Document:

Exhibit 4.3

 

 

DEPOSIT AGREEMENT

 

 

by and among

 

CATHAY INDUSTRIAL BIOTECH LTD.

 

AND

 

CITIBANK, N.A.,

as Depositary,

 

AND

 

THE HOLDERS AND BENEFICIAL OWNERS OF
 AMERICAN DEPOSITARY SHARES
 ISSUED HEREUNDER

 

 

Dated as of [DATE], 2011

 

 

DEPOSIT AGREEMENT

 

DEPOSIT AGREEMENT, dated as of [DATE], 2011, by and among (i) CATHAY INDUSTRIAL BIOTECH LTD., a company incorporated under the laws of the Cayman Islands, and its successors (the “Company”), (ii) CITIBANK, N.A., a national banking association organized under the laws of the United States of America acting in its capacity as depositary, and any successor depositary hereunder (the “Depositary”), and (iii) all Holders and Beneficial Owners of American Depositary Shares issued hereunder (all such capitalized terms as hereinafter defined).

 

W I T N E S S E T H   T H A T:

 

WHEREAS, the Company desires to establish with the Depositary an ADR facility to provide for the deposit (by means of transfer to the Depositary) of the Shares (as hereinafter defined) and the creation of American Depositary Shares representing the Shares so deposited; and

 

WHEREAS, the Depositary is willing to act as the Depositary for such ADR facility upon the terms set forth in the Deposit Agreement (as hereinafter defined); and

 

WHEREAS, any American Depositary Receipts issued pursuant to the terms of the Deposit Agreement are to be substantially in the form of Exhibit A attached hereto, with appropriate insertions, modifications and omissions, as hereinafter provided in the Deposit Agreement; and

 

WHEREAS, the American Depositary Shares to be issued pursuant to the terms of the Deposit Agreement are to be listed for trading on the NASDAQ Stock Market LLC (the “NASDAQ”); and

 

WHEREAS, the Board of Directors of the Company (or an authorized committee thereof) has duly approved the establishment of an ADR facility upon the terms set forth in the Deposit Agreement, the execution and delivery of the Deposit Agreement on behalf of the Company, and the actions of the Company and the transactions contemplated herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

All capitalized terms used, but not otherwise defined, herein shall have the meanings set forth below, unless otherwise clearly indicated:

 

Section 1.1            “ADS Record Date” shall have the meaning given to such term in Section 4.9.

 

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Section 1.2            “Affiliate” shall have the meaning assigned to such term by the Commission (as hereinafter defined) under Regulation C promulgated under the Securities Act (as hereinafter defined), or under any successor regulation thereto.

 

Section 1.3            “American Depositary Receipt(s)”, “ADR(s)” and “Receipt(s)” shall mean the certificate(s) issued by the Depositary to evidence the American Depositary Shares issued under the terms of the Deposit Agreement in the form of Certificated ADS(s) (as hereinafter defined), as such ADRs may be amended from time to time in accordance with the provisions of the Deposit Agreement.  An ADR may evidence any number of ADSs and may, in the case of ADSs held through a central depository such as DTC, be in the form of a “Balance Certificate.”

 

Section 1.4            “American Depositary Share(s)” and “ADS(s)” shall mean the rights and interests in the Deposited Securities (as hereinafter defined) granted to the Holders and Beneficial Owners pursuant to the terms and conditions of the Deposit Agreement and, if issued as Certificated ADS(s), (as hereinafter defined) the ADR(s) issued to evidence such ADSs.  ADS(s) may be issued under the terms of the Deposit Agreement in the form of (a) Certificated ADS(s) (as hereinafter defined), in which case the ADS(s) are evidenced by ADR(s), or (b) Uncertificated ADS(s) (as hereinafter defined), in which case the ADS(s) are not evidenced by ADR(s) but are reflected on the direct registration system maintained by the Depositary for such purposes under the terms of Section 2.13.  Unless otherwise specified in the Deposit Agreement or in any ADR, or unless the context otherwise requires, any reference to ADS(s) shall include Certificated ADS(s) and Uncertificated ADS(s), individually or collectively, as the context may require.  Each ADS shall represent the right to receive, subject to the terms and conditions of the Deposit Agreement and the applicable ADR (if issued as a certificated ADS), [NUMBER] Shares until there shall occur a distribution upon Deposited Securities referred to in Section 4.2 or a change in Deposited Securities referred to in Section 4.11 with respect to which additional ADSs are not issued, and thereafter each ADS shall represent the right to receive, subject to the terms and conditions of the Deposit Agreement and the applicable ADR (if issued as a certificated ADS), the Deposited Securities determined in accordance with the terms of such Sections.

 

Section 1.5            “Applicant” shall have the meaning given to such term in Section 5.10.

 

Section 1.6            “Articles of Association” shall mean the memorandum and articles of association of the Company, as amended and restated from time to time.

 

Section 1.7            “Beneficial Owner” shall mean, as to any ADS, any person or entity having a beneficial interest deriving from the ownership of such ADS.  A Beneficial Owner of ADSs may or may not be the Holder of such ADSs.  A Beneficial Owner shall be able to exercise any right or receive any benefit hereunder solely through the person who is the Holder of the ADSs owned by such Beneficial Owner.  Unless otherwise identified to the Depositary, a Holder shall be deemed to be the Beneficial Owner of all the ADSs registered in his/her/its name.

 

Section 1.8            “Certificated ADS(s)” shall have the meaning set forth in Section 2.13.

 

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Section 1.9            “Commission” shall mean the Securities and Exchange Commission of the United States or any successor governmental agency thereto in the United States.

 

Section 1.10         “Company” shall mean Cathay Industrial Biotech Ltd., a company incorporated and existing under the laws of the Cayman Islands, and its successors.

 

Section 1.11         “Custodian” shall mean (i) as of the date hereof, Citibank, N.A. - Hong Kong Branch, having its principal office at 10/F, Harbour Front (II), 22 Tak Fung Street, Hung Hom, Kowloon, Hong Kong, as the custodian for the purposes of the Deposit Agreement, (ii) Citibank, N.A., acting as custodian of Deposited Securities pursuant to the Deposit Agreement, and (iii) any other entity that may be appointed by the Depositary pursuant to the terms of Section 5.5 as successor, substitute or additional custodian hereunder.  The term “Custodian” shall mean any Custodian individually or all Custodians collectively, as the context requires.

 

Section 1.12         “Deliver” and “Delivery” shall mean (x) when used in respect of Shares and other Deposited Securities, the transfer of such Shares or Deposited Securities to the relevant holder and the registration of such person in the register of members of the Company as the registered holder of such Shares or Deposited Securities and the delivery to such person of a share certificate in respect of such registration, and (y) when used in respect of ADSs, either (i) the physical delivery of ADR(s) evidencing the ADSs, or (ii) the book-entry transfer and recordation of ADSs on the books of the Depositary or any book-entry settlement system in which the ADSs are settlement-eligible.

 

Section 1.13         “Deposit Agreement” shall mean this Deposit Agreement and all exhibits hereto, as the same may from time to time be amended and supplemented from time to time in accordance with the terms of the Deposit Agreement.

 

Section 1.14         “Depositary” shall mean Citibank, N.A., a national banking association organized under the laws of the United States, in its capacity as depositary under the terms of the Deposit Agreement, and any successor depositary hereunder.

 

Section 1.15         “Deposited Securities” shall mean Shares at any time deposited under the Deposit Agreement and any and all other securities, property and cash held by the Depositary or the Custodian in respect thereof, subject, in the case of cash, to the provisions of Section 4.8.  The collateral delivered in connection with Pre-Release Transactions described in Section 5.10 shall not constitute Deposited Securities.

 

Section 1.16         “Dollars” and “$”shall refer to the lawful currency of the United States.

 

Section 1.17         “DTC” shall mean The Depository Trust Company, a national clearinghouse and the central book-entry settlement system for securities traded in the United States and, as such, the custodian for the securities of DTC Participants (as hereinafter defined) maintained in DTC, and any successor thereto.

 

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Section 1.18         “DTC Participant” shall mean any financial institution (or any nominee of such institution) having one or more participant accounts with DTC for receiving, holding and delivering the securities and cash held in DTC.  A DTC Participant may or may not be a Beneficial Owner.  If a DTC Participant is not the Beneficial Owner of the ADSs credited to its account at DTC, or of the ADSs in respect of which the DTC Participant is otherwise acting, such DTC Participant shall be deemed, for all purposes hereunder, to have all requisite authority to act on behalf of the Beneficial Owner(s) of the ADSs credited to its account at DTC or in respect of which the DTC Participant is so acting.

 

Section 1.19         “Exchange Act” shall mean the United States Securities Exchange Act of 1934, as amended from time to time.

 

Section 1.20         “Foreign Currency” shall mean any currency other than Dollars.

 

Section 1.21         “Full Entitlement ADR(s)”, “Full Entitlement ADS(s)” and “Full Entitlement Share(s)” shall have the respective meanings set forth in Section 2.12.

 

Section 1.22         “Holder(s)” shall mean the person(s) in whose name the ADSs are registered on the books of the Depositary (or the Registrar, if any) maintained for such purpose.  A Holder may or may not be a Beneficial Owner.  If a Holder is not the Beneficial Owner of the ADS(s) registered in its name, such person shall be deemed, for all purposes hereunder, to have all requisite authority to act on behalf of the Beneficial Owners of the ADSs registered in its name.

 

Section 1.23         “Partial Entitlement ADR(s)”, “Partial Entitlement ADS(s)” and “Partial Entitlement Share(s)” shall have the respective meanings set forth in Section 2.12.

 

Section 1.24         “Pre-Release Transaction” shall have the meaning set forth in Section 5.10.

 

Section 1.25         “Principal Office” shall mean, when used with respect to the Depositary, the principal office of the Depositary at which at any particular time its depositary receipts business shall be administered, which, at the date of the Deposit Agreement, is located at 388 Greenwich Street, New York, New York 10013, U.S.A.

 

Section 1.26         “Registrar” shall mean the Depositary or any bank or trust company having an office in the Borough of Manhattan, The City of New York, which shall be appointed by the Depositary to register issuances, transfers and cancellations of ADSs as herein provided, and shall include any co-registrar appointed by the Depositary for such purposes.  Registrars (other than the Depositary) may be removed and substitutes appointed by the Depositary.  Each Registrar (other than the Depositary) appointed pursuant to the Deposit Agreement shall be required to give notice in writing to the Depositary accepting such appointment and agreeing to be bound by the applicable terms of the Deposit Agreement.

 

Section 1.27         “Restricted Securities” shall mean Shares, Deposited Securities or ADSs which (i) have been acquired directly or indirectly from the Company or any of its Affiliates in a 

 

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transaction or chain of transactions not involving any public offering and are subject to resale limitations under the Securities Act or the rules issued thereunder, or (ii) are held by an officer or director (or persons performing similar functions) or other Affiliate of the Company, or (iii) are subject to other restrictions on sale or deposit under the laws of the United States, the Cayman Islands, or under a shareholder agreement or the Articles of Association  of the Company or under the regulations of an applicable securities exchange unless, in each case, such Shares, Deposited Securities or ADSs are being transferred or sold to persons other than an Affiliate of the Company in a transaction (a) covered by an effective resale registration statement, or (b) exempt from the registration requirements of the Securities Act (as hereinafter defined), and the Shares, Deposited Securities or ADSs are not, when held by such person(s), Restricted Securities.

 

Section 1.28         “Restricted ADR(s)”, “Restricted ADS(s)” and “Restricted Shares” shall have the respective meanings set forth in Section 2.14.

 

Section 1.29         “Securities Act” shall mean the United States Securities Act of 1933, as amended from time to time.

 

Section 1.30         “Share Registrar” shall mean Maples Fund Services (Cayman) Limited, or any other institution organized under the laws of the Cayman Islands appointed by the Company to carry out the duties of registrar for the Shares, and any successor thereto that the Company approves.

 

Section 1.31         “Shares” shall mean the Company’s ordinary shares, par value $0.001 per share, validly issued and outstanding and fully paid and may, if the Depositary so agrees after consultation with the Company, include evidence of the right to receive Shares; provided  that in no event shall Shares include evidence of the right to receive Shares with respect to which the full purchase price has not been paid or Shares as to which preemptive rights have theretofore not been validly waived or exercised; provided  further, however, that, if there shall occur any change in par or nominal value, split-up, consolidation, reclassification, exchange, conversion or any other event described in Section 4.11 in respect of the Shares of the Company, the term “Shares” shall thereafter, to the maximum extent permitted by law, represent the successor securities resulting from such event.

 

Section 1.32         “Uncertificated ADS(s)” shall have the meaning set forth in Section 2.13.

 

Section 1.33         “United States” and “U.S.” shall have the meaning assigned to it in Regulation S as promulgated by the Commission under the Securities Act.

 

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ARTICLE II

 

APPOINTMENT OF DEPOSITARY; FORM OF RECEIPTS;
 DEPOSIT OF SHARES; EXECUTION AND
 DELIVERY, TRANSFER AND SURRENDER OF RECEIPTS

 

Section 2.1            Appointment of Depositary.  The Company hereby appoints the Depositary as depositary for the Deposited Securities and hereby authorizes and directs the Depositary to act in accordance with the terms and conditions set forth in the Deposit Agreement and the applicable ADRs.  Each Holder and each Beneficial Owner, upon acceptance of any ADSs (or any interest therein) issued in accordance with the terms and conditions of the Deposit Agreement, shall be deemed for all purposes to (a) be a party to and bound by the terms of the Deposit Agreement and the applicable ADR(s), and (b) appoint the Depositary its attorney-in-fact, with full power to delegate, to act on its behalf and to take any and all actions contemplated in the Deposit Agreement and the applicable ADR(s), to adopt any and all procedures necessary to comply with applicable law and to take such action as the Depositary in its sole discretion may deem necessary or appropriate to carry out the purposes of the Deposit Agreement and the applicable ADR(s), the taking of such actions to be the conclusive determinant of the necessity and appropriateness thereof.

 

Section 2.2            Form and Transferability of ADSs.

 

(a)           Form.  Certificated  ADSs shall be evidenced by definitive ADRs which shall be engraved, printed, lithographed or produced in such other manner as may be agreed upon by the Company and the Depositary.  ADRs may be issued under the Deposit Agreement in denominations of any whole number of ADSs.  The ADRs shall be substantially in the form set forth in Exhibit A to the Deposit Agreement, with any appropriate insertions, modifications and omissions, in each case as otherwise contemplated in the Deposit Agreement or required by law.  ADRs shall be (i) dated, (ii) signed by the manual or facsimile signature of a duly authorized signatory of the Depositary, (iii) countersigned by the manual or facsimile signature of a duly authorized signatory of the Registrar, and (iv) registered in the books maintained by the Registrar for the registration of issuances and transfers of ADSs.  No ADR and no Certificated  ADS evidenced thereby shall be entitled to any benefits under the Deposit Agreement or be valid or enforceable for any purpose against the Depositary or the Company, unless such ADR shall have been so dated, signed, countersigned and registered.  ADRs bearing the facsimile signature of a duly-authorized signatory of the Depositary or the Registrar, who at the time of signature was a duly-authorized signatory of the Depositary or the Registrar, as the case may be, shall bind the Depositary, notwithstanding the fact that such signatory has ceased to be so authorized prior to the delivery of such ADR by the Depositary.  The ADRs shall bear a CUSIP number that is different from any CUSIP number that was, is or may be assigned to any depositary receipts previously or subsequently issued pursuant to any other arrangement between the Depositary (or any other depositary) and the Company and which are not ADRs outstanding hereunder.

 

(b)           Legends.  The ADRs may be endorsed with, or have incorporated in the text thereof, such legends or recitals not inconsistent with the provisions of the Deposit Agreement as (i) may be necessary to enable the Depositary and the Company to perform their respective 

 

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obligations hereunder, (ii) may be required to comply with any applicable laws or regulations, or with the rules and regulations of any securities exchange or market upon which ADSs may be traded, listed or quoted, or to conform with any usage with respect thereto, (iii) may be necessary to indicate any special limitations or restrictions to which any particular ADRs or ADSs are subject by reason of the date of issuance of the Deposited Securities or otherwise, or (iv) may be required by any book-entry system in which the ADSs are held.  Holders and Beneficial Owners shall be deemed, for all purposes, to have notice of, and to be bound by, the terms and conditions of the legends set forth, in the case of Holders, on the ADR registered in the name of the applicable Holders or, in the case of Beneficial Owners, on the ADR representing the ADSs owned by such Beneficial Owners.

 

(c)           Title.  Subject to the limitations contained herein and in the ADR, title to an ADR (and to each Certificated  ADS evidenced thereby) shall be transferable upon the same terms as a certificated security under the laws of the State of New York, provided that, in the case of Certificated ADSs, such ADR has been properly endorsed or is accompanied by proper instruments of transfer.  Notwithstanding any notice to the contrary, the Depositary and the Company may deem and treat the Holder of an ADS (that is, the person in whose name an ADS is registered on the books of the Depositary) as the absolute owner thereof for all purposes.  Neither the Depositary nor the Company shall have any obligation nor be subject to any liability under the Deposit Agreement or any ADR to any holder or any Beneficial Owner unless, in the case of a holder of ADSs, such holder is the Holder registered on the books of the Depositary or, in the case of a Beneficial Owner, such Beneficial Owner, or the Beneficial Owner’s representative, is the Holder registered on the books of the Depositary.

 

(d)           Book-Entry Systems.  The Depositary shall make arrangements for the acceptance of the ADSs into DTC.  All ADSs held through DTC will be registered in the name of the nominee for DTC (currently “Cede & Co.”).  As such, the nominee for DTC will be the only “Holder” of all ADSs held through DTC.  Unless issued by the Depositary as Uncertificated ADSs, the ADSs registered in the name of Cede & Co. will be evidenced by a single ADR in the form of a “Balance Certificate,” which will provide that it represents the aggregate number of ADSs from time to time indicated in the records of the Depositary as being issued hereunder and that the aggregate number of ADSs represented thereby may from time to time be increased or decreased by making adjustments on such records of the Depositary and of DTC or its nominee as hereinafter provided.  Citibank, N.A. (or such other entity as is appointed by DTC or its nominee) may hold the “Balance Certificate” as custodian for DTC.  Each Beneficial Owner of ADSs held through DTC must rely upon the procedures of DTC and the DTC Participants to exercise or be entitled to any rights attributable to such ADSs.  The DTC Participants shall for all purposes be deemed to have all requisite power and authority to act on behalf of the Beneficial Owners of the ADSs held in the DTC Participants’ respective accounts in DTC and the Depositary shall for all purposes be authorized to rely upon any instructions and information given to it by DTC Participants.  So long as ADSs are held through DTC or unless otherwise required by law, ownership of beneficial interests in the ADSs registered in the name of the nominee for DTC will be shown on, and transfers of such ownership will be effected only through, records maintained by (i) DTC or its nominee (with respect to the interests of DTC 

 

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Participants), or (ii) DTC Participants or their nominees (with respect to the interests of clients of DTC Participants).

 

Section 2.3            Deposit of Shares.  Subject to the terms and conditions of the Deposit Agreement and applicable law, Shares or evidence of rights to receive Shares (other than Restricted Securities) may be deposited by any person (including the Depositary in its individual capacity but subject, however, in the case of the Company or any Affiliate of the Company, to Section 5.7 hereof) at any time, whether or not the transfer books of the Company or the Share Registrar, if any, are closed, by Delivery of the Shares to the Custodian.  Every deposit of Shares shall be accompanied by the following:  (A) (i) in the case of Shares represented by certificates in bearer form, the requisite coupons and talons pertaining thereto, and (ii) in the case of registered Shares, confirmation of book-entry transfer to the Custodian of the recordation in the books of the Share Registrar or of the book-entry settlement entity, as applicable or that irrevocable instructions have been given to cause such Shares to be so transferred and recorded, (B) such certifications and payments (including, without limitation, the Depositary’s fees and related charges) and evidence of such payments (including, without limitation, stamping or otherwise marking such Shares by way of receipt) as may be required by the Depositary or the Custodian in accordance with the provisions of the Deposit Agreement and applicable law, (C) if the Depositary so requires, a written order directing the Depositary to issue and deliver to, or upon the written order of, the person(s) stated in such order the number of ADSs representing the Shares so deposited, (D) evidence satisfactory to the Depositary (which may be an opinion of counsel) that all necessary approvals have been granted by, or there has been compliance with the rules and regulations of, any applicable governmental agency in the Cayman Islands, and (E) if the Depositary so requires, (i) an agreement, assignment or instrument satisfactory to the Depositary or the Custodian which provides for the prompt transfer by any person in whose name the Shares are or have been recorded to the Custodian of any distribution, or right to subscribe for additional Shares or to receive other property in respect of any such deposited Shares or, in lieu thereof, such indemnity or other agreement as shall be satisfactory to the Depositary or the Custodian and (ii) if the Shares are registered in the name of the person on whose behalf they are presented for deposit, a proxy or proxies entitling the Custodian to exercise voting rights in respect of the Shares for any and all purposes until the Shares so deposited are registered in the name of the Depositary, the Custodian or any nominee.

 

Without limiting any other provision of the Deposit Agreement, the Depositary shall instruct the Custodian not to, and the Depositary shall not knowingly, accept for deposit (a) any Restricted Securities except as contemplated by Section 2.14 nor (b) any fractional Shares or fractional Deposited Securities nor (c) a number of Shares or Deposited Securities which upon application of the ADS to Shares ratio would give rise to fractional ADSs.  No Shares shall be accepted for deposit unless accompanied by evidence, if any is required by the Depositary, that is reasonably satisfactory to the Depositary or the Custodian that all conditions to such deposit have been satisfied by the person depositing such Shares under the laws and regulations of the Cayman Islands and any necessary approval has been granted by any applicable governmental body in the Cayman Islands, if any.  The Depositary may issue ADSs against evidence of rights to receive Shares from the Company, any agent of the Company or any custodian, registrar, transfer agent, clearing agency or other entity involved in ownership or transaction records in 

 

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respect of the Shares.  Such evidence of rights shall consist of written blanket or specific guarantees of ownership of Shares furnished by the Company or any such custodian, registrar, transfer agent, clearing agency or other entity involved in ownership or transaction records in respect of the Shares.

 

Without limitation of the foregoing, the Depositary shall not knowingly accept for deposit under the Deposit Agreement (A) any Shares or other securities required to be registered under the provisions of the Securities Act, unless (i) a registration statement is in effect as to such Shares or other securities or (ii) the deposit is made upon terms contemplated in Section 2.14, or (B) any Shares or other securities the deposit of which would violate any provisions of the Articles of Association of the Company.  For purposes of the foregoing sentence, the Depositary shall be entitled to rely upon representations and warranties made or deemed made pursuant to the Deposit Agreement and shall not be required to make any further investigation.  The Depositary will comply with written instructions of the Company (received by the Depositary reasonably in advance) not to accept for deposit hereunder any Shares identified in such instructions at such times and under such circumstances as may reasonably be specified in such instructions in order to facilitate the Company’s compliance with the securities laws of the United States.

 

Section 2.4            Registration and Safekeeping of Deposited Securities.  The Depositary shall instruct the Custodian upon each Delivery of certificates representing registered Shares being deposited hereunder with the Custodian (or other Deposited Securities pursuant to Article IV hereof), together with the other documents above specified, to present such certificate(s), together with the appropriate instrument(s) of transfer or endorsement, duly stamped, if applicable, to the Share Registrar for transfer and registration of the Shares (as soon as transfer and registration can be accomplished and at the expense of the person for whom the deposit is made) in the name of the Depositary, the Custodian or a nominee of either.  Deposited Securities shall be held by the Depositary or by a Custodian for the account and to the order of the Depositary or a nominee in each case on behalf of the Holders and Beneficial Owners, at such place or places as the Depositary or the Custodian shall determine.

 

Section 2.5            Issuance of ADSs.  The Depositary has made arrangements with the Custodian for the Custodian to confirm to the Depositary upon receipt of a deposit of Shares (i) that a deposit of Shares has been made pursuant to Section 2.3, (ii) that such Deposited Securities have been recorded in the name of the Depositary, the Custodian or a nominee of either on the register of members maintained by or on behalf of the Company by the Share Registrar if registered Shares have been deposited or, if deposit is made by book-entry transfer, confirmation of such transfer in the books of the book-entry settlement entity, (iii) that all required documents have been received, and (iv) the person(s) to whom or upon whose order ADSs are deliverable in respect thereof and the number of ADSs to be so delivered.  Such notification may be made by letter, cable, telex, SWIFT message or, at the risk and expense of the person making the deposit, by facsimile or other means of electronic transmission.  Upon receiving such notice from the Custodian, the Depositary, subject to the terms and conditions of the Deposit Agreement and applicable law, shall issue the ADSs representing the Shares so deposited to or upon the order of the person(s) named in the notice delivered to the Depositary 

 

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and, if applicable,  shall execute and deliver at its Principal Office Receipt(s) registered in the name(s) requested by such person(s) and evidencing the aggregate number of ADSs to which such person(s) are entitled, but, in each case, only upon payment to the Depositary of the charges of the Depositary for accepting a deposit, issuing ADSs (as set forth in Section 5.9 and Exhibit B hereto) and all taxes and governmental charges and fees payable in connection with such deposit and the transfer of the Shares and the issuance of the ADS(s).  The Depositary shall only issue ADSs in whole numbers and deliver, if applicable, ADR(s) evidencing whole numbers of ADSs.  Nothing herein shall prohibit any Pre-Release Transaction upon the terms set forth in the Deposit Agreement.

 

Section 2.6            Transfer, Combination and Split-up of ADRs. Transfer.  The Registrar, as promptly as practicable, shall register the transfer of ADRs (and of the ADSs represented thereby) on the books maintained for such purpose and the Depositary shall, as promptly as practicable, (x) cancel such ADRs and execute new ADRs evidencing the same aggregate number of ADSs as those evidenced by the ADRs canceled by the Depositary, (y) cause the Registrar to countersign such new ADRs and (z) Deliver such new  ADRs to or upon the order of the person entitled thereto, if each of the following conditions has been satisfied:  (i) the ADRs have been duly Delivered by the Holder (or by a duly authorized attorney of the Holder) to the Depositary at its Principal Office for the purpose of effecting a transfer thereof, (ii) the surrendered ADRs have been properly endorsed or are accompanied by proper instruments of transfer (including signature guarantees in accordance with standard securities industry practice), (iii) the surrendered ADRs have been duly stamped (if required by the laws of the State of New York or of the United States), and (iv) all applicable fees and charges of, and expenses incurred by, the Depositary and all applicable taxes and governmental charges (as are set forth in Section 5.9 and Exhibit B hereto) have been paid, subject, however, in each case, to the terms and conditions of the applicable ADRs, of the Deposit Agreement and of applicable law, in each case as in effect at the time thereof.

 

(a)           Combination & Split Up.  The Registrar, as promptly as practicable, shall register the split-up or combination of ADRs (and of the ADSs represented thereby) on the books maintained for such purpose and the Depositary shall, as promptly as practicable, (x) cancel such ADRs and execute new ADRs for the number of ADSs requested, but in the aggregate not exceeding the number of ADSs evidenced by the ADRs cancelled by the Depositary, (y) cause the Registrar to countersign such new ADRs and (z) Deliver such new ADRs to or upon the order of the Holder thereof, if each of the following conditions has been satisfied:  (i) the ADRs have been duly Delivered by the Holder (or by a duly authorized attorney of the Holder) to the Depositary at its Principal Office for the purpose of effecting a split-up or combination thereof, and (ii) all applicable fees and charges of, and expenses incurred by, the Depositary and all applicable taxes and governmental charges (as are set forth in Section 5.9 and Exhibit B hereto) have been paid, subject, however, in each case, to the terms and conditions of the applicable ADRs, of the Deposit Agreement and of applicable law, in each case as in effect at the time thereof.

 

(b)           Co-Transfer Agents.  The Depositary may appoint one or more co-transfer agents for the purpose of effecting transfers, combinations and split-ups of ADRs at designated 

 

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transfer offices on behalf of the Depositary.  In carrying out its functions, a co-transfer agent may require evidence of authority and compliance with applicable laws and other requirements by Holders or persons entitled to such ADRs and will be entitled to protection and indemnity to the same extent as the Depositary.  Such co-transfer agents may be removed and substitutes appointed by the Depositary.  Each co-transfer agent appointed under this Section 2.6 (other than the Depositary) shall give notice in writing to the Depositary accepting such appointment and agreeing to be bound by the applicable terms of the Deposit Agreement.

 

Section 2.7            Surrender of ADSs and Withdrawal of Deposited Securities.  The Holder of ADSs shall be entitled to Delivery (at the Custodian’s designated office) of the Deposited Securities at the time represented by the ADSs upon satisfaction of each of the following conditions: (i) the Holder (or a duly-authorized attorney of the Holder) has duly Delivered ADSs to the Depositary at its Principal Office (and if applicable, the ADRs evidencing such ADSs) for the purpose of withdrawal of the Deposited Securities represented thereby, (ii) if applicable and  so required by the Depositary, the ADRs Delivered to the Depositary for such purpose have been properly endorsed in blank or are accompanied by proper instruments of transfer in blank (including signature guarantees in accordance with standard securities industry practice), (iii) if so required by the Depositary, the Holder of the ADSs has executed and delivered to the Depositary a written order directing the Depositary to cause the Deposited Securities being withdrawn to be Delivered to or upon the written order of the person(s) designated in such order, and (iv) all applicable fees and charges of, and expenses incurred by, the Depositary and all applicable taxes and governmental charges (as are set forth in Section 5.9 and Exhibit B) have been paid, subject, however, in each case, to the terms and conditions of the ADRs evidencing the surrendered ADSs, of the Deposit Agreement, of the Company’s Articles of Association and of any applicable laws and the rules of the book-entry settlement entity, if any, and to any provisions of or governing the Deposited Securities , in each case as in effect at the time thereof.

 

Upon satisfaction of each of the conditions specified above, the Depositary (i) shall cancel the ADSs Delivered to it (and, if applicable, the ADRs evidencing the ADSs so Delivered), (ii) shall direct the Registrar to record the cancellation of the ADSs so Delivered on the books maintained for such purpose, and (iii) shall direct the Custodian to Deliver, or cause the Delivery of, in each case, without unreasonable delay, the Deposited Securities represented by the ADSs so canceled together with any certificate or other document of title for the Deposited Securities, or evidence of the electronic transfer thereof (if available), as the case may be, to or upon the written order of the person(s) designated in the order delivered to the Depositary for such purpose, subject however, in each case, to the terms and conditions of the Deposit Agreement, of the ADRs evidencing the ADSs so cancelled, of the Articles of Association of the Company, of any applicable laws and of the rules of the book-entry settlement entity, if any, and to the terms and conditions of or governing the Deposited Securities, in each case as in effect at the time thereof.

 

The Depositary shall not accept for surrender ADSs representing less than one (1) Share.  In the case of the Delivery to it of ADSs representing a number other than a whole number of Shares, the Depositary shall cause ownership of the appropriate whole number of Shares to be 

 

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Delivered in accordance with the terms hereof, and shall, at the discretion of the Depositary, either (i) return to the person surrendering such ADSs the number of ADSs representing any remaining fractional Share, or (ii) sell or cause to be sold the fractional Share represented by the ADSs so surrendered and remit the proceeds of such sale (net of (a) applicable fees and charges of, and expenses incurred by, the Depositary and (b) taxes withheld) to the person surrendering the ADSs.

 

Notwithstanding anything else contained in any ADR or the Deposit Agreement, the Depositary may make delivery at the Principal Office of the Depositary of (i) any cash dividends or cash distributions, or (ii) any proceeds from the sale of any distributions of shares or rights, which are at the time held by the Depositary in respect of the Deposited Securities represented by the ADSs surrendered for cancellation and withdrawal.  At the request, risk and expense of any Holder so surrendering ADSs, and for the account of such Holder, the Depositary shall direct the Custodian to forward (to the extent permitted by law) any cash or other property (other than securities) held by the Custodian in respect of the Deposited Securities represented by such ADSs to the Depositary for delivery at the Principal Office of the Depositary.  Such direction shall be given by letter or, at the request, risk and expense of such Holder, by cable, telex or facsimile transmission.

 

Section 2.8                                   Limitations on Execution and Delivery, Transfer, etc. of ADSs; Suspension of Delivery, Transfer, etc.

 

(a)           Additional Requirements.  As a condition precedent to the execution and delivery, registration of issuance, transfer, split-up, combination or surrender, of any ADS, the delivery of any distribution thereon, or the withdrawal of any Deposited Securities, the Depositary or the Custodian may require (i) payment from the depositor of Shares or presenter of ADSs or of an ADR of a sum sufficient to reimburse it for any tax or other governmental charge and any stock transfer or registration fee with respect thereto (including any such tax or charge and fee with respect to Shares being deposited or withdrawn) and payment of any applicable fees and charges of the Depositary as provided in Section 5.9 and Exhibit B, (ii) the production of proof satisfactory to it as to the identity and genuineness of any signature or any other matter contemplated by Section 3.1, and (iii) compliance with (A) any laws or governmental regulations relating to the execution and delivery of ADRs or ADSs or to the withdrawal of Deposited Securities and (B) such reasonable regulations as the Depositary and the Company may establish consistent with the provisions of the representative ADR, if applicable, the Deposit Agreement and applicable law.

 

(b)           Additional Limitations.  The issuance of ADSs against deposits of Shares generally or against deposits of particular Shares may be suspended, or the deposit of particular Shares may be refused, or the registration of transfer of ADSs in particular instances may be refused, or the registration of transfers of ADSs generally may be suspended, during any period when the transfer books of the Company, the Depositary, a Registrar or the Share Registrar are closed or if any such action is deemed necessary or advisable by the Depositary or the Company, in good faith, at any time or from time to time because of any requirement of law or regulation, any government or governmental body or commission or any securities exchange on which the ADSs or Shares are listed, or under any provision of the Deposit Agreement or the representative 

 

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ADR(s), if applicable, or under any provision of, or governing, the Deposited Securities, or because of a meeting of shareholders of the Company or for any other reason, subject, in all cases, to Section 7.8.

 

(c)           Regulatory Restrictions.  Notwithstanding any provision of the Deposit Agreement or any ADR(s) to the contrary, Holders are entitled to surrender outstanding ADSs to withdraw the Deposited Securities associated herewith at any time subject only to (i) temporary delays caused by closing the transfer books of the Depositary or the Company or the deposit of Shares in connection with voting at a shareholders’ meeting or the payment of dividends, (ii) the payment of fees, taxes and similar charges, (iii) compliance with any U.S. or foreign laws or governmental regulations relating to the ADSs or to the withdrawal of the Deposited Securities, and (iv) other circumstances specifically contemplated by Instruction I.A.(l) of the General Instructions to Form F-6 (as such General Instructions may be amended from time to time).

 

Section 2.9            Lost ADRs, etc.  In case any ADR shall be mutilated, destroyed, lost, or stolen, the Depositary shall execute and deliver a new ADR of like tenor at the expense of the Holder (a) in the case of a mutilated ADR, in exchange of and substitution for such mutilated ADR upon cancellation thereof, or (b) in the case of a destroyed, lost or stolen ADR, in lieu of and in substitution for such destroyed, lost, or stolen ADR, after the Holder thereof (i) has submitted to the Depositary a written request for such exchange and substitution before the Depositary has notice that the ADR has been acquired by a bona fide purchaser, (ii) has provided such security or indemnity (including an indemnity bond) as may be required by the Depositary to save it and any of its agents harmless, and (iii) has satisfied any other reasonable requirements imposed by the Depositary, including, without limitation, evidence satisfactory to the Depositary of such destruction, loss or theft of such ADR, the authenticity thereof and the Holder’s ownership thereof.

 

Section 2.10         Cancellation and Destruction of Surrendered ADRs; Maintenance of Records.  All ADRs surrendered to the Depositary shall be canceled by the Depositary.  Canceled ADRs shall not be entitled to any benefits under the Deposit Agreement or be valid or enforceable against the Depositary or the Company for any purpose.  The Depositary is authorized to destroy ADRs so canceled, provided the Depositary maintains a record of all destroyed ADRs.  Any ADSs held in book-entry form (i.e., through accounts at DTC) shall be deemed canceled when the Depositary causes the number of ADSs evidenced by the Balance Certificate to be reduced by the number of ADSs surrendered (without the need to physically destroy the Balance Certificate).

 

Section 2.11         Escheatment.  In the event any unclaimed property relating to the ADSs, for any reason, is in the possession of Depositary and has not been claimed by the Holder thereof or cannot be delivered to the Holder thereof through usual channels, the Depositary shall, upon expiration of any applicable statutory period relating to abandoned property laws, escheat such unclaimed property to the relevant authorities in accordance with the laws of each of the relevant States of the United States.

 

Section 2.12         Partial Entitlement ADSs.  In the event any Shares are deposited which (i) entitle the holders thereof to receive a per-share distribution or other entitlement in an amount 

 

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different from the Shares then on deposit or (ii) are not fully fungible (including, without limitation, as to settlement or trading) with the Shares then on deposit (the Shares then on deposit collectively, “Full Entitlement Shares” and the Shares with different entitlement, “Partial Entitlement Shares”), the Depositary shall (i) cause the Custodian to hold Partial Entitlement Shares separate and distinct from Full Entitlement Shares, and (ii) subject to the terms of the Deposit Agreement, issue ADSs representing Partial Entitlement Shares which are separate and distinct from the ADSs representing Full Entitlement Shares, by means of separate CUSIP numbering and legending (if necessary) and, if applicable, by issuing ADRs evidencing such ADSs with applicable notations thereon (“Partial Entitlement ADSs/ADRs” and “Full Entitlement ADSs/ADRs”, respectively).  If and when Partial Entitlement Shares become Full Entitlement Shares, the Depositary shall (a) give notice thereof to Holders of Partial Entitlement ADSs and give Holders of Partial Entitlement ADRs the opportunity to exchange such Partial Entitlement ADRs for Full Entitlement ADRs, (b) cause the Custodian to transfer the Partial Entitlement Shares into the account of the Full Entitlement Shares, and (c) take such actions as are necessary to remove the distinctions between (i) the Partial Entitlement ADRs and ADSs, on the one hand, and (ii) the Full Entitlement ADRs and ADSs on the other.  Holders and Beneficial Owners of Partial Entitlement ADSs shall only be entitled to the entitlements of Partial Entitlement Shares.  Holders and Beneficial Owners of Full Entitlement ADSs shall be entitled only to the entitlements of Full Entitlement Shares.  All provisions and conditions of the Deposit Agreement shall apply to Partial Entitlement ADRs and ADSs to the same extent as Full Entitlement ADRs and ADSs, except as contemplated by this Section 2.12.  The Depositary is authorized to take any and all other actions as may be necessary (including, without limitation, making the necessary notations on ADRs) to give effect to the terms of this Section 2.12.  The Company agrees to give timely written notice to the Depositary if any Shares issued or to be issued are Partial Entitlement Shares and shall assist the Depositary with the establishment of procedures enabling the identification of Partial Entitlement Shares upon Delivery to the Custodian.

 

Section 2.13         Certificated/Uncertificated ADSs.  Notwithstanding any other provision of the Deposit Agreement, the Depositary may, at any time and from time to time, issue ADSs that are not evidenced by ADRs (such ADSs, the “Uncertificated ADS(s)” and the ADS(s) evidenced by ADR(s), the “Certificated ADS(s)”).  When issuing and maintaining Uncertificated ADS(s) under the Deposit Agreement, the Depositary shall at all times be subject to (i) the standards applicable to registrars and transfer agents maintaining direct registration systems for equity securities in New York and issuing uncertificated securities under New York law, and (ii) the terms of New York law applicable to uncertificated equity securities.  Uncertificated ADSs shall not be represented by any instruments but shall be evidenced by registration in the books of the Depositary maintained for such purpose.  Holders of Uncertificated ADSs, that are not subject to any registered pledges, liens, restrictions or adverse claims of which the Depositary has notice at such time, shall at all times have the right to exchange the Uncertificated ADS(s) for Certificated ADS(s) of the same type and class, subject in each case to applicable laws and any rules and regulations the Depositary may have established in respect of the Uncertificated ADSs.  Holders of Certificated ADSs shall, if the Depositary maintains a direct registration system for the ADSs, have the right to exchange the Certificated ADSs for Uncertificated ADSs upon (i) the due surrender of the Certificated ADS(s) to the Depositary for 

 

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such purpose and (ii) the presentation of a written request to that effect to the Depositary, subject in each case to (a) all liens and restrictions noted on the ADR evidencing the Certificated ADS(s) and all adverse claims of which the Depositary then has notice, (b) the terms of the Deposit Agreement and the rules and regulations that the Depositary may establish for such purposes hereunder, (c) applicable law, and (d) payment of the Depositary fees and expenses applicable to such exchange of Certificated ADS(s) for Uncertificated ADS(s).  Uncertificated ADSs shall in all respects be identical to Certificated ADS(s) of the same type and class, except that (i) no ADR(s) shall be, or shall need to be, issued to evidence Uncertificated ADS(s), (ii) Uncertificated ADS(s) shall, subject to the terms of the Deposit Agreement, be transferable upon the same terms and conditions as uncertificated securities under New York law, (iii) the ownership of Uncertificated ADS(s) shall be recorded on the books of the Depositary maintained for such purpose and evidence of such ownership shall be reflected in periodic statements provided by the Depositary to the Holder(s) in accordance with applicable New York law, (iv) the Depositary may from time to time, upon notice to the Holders of Uncertificated ADSs affected thereby, establish rules and regulations, and amend or supplement existing rules and regulations, as may be deemed reasonably necessary to maintain Uncertificated ADS(s) on behalf of Holders, provided that (a) such rules and regulations do not conflict with the terms of the Deposit Agreement and applicable law, and (b) the terms of such rules and regulations are readily available to Holders upon request, (v) the Uncertificated ADS(s) shall not be entitled to any benefits under the Deposit Agreement or be valid or enforceable for any purpose against the Depositary or the Company unless such Uncertificated ADS(s) is/are registered on the books of the Depositary maintained for such purpose, (vi) the Depositary may, in connection with any deposit of Shares resulting in the issuance of Uncertificated ADSs and with any transfer, pledge, release and cancellation of Uncertificated ADSs, require the prior receipt of such documentation as the Depositary may deem reasonably appropriate, and (vii) upon termination of the Deposit Agreement, the Depositary shall not require Holders of Uncertificated ADSs to affirmatively instruct the Depositary before remitting proceeds from the sale of the Deposited Securities represented by such Holders’ Uncertificated ADSs under the terms of Section 6.2 of the Deposit Agreement.  When issuing ADSs under the terms of the Deposit Agreement, including, without limitation, issuances pursuant to Sections 2.5, 4.2, 4.3, 4.4, 4.5 and 4.11, the Depositary may in its discretion determine to issue Uncertificated ADSs rather than Certificated ADSs, unless otherwise specifically instructed by the applicable Holder to issue Certificated ADSs.  All provisions and conditions of the Deposit Agreement shall apply to Uncertificated ADSs to the same extent as to Certificated ADSs, except as contemplated by this Section 2.13.  The Depositary is authorized and directed to take any and all actions and establish any and all procedures deemed reasonably necessary to give effect to the terms of this Section 2.13.  Any references in the Deposit Agreement or any ADR(s) to the terms “American Depositary Share(s)” or “ADS(s)” shall, unless the context otherwise requires, include Certificated ADS(s) and Uncertificated ADS(s).  Except as set forth in this Section 2.13 and except as required by applicable law, the Uncertificated ADSs shall be treated as ADSs issued and outstanding under the terms of the Deposit Agreement.  In the event that, in determining the rights and obligations of parties hereto with respect to any Uncertificated ADSs, any conflict arises between (a) the terms of the Deposit Agreement (other than this Section 2.13) and (b) the terms of this Section 2.13, the terms and conditions set forth in this Section 2.13 shall be controlling and shall govern

 

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the rights and obligations of the parties to the Deposit Agreement pertaining to the Uncertificated ADSs.

 

Section 2.14                            Restricted ADSs.  The Depositary shall, at the request and expense of the Company, establish procedures enabling the deposit hereunder of Shares that are Restricted Securities in order to enable the holder of such Shares to hold its ownership interests in such Restricted Shares in the form of ADSs issued under the terms hereof (such Shares, “Restricted Shares”).  Upon receipt of a written request from the Company to accept Restricted Shares for deposit hereunder, the Depositary agrees to establish procedures permitting the deposit of such Restricted Shares and the issuance of ADSs representing the right to receive, subject to the terms of the Deposit Agreement and the applicable ADR (if issued as a Certificated ADS), such deposited Restricted Shares (such ADSs, the “Restricted ADSs,” and the ADRs evidencing such Restricted ADSs, the “Restricted ADRs”).  Notwithstanding anything contained in this Section 2.14, the Depositary and the Company may, to the extent not prohibited by law, agree to issue the Restricted ADSs in uncertificated form (“Uncertificated Restricted ADSs”) upon such terms and conditions as the Company and the Depositary may deem necessary and appropriate.  The Company shall assist the Depositary in the establishment of such procedures and agrees that it shall take all steps necessary and satisfactory to the Depositary to insure that the establishment of such procedures does not violate the provisions of the Securities Act or any other applicable laws.  The depositors of such Restricted Shares and the Holders of the Restricted ADSs may be required prior to the deposit of such Restricted Shares, the transfer of the Restricted ADRs and the Restricted ADSs evidenced thereby or the withdrawal of the Restricted Shares represented by Restricted ADSs to provide such written certifications or agreements as the Depositary or the Company may require.  The Company shall provide to the Depositary in writing the legend(s) to be affixed to the Restricted ADRs (if the Restricted ADSs are to be issued as Certificated ADSs), or to be included in the statements issued from time to time to Holders of Uncertificated ADSs (if issued as Uncertificated Restricted ADSs), which legends shall (i) be in a form reasonably satisfactory to the Depositary and (ii) contain the specific circumstances under which the Restricted ADSs, and if applicable, the Restricted ADRs evidencing the Restricted ADSs may be transferred or the Restricted Shares withdrawn.  The Restricted ADSs issued upon the deposit of Restricted Shares shall be separately identified on the books of the Depositary and the Restricted Shares so deposited shall, to the extent required by law, be held separate and distinct from the other Deposited Securities held hereunder.  The Restricted Shares and the Restricted ADSs shall not be eligible for Pre-Release Transactions.  The Restricted ADSs shall not be eligible for inclusion in any book-entry settlement system, including, without limitation, DTC, and shall not in any way be fungible with the ADSs issued under the terms hereof that are not Restricted ADSs.  The Restricted ADSs , and if applicable, the Restricted ADRs evidencing the Restricted ADSs shall be transferable only by the Holder thereof upon delivery to the Depositary of (i) all documentation otherwise contemplated by the Deposit Agreement and (ii) an opinion of counsel satisfactory to the Depositary setting forth, inter alia, the conditions upon which the Restricted ADSs presented, and if applicable, the Restricted ADRs evidencing the Restricted ADSs are transferable by the Holder thereof under applicable securities laws and the transfer restrictions contained in the legend applicable to the Restricted ADSs presented for transfer.  Except as set forth in this Section 2.14 and except as required by applicable law, the Restricted ADSs and the Restricted ADRs evidencing Restricted ADSs shall be treated as ADSs and ADRs issued and 

 

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outstanding under the terms of the Deposit Agreement.  In the event that, in determining the rights and obligations of parties hereto with respect to any Restricted ADSs, any conflict arises between (a) the terms of the Deposit Agreement (other than this Section 2.14) and (b) the terms of (i) this Section 2.14 or (ii) the applicable Restricted ADR, the terms and conditions set forth in this Section 2.14 and of the Restricted ADR shall be controlling and shall govern the rights and obligations of the parties to the Deposit Agreement pertaining to the deposited Restricted Shares, the Restricted ADSs and Restricted ADRs.

 

If the Restricted ADRs, the Restricted ADSs and the Restricted Shares cease to be Restricted Securities, the Depositary, upon receipt of (x) an opinion of counsel satisfactory to the Depositary setting forth, inter alia, that the Restricted ADRs, the Restricted ADSs and the Restricted Shares are not as of such time Restricted Securities, and (y) instructions from the Company to remove the restrictions applicable to the Restricted ADRs, the Restricted ADSs and the Restricted Shares, shall (i) eliminate the distinctions and separations that may have been established between the applicable Restricted Shares held on deposit under this Section 2.14 and the other Shares held on deposit under the terms of the Deposit Agreement that are not Restricted Shares, (ii) treat the newly unrestricted ADRs and ADSs on the same terms as, and fully fungible with, the other ADRs and ADSs issued and outstanding under the terms of the Deposit Agreement that are not Restricted ADRs or Restricted ADSs, (iii) take all actions necessary to remove any distinctions, limitations and restrictions previously existing under this Section 2.14 between the applicable Restricted ADRs and Restricted ADSs, respectively, on the one hand, and the other ADRs and ADSs that are not Restricted ADRs or Restricted ADSs, respectively, on the other hand, including, without limitation, by making the newly-unrestricted ADSs eligible for Pre-Release Transactions and for inclusion in the applicable book-entry settlement systems.

 

ARTICLE III

 

CERTAIN OBLIGATIONS OF HOLDERS
 AND BENEFICIAL OWNERS OF ADSs

 

Section 3.1                                   Proofs, Certificates and Other Information.  Any person presenting Shares for deposit, any Holder and any Beneficial Owner may be required, and every Holder and Beneficial Owner agrees, from time to time to provide to the Depositary and the Custodian such proof of citizenship or residence, taxpayer status, payment of all applicable taxes or other governmental charges, exchange control approval, legal or beneficial ownership of ADSs and Deposited Securities, compliance with applicable laws, the terms of the Deposit Agreement or the ADR(s) evidencing the ADSs and the provisions of, or governing, the Deposited Securities, to execute such certifications and to make such representations and warranties, and to provide such other information and documentation (or, in the case of Shares in registered form presented for deposit, such information relating to the registration on the books of the Company or of the Share Registrar) as the Depositary or the Custodian may deem necessary or proper or as the Company may reasonably require by written request to the Depositary consistent with its obligations under the Deposit Agreement and the applicable ADR(s).  The Depositary and the Registrar, as applicable, may withhold the execution or delivery or registration of transfer of any ADR or ADS or the distribution or sale of any dividend or distribution of rights or of the 

 

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proceeds thereof or, to the extent not limited by the terms of Section 7.8, the delivery of any Deposited Securities until such proof or other information is filed or such certifications are executed, or such representations and warranties are made, or such other documentation or information provided, in each case to the Depositary’s, the Registrar’s and the Company’s satisfaction.  At the Company’s sole cost and expense, the Depositary shall provide the Company, in a timely manner, with copies or originals if necessary and appropriate of (i) any such proofs of citizenship or residence, taxpayer status, exchange control approval or copies of representations and warranties which it receives from Holders and Beneficial Owners, and (ii) any other information or documents which the Company may reasonably request and which the Depositary shall request and receive from any Holder or Beneficial Owner or any person presenting Shares for deposit or ADSs for cancellation, transfer or withdrawal.  Nothing herein shall obligate the Depositary to (i) obtain any information for the Company if not provided by the Holders or Beneficial Owners, or (ii) verify or vouch for the accuracy of the information so provided by the Holders or Beneficial Owners.

 

Section 3.2                                   Liability for Taxes and Other Charges.  Any tax or other governmental charge payable by the Custodian or by the Depositary with respect to any ADR or any Deposited Securities or ADSs shall be payable by the Holders and Beneficial Owners to the Depositary.  The Company, the Custodian and/or the Depositary may withhold or deduct from any distributions made in respect of Deposited Securities and may sell for the account of a Holder and/or Beneficial Owner any or all of the Deposited Securities and apply such distributions and sale proceeds in payment of such taxes (including applicable interest and penalties) or charges that are or may be payable by Holders or Beneficial Owners in respect of the ADSs, Deposited Securities and ADRs, the Holder and the Beneficial Owner remaining liable for any deficiency.  The Custodian may refuse the deposit of Shares and the Depositary may refuse to issue ADSs, to deliver ADRs, register the transfer of ADSs, register the split-up or combination of ADRs and (subject to Section 7.8) the withdrawal of Deposited Securities until payment in full of such tax, charge, penalty or interest is received.  Every Holder and Beneficial Owner agrees to indemnify the Depositary, the Company, the Custodian, and any of their agents, officers, employees and Affiliates for, and to hold each of them harmless from, any claims with respect to taxes or additions to tax (including applicable interest and penalties thereon) arising from any tax benefit obtained for such Holder and/or Beneficial Owner.

 

Section 3.3                                   Representations and Warranties on Deposit of Shares.  Each person depositing Shares under the Deposit Agreement shall be deemed thereby to represent and warrant that (i) such Shares and the certificates therefor are duly authorized, validly issued, fully paid, non-assessable and legally obtained by such person, (ii) all preemptive (and similar) rights, if any, with respect to such Shares have been validly waived or exercised, (iii) the person making such deposit is duly authorized so to do, (iv) the Shares presented for deposit are free and clear of any lien, encumbrance, security interest, charge, mortgage or adverse claim, and (v) the Shares presented for deposit are not, and the ADSs issuable upon such deposit will not be, Restricted Securities (except as contemplated in Section 2.14), and (vi) the Shares presented for deposit have not been stripped of any rights or entitlements.  Such representations and warranties shall survive the deposit and withdrawal of Shares, the issuance and cancellation of ADSs in respect thereof and the transfer of such ADSs.  If any such representations or warranties are false 

 

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in any way, the Company and the Depositary shall be authorized, at the cost and expense of the person depositing Shares, to take any and all actions necessary to correct the consequences thereof.

 

Section 3.4                                   Compliance with Information Requests.  Notwithstanding any other provision of the Deposit Agreement or any ADR(s), each Holder and Beneficial Owner agrees to comply with requests from the Company pursuant to applicable law, the rules and requirements of any stock exchange on which the Shares or ADSs are, or will be, registered, traded or listed or the Articles of Association of the Company, which are made to provide information, inter alia, as to the capacity in which such Holder or Beneficial Owner owns ADSs (and Shares as the case may be) and regarding the identity of any other person(s) interested in such ADSs and the nature of such interest and various other matters, whether or not they are Holders and/or Beneficial Owners at the time of such request.  The Depositary agrees to use its reasonable efforts to forward, upon the request of the Company and at the Company’s expense, any such request from the Company to the Holders and to forward to the Company any such responses to such requests received by the Depositary.

 

Section 3.5                                   Ownership Restrictions.  Notwithstanding any other provision in the Deposit Agreement or any ADR, the Company may restrict transfers of the Shares where such transfer might result in ownership of Shares exceeding limits imposed by applicable law or the Articles of Association of the Company.  The Company may also restrict, in such manner as it deems appropriate, transfers of the ADSs where such transfer may result in the total number of Shares represented by the ADSs owned by a single Holder or Beneficial Owner to exceed any such limits.  The Company may, in its sole discretion but subject to applicable law, instruct the Depositary to take action with respect to the ownership interest of any Holder or Beneficial Owner in excess of the limits set forth in the preceding sentence, including, but not limited to, the imposition of restrictions on the transfer of ADSs, the removal or limitation of voting rights or mandatory sale or disposition on behalf of a Holder or Beneficial Owner of the Shares represented by the ADSs held by such Holder or Beneficial Owner in excess of such limitations, if and to the extent such disposition is permitted by applicable law and the Articles of Association of the Company.  Nothing herein shall be interpreted as obligating the Depositary or the Company to ensure compliance with the ownership restrictions described in this Section 3.5.

 

Section 3.6                                   Reporting Obligations and Regulatory Approvals.  Applicable laws and regulations may require holders and beneficial owners of Shares, including the Holders and Beneficial Owners of ADSs, to satisfy reporting requirements and obtain regulatory approvals in certain circumstances.  Holders and Beneficial Owners of ADSs are solely responsible for determining and complying with such reporting requirements and obtaining such approvals.  Each Holder and each Beneficial Owner hereby agrees to make such determination, file such reports, and obtain such approvals to the extent and in the form required by applicable laws and regulations as in effect from time to time.  Neither the Depositary, the Custodian, the Company or any of their respective agents or affiliates shall be required to take any actions whatsoever on behalf of Holders or Beneficial Owners to determine or satisfy such reporting requirements or obtain such regulatory approvals under applicable laws and regulations.

 

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ARTICLE IV

 

THE DEPOSITED SECURITIES

 

Section 4.1                                   Cash Distributions.  Whenever the Company intends to make a distribution of a cash dividend or other cash distribution, the Company shall give notice thereof to the Depositary at least twenty (20) days prior to the proposed distribution specifying, inter alia, the record date applicable for determining the holders of Deposited Securities entitled to receive such distribution.  Upon the timely receipt of such notice, the Depositary shall establish an ADS Record Date upon the terms described in Section 4.9.  Upon receipt of confirmation from the Custodian of the receipt of any cash dividend or other cash distribution on any Deposited Securities, or upon receipt of proceeds from the sale of any Deposited Securities or any other entitlements held in respect of Deposited Securities under the terms hereof, the Depositary will (i) if at the time of receipt thereof any amounts received in a Foreign Currency can, in the judgment of the Depositary (pursuant to Section 4.8), be converted on a practicable basis into Dollars transferable to the United States, promptly convert or cause to be converted such cash dividend, distribution or proceeds into Dollars (on the terms described in Section 4.8), (ii) if applicable and unless previously established, establish the ADS Record Date upon the terms described in Section 4.9, and (iii) distribute promptly the amount thus received (net of (a) the applicable fees and charges of, and expenses incurred by, the Depositary and (b) taxes withheld) to the Holders entitled thereto as of the ADS Record Date in proportion to the number of ADSs held as of the ADS Record Date.  The Depositary shall distribute only such amount, however, as can be distributed without attributing to any Holder a fraction of one cent, and any balance not so distributed shall be held by the Depositary (without liability for interest thereon) and shall be added to and become part of the next sum received by the Depositary for distribution to Holders of ADSs outstanding at the time of the next distribution.  If the Company, the Custodian or the Depositary is required to withhold and does withhold from any cash dividend or other cash distribution in respect of any Deposited Securities an amount on account of taxes, duties or other governmental charges, the amount distributed to Holders on the ADSs representing such Deposited Securities shall be reduced accordingly.  Such withheld amounts shall be forwarded by the Company, the Custodian or the Depositary to the relevant governmental authority.  Evidence of payment thereof by the Company shall be forwarded by the Company to the Depositary upon request.  The depositary will hold any cash amounts it is unable to  distribute in a non-interest bearing account for the benefit of the applicable holders and beneficial owners of ADSs until the distribution can be effected or the funds that the depositary holds must be escheated as unclaimed property in accordance with the laws of the relevant states of the United States.

 

Section 4.2                                   Distribution in Shares.  Whenever the Company intends to make a distribution that consists of a dividend in, or free distribution of, Shares, the Company shall give notice thereof to the Depositary at least twenty (20) days prior to the proposed distribution, specifying, inter alia, the record date applicable to holders of Deposited Securities entitled to receive such distribution.  Upon the timely receipt of such notice from the Company, the Depositary shall establish the ADS Record Date upon the terms described in Section 4.9.  Upon receipt of confirmation from the Custodian of the receipt of the Shares so distributed by the 

 

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Company, the Depositary shall either (i) subject to Section 5.9, distribute to the Holders as of the ADS Record Date in proportion to the number of ADSs held as of the ADS Record Date, additional ADSs, which represent in the aggregate the number of Shares received as such dividend, or free distribution, subject to the other terms of the Deposit Agreement (including, without limitation, (a) the applicable fees and charges of, and expenses incurred by, the Depositary and (b) taxes), or (ii) if additional ADSs are not so distributed, take all actions necessary so that each ADS issued and outstanding after the ADS Record Date shall, to the extent permissible by law, thenceforth also represent rights and interests in the additional integral number of Shares distributed upon the Deposited Securities represented thereby (net of (a) the applicable fees and charges of, and expenses incurred by, the Depositary and (b) taxes).  In lieu of delivering fractional ADSs, the Depositary shall sell the number of Shares or ADSs, as the case may be, represented by the aggregate of such fractions and distribute the net proceeds upon the terms described in Section 4.1.  In the event that the Depositary determines that any distribution in property (including Shares) is subject to any tax or other governmental charges which the Depositary is obligated to withhold, or, if the Company in the fulfillment of its obligation under Section 5.7, has furnished an opinion of U.S. counsel determining that Shares must be registered under the Securities Act or other laws in order to be distributed to Holders (and no such registration statement has been declared effective), the Depositary may dispose of all or a portion of such property (including Shares and rights to subscribe therefor) in such amounts and in such manner, including by public or private sale, as the Depositary deems necessary and practicable, and the Depositary shall distribute the net proceeds of any such sale (after deduction of (a) taxes and (b) fees and charges of, and expenses incurred by, the Depositary) to Holders entitled thereto upon the terms described in Section 4.1.  The Depositary shall hold and/or distribute any unsold balance of such property in accordance with the provisions of the Deposit Agreement.

 

Section 4.3                                   Elective Distributions in Cash or Shares.  Whenever the Company intends to make a distribution payable at the election of the holders of Shares in cash or in additional Shares, the Company shall give notice thereof to the Depositary at least sixty (60) days prior to the proposed distribution  specifying, inter alia, the record date applicable to holders of Deposited Securities entitled to receive such elective distribution and whether or not it wishes such elective distribution to be made available to Holders of ADSs.  Upon the timely receipt of a notice indicating that the Company wishes such elective distribution to be made available to Holders of ADSs, the Depositary shall consult with the Company to determine, and the Company shall assist the Depositary in its determination, whether it is lawful and reasonably practicable to make such elective distribution available to the Holders of ADSs.  The Depositary shall make such elective distribution available to Holders only if (i) the Company shall have timely requested that the elective distribution be made available to Holders, (ii) the Depositary shall have determined that such distribution is reasonably practicable and (iii) the Depositary shall have received satisfactory documentation within the terms of Section 5.7.  If the above conditions are not satisfied, the Depositary shall establish an ADS Record Date on the terms described in Section 4.9 and, to the extent permitted by law, distribute to the Holders, on the basis of the same determination as is made in the Cayman Islands in respect of the Shares for which no election is made, either (X) cash upon the terms described in Section 4.1 or (Y) additional ADSs representing such additional Shares upon the terms described in Section 4.2.  If 

 

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the above conditions are satisfied, the Depositary shall establish an ADS Record Date on the terms described in Section 4.9 and establish procedures to enable Holders to elect the receipt of the proposed distribution in cash or in additional ADSs.  The Company shall assist the Depositary in establishing such procedures to the extent necessary.  If a Holder elects to receive the proposed distribution (X) in cash, the distribution shall be made upon the terms described in Section 4.1, or (Y) in ADSs, the distribution shall be made upon the terms described in Section 4.2.  Nothing herein shall obligate the Depositary to make available to Holders a method to receive the elective distribution in Shares (rather than ADSs).  There can be no assurance that Holders generally, or any Holder in particular, will be given the opportunity to receive elective distributions on the same terms and conditions as the holders of Shares.

 

Section 4.4                                   Distribution of Rights to Purchase Additional ADSs.

 

(a)                                  Distribution to ADS Holders.  Whenever the Company intends to distribute to the holders of the Deposited Securities rights to subscribe for additional Shares, the Company shall give notice thereof to the Depositary  at least forty-five (45) days prior to the proposed distribution specifying, inter alia, the record date applicable to holders of Deposited Securities entitled to receive such distribution and whether or not it wishes such rights to be made available to Holders of ADSs.  Upon the timely receipt of a notice indicating that the Company wishes such rights to be made available to Holders of ADSs, the Depositary shall consult with the Company to determine, and the Company shall assist the Depositary in its determination, whether it is lawful and reasonably practicable to make such rights available to the Holders.  The Depositary shall make such rights available to Holders only if (i) the Company shall have timely requested that such rights be made available to Holders, (ii) the Depositary shall have received satisfactory documentation within the terms of Section 5.7, and (iii) the Depositary shall have determined that such distribution of rights is reasonably practicable.  In the event any of the conditions set forth above are not satisfied or if the Company requests that the rights not be made available to Holders of ADSs, the Depositary shall proceed with the sale of the rights as contemplated in Section 4.4(b) below.  In the event all conditions set forth above are satisfied, the Depositary shall establish an ADS Record Date (upon the terms described in Section 4.9) and establish procedures to (x) distribute rights to purchase additional ADSs (by means of warrants or otherwise), (y) to enable the Holders to exercise such rights (upon payment of the subscription price and of the applicable (a) fees and charges of, and expenses incurred by, the Depositary and (b) taxes), and (z) to deliver ADSs upon the valid exercise of such rights.  The Company shall assist the Depositary to the extent necessary in establishing such procedures.  Nothing herein shall obligate the Depositary to make available to the Holders a method to exercise rights to subscribe for Shares (rather than ADSs).

 

(b)                                  Sale of Rights.  If (i) the Company does not timely request the Depositary to make the rights available to Holders or requests that the rights not be made available to Holders, (ii) the Depositary fails to receive satisfactory documentation within the terms of Section 5.7 or determines it is not reasonably practicable to make the rights available to Holders, or (iii) any rights made available are not exercised and appear to be about to lapse, the Depositary shall determine whether it is lawful and reasonably practicable to sell such rights, in a riskless principal capacity, at such place and upon such terms (including public or private sale) as it may 

 

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deem practicable.  The Company shall assist the Depositary to the extent necessary to determine such legality and practicability.  The Depositary shall, upon such sale, convert and distribute proceeds of such sale (net of applicable (a) fees and charges of, and expenses incurred by, the Depositary and (b) taxes) upon the terms set forth in Section 4.1.

 

(c)                                  Lapse of Rights.  If the Depositary is unable to make any rights available to Holders upon the terms described in Section 4.4(a) or to arrange for the sale of the rights upon the terms described in Section 4.4(b), the Depositary shall allow such rights to lapse.

 

The Depositary shall not be responsible for (i) any failure to determine that it may be lawful or practicable to make such rights available to Holders in general or any Holders in particular, (ii) any foreign exchange exposure or loss incurred in connection with such sale, or exercise, or (iii) the content of any materials forwarded to the Holders on behalf of the Company in connection with the rights distribution.

 

Notwithstanding anything to the contrary in this Section 4.4, if registration (under the Securities Act or any other applicable law) of the rights or the securities to which any rights relate may be required in order for the Company to offer such rights or such securities to Holders and to sell the securities represented by such rights, the Depositary will not distribute such rights to the Holders (i) unless and until a registration statement under the Securities Act (or other applicable law) covering such offering is in effect or (ii) unless the Company furnishes the Depositary opinion(s) of counsel for the Company in the United States and counsel to the Company in any other applicable country in which rights would be distributed, in each case satisfactory to the Depositary, to the effect that the offering and sale of such securities to Holders and Beneficial Owners are exempt from, or do not require registration under, the provisions of the Securities Act or any other applicable laws.  A liquid market for rights may not exist, and this may adversely affect (1) the ability of the Depositary to dispose of such rights or (2) the amount the Depositary would realize upon disposal of rights.

 

In the event that the Company, the Depositary or the Custodian shall be required to withhold and does withhold from any distribution of property (including rights) an amount on account of taxes or other governmental charges, the amount distributed to the Holders of ADSs representing such Deposited Securities shall be reduced accordingly.  In the event that the Depositary determines that any distribution in property (including Shares and rights to subscribe therefor) is subject to any tax or other governmental charges which the Depositary is obligated to withhold, the Depositary may dispose of all or a portion of such property (including Shares and rights to subscribe therefor) in such amounts and in such manner, including by public or private sale, as the Depositary deems necessary and practicable to pay any such taxes or charges.

 

There can be no assurance that Holders generally, or any Holder in particular, will be given the opportunity to receive or exercise rights on the same terms and conditions as the holders of Shares or be able to exercise such rights.  Nothing herein shall obligate the Company to file any registration statement in respect of any rights or Shares or other securities to be acquired upon the exercise of such rights.

 

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Section 4.5                                   Distributions Other Than Cash, Shares or Rights to Purchase Shares.

 

(a)                                  Whenever the Company intends to distribute to the holders of Deposited Securities property other than cash, Shares or rights to purchase additional Shares, the Company shall give timely notice thereof to the Depositary and shall indicate whether or not it wishes such distribution to be made to Holders of ADSs.  Upon receipt of a notice indicating that the Company wishes such distribution be made to Holders of ADSs, the Depositary shall consult with the Company, and the Company shall assist the Depositary, to determine whether such distribution to Holders is lawful and reasonably practicable.  The Depositary shall not make such distribution unless (i) the Company shall have requested the Depositary to make such distribution to Holders, (ii) the Depositary shall have received satisfactory documentation within the terms of Section 5.7, and (iii) the Depositary shall have determined that such distribution is reasonably practicable.

 

(b)                                  Upon receipt of satisfactory documentation and the request of the Company to distribute property to Holders of ADSs and after making the requisite determinations set forth in (a) above, the Depositary shall distribute the property so received to the Holders of record, as of the ADS Record Date, in proportion to the number of ADSs held by them respectively and in such manner as the Depositary may deem practicable for accomplishing such distribution (i) upon receipt of payment or net of the applicable fees and charges of, and expenses incurred by, the Depositary, and (ii) net of any taxes withheld.  The Depositary may dispose of all or a portion of the property so distributed and deposited, in such amounts and in such manner (including public or private sale) as the Depositary may deem practicable or necessary to satisfy any taxes (including applicable interest and penalties) or other governmental charges applicable to the distribution.

 

(c)                                  If (i) the Company does not request the Depositary to make such distribution to Holders or requests not to make such distribution to Holders, (ii) the Depositary does not receive satisfactory documentation within the terms of Section 5.7, or (iii) the Depositary determines that all or a portion of such distribution is not reasonably practicable, the Depositary shall sell or cause such property to be sold in a public or private sale, at such place or places and upon such terms as it may deem practicable and shall (i) cause the proceeds of such sale, if any, to be converted into Dollars and (ii) distribute the proceeds of such conversion received by the Depositary (net of applicable (a) fees and charges of, and expenses incurred by, the Depositary and (b) taxes) to the Holders as of the ADS Record Date upon the terms of Section 4.1.  If the Depositary is unable to sell such property, the Depositary may dispose of such property for the account of the Holders in any way it deems reasonably practicable under the circumstances.

 

Section 4.6                                   Distributions with Respect to Deposited Securities in Bearer Form.  Subject to the terms of this Article IV, distributions in respect of Deposited Securities that are held by the Depositary in bearer form shall be made to the Depositary for the account of the respective Holders of ADS(s) with respect to which any such distribution is made upon due presentation by the Depositary or the Custodian to the Company of any relevant coupons, talons, or certificates.  The Company shall promptly notify the Depositary of such distributions.  The Depositary or the Custodian shall promptly present such coupons, talons or certificates, as the case may be, in connection with any such distribution.

 

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Section 4.7                                   Redemption.  If the Company intends to exercise any right of redemption in respect of any of the Deposited Securities, the Company shall give notice thereof to the Depositary at least sixty (60) days prior to the intended date of redemption which notice shall set forth the particulars of the proposed redemption.  Upon timely receipt of (i) such notice and (ii) satisfactory documentation given by the Company to the Depositary within the terms of Section 5.7, and only if the Depositary shall have determined that such proposed redemption is practicable, the Depositary shall provide to each Holder a notice setting forth the intended exercise by the Company of the redemption rights and any other particulars set forth in the Company’s notice to the Depositary.  The Depositary shall instruct the Custodian to present to the Company the Deposited Securities in respect of which redemption rights are being exercised against payment of the applicable redemption price.  Upon receipt of confirmation from the Custodian that the redemption has taken place and that funds representing the redemption price have been received, the Depositary shall convert, transfer, and distribute the proceeds (net of applicable (a) fees and charges of, and the expenses incurred by, the Depositary, and (b) taxes), retire ADSs and cancel ADRs, if applicable, upon delivery of such ADSs by Holders thereof and the terms set forth in Sections 4.1 and 6.2.  If less than all outstanding Deposited Securities are redeemed, the ADSs to be retired will be selected by lot or on a pro rata basis, as may be determined by the Depositary.  The redemption price per ADS shall be the dollar equivalent of the per share amount received by the Depositary (adjusted to reflect the ADS(s)-to-Share(s) ratio) upon the redemption of the Deposited Securities represented by ADSs (subject to the terms of Section 4.8 and the applicable fees and charges of, and expenses incurred by, the Depositary, and taxes) multiplied by the number of Deposited Securities represented by each ADS redeemed.

 

Section 4.8                                   Conversion of Foreign Currency.  Whenever the Depositary or the Custodian shall receive Foreign Currency, by way of dividends or other distributions or the net proceeds from the sale of securities, property or rights, which in the judgment of the Depositary can at such time be converted on a practicable basis, by sale or in any other manner that it may determine in accordance with applicable law, into Dollars transferable to the United States and distributable to the Holders entitled thereto, the Depositary shall convert or cause to be converted, by sale or in any other manner that it may determine, such Foreign Currency into Dollars, and shall distribute such Dollars (net of any applicable fees, any reasonable and customary expenses incurred in such conversion and any expenses incurred on behalf of the Holders in complying with currency exchange control or other governmental requirements) in accordance with the terms of the applicable sections of the Deposit Agreement.  If the Depositary shall have distributed warrants or other instruments that entitle the holders thereof to such Dollars, the Depositary shall distribute such Dollars to the holders of such warrants and/or instruments upon surrender thereof for cancellation, in either case without liability for interest thereon.  Such distribution may be made upon an averaged or other practicable basis without regard to any distinctions among Holders on account of any application of exchange restrictions or otherwise.

 

If such conversion or distribution generally or with regard to a particular Holder can be effected only with the approval or license of any government or agency thereof, the Depositary shall have authority to file such application for approval or license, if any, as it may deem desirable.  In no event, however, shall the Depositary be obligated to make such a filing.

 

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If at any time the Depositary shall determine that in its judgment the conversion of any Foreign Currency and the transfer and distribution of proceeds of such conversion received by the Depositary is not practicable or lawful, or if any approval or license of any governmental authority or agency thereof that is required for such conversion, transfer and distribution is denied or, in the opinion of the Depositary, not obtainable at a reasonable cost or within a reasonable period, the Depositary may, in its discretion, (i) make such conversion and distribution in Dollars to the Holders for whom such conversion, transfer and distribution is lawful and practicable, (ii) distribute the Foreign Currency (or an appropriate document evidencing the right to receive such Foreign Currency) to Holders for whom this is lawful and practicable or (iii) hold (or cause the Custodian to hold) such Foreign Currency (without liability for interest thereon) for the respective accounts of the Holders entitled to receive the same.

 

Section 4.9                                   Fixing of ADS Record Date.  Whenever the Depositary shall receive notice of the fixing of a record date by the Company for the determination of holders of Deposited Securities entitled to receive any distribution (whether in cash, Shares, rights, or other distribution), or whenever for any reason the Depositary causes a change in the number of Shares that are represented by each ADS, or whenever the Depositary shall receive notice of any meeting of, or solicitation of consents or proxies of, holders of Shares or other Deposited Securities, or whenever the Depositary shall find it necessary or convenient in connection with the giving of any notice, solicitation of any consent or any other matter, the Depositary shall fix a record date (the “ADS Record Date”) for the determination of the Holders of ADS(s) who shall be entitled to receive such distribution, to give instructions for the exercise of voting rights at any such meeting, to give or withhold such consent, to receive such notice or solicitation or to otherwise take action, or to exercise the rights of Holders with respect to such changed number of Shares represented by each ADS.  The Depositary shall make reasonable efforts to establish the ADS Record Date as closely as possible to the applicable record date for the Deposited Securities (if any) set by the Company in the Cayman Islands.  Subject to applicable law and the provisions of Section 4.1 through 4.8 and to the other terms and conditions of the Deposit Agreement, only the Holders of ADSs at the close of business in New York on such ADS Record Date shall be entitled to receive such distribution, to give such voting instructions, to receive such notice or solicitation, or otherwise take action.

 

Section 4.10                            Voting of Deposited Securities.  (a) ADS Voting Instructions.  As soon as practicable after receipt of notice of any meeting at which the holders of Deposited Securities are entitled to vote, or of solicitation of consents or proxies from holders of Deposited Securities, the Depositary shall fix the ADS Record Date in respect of such meeting or solicitation of consent or proxy in accordance with Section 4.9.  The Depositary shall, if requested by the Company in writing in a timely manner (the Depositary having no obligation to take any further action if the request shall not have been received by the Depositary at least thirty (30) days prior to the date of such vote or meeting), at the Company’s expense and provided no U.S. legal prohibitions exist, distribute as soon as practicable after receipt thereof to Holders as of the ADS Record Date: (a) such notice of meeting or solicitation of consent or proxy, (b) a statement that the Holders at the close of business on the ADS Record Date will be entitled, subject to any applicable law, the provisions of the Deposit Agreement, the Articles of Association of the Company and the provisions of or governing the Deposited Securities (which provisions, if any, 

 

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shall be summarized in pertinent part by the Company), to instruct the Depositary as to the exercise of the voting rights, if any, pertaining to the Deposited Securities represented by such Holder’s ADSs, and (c) a brief statement as to the manner in which such voting instructions may be given, including an indication that Holders for which the Depositary has not timely received voting instructions will be deemed, and the Depositary shall deem such Holders, to have given a discretionary proxy to a person designated by the Company to vote the Shares or other Deposited Securities represented by such Holder’s ADSs in his or her discretion as set forth in paragraph (b) below.  Voting instructions may be given only in respect of a number of ADSs representing an integral number of Deposited Securities.

 

Notwithstanding anything contained in the Deposit Agreement or any ADR, the Depositary may, to the extent not prohibited by law or regulations, or by the requirements of the stock exchange on which the ADSs are listed, in lieu of distribution of the materials provided to the Depositary in connection with any meeting of, or solicitation of consents or proxies from, holders of Deposited Securities, distribute to the Holders a notice that provides Holders with, or otherwise publicize to Holders, instructions on how to retrieve such materials or receive such materials upon request (i.e., by reference to a website containing the materials for retrieval or a contact for requesting copies of the materials).

 

[The Depositary has been advised by the Company that under the Cayman Islands law as in effect as of the date of the Deposit Agreement and the Articles of Association, voting at any meeting of shareholders of the Company is by show of hands unless a poll is demanded.  Under the Articles of Association of the Company (in effect as of the date of the Deposit Agreement) a poll may be demanded by the chairman of the board of directors of the Company or by any shareholder holding at least ten percent of the Shares given a right to vote at the meeting, present in person or by proxy.] The Depositary will not join in demanding a poll, whether or not requested to do so by Holders of ADSs.

 

Upon the timely receipt of voting instructions from a Holder of ADSs as of the ADS Record Date in the manner specified by the Depositary, the Depositary shall endeavor, insofar as practicable and permitted under applicable law, the provisions of the Deposit Agreement, the Articles of Association of the Company and the provisions of the Deposited Securities, to vote, or cause the Custodian to vote, the Deposited Securities (in person or by proxy) represented by such Holder’s ADSs as follows:  (i) in the event voting takes place at a shareholders’ meeting by show of hands, the Depositary will instruct the Custodian to vote all Deposited Securities in accordance with the voting instructions received from a majority of Holders of ADSs who provided voting instructions and (ii) in the event voting takes place at a shareholders’ meeting by poll, the Depositary will instruct the Custodian to vote the Deposited Securities in accordance with the voting instructions received from the Holders of ADSs.

 

(b)                                      Discretionary Proxy.  Neither the Depositary nor the Custodian shall under any circumstances exercise any discretion as to voting and neither the Depositary nor the Custodian shall vote, attempt to exercise the right to vote, or in any way make use of, for purposes of establishing a quorum or otherwise, the Deposited Securities represented by ADSs, except pursuant to and in accordance with the voting instructions timely received from Holders or as otherwise contemplated herein.  If the Depositary timely receives voting instructions from a 

 

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Holder which fail to specify the manner in which the Depositary is to vote the Deposited Securities represented by such Holder’s ADSs, the Depositary will deem such Holder (unless otherwise specified in the notice distributed to Holders) to have instructed the Depositary to vote in favor of the items set forth in such voting instructions.  If no timely voting instructions are received by the Depositary from a Holder with respect to the Deposited Securities represented by the ADSs held by such Holder as of the ADS Record Date and provided that the Depositary received notice of the meeting or solicitation of vote at least 30 days prior to such meeting or vote, such Holder shall be deemed, and the Depositary shall deem such Holder, to have instructed the Depositary to give a discretionary proxy to a person designated by the Company to vote the Deposited Securities represented by such Holder’s ADSs; provided, that no such instruction shall be deemed given and no such discretionary proxy shall be given with respect to any matter as to which the Company informs the Depositary (and the Company agrees to provide such information promptly in writing) that the Company does not wish such proxy to be given; provided, further, that no such discretionary proxy shall be given (x) with respect to any matter as to which the Company informs the Depositary that (i) there exists substantial opposition, or (ii)  the rights of  Holders or the shareholders of the Company will be materially adversely affected and (y) in the event that the vote is on a show of hands.  Notwithstanding anything else contained herein, the Depositary shall, if so requested in writing by the Company, represent all Deposited Securities (whether or not voting instructions have been received in respect of such Deposited Securities from Holders as of the ADS Record Date) for the sole purpose of establishing quorum at a meeting of shareholders.

 

Notwithstanding anything else contained in the Deposit Agreement or any ADR, the Depositary shall not have any obligation to take any action with respect to any meeting, or solicitation of consents or proxies, of holders of Deposited Securities if the taking of such action would violate U.S. laws.  The Company agrees to take any and all actions reasonably necessary and as permitted by Cayman Islands law to enable Holders and Beneficial Owners to exercise the voting rights accruing to the Deposited Securities and to deliver to the Depositary an opinion of U.S. counsel addressing any actions requested to be taken if requested by the Depositary.

 

There can be no assurance that Holders generally or any Holder in particular will receive the notice described above with sufficient time to enable the Holder to return voting instructions to the Depositary in a timely manner.

 

Section 4.11                            Changes Affecting Deposited Securities.  Upon any change in nominal or par value, split-up, cancellation, consolidation or any other reclassification of Deposited Securities, or upon any recapitalization, reorganization, merger, consolidation or sale of assets affecting the Company or to which it is a party, any securities which shall be received by the Depositary or the Custodian in exchange for, or in conversion of or replacement of or otherwise in respect of, such Deposited Securities shall, to the extent permitted by law, be treated as new Deposited Securities under the Deposit Agreement, and the ADRs shall, subject to the provisions of the Deposit Agreement and applicable law, evidence ADSs representing the right to receive such additional or replacement securities, as applicable.  In giving effect to such change, split-up, cancellation, consolidation or other reclassification of Deposited Securities, recapitalization, reorganization, merger, consolidation or sale of assets, the Depositary may, with the Company’s 

 

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approval, and shall, if the Company shall so request, subject to the terms of the Deposit Agreement and receipt of an opinion of counsel to the Company satisfactory to the Depositary that such actions are not in violation of any applicable laws or regulations, (i) issue and deliver additional ADSs as in the case of a stock dividend on the Shares, (ii) amend the Deposit Agreement and the applicable ADRs, (iii) amend the applicable Registration Statement(s) on Form F-6 as filed with the Commission in respect of the ADSs, (iv) call for the surrender of outstanding ADRs to be exchanged for new ADRs, and (v) take such other actions as are appropriate to reflect the transaction with respect to the ADSs.  The Company agrees to, jointly with the Depositary, amend the Registration Statement on Form F-6 as filed with the Commission to permit the issuance of such new form of ADRs.  Notwithstanding the foregoing, in the event that any security so received may not be lawfully distributed to some or all Holders, the Depositary may, with the Company’s approval, and shall, if the Company requests, subject to receipt of an opinion of Company’s counsel satisfactory to the Depositary that such action is not in violation of any applicable laws or regulations, sell such securities at public or private sale, at such place or places and upon such terms as it may deem proper and may allocate the net proceeds of such sales (net of (a) fees and charges of, and expenses incurred by, the Depositary and (b) taxes) for the account of the Holders otherwise entitled to such securities upon an averaged or other practicable basis without regard to any distinctions among such Holders and distribute the net proceeds so allocated to the extent practicable as in the case of a distribution received in cash pursuant to Section 4.1.  The Depositary shall not be responsible for (i) any failure to determine that it may be lawful or practicable to make such securities available to Holders in general or to any Holder in particular, (ii) any foreign exchange exposure or loss incurred in connection with such sale, or (iii) any liability to the purchaser of such securities.

 

Section 4.12                            Available Information.

 

The Company is subject to the periodic reporting requirements of the Exchange Act and, accordingly, is required to file or submit certain reports with the Commission.  These reports can be retrieved from the Commission’s website (www.sec.gov) and can be inspected and copied at the public reference facilities maintained by the Commission located (as of the date of the Deposit Agreement) at 100 F Street, N.E., Washington D.C.  20549.

 

Section 4.13                            Reports.  The Depositary shall make available for inspection by Holders at its Principal Office any reports and communications, including any proxy soliciting materials, received from the Company which are both (a) received by the Depositary, the Custodian, or the nominee of either of them as the holder of the Deposited Securities and (b) made generally available to the holders of such Deposited Securities by the Company.  The Depositary shall also provide or make available to Holders copies of such reports when furnished by the Company pursuant to Section 5.6.

 

Section 4.14                            List of Holders.  Promptly upon written request by the Company, the Depositary shall furnish to it a list, as of a recent date, of the names, addresses and holdings of ADSs of all Holders.

 

Section 4.15                            Taxation.  The Depositary will, and will instruct the Custodian to, forward to the Company or its agents such information from its records as the Company may 

 

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reasonably request to enable the Company or its agents to file the necessary tax reports with governmental authorities or agencies.  The Depositary, the Custodian or the Company and its agents may (but shall not be obligated to) file such reports as are necessary to reduce or eliminate applicable taxes on dividends and on other distributions in respect of Deposited Securities under applicable tax treaties or laws for the Holders and Beneficial Owners.  In accordance with instructions from the Company and to the extent practicable, the Depositary or the Custodian will take reasonable administrative actions to obtain tax refunds, reduced withholding of tax at source on dividends and other benefits under applicable tax treaties or laws with respect to dividends and other distributions on the Deposited Securities.  As a condition to receiving such benefits, Holders and Beneficial Owners of ADSs may be required from time to time, and in a timely manner, to file such proof of taxpayer status, residence and beneficial ownership (as applicable), to execute such certificates and to make such representations and warranties, or to provide any other information or documents, as the Depositary or the Custodian may deem necessary or proper to fulfill the Depositary’s or the Custodian’s obligations under applicable law.  The Holders and Beneficial Owners shall indemnify the Depositary, the Company, the Custodian and any of their respective directors, employees, agents and Affiliates against, and hold each of them harmless from, any claims by any governmental authority with respect to taxes, additions to tax, penalties or interest arising out of any refund of taxes, reduced rate of withholding at source or other tax benefit obtained.

 

If the Company (or any of its agents) withholds from any distribution any amount on account of taxes or governmental charges, or pays any other tax in respect of such distribution (i.e., stamp duty tax, capital gains or other similar tax), the Company shall (and shall cause such agent to) remit promptly to the Depositary information about such taxes or governmental charges withheld or paid, and, if so requested, the tax receipt (or other proof of payment to the applicable governmental authority) therefor, in each case,  in a form satisfactory to the Depositary.  The Depositary shall, to the extent required by U.S. law, report to Holders any taxes withheld by it or the Custodian, and, if such information is provided to it by the Company, any taxes withheld by the Company.  The Depositary and the Custodian shall not be required to provide the Holders with any evidence of the remittance by the Company (or its agents) of any taxes withheld, or of the payment of taxes by the Company, except to the extent the evidence is provided by the Company to the Depositary or the Custodian, as applicable.  Neither the Depositary nor the Custodian shall be liable for the failure by any Holder or Beneficial Owner to obtain the benefits of credits on the basis of non-U.S. tax paid against such Holder’s or Beneficial Owner’s income tax liability.

 

The Depositary is under no obligation to provide the Holders and Beneficial Owners with any information about the tax status of the Company.  The Depositary shall not incur any liability for any tax consequences that may be incurred by Holders and Beneficial Owners on account of their ownership of the ADSs, including without limitation, tax consequences resulting from the Company (or any of its subsidiaries) being treated as a “Passive Foreign Investment Company” (in each case as defined in the U.S. Internal Revenue Code and the regulations issued thereunder) or otherwise.

 

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ARTICLE V

 

THE DEPOSITARY, THE CUSTODIAN AND THE COMPANY

 

Section 5.1                                   Maintenance of Office and Transfer Books by the Registrar.  Until termination of the Deposit Agreement in accordance with its terms, the Registrar shall maintain in the Borough of Manhattan, the City of New York, an office and facilities for the issuance and delivery of ADSs, the acceptance for, and surrender of, ADS(s) for the purpose of withdrawal of Deposited Securities, the registration of issuances, cancellations, transfers, combinations and split-ups of ADS(s) and, if applicable, to countersign ADRs evidencing the ADSs so issued, transferred, combined or split-up, in each case in accordance with the provisions of the Deposit Agreement.

 

The Registrar shall keep books for the registration of ADSs which at all reasonable times shall be open for inspection by the Company and by the Holders of such ADSs, provided that such inspection shall not be, to the Registrar’s knowledge, for the purpose of communicating with Holders of such ADSs in the interest of a business or object other than the business of the Company or other than a matter related to the Deposit Agreement or the ADSs.

 

The Registrar may close the transfer books with respect to the ADSs, at any time or from time to time, when deemed necessary or advisable by it in good faith in connection with the performance of its duties hereunder, or at the reasonable written request of the Company subject, in all cases, to Section 7.8.

 

If any ADSs are listed on one or more stock exchanges or automated quotation systems in the United States, the Depositary shall act as Registrar or appoint a Registrar or one or more co-registrars for registration of issuances, cancellations, transfers, combinations and split-ups of ADSs and, if applicable, to countersign ADRs evidencing the ADSs so issued, transferred, combined or split-up,  in accordance with any requirements of such exchanges or systems.  Such Registrar or co-registrars may be removed and a substitute or substitutes appointed by the Depositary.  The Depositary shall promptly notify the Company of any such removal or appointment.

 

Section 5.2                                   Exoneration.  Neither the Depositary nor the Company shall be obligated to do or perform any act which is inconsistent with the provisions of the Deposit Agreement or incur any liability (i) if the Depositary or the Company shall be prevented or forbidden from, or delayed in, doing or performing any act or thing required by the terms of the Deposit Agreement, by reason of any provision of any present or future law or regulation of the United States, the Cayman Islands or any other country, or of any other governmental authority or regulatory authority or stock exchange, or on account of the possible criminal or civil penalties or restraint, or by reason of any provision, present or future, of the Articles of Association of the Company or any provision of or governing any Deposited Securities, or by reason of any act of God or war or other circumstances beyond its control (including, without limitation, nationalization, expropriation, currency restrictions, work stoppage, strikes, civil unrest, acts of terrorism, revolutions, rebellions, explosions and computer failure), (ii) by reason of any exercise of, or failure to exercise, any discretion provided for in the Deposit Agreement or in the Articles of 

 

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Association  of the Company or provisions of or governing Deposited Securities, (iii) for any action or inaction in reliance upon the advice of or information from legal counsel, accountants, any person presenting Shares for deposit, any Holder, any Beneficial Owner or authorized representative thereof, or any other person believed by it in good faith to be competent to give such advice or information, (iv) for the inability by a Holder or Beneficial Owner to benefit from any distribution, offering, right or other benefit which is made available to holders of Deposited Securities but is not, under the terms of the Deposit Agreement, made available to Holders of ADSs, or (v) for any consequential or punitive damages for any breach of the terms of the Deposit Agreement.

 

The Depositary, its controlling persons, its agents, any Custodian and the Company, its controlling persons and its agents may rely and shall be protected in acting upon any written notice, request or other document believed by it to be genuine and to have been signed or presented by the proper party or parties.

 

No disclaimer of liability under the Securities Act is intended by any provision of the Deposit Agreement.

 

Section 5.3                                   Standard of Care.  The Company and the Depositary assume no obligation and shall not be subject to any liability under the Deposit Agreement or any ADRs to any Holder(s) or Beneficial Owner(s), except that the Company and the Depositary agree to perform their respective obligations specifically set forth in the Deposit Agreement or the applicable ADRs without negligence or bad faith.

 

Without limitation of the foregoing, neither the Depositary, nor the Company, nor any of their respective controlling persons, or agents, shall be under any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or in respect of the ADSs, which in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expense (including fees and disbursements of counsel) and liability be furnished as often as may be required (and no Custodian shall be under any obligation whatsoever with respect to such proceedings, the responsibility of the Custodian being solely to the Depositary).

 

The Depositary and its agents shall not be liable for any failure to carry out any instructions to vote any of the Deposited Securities, or for the manner in which any vote is cast or the effect of any vote, provided that any such action or omission is in good faith and in accordance with the terms of the Deposit Agreement.  The Depositary shall not incur any liability for any failure to determine that any distribution or action may be lawful or reasonably practicable, for the content of any information submitted to it by the Company for distribution to the Holders or for any inaccuracy of any translation thereof, for any investment risk associated with acquiring an interest in the Deposited Securities, for the validity or worth of the Deposited Securities or for any tax consequences that may result from the ownership of ADSs, Shares or Deposited Securities, for the credit-worthiness of any third party, for allowing any rights to lapse upon the terms of the Deposit Agreement, for the failure or timeliness of any notice from the Company, or for any action of or failure to act by, or any information provided or not provided by, DTC or any DTC Participant.

 

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The Depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the Depositary or in connection with any matter arising wholly after the removal or resignation of the Depositary, provided that in connection with the issue out of which such potential liability arises the Depositary performed its obligations without negligence or bad faith while it acted as Depositary.

 

Section 5.4                                   Resignation and Removal of the Depositary; Appointment of Successor Depositary.  The Depositary may at any time resign as Depositary hereunder by written notice of resignation delivered to the Company, such resignation to be effective on the earlier of (i) the 90th day after delivery thereof to the Company (whereupon the Depositary shall be entitled to take the actions contemplated in Section 6.2), or (ii) the appointment by the Company of a successor depositary and its acceptance of such appointment as hereinafter provided.

 

The Depositary may at any time be removed by the Company by written notice of such removal, which removal shall be effective on the later of (i) the 90th day after delivery thereof to the Depositary (whereupon the Depositary shall be entitled to take the actions contemplated in Section 6.2), or (ii) upon the appointment by the Company of a successor depositary and its acceptance of such appointment as hereinafter provided.

 

In case at any time the Depositary acting hereunder shall resign or be removed, the Company shall use its best efforts to appoint a successor depositary, which shall be a bank or trust company having an office in the Borough of Manhattan, the City of New York.  Every successor depositary shall be required by the Company to execute and deliver to its predecessor and to the Company an instrument in writing accepting its appointment hereunder, and thereupon such successor depositary, without any further act or deed (except as required by applicable law), shall become fully vested with all the rights, powers, duties and obligations of its predecessor (other than as contemplated in Sections 5.8 and 5.9).  The predecessor depositary, upon payment of all sums due it and on the written request of the Company shall, (i) execute and deliver an instrument transferring to such successor all rights and powers of such predecessor hereunder (other than as contemplated in Sections 5.8 and 5.9), (ii) duly assign, transfer and deliver all right, title and interest to the Deposited Securities to such successor, and (iii) deliver to such successor a list of the Holders of all outstanding ADSs and such other information relating to ADSs and Holders thereof as the successor may reasonably request.  Any such successor depositary shall promptly provide notice of its appointment to such Holders.

 

Any corporation into or with which the Depositary may be merged or consolidated shall be the successor of the Depositary without the execution or filing of any document or any further act.

 

Section 5.5                                   The Custodian.  The Depositary has initially appointed Citibank, N.A. - Hong Kong as Custodian for the purpose of the Deposit Agreement.  The Custodian or its successors in acting hereunder shall be subject at all times and in all respects to the direction of the Depositary for the Deposited Securities for which the Custodian acts as custodian and shall be responsible solely to it.  If any Custodian resigns or is discharged from its duties hereunder

 

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with respect to any Deposited Securities and no other Custodian has previously been appointed hereunder, the Depositary shall promptly appoint a substitute custodian.  The Depositary shall require such resigning or discharged Custodian to Deliver, or cause the Delivery of, the Deposited Securities held by it, together with all such records maintained by it as Custodian with respect to such Deposited Securities as the Depositary may request, to the Custodian designated by the Depositary.  Whenever the Depositary determines, in its discretion, that it is appropriate to do so, it may appoint an additional custodian with respect to any Deposited Securities, or discharge the Custodian with respect to any Deposited Securities and appoint a substitute custodian, which shall thereafter be Custodian hereunder with respect to the Deposited Securities.  Immediately upon any such change, the Depositary shall give notice thereof in writing to all Holders of ADSs, each other Custodian and the Company.

 

Citibank, N.A. may at any time act as Custodian of the Deposited Securities pursuant to the Deposit Agreement, in which case any reference to Custodian shall mean Citibank, N.A. solely in its capacity as Custodian pursuant to the Deposit Agreement.  Notwithstanding anything contained in the Deposit Agreement or any ADR, the Depositary shall not be obligated to given notice to the Company, an Holders of ADSs or any other Custodian of its acting as Custodian pursuant to the Deposit Agreement.

 

Upon the appointment of any successor depositary, any Custodian then acting hereunder shall, unless otherwise instructed by the Depositary, continue to be the Custodian of the Deposited Securities without any further act or writing, and shall be subject to the direction of the successor depositary.  The successor depositary so appointed shall, nevertheless, on the written request of any Custodian, execute and deliver to such Custodian all such instruments as may be proper to give to such Custodian full and complete power and authority to act on the direction of such successor depositary.

 

Section 5.6                                   Notices and Reports.  On or before the first date on which the Company gives notice, by publication or otherwise, of any meeting of holders of Shares or other Deposited Securities, or of any adjourned meeting of such holders, or of the taking of any action by such holders other than at a meeting, or of the taking of any action in respect of any cash or other distributions or the offering of any rights in respect of Deposited Securities, the Company shall transmit to the Depositary and the Custodian a copy of the notice thereof in the English language but otherwise in the form given or to be given to holders of Shares or other Deposited Securities. The Company shall also furnish to the Custodian and the Depositary a summary, in English, of any applicable provisions or proposed provisions of the Articles of Association of the Company that may be relevant or pertain to such notice of meeting or be the subject of a vote thereat.

 

The Depositary shall arrange, at the request of the Company and at the Company’s expense, to provide copies thereof to all Holders or make such notices, reports and other communications available to all Holders on a basis similar to that for holders of Shares or other Deposited Securities or on such other basis as the Company may advise the Depositary or as may be required by any applicable law, regulation or stock exchange requirement.

 

The Depositary will, at the expense of the Company, make available a copy of any such notices, reports or communications issued by the Company and delivered to the Depositary for

 

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inspection by the Holders of the ADSs at the Depositary’s Principal Office, at the office of the Custodian and at any other designated transfer office.

 

Section 5.7                                   Issuance of Additional Shares, ADSs etc.  The Company agrees that in the event it or any of its Affiliates proposes (i) an issuance, sale or distribution of additional Shares, (ii) an offering of rights to subscribe for Shares or other Deposited Securities, (iii) an issuance or assumption of securities convertible into or exchangeable for Shares, (iv) an issuance of rights to subscribe for securities convertible into or exchangeable for Shares, (v) an elective dividend of cash or Shares, (vi) a redemption of Deposited Securities, (vii) a meeting of holders of Deposited Securities, or solicitation of consents or proxies, relating to any reclassification of securities, merger or consolidation or transfer of assets, (viii) any assumption, reclassification, recapitalization, reorganization, merger, consolidation or sale of assets which affects the Deposited Securities, or (ix) a distribution of securities other than Shares, it will obtain U.S. legal advice and take all steps necessary to ensure that the proposed transaction does not violate the registration provisions of the Securities Act, or any other applicable laws (including, without limitation, the Investment Company Act of 1940, as amended, the Exchange Act and the securities laws of the states of the U.S.).  In support of the foregoing, the Company will furnish to the Depositary (a) a written opinion of U.S. counsel (reasonably satisfactory to the Depositary) stating whether such transaction (1) requires a registration statement under the Securities Act to be in effect or (2) is exempt from the registration requirements of the Securities Act and (b) an opinion of the Cayman Islands counsel stating that (1) making the transaction available to Holders and Beneficial Owners does not violate the laws or regulations of the Cayman Islands and (2) all requisite regulatory consents and approvals have been obtained in the Cayman Islands; provided, however, that such opinions shall not be required in the event of an issuance of Shares as a bonus or a stock split.  If the filing of a registration statement is required, the Depositary shall not have any obligation to proceed with the transaction unless it shall have received evidence reasonably satisfactory to it that such registration statement has been declared effective.  If, being advised by counsel, the Company determines that a transaction is required to be registered under the Securities Act, the Company will either (i) register such transaction to the extent necessary, (ii) alter the terms of the transaction to avoid the registration requirements of the Securities Act or (iii) direct the Depositary to take specific measures, in each case as contemplated in the Deposit Agreement, to prevent such transaction from violating the registration requirements of the Securities Act.  The Company agrees with the Depositary that neither the Company nor any of its Affiliates will at any time (i) deposit any Shares or other Deposited Securities, either upon original issuance or upon a sale of Shares or other Deposited Securities previously issued and reacquired by the Company or by any such Affiliate, or (ii) issue additional Shares, rights to subscribe for such Shares, securities convertible into or exchangeable for Shares or rights to subscribe for such securities or distribute securities other than Shares, unless such transaction and the securities issuable in such transaction (a) are exempt from registration under the Securities Act, and, if applicable, the Exchange Act or have been registered under the Securities Act and, if applicable, the Exchange Act (and such registration statement has been declared effective) and (b) do not violate the provision of any other applicable laws (including, without limitation, the Investment Company Act of 1940, as amended, and the securities laws of the states of the U.S.).

 

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Notwithstanding anything else contained in the Deposit Agreement, nothing in the Deposit Agreement shall be deemed to obligate the Company to file any registration statement in respect of any proposed transaction.

 

Section 5.8                                   Indemnification.  The Depositary agrees to indemnify the Company and its directors, officers, employees, agents and Affiliates against, and hold each of them harmless from, any direct loss, liability, tax, charge or expense of any kind whatsoever (including, but not limited to, the reasonable fees and expenses of counsel) which may arise out of acts performed or omitted by the Depositary or the Custodian (for so long as the Custodian is a branch of Citibank, N.A.) under the terms hereof due to the negligence or bad faith of the Depositary or such Custodian, as applicable.

 

The Company agrees to indemnify the Depositary, the Custodian and any of their respective directors, officers, employees, agents and Affiliates against, and hold each of them harmless from, any direct loss, liability, tax, charge or expense of any kind whatsoever (including, but not limited to, the reasonable fees and expenses of counsel) that may arise (a) out of or in connection with any offer, issuance, sale, resale, transfer, deposit or withdrawal of ADRs, ADSs, the Shares, or other Deposited Securities, as the case may be, (b) out of or as a result of any offering documents in respect thereof or (c) out of acts performed or omitted, including, but not limited to, any delivery by the Depositary on behalf of the Company of information regarding the Company in connection with the Deposit Agreement, the ADRs, the ADSs, the Shares, or any Deposited Securities, in any such case (i) by the Depositary, the Custodian or any of their respective directors, officers, employees, agents and Affiliates, except to the extent such loss, liability, tax, charge or expense is due to the negligence or bad faith of any of them, or (ii) by the Company or any of its directors, officers, employees, agents and Affiliates.  The Company shall not indemnify the Depositary or the Custodian (for so long as the Custodian is a branch of Citibank, N.A.) against any liability or expense arising out of information relating to the Depositary or such Custodian, as the case may be, furnished in a signed writing to the Company, executed by the Depositary or such Custodian expressly for use in any registration statement, prospectus or preliminary prospectus relating to any Deposited Securities represented by the ADSs.

 

The obligations set forth in this Section shall survive the termination of the Deposit Agreement and the succession or substitution of any party hereto.

 

Any person seeking indemnification hereunder (an “indemnified person”) shall notify the person from whom it is seeking indemnification (the “indemnifying person”) of the commencement of any indemnifiable action or claim promptly after such indemnified person becomes aware of such commencement (provided that the failure to make such notification shall not affect such indemnified person’s rights to seek indemnification except to the extent the indemnifying person is materially prejudiced by such failure) and shall consult in good faith with the indemnifying person as to the conduct of the defense of such action or claim that may give rise to an indemnity hereunder, which defense shall be reasonable in the circumstances.  No indemnified person shall compromise or settle any action or claim that may give rise to an indemnity hereunder without the consent of the indemnifying person, which consent shall not be unreasonably withheld.

 

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Section 5.9                                   Fees and Charges of Depositary.  The Company, the Holders, the Beneficial Owners, and persons depositing Shares or surrendering ADSs for cancellation and withdrawal of Deposited Securities shall be required to pay to the Depositary the Depositary’s fees and related charges identified as payable by them respectively in the Fee Schedule attached hereto as Exhibit B.  All fees and charges so payable may, at any time and from time to time, be changed by agreement between the Depositary and the Company, but, in the case of fees and charges payable by Holders and Beneficial Owners, only in the manner contemplated in Section 6.1.  The Depositary shall provide, without charge, a copy of its latest fee schedule to anyone upon request.

 

Depositary Fees payable upon (i) deposit of Shares against issuance of ADSs and (ii) surrender of ADSs for cancellation and withdrawal of Deposited Securities will be charged by the Depositary to the person to whom the ADSs so issued are delivered (in the case of ADS issuances) and to the person who delivers the ADSs for cancellation to the Depositary (in the case of ADS cancellations).  In the case of ADSs issued by the Depositary into DTC or presented to the Depositary via DTC, the ADS issuance and cancellation fees will be payable to the Depositary by the DTC Participant(s) receiving the ADSs from the Depositary or the DTC Participant(s) surrendering the ADSs to the Depositary for cancellation, as the case may be, on behalf of the Beneficial Owner(s) and will be charged by the DTC Participant(s) to the account(s) of the applicable Beneficial Owner(s) in accordance with the procedures and practices of the DTC participant(s) as in effect at the time.  Depositary fees in respect of distributions and the Depositary services fee are payable to the Depositary by Holders as of the applicable ADS Record Date established by the Depositary.  In the case of distributions of cash, the amount of the applicable Depositary fees is deducted by the Depositary from the funds being distributed.  In the case of distributions other than cash and the Depositary service fee, the Depositary will invoice the applicable Holders as of the ADS Record Date established by the Depositary.  For ADSs held through DTC, the Depositary fees for distributions other than cash and the Depositary service fee are charged by the Depositary to the DTC Participants in accordance with the procedures and practices prescribed by DTC from time to time and the DTC Participants in turn charge the amount of such fees to the Beneficial Owners for whom they hold ADSs.

 

The Depositary may reimburse the Company for certain expenses incurred by the Company in respect of the ADR program established pursuant to the Deposit Agreement, by making available a portion of the Depositary fees charged in respect of the ADR program or otherwise, upon such terms and conditions as the Company and the Depositary agree from time to time.  The Company shall pay to the Depositary such fees and charges and reimburse the Depositary for such out-of-pocket expenses as the Depositary and the Company may agree from time to time.  Responsibility for payment of such charges and reimbursements may from time to time be changed by agreement between the Company and the Depositary.  Unless otherwise agreed, the Depositary shall present its statement for such expenses and fees or charges to the Company once every three months.  The charges and expenses of the Custodian are for the sole account of the Depositary.

 

The right of the Depositary to receive payment of fees, charges and expenses as provided above shall survive the termination of the Deposit Agreement.  As to any Depositary, upon the

 

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resignation or removal of such Depositary as described in Section 5.4, such right shall extend for those fees, charges and expenses incurred prior to the effectiveness of such resignation or removal.

 

Section 5.10                            Pre-Release Transactions.  Subject to the further terms and provisions of this Section 5.10, the Depositary, its Affiliates and their agents, on their own behalf, may own and deal in any class of securities of the Company and its Affiliates and in ADSs.  In its capacity as Depositary, the Depositary shall not lend Shares or ADSs; provided, however, that the Depositary may (i) issue ADSs prior to the receipt of Shares pursuant to Section 2.3 and (ii) deliver Shares prior to the receipt of ADSs for withdrawal of Deposited Securities pursuant to Section 2.7, including ADSs which were issued under (i) above but for which Shares may not have been received (each such transaction a “Pre-Release Transaction”).  The Depositary may receive ADSs in lieu of Shares under (i) above and receive Shares in lieu of ADSs under (ii) above.  Each such Pre-Release Transaction will be (a) subject to a written agreement whereby the person or entity (the “Applicant”) to whom ADSs or Shares are to be delivered (w) represents that at the time of the Pre-Release Transaction the Applicant or its customer owns the Shares or ADSs that are to be delivered by the Applicant under such Pre-Release Transaction, (x) agrees to indicate the Depositary as owner of such Shares or ADSs in its records and to hold such Shares or ADSs in trust for the Depositary until such Shares or ADSs are delivered to the Depositary or the Custodian, (y) unconditionally guarantees to deliver to the Depositary or the Custodian, as applicable, such Shares or ADSs, and (z) agrees to any additional restrictions or requirements that the Depositary deems appropriate, (b) at all times fully collateralized with cash, U.S. government securities or such other collateral as the Depositary deems appropriate, (c) terminable by the Depositary on not more than five (5) business days’ notice and (d) subject to such further indemnities and credit regulations as the Depositary deems appropriate.  The Depositary will normally limit the number of ADSs and Shares involved in such Pre-Release Transactions at any one time to thirty percent (30%) of the ADSs outstanding (without giving effect to ADSs outstanding under (i) above), provided, however, that the Depositary reserves the right to change or disregard such limit from time to time as it deems appropriate.

 

The Depositary may also set limits with respect to the number of ADSs and Shares involved in Pre-Release Transactions with any one person on a case-by-case basis as it deems appropriate.  The Depositary may retain for its own account any compensation received by it in conjunction with the foregoing.  Collateral provided pursuant to (b) above, but not the earnings thereon, shall be held for the benefit of the Holders (other than the Applicant).

 

Section 5.11                            Restricted Securities Owners.  The Company agrees to advise in writing each of the persons or entities who, to the knowledge of the Company, holds Restricted Securities that such Restricted Securities are ineligible for deposit hereunder (except under the circumstances contemplated in Section 2.14) and, to the extent practicable, shall require each of such persons to represent in writing that such person will not deposit Restricted Securities hereunder (except under the circumstances contemplated in Section 2.14).

 

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ARTICLE VI

 

AMENDMENT AND TERMINATION

 

Section 6.1                                   Amendment/Supplement.  Subject to the terms and conditions of this Section 6.1 and applicable law, the ADRs outstanding at any time, the provisions of the Deposit Agreement and the form of ADR attached hereto and to be issued under the terms hereof may at any time and from time to time be amended or supplemented by written agreement between the Company and the Depositary in any respect which they may deem necessary or desirable without the prior written consent of the Holders or Beneficial Owners.  Any amendment or supplement which shall impose or increase any fees or charges (other than charges in connection with foreign exchange control regulations, and taxes and other governmental charges, delivery and other such expenses), or which shall otherwise materially prejudice any substantial existing right of Holders or Beneficial Owners, shall not, however, become effective as to outstanding ADSs until the expiration of thirty (30) days after notice of such amendment or supplement shall have been given to the Holders of outstanding ADSs.  Notice of any amendment to the Deposit Agreement or any ADR shall not need to describe in detail the specific amendments effectuated thereby, and failure to describe the specific amendments in any such notice shall not render such notice invalid, provided, however, that, in each such case, the notice given to the Holders identifies a means for Holders and Beneficial Owners to retrieve or receive the text of such amendment (i.e., upon retrieval from the Commission’s, the Depositary’s or the Company’s website or upon request from the Depositary).  The parties hereto agree that any amendments or supplements which (i) are reasonably necessary (as agreed by the Company and the Depositary) in order for (a) the ADSs to be registered on Form F-6 under the Securities Act or (b) the ADSs to be settled solely in electronic book-entry form and (ii) do not in either such case impose or increase any fees or charges to be borne by Holders, shall be deemed not to materially prejudice any substantial rights of Holders or Beneficial Owners.  Every Holder and Beneficial Owner at the time any amendment or supplement so becomes effective shall be deemed, by continuing to hold such ADSs, to consent and agree to such amendment or supplement and to be bound by the Deposit Agreement and the ADR, if applicable, as amended or supplemented thereby.  In no event shall any amendment or supplement impair the right of the Holder to surrender such ADS and receive therefor the Deposited Securities represented thereby, except in order to comply with mandatory provisions of applicable law.  Notwithstanding the foregoing, if any governmental body should adopt new laws, rules or regulations which would require an amendment of, or supplement to, the Deposit Agreement to ensure compliance therewith, the Company and the Depositary may amend or supplement the Deposit Agreement and any ADRs at any time in accordance with such changed laws, rules or regulations.  Such amendment or supplement to the Deposit Agreement and any ADRs in such circumstances may become effective before a notice of such amendment or supplement is given to Holders or within any other period of time as required for compliance with such laws, rules or regulations.

 

Section 6.2                                   Termination.  The Depositary shall, at any time at the written direction of the Company, terminate the Deposit Agreement by distributing notice of such termination to the Holders of all ADSs then outstanding at least thirty (30) days prior to the date fixed in such notice for such termination.  If ninety (90) days shall have expired after (i) the Depositary shall

 

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have delivered to the Company a written notice of its election to resign, or (ii) the Company shall have delivered to the Depositary a written notice of the removal of the Depositary, and, in either case, a successor depositary shall not have been appointed and accepted its appointment as provided in Section 5.4 of the Deposit Agreement, the Depositary may terminate the Deposit Agreement by distributing notice of such termination to the Holders of all ADSs then outstanding at least thirty (30) days prior to the date fixed in such notice for such termination.  The date so fixed for termination of the Deposit Agreement in any termination notice so distributed by the Depositary to the Holders of ADSs is referred to as the “Termination Date”.  Until the Termination Date, the Depositary shall continue to perform all of its obligations under the Deposit Agreement, and the Holders and Beneficial Owners will be entitled to all of their rights under the Deposit Agreement.

 

If any ADSs shall remain outstanding after the Termination Date, the Registrar and the Depositary shall not, after the Termination Date, have any obligation to perform any further acts under the Deposit Agreement, except that the Depositary shall, subject, in each case, to the terms and conditions of the Deposit Agreement, continue to (i) collect dividends and other distributions pertaining to Deposited Securities, (ii) sell securities and other property received in respect of Deposited Securities, (iii) deliver Deposited Securities, together with any dividends or other distributions received with respect thereto and the net proceeds of the sale of any securities or other property, in exchange for ADSs surrendered to the Depositary (after deducting, or charging, as the case may be, in each case, the fees and charges of, and expenses incurred by, the Depositary, and all applicable taxes or governmental charges for the account of the Holders and Beneficial Owners, in each case upon the terms set forth in Section 5.9 of the Deposit Agreement), and (iv) take such actions as may be required under applicable law in connection with its role as Depositary under the Deposit Agreement.

 

At any time after the Termination Date, the Depositary may sell the Deposited Securities then held under the Deposit Agreement and shall after such sale hold un-invested the net proceeds of such sale, together with any other cash then held by it under the Deposit Agreement, in an un-segregated account and without liability for interest, for the pro - rata benefit of the Holders whose ADSs have not theretofore been surrendered.  After making such sale, the Depositary shall be discharged from all obligations under the Deposit Agreement except (i) to account for such net proceeds and other cash (after deducting, or charging, as the case may be, in each case, the fees and charges of, and expenses incurred by, the Depositary, and all applicable taxes or governmental charges for the account of the Holders and Beneficial Owners, in each case upon the terms set forth in Section 5.9 of the Deposit Agreement), and (ii) as may be required at law in connection with the termination of the Deposit Agreement.  After the Termination Date, the Company shall be discharged from all obligations under the Deposit Agreement, except for its obligations to the Depositary under Sections 5.8, 5.9 and 7.6 of the Deposit Agreement.  The obligations under the terms of the Deposit Agreement of Holders and Beneficial Owners of ADSs outstanding as of the Termination Date shall survive the Termination Date and shall be discharged only when the applicable ADSs are presented by their Holders to the Depositary for cancellation under the terms of the Deposit Agreement.

 

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ARTICLE VII

 

MISCELLANEOUS

 

Section 7.1                                   Counterparts.  The Deposit Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of such counterparts together shall constitute one and the same agreement.  Copies of the Deposit Agreement shall be maintained with the Depositary and shall be open to inspection by any Holder during business hours.

 

Section 7.2                                   No Third-Party Beneficiaries.  The Deposit Agreement is for the exclusive benefit of the parties hereto (and their successors) and shall not be deemed to give any legal or equitable right, remedy or claim whatsoever to any other person, except to the extent specifically set forth in the Deposit Agreement.  Nothing in the Deposit Agreement shall be deemed to give rise to a partnership or joint venture among the parties nor establish a fiduciary or similar relationship among the parties.  The parties hereto acknowledge and agree that (i) the Depositary and its Affiliates may at any time have multiple banking relationships with the Company and its Affiliates, (ii) the Depositary and its Affiliates may be engaged at any time in transactions in which parties adverse to the Company or the Holders or Beneficial Owners may have interests and (iii) nothing contained in the Deposit Agreement shall (a) preclude the Depositary or any of its Affiliates from engaging in such transactions or establishing or maintaining such relationships, and (b) obligate the Depositary or any of its Affiliates to disclose such transactions or relationships or to account for any profit made or payment received in such transactions or relationships.

 

Section 7.3                                   Severability.  In case any one or more of the provisions contained in the Deposit Agreement or in the ADRs should be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein or therein shall in no way be affected, prejudiced or disturbed thereby.

 

Section 7.4                                   Holders and Beneficial Owners as Parties; Binding Effect.  The Holders and Beneficial Owners from time to time of ADSs issued hereunder shall be parties to the Deposit Agreement and shall be bound by all of the terms and conditions hereof and of any ADR evidencing their ADSs by acceptance thereof or any beneficial interest therein.

 

Section 7.5                                   Notices.  Any and all notices to be given to the Company shall be deemed to have been duly given if personally delivered or sent by mail, air courier or cable, telex or facsimile transmission, confirmed by letter personally delivered or sent by mail or air courier, addressed to Cathay Industrial Biotech Ltd., 3F, Building 5, 1690 Cailun Road, Zhangjiang Hi-tech Park, Shanghai 201203, People’s Republic of China, attention: Mr. Xiucai Liu (facsimile number: +86-21-5080-1386), or to any other address which the Company may specify in writing to the Depositary.

 

Any and all notices to be given to the Depositary shall be deemed to have been duly given if personally delivered or sent by mail, air courier or cable, telex or facsimile transmission, confirmed by letter personally delivered or sent by mail or air courier, addressed to Citibank,

 

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N.A., 388 Greenwich Street, New York, New York 10013, U.S.A., Attention:  Depositary Receipts Department (facsimile number: 212-816-6865), or to any other address which the Depositary may specify in writing to the Company.

 

Any and all notices to be given to any Holder shall be deemed to have been duly given if (a) personally delivered or sent by mail or cable, telex or facsimile transmission, confirmed by letter, addressed to such Holder at the address of such Holder as it appears on the books of the Depositary or, if such Holder shall have filed with the Depositary a request that notices intended for such Holder be mailed to some other address, at the address specified in such request, or (b) if a Holder shall have designated such means of notification as an acceptable means of notification under the terms of the Deposit Agreement, by means of electronic messaging addressed for delivery to the e-mail address designated by the Holder for such purpose.  Notice to Holders shall be deemed to be notice to Beneficial Owners for all purposes of the Deposit Agreement.  Failure to notify a Holder or any defect in the notification to a Holder shall not affect the sufficiency of notification to other Holders or to the Beneficial Owners of ADSs held by such other Holders.

 

Delivery of a notice sent by mail, air courier or cable, telex or facsimile transmission shall be deemed to be effective at the time when a duly addressed letter containing the same (or a confirmation thereof in the case of a cable, telex or facsimile transmission) is deposited, postage prepaid, in a post-office letter box or delivered to an air courier service, without regard for the actual receipt or time of actual receipt thereof by a Holder.  The Depositary or the Company may, however, act upon any cable, telex or facsimile transmission received by it from any Holder, the Custodian, the Depositary, or the Company, notwithstanding that such cable, telex or facsimile transmission shall not be subsequently confirmed by letter.

 

Delivery of a notice by means of electronic messaging shall be deemed to be effective at the time of the initiation of the transmission by the sender (as shown on the sender’s records), notwithstanding that the intended recipient retrieves the message at a later date, fails to retrieve such message, or fails to receive such notice on account of its failure to maintain the designated e-mail address, its failure to designate a substitute e-mail address or for any other reason.

 

Section 7.6                                   Governing Law and Jurisdiction.  The Deposit Agreement and the ADRs shall be interpreted in accordance with, and all rights hereunder and thereunder and provisions hereof and thereof shall be governed by, the laws of the State of New York applicable to contracts made and to be wholly performed in that State.  Notwithstanding anything contained in the Deposit Agreement, any ADR or any present or future provisions of the laws of the State of New York, the rights of holders of Shares and of any other Deposited Securities and the obligations and duties of the Company in respect of the holders of Shares and other Deposited Securities, as such, shall be governed by the laws of the Cayman Islands (or, if applicable, such other laws as may govern the Deposited Securities).

 

Except as set forth in the following paragraph of this Section 7.6, the Company and the Depositary agree that the federal or state courts in the City of New York shall have jurisdiction to hear and determine any suit, action or proceeding and to settle any dispute between them that may arise out of or in connection with the Deposit Agreement and, for such purposes, each

 

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irrevocably submits to the non-exclusive jurisdiction of such courts.  The Company hereby irrevocably designates, appoints and empowers Law Debenture Corporate Services Inc. (the “Agent”) now at 400 Madison Avenue, 4th Floor, New York, NY 10017 as its authorized agent to receive and accept for and on its behalf, and on behalf of its properties, assets and revenues, service by mail of any and all legal process, summons, notices and documents that may be served in any suit, action or proceeding brought against the Company in any federal or state court as described in the preceding sentence or in the next paragraph of this Section 7.6.  If for any reason the Agent shall cease to be available to act as such, the Company agrees to designate a new agent in New York on the terms and for the purposes of this Section 7.6 reasonably satisfactory to the Depositary. The Company further hereby irrevocably consents and agrees to the service of any and all legal process, summons, notices and documents in any suit, action or proceeding against the Company, by service by mail of a copy thereof upon the Agent (whether or not the appointment of such Agent shall for any reason prove to be ineffective or such Agent shall fail to accept or acknowledge such service), with a copy mailed to the Company by registered or certified air mail, postage prepaid, to its address provided in Section 7.5.  The Company agrees that the failure of the Agent to give any notice of such service to it shall not impair or affect in any way the validity of such service or any judgment rendered in any action or proceeding based thereon.

 

Notwithstanding the foregoing, the Depositary and the Company unconditionally agree that in the event that a Holder or Beneficial Owner brings a suit, action or proceeding against (a) the Company, (b) the Depositary in its capacity as Depositary under the Deposit Agreement or (c) against both the Company and the Depositary, in any such case, in any state or federal court of the United States, and the Depositary or the Company have any claim, for indemnification or otherwise, against each other arising out of the subject matter of such suit, action or proceeding, then the Company and the Depositary may pursue such claim against each other in the state or federal court in the United States in which such suit, action, or proceeding is pending and, for such purposes, the Company and the Depositary irrevocably submit to the non-exclusive jurisdiction of such courts.  The Company agrees that service of process upon the Agent in the manner set forth in the preceding paragraph shall be effective service upon it for any suit, action or proceeding brought against it as described in this paragraph.

 

The Company irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any actions, suits or proceedings brought in any court as provided in this Section 7.6, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

 

The Company irrevocably and unconditionally waives, to the fullest extent permitted by law, and agrees not to plead or claim, any right of immunity from legal action, suit or proceeding, from setoff or counterclaim, from the jurisdiction of any court, from service of process, from attachment upon or prior to judgment, from attachment in aid of execution or judgment, from execution of judgment, or from any other legal process or proceeding for the giving of any relief or for the enforcement of any judgment, and consents to such relief and

 

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enforcement against it, its assets and its revenues in any jurisdiction, in each case with respect to any matter arising out of, or in connection with, the Deposit Agreement, any ADR or the Deposited Securities.

 

No disclaimer of liability under the Securities Act is intended by any provision of the Deposit Agreement.  The provisions of this Section 7.6 shall survive any termination of the Deposit Agreement, in whole or in part.

 

Section 7.7                                   Assignment.  Subject to the provisions of Section 5.4, the Deposit Agreement may not be assigned by either the Company or the Depositary.

 

Section 7.8                                   Compliance with U.S. Securities Laws.  Notwithstanding anything in the Deposit Agreement to the contrary, the withdrawal or delivery of Deposited Securities will not be suspended by the Company or the Depositary except as would be permitted by Instruction I.A.(1) of the General Instructions to Form F-6 Registration Statement, as amended from time to time, under the Securities Act.

 

Section 7.9                                   Cayman Islands Law References.  Any summary of the laws and regulations of the Cayman Islands and of the terms of the Company’s Articles of Association set forth in the Deposit Agreement have been provided by the Company solely for the convenience of Holders, Beneficial Owners and the Depositary.  While such summaries are believed by the Company to be accurate as of the date of the Deposit Agreement, (i) they are summaries and as such may not include all aspects of the materials summarized applicable to a Holder or Beneficial Owner, and (ii) these laws and regulations and the Company’s Articles of Association may change after the date of the Deposit Agreement.  Neither the Depositary nor the Company has any obligation under the terms of the Deposit Agreement to update any such summaries.

 

Section 7.10                            Titles and References.

 

(a)                                 Deposit Agreement.  All references in the Deposit Agreement to exhibits, articles, sections, subsections, and other subdivisions refer to the exhibits, articles, sections, subsections and other subdivisions of the Deposit Agreement unless expressly provided otherwise.  The words “the Deposit Agreement”, “herein”, “hereof”, “hereby”, “hereunder”, and words of similar import refer to the Deposit Agreement as a whole as in effect at the relevant time between the Company, the Depositary and the Holders and Beneficial Owners of ADSs and not to any particular subdivision unless expressly so limited.  Pronouns in masculine, feminine and neuter gender shall be construed to include any other gender, and words in the singular form shall be construed to include the plural and vice versa unless the context otherwise requires.  Titles to sections of the Deposit Agreement are included for convenience only and shall be disregarded in construing the language contained in the Deposit Agreement.  References to “applicable laws and regulations” shall refer to laws and regulations applicable to ADRs, ADSs or Deposited Securities as in effect at the relevant time of determination, unless otherwise required by law or regulation.

 

(b)                                 ADRs.  All references in any ADR(s) to paragraphs, exhibits, articles, sections, subsections, and other subdivisions refer to the paragraphs, exhibits, articles, sections,

 

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subsections and other subdivisions of the ADR(s) in question unless expressly provided otherwise.  The words “the Receipt”, “the ADR”, “herein”, “hereof”, “hereby”, “hereunder”, and words of similar import used in any ADR refer to the ADR as a whole and as in effect at the relevant time, and not to any particular subdivision unless expressly so limited.  Pronouns in masculine, feminine and neuter gender in any ADR shall be construed to include any other gender, and words in the singular form shall be construed to include the plural and vice versa unless the context otherwise requires.  Titles to paragraphs of any ADR are included for convenience only and shall be disregarded in construing the language contained in the ADR.  References to “applicable laws and regulations” shall refer to laws and regulations applicable to ADRs, ADSs or Deposited Securities as in effect at the relevant time of determination, unless otherwise required by law or regulation.

 

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IN WITNESS WHEREOF, CATHAY INDUSTRIAL BIOTECH LTD.  and CITIBANK, N.A. have duly executed the Deposit Agreement as of the day and year first above set forth and all Holders and Beneficial Owners shall become parties hereto upon acceptance by them of ADSs issued in accordance with the terms hereof, or upon acquisition of any beneficial interest therein.

 

	
 
    	
CATHAY   INDUSTRIAL BIOTECH LTD.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CITIBANK,   N.A.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

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EXHIBIT A

 

[FORM OF ADR]

 

	
Number:                 
    	
 
    	
CUSIP NUMBER:                    
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
American   Depositary Shares (each
   American Depositary Share
   representing the right to receive
    [NUMBER (#)] fully paid ordinary
   share[s] of Cathay Industrial Biotech
   Ltd.)
    

 

AMERICAN DEPOSITARY RECEIPT

 

FOR

 

AMERICAN DEPOSITARY SHARES

 

representing

 

DEPOSITED ORDINARY SHARES

 

of

 

CATHAY INDUSTRIAL BIOTECH LTD.

 

(Incorporated under the laws of the Cayman Islands)

 

CITIBANK, N.A., a national banking association organized and existing under the laws of the United States of America, as depositary (the “Depositary”), hereby certifies that                           is the owner of                              American Depositary Shares (hereinafter “ADS”), representing deposited ordinary shares, including evidence of rights to receive such ordinary shares (the “Shares”), of Cathay Industrial Biotech Ltd., a company incorporated under the laws of the Cayman Islands (the “Company”).  As of the date of the Deposit Agreement (as hereinafter defined), each ADS represents the right to receive [NUMBER (#)] Shares deposited under the Deposit Agreement with the Custodian, which at the date of execution of the Deposit Agreement is Citibank, N.A. — Hong Kong (the “Custodian”).  The ADS(s)-to-Share(s) ratio is subject to amendment as provided in Articles IV and VI of the Deposit Agreement.  The Depositary’s Principal Office is located at 388 Greenwich Street, New York, New York 10013, U.S.A.

 

(1)                                 The Deposit Agreement.  This American Depositary Receipt is one of an issue of American Depositary Receipts (“ADRs”), all issued and to be issued upon the terms and conditions set forth in the Deposit Agreement, dated as of [DATE], 2011 (as amended and

 

A-1

 

supplemented from time to time, the “Deposit Agreement”), by and among the Company, the Depositary, and all Holders and Beneficial Owners from time to time of ADSs issued thereunder.  The Deposit Agreement sets forth the rights and obligations of Holders and Beneficial Owners of ADSs and the rights and duties of the Depositary in respect of the Shares deposited thereunder and any and all other securities, property and cash from time to time received in respect of such Shares and held thereunder (such Shares, securities, property and cash are herein called “Deposited Securities”).  Copies of the Deposit Agreement are on file at the Principal Office of the Depositary and with the Custodian.  Each Holder and each Beneficial Owner, upon acceptance of any ADSs (or any interest therein) issued in accordance with the terms and conditions of the Deposit Agreement, shall be deemed for all purposes to (a) be a party to and bound by the terms of the Deposit Agreement and applicable ADR(s), and (b) appoint the Depositary its attorney-in-fact, with full power to delegate, to act on its behalf and to take any and all actions contemplated in the Deposit Agreement and the applicable ADR(s), to adopt any and all procedures necessary to comply with applicable law and to take such action as the Depositary in its sole discretion may deem necessary or appropriate to carry out the purposes of the Deposit Agreement and the applicable ADR(s), the taking of such actions to be the conclusive determinant of the necessity and appropriateness thereof.

 

The statements made on the face and reverse of this ADR are summaries of certain provisions of the Deposit Agreement and the Articles of Association  of the Company (as in effect on the date of the signing of the Deposit Agreement) and are qualified by and subject to the detailed provisions of the Deposit Agreement and the Articles of Association, to which reference is hereby made.  All capitalized terms used herein which are not otherwise defined herein shall have the meanings ascribed thereto in the Deposit Agreement.  The Depositary makes no representation or warranty as to the validity or worth of the Deposited Securities.  The Depositary has made arrangements for the acceptance of the ADSs into DTC.  Each Beneficial Owner of ADSs held through DTC must rely on the procedures of DTC and the DTC Participants to exercise and be entitled to any rights attributable to such ADSs.  The Depositary may issue Uncertificated ADSs subject, however, to the terms and conditions of Section 2.13 of the Deposit Agreement.

 

(2)                                 Withdrawal of Deposited Securities. The Holder of this ADR (and of the ADSs evidenced hereby) shall be entitled to Delivery (at the Custodian’s designated office) of the Deposited Securities at the time represented by the ADSs evidenced hereby upon satisfaction of each of the following conditions: (i) the Holder (or a duly authorized attorney of the Holder) has duly Delivered ADSs to the Depositary at its Principal Office the ADSs evidenced hereby (and, if applicable, this ADR evidencing such ADSs) for the purpose of withdrawal of the Deposited Securities represented thereby, (ii) if applicable and so required by the Depositary, this ADR Delivered to the Depositary for such purpose has been properly endorsed in blank or is accompanied by proper instruments of transfer in blank (including signature guarantees in accordance with standard securities industry practice), (iii) if so required by the Depositary, the Holder of the ADSs has executed and delivered to the Depositary a written order directing the Depositary to cause the Deposited Securities being withdrawn to be Delivered to or upon the written order of the person(s) designated in such order, and (iv) all applicable fees and charges of, and expenses incurred by, the Depositary and all applicable taxes and governmental charges (as are set forth in Section 5.9 of, and Exhibit B to, the Deposit Agreement) have been paid,

 

A-2

 

subject, however, in each case, to the terms and conditions of this ADR evidencing the surrendered ADSs, of the Deposit Agreement, of the Company’s Articles of Association, of any applicable laws and the rules of the book-entry settlement entity, if any, and to any provisions of or governing the Deposited Securities, in each case as in effect at the time thereof.

 

Upon satisfaction of each of the conditions specified above, the Depositary (i) shall cancel the ADSs Delivered to it (and, if applicable, the ADR(s) evidencing the ADSs so Delivered), (ii) shall direct the Registrar to record the cancellation of the ADSs so Delivered on the books maintained for such purpose, and (iii) shall direct the Custodian to Deliver, or cause the Delivery of, in each case, without unreasonable delay, the Deposited Securities represented by the ADSs so canceled together with any certificate or other document of title for the Deposited Securities, or evidence of the electronic transfer thereof (if available), as the case may be, to or upon the written order of the person(s) designated in the order delivered to the Depositary for such purpose, subject however, in each case, to the terms and conditions of the Deposit Agreement, of this ADR evidencing the ADS so cancelled, of the Articles of Association  of the Company, of any applicable laws and of the rules of the applicable book-entry settlement entity, and to the terms and conditions of or governing the Deposited Securities, in each case as in effect at the time thereof.

 

The Depositary shall not accept for surrender ADSs representing less than one (1) Share.  In the case of Delivery to it of ADSs representing a number other than a whole number of Shares, the Depositary shall cause ownership of the appropriate whole number of Shares to be Delivered in accordance with the terms hereof, and shall, at the discretion of the Depositary, either (i) return to the person surrendering such ADSs the number of ADSs representing any remaining fractional Share, or (ii) sell or cause to be sold the fractional Share represented by the ADSs so surrendered and remit the proceeds of such sale (net of (a) applicable fees and charges of, and expenses incurred by, the Depositary and (b) taxes withheld) to the person surrendering the ADSs.  Notwithstanding anything else contained in this ADR or the Deposit Agreement, the Depositary may make delivery at the Principal Office of the Depositary of (i) any cash dividends or cash distributions, or (ii) any proceeds from the sale of any distributions of shares or rights, which are at the time held by the Depositary in respect of the Deposited Securities represented by the ADSs surrendered for cancellation and withdrawal.  At the request, risk and expense of any Holder so surrendering ADSs represented by this ADR, and for the account of such Holder, the Depositary shall direct the Custodian to forward (to the extent permitted by law) any cash or other property (other than securities) held by the Custodian in respect of the Deposited Securities represented by such ADSs to the Depositary for delivery at the Principal Office of the Depositary.  Such direction shall be given by letter or, at the request, risk and expense of such Holder, by cable, telex or facsimile transmission.

 

(3)                                 Transfer, Combination and Split-Up of ADRs.  The Registrar, as promptly as practicable, shall register the transfer of this ADR (and of the ADSs represented hereby) on the books maintained for such purpose and the Depositary shall, as promptly as practicable, (x) cancel this ADR and execute new ADRs evidencing the same aggregate number of ADSs as those evidenced by this ADR canceled by the Depositary, (y) cause the Registrar to countersign such new ADRs, and (z) Deliver such new ADRs to or upon the order of the person entitled thereto, if each of the following conditions has been satisfied:  (i) this ADR has been duly Delivered by the Holder (or by a duly authorized attorney of the Holder) to the Depositary at its

 

A-3

 

Principal Office for the purpose of effecting a transfer thereof, (ii) this surrendered ADR has been properly endorsed or is accompanied by proper instruments of transfer (including signature guarantees in accordance with standard securities industry practice), (iii) this surrendered ADR has been duly stamped (if required by the laws of the State of New York or of the United States), and (iv) all applicable fees and charges of, and expenses incurred by, the Depositary and all applicable taxes and governmental charges (as are set forth in Section 5.9 of, and Exhibit B to, the Deposit Agreement) have been paid, subject, however, in each case, to the terms and conditions of this ADR, of the Deposit Agreement and of applicable law, in each case as in effect at the time thereof.

 

The Registrar shall register the split-up or combination of this ADR (and of the ADSs represented hereby) on the books maintained for such purpose and the Depositary shall, as promptly as practicable, (x) cancel this ADR and execute new ADRs for the number of ADSs requested, but in the aggregate not exceeding the number of ADSs evidenced by this ADR canceled by the Depositary, (y) cause the Registrar to countersign such new ADRs, and (z) Deliver such new ADRs to or upon the order of the Holder thereof, if each of the following conditions has been satisfied:  (i) this ADR has been duly Delivered by the Holder (or by a duly authorized attorney of the Holder) to the Depositary at its Principal Office for the purpose of effecting a split-up or combination hereof, and (ii) all applicable fees and charges of, and expenses incurred by, the Depositary and all applicable taxes and government charges (as are set forth in Section 5.9 of, and Exhibit B to, the Deposit Agreement) have been paid, subject, however, in each case, to the terms and conditions of this ADR, of the Deposit Agreement and of applicable law, in each case as in effect at the time thereof.

 

(4)                                 Pre-Conditions to Registration, Transfer, Etc.  As a condition precedent to the execution and delivery, the registration of issuance, transfer, split-up, combination or surrender, of any ADR, the delivery of any distribution thereon, or the withdrawal of any Deposited Securities, the Depositary or the Custodian may require (i) payment from the depositor of Shares or presenter of ADSs or of an ADR of a sum sufficient to reimburse it for any tax or other governmental charge and any stock transfer or registration fee with respect thereto (including any such tax or charge and fee with respect to Shares being deposited or withdrawn) and payment of any applicable fees and charges of the Depositary as provided in Section 5.9 and Exhibit B to the Deposit Agreement and in this ADR, (ii) the production of proof satisfactory to it as to the identity and genuineness of any signature or any other matters contemplated in Section 3.1 of the Deposit Agreement, and (iii) compliance with (A) any laws or governmental regulations relating to the execution and delivery of ADRs or ADSs or to the withdrawal of Deposited Securities and (B) such reasonable regulations as the Depositary and the Company may establish consistent with the provisions of this ADR, if applicable, the Deposit Agreement and applicable law.

 

The issuance of ADSs against deposits of Shares generally or against deposits of particular Shares may be suspended, or the deposit of particular Shares may be refused, or the registration of transfer of ADSs in particular instances may be refused, or the registration of transfer of ADSs generally may be suspended, during any period when the transfer books of the Company, the Depositary, a Registrar or the Share Registrar are closed or if any such action is deemed necessary or advisable by the Depositary or the Company, in good faith, at any time or from time to time because of any requirement of law or regulation, any government or

 

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governmental body or commission or any securities exchange on which the Shares or ADSs are listed, or under any provision of the Deposit Agreement or this ADR, if applicable, or under any provision of, or governing, the Deposited Securities, or because of a meeting of shareholders of the Company or for any other reason, subject, in all cases to paragraph (24) and Section 7.8 of the Deposit Agreement.  Notwithstanding any provision of the Deposit Agreement or this ADR to the contrary, Holders are entitled to surrender outstanding ADSs to withdraw the Deposited Securities associated therewith at any time subject only to (i) temporary delays caused by closing the transfer books of the Depositary or the Company or the deposit of Shares in connection with voting at a shareholders’ meeting or the payment of dividends, (ii) the payment of fees, taxes and similar charges, (iii) compliance with any U.S. or foreign laws or governmental regulations relating to the ADSs or the withdrawal of the Deposited Securities, and (iv) other circumstances specifically contemplated by Instruction I.A.(l) of the General Instructions to Form F-6 (as such General Instructions may be amended from time to time).

 

(5)                                 Compliance With Information Requests.  Notwithstanding any other provision of the Deposit Agreement or this ADR, each Holder and Beneficial Owner of the ADSs represented hereby agrees to comply with requests from the Company pursuant to applicable law, the rules and requirements of the NASDAQ, and of any other stock exchange on which Shares or ADSs are, or will be, registered, traded or listed, or the Articles of Association  of the Company, which are made to provide information, inter alia, as to the capacity in which such Holder or Beneficial Owner owns ADSs (and Shares, as the case may be) and regarding the identity of any other person(s) interested in such ADSs and the nature of such interest and various other matters, whether or not they are Holders and/or Beneficial Owners at the time of such request.  The Depositary agrees to use its reasonable efforts to forward, upon the request of the Company and at the Company’s expense, any such request from the Company to the Holders and to forward to the Company any such responses to such requests received by the Depositary.

 

(6)                                 Ownership Restrictions.  Notwithstanding any other provision of this ADR or of the Deposit Agreement, the Company may restrict transfers of the Shares where such transfer might result in ownership of Shares exceeding limits imposed by applicable law or the Articles of Association of the Company.  The Company may also restrict, in such manner as it deems appropriate, transfers of the ADSs where such transfer may result in the total number of Shares represented by the ADSs owned by a single Holder or Beneficial Owner to exceed any such limits.  The Company may, in its sole discretion but subject to applicable law, instruct the Depositary to take action with respect to the ownership interest of any Holder or Beneficial Owner in excess of the limits set forth in the preceding sentence, including but not limited to, the imposition of restrictions on the transfer of ADSs, the removal or limitation of voting rights or mandatory sale or disposition on behalf of a Holder or Beneficial Owner of the Shares represented by the ADSs held by such Holder or Beneficial Owner in excess of such limitations, if and to the extent such disposition is permitted by applicable law and the Articles of Association of the Company.  Nothing herein or in the Deposit Agreement shall be interpreted as obligating the Depositary or the Company to ensure compliance with the ownership restrictions described herein or in Section 3.5 of the Deposit Agreement.

 

Applicable laws and regulations may require holders and beneficial owners of Shares, including the Holders and Beneficial Owners of ADSs, to satisfy reporting requirements and obtain regulatory approvals in certain circumstances.  Holders and Beneficial Owners of ADSs are

 

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solely responsible for determining and complying with such reporting requirements, and for obtaining such approvals.  Each Holder and each Beneficial Owner hereby agrees to make such determination, file such reports, and obtain such approvals to the extent and in the form required by applicable laws and regulations as in effect from time to time.  Neither the Depositary, the Custodian, the Company or any of their respective agents or affiliates shall be required to take any actions whatsoever on behalf of Holders or Beneficial Owners to determine and satisfy such reporting requirements or obtain such regulatory approvals under applicable laws and regulations.

 

(7)                                 Liability for Taxes and Other Charges.  Any tax or other governmental charge payable with respect to any ADR or any Deposited Securities or ADSs shall be payable by the Holders and Beneficial Owners to the Depositary.  The Company, the Custodian and/or Depositary may withhold or deduct from any distributions made in respect of Deposited Securities and may sell for the account of a Holder and/or Beneficial Owner any or all of the Deposited Securities and apply such distributions and sale proceeds in payment of such taxes (including applicable interest and penalties) or charges that are or may be payable by Holders or Beneficial Owners in respect of the ADSs, Deposited Securities and ADRs, the Holder and the Beneficial Owner hereof remaining liable for any deficiency.  The Custodian may refuse the deposit of Shares and the Depositary may refuse to issue ADSs, to deliver ADRs, register the transfer of ADSs, register the split-up or combination of ADRs and (subject to paragraph (24) hereof and Section 7.8 of the Deposit Agreement) the withdrawal of Deposited Securities until payment in full of such tax, charge, penalty or interest is received.  Every Holder and Beneficial Owner agrees to indemnify the Depositary, the Company, the Custodian, and any of their agents, officers, employees and Affiliates for, and hold each of them harmless from, any claims with respect to taxes or additions to tax (including applicable interest and penalties thereon) arising from any tax benefit obtained for such Holder and/or Beneficial Owner.

 

(8)                                 Representations and Warranties of Depositors.  Each person depositing Shares under the Deposit Agreement shall be deemed thereby to represent and warrant that (i) such Shares and the certificates therefor are duly authorized, validly issued, fully paid, non-assessable and legally obtained by such person, (ii) all preemptive (and similar) rights, if any, with respect to such Shares have been validly waived or exercised, (iii) the person making such deposit is duly authorized so to do, (iv) the Shares presented for deposit are free and clear of any lien, encumbrance, security interest, charge, mortgage or adverse claim, and (v) the Shares presented for deposit are not, and the ADSs issuable upon such deposit will not be, Restricted Securities (except as contemplated in Section 2.14 of the Deposit Agreement), and (vi) the Shares presented for deposit have not been stripped of any rights or entitlements.  Such representations and warranties shall survive the deposit and withdrawal of Shares, the issuance and cancellation of ADSs in respect thereof and the transfer of such ADSs.  If any such representations or warranties are false in any way, the Company and the Depositary shall be authorized, at the cost and expense of the person depositing Shares, to take any and all actions necessary to correct the consequences thereof.

 

(9)                                 Proofs, Certificates and Other Information.  Any person presenting Shares for deposit, and any Holder and any Beneficial Owner may be required, and every Holder and Beneficial Owner agrees, from time to time to provide to the Depositary and the Custodian such proof of citizenship or residence, taxpayer status, payment of all applicable taxes or other

 

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governmental charges, exchange control approval, legal or beneficial ownership of ADSs and Deposited Securities, compliance with applicable laws, the terms of the Deposit Agreement or the ADR(s) evidencing the ADSs and the provisions of, or governing, the Deposited Securities, to execute such certifications and to make such representations and warranties, and to provide such other information and documentation (or, in the case of Shares in registered form presented for deposit, such information relating to the registration on the books of the Company or of the Shares Registrar) as the Depositary or the Custodian may deem necessary or proper or as the Company may reasonably require by written request to the Depositary consistent with its obligations under the Deposit Agreement and the applicable ADR(s).  The Depositary and the Registrar, as applicable, may withhold the execution or delivery or registration of transfer of any ADR or ADS or the distribution or sale of any dividend or distribution of rights or of the proceeds thereof or, to the extent not limited by paragraph (24) hereof and the terms of Section 7.8 of the Deposit Agreement, the delivery of any Deposited Securities until such proof or other information is filed or such certifications are executed, or such representations and warranties are made or such other information or documentation are provided, in each case to the Depositary’s, the Registrar’s and the Company’s satisfaction.

 

(10)                          Charges of Depositary.  The Depositary shall charge the following fees:

 

(i)                                    Issuance Fee:  to any person depositing Shares or to whom ADSs are issued upon the deposit of Shares, a fee not in excess of U.S. $5.00 per 100 ADSs (or fraction thereof) so issued under the terms of the Deposit Agreement (excluding issuances as a result of distributions described in paragraph (iv) below);

 

(ii)                                Cancellation Fee:  to any person surrendering ADSs for cancellation and withdrawal of Deposited Securities or to any person to whom Deposited Securities are delivered, a fee not in excess of U.S. $5.00 per 100 ADSs (or fraction thereof) surrendered;

 

(iii)                            Cash Distribution Fee:  to any Holder of ADS(s), a fee not in excess of U.S. $5.00 per 100 ADSs (or fraction thereof) held for the distribution of cash dividends or other cash distributions (i.e., sale of rights and other entitlements); and

 

(iv)                               Stock Distribution/Rights Exercise Fee:  to any Holder of ADS(s), a fee not in excess of U.S. $5.00 per 100 ADSs (or fraction thereof) held for (a) stock dividends or other free stock distributions or (b)  the exercise of rights to purchase additional ADSs;

 

(v)                                   Other Distribution Fee:  to any Holder of ADS(s), a fee not in excess of U.S. $5.00 per 100 ADSs (or fraction thereof) held for the distribution of securities other than ADSs or rights to purchase additional ADSs (i.e., spin-off shares); and

 

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(vi)                               Depositary Services Fee:  to any Holder of ADS(s), a fee not in excess of U.S. $5.00 per 100 ADSs (or fraction thereof) held on the applicable record date(s) established by the Depositary.

 

Holders, Beneficial Owners, persons depositing Shares and persons surrendering ADSs for cancellation and for the purpose of withdrawing Deposited Securities shall be responsible for the following charges:

 

(a)                                  taxes (including applicable interest and penalties) and other governmental charges;

 

(b)                                 such registration fees as may from time to time be in effect for the registration of Shares or other Deposited Securities on the share register and applicable to transfers of Shares or other Deposited Securities to or from the name of the Custodian, the Depositary or any nominees upon the making of deposits and withdrawals, respectively;

 

(c)                                  such cable, telex and facsimile transmission and delivery expenses as are expressly provided in the Deposit Agreement to be at the expense of the person depositing or withdrawing Shares or Holders and Beneficial Owners of ADSs;

 

(d)                                 the expenses and charges incurred by the Depositary in the conversion of foreign currency;

 

(e)                                  such fees and expenses as are incurred by the Depositary in connection with compliance with exchange control regulations and other regulatory requirements applicable to Shares, Deposited Securities, ADSs and ADRs; and

 

(f)                                    the fees and expenses incurred by the Depositary, the Custodian, or any nominee in connection with the delivery or servicing of Deposited Securities.

 

All fees and charges may, at any time and from time to time, be changed by agreement between the Depositary and Company but, in the case of fees and charges payable by Holders or Beneficial Owners, only in the manner contemplated by paragraph (22) of this ADR and as contemplated in Section 6.1 of the Deposit Agreement.  The Depositary will provide, without charge, a copy of its latest fee schedule to anyone upon request.

 

Depositary Fees payable upon (i) deposit of Shares against issuance of ADSs and (ii) surrender of ADSs for cancellation and withdrawal of Deposited Securities will be charged by the Depositary to the person to whom the ADSs so issued are delivered (in the case of ADS issuances) and to the person who delivers the ADSs for cancellation to the Depositary (in the case of ADS cancellations).  In the case of ADSs issued by the Depositary into DTC or presented to the Depositary via DTC, the ADS issuance and cancellation fees will be payable to the Depositary by the DTC Participant(s) receiving the ADSs from the Depositary or the DTC

 

A-8

 

Participant(s) surrendering the ADSs to the Depositary for cancellation, as the case may be, on behalf of the Beneficial Owner(s) and will be charged by the DTC Participant(s) to the account(s) of the applicable Beneficial Owner(s) in accordance with the procedures and practices of the DTC participant(s) as in effect at the time.  Depositary fees in respect of distributions and the Depositary services fee are payable to the Depositary by Holders as of the applicable ADS Record Date established by the Depositary.  In the case of distributions of cash, the amount of the applicable Depositary fees is deducted by the Depositary from the funds being distributed.  In the case of distributions other than cash and the Depositary service fee, the Depositary will invoice the applicable Holders as of the ADS Record Date established by the Depositary.  For ADSs held through DTC, the Depositary fees for distributions other than cash and the Depositary service fee are charged by the Depositary to the DTC Participants in accordance with the procedures and practices prescribed by DTC from time to time and the DTC Participants in turn charge the amount of such fees to the Beneficial Owners for whom they hold ADSs.

 

The Depositary may reimburse the Company for certain expenses incurred by the Company in respect of the ADR program established pursuant to the Deposit Agreement, by making available a portion of the Depositary fees charged in respect of the ADR program or otherwise, upon such terms and conditions as the Company and the Depositary agree from time to time.  The Company shall pay to the Depositary such fees and charges and reimburse the Depositary for such out-of-pocket expenses as the Depositary and the Company may agree from time to time.  Responsibility for payment of such charges and reimbursements may from time to time be changed by agreement between the Company and the Depositary.  Unless otherwise agreed, the Depositary shall present its statement for such expenses and fees or charges to the Company once every three months.  The charges and expenses of the Custodian are for the sole account of the Depositary.

 

The right of the Depositary to receive payment of fees, charges and expenses as provided above shall survive the termination of the Deposit Agreement.  As to any Depositary, upon the resignation or removal of such Depositary as described in Section 5.4 of the Deposit Agreement, such right shall extend for those fees, charges and expenses incurred prior to the effectiveness of such resignation or removal.

 

(11)                          Title to ADRs.  It is a condition of this ADR, and every successive Holder of this ADR by accepting or holding the same consents and agrees, that title to this ADR (and to each ADS evidenced hereby) shall be transferable upon the same terms as a certificated security under the laws of the State of New York, provided that, in the case of Certificated ADSs, such ADR has been properly endorsed or is accompanied by proper instruments of transfer.  Notwithstanding any notice to the contrary, the Depositary and the Company may deem and treat the Holder of this ADR (that is, the person in whose name this ADR is registered on the books of the Depositary) as the absolute owner thereof for all purposes.  Neither the Depositary nor the Company shall have any obligation nor be subject to any liability under the Deposit Agreement or this ADR to any holder of this ADR or any Beneficial Owner unless, in the case of a holder of ADSs, such holder is the Holder of this ADR registered on the books of the Depositary or, in the case of a Beneficial Owner, such Beneficial Owner or the Beneficial Owner’s representative is the Holder registered on the books of the Depositary.

 

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(12)         Validity of ADR.  The Holder(s) of this ADR (and the ADSs represented hereby) shall not be entitled to any benefits under the Deposit Agreement or be valid or enforceable for any purpose against the Depositary or the Company unless this ADR has been (i) dated, (ii) signed by the manual or facsimile signature of a duly-authorized signatory of the Depositary, (iii) countersigned by the manual or facsimile signature of a duly-authorized signatory of the Registrar, and (iv) registered in the books maintained by the Registrar for the registration of issuances and transfers of ADRs.  An ADR bearing the facsimile signature of a duly-authorized signatory of the Depositary or the Registrar, who at the time of signature was a duly authorized signatory of the Depositary or the Registrar, as the case may be, shall bind the Depositary, notwithstanding the fact that such signatory has ceased to be so authorized prior to the delivery of such ADR by the Depositary.

 

(13)         Available Information; Reports; Inspection of Transfer Books.  The Company is subject to the periodic reporting requirements of the Exchange Act and, accordingly, is required to file or submit certain reports with the Commission.  These reports can be retrieved from the Commission’s website (www.sec.gov) and can be inspected and copied at the public reference facilities maintained by the Commission located (as of the date of the Deposit Agreement) at 100 F Street, N.E., Washington D.C.  20549.  The Depositary shall make available for inspection by Holders at its Principal Office any reports and communications, including any proxy soliciting materials, received from the Company which are both (a) received by the Depositary, the Custodian, or the nominee of either of them as the holder of the Deposited Securities and (b) made generally available to the holders of such Deposited Securities by the Company.  The Depositary shall also provide or make available to Holders copies of such reports when furnished by the Company pursuant to Section 5.6 of the Deposit Agreement.

 

The Registrar shall keep books for the registration of ADSs which at all reasonable times shall be open for inspection by the Company and by the Holders of such ADSs, provided that such inspection shall not be, to the Registrar’s knowledge, for the purpose of communicating with Holders of such ADSs in the interest of a business or object other than the business of the Company or other than a matter related to the Deposit Agreement or the ADSs.

 

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The Registrar may close the transfer books with respect to the ADSs, at any time or from time to time, when deemed necessary or advisable by it in good faith in connection with the performance of its duties hereunder, or at the reasonable written request of the Company subject, in all cases, to paragraph (24) hereof and Section 7.8 of the Deposit Agreement.

 

	
Dated:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
CITIBANK,   N.A.
    	
 
    	
CITIBANK,   N.A.
    
	
Transfer   Agent and Registrar
    	
 
    	
as   Depositary
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
Authorized   Signatory
    	
 
    	
 
    	
Authorized   Signatory
    

 

The address of the Principal Office of the Depositary is 388 Greenwich Street, New York, New York 10013, U.S.A.

 

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[FORM OF REVERSE OF ADR]

 

SUMMARY OF CERTAIN ADDITIONAL PROVISIONS

 

OF THE DEPOSIT AGREEMENT

 

(14)         Dividends and Distributions in Cash, Shares, etc.  Upon the timely receipt by the Depositary of a notice from the Company that it intends to make a distribution of a cash dividend or other cash distribution, the Depositary shall establish an ADS Record Date upon the terms described in Section 4.9 of the Deposit Agreement.  Upon receipt of confirmation from the Custodian of receipt of any cash dividend or other cash distribution on any Deposited Securities, or upon receipt of proceeds from the sale of any Deposited Securities or of any entitlements held in respect of Deposited Securities under the terms of the Deposit Agreement, the Depositary will (i) if at the time of receipt thereof any amounts received in a Foreign Currency can in the judgment of the Depositary (upon the terms of Section 4.8 of the Deposit Agreement), be converted on a practicable basis into Dollars transferable to the United States, promptly convert or cause to be converted such cash dividend, distribution or proceeds into Dollars (upon the terms of Section 4.8 of the Deposit Agreement), (ii) if applicable and unless previously established, establish the ADS Record Date upon the terms described in Section 4.9 of the Deposit Agreement, and (iii) distribute promptly the amount thus received (net of (a) applicable fees and charges of, and expenses incurred by, the Depositary and (b) taxes withheld) to the Holders entitled thereto as of the ADS Record Date in proportion to the number of ADSs held as of the ADS Record Date.  The Depositary shall distribute only such amount, however, as can be distributed without attributing to any Holder a fraction of one cent, and any balance not so distributed shall be held by the Depositary (without liability for interest thereon) and shall be added to and become part of the next sum received by the Depositary for distribution to Holders of ADSs outstanding at the time of the next distribution.  If the Company, the Custodian or the Depositary is required to withhold and does withhold from any cash dividend or other cash distribution in respect of any Deposited Securities an amount on account of taxes, duties or other governmental charges, the amount distributed to Holders on the ADSs representing such Deposited Securities shall be reduced accordingly.  Such withheld amounts shall be forwarded by the Company, the Custodian or the Depositary to the relevant governmental authority.  Evidence of payment thereof by the Company shall be forwarded by the Company to the Depositary upon request.  The Depositary will hold any cash amounts it is unable to distribute in a non-interest bearing account for the benefit of the applicable Holders and Beneficial Owners of ADSs until the distribution can be effected or the funds that the Depositary holds must be escheated as unclaimed property in accordance with the laws of the relevant states of the United States.

 

Upon the timely receipt by the Depositary of a notice from the Company that it intends to make a distribution that consists of a dividend in, or free distribution of Shares, the Depositary shall establish an ADS Record Date upon the terms described in Section 4.9 of the Deposit Agreement.  Upon receipt of confirmation from the Custodian of the receipt of the Shares so distributed by the Company, the Depositary shall either (i) subject to Section 5.9 of the Deposit Agreement, distribute to the Holders as of the ADS Record Date in proportion to the number of ADSs held as of the ADS Record Date, additional ADSs, which represent in the aggregate the

 

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number of Shares received as such dividend, or free distribution, subject to the other terms of the Deposit Agreement (including, without limitation, (a) the applicable fees and charges of, and expenses incurred by, the Depositary and (b) taxes), or (ii) if additional ADSs are not so distributed, take all actions necessary so that each ADS issued and outstanding after the ADS Record Date shall, to the extent permissible by law, thenceforth also represent rights and interest in the additional integral number of Shares distributed upon the Deposited Securities represented thereby (net of (a) the applicable fees and charges of, and expenses incurred by, the Depositary, and (b) taxes).  In lieu of delivering fractional ADSs, the Depositary shall sell the number of Shares or ADSs, as the case may be, represented by the aggregate of such fractions and distribute the net proceeds upon the terms set forth in Section 4.1 of the Deposit Agreement.

 

In the event that the Depositary determines that any distribution in property (including Shares) is subject to any tax or other governmental charges which the Depositary is obligated to withhold, or, if the Company in the fulfillment of its obligations under Section 5.7 of the Deposit Agreement, has furnished an opinion of U.S. counsel determining that Shares must be registered under the Securities Act or other laws in order to be distributed to Holders (and no such registration statement has been declared effective), the Depositary may dispose of all or a portion of such property (including Shares and rights to subscribe therefor) in such amounts and in such manner, including by public or private sale, as the Depositary deems necessary and practicable, and the Depositary shall distribute the net proceeds of any such sale (after deduction of (a) taxes and (b) fees and charges of, and the expenses incurred by, the Depositary) to Holders entitled thereto upon the terms of Section 4.1 of the Deposit Agreement.  The Depositary shall hold and/or distribute any unsold balance of such property in accordance with the provisions of the Deposit Agreement.

 

Upon the timely receipt of a notice indicating that the Company wishes an elective distribution in cash or Shares to be made available to Holders of ADSs upon the terms described in the Deposit Agreement, the Company and the Depositary shall determine whether such distribution is lawful and reasonably practicable.  If so, the Depositary shall, subject to the terms and conditions of the Deposit Agreement, establish an ADS Record Date according to paragraph (16) and establish procedures to enable the Holder hereof to elect to receive the proposed distribution in cash or in additional ADSs.  If a Holder elects to receive the distribution in cash, the distribution shall be made as in the case of a distribution in cash.  If the Holder hereof elects to receive the distribution in additional ADSs, the distribution shall be made as in the case of a distribution in Shares upon the terms described in the Deposit Agreement.  If such elective distribution is not reasonably practicable or if the Depositary did not receive satisfactory documentation set forth in the Deposit Agreement, the Depositary shall establish an ADS Record Date upon the terms of Section 4.9 of the Deposit Agreement and, to the extent permitted by law, distribute to Holders, on the basis of the same determination as is made in the Cayman Islands in respect of the Shares for which no election is made, either (x) cash or (y) additional ADSs representing such additional Shares, in each case, upon the terms described in the Deposit Agreement.  Nothing herein or in the Deposit Agreement shall obligate the Depositary to make available to the Holder hereof a method to receive the elective distribution in Shares (rather than ADSs).  There can be no assurance that the Holder hereof will be given the opportunity to receive elective distributions on the same terms and conditions as the holders of Shares.

 

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Upon the timely receipt by the Depositary of a notice indicating that the Company wishes rights to subscribe for additional Shares to be made available to Holders of ADSs, the Depositary upon consultation with the Company, shall determine, whether it is lawful and reasonably practicable to make such rights available to the Holders.  The Depositary shall make such rights available to Holders only if (i) the Company shall have timely requested that such rights be made available to Holders, (ii) the Depositary shall have received satisfactory documentation within the terms of Section 5.7 in the Deposit Agreement, and (iii) the Depositary shall have determined that such distribution of rights is reasonably practicable.  In the event any of the conditions set forth above are not satisfied or if the Company requests that the rights not be made available to the Holders of ADSs, the Depositary shall proceed with the sale of the rights as contemplated in Section 4.4(b) of the Deposit Agreement.  In the event all conditions set forth above are satisfied, the Depositary shall establish an ADS Record Date (upon the terms described in Section 4.9 of the Deposit Agreement) and establish procedures to (x) distribute rights to purchase additional ADSs (by means of warrants or otherwise), (y) enable the Holders to exercise such rights (upon payment of the subscription price and of the applicable (a) fees and charges of, and expenses incurred by, the Depositary and (b) taxes), and (z) deliver ADSs upon the valid exercise of such rights.  Nothing herein or in the Deposit Agreement shall obligate the Depositary to make available to the Holders a method to exercise rights to subscribe for Shares (rather than ADSs).  If (i) the Company does not timely request the Depositary to make the rights available to Holders or requests that the rights not be made available to Holders, (ii) the Depositary fails to receive satisfactory documentation within the terms of Section 5,7 of the Deposit Agreement or determines it is not reasonably practicable to make the rights available to Holders, or (iii) any rights made available are not exercised and appear to be about to lapse, the Depositary shall determine whether it is lawful and reasonably practicable to sell such rights, in a riskless principal capacity, at such place and upon such terms (including public and private sale) as it may deem practicable.  The Depositary shall, upon such sale, convert and distribute proceeds of such sale (net of applicable (a) fees and charges of, and expenses incurred by, the Depositary and (b) taxes) upon the terms hereof and of Section 4.1 of the Deposit Agreement.  If the Depositary is unable to make any rights available to Holders upon the terms described in Section 4.4(a) of the Deposit Agreement or to arrange for the sale of the rights upon the terms described in Section 4.4(b) of the Deposit Agreement, the Depositary shall allow such rights to lapse.  The Depositary shall not be responsible for (i) any failure to determine that it may be lawful or practicable to make such rights available to Holders in general or any Holders in particular, (ii) any foreign exchange exposure or loss incurred in connection with such sale or exercise, or (iii) the content of any materials forwarded to the ADS Holders on behalf of the Company in connection with the rights distribution.

 

Notwithstanding anything herein or in Section 4.4 of the Deposit Agreement to the contrary, if registration (under the Securities Act or any other applicable law) of the rights or the securities to which any rights relate may be required in order for the Company to offer such rights or such securities to Holders and to sell the securities represented by such rights, the Depositary will not distribute such rights to the Holders (i) unless and until a registration statement under the Securities Act (or other applicable law) covering such offering is in effect or (ii) unless the Company furnishes the Depositary opinion(s) of counsel for the Company in the United States and counsel to the Company in any other applicable country in which rights would be distributed, in each case satisfactory to the Depositary, to the effect that the offering and sale

 

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of such securities to Holders and Beneficial Owners are exempt from, or do not require registration under, the provisions of the Securities Act or any other applicable laws.  A liquid market for rights may not exist, and this may adversely affect (1) the ability of the Depositary to dispose of such rights or (2) the amount the Depositary would realize upon disposal of rights.  In the event that the Company, the Depositary or the Custodian shall be required to withhold and does withhold from any distribution of property (including rights) an amount on account of taxes or other governmental charges, the amount distributed to the Holders of ADSs representing such Deposited Securities shall be reduced accordingly.  In the event that the Depositary determines that any distribution in property (including Shares and rights to subscribe therefor) is subject to any tax or other governmental charges which the Depositary is obligated to withhold, the Depositary may dispose of all or a portion of such property (including Shares and rights to subscribe therefor) in such amounts and in such manner, including by public or private sale, as the Depositary deems necessary and practicable to pay any such taxes or charges.

 

There can be no assurance that Holders generally, or any Holder in particular, will be given the opportunity to exercise rights on the same terms and conditions as the holders of Shares or be able to exercise such rights.  Nothing herein or in the Deposit Agreement shall obligate the Company to file any registration statement in respect of any rights or Shares or other securities to be acquired upon the exercise of such rights.

 

Whenever the Company intends to distribute to the holders of Deposited Securities property other than cash, Shares or rights to purchase additional Shares, the Company shall give timely notice thereof to the Depositary and shall indicate whether or not it wishes such distribution be made to Holders of ADSs.  Upon receipt of a notice indicating that the Company wishes such distribution be made to Holders of ADSs, the Depositary shall consult with the Company, and the Company shall assist the Depositary, to determine whether such distribution to Holders is lawful and reasonably practicable.  The Depositary shall not make such distribution unless (i) the Company shall have requested the Depositary to make such distribution to Holders, (ii) the Depositary shall have received satisfactory documentation within the terms of Section 5.7 of the Deposit Agreement, and (iii) the Depositary shall have determined that such distribution is reasonably practicable.  Upon satisfaction of such conditions, the Depositary shall distribute the property so received to the Holders of record, as of the ADS Record Date, in proportion to the number of ADSs held by them respectively and in such manner as the Depositary may deem practicable for accomplishing such distribution (i) upon receipt of payment or net of the applicable fees and charges of, and expenses incurred by, the Depositary, and (ii) net of any taxes withheld.  The Depositary may dispose of all or a portion of the property so distributed and deposited, in such amounts and in such manner (including public or private sale) as the Depositary may deem practicable or necessary to satisfy any taxes (including applicable interest and penalties) or other governmental charges applicable to the distribution.

 

If the conditions above are not satisfied, the Depositary shall sell or cause such property to be sold in a public or private sale, at such place or places and upon such terms as it may deem practicable and shall (i) cause the proceeds of such sale, if any, to be converted into Dollars and (ii) distribute the proceeds of such conversion received by the Depositary (net of applicable (a) fees and charges of, and expenses incurred by, the Depositary and (b) taxes) to the Holders as of the ADS Record Date upon the terms hereof and of the Deposit Agreement.  If the Depositary

 

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is unable to sell such property, the Depositary may dispose of such property for the account of the Holders in any way it deems reasonably practicable under the circumstances.

 

(15)         Redemption.  Upon timely receipt of notice from the Company that it intends to exercise its right of redemption in respect of any of the Deposited Securities, and a satisfactory opinion of counsel, and upon determining that such proposed redemption is practicable, the Depositary shall (to the extent practicable) provide to each Holder a notice setting forth the Company’s intention to exercise the redemption rights and any other particulars set forth in the Company’s notice to the Depositary.  Upon receipt of confirmation from the Custodian that the redemption has taken place and that funds representing the redemption price have been received, the Depositary shall convert, transfer, distribute the proceeds (net of applicable (a) fees and charges of, and expenses incurred by, the Depositary, and (b) taxes), retire ADSs and cancel ADRs, if applicable, upon delivery of such ADSs by Holders thereof in accordance with the terms set forth in Sections 4.1 and 6.2 of the Deposit Agreement.  If less than all outstanding Deposited Securities are redeemed, the ADSs to be retired will be selected by lot or on a pro rata basis, as may be determined by the Depositary.  The redemption price per ADS shall be the dollar equivalent of the per share amount received by the Depositary (adjusted to reflect the ADS(s)-to-Share(s) ratio) upon the redemption of the Deposited Securities represented by ADSs (subject to the terms of Section 4.8 of the Deposit Agreement and the applicable fees and charges of, and expenses incurred by, the Depositary, and taxes) multiplied by the number of Deposited Securities represented by each ADS redeemed.

 

(16)         Fixing of ADS Record Date.  Whenever the Depositary shall receive notice of the fixing of a record date by the Company for the determination of holders of Deposited Securities entitled to receive any distribution (whether in cash, Shares, rights or other distribution), or whenever for any reason the Depositary causes a change in the number of Shares that are represented by each ADS, or whenever the Depositary shall receive notice of any meeting of, or solicitation of consents or proxies of, holders of Shares or other Deposited Securities, or whenever the Depositary shall find it necessary or convenient in connection with the giving of any notice, solicitation of any consent or any other matter, the Depositary shall fix a record date (“ADS Record Date”) for the determination of the Holders of ADSs who shall be entitled to receive such distribution, to give instructions for the exercise of voting rights at any such meeting, to give or withhold such consent, to receive such notice or solicitation or to otherwise take action, or to exercise the rights of Holders with respect to such changed number of Shares represented by each ADS.  The Depositary shall make reasonable efforts to establish the ADS Record Date as closely as possible to the applicable record date for the Deposited Securities (if any) set by the Company in the Cayman Islands.  Subject to applicable law and the terms and conditions of this ADR and the terms and conditions of the Deposit Agreement, only the Holders of ADSs at the close of business in New York on such ADS Record Date shall be entitled to receive such distributions, to give such instructions, to receive such notice or solicitation, or otherwise take action.

 

(17)         Voting of Deposited Securities.  (a)  ADS Voting Instructions.  As soon as practicable after receipt of notice of any meeting at which the holders of Deposited Securities are entitled to vote, or of solicitation of consents or proxies from holders of Deposited Securities, the Depositary shall fix the ADS Record Date in respect of such meeting or solicitation of consent or proxy in accordance with Section 4.9 of the Deposit Agreement.  The Depositary shall, if

 

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requested by the Company in writing in a timely manner (the Depositary having no obligation to take any further action if the request shall not have been received by the Depositary at least thirty (30) days prior to the date of such vote or meeting), at the Company’s expense and provided no U.S. legal prohibitions exist, distribute as soon as practicable to Holders as of the ADS Record Date: (a) such notice of meeting or solicitation of consent or proxy, (b) a statement that the Holders at the close of business on the ADS Record Date will be entitled, subject to any applicable law, the provisions of the Deposit Agreement, the Articles of Association of the Company and the provisions of or governing the Deposited Securities (which provisions, if any, shall be summarized in pertinent part by the Company), to instruct the Depositary as to the exercise of the voting rights, if any, pertaining to the Deposited Securities represented by such Holder’s ADSs, and (c) a brief statement as to the manner in which such voting instructions may be given to the Depositary, including an indication that Holders for which the Depositary has not timely received voting instructions will be deemed, and the Depositary shall deem such Holders, to have given a discretionary proxy to a person designated by the Company to vote the Shares or other Deposited Securities represented by such Holder’s ADSs in his or her discretion as set forth in paragraph (b) below.  Voting instructions may be given only in respect of a number of ADSs representing an integral number of Deposited Securities.

 

Notwithstanding anything contained in the Deposit Agreement or any ADR, the Depositary may, to the extent not prohibited by law or regulations, or by the requirements of the stock exchange on which the ADSs are listed, in lieu of distribution of the materials provided to the Depositary in connection with any meeting of, or solicitation of consents or proxies from, holders of Deposited Securities, distribute to the Holders a notice that provides Holders with, or otherwise publicize to Holders, instructions on how to retrieve such materials or receive such materials upon request (i.e., by reference to a website containing the materials for retrieval or a contact for requesting copies of the materials).

 

The Depositary has been advised by the Company that under the Cayman Islands law as in effect as of the date of the Deposit Agreement and the Articles of Association, voting at any meeting of shareholders of the Company is by show of hands unless a poll is demanded.  Under the Articles of Association of the Company (in effect as of the date of the Deposit Agreement) a poll may be demanded by the chairman of the board of directors or by any shareholder holding at least ten percent of the Shares given a right to vote at the meeting, present in person or by proxy.  The Depositary will not join in demanding a poll, whether or not requested to do so by Holders of ADSs.

 

Upon the timely receipt of voting instructions from a Holder of ADSs as of the ADS Record Date in the manner specified by the Depositary, the Depositary shall endeavor, insofar as practicable and permitted under applicable law, the provisions of the Deposit Agreement, the Articles of Association of the Company and the provisions of the Deposited Securities, to vote, or cause the Custodian to vote, the Deposited Securities (in person or by proxy) represented by such Holder’s ADSs as follows:  (i) in the event voting takes place at a shareholders’ meeting by show of hands, the Depositary will instruct the Custodian to vote all Deposited Securities in accordance with the voting instructions received from a majority of Holders of ADSs who provided voting instructions and (ii) in the event voting takes place at a shareholders’ meeting by poll, the Depositary will instruct the Custodian to vote the Deposited Securities in accordance with the voting instructions received from the Holders of ADSs.

 

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(b)           Discretionary Proxy.  Neither the Depositary nor the Custodian shall under any circumstances exercise any discretion as to voting and neither the Depositary nor the Custodian shall vote, attempt to exercise the right to vote, or in any way make use of, for purposes of establishing a quorum or otherwise, the Deposited Securities represented by ADSs, except pursuant to and in accordance with the voting instructions timely received from Holders or as otherwise contemplated herein.  If the Depositary timely receives voting instructions from a Holder which fail to specify the manner in which the Depositary is to vote the Deposited Securities represented by such Holder’s ADSs, the Depositary will deem such Holder (unless otherwise specified in the notice distributed to Holders) to have instructed the Depositary to vote in favor of the items set forth in such voting instructions.  If no voting instructions are received by the Depositary from a Holder with respect to the Deposited Securities represented by the ADSs held by such Holder as of the ADS Record Date and provided that the Depositary received notice of the meeting or solicitation of vote at least 30 days prior to such meeting or vote, such Holder shall be deemed, and the Depositary shall deem such Holder, to have instructed the Depositary to give a discretionary proxy to a person designated by the Company to vote the Deposited Securities represented by such Holder’s ADSs; provided, that no such instruction shall be deemed given and no such discretionary proxy shall be given with respect to any matter as to which the Company informs the Depositary (and the Company agrees to provide such information promptly in writing) that the Company does not wish such proxy to be given; provided, further, that no such discretionary proxy shall be given (x) with respect to any matter as to which the Company informs the Depositary that (i) there exists substantial opposition, or (ii)  the rights of Holders or the shareholders of the Company will be materially adversely affected and (y) in the event that the vote is on a show of hands.  Notwithstanding anything else contained herein, the Depositary shall, if so requested in writing by the Company, represent all Deposited Securities (whether or not voting instructions have been received in respect of such Deposited Securities from Holders as of the ADS Record Date) for the sole purpose of establishing quorum at a meeting of shareholders.

 

Notwithstanding anything else contained in the Deposit Agreement or any ADR, the Depositary shall not have any obligation to take any action with respect to any meeting, or solicitation of consents or proxies, of holders of Deposited Securities if the taking of such action would violate U.S. laws.  The Company agrees to take any and all actions reasonably necessary to enable Holders and Beneficial Owners to exercise the voting rights accruing to the Deposited Securities and to deliver to the Depositary an opinion of U.S. counsel addressing any actions requested to be taken if so requested by the Depositary.  There can be no assurance that Holders generally or any Holder in particular will receive the notice described above with sufficient time to enable the Holder to return voting instructions to the Depositary in a timely manner.

 

(18)         Changes Affecting Deposited Securities.  Upon any change in nominal or par value, split-up, cancellation, consolidation or any other reclassification of Deposited Securities, or upon any recapitalization, reorganization, merger, consolidation or sale of assets affecting the Company or to which it is a party, any securities which shall be received by the Depositary or the Custodian in exchange for, or in conversion of or replacement of or otherwise in respect of, such Deposited Securities shall, to the extent permitted by law, be treated as new Deposited Securities under the Deposit Agreement, and the ADRs shall, subject to the provisions of the Deposit Agreement and applicable law, evidence ADSs representing the right to receive such additional

 

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or replacement securities, if applicable.  In giving effect to such change, split-up, cancellation, consolidation or other reclassification of Deposited Securities, recapitalization, reorganization, merger, consolidation or sale of assets, the Depositary may, with the Company’s approval, and shall, if the Company shall so request, subject to the terms of the Deposit Agreement and receipt of an opinion of counsel to the Company satisfactory to the Depositary that such actions are not in violation of any applicable laws or regulations, (i) issue and deliver additional ADSs as in the case of a stock dividend on the Shares, (ii) amend the Deposit Agreement and the applicable ADRs, (iii) amend the applicable Registration Statement(s) on Form F-6 as filed with the Commission in respect of the ADSs, (iv) call for the surrender of outstanding ADRs to be exchanged for new ADRs, and (v) take such other actions as are appropriate to reflect the transaction with respect to the ADSs.  The Company agrees to, jointly with the Depositary, amend the Registration Statement on Form F-6 as filed with the Commission to permit the issuance of such new form ADRs.  Notwithstanding the foregoing, in the event that any security so received may not be lawfully distributed to some or all Holders, the Depositary may, with the Company’s approval, and shall, if the Company requests, subject to receipt of an opinion of Company’s counsel satisfactory to the Depositary that such action is not in violation of any applicable laws or regulations, sell such securities at public or private sale, at such place or places and upon such terms as it may deem proper and may allocate the net proceeds of such sales (net of (a) fees and charges of, and expenses incurred by, the Depositary and (b) taxes) for the account of the Holders otherwise entitled to such securities upon an averaged or other practicable basis without regard to any distinctions among such Holders and distribute the net proceeds so allocated to the extent practicable as in the case of a distribution received in cash pursuant to Section 4.1 of the Deposit Agreement.  The Depositary shall not be responsible for (i) any failure to determine that it may be lawful or practicable to make such securities available to Holders in general or any Holder in particular, (ii) any foreign exchange exposure or loss incurred in connection with such sale, or (iii) any liability to the purchaser of such securities.

 

(19)         Exoneration.  Neither the Depositary nor the Company shall be obligated to do or perform any act which is inconsistent with the provisions of the Deposit Agreement or incur any liability (i) if the Depositary or the Company shall be prevented or forbidden from, or subjected to any civil or criminal penalty or restraint on account of, or delayed in, doing or performing any act or thing required by the terms of the Deposit Agreement and this ADR, by reason of any provision of any present or future law or regulation of the United States, the Cayman Islands or any other country, or of any other governmental authority or regulatory authority or stock exchange, or on account of the possible criminal or civil penalties or restraint, or by reason of any provision, present or future, of the Articles of Association of the Company or any provision of or governing any Deposited Securities, or by reason of any act of God or war or other circumstances beyond its control (including, without limitation, nationalization, expropriation, currency restrictions, work stoppage, strikes, civil unrest, acts of terrorism, revolutions, rebellions, explosions and computer failure), (ii) by reason of any exercise of, or failure to exercise, any discretion provided for in the Deposit Agreement or in the Articles of Association of the Company or provisions of or governing Deposited Securities, (iii) for any action or inaction in reliance upon the advice of or information from legal counsel, accountants, any person presenting Shares for deposit, any Holder, any Beneficial Owner or authorized representative thereof, or any other person believed by it in good faith to be competent to give such advice or information, (iv) for the inability by a Holder or Beneficial Owner to benefit from

 

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any distribution, offering, right or other benefit which is made available to holders of Deposited Securities but is not, under the terms of the Deposit Agreement, made available to Holders of ADSs or (v) for any consequential or punitive damages for any breach of the terms of the Deposit Agreement.  The Depositary, its controlling persons, its agents, any Custodian and the Company, its controlling persons and its agents may rely and shall be protected in acting upon any written notice, request or other document believed by it to be genuine and to have been signed or presented by the proper party or parties.  No disclaimer of liability under the Securities Act is intended by any provision of the Deposit Agreement or this ADR.

 

(20)         Standard of Care.  The Company and the Depositary assume no obligation and shall not be subject to any liability under the Deposit Agreement or this ADR to any Holder(s) or Beneficial Owner(s), except that the Company and Depositary agree to perform their respective obligations specifically set forth in the Deposit Agreement and this ADR without negligence or bad faith.  Without limitation of the foregoing, neither the Depositary, nor the Company, nor any of their respective controlling persons, or agents, shall be under any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or in respect of the ADSs, which in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expense (including fees and disbursements of counsel) and liability be furnished as often as may be required (and no Custodian shall be under any obligation whatsoever with respect to such proceedings, the responsibility of the Custodian being solely to the Depositary).  The Depositary and its agents shall not be liable for any failure to carry out any instructions to vote any of the Deposited Securities, or for the manner in which any vote is cast or the effect of any vote, provided that any such action or omission is in good faith and in accordance with the terms of the Deposit Agreement.  The Depositary shall not incur any liability for any failure to determine that any distribution or action may be lawful or reasonably practicable, for the content of any information submitted to it by the Company for distribution to the Holders or for any inaccuracy of any translation thereof, for any investment risk associated with acquiring an interest in the Deposited Securities, for the validity or worth of the Deposited Securities or for any tax consequences that may result from the ownership of ADSs, Shares or Deposited Securities, for the credit-worthiness of any third party, for allowing any rights to lapse upon the terms of the Deposit Agreement, for the failure or timeliness of any notice from the Company, or for any action or failure to act by, or any information provided or not provided by, DTC or any DTC participant.

 

The Depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the Depositary or in connection with any matter arising wholly after the removal or resignation of the Depositary, provided that in connection with the issue out of which such potential liability arises the Depositary performed its obligations without negligence or bad faith while it acted as Depositary.

 

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(21)         Resignation and Removal of the Depositary; Appointment of Successor Depositary.  The Depositary may at any time resign as Depositary under the Deposit Agreement by written notice of resignation delivered to the Company, such resignation to be effective on the earlier of (i) the 90th day after delivery thereof to the Company (whereupon the Depositary shall be entitled to take the actions contemplated in Section 6.2 of the Deposit Agreement), or (ii) upon the appointment by the Company of a successor depositary and its acceptance of such appointment as provided in the Deposit Agreement.  The Depositary may at any time be removed by the Company by written notice of such removal, which removal shall be effective on the later of (i) the 90th day after delivery thereof to the Depositary (whereupon the Depositary shall be entitled to take the actions contemplated in Section 6.2 of the Deposit Agreement), or (ii) upon the appointment by the Company of a successor depositary and its acceptance of such appointment as provided in the Deposit Agreement.  In case at any time the Depositary acting hereunder shall resign or be removed, the Company shall use its best efforts to appoint a successor depositary, which shall be a bank or trust company having an office in the Borough of Manhattan, the City of New York.  Every successor depositary shall be required by the Company to execute and deliver to its predecessor and to the Company an instrument in writing accepting its appointment hereunder, and thereupon such successor depositary, without any further act or deed (except as required by applicable law), shall become fully vested with all the rights, powers, duties and obligations of its predecessor (other than as contemplated in Sections 5.8 and 5.9 of the Deposit Agreement).  The predecessor depositary, upon payment of all sums due it and on the written request of the Company, shall (i) execute and deliver an instrument transferring to such successor all rights and powers of such predecessor hereunder (other than as contemplated in Sections 5.8 and 5.9 of the Deposit Agreement), (ii) duly assign, transfer and deliver all right, title and interest to the Deposited Securities to such successor, and (iii) deliver to such successor a list of the Holders of all outstanding ADSs and such other information relating to ADSs and Holders thereof as the successor may reasonably request. Any such successor depositary shall promptly provide notice of its appointment to such Holders.  Any corporation into or with which the Depositary may be merged or consolidated shall be the successor of the Depositary without the execution or filing of any document or any further act.

 

(22)         Amendment/Supplement.  Subject to the terms and conditions of this paragraph 22, and Section 6.1 of the Deposit Agreement and applicable law, this ADR and any provisions of the Deposit Agreement may at any time and from time to time be amended or supplemented by written agreement between the Company and the Depositary in any respect which they may deem necessary or desirable without the prior written consent of the Holders or Beneficial Owners.  Any amendment or supplement which shall impose or increase any fees or charges (other than charges in connection with foreign exchange control regulations, and taxes and other governmental charges, delivery and other such expenses), or which shall otherwise materially prejudice any substantial existing right of Holders or Beneficial Owners, shall not, however, become effective as to outstanding ADSs until the expiration of thirty (30) days after notice of such amendment or supplement shall have been given to the Holders of outstanding ADSs.  Notice of any amendment to the Deposit Agreement or any ADR shall not need to describe in detail the specific amendments effectuated thereby, and failure to describe the specific amendments in any such notice shall not render such notice invalid, provided, however, that, in each such case, the notice given to the Holders identifies a means for Holders and Beneficial Owners to retrieve or receive the text of such amendment (i.e., upon retrieval from the

 

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Commission’s, the Depositary’s or the Company’s website or upon request from the Depositary).  The parties hereto agree that any amendments or supplements which (i) are reasonably necessary (as agreed by the Company and the Depositary) in order for (a) the ADSs to be registered on Form F-6 under the Securities Act or (b) the ADSs to be settled solely in electronic book-entry form and (ii) do not in either such case impose or increase any fees or charges to be borne by Holders, shall be deemed not to materially prejudice any substantial rights of Holders or Beneficial Owners.  Every Holder and Beneficial Owner at the time any amendment or supplement so becomes effective shall be deemed, by continuing to hold such ADSs, to consent and agree to such amendment or supplement and to be bound by the Deposit Agreement and this ADR, if applicable, as amended or supplemented thereby.  In no event shall any amendment or supplement impair the right of the Holder to surrender such ADS and receive therefor the Deposited Securities represented thereby, except in order to comply with mandatory provisions of applicable law.  Notwithstanding the foregoing, if any governmental body should adopt new laws, rules or regulations which would require an amendment of, or supplement to, the Deposit Agreement to ensure compliance therewith, the Company and the Depositary may amend or supplement the Deposit Agreement and this ADR at any time in accordance with such changed laws, rules or regulations.  Such amendment or supplement to the Deposit Agreement and this ADR in such circumstances may become effective before a notice of such amendment or supplement is given to Holders or within any other period of time as required for compliance with such laws, rules or regulations.

 

(23)         Termination.  The Depositary shall, at any time at the written direction of the Company, terminate the Deposit Agreement by distributing notice of such termination to the Holders of all ADSs then outstanding at least thirty (30) days prior to the date fixed in such notice for such termination.  If ninety (90) days shall have expired after (i) the Depositary shall have delivered to the Company a written notice of its election to resign, or (ii) the Company shall have delivered to the Depositary a written notice of the removal of the Depositary, and, in either case, a successor depositary shall not have been appointed and accepted its appointment as provided in Section 5.4 of the Deposit Agreement, the Depositary may terminate the Deposit Agreement by distributing notice of such termination to the Holders of all ADSs then outstanding at least thirty (30) days prior to the date fixed in such notice for such termination.  The date so fixed for termination of the Deposit Agreement in any termination notice so distributed by the Depositary to the Holders of ADSs is referred to as the “Termination Date”.  Until the Termination Date, the Depositary shall continue to perform all of its obligations under the Deposit Agreement, and the Holders and Beneficial Owners will be entitled to all of their rights under the Deposit Agreement.  If any ADSs shall remain outstanding after the Termination Date, the Registrar and the Depositary shall not, after the Termination Date, have any obligation to perform any further acts under the Deposit Agreement, except that the Depositary shall, subject, in each case, to the terms and conditions of the Deposit Agreement, continue to (i) collect dividends and other distributions pertaining to Deposited Securities, (ii) sell securities and other property received in respect of Deposited Securities, (iii) deliver Deposited Securities, together with any dividends or other distributions received with respect thereto and the net proceeds of the sale of any securities or other property, in exchange for ADSs surrendered to the Depositary (after deducting, or charging, as the case may be, in each case, the fees and charges of, and expenses incurred by, the Depositary, and all applicable taxes or governmental charges for the account of the Holders and Beneficial Owners, in each case upon the terms set forth in

 

A-22

 

Section 5.9 of the Deposit Agreement), and (iv) take such actions as may be required under applicable law in connection with its role as Depositary under the Deposit Agreement.  At any time after the Termination Date, the Depositary may sell the Deposited Securities then held under the Deposit Agreement and shall after such sale hold un-invested the net proceeds of such sale, together with any other cash then held by it under the Deposit Agreement, in an un-segregated account and without liability for interest, for the pro - rata benefit of the Holders whose ADSs have not theretofore been surrendered.  After making such sale, the Depositary shall be discharged from all obligations under the Deposit Agreement except (i) to account for such net proceeds and other cash (after deducting, or charging, as the case may be, in each case, the fees and charges of, and expenses incurred by, the Depositary, and all applicable taxes or governmental charges for the account of the Holders and Beneficial Owners, in each case upon the terms set forth in Section 5.9 of the Deposit Agreement), and (ii) as may be required at law in connection with the termination of the Deposit Agreement.  After the Termination Date, the Company shall be discharged from all obligations under the Deposit Agreement, except for its obligations to the Depositary under Sections 5.8, 5.9 and 7.6 of the Deposit Agreement.  The obligations under the terms of the Deposit Agreement of Holders and Beneficial Owners of ADSs outstanding as of the Termination Date shall survive the Termination Date and shall be discharged only when the applicable ADSs are presented by their Holders to the Depositary for cancellation under the terms of the Deposit Agreement.

 

(24)         Compliance with U.S. Securities Laws.  Notwithstanding any provisions in this ADR or the Deposit Agreement to the contrary, the withdrawal or delivery of Deposited Securities will not be suspended by the Company or the Depositary except as would be permitted by Instruction I.A.(1) of the General Instructions to the Form F-6 Registration Statement, as amended from time to time, under the Securities Act.

 

(25)         Certain Rights of the Depositary; Limitations.  Subject to the further terms and provisions of this paragraph (25) and Section 5.10 of the Deposit Agreement, the Depositary, its Affiliates and their agents, on their own behalf, may own and deal in any class of securities of the Company and its Affiliates and in ADSs.  In its capacity as Depositary, the Depositary shall not lend Shares or ADSs; provided, however, that the Depositary may (i) issue ADSs prior to the receipt of Shares pursuant to Section 2.3 of the Deposit Agreement and (ii) deliver Shares prior to the receipt of ADSs for withdrawal of Deposited Securities pursuant to Section 2.7 of the Deposit Agreement, including ADSs which were issued under (i) above but for which Shares may not have been received (each such transaction a “Pre-Release Transaction”).  The Depositary may receive ADSs in lieu of Shares under (i) above and receive Shares in lieu of ADSs under (ii) above.  Each such Pre-Release Transaction will be (a) subject to a written agreement whereby the person or entity (the “Applicant”) to whom ADSs or Shares are to be delivered (w) represents that at the time of the Pre-Release Transaction the Applicant or its customer owns the Shares or ADSs that are to be delivered by the Applicant under such Pre-Release Transaction, (x) agrees to indicate the Depositary as owner of such Shares or ADSs in its records and to hold such Shares or ADSs in trust for the Depositary until such Shares or ADSs are delivered to the Depositary or the Custodian, (y) unconditionally guarantees to deliver to the Depositary or the Custodian, as applicable, such Shares or ADSs and (z) agrees to any additional restrictions or requirements that the Depositary deems appropriate, (b) at all times fully collateralized with cash, U.S. government securities or such other collateral as the Depositary

 

A-23

 

deems appropriate, (c) terminable by the Depositary on not more than five (5) business days’ notice and (d) subject to such further indemnities and credit regulations as the Depositary deems appropriate.  The Depositary will normally limit the number of ADSs and Shares involved in such Pre-Release Transactions at any one time to thirty percent (30%) of the ADSs outstanding (without giving effect to ADSs outstanding under (i) above), provided, however, that the Depositary reserves the right to change or disregard such limit from time to time as it deems appropriate.  The Depositary may also set limits with respect to the number of ADSs and Shares involved in Pre-Release Transactions with any one person on a case by case basis as it deems appropriate.  The Depositary may retain for its own account any compensation received by it in conjunction with the foregoing.  Collateral provided pursuant to (b) above, but not earnings thereon, shall be held for the benefit of the Holders (other than the Applicant).

 

A-24

 

(ASSIGNMENT AND TRANSFER SIGNATURE LINES)

 

FOR VALUE RECEIVED, the undersigned Holder hereby sell(s), assign(s) and transfer(s) unto                                                              whose taxpayer identification number is                                                and whose address including postal zip code is                                 , the within ADS and all rights thereunder, hereby irrevocably constituting and appointing                                                    attorney-in-fact to transfer said ADS on the books of the Depositary with full power of substitution in the premises.

 

	
Dated:
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    	
By:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
NOTICE:   The signature of the Holder to this assignment must correspond with the name   as written upon the face of the within instrument in every particular,   without alteration or enlargement or any change whatsoever.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
If   the endorsement be executed by an attorney, executor, administrator, trustee   or guardian, the person executing the endorsement must give his/her full   title in such capacity and proper evidence of authority to act in such   capacity, if not on file with the Depositary, must be forwarded with this   ADR.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
SIGNATURE   GUARANTEED
    	
 
    	
 
    
	
 
    	
 
    	
All   endorsements or assignments of ADRs must be guaranteed by a member of a   Medallion Signature Program approved by the Securities Transfer   Association, Inc.
    

 

Legends

 

[The ADRs issued in respect of Partial Entitlement American Depositary Shares shall bear the following legend on the face of the ADR:  “This ADR evidences ADSs representing ‘partial entitlement’ ordinary shares of Cathay Industrial Biotech Ltd. and as such do not entitle the holders thereof to the same per-share entitlement as other ordinary shares (which are ‘full entitlement’ ordinary shares) issued and outstanding at such time.  The ADSs represented by this ADR shall entitle holders to distributions and entitlements identical to other ADSs when the ordinary shares represented by such ADSs become ‘full entitlement’ ordinary shares.”]

 

A-25

 

EXHIBIT B

 

FEE SCHEDULE

 

DEPOSITARY FEES AND RELATED CHARGES

 

All capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Deposit Agreement.

 

I.              Depositary Fees

 

The Company, the Holders, the Beneficial Owners and the persons depositing Shares or surrendering ADSs for cancellation agree to pay the following fees of the Depositary:

 

	
Service
    	
 
    	
Rate
    	
 
    	
By Whom Paid
    
	
(1)           Issuance of ADSs upon deposit of Shares (excluding issuances as a   result of distributions described in paragraph (4) below).
    	
 
    	
Up to U.S. $5.00 per 100 ADSs (or fraction thereof) issued.
    	
 
    	
Person depositing Shares, or person receiving ADS.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
(2)           Delivery of Deposited Securities against surrender of ADSs.
    	
 
    	
Up to U.S. $5.00 per 100 ADSs (or fraction thereof)   surrendered.
    	
 
    	
Person surrendering ADSs for purpose of withdrawal of   Deposited Securities or person to whom Deposited Securities are delivered.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
(3)           Distribution of cash dividends or other cash distributions (i.e., sale of rights and other   entitlements).
    	
 
    	
Up to U.S. $5.00 per 100 ADSs (or fraction thereof) held.
    	
 
    	
Person to whom distribution is made.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
(4)           Distribution of ADSs pursuant to (i) stock dividends or other free   stock distributions, or (ii) exercise of rights to purchase additional   ADSs.
    	
 
    	
Up to U.S. $5.00 per 100 ADSs (or fraction thereof) held.
    	
 
    	
Person to whom distribution is made.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
(5)           Distribution of securities other than ADSs or rights to purchase   additional ADSs (i.e., spin-off   shares).
    	
 
    	
Up to U.S. $5.00 per 100 ADSs (or fraction thereof) held.
    	
 
    	
Person to whom distribution is made.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
(6)           Depositary Services.
    	
 
    	
Up to U.S. $5.00 per 100 ADSs (or fraction thereof) held.
    	
 
    	
Person holding ADSs on applicable record   date(s) established by the Depositary.
    

 

B-1

 

II.            Charges

 

Holders, Beneficial Owners, persons depositing Shares and persons surrendering ADSs for cancellation and for the purpose of withdrawing Deposited Securities shall be responsible for the following charges:

 

(i)            taxes (including applicable interest and penalties) and other governmental charges;

 

(ii)           such registration fees as may from time to time be in effect for the registration of Shares or other Deposited Securities on the share register and applicable to transfers of Shares or other Deposited Securities to or from the name of the Custodian, the Depositary or any nominees upon the making of deposits and withdrawals, respectively;

 

(iii)          such cable, telex and facsimile transmission and delivery expenses as are expressly provided in the Deposit Agreement to be at the expense of the person depositing or withdrawing Shares or Holders and Beneficial Owners of ADSs;

 

(iv)          the expenses and charges incurred by the Depositary in the conversion of foreign currency;

 

(v)           such fees and expenses as are incurred by the Depositary in connection with compliance with exchange control regulations and other regulatory requirements applicable to Shares, Deposited Securities, ADSs and ADRs; and

 

(vi)          the fees and expenses incurred by the Depositary, the Custodian, or any nominee in connection with the servicing or delivery of Deposited Securities.

 

B-2

 

TABLE OF CONTENTS

 

	
ARTICLE I
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
DEFINITIONS
    	
 
    	
1
    
	
Section 1.1
    	
“ADS Record Date”
    	
1
    
	
Section 1.2
    	
“Affiliate”
    	
2
    
	
Section 1.3
    	
“American Depositary Receipt(s)”, “ADR(s)” and “Receipt(s)”
    	
2
    
	
Section 1.4
    	
“American Depositary Share(s)” and “ADS(s)”
    	
2
    
	
Section 1.5
    	
“Applicant”
    	
2
    
	
Section 1.6
    	
“Articles of Association”
    	
2
    
	
Section 1.7
    	
“Beneficial Owner”
    	
2
    
	
Section 1.8
    	
“Certificated ADS(s)”
    	
2
    
	
Section 1.9
    	
“Commission”
    	
3
    
	
Section 1.10
    	
“Company”
    	
3
    
	
Section 1.11
    	
“Custodian”
    	
3
    
	
Section 1.12
    	
“Deliver” and “Delivery”
    	
3
    
	
Section 1.13
    	
“Deposit Agreement”
    	
3
    
	
Section 1.14
    	
“Depositary”
    	
3
    
	
Section 1.15
    	
“Deposited Securities”
    	
3
    
	
Section 1.16
    	
“Dollars” and “$”
    	
3
    
	
Section 1.17
    	
“DTC”
    	
3
    
	
Section 1.18
    	
“DTC Participant”
    	
4
    
	
Section 1.19
    	
“Exchange Act”
    	
4
    
	
Section 1.20
    	
“Foreign Currency”
    	
4
    
	
Section 1.21
    	
“Full Entitlement ADR(s)”, “Full Entitlement ADS(s)” and “Full   Entitlement Share(s)”
    	
4
    
	
Section 1.22
    	
“Holder(s)”
    	
4
    
	
Section 1.23
    	
“Partial Entitlement ADR(s)”, “Partial Entitlement ADS(s)”   and “Partial Entitlement Share(s)”
    	
4
    
	
Section 1.24
    	
“Pre-Release Transaction”
    	
4
    
	
Section 1.25
    	
“Principal Office”
    	
4
    
	
Section 1.26
    	
“Registrar”
    	
4
    
	
Section 1.27
    	
“Restricted Securities”
    	
4
    
	
Section 1.28
    	
“Restricted ADR(s)”, “Restricted ADS(s)” and “Restricted   Shares”
    	
5
    
	
Section 1.29
    	
“Securities Act”
    	
5
    
	
Section 1.30
    	
“Share Registrar”
    	
5
    
	
Section 1.31
    	
“Shares”
    	
5
    
	
Section 1.32
    	
“Uncertificated ADS(s)”
    	
5
    
	
Section 1.33
    	
“United States” and “U.S.”
    	
5
    
	
 
    	
 
    	
 
    
	
ARTICLE II
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
APPOINTMENT OF DEPOSITARY; FORM OF RECEIPTS; DEPOSIT   OF SHARES; EXECUTION AND DELIVERY, TRANSFER AND SURRENDER OF RECEIPTS
    	
6
    
	
Section 2.1
    	
Appointment of Depositary
    	
6
    
	
Section 2.2
    	
Form and Transferability of ADSs
    	
6
    

 

 

	
Section 2.3
    	
Deposit of Shares
    	
8
    
	
Section 2.4
    	
Registration and Safekeeping of Deposited Securities
    	
9
    
	
Section 2.5
    	
Issuance of ADSs
    	
9
    
	
Section 2.6
    	
Transfer, Combination and Split-up of ADRs. Transfer
    	
10
    
	
Section 2.7
    	
Surrender of ADSs and Withdrawal of Deposited Securities
    	
11
    
	
Section 2.8
    	
Limitations on Execution and Delivery, Transfer, etc.   of ADSs; Suspension of Delivery, Transfer, etc.
    	
12
    
	
Section 2.9
    	
Lost ADRs, etc.
    	
13
    
	
Section 2.10
    	
Cancellation and Destruction of Surrendered ADRs;   Maintenance of Records
    	
13
    
	
Section 2.11
    	
Escheatment
    	
13
    
	
Section 2.12
    	
Partial Entitlement ADSs
    	
13
    
	
Section 2.13
    	
Certificated/Uncertificated ADSs
    	
14
    
	
Section 2.14
    	
Restricted ADSs
    	
16
    
	
 
    	
 
    	
 
    
	
ARTICLE III
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
CERTAIN OBLIGATIONS OF HOLDERS AND BENEFICIAL OWNERS OF   ADSs
    	
17
    
	
Section 3.1
    	
Proofs, Certificates and Other Information
    	
17
    
	
Section 3.2
    	
Liability for Taxes and Other Charges
    	
18
    
	
Section 3.3
    	
Representations and Warranties on Deposit of Shares
    	
18
    
	
Section 3.4
    	
Compliance with Information Requests
    	
19
    
	
Section 3.5
    	
Ownership Restrictions
    	
19
    
	
Section 3.6
    	
Reporting Obligations and Regulatory Approvals
    	
19
    
	
 
    	
 
    	
 
    
	
ARTICLE IV
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
THE DEPOSITED SECURITIES
    	
20
    
	
Section 4.1
    	
Cash Distributions
    	
20
    
	
Section 4.2
    	
Distribution in Shares
    	
20
    
	
Section 4.3
    	
Elective Distributions in Cash or Shares
    	
21
    
	
Section 4.4
    	
Distribution of Rights to Purchase Additional ADSs.
    	
22
    
	
Section 4.5
    	
Distributions Other Than Cash, Shares or Rights to Purchase   Shares.
    	
24
    
	
Section 4.6
    	
Distributions with Respect to Deposited Securities in Bearer   Form
    	
24
    
	
Section 4.7
    	
Redemption
    	
25
    
	
Section 4.8
    	
Conversion of Foreign Currency
    	
25
    
	
Section 4.9
    	
Fixing of ADS Record Date
    	
26
    
	
Section 4.10
    	
Voting of Deposited Securities
    	
26
    
	
Section 4.11
    	
Changes Affecting Deposited Securities
    	
28
    
	
Section 4.12
    	
Available Information
    	
29
    
	
Section 4.13
    	
Reports
    	
29
    
	
Section 4.14
    	
List of Holders
    	
29
    
	
Section 4.15
    	
Taxation
    	
29
    
	
 
    	
 
    	
 
    
	
ARTICLE V
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
THE DEPOSITARY, THE CUSTODIAN AND THE COMPANY
    	
31
    
	
Section 5.1
    	
Maintenance of Office and Transfer Books by the Registrar
    	
31
    

 

 

	
Section 5.2
    	
Exoneration
    	
31
    
	
Section 5.3
    	
Standard of Care
    	
32
    
	
Section 5.4
    	
Resignation and Removal of the Depositary; Appointment of   Successor Depositary
    	
33
    
	
Section 5.5
    	
The Custodian
    	
33
    
	
Section 5.6
    	
Notices and Reports
    	
34
    
	
Section 5.7
    	
Issuance of Additional Shares, ADSs etc
    	
35
    
	
Section 5.8
    	
Indemnification
    	
36
    
	
Section 5.9
    	
Fees and Charges of Depositary
    	
37
    
	
Section 5.10
    	
Pre-Release Transactions
    	
38
    
	
Section 5.11
    	
Restricted Securities Owners
    	
38
    
	
 
    	
 
    	
 
    
	
ARTICLE VI
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
AMENDMENT AND TERMINATION
    	
39
    
	
Section 6.1
    	
Amendment/Supplement
    	
39
    
	
Section 6.2
    	
Termination
    	
39
    
	
 
    	
 
    	
 
    
	
ARTICLE VII
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
MISCELLANEOUS
    	
41
    
	
Section 7.1
    	
Counterparts
    	
41
    
	
Section 7.2
    	
No Third-Party Beneficiaries
    	
41
    
	
Section 7.3
    	
Severability
    	
41
    
	
Section 7.4
    	
Holders and Beneficial Owners as Parties; Binding Effect
    	
41
    
	
Section 7.5
    	
Notices
    	
41
    
	
Section 7.6
    	
Governing Law and Jurisdiction
    	
42
    
	
Section 7.7
    	
Assignment
    	
44
    
	
Section 7.8
    	
Compliance with U.S. Securities Laws
    	
44
    
	
Section 7.9
    	
Cayman Islands Law References
    	
44
    
	
Section 7.10
    	
Titles and References
    	
44
    
	
 
    	
 
    	
 
    
	
EXHIBITS
    	
 
    	
 
    
	
 
    	
Form of ADR
    	
A-1
    
	
 
    	
Fee Schedule
    	
B-1Exhibit 4.4

 

 

THIRD AMENDED AND RESTATED SHAREHOLDERS

AGREEMENT

 

 

 

CONTENTS

 

	
Clause
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1.
    	
Definitions   And Interpretation
    	
 
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
Business   Of The Company
    	
 
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
3.
    	
Board   Of Directors
    	
 
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
4.
    	
Meetings   And Resolutions Of Shareholders
    	
 
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
5.
    	
Transfer   Of Shares
    	
 
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
6.
    	
Covenants
    	
 
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
7.
    	
Warranties   As To Authority
    	
 
    	
28
    
	
 
    	
 
    	
 
    	
 
    
	
8.
    	
Registration   Rights
    	
 
    	
28
    
	
 
    	
 
    	
 
    	
 
    
	
9.
    	
Non-Competition   By Shareholders
    	
 
    	
38
    
	
 
    	
 
    	
 
    	
 
    
	
10.
    	
General   Obligations Of Shareholders
    	
 
    	
39
    
	
 
    	
 
    	
 
    	
 
    
	
11.
    	
Prevalence   Of Agreement
    	
 
    	
39
    
	
 
    	
 
    	
 
    	
 
    
	
12.
    	
Entire   Agreement
    	
 
    	
39
    
	
 
    	
 
    	
 
    	
 
    
	
13.
    	
Duration   And Termination
    	
 
    	
39
    
	
 
    	
 
    	
 
    	
 
    
	
14.
    	
Confidentiality
    	
 
    	
40
    
	
 
    	
 
    	
 
    	
 
    
	
15.
    	
No   Partnership
    	
 
    	
41
    
	
 
    	
 
    	
 
    	
 
    
	
16.
    	
Release   And Indulgence
    	
 
    	
41
    
	
 
    	
 
    	
 
    	
 
    
	
17.
    	
Assignment
    	
 
    	
41
    
	
 
    	
 
    	
 
    	
 
    
	
18.
    	
Force   Majeure
    	
 
    	
41
    
	
 
    	
 
    	
 
    	
 
    
	
19.
    	
Counterparts
    	
 
    	
42
    
	
 
    	
 
    	
 
    	
 
    
	
20.
    	
Notices   And General
    	
 
    	
42
    
	
 
    	
 
    	
 
    	
 
    
	
SCHEDULE   1
    	
ORDINARY   SHAREHOLDERS OF THE COMPANY
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
SCHEDULE   2
    	
SERIES   A PREFERRED SHAREHOLDERS
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
SCHEDULE   3
    	
SERIES   B PREFERRED SHAREHOLDERS
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
SCHEDULE   4
    	
SERIES   C PREFERRED SHAREHOLDERS
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
EXHIBIT A GROUP COMPANIES
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
APPENDIX A DEED OF RATIFICATION AND ACCESSION
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
APPENDIX B INDEMNITY LETTER
    	
 
    	
 
    
					

 

 

THIS THIRD AMENDED AND RESTATED SHAREHOLDERS AGREEMENT is made as of October 19, 2007

 

BETWEEN:

 

(1)           THE PERSONS whose names are set out in Schedule 1 (collectively, the “Existing Ordinary Shareholders” and individually, an “Existing Ordinary Shareholder”);

 

(2)           THE PERSONS whose names are set out in Schedule 2 (collectively, the “Series A Preferred Shareholders” and individually, a “Series A Preferred Shareholder”);

 

(3)           THE PERSONS whose names are set out in Schedule 3 (collectively, the “Series B Preferred Shareholders” and individually, a “Series B Preferred Shareholder”);

 

(4)           THE PERSONS whose names are set out in Schedule 4 (collectively, the “Series C Preferred Shareholders” and individually, a “Series C Preferred Shareholder”);

 

(5)           Cathay Industrial Biotech Ltd. (the “Company”), a company incorporated in the Cayman Islands with its registered office at Corporate Filing Services Limited, 4th Floor, Harbour Centre, P.O. Box 613, George Town, Grand Cayman, Cayman Islands; and

 

(6)           Xiucai Liu (“Dr. Liu”), an individual whose primary place of business is located at Building 5, 3F, 1690 Cailun Road, Zhangjiang Hightech Park, Shanghai, People’s Republic of China.

 

WHEREAS:

 

(A)          The Parties desire to enter into this Agreement to regulate the affairs of the Company and their relationship inter se as shareholders of the Company on the terms and conditions hereinafter set out;

 

(B)           This Agreement is entered into by the parties hereto pursuant to a Series C Preferred Shares Subscription Agreement dated as of October 19, 2007 (the “Series C Subscription Agreement”) made between the Company and the Series C Preferred Shareholders.

 

IT IS AGREED as follows:

 

1.             DEFINITIONS AND INTERPRETATION

 

1.1         Definitions

 

In this Agreement and the Schedules, unless the subject or context otherwise requires, the following words and expressions shall have the following meanings respectively ascribed to them:

 

“Act” means the Companies Law (as amended) of the Cayman Islands;

 

“Adjustment Payment” means an amount equal to the difference between (x) the Series C Price (as defined below) multiplied by the total number of Ordinary Shares issuable to an Investor upon conversion of the Series C Preferred Shares held by such Investor at the time of and in connection with the closing of an initial public offering of the Company (the

 

1

 

“Conversion Shares”) minus (y) the Offering Price (as defined below) multiplied by the total number of Conversion Shares issuable to such Investor.

 

“Affiliate” with respect to a person, means any person that is Controlled by, Controls, or is under common Control with that person, in each case for so long as such Control continues and:

 

(a)   in the case of an individual includes (i) his immediate family; (ii) the trustees of any trust of which he or his immediate family is a beneficiary or, in the case of a discretionary trust, is a discretionary object; and (iii) any company in which he and his immediate family together (directly or indirectly) have an interest of 25% or more of its voting share capital; and

 

(b)   in the case of a company includes (i) an associated company of the first-mentioned company; and (ii) any company where the first-mentioned company and its associated companies together (directly or indirectly) have an interest of 25% or more of its voting share capital.

 

“Applicable Laws” means, with respect to any person, all applicable provisions of all (a) constitutions, treaties, statutes, laws (including the common law), codes, rules, regulations, ordinances or orders of any governmental authority, (b) governmental approvals and (c) notices, orders, decisions, injunctions, judgments, awards and decrees of or agreements with any governmental authority;

 

“Articles” means the Third Amended and Restated Articles of Association of the Company, as may be amended, modified or supplemented from time to time;

 

“Auditors” means the auditors of the Company;

 

“Board” means the Board of Directors of the Company;

 

“Business Days” means any weekdays (other than Saturdays and Sundays) when banks are generally open for the transaction of domestic business in Cayman Islands, City of New York, State of New York, and the People’s Republic of China;

 

“Business Plan” means the business plan provided by the Company to the Investors;

 

“Capital” means Capital International Private Equity Fund V, L.P. and CGPE V, L.P;

 

“Capital Reorganisation” means, in relation to any of the Group Companies, the reorganization of any Group Company’s share capital and, includes every issue by way of capitalisation of profits or reserves, every issue by way of rights issue, every consolidation or sub-division or reduction of capital or capital dividend, any amalgamation or reconstruction relating to or affecting equity share capital;

 

“Closing” or “Closing Date” is as defined in the Series C Subscription Agreement;

 

“Competitor” means any company which has as its primary business one or more of the following: (i) production of long-chain diacids, such as DC-12, by way of a bio-fermentation process, (ii) production of butanol by way of a bio-fermentation process, or (iii) with respect to

 

2

 

any company which operates predominantly in the People’s Republic of China (solely for purposes of this definition, excluding Taiwan, the Macau Special Administrative Region and the Hong Kong Special Administrative Region), production of any corn-process derived products, in the case of each of (i), (ii) and (iii), utilizing production platform technologies similar to those used by the Company and/or its affiliates;

 

“Confidential Information” means, subject to Clause 14.1.1, (i) all information and other material supplied by any party hereto to another (including any information and other material supplied to any director nominated by such other party to the Board as of right hereunder) which is marked “confidential”, is Subject Proprietary Information, or is by its nature intended to be exclusively for the knowledge of the recipient alone, (ii) any information concerning the business transactions, financial arrangements or business of any party hereto or any person with whom such party is in a confidential relationship with regard to the matter in question, and (iii) to the extent disclosed to the Investors prior to October 19, 2007 secret or highly sensitive information which relates to the organization, business, finances or affairs of such party or any of its clients’ or customers’, including, without limitation, information contained in any memoranda or documentation provided to the Investors in respect of the sale or supply of any products;

 

“Consent” means any consent, notice, approval, ratification, authorization, waiver, permit, grant, concession, agreement, license, exception or order of, registration, certificate, declaration or filing with, or report or notice to, any person, including, without limitation, any governmental approvals secured from any governmental entity;

 

“Control” means, with respect to a person, the possession, directly or indirectly, of power to direct or cause the direction of management or policies of such person (whether through ownership of more than 50% of the voting power of securities of such person through the power to appoint a majority of the members of the board of directors or similar governing body of such person, or through contractual arrangements or otherwise).  The terms “Controlled” and “Controlling” shall have meanings correlative to the foregoing;

 

“Deed of Ratification and Accession” means the deed in the form and on the terms set out in Appendix A;

 

“Directors” means the Directors of the Company;

 

“Dr. Liu” means Dr. Xiucai Liu;

 

“Existing Ordinary Shareholders” means the Ordinary Shareholders holding the Ordinary Shares of the Company as of the date hereof;

 

“GAAP” means generally accepted accounting principals, consistently applied;

 

“Goldman Sachs” means GSPS Asia Limited; 

 

“Gramineae” means Gramineae Holding Company Limited;

 

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“Group Companies” or individually “Group Company” means the Company and any person (other than a natural person) from time to time Controlled thereby, including without limitation, the companies set out in Exhibit A;

 

“Holder” means the holders of the Registrable Securities;

 

“Intellectual Property” includes patents, know-how, inventions (whether patentable or not), trade secrets and other confidential information, copyrights, trademarks, service marks, trade dress rights, logos, domain names, business names, registration of and applications to register any of the aforesaid items, rights in the nature of any of the aforesaid items in any country, rights in the nature of unfair competition rights and rights to sue for passing off;

 

“Investors” mean Goldman Sachs, Gramineae, the New Horizon Funds, China Biochem, Capital, HBM BioVentures (Cayman) Ltd., HBM BioMed China, Stone Group Holdings Limited, Verbier International Inc., BioVeda China Fund II, L.P., Northern Light Venture Fund, L.P., Northern Light Strategic Fund, L.P., Northern Light Partners Fund, L.P., New Enterprise Associates 12, Limited Partnership, and MS China 8 Limited;

 

“Key Managers” or “Key Management”  means the Chief Executive Officer of the Company, the Chief Financial Officer of the Company, any Vice President of the Company or any employee of any Group Company who reports directly to the Board of Directors or the Chief Executive Officer, it being understood that, on the date hereof, the Key Managers consist solely of Xiucai Liu, Paul Caswell, Qixian Zhang, Li Zhu, Bao Lv, Hui Huang and Xiaodong Shen;

 

“Liquidation” means a consolidation, merger, amalgamation or scheme of arrangement of a Group Company, or a sale, license or other disposition of all or substantially all of the assets of a Group Company, or any transaction or series of related transactions in which a majority of the voting capital of, or Control in, a Group Company is transferred;

 

“Memorandum” means the Third Amended and Restated Memorandum of Association of the Company, as amended, modified or supplemented from time to time;

 

“Medy” means Medy Ltd., a British Virgin Islands Company;

 

“New Horizon Funds” means New Horizon Evergreen Investment Co., Ltd and GM Investment Company Limited, collectively, and each, a “New Horizon Fund”;

 

“Offering Price” means the price per share of Shares of the Company sold to the public in any initial public offering of the Company;

 

“Ordinary Shares” means ordinary shares of the Company with par value of US$0.001 per share, each of which shall be entitled to one vote on all matters subject to shareholders’ votes;

 

“Ordinary Shareholders” means the persons holding Ordinary Shares;

 

“Parties” means the parties to this Agreement and “Party” means any one of them;

 

“Permitted Repurchase” is defined in Clause 6.17;

 

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“Permitted Transferee” means a transferee of Shares transferred pursuant to Clause 5.5 of this Agreement;

 

“PRC” means the Peoples Republic of China, solely for purposes of this Agreement, excluding Taiwan, the Special Administrative Region of Macau and the Special Administrative Region of Hong Kong;

 

“Preferred Shareholders” means the holders of the Series A Preferred Shares, the holders of the Series B Preferred Shares and the holders of the Series C Preferred Shares;

 

“Preferred Shares” means the Series A Preferred Shares, the Series B Preferred Shares and the Series C Preferred Shares;

 

“Qualified IPO” shall mean the closing of the sale of shares to the public at a price greater than or equal to US$4.27 per share (subject to appropriate adjustment in the event of any share dividend, share split, combination or other similar recapitalization with respect to the Ordinary Shares) in a firmly underwritten initial public offering of the Company on an internationally recognised stock exchange that is reasonably acceptable to the holders of at least two-thirds of the issued and outstanding Shares, voting together as a class,  with gross proceeds to the Company of not less than US$150 million;

 

“Registrable Securities” shall mean (i) the Preferred Shares, (ii) the Ordinary Shares issuable or issued upon conversion of the Preferred Shares, (iii) any Shares issued as (or issuable upon the conversion, exchange or exercise of any Ordinary Share derivative) a dividend or other distribution with respect to, or in exchange for, or in replacement of the shares referenced in (i) and (ii);

 

“Required Approval” means the affirmative vote or written consent of at least two-thirds of the Directors then in office, including the affirmative vote of at least three Preferred Directors.

 

“SEC”means the Securities Exchange Commission of the United States or any other federal agency at the time administering the Securities Act;

 

“Securities Act” means the Securities Act of 1933 of the United States of America, as amended from time to time;

 

“Senior Executives” is defined in Clause 6.4.1;

 

“Series A Preferred Shares” means the Series A Participating Convertible Preference Shares of US$0.001 each in the capital of the Company and having the rights attached thereto as set out in the Memorandum and Articles;

 

“Series A Subscription Agreement” means the share subscription agreement dated April 24, 2006, entered into among the Company and certain other parties thereto for the subscription and purchase of Series A Preferred Shares;

 

“Series B Preferred Shares” means the Series B Participating Convertible Preference Shares of US$0.001 each in the capital of the Company and having the rights attached thereto as set out in the Memorandum and Articles;

 

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“Series B Price” means US$2.03 per share;

 

“Series B Subscription Agreement” means the share subscription agreement dated November 3, 2006 entered into among the Company and certain other parties thereto for the subscription and purchase of Series B Preferred Shares;

 

“Series C Preferred Shares” means the Series C Participating Convertible Preference Shares of US$0.001 each in the capital of the Company and having the rights attached thereto as set out in the Memorandum and Articles;

 

“Series C Price” means US$5.35 per share;

 

“Series C Subscription Agreement” means the share subscription agreement dated October 19, 2007 entered into among the Company and certain other parties thereto for the subscription and purchase of Series C Preferred Shares;

 

“Shareholders” means the holders of the Shares;

 

“Shares” means the Ordinary Shares, Series A Preferred Shares, Series B Preferred Shares, Series C Preferred Shares and any other shares from time to time issued by the Company;

 

“Specified Business” means the development, manufacturing, distribution or sale either of (1) long-chain diacids and any derivatives thereof; or (2) biomass-based or derived other raw materials-based products of any kind produced using bio-process manufacturing methods; or (3) other products, technology or services associated with the industrial biotechnology or chemical industries;

 

“Subject Proprietary Information” means secret or highly sensitive information which relates to a party’s technology, designs, documentation, manuals, pricing strategies, accounts, dealers’ lists, customer lists, marketing studies, drawings, notes, memoranda and the information contained therein, any information therein in respect of trade secrets, technology and technical or other information relating to the development, manufacture, clinical testing, analysis, or proposed development, of any products by such party; and plans for the development of such products;

 

1.2         Interpretation

 

1.2.1        Any reference in this Agreement to “Recitals”, “Clauses” and the “Schedules” and the “Appendix” are to the recitals and clauses of, and the schedules and the appendix to, this Agreement.

 

1.2.2        The headings are for convenience only and shall not affect the interpretation of this Agreement.

 

1.2.3        Unless the context otherwise requires or permits, references to the singular number shall include references to the plural number and vice versa; references to natural persons shall include bodies corporate and vice versa; and words denoting any gender shall include all genders.

 

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1.2.4        Any reference in this Agreement to “this Agreement” and to any other documents or agreement includes all amendments, additions and variations thereto agreed between the respective parties thereto.

 

1.2.5        Any reference in this Agreement or the Appendices to a statutory provision shall include that provision and any regulations made in pursuance thereof as from time to time modified or re-enacted, whether before or after the date of this Agreement.

 

1.2.6        References to “financial year” are to a period in respect of which an audited profit and loss account of the Company has been or is to be prepared for the purpose of laying before the Company at its annual general meeting, whether that period is a year or not.

 

1.2.7        References to “RMB” are to the lawful currency of the People’s Republic of China, references to “US Dollars” and to “US$” are to the lawful currency of the United States of America.

 

1.2.8        The expressions “holding company”, “subsidiary”, and “related corporation” shall bear the meanings respectively ascribed thereto in the Act.

 

1.2.9        References to “person” includes any individual, company, corporation, firm, partnership, joint venture, association, organisation, trust, state or agency of a state (in each case, whether or not having separate legal personality);

 

1.2.10      The expression “associated companies” means, with respect to any given company, such other companies as the given company and/or its subsidiaries now or from time to time hold not less than 20% but not more than 50% of the issued share capital, and “associated company” means any of the associated companies.

 

1.2.11      Terms and references used in this Agreement, which are defined or construed in the Series C Subscription Agreement but are not defined or construed in this Agreement, shall have the same meaning and construction as in the Series C Subscription Agreement.

 

1.2.12      The term “including” is to be construed without limitation.

 

2.             BUSINESS OF THE COMPANY

 

2.1         Business

 

The Shareholders agree that the Company shall carry on the Specified Business.

 

2.2         Conduct of Business

 

Each of the Parties shall use its respective reasonable endeavours, without being required to incur any financial obligations (other than as expressly set out in this Agreement) to promote the interests of the Company.

 

Each of the Parties shall exercise its powers in relation to the Company and/or the Group Companies so as to ensure that each Group Company:

 

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2.2.1        carries on only the Specified Business;

 

2.2.2        carries on its business and conducts its affairs for its own benefit pursuant to the policies set out herein or laid down from time to time by the Board;

 

2.2.3        shall cause to be kept full and proper accounting records relating to its business, undertakings and affairs, which records shall be made available at all reasonable times for inspection by the Directors by prior appointment during office hours not more frequent than once per calendar quarter; and

 

2.2.4        shall provide the Auditors with all such information and explanation as they may reasonably require.

 

2.3         Pre-emptive Right

 

Except in the circumstances listed below, each Shareholder shall exercise its voting rights in the Company and take such steps as for the time being lie within its powers to procure that the issue by the Company of any shares, warrants or any form of securities shall before issuance be offered for subscription in the first instance to each Shareholder in proportion as nearly as practicable to its then valid and effective shareholding percentage in respect of Shares on an as-converted basis and any offer of securities not accepted by a Shareholder shall be reallocated among and offered to the other Shareholders on a pro rata basis:

 

2.3.1        any securities issued or capable of being issued upon conversion of Series A Preferred Shares, Series B Preferred Shares and Series C Preferred Shares;

 

2.3.2        any securities issued pursuant to the ESOP and the existing share option plan or share option plan to be adopted by the Board from time to time;

 

2.3.3        any shares issued in connection with any share split or share dividend;

 

2.3.4        any shares offered by the Company to the public pursuant to a Qualified IPO;

 

2.3.5        the issuance of shares in connection with a bona fide business acquisition of or by the Company, whether by merger, consolidation, sale of assets, sale or exchange of stock or otherwise, duly approved by the Board of Directors and/or the Shareholders, as applicable; and

 

2.3.6        any Series C Preferred Shares issued pursuant to the Series C Subscription Agreement and securities issued upon conversion or exercise thereof.

 

In any event, no securities shall be issued to any party who is not a Shareholder for the time being unless such party executes and delivers to the Company and each Shareholder a Deed of Ratification and Accession.

 

Each Shareholder shall exercise its pre-emptive right under this Clause 2.3 within ten (10) Business Days of the receipt of a notification in writing from the Company of the proposed issuance of any shares, warrants or any form of securities of the Company. The failure of each Shareholder to respond in writing to the Company within the above-mentioned ten (10)

 

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Business-Day period shall be deemed an irrevocable waiver by such Shareholder of its pre-emptive right with respect to such issuance.

 

2.4         The Parties hereby agree that each Series B Preferred Shareholder who purchases the Series C Preferred Shares under the Series C Subscription Agreement is doing so pursuant to the exercise of its pre-emptive rights under the Prior Agreement (as defined in Clause 12 hereof) and the Second Amended and Restated Articles of Association of the Company (the “Series B Pre-emptive Right”). Such Series B Preferred Shareholder hereby acknowledges that by entering into this Agreement, it (i) has no other right to exercise the Series B Pre-emptive Right with respect to the Series C Preferred Shares issued pursuant to the Series C Subscription Agreement, and (ii) otherwise waives any rights it may have in respect of the exercise of the Series B Pre-emptive Right, including without limitation any right to receive notice in connection with the Series B Pre-emptive Right.

 

3.             BOARD OF DIRECTORS

 

3.1         The Parties agree that the Board shall consist of nine (9) Directors. Subject to the rights, powers and restrictions of the Shareholders set forth below to appoint their respective nominees as the Directors to serve on the Board, Directors shall be elected by the Shareholders at large (any series or class of the Preference Shares to vote on an as-converted basis with the Ordinary Shares and not as a separate series or class). Without prejudice to the foregoing, the following Shareholders shall have the following rights to appoint Directors to serve on the Board:

 

3.1.1      For so long as at least 50% of the Series A Preferred Shares originally issued pursuant to the Series A Subscription Agreement remain issued and outstanding (subject to adjustment for share splits, reverse share splits, share dividends, recapitalization and the like), the holders of Series A Preferred Shares shall be entitled to appoint one (1) Director to the Board of Directors (the “Series A Director”), who shall initially be Dr. Zhi Yang.

 

3.1.2      For so long as Goldman Sachs and its Affiliates continue to own at least 50% of the Series B Preferred Shares issued to Goldman Sachs pursuant to the Series B Subscription Agreement (subject to adjustment for share splits, reverse share splits, share dividends, recapitalization and the like), Goldman Sachs shall be entitled to appoint one (1) Director to the Board, and for so long as each of the New Horizon Funds and its Affiliates continue to own at least 50% of the Series B Preferred Shares issued to such New Horizon Fund pursuant to the Series B Subscription Agreement (subject to adjustment for share splits, reverse share splits, share dividends, recapitalization and the like), the New Horizon Funds, acting together, shall be entitled to appoint one (1) Director to the Board (collectively, the “Series B Directors”). The initial Series B Directors shall be Terence Ting and Yu Jianming.

 

3.1.3      For so long as Capital International Private Equity Fund V, L.P. and its Affiliates or Permitted Transferees continue to own at least 50% of the Series C Preferred Shares originally issued pursuant to the Series C Subscription Agreement (subject to adjustments for share splits, reverse share splits, share dividends, recapitalization and the like), Capital International Private Equity Fund V, L.P. shall be entitled to appoint one (1) Director to the Board of Directors (the “Series C Director” and together with the Series A Director and the Series B Directors, the “Preferred Directors”), who shall initially be Mr. James Ho.

 

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3.1.4      The holders of a majority of the issued and outstanding Ordinary Shares of the Company shall be entitled to appoint five (5) directors (the “Management Directors”), who shall initially be Dr. Liu, Paul Caswell, Qixian Zhang, Li Zhu and Hui Huang.

 

3.2         The Company shall deliver to each of the Directors (as may be appointed in accordance with Clause 3.1) an indemnity letter(s) duly executed by the Company substantially in the form set out in Appendix B.

 

3.3         In the case of any vacancy in the office of a Director elected as of right by a Shareholder under Clause 3.1, that Shareholder may elect a successor to hold office for the unexpired term of the Director whose place is vacant, provided, however, that in the case that any of the Preferred Directors shall cease to serve as a Director due to the failure of the relevant Series of Preferred Shareholders to meet the requirements of Clause 3.1.1, Clause 3.1.2 or Clause 3.1.3, as the case may be, the remaining Directors may, by affirmative vote of a majority thereof (or, if there is only one Director remaining, such remaining Director may) elect a successor to hold office for the unexpired term of the Director whose place was vacated.

 

3.4         The right of appointment conferred on a Shareholder under Clause 3.1 shall include the right of that Shareholder to remove, with or without cause, at any time prior to expiration of such Director’s term of office from office such person appointed by that Shareholder as a Director, and the right of that Shareholder at any time and from time to time to determine the period during which such person shall hold the office of Director and to replace any Director appointed by that Shareholder who ceases to be a Director for any reason. No Director may be removed from office except by the respective Shareholder appointing him or pursuant to Clause 3.3 above. Each appointment or removal of a Director pursuant to this Clause 3.4 above shall be in writing and signed by or on behalf of the Shareholder appointing or removing such Director and shall be delivered to the registered office for the time being of the Company.

 

3.5         A Director shall be entitled at any time and from time to time to appoint any person to act as his alternate and to terminate the appointment of such person. Such alternate Director shall be entitled while holding office as such to receive notices of meetings of the Board. An alternate Director may attend any meeting of the Board whether or not the Director appointing him is present and generally to exercise all the powers, rights, duties and authorities and to perform all functions of his appointor but he shall not be entitled to vote at any meeting of the Board at which the Director appointing him is present. In the event that the Director appointing him is not present at any meeting of the Board, such alternate Director shall be entitled to exercise the vote of the Director appointing him at that meeting and if such alternate Director represents more than one Director, such alternate Director shall be entitled to one vote for every Director he represents who is not present at such meeting.

 

3.6         The Chairman of the Board shall be Dr. Liu, for as long as Dr. Liu holds a majority of the voting power of the capital shares of Medy. The Chairman of the Board shall not have a second or casting vote at any meeting of the Board or at any general meeting of the Company.

 

3.7         Meetings of the Board shall be held at such times as the Chairman or any two (2) Directors shall determine. A general meeting of the Board shall be held at least once in every three (3) months, and a special meeting of the Board shall be held from time to time as the Chairman or

 

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any two Directors shall determine. Not less than ten (10) Business Days’ written notice (excluding the day of notice and the day of the meeting), in the case of a general meeting, and as may be decided by the Chairman or any two (2) of the Directors, but in any event, not less than four (4) Business Days’ written notice (excluding the day of notice and the day of the meeting) in the case of any special meeting of the Board should be given to all Directors. In each case of notice provided pursuant to this Clause 3.7, the notice shall specify the date, place and time, of the meeting and the business to be transacted thereat, and shall be accompanied by an agenda stating in reasonable detail the matters to be considered at such meeting together with all papers to be circulated or presented to the same.

 

For purposes of this Clause 3.7, notice of a meeting of the Board shall be deemed to be duly given to a Director if it is given to such Director by facsimile (with confirmation of error-free transmission) or internationally recognized express courier at the last known address of such Director or any other address given by such Director to the Company for this purpose.

 

Board meetings shall be held at the headquarters office of the Company located in Shanghai, the People’s Republic of China, or such other locations as may be determined by the Chairman of the Board.

 

3.8         All or any of the Directors may participate in a meeting of the Board by means of a conference telephone or any communication equipment which allows all persons participating in the meeting to hear each other. A person so participating shall be deemed to be present in person at the meeting and, in respect of the Directors only, shall be entitled to vote or be counted in a quorum accordingly. Such a meeting shall be deemed to take place where the largest group of those participating is assembled, or, if there is no such group, where the Chairman of the meeting then is situated.

 

3.9         No meeting of the Board may proceed to business nor transact any business unless a quorum is present at the start and throughout such meeting or adjournment thereof. The quorum at a meeting of Directors necessary for the transaction of any business of the Company shall be five (5) Directors (or their respective alternates), at least two (2) of whom shall be Preferred Directors (or their respective alternates). In the event that a meeting of Directors duly convened cannot be held for lack of a quorum, the meeting shall be adjourned to the same time and the same place, on a day being not less than three (3) days after the original meeting. For purposes of such reconvened meeting, it shall be sufficient to constitute a quorum that there shall be five (5) Directors (or their respective alternates) present. Subject to sub-clauses 3.11.3, 3.11.4 and 4.4 below and the rights and powers of any class or series of Preferred Shares, any action, determination or resolution of the Board shall require the affirmative vote of a simple majority of Directors present at a meeting at which a valid quorum pursuant to this Clause 3.9 is present.

 

3.10       Minutes of all meetings of the Board and of the boards of directors of the Group Companies shall be circulated to all Directors and their alternates as soon as reasonably practicable after the holding of such meetings, and copies of any resolution in writing adopted by the directors thereof shall be circulated to all Directors as soon as reasonably practicable after the adoption thereof.

 

3.11       Voting at Meetings and Written Resolutions

 

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3.11.1    Subject to sub-clause 3.11.3, 3.11.4 and Clause 4.4 below and the rights and powers of any class or series of Preferred Shares, all resolutions of the Directors at a meeting or adjourned meeting of the Directors shall be adopted by a simple majority vote of the Directors present.

 

3.11.2    A resolution in writing circulated to all Directors and signed by all the Directors shall be as valid and effectual as if it had been a resolution passed at a meeting of the Board duly convened and held with the requisite quorum. Any such resolution may consist of several documents in the like form, each signed by one or more of the Directors, and any resolution bearing the signature of any Director dispatched by facsimile transmission shall constitute a document for this purpose.

 

3.11.3    Notwithstanding anything to the contrary herein, none of the acts in this sub-clause 3.11.3 shall be taken by the Company (or where relevant, another Group Company) without the Required Approval of the Directors:

 

(a)   any Group Company, or combination of Group Companies, entering into any acquisition or disposition transactions with underlying value over RMB100,000,000;

 

(b)   any alteration to the size of the share capital of the Company reserved for the ESOP and the existing share option plan or share option plan to be adopted by the Board of Directors from time to time (collectively, the “Incentive Plans”) and any other terms and conditions of the Incentive Plan;

 

(c)   any Group Company, or combination of Group Companies, incurring, satisfying or discharging any indebtedness or making payment of any obligation which exceeds RMB80,000,000, other than in the ordinary course of business consistent with past practice;

 

(d)   any Group Company, or combination of Group Companies, creating or issuing, or allowing to come into being, any mortgage or charge or standard security over the assets of any Group Companies which exceeds RMB200,000,000, save for charges (including liens) arising by operation of law in the ordinary course of business;

 

(e)   any Group Company, or combination of Group Companies, making any loan or advance to any person if such loan or advance shall cause the aggregate amount of all such loans and advances outstanding at any moment to exceed RMB50,000,000, or issuing or agreeing to issue any security, guarantee or indemnity for indebtedness or obligations of any person;

 

(f)    any Group Company, or combination of Group Companies, incurring any capital expenditure in any financial year in excess of RMB200,000,000;

 

(g)   any transaction or dealings (other than a Permitted Repurchase) between any Shareholder, Key Management and their Affiliates, on the one hand, and any Group Company, on the other hand; provided that any Director appointed by

 

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such Shareholder, Key Manager or relevant Affiliate shall recuse himself or herself from such vote;

 

(h)   the appointment, removal, or any amendment or supplement to or waiver of the terms of employment for any Key Manager;

 

(i)    adoption of or amendment to any Business Plan or any strategic and overall management plan, or any annual budget, of the Company or any of the other Group Companies;

 

(j)    any change in the accounting policies and procedures of the Company or any of the Group Companies unless otherwise required by Applicable Law;

 

(k)   any transfer, assignment, disposal or grant of a license of any material Intellectual Property rights or trade secrets relating to existing or proposed production technologies of any of Group Company, or combination thereof, that would materially adversely affect the Company;

 

(l)    any action in connection with the dissolution, Liquidation, or winding up of a Group Company;

 

(m)  Any declaration or payment of any dividends or other distribution of profits of any Group Company (whether in cash or specie);

 

(n)   the selection of, and any change in, any person retained by any Group Company (other than employees hired thereby in the ordinary course) to provide tax advisory services thereto or to assist in the preparation of tax returns therefor;

 

(o)   the re-domestication, continuance or removal of any Group Company to any other jurisdiction;

 

(p)   the entry into any transaction or series of related transactions by any of the Group Companies, or by any combination of the Group Companies, which has as an objective and/or the effect of securing a tax benefit therefor; or

 

(q)   the tax-motivated restructuring of any of the Group Companies, or any combination of the Group Companies, or of the business, operations or practices thereof.

 

3.11.4    Notwithstanding anything to the contrary, none of the matters in this sub-clause 3.11.4 shall be taken by the Company (or where relevant, another Group Company) without the unanimous approval or written consent of the Board of Directors:

 

(a)   any change in the nature and/or scope of the business activities currently being conducted and proposed to be conducted by the Group Companies or any investments made outside such business; and

 

(b)   any action leading to an initial public offering of the Company’s securities which is not a Qualified IPO, it being understood that the Board has

 

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unanimously approved the activities of the Company as of the date hereof relating to the proposed initial public offering of the Company’s securities on the New York Stock Exchange or the Nasdaq Global Market.

 

3.12       Each Shareholder agrees to exercise, or refrain from exercising, any voting rights or other powers of control (including causing their Director nominees, if any, to vote) so as to ensure the passing of any and every resolution necessary to give effect to the provisions of this Clause 3 and likewise to ensure that no resolution is passed which does not accord with such provisions.

 

3.13       The Company shall maintain an Audit Committee and a Compensation Committee. The Parties agree that the Audit Committee and Compensation Committee shall each consist of three (3) members of the Board (who may sit on one or both committees) and, to the extent practicable under the circumstances, that both such committees shall only be consultative in nature and shall only implement or approve such actions as are specifically delegated to such committees by the Board. The Directors appointed by the holders of Preferred Shares shall jointly have the right to appoint: (i) at least two (2) members to the Audit Committee and (ii) at least one (1) member to the Compensation Committee. The undersigned holders of Series A Preferred Shares hereby acknowledge that this provision expressly amends and restates Section 6.9 of the Series A Preferred Shares Subscription Agreement, dated as of April 24, 2006, by and between the Company and the parties identified therein, so that such section shall be null and void following the execution and delivery of this Agreement.

 

4.             MEETINGS AND RESOLUTIONS OF SHAREHOLDERS

 

4.1         Notwithstanding anything in the Articles to the contrary, no business shall be transacted at any general meeting of the Company unless a quorum is present at the commencement of the meeting. Shareholders holding not less than fifty percent (50%) of the voting power of the Shares shall constitute the quorum, provided that no such quorum shall be deemed constituted unless a representative of the Investors attends such shareholders meeting. If no quorum is present by the appointed time for the meeting, the meeting shall stand adjourned to the same day in the next week at the same time and place. For purposes of such reconvened meeting, it shall be sufficient to constitute a quorum that there shall be Shareholders present representing not less than fifty percent (50%) in voting power of the Shares.

 

4.2         Minutes of all general meetings of Shareholders of the Company shall be circulated to all Shareholders as soon as reasonably practicable after the holding of such meetings, and copies of any resolution in writing adopted by the Shareholders shall be circulated to all Shareholders as soon as reasonably practicable after the adoption thereof. Minutes of all general meetings of any Group Company (other than the Company) shall be circulated to all Directors as soon as reasonably practicable after the holding of such meetings, and copies of any resolution in writing adopted by the shareholders thereof shall be circulated to all the Directors as soon as practicable after the adoption thereof.

 

4.3         Subject to Clause 4.4 below and any additional requirements specified by any Applicable Law, all resolutions of the Shareholders on any matter may be passed at any meeting of Shareholders by a simple majority of the votes cast by the Shareholders present, whether in person or by proxy.

 

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4.4         None of the matters below shall be taken by the Company (or where relevant, another Group Company) unless the affirmative vote of a holder or holders holding no less than eighty percent (80%) in voting power of the Preferred Shares then outstanding, voting together as a single class, has been obtained:

 

4.4.1        the consummation of any amalgamation or merger of a Group Company with any corporation, firm or other body at any time prior to November 20, 2009;

 

4.4.2        any action in connection with the dissolution, Liquidation, or winding up of a Group Company;

 

4.4.3        any Capital Reorganization relating to the Company which materially adversely affect the rights of the Preferred Shareholders, it being understood that, notwithstanding anything to the contrary in this Agreement, a Capital Reorganization shall not be deemed to include the issuance of Ordinary Shares by reason of a dividend, split, division, share combination or other distribution on the Ordinary Shares;

 

4.4.4        any amendment to or waiver of the provisions of the Memorandum and/or the Articles of the Company (or the constitutional documents of any other Group Company) or any other actions which materially adversely affect the rights and powers enjoyed by the holders of any Preferred Shares described in the terms of such Shares;

 

4.4.5        the repurchase or redemption by the Company of any of the Shares other than a Permitted Repurchase or pursuant to contractual rights to repurchase or redeem unvested Ordinary Shares held by employees, directors, advisors or consultants of the Company or its subsidiaries upon termination of their employment or service to the Company or its subsidiaries; or

 

4.4.6        the issuance of any new equity securities.

 

5.             TRANSFER OF SHARES

 

5.1         Restrictions on Transfer

 

5.1.1        Notwithstanding anything to the contrary in this Agreement, no holder of the Shares may, either directly or indirectly, transfer Shares held by it or otherwise sell, dispose of or deal with all or any part of its interest in such Shares except where the transfer is made in accordance with the provisions of this Clause 5.

 

5.1.2        Subject to Clauses 5.1.2(a), 5.1.2(b) and 5.1.2(c), until the earlier of (x) the Company’s initial public offering, (y) the third (3rd) anniversary of the Closing Date and (z) the Company’s filing of a registration statement under the Securities Act pursuant to Clause 8.1, Dr. Liu shall remain the ultimate beneficial owner of any Shares from time to time held directly or indirectly thereby or retain ultimate voting control of any Shares from time to time held by Medy and, inasmuch, Dr. Liu shall not directly or indirectly transfer, sell, encumber or otherwise grant any other person rights with respect to such Shares other than such rights as may have been granted to the other Shareholders pursuant to this Agreement. Without limiting the foregoing, Dr. Liu shall ensure that Medy will not, either directly or indirectly, transfer, sell,

 

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encumber or otherwise grant any rights with respect to such Shares, and Dr. Liu shall ensure that the shareholders of Medy shall not transfer, sell, encumber or otherwise grant any rights with respect to any of the equity in Medy. Notwithstanding anything to the contrary in this Clause 5.1.2:

 

(a)   Dr. Liu shall be permitted to transfer any Shares (whether held by Dr. Liu or Medy) or share capital of Medy held by Dr. Liu to any member of his immediate family without compliance with Clauses 5.2 and 5.3 below, provided that Dr. Liu shall retain voting control over such shares.

 

(b)   Dr. Liu shall be permitted to cause the sale of up to 10% of the current Shares held by Medy to fund personal or family health care related expenses or otherwise to deal with other family emergencies so long as in connection with such sale, the other Shareholders (but not the Company) shall have been given an opportunity to exercise their rights of first refusal pursuant to Clause 5.2, it being understood, however, that such transfers shall not be subject to the co-sale restrictions pursuant to Clause 5.3.

 

(c)   Dr. Liu shall be permitted to cause the sale or transfer of up to 100% of the current Shares held by Medy without compliance with Clause 5.3 below in the event that either (i) Dr. Liu’s employment is terminated as a result of a disability that renders Dr. Liu unable to perform his duties under the terms of his employment agreement or (ii) other than where such termination is authorized, approved or ratified by two or more Management Directors, the Company terminates Dr. Liu’s employment with the Company; provided, that the other Shareholders (but not the Company or Medy) shall be given an opportunity to exercise their rights of first refusal pursuant to Clause 5.2 in connection with any such sale or transfer.

 

5.1.3        Without prejudice to Clause 5.1.1 and except where the transfer is made pursuant to the provisions of Clause 5.5,

 

(a)   A Shareholder (other than Medy or an Investor) shall be prohibited from transferring its Shares or otherwise selling, disposing of or dealing with all or any part of its interest in such Shares unless and until (x) in connection with such transaction, the Company and the other Shareholders shall have been given an opportunity to exercise their rights of first refusal pursuant to Clause 5.2 and (y) the rights of co-sale conferred by Clause 5.3 shall have been exhausted.

 

(b)   an Investor shall be prohibited from transferring its Shares or otherwise selling, disposing of or dealing with all or any part of its interest in such Shares unless (x) such transaction shall fall under Clause 5.5 or (y) the obligations of such Shareholder in respect of the rights of first offer conferred by Clause 5.4 have been met.

 

5.1.4        Any transfers of Shares made in contravention of this Clause 5 shall be null and void.

 

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5.1.5        No Shareholder shall, without the prior written consent of the Company, create or have outstanding any pledge, lien, charge or other encumbrance or security interest on or over any Share or any part of its interest in any Shares.

 

5.1.6        Notwithstanding anything in this Agreement to the contrary and except as permitted in Clause 5.5.1, from the date hereof until the Effective Time (as defined below), no Holder of Series C Preferred Shares (or any equity securities of the Company issued upon conversion of the Series C Preferred Shares) shall, directly or indirectly, offer for sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of (including, without limitation, any short sale), or enter into any contract, option or other arrangement or understanding with respect to, or consent to the offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or other disposition of, any or all of the Series C Preferred Shares (or any equity securities of the Company issued upon conversion of the Series C Preferred Shares) or any interest therein held by such Holder. For purposes hereof, the term “Effective Time” means the earlier of (i) the expiration of the twelve (12) month period following the date of the Qualified IPO and (ii) the eighteen (18) month anniversary of the Closing Date.

 

5.2         Right of First Refusal

 

5.2.1        Without prejudice to Clause 5.1, every Shareholder (other than an Investor) who desires to transfer any Share or Shares (the “Transferor”) other than in connection with a Permitted Transfer (as defined below) shall give to the Company and the Shareholders other than the Transferor (the “Other Shareholders”) a notice in writing of such desire (a “Transfer Notice”), which notice shall specify:

 

(a)   the identity of the buyer to whom the Transferor proposes to transfer such shares (the “Buyer”);

 

(b)   the number of Shares proposed to be transferred (the “Sale Shares”);

 

(c)   the price offered by the Buyer for each Sale Share (the “Transferor’s Price”); and

 

(d)   the other terms and conditions of such sale (if any) (the “Prescribed Terms”).

 

5.2.2        Subject as hereinafter mentioned, a Transfer Notice shall first constitute an offer by the Transferor for the sale of the Sale Shares to the Company at the Transferor’s Price and on the Prescribed Terms (if any) in the order of preference as described in the provisions below. Subject to Clause 5.2.7 below, a Transfer Notice shall not be revocable except with the sanction of the Board.

 

5.2.3        Upon its receipt of the Transfer Notice, and within thirty (30) days of the date of dispatch of the notice (the “First Refusal Period”), the Company shall have the option to purchase the Sale Shares (being all or any thereof).

 

5.2.4        Subject to Clause 5.2.3 above, upon the exercise of the Company’s option to purchase the Sale Shares in accordance with Clause 5.2.3 above, the Transferor shall be bound to transfer the Sale Shares to the Company at the time and place specified by the

 

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Company by the delivery of duly executed transfer forms together with the share certificates in respect of such Sale Shares and, if it shall fail to do so, a person appointed by the Board shall be deemed to have been appointed attorney of the Transferor with full power to execute, complete and deliver, in the name and on behalf of the Transferor, transfers of the Sale Shares to the Company against payment of the price to the Transferor.

 

5.2.5        Within ten (10) days after expiration of the First Refusal Period, the Transferor will give written notice to the Other Shareholders specifying either (i) that all of the Sale Shares have been subscribed by the Company; or (ii) that the Company has not subscribed all of the Offered Shares. Each of the Other Shareholder will have the right, exercisable upon written notice to the Transferor and each Other Shareholder within thirty (30) days after the expiration of the First Refusal Period (the “Second Refusal Period”) of its election to exercise its right of refusal hereunder.

 

5.2.6        Each Other Shareholder will have the right to purchase that number of remaining Sale Shares (the “Second Refusal Allotment”) equivalent to the product obtained by multiplying the aggregate remaining number of the Sale Shares by a fraction, the numerator of which is the number of Ordinary Shares held by such Other Shareholder (on an as-converted basis) at the time of the transaction and the denominator of which is the total number of Ordinary Shares owned by all the Other Shareholders (on an as-converted basis) at the time of the transaction. Any Other Shareholder will not have a right to purchase any of the Sale Shares unless it exercises its right of refusal within the Second Refusal Period to purchase up to all of its Second Refusal Allotment of the remaining Sale Shares. To the extent that any other Shareholder does not exercise its right of refusal to the full extent of its Second Refusal Allotment, the Transferor and the Other Shareholders shall, within five (5) days after the end of the Second Refusal Period, make such adjustments to the Second Refusal Allotment of each exercising Other Shareholder so that any remaining Sale Shares may be allocated to those Other Shareholders exercising their rights of first refusal on a pro rata basis.

 

5.2.7        During the two (2) months following the expiry of the Second Refusal Period, the Transferor shall be at liberty to transfer any Sale Share acquired at the Closing not purchased by the Company or the Other Shareholders to the Buyer and at any price (not being less than the Transferor’s Price) and on terms not more favourable than the Prescribed Terms (if any) except that the Transferor may provide representations, warranties, covenants and indemnities customary for such transfer to the Buyer.

 

5.3         Co-Sale Right

 

5.3.1        Tag-Along Rights: Subject to the provisions herein, if at any time any Shareholder other than an Investor (“Tag-Along Transferor”) desires to sell or transfer (“Transfer”) its Shares to a Buyer or any third party other than in connection with a Permitted Transfer, each other Shareholder shall, after its exhaustion of their rights of first refusal under Clause 5.2, be entitled to exercise tag-along rights in accordance with the following procedure:

 

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(a)   the Tag-Along Transferor shall notify each other Shareholder in writing, of such proposed Transfer, and of the terms and conditions of the proposed Transfer, including the price per Share at which the Transferor proposes to Transfer such Shares (“Transfer Price”);

 

(b)   within fourteen (14) Business Days of the date of such notice, each other Shareholder shall notify the Tag-Along Transferor (a “Tag-Along Notice”) if it wishes to include its Shares in the proposed Transfer. If any other Shareholder fails to do so, that Shareholder shall be deemed to have waived its rights under this Clause in respect of such Transfer;

 

(c)   if any other Shareholder (a “Participating Selling Shareholder”) so notifies the Tag-Along Transferor, that Shareholder shall have the right to include such number of its Shares specified in the Tag-Along Notice in the proposed Transfer at a price per Share equal to the Transfer Price (in the case where the shares are of the same series as the Tag-Along Transferor’s shares) or at a price per Share on a deemed converted basis equal to the equivalent transfer price (in the case where the shares are of a different series from the Tag-Along Transferor’s shares) and on the same terms and conditions as those applicable to the Tag-Along Transferor. The maximum number of Shares a Shareholder can include in the proposed Transfer is limited to, or if the Shareholder fails to specify the number of Shares in the Tag-Along Notice, then the number of Shares deemed specified in the Tag-Along Notice shall be, a pro rata portion of its Shares which is determined by multiplying (1) the number of Shares specified in the Tag-Along Notice by (2) a fraction where the numerator is the number of Ordinary Shares (on an as-if converted basis) of which that Participating Selling Shareholder is the registered holder of, or in respect of which it is unconditionally entitled to be registered as the holder of, and the denominator is the sum of all Ordinary Shares (on an as-if converted basis) of which the Tag-Along Transferor and all the Participating Selling Shareholders participating in such tag-along are registered or unconditionally entitled to be registered as holders of; and

 

(d)   the Tag-Along Transferor shall procure that such Transfer be effected and the number of Shares the Tag-Along Transferor may actually Transfer shall be reduced by the lesser of (1) the number of Shares specified in the Tag-Along Notice and (2) the number of pro rata Shares determined pursuant to Clause 5.3.1(c).

 

5.4         Right of First Offer

 

5.4.1        Subject to Clause 5.5, any Investor (an “Offering Holder”) who desires to transfer any Share or Shares (the “Offered Shares”) shall give to the Company and the other Shareholders (the “Non-Transferring Shareholders”) a notice in writing of such desire (an “Offering Notice”), which notice shall include a description of the Offered Shares, including, without limitation, the number of Shares to be sold or transferred.

 

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5.4.2        Each of the Company and the Non-Transferring Shareholders shall have a right, within thirty (30) days after delivery of the Offering Notice, to make an offer in writing (a “Purchase Offer”) to purchase all, but not less than all, of the Offered Shares. Any Purchase Offer shall set forth the consideration and the material terms and conditions upon which the party making the Purchase Offer proposes to acquire the Offered Shares. Within fifteen (15) days of receiving a timely Purchase Offer, the Offering Holder shall accept or decline the Purchase Offer in writing, and prior to expiration of such 15-day period, the Purchase Offer shall not be rescinded.

 

5.4.3        If the Offering Holder shall accept a Purchase Offer, then the Offering Holder and the party making such Purchase Offer shall use their good faith efforts to conclude, within ninety (90) days after the date of the Offering Notice, a sale between them of the Offered Shares pursuant to the terms and conditions of the Purchase Offer. If the Offering Holder and the party making the Purchase Offer have not timely concluded the sale of the Offered Shares within such 90 day period, the Purchase Offer shall be deemed to have been rescinded, and neither the party making such Purchase Offer or the Offering Holder shall have any further obligation to consummate a sale of the Offered Shares pursuant to the terms and conditions of such Purchase Offer.

 

5.4.4        In respect of any Offering Notice for Offered Shares, following the Release (as defined below) of such Offered Shares from the right of first offer contained in this Clause 5.4, the Offering Holder may either withdraw its intention to sell the Offered Shares or, for a period of 120 days from the date of the Release, the Offering Holder shall have the right to conclude a binding sale and purchase agreement with a third party to purchase the Offered Shares; provided that the terms and conditions of any sale of the Offered Shares to a third party including, without limitation, the consideration for such sale shall be more favourable to the Offering Holder than the terms and conditions contained in any timely Purchase Offer. If the Offering Holder has not concluded a binding sale and purchase agreement for the Offered Shares within such 120-day period, the Offering Holder shall not further be entitled to enter into a binding agreement to transfer the Offered Shares to any third party without first again permitting the other parties hereto to exercise their right of first offer under this Clause 5.4. In respect of any Offering Notice for Offered Shares, “Release” shall mean the earlier of (i) the date that the 30-day period for making Purchase Offers hereunder shall expire without the Offering Holder having received a Purchase Offer, (ii) the date that the Offering Holder shall have declined to accept all timely Purchase Offers, or (iii) the date that any Purchase Offer accepted by the Offering Holder may subsequently be rescinded pursuant to Clause 5.4.3.

 

5.5         Permitted Transfers

 

5.5.1        Transfers to related corporations

 

(a)   Notwithstanding anything to the contrary in Clause 5, any Investor that is a corporation or other legal entity (the “Transferor Corporation”) shall be entitled to transfer all or only some of the Shares to any of its Affiliates or any other entity managed by the same fund manager (“Affiliated Entity”),

 

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provided that such Shares shall forthwith be re-transferred to that Transferor Corporation or transferred to another Affiliate or Affiliated Entity of that Transferor Corporation if at any time after a transfer of Shares is effected pursuant to this Clause 5.5.1, the transferee ceases to be an Affiliate or an Affiliated Entity of that Transferor Corporation.

 

(b)   It shall be the duty of a Transferor Corporation to immediately notify the Board in writing if the transferee of Shares pursuant to this Clause 5.5.1 ceases to be an Affiliate or Affiliated Entity of the Transferor Corporation and in such event both the Transferor Corporation and the transferee jointly and severally undertake to procure and ensure that all (and not some only) of the Shares held by the transferee are forthwith transferred or re-transferred in compliance with this Clause 5.5.1.

 

(c)   Notwithstanding anything to the contrary in this Agreement, any transfer of Shares pursuant to this Clause 5.5.1 shall not relieve or discharge the Transferor Corporation from any of its obligations under this Agreement and the Transferor Corporation shall continue to be subject to the obligations under this Agreement and be liable to the other Parties as if no such transfer had occurred and the liability of the Transferor Corporation hereunder shall be joint and several with its Affiliate or Affiliated Entity which holds those Shares pursuant to any transfer under this Clause 5.5.1, provided however that this provision shall cease to apply upon the disposal and transfer by that transferee of all the relevant Shares as permitted under this Agreement other than by a transfer or re-transfer pursuant to the provisions of this Clause 5.5.1.

 

(d)   For any transferor that is, directly or indirectly, a fund, any transfer of Shares to such fund’s limited partners is permitted, so long as such limited partners appoint the same agent to represent such limited partners in connection with this Agreement.

 

5.5.2        Additional Permitted Transfers. Notwithstanding the foregoing or anything to the contrary herein, the provisions of Clauses 5.1, 5.2 and 5.3 shall not apply in the case of a Shareholder that is a natural person, upon a transfer of Shares by such Shareholder made for bona fide estate planning purposes (a “Permitted Transfer”), either during his or her lifetime or on death by will or intestacy to his or her spouse, child (natural or adopted), or any other direct lineal descendant of such Shareholder (or his or her spouse) (all of the foregoing collectively referred to as “family members”), or any other relative/person approved by the unanimous consent of the Board of Directors of the Company, or any custodian or trustee of any trust, partnership or limited liability company for the benefit of, or the ownership interests of which are owned wholly by, such Shareholder or any such family members, provided that such Shareholder shall deliver prior written notice to the Investors of such transfer and such Shares shall at all times remain subject to the terms and restrictions set forth in this Agreement and such transferee shall, as a condition to such issuance, deliver a counterpart signature page to this Agreement

 

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as confirmation that such transferee shall be bound by all the terms and conditions of this Agreement as a Shareholder (but only with respect to the securities so transferred to the transferee); and provided, further, that such transfer is made pursuant to a transaction in which there is no consideration actually paid for such transfer.

 

5.6         Transfer Procedures

 

Notwithstanding any of the provisions of this Agreement to the contrary, the Company shall not register any transfer of any Shares unless and until:

 

5.6.1        all stamp duties or other transfer taxes payable in respect of the transfer of the Shares have been paid;

 

5.6.2        where the Shares are transferred to a third-party transferee in compliance with Clause 5.1.2(b), 5.1.2(c), 5.1.3(a) or 5.1.3(b), the Transferor shall cause the transferee (if not already a Party to this Agreement) to execute and deliver to the Company a Deed of Ratification and Accession and upon the delivery to the Company of such Deed of Ratification and Accession executed by the transferee and the registration of the Shares in the name of the transferee, the transferee shall be bound by and shall be entitled to the benefit of this Agreement in place of the Transferor; and

 

5.6.3        where the transfer of the Shares is effected pursuant to Clause 5.5.1 above, the Affiliate or Affiliated Entity, as the case may be, stated as transferee in the instrument of transfer with respect to those Shares executes and delivers to the Company a Deed of Ratification and Accession.

 

6.             COVENANTS

 

6.1         Preparation of Accounts:

 

The Company will ensure that, except as otherwise specified in Clause 6.2, its audited consolidated annual financial statements to be delivered by it pursuant to Clause 6.2 are prepared in accordance with generally accepted accounting standards, principles and practice in the United States (US GAAP).

 

6.2         Information

 

6.2.1        The Company shall provide to the Preferred Shareholders the following:

 

(a)           as soon as available, and in any event within 45 days after the end of any quarter, its most recent unaudited consolidated and consolidating financial statements and management accounts (including balance sheets, profit and loss statements and cash flow statements) for such quarter, prepared in accordance with PRC GAAP and certified by an officer of the Company as being true and correct;

 

(b)           as soon as available, and in any event within 120 days after the end of each financial year, its audited consolidated financial statements (including balance

 

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sheets, profit and loss statements, cash flow statements and the notes thereto) for such year; prepared in accordance with US GAAP;

 

(c)           as soon as available, and in any event within 120 days after the end of each financial year, a reconciliation of the differences between the unaudited consolidated financial statements prepared under PRC GAAP for the last quarter of such year and the audited consolidated financial statements prepared under US GAAP for such year;

 

(d)           as soon as available, and in any event no later than December 31st of the preceding financial year, an annual Business Plan (including annual budgets), approved by the Board; and

 

(e)           as soon as practicable, written notice of any material change in the financial and business affairs of any Group Company.

 

6.2.2        The Company shall permit each Investor, together with its lawyers, accountants, advisors and representatives, at such Investor’s expense and upon reasonable advance written notice to the Company, to visit and inspect any of the properties and examine the books of account and records of the Group Companies and discuss the affairs, finances and accounts of the Group Companies with the directors, officers, employees, accountants, legal counsel and investment bankers of the Group Companies, all at such working hours as may be reasonably requested by the Investor; provided, however, that the Company shall have no obligation to provide any (a) information or material that contains any Subject Proprietary Information of the Company, the disclosure of which to a Competitor would, in the reasonable judgment of the Company, be materially detrimental to the strategic interests of the Company or (b) information or material which, in the reasonable judgment of the Company’s outside counsel, would eliminate the attorney-client privilege between the Company and its legal advisors so long as such information or material is provided to the Series B Director appointed by Goldman Sachs. Without limiting the foregoing, the Company shall permit each Investor, together with its lawyers, accountants, advisors and representatives, at such Investor’s expense, to inspect all tax returns for the Group Companies, together with all supporting materials or materials used in the preparation of such tax returns, and to discuss the Group Companies’ tax policies with the directors, officers, employees, accountants, legal counsel and investment bankers of the Group Companies, all at such working hours as may be reasonably requested by the Investor. Notwithstanding anything to the contrary provided in this Clause 6.2.2, no Investor shall seek to exercise its right hereunder to conduct an audit of the properties, affairs, finances and accounts of the Group Companies in accordance with the provisions of this Clause 6.2.2 more than once an in any financial quarter, it being understood that any Investor exercising its rights under this Clause 6.2.2 shall ensure that the duration and scope of any such audit shall be commercially reasonable in all respects.

 

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6.3         Litigation

 

The Company shall promptly inform the Board and keep the Board fully advised of all litigation, arbitration or administrative proceedings to which a Group Company may become a party, which, if adversely concluded against any such Group Company, would reasonably be expected to have a material adverse effect on such Group Company.

 

6.4         Management and Control

 

The Company shall:

 

6.4.1        ensure that unless already appointed at the date of this Agreement, none of the Group Companies shall appoint any senior executives whose annual remuneration exceeds RMB 500,000, in the case that such executive is paid in RMB, or US$200,000, in the case that such executive is paid in US dollars (a “Senior Executive”) without the approval of the Board or Compensation Committee, as applicable;

 

6.4.2        ensure that no person other than the Shareholders is entitled to share the distributions from the Company.

 

6.4.3        obtain the prior approval of the Board (including as required by Clause 3.11.3(h)) or Compensation Committee, as applicable, for any proposed:

 

(a)           salary increments, bonus, ex-gratis payments, fees and other remuneration and benefits-in-kind for the benefit of any Senior Executive or Key Manager which was not contracted for or if contracted for, is subject to the discretion of the relevant Group Company or its management; and

 

(b)           change in a Senior Executive’s or Key Manager’s terms of employment.

 

6.5         Taxes

 

6.5.1        The Company shall ensure that the Group Companies shall promptly pay all corporate tax, property tax, sales tax, goods and services tax, import tax and other governmental, state and provincial taxes and levies against them or any of their property or assets, except those which are being disputed.

 

6.5.2        None of the Group Companies will take any action inconsistent with the treatment of the Company as a corporation for U.S. federal income tax purposes and will not elect to be treated as an entity other than a corporation for U.S. federal income tax purposes.  Upon written notification by Goldman Sachs to the Company that any of the Group Companies should elect to be classified as a partnership or disregarded entity for U.S. federal income tax purposes (an “Election”), the Company shall make, or shall cause to be made, the relevant Election by filing, or by causing to be filed, Internal Revenue Service (“IRS”) Form 8832 (or any successor form) with respect to the relevant Group Company; it being understood that the Company shall not undertake any such action in the event either (i) the Company has received advance written notice from any Shareholder indicating that such action would be materially detrimental to such Shareholder based on reasonable advice from counsel or (ii) the Company has reasonably determined that such action would be materially detrimental to it based on

 

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advice from counsel. The Company shall not permit the Election to be terminated or revoked without the written consent of Goldman Sachs.

 

(a)           The Company agrees to make available to the Preferred Shareholders, as reasonably requested, the books and records of any of the Group Companies and such information as may in the view of any Preferred Shareholder to be pertinent to any Group Company’s status or potential status as a Controlled Foreign Corporation (“CFC”) or Passive Foreign Investment Company (“PFIC”) so as to permit the Preferred Shareholders to make a determination as to whether one or more such companies is a CFC or PFIC and, as reasonably requested, to assist any Preferred Shareholder to make all necessary tax elections, file appropriate tax returns and comply with all necessary reporting requirements (including the reporting of Subpart F Income or the provision of a “PFIC Annual Information Statement” to the Preferred Shareholders).

 

(b)           The Company will comply and will cause each Group Company to comply with all record-keeping, reporting, and other requests necessary for the Company and such Group Company to allow the Preferred Shareholders to comply with any Applicable Laws related to U.S. federal income tax.

 

(c)           All the costs and expenses actually incurred which are associated with the Company carrying out the provisions in this Clause 6.5.2 (excluding the general operation costs, expenses and overhead not derived from the Company carrying out such provisions) will be borne by the Preferred Shareholders on a pro rata basis according to the number of Ordinary Shares held thereby (on an as-if converted basis).

 

6.6         Related and Inter-company Transactions

 

The Company shall ensure that any transaction between the Group Companies, on the one hand, and their directors, shareholders or the Affiliates of any of the foregoing, on the other hand, shall at all times be carried out at arm’s length basis and subject to the prior approval of the Board or the Audit Committee, as applicable.

 

6.7         Compliance with Consents and Approvals

 

The Company shall comply, in all material respects, with all necessary Consents whatsoever for it to perform and comply with all its obligations under this Agreement and shall maintain such Consents in full force and effect and will not do or omit to do any act which will in any way vitiate the full effect thereof.

 

6.8         Protection of Intellectual Property

 

The Company shall, and shall procure that all of its employees shall, take all necessary and desirable action to protect the Intellectual Property of the Group Companies including, without limitation, using secure storage, making applications for the registration of such Intellectual Property (where applicable) and taking active steps to defend and prosecute for infringements of such Intellectual Property.

 

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6.9         Non-Compete, Invention Assignment and Confidentiality Agreements

 

As a condition to employment for any management-level employee, the Company should enter into a confidentiality, non-competition, no-raid, invention assignment and employment agreement with such employee.

 

6.10       Insurance

 

The Company shall and shall cause each other Group Company to maintain customary insurance suitable for the operation of the business as determined by the Board from time to time. The Company shall, and shall cause each other Group Company to, pay all insurance premiums payable by them.

 

6.11       Internal Accounting Controls

 

The Company shall maintain a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with the authorisations by the Board, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with applicable GAAP and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with management’s general or specific authorisation, and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

 

6.12       Prohibited Payments

 

The Company shall ensure that each Group Company and the officers, directors, employees, or representatives of each Group Company shall use only legitimate practices in commercial operations and in promoting the Group’s position on issues before governmental authorities, and that no officer, director, employee, or representative of a Group Company shall pay, offer, promise or authorize the payment, directly or indirectly through any other person or firm, of any monies or anything of value to:

 

6.12.1      any person or firm employed by or acting for or on behalf of any customer, whether private or governmental, or

 

6.12.2      any government official or employee or any political party or candidate for political office or any or employee of, or any person acting on behalf of, a public international organization, for the purpose of inducing or rewarding any favorable action by the customer in any commercial transaction or in any governmental matter (any such act being a “Prohibited Payment”). A Prohibited Payment shall not include the payment of reasonable and bona fide expenditures, such as travel and lodging expenses, which are directly related to the promotion, demonstration or explanation of products or services, or the execution or performance of a contract with a foreign government or agency thereof; provided such payments are permissible under local law and customer guidelines.

 

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6.13       Action by Shareholders

 

Each Shareholder shall vote its Shares and any other voting securities of the Company, and shall procure its Director nominees, if any, to vote, and shall take all the other necessary or desirable actions within its control (including without limitation, attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings) to implement the provisions of this Clause 6.

 

6.14       Listing

 

6.14.1      The Company shall use its commercially reasonable efforts to achieve a Qualified IPO no later than June 30, 2008 and in the event that a Qualified IPO has not occurred on or prior to such date, the Company shall use its best efforts to achieve a Qualified IPO on or prior to June 30, 2010. In connection with the foregoing, each of the Shareholders shall exercise their voting rights in favour of the Company’s application for such listing. The Company and the Shareholders shall not do or permit to be done or omit or permit to be omitted or otherwise undertake, agree or propose any act, deed, transaction or proposal prejudicial to or which may affect its ability to achieve such listing.

 

6.14.2      In the event that the Board of Directors and the requisite shareholders of the Company approve an initial public offering of the Company with an Offering Price lower than the Series C Price, each Shareholder shall vote its Shares and any other voting securities of the Company, to approve the Adjustment Payment by the Company to each holder of Series C Preferred Shares (or Ordinary Shares issued upon conversion of such Series C Preferred Shares) in accordance with the Series C Subscription Agreement.

 

6.15       ESOP

 

The Company shall maintain its 2007 share incentive plan covering 9,263,054 Ordinary Shares (the “ESOP”) in form and substance previously approved by the Board.

 

6.16       Compliance with Law

 

Each Shareholder agrees that it shall take all steps necessary or desirable to ensure that any interest it holds in the Company shall comply with Applicable Law, including, without limitation, securing or causing its ultimate beneficial owner to secure, any Consents required by Applicable Law in respect of or in connection with the Shares held by such Shareholder.

 

6.17       Permitted Repurchase

 

Each Shareholder agrees that: (i) following the Closing, the Company shall be permitted to repurchase, and each Subject Shareholder (as defined below) shall be permitted to transfer and sell to the Company, up to (x) 2,584,027 Ordinary Shares from Medy Ltd. (“Medy”) at a purchase price equal to $5.00 per share (the “Medy Repurchase”), (y) 200,000 Ordinary Shares from Qixian Zhang (“Zhang”) at a purchase price equal to US$5.00 per share (the “Zhang Repurchase”), and (z) 300,000 Ordinary Shares from Paul Caswell (“Caswell” and together with Medy and Zhang, the “Subject Shareholders”) at a purchase price equal to US$5.00 per share (the “Caswell Repurchase” and together with the Medy Repurchase and

 

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the Zhang Repurchase, the “Permitted Repurchase”); and (ii) if and when requested by the Company, such Shareholder shall vote its Shares and any other voting securities of the Company, and shall procure its Director nominees, if any, to vote, and shall take all the other necessary or desirable actions within its control (including without limitation, attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings) to authorize and approve the Permitted Repurchase.

 

7.             WARRANTIES AS TO AUTHORITY

 

Each Party hereby represents and warrants to and undertakes with the other Parties as follows:

 

7.1.1        where it is a corporation, it is a corporation duly organised and validly existing under the laws of its place of incorporation, and has full power and authority to execute and deliver and perform all of its obligations under this Agreement and any other agreements to be executed by it hereunder;

 

7.1.2        all actions, conditions and things required to be taken, fulfilled and done (including the obtaining of any necessary consents) in order (i) to enable such Party lawfully to enter into, exercise its rights and perform and comply with its obligations under, this Agreement and (ii) to ensure that those obligations are legally binding and enforceable have been taken, fulfilled and done;

 

7.1.3        this Agreement is, and all other agreements and instruments of such Party contemplated hereby shall be, the legal, valid and binding agreement of such Party, enforceable against such Party in accordance with their terms; and

 

7.1.4        the execution, delivery and performance of this Agreement by it will not conflict with any law, order, judgment, decree, rule or regulation of any court, arbitral tribunal or government agency, or any agreement, instrument or indenture to which such Party or any of its Affiliates is a party or by which such Party is bound.

 

8.             REGISTRATION RIGHTS

 

8.1         Demand Registration

 

8.1.1        Subject to the conditions of this Clause 8.1, if the Company shall receive at any time after the earlier of (i) December 30, 2008, (ii) six (6) months after the effective date a Qualified IPO and (iii) the delivery of a Written Indication (as defined below), a written request from the Holders of at least twenty five percent (25%) of the Registrable Securities then outstanding (the “Initiating Holders”) that the Company file a registration statement under the Securities Act covering the registration of Registrable Securities for which the reasonably anticipated aggregate price to the public, net of selling expenses, would exceed US$5,000,000, then the Company shall, within thirty (30) days of the receipt thereof, give written notice of such request to all Holders, and subject to the limitations of this Clause 8.1, use its commercially reasonable efforts to file and have declared effective, as soon as practicable, the registration under the Securities Act of all Registrable Securities that the Initiating

 

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Holders, together with any Registrable Securities of any Holder who requests in writing to join such registration within fifteen days after the Company’s delivery of written notice, request to be registered. For purposes hereof, the term “Written Indication” means a written indication delivered to the Company by an internationally recognized investment banking institution other than Goldman Sachs (Asia) L.L.C. or any of its Affiliates (an “Independent Underwriter”) at the request of an Initiating Holder, that market conditions exist for the successful consummation of a Qualified IPO and that such Independent Underwriter would agree to underwrite, on a firmly underwritten basis, an offering of the Company’s equity securities that would constitute a Qualified IPO.

 

8.1.2        If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to this Clause 8.1 or any request pursuant to Clause 8.3 and the Company shall include such information in the written notice referred to in Clause 8.1.1 or Clause 8.3.1, as applicable. In such event, the right of any Holder to include its Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Clause 8.1 or 8.3, if the underwriter advises the Company that marketing factors require a limitation of the number of securities to be underwritten (including Registrable Securities) then the Company shall so advise all Holders of Registrable Securities which would otherwise be underwritten pursuant hereto, and the number of shares that may be included in the underwriting shall be allocated among such, including the Initiating Holders, on a pro rata basis based on the number of Registrable Securities held by all such Holders; provided however, that in no event shall any Registrable Securities then held by a Preferred Shareholder be excluded from such underwriting unless all other securities are first excluded. Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from the registration.

 

8.1.3        The Company shall not be required to file a registration pursuant to this Clause 8.1:

 

(a)   after the Company has effected four registrations pursuant to this Clause 8.1, and such registrations have been declared or ordered effective;

 

(b)   if the Company has effected a registration pursuant to this Clause 8.1 within the preceding twelve (12) months, and such registration has been declared effective;

 

(c)   during the period starting with the date sixty (60) days prior to the Company’s good faith estimate of the date of the filing of, and ending on a date one hundred eighty (180) days following the effective date of, a Company-initiated

 

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registration, provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective;

 

(d)   if the Initiating Holders propose to dispose of Registrable Securities that may be immediately registered on Form F-3 pursuant to a request made pursuant to Clause 8.3 below; or

 

(e)   if the Company shall furnish to Holders requesting a registration statement pursuant to this Clause 8.1, a certificate signed by the Chairman of the Board stating that in the good faith judgment of the Board, it would be seriously detrimental to the Company and its Shareholders for such registration statement to be effected at such time, in which event the Company shall have the right to defer such filing for a period of not more than 90 days after receipt of the request of the Initiating Holders; provided that such right to delay a request pursuant to this Clause or Clause 8.3.1(b)(iv) shall be exercised by the Company not more than once in any twelve (12) month period.

 

8.2         Piggyback Registrations

 

8.2.1        The Company shall notify all Holders of Registrable Securities in writing at least thirty (30) days prior to the filing of any registration statement under the Securities Act for purposes of a public offering of securities of the Company (including, but not limited to, registration statements relating to secondary offerings of securities of the Company, but excluding registration statements relating to employee benefit plans or with respect to corporate reorganizations or other transactions under Rule 145 of the Securities Act) and will afford each such Holder an opportunity to include in such registration statement all or part of such Registrable Securities held by such Holder. Each Holder desiring to include in any such registration statement all or any part of the Registrable Securities held by it shall, within thirty (30) days after the above-described notice from the Company, so notify the Company in writing. Such notice shall state the intended method of disposition of the Registrable Securities by such Holder. If a Holder decides not to include all of its Registrable Securities in any registration statement thereafter filed by the Company, such Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statements as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein. Upon the written request of each Holder given within twenty (20) days after mailing of such notice by the Company, the Company shall use commercially reasonable efforts to cause to be registered under the Act all of the Registrable Securities that each such Holder has requested to be registered.

 

8.2.2        If the registration statement in respect of which the Company gives notice under this Clause 8.2 is for an underwritten offering, the Company shall so advise the Holders of Registrable Securities. In such event, the right of any such Holder to be included in a registration pursuant to this Clause 8.2 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided in this Clause 8.2.2. All Holders

 

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proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of the Agreement, if the underwriter determines in good faith that marketing factors require a limitation of the number of shares to be underwritten, the number of shares that may be included in the underwriting shall be allocated, first, to the Company; second, to the Holders on a pro rata basis based on the total number of Registrable Securities held by the Holders; and third, to any shareholder of the Company (other than a Holder) on a pro rata basis. In no event will shares of any other selling shareholder be included in such registration which would reduce the number of shares which may be included by Holders without the written consent of Holders of at least twenty five percent (25%) of the Registrable Securities proposed to be sold in the offering. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter, delivered at least ten (10) Business Days prior to the effective date of the registration statement. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration.

 

8.2.3        The Company shall have the right to terminate or withdraw any registration initiated by it under this Clause 8.2 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. The expenses of such withdrawn registration shall be borne by the Company in accordance with Clause 8.4 hereof.

 

8.3         Form S-3 or F-3 Registration

 

8.3.1        In case the Company shall receive from any Holder or Holders of Registrable Securities then outstanding a written request or requests that the Company effect a registration on Form S-3 or Form F-3 (or any successor to Form S-3 or Form F-3), as applicable, or any similar short-form registration statement and any related qualification or compliance, for the public offering of Registrable Securities for which the reasonably anticipated aggregate price to the public, net of selling expenses, would exceed US$5,000,000, the Company will:

 

(a)   promptly give written notice of the proposed registration, and any related qualification or compliance, to all other Holders of Registrable Securities; and

 

(b)   use commercially reasonable efforts, as soon as practicable, to effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holder’s or Holders’ Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holder as such other Holder seeks to include in the registration by giving written notice to the Company within thirty (30) days after receipt of the Company’s written notice; provided, however, that the Company shall not be

 

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obligated to effect any such registration, qualification or compliance pursuant to this Clause 8.3:

 

(i)    if Form S-3 or Form F-3 (or any successor or similar form) is not available for such offering by the Holders;

 

(ii)   if within thirty (30) days of receipt of a written request from any Holder or Holders pursuant to this Clause 8.3, the Company gives notice to such Holder or Holders of the Company’s intention to make a public offering within ninety (90) days, provided, that such right to delay a request shall be exercised by the Company not more than once in any twelve (12) month period;

 

(iii)  if the Company shall furnish to the Holders a certificate signed by the Chairman of the Board stating that in the good faith judgment of the Board, it would be seriously detrimental to the Company and its shareholders for such Form S-3 or Form F-3 registration to be effected at such time, in which event the Company shall have the right to defer the filing of the Form S-3 or Form F-3 registration statement for a period of not more than ninety (90) days after receipt of the request of the Holder or Holders under this Clause 8.3; provided, that such right to delay a request pursuant to this Clause 8.3 and Clause 8.1.3(d) shall be exercised by the Company not more than once in any twelve (12) month period;

 

(iv)  in any particular jurisdiction in which the Company would be required to qualify or do business or to execute a general consent to service of process in effecting such registration, qualification or compliance; or

 

(v)   more than two in any twelve-month period.

 

8.3.2        Subject to the foregoing, the Company shall use commercially reasonable efforts to file a Form S-3 or Form F-3 registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable after receipt of the request or requests of the Holders. Registrations effected pursuant to this Clause 8.3 shall not be counted registrations effected pursuant to Clauses 8.1.

 

8.4         Expenses of Registration

 

All expenses other than underwriting discounts and commissions incurred in connection with registrations, filings or qualifications pursuant to Clauses 8.1 and 8.2, including, without limitation, all registration, filing and qualification fees (including “blue sky” fees), printers’ and accounting fees, fees and disbursements of counsel for the Company (including fees and disbursements of counsel for the Company in its capacity as counsel to the selling Holders hereunder; if Company counsel does not make itself available for this purpose, the Company will pay the reasonable fees and disbursements of one counsel for the selling Holders) shall be borne by the Company. Notwithstanding the foregoing, the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Clause 8.1 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the

 

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Registrable Securities to be registered (in which case all participating Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be registered in the withdrawn registration).

 

8.5         Obligations of the Company

 

Whenever required to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

 

8.5.1        prepare and file with the United States Securities and Exchange Commission or other applicable securities regulatory agency (the “SEC”) a registration statement with respect to such Registrable Securities and use all reasonable efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for up to 180 days or, if earlier, until the Holder or Holders have completed the distribution related thereto; provided, however, that at any time, upon written notice to the participating Holders and for a period not to exceed sixty (60) days thereafter (the “Suspension Period”), the Company may delay the filing or effectiveness of any registration statement or suspend the use or effectiveness of any registration statement (and the Initiating Holders hereby agree not to offer or sell any Registrable Securities pursuant to such registration statement during the Suspension Period) if the Company reasonably believes that there is or may be in existence material nonpublic information or events involving the Company, the failure of which to be disclosed in the prospectus included in the registration statement could result in a Violation (as defined below). In the event that the Company shall exercise its right to delay or suspend the filing or effectiveness of a registration hereunder, the applicable time period during which the registration statement is to remain effective shall be extended by a period of time equal to the duration of the Suspension Period. The Company may extend the Suspension Period for an additional consecutive sixty (60) days with the consent of the holders of a majority of the Registrable Securities registered or to be registered under the applicable registration statement, which consent shall not be unreasonably withheld. No more than two (2) such Suspension Periods shall occur in any twelve (12) month period. If so directed by the Company, all Holders registering shares under such registration statement shall (i) not offer to sell any Registrable Securities pursuant to the registration statement during the Suspension Period after receiving notice of such delay or suspension; and (ii) use their best efforts to deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holders’ possession, of the prospectus relating to such Registrable Securities current at the time of receipt of such notice. The Company shall use its commercially reasonable best efforts to promptly resolve any Violation resulting in a Suspension Period and to permit the filing and/or effectiveness of the applicable registration statement.

 

8.5.2        Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to

 

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the disposition of all securities covered by such registration statement for the period set forth in Clause 8.5.1 above.

 

8.5.3        Furnish to the Holders such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them.

 

8.5.4        Use its commercially reasonable best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.

 

8.5.5        In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement.

 

8.5.6        Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. The Company will use reasonable efforts to amend or supplement such prospectus in order to cause such prospectus not to include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.

 

8.5.7        Provide a transfer agent and registrar for all Registrable Securities registered pursuant to the registration statement and, where applicable, a CUSIP number for all those Registrable Securities, in each case not later than the effective date of the registration.

 

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

 

8.5.9        Take all reasonable action necessary to list the Registrable Securities on the primary exchange upon which the Company’s securities are traded or, in connection with an

 

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initial public offering, the primary exchange upon which the Company’s securities will be traded.

 

8.6         Furnish Information

 

It shall be a condition precedent to the obligations of the Company to take any action pursuant to Clause 8.5 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be reasonably required to effect the registration of such Holder’s Registrable Securities.

 

8.7         Indemnification

 

In the event any Registrable Securities are included in a registration statement under Clauses 8.1, 8.2 or 8.3:

 

8.7.1        To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners, members, officers, directors legal counsel and accountants of each Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a “Violation”): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement or incorporated reference therein, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any other federal or state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any other federal or state securities law in connection with the offering covered by such registration statement; and the Company will reimburse each such Holder, partner, member, officer, director, legal counsel, accountant, underwriter or controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided however, that the indemnity agreement contained in this Clause 8.7.1 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by such Holder, underwriter or controlling person of such Holder.

 

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8.7.2        To the extent permitted by law, each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration qualifications or compliance is being effected, indemnify and hold harmless the Company, its directors, officers, legal counsel and accountants and each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter and any other Holder selling securities under such registration statement or any of such other Holder’s partners, directors, officers, legal counsel or accountants or any person who controls such Holder, against any losses, claims, damages or liabilities (joint or several) to which the Company or any such director, officer, controlling person, underwriter or other such Holder, or partner, director, officer or controlling person of such other Holder may become subject under the Securities Act, the Exchange Act or other federal or state law or any rule or regulation promulgated thereunder, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any of the following statements: (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement or incorporated reference therein, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading (collectively, a “Holder Violation”), in each case to the extent (and only to the extent) that such Holder Violation occurs in reliance upon and in conformity with written information furnished by such Holder under an instrument duly executed by such Holder and stated to be specifically for use in connection with such registration; and each such Holder will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, legal counsel, accountant, controlling person, underwriter or other Holder, or partner, officer, director, legal counsel, accountant or controlling person of such other Holder in connection with investigating or defending any such loss, claim, damage, liability or action if it is judicially determined that there was such a Holder Violation; provided, however, that the indemnity agreement contained in this Clause 8.7.2 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld.

 

8.7.3        Promptly after receipt by an indemnified party under this Clause 8.7 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Clause 8.7, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with reasonable fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the

 

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indemnifying party within a reasonable time of the commencement of any such action, if materially prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Clause 8.7, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Clause 8.7.

 

8.7.4        If the indemnification provided for in this Clause 8.7 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any losses, claims, damages, liabilities or expenses referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party thereunder, shall to the extent permitted by applicable law contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage, liability or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the Violation(s) or Holder Violation(s) that resulted in such loss, claim, damage, liability or expense, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

8.7.5        The obligations of the Company and Holders under this Clause 8.7 shall survive completion of any offering of Registrable Securities in a registration statement and the termination of this Agreement. No indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of each indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.

 

8.8         “Market Stand-Off” Agreement

 

Each Holder hereby agrees that such Holder shall not sell, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any Ordinary Shares (or other securities) of the Company held by such Holder (other than those included in the registration) for a period specified by the representative of the underwriters of the securities of the Company not to exceed one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act; provided that:

 

8.8.1        such agreement shall apply only to the Company’s first firm commitment underwritten public offering of its Ordinary Shares registered under the Securities Act; and

 

8.8.2        Dr. Liu, Medy and all officers and directors of the Company enter into similar agreements.

 

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The Company may impose stop-transfer instructions with respect to the Ordinary Shares (or other securities) subject to the foregoing restriction until the end of said one hundred eighty (180) day period. Each Holder agrees that any transferee of any shares of Registrable Securities shall be bound by this Clause 8.8.

 

8.9         Rule 144 Reporting

 

With a view to making available to the Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to the public without registration, or pursuant to registration on Form F-3 or Form S-3, the Company agrees to use its best efforts to:

 

8.9.1        Make and keep public information available, as those terms are understood and defined in SEC Rule 144 or any similar or analogous rule promulgated under the Securities Act, at all times after the effective date of the first registration filed by the Company for an offering of its securities to the general public;

 

8.9.2        File with the SEC, in a timely manner, all reports and other documents required of the Company under the Exchange Act; and

 

8.9.3        So long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon request: (i) a written statement by the Company as to its compliance with the reporting requirements of the Securities Act, the Exchange Act, and all other federal and state laws, and any rules or regulations promulgated thereunder, at any time after the Company has become subject to such reporting requirements or, at any time after so qualified, that it qualifies as a registrant whose securities may be resold pursuant to Form F-3 or Form S-3; (ii) a copy of the most recent annual or quarterly report of the Company filed with the Commission and such other reports and documents as may be filed by the Company with the SEC; and (iii) such other information as a Holder may reasonably request in connection with availing itself of any rule or regulation of the SEC allowing it to sell any such securities without registration or pursuant to Form F-3 or Form S-3.

 

9.             NON-COMPETITION BY SHAREHOLDERS

 

9.1         None of the Shareholders (other than Goldman Sachs, Capital, MS China 8 Limited or any permitted transferees of such parties) shall at any time while it is a shareholder of the Company, either solely or jointly with or on behalf of any person, directly or indirectly compete, or allow or cause their affiliates to compete, with the Company in the development, manufacturing, distribution, sale of long chain diacids (and downstream derivatives), bio butanol, corn-process derived products using Cathay’s corn-processing platform technologies and/or any other principal products that the Company is producing on or before the Closing Date, by promoting, sponsoring, funding or managing, working for or advising another company engaged in any of such activities, provided that any Shareholder (other than Goldman Sachs, Capital, MS China 8 Limited or any permitted transferees of such parties) may, without violating the foregoing (1) invest in publicly listed companies in amounts representing in the aggregate for any given public company not more than 5% fully diluted equity ownership interest therein and without board representation, and (2) investment in

 

38

 

private (unlisted) companies in amounts representing in the aggregate for any given private company not more than a 25% fully diluted ownership interest therein and without board representation.

 

9.2         Neither Goldman Sachs, Capital nor MS China 8 Limited (in either instance, a “Subject Party”) shall invest in any Competitor where (i) such investment would constitute more than 25% of the fully-diluted equity of such Competitor or (ii) such Subject Party would be entitled to designate at least one director to the board of directors for such Competitor. The obligations of a Subject Party under this Clause shall: (x) not apply to any investment in a Competitor in which the Company is a co-investor with a Subject Party and (y) expire on the earlier of (i) the date of the initial public offering by the Company of its securities, (ii) November 20, 2009, and (iii) such time as such Subject Party shall no longer hold any Shares.

 

10.           GENERAL OBLIGATIONS OF SHAREHOLDERS

 

To the full extent permitted by Applicable Law, each Party shall take all steps necessary or desirable on its part to give full effect to the provisions of this Agreement and to procure (so far as it is able by the exercise of voting rights or otherwise so to do) that the Company and the Directors shall perform and observe the provisions of this Agreement.

 

11.           PREVALENCE OF AGREEMENT

 

In the event of any inconsistency or conflict between the provisions of this Agreement and the provisions of the Memorandum or the Articles, the provisions of this Agreement shall as between the Shareholders prevail over the Memorandum and the Articles. The Shareholders shall, so far as they are able, cause such necessary alterations to be made to the Memorandum or the Articles as are required to remove such conflict.

 

12.           ENTIRE AGREEMENT

 

This Agreement embodies all the terms and conditions agreed upon between the Parties as to the subject matter of this Agreement and upon the execution and delivery of this Agreement by the Company and the shareholders identified herein, the Prior Agreement (as defined below) shall automatically be amended, restated and replaced in its entirety by this Agreement. Any variation, modification and/or amendment of this Agreement shall be effective only if it is in writing and duly signed and confirmed in writing by each Party, provided however that the Company may, absent any manifest error, amend Schedule 3 of this Agreement without the consent of the parties solely for purpose of giving effect to the issuance of the Special Adjustment Shares (as defined in the Series B Subscription Agreement). For purposes hereof, “Prior Agreement” means the Amended and Restated Shareholders Agreement dated as of November 20, 2006 by and between the Company and the shareholders identified therein.

 

13.           DURATION AND TERMINATION

 

13.1       This Agreement shall take effect from the date hereof and continue thereafter without limit in point of time but, upon the registration of the transfer by any Shareholder of all the Shares held by it pursuant to the provisions of Clause 5, it shall be released and discharged from all its obligations hereunder as a Shareholder (except as expressly provided in this Agreement) and shall cease to be entitled to any rights hereunder, but, if at that time there are two or more

 

39

 

persons bound by the provisions of this Agreement, this Agreement shall continue in full force and effect as between them.

 

13.2       All the rights and obligations of any Shareholder pursuant to this Agreement (other than the rights and obligations under Clause 8) shall terminate and be of no further force or effect upon the consummation of the Company’s initial public offering of its securities.

 

13.3       Except for the information rights (under Clause 6.2) and registration rights (under Clause 8), all rights granted to the Preferred Shareholders or any of its permitted transferees pursuant to this Agreement shall automatically terminate upon the first date that the Preferred Shareholders and their permitted transferees collectively own less than fifty percent (50%) of the Shares initially acquired by the Preferred Shareholders (including Ordinary Shares issued upon conversion of such Shares), and each such Preferred Shareholder and other Shareholder hereby agrees to vote its Shares, and to instruct its Company director appointee to take such other action as may be necessary, to amend the Company’s Memorandum and Articles then in effect as necessary to implement such termination as to such Preferred Shareholder.

 

13.6       The termination of this Agreement from any cause shall not release any Shareholder from any liability which at the time of termination has already accrued, or which thereafter may accrue.

 

14.           CONFIDENTIALITY

 

14.1       Each party hereto shall keep confidential the Confidential Information of each other party except (i) as such other party may otherwise agree, (ii) to the extent disclosure is compelled by judicial or administrative procedures or required by Applicable Laws, (iii) to the extent required by the rules of any stock exchange, (iv) for purposes of fund and/or inter-fund reporting, (v) to the officers, directors, employees and professional advisors of a party as necessary to the performance of its obligations or exercise of its rights in connection herewith and with the Series C Subscription Agreement so long as such party advises each person to whom the Confidential Information is so disclosed as to the confidential nature thereof and, in the case of advisors other than licensed professionals bound by rules of professional conduct not to disclose the Confidential Information, such recipient has agreed to maintain the confidentiality of the Confidential Information, (vi) to the investors or bona fide potential investors of a party and any person otherwise providing substantial debt or equity financing to such party so long as the party advises each person to whom the Confidential Information is so disclosed as to the confidential nature thereof, (vii) with respect to any submission by Goldman Sachs (Asia) L.L.C. or Morgan Stanley & Co. Incorporated, or any of their respective affiliates, directors, officers, counsel, representatives, and/or agents, may make to the Financial Industry Regulatory Authority of the United States to the extent reasonably in furtherance of the initial public offering of the Company and/or the participation of GSPS Asia Limited and MS China 8 Limited, respectively, as an investor of the Company, and (viii) disclosure to any person that enters into bona fide negotiations to acquire a party or such party’s interest in the Company so long as the recipient (to the extent the recipient is a Shareholder) provides advance written notice to the Company of its intention to disclose Confidential Information to such person and that such person (1) is not a Competitor and (2) has agreed to maintain the confidentiality of the Confidential Information in accordance with this Clause and, prior to becoming a party to this Agreement, to refrain from using the

 

40

 

Confidential Information for any purpose other than evaluation of its proposed acquisition of the interest or, to the extent that such person has executed a definitive agreement to acquire the interest, solely in furtherance of the consummation of the acquisition of such interest.

 

14.1.1      Notwithstanding anything to the contrary provided herein, the term Confidential Information shall not include information received by any party hereto from another party hereto which (i) is or becomes generally available to the public other than as a result of disclosure by any party hereto in violation of this Clause, (ii) was available to the recipient thereof on a non-confidential basis prior to such information being disclosed to the recipient by any other party to this Agreement, (iii) becomes available to the recipient thereof on a non-confidential basis from a person (other than another party hereto) who is not prohibited from disclosing such information by a legal, contractual or fiduciary obligation, or (iv) is independently developed by the recipient thereof or its affiliates without reference to any Confidential Information.

 

14.1.2      The obligations of any Shareholder under this Clause 14 shall expire upon the earlier of (i) the date of an initial public offering of the Company and (ii) two years after the first date that such Shareholder no longer holds any Shares.

 

14.2       Shareholders’ Obligations

 

The Parties shall procure the observance of the abovementioned restrictions by the Company and shall take all reasonable steps to minimise the risk of disclosure of confidential information, by ensuring that only their employees and directors and those of the Company whose duties will require them to possess any of such information shall have access thereto, and that they shall be instructed to treat the same as confidential.

 

15.           NO PARTNERSHIP

 

The relationship between the Parties shall not constitute a partnership. No Party has the power or the right to bind, commit or pledge the credit of another Party or the Company.

 

16.           RELEASE AND INDULGENCE

 

No failure on the part of any Party to exercise and no delay on the part of any Party in exercising any right hereunder will operate as a release or waiver thereof, nor will any single or partial exercise of any right under this Agreement preclude any other or further exercise of it.

 

17.           ASSIGNMENT

 

None of the Parties shall transfer or assign all or any of its rights, obligations or benefits under this Agreement to any person except with the written consent of all the other Parties or save as expressly permitted under this Agreement. This Agreement shall inure to the benefit of, and shall be binding upon, the Parties and their respective successors, heirs, executors, administrators, personal representatives and permitted assigns.

 

18.           FORCE MAJEURE

 

The obligations of any Party, other than the obligation to pay money, shall be suspended during the time and to the extent that such Party is prevented from complying therewith in

 

41

 

whole or in part by an act of God, strike, lockout, act of the public enemy, war declared or undeclared, blockade, revolution, riot, insurrection, civil commotion, sabotage, lightning, fire, storm, flood, earthquake, volcanic eruption, explosion, governmental restraint, perils of the sea, embargo or any other cause whether of the kind specifically enumerated above or otherwise which is beyond the reasonable control of the Party whose obligations it affects and which that Party is unable to avoid by the exercise of reasonable foresight and diligence; Provided that such Party (for the purposes of this Clause, the “Hindered Party”) shall have given written notice thereof, specifying the nature and details of such event and the probable extent of the delay, to each other Party; and provided further that the Hindered Party shall promptly and diligently make every effort in good faith to overcome or dispel such obstacle and pursue appropriate action to enable it to perform such obligations. If any Party should become a Hindered Party, then the Parties shall review the implications of the event specified in such Hindered Party’s notice to determine whether this Agreement ought to be amended or whether such Hindered Party should be fully or partially released from its obligations hereunder.

 

19.           COUNTERPARTS

 

This Agreement may be entered into in any number of counterparts, all of which taken together shall constitute one and the same instrument. Any Party may enter into this Agreement by signing any such counterpart. Each Party agrees that signatures may be exchanged by facsimile, and that it is bound by its own facsimile signature and accepts the other Party’s facsimile signature.

 

20.           NOTICES AND GENERAL

 

20.1       Notices

 

All notices, demands or other communications required or permitted to be given or made hereunder shall be in writing and may be delivered personally or sent by prepaid registered post (by air-mail if to or from an address outside China) with recorded delivery, or by facsimile transmission addressed to the intended recipient thereof at its address or at its facsimile number set out in this Agreement (or to such other address or facsimile number as a Party may from time to time duly notify the others in writing). Any such notice, demand or communication shall be deemed to have been duly served (if delivered personally or given or made by facsimile) immediately or (if given or made by letter) five (5) days after posting or (if made or given to or from an address outside China) ten (10) days after posting and in proving the same it shall be sufficient to show that personal delivery was made or that the envelope containing the same was duly addressed, stamped and posted or that the facsimile transmission was properly addressed and despatched. The addresses and facsimile numbers of the Parties for the purpose of this Agreement are:

 

Company: Cathay Industrial Biotech Ltd.

 

	
Address:
    	
 
    	
3F,   Building 5, 1690 Cailun Road, Zhangjiang Hightech Park,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Shanghai   201203, PRC
    
	
 
    	
 
    	
 
    
	
Fax   No:
    	
 
    	
86-21-5080-1386
    

 

42

 

	
Attention:
    	
 
    	
Dr.   Xiucai Liu
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
With a copy to (but which shall not constitute notice   hereunder):
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Hogan   & Hartson LLP
    
	
 
    	
 
    	
 
    
	
Address:
    	
 
    	
Suite   3006, Raffles City, 268 Xizang Middle Road
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Shanghai   200001, PRC
    
	
 
    	
 
    	
 
    
	
Fax   No.:
    	
 
    	
86-21-63404999
    
	
 
    	
 
    	
 
    
	
Attention:
    	
 
    	
Arthur   C. Mok, Esq.
    
	
 
    	
 
    	
 
    
	
Dr. Xiucai Liu
    
	
 
    	
 
    	
 
    
	
Address:
    	
 
    	
3F,   Building 5, 1690 Cailun Road, Zhangjiang Hightech Park,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Shanghai   201203, PRC
    
	
 
    	
 
    	
 
    
	
Fax   No:
    	
 
    	
86-21-5080-1386
    

 

	
Ordinary Shareholders:
    	
 
    	
As   per Schedule 1
    
	
 
    	
 
    	
 
    
	
Series A Preferred Shareholders:
    	
 
    	
As   per Schedule 2
    
	
 
    	
 
    	
 
    
	
Series B Preferred Shareholders:
    	
 
    	
As   per Schedule 3
    
	
 
    	
 
    	
 
    
	
Series C Preferred Shareholders:
    	
 
    	
As   per Schedule 4
    

 

20.2       Remedies

 

No remedy conferred by any of the provisions of this Agreement is intended to be exclusive of any other remedy which is otherwise available at law, in equity, by statute or otherwise, and each and every other remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law, in equity, by statute or otherwise. The election of any one or more of such remedies by any of the Shareholders shall not constitute a waiver by such Shareholder of the right to pursue any other available remedies.

 

20.3       Severance

 

If any provision of this Agreement or part thereof is rendered void, illegal or unenforceable by any legislation or other laws to which it is subject, or by a competent court with jurisdiction, it shall be rendered void, illegal or unenforceable to that extent and it shall in no way affect or prejudice the enforceability of the remainder of such provision or the other provisions of this Agreement. The invalidity, illegality or unenforceability of any provision in this Agreement under the laws of any one jurisdiction shall not in itself affect the validity, legality and enforceability of such provisions under the laws of any other jurisdiction.

 

20.4       Several Rights and Obligations and Consent

 

The obligations of the Shareholders under this Agreement shall be on a several basis and not on a joint basis or a joint and several basis. Save as otherwise provided, any requirement to obtain the consent or waiver of the holders of a particular series of Shares hereunder shall not be fulfilled unless the consent or waiver of all the holders of that Shares has been obtained.

 

43

 

20.5       Arbitration and Mediation

 

20.5.1      Any dispute, controversy or claim arising under, out of or in connection with this Agreement, including any question regarding its existence, validity or termination shall be referred to and finally resolved by arbitration in Hong Kong in accordance with the arbitration rules (“Rules”) of the Hong Kong International Arbitration Centre (“HKIAC”) for the time being in force, which Rules are deemed to be incorporated by reference to this Clause. The arbitral tribunal shall consist of three arbitrators. The claimant or claimants (collectively) shall select one arbitrator and the respondent or respondents (collectively) in the arbitration proceeding shall select one arbitrator. The third arbitrator shall be appointed by mutual agreement of the respondent and claimants. If any of the members of the arbitral tribunal shall not have been appointed within thirty (30) days after any Party has delivered notice in writing to any other Party requesting arbitration, the relevant appointment shall be made by the Secretary General of the HKIAC. The language of arbitration shall be English. The arbitral tribunal’s award shall be final and binding from the day it is made and enforceable in any court of competent jurisdiction.

 

20.6       Governing Law and Jurisdiction

 

20.6.1      Governing Law: This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

 

20.6.2      Jurisdiction: In relation to any legal action or proceedings (“Proceedings”):

 

(a)   in aid of any arbitration Proceedings commenced pursuant to Clause 20.5.1 or the enforcement of any decision, order or award of the arbitrator in those proceedings; or

 

(b)   securing any interim or permanent injunctive relief with respect to any breach or threatened breach of,

 

each party hereto irrevocably submits to the non-exclusive jurisdiction of the courts of Hong Kong SAR, and waives any objection to Proceedings in any such court on the grounds of venue or on the grounds that the Proceedings have been brought in an inappropriate or inconvenient forum.

 

20.6.3      Submission Non-Exclusive: That submission shall not affect the right of any other Party to take Proceedings in any other jurisdiction nor shall the taking of Proceedings in any jurisdiction preclude any Party from taking Proceedings in any other jurisdiction.

 

44

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

MEDY LTD.

 

	
By:
    	
/s/   Xiucai Liu
    	
 
    
	
Name:
    	
Xiucai   Liu
    	
 
    
	
Title:
    	
Chairman
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

	
XIUCAI LIU
    	
 
    
	
 
    	
 
    
	
(solely with respect to Clause   5.1)
    	
 
    
	
 
    	
 
    
	
/s/ Xiucai Liu
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

	
QIXIAN   ZHANG
    	
 
    
	
 
    	
 
    
	
/s/   [ILLEGIBLE]
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

	
PAUL   CASWELL
    	
 
    
	
 
    	
 
    
	
/s/   Paul J. Caswell
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

	
DEUTSCHE   BANK TRUST COMPANY AND
    	
 
    
	
PAUL   J. CASWELL AS CO-TRUSTEEES OF THE
    	
 
    
	
PAUL   J. CASWELL 2007 GRAT
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Paul J. Caswell
    	
 
    
	
Name:
    	
 
    
	
Title:
    	
 
    
			

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

	
DEUTSCHE   BANK TRUST COMPANY AND
    	
 
    
	
PAUL   J. CASWELL AS CO-TRUSTEEES OF THE
    	
 
    
	
CASWELL   2007 FAMILY TRUST
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Paul J. Caswell
    	
 
    
	
Name:
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

	
DEUTSCHE   BANK TRUST COMPANY AND
    	
 
    
	
PAMELA   CASWELL AS CO-TRUSTEEES OF THE
    	
 
    
	
PAMELA   CASWELL 2007 GRAT
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Pamela Jean Caswell
    	
 
    
	
Name:
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

	
PAMELA   JEAN CASWELL
    	
 
    
	
 
    	
 
    
	
/s/   Pamela Jean Caswell
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

	
CHINA BIOCHEM
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Zhi Yang
    	
 
    
	
Name:   
    	
Zhi   Yang
    	
 
    
	
Title:
    	
Managing   Partner
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

	
GSPS ASIA LIMITED
    	
 
    
	
 
    	
 
    
	
By:   
    	
/s/   Terence Ting
    	
 
    
	
Name:   
    	
Terence   Ting
    	
 
    
	
Title:   
    	
Director
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

	
GM INVESTMENT COMPANY LIMITED
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Samuel Kong
    	
 
    
	
Name:
    	
Samuel   Kong
    	
 
    
	
Title:   
    	
Director
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

	
GRAMINEAE HOLDINGS COMPANY   LIMITED
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Andrew Lo
    	
 
    
	
Name:
    	
Andrew   Lo
    	
 
    
	
Title:
    	
Authorized   Signatory
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

	
NEW HORIZON EVERGREEN INVESTMENT CO., LTD.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By: 
    	
/s/ Jianming Yu
    	
 
    
	
Name:   
    	
Jianming   Yu
    	
 
    
	
Title:   
    	
Director
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

	
CAPITAL   INTERNATIONAL PRIVATE
    	
 
    
	
EQUITY   FUND V, L.P.
    	
 
    
	
 
    	
 
    
	
By:   
    	
/s/   James Ho
    	
 
    
	
Name:   
    	
James   Ho
    	
 
    
	
Title:   
    	
Authorized   Signatory
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

CGPE V, L.P.

 

 

	
By:
    	
/s/ James Ho
    	
 
    
	
Name:
    	
James   Ho
    	
 
    
	
Title:
    	
Authorized   Signatory
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

NORTHERN LIGHT VENTURE FUND, L.P.

NORTHERN LIGHT STRATEGIC FUND, L.P.

NORTHERN LIGHT PARTNERS FUND, L.P.

 

By Northern Light Partners L.P.

its General Partner

 

By Northern Light Venture Capital Limited

its General Partner

 

	
/s/   Jeffrey Lee
    	
 
    
	
By   Jeffrey Lee, Director
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

VERBIER INTERNATIONAL INC.

 

	
 
    	
For and on behalf of

Verbier International Inc.
    	
 
    
	
By:
    	
/s/ Yung Lap Hang
    	
 
    
	
Name:
    	
Yung   Lap Hang
    	
 
    
	
Title:
    	
Sole   Owner
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

MS CHINA 8 LIMITED

 

 

	
By:
    	
/s/   Andrew Wise
    	
 
    
	
Name:
    	
Andrew   Wise
    	
 
    
	
Title:
    	
Director
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

NEW ENTERPRISE ASSSOCIATES 12, LIMITED PARTNERSHIP

 

 

	
By:
    	
/s/   Charles W. Newhall
    	
 
    
	
Name:
    	
Charles   W. Newhall
    	
 
    
	
Title:
    	
Manager
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.  

 

 

BIOVEDA CHINA FUND II, L.P.

 

 

	
By:
    	
/s/   Yungzhi
    	
 
    
	
Name:
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

	
HBM BIOVENTURES (CAYMAN) LTD.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   John Arnold
    	
 
    	
 
    
	
Name:
    	
John   Arnold
    	
 
    	
 
    
	
Title:
    	
Chairman   and Managing Director
    	
 
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

	
HBM   BIOMED CHINA
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   John Arnold
    	
 
    	
 
    
	
Name:
    	
John   Arnold
    	
 
    	
 
    
	
Title:
    	
Director
    	
 
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

NEW HORIZON DAIRY INDUSTRY INVESTMENT LIMITED

 

	
By:
    	
/s/   Jianming Yu
    	
 
    	
 
    
	
Name:
    	
Jianming   Yu
    	
 
    	
 
    
	
Title:
    	
Director
    	
 
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

STONE GROUP HOLDINGS LIMITED

 

 

	
By:
    	
/s/   Yongji Duan
    	
 
    	
 
    
	
Name:
    	
Yongji   Duan
    	
 
    	
 
    
	
Title:
    	
Chairman
    	
 
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning.

 

 

The Company

 

CATHAY INDUSTRIAL BIOTECH LTD.

 

 

	
By:
    	
/s/   Xiucai Liu
    	
 
    	
 
    
	
Name:
    	
Xiucai   Liu
    	
 
    	
 
    
	
Title:
    	
President   and CEO
    	
 
    	
 
    

 

Cathay Series C Shareholders Agreement

 

 

SCHEDULE 1

 

ORDINARY SHAREHOLDERS OF THE COMPANY

 

	
 
    	
 
    	
 
    	
 
    	
No. of Ordinary
    
	
Name of Shareholder
    	
 
    	
Contact Details
    	
 
    	
Shares issued
    
	
Medy Ltd.
    	
 
    	
Address:
    	
c/o Cathay Industrial
    	
 
    	
38,279,403
    
	
 
    	
 
    	
 
    	
Biotech Ltd., 3F,
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Building 5, 1690 Cailun
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Road, Zhangjiang
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Hightech Park, Shanghai
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
201203, PRC
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax: 86-21-5080-1386
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention: Dr. Xiucai Liu
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Mr. Qixian Zhang
    	
 
    	
Address:
    	
c/o Cathay Industrial
    	
 
    	
1,431,818
    
	
 
    	
 
    	
 
    	
Biotech Ltd., 3F,
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Building 5, 1690 Cailun
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Road, Zhangjiang
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Hightech Park, Shanghai
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
201203, PRC
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax: +86-21-5080-1386
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention: Mr. Qixian   Zhang
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Mr. Paul Caswell
    	
 
    	
Address:
    	
c/o Cathay Industrial
    	
 
    	
713,779
    
	
 
    	
 
    	
 
    	
Biotech Ltd., 3F,
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Building 5, 1690 Cailun
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Road, Zhangjiang
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Hightech Park, Shanghai
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
201203, PRC
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax: +86-21-5080-1386
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention: Mr. Paul   Caswell
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Deutsche Bank Trust
    	
 
    	
Address:
    	
c/o Cathay Industrial
    	
 
    	
275,000
    
	
Company and Paul J.
    	
 
    	
 
    	
Biotech Ltd., 3F,
    	
 
    	
 
    
	
Caswell as co-trustees of
    	
 
    	
 
    	
Building 5, 1690 Cailun
    	
 
    	
 
    
	
the Paul J. Caswell 2007
    	
 
    	
 
    	
Road, Zhangjiang
    	
 
    	
 
    
	
GRAT
    	
 
    	
 
    	
Hightech Park, Shanghai
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
201203, PRC
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax: +86-21-5080-1386
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention: Mr. Paul   Caswell
    	
 
    	
 
    

 

 

	
Name of Shareholder
    	
 
    	
Contact Details
    	
 
    	
No. of Ordinary
   Shares issued
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Deutsche   Bank Trust
    	
 
    	
Address:
    	
c/o   Cathay Industrial
    	
 
    	
300,000
    	
 
    
	
Company   and Paul J.
    	
 
    	
 
    	
Biotech   Ltd., 3F,
    	
 
    	
 
    	
 
    
	
Caswell   as co-trustees of
    	
 
    	
 
    	
Building   5, 1690 Cailun
    	
 
    	
 
    	
 
    
	
the   Caswell 2007 Family
    	
 
    	
 
    	
Road,   Zhangjiang
    	
 
    	
 
    	
 
    
	
Trust
    	
 
    	
 
    	
Hightech   Park, Shanghai
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
201203,   PRC
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax:   +86-21-5080-1386
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:
    	
Mr.   Paul Caswell
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Deutsche   Bank Trust
    	
 
    	
Address:
    	
c/o   Cathay Industrial
    	
 
    	
325,000
    	
 
    
	
Company   and Pamela
    	
 
    	
 
    	
Biotech   Ltd., 3F,
    	
 
    	
 
    	
 
    
	
Caswell   as co-trustees of
    	
 
    	
 
    	
Building   5, 1690 Cailun
    	
 
    	
 
    	
 
    
	
the   Pamela Caswell 2007
    	
 
    	
 
    	
Road,   Zhangjiang
    	
 
    	
 
    	
 
    
	
GRAT
    	
 
    	
 
    	
Hightech   Park, Shanghai
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
201203,   PRC
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax:   +86-21-5080-1386
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:
    	
Mr.   Paul Caswell
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Pamela   Jean Caswell
    	
 
    	
Address:
    	
c/o   Cathay Industrial
    	
 
    	
675,000
    	
 
    
	
 
    	
 
    	
 
    	
Biotech   Ltd., 3F,
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Building   5, 1690 Cailun
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Road,   Zhangjiang
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Hightech   Park, Shanghai
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
201203,   PRC
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax:   +86-21-5080-1386
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:
    	
Mr.   Paul Caswell
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total
    	
 
    	
 
    	
 
    	
 
    	
42,000,000
    	
 
    

 

 

SCHEDULE 2

 

SERIES A PREFERRED SHAREHOLDERS

 

	
Name
    	
 
    	
Contact Details
    	
 
    	
No. of Series A
   Preferred Shares
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
China Biochem
    	
 
    	
Address:
    	
 Suite 2010, Jing An Zhong
    	
 
    	
26,000,000
    	
 
    
	
 
    	
 
    	
 
    	
Hua   Plaza, 1701 Beijing
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
West   Road, Shanghai
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
200040,   PRC
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax:   + 86-21-5157-2235
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:
    	
Mr.   Zhi Yang
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total
    	
 
    	
 
    	
 
    	
 
    	
26,000,000
    	
 
    

 

 

SCHEDULE 3

 

SERIES B PREFERRED SHAREHOLDERS

 

	
Name
    	
 
    	
Contact Details
    	
 
    	
No. of Series B
   Preferred Shares
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
GSPS   Asia Limited
    	
 
    	
Address:
    	
68th   Floor, Cheung Kong
    	
 
    	
9,852,217
    	
 
    
	
 
    	
 
    	
 
    	
Center,   2 Queens Road
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Central,   Hong Kong
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax:   +852-2978-0515
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:
    	
Terence   Ting
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Copy:   Karen Ip at the same address
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Gramineae   Holdings Company Limited
    	
 
    	
Address:
    	
Suite   305 St. George’s
    	
 
    	
9,852,217
    	
 
    
	
 
    	
 
    	
 
    	
Building,   2 Ice House
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Street,   Central, Hong
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Kong
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax:   +852-2521-8023
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:
    	
Andrew   Lo
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
China   Biochem
    	
 
    	
Address:
    	
Suite   2010, Jing An Zhong
    	
 
    	
492,611
    	
 
    
	
 
    	
 
    	
 
    	
Hua   Plaza, 1701 Beijing
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
West   Road, Shanghai
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
200040,   PRC
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax:   +86-21-5157-2235
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:
    	
Mr.   Zhi Yang
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
GM   Investment Company Limited
    	
 
    	
Address:
    	
Jin   Bao Tower, 12 th Floor
    	
 
    	
3,448,276
    	
 
    
	
 
    	
 
    	
 
    	
89   Jin Bao Street Dong
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Cheng   District Beijing,
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
PRC
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax:   +86-10-8522-1235
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:
    	
Samuel   Kong
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
New   Horizon Evergreen
    	
 
    	
Address:
    	
Jin   Bao Tower, 12 th Floor
    	
 
    	
1,970,443
    	
 
    
	
Investment   Co., Ltd
    	
 
    	
 
    	
89   Jin Bao Street Dong
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Cheng   District Beijing,
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
PRC
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax:   +86-10-8522-1235
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:
    	
Jianming   Yu
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total
    	
 
    	
 
    	
 
    	
 
    	
25,615,764
    	
 
    

 

 

SCHEDULE 4

 

SERIES C PREFERRED SHAREHOLDERS

 

	
Name
    	
 
    	
Contact Details
    	
 
    	
No. of Series C
   Preferred Shares
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Capital   International Private
    	
 
    	
Capital   International Private Equity
    	
 
    	
9,883,253
    	
 
    
	
Equity   Fund V, L.P.
    	
 
    	
Fund   V, L.P.
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
c/o Capital International, Inc.
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
6455   Irvine Drive
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Irvine,   California 92618, USA
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Private Equity Accounting
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
&   Administration (C-2D)
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax:   949 975 4339
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
with   a copy to:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Capital   International, Inc.
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
11100   Santa Monica Blvd.
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
15th   Floor
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Los   Angeles, California 90025, USA
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attn:   Christopher D. Chen
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax:   310 996 6171
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
CGPE   V, L.P.
    	
 
    	
Capital   International Private Equity
    	
 
    	
397,121
    	
 
    
	
 
    	
 
    	
Fund   V, L.P.
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
c/o Capital International, Inc.
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
6455   Irvine Drive
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Irvine,   California 92618, USA
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attn:   Private Equity Accounting &
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Administration   (C-2D)
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax:   949 975 4339
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
with   a copy to:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Capital   International, Inc.
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
11100   Santa Monica Blvd.
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
15th   Floor
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Los   Angeles, California 90025, USA
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attn:   Christopher D. Chen
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax::   310 996 6171
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
HBM   BioVentures (Cayman)
    	
 
    	
Address:
    	
Centennial   Towers, 3rd
    	
 
    	
747,664
    	
 
    
	
Ltd.
    	
 
    	
 
    	
Floor,   2454 West Bay Road,
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Grand   Cayman, Cayman
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Islands
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax:
    	
 + 1 345 946 8003
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:
    	
John   Arnold
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
HBM   BioMed China
    	
 
    	
Address:
    	
Centennial   Towers, 3rd
    	
 
    	
934,580
    	
 
    
	
 
    	
 
    	
 
    	
Floor,   2454 West Bay Road,
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Grand   Cayman, Cayman
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Islands
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax:
    	
 + 1 345 946 8003
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:
    	
 John Arnold
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Stone   Group Holdings Limited
    	
 
    	
Address:
    	
 
    	
934,580
    	
 
    
	
 
    	
 
    	
27/F.,   K. Wah Centre
    	
 
    	
 
    	
 
    

 

 

	
 
    	
 
    	
191   Java Road, North Point
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Hong   Kong
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +852 2880 5573
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Yongji Duan
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Verbier   International Inc.
    	
 
    	
Address:
    	
 
    	
747,664
    	
 
    
	
 
    	
 
    	
23/F,   Jing An Center, #8 North Third
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Ring   Road East, Chao Yang District,
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Beijing,   100028
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +86-10-5108-5666
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Xiaoxin Chen
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
BioVeda   China Fund II, L.P.
    	
 
    	
Address:
    	
 
    	
1,869,159
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Northern   Light Venture Fund,
    	
 
    	
Address:
    	
 
    	
843,554
    	
 
    
	
L.P.
    	
 
    	
2440   Sand Hill Road Suite 201
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Menlo   Park, CA 94025
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +1-650-585-5460
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Jeffrey Lee
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Northern   Light Strategic Fund,
    	
 
    	
Address:
    	
 
    	
185,295
    	
 
    
	
L.P.
    	
 
    	
2440   Sand Hill Road Suite 201
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Menlo   Park, CA 94025
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +1-650-585-5460
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Jeffrey Lee
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Northern   Light Partners Fund,
    	
 
    	
Address:
    	
 
    	
92,647
    	
 
    
	
L.P.
    	
 
    	
2440   Sand Hill Road Suite 201
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Menlo   Park, CA 94025
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +1-650-585-5460
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Jeffrey Lee
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
New   Enterprise Associates 12,
    	
 
    	
Address:
    	
 
    	
373,832
    	
 
    
	
Limited   Partnership
    	
 
    	
1119   St. Paul Street
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Baltimore,   MD 21202, USA
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +1-410-752-7721
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Louis Citron
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
MS   China 8 Limited
    	
 
    	
Address:
    	
 
    	
1,869,159
    	
 
    
	
 
    	
 
    	
M&C   Corporate Services Limited
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
PO   Box 309 GT Grand Cayman
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
George   Town Cayman Islands
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +852-3407-5987
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Andrew Wise
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
With   a copy to:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
5/F,   Two Exchange Square
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Central,   Hong Kong
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +852-3407-5128
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   James Tam
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
GSPS   Asia Limited
    	
 
    	
Address:   68th Floor, Cheung   Kong
    	
 
    	
1,869,159
    	
 
    
	
 
    	
 
    	
Center,   2 Queens Road Central, Hong
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Kong
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +852-2978-0515
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Terence Ting
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Copy:   Karen Ip at the same address
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Gramineae   Holdings Company
    	
 
    	
Address:   Suite 305, St. George’s
    	
 
    	
1,869,159
    	
 
    
	
 
    	
 
    	
Building,   2 Ice House Street, Central,
    	
 
    	
 
    	
 
    

 

 

	
Limited
    	
 
    	
Hong   Kong
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +852-2521-8023
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Andrew Lo
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
with   a copy to
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Clifford   Chance LLP
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Address:   40th Floor, Bund Center, 222
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Yan   An East Road, Shanghai 200002,
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
PRC
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +86-21-6335-0337
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Yanping Cao
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
GM   Investment Company
    	
 
    	
Address:
    	
48/F,   Bank of China Tower
    	
 
    	
826,190
    	
 
    
	
Limited
    	
 
    	
 
    	
1   Garden Road
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Central,   Hong Kong
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +852 3605 8189
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:
    	
Samuel   Kong
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
New   Horizon Dairy Industry
    	
 
    	
Address:
    	
Jin   Bao Tower, 12th   Floor,
    	
 
    	
1,869,159
    	
 
    
	
Investment   Limited
    	
 
    	
 
    	
89   Jin Bao Street
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Dong   Cheng District
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Beijing,   PRC
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +86-10-8522-1235
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:
    	
Jianming   Yu
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total
    	
 
    	
 
    	
 
    	
 
    	
25,312,175
    	
 
    

 

 

EXHIBIT A

 

GROUP COMPANIES

 

1.                                       Cathay Industrial Biotech Ltd., a Cayman Islands company.

 

2.                                       Cathay Biotechnology Limited (“Cathay BVI”), a wholly-owned subsidiary of the Company incorporated under the laws of the British Virgin Islands.

 

3.                                       Cathay BioMaterials Limited (“Cathay BioMaterials”), a wholly-owned subsidiary of the Company incorporated under the laws of the British Virgin Islands.

 

4.                                       Cathay Industrial Biotech (Hong Kong) Limited (“Cathay Hong Kong”), a wholly owned subsidiary of the Company incorporated in Hong Kong.

 

5.                                       Shanghai Cathay Industrial Biotech Co., Ltd. (上海凯赛生物科技有限公司)(predecessor of Shanghai Cathay Biotechnology Co., Ltd) (“Cathay Shanghai”), a wholly-owned subsidiary of the Company established under PRC law.

 

6.                                       Shanghai Cathay Biotechnology R&D Co., Ltd. (上海凯赛生物技术研发中心有限公司) (“Cathay R&D”), a wholly-owned subsidiary of the Company established under PRC law.

 

7.                                       Shandong Cathay Industrial Biotech Limited. (山东凯赛生物技术有限公司)(“Cathay SD Industrial”), a wholly-owned subsidiary of the Company established under PRC law.

 

8.                                       Jilin Cathay Industrial Biotech Limited. (吉林凯赛生物技术有限公司)(“Cathay Jilin”), a wholly-owned subsidiary of the Company established under PRC law.

 

9.                                       Shanghai BioSight Engineering Co., Ltd ( 上海景业生化工程有限公司) (“Cathay Biosight”), a wholly-owned subsidiary of Cathay Shanghai established under PRC law.

 

10.                                 Shandong Cathay Lineng Biotechnology Co., Ltd. (山东凯赛里能生物高科技有限责任公司) (“Cathay Shandong”), a Sino-foreign joint venture enterprise established under PRC law. Cathay Shanghai and Cathay BioMaterials, holds 70.25% and 29.75%, respectively, of the equity interests in Cathay Shandong.

 

11.                                 Shandong Degussa Cathay Biotech Co. Ltd ( 山东德固赛凯赛生物技术有限公司) (“Degussa Cathay Biotech”), a Sino-Foreign Joint Venture Company established under PRC law. Cathay Shandong and Degussa (China) Co., Ltd.(“Degussa China”) holds 49% and 51%, respectively, of the equity interests in the Degussa Cathay Biotech.

 

 

APPENDIX A

 

DEED OF RATIFICATION AND ACCESSION

 

THIS DEED OF RATIFICATION AND ACCESSION is made and issued on [·] by [·] (the “Transferee”), a company incorporated in [·] with its registered office at [·] in favour of and for the benefit of each and all of the following (other than the Transferor (as herein defined)):

 

(1)                                  the parties to the Third Amended and Restated Shareholders’ Agreement dated October 19, 2007 (the “Shareholders’ Agreement”) made between Cathay Industrial Biotech Ltd. (the “Company”), Dr. Xiucai Liu; and the other shareholders identified therein; and

 

(2)                                  all persons and corporations who are or subsequently become shareholders of the Company.

 

WHEREAS:

 

(A)                              The parties to the Shareholders’ Agreement have agreed thereunder to regulate the affairs of the Company to carry out the Specified Business (as defined in the Shareholders’ Agreement).

 

(B)                                The Transferee is a Permitted Transferee (as defined in the Shareholders’ Agreement) of [·] shares (the “Transferred Shares”) in the issued capital of the Company by virtue of the instrument(s) of transfer in respect thereof executed by [·] (the “Transferor”).

 

(C)                                By the terms of the Shareholders’ Agreement, it is a condition precedent to the transfer to the Transferee of the Transferred Shares that the Transferee executes this Deed.

 

NOW THIS DEED WITNESSES as follows:

 

1.                                       In this Deed, all references to the “Shareholders’ Agreement” means the Shareholders’ Agreement referred to in sub-paragraph (1) above and includes all amendments, additions and variations thereto agreed between the parties thereto

 

2.                                       The Transferee hereby covenants and agrees with each of the parties, persons and corporations in whose favour and for whose benefit this Deed is executed:

 

(b)                                 that in consideration of and upon the registration in the Company’s register of members of the Transferee as the holder of the Transferred Shares, the Transferee will as from the date of the registration of the Transferee as holder of the Transferred Shares, observe and discharge all the terms and conditions of the Shareholders’ Agreement which are applicable to it as a Shareholder (as defined in the Shareholders’ Agreement) in all respects as if it had been a Party thereto;

 

(a)                                  that in the event that the Transferred Shares were transferred to the Transferee pursuant to Clauses 5.5.1 of the Shareholders’ Agreement, the liability of the Transferee by virtue of this Deed to each of the parties, persons or corporation (other than the Transferor) in whose favour and for whose benefit this Deed is executed shall be joint and several with the Transferor; and

 

2

 

 

(b)                                 that this Deed is enforceable against the Transferee by any of the parties, persons and corporations in whose favour and for whose benefit this Deed is executed.

 

3.                                       For the purpose of Clause 5 of the Shareholders’ Agreement, the address and facsimile number of the Transferee is:

 

Address:

 

Facsimile No.:

 

4.                                       Nothing in this Deed shall operate to release or discharge the Transferor from any of the Transferor’s obligations and liabilities under the Shareholders’ Agreement, while the Transferor shall remain fully responsible for obligations and liabilities notwithstanding any permitted transfer of Transferred Shares pursuant thereto and hereunder.

 

5.                                       This Deed shall be governed by, and construed in accordance with, the laws of the Cayman Islands.

 

IN WITNESS WHEREOF this Deed has been entered into on the date stated at the beginning.

 

 

The Transferee

 

	
The   Common Seal of
    	
)
    	
 
    
	
 
    	
 
    	
 
    
	
[                           ]
    	
)
    	
 
    
	
 
    	
 
    	
 
    
	
was   hereunto affixed
    	
)
    	
Director
    
	
 
    	
 
    	
 
    
	
in   the presence of:
    	
)
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Director/Secretary
    

 

3

 

APPENDIX B

 

INDEMNITY LETTER

 

Letterhead of Cathay Industrial Biotech Ltd.

 

THIS DEED is made as of [·], [200  ] by Cathay Industrial Biotech Ltd. (“Company”) in favour of [·] (the “Director”).

 

NOW THIS DEED WITNESSES as follows:

 

1.                                       In consideration of the Director acting as a director of the Company at the request of the Company:

 

(a)                                  The Company hereby indemnifies the Director from and against any liability incurred by him in his capacity as a director of the Company in defending any proceedings, whether civil or criminal, in which judgment is given in his favour or in which he is acquitted or in connection with any application in relation to any such proceedings in which relief is under the Cayman Islands Companies Law granted to him by a Court; and

 

(b)                                 The Company hereby indemnifies the Director from and against all liabilities, damages, actions, suits, proceedings, claims, costs, charges and expenses suffered or incurred by or brought or made against the Director as a result of any act matter or thing done or omitted to be done by him in good faith and for the interest or benefit of the Company in the course of his being a director of the Company unless such liabilities, damages, actions, suits, proceedings, claims, costs, charges and expenses are attributable to fraud or other wilful misconduct, or gross negligence of the Director.

 

2.                                       In this Deed, words importing any gender include the other genders and words importing the singular include the plural and vice versa.

 

3.                                       This Deed shall be governed and construed in accordance with the laws of Cayman Islands. The parties submit to the non-exclusive jurisdiction of the Courts of Cayman Islands.

 

IN WITNESS WHEREOF this Deed has been executed and delivered the day and year first hereinbefore mentioned.

 

	
The   Common Seal of
    	
)
    	
 
    
	
 
    	
)
    	
 
    
	
 
    	
 
    	
 
    
	
was   hereunto affixed in
    	
)
    	
Director
    
	
the   presence of:
    	
)
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Director/Secretary
    

 

4

 

AMENDMENT

TO

THIRD AMENDED AND RESTATED SHAREHOLDERS AGREEMENT

 

This AMENDMENT TO THE THIRD AMENDED AND RESTATED SHAREHOLDERS AGREEMENT (this "Amendment"), dated as of October 10, 2008, is entered into by and among CATHAY INDUSTRIAL BIOTECH LTD. (the "Company"), an exempt company incorporated in the Cayman Islands with its registered office at Corporate Filing Services Limited, 4th Floor, Harbour Centre, P.O. Box 613, George Town, Grand Cayman, Cayman Islands, the individuals and entities identified on Schedule 1 of this Amendment, and Xiucai Liu, an individual whose primary place of business is located at Building 5, 3F, 1690 Cailun Road, Zhangjiang Hightech Park, Shanghai, People’s Republic of China.

 

RECITALS

 

WHEREAS, the parties have entered into that certain Third Amended and Restated Shareholders Agreement dated as of October 19, 2007 (the "Shareholders Agreement") by and among the Company, the shareholders of the Company and Xiucai Liu, as amended by that certain Amendment Agreement and Waiver dated as of January 14, 2008 by and among the Company, the shareholders of the Company, and Xiucai Liu;

 

WHEREAS, the parties desire to enter into this Amendment to further amend the terms of the Shareholders Agreement; and

 

WHEREAS, all terms not otherwise defined in this Amendment shall have the meanings ascribed to such terms in the Shareholders Agreement.

 

NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

 

1.             AMENDMENTS

 

1.1          Section 1.1 of the Shareholders Agreement is hereby amended to include the following defined terms:

 

“Additional Series C Subscription Agreement” means the Series C Subscription Agreement dated as of October 10, 2008 entered into among the Company and certain other parties thereto for the subscription and purchase of Series C Preferred Shares.

 

“Capital Repurchase” means the purchase by the Company, pursuant to the Securities Purchase Agreement dated as of September 11, 2008 by and among the Company, Capital and certain shareholders of the Company (the “Capital Agreement”), of all Series C Preferred Shares acquired by Capital pursuant to the Series C Subscription Agreement (the “Capital Shares”).

 

“Subscription Agreements” mean the Series C Subscription Agreement and the Additional Series C Subscription Agreement.

 

1.2          Section 2 of the Shareholders Agreement is hereby amended by including the following new Section 2.5:

 

2.5                                 The Parties hereby acknowledge and agree that each Party has waived in full any and all pre-emptive rights (including without limitation any right to receive notice in connection with such right) that such Party may have under this Agreement with respect the sale and issuance of Series C Preferred Shares by the Company to

 

 

Goldman Sachs, HBM Biomed China and Medy under the Additional Series C Subscription Agreement (the “Additional Series C Financing”).

 

1.3          Section 2.3.6 of the Shareholders Agreement is hereby amended by deleting the words “Series C Subscription Agreement” and replacing such words with “Subscription Agreements”. 

 

1.4          Sections 6.14.1 and 6.14.2 of the Shareholders Agreement are hereby amended by deleting such sections in their entirety and replacing such sections with the following new Sections 6.14.1 and 6.14.2:

 

“6.14.1            The Company shall use its commercially reasonable efforts to achieve a Qualified IPO on or prior to June 30, 2010. In connection with the foregoing, each of the Shareholders shall exercise their voting rights in favor of the Company’s application for such listing. The Company and the Shareholders shall not do or permit to be done or omit or permit to be omitted or otherwise undertake, agree or propose any act, deed, transaction or proposal prejudicial to or which may affect its ability to achieve such listing.

 

6.14.2                  In the event that the Board of Directors and the requisite shareholders of the Company approve an initial public offering of the Company with an Offering Price lower than the Series C Price, each Shareholder shall vote its Shares and any other voting securities of the Company, to approve the Adjustment Payment by the Company to each holder of Series C Preferred Shares (or Ordinary Shares issued upon conversion of such Series C Preferred Shares) in accordance with the Subscription Agreements.”

 

1.5          Section 4 of the Shareholders Agreement is hereby amended by including the following new Section 4.5:

 

“4.5                           The Company (or where relevant, another Group Company) shall not issue any Special Financing Shares (as defined below) at a price per share less than US$4.28 unless the affirmative vote of a holder or holders holding no less than ninety percent (90%) in voting power of the Preferred Shares then outstanding, voting together as a single class, has been obtained (the “Special Preferred Approval”), it being understood that the Company shall not be required to obtain the Special Preferred Approval in connection with the sale and issuance of any equity securities of the Company if any such issuance is undertaken by the Company for any purpose other than in relation to the Capital Repurchase. Notwithstanding the foregoing, any issuance of Special Financing Shares shall be approved by the Board of Directors of the Company (including at least two Preferred Directors). For purposes hereof, the term "Special Financing Shares" means any equity securities of the Company to be issued and sold by the Company following the closing of the Capital Repurchase other than (i) as determined by the Board of Directors of the Company (including at least two Preferred Directors) not to be in relation to such Capital Repurchase or (ii) to the extent the aggregate consideration received by the Company in respect of all other equity securities issued and sold thereby following the Capital Repurchase exceeds US$37,000,000.”

 

2

 

1.6          Section 5.5 of the Shareholders Agreement is hereby amended by including the new Section 5.5.3:

 

“5.5.3                  Notwithstanding anything to the contrary herein, the provisions of Clauses 5.1.6 and 5.4 shall not apply with respect to any Transfer of Series C Preferred Shares by Capital to the Company pursuant to, and in accordance with, the terms and conditions of the Capital Agreement.”

 

1.7          Section 6 of the Shareholders Agreement is hereby amended by including the new Section 6.18:

 

“6.18                     Each Shareholder agrees that following the closing of the Additional Series C Financing pursuant to the Additional Series C Subscription Agreement, (i) each of the Company and Capital shall be permitted to consummate the Capital Repurchase, pursuant to which, amongst other things, the Company shall repurchase from Capital, and Capital transfer and sell to the Company, the Capital Shares at a price equal to US$5.35 per share, and (ii) if and when requested by the Company, such Shareholder shall vote its Shares and any other voting securities of the Company, and shall procure its Director nominees, if any, to vote, and shall take all the other necessary or desirable actions within its control (including without limitation, attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings) to authorize, approve and/or ratify the Capital Repurchase and the Capital Agreement.”

 

1.8          Section 14.1 of the Shareholders Agreement is hereby amended by deleting the words “Series C Subscription Agreement” and replacing such words with “Subscription Agreements”.

 

1.9          Schedule 4 of the Shareholders Agreement is hereby superseded in its entirety by Schedule 4 attached hereto.

 

1.10        Exhibit A of the Shareholders Agreement is hereby superseded in its entirety by Exhibit A attached hereto.

 

2.                                      EFFECTIVENESS; OTHER PROVISIONS

 

This Amendment shall be effective as of the date first above written and all other provisions of the Shareholders Agreement, as amended by the Amendment Agreement and this Amendment, shall remain in full force and effect.

 

3.                                      GOVERNING LAW

 

This Amendment shall be governed by and construed in accordance with the laws of the State of New York.

 

4.                                      COUNTERPARTS

 

This Amendment may be entered into in any number of counterparts, all of which taken together shall constitute one and the same instrument. Any Party may enter into this Amendment by signing any such counterpart. Each Party agrees that signatures may be exchanged by facsimile, and that it is bound by its own facsimile signature and accepts the other Party’s facsimile signature.

 

3

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

	
CATHAY   INDUSTRIAL BIOTECH, LTD.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Xiucai Liu
    	
 
    
	
 
    	
Xiucai   Liu
   Chairman and CEO
    	
 
    

 

Signature Page to Shareholders Agreement Amendment

 

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

	
MEDY   LTD.
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Xiucai Liu
    	
 
    
	
 
    	
Xiucai   Liu 
   Chairman
    	
 
    

 

Signature Page to Shareholders Agreement Amendment

 

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

	
QIXIAN ZHANG
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/   Qixian Zhang
    	
 
    

 

Signature Page to Shareholders Agreement Amendment

 

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

	
PAMELA JEAN CASWELL
    	
 
    
	
 
    	
 
    	
 
    
	
/s/   Pamela Jean Caswell
    	
 
    
	
Pamela Jean Caswell
    	
 
    
			

 

Signature Page to Shareholders Agreement Amendment

 

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

	
PAUL CASWELL
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/   Paul Caswell
    	
 
    

 

Signature Page to Shareholders Agreement Amendment

 

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

DEUTSCHE BANK TRUST COMPANY AND
 PAUL J. CASWELL AS CO-TRUSTEEES OF THE 
 PAUL J. CASWELL 2007 GRAT

 

 

	
By:
    	
/s/   Paul J. Caswell
    	
 
    
	
Name:
    	
Paul   J. Caswell
    	
 
    
	
Title:
    	
Authorized   to Sign
    	
 
    

 

Signature Page to Shareholders Agreement Amendment

 

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

DEUTSCHE BANK TRUST COMPANY AND
 PAUL J. CASWELL AS CO-TRUSTEEES OF THE 
 CASWELL 2007 FAMILY TRUST

 

 

	
By:
    	
/s/   Paul J. Caswell
    	
 
    
	
Name:
    	
Paul   J. Caswell
    	
 
    
	
Title:
    	
Authorized   to Sign
    	
 
    

 

Signature Page to Shareholders Agreement Amendment

 

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

DEUTSCHE BANK TRUST COMPANY AND
 PAMELA CASWELL AS CO-TRUSTEEES OF THE 
 PAMELA CASWELL 2007 GRAT

 

 

	
By:
    	
/s/   Paul J. Caswell
    	
 
    
	
Name:
    	
Paul   J. Caswell
    	
 
    
	
Title:
    	
Authorized   to Sign
    	
 
    

 

Signature Page to Shareholders Agreement Amendment

 

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

	
CHINA   BIOCHEM
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Zhi Yang
    	
 
    	
 
    
	
 
    	
Zhi   Yang
    	
 
    	
 
    
	
 
    	
Managing   Partner
    	
 
    	
 
    

 

Signature Page to Shareholders Agreement Amendment

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

 

	
GSPS ASIA LIMITED
    	
 
    	
ADDRESS:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
68th   Floor, Cheung Kong Center,
    
	
By:
    	
/s/   Morgan C. W. Sze
    	
 
    	
2   Queens Road Central, Hong Kong 
    
	
 
    	
Name:   Morgan C. W. Sze
    	
 
    	
Fax   No.: +852-2978-0515
    
	
 
    	
Title:   Director
    	
 
    	
Attention:   Terence Ting
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
with a copy to (which shall not constitute notice):
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
68th   Floor, Cheung Kong Center,
    
	
 
    	
 
    	
 
    	
2   Queens Road Central, Hong Kong 
    
	
 
    	
 
    	
 
    	
Fax   No.: +852-2978-1966
    
	
 
    	
 
    	
 
    	
Attention:   Karen Ip
    

 

Cathay Series C Share Subscription Agreement

 

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

	
GM   INVESTMENT COMPANY LIMITED
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Samuel Kong
    	
 
    
	
 
    	
Samuel   Kong
    	
 
    
	
 
    	
Director
    	
 
    

 

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

	
GRAMINEAE HOLDINGS COMPANY   LIMITED
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:   
    	
/s/ Zhenzhi Li
    	
 
    
	
 
    	
Zhenzhi Li
    	
 
    
	
 
    	
Director
    	
 
    

 

Signature Page to Shareholders Agreement Amendment

 

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

	
NEW   HORIZON DAIRY INDUSTRY INVESTMENT LIMITED
    

 

	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Jianming Yu
    	
 
    
	
 
    	
Jianming   Yu
    	
 
    
	
 
    	
Director
    	
 
    

 

Signature Page to Shareholders Agreement Amendment

 

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

	
CAPITAL INTERNATIONAL PRIVATE
   EQUITY FUND V, L.P.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:   
    	
/s/   Naomi Kobayashi
    	
 
    
	
Name:   
    	
Naomi   Kobayashi CHNC
    	
 
    
	
Title:   
    	
Authorized   Signer
    	
 
    

 

Signature Page to Shareholders Agreement Amendment

 

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

	
CGPE V, L.P.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:   
    	
/s/   Naomi Kobayashi
    	
 
    
	
Name:   
    	
Naomi   Kobayashi
    	
 
    
	
Title:   
    	
Authorized   Signer
    	
 
    

 

Signature Page to Shareholders Agreement Amendment

 

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

	
NORTHERN   LIGHT VENTURE FUND, L.P.
    	
 
    
	
NORTHERN   LIGHT STRATEGIC FUND, L.P.
    	
 
    
	
NORTHERN   LIGHT PARTNERS FUND, L.P.
    	
 
    
	
By Northern Light Partners L.P.
    	
 
    
	
its General Partner
    	
 
    
	
By Northern Light Venture Capital Limited
    	
 
    
	
its General Partner
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ Jeffrey Lee
    	
 
    
	
Jeffrey   Lee
    	
 
    
	
Director
    	
 
    

 

Signature Page to Shareholders Agreement Amendment

 

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

	
VERBIER INTERNATIONAL INC.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Yung Lap Hang
    	
 
    
	
Name:
    	
Yung Lap Hang
    	
 
    
	
Title: 
    	
Sole Owner
    	
 
    

 

Signature Page to Shareholders Agreement Amendment

 

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

MS CHINA 8 LIMITED

 

 

	
By:
    	
/s/ Emil Costa
    	
 
    
	
Name:
    	
Emil Costa
    	
 
    
	
Title:
    	
Director
    	
 
    

 

Signature Page to Shareholders Agreement Amendment

 

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

NEW ENTERPRISE ASSSOCIATES 12, LIMITED PARTNERSHIP

 

 

	
By:
    	
/s/ Charles W. Newhall
    	
 
    
	
Name:
    	
Charles W. Newhall
    	
 
    
	
Title:
    	
Manager
    	
 
    

 

Signature Page to Shareholders Agreement Amendment

 

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

BIOVEDA CHINA FUND II, L.P.

 

 

	
By:
    	
/s/ Yang Zhi
    	
 
    
	
Name:
    	
Yang Zhi
    	
 
    
	
Title:
    	
Managing Partner
    	
 
    

 

Signature Page to Shareholders Agreement Amendment

 

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

HBM BIOVENTURES (CAYMAN) LTD.

 

 

	
By:
    	
/s/ John Arnold
    	
 
    
	
 
    	
John Arnold
    	
 
    
	
 
    	
Chairman and Managing   Director
    	
 
    

 

Signature Page to Shareholders Agreement Amendment

 

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

HBM BIOMED CHINA

 

 

	
By:
    	
/s/ John Arnold
    	
 
    
	
 
    	
John Arnold
    	
 
    
	
 
    	
Director
    	
 
    

 

Signature Page to Shareholders Agreement Amendment

 

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

NEW HORIZON EVERGREEN INVESTMENT CO., LTD.

 

 

	
By:
    	
/s/ Jianming Yu
    	
 
    
	
 
    	
Jianming Yu
    	
 
    
	
 
    	
Director
    	
 
    

 

Signature Page to Shareholders Agreement Amendment

 

 

Shareholders Agreement

 

IN WITNESS WHEREOF this Amendment has been entered into on the date first above written.

 

 

	
STONE   GROUP HOLDINGS LIMITED
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Yongji Duan
    	
 
    
	
 
    	
Yongji   Duan
    	
 
    
	
 
    	
Chairman
    	
 
    

 

Signature Page to Shareholders Agreement Amendment

 

 

SCHEDULE 4

 

	
Name
    	
 
    	
Contact Details
    	
 
    	
No. of Series C
   Preferred Shares
    
	
Capital   International Private Equity Fund V, L.P.
    	
 
    	
Capital   International Private Equity Fund V, L.P.

c/o Capital International, Inc.
    	
 
    	
9,883,253
    
	
 
    	
 
    	
6455   Irvine Drive
    	
 
    	
 
    
	
 
    	
 
    	
Irvine,   California 92618, USA
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Private Equity Accounting & Administration (C-2D)
    	
 
    	
 
    
	
 
    	
 
    	
Fax:   949 975 4339
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
with   a copy to:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Capital   International, Inc.
    	
 
    	
 
    
	
 
    	
 
    	
11100   Santa Monica Blvd.
    	
 
    	
 
    
	
 
    	
 
    	
15th   Floor
    	
 
    	
 
    
	
 
    	
 
    	
Los   Angeles, California 90025, USA
    	
 
    	
 
    
	
 
    	
 
    	
Attn:   Christopher D. Chen
    	
 
    	
 
    
	
 
    	
 
    	
Fax:   310 996 6171
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
CGPE   V, L.P.
    	
 
    	
Capital   International Private Equity Fund V, L.P.
    	
 
    	
397,121
    
	
 
    	
 
    	
c/o Capital International, Inc.
    	
 
    	
 
    
	
 
    	
 
    	
6455   Irvine Drive
    	
 
    	
 
    
	
 
    	
 
    	
Irvine,   California 92618, USA
    	
 
    	
 
    
	
 
    	
 
    	
Attn:   Private Equity Accounting & Administration (C-2D)
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax:949   975 4339
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
with   a copy to:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Capital   International, Inc.
    	
 
    	
 
    
	
 
    	
 
    	
11100   Santa Monica Blvd.
    	
 
    	
 
    
	
 
    	
 
    	
15th   Floor
    	
 
    	
 
    
	
 
    	
 
    	
Los   Angeles, California 90025, USA
    	
 
    	
 
    
	
 
    	
 
    	
Attn:   Christopher D. Chen
    	
 
    	
 
    
	
 
    	
 
    	
Fax::   310 996 6171
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
HBM   BioVentures (Cayman) Ltd.
    	
 
    	
Address:   Centennial Towers, 3rd
    	
 
    	
747,664
    
	
 
    	
 
    	
 
    	
Floor,   2454 West Bay Road,
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Grand   Cayman, Cayman
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Islands
    	
 
    	
 
    
	
 
    	
 
    	
Fax:
    	
+1   345 946 8003
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   John Arnold
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
HBM   BioMed China
    	
 
    	
Address:   Centennial Towers, 3rd
    	
 
    	
1,869,160
    
	
 
    	
 
    	
 
    	
Floor,   2454 West Bay Road,
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Grand   Cayman, Cayman
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Islands
    	
 
    	
 
    
	
 
    	
 
    	
Fax:
    	
+1   345 946 8003
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   John Arnold
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Stone   Group Holdings Limited
    	
 
    	
Address:
    	
 
    	
934,580
    
	
 
    	
 
    	
27/F.,   K. Wah Centre
    	
 
    	
 
    
	
 
    	
 
    	
191   Java Road, North Point
    	
 
    	
 
    
	
 
    	
 
    	
Hong   Kong
    	
 
    	
 
    

 

 

	
 
    	
 
    	
Fax   No.: +852 2880 5573
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Yongji Duan
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Verbier   International Inc.
    	
 
    	
Address:
    	
 
    	
747,664
    
	
 
    	
 
    	
23/F,   Jing An Center, #8 North Third
    	
 
    	
 
    
	
 
    	
 
    	
Ring   Road East, Chao Yang District,
    	
 
    	
 
    
	
 
    	
 
    	
Beijing,   100028
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +86-10-5108-5666
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Xiaoxin Chen
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
BioVeda   China Fund II, L.P.
    	
 
    	
Address:
    	
 
    	
1,869,159
    
	
 
    	
 
    	
Fax   No.:
    	
 
    	
 
    
	
 
    	
 
    	
Attention:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Northern   Light Venture Fund, L.P.
    	
 
    	
Address:
    	
 
    	
843,554
    
	
 
    	
 
    	
2440   Sand Hill Road Suite 201
    	
 
    	
 
    
	
 
    	
 
    	
Menlo   Park, CA 94025
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +1-650-585-5460
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Jeffrey Lee
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Northern Light Strategic Fund, L.P.
    	
 
    	
Address:
    	
 
    	
185,295
    
	
 
    	
 
    	
2440   Sand Hill Road Suite 201
    	
 
    	
 
    
	
 
    	
 
    	
Menlo   Park, CA 94025
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +1-650-585-5460
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Jeffrey Lee
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Northern   Light Partners Fund, L.P.
    	
 
    	
Address:
    	
 
    	
92,647
    
	
 
    	
 
    	
2440   Sand Hill Road Suite 201
    	
 
    	
 
    
	
 
    	
 
    	
Menlo   Park, CA 94025
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +1-650-585-5460
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Jeffrey Lee
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
New   Enterprise Associates 12,
    	
 
    	
Address:
    	
 
    	
373,832
    
	
Limited   Partnership
    	
 
    	
1119   St. Paul Street
    	
 
    	
 
    
	
 
    	
 
    	
Baltimore,   MD 21202, USA
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +1-410-752-7721
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Louis Citron
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
MS   China 8 Limited
    	
 
    	
Address:
    	
 
    	
1,869,159
    
	
 
    	
 
    	
M&C   Corporate Services Limited
    	
 
    	
 
    
	
 
    	
 
    	
PO   Box 309 GT Grand Cayman
    	
 
    	
 
    
	
 
    	
 
    	
George   Town Cayman Islands
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +852-3407-5987
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Andrew Wise
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
With   a copy to:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
5/F,   Two Exchange Square
    	
 
    	
 
    
	
 
    	
 
    	
Central,   Hong Kong
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +852-3407-5128
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   James Tam
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
GSPS   Asia Limited
    	
 
    	
Address:   68th Floor, Cheung   Kong
    	
 
    	
2,803,739
    
	
 
    	
 
    	
Center,   2 Queens Road Central, Hong Kong
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +852-2978-0515
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Terence Ting
    	
 
    	
 
    
	
 
    	
 
    	
Copy:   Karen Ip at the same address
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Gramineae   Holdings Company 
    	
 
    	
Address:   Suite 305, St. George’s
    	
 
    	
1,869,159
    
	
Limited
    	
 
    	
Building,   2 Ice House Street, Central,
    	
 
    	
 
    
	
 
    	
 
    	
Hong   Kong
    	
 
    	
 
    

 

 

	
 
    	
 
    	
Fax   No.: +852-2521-8023
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Andrew Lo
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
with   a copy to
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Clifford   Chance LLP
    	
 
    	
 
    
	
 
    	
 
    	
Address:   40th Floor, Bund Center, 222
    	
 
    	
 
    
	
 
    	
 
    	
Yan   An East Road, Shanghai 200002,
    	
 
    	
 
    
	
 
    	
 
    	
PRC
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +86-21-6335-0337
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Yanping Cao
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
GM   Investment Company
    	
 
    	
Address:
    	
48/F,   Bank of China Tower
    	
 
    	
826,190
    
	
Limited
    	
 
    	
 
    	
1   Garden Road
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Central,   Hong Kong
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +852 3605 8189
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Samuel Kong
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
New   Horizon Dairy Industry
    	
 
    	
Address:
    	
Jin   Bao Tower, 12th   Floor,
    	
 
    	
1,869,159
    
	
Investment   Limited
    	
 
    	
 
    	
89   Jin Bao Street
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Dong   Cheng District
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Beijing,   PRC
    	
 
    	
 
    
	
 
    	
 
    	
Fax   No.: +86-10-8522-1235
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Jianming Yu
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Medy   Ltd.
    	
 
    	
Address:   
    	
c/o   Cathay Industrial
    	
 
    	
1,495,328
    
	
 
    	
 
    	
 
    	
Biotech   Ltd., 3F, Building
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
5,   1690 Cailun Road, 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Zhangjiang   Hightech Park,
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Shanghai   201203, PRC
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax:   86-21-5080-1386
    	
 
    	
 
    
	
 
    	
 
    	
Attention:   Dr. Xiucai Liu
    	
 
    	
 
    
	
Total
    	
 
    	
 
    	
 
    	
28,676,663
    

 

 

EXHIBIT A

GROUP COMPANIES

 

1.                                       Cathay Industrial Biotech Ltd., a Cayman Islands company.

 

2.                                       Cathay BioMaterials Limited (“Cathay BioMaterials”), a wholly-owned subsidiary of the Company incorporated under the laws of the British Virgin Islands.

 

3.                                       Cathay Industrial Biotech (Hong Kong) Limited (“Cathay Hong Kong”), a wholly owned subsidiary of the Company incorporated in Hong Kong.

 

4.                                       Cathay Industrial Biotech (UK) Ltd. (“Cathay UK”), a wholly owned subsidiary of the Company established under the law of the United Kingdom.

 

5.                                       Shanghai Cathay Industrial Biotech Co., Ltd. (上海凯赛生物科技有限公司) (“Cathay Shanghai”), a wholly-owned subsidiary of the Company established under PRC law.

 

6.                                       Shanghai Cathay Biotechnology R&D Co., Ltd. (上海凯赛生物技术研发中心有限公司) (“Cathay R&D”), a wholly-owned subsidiary of the Company established under PRC law.

 

7.                                       Shandong Cathay Industrial Biotech Limited. (山东凯赛生物技术有限公司)(“Cathay SD Industrial”), a wholly-owned subsidiary of the Company established under PRC law.

 

8.                                       Jilin Cathay Industrial Biotech Limited. (吉林凯赛生物技术有限公司)(“Cathay Jilin”), a wholly-owned subsidiary of the Company established under PRC law.

 

9.                                       Shandong Cathay Biotechnology Co., Ltd. (山东凯赛生物科技材料有限公司) (“Cathay Shandong”), a Sino-foreign joint venture enterprise established under PRC law. Cathay Shanghai and Cathay BioMaterials, holds 70.25% and 29.75%, respectively, of the equity interests in Cathay Shandong.

 

10.                                 Shandong Degussa Cathay Biotech Co. Ltd ( 山东德固赛凯赛生物技术有限公司) (“Degussa Cathay Biotech”), a Sino-Foreign Joint Venture Company established under PRC law. Cathay Shandong and Degussa (China) Co., Ltd.(“Degussa China”) holds 49% and 51%, respectively, of the equity interests in the Degussa Cathay Biotech.

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