Leyou Technologies : DISCLOSEABLE TRANSACTION AMENDMENT AGREEMENT IN RELATION TO THE PROVISION OF LOAN DISCLOSURE PURSUANT TO RULES 13.13 AND 13.16 OF THE LISTING RULES

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LEYOU TECHNOLOGIES HOLDINGS LIMITED ᆀ༷߅ҦછٰϞࠢʮ̡

(Incorporated in the Cayman Islands with limited liability)

6WRFN &RGH

DISCLOSEABLE TRANSACTION AMENDMENT AGREEMENT IN RELATION TO

THE PROVISION OF LOAN

DISCLOSURE PURSUANT TO

RULES 13.13 AND 13.16 OF THE LISTING RULES

Reference is made to the Announcement in relation to, among other things, the entering into of the Game Development Agreement, pursuant to which Certain Affinity shall develop and produce for the Company the Game based on certain intellectual property (namely, the TRANSFORMERS Property) and the Company shall provide Certain Affinity with the Loan in the amount of up to US$15 million to pay for costs and expenses incurred in connection with the provision of the development services relating to the Game.

PRINCIPAL TERMS OF THE LOAN UNDER THE GAME DEVELOPMENT AGREEMENT

Date:	15 October 2017
Lender:	The Company
Borrower:	Certain Affinity
Principal amount:	US$15 million
Interest rate:	Interest-free
Repayment:	The Loan was granted on a non-recourse basis which was solely
recoupable by the Company from its share of the revenue derived
from the exploitation of the Game

THE AMENDMENT AGREEMENT IN RELATION TO THE INCREASE IN PRINCIPAL AMOUNT OF THE LOAN

On 7 January 2019, the Company entered into the Amendment Agreement and the Contingent Funding Agreement with Certain Affinity and Mr. Hoberman, who is the founder, President and controlling shareholder of Certain Affinity.

Pursuant to the Amendment Agreement, the Company agreed, among other things, to increase the maximum principal amount of the Loan from US$15,000,000 to US$33,000,000. Save as disclosed herein, all other terms of the Loan shall remain in full force and effect. The Loan will continue to be interest-free and be granted on a non-recourse basis and solely recoupable by the Company from its share of the revenues derived from exploitation of the Game. The Company's equity position and percentage of ownership in Certain Affinity remain unchanged.

Pursuant to the Contingent Funding Agreement, Mr. Hoberman agreed, among other things, to fund the portion of the costs and expenses required for the Game Development which is in excess of the Loan in accordance with the terms of the Game Development Agreement (as amended by the Amendment Agreement) in the event that Certain Affinity fails to do so.

REASONS FOR AND THE BENEFITS OF THE INCREASE IN THE PRINCIPAL AMOUNT OF THE LOAN

The Game Development is progressing well with approximately 50% of the Open Beta version completed. With the increase in the principal amount of the Loan, which is essentially the development budget for the Game, Certain Affinity will be able to develop and produce the Game with richer content, such as in the form of more characters, more levels, challenges or missions and a bigger game universe, and prepare to make the Game available on PC.

The Directors believe that with the Game being designed to have richer content and to ultimately be made available on more platforms, more gamers will be attracted to play the Game and in turn, increase the revenue derived from the Game. The increase in the principal amount of the Loan is in the ordinary course of business of the Company, on normal commercial terms and arrived after arm's length negotiations.

Taking into consideration the potential increase in the revenue to be received by the Group, the Directors consider that the increase in the principal amount of the Loan is fair and reasonable and in the best interest of the Company and its shareholders as a whole.

The increase in the principal amount of the Loan will be funded by internal resources or potential debt financing of the Company.

INFORMATION OF CERTAIN AFFINITY

Certain Affinity was founded in 2006 and is an independent video game development studio based on Austin, Texas of the United States of America known for creating innovative, high-quality action games. Certain Affinity employs over 160 full-time employees and has worked on a number of notable products and games in the video gaming market, including development of original games, co-development of multiple Call of Duty and Halo games, co-development of DOOM, and development of extensive downloadable competitive and cooperative content for the Call of Duty and Halo franchises.

Pursuant to a sale and purchase agreement dated 15 October 2017 entered into between the Company and Certain Affinity, the Company acquired 20% interest in Certain Affinity and the acquisition was completed on 30 October 2017. Further details of the said acquisition were set out in the Announcement.

Mr. Hoberman is the founder, President and controlling shareholder of Certain Affinity.

INFORMATION ON THE GROUP AND THE COMPANY

The Group is principally engaged in the development and publishing of online multiplayer PC and console video games. It mainly focuses on high-quality video game products and is a leading player in the niche market of PC and console free-to-play games. The Company is an investment holding company.

LISTING RULES IMPLICATIONS

As certain applicable percentage ratios (as defined under the Listing Rules) in respect of the total maximum principal amount of the Loan granted to Certain Affinity under the Game Development Agreement exceed 5% but are less than 25%, the increase in the principal amount of the Loan under the Game Development Agreement constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting and announcement requirements.

As the amount of the Loan advanced to Certain Affinity as supplemented and varied by the Amendment Agreement exceeds 8% of the assets ratio as defined under Rule 14.07(1) of the Listing Rules, the grant of the Loan is subject to the general disclosure obligation under Rule 13.13 of the Listing Rules.

In addition, as the amount of the Loan provided by the Group to Certain Affinity, an affiliated company of the Company as defined under Rule 13.11(2) of the Listing Rules, exceeds 8% of the assets ratio as defined under Rule 14.07(1) of the Listing Rules, the grant of the Loan is also subject to the general disclosure obligation under Rule 13.16 of the Listing Rules.

DEFINITIONS

The following terms have the following meanings when used in this announcement, unless the context requires otherwise:

"Amendment Agreement"

the amendment agreement dated 7 January 2019 entered into among the Company, Certain Affinity and Mr. Hoberman supplementing and amending the Game Development Agreement

"Announcement"

the announcement of the Company dated 16 October 2017

"Board"

the board of Directors

"Certain Affinity"

Certain Affinity, Inc., a limited liability company organised under the laws of the State of Delaware, the United States of America, and a developer of licensed games (including associated computer software product and add-ons)

"Company"

Leyou Technologies Holdings Limited, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Stock Exchange (stock code: 1089)

"Contingent Funding

Agreement"

the letter agreement dated 7 January 2019 entered among the Company, Certain Affinity and Mr. Hoberman in relation to the obligation of Mr. Hoberman to fund the Game Development should Certain Affinity fail to do so under the Game Development Agreement (as amended by the

Amendment Agreement)