (or his successors orassignees) shall, to the extent permissible by the PRC laws and as required by Party A’s written notice, transfer the equity interest in BaiduNetcom to Party A or its designated person and use the proceeds to repay the loan when the loan is due and Party A gives a written notice, orthrough another method as mutually agreed by the parties herein. 6.The Parties herein agree and confirm that this loan is an interest-free loan unless there are different provisions in this Agreement. But if the loanis due and Party B has to transfer his equity interests in Baidu Netcom to Party A or its designated person and the proceeds exceed the loanprincipal due to the legal requirement or other reasons, Party B agrees to pay such excess amount over the principal of proceeds, net of theindividual income tax and other taxes and fees payable by Party B, to Party A at its decision to the extent permissible by the law. 7.The parties agree and confirm that Party B shall be deemed to have completed his obligations under this Agreement only if all of the followingrequirements are met: (1)Party B has transferred all his equity interests in Baidu Netcom to Party A and/or its designated person; and (2)Party B has repaid the total amount of proceeds from the equity interest transfer or the maximum amount (including principal and themaximum interests as permitted by the applicable laws at the time) permitted by applicable laws to Party A. 8.To secure the performance of debt under this Agreement, Party B agrees to pledge all of his equity interests in Baidu Netcom to Party A (the“Equity Pledge”). The parties agree to execute an equity pledge agreement for the above matters. 9.Party A hereby represents and warrants to Party B that, as of the execution date of this Agreement: (1)Party A is a wholly foreign-owned enterprise incorporated and validly existing under the laws of the PRC; (2)Party A has the right to execute and perform this Agreement. The execution and performance by Party A of this agreement comply withits business scope, Articles or other institutional documents, and Party A has obtained all necessary and appropriate approvals andauthorizations in connection with the execution and performance of this Agreement; 2 (3)The principal of the loan to Party B is legally owned by Party A; (4)The execution and performance of this Agreement by Party A does not violate any law, regulation, approval, authorization, notice orother governmental document by which it is bound or affected, or any agreement between Party A and any third party, or any promisemade by Party A to a third party; and (5)This Agreement, once executed, shall constitute a legal, valid and enforceable obligations of Party A. 10.Party B hereby represents and warrants to Party A that, from the execution date of this agreement until this Agreement terminates: (1)Baidu Netcom is a limited liability company incorporated and validly existing under the laws of the PRC and Party B is the legal holderof the equity interest of Baidu Netcom; (2)Party B has the right to execute and perform this Agreement. The execution and performance by Party B of this Agreement comply withits business scope, Articles or other institutional documents, and Party B has taken necessary actions to obtain all necessary andappropriate approvals and authorizations; (3)The execution and performance of this Agreement by Party B does not violate any law, regulation, approval, authorization, notice orother governmental document by which it is bound or affected, or any agreement between Party B and any third party, or any promisemade by Party B to a third party; (4)This Agreement, once executed, shall constitute a legal, valid and enforceable obligation of Party B; (5)Party B has paid contribution in full for the equity interests he holds in Baidu Netcom in accordance with applicable laws andregulations; (6)Except pursuant to the provisions stipulated in the equity pledge agreement and exclusive equity purchase and transfer optionagreement, Party B did not create any mortgage, pledge or other security over his equity interest in Baidu Netcom, make any offer to athird party to transfer his equity, make acceptance for the offer to a third party to purchase his equity, or execute any agreement with athird party to transfer his equity; (7)There are no pending or potential disputes, litigation, arbitration, administrative proceedings or other legal proceedings in connectionwith the equity interests of Baidu Netcom held by Party B; (8)Baidu Netcom has completed all necessary governmental approvals, licenses, registrations and filings. 11.Party B undertakes, during the term of this Agreement: (1)not to sell, transfer, pledge or otherwise dispose of his equity interests or other interests in Baidu Netcom, nor to allow the creation of anyother security interest over his equity interests without the prior written consent of Party A, except pledges or other rights created for thebenefit of Party A; (2)not to vote for, support or execute any shareholder resolutions at Baidu Netcom’s shareholder’s meetings that permit the sale, transfer,pledge or other disposal of, or the creation of any other security interest on, any of his legal or beneficiary equity interests without theprior written consent of Party A, except those made to Party A or its designated person; 3 (3)not to vote for, support or execute any shareholder resolutions at Baidu Netcom’s shareholder meetings that permit Baidu Netcom tomerge or combine with, or acquire or invest in, any person without Party A’s prior written consent; (4)to promptly inform Party A of any pending or threatened litigation, arbitration or administrative proceeding relating to the equityinterests of Baidu Netcom; (5)to execute all necessary or appropriate documents, take all necessary or appropriate actions and bring all necessary or appropriatelawsuits or make all necessary and appropriate defenses against all claims in order to maintain his ownership of equity interests in BaiduNetcom; (6)to refrain from any act and/or omission that may materially affect the assets, business and liabilities of Baidu Netcom without the priorwritten consent of Party A; (7)to appoint any person nominated by Party A as director/executive director of Baidu Netcom, upon Party A’s request; (8)in connection with Party A’s exercise of the subscription right provided hereunder, to transfer promptly and unconditionally all equityinterests in Baidu Netcom held by Party B to Party A and/or its designated person, to the extent and within the scope permissible underthe laws of the PRC; (9)not to request Baidu Netcom to distribute dividends or profits to it; (10)once Party B transfers his equity interest in Baidu Netcom to Party A or its designated person, to repay the consideration he receives asthe principal and the interests or capital use cost to Party A to the extent permitted under the laws of the PRC; (11)to strictly comply with the terms of this Agreement, perform the obligations under this Agreement, and refrain from any act or omissionthat suffices to affect the validity and enforceability of this Agreement. 12.Party B, as the shareholder of Baidu Netcom, undertakes to cause Baidu Netcom, during the term of this Agreement: (1)not to supplement, amend or modify its articles of association, or increase or decrease its registered capital, or to change its capitalstructure in any form without the prior written consent of Party A; (2)to maintain its existence and handle matters prudently and affectively according to good financial and business rules and practices; (3)not to sell, transfer, mortgage or otherwise dispose of, nor to permit the creation of any other security interest on, any of its legal orbeneficial interests in its assets, business or income without the prior written consent of Party A, at any time as of the date of thisAgreement; (4)not to incur, succeed, guarantee or permit the existence of any liabilities without the prior written consent of Party A, except theliabilities (i) arising from the ordinary or day-to-day course of business, rather than through Party B; and (ii) disclosed to Party A orapproved by Party A in writing; (5)to operate all businesses on a continued basis and maintain the value of its assets; (6)not to execute any material contracts (for the purpose of this item, a contract will be deemed material if its value exceeds RMB100,000)without the prior written consent of Party A, other than those executed during the ordinary course of business; 4 (7)to provide all information about its operations and financial affairs at Party A’s request; (8)not to merge or combine with, acquire or invest in, any other person without the prior written consent of Party A; (9)not to distribute dividends to the shareholders in any way without the prior written consent of Party A, and upon Party A’s request, topromptly distribute all distributable profits to the shareholders. (10)to promptly inform Party A of any pending or threatened litigation, arbitration or administrative proceeding relating to its assets,business or revenue; (11)to execute all necessary or appropriate documents, take all necessary or appropriate actions and bring all necessary or appropriatelawsuits or make all necessary and appropriate defenses against all claims in order to maintain its ownership of its assets; (12)to strictly comply with the terms of the Exclusive Technology Service Agreement (“Service Agreement”) entered into between BaiduNetcom and Party A and other agreements, duly perform its obligations under the Service Agreement and such other agreements, andrefrain from any act or omission that suffice to affect the validity and enforceability of the Service Agreement. 13.This Agreement shall be binding on, and only for the benefits of, all parties hereto and their respective successors and assignees. Without priorwritten consent of Party A, Party B shall not transfer, pledge or otherwise assign any of its rights, interests or obligations hereunder. 14.Party B agrees that Party A may assign its rights and obligations hereunder to a third party by a written notice to Party B when it considersnecessary. No further consent from Party B is required for such transfer. 15.The execution, validity, interpretation, performance, amendment, termination and dispute resolution of this Agreement are governed by the lawsof the PRC. 16.Arbitration (1)Both Parties shall strive to settle any dispute, conflicts, or claims arising from the interpretation or performance (including any issuerelating to the existence, validity and termination) of this Agreement through friendly consultation. In case no settlement can be reachedwithin thirty (30) days after one party requests for settlement, any party can submit such matter to China International Economic andTrade Arbitration Commission (the “CIETAC”) in accordance with its then-current rules at the time of application. The arbitration awardshall be final and conclusive and binding upon the Parties. (2)The arbitration shall take place in Beijing. (3)The arbitration language shall be Chinese. 17.This Agreement shall be concluded as of the date of execution, and the Parties agree and confirm that the terms and conditions of this Agreementwill become effective from the date when Party B receives the loan and end on the date when each Party has completed its obligations hereunder. 18.Party B shall not terminate or revoke this Agreement under any circumstances unless (a) Party A commits a gross negligence, fraud, or othermaterial misconduct; or (b) upon Party A’s bankruptcy. 5 19.This Agreement shall not be amended or modified without the written consent of the Parties hereto. Any matters not agreed upon in thisAgreement may be supplemented by all Parties through the execution of a written agreement. The above amendments, modifications,supplements and any attachment of this Agreement shall be integral parts of this Agreement. 20.This Agreement constitutes the entire agreement of the Parties with respect to the transaction herein and supersedes and replaces all prior verbaldiscussions and written agreements between the Parties. This Agreement shall supersede the original loan agreement entered into by the Partiesand other relevant parties, and such original loan agreement shall terminate immediately after the effectiveness of this Agreement. 21.This Agreement is severable. The invalidity or unenforceability of any one clause shall not affect the validity or enforceability of other clausesherein. 22.Each Party shall strictly protect the confidentiality of information concerning the other Party’s business, operation, financial situation or otherconfidential information obtained under this Agreement or during the performance of this Agreement. 23.Any obligation that is incurred or becomes due before the expiration or early termination of this Agreement shall survive such expiration or earlytermination. Section 15, 16, and 22 shall survive the termination of this Agreement. 24.This Agreement shall be executed in two counterparts, and each Party shall hold one counterpart. Both counterparts shall have the same legaleffect.[No text below] 6 [No text on this page]IN WITNESS WHEREOF, each party hereto has executed or caused this Agreement to be duly executed by its legal or authorized representative on itsbehalf as of the date first written above. Party A:Baidu Online Network Technology (Beijing) Co., Ltd.Legal representative/authorized representative: /s/ Hailong XiangCompany seal: /s/ Baidu Online Network Technology (Beijing) Co., Ltd. Party B: Hailong XiangSignature: /s/ Hailong Xiang 7 Appendix IThe Original Loan Agreement Number Contract Name Parties Date1 Loan Agreement Baidu Online Network Technology(Beijing) Co., Ltd.; Hailong Xiang June 13, 2016 8 Exhibit 4.45Amended and Restated Loan AgreementThis Amended and Restated Loan Agreement (this “Agreement”) is entered into on January 18, 2017 in Beijing, by and between: Party A:Baidu Online Network Technology (Beijing) Co., Ltd.Registered Address: 3/F, No. 10 Shangdi 10th Street, Haidian District, Beijing Party B:Yanhong LiID Card No.:Residence:WHEREAS, 1.Party A is a wholly foreign-owned enterprise incorporated under the laws of the People’s Republic of China (PRC); 2.Party B, a Chinese citizen, is the shareholder of Beijing Baidu Netcom Science Technology Co., Ltd. (“Baidu Netcom”); and 3.Party A, Party B and other relevant parties have entered into a series of loan agreements (collectively the “Original Loan Agreements”) listed inAppendix 1 hereof, and both Parties hereto now agree to execute this Agreement to amend and restate the Original Loan Agreements. ThisAgreement shall supersede and replace the Original Loan Agreements as of the effective time provided herein.Party A and Party B, through friendly consultation, agree as follows: 1.In accordance with the terms and conditions of this Agreement, the Parties acknowledge that Party B has obtained from Party A, and Party Aagrees to accept, a loan in an aggregate amount of RMB2,160,423,600 yuan. 2.Party B confirms the receipt of such loan and has applied the entirety of such loan toward the payment of its subscribed contribution in BaiduNetcom. 3.The term of the loan under this Agreement shall commence on the date Party B receives such loan to the date 10 years from the execution of thisAgreement, which may be extended upon mutual written consent of the Parties. During the term of the loan or the extended term of the loan,Party A has the right to cause the loan to be due immediately by written notice, and require Party B to repay the loan in accordance to thisAgreement in the event any of the following circumstances occur to Party B: (1)Party B leaves or is dismissed from Party A or an affiliated company of Party A; (2)Party B dies, loses civil capacity or with limited civil capacity; (3)Party B engages in criminal act or is involved in criminal activities; (4)Any third party files a claim against Party B that exceeds RMB100,000; or (5)Subject to the laws of the PRC, Party A or a person designated by Party A is permitted to invest in Baidu Netcom to conduct internetinformation service business, value-added telecommunication business and other business, and Party A has issued a written noticerelating to the equity purchase of Baidu Netcom to Party B pursuant to the provisions of the Exclusive Equity Purchase and TransferOption Agreement mentioned in article 4 hereof, to exercise the option. 1 4.The parties herein agree and confirm that, to the extent and within the scope permitted by the laws of the PRC, Party A shall have the right butnot the obligation to purchase or designate other persons (including natural person, legal entity or any other entity) to purchase the equityinterests of Baidu Netcom held by Party B in whole or in part (hereinafter referred to as “Option Right”), but Party A shall issue a written noticeto purchase equity interests to Party B. Upon Party A’s issuance of a written notice to exercise such Option, Party B shall, in accordance withParty A’s wishes and instructions, immediately transfer all of its equity interests in Baidu Netcom to Party A or other persons as designated byParty A at the original investment price (“Original Investment Price”) or at another price agreed upon by Party A where the law otherwiserequires. The Parties hereby agree and acknowledge, when Party A exercises its Option Right, if in accordance with the applicable laws at thetime, the lowest price of the equity interests permitted is higher than the Original Investment Price, then the subscription price of Party A or otherpersons designated by Party A shall be the lowest price permitted by the laws. The parties agree to execute the Exclusive Equity Purchase andTransfer Option Agreement with respect to the above. 5.The parties herein agree and confirm that Party B may repay the loan only by the following methods: the borrower (or his successors orassignees) shall, to the extent permissible by the PRC laws and as required by Party A’s written notice, transfer the equity interest in BaiduNetcom to Party A or its designated person and use the proceeds to repay the loan when the loan is due and Party A gives a written notice, orthrough another method as mutually agreed by the parties herein. 6.The Parties herein agree and confirm that this loan is an interest-free loan unless there are different provisions in this Agreement. But if the loanis due and Party B has to transfer his equity interests in Baidu Netcom to Party A or its designated person and the proceeds exceed the loanprincipal due to the legal requirement or other reasons, Party B agrees to pay such excess amount over the principal of proceeds, net of theindividual income tax and other taxes and fees payable by Party B, to Party A at its decision to the extent permissible by the law. 7.The parties agree and confirm that Party B shall be deemed to have completed his obligations under this Agreement only if all of the followingrequirements are met: (1)Party B has transferred all his equity interests in Baidu Netcom to Party A and/or its designated person; and (2)Party B has repaid the total amount of proceeds from the equity interest transfer or the maximum amount permitted by applicable laws toParty A as agreed in Articles 5 and 6 hereof. 8.To secure the performance of debt under this Agreement, Party B agrees to pledge all of his equity interests in Baidu Netcom to Party A (the“Equity Pledge”). The parties agree to execute an equity pledge agreement for the above matters. 9.Party A hereby represents and warrants to Party B that, as of the execution date of this Agreement: (1)Party A is a wholly foreign-owned enterprise incorporated and validly existing under the laws of the PRC; 2 (2)Party A has the right to execute and perform this Agreement. The execution and performance by Party A of this agreement comply withits business scope, Articles or other institutional documents, and Party A has obtained all necessary and appropriate approvals andauthorizations in connection with the execution and performance of this Agreement; (3)The principal of the loan to Party B is legally owned by Party A; (4)The execution and performance of this Agreement by Party A does not violate any law, regulation, approval, authorization, notice orother governmental document by which it is bound or affected, or any agreement between Party A and any third party, or any promisemade by Party A to a third party; and (5)This Agreement, once executed, shall constitute a legal, valid and enforceable obligations of Party A. 10.Party B hereby represents and warrants to Party A that, from the execution date of this agreement until this Agreement terminates: (1)Baidu Netcom is a limited liability company incorporated and validly existing under the laws of the PRC and Party B is the legal holderof the equity interest of Baidu Netcom; (2)Party B has the right to execute and perform this Agreement. The execution and performance by Party B of this Agreement comply withits business scope, Articles or other institutional documents, and Party B has taken necessary actions to obtain all necessary andappropriate approvals and authorizations; (3)The execution and performance of this Agreement by Party B does not violate any law, regulation, approval, authorization, notice orother governmental document by which it is bound or affected, or any agreement between Party B and any third party, or any promisemade by Party B to a third party; (4)This Agreement, once executed, shall constitute a legal, valid and enforceable obligation of Party B; (5)Party B has paid contribution in full for the equity interests he holds in Baidu Netcom in accordance with applicable laws andregulations; (6)Except pursuant to the provisions stipulated in the equity pledge agreement and exclusive equity purchase and transfer optionagreement, Party B did not create any mortgage, pledge or other security over his equity interest in Baidu Netcom, make any offer to athird party to transfer his equity, make acceptance for the offer to a third party to purchase his equity, or execute any agreement with athird party to transfer his equity; (7)There are no pending or potential disputes, litigation, arbitration, administrative proceedings or other legal proceedings in connectionwith the equity interests of Baidu Netcom held by Party B; (8)Baidu Netcom has completed all necessary governmental approvals, licenses, registrations and filings. 11.Party B undertakes, during the term of this Agreement: (1)not to sell, transfer, pledge or otherwise dispose of his equity interests or other interests in Baidu Netcom, nor to allow the creation of anyother security interest over his equity interests without the prior written consent of Party A, except pledges or other rights created for thebenefit of Party A; 3 (2)not to vote for, support or execute any shareholder resolutions at Baidu Netcom’s shareholder’s meetings that permit the sale, transfer,pledge or other disposal of, or the creation of any other security interest on, any of his legal or beneficiary equity interests without theprior written consent of Party A, except those made to Party A or its designated person; (3)not to vote for, support or execute any shareholder resolutions at Baidu Netcom’s shareholder meetings that permit Baidu Netcom tomerge or combine with, or acquire or invest in, any person without Party A’s prior written consent; (4)to promptly inform Party A of any pending or threatened litigation, arbitration or administrative proceeding relating to the equityinterests of Baidu Netcom; (5)to execute all necessary or appropriate documents, take all necessary or appropriate actions and bring all necessary or appropriatelawsuits or make all necessary and appropriate defenses against all claims in order to maintain his ownership of equity interests in BaiduNetcom; (6)to refrain from any act and/or omission that may materially affect the assets, business and liabilities of Baidu Netcom without the priorwritten consent of Party A; (7)to appoint any person nominated by Party A as director/executive director of Baidu Netcom, upon Party A’s request; (8)in connection with Party A’s exercise of the subscription right provided hereunder, to transfer promptly and unconditionally all equityinterests in Baidu Netcom held by Party B to Party A and/or its designated person, to the extent and within the scope permissible underthe laws of the PRC; (9)not to request Baidu Netcom to distribute dividends or profits to it; (10)once Party B transfers his equity interest in Baidu Netcom to Party A or its designated person, to pay the entire consideration he receivesto Party A as agreed in Articles 5 and 6 and to the extent permitted under the laws of the PRC; (11)to strictly comply with the terms of this Agreement, perform the obligations under this Agreement, and refrain from any act or omissionthat suffices to affect the validity and enforceability of this Agreement. 12.Party B, as the shareholder of Baidu Netcom, undertakes to cause Baidu Netcom, during the term of this Agreement: (1)not to supplement, amend or modify its articles of association, or increase or decrease its registered capital, or to change its capitalstructure in any form without the prior written consent of Party A; (2)to maintain its existence and handle matters prudently and affectively according to good financial and business rules and practices; (3)not to sell, transfer, mortgage or otherwise dispose of, nor to permit the creation of any other security interest on, any of its legal orbeneficial interests in its assets, business or income without the prior written consent of Party A, at any time as of the date of thisAgreement; (4)not to incur, succeed, guarantee or permit the existence of any liabilities without the prior written consent of Party A, except theliabilities (i) arising from the ordinary or day-to-day course of business, rather than through Party B; and (ii) disclosed to Party A orapproved by Party A in writing; (5)to operate all businesses on a continued basis and maintain the value of its assets; 4 (6)not to execute any material contracts (for the purpose of this item, a contract will be deemed material if its value exceeds RMB100,000)without the prior written consent of Party A, other than those executed during the ordinary course of business; (7)to provide all information about its operations and financial affairs at Party A’s request; (8)not to merge or combine with, acquire or invest in, any other person without the prior written consent of Party A; (9)not to distribute dividends to the shareholders in any way without the prior written consent of Party A, and upon Party A’s request, topromptly distribute all distributable profits to the shareholders. (10)to promptly inform Party A of any pending or threatened litigation, arbitration or administrative proceeding relating to its assets,business or revenue; (11)to execute all necessary or appropriate documents, take all necessary or appropriate actions and bring all necessary or appropriatelawsuits or make all necessary and appropriate defenses against all claims in order to maintain its ownership of its assets; (12)to strictly comply with the terms of the Exclusive Technology Service Agreement (“Service Agreement”) entered into between BaiduNetcom and Party A and other agreements, duly perform its obligations under the Service Agreement and such other agreements, andrefrain from any act or omission that suffice to affect the validity and enforceability of the Service Agreement. 13.This Agreement shall be binding on, and only for the benefits of, all parties hereto and their respective successors and assignees. Without priorwritten consent of Party A, Party B shall not transfer, pledge or otherwise assign any of its rights, interests or obligations hereunder. 14.Party B agrees that Party A may assign its rights and obligations hereunder to a third party by a written notice to Party B when it considersnecessary. No further consent from Party B is required for such transfer. 15.The execution, validity, interpretation, performance, amendment, termination and dispute resolution of this Agreement are governed by the lawsof the PRC. 16.Arbitration (1)Both Parties shall strive to settle any dispute, conflicts, or claims arising from the interpretation or performance (including any issuerelating to the existence, validity and termination) of this Agreement through friendly consultation. In case no settlement can be reachedwithin thirty (30) days after one party requests for settlement, any party can submit such matter to China International Economic andTrade Arbitration Commission (the “CIETAC”) in accordance with its then-current rules at the time of application. The arbitration awardshall be final and conclusive and binding upon the Parties. (2)The arbitration shall take place in Beijing. (3)The arbitration language shall be Chinese. 17.This Agreement shall be concluded as of the date of execution, and the Parties agree and confirm that the terms and conditions of this Agreementwill become effective from the date when Party B receives the loan and end on the date when each Party has completed its obligations hereunder. 5 18.Party B shall not terminate or revoke this Agreement under any circumstances unless (1) Party A commits a gross negligence, fraud, or othermaterial misconduct; or (2) upon Party A’s bankruptcy. 19.This Agreement shall not be amended or modified without the written consent of the Parties hereto. Any matters not agreed upon in thisAgreement may be supplemented by all Parties through the execution of a written agreement. The above amendments, modifications,supplements and any attachment of this Agreement shall be integral parts of this Agreement. 20.This Agreement constitutes the entire agreement of the Parties with respect to the transaction herein and supersedes and replaces all prior verbaldiscussions and written agreements between the Parties. This Agreement shall supersede the original loan agreement entered into by the Partiesand other relevant parties, and such original loan agreement shall terminate immediately after the effectiveness of this Agreement. 21.This Agreement is severable. The invalidity or unenforceability of any one clause shall not affect the validity or enforceability of other clausesherein. 22.Each Party shall strictly protect the confidentiality of information concerning the other Party’s business, operation, financial situation or otherconfidential information obtained under this Agreement or during the performance of this Agreement. 23.Any obligation that is incurred or becomes due before the expiration or early termination of this Agreement shall survive such expiration or earlytermination. Section 15, 16, and 22 shall survive the termination of this Agreement. 24.This Agreement shall be executed in two counterparts, and each Party shall hold one counterpart. Both counterparts shall have the same legaleffect.[No text below] 6 [No text on this page]IN WITNESS WHEREOF, each party hereto has executed or caused this Agreement to be duly executed by its legal or authorized representative on itsbehalf as of the date first written above. Party A:Baidu Online Network Technology (Beijing) Co., Ltd.Legal representative/authorized representative: /s/ authorized signatoryCompany seal: /s/ Baidu Online Network Technology (Beijing) Co., Ltd. Party B: Yanhong LiSignature: /s/ Yanhong Li 7 Appendix 1Original Loan Agreement No. Contract Name Parties Date of Execution1 Amended and Restated Loan Contract Baidu OnlineNetwork Technology (Beijing) Co., Ltd.;Yanhong Li; Yong Xu 200503222 Loan Agreement for Capital Increase Baidu OnlineNetwork Technology (Beijing) Co., Ltd.;Yanhong Li 200602103 Loan Agreement for Capital Increase Baidu OnlineNetwork Technology (Beijing) Co., Ltd.;Yanhong Li 200803064 Supplementary Agreement to Loan Agreement Baidu OnlineNetwork Technology (Beijing) Co., Ltd.;Yanhong Li; Yong Xu; Haoyu Shen 201101115 Update Agreement of Amended and Restated Loan Agreement Baidu OnlineNetwork Technology (Beijing) Co., Ltd.;Yanhong Li; Haoyu Shen; Zhan Wang 201403016 Supplementary Agreement to Amended and Restated Loan Agreement Baidu OnlineNetwork Technology (Beijing) Co., Ltd.;Yanhong Li; Zhan Wang 201403017 Amended and Restated Loan Agreement Baidu OnlineNetwork Technology (Beijing) Co., Ltd.;Yanhong Li 201511308 Amended and Restated Loan Agreement Baidu OnlineNetwork Technology (Beijing) Co., Ltd.;Yanhong Li 20151231 8 Exhibit 4.46Equity Transfer AgreementThis Equity Transfer Agreement (this “Agreement”) is entered into as of June 13, 2016 in Beijing, the People’s Republic of China (“PRC”) by and between:Transferor: Zhan Wang, a PRC citizen, ID No.:Transferee: Hailong Xiang, a PRC citizen, ID No.:The Parties above are collectively referred to as the “Parties,” individually as a “Party.”DefinitionsUnless otherwise agreed hereunder, the following terms shall have the following meanings:“Target” means Beijing Baidu Netcom Science Technology Co.,Ltd., whose registered address is at 2/F Baidu Plaza, No. 10 Shangdi 10th Street, HaidianDistrict, Beijing.“Transfer Subject” means the aggregate 0.5% equity interests of the Target held by the Transferor (corresponding to the registered capital of RMB4.45million).WHEREAS (1)The Target is a limited liability company duly incorporated and validly existing under the PRC laws, with its registered capital of RMB890 million. Asof the date hereof the shareholding structure of the Target is set forth as follows: No. Shareholder Amount of Contribution(RMB10,000) Shareholding Percentage 1 Yanhong Li 88,555 99.5% 2 Zhan Wang 445 0.5% Total 89,000 100% (2)The Transferor intends to transfer to the Transferee, and the Transferee is willing to accept the transfer of, the aggregate 0.5% equity interests of theTarget the Transferor holds.NOW THEREFORE, in accordance with the relevant PRC laws, rules and regulations, based on the principals of voluntariness, fairness and honesty and uponfriendly consultation, with respect to the matters regarding the transfer of the 0.5% equity interest in the Target, the Parties agree as follows: 1 1.Transfer Subject 1.1The Transfer Subject of this Agreement is the aggregate 0.5% of the equity interests it holds in the Target, and the Transferor agrees to transfer theTransfer Subject to the Transferee. 2.Target 2.1The Target involved herein is legally existing and has independent legal person status. 2.2The Target owns legal approval or licensing documents involved in its conduct of business. 3.Transfer Price and Payment 3.1Transfer price: the Parties agree that the price of the Transfer Subject hereunder shall be RMB4.45 million. 3.2Means of payment: the Transferee will pay the price in cash to the bank account designated by the Transferor in writing. 4.Registration Changes 4.1The Transferor shall cause the Target to handle the equity change registration procedures of the Target with the registration authority. The date whenthe registration authority completes the equity change registration procedures and issues new business license of the Target shall be deemed as the datewhen the transaction is accomplished. 5.Representations and Warranties of the Transferor 5.1The Transferor has fully paid up its contribution to the registered capital of the Target, and its contribution has been verified and a capital verificationreport has been obtained therefor. There are no fake or escaped contributions. 5.2The Transferor owns legal, valid and full right of disposal on the Transfer Subject hereunder, and the Transfer Subject it holds is free of pledge or anyother form of security or third party interest. 6.Representations and Warranties of the Transferee 6.1The acceptance of the Transfer Subject hereunder by the Transferee is in compliance with the provisions of law and regulations and does not violateany industrial policy in the PRC. 6.2All certificates and materials submitted to the Transferor for purposes of executing this Agreement are true and complete. 6.3All approval procedures necessary for execution of this Agreement have been duly and validly obtained. 2 7.Transaction ExpensesThe transaction expenses arising in connection with the transaction hereunder shall be borne in accordance with provisions of relevant law. 8.Liabilities for Breach 8.1Any Party in violation of this Agreement shall take full compensation responsibilities for any loss incurred to the other Parties as a result of its breach. 8.2The liabilities to be taken by any Party for its breach of this Agreement shall not be relieved due to termination of this Agreement. 9.Amendment and Termination of Agreement 9.1The Parties may amend or terminate this Agreement through negotiations. Matters not covered herein may be subject to a written supplementaryagreement between the Parties. 9.2In any of the following cases, this Agreement may be terminated:9.2.1 by either Party, if the purposes of this Agreement cannot be realized for an event of force majeure or any reason not contributable to either Party;9.2.2 by a Party, if the other Party is incapacitated for performance of this Agreement;9.2.3 by a Party, if the purposes of this Agreement cannot be realized due to the other Party is in serious breach;9.2.4 by a Party, if the other Party breaches any of its representations and warranties of Articles 5 and 6 hereof. 10.Governing Law and Dispute Resolution 10.1This Agreement shall be governed by the laws of the People’s Republic of China. 10.2Any disputes arising from the interpretation and performance of the terms hereunder shall first be resolved by the Parties through consultation in goodfaith. In case of a failure to reach an agreement to resolve a dispute between the Parties, either Party may submit the dispute to China InternationalEconomic and Trade Arbitration Commission for arbitration in accordance with its then effective arbitration rules. The arbitration shall be held inBeijing. The arbitral award shall be final and binding upon both Parties. 11.EffectivenessThis Agreement shall become effective upon executed by the Parties on the date first written above. 3 12.Miscellaneous 12.1The Parties may amend and supplement this Agreement in writing, which shall be attached to this Agreement as appendices. The appendices shall haveequal legal effect as this Agreement. 12.2This Agreement is made in four counterparts, one for each Party and the others shall be filed to relevant registration authority for record.[Remainder of the page intentionally left blank] 4 [This page contains no body text and is the signature page of the Equity Transfer Agreement]Transferor:Zhan Wang Signature: /s/ Zhan WangTransferee:Hailong Xiang Signature: /s/ Hailong Xiang 5 Exhibit 4.47Voting Proxy AgreementThis Voting Proxy Agreement (this “Agreement”) is entered into as of June 13, 2016 in Beijing, the People’s Republic of China (“PRC,” for purposes of thisAgreement, excluding Hong Kong Macau and Taiwan) by and between: Party A:Baidu Online Network Technology (Beijing) Co., Ltd.Registered Address: 3/F, Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingParty B:Yanhong Li, ID No. ; andHailong Xiang, ID No.WHEREAS 1.Party B are citizens of the PRC and shareholders of Beijing Baidu Netcom Science Technology Co., Ltd. (“Baidu Netcom”) owning 100% equityinterests in Baidu Netcom (“Party B’s Equity”). 2.Party B agrees to entrust a PRC company or individual designated by Party A, and Party A agrees to accept such entrustment, based on the terms andsubject to the conditions set forth herein, to exercise their rights as shareholders of Baidu Netcom on their behalf.NOW, THEREFORE, the Parties hereby agree as follows: 1.Party B hereby agrees to irrevocably entrust the entity or individual designated by Party A to exercise on their behalf all shareholder’s voting rightsand other shareholder’s rights empowered by the law and Baidu Netcom’s articles of association at the shareholders’ meeting of Baidu Netcom,including, but not limited to, with respect to the sale, transfer, pledge or disposal of all or part of Party B’s equity interests in Baidu Netcom;convening, attending and presiding over shareholders’ meeting of Baidu Netcom as authorized representative of Baidu Netcom’s shareholder; electionand replacement executive director, director, supervisor, manager and other executive officer; considering and approving profit distribution and lossmake-up plans of Baidu Netcom; adopting resolution regarding merger, division, liquidation or change of corporate form of Baidu Netcom; decidingupon business strategy and investment plan of Baidu Netcom; and change of articles of association of Baidu Netcom. 2.Party A agrees to designate an entity or individual permissible by relevant applicable laws to accept the entrustment by Party B granted in Article 1 ofthis Agreement, and such entity or individual shall exercise Party B’s voting rights and other shareholder’s rights on behalf of Party B pursuant to thisAgreement. 3.Party B hereby agrees and irrevocably acknowledges that, regardless of any change of their equity interests in Baidu Netcom, they shall entrust theentity or individual designated by Party A with all of their shareholder’s voting rights and other shareholder’s rights. 1 4.Party B hereby agrees and irrevocably acknowledges that if Party A withdraws the appointment of the relevant entity or individual to whom Party Bhas entrusted their shareholder’s voting rights and other shareholder’s rights, they will withdraw his entrustment and authorization to such entity orindividual and authorize another entity or individual designated by Party A to exercise their shareholder’s voting rights and other shareholder’s rightsat the shareholders’ meeting of Baidu Netcom. During the term of this Agreement, Party B waives and will not exercise any and all rights regardingParty B’s Equity entrusted to Party A under this Agreement. 5.This Agreement shall be executed by the Parties or their respective legal or authorized representatives and become effective as of the date first writtenabove. This Agreement shall remain permanently valid unless otherwise expressly provided under this Agreement or terminated by Party A in writing.If any Party’s operating term expires within the term of this Agreement, such Party shall timely renew its operating term to enable this Agreement to becontinually valid and implementable. If a Party’s application to renew its operating term fails to obtain the approval or consent of any competentauthority, this Agreement shall terminate at the expiry of such Party’s operating term, unless such Party has transferred its rights and obligationspursuant to Article 10 hereof. 6.This Agreement shall remain valid as long as Party B continues to hold any equity interest in Baidu Netcom. During the term of this Agreement, unlessotherwise provided by law, Party B may not cancel, early terminate or end this Agreement. Notwithstanding the foregoing, Party A shall have the rightto terminate this Agreement at any time by sending a written notice to Party B thirty (30) days in advance. 7.Any amendment to, and/or termination of, this Agreement shall be agreed by the Parties in writing. Any amendment or supplement hereto which is dulyexecuted by the Parties is an integral part of, and shall have equal binding effect with, this Agreement. 8.Should any provision hereof be held invalid or unenforceable due to its inconsistency with relevant law, such provision shall be deemed invalid onlyto the extent governed by such law without affecting the validity of the other provisions hereof. 9.All notices or other correspondences required to be sent by any Party hereunder shall be written in Chinese and delivered to the following addresses ofthe other Parties or other addresses designated and notified to such Party from time to time by hand, via mail or fax. The notices shall be deemed tohave been duly served (a) on the day of delivery if it is sent by hand, (b) on the tenth (10th) day after it is sent by post-prepaid registered airmail (withthe day of sending shown on the postmark), or on the fourth day after the notice is handed to an internationally recognized express delivery service;and (c) at the time of receipt shown on the transmission acknowledgement if it is sent via fax. 2 Party A: Baidu Online Network Technology (Beijing) Co., Ltd. Address: 3/F, Baidu Building, No. 10 Shangdi 10th Street, Haidian District, Beijing Attn: Yanhong Li Fax: 010-59927435 Tel: 010-58003399 Party B: Yanhong Li Address: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, Beijing Fax: 010-59927435 Tel: 010-58003399 Hailong Xiang Address: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, Beijing Fax: 010-59927435 Tel: 010-58003399 10.Except with Party A’s prior written consent, Party B shall not transfer their rights and obligations hereunder to any third party. Party B hereby agreesthat Party A may assign its rights and obligations under this Agreement as Party A considers it necessary to do so, in which case Party A only needs togive a written notice to Party B and no further consent of Party B is required. 11.Both Parties acknowledge and confirm that any oral or written information exchanged between the Parties in connection with this Agreement areconfidential, and both Parties shall keep all such information confidential and not disclose any such information to any third person, except for theinformation which: (a) is known or will be known by the public (not due to an unauthorized disclosure by the Party receiving such information); (b) isrequired to be disclosed by applicable law or rules or regulations of a stock exchange; or (c) needs to be disclosed to a Party’s legal or financial advisorin connection with the transaction contemplated hereby, provided that such advisor shall be subject to a confidential obligation similar to thatprovided in this Article. Disclosure by any employee or entity engaged by any Party shall be deemed disclosure by such Party, and such disclosingParty shall be liable for breach of this Agreement. This Article shall survive any invalidity, amendment, termination, dissolution or unenforceability ofthis Agreement for any reason whatsoever. 12. (1)The formation, validity, interpretation, performance, amendment and termination of and resolution of any dispute under this Agreement shall begoverned by the laws of the PRC. (2)Any dispute arising in connection with the interpretation and performance of the provisions of this Agreement shall first be resolved by theParties in good faith through negotiations. If resolution is reached by the Parties, any Party may submit such dispute to China InternationalEconomic and Trade Arbitration Commission for arbitration in accordance with its then effective arbitration rules. The arbitration shall be heldin Beijing and the language used shall be Chinese. The arbitral award shall be final and binding upon both Parties. 3 13.This Agreement, once becoming effective, constitutes the entire agreement and understanding between the Parties with respect to the matters containedherein, and fully supersedes all prior oral and written agreements and understandings between the Parties with respect to the matters contained herein. 14.This Agreement is made in three originals, with each Party holding one original, and each original shall have the same effect.[No text below] 4 [This page contains no body text]IN WITNESS WHEREOF, each party has executed this Agreement as of the date first written above.Party A: Baidu Online Network Technology (Beijing) Co., Ltd. (seal) /s/: Hailong XiangTitle: Legal RepresentativeParty B: /s/: Yanhong Li/s/: Hailong Xiang 5 Exhibit 4.48Business Operating AgreementThis Business Operating Agreement (this “Agreement”) is entered into as of June 13, 2016 in Beijing, the People’s Republic of China (“PRC,” for purposes ofthis Agreement, excluding Hong Kong Macau and Taiwan) by and among: Party A:Baidu Online Network Technology (Beijing) Co., Ltd.Registered Address: 3/F, Baidu Building, No. 10 Shangdi 10th Street, Haidian District, Beijing Party B:Beijing Baidu Netcom Science Technology Co., Ltd.Registered Address: 2/F, Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingParty C:Yanhong Li, a PRC citizen, ID No. ; andHailong Xiang, a PRC citizen, ID No.WHEREAS: 1.Party A is a wholly foreign-owned enterprise duly incorporated and validly existing under the laws of the PRC, which has the technology expertise andpractical experience in the development and design of computer software, and also has rich experience and human resources specializing ininformation technology and services; 2.Party B is a limited liability company duly incorporated and validly existing under PRC law; 3.Party C is shareholders of Party B owning 100% equity interests in Party B; 4.Party A and Party B have established business relationship by entering into an Exclusive Technology Consulting and Services Agreement; and 5.Pursuant to the above-mentioned agreement between Party A and Party B, Party B shall make certain payments to Party A, and the daily operations ofParty B will have a material effect on Party B’s ability to make such payment to Party A.NOW THEREFORE, through negotiations, all parties to this Agreement hereby agree as follows: 1.Party A agrees, subject to satisfaction of applicable provisions herein by Party B, to be the guarantor of Party B in the contracts, agreements ortransactions entered into between Party B and any third party in connection with Party B’s business and operations, to provide full guarantees forperformance of such contracts, agreements or transactions by Party B. As counter-guarantee, Party B agrees to pledge the accounts receivable in itsoperations and all of its assets to Party A. According to the aforesaid guarantee arrangement, Party A, when necessary, is willing to enter into writtenguarantee contracts with Party B’s counterparties to assume the guarantor’s liabilities. Party B and Party C shall take all necessary actions (including,but not limited to, executing relevant documents and filing relevant registrations) to carry out the counter-guarantee arrangement with Party A. 1 2.In consideration of the requirements of Article 1 hereof and to ensure performance of the various business agreements between Party A and Party B andpayment by Party B of the amounts payable to Party A thereunder, Party B and Party C hereby agree that, without Party A’s prior written consent, PartyB shall not engage in any transaction that may materially affect its assets, liabilities, rights or operations (other than execution of any business contractor agreement, sale or purchase of any asset by Party B in its ordinary course of business and receipt of legal rights by applicable counterparties as aresult thereof), including, but not limited to, the following: 2.1To borrow money from any third party or assume any debt; 2.2To sell to or acquire from any third party any asset or right, including, but not limited to, any intellectual property rights; 2.3To provide guarantee for any third party using its assets or intellectual property rights as collaterals; or 2.4To assign to any third party its business contracts. 3.In order to ensure the performance of the various business agreements between Party A and Party B and the payment by Party B of the amounts payableto Party A thereunder, Party B and Party C hereby agree to accept advice and guidance provided by Party A from time to time relating to its policies onmatters such as employment and dismissal of employees, daily operations and management, and financial management. 4.In the event that any agreement between Party A and Party B terminates or expires, Party A shall have the right, but not the obligation, to terminate allagreements between Party A and Party B, including, but not limited to, the Services Agreement. 5.Any amendment or supplement to this Agreement shall be made in writing. The amendment or supplement duly executed by all parties shall form anintegral part of this Agreement and shall have the same legal effect as this Agreement. 6.Should any provision of this Agreement be held invalid or unenforceable because of inconsistency with applicable laws, such provision shall beinvalid or unenforceable only to the extent of jurisdiction of such applicable laws without affecting the validity or enforceability of the remainder ofthis Agreement. 7.Neither Party B or Party C may assign its rights and obligations under this Agreement to any third party without the prior written consent of Party A.Party B and Party C hereby agree that Party A may assign its rights and obligations under this Agreement as Party A considers it necessary to do so, inwhich case Party A only needs to give a written notice to Party B and no further consent of Party B is required. 2 8.Each party acknowledges and confirms that any oral or written information exchanged pursuant to this Agreement are confidential. Each party shallkeep confidential all such information and not disclose any such information to any third party without the prior written consent from the other partyexcept for any information which: (a) is or will become known to the public (without any fault of the receiving party); (b) is required to be disclosed bythe applicable laws or rules of stock exchange; or (c) is disclosed by each party to its legal or financial advisor relating to the transactionscontemplated by this Agreement, provided that such legal or financial advisor shall comply with the confidentiality provisions set forth in this Article10. Disclosure of any confidential information by the employee of or any entity engaged by any Party shall be deemed as disclosure by such Party, andsuch disclosing Party shall be liable for breach under this Agreement. This Article 10 shall survive the invalidity, cancellation, termination orunenforceability of this Agreement for any reason. 9.This Agreement shall be governed by and interpreted in accordance with the laws of the PRC. 10.Any dispute arising in connection with the interpretation and performance of the provisions of this Agreement shall be resolved by the Parties in goodfaith through negotiations. IF no resolution is reached by the Parties through negotiations, any Party may submit such dispute to the ChinaInternational Economic and Trade Arbitration Commission (the “CIETAC”) for arbitration in accordance with CIETAC’s arbitration rules then ineffect. The seat of arbitration shall be in Beijing, and the language of the proceedings shall be Chinese. The arbitral award shall be final and bindingupon all of the Parties. 11.This Agreement shall be executed by a duly authorized representative of each Party and become effective as of the date first written above. 12.Once effective, this Agreement shall constitute the entire agreement of the Parties with respect to the subject matters hereof and supersede all prior oraland written agreements and understandings by the Parties with respect to the subject matters hereof. 13.This Agreement shall remain permanently valid unless early terminated as expressly agreed in this Agreement or decided by Party A in writing. If theduration of operation (including any extension thereof) of Party A or Party B is expired or terminated for any other reason within the aforesaid term ofthis Agreement, such Party shall timely renew its duration of operation to enable this Agreement to continue to be valid and implementable. If a Party’sapplication to renew its duration of operation fails to obtain the approval or consent of any competent authority, this Agreement shall be terminatedsimultaneously with the expiration or termination of the duration of operation of such Party, unless such Party has transferred its rights and obligationspursuant to Article 7 of this Agreement. 14.During the term of this Agreement, unless otherwise required under applicable laws, neither Party B or Party C may early terminate or end thisAgreement. Notwithstanding the foregoing, Party A shall have the right to terminate this Agreement at any time by issuing a thirty (30) days’ priorwritten notice to Party B and Party C. During the term of this Agreement, if Party B or Party C is found in breach of this Agreement and fails to correctsuch breach within fourteen (14) days upon receipt of written notice regarding such breach from Party A, Party A may terminate this Agreement withnotice to Party B and Party C in writing. 3 15.All notices or other correspondences required to be sent by any Party hereunder shall be written in Chinese and delivered to the following addresses ofthe other Parties or other addresses designated and notified to such Party from time to time via personal delivery, registered mail, post prepaid mail,recognized express delivery service or fax. The notices shall be deemed to have been duly served (a) upon sent if sent by personal delivery, (b) on thetenth (10th) day after the post-prepaid registered airmail is sent (shown on the postmark) if sent by mail, or on the fourth day after the notice is handedto an internationally recognized express delivery service; and (c) at the time of receipt shown on the transmission acknowledgement if sent via fax. Party A: Baidu Online Network Technology (Beijing) Co., Ltd. Address: 3/F, Baidu Building, No. 10 Shangdi 10th Street, Haidian District, Beijing Attention: Hailong Xiang Fax: 010-59927435 Tel: 010-59925049 Party B: Beijing Baidu Netcom Science Technology Co., Ltd. Address: 2/F, Baidu Building, No. 10 Shangdi 10th Street, Haidian District, Beijing Attention: Zhixiang Liang Fax: 010-59927435 Tel: 010-59928888 Party C: Address: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, Beijing Attn: Yanhong Li/Hailong Xiang Fax: 010-59927435 Tel: 010-59928888 16.This Agreement is made in four originals, with each party holding one original. All originals shall have the same legal effect.[No text below] 4 [This pages contains no body text]IN WITNESS THEREOF, each Party has caused this Agreement to be duly executed by himself or its duly authorized representative as of the date firstwritten above. Party A:Baidu Online Network Technology (Beijing) Co., Ltd. (seal) /s/: Hailong XiangTitle: Legal Representative Party B:Beijing Baidu Netcom Science Technology Co., Ltd. (seal) /s/: Zhixiang LiangTitle: Legal RepresentativeParty C:/s/: Yanhong Li/s/: Hailong Xiang 5 Exhibit 4.49AMENDED AND RESTATED EQUITY PLEDGE AGREEMENTThis Amended and Restated Equity Pledge Agreement (this “Agreement”) is entered into in Beijing, PRC by the following parties on January 18, 2017:Pledgee: Party A:Baidu Online Network Technology (Beijing) Co., Ltd.Registered Address: 3/F, Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingPledgor: Party B:Hailong XiangID No.Address: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingWHEREAS:1. Party A is a wholly foreign-owned enterprise registered in Beijing, the People’s Republic of China (the “PRC”).2. Party B is a citizen of the PRC owning 0.5% equity interests in Beijing Baidu Netcom Science Technology Co., Ltd. (“Baidu Netcom”), a limited liabilitycompany registered in Beijing, the PRC.3. Party A and Party B entered into a Amended and Restated Loan Agreement dated June 13, 2016, whereby Party B obtains a loan (the “Loan Arrangement”)up to a total amount of RMB10,856,400 (the “Loan”).4. Party A and Baidu Netcom entered into an Exclusive Technology Consulting and Services Agreement dated March 22, 2005 (the “Services Agreement”),pursuant to which Baidu Netcom shall pay Party A technical consulting and services fee (the “Service Fees”) for the technology consulting and servicesprovided by Party A.5. In order to ensure that Party B will perform its obligations under the Loan Arrangement and Party A will be able to collect Service Fees from Baidu Netcom,Party B agrees to pledge his equity interest in Baidu Netcom as security for the Loan and the Service Fees. Party A and Party B intend to enter into thisAgreement to specify their respective rights and obligations in respect of such pledge.6. Party A and Party B have entered into a series of equity pledge agreements (collectively the “Original Equity Pledge Agreement”) listed in Appendix Ihereof, and both Parties hereto now agree to execute this Agreement to amend and restate the Original Equity Pledge Agreement. This Agreement shallsupersede and replace the Original Equity Pledge Agreement as of the effective time provided herein. 1 NOW THEREFORE, the Pledgee and the Pledgor agree as follows through negotiations and to be bound hereby: 1.DefinitionsUnless otherwise provided in this Agreement, the following terms shall have the following meanings:1.1 “Pledge”: refers to the full content of Article 2 hereunder.1.2 “Equity Interest”: refers to all of the equity interest in Baidu Netcom legally held by the Pledgor.1.3 “Rate of Pledge”: refers to the ratio between the value of the Pledge under this Agreement and the total amount of the Service Fees and the Loan.1.4 “Term of Pledge”: refers to the period provided for under Article 3.2 hereunder.1.5 “Principal Agreement”: refers to the Services Agreements and the agreements under the Loan Arrangement.1.6 “Event of Default”: refers to any event listed in Article 7.1 hereunder.1.7 “Notice of Default”: refers to the notice of default issued by the Pledgee in accordance with this Agreement. 2.PledgeThe Pledgor will pledge all of his Equity Interest in Baidu Netcom to the Pledgee as security for (i) all his obligations under the Loan Arrangement and (ii) allobligations of Baidu Netcom under the Services Agreement. For purpose of this Agreement, “Pledge” refers to the priority in receiving payment in the form ofall or part of the Equity Interest based on the conversion value thereof, or from the proceeds from the auction or sale of all or part of the Equity Interest inaccordance with legal procedure. 3.Rate of Pledge and Term of Pledge3.1 Rate of the PledgeThe rate of the Pledge shall be approximately 100%.3.2 Term of the Pledge3.2.1 The Pledge shall take effect as of the date when the pledge of the Equity Interest is recorded in the Register of Shareholders of Baidu Netcom andregistered with the applicable authority of industrial and commercial administration, and shall remain in effect until two (2) years after obligations under thePrincipal Agreement have been fulfilled.3.2.2 During the term of the Pledge, the Pledgee shall be entitled to dispose of the Pledge in accordance with this Agreement in the event that the Pledgorfails to perform his obligations under the Loan Arrangement or Baidu Netcom fails perform its obligations under the Services Agreement. 2 4.Physical Possession of Documents4.1 During the term of the Pledge under this Agreement, the Pledgor shall deliver his capital contribution certificate and the register of shareholders of BaiduNetcom to the Pledgee within one (1) week from the date of this Agreement.4.2 The Pledgee shall be entitled to receive dividends from the Equity Interest.4.3 The Pledge under this Agreement will be recorded in the Register of Shareholders of Baidu Netcom (See Appendix II) after execution of this Agreement. 5.Representations and Warranties of the Pledgor5.1 The Pledgor is the legal owner of the Equity Interest and has adopted shareholders’ resolutions to approve the Pledge (See Appendix III).5.2 Except for the benefit of the Pledgee, the Pledgor has not pledged the Equity Interest or created other encumbrance on the Equity Interest. 6.Covenants of the Pledgor6.1 During the term of this Agreement, the Pledgor covenants to the Pledgee for its benefit that the Pledgor shall:6.1.1 not transfer or assign the Equity Interest, create or permit the existence of any other pledges which may have any effect on the rights or benefits of thePledgee without prior written consent of the Pledgee;6.1.2 comply with and implement the laws and regulations with respect to the pledge of rights; present to the Pledgee the notices, orders or suggestions withrespect to the Pledge issued or made by relevant government authorities within five (5) days upon receiving such notices, orders or suggestions; comply withsuch notices, orders or suggestions or, alternatively, at the reasonable request of the Pledgee or with consent from the Pledgee, raise objection to such notices,orders or suggestions; and6.1.3 timely notify the Pledgee of any events or any notices received which may affect the Pledgor’s right to all or any part of the Equity Interest, and anyevents or any received notices which may change the Pledgor’s warranties and obligations under this Agreement or affect the Pledgor’s performance of itsobligations under this Agreement.6.2 The Pledgor agrees that the Pledgee’s right to the Pledge obtained from this Agreement shall not be suspended or inhibited by any legal procedureinitiated by the Pledgor or any successors of the Pledgor or any person authorized by the Pledgor or any other person. 3 6.3 The Pledgor promises to the Pledgee that in order to protect or perfect the security for the payment of the Loan and the Services Fees, the Pledgor shallexecute in good faith and cause other parties who have interests in the Pledge to execute, all title certificates and contracts and/or to perform any otheractions (and cause other parties who have interests to take action) as required by the Pledgee and facilitate the exercise of the rights and authorization vestedin the Pledgee under this Agreement.6.4 The Pledgor promises to the Pledgee that he will execute all amendment documents (if applicable and necessary) in connection with the certificate of theEquity Interest with the Pledgee or its designated person (being a natural person or a legal entity) and, within a reasonable period, provide to the Pledgee allnotices, orders and decisions about the Pledge as the Pledgee deems necessary.6.5 The Pledgor promises to the Pledgee that he will comply with and perform all the guarantees, covenants, warranties, representations and conditions for thebenefit of the Pledgee. The Pledgor shall compensate the Pledgee for all losses suffered by the Pledgee because of the Pledgor’s failure to perform in whole orin part its guarantees, covenants, warranties, representations and conditions.6.6 During the term of this Agreement, the Pledgor will not perform any action/non-action which may affect the value of the Equity Interest to maintain orincrease the value. The Pledgor shall timely notify the Pledgee of any events which may decrease the value of the Equity Interest or affect the Pledgor’sperformance of the obligations under this Agreement, and shall provide security satisfactory to the Pledgee of the decreased value of the Equity Interest uponthe Pledgee’s request.6.7 To the extent permitted under applicable laws or regulations, the Pledgor shall use his best efforts to cooperate with all the registration, record or otherprocedures relating to the Pledge as required by relevant laws and regulations. 7.Event of Default7.1 Each of the following events shall be regarded as an Event of Default:7.1.1 Pledgor fails to perform his obligations under the Loan Arrangement;7.1.2 Baidu Netcom fails to pay the Services Fees in due course in full amount or perform other obligations under the Services Agreements;7.1.3 Any representation or warranty made by the Pledgor in Article 5 hereof contains material misleading statements or errors and/or the Pledgor breachesany warranty in Article 5 hereof;7.1.4 The Pledgor breaches the covenants under Article 6 hereof;7.1.5 The Pledgor breaches any other provision of this Agreement; 4 7.1.6 The Pledgor waives the pledged Equity Interest or transfers or assigns the pledged Equity Interest without prior written consent from the Pledgee;7.1.7 Any of the Pledgor’s external loans, guaranties, compensations, undertakings or other obligations (1) is required to be repaid or performed prior to thescheduled due date because of a default; or (2) is due but cannot be repaid or performed as scheduled, causing the Pledgee to believe that the Pledgor’sability to perform the obligations hereunder has been affected; 7.1.8Baidu Netcom is incapable of repaying its general debts or other debts;7.1.9 This Agreement becomes illegal or the Pledgor is not capable of continuing to perform the obligations hereunder due to any reason other than a forcemajeure event;7.1.10 There have been adverse changes to the properties owned by the Pledgor, causing the Pledgee to believe that the capability of the Pledgor to performthe obligations hereunder has been affected;7.1.11 The successor or custodian of Baidu Netcom only partially performs or refuses to perform the payment obligation under the Services Agreements; and7.1.12 The breach of the other provisions of this Agreement by the Pledgor due to his act or omission.7.2 The Pledgor shall immediately give a written notice to the Pledgee if the Pledgor knows or discovers that any event specified under Article 7.1 hereof orany event that may result in the foregoing events has occurred.7.3 Unless an event of default under Article 7.1 hereof has been solved to the Pledgee’s satisfaction, the Pledgee, at any time when the event of default occursor at any time thereafter, may give a written Notice of Default to the Pledgor, requiring the Pledgor to immediately make full payment of the outstandingamount under the Loan Arrangement or under the Services Agreements or requesting to exercise the Pledge in accordance with Article 8 hereof. 8.Exercise of the Pledge8.1 The Pledgor shall not transfer or assign the Equity Interest without prior written approval from the Pledgee prior to the full performance of his obligationsunder the Loan Arrangement and supplementary agreement and full payment of all Service Fees under the Services Agreements, whichever is later.8.2 The Pledgee shall give a Notice of Default to the Pledgor when the Pledgee exercises the Pledge.8.3 Subject to Article 7.3, the Pledgee may exercise the Pledge when the Pledgee gives a Notice of Default in accordance with Article 7.3 or at any timethereafter. 5 8.4 The Pledgee is entitled to priority in receiving payment in the form of all or part of the Equity Interest based on the conversion value thereof, or from theproceeds from the auction or sale of all or part of the Equity Interest in accordance with legal procedure, until the outstanding debt and all other payables ofthe Pledgor under Loan Arrangement and Services Agreements are repaid.8.5 The Pledgor shall not hinder the Pledgee from exercising the Pledge in accordance with this Agreement and shall give necessary assistance so that thePledgee could fully exercise its Pledge. 9.Assignment9.1 The Pledgor shall not assign or transfer its rights and obligations hereunder without prior consent from the Pledgee.9.2 This Agreement shall be binding upon the Pledgor and his successors and be binding on the Pledgee and each of its successors and permitted assigns.9.3 To the extent permitted by law, the Pledgee may transfer or assign any or all of its rights and obligations under the Loan Arrangement and supplementaryagreements to any person (natural person or legal entity) designated by it at any time. In that case, the assignee shall have the same rights and obligations asthose of the Pledgee as if the assignee were an original party hereto. When the Pledgee transfers or assigns the rights and obligations under the ServicesAgreement, Loan Arrangement and supplementary agreements, it is only required to provide a written notice to the Pledgor, and at the request of the Pledgee,the Pledgor shall execute the relevant agreements and/or documents with respect to such transfer or assignment.9.4 After the Pledgee has been changed as a result of a transfer or an assignment, the new parties to the Pledge shall execute a new pledge contract. 10.Effectiveness and TermThis Agreement is executed on the date first set forth above and becomes effective from the date when the pledge is recorded on Baidu Netcom’s Register ofShareholders. 11.TerminationThis Agreement shall terminate when the loan under the Loan Arrangement and the Services Fees under the Services Agreement have been fully repaid andthe Pledgor no longer has any outstanding obligations under the Loan Arrangement and Baidu Netcom no longer has any outstanding obligations under theServices Agreements. Thereafter, the Pledgee shall cancel or terminate this Agreement as soon as reasonably practicable. 6 12.Fees and Other Charges12.1 The Pledgor shall be responsible for all of the fees and actual expenses in relation to this Agreement including, but not limited to, legal fees, productioncosts, stamp tax and any other taxes and charges. If the Pledgee pays the relevant taxes in accordance with the laws, the Pledgor shall fully indemnify thePledgee for such taxes paid by the Pledgee.12.2 In the event that the Pledgee has to make a claim against the Pledgor by any means as a result of the Pledgor’s failure to pay any tax or expense payableby the Pledgor under this Agreement, the Pledgor shall be responsible for all the expenses arising from such claim (including but not limited to any taxes,handling fees, management fees, litigation fees, attorney’s fees, and various insurance premiums in connection with the disposition of the Pledge). 13.Force Majeure13.1 A Force Majeure event refers to any unforeseen event that is beyond a party’s reasonable control and cannot be prevented with reasonable care, whichincludes but is not limited to acts of governments, changes of law, acts of God, fires, explosions, typhoons, floods, earthquake, tides, lightning or war;provided, however, that any insufficiency of creditworthiness, capital or financing shall not be regarded as an event beyond a party’s reasonable control. Theaffected party by Force Majeure shall promptly notify the other party of such event resulting in exemption.13.2 In the event that the affected party is delayed or prevented from performing its obligations under this Agreement by Force Majeure, and only to theextent of such delay and prevention, the affected party shall not be liable for obligations under this Agreement. The affected party shall take appropriatemeasures to minimize or remove the effects of Force Majeure and attempt to resume performance of the obligations that were delayed or prevented by theevent of Force Majeure. After the event of Force Majeure is removed, both Parties agree to resume the performance of this Agreement using their best efforts. 14.ConfidentialityThe Parties acknowledge and confirm that all the oral and written materials exchanged relating to this Agreement are confidential. Each party must keep suchmaterials confidential and cannot disclose such materials to any other third party without the other party’s prior written approval, unless: (a) the public knowsor will know the materials (not due of the disclosure by the receiving party); (b) the disclosed materials are required by law or stock exchange rules to bedisclosed; or (c) materials relating to the transactions under this Agreement are disclosed to the Parties’ legal or financial advisors, who must keep themconfidential as well. Disclosure of the confidential information by employees or institutions hired by the Parties is deemed as an act by the Parties, therefore,subjecting them to liability. 15.Dispute Resolution 15.1This Agreement shall be governed by and construed in accordance with PRC law. 7 15.2 The Parties shall strive to settle any dispute arising from the interpretation or performance of this Agreement through friendly consultation. In case nosettlement can be reached through consultation, each party can submit such matter to the China International Economic and Trade Arbitration Commission(“CIETAC”) for arbitration. The arbitration shall follow the current rules of CIETAC, the arbitration proceedings shall be conducted in Chinese and shall takeplace in Beijing, PRC. The arbitration award shall be final and binding upon the Parties. 16.NoticeAny notice which is given by the Parties hereto for the purpose of performing the rights and obligations hereunder shall be in writing. If such notice isdelivered personally, the time of notice is the time when such notice actually reaches the addressee; where such notice is transmitted by telex or facsimile, thenotice time is the time when such notice is transmitted. If such notice does not reach the addressee on a business day or reaches the addressee after businesshours, the next business day following such day is the date of notice. The delivery place is the address first written above for each of the Parties hereto or theaddress advised by such party in writing, including facsimile and telex, from time to time. Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Address: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingFax: 5992-7435Telephone: 5992-8888Party B: Hailong XiangAddress: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingTelephone: 17.Entire AgreementNotwithstanding provisions in Article 10 hereof, the Parties agree that this Agreement constitutes the entire agreement of the Parties hereto with respect to thesubject matters herein upon its effectiveness and supersedes and replaces all prior oral and/or written agreements and understandings relating to the subjectmatters of this Agreement. 18.SeverabilityShould any provision of this Agreement be held invalid or unenforceable because of inconsistency with applicable laws, such provision shall be invalid orunenforceable only to the extent of such applicable laws without affecting the validity or enforceability of the remainder of this Agreement. 19.AppendicesThe appendices to this Agreement shall constitute an integral part of this Agreement. 8 20.Amendment or Supplement20.1 The Parties may amend or supplement this Agreement by written agreement. The amendments or supplements to this Agreement duly executed by bothParties shall form an integral part of this Agreement and shall have the same legal effect as this Agreement.20.2 This Agreement and any amendments, modifications, supplements, additions or changes hereto shall be in writing and shall be effective upon beingexecuted and sealed by the Parties hereto. 21.CounterpartsThis Agreement is made in Chinese in two originals, with each Party holding one original. Both originals have the same legal effect.[no text below] 9 [This page contains no body text]IN WITNESS WHEREOF, each Party has caused this Agreement to be executed by himself, its legal representative or its duly authorized representative asof the date first written above.Party A: Baidu Online Network Technology (Beijing) Co., Ltd. /s/: Hailong XiangSeal of Baidu Online Network Technology (Beijing) Co., Ltd.Party B: Hailong Xiang/s/: Hailong Xiang 10 Appendices: 1.The Original Equity Pledge Agreement2.Register of Shareholders of Beijing Baidu Netcom Technology Co., Ltd.3.Resolutions of the Shareholders’ Meeting of Beijing Baidu Netcom Technology Co., Ltd. 11 Appendix IThe Original Equity Pledge Agreement Number Contract Name Parties Date 1 Equity Pledge Agreement Baidu Online Network Technology (Beijing) Co., Ltd.;Hailong Xiang June 13, 2016 12 Appendix IIRegister of shareholders of Beijing Baidu Netcom Technology Co., Ltd. Name of the Shareholder: Yanhong LiID number: Residence Contribution Amount: RMB2,160,423,600Percentage of Share Capital: 99.5%Number of the certificate ofcapital contribution: 001Yanhong Li holds 99.5% equity interests in Beijing Baidu Netcom Technology Co., Ltd., the entirety of which has been pledged to Baidu Online NetworkTechnology (Beijing) Co., Ltd. Name of the Shareholder: Hailong XiangID number: Residence Contribution Amount: RMB10,856,400Percentage of Share Capital: 0.5%Number of the certificate ofcapital contribution: 002Hailong Xiang holds 0.5% equity interests in Beijing Baidu Netcom Technology Co., Ltd., the entirety of which has been pledged to Baidu Online NetworkTechnology (Beijing) Co., Ltd.Baidu Online Network Technology (Beijing) Co., Ltd. is the pledgee of 100% of the equity interests in Beijing Baidu Netcom Technology Co., Ltd.Beijing Baidu Netcom Technology Co., Ltd. Signature: /s/ Zhixiang LiangName: Zhixiang LiangTitle: Legal representativeDate: January 18, 2017 13 Appendix IIIResolutions of the Shareholders’ Meeting of Beijing Baidu Netcom Technology Co., Ltd.In respect of the Amended and Restated Equity Pledge Agreement dated January 18, 2017 between the shareholders of Beijing Baidu Netcom TechnologyCo., Ltd. (the “Company”) and Beijing Online Network Technology (Beijing) Co., Ltd., a resolution is unanimously adopted at the shareholders’ meeting ofthe Company that:It is approved that the shareholders of the Company pledge all of their equity interests in the Company to Baidu Online Network Technology (Beijing) Co.,Ltd.The resolution was signed and delivered on January 18, 2017 by the undersigned shareholders.Shareholders:Yanhong LiSigned by: /s/ Yanhong LiHailong XiangSigned by: /s/ Hailong Xiang 14 Exhibit 4.50AMENDED AND RESTATED EQUITY PLEDGE AGREEMENTThis Amended and Restated Equity Pledge Agreement (this “Agreement”) is entered into in Beijing, PRC by the following parties on January 18, 2017:Pledgee: Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Registered Address: 3/F, Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingPledgor: Party B: Yanhong LiAddress: WHEREAS:1. Party A is a wholly foreign-owned enterprise registered in Beijing, the People’s Republic of China (the “PRC”).2. Party B is a citizen of the PRC owning 99.5% equity interests in Beijing Baidu Netcom Science Technology Co., Ltd. (“Baidu Netcom”), a limited liabilitycompany registered in Beijing, the PRC.3. Party A and Party B entered into an Amended and Restated Loan Agreement dated January 18, 2017, whereby Party B obtains a loan (the “LoanArrangement”) up to a total amount of RMB2,160,423,600 (the “Loan”).4. Party A and Baidu Netcom entered into an Exclusive Technology Consulting and Services Agreement dated March 22, 2005 (the “Services Agreement”),pursuant to which Baidu Netcom shall pay Party A technical consulting and services fee (the “Service Fees”) for the technology consulting and servicesprovided by Party A.5. In order to ensure that Party B will perform its obligations under the Loan Arrangement and Party A will be able to collect Service Fees from Baidu Netcom,Party B agrees to pledge his equity interest in Baidu Netcom as security for the Loan and the Service Fees. Party A (the “Pledgee”) and Party B (the“Pledgor”) intend to enter into this Agreement to specify their respective rights and obligations in respect of such pledge.6. Party A, Party B and other relevant parties have entered into a series of equity pledge agreements (collectively the “Original Equity Pledge Agreements”)listed in Appendix I hereof, and both Parties hereto now agree to execute this Agreement to amend and restate the Original Equity Pledge Agreements. ThisAgreement shall supersede and replace the Original Equity Pledge Agreements as of the effective time provided herein. 1 NOW THEREFORE, the Pledgee and the Pledgor agree as follows through negotiations and to be bound hereby: 1.DefinitionsUnless otherwise provided in this Agreement, the following terms shall have the following meanings:1.1 “Pledge”: refers to the full content of Article 2 hereunder.1.2 “Equity Interest”: refers to all of the equity interest in Baidu Netcom legally held by the Pledgor.1.3 “Rate of Pledge”: refers to the ratio between the value of the Pledge under this Agreement and the total amount of the Service Fees and the Loan.1.4 “Term of Pledge”: refers to the period provided for under Article 3.2 hereunder.1.5 “Principal Agreement”: refers to the Services Agreements and the agreements under the Loan Arrangement.1.6 “Event of Default”: refers to any event listed in Article 7.1 hereunder.1.7 “Notice of Default”: refers to the notice of default issued by the Pledgee in accordance with this Agreement. 2.PledgeThe Pledgor will pledge all of his Equity Interest in Baidu Netcom to the Pledgee as security for (i) all his obligations under the Loan Arrangement and (ii) allobligations of Baidu Netcom under the Services Agreement. For purpose of this Agreement, “Pledge” refers to the priority in receiving payment in the form ofall or part of the Equity Interest based on the conversion value thereof, or from the proceeds from the auction or sale of all or part of the Equity Interest inaccordance with legal procedure. 3.Rate of Pledge and Term of Pledge3.1 Rate of the PledgeThe rate of the Pledge shall be approximately 100%.3.2 Term of the Pledge3.2.1 The Pledge shall take effect as of the date when the pledge of the Equity Interest is recorded in the Register of Shareholders of Baidu Netcom andregistered with the applicable authority of industrial and commercial administration, and shall remain in effect until two (2) years after obligations under thePrincipal Agreement have been fulfilled. 2 3.2.2 During the term of the Pledge, the Pledgee shall be entitled to dispose of the Pledge in accordance with this Agreement in the event that the Pledgorfails to perform his obligations under the Loan Arrangement or Baidu Netcom fails to perform its obligations under the Services Agreement. 4.Physical Possession of Documents4.1 During the term of the Pledge under this Agreement, the Pledgor shall deliver his capital contribution certificate and the register of shareholders of BaiduNetcom to the Pledgee within one (1) week from the date of this Agreement.4.2 The Pledgee shall be entitled to receive dividends from the Equity Interest.4.3 The Pledge under this Agreement will be recorded in the Register of Shareholders of Baidu Netcom (See Appendix II) after execution of this Agreement. 5.Representations and Warranties of the Pledgor5.1 The Pledgor is the legal owner of the Equity Interest and has adopted shareholders’ resolutions to approve the Pledge (See Appendix III).5.2 Except for the benefit of the Pledgee, the Pledgor has not pledged the Equity Interest or created other encumbrance on the Equity Interest. 6.Covenants of the Pledgor6.1 During the term of this Agreement, the Pledgor covenants to the Pledgee for its benefit that the Pledgor shall:6.1.1 not transfer or assign the Equity Interest, create or permit the existence of any other pledges which may have any effect on the rights or benefits of thePledgee without prior written consent of the Pledgee;6.1.2 comply with and implement the laws and regulations with respect to the pledge of rights; present to the Pledgee the notices, orders or suggestions withrespect to the Pledge issued or made by relevant government authorities within five (5) days upon receiving such notices, orders or suggestions; comply withsuch notices, orders or suggestions or, alternatively, at the reasonable request of the Pledgee or with consent from the Pledgee, raise objection to such notices,orders or suggestions; and6.1.3 timely notify the Pledgee of any events or any notices received which may affect the Pledgor’s right to all or any part of the Equity Interest, and anyevents or any received notices which may change the Pledgor’s warranties and obligations under this Agreement or affect the Pledgor’s performance of itsobligations under this Agreement. 3 6.2 The Pledgor agrees that the Pledgee’s right to the Pledge obtained from this Agreement shall not be suspended or inhibited by any legal procedureinitiated by the Pledgor or any successors of the Pledgor or any person authorized by the Pledgor or any other person.6.3 The Pledgor promises to the Pledgee that in order to protect or perfect the security for the payment of the Loan and the Services Fees, the Pledgor shallexecute in good faith and cause other parties who have interests in the Pledge to execute, all title certificates and contracts and/or to perform any otheractions (and cause other parties who have interests to take action) as required by the Pledgee and facilitate the exercise of the rights and authorization vestedin the Pledgee under this Agreement.6.4 The Pledgor promises to the Pledgee that he will execute all amendment documents (if applicable and necessary) in connection with the certificate of theEquity Interest with the Pledgee or its designated person (being a natural person or a legal entity) and, within a reasonable period, provide to the Pledgee allnotices, orders and decisions about the Pledge as the Pledgee deems necessary.6.5 The Pledgor promises to the Pledgee that he will comply with and perform all the guarantees, covenants, warranties, representations and conditions for thebenefit of the Pledgee. The Pledgor shall compensate the Pledgee for all losses suffered by the Pledgee because of the Pledgor’s failure to perform in whole orin part its guarantees, covenants, warranties, representations and conditions.6.6 During the term of this Agreement, the Pledgor will not perform any action/non-action which may affect the value of the Equity Interest to maintain orincrease the value. The Pledgor shall timely notify the Pledgee of any events which may decrease the value of the Equity Interest or affect the Pledgor’sperformance of the obligations under this Agreement, and shall provide security satisfactory to the Pledgee of the decreased value of the Equity Interest uponthe Pledgee’s request.6.7 To the extent permitted under applicable laws or regulations, the Pledgor shall use his best efforts to cooperate with all the registration, record or otherprocedures relating to the Pledge as required by relevant laws and regulations. 7.Event of Default7.1 Each of the following events shall be regarded as an Event of Default:7.1.1 Pledgor fails to perform his obligations under the Loan Arrangement;7.1.2 Baidu Netcom fails to pay the Services Fees in due course in full amount or perform other obligations under the Services Agreements; 4 7.1.3 Any representation or warranty made by the Pledgor in Article 5 hereof contains material misleading statements or errors and/or the Pledgor breachesany warranty in Article 5 hereof;7.1.4 The Pledgor breaches the covenants under Article 6 hereof;7.1.5 The Pledgor breaches any other provision of this Agreement;7.1.6 The Pledgor waives the pledged Equity Interest or transfers or assigns the pledged Equity Interest without prior written consent from the Pledgee;7.1.7 Any of the Pledgor’s external loans, guaranties, compensations, undertakings or other obligations (1) is required to be repaid or performed prior to thescheduled due date because of a default; or (2) is due but cannot be repaid or performed as scheduled, causing the Pledgee to believe that the Pledgor’sability to perform the obligations hereunder has been affected;7.1.8 Baidu Netcom is incapable of repaying its general debts or other debts;7.1.9 This Agreement becomes illegal or the Pledgor is not capable of continuing to perform the obligations hereunder due to any reason other than a forcemajeure event;7.1.10 There have been adverse changes to the properties owned by the Pledgor, causing the Pledgee to believe that the capability of the Pledgor to performthe obligations hereunder has been affected;7.1.11 The successor or custodian of Baidu Netcom only partially performs or refuses to perform the payment obligation under the Services Agreements; and7.1.12 The breach of the other provisions of this Agreement by the Pledgor due to his act or omission.7.2 The Pledgor shall immediately give a written notice to the Pledgee if the Pledgor knows or discovers that any event specified under Article 7.1 hereof orany event that may result in the foregoing events has occurred.7.3 Unless an event of default under Article 7.1 hereof has been solved to the Pledgee’s satisfaction, the Pledgee, at any time when the event of default occursor at any time thereafter, may give a written Notice of Default to the Pledgor, requiring the Pledgor to immediately make full payment of the outstandingamount under the Loan Arrangement or under the Services Agreements or requesting to exercise the Pledge in accordance with Article 8 hereof. 8.Exercise of the Pledge8.1 The Pledgor shall not transfer or assign the Equity Interest without prior written approval from the Pledgee prior to the full performance of his obligationsunder the Loan Arrangement and supplementary agreement and full payment of all Service Fees under the Services Agreements, whichever is later. 5 8.2 The Pledgee shall give a Notice of Default to the Pledgor when the Pledgee exercises the Pledge.8.3 Subject to Article 7.3, the Pledgee may exercise the Pledge when the Pledgee gives a Notice of Default in accordance with Article 7.3 or at any timethereafter.8.4 The Pledgee is entitled to priority in receiving payment in the form of all or part of the Equity Interest based on the conversion value thereof, or from theproceeds from the auction or sale of all or part of the Equity Interest in accordance with legal procedure, until the outstanding debt and all other payables ofthe Pledgor under Loan Arrangement and Services Agreements are repaid.8.5 The Pledgor shall not hinder the Pledgee from exercising the Pledge in accordance with this Agreement and shall give necessary assistance so that thePledgee could fully exercise its Pledge. 9.Assignment9.1 The Pledgor shall not give away or transfer its rights and obligations hereunder without prior consent from the Pledgee.9.2 This Agreement shall be binding upon the Pledgor and his successors and be binding on the Pledgee and each of its successors and permitted assigns.9.3 To the extent permitted by law, the Pledgee may transfer or assign any or all of its rights and obligations under the Loan Arrangement and supplementaryagreements to any person (natural person or legal entity) designated by it at any time. In that case, the assignee shall have the same rights and obligations asthose of the Pledgee as if the assignee were an original party hereto. When the Pledgee transfers or assigns the rights and obligations under the ServicesAgreement, Loan Arrangement and supplementary agreements, it is only required to provide a written notice to the Pledgor, and at the request of the Pledgee,the Pledgor shall execute the relevant agreements and/or documents with respect to such transfer or assignment.9.4 After the Pledgee has been changed as a result of a transfer or an assignment, the new parties to the Pledge shall execute a new pledge contract. 10.Effectiveness and TermThis Agreement is executed on the date first set forth above and becomes effective from the date when the pledge is recorded on Baidu Netcom’s Register ofShareholders. 11.TerminationThis Agreement shall terminate when the loan under the Loan Arrangement and the Services Fees under the Services Agreement have been fully repaid andthe Pledgor no longer has any outstanding obligations under the Loan Arrangement and Baidu Netcom no longer has any outstanding obligations under theServices Agreements. Thereafter, the Pledgee shall cancel or terminate this Agreement as soon as reasonably practicable. 6 12.Fees and Other Charges12.1 The Pledgor shall be responsible for all of the fees and actual expenses in relation to this Agreement including, but not limited to, legal fees, productioncosts, stamp tax and any other taxes and charges. If the Pledgee pays the relevant taxes in accordance with the laws, the Pledgor shall fully indemnify thePledgee for such taxes paid by the Pledgee.12.2 In the event that the Pledgee has to make a claim against the Pledgor by any means as a result of the Pledgor’s failure to pay any tax or expense payableby the Pledgor under this Agreement, the Pledgor shall be responsible for all the expenses arising from such claim (including but not limited to any taxes,handling fees, management fees, litigation fees, attorney’s fees, and various insurance premiums in connection with the disposition of the Pledge). 13.Force Majeure13.1 A Force Majeure event refers to any unforeseen event that is beyond a party’s reasonable control and cannot be prevented with reasonable care, whichincludes but is not limited to acts of governments, changes of law, acts of God, fires, explosions, typhoons, floods, earthquake, tides, lightning or war;provided, however, that any insufficiency of creditworthiness, capital or financing shall not be regarded as an event beyond a party’s reasonable control. Theaffected party by Force Majeure shall promptly notify the other party of such event resulting in exemption.13.2 In the event that the affected party is delayed or prevented from performing its obligations under this Agreement by Force Majeure, and only to theextent of such delay and prevention, the affected party shall not be liable for obligations under this Agreement. The affected party shall take appropriatemeasures to minimize or remove the effects of Force Majeure and attempt to resume performance of the obligations that were delayed or prevented by theevent of Force Majeure. After the event of Force Majeure is removed, both Parties agree to resume the performance of this Agreement using their best efforts. 14.ConfidentialityThe Parties acknowledge and confirm that all the oral and written materials exchanged relating to this Agreement are confidential. Each party must keep suchmaterials confidential and cannot disclose such materials to any other third party without the other party’s prior written approval, unless: (a) the public knowsor will know the materials (not due of the disclosure by the receiving party); (b) the disclosed materials are required by law or stock exchange rules to bedisclosed; or (c) materials relating to the transactions under this Agreement are disclosed to the Parties’ legal or financial advisors, who must keep themconfidential as well. Disclosure of the confidential information by employees or institutions hired by the Parties is deemed as an act by the Parties, therefore,subjecting them to liability. 7 15.Dispute Resolution15.1 This Agreement shall be governed by and construed in accordance with PRC law.15.2 The Parties shall strive to settle any dispute arising from the interpretation or performance of this Agreement through friendly consultation. In case nosettlement can be reached through consultation, each party can submit such matter to the China International Economic and Trade Arbitration Commission(“CIETAC”) for arbitration. The arbitration shall follow the current rules of CIETAC, the arbitration proceedings shall be conducted in Chinese and shall takeplace in Beijing, PRC. The arbitration award shall be final and binding upon the Parties. 16.NoticeAny notice which is given by the Parties hereto for the purpose of performing the rights and obligations hereunder shall be in writing. If such notice isdelivered personally, the time of notice is the time when such notice actually reaches the addressee; where such notice is transmitted by telex or facsimile, thenotice time is the time when such notice is transmitted. If such notice does not reach the addressee on a business day or reaches the addressee after businesshours, the next business day following such day is the date of notice. The delivery place is the address first written above for each of the Parties hereto or theaddress advised by such party in writing, including facsimile and telex, from time to time. Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Address: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingFax: 5992-7435Telephone: 5992-8888Party B: Yanhong LiAddress: Fax: 5992-7435 Telephone: 010-59928888 17.Entire AgreementNotwithstanding provisions in Article 10 hereof, the Parties agree that this Agreement constitutes the entire agreement of the Parties hereto with respect to thesubject matters herein upon its effectiveness and supersedes and replaces all prior oral and/or written agreements and understandings relating to the subjectmatters of this Agreement. This Agreement shall supersede the Original Equity Pledge Agreements previously executed by the Parties and other relevantparties, and the Original Equity Pledge Agreements shall terminate immediately after this Agreement becomes effective. 8 18.SeverabilityShould any provision of this Agreement be held invalid or unenforceable because of inconsistency with applicable laws, such provision shall be invalid orunenforceable only to the extent of such applicable laws without affecting the validity or enforceability of the remainder of this Agreement. 19.AppendicesThe appendices to this Agreement shall constitute an integral part of this Agreement. 20.Amendment or Supplement20.1 The Parties may amend or supplement this Agreement by written agreement. The amendments or supplements to this Agreement duly executed by bothParties shall form an integral part of this Agreement and shall have the same legal effect as this Agreement.20.2 This Agreement and any amendments, modifications, supplements, additions or changes hereto shall be in writing and shall be effective upon beingexecuted and sealed by the Parties hereto. 21.CounterpartsThis Agreement is made in Chinese in two originals, with each Party holding one original. Both originals have the same legal effect.[no text below] 9 [This page contains no body text]IN WITNESS WHEREOF, each Party has caused this Agreement to be executed by himself, its legal representative or its duly authorized representative asof the date first written above.Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Legal Representative/Authorized Representative: /s/ Hailong XiangSeal of Baidu Online Network Technology (Beijing) Co., Ltd.Party B: Yanhong Li/s/: Yanhong Li 10 Appendices: 1.Original Equity Pledge Agreement 2.Register of Shareholders of Beijing Baidu Netcom Technology Co., Ltd. 3.Resolutions of the Shareholders’ Meeting of Beijing Baidu Netcom Technology Co., Ltd. 11 Appendix IOriginal Equity Pledge Agreement No. Contract Name Parties Date of Execution1 Amended and Restated Equity Pledge Agreement Baidu OnlineNetwork Technology (Beijing)Co., Ltd.; Yanhong Li; YongXu 200503222 Equity Pledge Agreement Baidu OnlineNetwork Technology (Beijing)Co., Ltd.;Haoyu Shen 201101193 Update Agreement of Amended and Restated Equity Pledge Agreement Baidu OnlineNetwork Technology (Beijing)Co., Ltd.; Yanhong Li; HaoyuShen; Zhan Wang 201108264 Equity Pledge Agreement Baidu OnlineNetwork Technology (Beijing)Co., Ltd.; Yanhong Li 201112015 Amended and Restated Equity Pledge Agreement Baidu OnlineNetwork Technology (Beijing)Co., Ltd.; Yanhong Li 201511306 Amended and Restated Equity Pledge Agreement Baidu OnlineNetwork Technology (Beijing)Co., Ltd.; Yanhong Li 20151231 12 Register of shareholders of Beijing Baidu Netcom Technology Co., Ltd. Name of the Shareholder: Yanhong LiID number: 110108196811171874Residence Room 901, Suite 1 Building 1, Section 2, ShanghecunResidential Quarter, Haidian District, BeijingContribution Amount: RMB2,160,423,600Percentage of Share Capital: 99.5%Number of the certificate ofcapital contribution: 001Yanhong Li holds 99.5% equity interests in Beijing Baidu Netcom Technology Co., Ltd., the entirety of which has been pledged to Baidu Online NetworkTechnology (Beijing) Co., Ltd. Name of the Shareholder: Hailong XiangID number: 51220119770824001XResidence Room 301 60 Lane 1351 Hua Ling Road, Baoshan District, ShanghaiContribution Amount: RMB10,856,400Percentage of Share Capital: 0.5%Number of the certificate ofcapital contribution: 002Hailong Xiang holds 0.5% equity interests in Beijing Baidu Netcom Technology Co., Ltd., the entirety of which has been pledged to Baidu Online NetworkTechnology (Beijing) Co., Ltd.Baidu Online Network Technology (Beijing) Co., Ltd. is the pledgee of 100% of the equity interests in Beijing Baidu Netcom Technology Co., Ltd. Beijing Baidu Netcom Technology Co., Ltd.Signature: /s/ Zhixiang LiangName: Zhixiang LiangTitle: Legal representativeDate: January 18, 2017 13 Resolutions of the Shareholders’ Meeting of Beijing Baidu Netcom Technology Co., Ltd.In respect of the Amended and Restated Equity Pledge Agreement dated January 18, 2017 between the shareholders of Beijing Baidu Netcom TechnologyCo., Ltd. (the “Company”) and Beijing Online Network Technology (Beijing) Co., Ltd., a resolution is unanimously adopted at the shareholders’ meeting ofthe Company that:It is approved that the shareholders of the Company pledge all of their equity interests in the Company to Baidu Online Network Technology (Beijing) Co.,Ltd.The resolution was signed and delivered on January 18, 2017 by the undersigned shareholders. Shareholders:Yanhong LiSigned by: /s/ Yanhong Li Hailong XiangSigned by: /s/ Hailong Xiang 14 Exhibit 4.51AMENDED AND RESTATED EXCLUSIVE EQUITY PURCHASE AND TRANSFER OPTION AGREEMENTThis Amended and Restated Exclusive Equity Purchase and Transfer Option Agreement (this “Agreement”) is entered into by and among the followingparties in Beijing, PRC on January 18, 2017: Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Address: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingParty B: Hailong XiangID No.: Party C: Beijing Baidu Netcom Science Technology Co., Ltd.Address: 2/F Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingIn this Agreement, Party A, Party B and Party C are called collectively as the “Parties” and each of them is a “Party.”WHEREAS:1. Party A is a wholly foreign-owned enterprise incorporated under the laws of the People’s Republic of China (the “PRC”);2. Party C is a liability limited company incorporated in Beijing, the PRC;3. Party B is a shareholder of Party C, owning 0.5% equity interests in Party C (the “Equity Interest”);4. Party A and Party B entered into a Amended and Restated Loan Agreement dated January 18, 2017, whereby Party B obtains a loan (the “LoanArrangement”);5. Party A and Party C entered into a series of agreement on March 22, 2005, including the Exclusive Technology Consulting and Services Agreement (the“Services Agreements”); and6. Party A and Party B entered into an Amended and Restated Equity Pledge Agreement (the “Equity Pledge Agreement”) dated January 18, 2017;7. Party A and Party B have entered into a series of equity purchase and transfer option agreements (collectively the “Original Equity Purchase and TransferOption Agreement”) listed in Appendix I hereof, and both Parties hereto now agree to execute this Agreement to amend and restate the Original EquityPurchase and Transfer Option Agreement. This Agreement shall supersede and replace the Original Equity Purchase and Transfer Option Agreement as of theeffective time provided herein.NOW, THEREFORE, the Parties agree as follows through negotiations and to be bound hereby: 1.Purchase and Sale of Equity Interest1.1 Granting of Rights 1 Party B hereby irrevocably grants to Party A an option to purchase or cause any one or more designated persons (“Designated Persons”) to purchase, to theextent permitted under PRC law, according to the steps determined by Party A, at the price specified in Article 1.3 of this Agreement, and at any time fromParty B (the “Transferor”), a portion or all of the equity interests held by Party B in Party C (the “Option”). No Option shall be granted to any third partyother than Party A and/or the Designated Persons. Party C hereby agrees to granting of the Option by Party B to Party A and/or the Designated Persons. Forpurpose of this Section 1.1 and this Agreement, “person” means individual, corporation, joint venture, partnership, enterprise, trust or unincorporatedorganization.1.2 Exercise StepsSubject to PRC law and regulations, Party A and/or the Designated Persons may exercise the Option by issuing a written notice (the “Option Notice”) to theTransferor, specifying the equity interest to be purchased from the Transferor (the “Purchased Equity Interest”) and the manner of such purchase.1.3 Purchase Price1.3.1 If Party A exercises the Option, the purchase price of the Purchased Equity Interest (“Purchase Price”) shall be equal to the actual paid-in capital paidby the Transferor for the Purchased Equity Interest, unless then applicable PRC laws and regulations require appraisal of the Purchased Equity Interest orstipulate other restrictions on the Purchase price.1.3.2 If the applicable PRC laws require appraisal of the Purchased Equity Interest or stipulate other restrictions on the Purchase Price at the time that Party Aexercises the Option, the Parties agree that the Purchase Price shall be set at the lowest price permissible under applicable law.1.4 Transfer of the Purchased Equity InterestAt each exercise of the Option:1.4.1 The Transferor shall, in accordance the terms and conditions of this Agreement and the Option Notice in connection with the Purchased Equity Interest,enter into an equity transfer agreement with Party A and/or the Designated Persons (as applicable) for each transfer in a substance and form satisfactory toParty A;1.4.2 The Transferor shall execute all other requisite contracts, agreements or documents, obtain all requisite government approvals and consents, and take allnecessary actions to unconditionally transfer the valid ownership of the Purchased Equity Interest to Party A and/or the Designated Persons free of anysecurity interest, and cause Party A and/or the Designated Persons to be the registered owner(s) of the Purchased Equity Interest. For purpose of thisSection 1.4.2 and this Agreement, “Security Interest” includes without limitation guaranty, mortgage, pledge, third-party right or interest, any share option,right of acquisition, right of first refusal, right of set-off, ownership retention or other security arrangements. However, it does not include any security interestarising under the Equity Pledge Agreement. 2 1.5 PaymentPayment manner of the Purchase Price shall be determined through negotiations between Party A and/or the Designated Persons and the Transferor inaccordance with then applicable laws at the exercise of the Option. The Parties hereby agree that, subject to applicable laws, Transferor shall repay to Party Aany amount that is paid by Party A and/or the Designated Persons to the Transferor in connection with the Purchased Equity Interest (which amount may benet of any tax and other fees (if any) paid by the Transferor in connection with the proposed transaction contemplated under the transfer agreement). 2.Covenants Relating to the Equity Interest2.1 Covenants Relating to Party CParty B and Party C hereby covenant, in relation to Party C:2.1.1 Not to supplement, amend or modify Party C’s articles of association in any way, or to increase or decrease its registered capital, or to change itsregistered capital structure in any way without Party A’s prior written consent;2.1.2 To maintain the corporate existence of Party C and operate its business and deal with matters prudently and effectively according to good financial andbusiness rules and practices;2.1.3 Not to sell, transfer, mortgage or otherwise dispose of, or permit any other security interest to be created on, any of Party C’s assets, business or legal orbeneficial interests in its revenue at any time after the signing of this Agreement without Party A’s prior written consent;2.1.4 Not to incur, succeed to, guarantee or permit the existence of any liability, without Party A’s prior written consent, except (i) liabilities arising from thenormal course of business, but not arising from loans; and (ii) liabilities disclosed to Party A and approved by Party A in writing;2.1.5 To operate persistently all the business in the normal course of business to maintain the value of Party C’s assets, and not to commit any act or omissionthat would affect its operations and asset value;2.1.6 Without prior written consent by Party A, not to enter into any material agreement, other than agreements entered into in Party C’s normal course ofbusiness (for purpose of this paragraph, an agreement will be deemed material if its value exceeds RMB500,000);2.1.7 Not to provide loans or credit to any person without Party A’s prior written consent;2.1.8 To provide all information relating to Party C’s operations and financial conditions upon the request of Party A; 3 2.1.9 To purchase and maintain insurance from insurance companies accepted by Party A. The amount and category of the insurance shall be the same asthose of the insurance normally procured by companies engaged in similar businesses and possessing similar properties or assets in the area where Party C islocated;2.1.10 Not to merge or consolidate with, or acquire or invest in, any person without Party A’s prior written consent;2.1.11 To promptly notify Party A of any pending or threatened suit, arbitration or administrative proceedings concerning Party C’s assets, business orrevenue;2.1.12 To execute all necessary or appropriate documents, take all necessary or appropriate actions and to bring all necessary or appropriate claims or to makeall necessary and appropriate defenses against all claims in order for Party C to maintain the ownership over all its assets;2.1.13 Not to distribute dividends to Party C’s shareholders in any way without Party A’s prior written consent. However, Party C shall promptly distribute allor part of its distributable profits to its shareholders upon Party A’s request;2.1.14 At the request of Party A, to appoint persons nominated by Party A to be executive directors of Party C;2.2 Covenants Relating to the TransferorParty B hereby covenants:2.2.1 Not to sell, transfer, mortgage or otherwise dispose of, or allow any other security interest to be created on, the legal or beneficial interest in the EquityInterest at any time after the signing of this Agreement without Party A’s prior written consent, other than the pledge created on the Transferor’s EquityInterest in accordance with the Equity Pledge Agreement;2.2.2 Without Party A’s prior written consent, not to vote for or sign any shareholders’ resolution at Party C’s shareholders’ meetings to approve the sale,transfer, mortgage or disposition in any other manner of, or the creation of any other security interest on, any legal or beneficial interest in the Equity Interest,except to or for the benefit of Party A or its designated persons;2.2.3 Without Party A’s prior written consent, not to vote for or sign any shareholders’ resolution at Party C’s shareholders’ meetings to approve Party C’smerger or consolidation with, acquisition of or investment in, any person;2.2.4 To promptly notify Party A of any pending or threatened suit, arbitration or administrative proceedings concerning the Equity Interest owned by it; 4 2.2.5 To execute all necessary or appropriate documents, to take all necessary or appropriate actions and to bring all necessary or appropriate claims or tomake all necessary and appropriate defenses against all claims in order to maintain his ownership over the Equity Interest; 2.2.6At the request of Party A, to appoint persons nominated by Party A to be executive directors of Party C;2.2.7 At any time upon the request of Party A, to transfer its Equity Interest immediately and unconditionally to the representative designated by Party A, andwaive its preemptive right with respect to the transfer of equity interest by the other shareholder of Party C;2.2.8 To fully comply with the provisions of this Agreement and the other agreements entered into jointly or respectively by and among the Transferor, PartyC and Party A, perform all obligations under these agreements and not commit any act or omission that would affect the validity and enforceability of theseagreements; and 2.2.9To transfer to Party A all dividends and any other form of profit distributed to it by Party C.2.3 Covenants Relating to Party AParty A hereby covenants:2.3.1 If Party C needs any loan or other capital support in its business, under acceptable and reasonable scope, Party A shall provide such capital supportwithout imposing any condition or restriction; and2.3.2 If Party C cannot repay the loan from Party A as loss incurred and has sufficient evidence to prove, Party A agrees that it will unconditionally give up itsright to require Party C to repay the loan. 3.Representations and WarrantiesAs of the date of this Agreement and each transfer date, each of the Transferor and Party C hereby represents and warrants to Party A as follows:3.1 It has the power and authority to execute and deliver this Agreement, and any equity transfer agreement (the “Transfer Agreement”) to which it is a partyfor each transfer of the Purchased Equity under this Agreement and to perform its obligations under this Agreement and any Transfer Agreement. Onceexecuted, this Agreement and any Transfer Agreement to which it is party will constitute a legal, valid and binding obligation of it enforceable against it inaccordance with its terms;3.2 The execution, delivery and performance of this Agreement or any Transfer Agreement by it will not: (i) violate any relevant PRC laws and regulations;(ii) conflict with its articles of association or other organizational documents; (iii) violate or constitute a default under any contract or instrument to which itis party or that binds upon it; (iv) violate any condition for the grant and/or continued effectiveness of any permit or approval granted to it; or (v) cause anypermit or approval granted to it to be suspended, cancelled or attached with additional conditions; 5 3.3 Party C has good and marketable ownership interest in all of its assets and has not created any security interest on the said assets;3.4 Party C has no outstanding liabilities, except (i) liabilities arising in its normal course of business; and (ii) liabilities disclosed to Party A and approvedby Party A in writing;3.5 There are currently no existing, pending or threatened litigations, arbitrations or administrative proceedings related to the Equity Interest, Party C’s assetsor Party C; and3.6 The Transferor has good and marketable ownership interest in the Equity Interest and has not created any security interest on such Equity Interest, otherthan the security interest pursuant to the Equity Pledge Agreement. 4.Assignment of Agreement4.1 Party B and Party C shall not assign their rights and obligations under this Agreement to any third party without the prior written consent of Party A.4.2 Party B and Party C hereby agree that Party A may assign all its rights and obligation under this Agreement to a third party as Party A sees fit, in whichcase Party A only needs to give a written notice to Party B and Party C and no further consent of Party B or Party C is required. 5.Effectiveness and Term5.1 This Agreement shall be effective as of the date first set forth above, and terminate on the date when all the Equity Interests held by Party B in Party Chave been duly transferred to and under the name of Party A and/or the Designated Persons in accordance with this Agreement.5.2 If the duration of operation (including any extension thereof) of Party A or Party C is expired or terminated for other reasons within the term set forth inArticle 5.1, this Agreement shall be terminated simultaneously, except in the situation where Party A has assigned its rights and obligations in accordancewith Article 4.2 hereof. 6.Applicable Law and Dispute Resolution6.1 Applicable LawThe formation, validity, interpretation and performance of and resolution of any dispute arising from this Agreement shall be protected and governed by thelaws of the PRC. 6 6.2 Dispute ResolutionAny dispute arising in connection with the interpretation and performance of the provisions of this Agreement shall be resolved by the Parties in good faiththrough negotiations. In case no resolution can be reached by the Parties within thirty (30) days after either party makes a request for dispute resolutionthrough negotiations, either party may refer such dispute to China International Economic and Trade Arbitration Commission (“CIETAC”) for arbitration inaccordance with CIETAC’s arbitration rules then in effect. The seat of arbitration shall be Beijing and language of proceedings shall be Chinese. The arbitralaward shall be final and binding upon the Parties. 7.Taxes and ExpensesEvery Party shall, in accordance with PRC laws, bear any and all transfer and registration taxes, expenses and charges incurred by or levied on it with respectto the preparation and execution of this Agreement and each Transfer Agreement and the consummation of the transactions contemplated under thisAgreement and each Transfer Agreement. 8.NoticesAny notice or other communication forms which is given by the parties hereto shall be in Chinese and delivered personally to the addresses listed as below orthe addresses designated by the Parties. The notice time which is deemed as the time when the notice actually reaches the addressee follows: (a) the noticetime of the notice delivered personally shall be the day when the person conducts the delivery; (b) the notice time of the notice delivered as mail shall be thetenth (10th) day following the mailing date of the registered mail by air (marked by seal) or shall be the fourth (4th) day following the day handing tointernally recognized delivery services organizations; and (c) the notice time of the notice delivered by facsimile shall be the acceptance time on the deliveryconfirmation. Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Address: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingFacsimile: 59927435Telephone: 59928888Party B: Hailong XiangAddress: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingFacsimile: 59927435Telephone: 59928888Party C: Beijing Baidu Netcom Science Technology Co., Ltd.Address: 2/F Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingFacsimile: 59927435Telephone: 59928888 7 9.ConfidentialityThe Parties acknowledge and confirm any oral or written materials exchanged by the Parties in connection with this Agreement are confidential. The Partiesshall maintain the confidentiality of all such materials. Without the written approval by the other Parties, any Party shall not disclose to any third party anyrelevant materials, but the following circumstances shall be excluded: a.Materials that are or will become known by the public (through no fault of the receiving party); b.Materials required to be disclosed by the applicable laws or rules of the stock exchange; and c.Materials disclosed by each Party to its legal or financial advisors relating the transactions contemplated by this Agreement, and such legal orfinancial advisors shall comply with the confidentiality provisions similar to this article.The disclosure of information by the staff or consultants of any party shall be deemed as disclosure by the party itself. This Article 9 shall survive anyinvalidity, termination, expiration or unenforceability of this Agreement. 10.Further AssurancesThe Parties agree to promptly execute documents and take further actions that are reasonably required for, or beneficial to, the purpose of performing theprovisions and carrying out the intent of this Agreement. 11.Miscellaneous11.1 Amendment, Modification or SupplementAny amendment or supplement to this Agreement shall be made by the Parties in writing. The amendments or supplements duly executed by each Party shallbe deemed as a part of this Agreement and shall have the same legal effect as this Agreement.11.2 Entire AgreementNotwithstanding Article 5 of this Agreement, the Parties acknowledge that once this Agreement becomes effective, it shall constitute the entire agreementand understanding of the Parties with respect to the subject matters hereof and shall supersede all prior oral and/or written agreements and understandings bythe Parties with respect to the subject matters hereof. This Agreement shall supersede the original exclusive equity purchase and transfer option agreementpreviously entered into by the Parties and other involved parties and such original exclusive equity purchase and transfer option agreement shall terminateimmediately after this Agreement becomes effective. 8 11.3 SeverabilityIf any provision of this Agreement is judged to be invalid, illegal or unenforceable in any respect according to any applicable law or regulation, the validity,legality and enforceability of the other provisions hereof shall not be affected or impaired in any way. The Parties shall, through good-faith negotiations,replace those invalid, illegal or unenforceable provisions with valid provisions that may bring about economic effects as similar as possible to those fromsuch invalid, illegal or unenforceable provisions.11.4 HeadingsThe headings contained in this Agreement are for the convenience of reference only and shall not be used for the interpretation or explanation or otherwiseaffect the meaning of the provisions of this Agreement.11.5 Language and counterpartsThis Agreement is executed in Chinese in three originals; each Party holds one original and each original has the same legal effect.11.6 SuccessorThis Agreement shall bind upon and inure to the benefit of the successors and permitted assigns of each Party.11.7 SurvivalAny obligation arising from or becoming due under this Agreement before its expiration or premature termination shall survive such expiration or prematuretermination. Articles 6, 8 and 9 and this Article 11.7 shall survive the termination of this Agreement.11.8 WaiverAny Party may waive the terms and conditions of this Agreement by a written instrument signed by the Parties. Any waiver by a Party to a breach by the otherParties in a specific situation shall not be construed as a waiver to any similar breach by the other Parties in other situations.[No text below] 9 [This page contains no body text]IN WITNESS WHEREOF, each Party has caused this Agreement to be executed by its legal representative or its duly authorized representative as of thedate first written above. Party A: Baidu Online Network Technology (Beijing) Co., Ltd./s/: Hailong XiangSeal of Baidu Online Network Technology (Beijing) Co., Ltd.Party B: Hailong Xiang/s/: Hailong XiangParty C: Beijing Baidu Netcom Science Technology Co., Ltd./s/: Zhixiang LiangSeal of Beijing Baidu Netcom Science Technology Co., Ltd. 10 Appendix IThe Original Equity Purchase and Transfer Option Agreement Number Contract Name Parties Date 1 Exclusive Equity Purchase and Transfer Option Agreement Baidu Online Network Technology (Beijing) Co., Ltd.;Hailong Xiang; Beijing Baidu Netcom Science TechnologyCo., Ltd. June 13, 2016 11 Exhibit 4.52AMENDED AND RESTATED EXCLUSIVE EQUITY PURCHASE AND TRANSFER OPTION AGREEMENT This Exclusive Equity Purchase and Transfer Option Agreement (this “Agreement”) is entered into by and among the following parties in Beijing, PRC onJanuary 18, 2017: Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Address: 3/F Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingParty B: Yanhong LiAddress: Party C: Beijing Baidu Netcom Science Technology Co., Ltd.Address: 2/F Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingIn this Agreement, Party A, Party B and Party C are called collectively as the “Parties” and each of them is a “Party.”WHEREAS:1. Party A is a wholly foreign-owned enterprise incorporated under the laws of the People’s Republic of China (the “PRC”);2. Party C is a liability limited company incorporated in Beijing, the PRC;3. Party B is a shareholder of Party C, owning 99.5% equity interests in Party C (the “Equity Interest”);4. Party A and Party B entered into an Amended and Restated Loan Agreement dated January 18, 2017, whereby Party B obtains a loan from Party A (the“Loan Arrangement”);5. Party A and Party C entered into a series of agreement on March 22, 2005, including the Exclusive Technology Consulting and Services Agreement (the“Services Agreements”); and6. Party A and Party B entered into an Amended and Restated Equity Pledge Agreement (the “Equity Pledge Agreement”) dated January 18, 2017; and7. Party A, Party B and other relevant parties have entered into a series of exclusive equity purchase and transfer option agreements (collectively the“Original Option Agreements”) listed in Appendix 1 hereof, and all the Parties hereto now agree to execute this Agreement to amend and restate the OriginalOption Agreements. This Agreement shall supersede and replace the Original Option Agreements as of the effective time provided herein.NOW, THEREFORE, the Parties agree as follows through negotiations and to be bound hereby: 1.Purchase and Sale of Equity Interest 1 1.1 Granting of RightsParty B hereby irrevocably grants to Party A an option to purchase or cause any one or more designated persons (“Designated Persons”) to purchase, to theextent permitted under PRC law, according to the steps determined by Party A, at the price specified in Article 1.3 of this Agreement, and at any time fromParty B (the “Transferor”), a portion or all of the equity interests held by Party B in Party C (the “Option”). No Option shall be granted to any third partyother than Party A and/or the Designated Persons. Party C hereby agrees to granting of the Option by Party B to Party A and/or the Designated Persons. Forpurpose of this Section 1.1 and this Agreement, “person” means individual, corporation, joint venture, partnership, enterprise, trust or unincorporatedorganization.1.2 Exercise StepsSubject to PRC law and regulations, Party A and/or the Designated Persons may exercise the Option by issuing a written notice (the “Option Notice”) to theTransferor, specifying the equity interest to be purchased from the Transferor (the “Purchased Equity Interest”) and the manner of such purchase.1.3 Purchase Price1.3.1 If Party A exercises the Option, the purchase price of the Purchased Equity Interest (“Purchase Price”) shall be equal to the actual paid-in capital paidby the Transferor for the Purchased Equity Interest, unless then applicable PRC laws and regulations require appraisal of the Purchased Equity Interest orstipulate other restrictions on the Purchase price.1.3.2 If the applicable PRC laws require appraisal of the Purchased Equity Interest or stipulate other restrictions on the Purchase Price at the time that Party Aexercises the Option, the Parties agree that the Purchase Price shall be set at the lowest price permissible under applicable law.1.4 Transfer of the Purchased Equity InterestAt each exercise of the Option:1.4.1 The Transferor shall, in accordance the terms and conditions of this Agreement and the Option Notice in connection with the Purchased Equity Interest,enter into an equity transfer agreement with Party A and/or the Designated Persons (as applicable) for each transfer in a substance and form satisfactory toParty A;1.4.2 The Transferor shall execute all other requisite contracts, agreements or documents, obtain all requisite government approvals and consents, and take allnecessary actions to unconditionally transfer the valid ownership of the Purchased Equity Interest to Party A and/or the Designated Persons free of anysecurity interest, and cause Party A and/or the Designated Persons to be the registered owner(s) of the Purchased Equity Interest. For purpose of thisSection 1.4.2 and this Agreement, “Security Interest” includes without limitation guaranty, mortgage, pledge, third-party right or interest, any share option,right of acquisition, right of first refusal, right of set-off, ownership retention or other security arrangements. However, it does not include any security interestarising under the Equity Pledge Agreement. 2 1.5 PaymentPayment manner of the Purchase Price shall be determined through negotiations between Party A and/or the Designated Persons and the Transferor inaccordance with then applicable laws at the exercise of the Option. The Parties hereby agree that, subject to applicable laws, Transferor shall repay to Party Aany amount that is paid by Party A and/or the Designated Persons to the Transferor in connection with the Purchased Equity Interest (which amount may benet of any tax and other fees (if any) paid by the Transferor in connection with the proposed transaction contemplated under the transfer agreement). 2.Covenants Relating to the Equity Interest2.1 Covenants Relating to Party CParty B and Party C hereby covenant, in relation to Party C:2.1.1 Not to supplement, amend or modify Party C’s articles of association in any way, or to increase or decrease its registered capital, or to change itsregistered capital structure in any way without Party A’s prior written consent;2.1.2 To maintain the corporate existence of Party C and operate its business and deal with matters prudently and effectively according to good financial andbusiness rules and practices;2.1.3 Not to sell, transfer, mortgage or otherwise dispose of, or permit any other security interest to be created on, any of Party C’s assets, business or legal orbeneficial interests in its revenue at any time after the signing of this Agreement without Party A’s prior written consent;2.1.4 Not to incur, succeed to, guarantee or permit the existence of any liability, without Party A’s prior written consent, except (i) liabilities arising from thenormal course of business, but not arising from loans; and (ii) liabilities disclosed to Party A and approved by Party A in writing;2.1.5 To operate persistently all the business in the normal course of business to maintain the value of Party C’s assets, and not to commit any act or omissionthat would affect its operations and asset value;2.1.6 Without prior written consent by Party A, not to enter into any material agreement, other than agreements entered into in Party C’s normal course ofbusiness (for purpose of this paragraph, an agreement will be deemed material if its value exceeds RMB500,000);2.1.7 Not to provide loans or credit to any person without Party A’s prior written consent; 3 2.1.8 To provide all information relating to Party C’s operations and financial conditions upon the request of Party A;2.1.9 To purchase and maintain insurance from insurance companies accepted by Party A. The amount and category of the insurance shall be the same asthose of the insurance normally procured by companies engaged in similar businesses and possessing similar properties or assets in the area where Party C islocated;2.1.10 Not to merge or consolidate with, or acquire or invest in, any person without Party A’s prior written consent;2.1.11 To promptly notify Party A of any pending or threatened suit, arbitration or administrative proceedings concerning Party C’s assets, business orrevenue;2.1.12 To execute all necessary or appropriate documents, take all necessary or appropriate actions and to bring all necessary or appropriate claims or to makeall necessary and appropriate defenses against all claims in order for Party C to maintain the ownership over all its assets;2.1.13 Not to distribute dividends to Party C’s shareholders in any way without Party A’s prior written consent. However, Party C shall promptly distribute allor part of its distributable profits to its shareholders upon Party A’s request;2.1.14 At the request of Party A, to appoint persons nominated by Party A to be executive directors of Party C;2.2 Covenants Relating to the TransferorParty B hereby covenants:2.2.1 Not to sell, transfer, mortgage or otherwise dispose of, or allow any other security interest to be created on, the legal or beneficial interest in the EquityInterest at any time after the signing of this Agreement without Party A’s prior written consent, other than the pledge created on the Transferor’s EquityInterest in accordance with the Equity Pledge Agreement;2.2.2 Without Party A’s prior written consent, not to vote for or sign any shareholders’ resolution at Party C’s shareholders’ meetings to approve the sale,transfer, mortgage or disposition in any other manner of, or the creation of any other security interest on, any legal or beneficial interest in the Equity Interest,except to or for the benefit of Party A or its designated persons;2.2.3 Without Party A’s prior written consent, not to vote for or sign any shareholders’ resolution at Party C’s shareholders’ meetings to approve Party C’smerger or consolidation with, acquisition of or investment in, any person;2.2.4 To promptly notify Party A of any pending or threatened suit, arbitration or administrative proceedings concerning the Equity Interest owned by it; 4 2.2.5 To execute all necessary or appropriate documents, to take all necessary or appropriate actions and to bring all necessary or appropriate claims or tomake all necessary and appropriate defenses against all claims in order to maintain his ownership over the Equity Interest;2.2.6 At the request of Party A, to appoint persons nominated by Party A to be executive directors of Party C;2.2.7 At any time upon the request of Party A, to transfer its Equity Interest immediately and unconditionally to the representative designated by Party A, andwaive its preemptive right with respect to the transfer of equity interest by the other shareholder of Party C;2.2.8 To fully comply with the provisions of this Agreement and the other agreements entered into jointly or respectively by and among the Transferor, PartyC and Party A, perform all obligations under these agreements and not commit any act or omission that would affect the validity and enforceability of theseagreements; and2.2.9 To transfer to Party A all dividends and any other form of profit distributed to it by Party C.2.3 Covenants Relating to Party AParty A hereby covenants:2.3.1 If Party C needs any loan or other capital support in its business, under acceptable and reasonable scope, Party A shall provide such capital supportwithout imposing any condition or restriction; and2.3.2 If Party C cannot repay the loan from Party A as loss incurred and has sufficient evidence to prove, Party A agrees that it will unconditionally give up itsright to require Party C to repay the loan. 3.Representations and WarrantiesAs of the date of this Agreement and each transfer date, each of the Transferor and Party C hereby represents and warrants to Party A as follows:3.1 It has the power and authority to execute and deliver this Agreement, and any equity transfer agreement (the “Transfer Agreement”) to which it is a partyfor each transfer of the Purchased Equity under this Agreement and to perform its obligations under this Agreement and any Transfer Agreement. Onceexecuted, this Agreement and any Transfer Agreement to which it is party will constitute a legal, valid and binding obligation of it enforceable against it inaccordance with its terms;3.2 The execution, delivery and performance of this Agreement or any Transfer Agreement by it will not: (i) violate any relevant PRC laws and regulations;(ii) conflict with its articles of association or other organizational documents; (iii) violate or constitute a default under any contract or instrument to which itis party or that binds upon it; (iv) violate any condition for the grant and/or continued effectiveness of any permit or approval granted to it; or (v) cause anypermit or approval granted to it to be suspended, cancelled or attached with additional conditions; 5 3.3 Party C has good and marketable ownership interest in all of its assets and has not created any security interest on the said assets;3.4 Party C has no outstanding liabilities, except (i) liabilities arising in its normal course of business; and (ii) liabilities disclosed to Party A and approvedby Party A in writing;3.5 There are currently no existing, pending or threatened litigations, arbitrations or administrative proceedings related to the Equity Interest, Party C’s assetsor Party C; and3.6 The Transferor has good and marketable ownership interest in the Equity Interest and has not created any security interest on such Equity Interest, otherthan the security interest pursuant to the Equity Pledge Agreement. 4.Assignment of Agreement4.1 Party B and Party C shall not assign their rights and obligations under this Agreement to any third party without the prior written consent of Party A.4.2 Party B and Party C hereby agree that Party A may assign all its rights and obligation under this Agreement to a third party as Party A sees fit, in whichcase Party A only needs to give a written notice to Party B and Party C and no further consent of Party B or Party C is required. 5.Effectiveness and Term5.1 This Agreement shall be effective as of the date first set forth above.5.2 This Agreement shall remain valid for ten (10) years unless early terminated pursuant to the terms of this Agreement or other relevant agreementseparately executed by the Parties. Party B and Party C confirm that this Agreement may be extended with Party A’s written confirmation prior to the expiryof the effective term hereof without obtaining the consent of Party B or Party C; the extension period shall be determined by the Parties upon consultations.5.3 If the duration of operation (including any extension thereof) of Party A or Party C is expired or terminated for other reasons within the term set forth inArticle 5.2, this Agreement shall be terminated simultaneously, except in the situation where Party A has assigned its rights and obligations in accordancewith Article 4.2 hereof. 6.Applicable Law and Dispute Resolution6.1 Applicable LawThe formation, validity, interpretation and performance of and resolution of any dispute arising from this Agreement shall be protected and governed by thelaws of the PRC. 6 6.2Dispute ResolutionAny dispute arising in connection with the interpretation and performance of the provisions of this Agreement shall be resolved by the Parties in good faiththrough negotiations. In case no resolution can be reached by the Parties within thirty (30) days after either party makes a request for dispute resolutionthrough negotiations, either party may refer such dispute to China International Economic and Trade Arbitration Commission (“CIETAC”) for arbitration inaccordance with CIETAC’s arbitration rules then in effect. The seat of arbitration shall be Beijing and language of proceedings shall be Chinese. The arbitralaward shall be final and binding upon the Parties. 7.Taxes and ExpensesEvery Party shall, in accordance with PRC laws, bear any and all transfer and registration taxes, expenses and charges incurred by or levied on it with respectto the preparation and execution of this Agreement and each Transfer Agreement and the consummation of the transactions contemplated under thisAgreement and each Transfer Agreement. 8.NoticesAny notice or other communication forms which is given by the parties hereto shall be in Chinese and delivered personally to the addresses listed as below orthe addresses designated by the Parties. The notice time which is deemed as the time when the notice actually reaches the addressee follows: (a) the noticetime of the notice delivered personally shall be the day when the person conducts the delivery; (b) the notice time of the notice delivered as mail shall be thetenth (10th) day following the mailing date of the registered mail by air (marked by seal) or shall be the fourth (4th) day following the day handing tointernally recognized delivery services organizations; and (c) the notice time of the notice delivered by facsimile shall be the acceptance time on the deliveryconfirmation. Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Address: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingFacsimile: 59927435Telephone: 59928888Party B: Yanhong LiAddress: Facsimile: 59927435Telephone: 59928888Party C: Beijing Baidu Netcom Science Technology Co., Ltd.Address: 2/F Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingFacsimile: 59927435Telephone: 59928888 7 9.ConfidentialityThe Parties acknowledge and confirm any oral or written materials exchanged by the Parties in connection with this Agreement are confidential. The Partiesshall maintain the confidentiality of all such materials. Without the written approval by the other Parties, any Party shall not disclose to any third party anyrelevant materials, but the following circumstances shall be excluded: a.Materials that are or will become known by the public (through no fault of the receiving party); b.Materials required to be disclosed by the applicable laws or rules of the stock exchange; and c.Materials disclosed by each Party to its legal or financial advisors relating the transactions contemplated by this Agreement, and such legal orfinancial advisors shall comply with the confidentiality provisions similar to this article.The disclosure of information by the staff or consultants of any party shall be deemed as disclosure by the party itself. This Article 9 shall survive anyinvalidity, termination, expiration or unenforceability of this Agreement. 10.Further AssurancesThe Parties agree to promptly execute documents and take further actions that are reasonably required for, or beneficial to, the purpose of performing theprovisions and carrying out the intent of this Agreement. 11.Miscellaneous11.1 Amendment, Modification or SupplementAny amendment or supplement to this Agreement shall be made by the Parties in writing. The amendments or supplements duly executed by each Party shallbe deemed as a part of this Agreement and shall have the same legal effect as this Agreement. 11.2Entire AgreementNotwithstanding Article 5 of this Agreement, the Parties acknowledge that once this Agreement becomes effective, it shall constitute the entire agreementand understanding of the Parties with respect to the subject matters hereof and shall supersede all prior oral and/or written agreements and understandings bythe Parties with respect to the subject matters hereof. This Agreement shall supersede the original exclusive equity purchase and transfer option agreementpreviously entered into by the Parties and other involved parties and such original exclusive equity purchase and transfer option agreement shall terminateimmediately after this Agreement becomes effective. 8 11.3 SeverabilityIf any provision of this Agreement is judged to be invalid, illegal or unenforceable in any respect according to any applicable law or regulation, the validity,legality and enforceability of the other provisions hereof shall not be affected or impaired in any way. The Parties shall, through good-faith negotiations,replace those invalid, illegal or unenforceable provisions with valid provisions that may bring about economic effects as similar as possible to those fromsuch invalid, illegal or unenforceable provisions.11.4 HeadingsThe headings contained in this Agreement are for the convenience of reference only and shall not be used for the interpretation or explanation or otherwiseaffect the meaning of the provisions of this Agreement.11.5 Language and counterpartsThis Agreement is executed in Chinese in three originals; each Party holds one original and each original has the same legal effect.11.6 SuccessorThis Agreement shall bind upon and inure to the benefit of the successors and permitted assigns of each Party.11.7 SurvivalAny obligation arising from or becoming due under this Agreement before its expiration or premature termination shall survive such expiration or prematuretermination. Articles 6, 8 and 9 and this Article 11.7 shall survive the termination of this Agreement.11.8 WaiverAny Party may waive the terms and conditions of this Agreement by a written instrument signed by the Parties. Any waiver by a Party to a breach by the otherParties in a specific situation shall not be construed as a waiver to any similar breach by the other Parties in other situations.[No text below] 9 [This page contains no body text]IN WITNESS WHEREOF, each Party has caused this Agreement to be executed by its legal representative or its duly authorized representative as of thedate first written above. Party A: Baidu Online Network Technology (Beijing) Co., Ltd./s/: Hailong XiangSeal of Baidu Online Network Technology (Beijing) Co., Ltd.Party B: Yanhong Li/s/: Yanhong LiParty C: Beijing Baidu Netcom Science Technology Co., Ltd./s/: Zhixiang LiangSeal of Beijing Baidu Netcom Science Technology Co., Ltd. 10 Appendix 1Original Option Agreement No. Contract Name Parties Date of Execution1 Amended and Restated ExclusiveOption Agreement Baidu OnlineNetwork Technology(Beijing) Co., Ltd.;Beijing Baidu NetcomScience TechnologyCo., Ltd.; YanhongLi; Yong Xu 200503222 Exclusive Option Agreement forCapital Increase Equity Baidu OnlineNetwork Technology(Beijing) Co., Ltd.;Beijing Baidu NetcomScience TechnologyCo., Ltd.; Yanhong Li; 200602103 Exclusive Equity Option Agreement Baidu OnlineNetwork Technology(Beijing) Co., Ltd.;Beijing Baidu NetcomScience TechnologyCo., Ltd.; Yanhong Li; 200803064 Supplementary Agreement to Amendedand Restated Exclusive OptionAgreement Baidu OnlineNetwork Technology(Beijing) Co., Ltd.;Beijing Baidu NetcomScience TechnologyCo., Ltd.; YanhongLi; Yong Xu 201004225 Update Agreement of Amended andRestated Exclusive Option Agreementand its Supplementary Agreement Baidu OnlineNetwork Technology(Beijing) Co., Ltd.;Beijing Baidu NetcomScience TechnologyCo., Ltd.; YanhongLi; Haoyu Shen; Zhan Wang 20110826 11 6 Amended and Restated Exclusive Option Agreement Baidu OnlineNetwork Technology(Beijing) Co., Ltd.;Beijing Baidu NetcomScience Technology Co.,Ltd.; Yanhong Li 201511307 Amended and Restated Exclusive Option Agreement Baidu OnlineNetwork Technology(Beijing) Co., Ltd.; Beijing BaiduNetcom Science Technology Co.,Ltd.; Yanhong Li; 20151231 12 Exhibit 4.53Irrevocable Power of AttorneyI, Yanhong Li, citizen of the People’s Republic of China (the “ PRC”) with ID No.: , is the shareholder holding 99.5% equity interestsof Beijing Baidu Netcom Science Technology Co., Ltd. (the “Baidu Netcom”), hereby irrevocably appoint Hailong Xiang with the following powers andrights during the term of this Power of Attorney, with respect to my current and future equity interests in Baidu Netcom (“My Equity”):I hereby appoint Hailong Xiang as my sole and exclusive agent, to exercise, on my behalf, all voting rights of shareholder in accordance with PRC laws andBaidu Netcom’s Articles of Association at the shareholders’ meetings of Baidu Netcom, including but not limited to the right to sell or transfer any or all ofequity interests of Baidu Netcom held by me and to designate and appoint the general manager of Baidu Netcom as my authorized representative on theshareholders’ meeting of Baidu Netcom.The authorization and appointment are conditioned on that Hailong Xiang is acting as an employee of Baidu Online Network Technology (Beijing) Co., Ltd(“Baidu Online”) and Baidu Online approves the authorization and appointment. Once Hailong Xiang loses his title or position in Baidu Online or BaiduOnline notifies me to terminate the authorization and appointment, I will withdraw the authorization and appointment immediately and designate/authorizethe other individual nominated by Baidu Online to exercise the full voting rights on my behalf at the shareholders’ meetings of Baidu Netcom.Unless otherwise expressly provided herein, this Power of Attorney is irrevocable and continues to have effect as of the date hereof so long as I hold equityinterests in Baidu Netcom. Signature: /s/ Yanhong liDate: June 13, 2016 1 Exhibit 4.54Irrevocable Power of AttorneyI, Hailong Xiang, citizen of the People’s Republic of China (the “ PRC”) with ID No.: , is the shareholder holding 0.5% equity interestsof Beijing Baidu Netcom Science Technology Co., Ltd. (the “Baidu Netcom”), hereby irrevocably appoint Hailong Xiang with the following powers andrights during the term of this Power of Attorney, with respect to my current and future equity interests in Baidu Netcom (“My Equity”):I hereby appoint Hailong Xiang as my sole and exclusive agent, to exercise, on my behalf, all voting rights of shareholder in accordance with PRC laws andBaidu Netcom’s Articles of Association at the shareholders’ meetings of Baidu Netcom, including but not limited to the right to sell or transfer any or all ofequity interests of Baidu Netcom held by me and to designate and appoint the general manager of Baidu Netcom as my authorized representative on theshareholders’ meeting of Baidu Netcom.The authorization and appointment are conditioned on that Hailong Xiang is acting as an employee of Baidu Online Network Technology (Beijing) Co., Ltd(“Baidu Online”) and Baidu Online approves the authorization and appointment. Once Hailong Xiang loses his title or position in Baidu Online or BaiduOnline notifies me to terminate the authorization and appointment, I will withdraw the authorization and appointment immediately and designate/authorizethe other individual nominated by Baidu Online to exercise the full voting rights on my behalf at the shareholders’ meetings of Baidu Netcom.Unless otherwise expressly provided herein, this Power of Attorney is irrevocable and continues to have effect as of the date hereof so long as I hold equityinterests in Baidu Netcom. Signature: /s/ Hailong XiangDate: June 13, 2016 1 Exhibit 4.55Termination of Power of AttorneyWHEREAS, Zhixiang Liang (ID No. ), as instructed by Baidu Online Network Technology (Beijing) Co., Ltd. (the “Baidu Online”),signed a Power of Attorney on April 23, 2012 authorizing Zhan Wang (ID No. ) to exercise on behalf of Zhixiang Liang all votingrights of shareholder at the shareholders’ meetings of Beijing BaiduPay Science and Technology Co., Ltd. (the “Power of Attorney”).WHEREAS, Zhan Wang has resigned from Baidu Online Network Technology (Beijing) Co., Ltd.NOW, THEREFORE, Baidu Online and Zhixiang Liang hereby confirm that the Power of Attorney, all authorizations and appointments thereunder, and allrights and interests obtained by Zhang Wang thereby, are terminated unconditionally as of October 18, 2016.This Confirmation Letter is signed and effective as of October 18, 2016.Baidu Online Network Technology (Beijing) Co., Ltd.Seal of Baidu Online Network Technology (Beijing) Co., Ltd.Zhixiang Liang Signature: /s/ Zhixiang Liang 1 Exhibit 4.56Irrevocable Power of AttorneyI, Zhixiang Liang, citizen of the People’s Republic of China (the “ PRC”) with ID No.: , is the shareholder holding 5.418% equityinterests of Beijing BaiduPay Science and Technology Co., Ltd.(the “BaiduPay”), hereby irrevocably appoint Hailong Xiang with the following powers andrights during the effective term of this Power of Attorney:I hereby appoint Hailong Xiang to exercise, on my behalf, all voting rights of shareholder in accordance with PRC laws and BaiduPay’s Articles ofAssociation at the shareholders’ meetings of BaiduPay, including but not limited to the right to sell or transfer any or all of equity interests of BaiduPay heldby me and to designate and appoint the general manager of BaiduPay as my authorized representative on the shareholders’ meeting of the BaiduPay.The authorization and appointment above stated are conditioned on that Hailong Xiang is acting as an employee of Baidu Online Network Technology(Beijing) Co., Ltd (the “Baidu Online”) and Baidu Online agrees the above stated authorization and appointment. Once Hailong Xiang quits or leaves BaiduOnline or Baidu Online notifies me to terminate the authorization and appointment, I will withdraw the authorization and appointment immediately anddesignate/authorize any other individuals nominated by Baidu Online to exercise the full voting rights on my behalf at the shareholders’ meetings ofBaiduPay.Unless otherwise expressly provided herein, this Power of Attorney is irrevocable and continues to have effect as of the date hereof as long as I hold equityinterests in BaiduPay.Zhixiang Liang Signature: /s/ Zhixiang LiangDate: October 18, 2016 1 Exhibit 4.57Acceptance of the Irrevocable Power of Attorney To:Mr. Zhixiang LiangBaidu Online Network Technology (Beijing) Co., Ltd.I, as an employee of Baidu Online Network Technology (Beijing) Co., Ltd. (“Baidu Online”), accept the appointment under the Irrevocable Power ofAttorney signed by Zhixiang Liang on October 18, 2016 (the “Power of Attorney”) to exercise on behalf of Zhixiang Liang all voting rights of shareholder atthe shareholders’ meetings of Beijing BaiduPay Science and Technology Co., Ltd. (“BaiduPay”), and undertake to Zhixiang Liang and Baidu Online asfollows: IDuring the term of my appointment, I will exercise on behalf of Zhixiang Liang all voting rights of shareholder in strict compliance withinstructions from Baidu Online, and take any actions (including any act or omission) at the shareholders’ meeting of BaiduPay in accordancewith instructions from Baidu Online, including without limitation to voting or abstaining from voting on any matters at the shareholders’meeting of BaiduPay, or signing any shareholder resolutions. IIOnce Baidu Online demands termination of the power of attorney relationship between Zhixiang Liang and myself, I understand that I willimmediately lose my appointment under the Power of Attorney, return the Irrevocable Power of Attorney to Zhixiang Liang in accordance withinstructions from Baidu Online, and return all files, documents, tapes, discs, plans, models or copies, correspondences and assets in relation toBaiduPay produced by myself or under my possession, retaining or control in connection with my appointment under the Power of Attorney. Hailong XiangSignature: /s/ Hailong XiangDate: October 18, 2016 1 Exhibit 4.58AMENDED AND RESTATED EQUITY PLEDGE AGREEMENTThis Amended and Restated Equity Pledge Agreement (this “Agreement”) is entered into in Beijing, PRC by the following parties on October 18, 2016:Pledgee: Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Address: 3/F, Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingPledgor: Party B: Zhixiang LiangAddress: 6/F, Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingWHEREAS:1. Party A is a wholly foreign-owned enterprise registered in Beijing, the People’s Republic of China (the “PRC”).2. Party B is a citizen of the PRC owning 5.418% equity interests in Beijing BaiduPay Science and Technology Co., Ltd., a limited liability companyregistered in Beijing, the PRC (the “BaiduPay”).3. Party A and Party B entered into an Amended and Restated Loan Agreement dated October 18, 2016, whereby Party B obtains a loan (the “LoanArrangement”) up to a total amount of RMB216,720,000 (the “Loan”), for which amount Party B pledges equity interest.4. Party A and BaiduPay entered into an Exclusive Technology Consulting and Services Agreement dated February 28, 2008 with infinite term, and then aSupplement to the Exclusive Technology Consulting and Service Agreement dated April 22, 2010, a Supplement II to the Exclusive Technology Consultingand Service Agreement and a Supplement Agreement, both dated September 6, 2011, to make supplement to the Exclusive Technology Consulting andService Agreement (collectively, the “Services Agreements”). Under the Services Agreement, Party B shall pay fee for the technology consulting and servicesprovided by Party A (the “Service Fees”).5. In order to ensure that Party B will perform its obligations under the Loan Arrangement and Party A will be able to collect Service Fees from BaiduPay,Party B agrees to pledge all his equity interest in BaiduPay as security for performance of his obligations under the Loan Arrangement and for the ServiceFees. Party A (the “Pledgee”) and Party B (the “Pledgor”) intend to enter into this Agreement to specify their respective rights and obligations in respect ofsuch pledge. 1 6. The Parties have entered into an Amended and Restated Equity Pledge Agreement dated December 22, 2015 (the “Original Equity Pledge Agreement”).The Parties hereby agree to enter into this Agreement to amend and restate the Original Equity Pledge Agreement, and this Agreement will replace andsubstitute the Original Equity Pledge Agreement as of the date of its effectiveness.NOW THEREFORE, the Pledgee and the Pledgor agree as follows through negotiations and to be bound hereby: 1.Definitions and InterpretationUnless otherwise provided in this Agreement, the following terms shall have the following meanings:1.1 “Pledge”: refers to the full content of Article 2 hereunder.1.2 “Equity Interest”: refers to all of the equity interest in BaiduPay legally held by the Pledgor.1.3 “Rate of Pledge”: refers to the ratio between the value of the Pledge under this Agreement and the total amount of the Service Fees and the Loan.1.4 “Term of Pledge”: refers to the period provided for under Article 3.2 hereunder.1.5 “Principal Agreement”: refers to the Services Agreements and the Loan Arrangement.1.6 “Event of Default”: refers to any event listed in Article 7.1 hereunder.1.7 “Notice of Default”: refers to the notice of default issued by the Pledgee in accordance with this Agreement. 2.PledgeThe Pledgor agrees to pledge all of his Equity Interest in BaiduPay to the Pledgee as security for (i) his obligations under the Loan Arrangement and(ii) BaiduPay’s obligations under the Services Agreements. For purpose of this Agreement, “Pledge” refers to the right of the Pledgee to be entitled to priorityin receiving payment in the form of the Equity Interest based on the conversion value thereof, or from the proceeds from the auction or sale of the EquityInterest pledged by the Pledgor to the Pledgee. 3.Rate of Pledge and Term of Pledge3.1 The rate of the PledgeThe rate of the Pledge shall be approximately 100%. 2 3.2 The term of the Pledge3.2.1 The Pledge shall take effect as of the date when the pledge of the Equity Interest is recorded in the Register of Shareholders of BaiduPay and when thepledge is registered with the Administration for Industry and Commerce and shall remain in effect until two (2) years after the obligations under the PrincipalAgreement will have been fulfilled.3.2.2 During the term of the Pledge, the Pledgee shall be entitled to dispose of the pledged assets in accordance with this Agreement in the event that thePledgor does not perform his obligations under the Loan Arrangement or BaiduPay does not perform his obligations under the Services Agreement. 4.Physical Possession of Documents4.1 During the term of the Pledge under this Agreement, the Pledgor shall deliver the physical possession of his Certificate of Capital Contribution and theRegister of Shareholders of BaiduPay to the Pledgee within one (1) week from the date of this Agreement.4.2 The Pledgee shall be entitled to receive dividends from the Equity Interest.4.3 The Pledge under this Agreement will be recorded in the Register of Shareholders of BaiduPay (See Appendix I). 5.Representations and Warranties of the Pledgor5.1 The Pledgor is the legal owner of the Equity Interest pledged and has adopted shareholders’ resolutions to approve the Pledge (See Appendix II).5.2 Except for the benefit of the Pledgee, the Pledgor has not pledged the Equity Interest or created other encumbrance on the Equity Interest. 6.Covenants of the Pledgor6.1 During the term of this Agreement, the Pledgor covenants to the Pledgee for its benefit that the Pledgor shall:6.1.1 Not transfer or assign the Equity Interest, create or permit the existence of any other pledges, which may have any effect on the rights or benefits of thePledgee without prior written consent of the Pledgee;6.1.2 Comply with laws and regulations with respect to the pledge of rights; present to the Pledgee the notices, orders or suggestions with respect to thePledge issued or made by relevant government authorities within five (5) days upon receiving such notices, orders or suggestions; comply with such notices,orders or suggestions or, alternatively, at the reasonable request of the Pledgee or with consent from the Pledgee, raise objection to such notices, orders orsuggestions; and 3 6.1.3 Timely notify the Pledgee of any events or any notices received which may affect the Pledgor’s right to all or any part of the Equity Interest, and anyevents or any received notices which may change the Pledgor’s warranties and obligations under this Agreement or affect the Pledgor’s performance of itsobligations under this Agreement.6.2 The Pledgor agrees that the Pledgee’s right to the Pledge obtained from this Agreement shall not be suspended or inhibited by any legal procedureinitiated by the Pledgor or any successors of the Pledgor or any person authorized by the Pledgor or any other person.6.3 The Pledgor promises to the Pledgee that in order to protect or perfect the security for the payment of the Loan and the Services Fees, the Pledgor shallexecute in good faith and cause other parties who have interests in the Pledge to execute, all title certificates and contracts or to perform any other actions(and cause other parties who have interests to take action) as required by the Pledgee and make access to exercise the rights and authorization vested in thePledgee under this Agreement.6.4 The Pledgor promises to the Pledgee that he will execute all amendment documents (if applicable and necessary) in connection with the certificate of theEquity Interest with the Pledgee or its designated person (being a natural person or a legal entity) and, within a reasonable period, provide to the Pledgee allnotices, orders and decisions about the Pledge as the Pledgee deems necessary.6.5 The Pledgor promises to the Pledgee that he will comply with and perform all the guarantees, covenants, warranties, representations and conditions for thebenefit of the Pledgee. The Pledgor shall compensate the Pledgee for all losses suffered by the Pledgee because of the Pledgor’s failure to perform in whole orin part its guarantees, covenants, warranties, representations and conditions.6.6 During the term of this Agreement, the Pledgor will not perform any action/non-action which may affect the value of the Equity Interest to maintain orincrease the value. The Pledgor shall timely notify the Pledgee of any events which may affect the value decrease of the Equity Interest or the obligationsunder this Agreement, and shall provide security satisfactory to the Pledgee of the decreased value of the Equity Interest upon the Pledgee’s request.6.7 To the extent permitted under applicable laws or regulations, the Pledgor shall use his best efforts to cooperate with all the registration, record or otherprocedures relating to the Pledge. 7.Event of Default7.1 Each of the following events shall be regarded as an Events of Default: 7.1.1Pledgor fails to perform his obligations under the Loan Arrangement; 4 7.1.2 BaiduPay fails to pay the Services Fees in due course in full amount or perform other obligations under the Services Agreements;7.1.3 Any representation or warranty made by the Pledgor in Article 5 hereof contains material misleading statements or errors and/or the Pledgor breachesany warranty in Article 5 hereof; 7.1.4The Pledgor breaches the covenants under Article 6 hereof; 7.1.5The Pledgor breaches any other provision of this Agreement;7.1.6 The Pledgor waives the pledged Equity Interest or transfers or assigns the pledged Equity Interest without prior written consent from the Pledgee;7.1.7 Any of the Pledgor’s external loans, guaranties, compensations, undertakings or other obligations (1) is required to be repaid or performed prior to thescheduled due date because of a default; or (2) is due but cannot be repaid or performed as scheduled, causing the Pledgee to believe that the Pledgor’sability to perform the obligations hereunder has been affected; 7.1.8BaiduPay is incapable of repaying its general debts or other debts;7.1.9 This Agreement becomes illegal or the Pledgor is not capable of continuing to perform the obligations hereunder due to any reason other than a forcemajeure event;7.1.10 There have been adverse changes to the properties owned by the Pledgor, causing the Pledgee to believe that the capability of the Pledgor to performthe obligations hereunder has been affected;7.1.11 The successor or custodian of BaiduPay only partially performs or refuses to perform the payment obligation under the Services Agreements; and 7.1.12The breach of the other provisions of this Agreement by the Pledgor due to his act or omission.7.2 The Pledgor shall immediately give a written notice to the Pledgee if the Pledgor knows or discovers that any event specified under Article 7.1 hereof orany event that may result in the foregoing events has occurred.7.3 Unless an event of default under Article 7.1 hereof has been solved to the Pledgee’s satisfaction, the Pledgee, at any time when the event of default occursor at any time thereafter, may give a written notice of default to the Pledgor, requiring the Pledgor to immediately make full payment of the outstandingamount under the Loan Arrangement or under the Services Agreements or requesting to exercise the Pledge in accordance with Article 8 hereof. 5 8.Exercise of the Pledge8.1 The Pledgor shall not transfer or assign the Equity Interest without prior written approval from the Pledgee prior to the full performance of his obligationsunder the Loan Arrangement and full payment of all Service Fees under the Services Agreements, whichever is later.8.2 The Pledgee shall give a notice of default to the Pledgor when the Pledgee exercises the Pledge.8.3 Subject to Article 7.3, the Pledgee may exercise the Pledge when the Pledgee gives a notice of default in accordance with Article 7.3 or at any timethereafter.8.4 The Pledgee is entitled to priority in receiving payment in the form of all or part of the Equity Interest based on the conversion value thereof, or from theproceeds from the auction or sale of all or part of the Equity Interest in accordance with legal procedure, until the outstanding debt and all other payables ofthe Pledgor under Loan Arrangement and Services Agreements are repaid.8.5 The Pledgor shall not hinder the Pledgee from exercising the Pledge in accordance with this Agreement and shall give necessary assistance so that thePledgee could fully exercise its Pledge. 9.Assignment9.1 The Pledgor shall not assign or transfer its rights and obligations hereunder without prior consent from the Pledgee.9.2 This Agreement shall be binding upon the Pledgor and his successors and be binding on the Pledgee and each of its successors and permitted assigns.9.3 To the extent permitted by law, the Pledgee may transfer or assign any or all of its rights and obligations under the Loan Arrangement to any person(natural person or legal entity) designated by it at any time. In that case, the assignee shall have the same rights and obligations as those of the Pledgee as ifthe assignee was an original party hereto. When the Pledgee transfers or assigns the rights and obligations under the Loan Arrangement, it is only required toprovide a written notice to the Pledgor, and at the request of the Pledgee, the Pledgor shall execute the relevant agreements and/or documents with respect tosuch transfer or assignment.9.4 After the Pledgee has been changed as a result of a transfer or an assignment, the new parties to the Pledge shall execute a new pledge contract. 10.Effectiveness and TermThis Agreement is effective as of the date first set forth above and from the date when the pledge is recorded on BaiduPay’s Register of Shareholders. 6 11.TerminationThis Agreement shall terminate when the loan under the Loan Arrangement and the Services Fees under the Services Agreements have been fully repaid andthe Pledgor no longer has any outstanding obligations under the Loan Arrangement and BaiduPay no longer has any outstanding obligations under theServices Agreements. Thereafter, the Pledgee shall cancel or terminate this Agreement as soon as reasonably practicable. 12.Fees and Other Charges12.1 [The Pledgor] shall be responsible for all of the fees and actual expenses in relation to this Agreement including, but not limited to, legal fees,production costs, stamp tax and any other taxes and charges. If the Pledgee pays the relevant taxes in accordance with the laws, [the Pledgor shall fullyindemnify the Pledgee for such taxes paid by the Pledgee].12.2 [In the event that the Pledgee has to make a claim against the Pledgor by any means as a result of the Pledgor’s failure to pay any tax or expense payableby the Pledgor under this Agreement, the Pledgor shall be responsible for all the expenses arising from such claim (including but not limited to any taxes,handling fees, management fees, litigation fees, attorney’s fees, and various insurance premiums in connection with the disposition of the Pledge)].13. Force Majeure13.1 Force Majeure, which includes but is not limited to acts of governments, acts of nature, fires, explosions, typhoons, floods, earthquake, tides, lightningor war, refers to any unforeseen event that is beyond a party’s reasonable control and cannot be prevented with reasonable care. However, any insufficiency ofcreditworthiness, capital or financing shall not be regarded as an event beyond a party’s reasonable control. The affected party by Force Majeure shallpromptly notify the other party of such event resulting in exemption.13.2 In the event that the affected party is delayed or prevented from performing its obligations under this Agreement by Force Majeure, and only to theextent of such delay and prevention, the affected party shall not be liable for obligations under this Agreement. The affected party shall take appropriatemeasures to minimize or remove the effects of Force Majeure and attempt to resume performance of the obligations that were delayed or prevented by theevent of Force Majeure. After the event of Force Majeure is removed, both Parties agree to resume the performance of this Agreement using their best efforts. 14.ConfidentialityThe Parties acknowledge and confirm that all the oral and written materials exchanged relating to this Agreement are confidential. Each party must keep suchmaterials confidential and cannot disclose such materials to any other third party without the other party’s prior written approval, unless: (a) the public knowsor will know the materials (not due of the disclosure by the receiving party); (b) the disclosed materials are required by law or stock exchange rules to bedisclosed; or (c) materials relating to the transactions under this Agreement are disclosed to the Parties’ legal or financial advisors, who must keep themconfidential as well. Disclosure of the confidential information by employees or institutions hired by the Parties is deemed as an act by the Parties, therefore,subjecting them to liability. 7 15.Dispute Resolution 15.1This Agreement shall be governed by and construed in accordance with PRC law.15.2 The Parties shall strive to settle any dispute arising from the interpretation or performance of this Agreement through friendly consultation. In case nosettlement can be reached through consultation, each party can submit such matter to the China International Economic and Trade Arbitration Commission(“CIETAC”) for arbitration. The arbitration shall follow the current rules of CIETAC, the arbitration proceedings shall be conducted in Chinese and shall takeplace in Beijing, PRC. The arbitration award shall be final and binding upon the Parties. 16.NoticeAny notice which is given by the Parties hereto for the purpose of performing the rights and obligations hereunder shall be in writing. If such notice isdelivered personally, the time of notice is the time when such notice actually reaches the addressee; where such notice is transmitted by telex or facsimile, thenotice time is the time when such notice is transmitted. If such notice does not reach the addressee on a business day or reaches the addressee after businesshours, the next business day following such day is the date of notice. The delivery place is the address first written above for each of the Parties hereto or theaddress advised by such party in writing, including facsimile and telex, from time to time. Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Address: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingFacsimile: 010-59928888Telephone: 010-59928888Party B: Zhixiang LiangAddress: 6/F, Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingFacsimile: 010-59927435Telephone: 010-50817917 17.Entire AgreementNotwithstanding provisions in Article 10 hereof, the Parties agree that this Agreement constitutes the entire agreement of the Parties hereto with respect to thesubject matters herein upon its effectiveness and supersedes and replaces all prior oral and/or written agreements and understandings relating to the subjectmatters of this Agreement. 8 18.SeverabilityShould any provision of this Agreement be held invalid or unenforceable because of inconsistency with applicable laws, such provision shall be invalid orunenforceable only to the extent of such applicable laws without affecting the validity or enforceability of the remainder of this Agreement. 19.AppendicesThe appendices to this Agreement shall constitute an integral part of this Agreement. 20.Amendment or Supplement20.1 The Parties may amend or supplement this Agreement by written agreement. The amendments or supplements to this Agreement duly executed by bothParties shall form an integral part of this Agreement and shall have the same legal effect as this Agreement.20.2 This Agreement and any amendments, modifications, supplements, additions or changes hereto shall be in writing and shall be effective upon beingexecuted and sealed by the Parties hereto. 21.CounterpartsThis Agreement is make in Chinese in two originals, with each Party holding one original. Both originals have the same legal effect.[no text below] 9 [Signature Page]IN WITNESS WHEREOF, each Party has caused this Agreement to be executed by himself, its legal representative or its duly authorized representative asof the date first written above. Party A: Baidu Online Network Technology (Beijing) Co., Ltd./s/: Hailong XiangSeal of Baidu Online Network Technology (Beijing) Co., Ltd.Party B: Zhixiang Liang/s/: Zhixiang Liang 10 Appendix IRegister of shareholders of Beijing BaiduPay Science and Technology Co., Ltd. Name of the Shareholder: Beijing Baidu Netcom Science Technology Co., Ltd.Address: 2/F, No. 10 Shangdi 10th Street, Haidian District, BeijingContribution Amount: RMB2,191.28 millionPercentage of Share Capital: 54.782%Number of the certificate ofcapital contribution: Name of the Shareholder: Zhixiang LiangID number: Contribution Amount: RMB216.72 millionPercentage of Share Capital: 5.418%Number of the certificate ofcapital contribution: Name of the Shareholder: Au Yi Heng Tong (Beijing) Co., Ltd.Address: Section BE, 4/F., Building One, No. 10 Shangdi 10th Street, Haidian District, BeijingContribution Amount: RMB1,592.00 millionPercentage of Share Capital: 39.8%Number of the certificate ofcapital contribution: Liang Zhixiang holds 5.418% equity interests in Beijing BaiduPay Science and Technology Co., Ltd., the entirety of which has been pledged to BaiduOnline Network Technology (Beijing) Co., Ltd.Baidu Online Network Technology (Beijing) Co., Ltd. is the pledgee of 5.418% of the equity interests in Beijing BaiduPay Science and Technology Co.,Ltd.Beijing Baidu Netcom Science Technology Co., Ltd./s/: Zhixiang LiangName: Zhixiang LiangTitle: Legal representativeDate: October 18, 2016 11 Appendix IIResolutions of the Shareholders’ Meetingof Beijing BaiduPay Science and Technology Co., Ltd.In respect of the Amended and Restated Equity Pledge Agreement dated October 18, 2016 between the shareholders of Beijing BaiduPay Science andTechnology Co., Ltd. (the “Company”) and Beijing Online Network Technology (Beijing) Co., Ltd., a resolution is unanimously adopted at the shareholders’meeting of the Company that:It is approved that Zhixiang Liang, a shareholder of the Company, pledges all of his equity interests in the Company to Baidu Online Network Technology(Beijing) Co., Ltd.The resolution was signed and delivered on October 18, 2016.Shareholder: Beijing Baidu Netcom Science Technology Co., Ltd./s/: Zhixiang LiangTitle: Legal representativeDate: October 18, 2016 12 Exhibit 4.59AMENDED AND RESTATEDEXCLUSIVE EQUITY PURCHASE AND TRANSFER OPTION AGREEMENTThis Amended and Restated Exclusive Equity Purchase and Transfer Option Agreement (this “Agreement”) is entered into by and among the followingparties in Beijing, PRC on October 18, 2016: Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Address: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingParty B: Zhixiang LiangID No.: Party C: Beijing BaiduPay Science and Technology Co., Ltd.Address: 5/F., Baidu Building B, No. 10 Shangdi 10th Street, Haidian District, BeijingIn this Agreement, Party A, Party B and Party C are called collectively as the “Parties” and each of them is a “Party.”WHEREAS:1. Party A, is a wholly foreign-owned enterprise incorporated under the laws of the People’s Republic of China (the “PRC”), which has technology expertiseand practical experience in computer software development and design, and also has rich experience and human resources in information technology andservices;2. Party C, a liability limited company incorporated in the PRC, is licensed by is licensed by Beijing Communications Administration to carry out thebusiness of value-added telecommunication services such as Internet information services;3. Party B is the shareholder of Party C, owning 5.418% equity interests in Party C (the “Equity Interest”);4. Party A and Party B entered into an Amended and Restated Loan Agreement dated October 18, 2016, whereby Party B obtains an interest-free loan up toRMB216,720,000 (the “Loan Arrangement”) in connection with his investment in Party C;5. Party A and Party C entered into an Exclusive Technology Consulting and Service Agreement dated February 28, 2008, and then a Supplement to theExclusive Technology Consulting and Service Agreement dated April 22, 2010, a Supplement II to the Exclusive Technology Consulting and ServiceAgreement and a Supplement Agreement, both dated September 6, 2011, to make supplement to the Exclusive Technology Consulting and ServiceAgreement (collectively, the “Services Agreements”);6. Party A and Party B entered into an Amended and Restated Equity Pledge Agreement (the “Equity Pledge Agreement”) dated October 18, 2016; and 1 7. The Parties have entered into an Amended and Restated Exclusive Equity Purchase and Transfer Option Agreement dated December 22, 2015 (the“Original Exclusive Option Agreement”). The Parties hereby agree to enter into this Agreement to amend and restate the Original Option Agreement, andthis Agreement will replace and substitute the Original Option Agreement as of the date of its effectiveness.NOW, THEREFORE, the Parties agree as follows through negotiations and to be bound hereby: 1.Purchase and Sale of Equity Interest1.1 Granting of RightsParty B hereby irrevocably grants to Party A an option to purchase or cause any one or more designated persons (“Designated Persons”) to purchase, to theextent permitted under PRC law, according to the steps determined by Party A, at the price specified in Article 1.3 of this Agreement, and at any time from theTransferor, a portion or all of the equity interests held by the Transferor in Party C (the “Option”). No Option shall be granted to any third party other thanParty A and/or the Designated Persons. Party C hereby agrees to granting of the Option by Party B to Party A and/or the Designated Persons. For purpose ofthis Section 1.1 and this Agreement, “person” means individual, corporation, joint venture, partnership, enterprise, trust or unincorporated organization.1.2 Exercise StepsSubject to PRC law and regulations, Party A and/or the Designated Persons may exercise the Option by issuing a written notice (the “Option Notice”) to theTransferor, specifying the equity interest to be purchased from the Transferor (the “Purchased Equity Interest”) and the manner of such purchase.1.3 Purchase Price1.3.1 If Party A exercises the Option, the purchase price of the Purchased Equity Interest (“Purchase Price”) shall be equal to the actual paid-in capital paidby the Transferor for the Purchased Equity Interest, unless then applicable PRC laws and regulations require appraisal of the Purchased Equity Interest orstipulate other restrictions on the Purchase price.1.3.2 If the applicable PRC laws require appraisal of the Purchased Equity Interest or stipulate other restrictions on the Purchase Price at the time that Party Aexercises the Option, the Parties agree that the Purchase Price shall be set at the lowest price permissible under applicable law.1.4 Transfer of the Purchased Equity InterestAt each exercise of the Option: 2 1.4.1 The Transferor shall, in accordance the terms and conditions of this Agreement and the Option Notice in connection with the Purchased Equity Interest,enter into an equity transfer agreement with Party A and/or the Designated Persons (as applicable) for each transfer in the form satisfactory to Party A;1.4.2 The Transferor shall execute all other requisite contracts, agreements or documents, obtain all requisite government approvals and consents, and take allnecessary actions to transfer the valid ownership of the Purchased Equity Interest to Party A and/or the Designated Persons free of any security interest, andcause Party A and/or the Designated Persons to be the registered owner(s) of the Purchased Equity Interest. For purpose of this Section 1.4.2 and thisAgreement, “Security Interest” means guaranty, mortgage, pledge, third-party right or interest, any share option, right of acquisition, right of first refusal, rightof set-off, ownership, detainment or other security arrangements. However, it does not include any security interest arising under the Equity PledgeAgreement.1.5 PaymentPayment of the Purchase Price shall be determined through negotiations between Party A and/or the Designated Persons and the Transferor in accordancewith then applicable laws upon exercise of the Option. The Parties hereby agree that, subject to applicable laws, Transferor shall repay to Party A any amountthat is paid by Party A and/or the Designated Persons to the Transferor in connection with the Purchased Equity Interest (excluding any tax and other feespaid by the Transferor in connection with the proposed transaction contemplated under the transfer agreement). 2.Covenants Relating to the Equity Interest2.1 Covenants Relating to Party CParty B and Party C hereby covenant, in relation to Party C:2.1.1 Not to supplement, amend or modify Party C’s articles of association in any way, or to increase or decrease its registered capital, or to change itsregistered capital structure in any way without Party A’s prior written consent;2.1.2 To maintain the corporate existence of Party C and operate its business and deal with matters prudently and effectively according to good financial andbusiness rules and practices;2.1.3 Not to sell, transfer, mortgage or otherwise dispose of, or permit any other security interest to be created on, any of Party C’s assets, business or legal orbeneficial interests in its revenue at any time after the signing of this Agreement without Party A’s prior written consent;2.1.4 Not to create, succeed to, guarantee or permit any liability, without Party A’s prior written consent, except (i) liabilities arising from the normal courseof business, but not arising from loans; and (ii) liabilities disclosed to Party A and approved by Party A in writing; 3 2.1.5 To operate persistently all the business in the normal course of business to maintain the value of Party C’s assets, and not to commit any act or omissionthat would affect its operations and asset value;2.1.6 Without prior written consent by Party A, not to enter into any material agreement, other than agreements entered into in Party C’s normal course ofbusiness (for purpose of this paragraph, an agreement will be deemed material if its value exceeds RMB500,000);2.1.7 Not to provide loans or credit to any person without Party A’s prior written consent;2.1.8 To provide all information relating to Party C’s operations and financial conditions upon the request of Party A;2.1.9 To purchase and maintain insurance from insurance companies accepted by Party A. The amount and category of the insurance shall the same as thoseof the insurance normally procured by companies engaged in similar businesses and possessing similar properties or assets in the area where Party C islocated;2.1.10 Not to merge or consolidate with, or acquire or invest in, any person without Party A’s prior written consent;2.1.11 To promptly notify Party A of any pending or threatened suit, arbitration or administrative proceedings concerning Party C’s assets, business orrevenue;2.1.12 To execute all necessary or appropriate documents, to take all necessary or appropriate actions and to bring all necessary or appropriate claims or tomake all necessary and appropriate defenses against all claims in order for Party C to maintain the ownership over all its assets;2.1.13 Not to distribute dividends to Party C’s shareholders in any way without Party A’s prior written consent. However, Party C shall promptly distribute allor part of its distributable profits to its shareholders upon Party A’s request;2.1.14 At the request of Party A, to appoint persons nominated by Party A to be the directors of Party C;2.2 Covenants Relating to the TransferorParty B hereby covenants:2.2.1 Not to sell, transfer, mortgage or otherwise dispose of, or allow any other security interest to be created on, the legal or beneficial interest in the EquityInterest at any time after the signing of this Agreement without Party A’s prior written consent, other than the pledge created on Party B’s Equity Interest inaccordance with the Equity Pledge Agreement; 4 2.2.2 Without Party A’s prior written consent, not to vote for or sign any shareholders’ resolution at Party C’s shareholders’ meetings to approve the sale,transfer, mortgage or disposition in any other manner of, or the creation of any other security interest on, any legal or beneficial interest in the Equity Interest,except to or for the benefit of Party A or its designated persons;2.2.3 Without Party A’s prior written consent, not to vote for or sign any shareholders’ resolution at Party C’s shareholders’ meetings to approve Party C’smerger or consolidation with, acquisition of or investment in, any person;2.2.4 To promptly notify Party A of any pending or threatened suit, arbitration or administrative proceedings concerning the Equity Interest owned by it;2.2.5 To execute all necessary or appropriate documents, to take all necessary or appropriate actions and to bring all necessary or appropriate claims or tomake all necessary and appropriate defenses against all claims in order to maintain his ownership over the Equity Interest;2.2.6 At the request of Party A, to appoint persons nominated by Party A to be the directors of Party C;2.2.7 At any time, upon the request of Party A, to transfer its Equity Interest immediately and unconditionally to the representative designated by Party A,and waive its preemptive right with respect to the transfer of equity interest by the other shareholder of Party C;2.2.8 To fully comply with the provisions of this Agreement and the other agreements entered into jointly or respectively by and among the Transferor, PartyC and Party A, perform all obligations under these agreements and not commit any act or omission that would affect the validity and enforceability of theseagreements; and2.2.9 To transfer all dividends and any other form of profit allocated by Party C to Party A.2.3 Covenants Relating to Party AParty A hereby covenants:2.3.1 If Party C needs any loan or other capital support in its business, under acceptable and reasonable scope, Party A shall provide capital support; and2.3.2 If Party C cannot repay the loan from Party A as loss incurred and has sufficient evidence to prove, Party A agrees that it shall give up the rights ofrequiring Party C to repay the loan. 3.Representations and WarrantiesAs of the date of this Agreement and each transfer date, each of the Transferor and Party C hereby represents and warrants to Party A as follows:3.1 It has the power and authority to execute and deliver this Agreement, and any equity transfer agreement (the “Transfer Agreement”) to which it is partyfor each transfer of the Purchased Equity under this Agreement and to perform its obligations under this Agreement and any Transfer Agreement. Onceexecuted, this Agreement and any Transfer Agreement to which it is party will constitute a legal, valid and binding obligation of it enforceable against it inaccordance with its terms; 5 3.2 The execution, delivery and performance of this Agreement or any Transfer Agreement by it will not: (i) violate any relevant PRC laws and regulations;(ii) conflict with its articles of association or other organizational documents; (iii) violate or constitute a default under any contract or instrument to which itis party or that binds upon it; (iv) violate any condition for the grant and/or continued effectiveness of any permit or approval granted to it; or (v) cause anypermit or approval granted to it to be suspended, cancelled or attached with additional conditions;3.3 Party C has good and marketable ownership interest in all of its assets and has not created any security interest on the said assets;3.4 Party C has no outstanding liabilities, except (i) liabilities arising in its normal course of business; and (ii) liabilities disclosed to Party A and approvedby Party A in writing;3.5 There are currently no existing, pending or threatened litigation, arbitration or administrative proceedings related to the Equity Interest, Party C’s assetsor Party C; and3.6 The Transferor has good and marketable ownership interest in the Equity Interest and has not created any security interest on such Equity Interest, otherthan the security interest pursuant to the Equity Pledge Agreement. 4.Assignment of Agreement4.1 Party B and Party C shall not assign their rights and obligations under this Agreement to any third party without the prior written consent of Party A.4.2 Party B and Party C hereby agree that Party A may assign all its rights and obligation under this Agreement to a third party without the consent of Party Band Party C, but such assignment shall be notified in writing to Party B and Party C. 5.Effective Date and Term5.1 This Agreement shall be effective as of the date first set forth above.5.2 This Agreement shall come into force when it is duly executed by each of the Parties and expires when all Equity Interest held by Party B is transferred toParty A and/or Designated Persons in accordance with this Agreement.5.3 If the duration of operation (including any extension thereof) of Party A or Party C is expired or terminated for other reasons within the term set forth inArticle 5.2, this Agreement shall be terminated simultaneously, except in the situation where Party A has assigned its rights and obligations in accordancewith Article 4.2 hereof. 6 6.Applicable Law and Dispute Resolution6.1 Applicable LawThe formation, validity, interpretation and performance of and resolution of any dispute arising from this Agreement shall be governed by the laws of thePRC.6.2 Dispute ResolutionAny dispute arising in connection with the interpretation and performance of the provisions of this Agreement shall be resolved by the Parties in good faiththrough negotiations. In case no resolution can be reached by the Parties within thirty (30) days after either party makes a request for dispute resolutionthrough negotiations, either party may refer such dispute to China International Economic and Trade Arbitration Commission (“CIETAC”) for arbitration inaccordance with CIETAC’s arbitration rules then in effect. The seat of arbitration shall be Beijing and language of proceedings shall be Chinese. The arbitralaward shall be final and binding upon the Parties. 7.Taxes and ExpensesEvery Party shall, in accordance with PRC laws, bear any and all transfer and registration taxes, expenses and charges incurred by or levied on it with respectto the preparation and execution of this Agreement and each Transfer Agreement and the consummation of the transactions contemplated under thisAgreement and each Transfer Agreement. 8.NoticesAny notice or other communication forms which is given by the parties hereto shall be in Chinese and delivered personally to the addresses listed as below orthe addresses designated by the Parties. The notice time which is deemed as the time when the notice actually reaches the addressee follows: (a) the noticetime of the notice delivered personally shall be the day when the person conducts the delivery; (b) the notice time of the notice delivered as mail shall be thetenth (10th) day following the mailing date of the registered mail by air (marked by seal) or shall be the fourth (4th) day following the day handing tointernally recognized delivery services organizations; and (c) the notice time of the notice delivered by facsimile shall be the acceptance time on the deliveryconfirmation. Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Address: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingFacsimile: 010-59928888Telephone: 010-59928888 7 Party B: Zhixiang LiangAddress: Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingFacsimile: 010-59927435Telephone: 010-50817917Party C: Beijing BaiduPay Science and Technology Co., Ltd.Address: 5/F, Baidu Building B, No. 10 Shangdi 10th Street, Haidian District, BeijingFacsimile: 010-59928888Telephone: 010-59928888 9.ConfidentialityThe Parties acknowledge and confirm any oral or written materials exchanged by the Parties in connection with this Agreement are confidential. The Partiesshall maintain the confidentiality of all such materials. Without the written approval by the other Parties, any Party shall not disclose to any third party anyrelevant materials, but the following circumstances shall be excluded: a.Materials that are or will become known by the public (through no fault of the receiving party); b.Materials required to be disclosed by the applicable laws or rules of the stock exchange; and c.Materials disclosed by each Party to its legal or financial advisors relating the transactions contemplated by this Agreement, and such legal orfinancial advisors shall comply with the confidentiality provisions similar to this article.The disclosure of information by the staff or consultants of any party shall be deemed as disclosure by the party itself. This Article 9 shall survive anyinvalidity, termination, expiration or unenforceability of this Agreement. 10.Further AssurancesThe Parties agree to promptly execute documents and take further actions that are reasonably required for, or beneficial to, the purpose of performing theprovisions and carrying out the intent of this Agreement. 11.Miscellaneous11.1 Amendment, Modification or SupplementAny amendment or supplement to this Agreement shall be made by the Parties in writing. The amendments or supplements duly executed by each Party shallbe deemed as a part of this Agreement and shall have the same legal effect as this Agreement. 8 11.2 Entire AgreementNotwithstanding Article 5 of this Agreement, the Parties acknowledge that once this Agreement becomes effective, it shall constitute the entire agreement ofthe Parties with respect to the subject matters hereof and shall supersede all prior oral and/or written agreements and understandings by the Parties withrespect to the subject matters hereof.11.3 SeverabilityIf any provision of this Agreement is judged to be invalid, illegal or unenforceable in any respect according to any applicable law or regulation, the validity,legality and enforceability of the other provisions hereof shall not be affected or impaired in any way. The Parties shall, through good-faith negotiations,replace those invalid, illegal or unenforceable provisions with valid provisions that may bring about economic effects as similar as possible to those fromsuch invalid, illegal or unenforceable provisions. 11.4HeadingsThe headings contained in this Agreement are for the convenience of reference only and shall not be used for the interpretation or explanation or otherwiseaffect the meaning of the provisions of this Agreement.11.5 Language and counterpartsThis Agreement is executed in Chinese in three originals; each Party holds one original and each original has the same legal effect.11.6 SuccessorThis Agreement shall bind upon and inure to the benefit of the successors and permitted assigns of each Party.11.7 SurvivalAny obligation arising from or becoming due under this Agreement before its expiration or premature termination shall survive such expiration or prematuretermination. Articles 6, 8 and 9 and this Article 11.7 shall survive the termination of this Agreement.11.8 WaiverAny Party may waive the terms and conditions of this Agreement by a written instrument signed by the Parties. Any waiver by a Party to a breach by the otherParties in a specific situation shall not be construed as a waiver to any similar breach by the other Parties in other situations.[No text below] 9 IN WITNESS WHEREOF, each Party has caused this Agreement to be executed by himself/herself, its legal representative or its duly authorizedrepresentative as of the date first written above. Party A: Baidu Online Network Technology (Beijing) Co., Ltd. /s/: Hailong Xiang Seal of Baidu Online Network Technology (Beijing) Co., Ltd. Party B: Zhixiang Liang /s/: Zhixiang Liang Party C: Beijing BaiduPay Science and Technology Co., Ltd. /s/: Zhixiang Liang Seal of Beijing BaiduPay Science and Technology Co., Ltd. 10 Exhibit 4.60Amended and Restated Loan AgreementThis Amended and Restated Loan Agreement (this “Agreement”) is entered into on October 18, 2016 in Beijing, by and between: Party A:Baidu Online Network Technology (Beijing) Co., Ltd.Registered Address: 3/F, No. 10 Shangdi 10th Street, Haidian District, Beijing Party B:Zhixiang LiangID No.:WHEREAS: 1.Party A is a foreign invested enterprise incorporated under the laws of the PRC; 2.Party B is a Chinese citizen, holding 5.418% of equity interests in Beijing BaiduPay Science and Technology Co., Ltd. (“BaiduPay”), and is ashareholder of BaiduPay; 3.On December 22, 2015, Party A provided Party B with an interest-free loan of RMB90 million in connection with its investment in BaiduPay.With regards to such loan, Party A and Party B enter into an Amended and Restated Loan Agreement dated December 22, 2015 (the “OriginalLoan Agreement”); and 4.The Parties intend to amend and restate the Original Loan Agreement agreed herein.NOW, THEREFORE, Party A and Party B agree as follows through negotiations and to be bound hereby: 1.Subject to the terms and conditions of this Agreement, Party A agrees to provide, and Party B agrees to accept, an interest-free loan in the amountof RMB216,720,000.00. 2.Party B confirms receipt of such loan and has applied the entire loan amount to pay his investment in BaiduPay. 3.The term of the loan under this Agreement shall commence on the date Party B receives such loan until the tenth (10th) anniversary of the datehereof, which term could be extended upon mutual written consent of the Parties. During the term of the loan or any extension thereto, Party Ahas the right to require immediate maturity of the loan with written notice to Party B for repayment of the loan in accordance to this Agreementif: (1)Party B terminates, voluntarily or involuntarily, his employment with Party A or an affiliate of Party A; (2)Party B is dead, deprived or restricted of civil capacity; (3)Party B is found engaged or involved in any criminal act; (4)Any third party files a claim against Party B that exceeds RMB100,000; or 1 (5)To the extent permitted under the laws of the PRC, Party A or a person designated by Party A may invest in BaiduPay to conduct internetinformation service business, value-added telecommunication business and other business, and Party A has issued to Party B a writtennotice to exercise the option for purchase of equity in BaiduPay pursuant to Article 4 of the Amended and Restated Exclusive EquityPurchase and Transfer Option Agreement. 4.The parties herein agree and acknowledge that, to the extent and within the scope permitted by the laws of the PRC, Party A shall have the rightbut no obligation to purchase or designate any other person (including natural person, legal entity or any other entity) to purchase the equityinterest in BaiduPay held by Party B in whole or in part (the “Option”), provided that Party A shall issue a written notice to purchase equityinterests to Party B. Upon issuance of a written notice to exercise such Option by Party A, Party B shall, in accordance with Party A’s intentionsand instructions, immediately transfer the equity interest in BaiduPay held by him to Party A or other any person designated by Party A at itsoriginal investment price (“Original Investment Price”) or, if otherwise required by law, any other price agreed upon by Party A. The Partieshereby agree and acknowledge that in connection with exercise of the Option by Party A, if the lowest price of equity interest subscriptionpermitted under applicable laws and regulations is higher than the Original Investment Price, the subscription price payable by Party A or anyother person designated by Party A shall be equal to such lowest price permitted by applicable laws and regulations. The parties agree to enterinto an Amended and Restated Exclusive Equity Option Agreement regarding the Option. 5.Both Parties hereby agree and acknowledge that Party B may repay the loan only in the following manner: if permitted by PRC laws, Party B orits successor or assign shall transfer the equity interests in BaiduPay to Party A or its designated persons and use the proceeds from such transferto repay the loan under this Agreement, or otherwise agreed by the Parties. 6.Both Parties hereby agree and acknowledge that, except as otherwise provided for herein, the loan under this Agreement is interest-free;provided, however, that if the loan becomes due and Party B needs to transfer his equity interests in BaiduPay to Party A or its designated person,and the actual transfer price is higher than the loan principal due to legal requirements or other reasons, the amount in excess of the loanprincipal, to the extent permitted by law, Party B agrees to pay such excessive amount, net of any applicable individual income tax, at thediscretion of Party A. 7.Both Parties hereby agree and acknowledge that Party B shall be deemed to have fully performed his obligations under this Agreement only ifthe following requirements are met: (1)Party B has transferred all his equity interests in BaiduPay to Party A and/or its designated persons; and 2 (2)Party B has paid the total proceeds from such transfer or the maximum amount (including principal and the highest loan interestpermitted under then applicable law) allowed by applicable law as repayment of the loan to Party A. 8.To secure performance of his obligations under this Agreement, Party B agrees to pledge all his equity interests in BaiduPay to Party A (the“Equity Pledge”). Both Parties agree to enter into an Equity Pledge Agreement (the “Equity Pledge Agreement”) regarding the Equity Pledge. 9.Party A represents and warrants to Party B that, as of the date of this Agreement: (1)Party A is a wholly foreign-owned enterprise incorporated and validly existing under the laws of PRC; (2)Party A has the right to execute and perform this Agreement. The execution and performance of this Agreement by Party A comply withits business scope, articles of association and other organizational documents. Party A has obtained all necessary and appropriateapprovals and authorizations for the execution and performance of this Agreement; (3)The principal of the loan to Party B is legally owned by Party A; (4)The execution and performance of this Agreement by Party A do not violate any laws, regulations, approvals, authorizations, notices,other governmental documents to which Party A is subject, any agreement signed by it with any third party or any undertaking made byit to any third party; and (5)Upon execution by the Parties hereto, this Agreement shall constitute the legal, valid and binding obligations of Party A. 10.Party B represents and warrants to Party A that, as of the date of this Agreement until this Agreement terminates: (1)BaiduPay is a limited liability company incorporated and validly existing under the laws of PRC and Party B is a legal holder of theequity interest of BaiduPay; (2)Party B has the right to execute and perform this Agreement. The execution and performance of this Agreement by Party B comply withthe business scope, articles of association and other organizational documents of BaiduPay. Party B has obtained all necessary andappropriate approvals and authorizations for the execution and performance of this Agreement; (3)The execution and the performance of this Agreement by Party B do not violate any laws, regulations, approvals, authorizations, notices,other governmental documents to which Party B is subject, any agreement signed by Party B with any third party or any undertakingmade by Party B to any third party; 3 (4)Upon execution by the Parties hereto, this Agreement shall constitute the legal, valid and binding obligations of Party B; (5)Party B has paid contribution in full for its equity interests in BaiduPay in accordance with applicable laws and regulations; (6)Unless required under the Amended and Restated Equity Pledge Agreement and the Amended and Restated Equity Purchase and TransferOption Agreement, Party B has not pledged or created any other security interest on, made any offer to any third party to transfer,accepted the offer of any third party to purchase, or execute agreement with any third party to transfer, Party B’s equity interests inBaiduPay; (7)There are no pending or threatened disputes, litigation, arbitration or other administrative proceedings or other legal proceedings inconnection with the equity interests of BaiduPay held by Party B; and (8)BaiduPay has received and completed all necessary governmental approval, license, registration and filing. 11.Party B covenants that it shall, during the term of this Agreement: (1)Not sell, transfer, pledge or dispose in any other manner of his equity or other interests in BaiduPay, or allow the creation of othersecurity interests thereon, without Party A’s prior written consent, except for equity pledges or other rights created for the benefit of PartyA; (2)Not vote at shareholder’s meetings of BaiduPay or execute any shareholders’ resolutions approving the sale, transfer, pledge, dispositionin any other manner, or the creation of any other security interest on, any legal or beneficial interest in the equity of BaiduPay withoutParty A’s prior written consent, except for the benefit of Party A or its designated persons; (3)Not vote at shareholder’s meetings of BaiduPay or execute any shareholders’ resolutions approving BaiduPay to merge or combine with,acquire or invest in any person without Party A’s prior written consent; (4)Promptly inform Party A of any pending or threatened litigation, arbitration or regulatory proceeding concerning the equity interests ofBaiduPay; (5)Execute all necessary or appropriate documents, take all necessary or appropriate actions, bring all necessary or appropriate lawsuits orassert all necessary and appropriate defenses against all claims in order to maintain his equity interests of BaiduPay; (6)Not commit any act or omission that may materially affect the assets, business and liabilities of BaiduPay without Party A’s prior writtenconsent; 4 (7)Appoint any person nominated by Party A to be the director of BaiduPay; (8)Upon Party A’s exercise of its Option, transfer promptly and unconditionally, all of Party B’s equity interests in BaiduPay to Party A orany person designated by Party A, provided that such transfer is permitted under the laws of PRC; (9)Not request BaiduPay to distribute dividends or profits; (10)Once he has transferred his equity interests in BaiduPay to Party A or its designated persons, promptly repay, subject to applicable laws,the proceeds received for such transfer in full, as the loan principal and loan interests or capital utilization cost allowed by laws, to PartyA; and (11)Comply strictly with the terms of this Agreement, and perform the obligations pursuant to this Agreement and not commit any act oromission that would affect the validity and enforceability of this Agreement. 12.Party B, as the shareholder of BaiduPay, covenants that during the term of this Agreement, he shall cause BaiduPay: (1)Not to supplement, amend or modify its articles of association, or to increase or decrease its registered capital, or to change its capitalstructure in any way without Party A’s prior written consent; (2)To maintain and operate its business and deal with matters prudently and effectively, in accordance with good financial and businessrules and practices; (3)Not to sell, transfer, mortgage, dispose of in any other manner, or to create other security interest on, any of its assets, business or legal orbeneficial right to its revenues without Party A’s prior written consent; (4)Not to create, succeed to, guarantee or permit any liability, without Party A’s prior written consent, except (i) the liability arising from theordinary course of business, but not arising through Party B; and (ii) the liability reported to and approved by Party A in writing; (5)To operate persistently all the business and to maintain the value of its assets; (6)Not to execute any material contracts (for the purpose of this paragraph, a contract will be deemed material if the value of it exceedsRMB100,000), without Party A’s prior written consent, other than those executed during the ordinary course of business; (7)To provide information concerning all of its operation and financial affairs upon Party A’s request; (8)Not to merge or combine with, acquire or invest in, any other person without Party A’s prior written consent; 5 (9)Not to issue dividends to shareholders in any form without Party A’s prior written consent; provided, however, that BaiduPay shallpromptly distributable all its distributable profits to each of its shareholders upon Party A’s request; (10)To inform promptly Party A of any pending or threatened suit, arbitration or regulatory proceeding concerning the assets, business orrevenue of BaiduPay; (11)To execute all necessary or appropriate documents, take all necessary or appropriate actions, bring all necessary or appropriate lawsuitsor assert all necessary and appropriate defenses against all claims in order to maintain the ownership of all its assets; and (12)To comply strictly with the terms of the Exclusive Technology Consulting and Service Agreement, the Supplement to the ExclusiveTechnology Consulting and Service Agreement dated April 22, 2010 between BaiduPay and Party A, the Supplement II to the ExclusiveTechnology Consulting and Service Agreement dated September 6, 2011 between BaiduPay and Party A (collectively, the “ServicesAgreements”), and any other agreements between Party A and BaiduPay, perform its obligations under the Services Agreements, and notcommit any act or omission that would affect the validity and enforceability of the Services Agreements. 13.This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assignees. Without priorwritten approval of Party A, Party B may not assign, pledge or otherwise transfer any right, benefit or obligation under this Agreement. 14.Party B agrees that Party A may assign its rights and duties under this Agreement to a third party when it is necessary, in which case Party A onlyneeds to give a written notice to Party B and no further consent of Party B is required. 15.The execution, validity, interpretation, performance, amendment, termination and resolution of disputes in connection with this Agreement shallbe governed by the laws of the PRC. 16.Arbitration. (1)Both Parties shall resolve any dispute, conflict, or claim arising from the interpretation or performance (including any issue relating tothe existence, validity and termination of this Agreement) in connection with this Agreement through friendly consultation. If noresolution is agreed upon by the Parties within thirty (30) day after one Party requests for the resolution, either Party may submit suchdispute to China International Economic and Trade Arbitration Commission (the “CIETAC”) for arbitration in accordance with its rulesthen in effect. The arbitration award shall be final and binding upon the parties. (2)The seat of the arbitration shall be Beijing. 6 (3)The language for the arbitration proceedings shall be Chinese. 17.This Agreement shall be established as of the date hereof. Both Parties agree that the terms and conditions of this Agreement shall be effective asof the date on which Party B obtains the loan and shall expire when both Parties have fully performed their obligations under this Agreement. 18.Party B may not terminate or revoke this Agreement unless (a) Party A commits a gross negligence, fraud or other material illegal acts; or(b) Party A is bankrupt. 19.This Agreement may not be amended or modified except with a written agreement reached by both Parties. For any matter not provided herein,the Parties may enter into a supplement hereto in writing. Any amendment, modification, supplement or annex to this Agreement shall form anintegral part of this Agreement. 20.This Agreement constitutes the entire agreement of the Parties hereto with respect to the subject matters hereof and supersedes all prior verbaldiscussions or written agreements between the parties with respect to subject matters hereof. 21.This Agreement is severable. If any clause of this Agreement is held to be invalid or unenforceable, such invalidity or unenforceability shallhave no effect on the validity or enforceability of the remainder of this Agreement. 22.Each party shall keep in strict confidence all information concerning the other Party’s business, operation, financial situation or otherconfidential information obtained under this Agreement or during the performance of this Agreement. 23.Any obligation arising from or becoming due under this Agreement before the expiration or early termination of this Agreement shall survivesuch expiration or early termination. The Articles 15, 16 and 22 of this Agreement shall survive the termination of this Agreement. 24.This Agreement shall be made in two originals, with each Party holding one original. All originals shall have the same legal effect.[No text below] 7 [No text on this page]IN WITNESS WHEREOF, each Party has caused this Agreement to be executed by himself, its legal representative or its duly authorized representative asof the date first written above. Party A: Baidu Online Network Technology (Beijing) Co., Ltd. /s/: Hailong Xiang Seal of Baidu Online Network Technology (Beijing) Co., Ltd.Party B: Zhixiang Liang /s/: Zhixiang Liang 8 Exhibit 4.61Amended and Restated Business Operating AgreementThis Amended and Restated Business Operating Agreement (this “Agreement”) is entered into among the following parties in Beijing, PRC as of October 18,2016: Party A: Baidu Online Network Technology (Beijing) Co., Ltd.Address: 3/F., Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingParty B: Beijing BaiduPay Science and Technology Co., Ltd.Address: 5/F., Baidu Building B, No. 10 Shangdi 10th Street, Haidian District, BeijingParty C: Zhixiang LiangID No.: Party D: Beijing Netcom Science Technology Co., Ltd.Address: 2/F., Baidu Building, No. 10 Shangdi 10th Street, Haidian District, BeijingParty E: Au Yi Heng Tong (Beijing) Co., Ltd.Address: Section BE, 4/F., Building One, No. 10 Shangdi 10th Street, Haidian District, BeijingWHEREAS: 1.Party A is a wholly foreign-owned enterprise duly incorporated and validly existing under the laws of the People’s Republic of China (the “PRC”),which has the technology expertise and practical experience in the development and design of computer software, and also has rich experience and ateam of professionals specializing in information technology and service; 2.Party B is a limited liability company duly incorporated and validly existing under PRC law, which carries out the business of individually operatingthird party payment platform (provide online payment for e-commerce); 3.Party C, Party D and Party E are shareholders of Party B, in which Party C owns 5.418%, Party D owns 54.782%, and Party E owns 39.8% of the equityinterest; 4.Party A has established a business relationship with Party B by entering into an Exclusive Technology Consulting and Services Agreement ( the“Services Agreement”), a Web Layout Copyright License Agreement and a Trademark License Agreement; 5.Pursuant to the above-mentioned agreements between Party A and Party B, Party B shall pay certain sums of money to Party A. However, no accountpayable under those agreements has been paid, and the daily operations of Party B will have a material effect on Party B’s ability to pay such accountpayable to Party A; and 6.Party A, Party B, Party C and Party D have entered into a Business Operating Agreement dated as of February 28, 2008, which was supplemented by aSupplement to the Business Operating Agreement dated as of April 22, 2010 by Party A, Party B, Party C and Party D (collectively, the “OriginalBusiness Operating Agreement”). Party A, Party B, Party C, Party D and Party E hereby agree to enter into this Agreement to amend and restate theoriginal Business Operating Agreement, which shall be so amended and restated as of the date on which this Agreement becomes effective.NOW THEREFORE, through negotiations, all parties to this Agreement hereby agree as follows: 1.Party A agrees, subject to the satisfaction of the relevant provisions herein by Party B, to be the guarantor of Party B in the contracts, agreements ortransactions entered into between Party B and any third party in connection with Party B’s business and operations, to provide full guarantees for theperformance of such contracts, agreements or transactions by Party B. As counter-guarantee, Party B agrees to pledge the accounts receivable in itsoperations and all of its assets to Party A. According to the aforesaid guarantee arrangement, Party A, when necessary, is willing to enter into writtenguarantee contracts with Party B’s counterparties to assume the guarantor’s liabilities. Party B, Party C, Party D and Party E shall take all necessaryactions (including, but not limited to, executing the relevant documents and filing the relevant registrations) to carry out the counter-guaranteearrangement with Party A. 1 2.In consideration of the requirements of Article 1 hereof and to ensure the performance of the various business agreements between Party A and Party Band the payment by Party B of the amounts payable to Party A thereunder, Party B, together with its shareholders Party C, Party D and Party E, herebyjointly agree that, without Party A’s prior written consent, Party B shall not engage in any transaction that may materially affect its assets, liabilities,rights or operations (except that Party B may, in the ordinary course of its business, enter into business contracts or agreements, sell or purchase assetsand create liens in favor of relevant counter parties as required by law.), including, but not limited to, the following: 2.1To borrow money from any third party or assume any debt; 2.2To sell to or acquire from any third party any asset or rights, including, but not limited to, any intellectual property rights; 2.3To provide guarantee for any third party using its assets or intellectual property rights as collaterals; or 2.4To assign to any third party its business contracts. 3.In order to ensure the performance of the various business agreements between Party A and Party B and the payment by Party B of the amounts payableto Party A thereunder, Party B, together with its shareholders Party C, Party D and Party E, hereby jointly agree to accept advices and guidanceprovided by Party A from time to time relating to its corporate policies on matters such as employment and dismissal of employees, daily operationsand management, and financial management. 4.Party B, together with its shareholders Party C, Party D and Party E, hereby jointly agree that Party C, Party D and Party E shall appoint candidatesrecommended by Party A as directors of Party B, and Party B shall appoint Party A’s senior executive officers recommended by Party A as its president,chief financial officer and other senior executive officers. If any of the above-mentioned senior executive officers of Party A leaves Party A, whethervoluntarily or as a result of dismissal by Party A, he or she shall also lose his/her right to hold any position at Party B, and Party B shall appoint othersenior executive officers of Party A recommended by Party A to fill such a position. The persons recommended by Party A in accordance with thisArticle 4 shall comply with the legal requirements regarding the qualifications of directors, presidents, chief financial officers, and other seniorexecutive officers. 5.Party B, together with its shareholders Party C, hereby jointly agree and confirm that Party B shall first seek a guarantee from Party A if Party B needsany guarantee for its performance of any of its contracts or for any borrowing for working capital purposes in the course of its operations. In such cases,Party A shall have the right, but not the obligation, to provide the appropriate guarantee to Party B at Party A’s sole discretion. 6.In the event that any of the agreements between Party A and Party B terminates or expires, Party A shall have the right, but not the obligation, toterminate all agreements between Party A and Party B including, but not limited to, the Services Agreement. 7.Any amendment or supplement to this Agreement shall be made in writing. The amendment or supplement duly executed by all parties shall form anintegral part of this Agreement and shall have the same legal effect as this Agreement. 8.Should any provision of this Agreement be held invalid or unenforceable because of inconsistency with applicable laws, such provision shall beinvalid or unenforceable only to the extent of such applicable laws without affecting the validity or enforceability of the remainder of this Agreement. 9.Party B shall not assign its rights and obligations under this Agreement to any third party without the prior written consent of Party A. Party B herebyagrees that Party A may assign its rights and obligations under this Agreement as Party A sees fit, in which case Party A only needs to give a writtennotice to Party B and no further consent of Party B is required. 2 10.Each party acknowledges and confirms that any oral or written materials exchanged pursuant to this Agreement are confidential. Each party shall keepconfidential all such materials and not disclose any such materials to any third party without the prior written consent from the other party except inthe following situations: (a) such materials are or will become known by the public (through no fault of the receiving party); (b) any materials asrequired to be disclosed by the applicable laws or rules of the stock exchange; or (c) any materials disclosed by each party to its legal or financialadvisors relating to the transactions contemplated by this Agreement, and such legal or financial advisors shall comply with the confidentialityprovisions set forth in this Article 10. Any disclosure of confidential information by the personnel of any party or by the entity engaged by such partyshall be deemed as a disclosure by such party, and such party shall be liable for the breach under this Agreement. This Article 10 shall survive theinvalidity, cancellation, termination or unenforceability of this Agreement for any reason. 11.This Agreement shall be governed by and interpreted in accordance with the laws of the PRC. 12.Any dispute arising in connection with the interpretation and performance of the provisions of this Agreement shall be resolved by the parties in goodfaith through negotiations. In case no resolution can be reached by the parties through negotiations, either party may refer such dispute to the ChinaInternational Economic and Trade Arbitration Commission (the “CIETAC”) for arbitration in accordance with CIETAC’s arbitration rules then ineffect. The seat of arbitration shall be in Beijing, and the language of the proceedings shall be Chinese. The arbitral award shall be final and bindingupon both of the Parties. 13.This Agreement shall be executed by a duly authorized representative of each party and become effective as of the date first written above. 14.Notwithstanding Article 13 hereof, once effective, this Agreement shall constitute the entire agreement of the parties hereto with respect to the subjectmatters hereof and supersede all prior oral and/or written agreements and understandings by the parties with respect to the subject matters hereof. 15.The term of this Agreement is ten (10) years unless terminated earlier in accordance with the provisions of this Agreement or related agreements enteredinto by the parties. This Agreement may be extended only with the written consent of Party A before its expiration. The term of the extension shall bedecided by the parties through negotiation. If the duration of operation (including any extension thereof) of Party A or Party B is expired or terminatedfor other reasons within the aforesaid term of this Agreement, this Agreement shall be terminated simultaneously, unless such party has alreadyassigned its rights and obligations hereunder in accordance with Article 9 hereof. 16.This Agreement will terminate on the expiration date unless it is renewed in accordance with the relevant provision herein. During the term of thisAgreement, Party B shall not terminate this Agreement. Notwithstanding the above stipulation, Party A shall have the right to terminate this Agreementat any time by issuing a thirty (30) days’ prior written notice to Party B. 17.This Agreement shall be executed in five originals, with each party holding one original. All originals shall have the same legal effect.[No text below on this page] 3 IN WITNESS THEREOF, each party hereto has caused this Agreement to be duly executed by himself/herself or a duly authorized representative on itsbehalf as of the date first written above. Party A: Baidu Online Network Technology (Beijing) Co., Ltd./s/: Hailong Xiang Seal of Baidu Online Network Technology (Beijing) Co., Ltd.Party B: Beijing BaiduPay Science and Technology Co., Ltd./s/: Zhixiang Liang Seal of Beijing BaiduPay Science and Technology Co., Ltd.Party C: Zhixiang Liang /s/: Zhixiang Liang Party D: Beijing Netcom Science Technology Co., Ltd./s/: Zhixiang Liang Seal of Beijing Netcom Science Technology Co., Ltd.Party E: Au Yi Heng Tong Co., Ltd./s/: Haibo Fu Seal of Au Yi Heng Tong (Beijing) Co., Ltd. 4 Exhibit 4.68 EXECUTION VERSIONBAIDU, INC.AS BORROWERARRANGED BYBANK OF CHINA LIMITED CITIGROUP GLOBALMARKETS ASIA LIMITED DEUTSCHE BANK AG,SINGAPORE BRANCHTHE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITEDANDOTHERSWITHCITICORP INTERNATIONAL LIMITEDACTING AS AGENT US$2,000,000,000 TERM AND REVOLVING CREDITFACILITIES AGREEMENT CONTENTS Clause Page 1. Definitions and Interpretation 1 2. The Facilities 21 3. Purpose 22 4. Conditions of Utilisation 22 5. Utilisation 23 6. Repayment 25 7. Prepayment and Cancellation 26 8. Interest 32 9. Interest Periods 33 10. Changes to the Calculation of Interest 33 11. Fees 35 12. Tax Gross Up and Indemnities 37 13. Increased Costs 42 14. Mitigation by the Lenders 43 15. Other Indemnities 44 16. Costs and Expenses 46 17. Representations 47 18. Information Undertakings 52 19. Financial Covenants 56 20. General Undertakings 58 21. Events of Default 67 22. Changes to the Parties 72 23. Disclosure of Information 78 24. Role of the Agent and the Arrangers 81 25. Sharing Among the Finance Parties 91 26. Payment Mechanics 94 27. Set-off 97 28. Notices 97 29. Calculations and Certificates 100 30. Partial Invalidity 100 31. Remedies and Waivers 101 32. Amendments and Waivers 101 33. Restrictions on Debt Purchase Transactions 102 34. Counterparts 103 -i- 35. U.S.A. Patriot Act 103 36. Governing Law 104 37. Enforcement 104 38. Waiver of Jury Trial 105 Schedule 1 The Original Lenders 106 Schedule 2 Conditions Precedent 108 Schedule 3 Requests 110 Part I Form of Utilisation Request 110 Part II Form of Selection Notice 111 Schedule 4 Form of Transfer Certificate 112 Schedule 5 Form of Compliance Certificate 115 Schedule 6 Timetables 117 Schedule 7 Standing Payment Instructions 118 -ii- THIS AGREEMENT is dated 8 June 2016 and madeBETWEEN: (1)BAIDU, INC., an exempted company incorporated with limited liability under the laws of Cayman Islands with registration number 96019 whoseregistered office at P.O. Box 309, Ugland House, South Church Street, George Town, Grand Cayman, KY1-1104, Cayman Islands (the “Borrower”); (2)BANK OF CHINA LIMITED, CITIGROUP GLOBAL MARKETS ASIA LIMITED,DEUTSCHE BANK AG, SINGAPORE BRANCH and THEHONGKONG AND SHANGHAI BANKING CORPORATION LIMITED as original mandated lead arrangers and bookrunners (the “OriginalMLABs” and each an “Original MLAB”); (3)BANK OF COMMUNICATIONS CO., LTD. (ACTING THROUGH ITS OFFSHORE BANKING UNIT), DBS BANK LTD., NANYANGCOMMERCIAL BANK, LIMITED, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED, BANK OF AMERICA, N.A., BNPPARIBAS, CHINA CONSTRUCTION BANK (ASIA) CORPORATION LIMITED, HANG SENG BANK LIMITED, INDUSTRIAL ANDCOMMERCIAL BANK OF CHINA (ASIA) LIMITED, JPMORGAN CHASE BANK, N.A., HONG KONG BRANCH, MIZUHO BANK, LTD.,STANDARD CHARTERED BANK (HONG KONG) LIMITED and WING LUNG BANK, LIMITED as additional mandated lead arrangers andbookrunners (the “Additional MLABs” and each an “Additional MLAB”); (4)CATHAY UNITED BANK COMPANY LIMITED, HONG KONG BRANCH, CHINA MERCHANTS BANK CO., LTD., MEGAINTERNATIONAL COMMERCIAL BANK CO., LTD. and KGI BANK as additional mandated lead arrangers (the “Additional MLAs” and eachan “Additional MLA”); (5)THE FINANCIAL INSTITUTIONS listed in Schedule 1 (The Original Lenders) as lenders (the “Original Lenders” and each an “OriginalLender”); and (6)CITICORP INTERNATIONAL LIMITED as agent of the Finance Parties (other than itself) (the “Agent”).IT IS AGREED as follows:SECTION 1INTERPRETATION 1.DEFINITIONS AND INTERPRETATION 1.1DefinitionsIn this Agreement:“1940 Act” means the U.S. Investment Company Act of 1940. 1 “Administrative Parties” means each of the Agent and the Arrangers (each an “Administrative Party”).“Affiliate” means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of anyHolding Company of that person.“Anti-Bribery and Corruption Laws” means: (a)the FCPA; (b)the UK Bribery Act of 2010; (c)all laws, rules and regulations (concerning or relating to bribery or corruption) issued, administered or enforced by any of the UnitedStates of America, the United Kingdom, the European Union (or any member state thereof), Hong Kong, the PRC, Singapore or anyGovernmental Agency of any of the foregoing; and (d)all laws, rules and regulations (concerning or relating to bribery or corruption) issued, administered or enforced by any other country orjurisdiction applicable to any Group Member from time to time or any other Governmental Agency having jurisdiction over any GroupMember from time to time.“Anti-Money Laundering Laws” means all applicable financial recordkeeping and reporting requirements and all applicable anti-moneylaundering laws and regulations of any of the United States, the United Kingdom, the European Union, the Cayman Islands, Hong Kong, the PRCand Singapore, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, which in each case are issued,administered or enforced by any Governmental Agency in any such jurisdiction from time to time.“Anti-Terrorism Laws” means any Executive Order, the U.S.A. Patriot Act, the Money Laundering Control Act of 1986, Public Law 99-570, theCurrency and Foreign Transactions Reporting Act, 31 U.S.C. §§ 5311-5330 and 12 U.S.C. §§ 1818(s), 1820(b) and 1951-1959, the InternationalEmergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., the Trading with the Enemy Act, 50 U.S.C. App. §§ 1 et seq., the US United NationsParticipation Act, the US Syria Accountability and Lebanese Sovereignty Act, the US Comprehensive Iran Sanctions, Accountability, andDivestment Act of 2010, the Iran Sanctions Act, Section 1245 of the National Defense Authorization Act of 2012, any other regulation issued underauthority of any Executive Order or administered by OFAC (provided that, with respect to each of the foregoing, “Anti-Terrorism Laws” shall notinclude provisions that have been suspended or waived by applicable U.S. Governmental Agencies and for so long as such suspension or waiver (asthe case may be) has not been revoked), the Prevention of Terrorism Act 2005 of the United Kingdom, any sanction implemented or effective in theUnited Kingdom under the United Nations Act 1946 or the Emergency Laws (Re-enactments and Repeals) Act 1964 or the Anti-Terrorism, Crimeand Security Act 2001 of the United Kingdom or under the Treaty establishing the European Community, and any similar law, regulations and/orsanctions enacted, issued and/oradministered by any of the United Nations, the United States, the United Kingdom, the European Union, theCayman Islands, Hong Kong, the PRC and Singapore. 2 “APLMA” means the Asia Pacific Loan Market Association Limited.“Arrangers” means the Original MLABs, the Additional MLABs and the Additional MLAs (each an “Arranger”).“Assignment Agreement” means, in relation to any assignment by any Lender of any or all of its rights under this Agreement, an assignmentagreement substantially in a recommended form of the APLMA or any other form agreed between the applicable assignor, the applicable assigneeand the Agent.“Auditors” means one of PricewaterhouseCoopers, Ernst & Young, KPMG or Deloitte & Touche or any other firm mutually agreed to by theBorrower and the Agent (acting on the instructions of the Majority Lenders).“Authorisation” means: (a)an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation, lodgement or registration; and/or (b)in relation to anything which will be fully or partly prohibited or restricted by law if a Governmental Agency intervenes or acts in anyway within a specified period after lodgement, filing, registration or notification, the expiry of that period without intervention or action.“Availability Period” means: (a)(in relation to Facility A) the Facility A Availability Period; or (b)(in relation to Facility B) the Facility B Availability Period.“Available Commitment” means in relation to a Lender: (a)(in relation to Facility A) that Lender’s Facility A Available Commitment; or (b)(in relation to Facility B) that Lender’s Facility B Available Commitment.“Available Facility” means: (a)(in relation to Facility A) the Facility A Available Facility; or (b)(in relation to Facility B) the Facility B Available Facility.“Baidu Netcom” means Beijing Baidu Netcom Science Technology Co., Ltd. , a company incorporatedunder the laws of the PRC with united social credit identification number 91110000802100433B.“Baidu Online” means Baidu Online Network Technology (Beijing) Co., Ltd. , a companyincorporated under the laws of the PRC with registration number 110000410144104. 3 “Break Costs” means the amount (if any) by which: (a)the interest (excluding any portion thereof attributable to the Margin) which a Finance Party should have received pursuant to the termsof this Agreement for the period from the date of receipt or recovery of all or any part of the principal amount of a Loan or an Unpaid Sumto the last day of the current Interest Period in respect of that Loan or that Unpaid Sum, had the principal amount of that Loan or had thatUnpaid Sum so received or recovered been paid on the last day of that Interest Period;exceeds: (b)the amount of interest which that Finance Party would be able to obtain by placing an amount equal to the principal amount of that Loanor equal to that Unpaid Sum so received or recovered by it on deposit with a leading bank in the Relevant Interbank Market for a periodstarting on the Business Day following such receipt or recovery and ending on the last day of that current Interest Period.“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in Hong Kong, the PRC and Singaporeand: (a)(in relation to any Utilisation Date or the delivery of any Utilisation Request or Selection Notice) London and Taiwan; (b)(in relation to any determination of a rate of interest) London; and (c)(in relation to any payment in US$) New York City.“Code” means the US Internal Revenue Code of 1986, and the regulations promulgated and rulings issued thereunder.“Commitment” means in relation to a Lender: (a)(in relation to Facility A) that Lender’s Facility A Commitment; or (b)(in relation to Facility B) that Lender’s Facility B Commitment.“Compliance Certificate” means a certificate substantially in the form set out in Schedule 5 (Form of Compliance Certificate) and signed by anauthorised signatory of the Borrower.“Confidential Information” means all information relating to the Borrower, the Group, the Finance Documents or a Facility of which a FinanceParty becomes aware in its capacity as, or for the purpose of becoming, a Finance Party or which is received by a Finance Party in relation to, or forthe purpose of becoming a Finance Party under, the Finance Documents or a Facility from either: (a)any member of the Group or any of its advisers; or 4 (b)another Finance Party, if the information was obtained by that Finance Party directly or indirectly from any member of the Group or anyof its advisers, in whatever form, and includes information given orally and any document, electronic file or any other way ofrepresenting or recording information which contains or is derived or copied from such information but excludes information that: (i)is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of Clause 23(Disclosure of Information); or (ii)is identified in writing at the time of delivery as non-confidential by any member of the Group or any of its advisers; or (iii)is known by that Finance Party before the date the information is disclosed to it in accordance with paragraphs (a) or (b) aboveor is lawfully obtained by that Finance Party after that date, from a source which is, as far as that Finance Party is aware,unconnected with the Group and which, in either case, as far as that Finance Party is aware, has not been obtained in breach of,and is not otherwise subject to, any obligation of confidentiality.“Confidentiality Undertaking” means a confidentiality undertaking substantially in a recommended form of the APLMA or in any other formagreed between the Borrower and the Agent.“Consolidated EBITDA” has the meaning given to it in Clause 19.1 (Financial definitions).“Deal Site” means “Debtdomain”.“Debt Purchase Transaction” means, in relation to a person, a transaction where such person: (a)purchases or acquires by way of assignment or transfer any rights and/or obligations in respect of; (b)enters into any sub-participation in respect of; or (c)enters into any other agreement or arrangement having an economic effect substantially similar to a sub-participation in respect of,any Commitment in respect of any Facility (or any commitment represented thereby) or any amount outstanding under any Finance Document.“Default” means an Event of Default or any event or circumstance which would (with the expiry of a grace period, the giving of notice, the makingof any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.“Equity Interest” means, in relation to any person: (a)any shares of any class or capital stock of or equity interest (including, without limitation, partnership or membership interest) in suchperson or any depositary receipt in respect of any such shares, capital stock or equity interest; 5 (b)any securities convertible or exchangeable (whether at the option of the holder thereof or otherwise and whether such conversion isconditional or otherwise) into any such shares, capital stock, equity interest or depositary receipt, or any depositary receipt in respect ofany such securities; or (c)any option, warrant or other right to acquire any such shares, capital stock, equity interest, securities or depositary receipts referred to inparagraphs (a) and/or (b).“Event of Default” means any event or circumstance specified in any of Clauses 21.1 (Non-payment) to 21.12 (Material adverse change).“Excluded Redeemable Preference Shares” means: (a)certain redeemable preference shares issued by Qiyi on 14 November 2014 (representing 13.42% of the then outstanding equity interestsin Qiyi) for a total consideration of US$300,000,000 on terms and conditions disclosed to the Arrangers prior to the date of thisAgreement; (b)250,000,000 preference shares issued by Xiaodu Life Technology Ltd. on 1 October 2015 at par value for a total consideration ofUS$250,000,000 on terms and conditions disclosed to the Arrangers prior to the date of this Agreement; (c)29,473,685 preference shares issued by Xiaodu Life Technology Ltd. on 5 May 2016 at par value for a total consideration ofUS$70,000,000 and warrants for up to 21,052,632 preference shares to be issued at par value for a total consideration of US$50,000,000,in each case, on terms and conditions disclosed to the Arrangers prior to the date of this Agreement; and (d)any other redeemable preference shares which are not redeemable on or prior to the Final Maturity Date (other than at the option of theissuer thereof) or which are otherwise categorised as equity in the consolidated financial statements of the Borrower in accordance withGAAP.“Executive Orders” means: (a)the US Executive Order No. 13224 on Blocking Property and Prohibiting Transactions with Persons who Commit, Threaten to Commit,or Support Terrorism, which came into effect on 23 September 2001, as amended; (b)the US Executive Order No. 13590 of 21 November 2011 authorising the imposition of certain sanctions with respect to the provision ofgoods, services, technology or support for Iran’s energy and petrochemical sectors; and (c)any other US Executive Order issued and in effect in connection with restrictions on the export of goods or economic or trade sanctions,(each an “Executive Order”). 6 “Facilities” means Facility A and Facility B (each a “Facility”).“Facility A” means the term loan facility made or to be made available under this Agreement as described in paragraph (a) of Clause 2.1 (TheFacilities).“Facility A Availability Period” means the period from and including the date of this Agreement to and including the earlier of (a) the date falling6 Months after the date of this Agreement and (b) the first date on which the Facility A Available Facility is zero.“Facility A Available Commitment” means in relation to a Lender and save as otherwise provided in this Agreement, that Lender’s Facility ACommitment minus: (a)the aggregate amount of its participation in any outstanding Facility A Loan (for such purpose taking into account the principal amountof each such Facility A Loan when it is made and disregarding any subsequent reduction in such principal amount); and (b)in relation to any proposed Utilisation, that Lender’s participation in any Facility A Loan (other than the Facility A Loan the subject ofsuch proposed Utilisation) that is due to be made on or before the Utilisation Date for such proposed Utilisation.“Facility A Available Facility” means the aggregate for the time being of each Lender’s Facility A Available Commitment.“Facility A Commitment” means: (a)in relation to an Original Lender, the sum of the amount set opposite its name under the heading “Facility A Commitment” in Schedule 1(The Original Lenders) and the amount of any other Facility A Commitment transferred to it pursuant to Clause 22 (Changes to theParties); and (b)in relation to any other Lender, the amount of any Facility A Commitment transferred to it pursuant to Clause 22 (Changes to theParties),to the extent not cancelled or reduced under this Agreement or transferred by it pursuant to Clause 22 (Changes to the Parties).“Facility A Loan” means, as the context requires, a loan made or to be made under Facility A or the principal amount outstanding for the timebeing of that loan.“Facility B” means the revolving credit facility made or to be made available under this Agreement as described in paragraph (b) of Clause 2.1 (TheFacilities).“Facility B Availability Period” means the period from and including the date of this Agreement to and including the date falling 1 Month prior tothe Final Maturity Date.“Facility B Available Commitment” means in relation to a Lender and save as otherwise provided in this Agreement, that Lender’s Facility BCommitment minus: (a)the aggregate amount of its participation in any outstanding Facility B Loan (for such purpose taking into account the principal amountof each such Facility B Loan when it is made and disregarding any subsequent reduction in such principal amount); and 7 (b)in relation to any proposed Utilisation, that Lender’s participation in any Facility B Loan (other than the Facility B Loan the subject ofsuch proposed Utilisation) that is due to be made on or before the Utilisation Date for such proposed Utilisation,provided that, for the purposes of calculating a Lender’s Facility B Available Commitment in relation to any proposed Utilisation under Facility Bonly, the amount of that Lender’s participation in any Facility B Loans that are due to be repaid or prepaid on or before the proposed UtilisationDate (for such proposed Utilisation) shall not be deducted from that Lender’s Facility B Available Commitment. “Facility B Available Facility” means the aggregate for the time being of each Lender’s Facility B Available Commitment.“Facility B Commitment” means: (a)in relation to an Original Lender, the sum of the amount set opposite its name under the heading “Facility B Commitment” in Schedule 1(The Original Lenders) and the amount of any other Facility B Commitment transferred to it pursuant to Clause 22 (Changes to theParties); and (b)in relation to any other Lender, the amount of any Facility B Commitment transferred to it pursuant to Clause 22 (Changes to theParties),to the extent not cancelled or reduced under this Agreement or transferred by it pursuant to Clause 22 (Changes to the Parties).“Facility B Loan” means, as the context requires, a loan made or to be made underFacility B or the principal amount outstanding for the time being of that loan.“Facility Office” means the office or offices notified by a Lender to the Agent in writing on or before the date it becomes a Lender (or, followingthat date, by not less than five Business Days’ written notice) as the office(s) through which it will perform its obligations under this Agreement.“FATCA” means: (a)sections 1471 to 1474 of the Code or any associated regulations; (b)any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any otherjurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or (c)any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the USInternal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction. 8 “FATCA Deduction” means a deduction or withholding from a payment under a Finance Document required by FATCA.“FATCA Exempt Party” means a Party that is entitled to receive payments free from any FATCA Deduction.“FCPA” means the United States Foreign Corrupt Practices Act 1977, as amended, and the rules and regulations thereunder.“Fee Letters” means any letter or letters referring to this Agreement or any Facility between one or more of the Administrative Parties (on the onehand) and the Borrower (on the other hand) setting out any of the fees referred to in Clause 11 (Fees) (each a “Fee Letter”).“Final Maturity Date” means the date falling 60 Months after the date of this Agreement.“Finance Documents” means this Agreement, the Fee Letters, any Utilisation Request, any Selection Notice, any Compliance Certificate and anyother document(s) designated as a “Finance Document” by the Agent and the Borrower (each a “Finance Document”).“Finance Parties” means the Agent, the Arrangers and the Lenders (each a “Finance Party”).“Finance Lease” means any lease or hire purchase contract which would, in accordance with GAAP, be treated as a finance or capital lease.“Financial Indebtedness” means any indebtedness for or in respect of: (a)any moneys borrowed; (b)any redeemable preference shares; (c)any amount raised by acceptance under any acceptance credit facility (including any dematerialised equivalent thereof); (d)any amount raised pursuant to any bond, note, debenture, loan stock or other similar instrument; (e)the amount of any liability in respect of any Finance Lease; (f)receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis); (g)any amount of any liability under an advance or deferred purchase agreement primarily entered into as a method of raising finance or tofinance the acquisition of any asset; (h)any amount raised under any other transaction (including any forward sale or purchase agreement) of a type not referred to in any otherparagraph of this definition having the commercial effect of a borrowing; 9 (i)any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, whencalculating the value of any derivative transaction, only the marked to market value shall be taken into account); (j)any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any otherinstrument issued by a bank or financial institution; and/or (k)the amount of any liability in respect of any guarantee or indemnity or similar assurance against financial loss for any of the itemsreferred to in paragraphs (a) to (j) above.“Financial Quarter” means the period commencing on the day after one Quarter Date and ending on the next Quarter Date.“Financial Year” means the annual accounting period of the Group ending on 31 December in each year.“GAAP” means generally accepted accounting principles in the United States of America.“Governmental Agency” means any government or any governmental agency, semi- governmental or judicial entity or authority (including,without limitation, any stock exchange or any self-regulatory organisation established under statute).“Group” means the Borrower and its Subsidiaries from time to time.“Group Member” means any member of the Group.“Holding Company” means, in relation to a company, corporation or entity, any other company, corporation or entity in respect of which it is aSubsidiary.“Indirect Tax” means any goods and services tax, consumption tax, value added tax or any tax of a similar nature.“Information Memorandum” means the document in the form approved by the Borrower concerning, among other things, the Group which, at theBorrower’s request and on its behalf, was or will be prepared in relation to the Facilities (or any part thereof) and has been or will be distributed byone or more of the Arrangers in connection with syndication of the Facilities (or any part thereof).“Initial Utilisation Date” means the date on which the first Loan is made under this Agreement.“Interest Period” means: (a)in relation to a Loan, any period determined in accordance with Clause 9 (Interest Periods); and/or (b)in relation to an Unpaid Sum, any period determined in accordance with Clause 8.3 (Default interest). 10 “Interpolated Screen Rate” means, in relation to LIBOR for any Loan or any Unpaid Sum and any Interest Period relating thereto, the rate perannum (rounded upwards to 4 decimal places) which results from interpolating on a linear basis between: (a)the rate per annum that is equal to the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is lessthan the length of such Interest Period; and (b)the rate per annum that is equal to the applicable Screen Rate for the shortest period (for which that Screen Rate is available) whichexceeds the length of such Interest Period,each as of the Specified Time on the Quotation Day for the currency of such Loan or such Unpaid Sum and for such Interest Period.“Lender” means: (a)any Original Lender; and/or (b)any bank, financial institution, trust, fund or other entity which has become a Party in accordance with Clause 22 (Changes to theParties),which in each case has not ceased to be a Party in accordance with the terms of this Agreement.“LIBOR” means, in relation to any Loan or Unpaid Sum and any Interest Period relating thereto, the rate per annum equal to: (a)the applicable Screen Rate; (b)(if no Screen Rate is available for the currency of such Loan or such Unpaid Sum and a period equal in length to such Interest Period) theInterpolated Screen Rate for such Loan or such Unpaid Sum and such Interest Period; or (c)(if (i) no Screen Rate is available for the currency of such Loan or such Unpaid Sum and a period equal in length to such Interest Periodand (ii) it is not possible to calculate the Interpolated Screen Rate for such Loan or such Unpaid Sum and such Interest Period) theReference Bank Rate,as of, in the case of paragraphs (a) and (c) above, the Specified Time on the Quotation Day for the currency of such Loan or Unpaid Sum and for aperiod equal in length to that Interest Period, provided that (in each case) if such rate is less than zero, LIBOR for such Loan or Unpaid Sum andsuch Interest Period shall (without prejudice to Clause 10.2 (Market disruption)) be deemed to be zero.“Loan” means a Facility A Loan or a Facility B Loan.“London Business Day” means a day (other than a Saturday or Sunday) on which commercial banks are open for general business includingdealings in interbank deposits in London. 11 “Majority Facility A Lenders” means a Lender or Lenders whose Facility A Commitments aggregate 66 2⁄3 per cent. or more of the Total Facility ACommitments (or, if the Total Facility A Commitments have been reduced to zero, aggregated 66 2⁄3 per cent. or more of the Total Facility ACommitments immediately prior to the reduction of the Total Facility A Commitments to zero).“Majority Facility B Lenders” means a Lender or Lenders whose Facility B Commitments aggregate 66 2⁄3 per cent. or more of the Total Facility BCommitments (or, if the Total Facility B Commitments have been reduced to zero, aggregated 66 2⁄3 per cent. or more of the Total Facility BCommitments immediately prior to the reduction of the Total Facility B Commitments to zero).“Majority Lenders” means a Lender or Lenders whose Commitments (for any or all Facilities) aggregate 66 2⁄3 per cent. or more of the TotalCommitments (or, if the Total Commitments have been reduced to zero, aggregated 66 2⁄3 per cent. or more of the Total Commitments immediatelyprior to the reduction of the Total Commitments to zero).“Margin” means 1.10 per cent. per annum.“Margin Stock” means margin stock or “margin security” within the meaning of Regulation T, Regulation U and Regulation X.“Material Adverse Effect” means a material adverse effect on: (a)the business or financial condition of the Group (taken as a whole); (b)the ability of the Borrower to perform its payment obligations under any or all of the Finance Documents; or (c)the legality, validity or enforceability of any or all of the Finance Documents or any or all of the rights or remedies of any Finance Partyunder any or all of the Finance Documents.“Material Subsidiary” means, at any time, any Group Member whose: (a)revenue (calculated on a consolidated basis if such Group Member has any Subsidiary) represents 10 per cent. or more of the revenue ofthe Group (calculated on a consolidated basis); or (b)earnings before interest, Tax, depreciation and amortisation calculated on a similar basis as Consolidated EBITDA (calculated mutatismutandis as if any reference in the definition of “Consolidated EBITDA” and any related definition to the Group were a reference to suchGroup Member and (if any) its Subsidiaries (on a consolidated basis)) represents 10 per cent. or more of Consolidated EBITDA. 12 Whether a Group Member meets any of the conditions set out in paragraphs (a) and/or (b) above shall be determined annually by reference to theperiod covered by the most recent audited consolidated financial statements of the Borrower delivered under this Agreement (and the ComplianceCertificate delivered in respect of such financial statements) and (where available) the financial statements of that Group Member (for the periodcovered by such most recent audited consolidated financial statements of the Borrower), provided that if a person becomes a Group Member(whether as a result of acquisition or establishment or otherwise) or ceases to be a Group Member (whether as a result of disposal or otherwise) sincethe date as at which the latest audited consolidated financial statements of the Borrower delivered under this Agreement were prepared, suchfinancial statements shall be deemed to be adjusted (on a pro forma basis as if such person had become or (as the case may be) ceased to be a GroupMember with effect from the commencement of the period to which such financial statements relate) in order to take into account that person’sbecoming or (as the case may be) ceasing to be a Group Member.A report by the Group’s auditors (which shall be one of the Auditors) that a Group Member is or is not a Material Subsidiary (for the purposes ofparagraphs (a) and/or (b) above) shall, in the absence of manifest error, be conclusive and binding on all Parties.“Month” means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month,except that: (a)(subject to paragraph (c) below) if the numerically corresponding day in that next calendar month (in which that period is to end) is not aBusiness Day, that period shall end on the next Business Day in that next calendar month if there is one, or if there is not, on theimmediately preceding Business Day in that next calendar month; (b)if there is no numerically corresponding day in that next calendar month (in which that period is to end), that period shall end on the lastBusiness Day in that next calendar month; and (c)if any period begins on the last Business Day of a calendar month, that period shall end on the last Business Day in the calendar month inwhich that period is to end.The above rules will only apply to the last Month of any period.“OFAC” means the Office of Foreign Assets Control of the US Department of the Treasury.“Original Financial Statements” means the audited consolidated financial statements of the Borrower for its Financial Year ended 31 December2015 and the unaudited consolidated financial statements of the Borrower for its Financial Quarter ended 31 March 2016.“Party” means a party to this Agreement.“PRC” means the People’s Republic of China (which, for the purposes of this Agreement, does not include Hong Kong, the Special AdministrativeRegion of Macau or Taiwan).“Qiyi” means Qiyi.com. Inc. , a company incorporated under the laws of the Cayman Islands with registered numberWK-233914. 13 “Quarter Dates” means each of 31 March, 30 June, 30 September and 31 December (each a “Quarter Date”).“Quotation Day” means: (a)in relation to any period for which an interest rate is to be determined (other than any Interest Period referred to in paragraph (b)), twoLondon Business Days before the first day of that period unless market practice differs in the Relevant Interbank Market, in which casethe Quotation Day will be determined by the Agent in accordance with market practice in the Relevant Interbank Market (and ifquotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day willbe the last of those days); or (b)in relation to any Interest Period the duration of which is selected by the Agent pursuant to Clause 8.3 (Default interest), such date asmay be determined by the Agent (acting reasonably).“Reference Bank Rate” means, in relation to any Loan or Unpaid Sum and any period relating thereto, the arithmetic mean of the rates (roundedupwards to four decimal places) as supplied to the Agent at its request by each of the Reference Banks as the rate at which such Reference Bankcould borrow funds in the London interbank market in the currency of such Loan or Unpaid Sum and for such period, were it to do so by asking forand then accepting interbank offers for deposits in reasonable market size in such currency and for such period.“Reference Banks” means the principal London offices of (a) DBS Bank Ltd. and Mizuho Bank, Ltd. or (b) such other banks as may be appointedby the Agent after consultation with the Borrower.“Regulation T” means Regulation T of the Board of Governors of the Federal Reserve System of the United States (or any successor thereof).“Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System of the United States (or any successor thereof).“Regulation X” means Regulation X of the Board of Governors of the Federal Reserve System of the United States (or any successor thereof).“Related Fund” in relation to a fund (the “first fund”), means a fund which is managed or advised by the same investment manager or investmentadviser as the first fund or, if it is managed by a different investment manager or investment adviser, a fund whose investment manager orinvestment adviser is an Affiliate of the investment manager or investment adviser of the first fund.“Relevant Interbank Market” means the London interbank market.“Relevant Period” means has the meaning given to it in Clause 19.1 (Financial definitions). 14 “Repeating Representations” means each of the representations and warranties set out in Clauses 17.1 (Status) to 17.6 (Governing law andenforcement) (inclusive), paragraphs (a) and (b) of 17.9 (No default), paragraph (c) of Clause 17.10 (No misleading information), Clause 17.11(Financial statements), Clause 17.13 (No proceedings pending or threatened), Clause 17.14 (Authorised Signatures), Clause 17.15 (FederalReserve Regulations) and Clause 17.17 (Sanctions, anti-terrorism, anti-money laundering and anti-corruption).“Restricted Material Subsidiaries” means: (a)Baidu Netcom; (b)Baidu Online; and (c)any Group Member to or in favour of whom all or substantially all of the assets of any of Baidu Netcom or Baidu Online has beentransferred or otherwise disposed of (whether in a single transaction or a series of transactions (whether related or not)),(each a “Restricted Material Subsidiary”).“Restricted Party” means a person: (a)that is listed on, or owned or controlled by a person listed on, or acting on behalf of a person listed on, any Sanctions List; (b)that is located in or incorporated under the laws of, or owned or (directly or indirectly) controlled by, or acting on behalf of, a personlocated in or organised under the laws of any Sanctioned Jurisdiction; or (c)that is otherwise a target of Sanctions (“target of Sanctions” signifying a person with whom a US person or other national of a SanctionsAuthority would be prohibited or restricted by law from engaging in trade, business or other activities).“Rollover Loan” means one or more Facility B Loans: (a)made or to be made on the same day that a maturing Facility B Loan is due to be repaid; (b)the aggregate amount of which is equal to or less than the amount of that maturing Facility B Loan; and (c)made or to be made for the purpose of refinancing that maturing Facility B Loan and identified as a “Rollover Loan” or “RolloverLoans” in the Utilisation Request for such first-mentioned Facility B Loans.“Sanctioned Jurisdiction” means, at any time, any country or territory that is the target of countrywide or territory-wide Sanctions (being, as at thedate hereof, Cuba, Iran, North Korea, Sudan, Syria and the Crimea region in Ukraine).“Sanctions” means any trade, economic or financial sanctions, embargoes, laws, regulations or restrictive measures administered, enacted orenforced by: (a)the European Union; 15 (b)the United Kingdom; (c)the United Nations; (d)the US; (e)Hong Kong; (f)the PRC; (g)Singapore; and/or (h)the respective governmental institutions and agencies of any of the foregoing, including, without limitation, OFAC, the United NationsSecurity Council, the United States Department of State, the United States Department of the Treasury, Her Majesty’s Treasury (“HMT”)and the Hong Kong Monetary Authority (together the “Sanctions Authorities” and each a “Sanctions Authority”).“Sanctions List” means the “Specially Designated Nationals and Blocked Persons” list maintained by OFAC and the Consolidated List of FinancialSanctions Targets and the Investment Ban List maintained by HMT, or any similar list maintained by, or any public announcement of Sanctionsdesignation made by, any of the Sanctions Authorities.“Screen Rate” means, in relation to any Loan or Unpaid Sum and any period relating thereto, the London interbank offered rate administered byICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for the currency of such Loan orUnpaid Sum and such period, as displayed (before any correction, recalculation or republication by such administrator) on the appropriate page ofthe Thomson Reuters screen (being currently page LIBOR01 or LIBOR02) or, if such page is replaced or such service ceases to be available, suchreplacement page or service displaying such rate as the Agent may select after consultation with the Borrower and the Lenders.“Security” means a mortgage, charge, pledge, lien or other security interest securing any obligation of any person or any other agreement orarrangement having a similar effect.“Selection Notice” means a notice in substantially the form set out in Part II of Schedule 3 (Requests).“Specified Time” means the applicable time determined in accordance with Schedule 6 (Timetables).“Standing Payment Instructions” means, in relation to any Lender, the standing payment instructions for that Lender set out in Schedule 7(Standing Payment Instructions) or in the Transfer Certificate or the Assignment Agreement relating to any assignment or transfer or rights and/orobligations under this Agreement to such Lender, in each case as amended from time to time by written instruction to the Agent by a dulyauthorised officer of such Lender, provided that such written instructions are made by letter in original. 16 “Subsidiary” means in relation to any company, corporation or entity, a company, corporation or entity: (a)which is controlled, directly or indirectly, by the first mentioned company, corporation or entity; (b)more than half the issued equity share capital, registered capital or equity interest of which is beneficially owned, directly or indirectlyby the first mentioned company, corporation or entity; (c)which is a Subsidiary of another Subsidiary of the first mentioned company, corporation or entity; or (d)the financial condition or results of operation of which are or are required under GAAP to be consolidated for the purposes of theconsolidated financial statements of the first mentioned company, corporation or entity,and for this purpose, a company, corporation or entity shall be treated as being controlled by another if that other company, corporation or entity isable to direct its affairs and/or to control the majority of the composition of its board of directors or equivalent body.“Super Majority Lenders” means a Lender or Lenders whose Commitments (for any or all Facilities) aggregate 80 per cent. or more of the TotalCommitments (or, if the Total Commitments have been reduced to zero, aggregated 80 per cent. or more of the Total Commitments immediatelyprior to the reduction of the Total Commitments to zero).“Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connectionwith any failure to pay or any delay in paying any of the same).“Tax Deduction” has the meaning given to such term in paragraph (a) of Clause 12.1 (Definitions).“Total Commitments” means the aggregate of the Facility A Commitments and the Facility B Commitments, being US$2,000,000,000 at the dateof this Agreement.“Total Facility A Commitments” means the aggregate of the Facility A Commitments, being US$1,000,000,000 at the date of this Agreement.“Total Facility B Commitments” means the aggregate of the Facility B Commitments, being US$1,000,000,000 at the date of this Agreement.“Transfer Certificate” means a certificate substantially in the form set out in Schedule 4 (Form of Transfer Certificate) or any other form agreedbetween the Agent and the Borrower.“Transfer Date” means, in relation to an assignment by a Lender of any or all of its rights under this Agreement or a transfer by a Lender of any orall of its rights and obligations under this Agreement, the later of: (a)the proposed Transfer Date specified in the Assignment Agreement relating to such assignment or (as the case may be) the TransferCertificate relating to such transfer; and 17 (b)the date on which the Agent executes the Assignment Agreement relating to such assignment or (as the case may be) the TransferCertificate relating to such transfer.“Unpaid Sum” means any sum due and payable but unpaid by the Borrower under any or all of the Finance Documents.“US”, “U.S.” and “United States” means the United States of America, its territories, possessions and other areas subject to the jurisdiction of theUnited States of America.“US Bankruptcy Code” means Title 11 of the United States Code, 11 USC. 101 et seq., entitled “Bankruptcy”.“U.S.A. Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct TerrorismAct of 2001, Public Law 107-56.“US Tax Obligor” means the Borrower if: (a)it is resident for tax purposes in the US; or (b)its payments under the Finance Documents are from sources within the US for United States federal income tax purposes.“Utilisation” means a utilisation of any Facility.“Utilisation Date” means the date of a Utilisation, being the date on which the Loan (the subject of such Utilisation) is made or to be made.“Utilisation Request” means a notice substantially in the form set out in Part I (Form of Utilisation Request) of Schedule 3 (Requests). 1.2Construction (a)Unless a contrary indication appears, any reference in this Agreement to: (i)the Agent, any Arranger, any Administrative Party, any Finance Party, any Lender or any Party shall be construed so as toinclude its successors in title, permitted assigns and permitted transferees; (ii)a Finance Document or any other agreement or instrument is a reference to that Finance Document or other agreement orinstrument as amended, novated, supplemented, extended and/or restated from time to time; (iii)a document in “agreed form” is a document which is in the form agreed in writing by or on behalf of the Borrower and theAgent; 18 (iv)“asset” includes present and future properties, revenues and rights of every description; (v)“disposal” includes any sale, lease, transfer, conveyance, assignment and other disposal of any asset or any interest therein(including, without limitation, any other transaction or arrangement pursuant to which the economic benefit of or beneficialinterest in such asset is lost or diluted) and “dispose” shall be construed accordingly; (vi)“guarantee” includes any guarantee, letter of credit, bond, indemnity or similar assurance against loss, or any obligation, director indirect, actual or contingent, to purchase or assume any indebtedness of any person or to make an investment in or loan toany person or to purchase assets of any person where, in each case, such obligation is assumed in order to maintain or assist theability of such person to meet its indebtedness (and “guarantor” shall be construed accordingly); (vii)“including” shall be construed as “including without limitation” (and cognate expressions shall be construed similarly); (viii)“indebtedness” includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money,whether present or future, actual or contingent; (ix)a Finance Party’s “participation” in any Loan or Unpaid Sum includes an amount (in the currency of such Loan or UnpaidSum) representing the fraction or portion (attributable to such Finance Party by virtue of the provisions of this Agreement) ofthe total amount of such Loan or Unpaid Sum and such Finance Party’s rights under this Agreement and/or any other FinanceDocument in respect thereof; (x)a “person” includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust,joint venture, consortium or partnership (whether or not having separate legal personality); (xi)a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) ofany governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or otherauthority or organisation; (xii)any gender shall be construed to include a reference to each other gender; (xiii)a provision of law is a reference to that provision as amended or re- enacted; and (xiv)a time of day is a reference to Hong Kong time. (b)Section, Clause and Schedule headings are for ease of reference only. 19 (c)Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with anyFinance Document has the same meaning in that Finance Document or notice as in this Agreement. (d)A Default (other than an Event of Default) is “continuing” if it has not been remedied or waived and an Event of Default is “continuing”if it has not been waived. (e)The “equivalent” of an amount in a given currency (the “specified currency”) is a reference to the amount of any other currency which,when converted into the specified currency utilising the Agent’s spot rate of exchange (or, if no such spot rate of exchange is quoted bythe Agent, such other prevailing market rate of exchange selected by the Agent) for the purchase of the specified currency with that othercurrency at or about 11:00 a.m. (Hong Kong time) on the applicable date of determination, is equal to the applicable amount in thespecified currency. 1.3Currency symbols and definitions“$”, “US$”, “US dollar”, “US dollars”, “dollar” and “dollars” denote lawful currency of the United States of America. 1.4Third party rights (a)A person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 (the “Third Parties Act”) to enforce or toenjoy the benefit of any term of this Agreement, except as otherwise provided in paragraph (b) of Clause 24.9 (Exclusion of liability) andClause 24.18 (Liability). (b)Notwithstanding any provision of this Agreement (including paragraph (a) above), the Parties do not require the consent of any personwho is not a Party to rescind, amend, vary or waive any provision of this Agreement at any time. 20 SECTION 2THE FACILITIES 2.THE FACILITIES 2.1The FacilitiesSubject to the terms of this Agreement, the Lenders agree to make available to the Borrower: (a)a US dollar term loan facility in an aggregate amount of up to the Total Facility A Commitments; and (b)a US dollar revolving credit facility in an aggregate amount of up to the Total Facility B Commitments. 2.2Finance Parties’ rights and obligations (a)The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligationsunder any or all of the Finance Documents does not affect the obligations of any other Party under the Finance Documents. No FinanceParty is responsible for the obligations of any other Finance Party under any or all of the Finance Documents. (b)The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debtarising under any or all of the Finance Documents to a Finance Party from the Borrower shall be a separate and independent debt inrespect of which a Finance Party shall be entitled to enforce its rights in accordance with paragraph (c) below. The rights of each FinanceParty include any debt owing to that Finance Party under the Finance Documents and, for the avoidance of doubt, any part of a Loan orany other amount owed by the Borrower which relates to a Finance Party’s participation in a Facility or its role under a FinanceDocument (including any such amount payable to the Agent on its behalf) is a debt owing to that Finance Party by the Borrower. (c)A Finance Party may, except as specifically provided in the Finance Documents, separately enforce its rights under or in connection withthe Finance Documents. Each Finance Party shall be entitled to separately enforce its rights under the Finance Documents against theBorrower to recover any amount that is due and payable to it under any Finance Document (or to recover its share of any amount that isdue and payable under any Finance Document) without the consent of any other Party; and nothing shall prejudice the rights of aFinance Party from separately enforcing its rights in relation to any debt arising under any Finance Document owing to it (or its share ofany debt arising under a Finance Document), which debt is due and payable. 21 3.PURPOSE 3.1PurposeThe Borrower shall ensure that all amounts borrowed by it under the Facilities are applied towards: (a)financing the general corporate purposes of the Group; and/or (b)payment of fees, costs and expenses incurred by the Borrower in connection with the Finance Documents. 3.2MonitoringNo Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement. 4.CONDITIONS OF UTILISATION 4.1Initial conditions precedent (a)The Borrower may not deliver a Utilisation Request unless the Agent has received all of the documents and other evidence listed inSchedule 2 (Conditions Precedent) in form and substance satisfactory to the Agent. The Agent shall notify the Borrower and the Lenderspromptly upon being so satisfied. (b)Other than to the extent that the Majority Lenders notify the Agent in writing to the contrary before the Agent gives the notificationdescribed in paragraph (a) above, the Lenders authorise (but do not require) the Agent to give that notification. The Agent shall not beliable for any damages, costs or losses whatsoever as a result of giving any such notification. 4.2Further conditions precedentThe Lenders will only be obliged to comply with Clause 5.4 (Lenders’ participation) in relation to any Loan if on the date of the UtilisationRequest (relating to such Loan) and on the proposed Utilisation Date (for such Loan): (a)(in the case of a Rollover Loan) the Agent has not given notice pursuant to Clause 21.13 (Acceleration) to the Borrower to declare thatno Rollover Loan shall be made or (in the case of any Loan other than a Rollover Loan) no Default is continuing or would result fromsuch proposed Loan; and (b)(in the case of any Loan other than a Rollover Loan) the representations and/or warranties to be repeated by the Borrower under any or allof the Finance Documents upon the date of any Utilisation Request or any Utilisation Date are true in all material respects (whetherbefore or after giving effect to such proposed Loan). 4.3Maximum number of Loans (a)The Borrower may not deliver a Utilisation Request if as a result of the proposed Utilisation, 10 or more Facility A Loans would beoutstanding. (b)The Borrower may not request that any Loan be divided. 22 SECTION 3UTILISATION 5.UTILISATION 5.1Delivery of a Utilisation RequestThe Borrower may utilise a Facility by delivery to the Agent of a duly completed Utilisation Request not later than the Specified Time. 5.2Completion of a Utilisation Request (a)Each Utilisation Request for a Loan under any Facility is irrevocable and will not be regarded as having been duly completed unless: (i)it identifies the Facility to be utilised; (ii)the proposed Utilisation Date is a Business Day within the Availability Period for such Facility; (iii)the currency and amount of such Loan (the subject of such Utilisation Request) comply with Clause 5.3 (Currency andamount); and (iv)the proposed first Interest Period complies with Clause 9 (Interest Periods). (b)Only one Loan in respect of each Facility may be requested in each Utilisation Request. 5.3Currency and amount (a)The currency specified in a Utilisation Request must be US dollars. (b)The amount of the proposed Loan under any Facility specified in a Utilisation Request must be an amount which does not exceed theAvailable Facility for such Facility and which is (i) a minimum of US$50,000,000 and an integral multiple of US$10,000,000, or (ii) ifless, the Available Facility for such Facility. 5.4Lenders’ participation (a)If the conditions set out in this Agreement have been met and subject to Clause 7.1 (Illegality) and paragraph (b) of Clause 6.2(Repayment of Facility B Loans), each Lender shall make its participation in each Loan available by the Utilisation Date for such Loanthrough its Facility Office. (b)The amount of each Lender’s participation in each Loan under any Facility will be equal to a proportion of such Loan, such proportionbeing equal to the proportion borne by such Lender’s Available Commitment for such Facility to the Available Facility for such Facilityimmediately prior to making such Loan. 23 (c)The Agent shall notify each Lender of the amount of each Loan and the amount of its participation in that Loan (and, in the case of aFacility B Loan and if different, the amount of its participation in that Loan to be made available to the Agent under Clause 26.1(Payments to the Agent) in accordance with paragraph (b) of Clause 6.2 (Repayment of Facility B Loans)), in each case by the SpecifiedTime. 5.5Cancellation of Available FacilityOn the expiry of the Availability Period in respect of any Facility (in the principal financial centre of the country of the currency in which suchFacility is denominated): (a)the Available Commitment (if any) of each Lender in respect of such Facility shall be immediately and automatically reduced to zero;and (b)the Commitment of each Lender in respect of such Facility shall be immediately and automatically reduced by the amount (if any) of theAvailable Commitment of such Lender in respect of such Facility immediately before the reduction to zero of its Available Commitmentin respect of such Facility in accordance with paragraph (a) above. 24 SECTION 4REPAYMENT, PREPAYMENT AND CANCELLATION 6.REPAYMENT 6.1Repayment of Facility A Loans (a)The Borrower shall repay each Facility A Loan in full on the Final Maturity Date. (b)The Borrower may not re-borrow any part of Facility A which is repaid. 6.2Repayment of Facility B Loans (a)Subject to paragraph (c), the Borrower shall repay each Facility B Loan in full on the last day of its Interest Period. (b)Without prejudice to the Borrower’s obligation under paragraph (a) above, if: (i) one or more Facility B Loans are to be made available to the Borrower in accordance with the provisions of this Agreement(“New Facility B Loans”): (A)on the same day that a maturing Facility B Loan is due to be repaid; and (B)in whole or in part for the purpose of refinancing such maturing Facility B Loan (as specified in the UtilisationRequest(s) for such New Facility B Loans); and (ii)each Lender’s aggregate participation in such New Facility B Loans (expressed as a percentage of the aggregate amount of suchNew Facility B Loans) is equal to such Lender’s participation in such maturing Facility B Loan (expressed as a percentage ofthe aggregate amount of such Facility B Loan),the aggregate amount of such New Facility B Loans shall, unless the Borrower notifies the Agent to the contrary in the UtilisationRequest(s) for such New Facility B Loans, be treated as if applied in or towards repayment of such maturing Facility B Loan so that: (A)if the amount of such maturing Facility B Loan exceeds the aggregate amount of the New Facility B Loans: (1)the Borrower will only be required to make a payment under Clause 26.1 (Payments to the Agent) in anamount equal to that excess; and (2)each Lender’s participation in such New Facility B Loans shall be treated as having been made availableand applied by the Borrower in or towards repayment of that Lender’s participation in such maturingFacility B Loan and that Lender will not be required to make a payment under Clause 26.1 (Payments tothe Agent) in respect of its participation in such New Facility B Loans; and 25 (B)if the amount of such maturing Facility B Loan is equal to or less than the aggregate amount of such New Facility BLoans: (1)the Borrower will not be required to make a payment under Clause 26.1 (Payments to the Agent); and (2)each Lender will be required to make a payment under 26.1 (Payments to the Agent) in respect of itsparticipation in such New Facility B Loans only to the extent that its participation in such New Facility BLoans exceeds that Lender’s participation in such maturing Facility B Loan and the remainder of thatLender’s participation in such New Facility B Loans shall be treated as having been made available andapplied by the Borrower in or towards repayment of that Lender’s participation in such maturing Facility BLoan. (c)All of the Facility B Loans must be repaid in full on the Final Maturity Date. 7.PREPAYMENT AND CANCELLATION 7.1IllegalityIf, at any time, it is or will become unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated by thisAgreement or to fund or maintain its participation in any Loan or any part thereof: (a)that Lender shall promptly notify the Agent upon becoming aware of that event and the Agent shall promptly notify the Borrower uponthe receipt of such notification from that Lender; (b)upon the Agent notifying the Borrower, the Available Commitment of that Lender for each Facility will be immediately cancelled andreduced to zero and the Lenders’ Commitment for each Facility shall be reduced by the amount of the Available Commitment for suchFacility so cancelled (and that Lender shall not be obliged to participate in the making of any Loan under any Facility); and (c)to the extent that that Lender’s participation in each Loan has not been transferred to another person pursuant to Clause 7.5 (Right ofrepayment and cancellation in relation to a single Lender), the Borrower shall repay that Lender’s participation in each Loan on the lastday of the Interest Period for such Loan occurring after the Agent has notified the Borrower or, if earlier, the date specified by that Lenderin the notice delivered to the Agent (being no earlier than the last day of any applicable grace period permitted by law). 26 7.2Voluntary cancellation (a)The Borrower may, if it gives the Agent not less than 10 Business Days’ (or such shorter period as the Majority Facility A Lenders mayagree) prior notice, reduce the Facility A Available Facility to zero or by such amount (being a minimum amount of US$50,000,000 andan integral multiple of US$10,000,000) as the Borrower may specify in such notice. (b)The Borrower may, if it gives the Agent not less than 10 Business Days’ (or such shorter period as the Majority Facility B Lenders mayagree) prior notice, reduce the Facility B Available Facility to zero or by such amount (being a minimum amount of US$50,000,000 andan integral multiple of US$10,000,000) as the Borrower may specify in such notice. (c)Any such reduction of the Available Facility for any Facility under this Clause 7.2 shall reduce the Commitments of the Lenders for suchFacility rateably. 7.3Voluntary prepayment of Facility A Loans (a)The Borrower may, if it gives the Agent not less than 10 Business Days’ (or such shorter period as the Majority Facility A Lenders mayagree) prior notice in writing, prepay the whole or any part of any Facility A Loan, provided that, in the case of any prepayment of anyFacility A Loan in part, the amount of such prepayment reduces the amount of such Facility A Loan by an amount that is (i) not less thanUS$50,000,000 and (ii) if in excess of US$50,000,000, an integral multiple of US$10,000,000. (b)A Facility A Loan may only be prepaid under this Clause 7.3 after the last day of the Availability Period in respect of Facility A (or, ifearlier, the day on which the Facility A Available Facility is zero). 7.4Voluntary prepayment of Facility B LoansThe Borrower may, if it gives the Agent not less than 10 Business Days’ (or such shorter period as the Majority Facility B Lenders may agree) priornotice in writing, prepay the whole or any part of any Facility B Loan, provided that, in the case of any prepayment of any Facility B Loan in part,the amount of such prepayment reduces the amount of such Facility B Loan by an amount that is (i) not less than US$50,000,000 and (ii) if inexcess of US$50,000,000, an integral multiple of US$10,000,000. 7.5Right of repayment and cancellation in relation to a single Lender (a)If: (i)any sum payable to any Lender by the Borrower is required to be increased under Clause 12.2 (Tax gross-up); or (ii)any Lender claims indemnification from the Borrower under Clause 12.3 (Tax indemnity) or Clause 13 (Increased Costs),the Borrower may, whilst the circumstance giving rise to such requirement or indemnification continues, give the Agent and that Lendernotice of its intention to procure the repayment of that Lender’s participation in the Loans and the cancellation of the Commitment ofthat Lender for each Facility (a “Cancellation Notice”). 27 (b)On receipt of a Cancellation Notice referred to in paragraph (a) above in respect of any Lender, the Available Commitment of that Lenderfor each Facility shall immediately be cancelled and reduced to zero (and the Lenders’ Commitment for each Facility shall be reduced bythe amount of the Available Commitment for such Facility so cancelled). (c)On the last day of each Interest Period relating to any Loan which ends after the Borrower has given a Cancellation Notice underparagraph (a) above in respect of any Lender (or, if earlier, the date specified by the Borrower in that notice), the Borrower shall repaythat Lender’s participation in that Loan. (d)If: (i)any sum payable to any Lender by the Borrower is required to be increased under Clause 12.2 (Tax gross-up); (ii)any Lender claims indemnification from the Borrower under Clause 12.3 (Tax indemnity) or Clause 13 (Increased Costs); (iii)the Borrower becomes obliged to repay any Loan in accordance with Clause 7.1 (Illegality); or (iv)any Lender becomes a Non-Consenting Lender (as defined in paragraph (e) below),the Borrower may, on not less than 10 Business Days’ prior written notice to the Agent and that Lender of its intention to replace thatLender (a “Replacement Notice”), replace that Lender (a “Replaced Lender”) by requiring such Replaced Lender to (and, to the extentpermitted by law, such Replaced Lender shall) transfer pursuant to Clause 22 (Changes to the Parties) all (and not part only) of its rightsand obligations under this Agreement to a Lender or any other bank, financial institution selected by the Borrower (a “ReplacementLender”) which confirms (x) its willingness to assume and does assume all the obligations of such Replaced Lender in accordance withClause 22 (Changes to the Parties) for a purchase price in cash payable, free and clear from any and all withholdings and deductions, atthe time of such transfer equal to the sum of (and in the currency of) (A) the aggregate outstanding principal amount of such ReplacedLender’s participation in each of the outstanding Loans, (B) all accrued interest (whether or not due) thereon, (C) any Break Costs thatwould have been payable to such Replaced Lender had such Replaced Lender received payment of its participation in each of the Loansand accrued interest thereon and other sums payable under the Finance Documents from the Borrower on the date of such transfer and(D) all other amounts owing or payable to such Replaced Lender under the Finance Documents, and (y) (in the case where such ReplacedLender is a Non-Consenting Lender) its consent to the waiver or amendment (that is the subject of the applicable Non-Consenting Eventwhich constitutes such Replaced Lender as a Non-Consenting Lender). 28 (e)The replacement of a Replaced Lender and the transfer of rights and obligations of such Replaced Lender to the applicable ReplacementLender pursuant to paragraph (d) above shall be subject to the following conditions: (i)without prejudice to paragraph (h) of Clause 24.11 (Resignation of the Agent), the Borrower shall have no right to replace theAgent; (ii)none of the Finance Parties (including without limitation such Replaced Lender) shall have any obligation to find aReplacement Lender; (iii)in no event shall such Replaced Lender be required to pay, account for or surrender to such Replacement Lender for anyamount (including without limitation any fees) received or recovered by such Replaced Lender pursuant to the FinanceDocuments prior to or in respect of any time prior to such transfer; (iv)such Replaced Lender shall not be obliged to make such transfer or execute any Transfer Certificate in respect of such transferunless it is satisfied (acting reasonably) that it has completed all “know your customer” and other similar procedures that it isrequired to conduct in relation to such transfer to such Replacement Lender (and the Replaced Lender shall perform suchprocedures as soon as reasonably practicable following delivery of a Replacement Notice to it in respect of such transfer andshall notify the Agent and the Borrower when it is satisfied that it has completed such procedures); (v)such Replaced Lender shall be paid the purchase price in respect of such transfer as set out in paragraph (d) by no later than thetime of such transfer, and any and all costs and expenses incurred or to be incurred in connection with such transfer by suchReplaced Lender shall be paid by the Borrower to such Replaced Lender no later than the time of such transfer; (vi)such Replacement Lender is not a Group Member or any Affiliate of a Group Member except with the prior written consent ofthe Agent (acting on the instructions of the Majority Lenders) provided that in no event shall such Replacement Lender be theBorrower; (vii)such Replaced Lender shall not be required to make any such transfer to the extent that such transfer is, or would be reasonablylikely to result, in breach of or non-compliance with any applicable law or regulation, or any rules or regulations of anyapplicable securities exchange; (viii)in the event of a replacement of a Non-Consenting Lender such replacement must take place no later than 30 days after the dateon which the Non-Consenting Event constituting such Replaced Lender a Non-Consenting Lender first arose; and 29 (ix)in the case of paragraph (d)(i), (d)(ii) or (d)(iii), such Replaced Lender shall only be obliged to make such transfer if at the timeof such transfer the circumstance giving rise to such requirement for increased payments to such Replaced Lender under Clause12.2 (Tax gross-up) or such indemnification in favour of such Replaced Lender under Clause 12.3 (Tax indemnity) or Clause 13(Increased Costs) or the Borrower’s obligation to repay any Loan in accordance with Clause 7.1 (Illegality) (as the case may be)is continuing. (f)In the event that: (i)the Borrower or the Agent (at the request of the Borrower) has requested the Lenders to consent to a waiver or amendment ofany provisions of the Finance Documents; (ii)the waiver or amendment in question requires the consent of all the Lenders; and (iii)the Super Majority Lenders have consented to such waiver or amendment,then any Lender who does not and continues not to consent to such waiver or amendment shall be deemed a “Non-Consenting Lender”and such event shall be a “Non-Consenting Event”. 7.6Restrictions (a)Any notice of cancellation or prepayment given by any Party under this Clause 7 shall be irrevocable and, unless a contrary indicationappears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and theamount of that cancellation or prepayment. (b)Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any BreakCosts, without premium or penalty. (c)The Borrower may not re-borrow any part of Facility A which is prepaid. (d)Unless a contrary indication appears in this Agreement, any part of Facility B which is prepaid or repaid may be re-borrowed during theFacility B Availability Period in accordance with the terms of this Agreement. (e)The Borrower shall not repay or prepay all or any part of the Loans or cancel or reduce all or any part of the Commitments or AvailableCommitments of the Lenders for any Facility except at the times and in the manner expressly provided for in this Agreement. (f)If any Commitment of any Lender in respect of any Facility is cancelled or reduced under this Agreement, such Commitment socancelled or reduced may not be subsequently reinstated. 30 (g)If the Agent receives a notice under this Clause 7 it shall promptly forward a copy of that notice to either the Borrower or the affectedLender, as appropriate. (h)If all or part of any Lender’s participation in a Loan under any Facility is repaid or prepaid and is not available for redrawing (other thanby reason of the operation of Clause 4.2 (Further conditions precedent)), an amount of that Lender’s Commitment in respect of thatFacility (equal to the amount of such Lender’s participation in such Loan which is so repaid or prepaid) will be deemed to be cancelledon the date of such repayment or prepayment. 31 SECTION 5COSTS OF UTILISATION 8.INTEREST 8.1Calculation of interestThe rate of interest on each Loan at any time during an Interest Period relating thereto is the percentage rate per annum which is the aggregate of theapplicable: (a)Margin for such Loan; (b)LIBOR for such Loan and such Interest Period. 8.2Payment of interestOn the last day of each Interest Period relating to a Loan the Borrower shall pay accrued interest on such Loan. 8.3Default interest (a)If the Borrower fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on such overdueamount from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph(b) below, is one (1) per cent. per annum higher than the rate which would have been payable if such overdue amount had, during theperiod of non-payment, constituted a Loan in the currency of such overdue amount for successive Interest Periods, each of a durationselected by the Agent (acting reasonably). Any interest accruing under this Clause 8.3 on any overdue amount owing by the Borrowershall be immediately payable by the Borrower on demand by the Agent. (b)If any Unpaid Sum consists of all or part of a Loan which became due on a day which was not the last day of an Interest Period relating tothat Loan: (i)the first Interest Period for that Unpaid Sum shall have a duration equal to the unexpired portion of the current Interest Periodrelating to that Loan; and (ii)the rate of interest applying to that Unpaid Sum during that first Interest Period shall be one (1) per cent. per annum higher thanthe rate which would have applied if that Unpaid Sum had not become due. (c)Default interest (if unpaid) arising on any Unpaid Sum will be compounded with that Unpaid Sum at the end of each Interest Periodapplicable to that Unpaid Sum but will remain immediately due and payable. 8.4Notification of rates of interestThe Agent shall promptly notify the Lenders and the Borrower of the determination of a rate of interest under this Agreement. 32 9.INTEREST PERIODS 9.1Selection of Interest Periods (a)Subject to the provisions of this Agreement: (i)the Borrower may select an Interest Period for any Loan in the Utilisation Request for such Loan or (if such Loan is a Facility ALoan which has already been borrowed) in a Selection Notice; (ii)each Selection Notice in respect of an Interest Period for any Facility A Loan is irrevocable and must be delivered to the Agentby the Borrower not later than three Business Days prior to the commencement of that Interest Period; (iii)if the Borrower fails to deliver a Selection Notice to the Agent in accordance with paragraph (a)(ii)) above in relation to anyInterest Period for a Facility A Loan, such Interest Period will, subject to paragraph (b), be three Months; and (iv)the Borrower may (pursuant to paragraph (a)(i)) select an Interest Period for any Loan of one, two or three Month(s) or any otherperiod agreed between the Borrower and the Agent (acting on the instructions of all the Lenders that have any participation inthat Loan). (b)No Interest Period for any Loan shall extend beyond the Final Maturity Date. (c)Each Interest Period for a Facility A Loan shall start on the Utilisation Date for such Loan or (if such Facility A Loan has already beenmade) on the last day of the preceding Interest Period relating to such Loan. (d)A Facility B Loan has one Interest Period only and such Interest Period shall start on the Utilisation Date of that Facility B Loan. 9.2Non-Business DaysIf an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day. 9.3Consolidation of Facility A LoansIf two or more Interest Periods relating to Facility A Loans end on the same date, then those Facility A Loans will be consolidated into, and treatedas, a single Facility A Loan on the last day of such first-mentioned Interest Periods. 10.CHANGES TO THE CALCULATION OF INTEREST 10.1Absence of quotationsSubject to Clause 10.2 (Market disruption), if LIBOR for any sum and any Interest Period relating thereto is to be determined by reference to theReference Banks but a Reference Bank does not supply a quotation by noon (London time) on the Quotation Day for such Interest Period, theapplicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks. 33 10.2Market disruption (a)Subject to any alternative basis agreed and consented to as contemplated by paragraphs (a) and (b) of Clause 10.3 (Alternative basis ofinterest or funding), if a Market Disruption Event occurs in relation to a Loan for any Interest Period relating thereto, then the rate ofinterest on each Lender’s participation in that Loan at any time during that Interest Period shall be the rate per annum which is the sumof: (i)the applicable Margin as at such time; (ii)(subject to paragraph (b)) the percentage rate per annum notified to the Agent by that Lender, as soon as practicable and in anyevent no later than five Business Days before interest is due to be paid in respect of that Interest Period (or such later date asmay be acceptable to the Agent), as the cost to that Lender of funding its participation in that Loan from whatever source it mayreasonably select (provided that if such percentage rate per annum is below zero, then such percentage rate per annum shall bedeemed to be zero). (b)In relation to a Market Disruption Event (in respect of any Loan and any Interest Period relating thereto) falling within paragraph (c)(ii),if the percentage rate per annum notified by a Lender pursuant to paragraph (a)(ii) above in respect of such Loan and such Interest Periodis less than LIBOR for such Loan and such Interest Period or if a Lender shall fail to notify the Agent of any such percentage rate perannum pursuant to paragraph (a)(ii) above in respect of such Loan and such Interest Period, then the cost of that Lender of funding itsparticipation in such Loan for such Interest Period shall be deemed, for the purposes of paragraph (a)(ii) above, to be equal to LIBOR forsuch Loan and such Interest Period, and such Lender shall be deemed to have notified the Agent of such cost of funding pursuant toparagraph (a)(ii) above. (c)In this Agreement “Market Disruption Event” means in relation to any Loan and any Interest Period relating thereto: (i)at or about noon (London time) on the Quotation Day for such Loan and such Interest Period, LIBOR for such Loan and suchInterest Period is to be determined by reference to the Reference Banks and none or only one of the Reference Banks supplies arate to the Agent to determine LIBOR for such Loan and such Interest Period; or (ii)as at 5:00 p.m. (Hong Kong time) on the Business Day immediately following the Quotation Day for such Loan and suchInterest Period, the Agent has received notifications from a Lender or Lenders (whose aggregate participations in such Loanexceed 35 per cent. of such Loan) that the cost to it or them of funding its/their participation(s) in such Loan from whateversource(s) it/they may reasonably select would be in excess of LIBOR for such Loan and such Interest Period. 34 (d)If a Market Disruption Event occurs in relation to any Loan and any Interest Period relating thereto, the Agent shall promptly notify theLenders and the Borrower thereof upon becoming aware of the same. 10.3Alternative basis of interest or funding (a)If a Market Disruption Event occurs and the Agent or the Borrower so requires, the Agent and the Borrower shall enter into negotiations(for a period of not more than 30 days) with a view to agreeing a substitute basis for determining the rate of interest under this Agreement. (b)Any alternative basis agreed pursuant to paragraph (a) above shall, with the prior consent of all the Lenders and the Borrower, be bindingon all Parties. (c)For the avoidance of doubt, in the event that no substitute basis is agreed at the end of such 30-day period, the rate of interest shallcontinue to be determined in accordance with the terms of this Agreement (including without limitation Clause 10.2 (Marketdisruption)). 10.4Break Costs (a)The Borrower shall, within ten Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to allor any part of a Loan or any Unpaid Sum being paid by or recovered from the Borrower on a day other than the last day of an InterestPeriod for that Loan or that Unpaid Sum. (b)Each Finance Party shall, as soon as reasonably practicable after a demand by the Agent, provide a certificate confirming the amount ofits Break Costs in relation to any Loan or any Unpaid Sum and any Interest Period relating thereto. 11.FEES 11.1Commitment fee (a)The Borrower shall, in respect of Facility B, pay to the Agent (for the account of each Lender) a commitment fee in US dollars computedand accruing on a daily basis at the rate of 0.2 per cent. per annum on that Lender’s Facility B Available Commitment on each day of theFacility B Availability Period. For such purposes, such Lender’s commitment fee for Facility B in respect of any day during the FacilityB Availability Period shall be calculated on such Lender’s Facility B Available Commitment as at the close of business on such day (or,if any such day is not a Business Day, the immediately preceding Business Day). (b)The accrued commitment fee under paragraph (a) is payable in arrears: (i)on the last day of each successive period of three Months which ends during the Facility B Availability Period; (ii)on the last day of the Facility B Availability Period; and 35 (iii)if a Lender’s Facility B Commitment is reduced to zero before the last day of the Facility B Availability Period, on the day onwhich such reduction to zero becomes effective. 11.2Arrangement feeThe Borrower shall pay to the Agent (for the account of Citigroup Global Markets Asia Limited, Deutsche Bank AG, Singapore Branch and TheHongkong and Shanghai Banking Corporation Limited) an arrangement fee in the amount and at the times agreed in a Fee Letter. 11.3Agency feeThe Borrower shall pay to the Agent (for its own account) an agency fee in the amount and at the times agreed in a Fee Letter. 11.4Deduction of feesPayment of the fees in Clause 11.2 (Arrangement fee) and/or Clause 11.3 (Agency fee) may, at the election of the Agent, be made out of the proceedsof the first Loan and the Agent is hereby irrevocably authorised to deduct the amount of such fees and apply the same towards payment of such feeson behalf of the Borrower. 36 SECTION 6ADDITIONAL PAYMENT OBLIGATIONS 12.TAX GROSS UP AND INDEMNITIES 12.1Definitions (a)In this Agreement:“Tax Credit” means a credit against, relief or remission for, or repayment of any Tax.“Tax Deduction” means a deduction or withholding for or on account of Tax from a payment under a Finance Document, other than aFATCA Deduction.“Tax Payment” means an increased payment made by the Borrower to a Finance Party under Clause 12.2 (Tax gross-up) or a paymentunder Clause 12.3 (Tax indemnity). (b)Unless a contrary indication appears, in this Clause 12 a reference to “determines” or “determined” means a determination made in theabsolute discretion of the person making the determination. 12.2Tax gross-up (a)All payments to be made by the Borrower to any Finance Party under any of the Finance Documents shall be made free and clear of andwithout any Tax Deduction unless the Borrower is required to make a Tax Deduction, in which case the sum payable by the Borrower (inrespect of which such Tax Deduction is required to be made) shall be increased to the extent necessary to ensure that such Finance Partyreceives a sum net of any deduction or withholding equal to the sum which it would have received had no such Tax Deduction beenmade or required to be made. (b)The Borrower shall promptly upon becoming aware that it must make a Tax Deduction (or that there is any change in the rate or the basisof a Tax Deduction) notify the Agent accordingly. Similarly, a Lender shall notify the Agent on becoming so aware in respect of apayment payable by the Borrower to that Lender. If the Agent receives such notification from a Lender it shall notify the Borrower. (c)If the Borrower is required to make a Tax Deduction, the Borrower shall make that Tax Deduction and any payment required inconnection with that Tax Deduction within the time allowed and in the minimum amount required by law. (d)Within thirty days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Borrower shalldeliver to the Agent for the Finance Party entitled to the payment (to which such Tax Deduction relates) an original receipt (or a certifiedcopy thereof) reasonably satisfactory to that Finance Party that such Tax Deduction has been made or (as applicable) any appropriatepayment has been paid to the relevant taxing authority. 37 (e)The Agent shall not have any duty or obligation to facilitate the making of any Tax Deduction by the Borrower. 12.3Tax indemnity (a)Without prejudice to Clause 12.2 (Tax gross-up), if any Finance Party is required to make any payment of or on account of Tax on or inrelation to any sum received or receivable under any of the Finance Documents (including any sum deemed for purposes of Tax to bereceived or receivable by such Finance Party whether or not actually received or receivable) or if any liability in respect of any suchpayment is asserted, imposed, levied or assessed against any Finance Party, the Borrower shall, within ten Business Days of demand ofthe Agent, promptly indemnify each Finance Party which suffers a loss or liability as a result against such payment or liability, togetherwith any interest, penalties, costs and expenses payable or incurred in connection therewith, provided that this Clause 12.3 shall notapply to: (i)any Tax imposed on and calculated by reference to the net income actually received or receivable by such Finance Party (but,for the avoidance of doubt, not including any sum deemed for purposes of Tax to be received or receivable by such FinanceParty but not actually receivable) by the jurisdiction in which such Finance Party is incorporated; or (ii)any Tax imposed on and calculated by reference to the net income of the Facility Office of such Finance Party actually receivedor receivable by such Finance Party (but, for the avoidance of doubt, not including any sum deemed for purposes of Tax to bereceived or receivable by such Finance Party but not actually receivable) by the jurisdiction in which its Facility Office islocated. (b)A Finance Party (other than the Agent) intending to make a claim under paragraph (a) shall notify the Agent of the event giving rise tosuch claim, whereupon the Agent shall notify the Borrower thereof. (c)A Finance Party shall, on receiving a payment from the Borrower under this Clause 12.3, notify the Agent. 12.4Tax CreditIf the Borrower makes a Tax Payment in respect of a Finance Party and that Finance Party determines that: (a)a Tax Credit is attributable to an increased payment of which that Tax Payment forms part, to that Tax Payment or to a Tax Deduction inconsequence of which that Tax Payment was required; and (b)that Finance Party has obtained and utilised that Tax Credit,that Finance Party shall pay an amount to the Borrower which that Finance Party determines will leave it (after that payment) in the same after-Taxposition as it would have been in had the Tax Payment not been required to be made by the Borrower. 38 12.5Stamp taxesThe Borrower shall: (a)pay all stamp duty, registration and other similar Taxes payable in respect of any Finance Document; and (b)within ten Business Days of demand, indemnify each Finance Party against any cost, loss or liability which that Finance Party incurs inrelation to any or all stamp duty, registration and/or other similar Taxes paid or payable in respect of any Finance Document. 12.6Indirect Tax (a)All amounts set out or expressed in any Finance Document to be payable by any Party to a Finance Party shall be deemed to be exclusiveof any Indirect Tax. If any Indirect Tax is chargeable on any supply made by any Finance Party to any Party under or in connection withany Finance Document, that Party shall pay to such Finance Party (in addition to and at the same time as paying the consideration forsuch supply) an amount equal to the amount of such Indirect Tax. (b)Where a Finance Document requires any Party to reimburse a Finance Party for any costs or expenses, that Party shall also at the sametime pay and indemnify that Finance Party against all Indirect Tax incurred by that Finance Party in respect of such costs or expenses tothe extent that such Finance Party reasonably determines that it is not entitled to credit or repayment in respect of such Indirect Tax. 12.7FATCA Information (a)Subject to paragraph (c) below, each Party shall, within ten Business Days of a reasonable request by another Party: (i)confirm to that requesting Party whether it is a FATCA Exempt Party or not a FATCA Exempt Party; (ii)supply to that other Party such forms, documentation and other information relating to its status under FATCA as that otherParty reasonably requests for the purposes of that other Party’s compliance with FATCA; and (iii)supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonablyrequests for the purposes of that other Party’s compliance with any other law, regulation, or exchange of information regime. (b)If a Party confirms to another Party pursuant to paragraph (a)(i) above that it is a FATCA Exempt Party and it subsequently becomesaware that it is not or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly. 39 (c)Paragraph (a) above shall not oblige any Finance Party to do anything, and paragraph (a)(iii) above shall not oblige any other Party to doanything, which would or might in its reasonable opinion constitute a breach of: (i)any law or regulation; (ii)any fiduciary duty; or (iii)any duty of confidentiality. (d)If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested inaccordance with paragraph (a)(i) or (a)(ii) above (including, for the avoidance of doubt, where paragraph (c) above applies), then suchParty shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party untilsuch time as the Party in question provides such requested confirmation, forms, documentation or other information. (e)If the Borrower is a US Tax Obligor or the Agent reasonably believes that its obligations under FATCA or any other applicable law orregulation require it, each Lender shall, within ten Business Days of: (i)where the Borrower is a US Tax Obligor and such Lender is an Original Lender, the date of this Agreement; (ii)where the Borrower is a US Tax Obligor on a Transfer Date and such Lender is a New Lender (in respect of any assignment ortransfer by an Existing Lender to such New Lender), the Transfer Date in respect of such assignment or transfer; or (iii)where the Borrower is not a US Tax Obligor, the date of a request from the Agent,supply to the Agent: (A)a withholding certificate on Form W-8, Form W-9 or any other relevant form; or (B)any withholding statement or other document, authorisation or waiver as the Agent may require to certify orestablish the status of such Lender under FATCA or that other law or regulation. (f)The Agent shall provide any withholding certificate, withholding statement, document, authorisation or waiver it receives from a Lenderpursuant to paragraph (e) above to the Borrower. (g)If any withholding certificate, withholding statement, document, authorisation or waiver provided to the Agent by a Lender pursuant toparagraph (e) above is or becomes materially inaccurate or incomplete, that Lender shall promptly update it and provide such updatedwithholding certificate, withholding statement, document, authorisation or waiver to the Agent unless it is unlawful for that Lender to doso (in which case that Lender shall promptly notify the Agent). The Agent shall provide any such updated withholding certificate,withholding statement, document, authorisation or waiver to the Borrower. 40 (h)The Agent may rely on any withholding certificate, withholding statement, document, authorisation or waiver it receives from a Lenderpursuant to paragraph (e) or (g) above without further verification. The Agent shall not be liable for any action taken by it under or inconnection with paragraph (e), (f) or (g) above. (i)If a Lender fails to supply any withholding certificate, withholding statement, document, authorisation, waiver or information inaccordance with paragraph (e) above, or any withholding certificate, withholding statement, document, authorisation, waiver orinformation provided by a Lender to the Agent is or becomes materially inaccurate or incomplete, then such Lender shall indemnify theAgent, within three Business Days of demand, against any cost, loss, Tax or liability (including, without limitation, for negligence or anyother category of liability whatsoever) incurred by the Agent (including any related interest and penalties) in acting as Agent under theFinance Documents as a result of such failure. (j)If, in accordance with paragraph (f) above, the Agent provides the Borrower with sufficient information to determine its withholdingobligations under FATCA, but the Borrower fails to withhold as required by FATCA, the Borrower shall indemnify the Agent, withinthree Business Days of demand, against any cost, loss, Tax or liability (including, without limitation, for negligence or any othercategory of liability whatsoever) incurred by the Agent (including any related interest and penalties) in acting as Agent under theFinance Documents as a result of such failure. 12.8FATCA Deduction (a)Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with thatFATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction orotherwise compensate the recipient of that payment for that FATCA Deduction. (b)Each Party shall promptly upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or thebasis of such FATCA Deduction) notify the Party to whom it is making the payment (to which such FATCA Deduction relates) and, inaddition, shall notify the Borrower and the Agent and the Agent shall notify the other Finance Parties. 41 13.INCREASED COSTS 13.1Increased costs (a)Subject to Clause 13.3 (Exceptions), the Borrower shall, within ten Business Days of a demand by the Agent, pay for the account of aFinance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of: (i)the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation; or (ii)compliance with any law or regulation made, enacted, issued or put into effect after the date of this Agreement; or (iii)the implementation or application of, or compliance with, Basel III or CRD IV or any law or regulation that implements orapplies Basel III or CRD IV.The terms “law” and “regulation” in this paragraph (a) shall include, without limitation, any law or regulation concerning capitaladequacy, prudential limits, liquidity, reserve assets or Tax. (b)In this Agreement: (i)“Basel III” means: (A)the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A globalregulatory framework for more resilient banks and banking systems”, “Basel III: International framework forliquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating thecountercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, eachas amended, supplemented or restated; (B)the rules for global systemically important banks contained in “Global systemically important banks: assessmentmethodology and the additional loss absorbency requirement – Rules text” published by the Basel Committee onBanking Supervision in November 2011, as amended, supplemented or restated; and (C)any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”; (ii)”CRD IV” means: (A)Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudentialrequirements for credit institutions and investment firms; and (B)Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity ofcredit institutions and the prudential supervision of credit institutions and investment firms, amending Directive2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC; 42 (iii)“Increased Costs” means: (A)a reduction in the rate of return from the Facility (or any part thereof) or on a Finance Party’s (or its Affiliate’s)overall capital; (B)an additional or increased cost; or (C)a reduction of any amount due and payable under any Finance Document, which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to the undertaking,funding or performance by that Finance Party of any of its obligations under any Finance Document or any participation of thatFinance Party in any Loan or Unpaid Sum. 13.2Increased cost claims (a)A Finance Party (other than the Agent) intending to make a claim pursuant to Clause 13.1 (Increased costs) shall notify the Agent of theevent giving rise to such claim, following which the Agent shall promptly notify the Borrower. (b)Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount of its IncreasedCosts in respect of any claim made by such Finance Party under Clause 13.1 (Increased costs). 13.3ExceptionsClause 13.1 (Increased costs) does not apply to any Increased Cost to the extent such Increased Cost is: (a)attributable to a Tax Deduction that is required by law to be made by the Borrower and that is already compensated for by Clause 12.2(Tax gross-up); (b)attributable to a FATCA Deduction required to be made by a Party; (c)compensated for by Clause 12.3 (Tax indemnity) (or would have been compensated for under Clause 12.3 (Tax indemnity) but was not socompensated solely because any of the exclusions in paragraph (a) of Clause 12.3 (Tax indemnity) applied); or (d)incurred by a Finance Party or an Affiliate of a Finance Party and is attributable to the wilful breach by such Finance Party or suchAffiliate of any law or regulation. 14.MITIGATION BY THE LENDERS 14.1Mitigation (a)Each Finance Party shall, in consultation with the Borrower, take all reasonable steps to mitigate any circumstances which arise andwhich would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 7.1 (Illegality), Clause12 (Tax Gross Up and Indemnities) or Clause 13 (Increased costs). 43 (b)Paragraph (a) above does not in any way limit the obligations of the Borrower under the Finance Documents. 14.2Limitation of liability (a)The Borrower shall indemnify each Finance Party, within ten Business Days of demand, for all costs and expenses reasonably incurred bythat Finance Party as a result of steps taken by it under Clause 14.1 (Mitigation). (b)A Finance Party is not obliged to take any steps under Clause 14.1 (Mitigation) if, in the opinion of that Finance Party (actingreasonably), to do so might be prejudicial to it. 14.3Conduct of business by the Finance PartiesNo provision of this Agreement will: (a)interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit; (b)oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and mannerof any such claim; or (c)oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax. 15.OTHER INDEMNITIES 15.1Currency indemnity (a)If any sum due from the Borrower under any or all of the Finance Documents (a “Sum”), or any order, judgment or award given or madein relation to a Sum, has to be converted from the currency (the “First Currency”) in which that Sum is payable into another currency(the “Second Currency”) for the purpose of: (i)making or filing a claim or proof against the Borrower; or (ii)obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,the Borrower shall as an independent obligation, within ten Business Days of demand, indemnify each Finance Party to whom that Sumis due against any cost, loss or liability arising out of or as a result of such conversion including any discrepancy between (A) the rate ofexchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available tothat person at the time of its receipt or recovery of that Sum. 44 (b)The Borrower waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currencyunit other than that in which it is expressed to be payable. 15.2Other indemnitiesThe Borrower shall, within ten Business Days of demand, indemnify each of the Finance Parties against any cost, loss or liability incurred by thatFinance Party as a result of: (a)the occurrence of any Event of Default; (b)the Information Memorandum or any other information produced or approved by the Borrower or any Group Member being or beingalleged to be misleading and/or deceptive in any respect; (c)any enquiry, investigation, subpoena (or similar order) or legal or arbitral proceedings with respect to the Borrower or with respect to anytransactions contemplated or financed under any Finance Document; (d)a failure by the Borrower to pay any amount due under a Finance Document on its due date and in the currency in which such amount isdue, including without limitation, any cost, loss or liability arising as a result of Clause 25 (Sharing Among the Finance Parties); (e)funding, or making arrangements to fund, its participation in a Loan requested by the Borrower in a Utilisation Request but not made byreason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by thatFinance Party alone); or (f)a Loan (or part of a Loan) not being prepaid in accordance with a notice of prepayment given by the Borrower. 15.3Indemnity to the AgentThe Borrower shall promptly (and in any event within ten Business Days of demand) indemnify the Agent against: (a)any cost, loss or liability incurred by the Agent (acting reasonably) as a result of: (i)investigating any event which it reasonably believes is a Default; (ii)any Default by the Borrower in respect of the performance of any of its obligations under the Finance Documents to which it isa party; (iii)acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriatelyauthorised; and/or 45 (iv)instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under thisAgreement; and/or (b)any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) incurred by theAgent (otherwise than by reason of the Agent’s gross negligence or wilful misconduct (as determined in a final non-appealable judgmentof a court of competent jurisdiction)) in acting as Agent under the Finance Documents. 16.COSTS AND EXPENSES 16.1Transaction expensesThe Borrower shall pay each Administrative Party, promptly (and in any event within fifteen (15) Business Days of demand by such AdministrativeParty or on a date as may be mutually agreed between the Borrower and such Administrative Party), the amount of all costs and expenses (includingwithout limitation legal fees, subject to any arrangements agreed between the Borrower and the relevant legal counsel) reasonably incurred by anyor all of the Administrative Parties in connection with the negotiation, preparation, printing, execution, delivery and syndication of: (a)this Agreement and/or any other documents referred to in this Agreement; and/or (b)any other Finance Documents executed after the date of this Agreement. 16.2Amendment costsIf the Borrower requests an amendment, waiver or consent or (b) an amendment is required pursuant to Clause 26.9 (Change of currency), theBorrower shall, within ten Business Days of demand, reimburse the Agent for the amount of all costs and expenses (including legal fees) reasonablyincurred by the Agent in responding to, evaluating, negotiating or complying with that request or requirement. 16.3Enforcement costsThe Borrower shall, within ten Business Days of demand, pay to each Finance Party the amount of all costs and expenses (including legal fees)incurred by that Finance Party in connection with the enforcement of, or the preservation of any rights under any Finance Document. 46 SECTION 7REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT 17.REPRESENTATIONSThe Borrower makes the representations and warranties set out in this Clause 17 to each Finance Party on the date of this Agreement. 17.1Status (a)It is a corporation, duly incorporated, validly existing and in good standing under the laws of the Cayman Islands. (b)Each of it and the Material Subsidiaries has the power to own its assets and carry on its business as it is being conducted. (c)It is acting as principal for its own account and not as agent or trustee in any capacity on behalf of any person in relation to the FinanceDocuments. 17.2Binding obligationsThe obligations expressed to be assumed by it in each Finance Document are, subject to any general principles of law limiting its obligations whichare specifically referred to in any legal opinion delivered in accordance with Clause 4 (Conditions of Utilisation), legal, valid, binding andenforceable obligations. 17.3Non-conflict with other obligationsThe entry into and performance by it of, and the transactions contemplated by, the Finance Documents do not and will not: (a)conflict with any law or regulation applicable to it; (b)conflict with the constitutional documents of it or any of its Subsidiaries; (c)conflict with any agreement or instrument binding upon it or any of its Subsidiaries or any asset of it or any of its Subsidiaries; or (d)result in the existence of or oblige it or its Subsidiaries to create any Security over all or any of the assets of it or its Subsidiaries (otherthan any Security permitted by Clause 20.4 (Negative pledge)). 17.4Power and authority (a)It has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and deliveryof, the Finance Documents and the transactions contemplated by the Finance Documents. (b)No limit on its powers will be exceeded as a result of the borrowing contemplated by the Finance Documents. 47 17.5Validity and admissibility in evidenceAll Authorisations required or desirable: (a)to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents; (b)to make the Finance Documents admissible in evidence in its jurisdiction of incorporation; and/or (c)for it and the Material Subsidiaries to carry on their respective business, and which are material,have been obtained or effected and are in full force and effect. 17.6Governing law and enforcementSubject to any general principles of law limiting its obligations which are specifically referred to in any legal opinion delivered in accordance withClause 4 (Conditions of Utilisation): (a)the choice of English law as the governing law of each Finance Document will be recognised and enforced in its jurisdiction ofincorporation; and (b)any judgment obtained in England in relation to any Finance Document will be recognised and enforced in its jurisdiction ofincorporation. 17.7Deduction of TaxIt is not required under the law applicable where it is incorporated or resident or at its address specified in this Agreement to make any deduction foror on account of Tax from any payment it may make under any Finance Document. 17.8No filing or stamp taxesUnder the law of its jurisdiction of incorporation it is not necessary that any of the Finance Documents be filed, recorded or enrolled with any courtor other authority in that jurisdiction or that any stamp, registration or similar tax be paid on or in relation to any or all of the Finance Documents orthe transactions contemplated by the Finance Documents except that Cayman Islands stamp duty will be payable on a Finance Document if thatFinance Document is executed in, brought into, or produced to a court of, the Cayman Islands. 17.9No default (a)No Event of Default is continuing or might reasonably be expected to result from the making of any Utilisation. (b)No other event or circumstance is outstanding which constitutes a default under any other agreement or instrument which is binding on itor any of its Subsidiaries or to which any asset of it or any of its Subsidiaries is subject to an extent or in a manner which has or couldreasonably be expected to have a Material Adverse Effect. 48 (c)No Default is continuing. 17.10No misleading information (a)Any factual information contained in or provided by or on behalf of the Borrower or any Group Member for the purposes of theInformation Memorandum was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which itis stated. (b)Nothing has occurred or been omitted from the Information Memorandum and no information has been given or withheld that results inthe information contained in the Information Memorandum being untrue or misleading in any material respect. (c)All written (including by way of electronic mail or other electronic means) information (other than the Information Memorandum)supplied by or on behalf of the Borrower or any Group Member in connection with the Finance Documents is true, complete and accuratein all material respects as at the date it was given or (if any) as at the date it is stated and is not misleading in any material respect. 17.11Financial statements (a)Its financial statements most recently supplied to the Agent (which, as at the date of this Agreement, are its Original FinancialStatements) were prepared in accordance with GAAP consistently applied save to the extent expressly disclosed in such financialstatements. (b)Its financial statements most recently supplied to the Agent (which, as at the date of this Agreement, are its Original FinancialStatements) give a true and fair view of (if audited) or fairly represent (if unaudited) the consolidated financial condition and operationsof the Group as at the end of and during the applicable period to which such financial statements relate, save to the extent expresslydisclosed in such financial statements. (c)There has been no material adverse change in the business or consolidated financial condition of the Group (taken as a whole) since 31December 2015. 17.12Pari passu rankingIts payment obligations under the Finance Documents rank at least pari passu with the claims of all of its other unsecured and unsubordinatedcreditors, except for obligations mandatorily preferred by law applying to companies generally. 17.13No proceedings pending or threatenedNo litigation, arbitration, investigation or administrative proceedings of or before any court, arbitral body or agency which, if adversely determined,could reasonably be expected to have a Material Adverse Effect have (to the best of its knowledge and belief) been started or threatened, or arepending, against it or any of its Subsidiaries. 49 17.14Authorised SignaturesAny person specified as its authorised signatory under Schedule 2 (Conditions Precedent) or paragraph (d) of Clause 18.4 (Information:miscellaneous) (in each case, to the extent not replaced as notified by the Borrower pursuant to paragraph (d) of Clause 18.4 (Information:miscellaneous)) is authorised to sign Utilisation Requests and Selection Notices and other notices on its behalf. 17.15Federal Reserve Regulations (a)The Borrower is not engaged or will not engage, principally or as one of its important activities, in the business of purchasing or carryingMargin Stock or extending credit for the purpose of purchasing or carrying Margin Stock. (b)None of the proceeds of the Loans or other extensions of credit under this Agreement will be used by any Group Member, directly orindirectly, for the purpose of buying or carrying any Margin Stock, for the purpose of reducing or retiring any Financial Indebtednessthat was originally incurred to buy or carry any Margin Stock or for any other purpose which might cause all or any of the Loans or otherextensions of credit under this Agreement to be considered a “purpose credit” within the meaning of Regulation U or Regulation X. 17.16Investment CompaniesNone of (a) the Borrower or (b) any Subsidiary of the Borrower is or is required to be registered as an “investment company” under the 1940 Act. 17.17Sanctions, anti-terrorism, anti-money laundering and anti-corruption (a)None of any Group Member or any director or officer of any Group Member or, to its knowledge, any agent or employee of, or any personacting on behalf of, any Group Member is a Restricted Party. (b)None of any Group Member or any director or officer of any Group Member or, to its knowledge, any employee of any Group Member isin violation of or, since the date that the representations and warranties under this Clause 17.17 were last made or deemed to be made, hasviolated, any applicable Sanctions. (c)None of any Group Member or any director or officer of any Group Member or, to its knowledge, any employee of, or any person actingon behalf of, any Group Member receives or, since the date that the representations and warranties under this Clause 17.17 were last madeor deemed to be made, has received, funds or other property from a Restricted Party in violation of any applicable Sanctions or conductsor, since the date that the representations and warranties under this Clause 17.17 were last made or deemed to be made, has conducted,any activities or business dealings, directly or indirectly, with or for the benefit of a Restricted Party in violation of any applicableSanctions. (d)None of any Group Member or any director or officer of any Group Member or, to its knowledge, any employee of, or any person actingon behalf of, any Group Member is engaging or, since the date that the representations and warranties under this Clause 17.17 were lastmade or deemed to be made, has engaged, directly or indirectly, in any transaction or conduct that could reasonably be expected to resultin it becoming a Restricted Party, or which evades or avoids any applicable prohibitions or restrictions set forth in any applicableSanctions. 50 (e)None of any Group Member or any director or officer any Group Member or, to its knowledge, any agent, representative or employee of,or any person acting on behalf of, or any Affiliate of, any Group Member: (i)has violated or is in violation of any Anti-Bribery and Corruption Laws; (ii)has directly or indirectly paid, given or offered or promised to pay or give, or authorised the payment or giving of, directly orindirectly, any unlawful payment or improper transfer of value within the meaning of the FCPA or any other Anti-Bribery andCorruption Laws; (iii)has directly or indirectly used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenserelating to political office or activity or made any direct or indirect unlawful payment or improper transfer of value to anypublic official or any company employee from corporate funds; or (iv)has been subject to any action, suit, proceeding, arbitration, litigation, regulatory or criminal investigation with regard to anyactual or alleged unlawful payment, improper transfer of value or violation in any way of the FCPA or any other Anti-Briberyand Corruption Laws. (f)None of any Group Member or any director or officer of any Group Member or, to its knowledge, any employee of, or any person actingon behalf of, any Group Member: (i)is in violation of or, since the date that the representations and warranties under this Clause 17.17 were last made or deemed tobe made, has violated, any Anti-Money Laundering Laws or Anti- Terrorism Laws; or (ii)or deals or engages in or, since the date that the representations and warranties under this Clause 17.17 were last made ordeemed to be made, has dealt or engaged in, directly or indirectly, any transaction or activities relating to any property orinterest in property blocked pursuant to any Sanctions in violation of any applicable Sanctions,and no action, suit, proceeding, arbitration, litigation, regulatory or criminal investigation involving any Group Member or any directoror officer of any Group Member or, to its knowledge, any agent, employee of, or any person acting on behalf of, any Group Member, withrespect to any Anti-Money Laundering Laws or Anti-Terrorism Laws is pending or, to the knowledge of any Group Member, threatened. 51 (g)Each of the Group Members has instituted and maintained systems, controls and other arrangements designed to: (i)promote and ensure compliance by the Group with all applicable Sanctions, Anti-Bribery and Corruption Laws, Anti-MoneyLaundering Laws and Anti-Terrorism Laws; and (ii)detect incidences of bribery and corruption. 17.18List of Material SubsidiariesThe list of Material Subsidiaries delivered to the Agent pursuant to Clause 4.1 (Initial conditions precedent) is true, complete and accurate. 17.19Repetition (a)All of the representations and warranties set out in this Clause 17 are deemed to be made by the Borrower in favour of each Finance Partyon the date of delivery of the first Utilisation Request under this Agreement and on the Initial Utilisation Date, in each case by referenceto the facts and circumstances then existing. (b)The Repeating Representations are deemed to be made by the Borrower on: (i)the date of each Utilisation Request (other than the first Utilisation Request delivered under this Agreement); (ii)each Utilisation Date (other than the Initial Utilisation Date); and (iii)the first day of each Interest Period relating to any Loan, in each case by reference to the facts and circumstances then existing. (c)The representations and warranties set out in Clause 17.10 (No misleading information) are deemed to be made by the Borrower, to theextent that they relate to the Information Memorandum, on the date the Information Memorandum is approved by the Borrower. 18.INFORMATION UNDERTAKINGSThe undertakings in this Clause 18 remain in force from the date of this Agreement for so long as any amount is outstanding under any of theFinance Documents or any Commitment in respect of any Facility (or any commitment represented thereby) is in force. 18.1Financial statementsThe Borrower shall supply or procure the supply to the Agent in sufficient copies for all the Lenders: (a)as soon as the same become available, but in any event within 150 days after the end of each of its Financial Years, the auditedconsolidated financial statements of the Borrower for that Financial Year audited by an independent firm of certified public accountants(which shall be one of the Auditors); and 52 (b)as soon as the same become available, but in any event within 120 days after the end of each of its Financial Quarters, the unauditedconsolidated financial statements of the Borrower for that Financial Quarter,provided that, in the case of any consolidated financial statements of the Borrower to be delivered pursuant to this Clause 18.1, such financialstatements shall be deemed to be so delivered upon being posted onto any electronic website of (i) the U.S. Securities and Exchange Commission,(ii) NASDAQ and/or (iii) the Borrower. 18.2Compliance Certificate (a)The Borrower shall supply to the Agent, with each set of financial statements in respect of any Financial Quarter ending 30 June or anyFinancial Year delivered under Clause 18.1 (Financial statements), a Compliance Certificate: (i)setting out (in reasonable detail) computations as to compliance with Clause 19 (Financial Covenants) as at the date as atwhich (and in respect of the Relevant Period ending on the date as at which) such financial statements were prepared; (ii)confirming that no Default has occurred and is continuing or, if a Default is continuing, specifying the nature of such Defaultand the steps being taken to remedy such Default; and (iii)setting out an up-to-date list of Material Subsidiaries. (b)Each Compliance Certificate delivered under paragraph (a) shall be signed by an authorised signatory of the Borrower. 18.3Requirements as to financial statements (a)The Borrower shall ensure that each set of financial statements delivered (or deemed delivered) pursuant to Clause 18.1 (Financialstatements) shall be certified by an authorised signatory of the Borrower as giving a true and fair view of (if audited) or fairly representing(if unaudited) the consolidated financial condition and operations of the Group as at the end of and during the applicable period towhich such financial statements relate. (b)The Borrower shall procure that each set of financial statements delivered (or deemed delivered) pursuant to Clause 18.1 (Financialstatements) is prepared using GAAP, accounting practices and financial reference periods consistent with those applied in the preparationof the audited Original Financial Statements unless, in relation to any set of financial statements, it notifies the Agent that there has beena change in GAAP, accounting practices or reference periods and the auditors of the Borrower (which shall be one of the Auditors) deliverto the Agent: (i)a description of any change necessary for those financial statements to reflect the GAAP, accounting practices and referenceperiods upon which the audited Original Financial Statements were prepared; and 53 (ii)sufficient information, in form and substance as may be reasonably required by the Agent, to enable the Lenders to determinewhether Clause 19 (Financial Covenants) has been complied with, to determine which Group Members are MaterialSubsidiaries and to make an accurate comparison between the financial position indicated in those financial statements and theaudited Original Financial Statements.Any reference in this Agreement to those financial statements shall be construed as a reference to those financial statements as adjustedto reflect the basis upon which the audited Original Financial Statements were prepared. 18.4Information: miscellaneousThe Borrower shall supply to the Agent (in sufficient copies for all the Lenders, if the Agent so requests): (a)all documents dispatched by the Borrower to its creditors (or any class of them) generally at the same time as they are dispatched (to theextent such documents relate to any event or circumstance in relation to any Group Member falling within any of Clause 21.5 (Crossdefault), Clause 21.6 (Insolvency), Clause 21.7 (Insolvency proceedings) or Clause 21.8 (Creditors’ process) (as if any reference in any ofsuch Clauses to the Borrower or any Material Subsidiary included a reference to any Group Member) or any restructuring matter(howsoever described) which may have a material adverse effect on the ability of the Borrower to repay its indebtedness); (b)promptly upon becoming aware of them, the details of any litigation, investigation, arbitration or administrative proceedings which arecurrent, threatened or pending against the Borrower or any Group Member and which might, if adversely determined, have a MaterialAdverse Effect; (c)promptly, such further information regarding the financial condition, business and operations of any Group Member or such furtherinformation in relation to the Borrower as any Finance Party (through the Agent) may reasonably request or such further information asmay otherwise be required by appropriate laws and/or regulations; (d)promptly, notice of any change in authorised signatories of the Borrower signed by a director, company secretary or an authorisedsignatory (other than any authorised signatory which has been replaced or is to be replaced pursuant to a notice given by the Borrowerunder this paragraph (d)) of the Borrower accompanied by specimen signatures of any new authorised signatories of the Borrower; and (e)promptly, such information as the Agent may from time to time reasonably require for the performance of its obligations or the exerciseof its rights under the Finance Documents. 18.5Notification of default (a)The Borrower shall notify the Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of itsoccurrence. 54 (b)Promptly upon a request by the Agent, the Borrower shall supply to the Agent a certificate signed by an authorised signatory on itsbehalf certifying that no Default is continuing (or if a Default is continuing, specifying such Default and the steps, if any, being taken toremedy it). 18.6Use of websites (a)The Borrower may satisfy its obligations under this Agreement to deliver any information in relation to those Lenders (the “WebsiteLenders”) who accept this method of communication by posting this information onto an electronic website designated by the Borrowerand the Agent (the “Designated Website”) if: (i)the Agent expressly agrees (after consultation with each of the Lenders) that it will accept communication of such informationby this method; (ii)both the Agent and the Borrower are aware of the address of and any relevant password specifications for the DesignatedWebsite; and (iii)such information is in a format previously agreed between the Borrower and the Agent. (b)If any Lender (a “Paper Form Lender”) does not agree to the delivery of information electronically then the Agent shall notify theBorrower accordingly and the Borrower shall, at its own cost, supply information to the Agent (in sufficient copies for each Paper FormLender) in paper form. In any event the Borrower shall, at its own cost, supply the Agent with at least one copy in paper form anyinformation required to be provided by it under this Agreement. (c)The Agent shall supply each Website Lender with the address of and any relevant password specifications for the Designated Websitefollowing designation of that website by the Borrower and the Agent. (d)The Borrower shall promptly upon becoming aware of its occurrence notify the Agent if: (i)the Designated Website cannot be accessed due to technical failure; (ii)the password specifications for the Designated Website change; (iii)any new information which is required to be provided under this Agreement is posted onto the Designated Website; (iv)any existing information which has been provided under this Agreement and posted onto the Designated Website is amended;or (v)it becomes aware that the Designated Website or any information posted onto the Designated Website is or has been infected byany electronic virus or similar software. 55 (e)If the Borrower notifies the Agent under paragraph (d)(i) or (d)(v) above, all information to be provided by the Borrower under thisAgreement after the date of that notice shall be supplied in paper form unless and until the Agent and each Website Lender is satisfiedthat the circumstances giving rise to such notification are no longer continuing. (f)Any Website Lender may request, through the Agent, one paper copy of any information required to be provided under this Agreementwhich is posted onto the Designated Website. The Borrower shall at its own cost comply with any such request within ten Business Days. 18.7“Know your customer” checks (a)The Borrower shall promptly upon the request of the Agent supply, or procure the supply of, such documentation and other evidence asis reasonably requested by the Agent (for itself or on behalf of any Lender (including for any Lender on behalf of any prospective newLender)) in order for the Agent, such Lender or any prospective new Lender to conduct any “know your customer” or other similarprocedures under applicable laws and regulations. (b)Each Lender shall promptly upon the request of the Agent supply, or procure the supply of, such documentation and other evidence as isreasonably requested by the Agent (for itself) in order for the Agent to conduct any “know your customer” or other similar proceduresunder applicable laws and regulations. 19.FINANCIAL COVENANTSThe undertakings in this Clause 19 remain in force from the date of this Agreement for so long as any amount is outstanding under any of theFinance Documents or any Commitment in respect of any Facility (or any commitment represented thereby) is in force. 19.1 FinancialdefinitionsIn this Agreement:“Borrowings” means, at any time, the aggregate outstanding principal, capital or nominal amount (and any fixed or minimum premium payable onprepayment or redemption) of any indebtedness of Group Members for or in respect of Financial Indebtedness (except any Financial Indebtednessfalling within (x) paragraph (i) of the definition of “Financial Indebtedness” and (y) paragraph (k) of the definition of “Financial Indebtedness” (tothe extent relating to any Financial Indebtedness falling within paragraph (i) of the definition of “Financial Indebtedness”)).“Consolidated EBIT” means, for any period, the consolidated operating profit of the Group (including the results from discontinued operations)before finance costs and tax for that period adjusted by: (a)taking no account of any Exceptional Item; (b)taking no account of any unrealised gains or losses on any derivative instrument or other financial instrument (other than any derivativeinstrument which is accounted for on a hedge accounting basis) which are reported through the consolidated income statement of theGroup; and 56 (c)taking no account of any expense referable to any equity-settled share-based compensation of employees.“Consolidated EBITDA” means, for any period, Consolidated EBIT for that period after adding back (to the extent deducted) any amountattributable to any depreciation or amortisation and taking no account of any impairment charge or any reversal of any previous impairment chargemade in such period.“Consolidated Net Finance Charges” means, for any period, the aggregate amount of interest, commission, fees, discounts, prepayment fees,premiums or charges, and other finance payments in respect of Borrowings whether accrued, paid or payable and whether or not capitalised byGroup Members (calculated on a consolidated basis) in respect of that period (and in each case excluding, for the avoidance of doubt, any suchamount paid or payable by a Group Member to another Group Member): (a)excluding any non-recurring upfront or costs but including the effect of amortisation of such upfront or costs; (b)including the interest (but not the capital) element of leasing and hire purchase payments; (c)including any commission fees, discounts and other finance payments paid, payable or accrued by any Group Member to anycounterparty (that is not a Group Member) under any interest rate hedging instrument during such period; (d)deducting any commission fees, discounts and other finance payments paid, payable or accrued by any counterparty (that is not a GroupMember) to any Group Member under any interest rate hedging instrument during such period; (e)taking no account of any unrealised gains or losses on any derivative instrument (other than any such instrument that is accounted for ona hedge accounting basis); and (f)deducting any interest paid or payable to or accrued to the benefit of any Group Member (from any person that is not a Group Member)during such period on any cash deposits, cash equivalents or short term investments held by any Group Member,and so that no amount shall be included or excluded more than once.“Consolidated Total Borrowings” means, in respect of the Group, at any time, the aggregate of the liabilities of Group Members (on a consolidatedbasis) for or in respect of Borrowings (excluding the Excluded Redeemable Preference Shares) calculated at the nominal, principal or other amountat which such liabilities would be carried in a consolidated balance sheet of the Group drawn up at that time (or, in the case of any guarantee orindemnity or similar assurance against financial loss referred to in paragraph (k) in the definition of “Financial Indebtedness”, the maximumliability under such guarantee or indemnity or similar assurance), in each case, for the avoidance of doubt, excluding any such liabilities owing by aGroup Member to another Group Member. 57 “Exceptional Item” means any exceptional, one-off, non-recurring or extraordinary items.“Interest Cover” means, in respect of any period, the ratio of Consolidated EBITDA to Consolidated Net Finance Charges for that period.“Leverage” means, in respect of any period, the ratio of Consolidated Total Borrowings on the last day of that period to Consolidated EBITDA inrespect of that period.“Relevant Periods” means: (a)each period of twelve months ending on the last day of each Financial Year; and (b)each period of twelve months ending on the last day of the second Financial Quarter of each Financial Year,(each a “Relevant Period”). 19.2Financial conditionThe Borrower shall ensure that: (a)LeverageLeverage in respect of each Relevant Period shall not exceed 3.50:1.00. (b)Interest CoverInterest Cover in respect of each Relevant Period shall not be less than 4.00:1.00. 19.3Financial testingThe financial covenants set out in Clause 19.2 (Financial condition) shall be calculated in accordance with GAAP (as applied to the auditedOriginal Financial Statements) and tested semi-annually in respect of each Relevant Period by reference to each of the financial statementsdelivered under Clause 18.1 (Financial statements) and/or the Compliance Certificate relating thereto delivered pursuant to Clause 18.2(Compliance Certificate). 20.GENERAL UNDERTAKINGSThe undertakings in this Clause 20 remain in force from the date of this Agreement for so long as any amount is outstanding under any of theFinance Documents or any Commitment in respect of any Facility (or any commitment represented thereby) is in force. 58 20.1AuthorisationsThe Borrower shall promptly: (a)obtain, comply with and do all that is necessary to maintain in full force and effect; and (b)supply certified copies to the Agent of,any Authorisation required to enable it to perform its obligations under the Finance Documents and/or to ensure the legality, validity,enforceability or admissibility in evidence in its jurisdiction of incorporation of any Finance Document. 20.2Compliance with lawsThe Borrower shall, and shall procure that each Group Member will, comply in all respects with all laws to which it may be subject, if failure so tocomply would, or could reasonably be expected to, have a Material Adverse Effect. 20.3Pari passu rankingThe Borrower shall ensure that its payment obligations under the Finance Documents rank and continue to rank at least pari passu with the claimsof all of its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally. 20.4Negative pledgeIn this Clause 20.4, “Quasi-Security” means any arrangement or transaction described in paragraph (b) below. (a)Without prejudice to paragraph (d), the Borrower shall not, and the Borrower shall procure that no Material Subsidiary will, create orpermit to subsist any Security over any of its assets. (b)Without prejudice to paragraph (d), the Borrower shall not, and the Borrower shall procure that no Material Subsidiary will: (i)sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by theBorrower or any Material Subsidiary; (ii)sell, transfer or otherwise dispose of any of its receivables on recourse terms; (iii)enter into or permit to subsist any title retention arrangement; (iv)enter into or permit to subsist any arrangement under which money or the benefit of a bank or other account may be applied,set-off or made subject to a combination of accounts; or (v)enter into or permit to subsist any other preferential arrangement having a similar effect, 59 in circumstances where such arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or offinancing the acquisition of any asset. (c)Subject to paragraph (d), paragraphs (a) and (b) above do not apply to: (i)any netting or set-off or cash-pooling arrangement entered into by the Borrower or any Material Subsidiary in the ordinarycourse of its banking arrangements for the purpose of netting debit and credit balances of itself and/or of itself and of any otherGroup Member; (ii)any payment or close out netting or set-off arrangement pursuant to any hedging transaction entered into by the Borrower orany Material Subsidiary for the purpose of: (A)hedging any risk to which it is exposed in its ordinary course of trading; or (B)its interest rate or currency management operations which are carried out in the ordinary course of business and fornon- speculative purposes only, excluding, in each case, any Security or Quasi-Security under a credit support arrangement in relation to any hedgingtransaction; (iii)any Security or Quasi-Security over documents of title to goods and/or goods as part of letter of credit transactions (relating tothe sale or purchase of such goods) entered into its ordinary course of trading; (iv)any lien arising by operation of law and in the ordinary course of trading, provided that any indebtedness which is securedthereby is paid when due or contested in good faith by appropriate proceedings and properly provisioned; (v)any Security or Quasi-Security over or affecting any asset acquired by the Borrower or any Material Subsidiary after the date ofthis Agreement if: (A)that Security or Quasi-Security was not created in contemplation of the acquisition of that asset by the Borrower or,as the case may be, such Material Subsidiary; (B)the principal amount secured by that Security or to which such Quasi-Security relates has not been increased incontemplation of, or since, the acquisition of that asset by the Borrower or, as the case may be, such MaterialSubsidiary; and (C)that Security or Quasi-Security is removed or discharged within 135 days of the date of acquisition of such asset bythe Borrower or, as the case may be, such Material Subsidiary; 60 (vi)any Security or Quasi-Security over or affecting any asset of any person which becomes a Group Member after the date of thisAgreement, where that Security or Quasi-Security is created prior to the date on which that person becomes a Group Member, if: (A)that Security or Quasi-Security was not created in contemplation of the acquisition of any interest inthat person by any Group Member; (B)the principal amount secured by that Security or to which that Quasi-Security relates has not increased incontemplation of or since the acquisition of any interest in that person by any Group Member; and (C)that Security or Quasi-Security is removed or discharged within 135 days of that person becoming a Group Member; (vii)any Security or Quasi-Security arising under any retention of title, hire purchase or conditional sale arrangement orarrangements having similar effect in respect of goods supplied to the Borrower or any Material Subsidiary in the ordinarycourse of trading and on the supplier’s standard or usual terms and not arising as a result of any default or omission by anyGroup Member; (viii)any Security or Quasi-Security over accounts receivable generated by the Group’s financial services business only (excluding,for the avoidance of doubt, any accounts receivable generated by the Group’s core search services) to secure any notes or otherindebtedness issued or incurred pursuant to any securitisation scheme or transaction; (ix)any Security or Quasi-Security granted with the prior written consent of the Agent (acting on the instructions of the MajorityLenders); or (x)any Security securing indebtedness the principal amount of which (when aggregated with the aggregate principal amount ofany and all other indebtedness which has the benefit of Security given by any one or more Group Members other than anypermitted under paragraphs (c)(i) to (ix) above) does not exceed US$100,000,000 (or its equivalent in another currency orcurrencies). (d)The Borrower shall procure that, save with the prior written consent of the Agent (acting on the instructions of the Majority Lenders), noSecurity or Quasi-Security shall be created by the Borrower or any other Group Member in respect of, or shall subsist over or affect, anyEquity Interest in any Material Subsidiary (or any interest therein). 20.5Disposals (a)The Borrower shall not, and the Borrower shall procure that no Material Subsidiary will, enter into a single transaction or a series oftransactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any asset. 61 (b)Subject to paragraph (c), paragraph (a) above does not apply to any sale, lease, transfer or other disposal: (i)made in the ordinary course of trading of the disposing entity; (ii)of assets in exchange for other assets comparable or superior as to type, value and quality; (iii)of obsolete or redundant vehicles, plant and equipment for cash; (iv)made to another Group Member; (v)of any asset which is a financial asset that has been classified in the latest audited consolidated financial statements of theBorrower as being available for sale; (vi)of any asset where: (A)such asset is being disposed as part of the Group’s business strategy; (B)such disposal is for good and valuable consideration; and (C)no Default is continuing or would result from such disposal; (vii)of Equity Interests in Qiyi; (viii)with the prior written consent of the Agent (acting on the instructions of the Majority Lenders); or (ix)of any asset in any financial year of the Borrower, where the higher of the market value or consideration receivable in respect ofsuch asset (when aggregated with the higher (in each case) of the market value or consideration receivable in respect of eachother asset the subject of any other sale, lease, transfer or other disposal by any or all of the Borrower and the MaterialSubsidiaries during such financial year, other than any permitted under paragraphs (b)(i) to (b)(viii) above) does not exceedUS$100,000,000 (or its equivalent in another currency or currencies). (c)The Borrower shall not, and the Borrower shall procure that no Group Member will, enter into a single transaction or a series oftransactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of: (i)any Equity Interest in any Restricted Material Subsidiary (or, in each case, any interest therein); or (ii)more than 10% of the aggregate shares of or equity interests in (or, in each case, any interest in more than 10% of the aggregateshares of or equity interests in) any Material Subsidiary (that is not Qiyi or a Restricted Material Subsidiary), 62 in each case, save with the prior written consent of the Agent (acting on the instructions of the Majority Lenders) or pursuant to any sale,lease, transfer or other disposal made by a Group Member to another Group Member (which sale, lease, transfer or other disposal does notreduce or have the effect of reducing the Borrower’s ownership (whether direct or indirect) of the aggregate shares of or equity interests inany Restricted Material Subsidiary or any Material Subsidiary). 20.6Merger (a)The Borrower shall not, and the Borrower shall procure that no Material Subsidiary will, enter into any amalgamation, demerger, mergeror corporate reconstruction. (b)Paragraph (a) above does not apply to any amalgamation, merger or corporate reconstruction: (i)entered into by the Borrower, provided that: (A)the Borrower is the surviving entity of such amalgamation, merger or corporate reconstruction; (B)all of the obligations expressed to be assumed by the Borrower under the Finance Documents shall be and continueto be legal, valid, binding and enforceable as against the Borrower (as the surviving entity of such amalgamation,merger or corporate reconstruction); and (C)the Borrower shall have, at its own cost, procured the delivery to the Agent of a legal opinion (in form and substancereasonably satisfactory to the Agent (acting on the instructions of the Majority Lenders)) issued by legal counselacceptable to the Agent confirming satisfaction of the requirements under paragraphs (A) and (B) above; or (ii)entered into by a Material Subsidiary (other than the Borrower) provided that such Material Subsidiary (or, in the case of anyamalgamation, merger or corporate reconstruction entered into by such Material Subsidiary with another Material Subsidiary,either one of such Material Subsidiaries) is the surviving entity of such amalgamation, merger or corporate reconstruction; or (iii)entered into with the prior written consent of the Agent (acting on the instructions of the Majority Lenders, such instructionsnot to be unreasonably withheld or delayed),provided further that, in each case under paragraphs (i) and (ii), (1) such amalgamation, merger or corporate reconstruction does not andcould not be reasonably expected to have a Material Adverse Effect and (2) no Default is continuing or would occur as a result of suchamalgamation, merger or corporate reconstruction. 63 20.7Change of businessThe Borrower shall procure that no change is made to the general nature or scope of the business of the Group (taken as a whole) from that carried onby the Group at the date of this Agreement, to the extent that such change would, or could reasonably be expected to, give rise to a material adverseeffect on the business or financial condition of the Group (taken as a whole). 20.8Acquisitions (a)The Borrower shall not, and the Borrower shall procure that no Material Subsidiary will, acquire any company, business, assets orundertaking or make any investment. (b)Paragraph (a) above does not apply to an acquisition or investment which is: (i)in respect of assets or businesses (or, in the case of any acquisition of any company or undertaking, the assets or businesses ofsuch company or undertaking) in the same nature and of the same scope as, or complementary to, the Group’s business asconducted on the date of this Agreement; or (ii)consistent with the Group’s business strategy, provided that, in each case: (A)such acquisition or investment does not result in a breach of any Authorisation or of any other provision of thisAgreement; (B)such acquisition or investment does not and could not reasonably be expected to have a Material Adverse Effect;and (C)no Default is continuing or would occur as a result of such acquisition or investment. 20.9Maintenance of corporate existence and books and recordsThe Borrower shall, and shall procure that each Material Subsidiary will: (a)maintain its corporate existence and registration in the jurisdiction of its incorporation (other than, in the case of any Material Subsidiarythat is not the Borrower, where such Material Subsidiary is not the surviving entity of any amalgamation, merger or corporatereconstruction to the extent permitted under Clause 20.6 (Merger)); and (b)keep and maintain proper books and records in accordance with GAAP in all material respects. 64 20.10Federal Reserve RegulationsThe Borrower shall not (and the Borrower shall ensure that no other Group Member will) use the Facilities (or any part thereof) in violation of any ofRegulation T, Regulation U and Regulation X. 20.11Compliance with US RegulationsThe Borrower shall not (and the Borrower shall ensure that no other Group Member will) become required to be registered as an “investmentcompany” under the 1940 Act. 20.12ERISAThe Borrower shall not establish, become party to or incur any liability under any employee benefit plan under Title IV of the United StatesEmployee Retirement Income Security Act of 1974. 20.13Anti-corruption law (a)The Borrower shall not (and the Borrower shall ensure that no Group Member will) directly or indirectly use any of the proceeds of theFacilities (or any part thereof) for any purpose which would breach, or would cause any Group Member or any Finance Party to be inbreach of, any Anti-Bribery and Corruption Laws. (b)The Borrower shall (and the Borrower shall ensure that each Group Member will) comply in all respects, and conduct its businesses incompliance, with all applicable Anti-Bribery and Corruption Laws. (c)The Borrower shall (and the Borrower shall ensure that each Group Member will) institute and maintain systems, controls and otherarrangements designed to promote and ensure ongoing compliance by Group Members and by persons associated with any GroupMember with all applicable Anti-Bribery and Corruption Laws. 20.14Sanctions, Anti-Terrorism Laws and Anti-Money Laundering Laws (a)The Borrower shall (and the Borrower shall procure that each Group Member will) comply with, and conduct its business in compliancewith, all applicable Sanctions, Anti-Money Laundering Laws and Anti-Terrorism Laws. Without prejudice to the foregoing, the Borrowershall not, and the Borrower shall procure that no Group Member will, knowingly engage in any transaction that violates or wouldviolate, or would cause any Group Member or any Finance Party to be in violation of, any of the applicable prohibitions set forth in anySanctions, Anti-Money Laundering Laws or Anti-Terrorism Laws. (b)The Borrower shall ensure that none of the funds or assets of any Group Member that are used to repay the Facilities (or any part thereof)shall constitute property of, or shall be beneficially owned directly or indirectly by, any Restricted Party. 65 (c)The Borrower shall not, and the Borrower shall procure that no Group Member will, fund all or part of any payment under any FinanceDocument out of proceeds derived from transactions that violates or would violate, or would cause any Group Member or any FinanceParty to be in violation of, any of the applicable prohibitions set forth in any Sanctions, Anti-Money Laundering Laws or Anti-TerrorismLaws. (d)The Borrower shall not (and the Borrower shall procure that no Group Member will): (i)directly or, to the Borrower’s best knowledge (after having made all reasonable investigations), indirectly use or allow to beused the proceeds of the Facilities (or any part thereof) or other transaction(s) contemplated by any Finance Document for anypurpose which would violate, or cause any Group Member or any Finance Party to be in violation of, any applicable Sanctions,Anti-Money Laundering Laws or Anti-Terrorism Laws; (ii)directly or, to the Borrower’s best knowledge (after having made all reasonable investigations), indirectly lend, invest,contribute or otherwise make available the proceeds of the Facilities (or any part thereof) to, or for the benefit of, or forfinancing the activities of, any Restricted Party in any manner which would violate, or cause any Group Member or any FinanceParty to be in violation of, any applicable Sanctions; or (iii)directly or, to the Borrower’s best knowledge (after having made all reasonable investigations), indirectly use or allow to beused the proceeds of the Facilities (or any part thereof): (A)in any other manner that would or might result in any Group Member or any Finance Party being in breach of anyapplicable Sanctions, Anti-Money Laundering Laws or Anti-Terrorism Laws or becoming a Restricted Party; (B)for business activities relating to any Sanctioned Jurisdiction, including any business activities involving persons orentities named on any Sanctions List in any manner which would violate, or cause any Group Member or anyFinance Party to be in violation of, any applicable Sanctions. (e)The Borrower shall (and shall procure that each Group Member shall) continue to institute and maintain systems, controls and otherarrangements designed to promote and ensure ongoing compliance by the Group with all applicable Sanctions, Anti-Money LaunderingLaws and Anti-Terrorism Laws. 20.15TaxationThe Borrower shall, and shall ensure that each Group Member will, pay and discharge all Taxes imposed upon it or its assets within the time periodallowed without incurring penalties unless and only to the extent that: (a)such payment is being contested in good faith; 66 (b)adequate reserves are being maintained for those Taxes and the costs required to contest them in accordance with GAAP; and (c)such payment can be lawfully withheld and failure to pay those Taxes does not have and could not reasonably be expected to have aMaterial Adverse Effect. 20.16No delisting or suspension of the Borrower’s sharesThe Borrower shall ensure that: (a)its shares are at all times listed (and will not at any time cease to be listed) on the NASDAQ Global Select Market; and (b)trading of shares in the Borrower on the NASDAQ Global Select Market will not be suspended for more than 20 consecutive TradingDays (or such longer period as may be agreed between the Borrower and the Agent (acting on the instructions of the Majority Lenders)),unless such suspension is solely caused by administrative or technical reasons in the system of the NASDAQ Global Select Market (andfor such purposes, “Trading Day” means a day (other than a Saturday or Sunday) on which the NASDAQ Global Select Market is openfor trading). 21.EVENTS OF DEFAULTEach of the events or circumstances set out in Clause 21.1 (Non-payment) to Clause 21.12 (Material adverse change) is an Event of Default. 21.1Non-paymentThe Borrower does not pay on the due date any amount pursuant to a Finance Document at the place at and in the currency in which it is expressedto be payable unless: (a)its failure to pay is caused by administrative or technical error; and (b)payment of such amount is made within five Business Days of its due date. 21.2Financial covenantsAny requirement of Clause 19 (Financial Covenants) is not satisfied. 21.3Other obligations (a)The Borrower does not comply with any provision of Clause 20.16 (No delisting or suspension of the Borrower’s shares); and/or (b)the Borrower does not comply with any provision of the Finance Documents (other than those referred to in paragraph (a) above, Clause21.1 (Non-payment) and Clause 21.2 (Financial covenants)),provided that, in respect of any failure to comply falling under paragraph (b) above, no Event of Default will occur in respect of such failure tocomply if such failure to comply is capable of remedy and is remedied within 20 Business Days of the earlier of (A) the Agent giving written noticeto the Borrower or (B) the Borrower becoming aware of such failure to comply. 67 21.4MisrepresentationAny representation or statement made or deemed to be made by the Borrower in any or all of the Finance Documents or any other documentdelivered by or on behalf of the Borrower under or in connection with any Finance Document is or proves to have been incorrect or misleading inany material respect when made or deemed to be made unless the underlying circumstances (if capable of remedy) are remedied within 20 BusinessDays of the earlier to occur of (A) the Agent giving written notice to the Borrower or (B) the Borrower becoming aware of such underlyingcircumstances (it being understood that the subsequent provision of accurate information shall not in itself be deemed to cure any misrepresentationin respect of the accuracy of previous information provided). 21.5Cross defaultAny: (a)Financial Indebtedness of the Borrower or any Material Subsidiary is not paid when due nor within any originally applicable graceperiod; (b)Financial Indebtedness of the Borrower or any Material Subsidiary is declared to be or otherwise becomes due and payable prior to itsspecified maturity as a result of an event of default (however described); (c)commitment for any Financial Indebtedness of the Borrower or any Material Subsidiary is cancelled or suspended by a creditor of theBorrower or any Material Subsidiary as a result of an event of default (however described); or (d)creditor of the Borrower or any Material Subsidiary becomes entitled to declare any Financial Indebtedness of the Borrower or anyMaterial Subsidiary due and payable prior to its specified maturity as a result of an event of default (however described),provided that (i) paragraphs (a) to (d) above shall not apply to any Financial Indebtedness that is owing to a Group Member and (ii) no Event ofDefault will occur under this Clause 21.5 if the aggregate amount of Financial Indebtedness and/or commitment for Financial Indebtedness fallingwithin paragraphs (a) to (d) above (for any and all of the Borrower and/or Material Subsidiaries) is less than US$100,000,000 (or its equivalent inany other currency or currencies). 21.6Insolvency (a)The Borrower or any Material Subsidiary is or is presumed or deemed to be unable or admits inability to pay its debts as they fall due,suspends making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations withone or more of its creditors with a view to rescheduling any of its indebtedness; 68 (b)the value of the assets of the Borrower or any Material Subsidiary is less than its liabilities (taking into account contingent andprospective liabilities); or (c)a moratorium is declared in respect of any indebtedness of the Borrower or any Material Subsidiary. 21.7Insolvency proceedings (a)Any corporate action, legal proceedings or other procedure or step is taken or occurs in relation to: (i)the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, striking-off, administration,provisional supervision or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of theBorrower or any Material Subsidiary (other than any solvent reorganisation constituted by any amalgamation, merger orcorporate reconstruction entered into by the Borrower or any Material Subsidiary, in each case, to the extent permitted underClause 20.6 (Merger)); (ii)a composition or arrangement with any creditor of the Borrower or any Material Subsidiary, or an assignment for the benefit ofcreditors generally of the Borrower or any Material Subsidiary or a class of such creditors; (iii)the appointment of a liquidator, receiver, administrator, administrative receiver, compulsory manager, provisional supervisor orother similar officer in respect of the Borrower or any Material Subsidiary or any of its assets (other than any solvent liquidationof any Material Subsidiary (other than the Borrower) constituted by any amalgamation, merger or corporate reconstructionentered into by such Material Subsidiary, in each case, to the extent permitted under Clause 20.6 (Merger)); or (iv)enforcement of any Security over any assets of the Borrower or any Material Subsidiary where the aggregate value of any andall of the assets of the Borrower and/or Material Subsidiaries that are subject to any or all such enforcement is not less thanUS$100,000,000 (or its equivalent in any other currency or currencies), or any analogous procedure or step is taken or occurs in any jurisdiction; or (b)any proceeding or case is commenced, with consent of the Borrower (or without the consent of the Borrower which (A) results in the entryof any order of relief or any order, judgment, decree, adjudication or appointment approving, ordering or giving effecting to any of (i) to(iii) below or (B) remains undismissed or undischarged for a period of 60 days of commencement), seeking: (i)the Borrower’s reorganisation, liquidation, dissolution, arrangement or winding-up or the composition or re-adjustment of theBorrower’s debts under the US Bankruptcy Code or other debtor relief laws of the United States; 69 (ii)the appointment of a receiver, custodian, trustee, examiner, liquidator or the like of the Borrower or of all or any substantial partof the Borrower’s property; or (iii)similar relief in respect of the Borrower under any law relating to the bankruptcy, insolvency, reorganisation, winding-up orcomposition or adjustment of debts.Paragraph (a)(i) shall not apply to any corporate action, legal proceedings or other procedure or step (brought by any person that is not a GroupMember) in relation to the winding-up, administration or dissolution of the Borrower or any Material Subsidiary which is being contested in goodfaith and with due diligence and is discharged or struck out within 30 days of commencement. 21.8Creditors’ processAny expropriation, attachment, sequestration, distress or execution (or any analogous process in any jurisdiction) affects any asset or assets of theBorrower or any Material Subsidiary, provided that it shall not be an Event of Default under this Clause 21.8 if the aggregate value of any and allassets of any or all of the Borrower and Material Subsidiaries that are subject to any or all events and/or circumstances of expropriation, attachment,sequestration, distress, execution and/or analogous process does not exceed US$100,000,000 (or its equivalent in any other currency or currencies). 21.9Unlawfulness and invalidity (a)It is or becomes unlawful for the Borrower to perform any of its obligations under the Finance Documents; (b)any obligation or obligations of the Borrower under any Finance Document are not or cease to be legal, valid, binding or enforceable andsuch illegality, invalidity, non-binding nature or unenforceability individually or cumulatively materially and adversely affects theinterests of the Finance Parties under the Finance Documents; or (c)any Finance Document is not or ceases to be in full force and effect. 21.10RepudiationThe Borrower rescinds or purports to rescind or repudiates or purports to repudiate any Finance Document or evidences an intention to rescind orrepudiate any Finance Document. 21.11Cessation of businessThe Borrower suspends or ceases to carry on all or substantially all of its business or of the business of the Group (taken as a whole). 70 21.12Material adverse changeAny event or circumstance occurs which the Majority Lenders reasonably believe would (whether individually or together with other events orcircumstances) have a Material Adverse Effect. 21.13AccelerationOn and at any time after the occurrence of an Event of Default which is continuing the Agent may, and shall if so directed by the Majority Lenders,by notice to the Borrower: (a)without prejudice to the participations of any or all of the Lenders in any Loans then outstanding: (i)cancel the Available Commitments of the Lenders (in respect of any or all of the Facilities) and reduce them to zero whereuponthey shall immediately be cancelled and reduced to zero (and the Commitments of the Lenders (in respect of such Facility orFacilities) shall be reduced by the same amount accordingly), provided that such reduction of the Commitments of the Lendersunder any Facility shall be applied towards the Commitments of the Lenders under that Facility rateably; or (ii)cancel any part of the Available Commitments of the Lenders (in respect of any or all of the Facilities) and reduce themaccordingly, whereupon the applicable part of the Available Commitments of the Lenders (in respect of such Facility orFacilities) shall be cancelled (and the Commitments of the Lenders (in respect of such Facility or Facilities) shall be reduced bythe same amount accordingly), provided that such reduction of the Available Commitments and the Commitments of theLenders under any Facility shall be applied towards the Available Commitments and the Commitments of the Lenders underthat Facility rateably; (b)declare that all or part of the Loans, together with accrued interest, and all other amounts accrued or outstanding under the FinanceDocuments be immediately due and payable, whereupon they shall become immediately due and payable; (c)declare that all or part of the Loans be payable on demand, whereupon they shall immediately become payable on demand by the Agenton the instructions of the Majority Lenders; and/or (d)declare that no Rollover Loan shall be made,provided that, if an Event of Default under Clause 21.6 (Insolvency) or Clause 21.7 (Insolvency proceedings) shall occur in respect of the Borrowerin a US court of competent jurisdiction, then without notice to the Borrower or any other person or any other act by the Agent or any other person,the Commitments of the Lenders (in respect of any or all of the Facilities) shall be automatically cancelled and reduced to zero and all of the Loanstogether with accrued interest and all other amounts accrued or outstanding under the Finance Documents shall automatically become 11 lediatelydue and payable without presentment demand protest or notice of any kind all of which are expressly waived 71 SECTION 8CHANGES TO PARTIES 22.CHANGES TO THE PARTIES 22.1Assignments and transfers by the LendersSubject to this Clause 22, a Lender (the “Existing Lender”) may: (a)assign any of its rights under this Agreement; or (b)transfer by novation any of its rights and/or obligations under this Agreement,to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making,purchasing or investing in loans, securities or other financial assets (the “New Lender”). 22.2Conditions of assignment or transfer (a)The consent of the Borrower shall be required in respect of any assignment or transfer made in accordance with Clause 22.1 (Assignmentsand transfers by the Lenders), except for: (i)any assignment or transfer made in favour of a Lender or an Affiliate of a Lender; (ii)any assignment or transfer made at a time when an Event of Default is continuing. (b)The consent of the Borrower to any transfer or assignment by a Lender must not be unreasonably withheld or delayed, and shall bedeemed to have been given 10 Business Days after such Lender has requested it unless such consent is expressly refused by the Borrowerwithin that time. (c)The Existing Lender shall, simultaneously with the assignment or transfer by it of rights and/or obligations under this Agreement to theNew Lender, assign to the New Lender a proportionate share of the rights held by it (in its capacity as Lender) under or in connectionwith the other Finance Documents. (d)A transfer by the Existing Lender to the New Lender will be effective only if the procedure set out in Clause 22.5 (Procedure for transfer)is complied with in respect of such transfer. (e)An assignment by the Existing Lender to the New Lender will be effective only if the procedure and conditions set out in Clause 22.6(Procedure for assignment) are complied with in respect of such assignment (subject to paragraph (c) of Clause 22.6 (Procedure forassignment)). (f)Each New Lender, by executing the applicable Transfer Certificate or Assignment Agreement to which it is a party, confirms, for theavoidance of doubt, that the Agent has authority to execute on its behalf any amendment or waiver relating to any Finance Documentthat has been approved by or on behalf of the requisite Lender or Lenders in accordance with this Agreement on or prior to the date onwhich the applicable transfer or assignment from the applicable Existing Lender to such New Lender becomes effective in accordancewith this Agreement and that it is bound by that decision to the same extent as such Existing Lender would have been had it remained aLender. 72 22.3Assignment or transfer feeThe New Lender shall, on the date upon which the relevant assignment or transfer by the Existing Lender to the New Lender takes effect, pay to theAgent (for its own account) a fee of US$2,500.00. 22.4Limitation of responsibility of Existing Lenders (a)Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a NewLender for: (i)the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents or any other documents; (ii)the financial condition of any Group Member or any Affiliate of any Group Member; (iii)the performance and observance by the Borrower of its obligations under any of the Finance Documents or any otherdocuments; or (iv)the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document or any otherdocument,and any representations or warranties implied by law are excluded. (b)Each New Lender confirms to the Existing Lender (which makes any assignment or transfer to such New Lender) and the other FinanceParties that it: (i)has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairsof the Borrower, Group Members and their related entities in connection with its participation in this Agreement and/or theother Finance Documents and has not relied exclusively on any information provided to it by such Existing Lender inconnection with any Finance Document; and (ii)will continue to make its own independent appraisal of the creditworthiness of the Borrower, Group Members and their relatedentities whilst any amount is or may be outstanding under any of the Finance Documents or any commitment represented byany Commitment in respect of any Facility is in force. 73 (c)Nothing in any Finance Document obliges an Existing Lender to: (i)accept a re-assignment or re-transfer from a New Lender of any of the rights and obligations assigned or transferred under thisClause 22; or (ii)support any losses directly or indirectly incurred by a New Lender by reason of the non-performance by the Borrower of itsobligations under any of the Finance Documents or otherwise. 22.5Procedure for transfer (a)Subject to the conditions set out in Clause 22.2 (Conditions of assignment or transfer) a transfer by an Existing Lender of any or all of itsrights and obligations under this Agreement to a New Lender is effected on the Transfer Date in accordance with paragraph (c) below.The Agent shall, subject to paragraph (b) below, as soon as reasonably practicable after receipt by it of a duly completed TransferCertificate appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of thisAgreement, execute that Transfer Certificate, provided that the Agent shall have no obligation to execute any Transfer Certificate at anytime earlier than the date that is 5 Business Days after its receipt of such Transfer Certificate. (b)The Agent shall not be obliged to execute a Transfer Certificate delivered to it by an Existing Lender and a New Lender unless it issatisfied that it has completed all “know your customer” and other similar procedures that it is required (including in accordance withinternal policies) (or deems desirable) to conduct in relation to the transfer from such Existing Lender to such New Lender (the subject ofsuch Transfer Certificate). (c)On the Transfer Date in respect of a transfer by an Existing Lender to a New Lender: (i)to the extent that in the Transfer Certificate (relating to such transfer) such Existing Lender seeks to transfer by novation itsrights and obligations under this Agreement each of the Borrower and such Existing Lender shall be released from furtherobligations towards one another under this Agreement and their respective rights against one another under this Agreementshall be cancelled (being the “Discharged Rights and Obligations”); (ii)each of the Borrower and such New Lender shall assume obligations towards one another and/or acquire rights against oneanother under this Agreement which differ from the Discharged Rights and Obligations only insofar as the Borrower and suchNew Lender have assumed and/or acquired the same in place of the Borrower and such Existing Lender; (iii)the Agent, the Arrangers, such New Lender and the other Lenders shall acquire the same rights and assume the same obligationsbetween themselves as they would have acquired and assumed had such New Lender been originally party hereto as a Lenderwith the rights and/or obligations acquired or assumed by it as a result of the transfer (the subject of such Transfer Certificate)and to that extent the Agent, the Arrangers and such other Lenders (on one hand) and such Existing Lender (on the other hand)shall each be released from further obligations to each other under this Agreement; and 74 (iv)such New Lender shall become a Party as a “Lender”. 22.6Procedure for assignment (a)Subject to the conditions set out in paragraph (d) below and Clause 22.2 (Conditions of assignment or transfer), an assignment by anExisting Lender of any or all of its rights under this Agreement to a New Lender may be effected on the Transfer Date in accordance withparagraph (b) below. The Agent shall, subject to paragraph (d)(ii), as soon as reasonably practicable after receipt by it of a dulycompleted Assignment Agreement appearing on its face to comply with the terms of this Agreement and delivered in accordance with theterms of this Agreement, execute that Assignment Agreement,, provided that the Agent shall have no obligation to execute anyAssignment Agreement at any time earlier than the date that is 5 Business Days after its receipt of such Assignment Agreement. (b)On the Transfer Date relating to an assignment by an Existing Lender to a New Lender: (i)such Existing Lender will assign absolutely to such New Lender the rights under the Finance Documents expressed to be thesubject of assignment in such Assignment Agreement; (ii)such Existing Lender will be released by the Borrower and the other Finance Parties from the obligations owed by it (the“Relevant Obligations”) and expressed to be the subject of release in such Assignment Agreement; and (iii)the New Lender shall become a Party as a “Lender” and shall be bound by obligations equivalent to the Relevant Obligations. (c)An Existing Lender may utilise procedures other than those set out in this Clause 22.6 to assign its rights under the Finance Documents(but not, without the consent of the Borrower or unless in accordance with Clause 22.5 (Procedure for transfer), to obtain a release by theBorrower from the obligations owed to the Borrower by that Existing Lender nor the assumption of equivalent obligations by theapplicable New Lender) provided that the conditions set out in paragraph (d) below are complied with. (d)An assignment by an Existing Lender to a New Lender (whether pursuant to an Assignment Agreement or paragraph (c) above) will onlybe effective on: (i)receipt by the Agent (whether in an Assignment Agreement or otherwise) of written confirmation from such New Lender (inform and substance satisfactory to the Agent) that such New Lender will assume the same obligations to the other FinanceParties as it would have been under if it were an Original Lender; and 75 (ii)performance by the Agent of all necessary “know your customer” or other similar checks under all applicable laws andregulations in relation to such assignment to such New Lender. The Agent shall promptly notify such Existing Lender and suchNew Lender of the completion of such checks. The Agent shall not be obliged to execute an Assignment Agreement deliveredto it by an Existing Lender and a New Lender or any document delivered to it pursuant to paragraph (c) above unless it issatisfied that it has completed all “know your customer” and other similar procedures that it is required (or deems desirable) toconduct in relation to such assignment to such New Lender. (e)The procedure set out in this Clause 22.6 shall not apply to any right or obligation under any Finance Document (other thanthis Agreement) if and to the extent its terms, or any laws or regulations applicable thereto, provide for or require a differentmeans of assignment of such right or release or assumption of obligation or prohibit or restrict any assignment of such right orrelease or assumption of such obligation, unless such prohibition or restriction shall not be applicable to the applicableassignment, release and assumption or each condition of any applicable assignment, release and assumption shall have beensatisfied. 22.7Copy of Transfer Certificate or Assignment Agreement to BorrowerThe Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate or an Assignment Agreement, send to the Borrower acopy of that Transfer Certificate or Assignment Agreement. 22.8Existing consents and waiversEach New Lender shall be bound by any consent, waiver, election or decision given or made by the applicable Existing Lender under or pursuant toany Finance Document prior to the coming into effect of the applicable assignment or transfer from such Existing Lender to such New Lender. 22.9Exclusion of the Agent’s liabilitiesIn relation to any assignment or transfer pursuant to this Clause 22, each Party acknowledges and agrees that the Agent shall not be obliged to: (a)enquire as to the accuracy of any representation or warranty made by, or the status of, any person in respect of its eligibility as a Lender; (b)attend to any registration or perfection requirements required in connection with such assignment or transfer or to ensure that suchregistration or perfection requirements are completed; and/or (c)provide any New Lender with any information regarding any previous amendments or waivers in relation to any Finance Document. 76 22.10Sub-participationFor the avoidance of doubt, each Lender may grant sub-participations in respect of any or all of its rights and/or obligations under any FinanceDocument to any person provided that the consent of the Borrower shall be required in respect of any such sub-participation except for: (a)any sub-participation where such Lender retains its voting rights under the Finance Documents (and is not required to exercise suchvoting rights at the discretion of any other person) (or retains such voting rights (and is not required to exercise such voting rights at thediscretion of any other person) except for voting rights in relation to items that would require all Lenders’ consent, approval orinstructions pursuant to the terms of the Finance Documents); (b)any sub-participation in favour of a Lender or an Affiliate of a Lender; (c)any sub-participation made at a time when an Event of Default is continuing.The consent of the Borrower under this Clause 22.10 must not be unreasonably withheld or delayed and the Borrower will be deemed to have givenits consent ten (10) Business Days after a Lender has requested it unless such consent is expressly refused by the Borrower in writing within thattime. 22.11Assignments and transfers to Group MembersA Lender may not assign or transfer any of its rights and/or obligations under any Finance Document to any Group Member or any Affiliate of anyGroup Member, except with the prior written consent of the Agent (acting on the instructions of the Majority Lenders), provided that in no eventshall any Lender assign or transfer any of its rights and/or obligations under any Finance Document to the Borrower. 22.12Security over Lenders’ rightsIn addition to the other rights provided to Lenders under this Clause 22, each Lender may without consulting with or obtaining consent from theBorrower, at any time charge, assign or otherwise create Security in or over (whether by way of collateral or otherwise) all or any of its rights underany Finance Document to secure obligations of that Lender including, without limitation: (a)any charge, assignment or other Security to secure obligations to a federal reserve or central bank; and (b)in the case of any Lender which is a fund, any charge, assignment or other Security granted to any holders (or trustee or representatives ofholders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities,except that no such charge, assignment or Security shall: (i)release such Lender from any of its obligations under the Finance Documents, or substitute the beneficiary of the relevantcharge, assignment or other Security for such Lender as a party to any of the Finance Documents; or 77 (ii)require any payments to be made by the Borrower or grant to any person any rights that are more extensive than those requiredto be made or granted to such Lender under the Finance Documents. 22.13No assignments or transfers by the BorrowerThe Borrower may not assign or transfer any or all of its rights or obligations under any or all of the Finance Documents. 23.DISCLOSURE OF INFORMATION 23.1ConfidentialityEach Finance Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clause23.2 (Disclosure of Confidential Information) and to ensure that all Confidential Information is protected with security measures and a degree ofcare that would apply to its own confidential information. 23.2Disclosure of Confidential InformationAny Finance Party may deliver copies of the Finance Documents and/or disclose any information (including Confidential Information) received byit under or pursuant to any Finance Document or any other information about the Borrower, the Group, and/or the Finance Documents as thatFinance Party shall consider appropriate (if, in relation to any of paragraphs (l)(i), (l)(ii) and (l)(iii) below, the person to whom any ConfidentialInformation is to be disclosed has entered into a Confidentiality Undertaking, except that there shall be no requirement for any ConfidentialityUndertaking if such recipient is subject to professional obligations to maintain the confidentiality of such Confidential Information) to: (a)any of its Affiliates and/or Related Funds; (b)any of its head office, branches and/or representative offices; (c)any other Finance Party; (d)any of the professional advisers of it or any person referred to in paragraphs (a) to (c) and/or any other person providing services to oragent or contractor of or any person referred to in paragraphs (a) to (c), including (provided that such professional adviser, personproviding services or agent or contractor is under a duty of confidentiality, contractual or otherwise, to such Finance Party or such personreferred to in paragraphs (a) to (c)); (e)the Borrower; (f)any person permitted (in writing) by the Borrower; 78 (g)any person to the extent required for the purpose of any litigation, arbitration or regulatory proceedings or procedure or in connectionwith any preservation or enforcement of any right or remedy under any Finance Document; (h)any person to whom, and to the extent that, information is requested or required to be disclosed by any applicable law or regulation orthe rules or requirements of any applicable court, tribunal, securities exchange or supervisory, governmental, quasi-governmental,regulatory or self-regulatory body or authority; (i)any employee or officer of any Finance Party or any person falling within any of paragraphs (a) to (d) (where such disclosure isreasonably required for the performance of the duties or functions of such employee or officer); (j)any rating agency, insurer or insurance broker of, or any direct or indirect provider of credit protection to, such Finance Party (or any ofits Affiliates, head office or other branch), provided that such person is informed of the confidential nature of such ConfidentialInformation; (k)any person to whom or for whose benefit that Finance Party charges, assigns or otherwise creates Security (or may do so) in or over all orany of its rights under any Finance Document pursuant to Clause 22.12 (Security over Lenders’ rights); or (l)any other person: (i)to (or through) whom that Finance Party assigns or transfers (or may potentially assign or transfer) all or any of its rights andobligations under any Finance Document; (ii)with (or through) whom that Finance Party enters into (or may potentially enter into) any sub-participation in relation to, or anyother transaction under which payments are to be made by reference to, the Facility, any Finance Document, the Borrower orany Group Member, or who invests directly or indirectly in any such sub- participation or other transaction; or (iii)who acquires or is proposing to acquire any interest in, or enters into or is proposing to enter into any merger, amalgamation orother similar arrangement with, that Finance Party.The Borrower further acknowledges and agrees that some services, operational and processing procedures relating to the transactions or servicescontemplated under the Finance Document may from time to time be outsourced by any Finance Party to its regional or global processing centres,branches, Subsidiaries, representative offices, Affiliates, agents of any Finance Party and third parties selected by any Finance Party, whereversituated, and these service providers may from time to time be given access to information and data relating to the transactions or servicescontemplated under the Finance Documents for the purpose of or in relation to the services and procedures they perform. This Clause 23 is not, andshall not be deemed to constitute, an express or implied agreement by a Finance Party for a higher degree of confidentiality than that prescribedunder any applicable law or regulation. 79 Notwithstanding any other provision in this Agreement or any other document, the Borrower acknowledges and agrees that each Finance Party (andeach employee, representative or other agent of each Finance Party) may each disclose to any and all persons, without limitation of any kind, theU.S. tax treatment and U.S. tax structure of the transactions contemplated under the Finance Documents and all materials of any kind (includingopinions or other tax analyses) that are provided to any of them relating to such U.S. tax treatment and U.S. tax structure, other than any informationfor which non-disclosure is necessary in order to comply with applicable securities laws.This Clause 23 supersedes any previous agreement between any of the Parties relation to the confidentiality of any such information or of anyFinance Document. 80 SECTION 9THE FINANCE PARTIES 24.ROLE OF THE AGENT AND THE ARRANGERS 24.1Appointment of the Agent (a)Each Finance Party (other than the Agent) appoints the Agent to act as its agent under and in connection with the Finance Documents. (b)Each Finance Party (other than the Agent) authorises the Agent to exercise the rights, powers, authorities and discretions specificallygiven to the Agent under or in connection with the Finance Documents together with any other incidental rights, powers, authorities anddiscretions. 24.2Duties of the Agent (a)Subject to paragraph (b) below, the Agent shall promptly forward to a party to any Finance Document the original or a copy of anydocument which is delivered to the Agent for that party by any other party to any Finance Document. (b)Without prejudice to Clause 22.7 (Copy of Transfer Certificate or Assignment Agreement to Borrower), paragraph (a) above shall notapply to any Assignment Agreement or any Transfer Certificate or any notice or confirmation under paragraph (d)(i) of Clause 22.6(Procedure for assignment). (c)Except where a Finance Document specifically provides otherwise, the Agent is not obliged to review or check the adequacy, accuracy orcompleteness of any document it forwards to any party to any Finance Document. (d)If the Agent receives notice from any party to any Finance Document referring to a Finance Document, describing a Default and statingthat the circumstance described is a Default, it shall promptly notify the other Finance Parties. (e)If the Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other thanany Administrative Party) under a Finance Document it shall promptly notify the other Finance Parties. (f)The Agent’s duties under the Finance Documents are solely mechanical and administrative in nature. The Agent shall have no otherduties, obligations and responsibilities save as expressly provided for in the Finance Documents to which it is a party (and no othersshall be implied). 24.3Role of the ArrangersExcept as specifically provided in the Finance Documents to which it is a party, none of the Arrangers shall have any obligations of any kind to anyother Party under or in connection with any Finance Document. 81 24.4No fiduciary duties (a)Nothing in this Agreement constitutes any Administrative Party as a trustee or fiduciary of any other person. (b)No Administrative Party shall be bound to account to any Lender for any sum or the profit element of any sum received by it for its ownaccount. 24.5Business with the Group (a)Each Administrative Party may accept deposits from, lend money to and generally engage in any kind of banking or other business withthe Borrower, any Group Member or any Affiliate of any of the foregoing. (b)Each of the Finance Parties hereby irrevocably waives, in favour of the Agent, any conflict of interest which may arise by virtue of theAgent acting in various capacities under the Finance Documents or for other customers of the Agent. Each of the Finance Partiesacknowledges that the Agent and its affiliates (together, the “Agent Parties”) may have interests in, or may be providing or may in thefuture provide financial or other services to other parties with interests which a Finance Party may regard as conflicting with its interestsand may possess information (whether or not material to the Finance Parties), other than as a result of the Agent acting as agent under theFinance Documents, that the Agent may not be entitled to share with any Finance Party. (c)The Agent will not disclose Confidential Information obtained from any Finance Party (without its consent) to any of the Agent’s othercustomers nor will it use on a Finance Party’s behalf any Confidential Information obtained from any other customer.Without prejudiceto the foregoing, each of the Finance Parties agrees that each of the Agent Parties may deal (whether for its own or its customers’ account)in, or advise on, securities of any party and that such dealing or giving of advice, will not constitute a conflict of interest for the purposesof the Finance Documents. 24.6Rights and discretions of the Agent (a)The Agent may rely on: (i)any representation, notice or document believed by it to be genuine, correct and appropriately authorised and shall have noduty to verify any signature on any document; and (ii)any statement purportedly made by a director, authorised signatory or employee of any person regarding any matters whichmay reasonably be assumed to be within his knowledge or within his power to verify. (b)The Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Finance Parties) that: (i)no Default has occurred (unless it has actual knowledge of a Default arising under Clause 21.1(Non-payment)); and 82 (ii)any right, power, authority or discretion vested in any party to any Finance Document, the Majority Lenders or the applicableLenders has not been exercised. (c)The Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts. (d)The Agent may act in relation to the Finance Documents through its personnel, agents and affiliates. The Agent shall not be liable for theacts or omissions of any such agents provided that it has acted in good faith in the selection of such agents. (e)The Agent may disclose to any other party to any Finance Document any information it reasonably believes it has received as agentunder any Finance Document. (f)Notwithstanding any other provision of any Finance Document to the contrary, neither the Agent nor any Finance Party is obliged to(i) do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any law or regulation or a breach of afiduciary duty or duty of confidentiality or (ii) disclose any information that is stated to be confidential. (g)The Agent is not obliged to disclose to any Finance Party any details of any rate notified to the Agent by any Lender for the purpose ofparagraph (a)(ii) of Clause 10.2 (Market disruption) or the identity of any such Lender. 24.7Majority Lenders’ instructions (a)Unless a contrary indication appears in a Finance Document, the Agent shall (i) exercise any right, power, authority or discretion vestedin it as Agent in accordance with any instructions given to it by the Majority Lenders (or, if so instructed by the Majority Lenders, refrainfrom exercising any right, power, authority or discretion vested in it as Agent) and (ii) not be liable for any act (or omission) if it acts (orrefrains from taking any action) in accordance with such an instruction of the Majority Lenders. (b)Unless a contrary indication appears in a Finance Document, any such instructions so given by the Majority Lenders will be binding onall of the Finance Parties. (c)The Agent may refrain from acting in accordance with the instructions of the Majority Lenders (or, if appropriate, the applicable Lenders)until it has received such security as it may require for any cost, loss or liability (together with any associated Indirect Tax) which it mayincur in complying with such instructions. (d)In the absence of instructions from the Majority Lenders, (or, if appropriate, the applicable Lenders) the Agent may act (or refrain fromtaking action) as it considers to be in the best interest of the Lenders, provided that (for the avoidance of doubt) the Agent shall not beunder any duty to take any action in the absence of such instructions. 83 (e)The Agent is not authorised to act on behalf of and in the name of a Finance Party (without first obtaining that Finance Party’s priorwritten consent) in any legal or arbitration proceedings relating to any Finance Document, provided that nothing herein shall prejudicethe ability of the Agent to bring, defend or conduct any proceedings in its capacity as Agent (in the name of the Agent). (f)For the purposes of determining: (i)Majority Lenders, Majority Facility A Lenders or Majority Facility B Lenders; or (ii)whether the consent, instruction or vote of (A) Lenders holding any applicable percentage (including, for the avoidance ofdoubt, unanimity) of the Total Commitments, the Commitments in respect of any or all of the Facilities and/or participations inrespect of any or all of the Loans or (B) any group of Lenders has been obtained in respect of any matter (including anyamendment or waiver relating to any Finance Document),a Lender may split its votes (as attributable to its Commitment(s) in respect of any or all of the Facilities and/or its participations inrespect of any or all of the Loans) in whatever percentages it may specify, and may exercise such votes in different ways (and shall forsuch purpose be construed as different Lenders holding such percentages of such Commitments in respect of such Facilities and/or suchpercentages of such participations in respect of such Loans as so specified by such Lender respectively, provided that the aggregate ofsuch percentages shall be equal to 100%). 24.8Responsibility for documentationNo Administrative Party: (a)is responsible for the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by anyAdministrative Party, the Borrower or any other person given in or in connection with any Finance Document, the InformationMemorandum or the transactions contemplated under any Finance Document; (b)is responsible for the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any other agreement,arrangement or document entered into, made or executed in anticipation of or in connection with any Finance Document; or (c)is responsible for any determination as to whether any information provided or to be provided to any Finance Party is non-publicinformation the use of which may be regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise. 84 24.9Exclusion of liability (a)Without limiting paragraph (b) below, the Agent will not be liable (including, without limitation, for negligence or any other category ofliability whatsoever) for any cost, loss or liability incurred by any Party as a consequence of: (i)the Agent having taken or having omitted to take any action under or in connection with any Finance Document, unlessdirectly caused by the Agent’s gross negligence or wilful misconduct (as determined in a final non-appealable judgment of acourt of competent jurisdiction); or (ii)any delay (or any related consequences) in crediting an account with an amount required under any of the Finance Documentsto be paid by the Agent if the Agent has taken all necessary steps as soon as reasonably practicable to comply with theregulations or operating procedures of any recognised clearing or settlement system used by the Agent for that purpose. (b)No Party (other than the Agent) may take any proceedings against any officer, employee or agent of the Agent in respect of any claim itmight have against the Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to anyFinance Document, and any officer, employee or agent of the Agent may rely on this Clause 24.9 subject to Clause 1.4 (Third partyrights) and the provisions of the Third Parties Act. (c)The Agent shall not be responsible for making, and shall not have any duty to make, any investigation in respect of or in any way beliable whatsoever for: (i)the nature, status, creditworthiness or solvency of the Borrower, any Group Member or any other person; (ii)the execution, legality, validity, adequacy (including without limitation adequacy of security, if any, relating to), admissibilityin evidence or enforceability of any Finance Document or any other document entered into in connection therewith; (iii)the scope, adequacy, accuracy or completeness of any representations, warranties or statements made by or on behalf of, or anyinformation (whether oral or written) supplied by or on behalf of, the Borrower, any Group Member, or any other person underor in connection with any Finance Document or any document entered into in connection therewith; (iv)the performance or observance by the Borrower or any other person with any provisions of any Finance Document or in anydocument entered into in connection therewith or the fulfilment or satisfaction of any conditions contained therein or relatingthereto or as to the existence or occurrence at any time of any default, event of default or similar event contained therein or anywaiver or consent which has at any time been granted in relation to any of the foregoing; 85 (v)the existence, accuracy or sufficiency of any legal or other opinions, searches, reports, certificates, valuations or investigationsdelivered or obtained or required to be delivered or obtained at any time in connection with any Finance Document; (vi)the compliance of the provisions and contents of and the manner and formalities applicable to the execution of any FinanceDocument and any documents connected therewith, and/or compliance of any such provisions, contents, manner and/orformalities with any applicable laws or regulations; (vii)the failure to call for delivery of documents of title to or require any transfers, legal mortgages, charges or other furtherassurances in relation to any of the assets the subject matter of any of the Finance Documents or any other document; or (viii)any other matter or thing relating to or in any way connected with any document entered into in connection therewith whetheror not similar to the foregoing. (d)The Agent shall not be responsible for any loss or damage, or any failure or delay in the performance of its obligations under any FinanceDocument if it is prevented from so performing its obligations by any reason which is beyond the control of the Agent, including, but notlimited to, any existing or future law or regulation, any existing or future act of governmental authority, Act of God, flood, war whetherdeclared or undeclared, terrorism, riot, rebellion, civil commotion, strike, lockout, other industrial action, general failure of electricity orother supply, aircraft collision, or technical failure of, accidental or mechanical or electrical breakdown of, or computer failure or otherfailure of, any money transmission system, or any event where, in the reasonable opinion of the Agent, performance of any duty orobligation under or pursuant to any Finance Document would or may be illegal or would result in the Agent being in breach of any law,rule, regulation, or any decree, order or judgment of any court, or practice, request, direction, notice, announcement or similar action(whether or not having the force of law) of any relevant government, government agency, regulatory authority, stock exchange or self-regulatory organisation to which the Agent is subject. (e)Notwithstanding any other term or provision of this Agreement to the contrary, the Agent shall not be liable under any circumstances forspecial, punitive, indirect or consequential loss or damage of any kind whatsoever, whether or not foreseeable, or for any loss of business,goodwill, opportunity or profit, whether arising directly or indirectly and whether or not foreseeable, even if the Agent is actually awareof or has been advised of the likelihood of such loss or damage and regardless of whether the claim for such loss or damage is made innegligence, for breach of contract, breach of trust, breach of fiduciary obligation or otherwise. For the avoidance of doubt, the provisionsof this Clause 24.9 shall survive any termination or expiry of this Agreement or any resignation or removal of the Agent. 86 (f)Nothing in this Agreement shall oblige any Administrative Party to carry out any “know your customer”, anti-money laundering or otherchecks in relation to any person on behalf of any Lender and each of the Lenders confirms to each Administrative Party that it is solelyresponsible for any such checks it is required to carry out and that it may not rely on any such checks made by, or any statement inrelation to such checks made by, any Administrative Party. 24.10Lenders’ indemnity to the Agent (a)Each Lender shall (in the proportion determined in accordance with paragraph (b) below) indemnify the Agent, within three BusinessDays of demand, against any cost, loss or liability (including, without limitation, for negligence or any other category of liabilitywhatsoever) incurred by the Agent (otherwise than by reason of the Agent’s gross negligence or wilful misconduct (as determined in afinal non-appealable judgment of a court of competent jurisdiction)) in acting as Agent under the Finance Documents (unless the Agenthas been reimbursed by the Borrower pursuant to a Finance Document in respect of the same cost, loss or liability). (b)Each Lender’s proportion of such cost, loss or liability shall be: (i)if there is any Loan then outstanding, the proportion borne by (A) such Lender’s aggregate participations in the Loan(s) thenoutstanding to (B) the aggregate amount of the Loans then outstanding; (ii)if no Loan is then outstanding and the Available Facility (in respect of any Facility) is then greater than zero, the proportionborne by (A) the aggregate of such Lender’s Available Commitments (for any or all Facilities) to (B) the aggregate of theAvailable Facility (in respect of each Facility); or (iii)if no Loan is then outstanding and the Available Facility (in respect of each Facility) is then zero: (A)if the time when the Available Facility (in respect of each Facility) became zero falls after the time when each Loanceased to be outstanding, the proportion borne by (A) the aggregate of such Lender’s Available Commitments (forany or all Facilities) immediately before the Available Facility (in respect of each Facility) became zero to (B) theaggregate of the Available Facility (in respect of each Facility) immediately before the Available Facility (in respectof each Facility) became zero, or (B)if the time when each Loan ceased to be outstanding falls upon or after the time when the Available Facility (inrespect of each Facility) became zero, the proportion borne by (A) the aggregate of such Lender’s participations inthe Loan(s) outstanding (immediately before the time when each Loan ceased to be outstanding) to (B) the aggregateamount of the Loans outstanding (immediately before the time when each Loan ceased to be outstanding). 87 24.11Resignation of the Agent (a)The Agent may resign and appoint one of its Affiliates as successor by giving notice to the Lenders and the Borrower. (b)Alternatively the Agent may resign by giving notice to the Lenders and the Borrower, in which case the Majority Lenders (afterconsultation with the Borrower) may appoint a successor Agent. (c)If the Majority Lenders have not appointed a successor Agent in accordance with paragraph (b) above within 30 days after the applicablenotice of resignation was given, the retiring Agent (after consultation with the Borrower) may appoint a successor Agent. (d)The retiring Agent shall make available to the successor Agent such documents and records and provide such assistance as the successorAgent may reasonably request for the purposes of performing its functions as Agent under the Finance Documents. (e)The Agent’s resignation notice shall only take effect upon the appointment of a successor to the Agent. (f)Upon the appointment of a successor Agent, the retiring Agent shall be discharged from any further obligation in respect of the FinanceDocuments (other than its obligations under paragraph (d) above) but shall remain entitled to the benefit of this Clause 24 (and anyagency fees for the account of such retiring Agent shall cease to accrue from such date and shall instead accrue in favour of suchsuccessor Agent). (g)The Majority Lenders may, by giving not less than 30 days’ notice to the Agent, require it to resign in accordance with paragraph(b) above. In this event, the Agent shall resign in accordance with paragraph (b) above but the cost of complying with paragraph(d) above shall be for the account of the Borrower. (h)In the event of any gross negligence or wilful misconduct on the part of the Agent in acting as Agent under the Finance Documents, theBorrower may request the Majority Lenders to consider in good faith to require the Agent to resign pursuant to paragraph (g) above. (i)Any successor Agent and each of the other Parties shall have the same rights and obligations among themselves as they would have hadhad such successor Agent been originally party hereto as the Agent. (j)Clauses 15 (Other Indemnities) and 16 (Costs and Expenses) shall survive and remain in full force and effect in favour of any Agent thathas resigned or been replaced. 88 24.12Confidentiality (a)In acting as agent for the Finance Parties, the Agent shall be regarded as acting through its agency division which shall be treated as aseparate entity from any other of its divisions or departments. (b)If information is received by another division or department of the Agent, it may be treated as confidential to that division or departmentand the Agent shall not be deemed to have notice of it. (c)The Agent shall not be obliged to disclose to any Finance Party any information supplied to it by the Borrower or any Affiliate of theBorrower on a confidential basis and for the purpose of evaluating whether any waiver or amendment is or may be required or desirablein relation to any Finance Document. 24.13Relationship with the Lenders (a)Subject to Clause 26.2 (Distributions by the Agent), the Agent may treat each person shown in the records of the Agent as a Lender at theopening of business (in the place of the Agent’s principal office as notified to the Finance Parties from time to time) as a Lender actingthrough its Facility Office: (i)entitled to or liable for an payment due under any Finance Document on that day as a Lender; and (ii)entitled to receive and act upon any notice, request, document or communication or make any decision or determination underany Finance Document made or delivered as a Lender on that day,unless it has received not less than five Business Days’ prior notice from that Lender to the contrary in accordance with the terms of thisAgreement. (b)Each Finance Party shall provide the Agent with such information that the Agent may reasonably specify as being necessary or desirableto enable the Agent to perform its functions as the Agent. (c)Any Lender may by notice to the Agent appoint a person to receive on its behalf all notices, communications, information anddocuments to be made or despatched to that Lender under the Finance Documents. Such notice shall contain the address, fax number and(where communication by electronic mail or other electronic means is permitted under Clause 28.5 (Electronic communication))electronic mail address and/or any other information required to enable the sending and receipt of information by that means (and, ineach case, the department or officer, if any, for whose attention communication is to be made) and be treated as a notification of asubstitute address, fax number, electronic mail address, department and officer by that Lender for the purposes of Clause 28.2 (Addresses)and paragraph (a)(iii) of Clause 28.5 (Electronic communication) and the Agent shall be entitled to treat such person as the personentitled to receive all such notices, communications, information and documents as though that person were that Lender. 89 24.14Credit appraisal by the LendersWithout affecting the responsibility of the Borrower for information supplied by it or on its behalf in connection with any Finance Document, eachof the Lenders confirms to each Administrative Party that it has been, and will continue to be, solely responsible for making its own independentappraisal and investigation of all risks arising under or in connection with any Finance Document including but not limited to: (a)the financial condition, status and nature of the Borrower, Group Members and their respective Affiliates; (b)the legality, validity, effectiveness, adequacy or enforceability of any Finance Document and/or any other agreement, arrangement ordocument entered into, made or executed in anticipation of, under or in connection with any Finance Document; (c)whether that Lender has recourse, and the nature and extent of that recourse, against any party to any Finance Document or any of itsrespective assets under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or anyother agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any FinanceDocument; and (d)the adequacy, accuracy and/or completeness of the Information Memorandum and/or any other information provided by the Agent, anyparty to any Finance Document or by any other person under or in connection with any Finance Document, the transactionscontemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed inanticipation of, under or in connection with any Finance Document. 24.15Deduction from amounts payable by the AgentIf any Party owes an amount to the Agent under any of the Finance Documents, the Agent may, after giving notice to such Party, deduct an amountnot exceeding that amount from any payment to such Party which the Agent would otherwise be obliged to make under the Finance Documents andapply the amount deducted in or towards satisfaction of that amount owed by such Party to the Agent. For the purposes of the Finance Documentssuch Party shall be regarded as having received any amount so deducted. 24.16Agent’s management timeAny amount payable to the Agent under Clause 15.3 (Indemnity to the Agent), Clause 16 (Costs and Expenses) and/or Clause 24.10 (Lenders’indemnity to the Agent) shall include the cost of utilising the Agent’s management time or other resources and will be calculated on the basis ofsuch reasonable daily or hourly rates as the Agent may notify to the Borrower and the Lenders, and shall be in addition to any fee paid or payable tothe Agent under Clause 11 (Fees). 90 24.17Money launderingUnless mandatorily required by applicable laws or regulations to which the Agent is subject, the Agent shall not be responsible to any Party forproviding any certification or documents with respect to any information (except for any information in respect of itself) required for any anti-money laundering due diligence purpose. Such certificates and related documents shall be provided directly by the Borrower provided that therequest for such information may be made through the Agent. 24.18LiabilityNone of the Finance Parties or their respective Affiliates, officers, directors or agents shall have any liability to the Borrower or any of itsSubsidiaries or be responsible to the Borrower or any of its Subsidiaries for (whether under contract, tort, any other theory of liability or otherwise)any special, indirect, consequential or punitive losses or damages incurred or suffered by the Borrower or any of its Subsidiaries under or inconnection with any Finance Document or any transaction contemplated thereby, whether or not such Finance Party shall have been advised of thelikelihood of such loss or damage, unless such loss or damage has been finally judicially determined to have primarily resulted from the wilfuldefault or gross negligence of such Finance Party or, as the case may be, such Affiliate, officer, director or agent; and the Borrower hereby waives,releases and agrees not to sue upon (for itself and on behalf of each of its Subsidiaries) any claim for any such loss or damage, whether or notaccrued and whether or not known or suspected to exist in its favour unless such loss or damage has been finally judicially determined to haveprimarily resulted from the wilful default or gross negligence of such Finance Party or, as the case may be, such Affiliate, officer, director or agent.Such Affiliates, officers, directors and agents may rely on this Clause 24.18 subject to Clause 1.4 (Third party rights) and the provisions of the ThirdParties Act. 25.SHARING AMONG THE FINANCE PARTIES 25.1Payments to Finance PartiesIf a Finance Party (a “Recovering Finance Party”) receives or recovers (whether by set-off or otherwise) any amount from or in respect of theBorrower, other than through the Agent and in accordance with Clause 26 (Payment Mechanics), (such amount being a “Recovered Amount”) andapplies that amount to a payment due under any of the Finance Documents then: (a)the Recovering Finance Party shall, within three Business Days, notify details of such receipt or recovery, to the Agent; (b)the Agent shall determine whether such receipt or recovery is in excess of the amount that the Recovering Finance Party would havebeen paid had such receipt or recovery been received or made by the Agent and distributed in accordance with Clause 26 (PaymentMechanics), without taking account of any Tax which would be imposed on the Agent in relation to such receipt, recovery ordistribution; and 91 (c)the Recovering Finance Party shall, within three Business Days of demand by the Agent, pay to the Agent an amount (the “SharingPayment”) equal to such receipt or recovery less any amount which the Agent determines may be retained by the Recovering FinanceParty as its share of any payment to be made (by reference to such receipt or recovery) in accordance with Clause 26.5 (Partial payments). 25.2Redistribution of paymentsThe Agent shall treat the Sharing Payment as if it had been paid by the Borrower and distribute it between the Finance Parties (other than theRecovering Finance Party) (the “Sharing Finance Parties”) in accordance with Clause 26.5 (Partial payments) towards the obligations owing tosuch Sharing Finance Parties. 25.3Recovering Finance Party’s rightsOn a distribution by the Agent under Clause 25.2 (Redistribution of payments), as between the Borrower and the Recovering Finance Party, anamount of such Recovered Amount equal to such Sharing Payment shall be treated as not having been paid by the Borrower (and the Borrower shallbe liable to the Recovering Finance Party for a debt equal to such Sharing Payment, which debt is immediately due and payable). 25.4Reversal of redistributionTo the extent that any part of such Recovered Amount received or recovered by a Recovering Finance Party (which Recovered Amount gives rise toany Sharing Payment) becomes repayable and is repaid by that Recovering Finance Party, then: (a)each Sharing Finance Party shall, upon request of the Agent, pay to the Agent for account of that Recovering Finance Party an amountequal to (i) the appropriate part of its share of such Sharing Payment (that is attributable to such Recovered Amount so repayable andrepaid by such Recovering Finance Party) together with (ii) an amount as is necessary to reimburse that Recovering Finance Party for itsproportion of any interest on such part of such Sharing Payment (or on such part of such Recovered Amount to which such SharingPayment is attributable) which that Recovering Finance Party is required to pay ((i) and (ii) being collectively the “RedistributedAmount”); and (b)as between the Borrower and each Sharing Finance Party, an amount equal to such Redistributed Amount shall be treated as not havingbeen paid by the Borrower (and the Borrower shall be liable to such Sharing Finance Party for a debt equal to such RedistributedAmount, which debt is immediately due and payable). 92 25.5Exceptions (a)This Clause 25 shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to thisClause, have a valid and enforceable claim against the Borrower. (b)A Recovering Finance Party is not obliged to share with any other Finance Party any amount which that Recovering Finance Party hasreceived or recovered as a result of taking legal or arbitration proceedings, if: (i)it notified that other Finance Party of those legal or arbitration proceedings; and (ii)that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon asreasonably practicable having received notice and did not take separate legal or arbitration proceedings. 93 SECTION 10ADMINISTRATION 26.PAYMENT MECHANICS 26.1Payments to the Agent (a)On each date on which the Borrower or a Lender is required to make a payment under a Finance Document, the Borrower or that Lender(as the case may be) shall make the same available to the Agent (unless a contrary indication appears in a Finance Document) for valueon the due date at the time and in such funds specified by the Agent as being customary at the time for settlement (in place of settlement)of transactions in the relevant currency in the place of payment. (b)Payment shall be made to such account in the principal financial centre of the country of the currency of such payment with such bank asthe Agent specifies. (c)The Agent shall not be liable to account for interest on money paid to it by or recovered from the Borrower. Monies held by the Agentneed not be segregated except as required by law. (d)Each payment of any amount made by the Borrower to the Agent in accordance with any Finance Document (including withoutlimitation paragraph (a) above) is made to the Agent for and on behalf of each Finance Party to whom such amount is owing. Thepayment of any such amount to the Agent shall not in any way affect or prejudice the separate and independent nature of the debt owingto each such Finance Party, which may be enforced individually by each such Finance Party in the event that all or part of such debtremains unpaid when due. 26.2Distributions by the Agent (a)Each payment received or recovered by the Agent under any Finance Documents for another Party shall, subject to Clause 26.3(Distributions to the Borrower), Clause 26.4 (Clawback), Clause 26.5 (Partial payments) and Clause 24.15 (Deduction from amountspayable by the Agent), be made available by the Agent as soon as practicable after receipt or recovery to the Party entitled to receivepayment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office as set out in the StandingPayment Instructions for such Lender), to such account as that Party may notify to the Agent by not less than five Business Days’ noticewith a bank in the principal financial centre of the country of the currency of such payment. (b)The Agent shall distribute payments received or recovered by it in relation to all or any part of a Loan to the applicable Lender(s)indicated in the records of the Agent as being so entitled on the applicable date, provided that the Agent is authorised to distributepayments to be made on the date on which any assignment or transfer becomes effective pursuant to Clause 22 (Changes to the Parties)to the applicable Lender(s) so entitled immediately before such assignment or transfer took place regardless of the period to which suchpayments relate. 94 (c)The Agent is not under any obligation to make payment to any Finance Party on account of any amount owing by the Borrower to suchFinance Party in the same currency as that in which such latter-mentioned amount is denominated. 26.3Distributions to the BorrowerThe Agent may (with the consent of the Borrower or in accordance with Clause 27 (Set-off)) apply any amount received by it for the Borrower in ortowards payment (on the date and in the currency and funds of receipt) of any amount due from the Borrower under any or all of the FinanceDocuments or in or towards purchase of any amount of any currency to be so applied. 26.4Clawback (a)Where a sum is to be paid to the Agent under the Finance Documents for another Party, the Agent is not obliged to pay that sum to thatother Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it hasactually received that sum. (b)To the extent that the Agent pays an amount to another Party and it proves to be the case that the Agent had not actually received thatamount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Agent shall on demandrefund the same to the Agent together with interest on that amount from the date of payment to the date of receipt by the Agent,calculated by the Agent to reflect its cost of funds. 26.5Partial payments (a)If the Agent receives or recovers an amount from or in respect of the Borrower under or in connection with any Finance Document whichamount is insufficient to, or is not applied to, discharge all the amounts then due and payable by the Borrower under the FinanceDocuments, such amount shall be applied towards the obligations of the Borrower under the Finance Documents in the following order: (i)first, in or towards payment pro rata of any unpaid fees, costs and expenses of, and other amounts owing to, any AdministrativeParty (in each case for its own account) under the Finance Documents; (ii)secondly, in or towards payment pro rata of any accrued interest, fee (other than as provided in paragraph (a)(i) above) orcommission due to any or all of the Finance Parties but unpaid under the Finance Documents; (iii)thirdly, in or towards payment pro rata of any principal due but unpaid under this Agreement; and (iv)fourthly, in or towards payment pro rata of any other sum due to any or all of the Finance Parties but unpaid under the FinanceDocuments. 95 (b)The Agent shall, if so directed by the Majority Lenders, vary the order set out in paragraphs (a)(ii) to (iv) above. (c)Paragraphs (a) and (b) above will override any appropriation made by the Borrower. 26.6No set-off by the BorrowerAll payments to be made by the Borrower under any or all of the Finance Documents shall be calculated and be made without (and free and clear ofany deduction for) set- off or counterclaim. 26.7Business Days (a)Any payment which is due to be made under a Finance Document on a day that is not a Business Day shall be made on the next BusinessDay. (b)During any extension of the due date for payment of any principal or Unpaid Sum pursuant to paragraph (a) above, interest is payable onsuch principal or Unpaid Sum at the rate applicable on the original due date. 26.8Currency of account (a)Subject to paragraphs (b) to (d) below, US dollar is the currency of account and payment for any sum from the Borrower under anyFinance Document. (b)Each payment of interest shall be made in the currency in which the sum in respect of which such interest is payable was denominatedwhen such interest accrued. (c)Each payment in respect of costs, expenses or Taxes shall be made in the currency in which such costs, expenses or Taxes are incurred. (d)Any amount expressed to be payable in a currency other than US dollar shall be paid in that other currency. 26.9Change of currency (a)Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of anycountry as the lawful currency of that country, then: (i)any reference in this Agreement to, and any obligations arising under this Agreement in, the currency of that country shall betranslated into, or paid in, the currency or currency unit of that country designated by the Agent (after consultation with theBorrower); and (ii)any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the centralbank for the conversion of that currency or currency unit into the other, rounded up or down by the Agent (acting reasonably). 96 (b)If a change in any currency of a country occurs, this Agreement will, to the extent the Agent (acting reasonably and after consultationwith the Borrower) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in theRelevant Interbank Market and otherwise to reflect the change in currency. 27.SET-OFFA Finance Party may set off any matured obligation due from the Borrower under any or all of the Finance Documents (to the extent beneficiallyowned by that Finance Party) against any matured obligation owed by that Finance Party to the Borrower, regardless of the place of payment,booking branch or currency of either obligation. If such obligations are in different currencies, that Finance Party may convert either obligation at amarket rate of exchange in its usual course of business for the purpose of such set-off. 28.NOTICES 28.1Communications in writingAny communication to be made by a Party to another Party under or in connection with the Finance Documents shall be made in writing and, unlessotherwise stated, may be made by fax or letter, provided that no such communication to be made by a Party to the Borrower shall be made by faxunless the Borrower consents otherwise (and provides its fax number for such purpose). 28.2AddressesThe address and (other than in the case of the Borrower) fax number (and the department or officer, if any, for whose attention the communication isto be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents is: (a)in the case of the Borrower, that identified with its name below; (b)in the case of any Lender, that notified in writing to the Agent on or prior to the date on which it becomes a Party; (c)in the case of the Agent, that identified with its name below; and (d)in the case of an Arranger, that identified with its name below,or any substitute address or fax number or department or officer as that Party may notify to the Agent (or the Agent may notify to the other Parties, ifa change is made by the Agent) by not less than five Business Days’ notice. 28.3Delivery (a)Any communication or document made or delivered by one Party to another Party under or in connection with any Finance Documentswill be effective: (i)if by way of fax, only when received in legible form; or 97 (ii)if by way of letter, only when it has been left at the relevant address or five Business Days after being deposited in the postpostage prepaid in an envelope addressed to it at that address,and, if a particular department or officer is specified as part of its address details provided under Clause 28.2 (Addresses), if addressed tothat department or officer. (b)Any communication or document to be made or delivered to the Agent under or in connection with any Finance Document will beeffective only when actually received by the Agent and then only if it is expressly marked for the attention of the department or officeridentified with the Agent’s signature below (or any substitute department or officer as the Agent shall specify for this purpose). (c)All notices from or to the Borrower under or in connection with any Finance Document shall be sent through the Agent. 28.4Notification of address and fax numberPromptly upon changing its own address or fax number, the Agent shall notify the other Parties. 28.5Electronic communication (a)Any communication to be made between any two Parties under or in connection with any Finance Document may be made by electronicmail or other electronic means, if those two Parties: (i)agree that, unless and until notified to the contrary, this is to be an accepted form of communication; (ii)notify each other in writing of their electronic mail address and/or any other information required to enable the sending andreceipt of information by that means; and (iii)notify (by not less than five Business Days’ notice) each other of any change to their address or any other such informationsupplied by them. (b)Any electronic communication made between any two Parties under or in connection with a Finance Document will be effective onlywhen actually received in readable form and in the case of any electronic communication made by a Party to the Agent only if it isaddressed in such a manner as the Agent shall specify for this purpose. (c)Each Party acknowledges and agrees that any electronic communication made by the Agent shall be in non-encrypted form unless, inrelation to any such communication to a Lender: (i)prior written notice has been given by such Lender to the Agent that electronic communication to be received by it shall be inencrypted form; and 98 (ii)the encryption tool to be used has been agreed between such Lender and the Agent. (d)Any electronic communication which becomes effective in accordance with this Clause 28.5 after 5.00 p.m. in the place of receipt shallbe deemed only to become effective on the following day. (e)The Borrower agrees and acknowledges that electronic means of communication may not be secure or virus or error free and could beintercepted, corrupted, lost, destroyed or arrive late, and none of the Finance Parties or their Affiliates will be liable to the Borrower forany of such occurrences. Each Finance Party may monitor, record and retain communications between such Finance Party and any otherParty or the Borrower. 28.6Deal Site (a)All notices, requests, consents, approvals, agreements or other communications by the Agent under or in respect of the FinanceDocuments may be given by publication on the Deal Site. Such communication shall include notices for notification for Lenders’participation in the Loan and for rates of interest. (b)Any communication posted on the Deal Site will be effective on the earlier of (i) one Business Day after such communication is postedon the Deal Site and (ii) receipt by the Agent of acknowledgement from the Deal Site that such communication has been posted and (inrespect of notices, requests, consents, approvals, agreements or other communications by the Agent to the Borrower) the Borrower hasbeen notified of such posting. (c)The Borrower consents to the inclusion of its logo (if applicable) on the Deal Site. (d)Subject to Clause 23 (Disclosure of Information) and paragraph (e) below, the Agent will promptly on request provide access to the DealSite to one or more representatives of the other Parties. (e)Electronic mail contact details of a Party may be for individuals or “group” addresses of that Party. However in either case, each Partymust ensure that all persons to whom it gives access can properly receive the information available on the Deal Site, including underClause 23 (Disclosure of Information). (f)If the Deal Site is not available for any reason, promptly following this being brought to its attention, the Agent will providecommunications to the Parties by another means of communications contemplated by this Clause 28. A Party shall notify the Agentpromptly if it becomes aware that it is unable to access the Deal Site but shall be under no obligation to monitor access to the Deal Site. 99 (g)Each of the other Parties agrees that the Agent is not liable for any liability, loss, damage, costs or expenses incurred or suffered by it as aresult of its access or use of the Deal Site or inability to access or use the Deal Site, other than in the case of the gross negligence or wilfulmisconduct of the Agent as determined pursuant to a final non-appealable judgment of a court of competent jurisdiction. (h)The Agent may terminate the Deal Site after the earlier of (i) the Final Maturity Date and (ii) prepayment or cancellation in full of each ofthe Facilities, unless instructed otherwise by the Majority Lenders. 28.7English language (a)Any notice given under or in connection with any Finance Document must be in English. (b)All other documents provided under or in connection with any Finance Document must be: (i)in English; or (ii)if not in English, and if so required by the Agent, accompanied by a certified English translation and, in this case, the Englishtranslation will prevail unless the document is a constitutional, statutory or other official document. 29.CALCULATIONS AND CERTIFICATES 29.1AccountsIn any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained bya Finance Party are prima facie evidence of the matters to which they relate. 29.2Certificates and determinationsAny certification or determination by a Finance Party of a rate or amount under any Finance Document is, in the absence of manifest error,conclusive evidence of the matters to which it relates. 29.3Day count conventionAny interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual numberof days elapsed and a year of 360 days or, in any case where the practice in the Relevant Interbank Market differs, in accordance with that marketpractice. 30.PARTIAL INVALIDITYIf, at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any respect under any law of anyjurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provisionunder the law of any other jurisdiction will in any way be affected or impaired. 100 31.REMEDIES AND WAIVERSNo failure to exercise, nor any delay in exercising, on the part of any Finance Party, any right or remedy under the Finance Documents shall operateas a waiver or constitute an election to affirm any Finance Document. No election by a Finance Party to affirm any Finance Document shall beeffective unless it is in writing. No single or partial exercise of any right or remedy by any Finance Party shall prevent any further or other exerciseor the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights orremedies provided by law. 32.AMENDMENTS AND WAIVERS 32.1Required consents (a)Subject to Clause 32.2 (Exceptions) any term of any Finance Document may be amended or waived only in writing and with the consentof the Majority Lenders and the Borrower. Any such amendment or waiver so made with such consent will be binding on all Parties. (b)The Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause. 32.2Exceptions (a)An amendment or waiver that has the effect of changing or which relates to: (i)the definition of “Majority Facility A Lenders”, “Majority Facility B Lenders”, “Majority Lenders” or “Super MajorityLenders” in Clause 1.1 (Definitions); (ii)an extension to the date of payment of any amount under the Finance Documents; (iii)a reduction in the Margin or a reduction in the amount of, or any change in the currency of, any payment of principal, interest,fees or commission payable; (iv)an increase in, or any change in the currency of, any Commitment in respect of any Facility; (v)an extension of the period of availability for utilisation of any Commitment in respect of any Facility (or any commitmentrepresented thereby); (vi)any provision which expressly requires the consent of all the Lenders; (vii)a change to the Borrower; or 101 (viii)Clause 2.2 (Finance Parties’ rights and obligations) and Clause 22 (Changes to the Parties),shall not be made without the prior consent of all the Lenders. (b)An amendment or waiver that has the effect of changing or which relates to any shorter period as the Majority Facility A Lenders or, asthe case may be the Majority Facility B Lenders may agree as contemplated in Clause 7.2 (Voluntary cancellation), Clause 7.3(Voluntary prepayment of Facility A Loans) and/or Clause 7.4 (Voluntary prepayment of Facility B Loans) shall not be made without theagreement of the Majority Facility A Lenders or, as the case may be, the Majority Facility B Lenders. (c)An amendment or waiver which relates to the rights or obligations of an Administrative Party may not be effected without the consent ofthat Administrative Party. (d)In relation to any consent, waiver, amendment or other matter that requires the instructions of the Majority Facility A Lenders, theMajority Facility B Lenders or the Majority Lenders (excluding, in each case, any matter that requires the consent or instructions of all ofthe Lenders), if a Lender fails to respond to any request for such consent, waiver or amendment or instructions on such other matterwithin 20 Business Days (unless the Borrower and the Agent shall have agreed to a longer period of time in relation to such request), thenthe Commitment of such Lender (in respect of each Facility) and participation of such Lender in each Loan shall not be included andshall be deemed to be zero for the purposes of calculating the Commitments of the Lenders (in respect of any Facility), the Loan(s) andthe respective participations of the Lenders in the Loan(s) for the purposes (but only for the purposes of) of ascertaining whether theinstructions of the Majority Facility A Lenders, the Majority Facility B Lenders or, as the case may be, the Majority Lenders have beenobtained in respect of such consent, waiver, amendment or other matter. 33.RESTRICTIONS ON DEBT PURCHASE TRANSACTIONS 33.1Prohibition on Debt Purchase TransactionsThe Borrower shall not, and the Borrower shall procure that (except with the prior written consent of the Agent (acting on the instructions of theMajority Lenders)) no Group Member or any Affiliate of any Group Member shall, (a) enter into any Debt Purchase Transaction or (b) be or becomean Affiliate of (i) a Lender or (ii) a party to a Debt Purchase Transaction of the type referred to in any of paragraphs (b) or (c) of the definition of“Debt Purchase Transaction”. 33.2Notification to other Lenders of Debt Purchase TransactionsWithout prejudice to Clause 33.1 (Prohibition on Debt Purchase Transactions) and Clause 22.11 (Assignments and transfers to Group Members),any Group Member or any Affiliate of any Group Member which is or becomes a Lender or which enters into a Debt Purchase Transaction as apurchaser, an acquiror or a participant (or similar capacity) shall, by 5.00 pm on the Business Day following the day on which it entered into thatDebt Purchase Transaction, notify the Agent of the extent of the Commitment(s) (in respect of any or all of the Facilities) (or any commitmentrepresented thereby), any Loan or any amount(s) outstanding to which that Debt Purchase Transaction relates. The Agent shall promptly disclosesuch information to the Lenders. 102 34.COUNTERPARTSThis Agreement may be executed in any number of counterparts, and this has the same effect as if the signatures on such counterparts were on asingle copy of this Agreement. 35.U.S.A. PATRIOT ACTEach Lender hereby notifies the Borrower that pursuant to the requirements of the U.S.A. Patriot Act, such Lender is required to obtain, verify andrecord information that identifies the Borrower, which information includes the name and address of the Borrower and other information that willallow such Lender to identify the Borrower in accordance with the U.S.A. Patriot Act. 103 SECTION 11GOVERNING LAW AND ENFORCEMENT 36.GOVERNING LAWThis Agreement and all non-contractual obligations arising from or in connection with this Agreement shall be governed by and construed inaccordance with English law. 37.ENFORCEMENT 37.1Jurisdiction of English Courts (a)The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including adispute regarding the existence, validity or termination of this Agreement) (a “Dispute”). (b)The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Partywill argue to the contrary. (c)This Clause 37.1 is for the benefit of the Finance Parties only. As a result, no Finance Party shall be prevented from taking proceedingsrelating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Finance Parties may take concurrentproceedings in any number of jurisdictions. 37.2Service of processWithout prejudice to any other mode of service allowed under any relevant law, the Borrower: (a)irrevocably appoints Law Debenture Corporate Services Limited as its agent for service of process in relation to any proceedings beforethe English courts in connection with any Finance Document; and (b)agrees that failure by a process agent to notify the Borrower of any process will not invalidate the proceedings concerned. 37.3Waiver of ImmunityThe Borrower irrevocably waives, to the extent permitted by applicable law, with respect to itself and its revenues and assets (irrespective of theiruse or intended use), all immunity on the grounds of sovereignty or other similar grounds from: (a)suit; (b)jurisdiction of any court; (c)relief by way of injunction or order for specific performance or recovery of property; (d)attachment of its assets (whether before or after judgment); and 104 (e)execution or enforcement of any judgment to which it or its revenues or assets might otherwise be entitled in any proceedings in thecourts of any jurisdiction (and irrevocably agrees, to the extent permitted by applicable law, that it will not claim any immunity in anysuch proceedings). 38.WAIVER OF JURY TRIALEACH OF THE PARTIES TO THIS AGREEMENT AGREES TO WAIVE IRREVOCABLY ITS RIGHTS TO A JURY TRIAL OF ANYCLAIM BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE DOCUMENTS REFERRED TO IN THISAGREEMENT OR ANY TRANSACTION CONTEMPLATED IN THIS AGREEMENT. THIS WAIVER IS INTENDED TO APPLY TO ALLDISPUTES. EACH PARTY ACKNOWLEDGES THAT (A) THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THISAGREEMENT, (B) IT HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND (C) IT WILLCONTINUE TO RELY ON THIS WAIVER IN FUTURE DEALINGS. EACH PARTY REPRESENTS THAT IT HAS REVIEWED THISWAIVER WITH ITS LEGAL ADVISERS AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS AFTERCONSULTATION WITH ITS LEGAL ADVISERS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS AWRITTEN CONSENT TO A TRIAL BY THE COURT.THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement. 105 SCHEDULE 1THE ORIGINAL LENDERS Name of Original Lender Facility ACommitment (US$) Facility BCommitment (US$) Bank of Communications Co., Ltd. (acting through its Offshore Banking Unit) 100,000,000 100,000,000 Bank of China Limited, Los Angeles Branch 80,000,000 80,000,000 Citibank N.A., Hong Kong Branch 50,000,000 50,000,000 DBS Bank Ltd., Hong Kong Branch 50,000,000 50,000,000 Deutsche Bank AG, Singapore Branch 50,000,000 50,000,000 The Hongkong and Shanghai Banking Corporation Limited 50,000,000 50,000,000 Nanyang Commercial Bank, Limited 50,000,000 50,000,000 Australia and New Zealand Banking Group Limited 40,000,000 40,000,000 Bank of America, N.A. 40,000,000 40,000,000 Bank of China (Hong Kong) Limited 40,000,000 40,000,000 Bank of China Limited Macau Branch 40,000,000 40,000,000 BNP Paribas, acting through its Hong Kong branch 40,000,000 40,000,000 China Construction Bank (Asia) Corporation Limited 40,000,000 40,000,000 Hang Seng Bank Limited 40,000,000 40,000,000 Industrial and Commercial Bank of China (Asia) Limited 40,000,000 40,000,000 JPMorgan Chase Bank, N.A., Hong Kong Branch 40,000,000 40,000,000 Mizuho Bank, Ltd., Hong Kong Branch 40,000,000 40,000,000 Standard Chartered Bank (Hong Kong) Limited 40,000,000 40,000,000 Wing Lung Bank, Limited 40,000,000 40,000,000 106 Name of Original Lender Facility ACommitment (US$) Facility BCommitment (US$) Cathay United Bank Company Limited, Hong Kong Branch 25,000,000 25,000,000 China Merchants Bank Co., Ltd. 25,000,000 25,000,000 Mega International Commercial Bank Co., Ltd. 25,000,000 25,000,000 KGI Bank 15,000,000 15,000,000 Total: 1,000,000,000 1,000,000,000 107 SCHEDULE 2CONDITIONS PRECEDENT 1.The Borrower (a)A certified copy of the constitutional documents of the Borrower together with its statutory registers (including its register of directorsand its register of mortgages and charges) and an up-to-date certificate of good standing issued by the Registrar of Companies of theCayman Islands. (b)A certified copy of a resolution of the board of directors of the Borrower: (i)approving the terms of, and the transactions contemplated by, the Finance Documents and resolving that it execute the FinanceDocuments; (ii)authorising a specified person or persons to execute the Finance Documents on its behalf; and (iii)authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices (including anyUtilisation Request and any Selection Notice) to be signed and/or despatched by it under or in connection with the FinanceDocuments. (c)Specimen signatures of one or more persons authorised by any resolution referred to in paragraph (b) above, provided that in the eventthat the specimen signature of any person so authorised is not provided, such person shall not be an authorised signatory for the purposesof this Agreement. (d)A certificate from the Borrower (signed by a director thereof) confirming that borrowing the Total Commitments would not cause anyborrowing or similar limit binding on it to be exceeded. (e)A certificate of the Borrower (signed by a director thereof) certifying that each copy document specified in this Schedule 2 is correct,complete and in full force and effect as at a date no earlier than the date of this Agreement. 2.Legal opinions (a)A legal opinion in relation to English law from Clifford Chance, legal advisers to the Original MLABs as to English law. (b)A legal opinion in relation to Cayman Islands law from Mourant Ozannes, legal advisers to the Original MLABs as to the laws of theCayman Islands. 3.Finance DocumentsEach of the following Finance Documents duly executed by the parties thereto: (a)this Agreement; and (b)each Fee Letter. 108 4.Other documents and evidence (a)Evidence that any process agent referred to in Clause 37.2 (Service of process) has accepted its appointment. (b)A copy of any other Authorisation or other document, opinion or assurance which the Agent reasonably considers to be necessary ordesirable (if it has notified the Borrower accordingly) in connection with the entry into and performance of the transactions contemplatedby any Finance Document or for the validity and enforceability of any Finance Document. (c)The Original Financial Statements. (d)The list of Material Subsidiaries. (e)Evidence that the fees, costs and expenses then due from the Borrower pursuant to Clause 11 (Fees) and/or Clause 16 (Costs andExpenses) have been paid or will be paid by the Initial Utilisation Date. (f)All other documents and evidence as reasonably requested by any Finance Party which are required to enable it to conduct any “knowyour customer” or anti-money laundering or other procedures under applicable laws and regulations. 109 SCHEDULE 3REQUESTSPART IFORM OF UTILISATION REQUEST From:Baidu, Inc. To:[ ] as AgentDated:Dear SirsFacilities agreement dated [ ] 2016 between, among others, Baidu, Inc. as borrower, [ ], [ ], [ ] and [ ] as original mandated leadarrangers and bookrunners and [ ] as agent (as amended from time to time, the “Facilities Agreement”) 1.We refer to the Facilities Agreement. This is a Utilisation Request. Terms defined in or construed for the purposes of the Facilities Agreement shall havethe same meaning in this Utilisation Request. 2.We wish to borrow a Loan on the following terms: Facility under which such Loan is to be made: [Facility A][Facility B]Proposed Utilisation Date: [ ] (or, if that is not a Business Day, the next Business Day)Amount of such Loan: US$[ ] or, if less, the Available Facility in respect of the above-mentioned FacilityFirst Interest Period relating to such Loan: (subject to the provisions of the Facilities Agreement) [ ] 3.We confirm that each condition specified in Clause 4.2 (Further conditions precedent) of the Facilities Agreement is satisfied on the date of thisUtilisation Request. 4.[The proceeds of such Loan should be credited to [account].][or][This Loan is a Rollover Loan and is to be made for the purpose of refinancing in whole or in party the following Facility B Loan(s) maturing on theproposed Utilisation Date: [insert relevant details].] 5.This Utilisation Request is irrevocable.Yours faithfullyauthorised signatory forBaiduInc 110 PART IIFORM OF SELECTION NOTICE From:Baidu, Inc. To:[ ] as AgentDated:Dear SirsFacilities agreement dated [ ] between, among others, Baidu, Inc. as borrower, [ ], [ ], [ ] and [ ] as original mandated leadarrangers and bookrunners and [ ] as agent (as amended from time to time, the “Facilities Agreement”) 1.We refer to the Facilities Agreement. This is a Selection Notice. Terms defined in or construed for the purposes of the Facilities Agreement shallhave the same meaning in this Selection Notice. 2.We refer to the following Facility A Loan[s] with an Interest Period ending on [ ]:[ ]* 3.We request that the next Interest Period for the above Facility A Loan[s] be [ ]. 4.This Selection Notice is irrevocable.Yours faithfully authorised signatory forBaidu, Inc. *Insert details of all Facility A Loans which have an Interest Period ending on the same date. 111 SCHEDULE 4FORM OF TRANSFER CERTIFICATE To:[ ] as Agent From:[name of the Existing Lender] (the “Existing Lender”) and [name of the New Lender] (the “New Lender”)Dated:Facilities agreement dated [ ] between, among others, Baidu, Inc. as borrower, [ ], [ ], [ ] and [ ] as original mandatedlead arrangers and bookrunners and [ ] as agent (as amended from time to time, the “Facilities Agreement”) 1.We refer to the Facilities Agreement. This is a Transfer Certificate. Unless otherwise defined herein, terms defined in or construed for the purposes ofthe Facilities Agreement shall have the same meaning in this Transfer Certificate. 2.We refer to Clause 22.5 (Procedure for transfer) of the Facilities Agreement: (a)The Existing Lender and the New Lender agree to the Existing Lender transferring to the New Lender by novation, in accordance withClause 22.5 (Procedure for transfer) of the Facilities Agreement, all or part of the Existing Lender’s Commitment(s) in respect of theapplicable Facility or Facilities specified in the Schedule hereto and all or part of the Existing Lender’s participation(s) in the applicableLoan(s) specified in the Schedule hereto, in each case together with related rights and obligations under the Facilities Agreement. (b)The Existing Lender hereby assigns to the New Lender, with effect from the Transfer Date, a portion of the rights held by it (in itscapacity as Lender) under or in connection with the Finance Documents (other than the Facilities Agreement) which corresponds with therights and obligations under the Facilities Agreement transferred pursuant hereto. (c)The proposed Transfer Date is [ ]. (d)The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause 28.2(Addresses) of the Facilities Agreement and the Standing Payment Instructions of the New Lender are set out in the Schedule hereto. 3.The New Lender expressly acknowledges: (a)the limitations on the Existing Lender’s obligations set out in paragraphs (a) and (c) of Clause 22.4 (Limitation of responsibility ofExisting Lenders) of the Facilities Agreement; and (b)that it is the responsibility of the New Lender to ascertain whether any document is required or any formality or other condition requiresto be satisfied to effect or perfect the transfer contemplated by this Transfer Certificate or otherwise to enable the New Lender to enjoythe full benefit of each Finance Document. 112 4.The New Lender confirms that it is a “New Lender” within the meaning of Clause 22.1 (Assignments and transfers by the Lenders) of the FacilitiesAgreement. 5.The New Lender confirms that the New Lender [is]/[is not]* a Group Member or an Affiliate of any Group Member. 6.This Transfer Certificate may be executed in any number of counterparts and this has the same effect as if the signatures on such counterparts wereon a single copy of this Transfer Certificate. 7.This Transfer Certificate and any non-contractual obligations arising out of or in connection with it are governed by English law. 8.This Transfer Certificate has been entered into by the Existing Lender and the New Lender on the date stated at the beginning of this TransferCertificate. *Delete as appropriate. Any transfer of by the Existing Lender to the New Lender that is a Group Member or an Affiliate of any Group Member is subject toClause 33 (Restrictions on Debt Purchase Transactions) and Clause 22.11 (Assignments and transfers to Group Members). 113 THE SCHEDULECommitment(s)/participation(s) in Loan(s) to be transferred, and other particularsCommitment(s) in respect of Facility [ ]/participation(s) in Loan(s) under Facility [ ] transferred Commitment in respect of such Facility transferred: [ ]of which the Available Commitmentin respect of such Facility transferred: [ ]Participation(s) in outstanding Loan(s) under such Facility transferred [ ]Administration particulars: New Lender’s receiving account: [ ]Address: [ ]Telephone: [ ]Facsimile: [ ]Attn/Ref: [ ]Standing Payment Instructions: [ ] [name of Existing Lender] [name of New Lender]By: By: This Transfer Certificate is accepted by the Agent and the Transfer Date is confirmed as [ ].[ ] as Agent By: Date: 114 SCHEDULE 5FORM OF COMPLIANCE CERTIFICATE To:[ ] as Agent From:Baidu, Inc.Dated:Dear SirsFacilities agreement dated [ ] between, among others, Baidu, Inc. as borrower, [ ], [ ], [ ] and [ ] as original mandatedlead arrangers and bookrunners and [ ] as agent (as amended from time to time, the “Facilities Agreement”)We refer to the Facilities Agreement. This is a Compliance Certificate. Terms used in or construed for the purposes of the Facilities Agreement shall have thesame meaning in this Compliance Certificate.We confirm that: 1.[the financial statements of the Borrower for the Financial Year ending on 31 December [ ] (the “Test Date”) delivered by the Borrower pursuantto the Facilities Agreement give a true and fair view of the consolidated financial condition and operations of the Borrower as at the end of andduring such Financial Year;]#[the financial statements of the Borrower for the Financial Quarter ending on 30 June [ ] (the “Test Date”) (and the financial statements of theBorrower for each of the three immediately preceding Financial Quarters) delivered by the Borrower pursuant to the Facilities Agreement fairlyrepresent the consolidated financial condition and operations of the Borrower as at the end of and during each such Financial Quarter (to suchwhich financial statements relate);]## 2.as at the last day of the Relevant Period ending on the Test Date, Consolidated Total Borrowings was [ ] and, in respect of such RelevantPeriod, Consolidated EBITDA was [ ]. Therefore Leverage in respect of such Relevant Period was [ ]:1.00 and the financial covenant setout in paragraph (a) of Clause 19.2 (Financial condition) of the Facilities Agreement [has/has not] been complied with; 3.in respect of such Relevant Period, Consolidated Net Finance Charges was [ ]. Therefore Interest Cover in respect of such Relevant Period was[ ]:1.00 and the financial covenant set out in paragraph (b) of Clause 19.2 (Financial condition) of the Facilities Agreement [has/has not]been complied with; and # Use this option for the audited consolidated financial statements of the Borrower in respect of any Financial Year.## Use this option for the unaudited consolidated financial statements of the Borrower in respect of any Financial Quarter ending 30 June. 115 4.the following companies constitute Material Subsidiaries for the purposes of the Facilities Agreement: [ ].Computations in respect of paragraphs 2 and 3 above are attached to this Compliance Certificate.[We confirm that no Default is continuing.]* Signed: Authorised signatory of Baidu, Inc. *If this statement cannot be made, the certificate should identify any Default that is continuing and the steps, if any, being taken to remedy it. 116 SCHEDULE 6TIMETABLES Delivery of a duly completed Utilisation Request (Clause 5.1 (Delivery of aUtilisation Request)) or a Selection Notice (Clause 9.1 (Selection of InterestPeriods)) U - 3 Business DaysAgent notifies the Lenders of the applicable Loan in accordance with Clause5.4 (Lenders’ participation) U - 2 Business DaysLIBOR is fixed Quotation Day as of 11:00 a.m. (London time)Where:U = the applicable Utilisation Date or the first day of the applicable Interest Period (as the case may be)U – X Business Days = the day falling X Business Days prior to U 117 SCHEDULE 7STANDING PAYMENT INSTRUCTIONS Bank of Communications Co., Ltd. (acting through its Offshore Banking Unit)Correspondent Bank Name: JPMorgan Chase Bank, N.A.Correspondent Bank SWIFT Address: Beneficiary Bank Account Name: Beneficiary Bank Account Number: Beneficiary Bank SWIFT Address: Final Beneficiary Bank Account Name: N/AFinal Beneficiary Bank Account Number: N/AAttention: Baidu SyndicationBank of China Limited, Los Angeles Branch Correspondent Bank Name: Bank of China Limited, New York BranchCorrespondent Bank SWIFT Address: A.B.A Number: CHIP UID: Beneficiary Bank Account Name: Beneficiary Bank Account Number: Beneficiary Bank SWIFT Address: Final Beneficiary Bank Account Name: N/AFinal Beneficiary Bank Account Number: N/AAttention: OSD, Elaine HoReference: Baidu Inc. in favor of Bank of China, Los Angeles Branch 118 Citibank N.A., Hong Kong Branch Correspondent Bank Name: Citibank, N.A., New York BranchCorrespondent Bank SWIFT Address: Beneficiary Bank Account Name: Beneficiary Bank Account Number: Beneficiary Bank SWIFT Address: Final Beneficiary Bank Account Name: N/AFinal Beneficiary Bank Account Number: N/AAttention: Regional Loans AgencyDBS Bank Ltd., Hong Kong Branch Correspondent Bank Name: Bank of New York, NYCorrespondent Bank SWIFT Address: Beneficiary Bank Account Name: Beneficiary Bank Account Number: Beneficiary Bank SWIFT Address: Final Beneficiary Bank Account Name: N/AFinal Beneficiary Bank Account Number: N/AAttention: HK Branch Operations – Loan Ops (Baidu, Inc.)Deutsche Bank AG, Singapore Branch Correspondent Bank Name: Deutsche Bank Trust Company Americas, New YorkCorrespondent Bank SWIFT Address: Beneficiary Bank Account Name: Beneficiary Bank Account Number: Beneficiary Bank SWIFT Address: Final Beneficiary Bank Account Name: N/AFinal Beneficiary Bank Account Number: N/AAttention: Loanops 119 The Hongkong and Shanghai Banking Corporation LimitedCorrespondent Bank Name: HSBC BANK USA, New YorkCorrespondent Bank SWIFT Address: Beneficiary Bank Account Name: Beneficiary Bank Account Number: Beneficiary Bank SWIFT Address: Final Beneficiary Bank Account Name: N/AFinal Beneficiary Bank Account Number: N/AAttention: Re: Baidu for the attention of CIB/CMB LoansNanyang Commercial Bank, Limited Correspondent Bank Name: Bank of China, New York, NYCorrespondent Bank SWIFT Address: Beneficiary Bank Account Name: Beneficiary Bank Account Number: N/ABeneficiary Bank SWIFT Address: UID No: 092162Final Beneficiary Bank Account Name: N/AFinal Beneficiary Bank Account Number: N/AAttention: Baidu, Inc. – SYN 2016Australia and New Zealand Banking Group LimitedCorrespondent Bank Name: JPMorgan Chase Bank N.A. New YorkCorrespondent Bank SWIFT Address: Beneficiary Bank Account Name: Beneficiary Bank Account Number: Beneficiary Bank SWIFT Address: Final Beneficiary Bank Account Name: N/AFinal Beneficiary Bank Account Number: N/AAttention: Lending Ops – Baidu Fee/Int Payment 120 Bank of America, N.A. Correspondent Bank Name: Bank of America New YorkCorrespondent Bank SWIFT Address: Beneficiary Bank Account Name: Beneficiary Bank Account Number: Beneficiary Bank SWIFT Address: Final Beneficiary Bank Account Name: Final Beneficiary Bank Account Number: Attention: Trade Finance ServiceBank of China (Hong Kong) Limited Correspondent Bank Name: Bank of China Limited, New York BranchCorrespondent Bank SWIFT Address: Beneficiary Bank Account Name: Beneficiary Bank Account Number: Beneficiary Bank SWIFT Address: Final Beneficiary Bank Account Name: N/AFinal Beneficiary Bank Account Number: N/AAttention: Loans Division (CFM2)Reference: Baidu, Inc. 2016Bank of China Limited Macau Branch Correspondent Bank Name: Bank of China Limited, New York BranchCorrespondent Bank SWIFT Address: Beneficiary Bank Account Name: Beneficiary Bank Account Number: Beneficiary Bank SWIFT Address: Final Beneficiary Bank Account Name: N/AFinal Beneficiary Bank Account Number: N/AAttention: Corporate Loan Operation Division- Baidu 121 BNP Paribas, acting through its Hong Kong branchCorrespondent Bank Name: BNP Paribas, New YorkCorrespondent Bank SWIFT Address: Beneficiary Bank Account Name: Beneficiary Bank Account Number: Beneficiary Bank SWIFT Address: Final Beneficiary Bank Account Name: N/AFinal Beneficiary Bank Account Number: N/A Attention: CMLS-BaiduChina Construction Bank (Asia) Corporation LimitedCorrespondent Bank Name: Bank of America N.A., New YorkCorrespondent Bank SWIFT Address: Beneficiary Bank Account Name: Beneficiary Bank Account Number: Beneficiary Bank SWIFT Address: Final Beneficiary Bank Account Name: N/AFinal Beneficiary Bank Account Number: N/AAttention: Wholesale Loans, principal / interest / feepayment for Baidu, Inc.Hang Seng Bank Limited Correspondent Bank Name: HSBC Bank USA, New YorkCorrespondent Bank SWIFT Address: Beneficiary Bank Account Name: Beneficiary Bank Account Number: Beneficiary Bank SWIFT Address: Final Beneficiary Bank Account Name: N/AFinal Beneficiary Bank Account Number: N/AAttention: Credit Services & Mortgage Department(CAN-GBS)Reference: Baidu, Inc. 122 Industrial and Commercial Bank of China (Asia) LimitedCorrespondent Bank Name: JPMorgan Chase Bank N.A., New YorkCorrespondent Bank SWIFT Address: Beneficiary Bank Account Name: Beneficiary Bank Account Number: Beneficiary Bank SWIFT Address: Final Beneficiary Bank Account Name: N/AFinal Beneficiary Bank Account Number: N/AAttention: Loans Administration DepartmentJPMorgan Chase Bank, N.A., Hong Kong BranchCorrespondent Bank Name: JPMorgan Chase Bank, N.A., New YorkCorrespondent Bank SWIFT Address: Beneficiary Bank Account Name: Beneficiary Bank Account Number: Beneficiary Bank SWIFT Address: Final Beneficiary Bank Account Name: N/AFinal Beneficiary Bank Account Number: N/AAttention: HKGLNO Asia Loan Operations – BAIDU2016Mizuho Bank, Ltd., Hong Kong Branch Correspondent Bank Name: Citibank N.A., New York BranchCorrespondent Bank SWIFT Address: Beneficiary Bank Account Name: Beneficiary Bank Account Number: Beneficiary Bank SWIFT Address: Final Beneficiary Bank Account Name: N/AFinal Beneficiary Bank Account Number: N/AAttention: Loan Ops – Baidu, Inc. 123 Standard Chartered Bank (Hong Kong) LimitedCorrespondent Bank Name: Standard Chartered Bank New YorkCorrespondent Bank SWIFT Address: Beneficiary Bank Account Name: Beneficiary Bank Account Number: Beneficiary Bank SWIFT Address: Final Beneficiary Bank Account Name: N/AFinal Beneficiary Bank Account Number: N/AAttention: LPU, Loan payment for BaiduWing Lung Bank, Limited Correspondent Bank Name: JPMorgan Chase Bank N.A., New YorkCorrespondent Bank SWIFT Address: Beneficiary Bank Account Name: Beneficiary Bank Account Number: Beneficiary Bank SWIFT Address: Final Beneficiary Bank Account Name: N/AFinal Beneficiary Bank Account Number: N/AAttention: Syn. Loan – Baidu, Inc., Attn: LOCCathay United Bank Company Limited, Hong Kong BranchCorrespondent Bank Name: Citibank, New YorkCorrespondent Bank SWIFT Address: Beneficiary Bank Account Name: Beneficiary Bank Account Number: Beneficiary Bank SWIFT Address: Final Beneficiary Bank Account Name: N/AFinal Beneficiary Bank Account Number: N/AAttention: Operations Dept - Loans, Re: Baidu 2016 124 China Merchants Bank Co., Ltd. Correspondent Bank Name: China Merchants Bank H.O. Off-ShoreBanking CenterCorrespondent Bank SWIFT Address: Beneficiary Bank Account Name: Beneficiary Bank Account Number: Beneficiary Bank SWIFT Address: N/AFinal Beneficiary Bank Account Name: N/AFinal Beneficiary Bank Account Number: N/AAttention: BAIDU,INC. –Syndicated LoanMega International Commercial Bank Co., Ltd.Correspondent Bank Name: Mega International Commercial Bank Co.,Ltd., New York BranchCorrespondent Bank SWIFT Address: Beneficiary Bank Account Name: Beneficiary Bank Account Number: Beneficiary Bank SWIFT Address: Final Beneficiary Bank Account Name: N/AFinal Beneficiary Bank Account Number: N/AAttention: Roger Chen / Chiao-Hsin LinKGI Bank Correspondent Bank Name: HSBC Bank USA New YorkCorrespondent Bank SWIFT Address: Beneficiary Bank Account Name: Beneficiary Bank Account Number: Beneficiary Bank SWIFT Address: Final Beneficiary Bank Account Name: Final Beneficiary Bank Account Number: Attention: Pay for Baidu 125 SIGNATURESTHE BORROWERBAIDU, INC. By: /s/ authorized signatory Address: Baidu Campus, No. 10, Shangdi 10th Street, Haidian District, Beijing 100085, People’s Republic of ChinaTelephone: Email: Attention: Yanjing Zheng, Director, FP&A DepartmentWith a copy to: Address: Baidu Campus, No. 10, Shangdi 10th Street, Haidian District, Beijing 100085, People’s Republic of ChinaTelephone: Email: Attention: Amy Tu, International and M&A Legal Affairs Department ORIGINAL MLABBANK OF CHINA LIMITED By: /s/ authorized signatory Address: 21st Floor, No. 1515,West Nanjing Road,ShanghaiTelephone: Fax: Email: Attention: Caizhe / Dailu ORIGINAL MLABCITIGROUP GLOBAL MARKETS ASIA LIMITED By: /s/ Vivian TanTitle: Managing Director Address: 47F Citibank Tower, Citibank Plaza, 3 Garden Road, Hong KongTelephone: Fax: Email: Attention: Cheng Wei Han ORIGINAL MLABDEUTSCHE BANK AG, SINGAPORE BRANCH By: /s/ Birendra BaidTitle: Director By: /s/ Saurabh JhalariaTitle: Managing Director Address: One Raffles Quay #16-00 South Tower, Singapore 048583Telephone: Fax: Email: Attention: Amit Khattar ORIGINAL MLABTHE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED By: /s/ authorized signatory Address: Level 17, HSBC Main Building, 1 Queen’s Road Central, Hong KongFax: Attention: Transaction Management ADDITIONAL MLABBANK OF COMMUNICATIONS CO., LTD. (ACTING THROUGH ITS OFFSHORE BANKING UNIT) By: /s/ Liu GanghuaTitle: Acting CEO Address: 188 Yincheng Zhong Road, Shanghai, 200120, ChinaTelephone: Fax: Email: Attention: Baidu Syndication ADDITIONAL MLABDBS BANK LTD. By: /s/ Benjamin WongTitle: Senior Vice President For credit mattersAddress: 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong KongTelephone: Fax: Email: Attention: Angelo Leung / Kenneth Yuen / Serena ZuoFor operational mattersAddress: 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong KongTelephone: Fax: Email: Attention: Colum Ting / Rocky Lam / Simon Ho ADDITIONAL MLABNANYANG COMMERCIAL BANK, LIMITED By: /s/ authorized signatories For credit matters: Address: 10/F, 151 Des Voeux Road Central, Hong KongTelephone: Fax: Email: Attention: Mr. Daniel Jung / Ms. Churen Chan / Mr. Ocean YeungFor operation matters:Address: 6/F, 151 Des Voeux Road Central, Hong KongTelephone: Fax: Email: Attention: Ms. Wai In Fong / Ms. Lui Yuen FunAddress: 17/F, Bank of China Centre, Olympian City, 11 Hoi Fai Road, West Kowloon, Hong KongTelephone: Fax: Email: Attention: Ms. Lam Yee Man Rita / Ms. Chan Wai Ying ADDITIONAL MLABAUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED By: /s/ Sherzad DesaiTitle: Head of TMET Asia /s/ Tai Alan Pak LingTitle: Director, Loans Structuring & Execution Asia Address: 22/F, Three Exchange Square, 8 Connaught Place Central, Hong Kong / 17/F Lincoln House, Taikoo Place, 979 King’s Road, Quarry Bay, Hong KongTelephone: Fax: Email: Attention: Danny Sung / Cecilia Yan / Johnny Cheung / Ginny Wong / Ryan Choi ADDITIONAL MLABBANK OF AMERICA, N.A. By: /s/ authorized signatory Address: 52/F Cheung Kong Centre, 2 Queen’s Road Central, Central, Hong KongTelephone: Fax: Email: Attention: Client Service Team ADDITIONAL MLABBNP PARIBAS By: /s/ Stanislas De TinguyTitle: Managing Director By: /s/ Jwalant NanavatiTitle: Managing Director Address: 63/F, Two International Finance Centre, 8 Finance Street, Central, Hong KongTelephone:Fax: Email: Attention: Stanislas de Tinguy / Rui Wang / Hao Gao ADDITIONAL MLABCHINA CONSTRUCTION BANK (ASIA) CORPORATION LIMITED By: /s/ Ivan Siu Wah /s/ Benny HaTitle: General Manager of CBDI For credit matters Address: 25/F, CCB Tower, 3 Connaught Road Central, Central, Hong KongTelephone: Fax: Email: Attention: Steve Chan / James Zhao For operational mattersAddress: 19/F, CCB Centre, 18 Wang Chiu Road, Kowloon Bay, Kowloon, Hong KongTelephone: Fax: Email: Attention: Cindy Hui / Ricky Hui ADDITIONAL MLABHANG SENG BANK LIMITED By: /s/ Heung Hong-wing Frank /s/ Chun-man, Thomas For credit mattersAddress: 11/F, 83 Des Voeux Road, Central, Hong KongTelephone: Email: Attention: Ms. Catherine Leung / Ms. Carmen Leung For operational mattersAddress: 11/F, 83 Des Voeux Road, Central, Hong KongTelephone: Fax: Email: Attention: Mr. Richard Cheung / Mr. Jason Kwok / Mr. Ken Lam ADDITIONAL MLABINDUSTRIAL AND COMMERCIAL BANK OF CHINA (ASIA) LIMITED By: /s/ authorized signatories For credit mattersAddress: 34/F, ICBC Tower, 3 Garden Road, Central, Hong KongTelephone: Fax: Email: Attention: Vincent Tse / Janet Chow For operational mattersAddress: Level 13, Tower 1, Millennium City 1, No. 388 Kwun Tong Road, Kwun Tong, Kowloon, Hong KongTelephone: Fax: Email: Attention: Alex Lau / Edmund Law ADDITIONAL MLABJPMORGAN CHASE BANK, N.A., HONG KONG BRANCH By: /s/ authorized signatory Address: Level 28 Chater House, 8 Connaught Road Central, Hong KongTelephone: Fax: Email: Attention: Jim Chan / Shirley Wong ADDITIONAL MLABMIZUHO BANK, LTD. By: /s/ Gabriel TangTitle: Joint General Manager Address: 17/F, Two Pacific Place, 88 Queensway, Hong KongTelephone: Fax: Email: Attention: Ms. Monita Chang / Ms. Joey Mak ADDITIONAL MLABSTANDARD CHARTERED BANK (HONG KONG) LIMITED By: /s/ Cristian JonssonTitle: Global head, Loan Syndications, Standard CharteredBank Address: 25/F, Standard Chartered Bank Building, 4-4A Des Voeux Road Central, Hong KongTelephone: Fax: Email: Attention: Frances Yao ADDITIONAL MLABWING LUNG BANK, LIMITED By: /s/ He Xin, WilsonTitle: Department Head, Corporate Banking Department /s/ Ng Wai Man, RaymondTitle: Vice President Address: 16/F, Wing Lung Bank Building 45 Des Voeux Road Central Hong KongTelephone: Fax: Email: Attention: Mr. Raymond Ng / Mr. Keith So / Mr. Jason Chan / Mr. Boris Liu / Mr. Stephen Ng ADDITIONAL MLACATHAY UNITED BANK COMPANY LIMITED, HONG KONG BRANCH By: /s/ Danny TsaiTitle: Vice President , Chief Marketing Officer Address: 20th Floor, LHT Tower, 31 Queen’s Road Central, Central, Hong KongTelephone: Fax: Email: Attention: Cindy Cheung / Lily Tang ADDITIONAL MLACHINA MERCHANTS BANK CO., LTD. By: /s/ authorized signatory Address: 19/F., China Merchants Bank Tower, No. 7088 Shennan Boulevard, Shenzhen, P.R. ChinaTelephone: Fax: Email: Attention: Hu Cheng / Sun Zhaohua ADDITIONAL MLAMEGA INTERNATIONAL COMMERCIAL BANK CO., LTD. By: /s/ authorized signatory Address: No.100, Chi-Lin Road, Taipei City 10424, TaiwanTelephone: Fax: Email: Attention: Roger Chen / Chiao-Hsin Lin / Lin Tung Liang ADDITIONAL MLAKGI BANK By: /s/ Jean WuTitle: Executive Vice President Address: No.125, Sec. 5, Nanjing E. Road, Songshan Dist., Taipei City 10504, TaiwanTelephone: Fax: Email: Attention: Kenneth Liu / Hong-wei Chien LENDERBANK OF COMMUNICATIONS CO., LTD. (ACTING THROUGH ITS OFFSHORE BANKING UNIT) By: /s/ Liu GanghuaTitle: Acting CEO Address: 188 Yincheng Zhong Road, Shanghai, 200120, ChinaTelephone: Fax: Email: Attention: Baidu Syndication LENDERBANK OF CHINA LIMITED, LOS ANGELES BRANCH By: /s/ authorized signatory Address: 444 S. Flower Street, 39th Floor Los Angeles, CA 90071Telephone: Fax: Email: Attention: Bank of China Limited, Los Angeles Branch as designated by Bank of China Limited, Shanghai Branch, Jing An Sub-Branch LENDERCITIBANK, N.A., HONG KONG BRANCH By: /s/ Vivian Tan Address: 44/F Citibank Tower, Citibank Plaza, 3 Garden Road, Central, Hong KongTelephone: Fax: Email: Attention: Sabrina Gao / Megan Chan / Tricia Qiu LENDERDBS BANK LTD., HONG KONG BRANCH By: /s/ Angelo Ka Kui LeungTitle: Senior Vice President For credit mattersAddress: 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong KongTelephone: Fax: Email: Attention: Angelo Leung / Kenneth Yuen / Serena Zuo For operational mattersAddress: 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong KongTelephone: Fax: Email: Attention: Colum Ting / Rocky Lam / Simon Ho LENDERDEUTSCHE BANK AG, SINGAPORE BRANCH By: /s/ Birendra BaidTitle: Director /s/ Saurabh JhalariaTitle: Managing Director Address: One Raffles Quay #16-00 South Tower, Singapore 048583Telephone: Fax: Email: Attention: CPSG APAC / Steffen Limbach LENDERTHE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED By: /s/ David MortonTitle: Regional Head of Credit and Lending, Asia-Pacific Address: Level 16, HSBC Main Building, 1 Queens Road Central, Hong KongTelephone: Fax: Email: Attention: Anqi Dong / Derek Leung LENDERNANYANG COMMERCIAL BANK, LIMITED By: /s/ authorized signatories For credit matters:Address: 10/F, 151 Des Voeux Road Central, Hong KongTelephone: Fax: Email: Attention: Mr. Daniel Jung / Ms. Churen Chan / Mr. Ocean Yeung For operation matters:Address: 6/F, 151 Des Voeux Road Central, Hong KongTelephone: Fax: Email: Attention: Ms. Wai In Fong / Ms. Lui Yuen Fun Address: 17/F, Bank of China Centre, Olympian City, 11 Hoi Fai Road, West Kowloon, Hong KongTelephone: Fax: Email: Attention: Ms. Lam Yee Man Rita / Ms. Chan Wai Ying LENDERAUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED By: /s/ Shezad DesaiTitle: Head of TMET Asia /s/ Tai, Alan Pak LingTitle: Director, Loans Structuring & Execution Asia Address: 22/F, Three Exchange Square, 8 Connaught Place Central, Hong Kong / 17/F Lincoln House, Taikoo Place, 979 King’s Road,Quarry Bay, Hong KongTelephone: Fax: Email: Attention: Danny Sung / Cecilia Yan / Johnny Cheung / Ginny Wong / Ryan Choi LENDERBANK OF AMERICA, N.A. By: /s/ Linda Kang Title: Managing Director, Co-Head of China Local Corporates, Asia Pacific Corporate Banking Bank of America, N.A. Address: 52/F Cheung Kong Centre, 2 Queen’s Road Central, Central, Hong KongTelephone: Fax: Email: Attention: Client Service Team LENDERBANK OF CHINA (HONG KONG) LIMITED By: /s/ Chan Hoi Mao /s/ Chin Lai Ngan Address: 17/F, Bank of China Centre, Olympian City, 11 Hoi Fai Road, West Kowloon, Hong KongTelephone: Fax: Email: Attention: Mr. Arthur Au / Ms. K. Y. Kwok / Ms. Venissa Fong / Ms. Judy Kwok LENDERBANK OF CHINA LIMITED MACAU BRANCH By: /s/ Wong Iao KunTitle: Deputy Director, Credit Administration Department Address: 13/F, Bank of China Building, Avenida Doutor Mario Soares, MacauTelephone: Fax: Email: Attention: James Wong / Alex Ung / Chole Wong LENDERBNP PARIBAS, ACTING THROUGH ITS HONG KONG BRANCH By: /s/ Stanislas De TinguyTitle: Managing Director By: /s/ Jwalant nanawatiTitle: Managing Director Address: 63/F, Two International Finance Centre, 8 Finance Street, Central, Hong KongTelephone: Fax: Email: Attention: Stanislas de Tinguy / Rui Wang / Hao Gao LENDERCHINA CONSTRUCTION BANK (ASIA) CORPORATION LIMITED By: /s/ Ivan Siu Wah /s/ Benny HaTitle: General Manager of CBDI For credit mattersAddress: 25/F, CCB Tower, 3 Connaught Road Central, Central, Hong KongTelephone: Fax: Email: Attention: Steve Chan /James Zhao For operational mattersAddress: 19/F, CCB Centre, 18 Wang Chiu Road, Kowloon Bay, Kowloon, Hong KongTelephone: Fax: Email: Attention: Cindy Hui / Ricky Hui LENDERHANG SENG BANK LIMITED By: /s/ Heung Hon-Wing, Frank /s/ authorized signatory For credit mattersAddress: 11/F, 83 Des Voeux Road, Central, Hong KongTelephone: Email: Attention: Ms. Catherine Leung / Ms. Carmen Leung For operational mattersAddress: 11/F, 83 Des Voeux Road, Central, Hong KongTelephone: Fax: Email: Attention: Mr. Richard Cheung / Mr. Jason Kwok / Mr. Ken Lam LENDERINDUSTRIAL AND COMMERCIAL BANK OF CHINA (ASIA) LIMITED By: /s/ authorized signatories For credit mattersAddress: 34/F, ICBC Tower, 3 Garden Road, Central, Hong KongTelephone: Fax: Email: Attention: Vincent Tse / Janet Chow For operational mattersAddress: Level 13, Tower 1, Millennium City 1, No. 388 Kwun Tong Road, Kwun Tong, Kowloon, Hong KongTelephone: Fax: Email: Attention: Alex Lau / Edmund Law LENDERJPMORGAN CHASE BANK, N.A., HONG KONG BRANCH By: /s/ authorized signatory Address: Level 28 Chater House, 8 Connaught Road Central, Hong KongTelephone: Fax: Email: Attention: Jim Chan / Shirley Wong LENDERMIZUHO BANK, LTD., HONG KONG BRANCH By: /s/ Junya Hagishita For credit mattersAddress: 16/F., Sun Life Tower, The Gateway, Harbour City, Kowloon, Hong KongTelephone: Fax: Email: Attention: Ms. Betty Chung / Ms. Red Tang / Ms. Iris Kau / Ms. Edith Wong For operational mattersAddress: 16/F., Sun Life Tower, The Gateway, Harbour City, Kowloon, Hong KongTelephone: Fax: Email: Attention: Mr. Andy Lam / Ms. Mandy Pang / Mr. Andy Chu LENDERSTANDARD CHARTERED BANK (HONG KONG) LIMITED By: /s/ Darcy LaiTitle: Regional Head, Corporate and Institutional Banking,Greater China and North Asia Standard Chartered Bank(Hong Kong) Limited Address: 22/F, Standard Chartered Bank Building, 4-4A Des Voeux Road Central, Hong KongTelephone: Fax: Email: Attention: Lynn Sha / Julian Shen LENDERWING LUNG BANK, LIMITED By: /s/ He Xin, WilsonTitle: Department Head, Corporate Banking Department /s/ Ng Wai Man, RaymondTitle: Vice President Address: 16/F, Wing Lung Bank Building 45 Des Voeux Road Central Hong KongTelephone: Fax: Email: Attention: Mr. Raymond Ng / Mr. Keith So / Mr. Jason Chan / Mr. Boris Liu / Mr. Stephen Ng LENDERCATHAY UNITED BANK COMPANY LIMITED, HONG KONG BRANCH By: /s/ Danny TsaiTitle: Vice President, Chief Marketing Officer Address: 20th Floor, LHT Tower, 31 Queen’s Road Central, Central, Hong KongTelephone: Fax: Email: Attention: Cindy Cheung / Lily Tang LENDERCHINA MERCHANTS BANK CO., LTD. By: /s/ authorized signatory Address: 19/F., China Merchants Bank Tower, No. 7088 Shennan Boulevard, Shenzhen, P.R. ChinaTelephone: Fax: Email: Attention: Hu Cheng / Sun Zhaohua LENDERMEGA INTERNATIONAL COMMERCIAL BANK CO., LTD. By: /s/ authorized signatory Address: No.100, Chi-Lin Road, Taipei City 10424, TaiwanTelephone: Fax:Email: Attention: Roger Chen / Chiao-Hsin Lin / Lin Tung Liang LENDERKGI BANK By: /s/ Jean WuTitle: Executive Vice President Address: No.125, Sec. 5, Nanjing E. Road, Songshan Dist., Taipei City 10504, TaiwanTelephone: Fax: Email: Attention: Kenneth Liu / Hong-wei Chien THE AGENTCITICORP INTERNATIONAL LIMITED By: /s/ Victor TamTitle: Vice President Address: 10th Floor, Citi Tower, One Bay East, 83 Hoi Bun Road, Kwun Tong, Kowloon, Hong KongTelephone: Fax: Email: Attention: Client Administration Team / Transaction Management Team Regional Loans Agency Exhibit 4.69Execution VersionNOTE PURCHASE AGREEMENTThis NOTE PURCHASE AGREEMENT, dated as of January 11, 2017 (this “Agreement”), is entered into by and among Qiyi.com, Inc., anexempted company incorporated under the laws of the Cayman Islands (the “Company”) and the parties listed on Schedule 1 attached hereto (each partylisted on Part A of Schedule 1, a “G1 Investor”, and collectively, the “G1 Investors”; each party listed on Part B of Schedule 1, a “G2 Investor”, andcollectively, the “G2 Investors”; and the G1 Investors and G2 Investors collectively, the “Investors”).RECITALSWHEREAS, subject to the terms and conditions set forth herein, (i) the Company desires to issue and sell to each G1 Investor, and each G1Investor, severally and not jointly, desires to purchase from the Company, certain convertible promissory note(s) in substantially the form attached hereto asExhibit A-1 (each, a “G1 Note”, and collectively, the “G1 Notes”) in the principal amount(s) set forth opposite such G1 Investor’s name on Schedule 1, whichshall be convertible into certain shares of the Company (the “G1 Conversion Shares”), and (ii) the Company desires to issue and sell to each G2 Investor, andeach G2 Investor, severally and not jointly, desires to purchase from the Company, certain convertible promissory note(s) in substantially the form attachedhereto as Exhibit A-2 (each, a “G2 Note”, and collectively, the “G2 Notes”; the G1 Notes and G2 Notes collectively, the “Notes”), which shall be convertibleinto certain shares of the Company (the “G2 Conversion Shares”, and collectively with the G1 Conversion Shares, the “Conversion Shares”) at the per shareconversion price and on the other terms stated therein.NOW, THEREFORE, in consideration of the above premises and the agreements hereinafter set forth, and for other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:ARTICLE I.DEFINITIONS1.1 Definitions. As used in this Agreement, and unless the context requires a different meaning, the following terms have the meaningsindicated:“Adverse Legal Development” has the meaning set forth in the Sixth Restated Articles.“Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, or iscontrolled by, or under common control with, the Person specified, including, in the case of the Investors, any investment capital fund now or hereafterexisting which is controlled by, or under the common control of, substantially the same principal(s) that control the Investors. Notwithstanding the foregoing,the parties acknowledge and agree that (a) the name “Sequoia Capital” is commonly used to describe a variety of entities (collectively, the “SequoiaEntities”) 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 the Transaction Documents to the contrary, the Transaction Documents shall not be binding on, or restrict theactivities of, any Sequoia Entity outside of the Sequoia China Sector Group. For purposes of the foregoing, the “Sequoia China Sector Group” means allSequoia Entities (whether currently existing or formed in the future) that are principally focused on companies located in, or with connections to, the PRC. 1 “Agreement” has the meaning set forth in the preamble, as amended, supplemented or modified from time to time in accordance with the termshereof.“Baidu” means Baidu Holdings Limited, a company incorporated under the laws of the British Virgin Islands.“Basket” has the meaning set forth in Section 8.4 of this Agreement.“Beijing WFOE” means Beijing Qiyi Century Science & Technology Co., Ltd. (“ ”), a wholly foreign-ownedenterprise established under the laws of the PRC.“Board of Directors” means the board of directors of the Company.“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in New York, Hong Kong or the PRC areauthorized or required by law or executive order to close.“Centre” has the meaning set forth in Section 10.9(b).“Chongqing WFOE” means Chongqing Qiyi Tianxia Science & Technology Co., Ltd. (“ ”), a wholly foreign-ownedenterprise established under the laws of the PRC.“Circular 37” means Circular 37 issued by SAFE on July 14, 2014, including any amendment, implementing rules, or official interpretationthereof, and any other rules and circulars issued by SAFE regulating filings or registrations of round-trip investment.“Closing” has the meaning set forth in Section 2.2 of this Agreement.“Closing Date” has the meaning set forth in Section 2.2 of this Agreement.“Company” has the meaning set forth in the preamble to this Agreement.“Consideration” has the meaning set forth in Section 2.1 of this Agreement.“Contractual Obligations” means, as to any Person, any provision of any security or financial instrument, issued by such Person or of anyagreement, undertaking, contract, license, engagement, lease, indenture, mortgage, deed of trust, purchase order, commitment or other instrument orcontractual arrangement, to which such Person is a party or by which it or any of its property is bound.“Control” (including the terms “controlling,” “controlled by” and “under common control with”) means the possession, direct or indirect, of thepower to direct or cause the direction of the management and policies of a Person (including without limitation, the power to determine or cause thedetermination of equity investment), whether through the ownership of voting securities, by contract or otherwise. 2 “Control Documents” means the exclusive technology consulting and service agreements ( ), business operationagreements ( ), business cooperation agreements ( ), software license contracts ( ), trademark license agreements ( ), exclusive option agreements ( ), voting rights proxy agreements ( ), loan agreements ( ), andequity pledge agreements ( ) entered into between the Beijing WFOE, on one hand, and the applicable Domestic Enterprises and/or theirshareholders, on the other hand, for the purpose of consolidating the financial statements of the Domestic Enterprises by the Company in accordance with theUS GAAP.“Conversion Shares” has the meaning set forth in the recitals of this Agreement.“Disclosure Schedule” means the schedule to be provided to the Investors by the Company attached hereto as Exhibit B.“Domestic Enterprise” means each of (i) Beijing Dingxin Tianxia Science & Technology Co., Ltd. (“ ”), a limitedliability company organized under the laws of the PRC, (ii) Beijing IQIYI Science & Technology Co., Ltd. (“ ”), a limited liabilitycompany organized under the laws of the PRC, (iii) Shanghai IQIYI Culture Media Co., Ltd. (“ ”), a limited liability companyorganized under the laws of the PRC and (iv) Shanghai Zhong Yuan Network Co., Ltd. (“ ”), a limited liability company organizedunder the laws of the PRC, and collectively, the “Domestic Enterprises”.“Equity Securities” means, with respect to any Person, such Person’s capital stock, membership interests, partnership interests, registered capital,joint venture or other ownership interests or any options, warrants or other securities that are directly or indirectly convertible into, or exercisable orexchangeable for, such capital stock, membership interests, partnership interests, registered capital, joint venture or other ownership interest (whether or notissued by such Person).“Financial Statements” has the meaning set forth in Section 6(a) of Schedule 2.“G1 Conversion Shares” has the meaning set forth in the recitals of this Agreement.“G1 Investors” has the meaning set forth in the preamble to this Agreement.“G1 Notes” has the meaning set forth in the recitals of this Agreement.“G2 Conversion Shares” has the meaning set forth in the recitals of this Agreement.“G2 Investors” has the meaning set forth in the preamble to this Agreement.“G2 Notes” has the meaning set forth in the recitals of this Agreement. 3 “Governmental Authority” means the government of any nation, state, city, locality or other political subdivision thereof, any entity exercisingexecutive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any stock exchange or its governing body.“Group Company” means each of the Company, the HK Subsidiary, the PRC Entities, together with their respective Subsidiaries, and “Group”refers to all of Group Companies collectively.“HK Subsidiary” means Qiyi.com HK Limited, a company limited by shares incorporated under the laws of Hong Kong.“Hong Kong” means the Hong Kong Special Administration Region of the PRC.“Indemnified Party” has the meaning set forth in Section 8.1 of this Agreement.“Indemnifying Party” has the meaning set forth in Section 8.1 of this Agreement.“Initial Public Offering” means an initial public offering of any Equity Securities of the Company on New York Stock Exchange, NASDAQStock Market, the Hong Kong Stock Exchange or such other stock exchange approved by the Board of Directors.“Investors” has the meaning set forth in the preamble to this Agreement.“Key Employee” means each person listed in Schedule 4 attached hereto.“Litigation” has the meaning set forth in Section 9(a) of Schedule 2 attached hereto.“Long Stop Date” has the meaning set forth in Section 9.1 of this Agreement.“Losses” has the meaning set forth in Section 8.1 of this Agreement.“Material Adverse Effect” means any change, event, circumstance or effect, individually or when taken together with all other changes, events,circumstances, or effects that have occurred prior to the date of determination of the occurrence of the Material Adverse Effect, that (i) is, or would reasonablybe expected to be, materially adverse to the business, operations, assets (including intangible assets), liabilities, condition (financial or otherwise), property,results of operations of the Group Companies, as a whole, or (ii) is or would reasonably be expected to materially impair the validity or enforceability of thisAgreement or any of the other Transaction Documents against the Company or (iii) is or would reasonably be expected to materially and adversely affect theCompany’s ability to perform its material obligations under this Agreement, or any other Transaction Document, or in connection with the transactionscontemplated hereunder or thereunder; provided, however, that in no event shall any of the following, alone or in combination, be deemed to constitute aMaterial Adverse Effect, nor shall any change, event or circumstance relating to or resulting from any of the following be taken into account in determiningwhether a Material Adverse Effect has occurred or would result: (i) general economic conditions in global or Chinese markets (including financial, banking,credit, currency and capital markets); (ii) fluctuations in currency exchange rates; (iii) conditions generally affecting the industry in which the GroupCompanies operate (but excluding any changes in applicable Requirements of Law or US GAAP that would, or would reasonably be expected to, result in a“Redemption Trigger Event” (as defined in the Sixth Restated Articles)); (iv) the commencement or material worsening of a war or armed hostilities or othernational or international calamity, or the occurrence of any military or terrorist attack; (v) acts of God or natural disasters; and (vi) any actions taken, orfailures to take action pursuant to or in accordance with this Agreement or at the request of the Investors or any change, event or circumstance solely resultingfrom such actions or failures to take action; which, in the case of any of the foregoing clauses (i) through (v) does not disproportionately affect the GroupCompanies, taken as a whole, relative to other comparable companies in the industries in which they operate. 4 “Notes” has the meaning set forth in the recitals of this Agreement.“Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.“Ordinary Shares” means the ordinary shares of the Company with a par value of US$0.00001 each.“Person” means any individual, firm, corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stockcompany, limited liability company, Governmental Authority or other entity of any kind, and shall include any successor (by merger or otherwise) of suchentity.“Permitted Liens” means (i) liens disclosed on the Financial Statements, (ii) liens for taxes not yet due or being contested in good faith (and forwhich adequate accruals or reserves have been established on the Financial Statements), or (iii) liens which do not materially detract from the value ormaterially interfere with any present or intended use of any property or assets of the Company and/or the Group Companies.“PRC” means the People’s Republic of China excluding, for the purpose of this Agreement, Hong Kong, Macau and Taiwan.“PRC Entities” means the Beijing WFOE, the Chongqing WFOE, the Domestic Enterprises and each of their respective Subsidiaries.“Qualified Financing” means the Company’s next preferred shares financing transaction on or before the first anniversary of the Closing Date,either (i) with a total investment amount or subscription price in such next preferred shares financing transaction of no less than US$100,000,000, which forthe avoidance of doubt shall not include the principal amount of the Notes, or (ii) with the number of shares newly issued in such next preferred sharesfinancing transaction constituting no less than 5% of the Company’s total issued and outstanding share capital immediately prior to the consummation ofsuch transaction, which for the avoidance of doubt shall not include the Conversion Shares.“Requirements of Law” means, as to any Person, any law, statute, treaty, rule, regulation, order, right, privilege, qualification, license or franchiseor determination of an arbitrator or a court or other Governmental Authority or stock exchange, in each case applicable or binding upon such Person or any ofits property or to which such Person or any of its property is subject or pertaining to any or all of the transactions contemplated or referred to herein. 5 “SAFE” means the State Administration of Foreign Exchange of the PRC.“Series A Preferred Shares” means the series A preferred shares of the Company with a par value of US$0.00001 each, with the rights andpreferences set forth in the Sixth Restated Articles.“Series A-1 Junior Preferred Shares” means the series A-1 junior preferred shares of the Company with a par value of US$0.00001 each, with therights and preferences set forth in the Sixth Restated Articles.“Series B Preferred Shares” means the series B preferred shares of the Company with a par value of US$0.00001 each, with the rights andpreferences set forth in the Sixth Restated Articles.“Series C Preferred Shares” means the series C preferred shares of the Company with a par value of US$0.00001 each, with the rights andpreferences set forth in the Sixth Restated Articles.“Series D Preferred Shares” means the series D preferred shares of the Company with a par value of US$0.00001 each, with the rights andpreferences set forth in the Sixth Restated Articles.“Series E Preferred Shares” means the series E preferred shares of the Company with a par value of US$0.00001 each, with the rights andpreferences set forth in the Sixth Restated Articles.“Series F Preferred Shares” means the series F preferred shares of the Company with a par value of US$0.00001 each, with the rights andpreferences set forth in the Sixth Restated Articles.“Series G Preferred Shares” means, collectively, the Series G1 Preferred Shares and the Series G2 Preferred Shares.“Series G1 Preferred Shares” means the series G1 preferred shares of the Company with a par value of US$0.00001 each, to be issued by theCompany to the G1 Investors upon conversion of the G1 Notes at the election of the Company in accordance with the terms and conditions of the G1 Notesand containing the terms set forth in the Terms of Series G.“Series G2 Preferred Shares” means the series G2 preferred shares of the Company with a par value of US$0.00001 each, to be issued by theCompany to the G2 Investors upon conversion of the G2 Notes at the election of the Company in accordance with the terms and conditions of the G2 Notesand containing the terms set forth in the Terms of Series G.“Shareholders Agreement” means the Fifth Amended and Restated Shareholders Agreement dated November 11, 2014 between the Companyand the parties named therein. 6 “Sixth Restated Articles” means the Sixth Amended and Restated Memorandum and Articles of Association of the Company as adopted on, andeffective as of, November 11, 2014.“Subsidiaries” means, as of the relevant date of determination, (i) with respect to any Person, any other Person of which more than 50% of thevoting power of the outstanding voting securities or more than 50% of the outstanding economic equity interest or ownership is held, directly or indirectly,by such Person and (ii) with respect to any Group Company, any other Person of which actual or de facto Control is held, directly or indirectly, by theapplicable Group Company. Unless otherwise qualified, or the context otherwise requires, all references to a “Subsidiary” or to “Subsidiaries” in thisAgreement shall refer to a Subsidiary or Subsidiaries of any of the Group Company.“Tax” means all forms of taxation, estate, duties, deductions, withholdings, duties, imposts, levies, fees, charges, social security contributionsand rates imposed, levied, collected, withheld or assessed by any local, municipal, regional, urban, state, federal or other governmental body in the PRC orany other jurisdiction and any interest, additional taxation, penalty, surcharge or fine in connection therewith.“Terms of Investor Rights” means the terms and conditions of certain rights and provisions of the Investors upon conversion of the Notes at theelection of the Company in the form attached hereto as Exhibit D.“Terms of Series G” means the terms and conditions in respect of the Series G Preferred Shares in the form attached hereto as Exhibit C.“Terms of Irrevocable Voting Undertaking and Proxy” means the terms and conditions of certain irrevocable voting undertaking and proxy andpower of attorney in the form attached hereto as Exhibit E to be entered into by the G2 Investors holding G2 Conversion Shares immediately prior to and as acondition to the conversion of such G2 Notes into G2 Conversion Shares.“Transaction Documents” means, collectively, this Agreement and the Notes.“US GAAP” means United States generally accepted accounting principles set forth in the opinions and pronouncements of the AccountingPrinciples Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Boardor in such other statements by such other entity as have been approved by a significant segment of the accounting profession that are in effect from time totime, as codified and described in FASB Statement No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally AcceptedAccounting Principles.“US$” means the United States Dollar, the law currency of the United States of America.1.2 Rules of Construction.Interpretation of this Agreement shall be governed by the following rules of construction: (i) the words such as “herein,” “hereinafter,” “hereof,”“hereby,” “hereto,” “hereunder” and derivative or similar words refer to this entire Agreement, including any Schedules or Exhibits hereto, as a whole and notmerely to a subdivision in which such words appear unless the context otherwise requires; (ii) words in the singular shall be held to include the plural andvice versa, and words of one gender shall be held to include the other gender as the context requires; (iii) references to the terms Article, Section, Scheduleand Exhibit are references to the Articles, Sections, Schedules and Exhibits to this Agreement, unless otherwise specified; (iv) references to “US$” shall meanU.S. dollars; (v) the word “including” and words of similar import when used in this Agreement shall mean “including without limitation,” unless otherwisespecified; (vi) the word “or” shall not be exclusive; (vii) references to “written” or “in writing” include in electronic form; (viii) the headings contained inthis Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement; (ix) the parties hereto haveeach participated in the negotiation and drafting of this Agreement and if any ambiguity or question of interpretation should arise, this Agreement shall beconstrued as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or burdening any party by virtue of theauthorship of any of the provisions in this Agreement or any interim drafts thereof; (x) a reference to any Person includes such Person’s successors andpermitted assigns; (xi) any reference to “days” means calendar days unless Business Days are expressly specified; and (xii) when calculating the period oftime before which, within which or following which any act is to be done or any step is taken pursuant to this Agreement, the date that is the reference date incalculating such period shall be excluded and, if the last day of such period is not a Business Day, the period shall end on the next succeeding Business Day. 7 ARTICLE II.PURCHASE AND SALE OF NOTES2.1 Purchase and Sale of Notes.Subject to the terms and conditions set forth herein and in the G1 Notes and G2 Notes, as applicable, (i) the Company agrees to issue and sell toeach G1 Investor, and each G1 Investor, severally but not jointly, agrees to purchase from the Company, at the Closing, certain G1 Note(s) in the principalamount(s) set forth opposite such G1 Investor’s name on Part A of Schedule 1, and (ii) the Company agrees to issue and sell to each G2 Investor, and each G2Investor, severally but not jointly, agrees to purchase from the Company, at the Closing, certain G2 Note(s) in the principal amount(s) set forth opposite suchG2 Investor’s name on Part B of Schedule 1, in each case, for the amount of cash set forth opposite such Investor’s name on Schedule 1 (the “Consideration”).2.2 Closing; Delivery.(a) Unless this Agreement shall have terminated pursuant to Article IX, and subject to the satisfaction or waiver of the conditionsset forth in Articles V and VI, the closing of the sale and purchase of the Notes (the “Closing,”) shall take place remotely via the exchange of documents andsignatures, as soon as practicable (but not later than the tenth (10th) Business Day) following the date upon which the conditions set forth in Articles V andVI shall be satisfied or waived in accordance with this Agreement, or at such other time and place that the Company and the Investors may agree in writing(the “Closing Date”).(b) On the Closing Date: 8 (i) each Investor shall deliver to the Company the Consideration as set forth opposite its name on Schedule 1, by wire transfer ofimmediately available funds to an account designated by the Company (which shall be provided to such Investor in writing at least five (5) Business Daysprior to the Closing);(ii) each Investor shall deliver to the Company the applicable Note(s) counter-signed by such Investor, agreeing to be bound bythe terms and conditions of such Note(s); and(iii) the Company shall issue and deliver to such Investor the applicable Note(s) as set forth opposite such Investor’s name onSchedule 1.2.3 Use of Proceeds.The proceeds from the sale of the Notes to the Investors shall be used for general working capital purposes and capital expenditures of the GroupCompanies, subject to the approval by the Board of Directors in accordance with the Shareholders Agreement and the Sixth Restated Articles.2.4 Terms of Conversion Shares.(a) In the event that the Notes are converted upon the closing of the Qualified Financing in accordance with the terms andconditions of the Notes, the Conversion Shares will be subject to the same general terms and conditions applicable to the Equity Securities of the Companyissued in the Qualified Financing, provided that, prior to the Initial Public Offering, the G2 Conversion Shares shall be non-voting shares and shall not entitlethe holders of such G2 Conversion Shares to vote at any meeting of shareholders or any class of shareholders of the Company or to execute any writtenconsent to, or dissent from, any matter in respect of which the shareholders or any class of shareholders of the Company are sought to express such consent ordissent without a meeting (including but not limited to the signing of resolutions in writing of the shareholders or any class of shareholders of the Company).Notwithstanding the foregoing, if the terms and conditions applicable to the Equity Securities issued in the Qualified Financing are less favorable than thosecontained in the Terms of Series G and the Terms of Investor Rights as set forth in Exhibit C and Exhibit D, respectively, the Investor holding the applicableNote(s) shall have the right to elect that the Terms of Series G and the Terms of Investor Rights shall instead apply to the conversion of such Note upon theclosing of the Qualified Financing.(b) In the event that the Notes are converted at the election of the Company in accordance with the terms and conditions of theNotes, (i) the Company agrees that, immediately prior to such conversion of the Notes, it will take all reasonable actions to adopt an amended and restatedmemorandum and articles of association of the Company, authorizing the issuance of Series G Preferred Shares and incorporating the Terms of Series G; and(ii) the Company and each Investor agrees that, upon such conversion of the Notes, the Company and each Investor shall enter into an amended and restatedshareholders agreement, in a form to be agreed between the Company and the Investors and incorporating the Terms of Investor Rights.2.5 Dual-class Share Structure. 9 In the event that the Notes are converted into Conversion Shares, each of the Investors hereby agree that the Company shall adopt a dual classordinary share structure immediately prior to the completion of the Initial Public Offering, to the extent permitted by Laws applicable in the jurisdictionwhere the Company seeks to conduct the Initial Public Offering, such that (i) the Ordinary Shares will consist of Class A ordinary shares and Class B ordinaryshares, with holders of Class A ordinary shares being entitled to one vote per share in respect of matters requiring the votes of shareholders while holders ofClass B ordinary shares being entitled to more than one vote per share, (ii) Baidu and its Affiliates shall hold Class B ordinary shares and all othershareholders shall hold Class A ordinary shares, and (iii) Class A ordinary shares or the depositary shares representing Class A ordinary shares shall be listedon a stock exchange in the jurisdiction where the Company conducts the Initial Public Offering and tradable subject to restrictions under applicable Laws.Each of the Investors agrees that the number of votes represented by each Class B ordinary shares shall be fixed by Baidu in its discretion to ensure that thevoting power held by Baidu and its Affiliates represent more than 50% of the total voting power of the Company immediately after the Initial PublicOffering. Each of the Investors agrees and undertakes to take all necessary actions, including by means of voting at each meeting of shareholders of theCompany or in lieu of any such meeting giving its written consent with respect to, as the case may be, all of its voting securities of the Company as may benecessary, to support and adopt the dual class ordinary share structure as described above in this paragraph.ARTICLE III.REPRESENTATIONS AND WARRANTIES OF THE COMPANYThe Company hereby represents and warrants to each Investor that, except as set forth in the Disclosure Schedule, the representations andwarranties set forth in Schedule 2 are true and correct as of the date hereof and the Closing Date (or, if any such representation or warranty is expressly statedto have been made as of a specific date, as of such specific date) and acknowledges that each Investor in entering into this Agreement is relying on suchrepresentations and warranties.ARTICLE IV.REPRESENTATIONS AND WARRANTIES OF THE INVESTORSEach of the Investors hereby, severally but not jointly, represents and warrants to the Company that the representations and warranties set forth inSchedule 3 are true and correct as of the date hereof and the Closing Date (or, if any such representation or warranty is expressly stated to have been made asof a specific date, as of such specific date) and acknowledges that the Company in entering into this Agreement is relying on such representations andwarranties.ARTICLE V.CONDITIONS TO THE OBLIGATION OF THE INVESTORS TO CLOSEThe obligation of each of the Investors to purchase the Notes and to pay the Consideration therefor, severally but not jointly, at the Closing shallbe subject to the satisfaction as determined by, or waiver in writing by, such Investor of the following conditions on or before the Closing Date. 10 5.1 Representation and Warranties. Each of the representations and warranties of the Company contained in Article III hereof (a) that arequalified by materiality or Material Adverse Effect shall be true and correct as of the date hereof and as of the Closing Date (or, if any such representation orwarranty is expressly stated to have been made on a specific date, at and on such specific date), and (b) that are not qualified by materiality or MaterialAdverse Effect shall be true and correct in all material respects as of the date hereof and as of the Closing Date (or, if any such representation or warranty isexpressly stated to have been made on a specific date, at and on such specific date); provided, however, that in the event of a breach of a representation orwarranty (other than those set forth in Section 1 (Corporate Matters), Section 2 (Authorization and Validity of Transactions), and Section 3 (LegalCompliance) of Schedule 2 hereto), the condition set forth in this Section 5.1 shall be deemed satisfied, unless the effect of all such breaches ofrepresentations and warranties taken as a whole result in a Material Adverse Effect.5.2 Compliance with Agreements. The Company shall have performed and complied in all material respects with all of its agreements,obligations and conditions set forth in this Agreement that are required to be performed or complied with by it on or before the Closing Date.5.3 Compliance Certificate. At the Closing, the Company shall have delivered a written certification dated the Closing Date in form andsubstance reasonably satisfactory to the Investors certifying that the conditions specified in Section 5.1 and Section 5.2 have been satisfied.5.4 Legal Opinion. Such Investor shall have received a legal opinion issued by Walkers, the Company’s Cayman counsel, addressed tosuch Investor and dated as of the Closing Date.5.5 No Material Adverse Change and Adverse Legal Development. Since the date hereof, there shall have been no event or circumstanceshaving a Material Adverse Effect and there shall have been no Adverse Legal Development.5.6 Consents and Approvals. All consents, exemptions, authorizations, or other actions by, or notice to, or filings with, GovernmentalAuthorities and other Persons in respect of all Requirements of Law and with respect to Contractual Obligations of the Company which are necessary orrequired in connection with the execution, delivery or performance by, or enforcement against, the Company of this Agreement and each of the otherTransaction Documents shall have been obtained and be in full force and effect, and any notice or other similar periods in connection with any regulatoryactions of Governmental Authorities shall have expired without any action being taken or threatened.5.7 No Material Judgment or Order. There shall not be on the Closing Date any Order of a court of competent jurisdiction or any ruling ofany Governmental Authority or any condition imposed under any Requirement of Law which would (a) prohibit or restrict (i) the purchase and sale of theNotes or (ii) the consummation of the transactions contemplated by this Agreement or any other Transaction Document, or (b) materially restrict the operationof the business of any of the Group Companies as conducted on the date hereof.5.8 No Litigation. No action, suit, proceeding, claim or dispute shall have been brought or otherwise arisen at law, in equity, inarbitration or before any Governmental Authority against any of the Group Companies which could, if adversely determined, have a Material Adverse Effecton the Group, taken as a whole. 11 5.9 Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated hereby and alldocuments and instruments incident to such transactions (including corporate resolutions and good standing certificate dated no earlier than ten(10) Business Days prior to the Closing) shall be reasonably satisfactory in substance and form to such Investor, and such Investor shall have received allsuch counterpart originals or certified or other copies of such documents as it may reasonably request.ARTICLE VI.CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSEThe obligation of the Company to issue and sell the Notes to each of the Investors at the Closing shall be subject to the satisfaction or waiver ofthe following conditions on or before the Closing Date:6.1 Representation and Warranties. Each of the representations and warranties of such Investor contained in Article IV hereof shall betrue and correct in all material respects as of the date hereof and as of the Closing Date (or, if any such representation or warranty is expressly stated to havebeen made on a specific date, at and on such specific date).6.2 Compliance with this Agreement. Such Investor shall have performed and complied in all material respects with all of its agreements,obligations and conditions set forth herein that are required to be performed or complied with by such Investor on or before the Closing Date.6.3 Compliance Certificate. At the Closing, such Investor shall have delivered a written certification dated the Closing Date in form andsubstance reasonably satisfactory to the Company certifying that the conditions specified in Section 6.1 and Section 6.2 have been satisfied.6.4 Payment of Consideration. Each Investor shall have paid the applicable Consideration for the Notes to be purchased by such Investorat the Closing.6.5 Consents and Approvals. All consents, exemptions, authorizations, or other actions by, or notice to, or filings with, GovernmentalAuthorities and other Persons in respect of all Requirements of Law in connection with the execution, delivery or performance by, or enforcement against,such Investor of this Agreement and each of the other Transaction Documents shall have been obtained and be in full force and effect, and any notice or othersimilar periods in connection with any regulatory actions of Governmental Authorities applicable to such Investor shall have expired without any actionbeing taken or threatened.6.6 No Material Judgment or Order. There shall not be on the Closing Date any Order of a court of competent jurisdiction or any ruling ofany Governmental Authority or any condition imposed under any Requirement of Law which would (a) prohibit or restrict (i) the issuance and sale of theNotes or (ii) the consummation of the transactions contemplated by this Agreement or any other Transaction Document, or (b) materially restrict the operationof the business of any of the Group Companies as conducted on the date hereof. 12 ARTICLE VII.COVENANTS7.1 Further Assurances. Each party hereto shall execute such documents and perform such further acts (including obtaining any consents,exemptions, authorizations or other actions by, or giving any notices to, or making any filings with, any Governmental Authority or any other Person) as maybe reasonably required to carry out or to perform the provisions of this Agreement and to give effect to the terms and intent of this Agreement, including thesatisfaction of all conditions set forth in Article V and Article VI above.7.2 Information. From the date hereof until the earlier of the Closing or the termination pursuant to Section 9.1, (a) the Company shallpromptly notify the Investors of any Litigation commenced or threatened in writing against any Group Company, and (b) each party hereto shall promptlynotify other parties hereto of any breach, violation or non-compliance of any of its representations, warranties or covenants hereunder by such party.7.3 Completion of SAFE Registration. Each of the Investors shall use their respective best efforts to complete their respective registrationor filing as required by Circular 37.7.4 Voting Undertaking and Proxy. In the event that any G2 Notes shall have been converted into G2 Conversion Shares, each G2Investor holding such G2 Conversion Shares shall, immediately prior to and as a condition to such conversion, execute and deliver to Baidu an irrevocablevoting undertaking and an irrevocable voting proxy and power of attorney incorporating the Terms of Irrevocable Voting Undertaking and Proxy.7.5 Compliance with Laws. The Company shall, and shall procure each of the Group Companies to, use its commercially reasonableefforts to comply with applicable laws of the jurisdiction of its incorporation as well as applicable requirements of the competent Governmental Authoritiesthat are necessary for operation of its business.ARTICLE VIII.INDEMNIFICATION8.1 Indemnification. Except as otherwise provided in this Article VIII, (a) the Company, on the one hand, and (b) each Investor, severallybut not jointly, on the other hand, (each, an “Indemnifying Party”) agree to indemnify, defend and hold harmless each member of the other group and theirrespective Affiliates and the respective officers, directors, agents, employees, partners, members and Controlling persons of such member and its Affiliates(each, an “Indemnified Party”) to the fullest extent permitted by law from and against any and all losses, Litigation, or written threats thereof (including anyLitigation by a third party), damages, expenses (including reasonable fees, disbursements and other charges of counsel incurred by the Indemnified Party inany action between the Indemnifying Party and the Indemnified Party or between the Indemnified Party and any third party or otherwise) or other liabilities(collectively, “Losses”) resulting from or arising out of any breach of any representation or warranty, covenant or agreement in this Agreement by theIndemnifying Party. 13 8.2 Notification of Third Party Claim. Each Indemnified Party under this Article VIII shall, promptly after the receipt of notice of thecommencement of any Litigation by a third party against such Indemnified Party in respect of which indemnity may be sought from the Indemnifying Partyunder this Article VIII, notify the Indemnifying Party in writing of the commencement thereof. The omission of any Indemnified Party to so notify theIndemnifying Party of any such action shall not relieve the Indemnifying Party from any liability which it may have to such Indemnified Party (a) other thanpursuant to this Article VIII or (b) under this Article VIII unless, and only to the extent that, such omission results in the Indemnifying Party’s forfeiture ofsubstantive rights or defenses which are material. In case any such Litigation shall be brought against any Indemnified Party, and it shall notify theIndemnifying Party of the commencement thereof, the Indemnifying Party shall be entitled to assume the defense thereof at its own expense, with counselsatisfactory to such Indemnified Party in its reasonable judgment; provided, however, that any Indemnified Party may, at its own expense, retain separatecounsel to participate in such defense at its own expense. Notwithstanding the foregoing, in any Litigation in which both the Indemnifying Party, on the onehand, and an Indemnified Party, on the other hand, are, or are reasonably likely to become, a party, such Indemnified Party shall have the right to employseparate counsel at the Indemnifying Party’s expense and to control its own defense of such Litigation if, in the reasonable opinion of counsel to suchIndemnified Party, either (x) one or more defenses are available to the Indemnified Party that are not available to the Indemnifying Party or (y) a conflict orpotential conflict exists between the Indemnifying Party, on the one hand, and such Indemnified Party, on the other hand, that would make such separaterepresentation advisable; provided, however, that the Indemnifying Party (i) shall not be liable for the fees and expenses of more than one counsel to allIndemnified Parties and (ii) shall reimburse the Indemnified Parties for all of such fees and expenses of such counsel incurred in any action between theIndemnified Parties and any third party, as such expenses are incurred. The Indemnifying Party agrees that it will not, without the prior written consent ofeach Indemnified Party, settle, compromise or consent to the entry of any judgment in any pending or threatened Litigation relating to the matterscontemplated hereby (if such Indemnified Party is a party thereto or has been actually threatened to be made a party thereto) unless such settlement,compromise or consent includes an unconditional release of each Indemnified Party from all liability arising or that may arise out of such Litigation. TheIndemnifying Party shall not be liable for any settlement of any Litigation effected against an Indemnified Party without its written consent, which shall notbe unreasonably withheld. The rights accorded to an Indemnified Party hereunder shall be in addition to any rights that any Indemnified Party may have atcommon law, by separate agreement or otherwise; provided, however, that notwithstanding the foregoing or anything to the contrary contained in thisAgreement, nothing in this Article VIII shall restrict or limit any rights that any Indemnified Party may have to seek equitable relief.8.3 Contribution. If the indemnification provided for in this Article VIII from the Indemnifying Party is unavailable to an IndemnifiedParty in respect of any Losses, the Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable bysuch Indemnified Party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and IndemnifiedParty in connection with the actions which resulted in such Losses, as well as any other relevant equitable considerations. The relative faults of suchIndemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue oralleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by,such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent suchaction. The amount paid or payable by a party as a result of the Losses referred to above shall be deemed to include, subject to the limitations set forth inSections 8.1 and 8.2, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. 14 8.4 Limitation of Liability. An Indemnifying Party shall not have liability for any breach of any representation or warranty unless theaggregate amount of Losses incurred by the Indemnified Party and indemnifiable thereunder based upon, attributable to or resulting from the failure of any ofthe representations or warranties to be true and correct exceeds US$3,000,000 (the “Basket”), and, in such event, the Indemnifying Party shall be required toindemnify the entire amount of all such Losses; provided, however, that the foregoing Basket shall not apply to any Losses related to the failure to be trueand correct of any of the representations and warranties set forth in Section 1 (Corporate Matters) and Section 2 (Authorization and Validity of Transactions)of Schedule 2 hereto. The aggregate liability of the Indemnifying Party hereunder to each Indemnified Party for any breach of any representation or warrantyshall not exceed the aggregate Consideration for the purchase of the applicable Notes. None of the parties shall have any liability for speculative, indirect,punitive, unforeseeable or consequential damages or lost profits resulting from any legal action or claim arising out of or relating to this Agreement.ARTICLE IX.TERMINATION OF AGREEMENT9.1 Termination. This Agreement may be terminated prior to the Closing:(a) at any time on or prior to the Closing, by mutual written consent of the Company and the Investors;(b) at the election of the Company or the Investors by written notice to the other parties hereto at any time after September 30,2017, if the Closing shall not have occurred by such date (the “Long Stop Date”), unless such date is extended by the mutual written consent of the Companyand the Investors; provided, however, that the right to terminate this Agreement under this Section 9.1(b) shall not be available to any party whose breach ofany representation, warranty, covenant or agreement under this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on orbefore such date;(c) at the election of the Investors, if there has been a material breach of any representation, warranty, covenant or agreement on thepart of the Company contained in this Agreement, which breach has not been cured within twenty (20) Business Days after delivery of written notice to theCompany of such breach; or(d) at the election of the Company, with respect to any Investor, if there has been a material breach of any representation, warranty,covenant or agreement on the part of such Investor contained in this Agreement, which breach has not been cured within twenty (20) Business Days afterdelivery of written notice to such Investor of such breach. 15 If this Agreement so terminates, it shall become null and void and have no further force or effect, except as otherwise provided in Section 9.2.9.2 Survival. If this Agreement is terminated pursuant to Section 9.1, (a) this Agreement shall become void and of no further force andeffect, except for the provisions of Sections 10.2 (Notices), 10.7 (Expenses), 10.8 (Governing Law), 10.9 (Dispute Resolution) and 10.12 (Publicity;Confidentiality), which shall survive the termination of this Agreement indefinitely or until the latest date permitted by law, (b) none of the parties heretoshall have any liability in respect of a termination of this Agreement pursuant to Section 9.1(a) or Section 9.1(b) (other than the party whose breach of arepresentation, warranty, covenant or agreement under this Agreement precipitated a termination pursuant to Section 9.1(b)), (c) nothing shall relieve any ofthe parties from liability for Losses resulting from the termination of this Agreement pursuant to Section 9.1(c) or Section 9.1(d), and (d) none of the partieshereto shall have any liability for speculative, indirect, punitive, unforeseeable or consequential damages or lost profits resulting from any legal actionrelating to the termination of this Agreement.9.3 Termination Fee. If this Agreement is terminated (i) by the Company with respect to any Investor pursuant to Section 9.1(d) or (ii) byeither the Company or any Investor pursuant to Section 9.1(b) as a result of (x) the failure by such Investor to fulfill the conditions set forth in Section 6.5 or(y) any other reason that is attributable to such Investor to consummate the Closing prior to the Long Stop Date, such Investor shall pay to the Company inimmediately available funds an amount equal to 5% of such Investor’s Consideration within three (3) Business Days after such termination.ARTICLE X.MISCELLANEOUS10.1 Survival of Representations and Warranties. The representations and warranties made by each party hereto shall survive the Closingfor a period of two (2) years (except for the Company’s representations and warranties set forth in Section 7 (Taxes) of Schedule 2, which shall survive theClosing for a period of five (5) years) and shall terminate and be of no further force and effect thereafter, provide that if a claim is made by any party hereto toanother party against whom such indemnity is sought with respect to any breach of a representation or warranty giving rise to the right of indemnity as setforth in Article VIII before the expiration of the applicable survival period, such representation or warranty, as applicable, shall survive the time at which itwould otherwise terminate until such claim is solved or settled.10.2 Notices.(a) Any party hereto giving any notice or making any other communication pursuant to this Agreement shall give such notice ormake such other communication in writing and shall use one of the following methods of delivery: personal delivery, courier with all fees prepaid orfacsimile. A notice or other communication is effective only if the party hereto giving the notice or making the other communication has complied with thepreceding sentence and if the addressee has received the notice or other communication; provided, that, a notice or other communication is deemed to havebeen received: 16 (i) if a notice or other communication is delivered in person, or sent by courier, upon receipt by the party hereto to whom thenotice or other communication is addressed as indicated by the date on a signed receipt for such notice or other communication signed for or on behalf ofsuch party; or(ii) if a notice or other communication is sent by facsimile, upon receipt by the party hereto giving or making the notice or othercommunication of an acknowledgement or transmission report generated by the machine from which the facsimile was sent indicating that the facsimile wassent in its entirety to the addressee’s facsimile number.(b) Any notice or other communication to a party hereto pursuant to this Agreement shall use the following address and facsimilenumber for such party (or such other address or facsimile number as such party may have notified to the other parties hereto pursuant to this Section 10.2):if to the Company:Qiyi.com, Inc.17/F, Capital Development TowerNo.2, Haidian North 1st StreetHaidian District, Beijing 100080, PRCFax: 86-10-6267 7000Attn: Wang Shuwenif to an Investor, at the address or facsimile number as set forth in Schedule 1.(c) A failure to deliver an informational copy of a notice or other communication to the applicable Person set forth in Section10.2(b) above does not affect the effectiveness of a notice or other communication that is otherwise given in accordance with this Section.(d) In the event that an addressee of a notice or communication rejects or otherwise refuses to accept a notice or othercommunication delivered or sent in accordance with this Section 10.2, or if the notice or other communication cannot be delivered because of a change inaddress for which no notice was given, then such notice or other communication is deemed to have been received upon such rejection, refusal or inability todeliver.(e) Any party may by notice given in accordance with this Section 10.2 designate another address or Person for receipt of noticeshereunder.10.3 Successors and Assigns; Third Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the successors andpermitted assigns of the parties hereto. Neither the Company on the one hand, nor the Investors on the other hand, shall assign any of its rights or delegate ortransfer any of its obligations under this Agreement without the written consent of the other side Except as otherwise provided herein, no Person other thanthe parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement. 17 10.4 Amendment and Waiver.(a) No failure or delay on any party hereto in exercising any right, power or remedy hereunder shall operate as a waiver thereof, norshall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power orremedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to the party hereto at law, in equity orotherwise.(b) Except as otherwise expressly specified in this Agreement, any amendment, supplement or modification of or to any provisionof this Agreement, any waiver of any provision of this Agreement, and any consent to any departure by the parties hereto from the terms of any provision ofthis Agreement, shall be effective and binding on the parties hereto (i) only if it is made or given in writing and signed by all of the parties hereto and(ii) only in the specific instance and for the specific purpose for which made or given.10.5 Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts,each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery ofan executed counterpart of a signature page of this Agreement by facsimile or other electronic means shall be as effective as delivery of a manually executedcounterpart of a signature page of this Agreement.10.6 Specific Performance. The parties hereto intend that each of the parties have the right to seek damages or specific performance in theevent that any other party hereto fails to perform such party’s obligations hereunder. Therefore, if any party shall institute any action or proceeding to enforcethe provisions hereof, any party against whom such action or proceeding is brought hereby waives any claim or defense therein that the plaintiff party has anadequate remedy at law.10.7 Expenses. All costs and expenses (including taxes, if any) incurred in connection with this Agreement, the other TransactionDocuments and any transaction contemplated hereby and thereby shall be paid by the party incurring such cost or expense.10.8 Governing Law. The laws of the State of New York (without giving effect to its conflicts of law principles) govern this Agreementand all matters arising out of or relating to this Agreement and any of the transactions contemplated hereby, including (a) its negotiation, execution, validity,interpretation, construction, performance and enforcement and (b) the rights and duties of the parties in whole or in part.10.9 Dispute Resolution.(a) Any dispute, controversy or claim arising out of or relating to this Agreement, or the interpretation, breach, termination orvalidity hereof, shall be resolved through consultation. Such consultation shall begin immediately after one party hereto has delivered to the other partieshereto a written request for such consultation. If within thirty (30) days following the date on which such notice is given the dispute cannot be resolved, thedispute shall be submitted to arbitration upon the request of any party with notice to the other parties. 18 (b) The arbitration shall be conducted in Hong Kong under the auspices of the Hong Kong International Arbitration Centre (the“Centre”). There shall be three (3) arbitrators. Each opposing party to a dispute shall be entitled to appoint one arbitrator (where there are more than one partyto one side of the dispute, the parties whose interests are aligned shall jointly appoint one arbitrator), and the third arbitrator shall be jointly appointed by thedisputing parties or, failing such agreement by thirty (30) days after the appointment by each party of its arbitrator, the appointment of the third arbitratorshall be made by the Secretary General of the Centre.(c) The arbitration proceedings shall be conducted in English. The arbitration tribunal shall apply the Arbitration Rules of theUnited Nations Commission on International Trade Law, as in effect at the time of the arbitration. However, if such rules are in conflict with the provisions ofthis Section 10.9, including the provisions concerning the appointment of arbitrators, the provisions of this Section 10.9 shall prevail.(d) The arbitrators shall decide any dispute submitted by the parties to the arbitration strictly in accordance with the substantivelaw of the State of New York and shall not apply any other substantive law.(e) Each party to an arbitration hereunder shall cooperate with the other in making full disclosure of and providing completeaccess to all information and documents requested by the other in connection with such arbitration proceedings, subject only to any confidentialityobligations binding on such party.(f) The award of the arbitration tribunal shall be final and binding upon the disputing parties, and the prevailing party may applyto a court of competent jurisdiction for enforcement of such award. In the event of any failure of a party to this Agreement to comply with the award of thearbitration tribunal, the non-complying party shall be liable to the other parties for all reasonable costs and expenses of such enforcement.(g) Either party shall be entitled to seek preliminary injunctive relief, if possible, from any court of competent jurisdiction pendingthe constitution of the arbitral tribunal, but such relief shall only be sought on the ground that the award to which the party may be entitled would beineffectual without interim relief.(h) The costs of arbitration shall be borne by the losing party(ies), unless otherwise determined by the arbitration tribunal.10.10 Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid,illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of theremaining provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair thebenefits of the remaining provisions hereof.10.11 Entire Agreement. This Agreement, together with the exhibits and schedules hereto, and the other Transaction Documents areintended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding ofthe parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, representations, warranties or undertakings,other than those set forth or referred to herein or therein. This Agreement, together with the exhibits and schedules hereto, and the other TransactionDocuments supersede all prior agreements and understandings between the parties with respect to such subject matter. 19 10.12 Publicity; Confidentiality. None of the parties hereto shall issue a press release or public announcement or otherwise make anydisclosure concerning (i) the provisions of this Agreement, the other Transactions Documents or the transactions contemplated hereby or thereby, (ii) thenegotiations relating to this Agreement or the other Transaction Documents, or (iii) the information of the other parties received during the negotiations andexecution of this Agreement and the other Transaction Documents without prior written approval by the Company and the Investors; provided, however, thatnothing in this Agreement shall restrict any party from disclosing information (a) that is already publicly available and not as a result of a breach of thisSection 10.12, (b) that may be required by applicable Requirements of Law, provided that such party will use reasonable efforts to (i) notify the other party inadvance of such disclosure so as to permit the other party to seek a protective order or otherwise contest such disclosure, and such party will use reasonableefforts to cooperate, at the expense of the other party, with the other party in pursuing any such protective order, and/or (ii) to obtain confidential treatment ofany information so disclosed, (c) to such party’s officers, directors, shareholders, investors, advisors, employees, members, partners, Controlling persons,auditors or counsel (as well as bona fide prospective lenders, investors, partners and advisors as long as such parties are subject to appropriate nondisclosureobligations) as may be reasonably required, or (d) to Persons from whom releases, consents or approvals are required, or to whom notice is required to beprovided, pursuant to the transactions contemplated by the Transaction Documents or any Requirement of Law.10.13 Consultation With Counsel. Each party hereto warrants that each of them has been represented and advised by legal counsel or hashad full opportunity to be represented and advised by legal counsel with respect to this Agreement and all matters covered by it. Each of them represents andagrees that if it has elected not to be represented by legal counsel in the negotiation, preparation or execution of this Agreement, such election was madefreely and voluntarily with full awareness of the consequences of the decision and that it is fully aware of the content and legal effect of this Agreement, andhas executed or will execute this Agreement after independent investigation and without fraud, duress or undue influence.[Signature Pages Follow] 20 IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Note Purchase Agreement as of the date firstwritten above. COMPANY:QIYI.COM, INC.By: /s/ Gong YuName: GONG YUTitle: Director[SIGNATURE PAGE TO QIYI.COM, INC. NOTE PURCHASE AGREEMENT] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Note Purchase Agreement as of the date firstwritten above. G1 INVESTOR:BAIDU HOLDINGS LIMITEDBy: /s/ Yanhong LiName: Yanhong LiTitle: Director[SIGNATURE PAGE TO QIYI.COM, INC. NOTE PURCHASE AGREEMENT] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Note Purchase Agreement as of the date firstwritten above. G1 INVESTOR:BCCF CAPITAL LIMITED PARTNERSHIPBy: /s/ Jianqiang DengName: Title: [SIGNATURE PAGE TO QIYI.COM, INC. NOTE PURCHASE AGREEMENT] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Note Purchase Agreement as of the date firstwritten above. G1 INVESTOR:HARVEST REWARDS FUND LPBy: /s/ Changqi LuName: Title: [SIGNATURE PAGE TO QIYI.COM, INC. NOTE PURCHASE AGREEMENT] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Note Purchase Agreement as of the date firstwritten above. G2 INVESTOR:MADRONE OPPORTUNITY FUND, L.P.By: Madrone Capital Partners, LLC,Its General PartnerBy: /s/ Greg PennerName: Greg PennerTitle: Manager[SIGNATURE PAGE TO QIYI.COM, INC. NOTE PURCHASE AGREEMENT] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Note Purchase Agreement as of the date firstwritten above. G2 INVESTOR:XIANG HE FUND I, L.P.By: /s/ authorized signatoryName: Title: [SIGNATURE PAGE TO QIYI.COM, INC. NOTE PURCHASE AGREEMENT] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Note Purchase Agreement as of the date firstwritten above. G2 INVESTOR:CMC CUE HOLDINGS LIMITEDBy: /s/ Xian ChenName: Xian ChenTitle: Director[SIGNATURE PAGE TO QIYI.COM, INC. NOTE PURCHASE AGREEMENT] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Note Purchase Agreement as of the date firstwritten above. G2 INVESTOR:EASTONE INTERNATIONAL CO., LTDBy: /s/ authorized signatoryName: Title: [SIGNATURE PAGE TO QIYI.COM, INC. NOTE PURCHASE AGREEMENT] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Note Purchase Agreement as of the date firstwritten above. G2 INVESTOR:GORGEOUS RAINBOW LIMITEDBy: /s/ Khalid ItonName: Khalid ItonTitle: Director[SIGNATURE PAGE TO QIYI.COM, INC. NOTE PURCHASE AGREEMENT] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Note Purchase Agreement as of the date firstwritten above. G2 INVESTOR:HH RSV-V HOLDINGS LIMITEDBy: /s/ Jennifer NeoName: Jennifer NeoTitle: Director[SIGNATURE PAGE TO QIYI.COM, INC. NOTE PURCHASE AGREEMENT] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Note Purchase Agreement as of the date firstwritten above. G2 INVESTOR:HONEY BEST LIMITEDBy: /s/ Jin ZhengName: Jin ZhengTitle: Director[SIGNATURE PAGE TO QIYI.COM, INC. NOTE PURCHASE AGREEMENT] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Note Purchase Agreement as of the date firstwritten above. G2 INVESTOR:IDG INFINITY FINANCIAL LIMITEDBy: /s/ Yihong GuoName: Yihong GuoTitle: Authorized Signatory[SIGNATURE PAGE TO QIYI.COM, INC. NOTE PURCHASE AGREEMENT] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Note Purchase Agreement as of the date firstwritten above. G2 INVESTOR:RUN LIANG TAI (HONG KONG) INVESTMENTCOMPANY LIMITEDBy: /s/ Yang YuxiangName: Yang Yuxiang Title: Director[SIGNATURE PAGE TO QIYI.COM, INC. NOTE PURCHASE AGREEMENT] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Note Purchase Agreement as of the date firstwritten above. G2 INVESTOR:SCC GROWTH IV HOLDCO A, LTD.By: /s/ Ip Siu Wai EvaName: Ip Siu Wai EvaTitle: Authorized Signatory[SIGNATURE PAGE TO QIYI.COM, INC. NOTE PURCHASE AGREEMENT] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Note Purchase Agreement as of the date firstwritten above. G2 INVESTOR:SILVERLINK CAPITAL LPBy: /s/ Andrew TsueiName: Andrew TsueiTitle: Managing Director of Silverlink Holdings Limited asGeneral Partner[SIGNATURE PAGE TO QIYI.COM, INC. NOTE PURCHASE AGREEMENT] Schedule 1Part AG1 Investors Name and Address of Investors Principal Amount of G1 Note ConsiderationBaidu Holdings Limited Address:No.10 Shangdi 10th Street,Haidian District,Beijing,100085, PRCFax: (86) 10 5992 0000 US$300,000,000 US$300,000,000BCCF Capital Limited Partnership Address:20/F, UNO Center Office,No.2A, Jiangtai Road, Chaoyang District,Beijing 100016, P.R. ChinaAttn: LI JiE-mail: ji.li@bccf.com.cnTel: (86) 10 5682 6952Fax: (86) 10 5682 6998 US$80,000,000 US$80,000,000Harvest Rewards Fund LP Address:31/F, One Exchange Square, 8 Connaught Place,Central, Hong KongAttn: E-mail: renjianqiong@ample-harvest.comTel: (86) 18612205601Fax: (852) 3921 8900 US$25,000,000 US$25,000,000G1 TOTAL US$405,000,000 US$405,000,000 SCHEDULE 1-1 Part BG2 Investors Name and Address of Investors Principal Amount of G2 Note ConsiderationMadrone Opportunity Fund, L.P. Attn: Greg PennerE-mail: greg@madronecap.com US$50,000,000 US$50,000,000Xiang He Fund I, L.P. Address:PO Box 309, Ugland House, Grand Cayman,KY1-1104, Cayman IslandsAttn: Hesong Tang / Eva WangE-mail: htang@xianghecap.com /ewang@xianghecap.comTel: (1) 650 666 7287 / (1) 650 319 5662 US$10,000,000 US$10,000,000CMC CUE HOLDINGS LIMITED Address:Unit 2208, North Building, Kerry Centre1 Guanghua Road, Chaoyang DistrictBeijing, ChinaAttn: CHEN XianE-mail: alex.chen@cmccap.comFax: (86) 10 6561 1002 US$80,000,000 US$80,000,000Eastone International Co., Ltd Address:24/F, Building A, 4 Xing Gong Street, Sha He KouDistrictDalian, Liaoning, ChinaAttn: Weifen XuE-mail: xuweifen1210@163.comTel: (86) 411 8889 1311; (86) 15998598082 US$114,200,000 US$114,200,000Gorgeous Rainbow Limited Address:Suite 1508, 15/F, Hutchison House,10 Harcourt Road, US$220,000,000 US$220,000,000Central, Hong KongAttn: Joey CHENE-mail: jchen@boyucapital.comFax: (852) 3987 1711 SCHEDULE 1-2 HH RSV-V Holdings Limited Address:Floor 28, Building B, PingAnInternational Financial Center,No. 1-3, Xinyuan South Road,Chaoyang District, Beijing100027 PRCAttn: Paul MaE-mail: yma@hillhousecap.com;with a copy toLegal@hillhousecap.comFax: (86) 10 5952 0882 US$350,000,000 US$350,000,000Honey Best Limited Address:Room904, Tower E1, OrientalPlaza, No.1 East Chang’anAvenue, Dongcheng District,Beijing, PRCAttn: CHAI HuaE-mail: hua.chai@everbright-idg.comFax: (86) 10 8518 8718 US$80,000,000 US$80,000,000IDG Infinity Financial Limited Address:c/o IDG Capital Management(HK) Ltd.Unit 5505, 55/F., The Center99 Queen’s RoadCentral, Hong KongAttn: Chi Sing HOFax: (852) 2529 1619 With a copy to:Address: c/o IDG CapitalInvestment Consultancy(Beijing) Co., Ltd.Floor 6, Tower A, COFCO Plaza,8 Jianguomennei DajieBeijing, 100005, P.R. ChinaAttn: Mr. GUO Rui US$50,000,000 US$50,000,000Fax: (86) 10 8512 0225 SCHEDULE 1-3 Run Liang Tai (Hong Kong) Investment CompanyLimited Address:9/F AMTEL BLDG 148 DESVOEUX RD CENTRALCENTRAL HONG KONGAttn: Meng Xiang YunOffice Address:SCG Parkside , 1006-1008 868Yinghua Rd, Pudong Shanghai,ChinaE-mail: xmeng@boliucapital.comFax: (86) 021 2612 0960-716 US$130,800,000 US$130,800,000SCC Growth IV Holdco A, Ltd. Address:Suite 3613, 36/F, Two Pacific Place, 88 QueenswayHong KongAttn: Ip Siu Wai EvaE-mail: eip@sequoiacap.comFax: (852) 2501 5249 US$80,000,000 US$80,000,000Silverlink Capital LP Address:Suite 1502, 15F, Beautiful Group Tower 74-77Connaught Road CentralCentral, HKAttn: Theresa TengE-mail: theresa@silverlinkcapital.com US$40,000,000 US$40,000,000G2 TOTAL US$1,205,000,000 US$1,205,000,000 SCHEDULE 1-4 Schedule 2Representations and Warranties of the CompanyDefinitionsIn this Schedule 2, in addition to the capitalized terms defined in Article I of this Agreement, the following terms have the meanings as follows:“Assets” means all assets, rights and privileges of any nature and all goodwill associated therewith, including all rights in respect of ContractualObligations, all Intellectual Property, Technology and Equipment.“Charter” means memorandum of association, articles of association, by-laws or other corporate constituting documents (including the business licensefor any entity organized under the laws of the PRC).“Contingent Obligation” means, with respect to any Person, any agreement by such Person with respect to any Indebtedness (the “primary obligation”)of another Person (the “primary obligor”), whether or not contingent, (a) to purchase, repurchase or otherwise acquire such primary obligations, (b) to advanceor provide funds (i) for the payment or discharge of any such primary obligation, or (ii) to maintain working capital or equity capital of the primary obligor orotherwise to maintain the net worth or solvency or any balance sheet item, level of income or financial condition of the primary obligor as required by or as acondition of any such primary obligation, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primaryobligation of the ability of the primary obligor to make payment of such primary obligation, or (d) otherwise to assure or hold harmless the owner of any suchprimary obligation against loss or failure or inability by the primary obligor to perform any primary obligation. The amount of any Contingent Obligationshall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation ismade or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof.“Copyrights” means copyrights, mask work rights, database rights and design rights, whether or not registered, published or unpublished, and allregistrations and applications for registration thereof, and all rights therein, whether provided by international treaties or conventions or otherwise.“Environmental Laws” means laws, regulations and codes of the PRC or any other jurisdiction, as well as orders, decrees, judgments or injunctions,issued, promulgated, approved or entered thereunder relating to pollution, protection of the environment or public health and safety.“Equipment” means all plant and machinery, tools and equipment, vehicles and office furniture, computer equipment and accessories and othertangible Assets.“Financial Statements” has the meaning set forth in Section 6(a) of this Schedule 2.“Indebtedness” means, as to any Person, without duplication, (a) all obligations of such Person for borrowed money (including, reimbursement and allother obligations with respect to surety bonds, letters of credit and bankers’ acceptances, whether or not matured), (b) all obligations of such Person to pay thedeferred purchase price of property or services, except trade accounts payable and accrued commercial or trade liabilities arising in the ordinary course ofbusiness, (c) all interest rate and currency swaps, caps, collars and similar agreements or hedging devices under which payments are obligated to be made bysuch Person, whether periodically or upon the happening of a contingency, (d) all indebtedness created or arising under any conditional sale or other titleretention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in theevent of default are limited to repossession or sale of such property), (e) all obligations of such Person under leases which have been or should be, inaccordance with the US GAAP, recorded as capital leases, (f) all indebtedness described in the foregoing clauses secured by any Lien (other than Liens infavor of lessors under leases other than leases included in clause (e)) on any property or asset owned or held by that Person regardless of whether theindebtedness secured thereby shall have been assumed by that Person or is non-recourse to the credit of that Person, and (g) any Contingent Obligation ofsuch Person. SCHEDULE 2-1 “Intellectual Property” means rights relating to all of the following, whether protected, created or arising under the laws of PRC or any other foreignjurisdiction: (a) Patents, (b) Copyrights, (c) Trade Secrets, (d) Trademarks, (e) Internet Assets, and (f) all applications and registrations relating to any of therights set forth in the foregoing clauses (a) to (e).“Internet Assets” means all rights arising from, in, or in respect of any Internet domain names and other computer user identifiers and any rights in andto sites on the worldwide web, including rights in and to any text, graphics, audio and video files and html or other code incorporated in such sites.“knowledge”, with respect to the Company, means the Company’s actual knowledge that has been brought to the attention of the Key Employeesand/or director(s) of the Company.“Land Use Rights” means with respect to the land on which the facilities of any Group Company are located, the land use rights granted in relationthereto under the relevant land use right certificates and real estate certificates.“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, encumbrance, lien (statutory or other), preemptive right, right of firstrefusal, or preference, priority, right or other security interest or preferential arrangement of any kind or nature whatsoever.“Litigation” has the meaning set forth in Section 9(a) of this Schedule 2.“Material Contracts” has the meaning set forth in Section 5(a) of this Schedule 2.“Patents” means any patents and patent applications issued by any Governmental Authority or made in any jurisdiction, including any statutoryinvention registrations, divisions, continuations, continuations-in-part, substitutions thereof, whether or not patents are issued on such applications andwhether or not such applications are modified, withdrawn or resubmitted, and any extensions, reissues, restorations and reexaminations of the foregoing.“Plan” means any employee benefit plan, arrangement, policy, program, agreement or commitment, including any employment, consulting or deferredcompensation agreement, executive compensation, bonus, incentive, pension, profit-sharing, savings, retirement, stock option, stock purchase or severancepay plan, any life, health, disability or accident insurance plan, whether oral or written, as to which any Group Company has or in the future could have any,direct or indirect, actual or contingent liability. SCHEDULE 2-2 “Related Party”, with respect to the Group Companies, means (i) any shareholder of the Company or any Subsidiary, (ii) any director of the Companyor any Subsidiary, (iii) any Key Employee, (iv) any Relative of a director of the Company or any Subsidiary, and (v) any Person in which any shareholder ordirector of the Company or any Subsidiary or any Key Employee, has a majority equity interest.“Relative” of a natural person means her/his spouse, parents, children, grandparents, grandchildren and siblings.“Software” means any computer software programs, source code, object code, data and documentation, including any computer software programs thatincorporate and run any Group Company’s pricing models, formulae and algorithms.“Technology” means, collectively, all designs, formulas, algorithms, procedures, techniques, ideas, know-how, Software, programs, models, routines,databases, tools, inventions, creations, improvements, works of authorship, recordings, graphs, drawings, reports, analyses, and other writings, and any otherembodiment of the above, in any form, whether or not specifically listed herein.“Trade Secrets” means any trade secrets, research records, processes, procedures, manufacturing formulae, technical know-how, proprietary technology,blue prints, designs, plans, inventions (whether patentable and whether reduced to practice), invention disclosures and improvements thereto, in each case,the value of which is contingent upon the maintenance of confidentiality thereof.“Trademarks” means any trademarks, service marks, trade names, service names, trade dress, logos, and other product or service identifiers or identifiersof source, whether registered or unregistered, including all goodwill associated therewith and all common law rights, registrations and applications forregistration thereof in any jurisdiction, all rights therein provided by international treaties or conventions, and all reissues, extensions and renewals of any ofthe foregoing.The Warranties 1.CORPORATE MATTERS (a)Organization, Good Standing and Qualification. Each of the Group Companies has been duly incorporated and organized under the laws of thejurisdiction of its incorporation, and is validly existing and in compliance with all registration and approval requirements relating to itsestablishment as a company under the laws of the jurisdiction of its incorporation. Each of the Group Companies has the corporate power andauthority to own and operate its Assets and properties and to carry on its business as currently conducted. Each of the Group Companies isqualified to do business and is in good standing (or equivalent status in the relevant jurisdiction) in each jurisdiction, except to the extent thatthe failure to be so qualified or be in good standing would not have, a Material Adverse Effect. Each PRC Entity has a valid business licenseissued by the State Administration for Industry and Commerce or its local branch, and has, since its establishment, carried on its businessmaterially in compliance with the business scope set forth in its business license. SCHEDULE 2-3 (b)Charter Documents. All legal and procedural requirements and other formalities concerning such Charter and the arrangements set forth thereinhave been duly and properly complied with in all material respects. (c)Capitalization. (i)Ordinary Shares. As of the date hereof, the Company has authorized 3,500,000,000 Ordinary Shares, of which 342,548,237 are currentlyissued and outstanding. As of the Closing Date, the Company will have reserved 589,729,714 Ordinary Shares for issuance to officers,directors, employees and other service providers of the Company pursuant to (i) the employment agreement with the chief executiveofficer of the Company, and (ii) an equity incentive plan duly adopted by the Board of Directors and approved by the Company’sshareholders (as amended from time to time, collectively the “Share Option Reserve”). (ii)Preferred Shares. As of the date hereof, the Company has authorized 2,714,387,481 Preferred Shares: (i) 200,000,000 of which aredesignated as Series A Preferred Shares, all of which are issued and outstanding; (ii) 6,064,174 of which are designated as Series A-1Junior Preferred Shares, all of which are issued and outstanding; (iii) 123,103,264 of which are designated as Series B Preferred Shares, allof which are issued and outstanding; (iv) 302,891,196 of which are designated as Series C Preferred Shares, all of which are issued andoutstanding; (v) 848,682,647 of which are designated as Series D Preferred Shares, all of which are issued and outstanding, (vi)686,646,383 of which are designated as Series E Preferred Shares, all of which are issued and outstanding, and (vii) 546,999,817 of whichare designated as Series F Preferred Shares, all of which are issued and outstanding. (iii)HK Subsidiary. The authorized share capital of the HK Subsidiary on the date hereof is HK$10,000 divided into 10,000 shares with a parvalue of HK$1.00 each, one (1) share of which is issued and outstanding and held by the Company. (iv)PRC Entities. The registered capital of each of the PRC Entities on the date hereof is set forth opposite its name on Section 1(c) of theDisclosure Schedule, together with an accurate list of the registered shareholders of such registered capital. (v)Except for (i) the Transaction Documents, (ii) the Share Option Reserve, and (iii) the option to purchase the equity interest of theDomestic Enterprises as set forth in the Control Documents, there are no options, warrants, conversion privileges, subscription orpurchase rights or other rights presently outstanding to purchase or otherwise acquire (i) any Equity Securities of the Group Companiesor (ii) any other securities of the Group Companies and there are no commitments, contracts, agreements, arrangements or understandingsby the Group Companies to issue any shares, capital stock or any Equity Securities or other securities of the Group Companies. TheConversion Shares, when issued to the Investors upon the conversion of the Notes, will be duly authorized, validly issued, fully paid andnon-assessable, will be issued in compliance with the registration and qualification requirements of all applicable securities laws(assuming the accuracy of the representations and warranties of the Investors set forth in Article IV) and will be free and clear of all Liens,other than the pledge created under the Control Documents with respect to the equity interest of the Domestic Enterprises and except asset forth in the amended and restated shareholders agreement to be entered into upon the conversion of the Notes. All of the issuedEquity Securities of the Group Companies are validly issued, fully paid and non-assessable, and were issued in compliance with theregistration and qualification requirements of all applicable securities laws. The registered capital of each of the PRC Entities weretimely contributed and such registered capital is nonassessable. All of the issued Equity Securities of the Group Companies are free andclear of any Lien (except as set forth in the Control Documents, the Shareholders Agreement and Requirements of Law). SCHEDULE 2-4 (d)Corporate Structure; Subsidiaries. Section 1(d) of the Disclosure Schedule sets forth a complete structure chart showing Group Companies, andindicating the ownership and Control relationships among all Group Companies and the jurisdiction in which each Group Company wasorganized. No Group Company owns or Controls, directly or indirectly, any Equity Security in any other Person except as disclosed in Section1(d) of the Disclosure Schedule. 2.AUTHORIZATION AND VALIDITY OF TRANSACTIONS (a)Authorization. The Company has the power and authority to execute and deliver the Transaction Documents and the other agreements to whichit is a party and the execution of which is contemplated hereunder as well as to perform its respective obligations thereunder. Except for suchcorporate actions on the part of the Company in connection with the conversion of the Notes, all corporate actions on the part of the Companynecessary for the authorization, execution and delivery of, and the performance of all of its respective obligations under, the TransactionDocuments have been taken or will be taken prior to the Closing Date. (b)Enforceability. This Agreement and each other Transaction Document will be, when executed, a valid and binding obligation of and enforceableagainst the Company, except where such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium orsimilar laws affecting creditors’ rights generally and (ii) laws relating to the availability of specific performance or injunctive relief. (c)Consents and Approvals. Except for such Consents (as defined below) that will need to be made or obtained in connection with or as a result ofthe conversion of the Notes, all consents, licenses, permits, approvals, orders or authorizations of, or registrations, qualifications, designations,declarations or filing with, any Governmental Authority or any other third party (“Consents”) which are required to be made or obtained by theCompany in connection with the consummation of the transactions contemplated under this Agreement have been or will be obtained or madeprior to and are effective as of the Closing. SCHEDULE 2-5 (d)No IP Litigation. To the knowledge of the Company, except as disclosed in Section 2(d) of the Disclosure Schedule, none of the GroupCompanies has pending material Litigation in which the right of any Group Company to use, sell or license out its Intellectual Property orTechnology has been contested. (e)No Breach. The execution and delivery by the Company of each Transaction Document and the performance by the Company of its obligationsunder such documents do not: (i)breach or constitute a default under (with or without notice, lapse of time or both) any Charter document of the Company; (ii)result in a material breach of, or constitute a material default under (with or without notice, lapse of time or both), or give rise to a right oftermination or cancellation with respect to any material Contractual Obligation to which the Company is a party or by which theCompany or its material property or Assets is bound or result in the acceleration of any material obligation under any ContractualObligation; (iii)result in a material violation or breach of or default under (with or without notice, lapse of time or both) any Requirements of Law or ofany order, writ, injunction, judgment or decree of any Governmental Authority by which such Person or its property of Assets is bound. (f)No Brokerage Fees. No Person is entitled to receive from the Company or any of its Affiliates any finder’s fee, brokerage or commission inconnection with this Agreement and each other Transaction Document or the transactions contemplated hereby or thereby. 3.LEGAL COMPLIANCE (a)Compliance with Laws. (i)Each of the Group Companies is, and has been (including without limitation, with respect to the carrying on of its business or theownership of its properties), in compliance in all material respects with all applicable Requirements of Law. None of the GroupCompanies nor, to the knowledge of the Company, any of its directors, officers or senior management staff, has committed any criminaloffence that could result in arrest or that carries a penalty that could include imprisonment, or any tort or any breach of any Requirementsof Law, in either case relating to the carrying on of the business of any Group Companies. None of the equity holders of any of the GroupCompanies is or has at any time committed any criminal offence or been in violation of any applicable Requirements of Law relating tothe carrying on of the business of any Group Company. (ii)There are no Contractual Obligations or concerted practices to which any of the Group Companies is a party or by which any of theGroup Companies is bound which are illegal or which contravene any applicable Requirements of Law in any material respects. SCHEDULE 2-6 (iii)Assuming the accuracy of the representations and warranties of the Investors set forth in Article IV, the offer, sale and issuance of theNotes and the issuance of the Conversion Shares upon the conversion of the Notes in conformity with the terms of this Agreement areexempt from the registration and prospectus delivery requirements of the United States Securities Act of 1933, as amended, and eachother analogous provision of any other applicable body of securities law. (b)Permits. Each of the Group Companies has all material permits, approvals, authorizations, franchises and licenses necessary for the conduct of itsbusiness as currently conducted. None of the Group Companies is in breach of or default under any such permit, approval, authorization,franchise or license. All such permits approvals, authorizations, franchises and licenses will remain in full force and effect notwithstanding anytransaction contemplated in connection with any Transaction Document. None of the Group Companies is in receipt of any letter or notice fromany relevant Governmental Authority notifying revocation of any such permits or licenses issued to it for noncompliance or the need forcompliance or remedial actions in respect of the activities carried out directly or indirectly by it. Each of the PRC Entities has been conductingtheir respective business activities within their respective permitted scopes of business or are otherwise operating their respective businesses inmaterial compliance with all Requirements of Law and with all requisite licenses, permits and approvals granted by competent PRCGovernmental Authorities. In respect of approvals, licenses or permits requisite for the conduct of any part of the business of any of the GroupCompanies which are subject to periodic renewal, none of the Group Companies has any reason to believe that such requisite renewals will notbe timely granted by the relevant Governmental Authorities. (c)Governmental Authority. (i) There is no Governmental Authority or other Person that has: (x)instituted or, to the knowledge of the Company, threatened any action or investigation to restrain, prohibit or otherwise challenge theacquisition of the Notes by the Investors or any of the transactions contemplated in connection with the Transaction Documents; or (y)to the knowledge of the Company, proposed or adopted any Requirements of Law which would prohibit, materially restrict theoperations of any of the Group Companies as currently conducted or currently proposed to be conducted. (ii)None of the information requested by any Governmental Authority in relation to the transactions contemplated by this Agreement is, inthe reasonable opinion of the Company, unusual or otherwise outside the ordinary course. (d)Compliance with Other Instruments. None of the Group Companies is in, nor shall the conduct of its business as currently result in, a violation,breach or default of any term of the Charter documents of the Company or the PRC Entity (as the case may be), or in any material respect of anyterm or provision of any mortgage, indenture, contract, agreement or instrument to which the Company or the PRC Entity is a party or by whichit or its property may be bound, or in any material respect of any provision of any judgment, decree, order, statute, rule or regulation applicableto or binding upon any of the Group Companies. None of the activities, agreements, commitments or rights of any of the Group Companies isultra vires or unauthorized. SCHEDULE 2-7 4.ASSETS (a)Title to Assets. The Group Companies have good title to (free and clear of any Lien, except for Permitted Liens), or in the case of leased propertyand assets, have valid leasehold interests in, all its properties and assets (whether real, personal, tangible or intangible) reflected on the FinancialStatements or acquired after June 30, 2016 except for properties and assets sold since June 30, 2016 in the ordinary course of business consistentwith past practice or where the failure to have such good title or valid leasehold interests would not have a Material Adverse Effect. Theforegoing properties and assets collectively represent in all material respects all properties and assets necessary for the conduct of the business ofthe Group Companies as presently conducted. (b)Land Use Rights. None of the Group Companies has at any time had any Land Use Rights or otherwise holds any title or other ownership interestto any real property. (c)Leased Properties. Section 4 (c) of the Disclosure Schedule lists all real property leased or subleased by the Group Companies. With respect toeach lease and sublease in connection with all real property leased or subleased by the Group Companies:(i) such lease or sublease is in full force and effect in all material respects, assuming the respective lessor holds valid title or land use rights tosuch properties;(ii) (A) none of the Group Companies is, and to the knowledge of the Company, no other party to the lease or sublease is, in material default withrespect to such lease or sublease, or (B) none of the Group Companies has received a written notice of default with respect to such lease orsublease;(iii) there is no pending, or to the knowledge of the Company, threated condemnation, confiscation or eminent domain proceeding by anyGovernmental Authority with respect to the leased properties of the Group Companies which could cause a Material Adverse Effect on the GroupCompanies. 5.CONTRACTS AND TRANSACTIONS (a)Material Contracts. With respect to each of the Contractual Obligations to which any of the Group Companies is a party (but excluding anyContractual Obligations that have been fully performed by all parties thereto, with no continuing obligations whatsoever by any party thereto),or by which it is bound, that: (i) was entered into outside of its ordinary course of business, (ii) involves total payments (contingent or otherwise)or revenues in excess of RMB400,000,000 individually with respect to each Contractual Obligation, (iii) involves any Related Party, (iv) extendfor more than one year beyond the date of this Agreement, (v) are not terminable upon notice of thirty (30) days or less without incurring anypenalty or obligation, (vi) contain exclusivity, non-competition, or similar clauses that impair, restrict or impose conditions on any of the GroupCompanies’ right to offer or sell products or services in specified areas, during specified periods, or otherwise, other than those ContractualObligations entered into by any Group Company during its ordinary course of business, (vii) transfer or license any Intellectual Property to orfrom the Group Companies (other than licenses granted in the ordinary course of business that also does not fall into any type from (ii) to (vi) and(viii), licenses from commercially readily available “off the shelf” computer software or licenses on the standard form of license agreement of theGroup Companies), (viii) the termination of which would be reasonably likely to have a Material Adverse Effect or (ix) is otherwise material tothe Group Companies (collectively, “Material Contracts”), the applicable Group Company is not in default (to the knowledge of the Company,nor with the giving of notice or passage of time, would be in default) in any material respect in the performance, observance or fulfillment of anyof its obligations or covenants contained in any such Material Contract, and to the knowledge of the Company, none of the parties to any suchMaterial Contract has indicated any intention to terminate, rescind, avoid or repudiate such Material Contract prior to the expiration of its term.Each Material Contract to which any of the Group Companies is a party has been duly authorized, executed and delivered by the applicableGroup Company and, to the knowledge of the Company, by each other party thereto and constitutes the valid and binding obligation of theapplicable Group Company and, to the knowledge of the Company, of each other party thereto, enforceable against the Group Companies and,to the knowledge of the Company, against each other party thereto, in accordance with its terms, except where such enforceability may belimited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and (ii) lawsrelating to the availability of specific performance or injunctive relief. SCHEDULE 2-8 (b)Performance. To the knowledge of the Company, there does not exist any fact, condition or circumstance which would render any materialobligation under any Material Contract incapable of being performed. 6.FINANCIAL MATTERS (a)Financial Statements. The Company has delivered or caused to be delivered to each Investor or its advisor (i) the unaudited and consolidatedincome statement for the six-month period ended June 30, 2016, and (ii) the unaudited consolidated balance sheet as of June 30, 2016(collectively, the “Financial Statements”). The Financial Statements (x) are true, correct and complete in all material aspects and present fairly inall material aspects the financial condition of the Group Companies at the date or dates therein indicated and the results of operations for theperiod or periods therein specified, subject in the case of the unaudited Financial Statements to normal year-end audit adjustments, and (y) havebeen prepared in all material aspects in accordance with the US GAAP applied on a consistent basis throughout the periods indicated, except thatthe unaudited Financial Statements may not contain all footnotes required by US GAAP. (b)No Material Liabilities. Since June 30, 2016, neither the Company nor any PRC Entity has incurred any material liability or obligation, absoluteor contingent (individually or in the aggregate) other than (i) in ordinary course of business, or (ii) duly approved by the Board of Directorspursuant to the then-existing Charter of the Company. Since June 30, 2016, except for any of the followings that would not have a MaterialAdverse Effect and other than those incurred in the ordinary course of business and those as contemplated by the Transaction Documents, noneof the Group Companies has: SCHEDULE 2-9 (i)purchased, acquired, sold, transferred, leased or otherwise disposed of any material assets; (ii)created, assumed or discharged any material Lien (other than Permitted Liens); and (iii)commenced or settled any material Litigation. (c)Financial Obligations. There is no Indebtedness made, given, assumed, guaranteed, entered into or incurred, directly or indirectly, by or onbehalf of any of the Group Companies; and there are no Liens (except Permitted Liens) on the Assets of any of the Group Companies or any partthereof, in each case except as set forth in the Control Documents, or as reflected on Financial Statements. None of the Group Companies hasentered into any financing or “off balance sheet” arrangements. 7.TAXES (a)There are no material Taxes due and payable by any of the Group Companies which have not been timely paid or withheld. There are no accruedand unpaid material Taxes of any of the Group Companies which are due, whether or not disputed. (b)Each of the Group Companies has timely filed or caused to be filed all returns for Taxes that it is required to file (including all applicableextensions), and all such Tax returns are accurate and complete in all material aspects. No Group Company has received any written claim madeby a Tax Governmental Authority having jurisdiction over such Group Company claiming such Group Company fails to file returns for Taxesthat such Group Company is subject to taxation by that jurisdiction. (c)With respect to all such Tax returns of any of the Group Companies, (i) there is no unassessed Tax deficiency proposed or, to the knowledge ofthe Company, threatened against any of the Group Companies and (ii) no audit is in progress with respect to any return for Taxes, no extensionof time is in force with respect to any date on which any return for Taxes was or is to be filed and no waiver or agreement is in force for theextension of time for the assessment or payment of any Tax. (d)With respect to each Group Company, there is no pending investigation conducted by a Tax Governmental Authority having jurisdiction oversuch Group Company regarding its payment or withholding of Taxes. (e)There are no Liens (except Permitted Liens) for Taxes on the Assets of any of the Group Companies. SCHEDULE 2-10 8.INSURANCE (a)All of the insurance policies held by or on behalf of any of the Group Companies are valid and enforceable in accordance with their terms and arein full force and effect and cover risks associated with the Company’s or applicable PRC Entity’s business that are customarily insured againstfor companies similarly situated and in such amounts as are customarily insured against for companies similarly situated. None of such policieswill be affected by, or terminate or lapse by reason of, any transaction contemplated in the Transaction Documents. 9.CLAIMS AND PROCEEDINGS (a)No Litigation. Except as disclosed in Section 9(a) of the Disclosure Schedule, none of the Group Companies and any officer or director of any ofthe Group Companies (in his or her capacity as an officer or director) is engaged in, has pending or has been notified that it is the subject of anymaterial action, suit, preceding, complaint, investigation, inquiry, claim, litigation, arbitration or administrative or criminal proceedings(collectively, “Litigation”), whether as plaintiff, defendant or otherwise. To the knowledge of the Company, there are no facts or circumstanceslikely to give rise to any material Litigation against any of the Group Companies or any officer or director thereof (in his or her capacity as anofficer or director). (b)No Threatened Proceedings. To the knowledge of the Company, there is no threatened Litigation against any of the Group Companies or anyofficer or director thereof (in his or her capacity as an officer or director). (c)Environmental Matters. Each of the Group Companies is in compliance in all material respects with all applicable Environmental Laws, nomaterial expenditures are or, to the knowledge of the Company, will be required in order to comply with any such laws. 10.EMPLOYMENT AND LABOR RELATIONS (a)Compliance with Law. Each of the Group Companies has complied in all material respects with all applicable employment and labor laws,including laws and regulations pertaining to welfare funds, social benefits, medical benefits, insurance, retirement benefits, and pensions. (b)Employee Benefit Plans. Each of the Group Companies has made all social security contributions (or similar contributions) in respect of or onbehalf of all its employees in accordance with Requirements of Law in all material respects. Other than such social security contributions, noneof the Group Companies maintains, or contributes to, or has any liability under, any Plan. (c)Key Employees. Each Key Employee has entered into an employment agreement and other ancillary agreement(s) on confidentiality andproprietary information, intellectual property right of the Group Companies as well as such Key Employees’ obligations of non-competition andnon-solicitation. (d)Labor Relations. (i) The Group Companies’ labor practice are in compliance with the applicable Requirements of Law in all material aspects;(ii) there is (A) no grievance or arbitration proceeding arising out of or under collective bargaining agreements pending or, to the knowledge ofthe Company, threatened against any of the Group Companies, and (B) no strike, labor dispute, slowdown or stoppage pending or, to theknowledge of the Company, threatened against any of the Group Companies. To the knowledge of the Company, none of the Key Employeesintends to terminate his/her employment with the Group Companies, as applicable. None of the Group Companies has discussed or taken anysteps to terminate the employment of any Key Employee. To the knowledge of the Company, each Key Employee spends all, or substantially all,of his/her business time on the business of the Group Companies. SCHEDULE 2-11 11.INTELLECTUAL PROPERTY (a)The Company and/or an applicable Group Company is the owner of, or, to the knowledge of the Company, has the valid and subsisting licenseor right to use, all of the Intellectual Property (including the Internet websites) and Technology necessary to operate its existing business. (b)Section 11(b) of the Disclosure Schedule lists all material Intellectual Property license agreements which grant Intellectual Property to the GroupCompanies. Each of the Group Companies has performed in all material aspects, obligations imposed upon it thereunder, and is not, nor to theknowledge of the Company, is any other party thereto, in breach of or default thereunder in any material respect, nor is there any event whichwith notice or lapse of time or both would constitute a default in any material respect thereunder. To the knowledge of the Company, all of suchIntellectual Property license agreements listed on Section 11(b) of the Disclosure Schedule are valid, enforceable and in full force and effect,except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium orsimilar laws affecting the enforcement of creditors’ rights generally and except for the termination or expiration pursuant to the terms andprovisions thereof. (c)None of the Intellectual Property or Technology used, developed, sold, licensed or otherwise exploited by any of the Group Companies, or to theknowledge of the Company, made for, or sold or licensed to any of the Group Companies by any Person infringes upon or otherwise violates anyIntellectual Property rights of any third Person, except to the extent that any such infringement or violation, individually or in the aggregate,would not have a Material Adverse Effect. (d)To the knowledge of the Company, no Person is infringing upon or otherwise violating the Intellectual Property rights of the Group Companies. (e)No employee or any former employee of the Group Companies has made a claim against the Group Companies that any of the Group Companiesis utilizing Intellectual Property owned by such employee or former employee. (f)None of the Group Companies is a party to or bound by any license or other agreement requiring the payment by any of the Group Companies ofany material royalty payment, excluding such agreements relating to Software licensed for use solely on the computers of any of the GroupCompanies, intra-company license agreements or video-contents related license agreements relating to the ordinary course of business of theGroup Companies. SCHEDULE 2-12 (g)To the knowledge of the Company, no employee of any of the Group Companies is in material violation of any term of any Patent or inventiondisclosure agreement, any Patent or invention disclosure provisions in any employment agreement, confidentiality agreement, or any othercontract or agreement. To the knowledge of the Company, none of the Key Employees is in material violation of any employment agreement orother employment-related agreement with any of the Group Companies, as applicable. (h)None of the Trade Secrets that are material to the business of the Group Companies, wherever located, the value of which is contingent uponmaintenance of confidentiality thereof, has been disclosed to any Person other than the shareholders and employees of any of the GroupCompanies, except: (i) as required pursuant to the filing of a Patent application by the Group Companies or (ii) where such disclosure wasproperly made in the ordinary course of its business or for financing purposes or as required under the Control Documents, in either case subjectto an agreement under which the recipient is obliged to maintain the confidentiality of such Trade Secrets and is restrained from furtherdisclosing it or using it other than for the purposes for which it was disclosed by the Group Companies. None of the Group Companies is inmaterial breach of any Contractual Obligations under which confidential information belonging to any Person is made available to the GroupCompanies. (i)It is not necessary for the business of any of the Group Companies as currently conducted to use any Intellectual Property or Technology ownedby any director, officer, employee or consultant of any of the Group Companies (or persons the Group Companies presently intends to hire). Tothe knowledge of the Company, at no time during the conception or reduction to practice of any of the Intellectual Property or Technology ofany of the Group Companies was any developer, inventor or other contributor to such Intellectual Property or Technology operating under anygrants from any Governmental Authority or subject to any employment agreement, invention assignment, nondisclosure agreement or otherContractual Obligations with any Person other than the Group Companies that could adversely affect the rights of any of the Group Companiesto its Intellectual Property or Technology. (j)All present and former employees and officers of each of the Group Companies have executed and delivered employment contracts containingproprietary invention provisions with the Group Companies, and are obligated under the terms thereof to assign all inventions made by themduring the course of employment that relate to any work assigned and are developed using the financial support, supplies and facilities providedby the Group Companies to the Group Companies. No such employee of any of the Group Companies has excluded works or inventions madeprior to his employment with or work for the Group Companies from his assignment of inventions pursuant to such proprietary inventionagreements. (k)Network Redundancy and Computer Back-up. (i)The server hardware and supporting equipment (including communications equipment, terminals and hook-ups that interface with thirdparty computer systems) used in the Company’s and each PRC Entity’s services network provide redundancy and meet industrystandards relating to high availability; and SCHEDULE 2-13 (ii)Each of the Group Companies has made back-up copies of all material computer Software and databases utilized by it and maintain suchSoftware and databases at a secure off-site location. 12.RELATED PARTY TRANSACTIONS (a)All the transactions between any Group Company and the Related Party have been, in all material respects, entered into on an arm’s length basis,in accordance with all the related party transaction decision-making formalities (if any and applicable) and not against the normal andreasonable interest of the Group Companies. 13.DISCLOSURE (a)No Misrepresentation. No disclosure made against a representation or warranty by the Company in this Agreement (including exhibits and/orschedules thereto) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements made herein,in light of the circumstances under which they were made, not misleading. (b)Full Disclosure. The Company has fully provided the Investors with all material information that the Investors have reasonably requested fordeciding whether to purchase the Notes. SCHEDULE 2-14 Schedule 3Representations and Warranties of the InvestorsIn this Schedule 3, capitalized terms not otherwise defined have the meanings specified in Schedule 2 to this Agreement, and if not defined therein,have the meanings set forth in Article I of this Agreement.1. Such Investor is a limited partnership or limited liability company duly organized and validly existing in good standing under the laws of thejurisdiction of its formation.2. Such Investor has the full power and authority to enter into, execute and deliver this Agreement and the other Transaction Documents towhich it is a party and to perform its obligations contemplated hereby or thereby. The execution and delivery by such Investor of this Agreement and theother Transaction Documents to which it is a party and the performance by such Investor of its obligations contemplated hereby or thereby have been dulyauthorized by all necessary corporate actions of such Investor. This Agreement is and each of the other Transaction Documents to which it is a party, whenexecuted by such Investor, will be a legal, valid and binding obligation of such Investor, enforceable against such Investor in accordance with its terms,except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rightsgenerally.3. Such Investor has had an opportunity to discuss the Group Companies’ business, management, financial affairs and the terms and conditionsof the offering of the Notes with the management of the Group Companies and has had an opportunity to review the Group Companies’ facilities. Theforegoing, however, does not limit or modify the representations and warranties of the Company in Article III of this Agreement or the right of such Investorto rely thereon.4. Such Investor is either (i) an “accredited investor” within the meaning of Securities and Exchange Commission Rule 501 of Regulation D, aspresently in effect, under the Securities Act, or (ii) not a “U.S. person” as defined in Rule 902 of Regulation S of the Securities Act. Such Investor hassufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Notes andis capable of bearing the economic risks of such investment.5. The Notes to be acquired by such Investor pursuant to this Agreement are being or will be acquired for its own account and with no intentionof distributing or reselling the Notes or any part thereof. If such Investor should in the future decide to dispose of any of such Notes, such Investorunderstands and agrees that it may do so only in compliance with the applicable securities laws, as then in effect, and the provisions in the Notes. SuchInvestor holds its interest in the Notes for itself beneficially and does not have any contract, undertaking, agreement, or arrangement with any Person to sellor transfer to any third party its interest (including beneficiary interest) in the Notes and is not acting as nominee or trustee or otherwise on behalf of anyPerson. Such Investor agrees to the imprinting, so long as required by law and to the extent applicable, of a legend on certificates representing all of its Notesand the Conversion Shares issuable upon conversion of its Notes to the following effect: SCHEDULE 3-1 THE SECURITIES REPRESENTED BY THIS [CERTIFICATE][INSTRUMENT] HAVE NOT BEEN REGISTERED UNDER THE UNITEDSTATES SECURITIES ACT OF 1933, AS AMENDED OR IN ANY JURISDICTION, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH AVIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUTAN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM REASONABLY SATISFACTORY TOTHE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR OTHERWISE IN COMPLIANCE THEREWITH. THE SALE,ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR OTHER DISPOSITION (EACH A “TRANSFER”) AND VOTING OF ANY OF THESECURITIES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE TERMS OF A SHAREHOLDERS AGREEMENT AMONG THECOMPANY AND THE SHAREHOLDERS NAMED THEREIN, A COPY OF WHICH MAY BE INSPECTED AT THE COMPANY’S PRINCIPAL OFFICE. THECOMPANY WILL NOT REGISTER THE TRANSFER OF SUCH SECURITIES ON THE BOOKS OF THE COMPANY UNLESS AND UNTIL THE TRANSFERHAS BEEN MADE IN COMPLIANCE WITH THE TERMS OF THE SHAREHOLDERS AGREEMENT.6. Such Investor understands that no public market now exists for the Notes or Conversion Shares, and that the Company has not made anyassurances that a public market will ever exist for the Notes or Conversion Shares.7. Such Investor acknowledges that it is not relying upon any Person other than the Company, its officers and directors, in making its investmentor decision to invest in the Notes. Such Investor agrees that no Investor or the respective Controlling persons, officers, directors, partners, agents, oremployees of any Investor shall be liable to any other Investor for any action heretofore or hereafter taken or omitted to be taken by any of them inconnection with the purchase of the Notes. SCHEDULE 3-2 EXHIBIT 8.1List of Principal Subsidiaries and Consolidated Affiliated EntitiesSubsidiaries:Baidu Holdings Limited — Incorporated in the British Virgin IslandsBaidu (Hong Kong) Limited — Incorporated in Hong KongBaidu Online Network Technology (Beijing) Co., Ltd. — Incorporated in the PRCBaidu (China) Co., Ltd. — Incorporated in the PRCBaidu.com Times Technology (Beijing) Co., Ltd. — Incorporated in the PRCBaidu International Technology (Shenzhen) Co., Ltd. — Incorporated in the PRCQiyi.com, Inc. — Incorporated in the Cayman Islands91 Wireless Websoft Limited — Incorporated in the Cayman IslandsConsolidated Affiliated Entities:Beijing Baidu Netcom Science Technology Co., Ltd. — Incorporated in the PRCBeijing Perusal Technology Co., Ltd. — Incorporated in the PRCBeijing BaiduPay Science and Technology Co., Ltd. — Incorporated in the PRC EXHIBIT 12.1Certification by the Principal Executive OfficerPursuant to Section 302 of the Sarbanes-Oxley Act of 2002I, Robin Yanhong Li, certify that:1. I have reviewed this annual report on Form 20-F of Baidu, Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for thecompany and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annualreport that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to thecompany’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the company’s ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal controlover financial reporting.Date: March 31, 2017 By: /s/ Robin Yanhong Li Name: Robin Yanhong Li Title: Chief Executive Officer EXHIBIT 12.2Certification by the Principal Financial OfficerPursuant to Section 302 of the Sarbanes-Oxley Act of 2002I, Jennifer Xinzhe Li, certify that:1. I have reviewed this annual report on Form 20-F of Baidu, Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for thecompany and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annualreport that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to thecompany’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent function):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the company’s ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal controlover financial reporting.Date: March 31, 2017 By: /s/ Jennifer Xinzhe Li Name: Jennifer Xinzhe Li Title: Chief Financial Officer EXHIBIT 13.1Certification by the Principal Executive OfficerPursuant to Section 906 of the Sarbanes-Oxley Act of 2002In connection with the Annual Report of Baidu, Inc. (the “Company”) on Form 20-F for the year ended December 31, 2016 as filed with the Securitiesand Exchange Commission on the date hereof (the “Report”), I, Robin Yanhong Li, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.Date: March 31, 2017 By: /s/ Robin Yanhong Li Name: Robin Yanhong Li Title: Chief Executive Officer EXHIBIT 13.2Certification by the Principal Financial OfficerPursuant to Section 906 of the Sarbanes-Oxley Act of 2002In connection with the Annual Report of Baidu, Inc. (the “Company”) on Form 20-F for the year ended December 31, 2016 as filed with the Securitiesand Exchange Commission on the date hereof (the “Report”), I, Jennifer Xinzhe Li, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.Date: March 31, 2017 By: /s/ Jennifer Xinzhe Li Name: Jennifer Xinzhe Li Title: Chief Financial Officer EXHIBIT 15.1[Maples and Calder (Hong Kong) LLP Letterhead]Baidu, Inc.Baidu CampusNo. 10 Shangdi 10th StreetHaidian District, Beijing 100085The People’s Republic of China31 March 2017Dear SirsBaidu, Inc.We consent to the reference to our firm under the heading “Item 10.E. Additional Information—Taxation—Cayman Islands Taxation Considerations” and“Item 16G. Corporate Governance” in Baidu Inc.’s Annual Report on Form 20-F for the year ended 31 December 2016 (the “Annual Report”), which will befiled with the Securities and Exchange Commission (the “SEC”) in the month of March 2017, and further consent to the incorporation by reference into theRegistration Statement (Form S-8 No. 333-129374) pertaining to Baidu, Inc.’s 2000 Option Plan, Registration Statement (Form S-8 No. 333-158678)pertaining to Baidu, Inc.’s 2008 Share Incentive Plan, and Registration Statement (Form F-3 No. 333-184757) of Baidu, Inc. of the summary of our opinionunder the heading “Item 10.E. Additional Information—Taxation—Cayman Islands Taxation Considerations” and “Item 16G. Corporate Governance” in theAnnual Report. We also consent to the filing with the SEC of this consent letter as an exhibit to the Annual Report.In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Actof 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated thereunder.Yours faithfully, /s/ Maples and Calder (Hong Kong) LLP EXHIBIT 15.2[Han Kun Law Offices Letterhead]March 31, 2017Baidu, Inc.Baidu CampusNo. 10 Shangdi 10th StreetHaidian District, BeijingPeople’s Republic of China 100085Dear Sir/Madam:We hereby consent to the reference of our name under the heading “Item 4.B. Information on the Company—Business Overview—Regulations” in Baidu,Inc.’s Annual Report on Form 20-F for the year ended December 31, 2016 (the “Annual Report”), which will be filed with the Securities and ExchangeCommission (the “SEC”) in the month of March 2017, and further consent to the incorporation by reference into the Registration Statement (Form S-8No. 333-129374) pertaining to Baidu, Inc.’s 2000 Option Plan, Registration Statement (Form S-8 No. 333-158678) pertaining to Baidu, Inc.’s 2008 ShareIncentive Plan, and Registration Statement (Form F-3 No. 333-184757) of Baidu, Inc. of the summary of our opinion under the heading “Item 4.B.Information on the Company—Business Overview—Regulations” in the Annual Report. We also consent to the filing of this consent letter with the SEC asan exhibit to the Annual Report.In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Actof 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated thereunder.Very truly yours, /s/ Han Kun Law Offices EXHIBIT 15.3Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the following Registration Statements: (1)Registration Statement (Form S-8 No. 333-129374) pertaining to Baidu, Inc.’s 2000 Option Plan, (2)Registration Statement (Form S-8 No. 333-158678) pertaining to Baidu, Inc.’s 2008 Share Incentive Plan, and (3)Registration Statement (Form F-3 No. 333-184757) of Baidu, Inc.;of our reports dated March 31, 2017, with respect to the consolidated financial statements of Baidu, Inc. and the effectiveness of internal control overfinancial reporting of Baidu, Inc. included in this Annual Report (Form 20-F) of Baidu Inc. for the year ended December 31, 2016. /s/ Ernst & Young Hua Ming LLPBeijing, the People’s Republic of ChinaMarch 31, 2017

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