Document:

EX-4.7

Exhibit 4.7

Dated June 20, 2007

CHINA LODGING GROUP, LIMITED

FOUNDERS NAMED IN SCHEDULE 1

WFOES NAMED IN SCHEDULE 2

and

INVESTORS NAMED IN SCHEDULE 3

 

SERIES B PREFERRED SHARE

PURCHASE AGREEMENT

Relating to

CHINA LODGING GROUP, LIMITED

 

 

 

Exhibit 4.7

Page 1

SERIES B PREFERRED SHARES PURCHASE AGREEMENT

     THIS SERIES B PREFERRED SHARES PURCHASE AGREEMENT (this
“Agreement”) is made as of this June
20, 2007, by and among China Lodging Group, Limited, a company incorporated in the Cayman Islands
as company No. 179930 having its registered office at the office of Offshore Incorporations
(Cayman) Limited, Scotia Centre, 4th Floor, P.O. Box 2804, George Town, Grand Cayman, Cayman
Islands (the “Company”), each of the persons listed in Schedule 1 attached hereto (each a
“Founder” and collectively, the “Founders”), each of the entities listed in Schedule 2
attached hereto (each a “WFOE” and collectively, the “WFOEs”), and each of the investors listed in
Schedule 3 attached hereto (each an “Investor” and collectively, the “Investors”).

RECITALS

	 	A.	 	The Founders and the Co-Founders (as defined below) own legally or
beneficially all of the issued and outstanding share capital of the Company.
	 
	 	B.	 	The Company is (or prior to October 1, 2007 the Company will be) the holding
company and 100% parent company of each of the WFOEs, which engage in the business of
property management, hotel management, property conversion and property improvement
(the “Business”).
	 
	 	C.	 	The Founders and the Company seek to induce the Investors to invest in the
Company and the Group Companies (as defined below).
	 
	 	D.	 	The Investors wish to invest in the Company and the Group Companies and, to
that end, wish to subscribe for certain preferred shares to be newly issued by the
Company pursuant to the terms and subject to the conditions of this Agreement.

NOW, THEREFORE, in consideration of the premises set forth above, the mutual covenants and
agreements set forth herein and for other good and valuable consideration, the adequacy of which
is hereby acknowledged, the parties hereto hereby agree as follows:

CERTAIN DEFINITIONS

For purposes of this Agreement:

“Affiliate” means, with respect to any given Person, any other Person directly or
indirectly Controlling, Controlled by, or under common Control with such Person and, where
the given Person is an individual, the spouse, parent, sibling, or child thereof.

“Agreement” has the meaning ascribed thereto in the Preamble.

“Ancillary Documents” means, collectively, the Shareholders Agreement, the Memorandum and
Articles, the Founder Warrant, the Investor Warrants, the Shareholder Loan Agreement and
any other document or agreement contemplated by this Agreement or any Ancillary Document.

“Applicable Law” means, with respect to any Person, any and all provisions of any
constitution, treaty, statute, law, regulation, ordinance, code, rule, judgment, rule of

 

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common law, order, decree, award, injunction, governmental approval, concession, grant, franchise,
license, agreement, directive, requirement, or other governmental restriction or any similar form
of decision of, or determination by, or any interpretation or administration of any of the
foregoing by, any Government Entity, whether in effect as of the date hereof or thereafter and in
each case as amended, applicable to such Person or its subsidiaries or their respective assets.

“Arbitration Notice” has the meaning ascribed thereto in Section 9.12.

“Articles” means the Amended and Restated Articles of Association of the Company in the form
attached hereto as Exhibit A adopted by the Shareholders of the Company on or prior to the
date hereof.

“Audited Financials” means the audited consolidated financial statements of the Group Companies for
the twelve-month period starting from January 1, 2006 and ending twelve months thereafter, audited
and certified by independent public accountants of internationally recognized standing selected by
the Company in accordance with GAAP.

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

“Business”
has the meaning ascribed thereto in the Recitals.

“CFC” means a controlled foreign corporation as defined in the Code.

“Chengwei” means, collectively, Chengwei Partners, L.P., an exempted limited partnership organized
and existing under the laws of the Cayman Islands, Chengwei Ventures Evergreen Fund, L.P., an
exempted limited partnership organized and existing under the laws of the Cayman Islands, and
Chengwei Ventures Evergreen Advisors Fund, LLC, an exempted limited liability company organized and
existing under the laws of the Cayman Islands.

“Closing” has the meaning ascribed thereto in Section 2.2.

“Closing Date” has the meaning ascribed thereto in Section 2.2.

“Code” means the Internal Revenue Code of 1986, as amended.

“Co-Founders” means MS. TONG TONG ZHAO, (Canadian passport number: JW698597), 5-22C, 118 Ziyun
Road, Shanghai, 200051, P.R.China and MR. JOHN JIONG WU, (United States passport number:
302014663), 774 Mays Blvd. #Ste 10 – 337, Incline Village, NV 89452, USA; a “Co-Founder” means any
of the Co-Founders.

“Company” has the meaning ascribed thereto in the Preamble.

“Company Warrantors” means the Company, each of the WFOEs and each of the Founders.

“Confidential Information” has the meaning ascribed thereto in Section 7.6.

 

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“Consent” means any consent, approval, authorization, waiver, permit, grant, franchise,
concession, agreement, license, exemption or order of, registration, certificate, declaration or
filing with, or report or notice to, any Person, including any Government Entity.

“Constitutional Documents” means, with respect to any Person, the Certificate of Incorporation,
Memorandum of Association, Articles of Association, Joint Venture Agreement, or similar
constitutive documents for such Person.

“Contemplated Transactions” means the transactions contemplated hereby and by each of the other
Transaction Documents.

“Contract” means any agreement, arrangement, bond, commitment, franchise, indemnity, indenture,
instrument, lease, license or binding understanding, whether or not in writing.

“Control” means, when used with respect to any Person, the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms “Controlling” and “Controlled” have meanings
correlative to the foregoing.

“Conversion Shares” shall mean the Ordinary Shares issued or issuable upon conversion of any
Series B Preferred Shares.

“Disclosure Schedule” means, as of the date hereof, the Disclosure Schedule attached hereto as
Exhibit C and as of the Closing, the Disclosure Schedule
attached hereto as Exhibit C, as modified or supplemented by the
Investors and the Company Warrantors in accordance with
Section 3.

“Dispute” has the meaning ascribed thereto in Section 9.12.

“Encumbrance” means any claim, charge, easement, encumbrance, lease, covenant, security interest,
lien, option, pledge, rights of others, or restriction (whether on voting, sale, transfer,
disposition or otherwise), whether imposed by agreement, understanding, law, equity or otherwise.

“Founder” or “Founders” has the meaning ascribed thereto in the Preamble.

“Founder Warrant” means the warrant to be issued by the Company to Winner Crown Holdings Limited
in accordance to Section 5.14.

“GAAP” means the generally accepted accounting principles of the United States.

“Government Entity” means any government or any agency, bureau, board, commission, court,
department, official, political subdivision, tribunal or other instrumentality of any government.

“Government Official” means any officer or employee of a Government Entity (including, for
purposes of this definition, any entity or enterprise owned or controlled by a government), or any
Person acting in an official capacity for or on behalf of any such Government Entity.

 

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“Group Companies” means the Company and all of its Subsidiaries, except, for the purposes of
Section 3, excluding any Subsidiary not existing on or before April 30, 2007; a “Group
Company” means any of the Group Companies.

“HKIAC” has the meaning ascribed thereto in Section 9.12.

“Hong Kong” means the Hong Kong Special Administrative Region.

“IDG” means, collectively, IDG-Accel China Growth Fund L.P., IDG-Accel China Growth Fund-A L.P.
And IDG-Accel China Investors L.P., each an exempted limited partnership organized and existing
under the laws of the Cayman Islands.

“Improvements” has the meaning ascribed thereto in Section 3.10.

“Indemnifiable Loss” means, with respect to any Person, any action, cost, damage, disbursement,
expense, liability, loss, deficiency, diminution in value, obligation, penalty or settlement of any
kind or nature, other than consequential damages that a party in breach does not, and did not, have
reason to foresee as a probable result of such breach. Notwithstanding anything to the contrary
provided in the preceding sentence, “Indemnifiable Loss” shall include, but shall not be limited
to, (i) interest or other carrying costs, penalties, legal, accounting and other professional fees
and expenses reasonably incurred in the investigation, collection, prosecution and defense of
claims and amounts paid in settlement, that may be imposed on or otherwise incurred or suffered by
such Person and (ii) any Taxes that may be payable by such Person by reason of the indemnification
of any Indemnifiable Loss hereunder, other than Taxes that would have been payable notwithstanding
the event giving rise to indemnification.

“Indemnified Party” has the meaning ascribed thereto in Section 9.1.

“Indemnifying Party” has the meaning ascribed thereto in Section 9.1.

“Intellectual Property” has the meaning ascribed thereto in Section 3.13.

“Intellectual Property License” has the meaning ascribed thereto in Section 3.13.

“Investor” or “Investors” has the meaning ascribed thereto in the Preamble.

“Investor Warrants” means the warrants to be issued by the Company to the Investors in accordance
with Section 5.15.

“IPO” means an initial public offering of the Company’s Ordinary Shares on the New York Stock
Exchange, the NASDAQ Global Market, the Main Board of the Hong Kong Stock Exchange or any other
exchange of recognized international reputation and standing duly approved by the Board.

“Key Management Personnel” means each of the following positions, or positions with similar
responsibilities, in any Group Company: (i) the Chief Executive Officer (responsible for general
strategic direction with emphasis on sales, marketing and business development), (ii) the Chief
Financial Officer (responsible for fund raising, financial control and management), (iii) the Chief
Operating Officer or Head of Operations (responsible for operations, public relations and corporate
marketing), and

 

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(iv) the Executive Vice President of any functional department. A list of the Key Management
Personnel is attached hereto as Exhibit D.

“Knowledge” means, with respect to any Person, the actual knowledge of such Person and that
knowledge which should have been acquired by such Person after making such due inquiry and
exercising such due diligence as a prudent business person would have made or exercised in the
management of his or her business affairs, including due inquiry of those officers, directors, key
employees and professional advisers (including attorneys, accountants and consultants) of the
Person and its Affiliates who could reasonably be expected to have knowledge of the matters in
question.

“Land Use Rights” has the meaning ascribed thereto in Section 3.10.

“Lead Investors” means Chengwei and CDH Courtyard Limited, a company incorporated under the laws
of the British Virgin Islands; a “Lead Investor” means any of the Lead Investors.

“Lease” has the meaning ascribed thereto in Section 3.10.

“Liabilities” means, with respect to any Person, liabilities owing by such Person of any nature,
whether accrued, absolute, contingent or otherwise, and whether due or to become due.

“Material Adverse Effect” means a material adverse effect (taking into account all the concurrent
adverse effects) on (i) the operations, results of operations, financial condition or assets of
the Company and the other Group Companies, taken as a whole, or (ii) the ability of the Company
and the other Group Companies, taken as a whole, to observe and perform the respective material
obligations under any Transaction Documents to which they are a party; provided, that knowledge of
such matter could reasonably be expected to severely and negatively impact a potential third-party
investor’s valuation of the Company and be considered material and important by a reasonable
third-party investor in deciding to invest in the Company.

“Material Contract” means, with respect to any Person, any outstanding Contract material to the
business of such Person as of or after the date hereof and includes, but is not limited to, those
Contracts deemed material by Section 3.12(v).

“Memorandum” means the Amended and Restated Memorandum of Association of the Company in the form
attached hereto as Exhibit A adopted by the Shareholders of the Company on or prior to the
date hereof.

“MOFCOM” means the Ministry of Commerce or its local branches or, with respect to any matter to be
submitted for examination and approval by the Ministry of Commerce or its local branches, any
Government Entity which is similarly competent to examine and approve such matter under the laws of
the PRC.

“Mortgage” has the meaning ascribed thereto in Section 3.10.

“Noteholders” shall mean IDG-Accel China Growth Fund L.P., IDG-Accel China Growth Fund-A L.P. and
IDG-Accel China Investgors L.P., each an exempted limited partnership organized and existing under
the laws of the Cayman Islands.

 

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“Note Agreement” means the Convertible Note Purchase Agreement entered into by and between the
Company and the Noteholders on March 28, 2007 and the Convertible Promissory Notes, dated March
30, 2007, issued by the Company thereunder.

“Ordinary Shares” means the ordinary shares of par value US$0.0001 each in the capital of the
Company, having the rights and obligations as set out in the Memorandum and Articles.

“Person” means any individual, partnership, corporation, trust or other entity (including, without
limitation, any unincorporated joint venture and whether or not having separate legal
personality).

“Principal Tribunal” has the meaning ascribed thereto in Section 9.12.

“PFIC” means a passive foreign investment company as defined in the Code.

“Pinpoint” means Pinpoint Capital 2006 A Limited, a company incorporated in the Territory of the
British Virgin Islands.

“PRC” means the People’s Republic of China, but solely for the purposes of this Agreement and all
Ancillary Documents, excluding the Hong Kong Special Administrative Region, the Macau Special
Administrative Region and the islands of Taiwan.

“Purchase Price” has the meaning ascribed thereto in Section 2.1.

“Qualified IPO” means a firm commitment, underwritten IPO by the Company of its Ordinary Shares
with (i) a market capitalization of the Company equal to no less than US$495 million (or the
equivalent thereof in other currencies) immediately prior to the IPO, and (ii) total offering
proceeds to the Company, before deduction of selling expenses, of not less than US$50 million (or
the equivalent thereof in other currencies).

“Related Party” means any of the officers, directors, supervisory board members, or equityholders
of the Company or any other Group Company or any Affiliates of such officers, directors,
supervisory board members, or equityholders.

“RMB¥” means Renminbi, the lawful currency of the PRC;

“SAIC” means the State Administration of Industry and Commerce or its local branches or, with
respect to the issuance of any business license or filing or registration to be effected with or by
the State Administration of Industry and Commerce or its local branches, any Government Entity
which is similarly competent to issue such business license or accept such filing or registration
under the laws of the PRC.

“SEC” means the U.S. Securities and Exchange Commission.

“Securities” has the meaning ascribed thereto in Section 4.2.

 

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“Securities Act” means the U.S. Securities Act of 1933, as amended and interpreted from time to
time.

“Selected Financial Information” means the selected interim financial information of the Company
as of April 30, 2007 attached hereto as Exhibit F.

“Series A Holders” means holders of Series A Preferred Shares of the Company.

“Series A Preferred Shares” means Series A Preferred Shares of the Company, par value US$0.0001
per share, with the rights and privileges as set forth in the Memorandum and Articles.

“Series B Preferred Shares” means Series B Preferred Shares of the Company, par value US$0.0001
per share, with the rights and privileges as set forth in the Memorandum and Articles.

“Shareholders” means the holders of the Ordinary Shares, Series A Preferred Shares and Series B
Preferred Shares.

“Shareholder Loan Agreement” means the Loan Repayment and Share Purchase Agreement substantially
in the form of Exhibit K attached hereto, to be entered into by and among the Company, the
Founder and the Co-Founders.

“Shareholders Agreement” means an amended and restated shareholders agreement substantially in the
form of Exhibit B attached hereto, to be entered into by and among the Company, Series A
Holders, the Investors and the Founders.

“Share Option Plan” has the meaning ascribed thereto in the Shareholders Agreement.

“Significant Breach” means a material adverse effect on the operations, results of operations,
financial condition or assets of the Company or any other Group Company; provided, that for
purposes of the representations provided in Section 3, any such material adverse effect
resulting in any loss, directly or indirectly, of (a) at least US$100,000, or its equivalent in
other currencies, to any Group Company other than the Company or a WFOE, shall constitute a
Significant Breach with respect to such Group Company, (b) at least US$150,000, or its equivalent
in other currencies, to any WFOE, shall constitute a Significant Breach with respect to such WFOE,
and (c) at least US$250,000, or its equivalent in other currencies, to the Company and all Group
Companies taken as a whole, shall constitute a Significant Breach with respect to the Company.

“Social Security Funds” means pension funds, housing funds, unemployment insurance, medical
insurance and any other social security funds as provided by the PRC authorities from time to time
to which an employer in the PRC is obliged to make contributions for its employees.

“Subsidiary” means, with respect to any given Person, any other Person (other than a natural
Person) Controlled by such given Person, including but not limited to the WFOEs).

 

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“Tax” means any national, provincial or local income, sales and use, excise, franchise,
real and personal property, gross receipt, capital stock, production, business and
occupation, disability, employment, payroll, severance or withholding tax or any other type
of tax, levy, assessment, custom duty or charge imposed by any Government Entity, any
interest and penalties (civil or criminal) related thereto or to the nonpayment thereof,
and any loss or Tax Liability incurred in connection with the determination, settlement or
litigation of any Liability arising therefrom.

“Tax Return” means any tax return, declaration, reports, estimates, claim for refund, claim
for extension, information returns, or statements relating to Taxes, including any schedule
or attachment thereto.

“Transaction Documents” means this Agreement and the Ancillary Documents.

“U.S.” means the United States of America.

“Unaudited Pro Forma Financials” means the unaudited pro forma financial statements of the
Group Companies prepared on an as-if consolidated basis for the twelve month period ended on
December 31 2006 and the four month period ended on April 30, 2007, including all notes
thereto, attached hereto as Exhibit E.

“US$” means United States dollars, the lawful currency of the U.S.

“Warrant” means any of the Founder Warrant and the Investor Warrants.

“Warrant Shares” means the Series B Preferred Shares issuable or issued upon exercise of
any Warrant.

“WFOE” or “WFOEs” has the meaning ascribed thereto in the Preamble.

1. Interpretation.

     1.1 For all purposes of this Agreement, except as otherwise expressly provided, (i) the terms
defined in above shall have the meanings assigned to them above and shall include the plural as
well as the singular, (ii) all accounting terms not otherwise defined herein have the meanings
assigned under GAAP consistently applied, (iii) all references in this Agreement to designated
“Sections” and other subdivisions are to the designated Sections and other subdivisions of the body
of this Agreement, (iv) pronouns of either gender or neuter shall include, as appropriate, the
other pronoun forms, (v) the words “herein,”
“hereof” and “hereunder” and other words of similar
import refer to this Agreement as a whole and not to any particular Section or other subdivision,
(vi) all references in this Agreement to designated Schedules and Exhibits are to the Schedules and
Exhibits attached to this Agreement unless explicitly stated otherwise, and (vii) any formula that
purports to calculate the excess of one value over another shall be deemed to yield a value equal
to zero if there is no excess.

2. Sale and Purchase of Series B Preferred Shares.

     2.1 Sale and Purchase. Subject to the terms and conditions of this Agreement, at the Closing,

 

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     (i) each Investor agrees severally and not jointly to subscribe for and
purchase, and the Company agrees to issue and sell to such Investor, the number of Series B
Preferred Shares indicated next to such Investor’s name in Schedule 3 hereto for the
amount of consideration indicated next to such Investor’s name as set forth in Schedule
3 hereto (such consideration in the aggregate, the “Purchase Price”);

     (ii) each Noteholder agrees to convert all of its outstanding principal, together
with any accrued and unpaid interest thereon, under the Note Agreement to, and the Company
agrees to issue to such Noteholder, the number of Series B Preferred Shares indicated next
to such Noteholder’s name in Schedule 3 hereto at the Conversion Price (as defined
in the Note Agreement) and for an aggregate amount of consideration indicated next to such
Noteholder’s name as set forth in Schedule 3 hereto.

     2.2 Closing. The purchase and sale of the Series B Preferred Shares (the “Closing”) shall
take place at the office of O’Melveny & Myers LLP, Plaza 66, 37th Floor, 1266 Nanjing Road West,
Shanghai 200040, PRC on June 20, 2007 or at such other place and on such other date as mutually
agreed to by the parties hereto after all conditions to the Closing under Sections 5 and 6
hereof have been waived or satisfied (the date on which the Closing occurs, the “Closing Date”).

     2.3 Closing Deliveries. At the Closing:

          (i) each Investor shall deliver to the Company:

     (a) by wire transfer in immediately available funds to an account designated
by the Company or by other payment method(s) mutually agreed to by the Company and
the Investor such Investor’s portion of the Purchase Price set forth on
Schedule 3 hereto,

     (b) with respect to a Noteholder, a conversion notice and any other instrument
or other document reasonably required by the Company to evidence conversion of each
Convertible Promissory Note held by such Noteholder,

     (c) original counterparts of this Agreement duly executed by the Investor, and

     (d) original counterparts of the Shareholders Agreement duly executed by the
Investor; and

          (ii) the Company shall deliver to each Investor:

     (a) a copy of the Company’s Register of Members certified by a director of the
Company which reflects the Series B Preferred Shares that each Investor is
purchasing pursuant to Section 2.1 hereof,

     (b) original share certificates representing the Series B Preferred Shares
that each Investor is purchasing pursuant to Section 2.1 hereof,

     (c) original counterparts of this Agreement duly executed by the Company, each
WFOE and each Founder,

 

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     (d) original counterparts of the Shareholders Agreement duly executed by the
Company, each Series A Holder, each Founder, each Co-Founder and each other party
to the Shareholders Agreement (other than the Investors), and

     (e) a copy of the Shareholder Loan Agreement duly executed by all parties
thereto.

     (iii) if so requested by an Investor, the Company shall deliver to such Investor
a management rights letter substantially in the form of Exhibit I attached hereto.

3. Representations and Warranties of the Company. Each Company Warrantor
jointly and severally represents, warrants and covenants to each of the Investors that all of the
representations and warranties set out in this Section 3 (subject to further adjustment
pursuant to this Section 3) will be true, accurate and complete as of the Closing Date
(except for representations and warranties made as of a specified date, in which case such
representations and warranties shall be true, accurate and complete as of such specified date), as
qualified by the disclosures set forth in the Disclosure Schedule with specific reference to the
Section to which exception is being taken. Between the date of this Agreement and the Closing
Date, representations and warranties set out in this Section 3 may be modified or
supplemented by mutual written agreement of the Investor and the Company Warrantors. On or before
the Closing Date, the Company Warrantors shall notify the Investors of any fact that causes,
constitutes or will cause or constitute a breach of any representations and warranties set forth
in this Section 3, as amended from time to time.

     3.1 Corporate Status.

     (i) The Company is an exempted company, duly organized, validly existing and in good
standing under the laws of the Cayman Islands. The Company has all requisite corporate
power and authority to own and operate its properties, to carry on its business as now
conducted and as proposed to be conducted and to perform each of its obligations hereunder
and under any Ancillary Document which it may enter into pursuant to the terms hereof. The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which such qualification is required. Since its establishment, the Company
has carried on its business in compliance with Applicable Law.

     (ii) The Company is a holding company and has no business activities other than the
ownership of the WFOEs. The Company has no Liabilities or obligations and is not party to
any agreement, contract or commitment, other than (a) this Agreement and the Ancillary
Documents; (b) any Liabilities or obligations relating solely to the transactions
contemplated by this Agreement or by the Ancillary Documents; (c) Liabilities under the
Note Agreement; (d) Liabilities reflected in the Unaudited Pro Forma Financials; and (e)
Liabilities incurred in the ordinary course of business after April 30, 2007 and not
exceeding US$100,000 (or its equivalent in any other currency) in the aggregate.

     (iii) Except as disclosed in Section 3.1(iii) of the Disclosure Schedule,
each WFOE is duly organized and validly existing under the laws of the PRC. Each Group
Company has secured all Consents required from any Government Entity for the

 

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formation and establishment thereof, including, without limitation, MOFCOM approval (if
applicable) for such formation and establishment. Except as disclosed in Section 3.1(iii)
of the Disclosure Schedule, each Group Company has a valid business license issued by the SAIC and
has the corporate power and authority to own and operate its properties, to carry on its business
as now conducted and as proposed to be conducted and to perform each of its obligations hereunder
and under any Ancillary Document which it may enter into as contemplated hereunder. Except as
disclosed in Section 3.1(iii) of the Disclosure Schedule, each Group Company has, since
its establishment, carried on its business in compliance with Applicable Law and within the
business scope set forth in its business license. The matters disclosed
Section 3.1(iii) of the Disclosure Schedule, whether individually or taken as a whole,
have not
constituted and shall not constitute or lead to a Significant Breach with respect to any
Group Company. Each Group Company has passed its statutory annual inspection in
the year 2005, as evidenced by an appropriate seal affixed to its current business
license, and shall pass its statutory annual inspection in the year 2006.

     (iv) The minute books for each WFOE, together with all the records filed with the SAIC,
contain complete and accurate records of all meetings conducted, resolutions adopted, and written
consents entered into by such WFOE’s shareholders and board of directors (or committees thereof)
since the date of its incorporation. A true and complete copy of the minute books for each WFOE,
together with all the records filed with the SAIC, have been provided to the Investors.

     3.2 Power and Authority; Authorization.

     (i) All corporate action necessary on the part of the Company and its officers, directors and
shareholders has been taken for the authorization, execution, and delivery by the Company of this
Agreement and the performance by the Company of its obligations hereunder. As of the Closing, all
corporate action necessary on the part of the Company and its officers, directors and shareholders
will have been taken for the authorization, execution and delivery by the Company of any Ancillary
Document and any other agreements and/or instruments which it may execute or enter into pursuant to
the terms hereof, for the performance by the Company of its obligations thereunder, and for the
authorization, issuance (or reservation for issuance), sale and delivery of all Series B Preferred
Shares and Warrants to be sold hereunder and of all Warrant Shares and Conversion Shares. This
Agreement constitutes, and any Ancillary Document or other agreement and/or instrument which the
Company may become party to pursuant to the terms hereof will constitute, the valid and legally
binding obligation of the Company, enforceable in accordance with its terms, except (a) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, and (b) as limited by laws
relating to the availability of specific performance, injunctive relief or other remedies in the
nature of equitable remedies.

     (ii) All corporate action necessary on the part of any Group Company which is party hereto
and its officers, directors and shareholders has been taken for the authorization, execution and
delivery by such Group Company of this Agreement and the performance by such Group Company of its
obligations hereunder. As of the Closing, all corporate action necessary on the part of any Group
Company and its

 

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officers, directors and shareholders will have been taken for the authorization, execution
and delivery by such Group Company of any Ancillary Document and any other agreements and/or
instruments which it may execute or enter into as contemplated hereunder and for the
performance by such Group Company of its obligations thereunder. Any Ancillary Document or
other agreement and/or instrument which any Group Company may become party to pursuant to
the terms hereof will constitute the valid and legally binding obligation of such Group
Company, enforceable in accordance with its terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, and (b) as limited by laws relating to
the availability of specific performance, injunctive relief or other remedies in the nature
of equitable remedies.

     3.3 Valid Issuance. The Series B Preferred Shares and the Investor Warrants being purchased
by each Investor hereunder, when issued, sold and delivered in accordance with the terms of this
Agreement for the consideration expressed herein, will be duly and validly issued, fully-paid and
non-assessable, and will be free of restrictions on transfer and other Encumbrances, other than
such restrictions on transfer or other Encumbrances as may be imposed by this Agreement or the
Ancillary Documents. On and after the Closing, the Warrant Shares and Conversion Shares will have
been duly and validly reserved for issuance and, upon issuance in accordance with the terms of the
Warrants or Memorandum and Articles, as the case may be, will be duly and validly issued,
fully-paid, and non-assessable and will be free of restrictions on transfer and other
Encumbrances, other than such restrictions on transfer or other Encumbrances as may be imposed by
this Agreement or the Ancillary Documents.

     3.4 Compliance; No Violations.

     (i) Except as disclosed in Section 3.4(i) of the Disclosure Schedule, no
Consent is required of any Government Entity on the part of any Group Company in
connection with the consummation of the transactions contemplated by this Agreement or by
the Ancillary Documents. The Consents described in Section 3.4(i) of the
Disclosure Schedule have been duly obtained and include all of the material Consents that
any Group Company is required to obtain from any Government Entity or other Person in
respect of its business as now conducted or as proposed to be conducted. All Consents
described in Section 3.4(i) of the Disclosure Schedule have been duly secured and
are in full force and effect, and each Group Company is in compliance with the terms of
each such Consent. None of the Group Companies is in violation of any term or provision of
its Constitutional Documents. The matters disclosed in Section 3.4 (i) of the Disclosure
Schedule, whether individually or taken as a whole, have not constituted and shall not
constitute or lead to a Significant Breach with respect to any Group Company.

     (ii) None of the Company or any WFOE is in violation of any term or provision of any
indebtedness, mortgage, Contract, or any Applicable Law, the violation of which could,
whether individually or in the aggregate, constitute or lead to a Significant Breach with
respect to the Company or any WFOE.

     (iii) Except as disclosed in Section 3.4(iii) of the Disclosure Schedule, the
execution, delivery, and performance by any of the Company or the WFOEs of this Agreement
and any Ancillary Documents which it may enter into pursuant to the

 

Page 13

terms hereof requires no Consent of any third party and (a) will not result in any violation of,
be in conflict with, or constitute a default under, with or without the passage of time or the
giving of notice, any provision of its Constitutional Documents as in effect at the date hereof,
any Applicable Law, or any material Contract or obligation to which it is a party or by which it
is bound, (b) accelerate or constitute an event entitling the holder of any indebtedness of the
Company or any WFOE to accelerate the maturity of any such indebtedness or to increase the rate of
interest presently in effect with respect to such indebtedness, or (c) result in the creation of
any Encumbrance upon any of the properties or assets of the Company or any WFOE.

3.5 Capitalization.

     (i) As of the date hereof, the authorized capital of the Company consists 100,000,000
Ordinary Shares of a nominal or par value of US$0.0001 each, of which 44,000,000 shares are issued
and outstanding, and 100,000,000 Series A Preferred Shares of a nominal or par value of US$0.0001
each, of which 44,000,000 shares are issued and outstanding. Immediately prior to the Closing, the
authorized capital of the Company will consist of 200,000,000 Ordinary Shares of a nominal or par
value of US$0.0001 each, of which 44,000,000 shares will be issued and outstanding, 44,000,000
Series A Preferred Shares of a nominal or par value of US$0.0001 each, of which 44,000,000 shares
will be issued and outstanding and 60,000,000 Series B Preferred Shares of a nominal or par value
of US$0.0001 each, none of which will be issued and outstanding. As of the Closing, the Company
shall have reserved 35,873,535 Ordinary Shares for issuance upon the conversion of the Series B
Preferred Shares to be issued to the Investors pursuant to this Agreement.

     (ii)
Section 3.5(ii) of the Disclosure Schedule shows an accurate and true list of all
outstanding securities of the Company and their holders to be in effect on and immediately
following the Closing. All such securities will have been duly authorized and validly issued as of
the Closing, will be fully paid, non-assessable and free of preemptive rights (other than those
preemptive rights imposed under the Ancillary Documents) and other Encumbrances, and will have
been issued in compliance with all Applicable Laws, including those regulating the offer, sale or
issuance of securities. Except as shown in Section 3.5(ii) of the Disclosure Schedule,
immediately following the Closing there will be no securities of the Company outstanding or
issued.

     (iii)
As of the date hereof, except as disclosed in Section 3.5(iii) of the Disclosure
Schedule, except for this Agreement, the Note Agreement and the Share Option Plan, there are no
outstanding options, warrants, rights (including conversion or preemptive rights and rights of
first refusal), proxy or shareholders agreements or agreements of any kind for the purchase or
acquisition from the Company of any of its securities. As of the Closing, except for this
Agreement, the Ancillary Documents and the Share Option Plan, there will be no outstanding options,
warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or
shareholders agreements or agreements of any kind for the purchase or acquisition from the Company
of any of its securities.

     (iv) Except as may be provided by the terms of the Series A Preferred Shares and the Series B
Preferred Shares, the Company is not subject to any obligation (contingent or otherwise) to
purchase or otherwise acquire or retire any

 

Page 14

equity interest held therein by its shareholders or to purchase or otherwise acquire or retire any
of its other outstanding securities.

     3.6 Group Structure.

          As of April 30, 2007:

     (i) Section 3.6(i) of the Disclosure Schedule lists each Group Company, and correctly
sets forth the capitalization of such Group Company, the Company’s ownership interest therein, the
interest of any other Person therein, the nature of legal entity which the Group Company
constitutes, the jurisdiction in which the Group Company was organized, each jurisdiction in which
the Group Company is required to be qualified or licensed to do business as a foreign Person and a
brief summary of the Group Company’s business.

     (ii) Except in respect of any interest held in any Group Company, none of the Company or the
Group Companies has any Subsidiaries or owns or controls, directly or indirectly, any interest in
any other corporation, partnership, trust, joint venture, association or other entity. None of the
Company or the Group Companies maintains any offices or any branches.

     (iii) Except for any restrictions and limitations imposed by the Applicable Law as
specifically disclosed in Section 3.6(iii) of the Disclosure Schedule, in respect of any
ownership interest held in a Group Company by the Company or another Group Company described in
Section 3.6(i) of the Disclosure Schedule, (a) the Company or such other Group Company
holds good and valid title to such ownership interest free and clear of all restrictions on
transfer or other Encumbrances, other than those restrictions on transfer or other Encumbrances
created by the Ancillary Documents or the Constitutional Documents, (b) such ownership interest
was acquired in compliance with all Applicable Laws, including those regulating the offer, sale or
issuance of securities, and (c) there are no outstanding options or rights for the purchase or
acquisition from the Company or such other Group Company of such ownership interest. There are no
outstanding options, warrants, rights (including conversion or preemptive rights and rights of
first refusal), proxy or shareholders agreements or agreements of any kind for the purchase or
acquisition from any Group Company of any of its equity. None of the Group Companies is subject to
any obligation (contingent or otherwise) to purchase or otherwise acquire or retire any interest
held therein by its equityholders or to purchase or otherwise acquire or retire any of its
securities. The Company has no outstanding Liabilities under the Share Transfer Agreement, dated
as of February 4, 2007, by and between the Company and Powerhill Holdings Limited and the Share
Transfer Agreement, dated as of February 4, 2007, by and between the Company and Crystal Water
Investment Holdings Limited.

     (iv) Except as disclosed in Section 3.6(iv) of the Disclosure Schedule, in respect of
each Group Company that is organized and existing under the laws of the PRC, the full amount of
the registered capital thereof has been contributed, such contribution has been duly verified by a
certified accountant registered in the PRC and/or the accounting firm employing such accountant,
and the report of the certified accountant evidencing such verification has been registered with
the SAIC. Any amount of registered capital of any Group Company that is organized and existing

 

Page 15

under the laws of the PRC that has not been contributed was not required to be contributed
as of April 30, 2007, and such amount shall be contributed in compliance with Applicable
Law.

     3.7 Offering. Subject in part to the truth and accuracy of each Investor’s representations
set forth in Section 4, the offer, sale and issuance pursuant hereto or any Ancillary
Document of any Series B Preferred Share or Warrant and the issuance of Warrant Shares upon
exercise of any Warrant and Conversion Shares upon conversion of any Series B Preferred Share is
exempt from the registration requirements of any applicable securities laws, and neither the
Company nor any authorized agent acting on its behalf will take any action that would cause the
loss of such exemption.

     3.8 Financial Statements; Liabilities

     (i) The Unaudited Pro Forma Financials have been certified by the chief executive
officer and chief financial officer of the Company. The income statements in the Unaudited
Pro Forma Financials present fairly the results of operations of the Company and the WFOEs
for the period covered, and the balance sheets in the Unaudited Pro Forma Financials present
fairly the financial condition of the Company and the WFOEs as of their respective dates.

     (ii)
Except as disclosed in Section 3.8(ii) of the Disclosure Schedule, none of
the Group Companies has any outstanding Liabilities, except (a) Liabilities that are
reflected or disclosed in the most recent balance sheet in the Unaudited Pro Forma
Financials, (b) Liabilities incurred in the ordinary course of business and consistent with
past practice since April 30, 2007, or (c) Liabilities, in the aggregate not exceeding
US$200,000, incurred since April 30, 2007 that are not in the ordinary course of business
or consistent with past practice.

     (iii) Each of Mr. Qi JI and the Key Management Personnel has not been and shall not be
in violation or breach of any non-competition obligations arising from any Contract,
Applicable Law or otherwise, including without limitation the Home Inns Hotel Management
(Beijing) Limited Employment And Confidentiality Agreement and the Home Inns Hotel
Management (Hong Kong) Limited Employment And Confidentiality Agreement entered into by Mr.
Qi JI, as a result of having worked for or owning interest in any Group Company.

     3.9 Absence of Changes. Since April 30, 2007:

     (i) none of the Group Companies has entered into any transaction in an amount in
excess of US$200,000 (or its equivalent in any other currency) which is not in the ordinary
course of business consistent with past practice;

     (ii) there have been no changes, whether individually or in the aggregate, that would
constitute or lead to a Significant Breach with respect to the business, financial
condition, results, operations or prospects of any of the Group Companies;

     (iii) there has been no damage to, destruction or loss of physical property (whether
or not covered by insurance), whether individually or in the aggregate, that would
constitute or lead to a Significant Breach with respect to the business or operations of
any Group Company;

 

Page 16

     (iv) none of the Group Companies has declared or paid any dividend or made any distribution
on its shares or registered capital, or redeemed, purchased or otherwise acquired any of its
shares or registered capital;

     (v) none of the Group Companies has increased the compensation of any of its officers, or the
rate of pay of its employees as a group, except as part of regular compensation increases in the
ordinary course of business;

     (vi) there has been no waiver of any material right or claim of any Group Company, or the
cancellation of any debt or claim held by any Group Company; and

     (vii) there has been no sale, assignment or transfer of any tangible or intangible assets of
any Group Company except in the ordinary course of business consistent with past practice.

3.10 Real Property.

          As of April 30, 2007:

     (i) None of the Company or the Group Companies owns or has legal or equitable title or other
right or interest in any real property other than the land use rights (the “Land Use Rights”) held
by the Group Companies as set forth in Schedule 3.10(i) of the Disclosure Schedule or as held
pursuant to Lease. True and complete copies of the certificates evidencing the Land Use Rights
have been delivered to each of the Investors or their agents or professional advisers and any land
grant premium required under Applicable Law in connection with securing such Land Use Rights has
been fully paid. None of the land with respect to which the Land Use Rights relate constitute
arable land that has been converted to other uses. The particulars of the Land Use Rights as set
out in Schedule 3.10(i) of the Disclosure Schedule are true and complete.

     (ii)
Section 3.10(ii) of the Disclosure Schedule sets forth each leasehold interest
pursuant to which any Group Company holds any real property (a “Lease”), indicating the parties to
such Lease, the address of the property demised under the Lease, the rent payable under the Lease
and the term of the Lease. Any breach by the real property holder of any Lease, including failure
to hold valid land certificates, will entitle the Group Company a party to such Lease to enforce
its rights under such Lease and seek compensation to remedy its losses resulting therefrom. Each
Lease constitutes the entire agreement to which any Group Company is party with respect to the
property demised thereunder, and a true and complete copy of each such Lease has been delivered to
the Investors, together with all amendments, modifications, alterations and other changes thereto.
Each Lease is valid and subsisting, enforceable against the parties thereto in accordance with its
terms and no change in ownership or claim from any third party shall adversely affect the forgoing
validity and enforceability. The lessor under each Lease is qualified and has obtained all Consents
necessary to enter into such Lease, including without limitation any Consents required from the
owner of the property demised pursuant to the Lease if the lessor is not such owner. There is no
claim asserted or threatened by any third party regarding the ownership of the property demised
pursuant to each Lease. Each Lease is in compliance with Applicable Law with respect to the
ownership and operation of property and conduct of business as now conducted and as proposed to be
conducted

 

Page 17

by any Group Company under such Lease. No Lease shall be discontinued, suspended or challenged by
any Government Entity or third party without the Consent of the Group Company to such Lease, and
no Group Company shall be subject to any fine, penalty or other punishment from any Government
Entity or third party in connection with any Lease. As of the date hereof, all conditions
precedent to the enforceability of each Lease have been satisfied and there exists no breach or
default, nor state of facts which, with the passage of time, notice, or both, would result in a
breach or default on the part of any party to the Lease. A Group Company has accepted possession
of the property demised pursuant to each Lease and is in actual possession thereof and has not
sublet, assigned or hypothecated its leasehold interest except as set forth on Section
3.10(ii) of the Disclosure Schedule. In the event that any Group Company subleases any real
property to a third party, such Group Company shall be qualified to do so and all Consents
required for such subleases, including without limitation any Consents required from any
Government Entity, shall have been obtained by such Group Company. The particulars of the Leases
as set out in Schedule 3.10(ii) of the Disclosure Schedule are true and complete. No breach or
breaches of any representations given in this Section 3.10(ii), including any matters
disclosed in Section 3.10(ii) of the Disclosure Schedule, in the aggregate, have
constituted or shall constitute or lead to a Significant Breach with respect to any Group Company.

     (iii) None of the Group Companies has obtained property ownership certification for the
buildings and improvements located on land with respect to which it holds under the Leases.

     (iv) Each of the Land Use Rights is free and clear of any and all Encumbrances except for
those identified in Section 3.10(iv) of the Disclosure Schedule, provided that exercise of
the rights under any Encumbrances, whether individually or taken as a whole, has not constituted
and shall not constitute or lead to a Significant Breach with respect to any Group Company. A true
and complete copy of each of the agreements relating to the Encumbrances identified in Section
3.10(iv) of the Disclosure Schedule (the “Mortgages”) has been delivered to each of the
Investors or their agents or professional advisors.

     (v) Except as set forth in Section 3.10(v) of the Disclosure Schedule, none of the
Group Companies uses any real property in the conduct of its business except insofar as it holds
valid Land Use Rights or has secured a Lease with respect thereto. No default or event of default
on the part of any Group Company or event which, with the giving of notice or passage of time or
both, would constitute a default or event of default on the part of any Group Company has occurred
and is continuing unremedied or unwaived under the terms of any of the Land Use Rights, the Leases
or Mortgages. There exists no pending or threatened condemnation, confiscation, dispute, claim,
demand or similar proceeding with respect to, or which could constitute or lead to a Significant
Breach with respect to, the continued use and enjoyment of any Land Use Right or Lease by any Group
Company. The Land Use Rights, Leases and Mortgages are valid and subsisting and are enforceable in
accordance with the terms contained therein.

 

Page 18

     3.11 Personal Property.

     (i) The personal property of each Group Company is sufficient for the conduct
of its business as currently conducted.

     (ii) All personal property of each Group Company which is reflected in the most recent
balance sheet in the Unaudited Pro Forma Financials or which has been acquired by any Group
Company since the date of such balance sheet and which has not been disposed of in the
ordinary course of such Group Company’s business is owned by such Group Company free and
clear of any Encumbrances, other than Encumbrances in the ordinary course of business on
property having a value not exceeding US$200,000 (or its equivalent in any other currency)
in the aggregate.

     (iii) All machinery, tools and equipment of any Group Company which are reflected in
the most recent balance sheet in the Unaudited Pro Forma Financials or which have been
acquired thereby since the date of such balance sheet are in a state of reasonable
maintenance and repair (except for ordinary wear and tear) and are adequate for the conduct
of the business thereof as currently operated, except the machinery, tools and equipment
having a value not exceeding RMB¥20,000 individually or US$200,000 (or its equivalent in
any other currency) in the aggregate.

     (iv) Except as reflected or disclosed in the most recent balance sheet in the
Unaudited Pro Forma Financials, none of the Group Companies maintains any inventory other
than the inventories of the Group Companies having a value not exceeding US$200,000 (or
its equivalent in any other currency) in the aggregate.

     3.12 Contracts. Each of the Contracts set forth in Section 3.12(v) of the Disclosure
Schedule is deemed to be a Material Contract as of April 30, 2007. With respect to each Material
Contract to which any Group Company is a party or to which any Group Company or any of its
properties is subject or by which any thereof is bound:

     (i) True and complete copies of the Material Contracts, including any
amendments and supplements to such Contracts, have been delivered to each of the Investors.

     (ii)
Unless otherwise noted on Section 3.12(ii) of the Disclosure Schedule,
each of the Material Contracts was entered into in the ordinary course of business.

     (iii) Each Material Contract is valid and subsisting, enforceable by the parties
thereto in accordance with its terms, except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, and (b) as limited by laws relating to the
availability of specific performance, injunctive relief or other remedies in the nature of
equitable remedies. Each Group Company has duly performed all its obligations under each
Material Contract to the extent that such obligations to perform have accrued. To the
Knowledge of the Company, no breach or default, alleged breach or default, or event which
would (with the passage of time, notice or both) constitute a breach or default under any
of the Material Contracts by any Group Company, or any other party or obligor with respect
thereto, has occurred, or as a result of this Agreement or any Ancillary Document, or the
performance hereof or thereof, will occur.

 

Page 19

     (iv) Consummation of the transactions contemplated by this Agreement, the Ancillary Documents
and the Note Agreement will not (and will not give any Person a right to) terminate or modify any
rights of, or accelerate or augment any obligation of, any Group Company under any Material
Contract.

     (v) Notwithstanding anything to the contrary provided herein, each of the following Contracts
is deemed to be a Material Contract and has been identified in Section 3.12(v) of the
Disclosure Schedule: (a) any Contract with respect to a contract value in excess of US$200,000 (or
its equivalent in any other currency); (b) any Contract that has an unexpired term in excess of
five years; (c) any Contract on which the business of any Group Company is substantially dependent
or which is otherwise material to the business of any Group Company; (d) any Lease and any Contract
with respect to the renovation at any real property or any property that is subject to a Lease; (e)
any Contract that limits or restricts the ability of any Group Company to compete or otherwise to
conduct its business in any material respect; (f) any Contract requiring performance in any country
other than the PRC; (g) any Contract that grants a power of attorney, agency or similar authority
to another Person or entity, agency or similar authority to another Person or entity; (h) any
Contract that contains a right of first refusal; and (i) any other Contract that was not made in
the ordinary course of business. No Material Contract has been entered into by the Company or any
WFOE after April 30, 2007, and no other Group Company has entered into any Material Contract after
April 30, 2007 which is material to the ability of such Group Company to conduct its business as
previously conducted.

     3.13 Intellectual Property.

     (i) Each Group Company owns or possesses sufficient legal rights to (a) all trademarks,
service marks, tradenames, copyrights, trade secrets, licenses, information and proprietary rights
and processes and (b) all patents and patent rights (such rights are collectively referred to
herein as the “Intellectual Property”) as are necessary to the conduct of its businesses as now
conducted and as presently proposed to be conducted. None of the Company Warrantors has any
Knowledge that any such Intellectual Property is being infringed by third parties. No claim is
currently asserted or threatened against any Group Company by any third party challenging or
questioning such Group Company’ right to use any of the Intellectual Property or the validity or
effectiveness of any license or similar agreement with respect thereto.

     (ii) All licenses under which each Group Company is currently using the Intellectual Property
(the “Intellectual Property Licenses”) are in full force and effect in accordance with their
terms, and are free and clear of any Encumbrances. None of the Group Companies is in default of
any material provision under any Intellectual Property License and no such default is currently
threatened.

     (iii) The conduct by each Group Company of its respective business does not infringe the
rights of any third party in respect of any Intellectual Property nor has any Group Company
received any communication that a claim or demand has been made, or threatened to be made to this
effect.

     (iv) None of the Group Companies will be necessary to utilize in the course of such Group
Company’s business any Intellectual Property of any of the respective employees of such Group
Company made prior to their employment by such Group

 

Page 20

Company, except for Intellectual Property that have been validly and properly assigned or
licensed to such Group Company as of the date hereof.

     (v) Except for the trademark logos listed in Section 3.13(v) of the Disclosure
Schedule, which trademarks have been registered or are in the process of being registered in
the PRC, none of the Group Companies owns or uses any trademarks. In respect of those
trademarks being registered in the PRC, to the Knowledge of the Company Warrantors, there
are no legal obstacles to such registration.

     (vi) None of the Group Companies is registered by a Government Entity as the owner of
any copyright.

     (vii) Except for the domain names listed in Section 3.13(vii) of the
Disclosure Schedule, which domain names have been registered with the domain name
registration institutions throughout the world, none of the Group Companies is the
registered owner of any domain names. None of the Group Companies is aware of any claim of
any third party in respect of the domain names listed in Section 3.13(vii) of the Disclosure Schedule.

     (viii) Each Group Company has taken all security measures that in the judgment of such
Group Company are prudent in order to protect the secrecy, confidentiality, and value of
its material Intellectual Property.

     3.14 Affiliate Transactions. Except as set forth in Section 3.14 of the Disclosure
Schedule, none of the Group Companies, on the one hand, is indebted, either directly or
indirectly, to any Related Party, on the other hand, in any amount whatsoever, other than for
payment of salary for services rendered and reasonable expenses. No Related Party is indebted to
any Group Company or has any direct or indirect ownership interest (other than as a result of any
ownership interest held in the Company) in any Group Company. To the Knowledge of the Company
Warrantors, no Related Party has any direct or indirect ownership interest, or contractual
relationship, with any Person with which any Group Company has a business relationship or any
Person which, directly or indirectly, competes with any Group Company. Except as set forth in
Section 3.14 of the Disclosure Schedule, no Related Party is, directly or indirectly, a
party to or otherwise an interested party with respect to any Contract with any Group Company. The
matters disclosed in Section 3.14 of the Disclosure Schedule, whether individually or
taken as a whole, have not constituted and shall not constitute or lead to a Significant Breach
with respect to any Group Company.

     3.15 Insurance. Except for the insurances listed in Section 3.15 of the Disclosure
Schedule, none of the Group Companies maintains any insurance.

     3.16 Litigation. Except as set forth in Section 3.16 of the Disclosure Schedule,
there is no litigation, proceedings, investigations (civil, criminal, regulatory or otherwise),
arbitration claims, demands, grievances or inquiries pending (or, to the Knowledge of the Company
Warrantors, any basis therefor or threat thereof) against or affecting any Group Company, or any
of its assets or properties, nor are there any facts which are likely to give rise to any such
litigation. There are no judgments unsatisfied against any Group Company or consent decrees or
injunctions to which any Group Company or any of its assets are subject.

 

Page 21

     3.17 Tax Matters

     (i) Except as set forth in Section 3.17(i) of the Disclosure Schedule, each
Group Company (a) has timely filed all Tax Returns that are required to have been filed by it with
any Government Entity, (b) has timely paid all Taxes owed by it which are due and payable or
withheld and remitted to the appropriate Governmental Entity all Taxes which it is obligated to
withhold and remit from amounts owing to any employee, creditor, customer or third party, and (c)
has not waived any statute of limitations with respect to Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency other than, in the case of clauses (a) and (b),
unpaid taxes that are in contest with tax authorities by any Group Company in good faith or
nonmaterial in amount. The matters disclosed in Section 3.17(i) of the Disclosure Schedule,
whether individually or taken as a whole, have not constituted and shall not constitute or lead to
a Significant Breach with respect to any Group Company.

     (ii) Each Tax Return referred to in paragraph (i) above was properly prepared in compliance
with Applicable Law and was (and will be) true, correct and complete in all material respects.
None of such Tax Returns contains a statement that is false or misleading in any material respect
or omits any matter that is required to be included or without which the statement would be false
or misleading in any material respect. No reporting position was taken on any such Tax Return
which has not been disclosed to the appropriate tax authority or in such Tax Return, as may be
required by Applicable Law. All records relating to such Tax Returns or to the preparation thereof
required by Applicable Law to be maintained by each Group Company have been duly maintained.

     (iii) The assessment of any additional Taxes with respect to any Group Company for periods
for which Tax Returns have been filed is not expected to exceed the recorded Liability therefor in
the most recent balance sheet in the Unaudited Pro Forma Financials, and except as disclosed in
Section 3.17(iii) of the Disclosure Schedule, there are no material unresolved questions
or claims concerning any Tax Liability of any Group Company. There is no pending dispute with, or
notice from, any taxing authority relating to any of the Tax Returns filed by any Group Company
which, if determined adversely to such Group Company, would result in the assertion by any taxing
authority of any valid deficiency in a material amount for Taxes, and to the Knowledge of the
Company Warrantors, there is no proposed Liability for a deficiency in any Tax to be imposed upon
the properties or assets of any Group Company. None of the Group Companies has been the subject of
any examination or investigation by any tax authority relating to the conduct of its business or
the payment or withholding of Taxes that has not been resolved or is currently the subject of any
examination or investigation by any tax authority relating to the conduct of its business or the
payment of withholding of Taxes. None of the Group Companies is responsible for the Taxes of any
other Person by reason of contract, successor liability or otherwise.

     (iv) None of the Group Companies is or expects to become, as a result of the Contemplated
Transactions, a CFC, based in part on the representations in Section 4.7. None of the Group
Companies anticipates that any will become a PFIC or CFC for the current taxable year or any future
taxable year.

     (v) Each Group Company is treated as a corporation for U.S. federal income tax purposes.

 

Page 22

     3.18 Legal Compliance.

     (i) Except as set forth in Section 3.18(i) of the Disclosure Schedule, each
Group Company is, and at all times has been, in compliance with Applicable Laws, except where
non-compliance could not reasonably be expected to constitute or lead to a Significant Breach with
respect to the business or condition of such Group Company.

     (ii) To the Knowledge of the Company, except for the events and circumstances which could not
reasonably be expected to, individually or aggregately, constitute or lead to a Significant Breach
with respect to any Group Company, no event has occurred or circumstance exists that (with or
without notice or lapse of time) (a) may constitute or result in a violation by any Group Company
of, or a failure on the part thereof to comply with, any Applicable Law, or (b) may give rise to
any obligation on the part of any Group Company to undertake, or to bear all or any portion of the
cost of, any remedial action of any nature. None of the Group Companies has received any notice or
other communication (whether oral or written) from any Government Entity regarding (x) any actual,
alleged, possible, or potential violation of, or failure to comply with, any Applicable Law, or
(y) any actual, alleged, possible, or potential obligation on the part of any Group Company to
undertake, or to bear all or any portion of the cost of, any remedial action of any nature.

     (iii) None of the Group Companies or any director, officer, agent, employee, or any other
Person associated with or acting for or on behalf of the foregoing, has offered, paid, promised to
pay, or authorized the payment of any money, or offered, given a promise to give, or authorized the
giving of anything of value, to any Government Official, to any political party or official thereof
or to any candidate for political office (or to any Person where such Group Company, director,
officer, agent, employee or other Person knew or was aware of a high probability that all or a
portion of such money or thing of value would be offered, given or promised, directly or
indirectly, to any Government Official, political party, party official, or candidate for political
office) for the purposes of:

	 	a)	 	(x) influencing any act or decision of such Government Official, political
party, party official, or candidate in his or its official capacity, (y) inducing such
Government Official, political party, party official or candidate to do or omit to do
any act in violation of the lawful duty of such Government Official, political party,
party official or candidate, or (z) securing any improper advantage, or
	 
	 	b)	 	inducing such Government Official, political party, party official, or
candidate to use his or its influence with any Government Entity to affect or
influence any act or decision of such Government Entity, in order to assist any Group
Company in obtaining or retaining business for or with, or directing business to any
Group Company.

     (iv) None of the Group Companies or any of the respective officers, employees, directors,
representatives, or agents of the foregoing has, within the past five years, (a) taken any action
in furtherance of any boycott not sanctioned by the United States; (b) engaged directly or
indirectly in transactions with any Government Entity, agent, representative, national or resident
of, or any entity based or resident in,

 

Page 23

any of the following countries: North Korea, Iraq, Libya, Cuba, Iran, Myanmar or Sudan; (c)
otherwise engaged in transactions with any entity or person that is the target of U.S.
economic sanctions, as designated by the U.S. Treasury Department Office of Foreign Assets
Control on its list of Specially Designated Nationals and Blocked Persons; or (d) received
unlicensed donations or engaged in financial transactions with respect to which any Group
Company knows or has reasonable cause to believe that the financial transaction poses a
risk of furthering terrorist attacks anywhere in the world.

     3.19 Environmental Compliance. None of the Group Companies is in violation of any applicable
statute, law or regulation relating to the environment or occupational health and safety and no
material expenditures are or will be required to comply with any such existing statute, law or
regulation.

     3.20 Employees, Labor Matters, etc.

         (i) Each Group Company has complied with all Applicable Law relating to the
employment of labor, including provisions thereof relating to wages, hours, social welfare,
Social Securities Funds, equal opportunity and collective bargaining. There is no organized
labor strike, dispute, slowdown or claim pending, or to the Knowledge of the Company
Warrantors threatened against or affecting any Group Company. None of the Group Companies
has any contract with any labor union. The matters disclosed in Section 3.20(i) of
the Disclosure Schedule, whether individually or taken as a whole, have not constituted and
shall not constitute or lead to a Significant Breach with respect to any Group Company.

         (ii) Section 3.20(ii) of the Disclosure Schedule sets forth a list of all
officers, employees and consultants of each Group Company whose current annual salary or
rate of compensation (including bonuses, commissions and inventive compensation) is in
excess of RMB¥800,000 (or equivalent in a different currency), together with their current
job titles or relationship to such Group Company. None of the Persons referred to above, nor
any other officer, key employee or consultant of any Group Company, has notified any Group
Company that such Person will cancel or otherwise terminate such Person’s relationship with
any Group Company, or is being terminated by any Group Company.

         (iii) To the Knowledge of the Company Warrantors, except as set forth in Section
3.20(iii) of the Disclosure Schedule, none of the officers, employees or consultants
referred to in Section 3.20(ii) of the Disclosure Schedule is obligated under any
contract (including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative agency, that
would interfere with the use of his or her best efforts to promote the interests of the
Group Companies or that would conflict with the business of the Group Companies as proposed
to be conducted. To the Knowledge of the Company Warrantors, the following will not
conflict with or result in a breach of the terms, conditions or provisions of, or
constitute a default under, any contract, covenant or instrument under which any of such
officer, employee or consultant is now obligated: (a) the execution, delivery and
performance of any of this Agreement or other Transaction Documents; (b) the adoption by
the Company of the Memorandum and Articles, (c) the carrying on of any Group Company’s
business by the employees thereof; and (d) the conduct of the business of any Group Company
as

 

Page 24

currently conducted or as proposed to be conducted. No Group Company has reason to believe
it is or will be necessary to utilize any inventions of any employees of any Group Company
(or people any Group Company currently intend to hire) made prior to or outside the scope of
their employment by such Group Company. None of the execution, delivery and performance of
this Agreement or other Transaction Documents or the adoption of the Memorandum and Articles
will (either alone or upon the occurrence of any additional or subsequent event) constitute
an event under any benefit plan or individual agreement that will or may result in any
payment (whether of severance pay or otherwise), acceleration, vesting or increase in
material benefits with respect to any employee, former employee, consultant, agent or
director of any Group Company.

           (iv) Except as set forth on Section 3.20(iv) of the Disclosure Schedule, none
of the Group Companies has any pension (other than any statutory pension), employee stock
purchase or other plan providing for incentives or other compensation to employees. The
Company has delivered to the Investors true, correct and complete copies of all documents,
summary plan descriptions, insurance contracts, third party administration contracts and
all other documentation created to embody all material benefit plans, plus descriptions of
any material benefit plans that have not been reduced to writing. Except for required
contributions or benefit accruals for the current plan year, no material Liability has been
or is expected to be incurred by any Group Company under or pursuant to any Applicable Law
relating to benefit plans and, to the Knowledge of the Company Warrantors, no event,
transaction or condition has occurred or exists that could result in any such Liability to
any Group Company. Each of the benefit plans listed in Section 3.20(iv) of the
Disclosure Schedule is and has at all times been in compliance in all material respects
with all applicable provisions of Applicable Law.

       3.21 State-Owned Assets. None of the assets of any Group Company constitute state-owned assets
and, inasmuch, are not required to undergo any form of valuation under Applicable Law in the PRC
governing the transfer of state-owned assets prior to the consummation of the transactions
contemplated herein or in any other Transaction Documents.

     3.22 Entire Business. There are no material facilities, services, assets or properties shared
(i) by the Company with any other Person that is not a Group Company or (ii) by any Group Company
with any other Person that is not a Group Company.

     3.23 Brokers. Except as set forth on Section 3.20(iv) of the Disclosure Schedule, no
finder, broker, agent, financial advisor or other intermediary has acted on behalf of any Group
Company or any of its Affiliates in connection with the offering of the Series B Preferred Shares
or the negotiation or consummation of this Agreement or the Ancillary Documents or any of the
transactions contemplated hereby or thereby. All such negotiations or the consummation of this
Agreement or the Ancillary Documents or any of the transactions contemplated hereby or thereby
will not give rise to any valid claim against any Group Company or any of the Investors for any
brokerage or finder’s commission, fee or similar compensation.

     3.24 Full Disclosure. The Company has fully provided the Investors with all the information
that the Investors have requested for deciding whether to purchase the Series B Preferred Shares
and all information that the Company believes is materially necessary to

 

Page 25

enable the Investors to make such decision. None of this Agreement or any other statements or
certificates or other materials made or delivered, or to be made or delivered to any of the
Investors in connection herewith or therewith, contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements herein or therein not misleading.

4. Representations and Warranties of the Investors. Each of the Investors, severally and not
jointly, represents, warrants and covenants to the Company that:

     4.1 Authorization. Such Investor has full power and authority to enter into this Agreement,
and, assuming due and valid execution and delivery hereof, the Agreement constitutes its valid and
legally binding obligation, enforceable in accordance with its terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors’ rights generally, and (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or other equitable
remedies.

     4.2 Purchase Entirely for Own Account. This Agreement is made with such Investor in reliance
upon such Investor’s representation to the Company, which by such Investor’s execution of this
Agreement such Investor hereby confirms, that the Series B Preferred Shares and the Investor
Warrants to be acquired hereunder and the Warrant Shares and Conversion Shares (collectively, the
“Securities”) will be acquired by the Investor for investment for the Investor’s own account, not
as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and
that such Investor has no present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, the Investor further represents that it does
not have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or
grant participations to such Person or to any third Person, with respect to any of the Securities.

     4.3 Disclosure of Information. Such Investor believes it has received all the information it
considers necessary or appropriate for deciding whether to purchase the Series B Preferred Shares.
Such Investor further represents that it has had an opportunity to ask questions and receive
answers from the Company regarding the terms and conditions of the offering of the Series B
Preferred Shares and the business, properties, prospects and financial condition of the Company.
The foregoing, however, does not limit or modify the representations and warranties of the Company
in Section 3 of this Agreement or the right of the Investors to rely thereon.

     4.4 Investment Experience. Such Investor acknowledges that it is able to fend for itself, can
bear the economic risk of its investment, and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of the investment in the
Series B Preferred Shares. Such Investor also represents it has not been organized for the purpose
of acquiring the Series B Preferred Shares.

     4.5 Status of Investor. Such Investor (i) is purchasing the Securities in accordance with any
applicable securities laws of any state of the United States or any other jurisdiction or (ii) is
an “accredited investor” within the meaning of SEC Rule 501 of Regulation D, as presently in
effect, under the Securities Act.

     4.6 Restricted Securities. Such Investor understands that the Securities it is purchasing are
characterized as “restricted securities” under U.S. federal securities laws

 

Page 26

inasmuch as they are being acquired from the Company in a transaction not involving a public
offering and that under such laws and applicable regulations such securities may be resold without
registration under the Act, only in certain limited circumstances. In this connection, such
Investor represents that it is familiar with SEC Rule 144, as presently in effect, and understands
the resale limitations imposed thereby and by the Securities Act.

     4.7
Tax Matters.

       (i) Each of the Lead Investors and Pinpoint represents and warrants that such
Investor is not a US Person as defined by §957(c) of the Code and no Person owns an
ownership interest, directly or indirectly, in such Investor that would cause such Person
to be a U.S. shareholder with respect to any Group Company as defined by §951(b) of the
Code. For these purposes direct and indirect ownership is determined under §958 of the Code
including the constructive ownership provisions in §958(b).

       (ii) Each of the Investors other than the Lead Investors and Pinpoint represents
and warrants that such Investor is an exempted limited partnership formed under the laws of
the Cayman Islands, and such Investor agrees to take reasonable steps to assist the company
in determining whether any Person owns an ownership interest, directly or indirectly, in
such Investor that would cause such Person to be a U.S. shareholder with respect to any
Group Company as defined by §951(b) of the Code. For these purposes direct and indirect
ownership is determined under §958 of the Code including the constructive ownership
provisions in § 958(b).

5. Conditions of the Investors’ Obligations at Closing. The obligations of each Investor at the
Closing are subject to the fulfillment on or before the Closing of each of the following
conditions, unless waived by the Lead Investors in writing:

     5.1 Representations and Warranties. The representations and warranties of the Company
Warrantors contained or referred to herein shall be true, correct and complete in all material
respects as of the date of the Closing as though made at such date with reference to the facts and
circumstances existing at such time (except to the extent that a representation and warranty
speaks as of an earlier date, in which case such representation and warranty shall be true as of
such earlier date), and each of the Company Warrantors shall have delivered a certificate to such
effect, dated the date of the Closing, signed by such Company Warrantor or by a director or
officer thereof.

     5.2 Performance. Each party to this Agreement (other than the Investors) shall have performed
and complied with all agreements, obligations and conditions contained in this Agreement or the
Ancillary Documents which such party is required to perform or comply with on or before the
Closing.

     5.3 Proceedings and Documents. All corporate and other proceedings in connection with the
transactions contemplated at the Closing, and all documents incident thereto, shall be in form and
substance reasonably satisfactory to the Lead Investors, and each Investor shall have received all
such counterpart original and certified or other copies of such documents as such Investor may
reasonably request.

     5.4 Qualifications. Except as disclosed in the Disclosure Schedule, all Consents of any
competent Government Entity that are required in connection any of the transactions

 

Page 27

contemplated hereunder, under any of the Ancillary Documents or under other agreements to be
entered into in connection herewith shall have been duly obtained and shall continue to be in
effect.

     5.5 No Orders; Legal Proceedings. Except as disclosed in the Disclosure Schedule, there shall
be no Applicable Law in effect which prohibits or restricts the transactions contemplated by this
Agreement or the Ancillary Documents which is not waived by a competent Government Entity.

     5.6 No Material Adverse Change. There shall not have been any changes, whether individually
or in the aggregate, that have had or can reasonably be expected to have a Material Adverse Effect
on the business, financial condition, results, operations or prospects of the Company, the WFOEs,
or the other Group Companies taken as a whole, since December 31, 2006.

     5.7 Compliance Certificate. A director of the Company shall deliver to each Investor at the
Closing a certificate stating that the conditions specified in Section 5.1, Section 5.2,
Section 5.4, Section 5.5 and Section 5.6 have been fulfilled.

     5.8 Legal Opinions. The Investors shall have each received from Conyers Dill & Pearman,
special Cayman Islands counsel to the Company, and Guantao Law Firm, special PRC counsel to the
Company, written opinions dated and delivered as of the date of the Closing, in form and substance
satisfactory to the Lead Investors.

     5.9 Due Diligence. The Investors shall have completed financial, business and legal due
diligence on the Company and the WFOEs to their satisfaction.

     5.10 Investment Committee Approval. Each Investor’s respective investment committee, if and
when applicable, shall have approved, and shall not have revoked such approval of, the terms of
the investment and the transactions contemplated herein and in the Transaction Documents.

     5.11 Memorandum and Articles. The Memorandum and Articles, in the form attached hereto as
Exhibit A shall have been duly adopted by all necessary actions of the Board and
Shareholders of the Company and shall remain in full force and effect.

     5.12 Shareholders Agreement. The Shareholders Agreement, dated as of the date of the Closing,
in form attached hereto as Exhibit B, shall have been duly executed by all parties thereto
(other than the Investors) and shall be in full force and effect.

     5.13 Indemnification Agreement. The Company shall have entered into an Indemnification
Agreement, dated as of the date of the Closing, in the form attached hereto as Exhibit G,
with each member appointed to the Board in accordance with Section 7.8 and such
Indemnification Agreements shall be in full force and effect.

     5.14 Founder Warrant. The Company shall have delivered to Winner Crown Holdings Limited a
warrant, dated as of the date of the Closing, in the form attached hereto as Exhibit H,
duly executed by the parties thereto, for the purchase of up to 4,704,000 Series B Preferred Shares
at a per share purchase price of US$1.27551.

     5.15 Investor Warrants. The Company shall have delivered to (i) each Investor a warrant,
dated as of the date of the Closing, in the form attached hereto as
Exhibit J-1, duly

 

Page 28

executed by the parties thereto, for the purchase of an amount of Series B Preferred Shares at a
per share purchase price as set forth next to such Investor’s name on Schedule 4, and (ii)
each of the Lead Investors and IDG a warrant, dated as of the date of the Closing, in the form
attached hereto as Exhibit J-2, duly executed by the parties thereto, for the purchase of
an amount of Series B Preferred Shares at a per share purchase price as set forth next to such
Investor’s name on Schedule 5.

     5.16 Disclosure Schedule. Any modification or supplement to the Disclosure Schedule shall have
been prepared and delivered by the Company to the Investors in form and substance satisfactory to
the Investors.

     5.17 Employment Agreement. Mr. Qi JI shall have entered into an Employment Agreement with the
Company, dated on or prior to the date of the Closing, which shall

     (i) provide, inter alia, that

     (a) all equity securities of the Company beneficially owned by Mr. Qi JI as of the
Closing, and

     (b) any equity securities of the Company purchased by Mr. Qi JI (directly or
beneficially) pursuant to the Shareholder Loan Agreement

shall be subject to the Company’s Repurchase Right under Section 9 of the
Shareholders Agreement with the following vesting schedule: 50% of such equity securities
shall vest on the one (1) year anniversary of the Closing and the remaining 50% of such
equity securities shall vest in equal monthly installments over a period of four (4) years
thereafter,

     (ii) be otherwise in form and substance satisfactory to the Lead Investors, and

     (iii) be in full force and effect.

     5.18 Shareholder Loan Agreement. The Shareholder Loan Agreement, dated as
of the date of the Closing, in the form attached hereto as Exhibit K, shall have been
duly
executed by all parties thereto and shall be in full force and effect.

6. Conditions of the Company’s Obligations at Closing. The obligations of the Company at the
Closing are subject to the fulfillment on or before the Closing of each of the following
conditions, unless waived by the Company in writing:

     6.1 Representations and Warranties. The representations and warranties of the Investors
contained in Section 4 of this Agreement shall be true and correct as of the date of the
Closing as though made at such date with reference to the facts and circumstances existing at such
time (except to the extent that a representation and warranty speaks as of an earlier date, in
which case such representation and warranty shall be true as of such earlier date).

     6.2 Performance. Each Investor shall have performed and complied with all agreements,
obligations and conditions contained in this Agreement or the Ancillary Documents which such
Investor is required to perform or comply with on or before the Closing.

 

Page 29

     6.3 No Orders; Legal Proceedings. There shall be no Applicable Law in effect which prohibits
or restricts the transactions contemplated by this Agreement or the Ancillary Documents which is
not waived by a competent Government Entity.

     6.4 Shareholders Agreement. The Shareholders Agreement, dated as of the date hereof, in form
attached hereto as Exhibit B, shall have been duly executed by the Investors.

7. Additional Covenants.

     7.1 Use of Proceeds. The Company will use the proceeds from the sale of Series B Preferred
Shares hereunder for business expansion, capital expenditures, marketing and general working
capital for its Business; provided that none of the proceeds shall be used to retire or pay off
all or any portion of any indebtedness of any Group Company, whether incurred before or after the
date hereof, other than (i) indebtedness to commercial lenders and the Shareholders (other than
the Shareholder Loan (as defined in the Shareholder Loan Agreement)), outstanding as of the
Closing, not exceeding US$4,000,000 in the aggregate (ii) the Shareholder Loan (as defined in and
pursuant to the Shareholder Loan Agreement) or (iii) scheduled interest and principal repayment,
when due and payable, without the prior written approval of the Lead Investors.

     7.2 Pre-Closing Actions. As promptly as practicable, each of the parties to this Agreement
will: (i) use reasonable best efforts to take all actions required of such party and to do all
other things reasonably necessary, proper or advisable to consummate the transactions contemplated
hereby and by the Ancillary Documents; (ii) file or supply, or cause to be filed or supplied, all
applications, notifications and information required to be filed or supplied by such party
pursuant to Applicable Law in connection with this Agreement, the Ancillary Documents and the
issuance of the Series B Preferred Shares pursuant hereto and the consummation of the other
transactions contemplated hereby and by the Ancillary Documents; (iii) use reasonable best efforts
to obtain, or cause to be obtained, all Consents (including any Consents required under any
contract) necessary to be obtained by such party in order to consummate the transactions
contemplated pursuant to this Agreement and the Ancillary Documents; and (iv) coordinate and
cooperate with the other parties in exchanging such information and supplying such assistance as
may be reasonably requested by the other parties in connection with any filings and other actions
to be made or taken in order to consummate the transactions contemplated pursuant to this
Agreement and the Ancillary Documents.

     7.3 Conduct of Business. Except as otherwise permitted by this Agreement or with the written
consent of the Lead Investors, from the date hereof to the date of the Closing, the Company shall
and shall cause each other Group Company to:

     (i) carry on its business in the ordinary course consistent with past practice and in
substantially the same manner as conducted prior to the date hereof and use reasonable best
efforts to preserve its relationships with customers, suppliers and others having business
dealings with any Group Company;

     (ii) not create, issue or sell any securities, or grant or otherwise issue any
options or purchase rights with respect thereto, or enter into any contract or commitment
to do any of the foregoing, except in the ordinary course of business by a Group Company
that is not a WFOE;

 

Page 30

     (iii) not repay or prepay any Liability or obligation in excess of US$100,000 (or its
equivalent in any other currency) in the aggregate prior to its stated maturity other than in the
ordinary course of business consistent with past practice;

     (iv) not declare or make any dividend, payment or distribution to its shareholders or
purchase, retire, acquire or redeem any of its shares or any part of its registered capital or
other securities;

     (v) not mortgage, pledge or subject to lien or any other Encumbrance, any of its material
assets, tangible or intangible other than in the ordinary course of business by a Group Company
that is not a WFOE;

     (vi) not sell, assign, license, transfer or otherwise dispose of any of its assets having a
fair market value of more than US$100,000 (or its equivalent in any other currency) in aggregate,
or incur any Liabilities or obligations (including Liabilities with respect to indebtedness,
capital leases or guarantees thereof) in excess of US$100,000 (or its equivalent in any other
currency) in the aggregate, other than in the ordinary course of business;

     (vii) not grant (or commit to grant) any increase in compensation (including incentive or
bonus compensation) to any officer or any general increase in compensation (including incentive or
bonus compensation) to its employees other than, in each case, normal merit and cost-of-living
increases, or enter into any new, or amend or alter (or commit to enter into, amend or alter) in
any material respect any existing, employment or consulting agreements or any bonus, incentive
compensation, profit sharing, retirement, pension, group insurance, death benefit or other fringe
benefit plan, collective bargaining agreement or commitment (including any commitment to pay
retirement or other benefits) trust agreement or similar arrangement adopted by it with respect to
its own employees;

     (viii) not amend its Constitutional Documents except as provided herein or as required by
Applicable Law;

     (ix) not merge or consolidate with or into any other Person, or make any acquisition of all
or substantially all of the stock, assets or business of any other Person, if such merger,
consolidation or acquisition would be material to the financial condition or operations of the
Company or any WFOE or has an aggregate fair market value exceeding US$100,000 (or its equivalent
in any other currency);

     (x) maintain in full force and effect existing insurance to the extent available on
commercially reasonable terms;

     (xi) not make any capital expenditure or capital commitment (other than in an emergency)
which exceeds US$100,000 (or its equivalent in any other currency) in a single transaction or a
series of related transactions, other than in the ordinary course of business consistent with past
practice;

     (xii) not make any material Tax elections, settle any Tax disputes or make any changes to any
accounting methods;

 

Page 31

     (xiii) other than as may be reasonably required to consummate the transactions
contemplated hereby, not make any modifications of or changes in or terminate any existing
Contract set forth in Section 3.12 of the Disclosure Schedule; or

     (xiv) except as expressly required by this Agreement, enter into or assume any
material contract, agreement, obligation lease, license or commitment which involves an
aggregate monetary commitment or exposure for all such contracts in excess of US$100,000
(or its equivalent in any other currency) other than in the ordinary course of business.

     7.4 Non-Violation. Pending the Closing, none of the Group Companies will, without the prior
written consent of the Lead Investors, take any action which (i) would render any of the
representations or warranties made by the Company Warrantors in this Agreement untrue in any
material respect if given with reference to the facts and circumstances then existing, or (ii)
would result in any of the covenants contained in this Agreement becoming incapable of
performance. Each Company Warrantor will promptly advise the Investor of any action or event of
which such Company Warrantor becomes aware which would have the effect of making incorrect in any
material respect any such representations or warranties if given with reference to facts and
circumstances then existing or which has the effect of rendering any such covenants incapable of
performance.

     7.5 Certain Business Practices. Each Group Company will (i) pay and/or fund all social
benefits which it is required by Applicable Law to pay or fund to or on behalf of any of the prior
or continuing employees thereof, (ii) will timely and accurately declare all taxable revenues and
pay all Taxes required by Applicable Law, and (iii) will not enter into multiple lease contracts
with concurrent terms for a single business premise.

     7.6 Confidentiality. Each party hereto shall keep confidential, and shall cause its officers,
directors, and employees to keep confidential, the terms and conditions hereof, of any predecessor
agreement and of any Ancillary Document (collectively, the “Confidential Information”) except as
the Lead Investors and the Company mutually agree otherwise; provided that any party may disclose
Confidential Information (i) to the extent required by Applicable Law so long as, where such
disclosure is to a Government Entity, such party shall use all reasonable efforts to obtain
confidential treatment of the Confidential Information so disclosed, (ii) to the extent required by
the rules of any stock exchange, (iii) to its officers, directors, employees and professional
advisors as necessary to the performance of its obligations in connection herewith and with the
Ancillary Documents so long as such party advises each Person to whom the Confidential Information
is so disclosed as to the confidential nature thereof, (iv) to its investors 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, and (v) to any Person that enters into bona fide negotiations to acquire such party or
such party’s interest in the Company so long as such Person has agreed to maintain the
confidentiality of the Confidential Information.

     7.7 Certain Agreements. Within thirty (30) days after the Closing Date, the Company shall
procure each of the Key Management Personnel to enter into (i) an employment agreement (or a
supplemental agreement to his/her existing employment agreement), (ii) a proprietary
information and inventions agreement and (iii) a non-

 

Page 32

competition agreement, with the Company or one of the WFOEs, in form and substance reasonably
satisfactory to the Lead Investors.

     7.8 Appointment of New Directors. The parties hereto shall procure that Ms. Ping PING, with
Mr. Eric LI as her alternate, and Mr. Yan HUANG, with Mr. Gongquan WANG as his alternate, shall be
appointed as additional directors of the Company and Mr. Eric LI and Mr. Gongquan WANG shall be
appointed as Board observers, effective immediately as of the Closing.

     7.9 Government Approval and Registration. The Company shall procure that each WFOE shall
obtain the appropriate certificate of approval and its new business license on or prior to July 1,
2007 identifying the Company as its sole investor.

     7.10 Disclosure Schedule. The Company shall prepare the Disclosure Schedule in consultation
and cooperation with the Investors and their counsels, and shall deliver to the Investors the
Disclosure Schedule in a form satisfactory to the Investors as soon as practicable after the date
hereof and prior to the Closing.

     7.11 Audited Financials. The Company shall deliver the Audited Financials to the Investors as
soon as practicable after the date hereof and prior to the six (6) month anniversary of the
Closing Date, which Audited Financials shall not materially and adversely differ from the
Unaudited Pro Forma Financials covering the same period.

     7.12 Business Licenses. The Company Warrantors shall procure that each Group Company shall,
as soon as practicable after the date hereof and prior to the six (6) month anniversary of the
Closing Date, have secured all Consents required from any Government Entity for the ownership and
operation of its properties and conduct of its business as then conducted and as then proposed to
be conducted and have updated its business license to reflect the business as then conducted and
as then proposed to be conducted.

     7.13 Franchise Consents. The Company Warrantors shall procure that each WFOE shall, as soon
as practicable after the date hereof and prior to the six (6) month anniversary of the Closing
Date, have obtained all Consents required by Applicable Law for conducting franchise business,
including without limitation approval from MOFCOM and registration with SAIC.

8. Termination and Survival.

     8.1 Termination.

       (i) This Agreement and the transactions contemplated by this Agreement shall
terminate upon the mutual consent in writing of the parties hereto;

       (ii) The Lead Investors shall have the right to terminate this Agreement (x) upon
notice from the Lead Investors given to the other parties in the event of any material
misrepresentation or other breach under this Agreement by any party (other than an Investor)
which materially affects any Investor, if such breach is not remedied within thirty (30)
days after written notice thereof is given to the breaching party by the affected party; or
(y) upon notice from the Lead Investors given to the other parties if there shall be any
change in Applicable Law since the date hereof that makes consummation of the transactions
hereunder illegal or otherwise prohibited

 

Page 33

which is not waived or repealed by a competent Government Entity within thirty (30) days
of first becoming known to the Lead Investors.

     (iii) The Company shall have the right to terminate this Agreement (x) upon notice
given to the Investors in the event of any material misrepresentation or other breach under
this Agreement by any of the Investors which materially affects the Company, if such breach
is not remedied within thirty (30) days after written notice thereof is given to the
breaching party by the Company, or (y) upon notice from the Company given to the Investors
if there shall be any change in Applicable Law since the date hereof that makes
consummation of the transactions hereunder illegal or otherwise prohibited which is not
waived or repealed by a competent Government Entity within thirty (30) days of first
becoming known to the Company.

     8.2 Effect of Termination. If this Agreement is terminated pursuant to the provisions of this
Section 8.1, then this Agreement shall become void and have no further effect, provided
that no party shall be relieved of any liability for a breach of this Agreement or for any
misrepresentation hereunder, nor shall such termination be deemed to constitute a waiver of any
available remedy (including specific performance if available) for any such breach or
misrepresentation.

     8.3
Survival. The provisions of Section 7.6, this Section 8.3 and Section
9 shall survive the termination of this Agreement; provided, however, that if
this Agreement is terminated by a party because of a breach by any other party or because one or
more conditions to the terminating party’s obligations under this Agreement have not been
satisfied as a result of any other party’s failure to comply with its obligations, the terminating
party’s right to pursue all legal remedies will survive termination unimpaired.

9. Miscellaneous.

     9.1 Indemnity.

       (i) Each of the Company Warrantors hereby agrees to jointly and severally indemnify
and hold harmless each Investor, and such Investor’s employees, Affiliates, agents and
assigns, from and against any and all Indemnifiable Losses suffered by such Investor, or
such Investor’s employees, Affiliates, agents and assigns, directly or indirectly, as a
result of, or based upon or arising from any inaccuracy in or breach or nonperformance of
any of the representations, warranties, covenants or agreements made by any Company
Warrantor in or pursuant to this Agreement or any of the Ancillary Documents.

       (ii) Each Investor, severally and not jointly, hereby agrees to indemnify and hold
harmless the Company, and the Company’s employees, Affiliates, agents and assigns, from and
against any and all Indemnifiable Losses suffered by the Company, or the Company’s
employees, Affiliates, agents and assigns, directly or indirectly, as a result of, or based
upon, or arising from any inaccuracy in or breach or nonperformance of any of the
representations, warranties, covenants or agreements made by such Investor in or pursuant
to this Agreement.

        (iii) Any party seeking indemnification with respect to any Indemnifiable Loss (an
“Indemnified Party”) shall give written notice to the party required to provide indemnity
hereunder (the “Indemnifying Party”).

 

Page 34

       (iv)
The aggregate amount of Indemnifiable Losses subject to Section 9.1(i)
and Section 9.1(ii), respectively, suffered by all Indemnified Parties with a right
to seek recourse shall exceed US$100,000 before any Indemnified Party shall be entitled to
assert any claim for indemnification under Section 9.1(i) and Section
9.1(ii), respectively, in which case the Indemnified Party shall be entitled to claim
indemnity for the full amount of its Indemnifiable Losses; provided, that such
limitation shall not apply in case of any claim for indemnification based on intentional
fraud or misrepresentation.

       (v) If any claim, demand or Liability is asserted by any third party against any
Indemnified Party, the Indemnifying Party shall upon the written request of the Indemnified
Party, defend any actions or proceedings brought against the Indemnified Party in respect
of matters embraced by the indemnity under this Section 9.1. If, after a request to
defend any action or proceeding, the Indemnifying Party neglects to defend the Indemnified
Party, a recovery against the Indemnified Party suffered by it in good faith shall be
conclusive in its favor against the Indemnifying Party, provided, however, that, if
the Indemnifying Party has not received reasonable notice of the action or proceeding
against the Indemnified Party or is not allowed to control its defense, judgment against
the Indemnified Party shall only constitute presumptive evidence against the Indemnifying
Party.

       (vi) This Section 9.1 shall not be deemed to preclude or otherwise limit in any
way the exercise of any other rights or pursuit of other remedies for the breach of this
Agreement or with respect to any misrepresentation.

     9.2 Successors and Assigns. Except as otherwise provided herein, the terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties hereto whose rights or obligations hereunder are affected by such terms and
conditions. This Agreement, and the rights and obligations herein may be assigned by the Investors
to any Affiliate of the Investors, but not to any other person without the prior written consent
of the Company. Except as otherwise provided herein and in the Ancillary Documents, no other party
may assign any of its rights or delegate any of its obligations under this Agreement without the
prior written consent of the Lead Investors.

     9.3 Governing Law. This Agreement shall be governed by and construed under the laws of Hong
Kong, without regard to principles of conflicts of law thereunder.

     9.4 Counterparts. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same
instrument. Counterparts transmitted by facsimile shall be deemed to be originals.

     9.5 Titles and Subtitles. The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this Agreement.

     9.6 Notices. All notices, claims, certificates, requests, demands and other communications
under this Agreement shall be made in writing and shall be delivered to any party hereto by hand
or sent by facsimile, or sent, postage prepaid, by reputable overnight courier services at the
address given for such party on the signature pages hereof (or at such other address for such
party as shall be specified by like notice), and shall be deemed given when so delivered by hand,
or if sent by facsimile, upon receipt of a confirmed transmittal

 

Page 35

receipt, or if sent by overnight courier, five (5) calendar days after delivery to or pickup by
the overnight courier service.

     9.7 No Third Party Beneficiary. Except to the extent expressly stated otherwise, nothing in
this Agreement is intended to confer upon any Person other than the parties hereto and their
respective successors and permitted assigns any rights, benefits, or obligations hereunder.

     9.8 Fees and Expenses. The Company shall pay reasonable costs and expenses of an outside
legal counsel engaged by the Lead Investors in connection with the negotiation, execution,
delivery and performance of this Agreement and the other Transaction Agreements and the
transactions contemplated hereby and thereby up to US$70,000. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney’s fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled.

     9.9 Amendments and Waivers. Any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company and Investors
designated to purchase at least a majority of the Series B Preferred Shares to be purchased under
this Agreement. Any amendment or waiver effected in accordance with this Section 9.9 shall
be binding on all parties, including all their permitted assigns and transferees, even if they do
not execute such consent.

     9.10 Severability. If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provision shall be excluded from this Agreement and the balance of the
Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.

     9.11 Entire Agreement. This Agreement and the documents referred to herein, together with all
schedules and exhibits hereto and thereto, constitute the entire agreement among the parties and
no party shall be liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or therein; provided,
 however, that nothing in this Agreement or any Ancillary Document shall be deemed to terminate
or supersede the provisions of any confidentiality and nondisclosure agreements executed by the
parties hereto prior to the date of this Agreement, all of which agreements shall continue in full
force and effect until terminated in accordance with their respective terms.

     9.12 Dispute Resolution.

         (i) Any dispute, controversy or claim (each, a “Dispute”) arising out of or relating
to this Agreement, or the interpretation, breach, termination or validity hereof, shall be
resolved at the first instance through consultation between the parties to such Dispute.
Such consultation shall begin immediately after any party has delivered written notice to
any other party to the Dispute requesting such consultation.

         (ii) If the Dispute is not resolved within sixty (30) days following the date on
which such notice is given, the Dispute shall be submitted to arbitration upon the request
of any party to the Dispute with notice to each other party to the Dispute (the
“Arbitration Notice”).

 

Page 36

          (iii) The arbitration shall be conducted in Hong Kong and shall be administered by the Hong
Kong International Arbitration Centre (“HKIAC”) in accordance with the HKIAC Procedures for the
Administration of International Arbitration in force at the time of the commencement of the
arbitration. There shall be three (3) arbitrators. The claimants in the Dispute shall collectively
choose one arbitrator, and the respondents shall collectively choose one arbitrator. The Secretary
General of the Centre shall select the third arbitrator, who shall be qualified to practice law in
Hong Kong. If any of the members of the arbitral tribunal have not been appointed within thirty
(30) days after the Arbitration Notice is given, the relevant appointment shall be made by the
Secretary General of the Centre.

          (iv) The arbitration proceedings shall be conducted in English. The arbitration tribunal
shall apply the Arbitration Rules of the United Nations Commission on International Trade Law, as
in effect at the time of the commencement of the arbitration. However, if such rules are in
conflict with the provisions of this Section 9.12, including the provisions concerning the
appointment of arbitrators, the provisions of this Section 9.12 shall prevail.

          (v) Each party to the arbitration shall cooperate with each other party to the arbitration in
making full disclosure of and providing complete access to all information and documents requested
by such other party in connection with such arbitration proceedings, subject only to any
confidentiality obligations binding on such party.

          (vi) The arbitrators shall decide any dispute submitted by the parties to the arbitration
tribunal strictly in accordance with the substantive law of Hong Kong and shall not apply any
other substantive law.

          (vii) Any party to the Dispute shall be entitled to seek preliminary injunctive relief, if
possible, from any court of competent jurisdiction pending the constitution of the arbitral
tribunal.

           (viii) The Parties to this Agreement agree to the consolidation of arbitrations under the
Transaction Documents in accordance with the provisions of this Section 9.12.

	 	(a)	 	In the event of two or more arbitrations having been commenced under any of
the Transaction Documents, the tribunal in the arbitration first filed (the “Principal
Tribunal”) may in its sole discretion, upon the application of any party to the
arbitrations, order that the proceedings be consolidated before the Principal Tribunal
if (1) there are issues of fact and/or law common to the arbitrations, (2) the
interests of justice and efficiency would be served by such a consolidation, and (3)
no prejudice would be caused to any party in any material respect as a result of such
consolidation, whether through undue delay or otherwise. Such application shall be
made as soon as practicable and the party making such application shall give notice to
the other parties to the arbitrations.
	 
	 	(b)	 	The Principal Tribunal shall be empowered to (but shall not be obliged to)
order at its discretion, after inviting written (and where desired

 

Page 37

	 	 	 	oral) representations from the parties that all or any of such arbitrations
shall be consolidated or heard together and/or that the arbitrations be
heard immediately after another and shall establish a procedure
accordingly. All parties shall take such steps as are necessary to give
effect and force to any orders of the Principal Tribunal.
	 
	 	 (c)	 	If the Principal Tribunal makes an order for consolidation,
it: (1) shall thereafter, to the exclusion of other arbitral tribunals, have
jurisdiction to resolve all disputes forming part of the consolidation order;
(2) shall order that notice of the consolidation order and its effect be given
immediately to any arbitrators already appointed in relation to the disputes
that were consolidated under the consolidation order; and (3) may also give
such directions as it considers appropriate (i) to give effect to the
consolidation and make provision for any costs which may result from it
(including costs in any arbitration rendered functus officio under Section
9.12); and (ii) to ensure the proper organisation of the arbitration
proceedings and that all the issues between the parties are properly
formulated and resolved.
	 
	 	 (d)	 	Upon the making of the consolidation order, any appointment of
arbitrators relating to arbitrations that have been consolidated by the
Principal Tribunal (except for the appointment of the arbitrators of the
Principal Tribunal itself) shall for all purposes cease to have effect and such
arbitrators are deemed to be functus officio, on and from the date of the
consolidation order. Such cessation is without prejudice to (1) the validity of
any acts done or orders made by such arbitrators before termination, (2) such
arbitrators’ entitlement to be paid their proper fees and disbursements and (3)
the date when any claim or defence was raised for the purpose of applying any
limitation period or any like rule or provision.
	 
	 	 (e)	 	The Parties hereby waive any objections they may have as to
the validity and/or enforcement of any arbitral awards made by the Principal
Tribunal following the consolidation of disputes or arbitral proceedings in
accordance with this Section 9.12 where such objections are based
solely on the fact that consolidation of the same has occurred.

         (ix) During the course of the arbitration tribunal’s adjudication of the dispute, this
Agreement shall continue to be performed except with respect to the part in dispute and
under adjudication.

         (x) The award of the arbitration tribunal shall be final and binding upon the parties,
and the prevailing party may apply to a court of competent jurisdiction for enforcement of
such award.

     9.13 Further Assurances. Each party shall do and perform, or cause to be done and performed,
all such further acts and things and shall execute and deliver all such other agreements,
certificates, instruments and documents as any other party may reasonably request to give effect
to the terms and intent of this Agreement.

 

Page 38

     9.14 Remedies Cumulative. The rights and remedies available under this Agreement or otherwise
available shall be cumulative of all other rights and remedies and may be exercised successively.

     9.15 Language. The governing version of this Agreement is the English language version. Any
translation of this Agreement into any other language is for the convenience of the parties only.

—
remainder of this page left intentionally blank —

 

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

COMPANY

	 	 	 	 	 	 	 
	SIGNED BY   

	 	 	)	 	 	 
	 
	for and on behalf of

	 	 	)	 	 	 
	CHINA LODGING GROUP, LIMITED

	 	 	)	 	 	 
	 
	in the presence of :  

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	Address:
	 	 	 	 	 	 
	Floor 5, Building 57
	 	 	 	 	 	 
	No. 461 Hongcao Road
	 	 	 	 	 	 
	Shanghai 200233
	 	 	 	 	 	 
	The People’s Republic of China
	 	 	 	 	 	 

Execution Page to Share Purchase Agreement

 

 

WFOES

Address:

Floor 5, Building 57

No. 461 Hongcao Road

Shanghai 200233

The People’s Republic of China

Address:

Floor 5, Building 57

No. 461 Hongcao Road

Shanghai 200233

The People’s Republic of China

Address:

Floor 5, Building 57

No. 461 Hongcao Road

Shanghai 200233

The People’s Republic of China

Execution Page to Share Purchase Agreement

 

 

FOUNDERS

Address:

Floor 5, Building 57

No. 461 Hongcao Road

Shanghai 200233

The People’s Republic of China

Address:

Floor 5, Building 57

No. 461 Hongcao Road

Shanghai 200233

The People’s Republic of China

Execution Page to Share Purchase Agreement

 

 

	 	 	 	 	 	 	 
	INVESTORS
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	SIGNED BY          

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	for and on behalf of

	 	 	)	 	 	 
	CHENGWEI PARTNERS, L.P.

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	in the presence of :

	 	 	)	 	 	 

Address:

c/o Chengwei Ventures

Suite 33C, Lane 672 Changle Road

Shanghai 200040, China

Fax: +86 21 5404 8766

Attention: Ping Ping

	 	 	 	 	 	 	 
	SIGNED BY          

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	for and on behalf of

	 	 	)	 	 	 
	CHENGWEI VENTURES

	 	 	)	 	 	 
	EVERGREEN FUND, L. P.

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	in the presence of :

	 	 	)	 	 	 

Address:

c/o Chengwei Ventures

Suite 33C, Lane 672 Changle Road

Shanghai 200040, China

Fax: +86 21 5404 8766

Attention: Ping Ping

	 	 	 	 	 	 	 
	SIGNED BY          

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	for and on behalf of
	 	 	)	 	 	 
	CHENGWEI VENTURES

	 	 	)	 	 	 
	EVERGREEN ADVISORS FUND, LLC

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	in the presence of :

	 	 	)	 	 	 

Address:

c/o Chengwei Ventures

Suite 33C, Lane 672 Changle Road

Shanghai 200040, China

Fax: +86 21 5404 8766

Attention: Ping Ping

Execution Page to Share Purchase Agreement

 

 

	 	 	 	 	 	 	 
	SIGNED BY

		 	)	 	 	 
	 
	 	 	 	 	 	 
	for and on behalf of

	 	 	)	 	 	 
	CDH COURTYARD LIMITED

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	in the presence of :

	 	 	)	 	 	 

Address:

c/o CDH Investments

2601, 26th Floor, Lippo Centre Tower 2,

89, Queensway, Admiralty,

Hong Kong

Tel: +852 2810 7003 

Fax: +852 2801 7083 

Attention: Chief Financial Officer

Execution Page to Share Purchase Agreement

 

 

	 	 	 	 	 	 	 
	SIGNED BY          

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	for and on behalf of

	 	 	)	 	 	 
	PINPOINT CAPITAL 2006 A LIMITED

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	in the presence of :

	 	 	)	 	 	 

Address:

299 Bisheng Road, Suite 13-101

Zhangjiang, Shanghai 201204

People’s Republic of China

Tel: +86 21 5080 7651

Fax: +86 21 5080 1333

Execution Page to Share Purchase Agreement

 

 

	 	 	 	 	 	 	 
	SIGNED BY

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	for and on behalf of 

NORTHERN LIGHT VENTURE

FUND, L.P.

	 	)

)

)
	 	
	 
	 	 	 	 	 	 
	in the presence of :

	 	 	)	 	 	

Address:

c/o Northern Light Venture Capital

2440 Sand Hill Road Suite 201

Menlo Park CA 94025 USA

Tel: +1 650-585-5460

Fax: +1 650-585-5451

	 	 	 	 	 	 	 
	SIGNED BY

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	for and on behalf of

NORTHERN LIGHT PARTNERS

FUND, L.P.

	 	)

)

)
	 	
	 
	 	 	 	 	 	 
	in the presence of :

	 	 	)	 	 	

Address:

c/o Northern Light Venture Capital

2440 Sand Hill Road Suite 201

Menlo Park CA 94025 USA

Tel: +1 650-585-5460

Fax: +1 650-585-5451

	 	 	 	 	 	 	 
	SIGNED BY

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	for and on behalf of

NORTHERN LIGHT STRATEGIC

FUND, L.P.

	 	)

)

)
	 	
	 
	 	 	 	 	 	 
	in the presence of :

	 	 	)	 	 	

Address:

c/o Northern Light Venture Capital

2440 Sand Hill Road Suite 201

Menlo Park CA 94025 USA

Tel: +1 650-585-5460

Fax: +l 650-585-5451

 Execution Page to Share Purchase Agreement

 

 

	 	 	 	 	 	 	 
	SIGNED BY

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	for and on behalf of

IDG-ACCEL CHINA GROWTH FUND

GP ASSOCIATES LTD.

for and on behalf of

IDG-ACCEL CHINA GROWTH FUND 

ASSOCIATES L.P.

	 	)

)

)

)

)

)
	 	
	 
	 	 	 	 	 	 
	for and on behalf of

	 	 	)	 	 	 
	IDG-ACCEL CHINA GROWTH FUND L.P.

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	in the presence of : 

	 	 	)	 	 	 

Address:

c/o IDG VC Management Ltd.

10/F Effectual Building

16 Hennessy Road

Wanchai, Hong Kong

Fax: (852) 25291619

	 	 	 	 	 	 	 
	SIGNED BY

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	for and on behalf of

IDG-ACCEL CHINA GROWTH FUND

GP ASSOCIATES LTD.

for and on behalf of

IDG-ACCEL CHINA GROWTH FUND

ASSOCIATES L.P.

	 	)

)

)

)

)

)
	 	
	 
	 	 	 	 	 	 
	for and on behalf of

	 	 	)	 	 	 
	IDG-ACCEL CHINA GROWTH FUND-A L.P.

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	in the presence of : 

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	Address:
	 	 	 	 	 	 
	c/o IDG VC Management Ltd.
	 	 	 	 	 	 
	10/F Effectual Building
	 	 	 	 	 	 
	16 Hennessy Road
	 	 	 	 	 	 
	Wanchai, Hong Kong
	 	 	 	 	 	 
	Fax:
(852) 25291619
	 	 	 	 	 	 

Execution Page to Share Purchase Agreement

 

 

	 	 	 	 	 	 	 
	SIGNED BY

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	for and on behalf of

IDG-ACCEL CHINA INVESTORS

ASSOCIATES LTD.

for and on behalf of

IDG-ACCEL CHINA INVESTORS L.P.

in the presence of : 

	 	)

)

)

)

)

)
	 	
	 
	 	 	 	 	 	 
	Address:
	 	 	 	 	 	 
	c/o
IDG VC Management Ltd.
	 	 	 	 	 	 
	10/F Effectual Building
	 	 	 	 	 	 
	16 Hennessy Road
	 	 	 	 	 	 
	Wanchai, Hong Kong
	 	 	 	 	 	 
	Fax:
(852) 25291619
	 	 	 	 	 	 

Execution Page to Share Purchase Agreement

 

 

SCHEDULE 1

FOUNDERS

WINNER CROWN HOLDINGS LIMITED, a company incorporated in British Virgin Islands under company No.
618532 having its registered office at Akara Bldg., 24 De Castro Street, Wickhams Cay I, Road Town,
Tortola, British Virgin Islands

MR. QI JI, (PRC ID card no. 31010419661010057x), Room 401 No. 5 Lane 99, Gui Lin Street East,
Shanghai, China.

Schedule-1

 

 

SCHEDULE 2

WFOES

HANTING XINGKONG HOTEL MANAGEMENT (SHANGHAI) CO., LTD. , a wholly
foreign-owned enterprise registered in Shanghai, PRC

LISHAN SENBAO INVESTMENT MANAGEMENT (SHANGHAI) CO., LTD. , a
wholly foreign-owned enterprise registered in Shanghai, PRC

YIJU HOTEL MANAGEMENT (SHANGHAI) CO., LTD. , a wholly foreign-owned
enterprise registered in Shanghai, PRC

Schedule-2

 

 

SCHEDULE 3

INVESTORS AND SUBSCRIBED SHARES

	 	 	 	 	 	 	 	 	 
	 	 	Series B	 	 	 	 
	 	 	Preferred	 	 	Consideration	 
	 	 	Shares	 	 	for Series B	 
	Investors	 	Subscribed	 	 	Shares (US$)	 
	Chengwei Partners, L.P.
	 	 	466,480	 	 	$	594,999.90	 
	Chengwei Ventures Evergreen Fund, L.P.
	 	 	11,446,755	 	 	$	14,600,450.47	 
	Chengwei Ventures Evergreen Advisors Fund, LLC
	 	 	1,414,768	 	 	$	1,804,550.73	 
	CDH Courtyard Limited
	 	 	13,328,003	 	 	$	17,000,001.11	 
	Pinpoint Capital 2006 A Limited
	 	 	1,568,001	 	 	$	2,000,000.96	 
	Northern Light Venture Fund, L.P.
	 	 	1,179,450	 	 	$	1,504,400.27	 
	Northern Light Partners Fund, L.P.
	 	 	129,517	 	 	$	165,200.23	 
	Northern Light Strategic Fund, L.P.
	 	 	259,034	 	 	$	330,400.45	 
	IDG-Accel China Growth Fund L.P.
	 	 	1,812,687.03	 	 	$	2,312,100.43	 
	IDG-Accel China Growth Fund-A L.P.
	 	 	370,439.60	 	 	$	472,499.41	 
	IDG-Accel China Investors L.P.
	 	 	168,874.01	 	 	$	215,400.48	 
	 
	 	 	 	 	 	 	 	 
	Investors as Noteholders
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	IDG-Accel China Growth Fund L.P.
	 	 	2,874,345.97	 	 	$	3,116,308.42	 
	IDG-Accel China Growth Fund-A L.P.
	 	 	587,400.40	 	 	$	636,847.77	 
	IDG-Accel China Investors L.P.
	 	 	267,779.99	 	 	$	290,321.71	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Total:
	 	 	35,873,535.00	 	 	$	45,043,482.34	 

Schedule-3

 

 

SCHEDULE 4

INVESTOR WARRANTS — SECTION 5.15(I)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Purchase Price	 	 	Aggregate Purchase	 
	Investors	 	Warrant Shares	 	 	per Share (US$)	 	 	Price (US$)	 
	Chengwei Partners, L.P.
	 	 	169,912	 	 	$	1.530612	 	 	$	260,069.35	 
	Chengwei
Ventures Evergreen Fund, L.P. 
	 	 	4,169,396	 	 	$	1.530612	 	 	$	6,381,727.55	 
	Chengwei Ventures
Evergreen Advisors Fund, LLC
	 	 	515,319	 	 	$	1.530612	 	 	$	788,753.45	 
	CDH Courtyard Limited
	 	 	4,854,626	 	 	$	1.530612	 	 	$	7,430,548.81	 
	Pinpoint Capital 2006 A
Limited
	 	 	571,133	 	 	$	1.530612	 	 	$	874,183.02	 
	Northern Light Venture
Fund, L.P.
	 	 	429,606	 	 	$	1.530612	 	 	$	657,560.10	 
	Northern Light Partners
Fund, L.P.
	 	 	47,176	 	 	$	1.530612	 	 	$	72,208.15	 
	Northern Light Strategic
Fund, L.P.
	 	 	94,351	 	 	$	1.530612	 	 	$	144,414.77	 
	IDG-Accel China Growth
Fund L.P.
	 	 	1,707,217	 	 	$	1.530612	 	 	$	2,613,086.83	 
	IDG-Accel China Growth
Fund-A L.P.
	 	 	348,886	 	 	$	1.530612	 	 	$	534,009.10	 
	IDG-Accel China Investors
L.P.
	 	 	159,048	 	 	$	1.530612	 	 	$	243,440.78	 
	Total:
	 	 	13,066,670	 	 	 	—	 	 	$	20,000,001.91	 

Schedule-4

 

 

     SCHEDULE
5

INVESTOR WARRANTS — SECTION 5.15(II)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Purchase Price	 	 	Aggregate Purchase	 
	Investors	 	Warrant Shares	 	 	per Share (US$)	 	 	Price (US$)	 
	Chengwei Partners, L.P.
	 	 	50,430	 	 	$	1.27551	 	 	$	64,323.97	 
	Chengwei Ventures
Evergreen Fund, L.P.
	 	 	1,237,487	 	 	$	1.27551	 	 	$	1,578,427.04	 
	Chengwei Ventures
Evergreen Advisors Fund, LLC
	 	 	152,948	 	 	$	1.27551	 	 	$	195,086.70	 
	CDH Courtyard Limited
	 	 	1,440,865	 	 	$	1.27551	 	 	$	1,837,837.72	 
	IDG-Accel China Growth
Fund L.P.
	 	 	195,966	 	 	$	1.27551	 	 	$	249,956.59	 
	IDG-Accel China Growth
Fund-A L.P.
	 	 	40,048	 	 	$	1.27551	 	 	$	51,081.62	 
	IDG-Accel China Investors
L.P.
	 	 	18,257	 	 	$	1.27551	 	 	$	23,286.99	 
	Total:
	 	 	3,136,001	 	 	 	—	 	 	$	4,000,000.63	 

Schedule-5

 

 

EXHIBIT A

MEMORANDUM AND ARTICLES

Exhibit-A

 

 

EXHIBIT B

SHAREHOLDERS AGREEMENT

Exhibit-B

 

 

EXHIBIT C

DISCLOSURE SCHEDULE

Exhibit-C

 

 

EXHIBIT D

KEY MANAGEMENT PERSONNEL

	 	 	 	 	 
	No.	 	Name	 	Position
		 		 	
	1.

	 	Ji Qi 

	 	Chief Executive Officer 

	2.

	 	Lee A. Wang 

	 	Chief Financial Officer 

	3.

	 	Zhiyong Yuan 

	 	Executive Vice President of Management Department 

	4.

	 	Cheng Jun 

	 	Executive Vice President of Marketing and Business Development 

	5.

	 	Haijun Wang 

	 	Executive Vice President of Management Department 

	6.

	 	Jiamin Shi 

	 	Executive Vice President of Human Resource Department 

	7.

	 	Zhiping Li 

	 	Executive Vice President; President of Hanting College 

	8.

	 	Ling Wang 

	 	Director of Sales Department 

	9.

	 	Hui Jin 

	 	Senior Manager of Business Development Department 

	10.

	 	Juan Cao 

	 	Director of Operation 

	11.

	 	Xining Rui 

	 	General Manager of Shanghai Hanting Decoration Engineering Co., Ltd. 

	12.

	 	Jun Chen 

	 	General Manager of Shanghai Hanting Decoration Engineering Co., Ltd. 

	13.

	 	Peigen Zhang 

	 	General Manager of Shanghai Hanting Decoration Engineering Co., Ltd. 

Exhibit-D

 

 

EXHIBIT E

UNAUDITED PRO FORMA FINANCIALS

Exhibit-E

 

 

EXHIBIT F

SELECTED FINANCIAL INFORMATION

Exhibit-F

 

 

EXHIBIT G

FORM OF INDEMNIFICATION AGREEMENT

Exhibit-G

 

 

EXHIBIT H

FORM OF FOUNDER WARRANT

Exhibit-H

 

 

EXHIBIT I

FORM OF MANAGEMENT RIGHTS LETTER

[COMPANY LETTERHEAD]

[DATE]

[INVESTORS]

Re:      Management Rights

Gentlemen:

     We refer to the Series B Preferred Shares Purchase Agreement, dated June 20, 2007, by and
among China Lodging Group Limited (the “Company”), [INVESTORS] (the “Investors”) and certain other
parties thereto (the “Purchase Agreement”). This letter sets forth our agreement with respect to
the Investors’ access to information and other rights as holders of the Series B Preferred Shares
(as defined in the Purchase Agreement).

     Information and Access 

     The Company will provide to the Investors within one hundred and twenty (120) days after the
end of each fiscal year, copies of the consolidated financial statements of the Company. Upon
reasonable notice, at such reasonable time during normal business hours as the Investors may
request, the Company will permit the Investors or their representatives to examine the books and
records of the Company, provided that access to highly confidential proprietary information need
not be provided by the Company.

     If the Investors are not represented on the Company’s Board of Directors, the Company will
give a representative of the Investors
access to minutes of the Board of Directors of the Company, except that the representative may
be excluded from access to any minutes or materials or portion thereof if the Company believes that
such exclusion is reasonably necessary or appropriate to preserve the attorney-client privilege or
to protect highly confidential proprietary information or for other similar reasons.

Exhibit-I

 

 

     Consultation with Management 

     The Investors shall be entitled to consult with management of the Company with respect to the
Company’s business plans, and to meet with senior management at mutually agreeable times for such
consultation and to review the progress of the Company in achieving those plans. In addition, upon
reasonable notice, at such reasonable time as the Board may determine in its sole discretion, such
representative may seek an invitation to address the Board of Directors with respect to the
Company’s business plans and other significant business issues facing the Company and affecting the
holders of the Series B Preferred Shares.

     Confidentiality 

     The Investors will keep confidential and will cause their respective representatives to keep
confidential of all information and documents obtained pursuant to this letter agreement. Upon
termination of this letter, the Investors will collect and deliver to the Company all documents
obtained by them or their representatives then in their possession and any copies thereof, provided
that, the Investors and such representatives may continue to possess such documents in their
capacity as shareholders of the Company subject to confidentiality and other obligations set forth
in any shareholders or similar agreement with respect to such shares.

     Termination 

     This letter agreement and the rights and obligations hereunder will terminate upon the earlier
of (a) the consummation of the sale of the Company’s securities
pursuant to a registration statement filed by the Company under the Securities Act of 1933, as
amended, or similar law, in connection with a public offering of its securities, (b) the
consummation of a merger or consolidation of the Company that is effected (i) for independent
business reasons unrelated to extinguishing such rights and (ii) for purposes other than (A) the
reincorporation of the Company in a different jurisdiction or (B) the formation of a holding
company that will be owned exclusively by the Company’s stockholders and will hold all of the
outstanding shares of capital stock of the Company’s successor, or (c) the date the Investors are
no longer shareholders of the Company. The confidentiality provisions hereof will survive any such
termination.

*     *     *

     This letter agreement shall be governed by and construed in accordance with the laws of Hong
Kong S.A.R.

     Please acknowledge your agreement with the foregoing by signing two copies of this letter.
Please return one signed copy to us and keep the other copy for your records.

Very truly yours,

Exhibit-I

 

 

	 	 	 	 	 
	 	China Lodging Group, Limited

 	 
	 	By:  	 	 
	 	 	Name:  	Ji Qi  	 
	 	 	Title:  	Chief Executive Officer 	 
	 

AGREED AND ACCEPTED:

[INVESTOR SIGNATURE BLOCK]

Exhibit-I

 

 

EXHIBIT J-1

FORM OF INVESTOR WARRANT — SECTION 5.15(I)

Exhibit-J-1

 

 

EXHIBIT J-2

FORM OF INVESTOR WARRANT — SECTION 5.15(II)

Exhibit-J-2

 

 

EXHIBIT K

SHAREHOLDER LOAN AGREEMENT

Exhibit-KEX-4.8

Exhibit 4.8

Dated June 20, 2007

CHINA LODGING GROUP, LIMITED

(“Company”)

and

PARTIES LISTED ON EXHIBIT A HERETO

 

AMENDED AND RESTATED

SHAREHOLDERS AGREEMENT

Relating to

CHINA LODGING GROUP, LIMITED

 

 

 

TABLE OF CONTENT

	 	 	 	 	 
	RECITALS
	 	 	1	 
	 
	 	 	 	 
	CERTAIN DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	1. INFORMATION RIGHTS; BOARD REPRESENTATION
	 	 	8	 
	 
	 	 	 	 
	2. REGISTRATION RIGHTS
	 	 	16	 
	 
	 	 	 	 
	3. RIGHT OF PARTICIPATION
	 	 	28	 
	 
	 	 	 	 
	4. TRANSFER RESTRICTIONS
	 	 	30	 
	 
	 	 	 	 
	5. DRAG-ALONG RIGHTS
	 	 	39	 
	 
	 	 	 	 
	6. ASSIGNMENT AND AMENDMENT
	 	 	40	 
	 
	 	 	 	 
	7. CONFIDENTIALITY AND NON-DISCLOSURE
	 	 	41	 
	 
	 	 	 	 
	8. OTHER COVENANTS
	 	 	42	 
	 
	 	 	 	 
	9. REPURCHASE RIGHTS
	 	 	43	 
	 
	 	 	 	 
	10. COMPLIANCE WITH PRC LAW; PUT OPTION
	 	 	44	 
	 
	 	 	 	 
	11. ADMINISTRATION
	 	 	46	 
	 
	 	 	 	 
	12. TAX MATTERS
	 	 	46	 
	 
	 	 	 	 
	13. GENERAL PROVISIONS
	 	 	48	 
	 
	 	 	 	 
	EXHIBIT A
	 	 	 	 
	 
	 	 	 	 
	EXHIBIT B
	 	 	 	 
	 
	 	 	 	 
	EXHIBIT C
	 	 	 	 
	 
	 	 	 	 
	EXHIBIT D
	 	 	 	 
	 
	 	 	 	 
	EXHIBIT E
	 	 	 	 

 

Page 1

AMENDED AND RESTATED SHAREHOLDERS AGREEMENT

This AMENDED AND RESTATED SHAREHOLDERS AGREEMENT (this “Agreement”) is made and entered into as
of June 20, 2007 by and among China Lodging Group, Limited, a company incorporated in the Cayman
Islands, having its registered office at the office of Offshore Incorporations (Cayman) Limited,
Scotia Centre, 4th Floor, P.O. Box 2804, George Town, Grand Cayman, Cayman Islands
(“the Company”), and the parties listed in Exhibit A hereto.

RECITALS

	A.	 	The Company is a private limited company incorporated under the laws of the Cayman
Islands. Corporate information of the Company is set out in Exhibit B.
	 
	B.	 	The Company, the Ordinary Holders (as defined below) and the Series A Holders (as defined
below) were parties to that certain Shareholders Agreement dated February 4, 2007 (the “Prior
Agreement”).
	 
	C.	 	The Investors listed in Exhibit A hereto (the “Investors”) are parties to that certain Series
B Preferred Shares Purchase Agreement, of even date herewith, between the Company and the
Investors (the “Series B Purchase Agreement”), under which certain of the Company’s and such
Investors’ obligations are conditioned upon the execution and delivery of this Agreement by the
parties hereto.
	 
	D.	 	The Company, the Ordinary Holders and the Series A Holders desire to amend and restate the
Prior Agreement in its entirety as set forth in this Agreement.
	 
	E.	 	The Founder and Co-Founders desire to make certain covenants as set forth in this
Agreement.

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises hereinafter set
forth, and other good and valuable considerations, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:

CERTAIN DEFINITIONS

For purposes of this Agreement:

	 	 	“2007 Global Share Plan” means the global share plan adopted by the Company’s Board of
Directors on February 4th, 2007 and approved by the then Shareholders on February 4th,
2007, under which 10,000,000 Ordinary Shares are reserved for issuance as of the date
hereof.
	 
	 	 	“2008 Global Share Plan” means the global share plan adopted by the Company’s Board of
Directors on June 15, 2007 and approved by the then Shareholders on June
15, 2007, under which 3,000,000 Ordinary Shares are reserved for issuance as of the date
hereof.
	 
	 	 	“Affiliates” means, with respect to any given Person, any other Person directly or
indirectly Controlling, Controlled by, or under common Control with such Person and,

 

Page 2

	 	 	where the given Person is an individual, the spouse, parent, sibling, or child thereof.
	 
	 	 	“Applicable Securities Law” means (i) with respect to any offering of securities in the
United States of America, or any other act or omission within that jurisdiction, the
securities law of the United States, including the Exchange Act and the Securities Act,
and any applicable law of any State of the United States, and (ii) with respect to any
offering of securities in any jurisdiction other than the United States of America, or any
related act or omission in that jurisdiction, the applicable laws of that jurisdiction.
	 
	 	 	“Approval” means, when used with respect to the Series B Holders, the approval in writing
of such matter by (i) the holders of a majority of the Series B Preferred Shares then
outstanding, including at least one of Chengwei and CDH (for so long as Chengwei or CDH
remains a Series B Holder), or (ii) both of Chengwei and CDH (for so long as each of
Chengwei and CDH remains a Series B Holder) and the term “Approved” has meanings
correlative to the foregoing.
	 
	 	 	“Articles” means the Amended and Restated Articles of Association of the Company adopted
by the Shareholders as of the date hereof.
	 
	 	 	“Auditor” means any Person appointed to serve as the auditor for the Group pursuant to the
Articles.
	 
	 	 	“Board” means the Board of Directors of the Company.
	 
	 	 	“Business Day” means any day of the week other than Saturday or Sunday that banks are
generally open for business in the PRC, Hong Kong and New York.
	 
	 	 	“Buyback Notice” has the meaning ascribed thereto in Section 10.2.
	 
	 	 	“CDH” means CDH Courtyard Limited, a company incorporated under the laws of the British
Virgin Islands.
	 
	 	 	“CEO” has the meaning ascribed thereto in Section 1.1(a)(ii).
	 
	 	 	“CFO” has the meaning ascribed thereto in Section 1.1(a)(ii).
	 
	 	 	“Chengwei” means, collectively, Chengwei Partners, L.P., an exempted limited partnership
organized and existing under the laws of the Cayman Islands, Chengwei Ventures Evergreen
Fund, L.P., an exempted limited partnership organized and existing under the laws of the
Cayman Islands, and Chengwei Ventures Evergreen
Advisors Fund, LLC, an exempted limited liability company organized and existing under the
laws of the Cayman Islands.
	 
	 	 	“Co-Founders” means the persons listed as “Co-Founders” on Exhibit A.
	 
	 	 	“Company Securities” means any shares in the share capital of the Company and any Share
Equivalents.
	 
	 	 	“Compensation Committee” has the meaning ascribed thereto in Section 1.3.

 

Page 3

	 	 	“Constitutional Documents” means, with respect to any Person, the Certificate of
Incorporation, Memorandum of Association, Articles of Association, Joint Venture
Agreement, or similar constitutive documents for such Person.
	 
	 	 	“Control” means, when used with respect to any Person, the power to direct the management
and policies of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise, and the terms “Controlling” and “Controlled”
have meanings correlative to the foregoing.
	 
	 	 	“Deemed Liquidation Event” means (i) any consolidation or merger of the Company with or
into any other person, or any other corporate reorganization, in which the Shareholders
immediately prior to such consolidation, merger or reorganization, own less than fifty
percent of the Company’s voting power immediately after such consolidation, merger or
reorganization, or any transaction or series of related transactions involving the Company
pursuant to which in excess of fifty percent of the Company’s voting power is transferred;
or (ii) a sale, transfer, lease, exclusive licensing or other disposition of all or
substantially all of the property, assets or revenues of the Company; unless holders
representing at least a majority in voting power of the Series A Preferred Shares have
approved in writing, and the Series B Shareholders have Approved, a waiver waiving the
treatment of such event as a Deemed Liquidation Event.
	 
	 	 	“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
	 
	 	 	“Founder Warrant” means the warrant to purchase Series B Preferred Shares issued by the
Company to Winner Crown Holdings Limited pursuant to the Series B Purchase Agreement.
	 
	 	 	“Founder” means the person listed as “Founder” on Exhibit A.
	 
	 	 	“Form F-3” means such respective form under the Securities Act or any successor
registration form under the Securities Act subsequently adopted by the SEC which permits
inclusion or incorporation of substantial information by reference to other documents
filed by the Company with the SEC.
	 
	 	 	“GAAP” means generally accepted accounting principles of the United States, consistently
applied.
	 
	 	 	“Group” means the Company and all other Group Companies, including but not limited to
Hanting Xingkong Hotel Management (Shanghai) Co., Ltd.
, a
wholly foreign-owned enterprise registered in Shanghai, PRC, Lishan Senbao Investment
Management (Shanghai) Co., Ltd. , a wholly foreign-owned
enterprise registered in Shanghai, PRC, Yiju Hotel Management (Shanghai) Co., Ltd.
, a wholly foreign-owned enterprise registered in Shanghai, PRC;
“Group Company” means the Company or any Person (other than a natural Person) Controlled
by the Company.
	 
	 	 	“Holder” means each of the Series A Holders and the Investors, and the permitted

 

Page 4

	 	 	transferees and assigns of any Holder.
	 
	 	 	“Hong Kong” means the Hong Kong Special Administrative Region.
	 
	 	 	“IPO” means an initial public offering of the Company’s Ordinary Shares on the New York
Stock Exchange, the NASDAQ Global Market, the Main Board of the Hong Kong Stock Exchange
or any other exchange of recognized international reputation and standing duly approved by
the Board.
	 
	 	 	“Investor Warrants” means the warrants to purchase Series B Preferred Shares issued by the
Company to the Investors pursuant to the Series B Purchase Agreement.
	 
	 	 	“Investors” means the Shareholders listed as “Investors” on Exhibit A.
	 
	 	 	“Key Management Personnel” means each of the following positions in any Group Company: (i)
the Chief Executive Officer (responsible for general strategic direction with emphasis on
sales, marketing and business development), (ii) the Chief Financial Officer (responsible
for fund raising, financial control and management), (iii) the Chief Operating Officer or
Head of Operations (responsible for operations, public relations and corporate marketing),
and (iv) the Executive Vice President of any functional department.
	 
	 	 	“Management Holders” means the Founder, Persons who become a party hereto in accordance
with Section 4.8 and any Person Controlled by any of the foregoing.
	 
	 	 	“Material Adverse Effect” has the meaning ascribed thereto in the Series B Purchase
Agreement.
	 
	 	 	“Memorandum” means the Amended and Restated Memorandum of Association of the Company
adopted by the Shareholders as of the date hereof.
	 
	 	 	“New Securities” means any Company Securities; provided that the term “New Securities”
shall not include: (a) any Series B Preferred Shares issued pursuant to the terms of the
Series B Purchase Agreement, the Note Agreement, the Founder Warrant
or the Investor Warrants, (b) securities issued upon conversion of the Series A Preferred
Shares; (c) securities issued upon conversion of the Series B Preferred Shares; (d) not
more than 13,000,000 Ordinary Shares issued or issuable pursuant to any Share Option Plan
and/or in connection with the exercise of any Share Equivalents issued or issuable in any
Share Option Plan; (e) Reserved Shares the issuance of which was approved by the Board,
including at least a majority of the Preferred Directors, if any; (f) any securities issued
in connection with any share split, share dividend or other similar event in which all
Participation Rights Holders are entitled to participate on a pro rata basis; (g) any
securities issued pursuant to a Qualified Public Offering; or (h) as may otherwise be
consented to in writing by Participation Rights Holders representing not less than 80% in
voting power of the Company Securities held by Participation Rights Holders.
	 
	 	 	“Noteholders” shall mean IDG-Accel China Growth Fund L.P., IDG-Accel China Growth Fund-A
L.P. and IDG-Accel China Investors L.P., each an exempted limited partnership organized
and existing under the laws of the Cayman Islands.

 

Page 5

	 	 	“Note Agreement” means the Convertible Note Purchase Agreement entered into by and between
the Company and the Noteholders on March 28, 2007 and the Convertible Promissory Note,
dated March 30, 2007, issued by the Company thereunder.
	 
	 	 	“Ordinary Holders” means the holders of Ordinary Shares.
	 
	 	 	“Ordinary Shares” means the Ordinary Shares, par value US$0.0001 per share, of the
Company.
	 
	 	 	“Participation Rights Holder” means each of the Series B Holders party to this Agreement
as of the date hereof, together with any Person to whom the rights of any Participation
Rights Holder under Section 3 have been duly assigned in accordance with Section 6.
	 
	 	 	“Permitted Transferee” has the meaning ascribed thereto in Section 4.9.
	 
	 	 	“Person” means any individual, partnership, corporation, trust or other entity (including,
without limitation, any unincorporated joint venture and whether or not having separate
legal personality).
	 
	 	 	“PRC” means the People’s Republic of China, solely for purposes of this definition,
excluding the Hong Kong, the Macau Special Administrative Region and Taiwan.
	 
	 	 	“Preferred Directors” means the Series A Directors and the Series B Directors.
	 
	 	 	“Preferred Holders” means the Series A Holders and Series B Holders.
	 
	 	 	“Preferred Shares” means the Series A Preferred Shares and Series B Preferred Shares.
	 
	 	 	“Put Option Shares” has the meaning ascribed thereto in Section 10.2.
	 
	 	 	“Qualified IPO” means a firm commitment, underwritten IPO by the Company of its Ordinary
Shares with (i) a market capitalization of the Company equal to no less than US$495
million (or the equivalent thereof in other currencies) immediately prior to the IPO, and
(ii) total offering proceeds to the Company, before deduction of Selling Expenses, of not
less than US$50 million (or the equivalent thereof in other currencies).
	 
	 	 	“RE Company” means a real estate company that may be established in the PRC by the
Founder, the Company or any Affiliate of the Founder or the Company (i) for the purpose of
acquiring, owning, enhancing, managing, operating or maintaining assets, real property or
other facilities for use in lodging-related business activities, including but not limited
to limited service, deluxe, luxury, upscale, and midscale with food and beverage service,
and (ii) deriving no less than 50% of its gross revenue from leasing and other
transactions with the Group.
	 
	 	 	“register,” “registered,” and “registration” when used in Section 2, refer to a
registration effected by filing a registration statement which is in a form which complies
with, and is declared effective by the SEC in accordance with the Securities Act.

 

Page 6

	 	 	“Registrable Securities” means (i) the Preferred Shares, (ii) any Ordinary Shares issuable
or issued upon conversion of the Preferred Shares, (iii) all Equity Securities which may
be from time to time acquired by a Holder of Preferred Shares after the date hereof, and
(iv) any Company Securities issued as (or issuable upon the conversion, exchange or
exercise of any Share Equivalent) a dividend or other distribution with respect to, or in
exchange for, or in replacement of the Company Securities referenced in clauses (i), (ii),
and (iii), excluding in all cases any Registrable Securities sold by a Person in a
transaction in which rights under Section 2 are not assigned in accordance with this
Agreement.
	 
	 	 	“Registration Expenses” shall mean all expenses incurred by the Company in complying with
Sections 2.3, 2.4 and 2.5, including, without limitation, all registration and filing
fees, printing expenses, fees, and disbursements of counsel for the Company, reasonable
fees and disbursements of counsel for the Holders, “blue sky” fees and expenses and the
expense of any special audits incident to or required by any such registration (but
excluding the compensation of regular employees of the Company which shall be paid in any
event by the Company).
	 
	 	 	“Related Party” shall mean, with respect to any specified Person, the holder of any equity
interest in such Person, or any director, officer or employee of such Person, or any
Affiliate of any of the foregoing; notwithstanding the foregoing, Related Parties of any
Group Company or the Founder shall also include any real estate investment fund or similar
business that is a Related Party of any Group Company or the Founder, any RE Company, or
any Affiliate thereof.
	 
	 	 	“Reserved Shares” means not more than 7,000,000 Ordinary Shares or options,
warrants, rights (including conversion or preemptive rights and rights of first refusal)
for the purchase of such Ordinary Shares issuable for such purposes and in such amounts and
at such prices and upon such other terms that shall be determined from time to time by the
Board (including at least a majority of the Preferred Directors, if any) in accordance with
this Agreement.
	 
	 	 	“Restricted Shareholder” means any of the SPV Entities, Founder, Co-Founders or Key
Management Personnel, or their respective Permitted Transferees.
	 
	 	 	“Sale of the Company” means either a Stock Sale or a Deemed Liquidation Event.
	 
	 	 	“SEC” or “Commission” means the U.S. Securities and Exchange Commission.
	 
	 	 	“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
	 
	 	 	“Selling Expenses” shall mean all underwriting discounts and selling commissions
applicable to the sale of Registrable Securities pursuant to Sections 2.3, 2.4 or 2.5.
	 
	 	 	“Series A Director” means any individual nominated to serve on the Board as of right
pursuant to Section 1.2 by Shareholders representing a majority in voting power of the
Series A Preferred Shares.

 

Page 7

	 	 	“Series A Holders” means the holders of Series A Preferred Shares.
	 
	 	 	“Series A Preferred Shares” means the Series A Preferred Shares, par value of US$0.0001
per share, of the Company.
	 
	 	 	“Series B Director” means any individual nominated to serve on the Board as of right
pursuant to Section 1.2.
	 
	 	 	“Series B Holders” means the holders of Series B Preferred Shares.
	 
	 	 	“Series B Preferred Shares” means the Series B Preferred Shares, par value of US$0.0001
per share, of the Company.
	 
	 	 	“Series B Purchase Agreement” means that certain Series B Preferred Shares Purchase
Agreement, of even date herewith, among the Company and certain subscribers to the Series
B Preferred Shares of the Company.
	 
	 	 	“Share Equivalents” means warrants, options and rights exercisable for shares in the share
capital of the Company and instruments convertible or exchangeable for shares in the share
capital of the Company.
	 
	 	 	“Share Option Plan” means the Company’s 2007 Global Share Plan, 2008 Global Share Plan and
any other share option, share appreciation, share purchase, phantom share or other
equity-based plan, arrangement, agreement, policy or understanding, whether written or
unwritten, duly authorized by the Board pursuant to the Articles
and this Agreement.
	 
	 	 	“Shares” means the Ordinary Shares and Preferred Shares.
	 
	 	 	“Shareholder Loan Agreement” means the Loan Repayment and Share Purchase Agreement of even
date herewith entered into by and among the Company, the Founder and the Co-Founders.
	 
	 	 	“Shareholders” means the Ordinary Holders and Preferred Holders.
	 
	 	 	“SPV Holders” means the Founder and Co-Founders.
	 
	 	 	“SPV Entities” means any Person (other than a natural Person) though which any of the SPV
Holders may hold indirect ownership interest in the Company, including without limitation
the Ordinary Holders and Series A Holders as listed on Exhibit A hereto.
	 
	 	 	“Stock Sale” means a transaction or series of related transactions in which a Person, or a
group of related Persons, acquires from Shareholders Shares representing more than fifty
percent (50%) of the outstanding voting power of the Company.
	 
	 	 	“Transaction Documents” has the meaning ascribed thereto in the Series B Purchase
Agreement.

 

Page 8

	1.	 	INFORMATION RIGHTS; BOARD REPRESENTATION
	 
	1.1	 	Information Rights and Inspection Rights.

	 	(a)	 	For so long as a Preferred Holder holds no less than 1,500,000 Preferred Shares
(adjusted for share splits, reverse share splits, share dividends, recapitalizations and
the like), the Company shall make available and deliver to such Preferred Holder:

	 	(i)	 	as soon as practicable, but in any event within 120 days after the end of each
fiscal year of the Company, (i) consolidated and consolidating balance sheets for
the Group, as of the end of such fiscal year, (ii) consolidated and consolidating
statements of income and of cash flows for the Group for such fiscal year, (iii)
consolidated and consolidating statements of shareholders’ equity for the Group as
of the end of such fiscal year, all such financial statements audited and
certified by the Auditor in accordance with GAAP;
	 
	 	(ii)	 	as soon as practicable, but in any event within forty five (45) days after
the end of each quarter of any fiscal year of the Company, consolidated and
consolidating unaudited statements of income and of cash flows for the Group for
such fiscal quarter, consolidated and consolidating unaudited balance sheets for
the Group as of the end of such fiscal quarter and consolidated and consolidating
statements of shareholders’ equity for the
Group as of the end of such fiscal quarter, all certified by the Chief Executive
Officer of the Company (the “CEO”) and Chief
Financial Officer of the Company (the “CFO”) as having been prepared in
accordance with GAAP and as fairly presenting the financial condition of
the Company and its results of operation;
	 
	 	(iii)	 	as soon as practicable, but in any event within ten (10) business days after
the end of each month, a monthly report substantially in the form attached hereto
as Exhibit E or any other form mutually agreed by the
Company and the Investors, which shall be certified by the Chief Financial
Officer of the Company;
	 
	 	(iv)	 	as soon as practicable, but in any event within forty-five (45) days after
the end of each quarter of any fiscal year, a comparison of the actual financials
for the Group for such quarter against the financials projected for the Group for
such quarter in the applicable Budget;
	 
	 	(v)	 	as soon as practicable, but in any event thirty (30) days before the end of
each fiscal year, a budget and business plan for the Group for the next fiscal
year (collectively, the “Budget”), which shall include projected consolidated
income statements and statements of cash flow for the Group for each month in the
next fiscal year and projected consolidated balance sheets for the Group as of the
end of each month in the next fiscal year; and
	 
	 	(vi)	 	as soon as practicable, but within fifteen (15) days after duly being

 

Page 9

	 	 	 	approved by the Board, any amendment, revision, supplement or other change
to the then-existing Budget for the Group.

	 	(b)	 	For so long as a Preferred Holder holds no less than 1,500,000 Preferred Shares
(adjusted for share splits, reverse share splits, share dividends, recapitalizations and
the like), the Company shall permit such Preferred Holder to visit and inspect any of the
properties and examine the books of account and records of the Company and the Group
Companies and discuss the affairs, finances and accounts of the Company and the Group
Companies with the directors, officers, employees, accountants, legal counsel and
investment bankers of the Company and the Group Companies, all at such reasonable times as
may be requested by the Preferred Holder. If any Group Company intends to dispose of any
of its books of account or corporate records, it shall, prior to such disposition, give
such Preferred Holder reasonable notice and opportunity to segregate, remove or retain
such books and records as the Preferred Holder may select.

	1.2	 	Board Representation.

	 	(a)	 	The composition of the Board shall be determined as follows:

	 	(i)	 	the Company shall maintain a five (5) member Board of Directors;
	 
	 	(ii)	 	Shareholders representing a majority in voting power of the Ordinary Shares
shall have the right to nominate, from time to time, individuals to occupy two (2)
of the five positions on the Board.
	 
	 	(iii)	 	For so long as any Series A Preferred Shares remain outstanding,
Shareholders representing a majority in voting power of the Series A
Preferred Shares shall have the right to nominate, from time to time, an
individual to occupy one (1) of the five positions on the Board; and
	 
	 	(iv)	 	For so long as any Series B Preferred Shares remain outstanding, Shareholders
representing a majority in voting power of the Series B
Preferred Shares shall have the right to nominate, from time to time,
individuals to occupy two (2) of the five positions on the Board; provided
that:

	 	(x)	 	For so long as Chengwei holds no less than 25% of the total number of
issued and outstanding Series B Preferred Shares, Chengwei shall have the
right to nominate, from time to time, an individual to occupy one (1) of
the two positions as a Series B
Director; and
	 
	 	(y)	 	For so long as CDH holds no less than 25% of the total number of
issued and outstanding Series B Preferred Shares, CDH shall have the right
to nominate, from time to time, an individual to occupy one (1) of the two
positions as a Series B Director.

	 	(v)	 	For so long as the Noteholders hold any Series B Preferred Shares, the
Noteholders shall be entitled, by notice in writing to the Company, to

 

Page 10

	 	 	 	jointly appoint one (1) person, as observer to attend and speak at, either
in person or by teleconference, any and all meetings of the Board. The
Company shall provide to such observer the same information concerning the
Company, and access thereto, provided to members of the Board.
	 
	 	(vi)	 	Each of Chengwei and CDH, respectively, for so long as it holds any Series B
Preferred Shares, shall be entitled by notice in writing to the Company, to
appoint one (1) person, as observer to attend and speak at, either in person or by
teleconference, any and all meetings of the Board.
The Company shall provide to such observer the same information concerning
the Company, and access thereto, provided to members of the Board.

	 	(b)	 	Upon the death, resignation, removal or incapacity of any director nominated as of
right hereunder to the Board by any party hereto, such party shall be entitled to nominate
such director’s replacement to the Board. Upon the death, resignation, removal or
incapacity of any director nominated as of right hereunder to the Board by Shareholders
representing a majority in voting power of the Series A Preferred Shares or the Series B
Preferred Shares, then Shareholders representing a majority in voting power of the Series
A Preferred Shares or the Series B Preferred Shares, respectively, shall be entitled to
nominate such director’s replacement to the Board. Any director nominated as of right
hereunder by any party hereto to the Board shall be removed from office upon motion by
such party. Any director nominated as of right hereunder by
Shareholders representing a majority in voting power of the Series A Preferred
Shares or the Series B Preferred Shares to the Board of Directors of any of the
Companies shall be removed from office upon motion by Shareholders representing a
majority in voting power of the Series A Preferred Shares or the Series B
Preferred Shares, respectively.
	 
	 	(c)	 	Except as provided in paragraph (e) below, (i) no director appointed by any party as
of right hereunder shall be removed from the Board unless the appointing party consents to
the removal and (ii) no director appointed by Shareholders representing a majority in
voting power of the Series A Preferred Shares or the Series B Preferred Shares shall be
removed from the Board unless Shareholders representing a majority in voting power of the
Series A Preferred Shares or the Series B Preferred Shares, respectively, consents to the
removal.
If any of Chengwei, CDH, the Series A Holders or Series B Holders, as the case may
be, fail to nominate a sufficient number of individuals to fill all positions on
the Board in respect of which they are entitled to nominate directors pursuant to
this Section 1.2, then any such position not so filled shall remain vacant until
an individual shall be duly nominated to fill such position in accordance with the
terms of this Agreement.
	 
	 	(d)	 	Each party agrees to vote all Equity Securities owned by it in favor of the election
of any director nominated to the Board pursuant to this Section 1.2.
Upon a motion to remove any director from the Board in accordance with this
Section 1.2, each party agrees to vote all Equity Securities owned thereby to
effect removal of such director from the Board.

 

Page 11

	 	(e)	 	Any director nominated by a party hereto as of right hereunder to a position on the
Board, following such time as the party shall cease to hold the right hereunder to
nominate individuals to occupy such position, shall be promptly removed therefrom as if a
motion had been duly made for such removal under this Section 1.2. Any director nominated
as of right hereunder to a position on the Board by Shareholders representing a majority
in voting power of the Series A Preferred Shares or the Series B Preferred Shares,
following such time as the Series A Holders
or the Series B Holders, respectively, shall cease to hold the right hereunder to nominate
individuals to occupy such position, shall be promptly removed therefrom as if a motion
had been duly made for such removal under this Section 1.2.
	 
	 	(f)	 	Ms. Ping PING, with Mr. Eric LI as her alternate, and Mr. Yan HUANG, with Mr. Gongquan
WANG as his alternate, shall hereby be deemed nominated to the Board by the Series B
Holders. Mr. Qi JI shall hereby be deemed nominated to the Board by Shareholders
representing a majority in voting power of the Series A Preferred Shares. Mr. Eric LI and
Mr. Gongquan WANG shall hereby be deemed nominated as Board observers by Chengwei and CDH,
respectively.
	 
	 	(g)	 	Notice of any appointment or removal under this clause shall be given to the other
Shareholders and to the Company at their addresses given in this Agreement and within
seven (7) days after receipt of such notice the parties hereto shall join in procuring (so
far as that lies within their respective powers) that such action is taken as is necessary
under the Articles to effect the appointment or removal concerned.
	 
	 	(h)	 	Meetings of the Board shall (unless the Shareholders shall otherwise agree) take place
either in Shanghai or in a place to be agreed by all the Directors but not in any event
less frequently than once every fiscal quarter. Notice of any such meeting of the Board
shall be of not less than seven (7) days and shall be in writing and the quorum for Board
meetings shall be three (3) Directors, including at least one (1) Series B Director for so
long as any Series B Preferred Shares remain outstanding and one(1) Series A Director of
so long as any Series A Preferred Shares remain outstanding.
	 
	 	(i)	 	A quorum must be present at the beginning of and throughout each meeting of the Board.
If within thirty (30) minutes of the time appointed for a meeting, a quorum is not
present, the meeting shall stand adjourned until the same time and place on the same day
in the next week and if at such adjourned meeting a quorum is not present within thirty
(30) minutes from the time appointed for such adjourned meeting (or such longer interval
as the chairman of the meeting may think fit to allow) the Director(s) present in person
or by his/their alternates shall constitute a quorum.
	 
	 	(j)	 	The Company shall procure that a notice of each meeting, agenda of the business to be
transacted at the meeting and all documents and materials to be circulated at or presented
to the meeting are sent to all directors entitled to receive notice of the meeting at
least seven (7) days before the meeting and a copy of the minutes of the meeting is sent
to such persons within thirty (30)

 

Page 12

	 	 	 	days following the meeting.
	 
	 	(k)	 	The Board of Directors of each Group Company other than the Company shall consist of
one (1) executive director, who shall be the Founder.
	 
	 	(l)	 	Notwithstanding any other provisions hereof, upon presentation to the Board for a vote
any proposed resolutions in connection with the entry into any transaction
or series of transactions (or the termination, extension, continuation after expiry,
renewal, amendment, variation or waiver of any term under agreement with respect to any
transaction or series of transactions) between any Group Company, on the one hand, and any
Person (other than another Group Company), on the other hand, any member of the Board who
is a Related Party of such Person shall not participate in such vote and, to the extent
such member’s vote is required hereunder or under the Memorandum and Articles, shall be
deemed to have voted along with the majority of the members of the Board who have
participated in such vote.

	1.3	 	Compensation Committee and Audit Committee. A Compensation Committee (the “Compensation
Committee”) and an Audit Committee (the “Audit Committee”) shall be set up under the Board. The
Compensation Committee and the Audit Committee shall each consist of no less than one Series B
Director and one Series A
Director.
	 
	 	 	The Compensation Committee shall be responsible for:

	 	(i)	 	Reviewing, and making recommendations for approval by the Board regarding,
corporate goals and objectives relevant to the compensation of the Group
Companies’ executive officers;
	 
	 	(ii)	 	Reviewing, and making recommendations for approval by the Board regarding,
compensation of Key Management Personnel, including, as applicable, (a) base
salary, (b) bonus, (c) long-term incentive and equity compensation, and (d) any
other compensation, perquisites, and special or supplemental benefits; and
	 
	 	(iii)	 	Recommending the terms and conditions for employment of Key Management
Personnel for approval by the Board.

	 	 	The Audit Committee shall be responsible for:

	 	(i)	 	overseeing the financial reporting process of the Group Companies;
	 
	 	(ii)	 	monitoring the choice of accounting standards and practices of the Group
Companies;
	 
	 	(iii)	 	monitoring the internal accounting control process of the Group Companies;
	 
	 	(iv)	 	ensuring open communication among the Key Management Personnel, internal
auditors, external auditors, and the Audit Committee of the

 

Page 13

	 	 	 	Group Companies; and
	 
	 	(v)	 	overseeing the hiring and performance of the external auditors.

	1.4	 	Board Indemnification. The Company shall enter into an indemnification agreement with each
director serving on the Board of Directors of the Company, in form and substance as attached as
Exhibit G of the Series B Purchase Agreement or as otherwise Approved by the Series B Holders,
providing for the indemnification of such director by the Company to the fullest extent allowed
under applicable law (as it presently exists or may hereafter be amended) with respect to all
liability and loss suffered and expenses (including attorneys’ fees) incurred by such director by
reason of the fact that he or she is a director of the Group Company.
	 
	1.5	 	Protective Provisions.

	 	(a)	 	Notwithstanding anything to the contrary in the Constitutional Documents of any Group
Company, the parties hereto shall ensure that none of the Group Companies shall, whether
directly or indirectly, take any of the actions described below unless Approved by the
Series B Holders:

	 	(i)	 	any amendment to, cancellation, waiver or other change in respect of, the
rights, preferences, privileges, powers, obligations or liabilities arising in
connection with the Series B Preferred Shares or otherwise adversely affecting the
holders thereof;
	 
	 	(ii)	 	any increase or decrease in the authorized number of Series B Preferred
Shares;
	 
	 	(iii)	 	the creation, or authorization of shares, securities or instruments
convertible, exchangeable or exercisable for or into shares (including convertible
debt), having rights, privileges or preferences superior to or on parity with the
Series B Preferred Shares with respect to voting, dividends, redemption,
conversion or liquidation or any other rights (including and without limitation,
registration rights);
	 
	 	(iv)	 	the purchase or redemption of, payment or declaration of any dividend on, or
making of any distribution on, any equity interest therein, other than (i)
redemption of the Series B Preferred Shares as expressly authorized herein, (ii)
dividends or other distributions payable on the Ordinary Shares solely in the form
of additional Ordinary Shares, (iii) upon termination of such services,
repurchases of shares at below cost from former employees, officers, directors,
consultants or other persons who performed services for any Group Company as
permitted by the terms of their engagement by such Group Company approved by the
Board, and (iv) repurchases of equity securities by the Company pursuant to
Section 9;
	 
	 	(v)	 	amendment, alteration or repeal of any provision of the Constitutional
Documents of the Company;

 

Page 14

	 	(vi)	 	liquidation, dissolution or winding up of the business and affairs thereof;
	 
	 	(vii)	 	any Deemed Liquidation Event;
	 
	 	(viii)	 	the issuance or agreement to issue shares or other securities or
instruments exchangeable, convertible or exercisable for any equity interest
therein other than the Reserved Shares and shares issuable under the Transaction
Documents and the Share Option Plan;
	 
	 	(ix)	 	raising or authorization of any indebtedness or debt financing by the
Company, and the raising or authorization of any indebtedness or debt financing by
any other member of the Group if after such indebtedness or debt financing the
aggregate amount of indebtedness and debt financing by all members of the Group
would exceed US$20 million, provided that this clause (ix) shall not apply to any
loan extended to a Group Company by a shareholder of the Company if (i) such loan
is made on terms no less favorable to the Group Company than the terms that would
be customary in an arms-length loan extended by a commercial bank, (ii) such loan
is subordinate to any amounts that are or may become payable to any Investor by
the Group Company, whether by virtue of the Investor’s ownership of securities of
the Company or pursuant to any of the Transaction Documents, including without
limitation any indemnification by the Company pursuant to the Series B Purchase
Agreement, and (iii) after receipt of such loan, the aggregate amount of all such
loans from shareholders of the Company to the Group Companies does not exceed
US$15 million;
	 
	 	(x)	 	any increase or decrease in the number of positions on the Board;
	 
	 	(xi)	 	the adoption or termination of any Share Option Plan or amendment to any
provision of any Share Option Plan or increase in the amount of Ordinary Shares
reserved for future issuance pursuant to any Share Option Plan;
	 
	 	(xii)	 	any action that effects a reclassification or recapitalization of the issued
and outstanding shares of the Company;
	 
	 	(xiii)	 	except as specifically contemplated in the Series B Purchase Agreement, the
entry into any transaction or series of transactions (or the termination,
extension, continuation after expiry, renewal, amendment, variation or waiver of
any term under agreement with respect to any transaction or series of
transactions) between any Group Company, on the one hand, and any Related Party of
any Group Company (other than another Group Company), on the other hand;
	 
	 	(xiv)	 	the sale, transfer, lease, assignment, parting with or disposal by the
Company or any Group Company, whether directly or indirectly, of all or
substantially all of the property, assets or revenues of the Company or such Group
Company;

 

Page 15

	 	(xv)	 	the merger, consolidation, reorganization, or amalgamation of any Group
Company with or into any other Person or any scheme of arrangement or other
business combination with or into any other Person;
	 
	 	(xvi)	 	the purchase or other acquisition by any of the Company or the Group
Companies, or any combination of the foregoing, of another Person or all (or
substantially all) of the business and/or assets of another Person through a single
transaction or series of related transactions (i) with aggregate value of at least
US$2,500,000, (ii) for which any required Consent has not been obtained, or (iii)
if the target company of such transaction has not obtained any Consent required in
connection with the conduct of its business;
	 
	 	(xvii)	 	the re-domestication, continuance or removal thereof to any other
jurisdiction; and
	 
	 	(xviii)	 	any prepayment or early retirement of all or any portion of any
indebtedness of any Group Company whether incurred before or after the date hereof,
other than scheduled interest and principal payments and any payments made in
accordance with Section 7.1 of the Series B Purchase Agreement.

	 	(b)	 	Notwithstanding anything to the contrary in the Constitutional Documents of the
Company or any Group Company, the parties hereto shall ensure that none of the Company or
the Group Companies shall take any of the actions described below unless approved in a
resolution adopted by a majority of the Board, including at least two (2) Series B
Directors:

	 	(i)	 	approval of any annual operating plan, budgets or any changes thereto;
	 
	 	(ii)	 	the guarantee, directly or indirectly, of any indebtedness, or the
indemnification to any Person regarding or in connection with any indebtedness,
except for trade accounts of any Group Company arising in the ordinary course of
business;
	 
	 	(iii)	 	alteration or amendment of the accounting principles thereof except as
required by applicable law;
	 
	 	(iv)	 	appointment, dismissal or change in the appointment of independent public
accountants, Auditor or counsels thereof;
	 
	 	(v)	 	the making of any loan or advance to any Person or granting any credit to any
Person, except accounts receivable arising in the ordinary course of business;
	 
	 	(vi)	 	the sale, transfer, lease, assignment or disposal of any assets (whether by a
single transaction or a series of related transactions) the aggregate fair market
value of which exceeds US$3,000,000;

 

Page 16

	 	(vii)	 	the purchase or acquisition of any assets thereof (whether by a single
transaction or a series of related transactions) the aggregate purchase price or
cost to acquire of which exceeds US$3,000,000;
	 
	 	(viii)	 	the commencement or settlement of any litigation the amount in controversy
with respect to which exceeds US$3,000,000;
	 
	 	(ix)	 	any change to the principal business thereof, entry into new lines of
business thereby, or exiting a line of business thereby;
	 
	 	(x)	 	hiring or termination of the CEO, CFO, chief operating officer or any other
officer with the position of executive vice president or higher of any Group
Company or any change to the compensation of any such officer of any Group
Company, including the award of any option grants or share awards;
	 
	 	(xi)	 	amendment, alteration or repeal of any provision of the Constitutional
Documents of any Group Company (other than the Company);
	 
	 	(xii)	 	the creation of any mortgage, charge, pledge, lien or other encumbrance with
respect to assets thereof other than in the ordinary course of business or as
imposed by operation of law;
	 
	 	(xiii)	 	the formation of any committee of the Board of Directors of any Group
Company and any changes to the powers granted to any such committee;
	 
	 	(xiv)	 	any increase or decrease in the size or any change in the member(s) of the
Board of Directors of any Group Company other than the Company; and
	 
	 	(xv)	 	the prescription of any regulation in general meeting that would limit the
powers of the Board of Directors of any of the Group Companies.

	2.	 	REGISTRATION RIGHTS
	 
	2.1	 	Applicability of Rights. The Preferred Holders shall be entitled to the following rights with
respect to any potential public offering of the Preferred Shares or the Ordinary Shares in the
United States and shall be entitled to reasonably analogous or equivalent rights with respect to
any other offering of any Company Securities in any other jurisdiction in which the Company
undertakes to publicly offer or list Company Securities for trading on a recognized securities
exchange. The Company shall not grant registration rights superior to or in parity with those
granted to the Preferred Holders to any other holder of the Company Securities without the prior
Approval of the Series B Holders.
	 
	2.2	 	[Reserved]
	 
	2.3.	 	Demand Registration.

 

Page 17

	 	(a)	 	Request by Holders.
	 
	 	 	 	If the Company shall, at any time after the earlier of (i) the third
anniversary of the date of this Agreement or (ii) the closing of the Qualified IPO,
receive a
written request from the Holders of at least 50% of the Registrable Securities
then held by all Holders of Series B Preferred Shares that the Company file a
registration statement under the Securities Act covering the registration of at
least 50% of the Registrable Securities then held by such requesting Holders
pursuant to this Section 2.3, then the Company shall, within ten (10) Business Days
of the receipt of such written request, give written notice of such request to all
Holders, and use its best efforts to effect, as soon as practicable, the
registration under the Securities Act of all Registrable Securities that the
Holders request to be registered and included in such registration by written
notice given by such Holders to the Company within twenty (20) days after the
Company’s delivery of written notice thereto, subject only to the limitations of
this Section 2.3; provided that the Company shall not be obligated to effect any
such registration if the Company has, within the six (6) month period preceding the
date of such request, already effected a registration under the Securities Act
pursuant to this Section 2.3 or Section 2.5 or in which the Holders had an
opportunity to participate pursuant to the provisions of Section 2.4, other than a
registration from which the Registrable Securities of the Holders have been
excluded (with respect to all or any portion of the Registrable Securities the
Holders requested be included in such registration) pursuant to the provisions of
Section 2.4(a). The Company shall not be obligated to effect more than three (3)
such demand registrations pursuant to this Section 2.3(a).
	 
	 	(b)	 	Underwriting. If the Holders initiating the registration request under this Section
2.3 (the “Initiating Holders”) intend to distribute the Registrable Securities covered by
their request by means of an underwriting, then they shall so advise the Company as a part
of their request made pursuant to this Section 2.3 and the Company shall include such
information in the Request Notice. 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 (unless otherwise mutually agreed by a majority in
voting power of the Initiating Holders and such Holder) 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
managing underwriter or underwriters selected for such underwriting by the Holders
representing a majority in voting power of the Registrable Securities held by the
Initiating Holders. Notwithstanding any other provision of this Section 2.3, if
the underwriter(s) advise(s) the Company in writing that marketing factors require
a limitation of the number of securities to be underwritten, then the Company shall
so advise all Holders of Registrable Securities which would otherwise be registered
and underwritten pursuant hereto, and the number of Registrable Securities that may
be included in the underwriting shall be reduced as required by the underwriter(s)
and allocated among the Holders of Registrable Securities on a pro rata basis
according to the number of Registrable Securities then outstanding held by each
Holder

 

Page 18

	 	 	 	requesting registration (including the Initiating Holders); provided, however,
that the number of Registrable Securities held by Holders of Series B Preferred
Shares to be included in such underwriting and registration shall not be reduced
unless all other securities are first excluded from the underwriting and
registration (including, without limitation, any Company Securities which the
Company may seek to include in the underwriting for its own account) and that the
number of Registrable Securities held by Holders of Series A Preferred Shares to
be included in such underwriting and registration shall not be reduced unless all
other securities (other than Registrable Securities held by Holders of Series B
Preferred Shares) are first excluded from the underwriting and registration
(including, without limitation, any Company Securities which the Company may seek
to include in the underwriting for its own account); provided further, that at
least 25% of any Registrable Securities requested by the Holders of Series B
Preferred Shares to be included in such underwriting and registration shall be so
included. 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(s), 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.
	 
	 	(c)	 	Deferral. Notwithstanding the foregoing, if the Company shall furnish to Holders
requesting registration pursuant to this Section 2.3, a certificate signed by the CEO
stating that in the good faith judgment of the Board, it would be materially detrimental
to the Company and its Shareholders for such registration statement to be filed at such
time, then the Company shall have the right to defer such filing for a period of not more
than ninety (90) days after receipt of the request of the Initiating Holders; provided,
however, that the Company may not utilize this right more than once in any twelve (12)
month period; provided further, that the Company shall not register any other of its
Shares during such twelve (12) month period. A demand right shall not be deemed to have
been exercised until such deferred registration shall have been effected.

	2.4	 	Piggyback Registrations.

	 	(a)	 	The Company shall notify all Holders of Registrable Securities in writing at least
thirty (30) days prior to filing any registration statement under the Securities Act for
purposes of effecting a public offering of Company Securities (including, but not limited
to, registration statements relating to secondary offerings of securities of the Company,
but excluding registration statements relating to any registration under Section 2.5 of
this Agreement or to any employee benefit plan or a corporate reorganization), and shall
afford each such Holder an opportunity to include in such registration statement all or
any part of the Registrable Securities then 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 twenty (20) days after receipt of the above-described notice from
the Company, so notify the Company in writing,
and in such notice shall inform the Company of the number of Registrable Securities such
Holder wishes to include in such registration statement. If a

 

Page 19

	 	 	 	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.
	 
	 	(b)	 	Underwriting. If a registration statement under which the Company gives notice under
this Section 2.4 is for an underwritten offering, then the Company shall so advise the
Holders of Registrable Securities. In such event, the right of any such Holder’s
Registrable Securities to be included in a registration pursuant to this Section 2.4
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 Registrable Securities through
such underwriting shall enter into an underwriting agreement in customary form with the
managing underwriter or underwriters selected for such underwriting. Notwithstanding any
other provision of this Agreement but subject to Section 2.12, if the managing
underwriter(s) determine(s) in good faith that marketing factors require a limitation of
the number of Shares to be underwritten, then the managing underwriter(s) may exclude
Shares from the registration and the underwriting, and the number of Shares that may be
included in the registration and the underwriting shall be allocated, first, to the
Company, second, to each of the Holders of Series B Preferred Shares requesting inclusion
of their Registrable Securities in such registration statement on a pro rata basis based
on the total number of shares of Registrable Securities then held by each such Holder,
third, to each of the Holders of Series A Preferred Shares requesting inclusion of their
Registrable Securities in such registration statement on a pro rata basis based on the
total number of shares of Registrable Securities then held by each such Holder and
fourth, to holders of other securities of the Company; provided, however, that the right
of the underwriter(s) to exclude Shares (including Registrable Securities) from the
registration and underwriting as described above shall be restricted so that the number
of Registrable Securities held by Holders of Series B Preferred Shares included in any
such registration is not reduced below twenty-five percent (25%) of the aggregate number
of Company Securities included in such registration statement. If any Holder disapproves
of the terms of any such underwriting, such Holder may elect to withdraw therefrom by
written notice in the Company and the underwriter(s), 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.
	 
	 	(c)	 	Not Demand Registration. Registration pursuant to this Section 2.4 shall not be
deemed to be a demand registration as described in Section 2.3 above. There shall be no
limit on the number of times the Holders may request registration of Registrable
Securities under this Section 2.4.

	2.5	 	Form F-3 Registration.

	 	(a)	 	In case the Company shall receive from Holders of the Series B Preferred

 

Page 20

	 	 	 	Shares a written request or requests that the Company effect a registration on
Form F-3 (and any related qualification or compliance) with respect to all or a
part of the Registrable Securities owned by such Holders, then the Company shall
promptly give written notice of the proposed registration and the Holders’ request
therefor, and any related qualification or compliance, to all other Holders of
Registrable Securities; and as soon as practicable, 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 such Registrable Securities of such
Holder as are specified in such request, together with all or such portion of the
Registrable Securities of any other Holders joining in such request as are
specified in a written request given within twenty (20) days after the Company
provides the notice contemplated above
	 
	 	(b)	 	Notwithstanding anything to the contrary provided above, the Company shall not be
obligated to effect any such registration, qualification or compliance pursuant to this
Section 2.5:

	 	(1)	 	if Form F-3 is not available for such offering by the Holders;
	 
	 	(2)	 	if the aggregate anticipated price to the public of any Registrable Securities
which such Holders propose to sell pursuant to such registration, together with
the aggregate anticipated price to the public of any other securities of the
Company entitled to inclusion in such registration, is less than US$500,000 (or
the equivalent thereof in other currencies);
	 
	 	(3)	 	if the Company shall furnish to the Holders a certificate signed by the CEO
stating that in the good faith judgment of the Board of Directors of the Company,
it would be materially detrimental to the Company and its Shareholders for such
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 F-3 registration statement no
more than once during any twelve (12) month period for a period of not more than
ninety (90) days after receipt of the request of the Holder or Holders under this
Section 2.5; provided that the Company shall not register any of its other Shares
during such ninety (90) day period; or
	 
	 	(4)	 	if the Company has, within the six (6) month period preceding the date of such
request, already effected a registration under the Securities Act other than a
registration from which the Registrable Securities of Holders have been excluded
(with respect to all or any portion of the Registrable Securities the Holders
requested be included in such registration) pursuant to the provisions of Sections
2.3(b) and 2.4(a).

	 	(d)	 	Not Demand Registration. Form F-3 registrations shall not be deemed to be demand
registrations as described in Section 2.3 above. Except as otherwise provided herein,
there shall be no limit on the number of times the Holders may request registration of
Registrable Securities under this Section 2.5.

	2.6	 	Expenses. All Registration Expenses incurred in connection with any registration

 

Page 21

	 	 	pursuant to Sections 2.3, 2.4 or 2.5 (but excluding Selling Expenses) shall be borne by
the Company. Each Holder participating in a registration pursuant to Sections 2.3, 2.4 or
2.5 shall bear such Holder’s proportionate share (based on the total number of Shares sold
in such registration) of all Selling Expenses in connection with such registration.
Notwithstanding the foregoing, the Company shall not be required to pay for any expenses
of any registration proceeding begun pursuant to Section 2.3 if the registration request
is subsequently withdrawn at the request of the Holders of a majority in voting power of
the Registrable Securities held by the Holders that requested the registration, unless the
Holders of a majority in voting power of the Registrable Securities held by the Holders
that requested the Registration agree that such registration constitutes the use by the
Holders of one (1) demand registration available to the Holders of Registrable Securities,
as the case may be, pursuant to Section 2.3; provided further, however, that if at the
time of such withdrawal, the Holders have learned of a material adverse change in the
condition, business, or prospects of the Company not known to the Holders at the time of
their request for such registration and have withdrawn their request for registration with
reasonable promptness after learning of such material adverse change, then the Holders
shall not be required to pay any of such expenses and such registration shall not
constitute the use of a demand registration by the Holders of Registrable Securities, as
the case may be, pursuant to Section 2.3.
	 
	2.7	 	Obligations of the Company. Whenever required to effect the registration of any Registrable
Securities under this Agreement the Company shall, as expeditiously as reasonably possible:

	 	(a)	 	Registration Statement. Prepare and file with the SEC a registration statement with
respect to such Registrable Securities, use its best efforts to cause such registration
statement to become effective and keep such registration statement effective for a period
of up to 120 days or, in the case of Registrable Securities registered under Form F-3 in
accordance with Rule 415 under the Securities Act or a successor rule, until the
distribution contemplated in the registration statement has been completed; provided,
however, that (i) such 120 day period shall be extended for a period of time equal to the
period any Holder refrains from selling any securities included in such registration at
the request of the underwriter(s), and (ii) in the case of any registration of Registrable
Securities on Form F-3 which are intended to be offered on a continuous or delayed basis,
such 120 day period shall be extended, if necessary, to keep the registration statement
effective until all such Registrable Securities are sold.
	 
	 	(b)	 	Amendments and Supplements. 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 the disposition of all securities covered by such
registration statement.
	 
	 	(c)	 	Prospectuses. 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 the Registrable Securities owned by them that are included in such registration.

 

Page 22

	 	(d)	 	Blue Sky. Use its 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, unless the Company is already subject to service in such jurisdiction and
except as may be required by the Securities Act.
	 
	 	(e)	 	Underwriting. 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.
	 
	 	(f)	 	Notification. 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 (i) the issuance of any stop order by the SEC in
respect of such registration statement, or (ii) 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, and at the request of any such Holder, prepare and
furnish to such Holder a reasonable number of copies of a supplement or amendment of such
prospectus as may be necessary so that, as thereafter delivered to the purchasers of such
Shares, such prospectus shall not include an 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 or incomplete in light of the circumstances then existing.
	 
	 	(g)	 	Opinion and Comfort Letter. Furnish, at the request of any Holder requesting
registration of Registrable Securities, on the date that such Registrable Securities are
delivered to the underwriter(s) for sale, if such securities are being sold through
underwriters, or, if such securities are not being sold through underwriters, on the date
that the registration statement with respect to such securities becomes effective, (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 and reasonably satisfactory to
Holders representing a majority in voting power of the Registrable Securities held by the
Holders requesting registration, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities and (ii) a “comfort” 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 and reasonably satisfactory to Holders
representing a majority in voting power of the Registrable Securities held by the Holders
requesting registration, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities.

 

Page 23

	 	(h)	 	Transfer Agent and CUSIP. Provide a transfer agent and registrar for all
Registrable Securities covered by such 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.
	 
	 	(i)	 	Further Actions. 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 any IPO, the primary exchange upon which the Company’s
securities will be traded.

	2.8	 	Furnish Information. It shall be a condition precedent to the obligations of the Company to
take any action pursuant to Sections 2.3, 2.4 or 2.5 that the selling Holders shall furnish to
the Company such information regarding themselves, the Registrable Securities held by them and
the intended method of disposition of such securities as shall be required to timely effect the
Registration of their Registrable Securities.
	 
	2.9	 	Indemnification. In the event any Registrable Securities are included in a registration
statement under Sections 2.3, 2.4 or 2.5:

	 	(a)	 	By the Company. To the extent permitted by law, the Company shall indemnify and hold
harmless each Holder, its partners, officers, directors, legal counsel, 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 Exchange Act,
against all losses, claims, damages, and liabilities (joint or several; or actions,
proceedings or settlements in respect thereof) to which they may become subject under laws
which are applicable to the company and relate to action or inaction required of the
Company in connection with any registration, qualification, or compliance, insofar as such
losses, claims, damages, or liabilities (or actions, proceedings or settlements 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, 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 Applicable
Securities Law, or any rule or regulation promulgated under the Applicable
Securities Law;

	 	 	 	and the Company shall reimburse each such Holder, and its respective partners,
officers, directors, legal counsel, underwriter and controlling Person for any
legal or other expenses reasonably incurred by them, as such expenses are
incurred, in connection with investigating or defending any such loss, claim,

 

Page 24

	 	 	 	damage, liability or action; provided, however, that the indemnity agreement
contained in this Section 2.9(a) 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, partner, officer, director, legal counsel, underwriter or controlling
Person of such Holder.
	 
	 	(b)	 	By Selling Holders. To the extent permitted by law, each selling Holder shall, if
Registrable Securities held by Holder are included in the securities as to which such
registration, qualifications or compliance is being effected, indemnify and hold harmless
the Company, each of its directors, each of its officers who has signed the registration
statement, 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 any Person who controls such Holder within the meaning of the Securities Act or
the Exchange Act, against any losses, claims, damages or liabilities (joint or several) to
which the Company or any such director, officer, legal counsel, controlling Person,
underwriter or other such Holder, partner or director, officer or controlling Person of
such other Holder may become subject under the Securities Act, the Exchange Act or other
United States federal or state law, 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, omissions or violations, in each case to the extent (and only to the extent)
that such statement, omission or violation occurs in sole reliance upon and in conformity
with written information furnished by such Holder expressly for use in connection with
such registration:

	 	(i)	 	untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or supplements
thereto, or
	 
	 	(ii)	 	omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading,

	 	 	 	and each such Holder shall reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling Person,
underwriter or other Holder, partner, officer, director or controlling Person of
such other Holder in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 2.9(b) 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 such Holder, which consent shall not be
unreasonably withheld; and provided, further, that except for liability for
willful

 

Page 25

	 	 	 	fraud or misrepresentation, in no event shall any indemnity under this Section
2.9(b) exceed the net proceeds received by such Holder in such registration.
	 
	 	(c)	 	Notice. Promptly after receipt by an indemnified Party under this Section 2.9 of
notice of the commencement of any action (including any governmental action), such
indemnified Party shall, if a claim in respect thereof is to be made against any
indemnifying Party under this Section 2.9, 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 the fees and expenses to be paid by the indemnifying Party, as incurred, if
representation of such indemnified Party by the counsel retained by the
indemnifying Party would be inappropriate due to actual or potential conflict of
interests between such indemnified Party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying Party within a reasonable time of the commencement of any such action
shall relieve such indemnifying Party of liability to the indemnified Party under
this Section 2.9 to the extent the indemnifying Party is prejudiced as a result
thereof, but the omission to so deliver written notice to the indemnifying Party
shall not relieve it of any liability that it may have to any indemnified Party
otherwise than under this Section 2.9.
	 
	 	(d)	 	Contribution. In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any indemnified Party
makes a claim for indemnification pursuant to this Section 2.9 but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last right of
appeal) that such indemnification may not be enforced in such case notwithstanding the
fact that this Section 2.9 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any indemnified Party in
circumstances for which indemnification is provided under this Section 2.9; then, and in
each such case, the indemnified Party and the indemnifying Party shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject (after
contribution from others) in such proportion so that a Holder (together with its
Affiliated Persons) is responsible for the portion represented by the percentage that the
public offering price of its Registrable Securities offered by and sold under the
registration statement bears to the public offering price of all securities offered by and
sold under such registration statement, and the Company and other selling Holders are
responsible for the remaining portion. 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; provided, however, that,
except for liability for willful fraud or misrepresentation, (A) no Holder shall be
required to contribute any amount in excess of the net proceeds

 

Page 26

	 	 	 	to such Holder from the sale of all such Registrable Securities offered and sold
by such Holder pursuant to such registration statement; and (B) no Person guilty
of willful fraud or misrepresentation (within the meaning of Section 12(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such willful fraud or misrepresentation.
	 
	 	(e)	 	Survival; Consents to Judgments and Settlements. The obligations of the Company and
Holders under this Section 2.9 shall survive the completion of any offering of Registrable
Securities in a registration statement, regardless of the expiration of any statutes of
limitation or extensions of such statutes. 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.

	2.10	 	No Registration Rights to Third Parties. Without the prior written consent of Holders
holding a majority in voting power of the Registrable Securities then outstanding, the Company
covenants and agrees that it shall not grant, or cause or permit to be created, for the benefit
of any Person any registration rights of any kind (whether similar to the demand, “piggyback” or
Form F-3 registration rights described in this Section 2, or otherwise) relating to any Company
Securities.
	 
	2.12	 	Market Stand-Off. The Founder, each of the Co-Founders and each Holder agrees that, and the
Founder and the Co-Founders shall cause each Key Management Personnel to agree that, so long as
it holds any voting Company Securities, whether directly or indirectly, upon request by the
Company or the underwriters managing a Qualified IPO of the Company
Securities, it shall not sell or otherwise transfer or dispose of any Company Securities (other
than those permitted to be included in the registration and other transfers to affiliates
permitted by law), whether directly or indirectly, without the prior written consent of the
Company or such underwriters, as the case may be, for a period of time specified by the
representative of the underwriters not to exceed 180 days from the effective date of the
registration statement covering such initial public offering or the pricing date of such offering
as may be requested by the underwriters.
Notwithstanding anything to the contrary herein, the foregoing provision of this Section
2.12 shall not apply to the sale of any Company Securities to an underwriter pursuant to
any underwriting agreement and shall not be applicable to the Holders unless all officers
and directors of the Group Companies and holders of one percent (1%) or more of the
Company’s outstanding share capital enter into similar agreements. If the Company or any
underwriter releases any such officer, director or holder of one percent (1%) or more of
the Company’s outstanding share capital from such sale restrictions once undertaken, then
each Holder shall be notified prior to such release and shall itself be simultaneously
released. The Company shall require all future acquirers of Company Securities holding at
least one percent (1%) of the then outstanding share capital of the Company to execute
prior to a Qualified IPO a market stand-off agreement containing provisions substantially
similar to those contained in this Section 2.12.
	 
	2.12	 	Listing in Hong Kong. Without limiting the generality of the foregoing provisions in this
Section 2, in the event of a listing of the Company’s Ordinary Shares in Hong Kong

 

Page 27

	 	 	(the “Listing”):

	 	(a)	 	The selection of Hong Kong as the jurisdiction, and the relevant exchange as the
exchange for the Listing shall be subject to the prior written approval of Holders of a
majority in voting power of the Registrable Securities then outstanding;
	 
	 	(b)	 	The selection of the sponsor and/or lead manager (and any co-managers) for the Listing
shall be subject to the prior written approval of Holders of a majority in voting power of
the Registrable Securities then outstanding;
	 
	 	(c)	 	Each Holder of Registrable Securities shall have the right to include and sell all of
the Registrable Securities held by it in such Listing;
	 
	 	(d)	 	Each Holder of Registrable Securities shall have the right to attend all meetings in
connection with the Listing where the Company is present;
	 
	 	(e)	 	The determination of the price at which the Ordinary Shares are to be listed in such
Listing shall be subject to the prior written approval of Holders of a majority in voting
power of the Registrable Securities then outstanding;
	 
	 	(f)	 	All expenses incurred in connection with the inclusion and sale of any Ordinary Shares
held by any Holder (including all reasonable fees and disbursements of counsel for the
Holder) shall be borne by the Company;
	 
	 	(g)	 	At any time after the second anniversary of the date of this Agreement, at the written
request from Holders of a majority in voting power of the Registrable Securities then
outstanding, the Company shall use its best efforts to effect such Listing on terms and
subject to conditions as agreed upon between the Company and such Holders; and
	 
	 	(h)	 	The Company shall not require any Holder to hold, or refrain from transferring, any of
its Shares in the Company beyond the specific period(s) as set forth in the listing rules
applicable to such Listing.

	2.13	 	Rule 144 Reporting. With a view to making available to the Holders the benefits of certain
rules and regulations of the SEC which may at any time permit the sale of the Registrable
Securities to the public without registration or pursuant to a registration on Form F-3, after
such time as a public market exists for the Ordinary Shares, the Company agrees to:

	 	(a)	 	Make and keep public information available, as those terms are understood and defined
in Rule 144 under the Securities Act, at all times after the effective date of the first
registration under the Securities Act filed by the Company for an offering of its
securities to the general public;
	 
	 	(b)	 	File with the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements); and
	 
	 	(c)	 	So long as a Holder owns any Registrable Securities, to furnish to such Holder

 

Page 28

	 	 	 	forthwith upon request (i) a written statement by the Company as to its compliance
with the reporting requirements of Rule 144 (at any time after ninety (90) days
after the effective date of the Company’s initial public offering), the Securities
Act and the Exchange Act (at any time after it has become subject to such
reporting requirements), or its qualification as a registrant whose securities may
be resold pursuant to Form F-3 (at any time after it so qualifies), (ii) a copy of
the most recent annual or quarterly report of the Company, and (iii) such other
reports and documents of the Company as a Holder may reasonably request in
availing itself of any rule or regulation of the SEC that permits the selling of
any such securities without registration or pursuant to 

Form F-3.

	2.14	 	Termination. The Company shall have no obligations pursuant to Sections 2.3, 2.4 and 2.5
with respect to any Registrable Securities proposed to be sold by a Holder in a registration or
listing pursuant to Section 2.3, 2.4 or 2.5 if, in the opinion of counsel to the Company, all
such Registrable Securities proposed to be sold by a Holder may then be sold without registration
in any ninety (90) day period pursuant to Rule 144 promulgated under the Securities Act.
	 
	3.	 	RIGHT OF PARTICIPATION.
	 
	3.1	 	General. Each Participation Rights Holder shall have a right of first offer to purchase its
pro rata share of any New Securities the Company may from time to time issue after the date of
this Agreement (the “Right of Participation”) as provided below:

	 	(a)	 	If the then outstanding Series B Preferred Shares (calculated on a fully-diluted and
as-if converted basis) represent more than 49% of the total number of Shares then
outstanding (calculated on a fully-diluted and as-if converted basis), then each
Participation Rights Holder’s “pro rata share” of any New Securities for purposes of
determining its Right of Participation shall be a portion of the aggregate number of New
Securities equal to the number of Series B Preferred Shares (calculated on a fully-diluted
and as-if converted basis) held by such Participation Rights Holder in relation to the
total number of Shares outstanding (calculated on a fully-diluted and as-if converted
basis) immediately prior to the issuance of such New Securities.
	 
	 	(b)	 	If the then outstanding Series B Preferred Shares (calculated on a fully-diluted and
as-if converted basis) represent 49% or less of the total number of Shares then
outstanding (calculated on a fully-diluted and as-if converted basis), then each
Participation Rights Holder’s “pro rata share” of any New Securities for purposes of
determining its Right of Participation shall be a portion of 49% of the aggregate number
of New Securities equal to the number of Series B Preferred Shares (calculated on a
fully-diluted and as-if converted basis) held by such Participation Rights Holder in
relation to the total number of Series B
Preferred Shares outstanding (calculated on a fully-diluted and as-if converted
basis) immediately prior to the issuance of such New Securities.

	3.2	 	Procedures.

	 	(a)	 	First Participate Notice. In the event that the Company proposes to undertake

 

Page 29

	 	 	 	an issuance of New Securities, it shall give written notice thereof (the “First
Participation Notice”) to each Participation Rights Holder describing the amount
and type of such New Securities, the price and general terms upon which the
Company proposes to issue the New Securities, and each Participation Rights
Holder’s pro rata share of such New Securities. Each Participation Rights Holder
shall have ten (10) Business Days from the date of receipt of such First
Participation Notice to elect in writing to purchase up to such Participation
Rights Holder’s pro rata share of such New Securities for the price and upon the
terms and conditions specified in the First Participation Notice by giving written
notice to the Company and stating therein the quantity of New Securities to be
purchased.
	 
	 	(b)	 	Second Participation Notice; Oversubscription. If any Participating Rights Holder
fails to timely exercise its Right of Participation in respect of any New Securities in
accordance with Section 3.2(a), the Company shall promptly give notice (the “Second
Participation Notice”) to each Participating Rights Holder who exercised its Right of
Participation to purchase its full pro rata share of such New
Securities in accordance with Section 3.2(a) (the “Rights Participants”), which notice
shall describe the remaining New Securities with respect to which any Participating Rights
Holder failed to exercise its Right of Participation. Each Rights Participant shall have
five (5) Business Days from the date of the Second Participation Notice (the “Second
Participation Period”) within which it may elect to purchase any or all of the remaining
New Securities by giving notice of such election to the Company stating the maximum number
of remaining New Securities which such Rights Participant is willing to purchase. Such
notice may be made in writing or by telephone (if confirmed in writing within two (2)
Business Days thereafter). If the sum of the remaining New Securities which the Rights
Participants elect to purchase exceed the actual number of remaining New Securities, then
the number of remaining New Securities that any Rights Participant shall purchase shall be
reduced to such number as is necessary to eliminate such excess; provided that there shall
be no reduction in the number of remaining New Securities that any Rights Participant
shall purchase to the extent that, after giving effect to such reduction, the number of
remaining New Securities which such Rights Participant is entitled to purchase, in
relation to the number of remaining New Securities to be purchased by any other Rights
Participant, would be less than the proportion that the number of Ordinary Shares held
such Rights Participant (determined on a fully-diluted, as-if converted basis) prior to
acquiring any of the New Securities bears to the number of Ordinary Shares held by such
other Rights Participant (determined on a fully-diluted, as-if converted basis) prior to
acquiring any of the New Securities.

	3.3	 	Failure to Exercise. Upon the expiration of the Second Participation Period, or in the event
no Participation Rights Holder timely exercises its Right of Participation within ten (10)
Business Days following the issuance of the First Participation Notice, the Company shall have
120 days thereafter to sell the New Securities described in the First Participation Notice at the
same or higher price and upon non-price terms not materially more favorable to the purchasers
thereof than specified in the First Participation Notice. In the event that the Company has not
issued and sold such New
Securities within such 120-day period, then the Company shall not thereafter issue or

 

Page 30

	 	 	sell any New Securities without again first offering such New Securities to the
Participation Rights Holders pursuant to this Section 3.
	 
	4.	 	TRANSFER RESTRICTIONS.
	 
	4.1	 	Prohibition on Transfers of Interest in the Company.

	 	(a)	 	Except as otherwise provided in Section 4.1(b), Section 4.8 and Section 4.9, no
Restricted Shareholder shall sell, assign, transfer, pledge, hypothecate, or
otherwise encumber or dispose of in any way (a “Transfer”), all or any part of any
interest in any Company Securities now or hereafter owned or held thereby. Any
Transfer of Company Securities by any Restricted Shareholder not made in
conformance with this Agreement shall be null and void, shall
not be recorded on the books of the Company, and shall not be recognized by the
Company.
	 
	 	(b)	 	The SPV Holders shall not Transfer all or any part of their ownership interests in any
SPV Entity now or hereafter owned or held thereby. In the event of any
Transfer of all or any part of any SPV Holder’s ownership interest in any SPV
Entity, the Company shall be entitled to repurchase all and any of the Company
Securities directly or indirectly held by such SPV Entity at the par value
thereof. Notwithstanding the foregoing, the following transfers shall not be
subject to any restriction contained in this Agreement except as specifically set
forth below: (i) any transfer of all or any part of the ownership interests in any
SPV Entity from time to time from a Co-Founder to the Founder, (ii) any transfer
of all or any part of the ownership interests in any SPV Entity from time to time
from the Founder to another SPV Entity Controlled by the Founder and (iii) any
transfer approved by the Board in good faith of all or any part of the ownership
interests in any SPV Entity from time to time from the Founder to the parents,
children or spouse of the Founder, or to trusts for the benefit of such Persons
for bona fide estate planning purposes. In the case of any transfer pursuant to
the clause (ii) or (iii) of the preceding sentence, (A) the transferee shall
execute a Deed of Adherence, in the form of Exhibit C hereto, agreeing to be bound
by this Agreement in place of the transferring SPV Holder, and (B) the Restricted
Shareholder shall remain liable for any breach by such transferee of any provision
hereunder.

	4.2	 	Right of First Refusal. Subject to Section 4.9 of this Agreement, if a Restricted
Shareholder proposes to sell or transfer any Company Securities held by it (a “Selling
Shareholder”), then it shall promptly give written notice (an “Offer Notice”) to the
Company and each Preferred Holder prior to such sale or transfer. The Offer Notice shall
state the Selling Shareholder’s bona fide intention to transfer the number of Restricted
Shares to be sold or transferred (the “Offered Shares”), the total number of Ordinary
Shares owned by the Selling Shareholder (determined on a fully-diluted, as-if converted
basis), the terms and conditions of the proposed sale or transfer (including, without
limitation, the sale price), the nature of such proposed sale or transfer, the name and
address of the prospective purchaser or transferee (the “Prospective Transferee”), and any
other material facts relating to such proposed sale or transfer. The Offer Notice shall
certify that the Selling Shareholder has received a firm offer from the Prospective
Transferee and in good faith believes a binding agreement for the Transfer is obtainable
on the terms set forth in the Offer Notice. The Offer Notice shall also include a copy of

 

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	 	 	any written proposal, term sheet or letter of intent or other agreement relating to the
proposed Transfer.
	 
	4.3	 	Company’s Option. The Company shall have an option for a period of thirty (30) days from
receipt of the Offer Notice to elect to purchase the Offered Shares at the same price
and subject to the same material economic terms and conditions as are described in the Offer
Notice. The Company may exercise such purchase option and, thereby, purchase all or a portion of
the Offered Shares by notifying the Selling Shareholder in writing before expiration of the
thirty-day period as to the number of such shares which it wishes to purchase. If the Company
gives the Selling Shareholder notice that it desires to purchase such shares, then payment for
the Offered Shares shall be by check or wire transfer, against delivery of the Offered Shares to
be purchased, at a place agreed upon between the parties and at the time of the scheduled closing
therefor, which shall be no later than sixty (60) days after the Company’s receipt of the Offer
Notice, unless the Offer Notice contemplated a later closing with any prospective third party
transferee or unless the value of the purchase price has not yet been established pursuant to
Section 4.6.
	 
	4.4	 	Series B Holders’ Option.

	 	(a)	 	Additional Offer Notice. If the Company has declined to purchase all, or a portion
of, the Offered Shares in connection with a proposed Transfer, then the Selling
Shareholder shall give each Series B Holder a written “Additional Offer Notice”, which
shall include all of the information and certifications required in an Offer Notice, and
shall additionally identify the Offered Shares which the Company has declined to purchase
(the “Remaining Shares”) and briefly describe the Series B Holders’ rights of first
refusal with respect to the proposed Transfer.
	 
	 	(b)	 	Option.

	 	(i)	 	Each Series B Holder shall have an option for a period of thirty (30) days
from the Series B Holder’s receipt of the Additional Offer Notice to elect to
purchase its respective pro rata share of the Remaining Shares at the same price
and subject to the same material terms and conditions as described in the
Additional Offer Notice.
	 
	 	(ii)	 	Each Series B Holder may exercise such purchase option and, thereby, purchase
all or any portion of its pro rata share of the Remaining Shares, by notifying the
Selling Shareholder and the Company in writing, before expiration of the
thirty-day period as to the number of such shares which it wishes to purchase. For
purposes of this clause (ii), each
Series B Holder’s pro rata share of the Remaining Shares shall be a
fraction of the Remaining Shares, of which the number of Ordinary Shares
(determined on a fully-diluted, as-if converted basis) owned by such
Series B Holder on the date of the Offer Notice shall be the numerator and
the total number of Ordinary Shares (determined on a fully-diluted, as-if
converted basis) held by all Series B Holders on the date of the Offer
Notice shall be the denominator.

 

Page 32

	 	(iii)	 	If any Series B Holder fails to exercise its option to purchase its full pro
rata share of the Remaining Shares, the Selling Shareholder shall give written
notice (a “Series B Reallotment Notice”) to each Series B Holder who has fully
exercised its option to purchase a pro rata portion of the Remaining
Shares. The Series B Reallotment Notice shall include all of the information and
certifications required in an Offer Notice and briefly describe the Series B
Holders’ rights of reallotment.
The Series B Reallotment Notice shall further identify the Remaining Shares
in respect of which any Series B Holder has failed to exercise its right of
first refusal (or in the case where there has been a prior Series B
Reallotment Period, in respect of which any Series B Holder has failed to
exercise its right of reallotment) (the “Series B Reallotment Shares”).
	 
	 	(iv)	 	Each Series B Holder entitled to receive a Series B Reallotment Notice (a
“Participating Series B Holder”) shall have an option to purchase, at the same
price and subject to the same material terms and conditions as described in any
Series B Reallotment Notice, all or part of its pro rata share of the Series B
Reallotment Shares described in such Series B Reallotment Notice. Such option shall be exercisable by each Participating
Series B Holder by notifying the Company and the Selling Shareholder in
writing, within thirty (30) days after delivery to the Participating Series
B Holder of the Series B Reallotment Notice (a “Series B Reallotment
Period”). For purposes of this clause (iv), each Participating Series B
Holder’s pro rata share of the Series B Reallotment Shares shall be a
fraction of the Series B Reallotment Shares, of which the number of
Ordinary Shares (determined on a fully-diluted, as-if converted basis)
owned by such Participating Series B Holder on the date of the Offer Notice
shall be the numerator and the total number of Ordinary Shares (determined
on a fully-diluted, as-if converted basis) held by all Participating Series
B Holders on the date of the Offer Notice shall be the denominator.
	 
	 	(v)	 	On expiration of any Series B Reallotment Period, the Company shall issue a
new Series B Reallotment Notice to each of the Series B Holders that have
exercised their right of reallotment in such period, and such Series B Holders
shall be given an additional right of reallotment under clause (iv) above, unless
either (x) the Series B Holders have exercised any rights of first refusal and
rights of reallotment with respect to all the Remaining Shares or (y) no Series B
Holder shall have exercised its right of reallotment during such Series B
Reallotment Period.
	 
	 	(vi)	 	Each Series B Holder shall be entitled to apportion Remaining Shares to be
purchased among its partners and Affiliates, provided that such Series B Holder
notifies the Selling Shareholder of such allocation.
	 
	 	(vii)	 	If any Series B Holder exercises its option under this paragraph (b) to
purchase any Remaining Shares, then payment for the Remaining Shares shall be by
check or wire transfer, against delivery of the Remaining Shares to be purchased
at a place agreed by the parties and at

 

Page 33

	 	 	 	the time of the scheduled closing therefor, which shall be no later than
thirty (30) days after the expiration of any period for exercise by such
Series B Holders of their right of first refusal with respect to the
Remaining Shares and all periods for exercise by the Series B Holders of
any right of reallotment, unless the Additional Offer Notice contemplated
a later closing with any prospective third party transferee or unless the
value of the purchase price has not yet been established pursuant to
Section 4.6.

	4.5	 	Series A Holders’ Option.

	 	(a)	 	Further Offer Notice. If the Company and the Series B Holders have declined to
purchase all, or a portion of, the Offered Shares in connection with a proposed Transfer,
then the Selling Shareholder shall give each Series A Holder a written “Further Offer
Notice”, which shall include all of the information and certifications required in an
Offer Notice, and shall additionally identify the Offered Shares which the Company and the
Series B Holders have declined to purchase (the “Balance Shares”) and briefly describe the
Series A Holders’ rights of first refusal with respect to the proposed Transfer.
	 
	 	(b)	 	Option.

	 	(i)	 	Each Series A Holder shall have an option for a period of thirty (30) days
from the Series A Holder’s receipt of the Further Offer Notice to elect to
purchase its respective pro rata share of the Balance Shares at the same price and
subject to the same material terms and conditions as described in the Further
Offer Notice.
	 
	 	(ii)	 	Each Series A Holder may exercise such purchase option and, thereby, purchase
all or any portion of its pro rata share of the Balance Shares, by notifying the
Selling Shareholder and the Company in writing, before expiration of the
thirty-day period as to the number of such shares which it wishes to purchase. For
purposes of this clause (ii), each Series A
Holder’s pro rata share of the Balance Shares shall be a fraction of the
Balance Shares, of which the number of Ordinary Shares (determined on a
fully-diluted, as-if converted basis) owned by such Series A Holder on the
date of the Offer Notice shall be the numerator and the total number of
Ordinary Shares (determined on a fully-diluted, as-if converted basis)
held by all Series A Holders on the date of the Offer Notice shall be the
denominator.
	 
	 	(iii)	 	If any Series A Holder fails to exercise its option to purchase its full pro
rata share of the Balance Shares, the Selling Shareholder shall give written
notice (a “Series A Reallotment Notice”) to each Series A Holder who has fully
exercised its option to purchase a pro rata portion of the Balance Shares. The
Series A Reallotment Notice shall include all of the information and
certifications required in an Offer Notice and briefly describe the Series A
Holders’ rights of reallotment. The Series
A Reallotment Notice shall further identify the Balance Shares in respect
of which any Series A Holder has failed to exercise its right of

 

Page 34

	 	 	 	first refusal (or in the case where there has been a prior Series A
Reallotment Period, in respect of which any Series A Holder has failed to
exercise its right of reallotment) (the “Series A Reallotment Shares”).
	 
	 	(iv)	 	Each Series A Holder entitled to receive a Series A Reallotment Notice (a
“Participating Series A Holder”) shall have an option to purchase, at the same
price and subject to the same material terms and conditions as described in any
Series A Reallotment Notice, all or part of its pro rata share of the Series A
Reallotment Shares described in such Series A
Reallotment Notice. Such option shall be exercisable by each
Participating Series A Holder by notifying the Company and the Selling
Shareholder in writing, within thirty (30) days after delivery to the
Participating Series A Holder of the Series A Reallotment Notice (a
“Series A Reallotment Period”). For purposes of this clause (iv), each
Participating Series A Holder’s pro rata share of the Series A Reallotment
Shares shall be a fraction of the Series A Reallotment Shares, of which
the number of Ordinary Shares (determined on a fully-diluted, as-if
converted basis) owned by such Participating Series A Holder on the date
of the Offer Notice shall be the numerator and the total number of
Ordinary Shares (determined on a fully-diluted, as-if converted basis)
held by all Participating Series A Holders on the date of the Offer Notice
shall be the denominator.
	 
	 	(v)	 	On expiration of any Series A Reallotment Period, the Company shall issue a
new Series A Reallotment Notice to each of the Series A Holders that have
exercised their right of reallotment in such period, and such Series A Holders
shall be given an additional right of reallotment under clause (iv) above, unless
either (x) the Series A Holders have exercised any rights of first refusal and
rights of reallotment with respect to all the Series B Balance Shares or (y) no
Series A Holder shall have exercised its right of reallotment during such Series A
Reallotment Period.
	 
	 	(vi)	 	If any Series A Holder exercises its option under this paragraph (c) to
purchase any Balance Shares, then payment for the Balance Shares shall be by check
or wire transfer, against delivery of the Balance Shares to be purchased at a
place agreed by the parties and at the time of the scheduled closing therefor,
which shall be no later than thirty (30) days after the expiration of any period
for exercise by such Series A Holders of their right of first refusal with respect
to the Balance Shares and all periods for exercise by the Series A Holders of any
right of reallotment, unless the Further Offer
Notice contemplated a later closing with any prospective third party transferee or
unless the value of the purchase price has not yet been established pursuant to
Section 4.6.

	4.6	 	Valuation of Property.

	 	(a)	 	Right to Pay Cash Value of Consideration. Should the purchase price specified in the
Offer Notice, Additional Offer Notice or Further Offer Notice be payable in property other
than cash or evidences of indebtedness, the Company, the

 

Page 35

	 	 	 	Series A Holders and/or the Series B Holders, as applicable, shall have the right
to pay the purchase price in connection with the exercise of their right of first
refusal hereunder in the form of cash equal in amount to the fair market value of
such property.
	 
	 	(b)	 	Valuation of Non-Cash Consideration. Such fair market cash value shall be determined
in the first instance by the Board acting in good faith, and the Company shall notify the
Selling Shareholder, Series A Holders and Series B
Holders in writing of such determination within three (3) Business Days
thereafter. If any of the Selling Shareholder, Series A Holders representing a
majority in voting power of the Series A Preferred Shares or Series B Holders
representing a majority in voting power of the Series B Preferred Shares disagrees
with such determination, then within ten (10) Business Days after receiving the
Company’s notification thereof, it may apply to the Hong Kong International
Arbitration Centre to appoint an appraiser of recognized international reputation
and standing, who shall determine such cash value. The cost of such appraisal (and
the appointment of an appraiser) shall be borne by the Selling Shareholder.
	 
	 	(c)	 	Adjustment to Time for Closing. If the time for the closing of the Company’s,
Series A Holders’ or Series B Holders’ purchase has expired but for the
determination of the value of the purchase price offered by the Prospective
Transferee, such closing shall be held on or prior to the fifth (5th) Business Day
after such valuation shall have been made pursuant to this Section 4.6.

	4.7	 	Co-Sale Rights. To the extent that the Company, Series A Holders and/or Series B
Holders have not exercised their respective rights of first refusal to purchase all the
Offered Shares under this Section 4, then subject to this Section 4.7, the Selling
Shareholder may sell the remaining Offered Shares in respect of which such rights were not
exercised (the “Co-Sale Shares”).

	 	(a)	 	Co-Sale Notice. Within ten (10) days after expiration of the time for exercise by the
Company and the Preferred Holders of any rights of first refusal hereunder (and any right
of reallotment) in respect of the Offered Shares, the Selling Shareholder shall give
written notice to each Series B Holder who has not exercised
its right under Section 4.4 (an “Eligible Preferred Holder”), which notice shall indicate
the number of Co-Sale Shares and advise such Series B Holder of its co-sale rights with
respect to such Co-Sale Shares.
	 
	 	(b)	 	Exercise. Each such Series B Holder that notifies the Selling Shareholder in writing
within twenty (20) Business Days after the receipt of such co-sale notice (a “Co-Sale
Participant”) shall have a right to participate in any sale by the Selling Shareholder of
the Co-Sale Shares and sell a pro rata number of its Company Securities on the same
economic terms and conditions as specified in the Offer Notice. Such Co-Sale Participant’s
notice to the Selling Shareholder shall indicate the number of Company Securities the
Co-Sale Participant wishes to sell pursuant to such right to participate. For purposes of
this paragraph (b), the pro rata number of Company Securities each Co-Sale Participant may
elect to sell pursuant to its right of participation shall equal (on a fully-diluted,
as-if converted basis) (i) the aggregate number of Ordinary Shares covered by the

 

Page 36

	 	 	 	Offer Notice (determined on a fully-diluted, as-if converted basis) by (ii) a
fraction, the numerator of which is the number of Ordinary Shares (determined on a
fully-diluted, as-if converted basis) owned by the Co-Sale Participant on the date
of the Offer Notice, and the denominator of which is the total number of Ordinary
Shares (determined on a fully-diluted, as-if converted basis) owned by the Selling
Shareholder and all of the Eligible Preferred Holders.
	 
	 	 	 	If any Eligible Preferred Holder fails to exercise its option to sell its full pro
rata share of its Company Securities pursuant to its co-sale right under this Section, the
Selling Shareholder shall give written notice (a “Co-Sale Reallotment Notice”) to each
Eligible Preferred Holder who has fully exercised its option to sell a pro rata portion of
its Company Securities. The Co-Sale Reallotment Notice shall state the sum (determined on
a fully-diluted, as-if converted basis) of all Company Securities that any Eligible
Preferred Holder was entitled to sell in the exercise of its co-sale right under this
Section where such Eligible Preferred Holder failed to exercise such right (or in the case
where there has been a prior Co-Sale Reallotment Period, in respect of which any Co-Sale
Participating Holder has failed to exercise its right of reallotment) (the “Co-Sale
Reallotment Shares”).

	 	(i)	 	Each Eligible Preferred Holder entitled to receive a Co-Sale Reallotment Notice
(a “Re-Allotment Participant”) shall have a right to include such additional number
of its Company Securities in any sale by the Selling Shareholder of the Co-Sale
Shares, and sell such additional Company Securities on the same economic terms and
conditions as specified in the Offer Notice, as is equal (on a fully-diluted, as-if
converted basis) to the number of Co-Sale Reallotment Shares (determined on a
fully-diluted, as-if converted basis) multiplied by a fraction, the numerator of
which is which is the number of Ordinary Shares (determined on a fully-diluted,
as-if converted basis) owned by the Re-Allotment Participant on the date of the
Offer Notice, and the denominator of which is the total number of Ordinary Shares
(determined on a fully-diluted, as-if converted basis) owned by all Re-
Allotment Participants. Such right shall be exercisable by any Re-Allotment
Participant notifying the Company and the Selling Shareholder in writing within
thirty (30) days after delivery to the Re-Allotment Participant of the Co-Sale
Re-Allotment Notice (the “Co-Sale Re-Allotment Period”).
	 
	 	(ii)	 	On expiration of any Co-Sale Reallotment Period, the Company shall issue a
new Co-Sale Reallotment Notice to each Re-Allotment Participant that has exercised
its full right of reallotment in such period, and such Re-Allotment Participant
shall be given an additional right of reallotment under clause (i) above, unless
either (x) there are no remaining Co-Sale Re-Allotment Shares or (y) no
Re-Allotment Participant shall have exercised its right of reallotment during such
Co-Sale Reallotment Period.

	 	(c)	 	Reduction of Co-Sale Shares. To the extent one or more of the Series B Holders
exercises its right of participation in accordance with the terms and conditions

 

Page 37

	 	 	 	set forth above, the number of Restricted Shares that the Selling Shareholder may
sell in the transaction shall be correspondingly reduced.
	 
	 	(d)	 	Transferred Shares. Each Co-Sale Participant shall effect its participation in the
sale by promptly delivering to the Selling Shareholder for transfer to the prospective
purchaser one or more certificates, properly endorsed for transfer, which represent the
type and number of Company Securities which such Co-Sale Participant elects to sell;
provided that, if the Prospective Transferee objects to the delivery of Share Equivalents
in lieu of Ordinary Shares, such Co-Sale Participant shall convert such Share Equivalents
into Ordinary Shares and deliver certificates corresponding to such Ordinary Shares. The
Company agrees to make any such conversion concurrent with the actual transfer of such
shares to the purchaser and contingent on such transfer. The share certificate or
certificates that a Co-Sale Participant delivers to the Selling Shareholder pursuant to
this paragraph shall be transferred to the Prospective Transferee in consummation of the
sale of the Company Securities evidenced thereby pursuant to the terms and conditions
specified in the Offer Notice, and the Selling Shareholder shall concurrently therewith
remit to such Co-Sale Participant that portion of the sale proceeds to which the Co-Sale
Participant is entitled by reason of its participation in such sale.
	 
	 	(e)	 	Special Terms of Sale. Notwithstanding anything to the contrary provided in this
Agreement, the only representations, warranties or covenants that any Co-Sale Participant
shall be required to make in connection with a sale pursuant to its co-sale rights under
this Section are representations and warranties with respect to its ownership of the
Company Securities to be sold by it pursuant to the exercise of such rights and its
ability to convey title thereto free and clear of liens, encumbrances or adverse claims
and reasonable covenants regarding confidentiality, publicity and similar matters.
	 
	 	(f)	 	Refusal by Prospective Transferee to Take Co-Sale Shares. To the extent that any
Prospective Transferee prohibits the participation of a Co-Sale Participant
exercising its co-sale rights hereunder in a proposed Transfer or otherwise refuses to
purchase shares or other securities from a Co-Sale Participant exercising its co-sale
rights hereunder, the Selling Shareholder shall not sell to such prospective purchaser any
Company Securities unless and until, simultaneously with such sale, the Selling
Shareholder shall purchase such shares or other securities from such Co-Sale Participant
for the same consideration and on the same terms and conditions as the proposed transfer
described in the Offer Notice.

	4.8	 	Non-Exercise of Rights. To the extent that the Company and the Preferred Holders have not
exercised their rights to purchase the Offered Shares within the time periods specified in
Section 4.2 through Section 4.5 and any Eligible Preferred Holders have not exercised their
rights to participate in the sale of the Offered Shares within the time periods specified in
Section 4.7, the Selling Shareholder shall have a period of ninety
(90) days from the expiration of such rights in which to sell the Offered Shares to any
third-party transferee identified in the Offer Notice so long as (i) the terms and
conditions (including the purchase price) of such sale are no more favorable than those
specified in the Offer Notice and (ii) such third-party transferee shall have executed a

 

Page 38

	 	 	binding instrument, in form and substance acceptable to Preferred Holders representing a
majority in voting power of the Preferred Shares agreeing to be bound by all the terms of
this Agreement as if it were originally a party hereto at the date hereof. Within fifteen
(15) days of entering into any agreement to sell Offered Shares to a third-party
transferee under this Section 4.8, the Transferor shall furnish each Holder with a copy of
all agreements relating to such sale.

	 	(a)	 	In the event the Selling Shareholder does not consummate the sale or disposition of
the Offered Shares within ninety (90) days from the expiration of such rights, the
Company’s first refusal rights and the Preferred Holders’ first refusal rights and co-sale
rights shall continue to be applicable to any subsequent disposition of the Offered Shares
by the Selling Shareholder until such rights lapse in accordance with the terms of this
Agreement.
	 
	 	(b)	 	The exercise or non-exercise of the rights of the Company and the Preferred Holders
under this Section 4 to purchase Company Securities from a Selling Shareholder or
participate in the sale of Company Securities by a Selling Shareholder shall not adversely
affect their rights to make subsequent purchases from the Restricted Shareholders of
Company Securities or subsequently participate in sales of Company Securities by the
Restricted Shareholders.

	4.9	 	Exempt Transfers. Notwithstanding anything to the contrary in Section 4.1, a
Restricted Shareholder may Transfer its Company Securities (and the rights of the Company
and the Preferred Holders contained in Sections 4.2, 4.3, 4.4, 4.5 and 4.7 shall not
apply) in any of the following circumstances (the transferee in each such circumstance, a
“Permitted Transferee”): (a) any repurchases by the Company of Company Securities at below
cost from former employees, officers, directors,
consultants or other persons who performed services for any Group Company, upon
termination of such services, as permitted by the terms of their engagement by such Group
Company approved by the Board; (b) any purchase by the Founder of Company Securities owned
either directly or indirectly by a 
Co-Founder; or (c) any transfer approved by the Board
in good faith to the parents, children or spouse of a Restricted Shareholder, or to trusts
for the benefit of such Persons, for bona fide estate planning purposes. In the case of
any transfer by a Restricted Shareholder of Company Securities to a Permitted Transferee,
(i) the Restricted Shareholder shall provide documentation reasonably satisfactory to the
Company and Series B Holders representing at least a majority in voting power of the
Series B Preferred Shares evidencing the bona fide nature of such transaction, (ii) the
Permitted Transferee shall execute a Deed of Adherence, in the form
of Exhibit C hereto,
agreeing to be bound by this Agreement in place of the Restricted Shareholder, and (iii)
with respect to any transfer pursuant to clause (c) of the preceding sentence, the
Restricted Shareholder shall remain liable for any breach by such Permitted Transferee of
any provision hereunder.
	 
	4.10	 	Legend. Each certificate representing any Company Securities now or hereafter owned by
Restricted Shareholder shall be endorsed with the following legend:
	 
	 	 	“THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN AN AMENDED AND

 

Page 39

	 	 	RESTATED SHAREHOLDERS AGREEMENT, A COPY OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST TO
THE SECRETARY OF THE COMPANY.”
	 
	 	 	The above restrictions on share transfer shall also be recorded in a notation to the entry
for such Company Securities on the Company’s share register.
	 
	5.	 	DRAG-ALONG RIGHTS
	 
	5.1	 	Drag-Along Right. Shareholders representing at least ninety percent (90%) in voting power of
the Company (a “Holder Supermajority”) may cause the sale (a “Compulsory Sale”) of the Company to
a third party (a “Compulsory Sale Purchaser”) in a bona-fide, 

arms-length transaction. Without
limiting the generality of the foregoing, in furtherance of a Compulsory Sale, a Holder
Supermajority (i) may require the sale of all or a material part of the business, assets and
undertaking as of any of the Group Companies, (ii) may require the continuation of the Company to
another jurisdiction, (iii) may require the merger, amalgamation or consolidation of the Company
with or into another Person, (iv) may require all Shareholders to sell all the Company Securities
held thereby or (v) may require the Company and/or all Shareholders to take all such other
actions as may as may be deemed appropriate by a Holder Supermajority to effect a Compulsory
Sale. In connection with any Compulsory Sale, all Shareholders shall refrain from exercising,
and each Shareholder hereby waives, any dissenters’ rights or rights of appraisal it may have
under applicable law in relation to such transaction.
	 
	5.2	 	Further Assurances. Each Shareholder shall do and perform, or cause to be done and performed,
all such further acts and things and shall execute and deliver all such other agreements,
certificates, instruments and documents as a Holder Supermajority may request in furtherance of
any proposed Compulsory Sale, including, without limitation,

	 	(a)	 	Voting all Company Securities held by the Shareholder to approve any resolution which
may be required to consummate such Compulsory Sale; and
	 
	 	(b)	 	Delivering to any representative appointed by a Shareholder Supermajority all
certificates evidencing any Company Securities held by such Shareholder, together with (x)
an instrument of transfer, duly executed in blank and in proper form to permit the
disposition of such securities to a Compulsory Sale Purchaser and (y) a limited
power-of-attorney, in form and substance reasonably satisfactory to a Holder
Supermajority, authorizing a representative appointed by such Shareholders Supermajority
to effect the disposition of such securities to the Compulsory Sale Purchaser on such
terms and conditions as shall be agreed between the Holder Supermajority and the
Compulsory Sale Purchaser for the Compulsory Sale. If any Shareholder shall fail to
deliver such certificates, instrument of transfer and limited power-of-attorney to the
representative of a Holder Supermajority as required under this clause, the disposition of
any Company Securities held by such Shareholder may be effected without the Shareholder’s
consent or surrender of the certificate(s) for such Company Securities.

	5.3	 	Distribution of Proceeds. Upon a Compulsory Sale, any proceeds therefrom payable to

 

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	 	 	the Shareholders shall be distributed as required under the Articles in relation to a
Deemed Liquidation.
	 
	6.	 	ASSIGNMENT AND AMENDMENT.
	 
	6.1	 	Assignment. This Agreement and the rights and obligations of the parties hereunder shall
inure to the benefit of, and be binding upon, their respective successors, assigns and legal
representatives. Notwithstanding anything herein to the contrary:

	 	(a)	 	Information Rights and Registration Rights. The registration rights of the Holders
under Section 2 may be assigned to any other Holder, to the Affiliates of any Holder or
to any Person acquiring Registrable Securities equivalent (on a fully-diluted, as-if
converted basis) to 400,000 Ordinary Shares (adjusted for any share splits, reverse share
splits, share dividends, recapitalizations and the like) in a Transfer permitted
hereunder; provided, however, that in either case no party may be assigned any of the
foregoing rights unless the Company is given written notice by the assigning party
stating the name and address of the assignee and identifying the Company Securities as to
which the rights in question are being assigned; and provided further, that any such
assignee shall receive such assigned rights subject to all the terms and conditions of
this Agreement, including without limitation the provisions of this Section 6.
	 
	 	(b)	 	Rights of Participation; Right of First Refusal; Co-Sale Rights. A Series B Holder
may assign its rights under Sections 3 and 4 in connection with a Transfer of Company
Securities thereby; provided, however, that no Person may be assigned any of the
foregoing rights unless the Company is given written notice by such Series B Holder at
the time of such assignment, stating the name and address of the assignee and identifying
the Company Securities as to which the rights in question are being assigned; and
provided further, that any such assignee shall receive such assigned rights subject to
all the terms and conditions of this Agreement. A Series A Holder may assign its rights
under
Section 4 in connection with a permitted Transfer of Company Securities thereby;
provided, however, that no Person (other than the Founder or an SPV Entity
Controlled by the Founder) may be assigned any of the foregoing rights unless
Approved by the Series B Holders and the Company is given written notice by such
Series A Holder at the time of such assignment, stating the name and address of
the assignee and identifying the Company Securities as to which the rights in
question are being assigned; and provided further, that any such assignee shall
receive such assigned rights subject to all the terms and conditions of this
Agreement.
	 
	 	(c)	 	Other Rights and Obligations. None of the parties hereto shall Transfer all or any
part of any interest in any Company Securities now or hereafter owned or held thereby
unless the Person to whom such Equity Securities are Transferred shall have entered into
a Deed of Adherence in the form of Exhibit C hereto to become bound by this Agreement as
if it was originally party hereto as of the date hereof. Any attempted transfer in
violation of this paragraph shall be void ab initio and of no force or effect.

	 	 	Except as provided above or as otherwise explicitly contemplated in this Agreement,

 

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	 	 	no party hereto shall assign its rights or obligations hereunder without the mutual
written consent of the other parties hereto.
	 
	6.2	 	Amendment of Rights. Any provision in this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either retroactively or
prospectively), only by (i) the written consent of the Company; (ii) the Approval of the Series B
Holders and (iii) the written consent of Shareholders representing a majority in voting power of
the Ordinary Shares and Series A Preferred Shares (voting together as a single class); provided,
however, that any party (other than the Company) may waive any of its rights hereunder without
obtaining the consent of any other party. Any amendment or waiver effected in accordance with
this Section 6.2 shall be binding upon all the parties hereto.
	 
	7.	 	CONFIDENTIALITY AND NON-DISCLOSURE.
	 
	7.1	 	Disclosure of Terms. The terms and conditions of this Agreement and the Series B Purchase
Agreement, and all exhibits and schedules attached to such agreements (collectively, the
“Financing Terms”), including their existence, shall be considered
confidential information and shall not be disclosed by any party hereto to any third party except
in accordance with the provisions set forth below; provided that such confidential information
shall not include any information that is in the public domain other than caused by the breach of
the confidentiality obligations hereunder.
	 
	7.2	 	Press Releases, Etc. Any press release issued by the Company shall not disclose any of the
Financing Terms and the final form of such press release shall be approved in advance in writing
by the Board, including at least a majority of the Preferred Directors, if any. No other
announcement regarding any of the Financing Terms in a press release, conference, advertisement,
announcement, professional or trade publication, mass marketing materials or otherwise to the
general public may be made without the Investors’ prior written consent.
	 
	7.3	 	Permitted Disclosures. Notwithstanding the foregoing, any party may disclose any of the
Financing Terms to its current or bona fide prospective purchasers of its interest in the
Company, to bona fide prospective investors in such party and to such party’s employees,
investment bankers, lenders, partners, accountants and attorneys, in each case only where such
Persons are under appropriate nondisclosure obligations.
Without limiting the generality of the foregoing, each Preferred Holder shall, without
disclosing the identities of the other Preferred Holders or the Financial Terms of their
respective investments in the Company without their consent, be entitled to disclose the
Financing Terms for the purposes of fund reporting or inter-fund reporting or to its fund
manager, other funds managed by its fund manager and their respective auditors, counsel,
directors, officers, employees, shareholders or investors.
	 
	7.4	 	Legally Compelled Disclosure. In the event that any party is requested or becomes required by
law or by the rules of any securities exchange (including without limitation, pursuant to
securities laws and regulations) to disclose the existence of this Agreement and the Series B
Purchase Agreement, any of the exhibits and schedules attached to such agreements, or any of the
Financing Terms hereof in contravention of the provisions of this Section 6, such party (the
“Disclosing Party”) shall provide the other parties (the “Non-Disclosing Parties”) with prompt
written notice of that fact and use

 

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	 	 	all reasonable efforts to seek (with the cooperation and reasonable efforts of the other
parties) a protective order, confidential treatment or other appropriate remedy. In such
event, the Disclosing Party shall furnish only that portion of the information which is
legally required to be disclosed and shall exercise reasonable efforts to keep
confidential such information to the extent reasonably requested by any Non-Disclosing
Party.

	7.5	 	Other Information. The provisions of this
Section 7 shall be in addition to, and not in
substitution for, the provisions of any separate nondisclosure agreement executed by any of the
parties with respect to the transactions contemplated hereby.

	8.	 	OTHER COVENANTS

	8.1	 	Exclusivity. Each of the Company and the Founder covenants to the Investors that the Company
shall be the exclusive vehicle through which all business related to hotel management shall be
conducted by the Company and the Founder.

	8.2	 	Founder Full Devotion and Non-Competition. The Founder shall devote his full business time
and attention to the business of the Company for at least five (5) years from the date hereof,
and shall not compete with the Company for at least three (3) years following the termination of
his employment with the Company for any reason.

	8.3	 	Non-Competition. The Company shall cause its current and future officers, directors and
employees (other than the Founder) to enter into (i) a proprietary information and assignment of
invention and patent agreement and (ii) a non-competition agreement with the Company,
substantially in the forms approved by a majority of the Board, which majority shall include at
least one Series B Director.

	8.4	 	Future Management Holders. The Company shall give
written notice to each Series B Holder of the
issuance by the Company of any Company Securities to any Key Management Personnel and, as a
condition precedent to such issuance, the Company shall require that such Key Management Personnel
execute a Deed of Adherence in the form of Exhibit C hereto to become bound by this Agreement as if
it was originally party hereto as of the date hereof. Each Key Management Personnel who shall
become a party to this Agreement in accordance with the terms hereof shall be deemed to be a
“Management Holder” hereunder for all purposes hereof.

	8.5	 	Indebtedness. The parties hereto acknowledge and each of the Company and the Founder shall
ensure that all indebtedness of the Company, whether incurred before or after the date hereof,
shall at all times be junior in priority and subordinate to any amounts owed to the Investors by
virtue of their ownership of securities of the Company or pursuant to any of the Transaction
Documents, including without limitation any indemnification by the Company pursuant to the Series
B Purchase Agreement.

	8.6	 	Financing. The Company shall, before any proposed issuance of equity securities of the
Company or instruments exchangeable, convertible or exercisable for any equity securities of the
Company, except any issuance of Ordinary Shares and/or Series B Preferred Shares pursuant to the
Transaction Documents or the Share Option Plan, seek the approval of the Board of such issuance
and shall notify the Investors in writing of

 

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	 	 	such proposed issuance immediately after the Board’s approval of such issuance.

	8.7	 	Material Contracts. The Company shall inform each Investor promptly upon learning of any
breach or default, alleged breach or default, or event which could reasonably be expected to
(with the passage of time, notice or both) constitute a material breach or default under any of
the Material Contracts (as defined in the Series B Purchase Agreement) by any party thereto.

	9.	 	REPURCHASE RIGHTS

	9.1	 	Repurchase Right. Upon the occurrence of any of the following Repurchase Events with respect
to the Founder, the Company shall have the right, but not the obligation, to purchase and the
Founder shall, if requested by the Company, sell, in accordance with this Section 9, all, but not
less than all, of the non-vested Ordinary Shares then beneficially owned by the Founder (the
“Repurchase Right”) at (i) the par value of such non-vested Ordinary Shares in case of sub-clauses
(a) or (b) below and (ii) the original subscription price for such non-vested Ordinary Shares in
case of sub-clause (c) below (the “Repurchase Price”). For purposes hereof, each of the following
shall be a “Repurchase Event”:

	 	(a)	 	the filing by the Founder of a petition for relief under the bankruptcy laws in any
jurisdiction; or

	 	(b)	 	the termination of full-time employment of the Founder with the Company unless
such termination is made by the Company without cause; or

	 	(c)	 	the termination of full-time employment of the Founder with the Company by the Company
without cause.

	9.2	 	Vesting.

	 	(a)	 	For purposes of this Section 9, the term “vest” shall mean, with respect to any
Ordinary Shares beneficially owned by the Founder as of the date of this Agreement,
together with any Company Securities issued as a dividend or other distribution with
respect to, or in exchange for, or in replacement of such Ordinary Shares (the “Founder’s
Shares”), that such Founder’s Shares are no longer subject to the Repurchase Right. If the
Founder would become vested in any fraction of a Founder’s Share on any date, such
fractional Share shall not vest and shall remain a Non-Vested Ordinary Share until the
Founder becomes vested in the entire Share.

	 	(b)	 	The Founder’s Shares shall vest based on the terms and conditions as specified in the
Founder’s employment agreement with the Company entered into in accordance with the Series
B Purchase Agreement.

	 	(c)	 	The Founder shall have full voting rights for both vested and non-vested Ordinary
Shares of the Company.

	9.3	 	Manner of Exercise of Repurchase Right. The Repurchase Right shall be exercised by

 

Page 44

	 	 	the Company by delivery of a written notice (the “Repurchase Notice”) of exercise to the
Founder (or his estate or legal representative) subject to the Repurchase Right following
a Repurchase Event.

	9.4	 	Repurchase Procedure. After the Company’s Repurchase Notice, the Founder shall promptly
endorse and deliver to the Company the certificates representing the Ordinary Shares being
repurchased, free and clear of any liens, claims or encumbrances (other than any such lien, claim
or encumbrance held by or guaranteed to the Company), and the Company shall then pay promptly to
the Founder (but in no event later than thirty (30) days after the date the notice of the
Company’s election to exercise the Right of Repurchase was delivered to the Founder), the total
repurchase price. The Founder hereby authorizes any director of the Company to execute a transfer
in his name to effect the transfer of Ordinary Shares pursuant to the Repurchase Right granted
hereunder.

	9.5	 	Binding Effect. The Company’s Repurchase Right shall inure to the benefit of the successors
and assigns of the Company and shall be binding upon any representative, executor, administrator,
heir, or legatee of the Founder.

	10.	 	COMPLIANCE WITH PRC LAW; PUT OPION

	10.1	 	Compliance with PRC Law. Prior to the twelve (12) month anniversary of this Agreement, the
Founder and Co-Founders shall complete all required registrations, obtain all required approvals
and otherwise comply with all rules and regulations of the PRC government or any agency, bureau,
board, commission, court, department, official, political subdivision, tribunal or other
instrumentality of the PRC government with respect to any Founder’s or Co-Founder’s shareholding
interests in the Company and each of the transactions contemplated by the Series B Purchase
Agreement, including without limitation, (i) the obligations as set forth in Sections 7.9, 7.12
and 7.13 of the Series B Purchase Agreement and (ii) all reporting obligations imposed by, and all
consents, approvals and permits required by the PRC State Administration of Foreign Exchange
(“SAFE”) pursuant to Circular on Issues Relating to the Administration of Foreign Exchange of
Company Financing through Offshore Special Purpose Vehicles and Round-Trip Investment by PRC
Resident   issued by SAFE effective November 1, 2005 (the “SAFE Circular”) and any
applicable laws of the PRC in force from time to time which operate to restate, amend or repeal
the aforesaid SAFE Circular or any part thereof.

	10.2	 	Investor Put Option. In the event any Triggering Condition (as defined below) occurs, then
from the date such Triggering Condition occurs (a “Triggering Date”), each Investor shall have
the right at any time after any Triggering Date and before the date of a Qualified IPO (the
“Expiration Date”), to require the Founder to purchase all or any portion of the Series B
Preferred Shares held by such Investor at a per share purchase price equal to 105% of the per
share purchase price paid by such Investor pursuant to the Series B Purchase Agreement. In the
event that any Investor desires to exercise its right pursuant to this Section 10.2, it shall, no
later than the Expiration Date, give written notice (a “Put Notice”) thereof to the Founder and
the Company describing the number of Series B Preferred Shares to be sold to the Founder by such
Investor (the “Put Option Shares”).

 

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	 	 	For purposes of this Section 10.2, a “Triggering Condition” includes any of the following:

	 	(i)	 	the obligations of the Founder and Co-Founders pursuant to
Section 10.1 have not been
met on or prior to the twelve (12) month anniversary of the date hereof,

	 	(ii)	 	the WFOEs are not wholly owned by the Company as of October 1, 2007,

	 	(iii)	 	the Audited Financials (as defined in the Series B Purchase Agreement) provided by
the Company to the Investors have not been provided as of the six (6) month anniversary of
the date hereof, or the Audited Financials differ materially and adversely from the
Unaudited Pro Forma Financials (as defined in the Series B Purchase Agreement, and
including any notes included therein) covering the same period,

	 	(iv)	 	any claim or demand of a third party with respect to any non-competition obligation
of the Founder arises and has or may reasonably be expected to have, a Material Adverse
Effect with respect to the Company,

	 	(v)	 	the Founder’s full-time employment with the Company is terminated at any time prior to
the five (5) year anniversary of the date hereof, unless such termination is made by the
Company without cause, or

	 	(vi)	 	there is any inaccuracy in or breach or nonperformance of any of the representations,
warranties, covenants or agreements made by the Company under (a) Section 3.10 or Section
3.12 of the Series B Purchase Agreement regarding Leases (as defined in the Series B
Purchase Agreement) or (b) Section 3.4 of the Series B Purchase Agreement, which,
individually or in the aggregate, results in, or which may reasonably be expected to
result in, a Material Adverse Effect with respect to the Company.

	 	 	Notwithstanding the foregoing, in case an Investor exercises his Put Option under this
Section 10.2 and the Put Option has been consummated in accordance with the terms hereof,
such Investor shall have no right to any indemnification pursuant to
Section 9.1 of the
Series B Purchase Agreement. In case an Investor seeks and receives indemnification from
the Company pursuant to Section 9.1 of the Series B Purchase Agreement with respect to any
Triggering Condition, such Investor shall have no right to exercise its Put Option in
accordance with this Section 10.2 with respect to such Triggering Condition.

	10.3	 	Closing. The closing of the sale and purchase of the Put Option Shares specified in any Put
Notice shall take place at the office of the Company (or at such other place as mutually agreed to
by the Founder and the Investor) on a date to be mutually agreed to by the Founder and the
Investor, which date shall in no case be later than thirty (30) days after delivery of the Put
Notice unless the Investor, in its sole discretion, agrees otherwise in writing. At such closing:

	 	(i)	 	the Founder shall pay the aggregate consideration for the Put Option Shares

 

Page 46

	 	 	 	pursuant to Section 10.2 by wire transfer in immediately available funds to an
account designated by the Investor or by other payment method(s) mutually agreed
to by the Founder and the Investor,

	 	(ii)	 	the Investor shall deliver to the Company share certificate(s) representing such Series
B Preferred Shares,

	 	(iii)	 	each of the Founder and the Investor shall deliver to the Company a duly executed
instrument of transfer with respect to the sale of the Put Option Shares to the Founder,

	 	(iv)	 	the Company shall deliver to the Founder and the Investor a copy of the Company’s
Register of Members certified by a director of the Company which reflects the Put Option Shares
purchased by the Founder, and

	 	(v)	 	if at such closing, the Investor does not exercise its right
pursuant to Section 10 with
respect to all Series B Preferred Shares held by such Investor, the Founder shall deliver an
irrevocable proxy in the form attached hereto as Exhibit D to such Investor, granting to the
designee of such Investor the power to vote the Put Option Shares the Founder purchased from such
Investor.

	 	 	The Founder acknowledges and agrees that no agreement, instrument or other
document, other than those specified in this Section 10.3, shall be necessary to
consummate the sale and purchase of the Put Option Shares.

	11.	 	ADMINISTRATION

	11.1	 	The accounts of the Company shall be kept in accordance with US GAAP and shall be audited
annually by an international “Big 4” accounting firm approved by the Board. The audited accounts and report of the auditors shall be made available to the Preferred
Holders within fifteen (15) days after the issue thereof by the auditors. Periodic
management accounts shall be prepared by the Company and these shall be forwarded to each
Director.

	11.2	 	The financial year of the Company shall end on 31st December in each year.

	11.3	 	Bank accounts of the Company shall be operated by the CEO of the Company. Any withdrawal or
transfer of fund from such bank accounts shall require the signature by the CEO.

	12.	 	TAX MATTERS

	12.1	 	The Company will not 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.

	12.2	 	The Company will use, and will cause each Group Company to use, best efforts to avoid
classification as a passive foreign investment company (“PFIC”) as defined in the
Internal Revenue Code of 1986, as amended (the “Code”) for the current year or any subsequent
year.

 

Page 47

	12.3	 	The Company shall promptly provide each Series B Holder with written notice if it (or any
Group Company) becomes a PFIC or a “controlled foreign corporation” (“CFC”) as defined under the
Code. Such notice shall include a reasonably detailed analysis of the determination that the
Company (or the applicable Group Company) has become a PFIC or CFC.

	12.4	 	The Company shall make due inquiry with its tax advisors on at least an annual basis
regarding its or any Group Company’s status as a PFIC, and if Company is informed by its tax
advisors that any such entity has become a PFIC, or that there is a likelihood of any such entity
being classified as a PFIC for any taxable year, the Company shall promptly notify each Series B
Holder of such status or risk, as the case may be. The Company agrees to make available to each
Series B Holder upon request, the books and records of the Company and each Group Company, and to
provide information to such Series B Holder pertinent to the Company’s or any Group Company’s
status or potential status as a PFIC. Upon a determination by the Company, any Series B Holder or
any taxing authority that the Company or any Group Company has been or is likely to become a
PFIC, the Company will provide such Series B Holder with all information reasonably available to
the Company or any Group Company to permit such Series B Holder to (i) accurately prepare all tax
returns and comply with any reporting requirements as a result of such determination and (ii)
make any election (including, without limitation, a “qualified electing fund” election under
Section 1295 of the Code), with respect to the Company or any Group Company, and comply with any
reporting or other requirements incident to such election. If a determination is made by the
Company, any Series B Holder or any taxing authority that the Company or any Group Company is a
PFIC for a particular year, then for such year and for each year thereafter, the Company will
also provide such Series B Holder with a completed “PFIC Annual Information Statement” as
required by Treasury Regulation Section 1.1295-1(g) and otherwise comply with applicable Treasury
Regulation requirements. In the event that a Series B Holder who has made a “Qualified Electing
Fund” election must include in its gross income for a particular taxable year its pro rata share
of the Company’s earnings and profits pursuant to Section 1293 of the Code, the Company agrees to
make a dividend distribution to such Series B Holder (no later than 90 days following the end of
the such Series B Holder’s taxable year) in an amount equal to 50% of the amount so included by
such Series B Holder.

	12.5	 	The Company shall provide each Series B Holder with information relating to the transfer of
any equity interests of the Company (or any Group Company) and the issuance or redemption by the
Company (or any Group Company) of any equity interests. No later than two (2) months following
the end of the Company’s taxable year, the Company shall provide the following information to
each Series B Holder: (i) the Company’s capitalization table as of the end of the last day of
such taxable year and (ii) a report regarding the Company and each Group Company’s status as a
CFC, if any. The Company shall: (A) furnish to each Series B Holder upon its reasonable request,
on a timely basis, all information necessary to satisfy the U.S. income tax return filing
requirements of such Series B Holder (and each “United States shareholder” of the Company as
defined by Section 951(b) of the Code that owns a direct or indirect interest in such Series B
Holder (a “U.S. Shareholder”)) arising from its investment in the Company and relating to the
Company or any Group Company’s classification as a CFC; and (B) use commercially reasonable
efforts to avoid generating for any taxable

 

Page 48

	 	 	year in which the Company or any Group Company is a CFC, amounts includible in the income
of any Series B Holder or U.S. Shareholder pursuant to Section 951 of the Code (a “Section
951 Inclusion”). If the Company or any Group Company ceases to be a CFC at any time, the
Company will provide prompt written notice to each Series B Holder if at any time
thereafter the Company becomes aware that it or any Group Company has become a CFC. Upon
written request of a U.S. Series B Holder from time to time, subject to obtaining the
consent of its shareholders to release such information, the Company will promptly provide
in writing such information in its possession concerning its shareholders and, to the
Company’s actual knowledge, the direct and indirect interest holders in each shareholder
sufficient for such U.S. Series B Holder to determine whether the Company is a CFC. If any
Series B Holder or U.S. Shareholder has a Section 951 Inclusion for any taxable year (such
Series B Holder or U.S. Shareholder, a “Taxable CFC Shareholder”), the Company shall
distribute cash pro rata with respect to each Share so that the aggregate amount
distributed to each Taxable CFC Shareholder equals fifty percent (50%) of the Section 951
Inclusion of such Taxable CFC Shareholder for such taxable year.

	12.6	 	The Company will comply and will cause the Group Companies to comply with all
record-keeping, reporting, and other requests necessary for the Company and the Group Companies
to allow each Series B Holder to comply with any applicable U.S. federal income tax law.

	12.7	 	The cost incurred by the Company in providing the information that it is required to
provide, or is required to cause to be provided, and the cost incurred by the Company in taking
the action, or causing the action to be taken, as described in this
Section 12 shall be borne by
the Company.

	13.	 	GENERAL PROVISIONS

	13.1	 	Notices. Except as may be otherwise provided herein, all notices, requests, waivers and other
communications made pursuant to this Agreement shall be in writing and shall be conclusively
deemed to have been duly given (a) when hand delivered to the other party, upon delivery; (b) when
sent by facsimile at the number as the parties have been given, upon receipt of confirmation of
error-free transmission; (c) seven (7) Business Days after deposit in the mail as air mail or
certified mail, receipt requested, postage prepaid and addressed to the other party as the parties
have been given; or (d) three (3) Business Days after deposit with an international overnight
delivery service, postage prepaid, addressed to the parties with next Business Day delivery
guaranteed, provided that the sending party receives a confirmation of delivery from the delivery
service provider.

	 	 	Each Person making a communication hereunder by facsimile shall promptly confirm by
telephone to the Person to whom such communication was addressed each communication made
by it by facsimile pursuant hereto but the absence of such confirmation shall not affect
the validity of any such communication. A party may change or supplement the addresses
given above, or designate additional addresses, for purposes of this Section 13.1 by giving the other party written notice of the new
address in the manner set forth above.

	13.2	 	Entire Agreement. This Agreement, together with all the exhibits and schedules hereto,
constitute and contain the entire agreement and understanding of the parties with

 

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	 	 	respect to the subject matter hereof and supersedes any and all prior negotiations,
correspondence, agreements, understandings, duties or obligations between the parties
respecting the subject matter hereof; provided, however, that nothing in this Agreement or
related agreements shall be deemed to supersede the provisions of any confidentiality and
nondisclosure agreements executed between any party hereto prior to the date of this
Agreement, all of which agreements shall continue in full force and effect until
terminated in accordance with their respective terms. Upon the effectiveness of this
Agreement, the Prior Agreement shall be deemed amended and restated and superseded and
replaced in its entirety by this Agreement, and shall be of no further force or effect.

	13.3	 	Governing Law and Dispute Resolution This Agreement shall be construed and governed by the
laws of Hong Kong, without regard to principles of conflicts of law thereunder.

	 	(a)	 	Any dispute, controversy or claim (each, a “Dispute”) arising out of or relating to
this Agreement, or the interpretation, breach, termination or validity hereof, shall be
resolved at the first instance through consultation between the parties to such Dispute.
Such consultation shall begin immediately after any party has delivered written notice to
any other party to the Dispute requesting such consultation.

	 	(b)	 	If the Dispute is not resolved within sixty (60) days following the date on which such
notice is given, the Dispute shall be submitted to arbitration upon the request of any
party to the Dispute with notice to each other party to the Dispute (the “Arbitration
Notice”).

	 	(c)	 	The arbitration shall be conducted in Hong Kong and shall be administered by the Hong
Kong International Arbitration Centre (“HKIAC”) in accordance with the HKIAC Procedures
for the Administration of International Arbitration in force at the time of the
commencement of the arbitration. There shall be three (3) arbitrators. The claimants in the Dispute shall collectively choose one
arbitrator, and the respondents shall collectively choose one arbitrator. The
Secretary General of the Centre shall select the third arbitrator, who shall be
qualified to practice law in Hong Kong. If any of the members of the arbitral
tribunal have not been appointed within thirty (30) days after the Arbitration
Notice is given, the relevant appointment shall be made by the Secretary General
of the Centre.

	 	(d)	 	The arbitration proceedings shall be conducted in English. The arbitration tribunal
shall apply the Arbitration Rules of the United Nations Commission on International Trade
Law, as in effect at the time of the commencement of the arbitration. However, if such
rules are in conflict with the provisions of this Section 13.3, including the provisions concerning the appointment of arbitrators,
the provisions of this Section 13.3 shall prevail.

	 	(e)	 	Each party to the arbitration shall cooperate with each other party to the arbitration
in making full disclosure of and providing complete access to all information and
documents requested by such other party in connection with such arbitration proceedings,
subject only to any confidentiality obligations

 

Page 50

	 	 	 	binding on such party.

	 	(f)	 	The arbitrators shall decide any dispute submitted by the parties to the arbitration
tribunal strictly in accordance with the substantive law of Hong Kong and shall not apply
any other substantive law.

	 	(g)	 	Any party to the Dispute shall be entitled to seek preliminary injunctive relief, if
possible, from any court of competent jurisdiction pending the constitution of the
arbitral tribunal.

	 	(h)	 	The parties to this Agreement agree to the consolidation of arbitrations under the
Transaction Documents in accordance with the
Section 9.12(viii) of the Series B Purchase
Agreement.

	 	(i)	 	During the course of the arbitration tribunal’s adjudication of the dispute, this
Agreement shall continue to be performed except with respect to the part in dispute and
under adjudication.

	 	(j)	 	The award of the arbitration tribunal shall be final and binding upon the parties, and
the prevailing party may apply to a court of competent jurisdiction for enforcement of
such award.

	13.4	 	Severability. If any provision of this Agreement is found to be invalid or unenforceable,
then such provision shall be construed, to the extent feasible, so as to render the provision
enforceable and to provide for the consummation of the transactions contemplated hereby on
substantially the same terms as originally set forth herein, and if no feasible interpretation
would save such provision, it shall be severed from the remainder of this Agreement, which shall
remain in full force and effect unless the severed provision is essential to the rights or
benefits intended by the parties. In such event, the parties shall use best efforts to negotiate,
in good faith, a substitute, valid and enforceable provision or agreement which most nearly
effects the parties’ intent in entering into this Agreement.

	13.5	 	Third Parties. Nothing in this Agreement, express or implied, is intended to confer upon any
Person other than the parties hereto any rights or remedies under or by reason of this Agreement.

	13.6	 	Successors and Assigns. Subject to the provisions of
Section 5.1, the provisions of this
Agreement shall inure to the benefit of, and shall be binding upon, the successors and permitted
assigns of the parties hereto.

	13.7	 	Interpretation; Captions. This Agreement shall be construed according to its fair language.
The rule of construction to the effect that ambiguities are to be resolved against the drafting
party shall not be employed in interpreting this Agreement. The captions to sections of this
Agreement have been inserted for identification and reference purposes only and shall not be used
to construe or interpret this Agreement. Unless otherwise expressly provided herein, all
references to Sections and Exhibits herein are to Sections and Exhibits of this Agreement.

	13.8	 	Counterparts. This Agreement may be executed by facsimile and in counterparts, each

 

Page 51

		 	of which shall be deemed an original, but all of which together shall constitute one and
the same instrument.

	13.9	 	Aggregation of Shares. All Shares held or acquired by Affiliates of a Shareholder shall be
aggregated together for the purpose of determining the availability of any rights of such
Shareholder under this Agreement.

	13.10	 	Waiver of Reliance among Investors. Each Investor stipulates that it is not relying upon
any Person or entity other than the Company and its officers and directors and the Founder in
entering into this Agreement or investing in the Company, and, specifically and without
limitation, is not relying on any other Investor or any other Investor’s Controlling Persons,
members, shareholders, officers, directors, employees, agents, or professional advisers, or on
any advice, representations, or work product of any of them. Each Investor hereby waives any claim
against, and covenants not to sue, any other Investor or the respective Controlling Persons,
members, shareholders, officers, directors, employees, agents, or professional advisers of any
Investor on account of any action heretofore or hereafter taken or omitted to be taken in
connection with this Agreement or any transaction contemplated hereby.

	13.11	 	Termination. This Agreement shall terminate upon a Qualified IPO; provided that the
provisions of Section 2, Section 7 and this
Section 13 shall survive any termination of this
Agreement.

— remainder of this page left intentionally blank —

 

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

	 	 	 
	SIGNED
BY 

	 	)
	 
	 	 
	for and on behalf of

	 	)
	CHINA LODGING GROUP, LIMITED

	 	)
	 
	 	 
	in
the presence of : 

	 	)

Address:

Floor 5, Building 57

No. 461 Hongcao Road

Shanghai 200233

The People’s Republic of China

Signature Page to Shareholders Agreement

 

 

	 	 	 
	SIGNED BY 

	 	)
	 
	 	 
	for and on behalf of

	 	)
	WINNER CROWN HOLDINGS LIMITED

	 	)
	 
	 	 
	in
the presence of : 

	 	)

Address:

Floor 5, Building 57

No. 461 Hongcao Road

Shanghai 200233

The People’s Republic of China

Signature Page to Shareholders Agreement

 

 

	 	 	 
	SIGNED
BY  

	 	)
	 
	 	 
	MS. TONGTONG ZHAO

	 	)
	 
	 	 
	in
the presence of :  

	 	)

Address:

Floor 5, Building 57

No. 461 Hongcao Road

Shanghai 200233

The People’s Republic of China

Signature Page to Shareholders Agreement

 

 

	 	 	 
	SIGNED BY

	 	)
	 
	 
	MR. JOHN JIONG WU

	 	)
	 
	 	 
	in the presence of :

	 	)
	 

Address:

Floor 5, Building 57

No. 461 Hongcao Road

Shanghai 200233

The People’s Republic of China

Signature Page to Shareholders Agreement

 

 

	 	 	 
	SIGNED BY

	 	)
	 
	 
	MR. QI JI

	 	)
	 
	 	 
	in the presence of :

	 	)
	 

Address:

Floor 5, Building 57

No. 461 Hongcao Road

Shanghai 200233

The People’s Republic of China

Signature Page to Shareholders Agreement

 

 

	 	 	 
	SIGNED
BY

	 	)
	 
	 
	for and on behalf of

	 	)
	POWERHILL HOLDING LIMITED

	 	)
	 
	 	 
	in the presence of :

	 	)
	 

Address:

Floor 5, Building 57

No. 461 Hongcao Road

Shanghai 200233

The People’s Republic of China

Signature Page to Shareholders Agreement

 

 

	 	 	 
	SIGNED BY   

	 	)
	 
	 	 
	for and on behalf of

	 	)
	CHENGWEI PARTNERS, L.P.

	 	)
	 
	 	 
	in the presence of :

	 	)
	 
	 	 
	Address:
	 	 
	 
	 	 
	c/o Chengwei Ventures
	 	 
	Suite 33C, Lane 672 Changle Road
	 	 
	Shanghai 200040, China
	 	 
	Fax: +86 21 5404 8766
	 	 
	Attention: Ping Ping
	 	 
	 
	 	 
	SIGNED BY   

	 	)
	 
	 	 
	for and on behalf of

	 	)
	CHENGWEI VENTURES

	 	)
	EVERGREEN FUND, L. P.

	 	)
	 
	 	 
	in the presence of :

	 	)
	 
	 	 
	Address:
	 	 
	 
	 	 
	c/o Chengwei Ventures
	 	 
	Suite 33C, Lane 672 Changle Road
	 	 
	Shanghai 200040, China
	 	 
	Fax: +86 21 5404 8766
	 	 
	Attention: Ping Ping
	 	 
	 
	 	 
	SIGNED BY   

	 	)
	 
	 	 
	for and on behalf of

	 	)
	CHENGWEI VENTURES

	 	)
	EVERGREEN ADVISORS FUND, LLC

	 	)
	 
	 	 
	in the presence of :

	 	)
	 
	 	 
	Address:
	 	 
	 
	 	 
	c/o Chengwei Ventures
	 	 
	Suite 33C, Lane 672 Changle Road
	 	 
	Shanghai 200040, China
	 	 
	Fax: +86 21 5404 8766
	 	 
	Attention: Ping Ping
	 	 

Signature Page to Shareholders Agreement

 

 

	 	 	 
	SIGNED BY   

	 	)
	 
	 	 
	for and on behalf of

	 	)
	CDH COURTYARD LIMITED

	 	)
	 
	 	 
	in the presence of :

	 	)

Address:

c/o CDH Investments

2601, 26th Floor, Lippo Centre Tower 2,

89, Queensway, Admiralty,

Hong Kong

Tel: +852 2810 7003

Fax: +852 2801 7083

Attention: Chief Financial Officer

Signature Page to Shareholders Agreement

 

 

	 	 	 
	SIGNED BY     

	 	)
	 
	 	 
	for and on behalf of

	 	)
	PINPOINT CAPITAL 2006 A LIMITED

	 	)
	 
	 	 
	in the presence of :

	 	)

Address:

299 Bisheng Road, Suite 13-101

Zhangjiang, Shanghai 201204

People’s Republic of China

Tel: +86 21 5080 7651

Fax: +86 21 5080 1333

Signature Page to Shareholders Agreement

 

 

	 	 	 
	SIGNED BY

	 	) 
	 
	 	 
	for and on behalf of

	 	)  Jeffery Lee CFO
	NORTHERN LIGHT VENTURE

	 	)
	FUND, L.P.

	 	)
	 
	 	 
	in the presence of :

	 	) 
	 
	 	 
	Address:
	 	 
	 
	 	 
	c/o Northern Light Venture Capital
	 	 
	2440 Sand Hill Road Suite 201
	 	 
	Menlo Park CA 94025 USA
	 	 
	Tel: +1 650-585-5460
	 	 
	Fax: +1 650-585-5451
	 	 
	 
	 	 
	SIGNED BY

	 	)  
	 
	 	
	for and on behalf of

	 	)  Jeffery Lee CFO
	NORTHERN LIGHT PARTNERS

	 	)
	FUND, L.P.

	 	)
	 
	 	 
	in the presence of :

	 	) 
	 
	 	 
	Address:
	 	 
	 
	 	 
	c/o Northern Light Venture Capital
	 	 
	2440 Sand Hill Road Suite 201
	 	 
	Menlo Park CA 94025 USA
	 	 
	Tel: +1 650-585-5460
	 	 
	Fax: +1 650-585-5451
	 	 
	 
	 	 
	SIGNED BY

	 	) 
	 
	 	 
	for and on behalf of

	 	)  Jeffery Lee CFO
	NORTHERN LIGHT STRATEGIC

	 	)
	FUND, L.P.

	 	)
	 
	 	 
	in the presence of :

	 	) 
	 
	 	 
	Address:
	 	 
	 
	 	 
	c/o Northern Light Venture Capital
	 	 
	2440 Sand Hill Road Suite 201
	 	 
	Menlo Park CA 94025 USA
	 	 
	Tel: +1 650-585-5460
	 	 
	Fax: +1 650-585-5451
	 	 

Signature Page to Shareholders Agreement

 

 

	 	 	 	 
	SIGNED BY

	 	)	 
	 
	 	 	 
	for and on behalf of

	 	)	 
	IDG-ACCEL CHINA GROWTH FUND

	 	)
	GP ASSOCIATES LTD.

	 	)
	 
	 	 	 
	for and on behalf of

	 	)	 
	IDG-ACCEL CHINA GROWTH FUND

	 	)	 
	ASSOCIATES L.P.

	 	)	 
	 
	 	 	 
	for and on behalf of

	 	)	 
	IDG-ACCEL CHINA GROWTH FUND L.P.

	 	)	 
	 
	 	 	 
	in
the presence of :  

	 	)	 
	 
	 	 	 
	Address:
	 	 	 
	 
	 	 	 
	c/o IDG VC Management Ltd.
	 	 	 
	10/F Effectual Building
	 	 	 
	16 Hennessy Road
	 	 	 
	Wanchai, Hong Kong
	 	 	 
	Fax: (852) 25291619
	 	 	 
	 
	 	 	 
	SIGNED BY

	 	)	 
	 
	 	 	 
	for and on behalf of

	 	)	 
	IDG-ACCEL CHINA GROWTH FUND

	 	)
	GP ASSOCIATES LTD.

	 	)
	 
	 	 
	for and on behalf of

	 	)
	IDG-ACCEL CHINA GROWTH FUND

	 	)
	ASSOCIATES L.P.

	 	)
	 
	 	 	 
	for and on behalf of

	 	)	 
	IDG-ACCEL CHINA GROWTH FUND-A L.P.

	 	)	 
	 
	 	 	 
	in the presence of : 

	 	)	 
	 
	 	 	 
	Address:
	 	 	 
	c/o IDG VC Management Ltd.
	 	 	 
	10/F Effectual Building
	 	 	 
	16 Hennessy Road
	 	 	 
	Wanchai, Hong Kong
	 	 	 
	Fax: (852) 25291619
	 	 	 

Signature Page to Shareholders Agreement

 

 

	 	 	 	 
	SIGNED BY

	 	)	 
	 
	 	 	 
	for and on behalf of

	 	)	 
	IDG-ACCEL CHINA INVESTORS

	 	)
	ASSOCIATES LTD.

	 	)
	 
	 	 	 
	for and on behalf of

	 	)	 
	IDG-ACCEL CHINA INVESTORS L.P.

	 	)	 
	 
	 	 	 
	in
the presence of :  

	 	)	 
	 
	 	 	 
	Address:
	 	 	 
	c/o IDG VC Management Ltd.
	 	 	 
	10/F Effectual Building
	 	 	 
	16 Hennessy Road
	 	 	 
	Wanchai, Hong Kong
	 	 	 
	Fax: (852) 25291619
	 	 	 

Signature Page to Shareholders Agreement

 

 

LIST OF EXHIBITS

Exhibit A            Parties to the Agreement

Exhibit B            Corporate Information of the Company

Exhibit C            Deed of Adherence

Exhibit D            Irrevocable Proxy

Exhibit E            Form of Monthly Report

 

 

EXHIBIT A

PARTIES TO THE AGREEMENT

ORDINARY HOLDERS:

WINNER CROWN HOLDINGS LIMITED, a company incorporated in British Virgin Islands under company No.
618532 having its registered office at Akara Bldg., 24 De Castro Street, Wickhams Cay I, Road
Town, Tortola, British Virgin Islands

MR. JOHN JIONG WU, (United States passport number: 302014663), 774 Mays Blvd. #Ste 10 — 337,
Incline Village, NV 89452, USA

SERIES A HOLDERS:

POWERHILL HOLDING LIMITED, a company incorporated in British Virgin Islands under company No.
571975 having its registered office at P.O. Box 957, Offshore Incorporations Centre, Road Town,
Tortola, British Virgin Islands

MR. JOHN JIONG WU, (United States passport number: 302014663), 774 Mays Blvd. #Ste 10 — 337,
Incline Village, NV 89452, USA

INVESTORS AND SERIES B HOLDERS:

CHENGWEI PARTNERS, L.P., an exempted limited partnership organized and existing under the laws of
the Cayman Islands.

CHENGWEI VENTURES EVERGREEN FUND, L.P., an exempted limited partnership organized and existing
under the laws of the Cayman Islands.

CHENGWEI VENTURES EVERGREEN ADVISORS FUND, LLC, an exempted limited liability company organized
and existing under the laws of the Cayman Islands.

CDH COURTYARD LIMITED, a company incorporated under the laws of the British Virgin Islands.

PINPOINT CAPITAL 2006 A LIMITED, a company incorporated in the Territory of the British Virgin
Islands.

NORTHERN LIGHT VENTURE FUND, L.P., an exempted limited partnership organized and existing under
the laws of the Cayman Islands.

NORTHERN LIGHT PARTNERS FUND, L.P., an exempted limited partnership organized and existing under
the laws of the Cayman Islands.

NORTHERN LIGHT STRATEGIC FUND, L.P., an exempted limited partnership organized and existing under
the laws of the Cayman Islands.

IDG-ACCEL CHINA GROWTH FUND L.P., an exempted limited partnership organized and existing under
the laws of the Cayman Islands.

i

 

IDG-ACCEL CHINA GROWTH FUND-A L.P., an exempted limited partnership organized and existing under
the laws of the Cayman Islands.

IDG-ACCEL CHINA INVESTORS L.P., an exempted limited partnership organized and existing under the
laws of the Cayman Islands.

FOUNDER:

MR. QI JI, (PRC ID card no. 31010419661010057x), Room 401 No. 5 Lane 99, Gui Lin Street East,
Shanghai, China.

CO-FOUNDERS:

MS. TONG TONG ZHAO, (Canadian passport number: JW698597), 5-22C, 128 Ziyun Road, Shanghai, 200051,
P.R.China

MR. JOHN JIONG WU, (United States passport number: 302014663), 774 Mays Blvd. #Ste 10 — 337,
Incline Village, NV 89452, USA

ii

 

 

EXHIBIT B

Corporate Information of the Company

Company No.: 179930

COMPANY’S PROFILE

	 	 	 	 	 	 	 
	1.1

	 	Name of Company
	 	:
	 	China Lodging Group, Limited
	 
	 	 	 	 	 	 
	1.2

	 	Date of Incorporation
	 	:
	 	4th January 2007
	 
	 	 	 	 	 	 
	1.3

	 	Registered Address
	 	:
	 	the office of Offshore Incorporations
	 

	 	 	 	 	 	(Cayman) Limited, Scotia Centre, 4th Floor, P.O.
	 

	 	 	 	 	 	Box 2804, George Town, Grand Cayman,
	 

	 	 	 	 	 	Cayman Islands
	 
	 	 	 	 	 	 
	1.4

	 	Directors
	 	:
	 	Mr. John Jiong WU
	 

	 	 	 	 	 	Mr. Qi JI
	 

	 	 	 	 	 	Ms. Tong Tong ZHAO
	 

	 	 	 	 	 	Ms. Ping PING
	 

	 	 	 	 	 	Mr. Yan HUANG
	 
	 	 	 	 	 	 
	1.5

	 	Shareholdings	 	:
	 	 
	 
	 	 	 	 	 	 
	 	 	Share Capital: US$ 20,000 divided into 200,000,000 Shares at a par value of US$0.0001 each.
	 
	 	 	 	 	 	 
	 	 	Issued Share Capital

i 

 

CLGL Capital Structure

Please see the attached.

ii

 

 

EXHIBIT C

DEED OF ADHERENCE

THIS DEED is made the {*} day of {*}

BETWEEN

	(1)	 	The Person whose name and address appears in Part 1 of Schedule 1 (“New Shareholder”);

	(2)	 	[The Person whose name and address appears in Part 2 of Schedule 1 (“Transferor”);]

	(3)	 	China Lodging Group, Limited, a company incorporated in and existing under the laws of the
Cayman Islands and whose registered office is situate at the office of Offshore Incorporations
(Cayman) Limited, Scotia Centre, 4th Floor, P.O. Box 2804, George Town, Grand Cayman, Cayman
Islands (the “Company”).

WHEREAS

	(A)	 	This Deed is supplemental to an amended and restated shareholders’ agreement date June 20,
2007 relating to the holding of Shares in the Company and made between the Company and certain
parties listed on Exhibit A thereto (the “Other Parties”) (the “Principal Agreement”).

	(B)	 	The New Shareholder has agreed to [purchase from the Transferor / subscribe from the
Company] Shares in the Company as more particularly set out in Schedule 3.

	(C)	 	The New Shareholder has agreed to execute this Deed as required pursuant to the terms of the
Principal Agreement.

NOW THIS DEED WITNESSETH as follows :-

	1.	 	Adherence

	1.1	 	The New Shareholder hereby acknowledges undertakes and covenants with the Company and the
Other Parties that, with effect on and from the date of this Deed, the New Shareholder shall be
bound by and shall observe and perform all the terms and conditions and obligations of the
Principal Agreement to be observed and performed as if the New Shareholder had at all times been
a party thereto and named therein as a Shareholder (including, where applicable, in place of or
on a joint and several basis with the Transferor).

	 	 	[The New Shareholder further agrees and undertakes with the Company and the Other Parties
that, if the Transferor remains a Shareholder following the transfer of Shares described
in recital (B) above, then the New Shareholder shall, with effect on and from the date of
this Deed, assume all obligations and liabilities expressed to be assumed on the part of
the Transferor under the Principal Agreement on a joint and several basis with the
Transferor.]

	 	 	[The New Shareholder further agrees and undertakes with the Company and the Other Parties
that the New Shareholder shall be deemed a Management Holder under the Principal
Agreement for all purposes.]

	1.2	 	The Company acknowledge that, as from the Effective Date, the provisions of the Principal
Agreement shall enure for the benefit of and shall be enforceable by the New Shareholder as if
he had at all times been a party thereto and named as a Shareholder therein.

	2.	 	Interpretation

	2.1	 	In this Deed where the context so admits :

 

 

	 	(A)	 	terms and expressions defined in the Principal Agreement shall bear
the same meanings in this Deed unless the context requires otherwise; and
	 
	 	(B)	 	references to clause(s) and schedule(s) are references to clause(s)
and schedule(s) of this Deed and references to this Deed shall include the schedule.

	3.	 	Notices
	 
	3.1	 	Any notice to be served on the New Shareholder shall be served on the New Shareholder at
the address, facsimile number or telex number of the New Shareholder set out in Part 1 of Schedule 1
in accordance with the terms of this Deed.
	 
	4.	 	Miscellaneous
	 
	4.1	 	The provisions of clauses 13.1 (Notices) and 13.3 (Governing Law) of the Principal
Agreement shall apply mutates mutandis to this Deed as if set out herein and as if references therein to
“this Agreement” were references to this Deed.

IN
WITNESS WHEREOF this Deed has been executed the day and year first above written.

Schedule 1

Part 1:

(Particulars of New Shareholder)

Name of New Shareholder :

Address :

Facsimile No. :

Part 2:

(Particulars of Transferor)

Name of Transferor :

Address :

Facsimile No. :

Schedule 2

(Particulars of the Shares to be [transferred / issued and allotted])

	 		
	Number of Shares	 	Class

EXECUTION PAGE

Executed as a Deed : if by an individual then to be SIGNED, SEALED and DELIVERED by the
individual / if by a corporation then SEAL with the COMMON SEAL and executed in accordance with
its articles and resolution of the board

 

 

EXHIBIT D

IRREVOCABLE PROXY

     The undersigned shareholder of China Lodging Group, Limited, a company incorporated in the
Cayman Islands as company No. 179930 having its registered office at the office of Offshore
Incorporations (Cayman) Limited, Scotia Centre, 4th Floor, P.O. Box 2804, George Town, Grand
Cayman, Cayman Islands (the “Company”), hereby irrevocably (to the fullest extent permitted by the
applicable law) appoints and constitutes [Insert name of Investor] (the “Proxy Holder”), the
attorney and proxy of the undersigned with full power of substitution and re-substitution, to the
full extent of the undersigned’s rights with respect to (i) [Insert number of shares] “Put Option
Shares,” as such term is defined in the Amended and Restated Shareholders Agreement dated as of
June 20, 2007 by and among the Company, the undersigned, the Proxy Holder and certain other
parties thereto (the “Shareholders Agreement”),
acquired by the undersigned pursuant to Section 10
of the Shareholders Agreement, and (ii) any other shares in the capital stock of the Company with
respect to which such Put Option Shares shall be converted or exchanged thereto or distributed
thereon (the shares referred to in clauses (i) and (ii), collectively, the “Shares”). Upon the
execution hereof, all prior proxies given by the undersigned with respect to any of the Shares are
hereby revoked, and no subsequent proxies will be given with respect to any of the Shares. This
proxy is irrevocable.

     Until the Expiration Date (as defined herein below) and with respect to any vote, written
resolution, consent or other instrument, whether at any meeting or adjournment thereof, however
called, or in any other context, in which the holders of Series B Preferred Shares, par value
US$0.0001 per share, of the Company (the “Series B Preferred Shares”) make any determination as a
separate class of equity securities of the Company (each, a “Vote”), the Proxy Holder will be
empowered, and may exercise this proxy, to vote the Shares in such Vote on all matters to be
decided in such Vote.

     Any obligation of the undersigned hereunder shall be binding upon the heirs, successors and
assigns of the undersigned (including any transferee of any of the Shares).

     This proxy shall terminate upon the termination of the Shareholders Agreement (the
“Expiration Date”).

Dated: [                                        ]

[Insert Founder’s name and signature block]

 

 

EXHIBIT E

FORM OF MONTHLY REPORT

See attached.

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