Document:

exv10w1

Exhibit 10.1

THIS AGREEMENT CONSTITUTES PART OF A PROSPECTUS COVERING

SECURITIES REGISTERED UNDER THE SECURITIES ACT OF 1933, AS

AMENDED. THE COMMON SHARES OF THE COMPANY ARE LISTED ON THE

NEW YORK STOCK EXCHANGE.

February 16, 2011

Attn: [____________]

PolyOne Corporation

POLYONE CORPORATION INCENTIVE AWARDS

Dear [_________________]:

               Subject to the terms and conditions of the 2010 Equity and Performance Incentive Plan (the
“Plan”) and this letter agreement (this “Agreement”), the Compensation Committee of the Board of
Directors (the “Committee”) of PolyOne Corporation (“PolyOne”) has granted to you, as of February
16, 2011, the following award(s) (collectively, the “Incentive Awards”):

	 	•	 	Stock-Settled Stock Appreciation Rights (“SARs”) in respect of an aggregate of
[_____] common shares of PolyOne, having a par value of $0.01 per share (the
“Common Shares”). The price (the “Base Price”) to be used as the basis for
determining the Spread (as defined on Schedule A) upon exercise of the SAR
is $_____, the Market Value per Share on February 16, 2011. The SARs shall become
exercisable in accordance with the terms set forth on Schedule A attached
hereto.
	 
	 	•	 	[_____] restricted stock units (the “Restricted Stock Units”), which shall
become non-forfeitable in accordance with the terms set forth on Schedule B
attached hereto. Each Restricted Stock Unit shall represent one hypothetical
Common Share and shall at all times be equal in value to one Common Share.
	 
	 	•	 	[_____] performance units (the “Performance Units”), with each such Performance
Unit being equal in value to $1.00, payment of which depends on PolyOne’s
performance as set forth on Schedule C attached hereto and in your
Statement of Performance Goals.

               A copy of the Plan is available for your review through the Corporate Secretary’s office.
Unless otherwise indicated, the capitalized terms used in this Agreement (including the Schedules
attached hereto) shall have the same meanings as set forth in the Plan.

	1.	 	Non-Assignability. The Incentive Awards are personal to you and are not transferable
by you other than by will or the laws of descent and distribution. Any purported transfer or
encumbrance in violation of the provisions of this Section 1 shall be void, and the other
party to any such purported transaction shall not obtain any right to or interest in such
Incentive Awards.

 

 

	2.	 	Adjustments. In the event of any change in the number of Common Shares by reason of
a merger, consolidation, reorganization, recapitalization, or similar transaction, or in the
event of a stock dividend, stock split, or distribution to shareholders (other than normal
cash dividends), the number and class of shares subject to outstanding Incentive Awards, the
Base Price applicable to outstanding SARs, and other value determinations, if any, applicable
to outstanding SARs will be adjusted. Such adjustment shall be made automatically on the
customary arithmetical basis in the case of any stock split, including a stock split effected
by means of a stock dividend, and in the case of any other dividend paid in Common Shares. If
any such transaction or event occurs, the Committee may provide in substitution for
outstanding Incentive Awards such alternative consideration (including, without limitation, in
the form of cash, securities or other property) as it may determine to be equitable in the
circumstances and may require in connection therewith the surrender of the Incentive Awards
subject to this Agreement. No adjustment provided for in this Section 2 will require PolyOne
to issue any fractional shares.
	 
	3.	 	Miscellaneous.

	 	(a)	 	The contents of this Agreement are subject in all respects to the terms and
conditions of the Plan as approved by the Board and the shareholders of PolyOne, which
are controlling. The interpretation and construction by the Board and/or the Committee
of any provision of the Plan or this Agreement shall be final and conclusive upon you,
your estate, executor, administrator, beneficiaries, personal representative and
guardian and PolyOne and its successors and assigns.
	 
	 	(b)	 	The grant of the Incentive Awards is discretionary and will not be considered
to be an employment contract or a part of your terms and conditions of employment or of
your salary or compensation. Information about you and your participation in the Plan,
including, without limitation, your name, home address and telephone number, date of
birth, social insurance number or other identification number, salary, nationality, job
title, any shares of stock or directorships held in PolyOne, and details of the
Incentive Awards or other entitlement to shares of stock awarded, cancelled, exercised,
vested, unvested or outstanding in your favor may be collected, recorded, held, used
and disclosed by PolyOne and any of its Subsidiaries and any non-PolyOne entities
engaged by PolyOne to provide services in connection with this grant (a “Third Party
Administrator”), for any purpose related to the administration of the Plan. You
understand that PolyOne and its Subsidiaries may transfer such information to Third
Party Administrators, regardless of whether such Third Party Administrators are located
within your country of residence, the European Economic Area or in countries outside of
the European Economic Area, including the United States of America. You consent to the
processing of information relating to you and your participation in the Plan in any one
or more of the ways referred to above. This consent may be withdrawn at any time in
writing by sending a declaration of withdrawal to PolyOne’s chief human resources
officer.

2

 

	 	(c)	 	Any amendment to the Plan shall be deemed to be an amendment to this Agreement
to the extent that the amendment is applicable hereto. The terms and conditions of
this Agreement may not be modified, amended or waived, except by an instrument in
writing signed by a duly authorized executive officer at PolyOne. Notwithstanding the
foregoing, no amendment shall adversely affect your rights under this Agreement without
your consent.
	 
	 	(d)	 	[It is a condition to your receipt of the Incentive Awards that you execute and
agree to the terms of PolyOne’s current and applicable Employee Agreement (the
“Employee Agreement”). If you do not sign and return the Employee Agreement to PolyOne
Human Resources within 30 days of your receipt of this Grant of Incentive Awards, this
Grant of Incentive Awards and any rights to the Incentive Awards will terminate and
become null and void.]
	 
	 	[(d)/(e)] 	 	By signing this Agreement, you acknowledge that you have entered into an Employee
Agreement [(the “Employee Agreement”)] with PolyOne. You understand that, as set forth
in Paragraph 5 and Attachment A of the Employee Agreement, you have agreed not to engage
in certain prohibited practices in competition with PolyOne following the termination of
your employment (hereinafter referred to as the “Covenant Not to Compete”). You further
acknowledge that as consideration for entering into the Covenant Not to Compete, PolyOne
is providing you the opportunity to participate in PolyOne’s long-term incentive plan and
receive the award set forth in this Agreement. You understand that eligibility for
participation in the long-term incentive plan was conditioned upon entering into the
Covenant Not to Compete. You further understand and acknowledge that you would have been
ineligible to participate in the long-term incentive plan and receive this award had you
decided not to agree to the Covenant Not to Compete. You understand that the
acknowledgment contained in this sub-section is a part of the Employee Agreement and is
to be interpreted in a manner consistent with its terms.

	4.	 	Notice. All notices under this Agreement to PolyOne must be delivered personally or
mailed to PolyOne Corporation at PolyOne Center, Avon Lake, Ohio 44012, Attention: Corporate
Secretary. PolyOne’s address may be changed at any time by written notice of such change to
you. Also, all notices under this Agreement to you will be delivered personally or mailed to
you at your address as shown from time to time in PolyOne’s records.
	 
	5.	 	Compliance with Section 409A of the Code.

	 	(a)	 	To the extent applicable, it is intended that this Agreement (including the
Schedules attached hereto) and the Plan comply with the provisions of Section 409A of
the Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code do
not apply to you. This Agreement and the Plan shall be administered in a manner
consistent with this intent.

3

 

	 	(b)	 	Reference to Section 409A of the Code will also include any regulations or
other formal guidance promulgated with respect to such Section by the U.S. Department
of the Treasury or the Internal Revenue Service.

	6.	 	Counterparts. This Agreement may be executed in separate counterparts, each of which
shall be deemed to be an original and both of which taken together shall constitute one and
the same agreement.
	 
	7.	 	Severability. If one or more of the provisions of this Agreement (including the
Schedules attached hereto) is invalidated for any reason by a court of competent jurisdiction,
any provision so invalidated shall be deemed to be separable from the other provisions hereof,
and the remaining provisions hereof shall continue to be valid and fully enforceable.

          This Agreement (including the Schedules attached hereto and the Statement of Performance
Goals), and the terms and conditions of the Plan, shall bind, and inure to the benefit of you, your
estate, executor, administrator, beneficiaries, personal representative and guardian and PolyOne
and its successors and assigns.

	 	 	 	 	 
	 	Very Truly Yours,

POLYONE CORPORATION

 	 
	 	By:  	 	 
	 	 	Kenneth M. Smith, Senior Vice President,  	 
	 	 	Chief Information and Human Resources Officer 	 
	 

Accepted:

______________________

_________________ (Date)

4

 

SCHEDULE A – SARs

	1.	 	Vesting and Exercise of SARs.

	 	(a)	 	Subject to the provisions of the Plan and the Agreement (including this
Schedule A), the SARs will expire on February 16, 2021 and shall be exercisable
on or before February 16, 2021. Subject to Sections 2 and 3 of this Schedule
A, vesting of the SARs will occur as follows, provided that you have been in the
continuous employ of PolyOne or a Subsidiary on each such vesting date specified below
(except as provided in Section 3(ii) of this Schedule A):

	 	•	 	One-third of the SARs will vest on February 16, 2012;
	 
	 	•	 	One-third of the SARs will vest on February 16, 2013; and
	 
	 	•	 	The remaining one-third of the SARs will vest on February 16, 2014.

	 	(b)	 	The SARs may be exercised as provided in Section 1(b) of this Schedule
A as to all or any of the SARs that are exercisable in accordance with this
Schedule A, as long as each exercise covers the lesser of the number of fully
vested SARs or 1,000 SARs. To exercise the SARs, you must submit an SAR Exercise Form
to PolyOne signed by you stating the number of SARs you are exercising at that time and
certifying that you are in compliance with the terms and conditions of the Plan.
PolyOne will then issue you the number of Common Shares determined under Section 1(c)
of this Schedule A.
	 
	 	(c)	 	The number of Common Shares to be issued will be determined by calculating (i)
the difference between the Market Value per Share on the date of exercise and the Base
Price (the “Spread”); (ii) multiplied by the number of SARs exercised; (iii) less any
withholding taxes (federal, state, local or foreign taxes) PolyOne determines are to be
withheld in accordance with the Plan and with applicable law. The result of this
calculation will then be divided by the Market Value per Share on the date of exercise
to determine the number of Common Shares to be issued, rounded down to the nearest
whole share. In no event will you be entitled to acquire a fraction of one Common
Share pursuant to this Schedule A.
	 
	 	(d)	 	Unless otherwise determined by the Board and so long as it does not violate
applicable law, if, on February 16, 2021, (i) the Market Value per Share exceeds the
Base Price, (ii) any SARs remain unexercised, and (iii) the SARs have not expired, any
SARs that remain unexercised will be deemed to have been exercised by you on such date.
In such event, PolyOne will issue you a number of Common Shares in accordance with
Section 1(c) of this Schedule A.
	 
	 	(e)	 	The SARs are exercisable during your lifetime only by you or by your guardian
or legal representative.

A-1

 

	2.	 	Vesting Upon a Change of Control. If a Change of Control occurs during the term of
the SARs, the SARs, to the extent not previously fully exercisable, will become immediately
exercisable in full.
	 
	3.	 	Retirement, Disability or Death. If your employment with PolyOne or a Subsidiary
terminates before the expiration of the SARs due to (a) retirement at age 55 or older with at
least 10 years of service, (b) retirement at age 58 or older with at least 5 years of service,
(c) permanent and total disability (as defined under the relevant disability plan or program
of PolyOne or a Subsidiary in which you then participate) or (d) death, then:

	 	(i)	 	Any SARs that have vested prior to the date of the termination
of your employment as provided in Section 1(a) above, but have not been
exercised as of the time of the termination of your employment, may be
exercised in whole or in part, for the remainder of their term, but in no event
beyond February 16, 2021, after which, subject to Section 1(d) of this
Schedule A, such SARs will terminate; and
	 
	 	(ii)	 	A pro-rata portion of any SARs that remain unvested as of the
time of the termination of your employment will vest, based on the number of
days that you were employed by PolyOne or a Subsidiary during the period
commencing on the February 17th immediately preceding the date of
the termination of your employment and ending on February 16, 2014. You or
your executor or administrator, as the case may be, will be entitled to
exercise, in whole or in part, such vested SARs for the remainder of their
term, but in no event beyond February 16, 2021, after which, subject to Section
1(d) of this Schedule A, such SARs will terminate.

	4.	 	Termination Following Change of Control.

	 	(a)	 	Subject to Section 1(d) of this Schedule A, if your employment with
PolyOne or a Subsidiary terminates within one year following a Change of Control
because (i) your employment is involuntarily terminated without “Cause” (as defined
below), or (ii) you terminate your employment for “Good Reason” (as defined below),
notwithstanding anything herein to the contrary, the SARs may be exercised in whole or
in part at any time and from time to time for the remainder of their term, but in no
event beyond February 16, 2021, after which the SARs will terminate.
	 
	 	(b)	 	For purposes of Section 4(a) above:

	 	(i)	 	If you are a party to a Management Continuity Agreement,
“Cause” shall mean “Cause” and “Good Reason” shall mean “Good Reason,” each as
defined in your Management Continuity Agreement;
	 
	 	(ii)	 	If you are not a party to a Management Continuity Agreement,
“Cause” shall mean: (A) the willful and continued failure by you to
substantially perform your duties with PolyOne or a Subsidiary, which failure
causes material and demonstrable injury to PolyOne or a Subsidiary (other than
any such failure resulting from your incapacity due to physical or mental

A-2

 

	 	 	 	illness), after a demand for substantial performance is delivered to you by
PolyOne or a Subsidiary which specifically identifies the manner in which you
have not substantially performed your duties, and after you have been given a
period (hereinafter known as the “Cure Period”) of at least thirty (30) days to
correct your performance, or (B) the willful engaging by you in other gross
misconduct materially and demonstrably injurious to PolyOne or a Subsidiary.
For purposes of this Section 4(b)(ii) of this Schedule A, no act, or
failure to act, on your part shall be considered “willful” unless conclusively
demonstrated to have been done, or omitted to be done, by you not in good faith
and without reasonable belief that your action or omission was in the best
interests of PolyOne or a Subsidiary; and
	 
	 	(iii)	 	If you are not a party to a Management Continuity Agreement,
“Good Reason” shall mean, without your express written consent: (A) your
permanent assignment to a new work location that would either increase your
routine one-way commute by fifty (50) or more miles, measured by the shortest
commonly traveled routes between your then-current residence and new reporting
or work location, or make your routine one-way commute sixty (60) or more
miles, or (B) a reduction in your base salary, target annual incentive amount
or employer-provided benefits, if immediately after the reduction the aggregate
total of your base salary, target annual incentive amount and value of
employer-provided benefits is less than eighty percent (80%) of the aggregate
total of your salary, target annual incentive amount and the value of
employer-provided benefits immediately prior to the Change of Control.

	5.	 	Other Termination. Subject to Section 1(d) of this Schedule A, if your
employment with PolyOne or a Subsidiary terminates before the expiration of the SARs for any
reason other than as set forth in Sections 3 or 4 above, the SARs that are exercisable shall
be limited to the number of SARs that could have been exercised under Section 1 above at the
time of your termination of employment and shall terminate as to the remaining SARs and may be
exercised as to such limited number of SARs at any time within ninety (90) days of your
termination of employment, but in no event beyond February 16, 2021, after which the SARs will
terminate.

A-3

 

SCHEDULE B – Restricted Stock Units

	1.	 	Vesting of Restricted Stock Units.

	 	(a)	 	Subject to the provisions of the Plan and the Agreement (including this
Schedule B) and provided that you have been in the continuous employ of PolyOne
or a Subsidiary from February 16, 2011 until February 16, 2014 (the “Restriction
Period”), the Restricted Stock Units shall become non-forfeitable on February 16, 2014
(the “Vesting Date”).
	 
	 	(b)	 	Notwithstanding the provisions of Section 1(a) of this Schedule B, (i)
all of the Restricted Stock Units shall immediately become non-forfeitable if a Change
of Control occurs, and (ii) a pro-rata portion of the Restricted Stock Units shall
immediately become non-forfeitable if your employment terminates prior to February 16,
2014 due to (A) your retirement at age 55 or older with at least 10 years of service,
(B) your retirement at age 58 or older with at least 5 years of service, (C) your
permanent and total disability (as defined under the relevant disability plan or
program of PolyOne or a Subsidiary in which you then participate), or (D) your death,
such proration to be based on the portion of the Restriction Period during which you
were employed by PolyOne or a Subsidiary, and the remaining portion will be forfeited.

	2.	 	Other Termination. If your employment with PolyOne or a Subsidiary terminates before
the Vesting Date for any reason other than as set forth in Section 1(b)(ii) of this
Schedule B and before a Change of Control, the Restricted Stock Units will be
forfeited.
	 
	3.	 	Payment of Restricted Stock Units.

	 	(a)	 	The Restricted Stock Units that have become non-forfeitable pursuant to Section
1 of this Schedule B will be paid in Common Shares transferred to you within 10
business days following the Vesting Date, provided, however, that,
subject to Section 3(b) of this Schedule B, (i) in the event a Change of
Control occurs prior to the Vesting Date or (ii) in the event your employment
terminates on account of the reasons set forth in Section 1(b)(ii) of this Schedule
B prior to the Vesting Date, the Restricted Stock Units will be paid within 10
business days following such Change of Control or the date of the termination of your
employment, whichever applies. If PolyOne determines that it is required to withhold
any federal, state, local or foreign taxes from any payment, PolyOne will withhold
Common Shares with a Market Value per Share equal to the amount of these taxes from the
payment.
	 
	 	(b)	 	If the event triggering the right to payment under Section 3(a) of this
Schedule B does not constitute a permitted distribution event under Section
409A(a)(2) of the Code, then notwithstanding anything herein to the contrary, the
payment of Common Shares will be made to you, to the extent necessary to comply with
Section 409A of the Code, on the earliest of (i) your “separation from service” 

B-1

 

	 	 	 	with
PolyOne or a Subsidiary (determined in accordance with Section 409A) that occurs after
the event giving rise to payment; (ii) the Vesting Date; or (iii) your death. In
addition, if you are a “key employee” as determined pursuant to procedures adopted by
PolyOne in compliance with Section 409A of the Code and any payment of Common Shares
made pursuant to this Schedule B is considered to be a “deferral of
compensation” (as such phrase is defined for purposes of Section 409A of the Code) that
is payable upon your “separation from service” (within the meaning of Section 409A of
the Code), then the payment date for such payment shall be the date that is the tenth
business day of the seventh month after the date of your “separation from service” with
PolyOne or a Subsidiary (determined in accordance with Section 409A of the Code).

	4.	 	Dividend, Voting and Other Rights. You shall have no rights of ownership in the
Restricted Stock Units and shall have no right to vote them until the date on which the Restricted
Stock Units are transferred to you pursuant to Section 3 of this Schedule B. While the
Restricted Stock Units are still outstanding, on the date that PolyOne pays a cash dividend to
holders of Common Shares generally, you shall be entitled to a number of additional whole
Restricted Stock Units determined by dividing (a) the product of (i) the dollar amount of the cash
dividend paid per Common Share on such date and (ii) the total number of Restricted Stock Units
(including dividend equivalents paid thereon) previously credited to you as of such date, by (b)
the Market Value per Share on such date. Such dividend equivalents shall be subject to the same
terms and conditions and shall be settled or forfeited in the same manner and at the same time as
the Restricted Stock Units to which the dividend equivalents were credited.

B-2

 

SCHEDULE C — Performance Units

	1.	 	Performance Units.

	 	(a)	 	Subject to the provisions of the Plan and the Agreement (including this
Schedule C), your right to receive all or any portion of the Performance Units
will be contingent upon the achievement of certain management objectives (the
“Management Objectives”), as set forth in your Statement of Performance Goals. The
achievement of the Management Objectives will be measured during the period from
January 1, 2011 through December 31, 2013 (the “Performance Period”).
	 
	 	(b)	 	The Management Objectives for the Performance Period will be based solely on
achievement of performance goals relating to PolyOne’s Earnings per Share (“EPS”), as
defined in your Statement of Performance Goals.

	2.	 	Earning of Performance Units.

	 	(a)	 	The Performance Units shall be earned as follows:

	 	(i)	 	If, upon the conclusion of the Performance Period, EPS equals
or exceeds the threshold level, but is less than the 100% target level, as set
forth in the Performance Matrix contained in your Statement of Performance
Goals, a proportionate number of the Performance Units shall become earned, as
determined by mathematical interpolation and rounded up to the nearest whole
unit.
	 
	 	(ii)	 	If, upon the conclusion of the Performance Period, EPS equals
or exceeds the 100% target level, but is less than the maximum level, as set
forth in the Performance Matrix contained in your Statement of Performance
Goals, a proportionate number of the Performance Units shall become earned, as
determined by mathematical interpolation and rounded up to the nearest whole
unit.
	 
	 	(iii)	 	If, upon the conclusion of the Performance Period, EPS equals
or exceeds the maximum level, as set forth in the Performance Matrix contained
in your Statement of Performance Goals, 200% of the Performance Units shall
become earned.

	 	(b)	 	In no event shall any Performance Units become earned if actual performance
falls below the threshold level for EPS or if the Board does not certify that the
Management Objectives have been satisfied.
	 
	 	(c)	 	If the Committee determines that a change in the business, operations,
corporate structure or capital structure of PolyOne, the manner in which it conducts
business or other events or circumstances render the Management Objectives to 

C-1

 

	 	 	 	be
unsuitable, the Committee may modify such Management Objectives or the related levels
of achievement, in whole or in part, as the Committee deems appropriate;
provided, however, that no such action will be made in the case of a
Covered Employee where such action may result in the loss of the otherwise available
exemption of the award under Section 162(m) of the Code.
	 
	 	(d)	 	Subject to the provisions of Sections 3 and 4 of this Schedule C, your
right to receive any Performance Units is contingent upon your remaining in the
continuous employ of PolyOne or a Subsidiary through the payment date, which shall be a
date in 2014 determined by the Board and shall occur no later than March 15, 2014 (the
“Payment Date”). For awards to Covered Employees, the Committee shall only have the
ability and authority to reduce, but not increase, the amount of Performance Units that
become earned hereunder.

	3.	 	Change of Control. Subject to Section 6,

	 	(a)	 	if a Change of Control occurs prior to the end of the Performance Period,
PolyOne shall pay to you 100% of the Performance Units as soon as administratively
practicable after, but in all events no later than 30 days following, the Change of
Control; and
	 
	 	(b)	 	if a Change of Control occurs after the end of the Performance Period but on or
prior to the Payment Date, PolyOne shall pay to you the actual number of Performance
Units earned pursuant to Section 2(a) of this Schedule C as soon as
administratively practicable after, but in all events no later than 30 days following,
the Change of Control.

	4.	 	Retirement, Disability or Death. Subject to Section 6 of this Schedule C, if
your employment with PolyOne or a Subsidiary terminates prior to the Payment Date due to (a)
retirement at age 55 or older with at least 10 years of service, (b) retirement at age 58 or
older with at least 5 years of service, (c) permanent and total disability (as defined under
the relevant disability plan or program of PolyOne or a Subsidiary in which you then
participate) or (d) death, PolyOne shall pay to you or your executor or administrator, as the
case may be, a pro-rata portion of the actual number of Performance Units earned pursuant to
Section 2(a) of this Schedule C, with such proration to be based on the portion of the
Performance Period during which you were employed by PolyOne or a Subsidiary, on the Payment
Date.
	 
	5.	 	Other Termination. If your employment with PolyOne or a Subsidiary terminates before
the Payment Date for any reason other than as set forth in Section 4 above and before a Change
of Control, the Performance Units will be forfeited.
	 
	6.	 	Payment of Performance Units.

	 	(a)	 	Payment of any Performance Units that become earned as set forth herein will be
made in the form of cash. The amount of the cash payment to be made shall be
determined by multiplying (i) the number of Performance Units earned pursuant to
Sections 2, 3 or 4 above by (ii) $1.00. Except as provided in Sections 3 and 

C-2

 

	 	 	 	6(b) of
this Schedule C, payment will be made on the Payment Date. If PolyOne
determines that it is required to withhold any federal, state, local or foreign taxes
from any payment, PolyOne will withhold the amount of these taxes from the payment.
	 
	 	(b)	 	If the event triggering the right to payment under Section 3 or 4 above does
not constitute a permitted distribution event under Section 409A(a)(2) of the Code,
then notwithstanding anything herein to the contrary, the cash payment will be made to
you, to the extent necessary to comply with Section 409A of the Code, on the earliest
of (i) your “separation from service” with PolyOne or a Subsidiary (determined in
accordance with Section 409A) that occurs after the event giving rise to payment; (ii)
the Payment Date; or (iii) your death. In addition, if you are a “key employee” as
determined pursuant to procedures adopted by PolyOne in compliance with Section 409A of
the Code and any payment made pursuant to this Schedule C is considered to be a
“deferral of compensation” (as such phrase is defined for purposes of Section 409A of
the Code) that is payable upon your “separation from service” (within the meaning of
Section 409A of the Code), then the payment date for such payment shall be the date
that is the tenth business day of the seventh month after the date of your “separation
from service” with PolyOne or a Subsidiary (determined in accordance with Section 409A
of the Code).

C-3Exhibit 4.18

Exhibit 4.18

DATED THE 27TH DAY OF APRIL 2011

	(1)	 	INSCOM HK LIMITED

and

	(2)	 	INSCOM GROUP LIMITED

and

	(3)	 	INSCOM HOLDING LIMITED

and

	(4)	 	APOLLO & MUSE HOLDING LIMITED

and

	(5)	 	CLEVER STAR HOLDINGS LIMITED

and

	(6)	 	CISG HOLDINGS LIMITED

SUPPLEMENTAL SUBSCRIPTION

and SHARE PURCAHSE

and SHAREHOLDERS AGREEMENT

relating to

INSCOM HOLDING LIMITED

STEVENSON, WONG & CO.

4/F & 5/F, Central Tower

No. 28 Queen’s Road Central

Hong Kong

Ref.: LFC/HLO(P)/68611/09(Comm)

 

 

 

THIS SUPPLEMENTAL SUBSCRIPTION AND SHARES PURCHASE AND SHAREHOLDERS AGREEMENT is made on the
27th April 2011

BETWEEN:-

	(1)	 	INSCOM HK LIMITED, a company incorporated under the laws of the HKSAR (under company number
1457225) whose registered office is situate at 12/F Ruttonjee House, 11 Duddell Street,
Central, Hong Kong. (“INSCOM HK”);

	(2)	 	INSCOM GROUP LIMITED, a company incorporated under the laws of the British Virgin Islands
(under company number 1584027) whose registered office is situate at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands (the “INSCOM BVI”);

	(3)	 	INSCOM HOLDING LIMITED, a company incorporated under the laws of the British Virgin Islands
(under company number 1584021) whose registered office is situate at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands (the “Company”);

	(4)	 	APOLLO & MUSE HOLDING LIMITED, a company incorporated under the laws of the British Virgin
Islands (under company number 1584020) whose registered office is situate at P.O. Box 957,
Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands (“Apollo”);

	(5)	 	CLEVER STAR HOLDINGS LIMITED, a company incorporated under the laws of the British Virgin
Islands (under company number 1593866) whose registered office is situate at P.O. Box 957,
Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands (“CSH”); and

	(6)	 	CISG HOLDINGS LTD., a company incorporated under the laws of the British Virgin Islands
(under company number 599853) whose registered office is situate at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands (“CISG” or “Subscriber”).

and is SUPPLEMENTAL to a subscription and shares purchase and shareholders agreement (the
“Principal Agreement”) relating to Inscom Holding Limited dated 29 July 2010 and made between the
parties hereto.

WHEREAS:-

	(A)	 	Pursuant to the Principal Agreement, the Subscriber has agreed to purchase and subscribe and
the Company has agreed to issue and allot the Subscriber such number of Subscription Shares
(as defined in the Principal Agreement) and Apollo has agreed to sell and transfer the Sale
 shares (as defined in the Principal Agreement) in accordance with the terms of the Principal
Agreement.

	(B)	 	Following further discussions between the parties to the Principal Agreement and having
regard to the prevailing circumstances, the parties have agreed to vary the terms of the
Principal Agreement on the terms and conditions as hereinafter provided.

 

2

 

	(C)	 	Apollo and CSH, together with the Company, INSCOM BVI and INSCOM HK, have entered into a
similar subscription and share purchase agreement (the “Further Share Purchase Agreement”)
relating to the Company on 29 October 2010 with two other subscribers, namely Wang Strategic
Capital Partners (II) Limited and Harbor Pacific Capital Partners I, LP (the “New
Subscribers”). The New Subscribers had, pursuant to the execution of the Further Share
Purchase Agreement, executed a Deed of Adherence to the effect that they shall perform,
assume, comply with and be bound by all the terms, covenants, obligations and provision in the
Principal Agreement.

	(D)	 	Apollo, CSH and the Company confirm that (i) the relevant terms in the Principal Agreement to
be amended by this Supplemental Agreement were not included in the Further Share Purchase
Agreement; and (ii) the relevant terms in the Principal Agreement as amended by this
Supplemental Agreement do not affect the rights and obligations of the New Subscribers under
the Principal Agreement and/or Further Share Purchase Agreement.

NOW, THEREFORE, the parties hereto agree as follows:-

Section 1 Interpretation. Words and expressions defined in the Principal Agreement shall,
unless the context otherwise requires, have the same meanings when used in this Supplemental
Agreement.

Section 2 Amendments to the Principal Agreement. With effect from the date of this
Supplemental Agreement, the terms of the Principal Agreement shall be deemed to be amended as
follows:

	(a)	 	Section 6.1 of the Principal Agreement shall be replaced by the following clause in its
entirety:-

“Section 6.1 Performance Benchmark.

	(a)	 	As an inducement to the Subscriber’s agreement to subscribe for the Subscription Shares, each
of Apollo, CSH and the Company hereby agrees to undertake to use its/his/her best endeavors to
achieve targets of Net Profit to be agreed for the financial years of 2011, 2012 and 2013
respectively.

	(b)	 	The exact targets of Net Profit shall be further negotiated and agreed among the Subscriber,
Apollo and CSH by 31 December 2011.

	(c)	 	If no agreement on applicable targets of Net Profit is made among CISG, Apollo and CSH by 31
December 2011, each of Apollo, CSH and the Company shall be deemed to have undertaken the
Subscriber to use its/his/her best endeavors to achieve the following targets:-

	 
	 	 	‘the Net Profit for the financial years of 2011, 2012 and 2013 shall not be less than
RMB 102,600,000, RMB 136,300,000 and RMB 170,200,000 respectively.’”

 

3

 

Section 3 Miscellaneous.

	(a)	 	Save as expressly amended or altered by this Supplemental Agreement, the Principal Agreement
shall continue in full force and effect and upon the same terms and conditions.

	(b)	 	The headings of the clauses of this Supplemental Agreement are inserted for convenience only
and shall not in any way affect the meaning or construction of any provision of this
Supplemental Agreement.

	(c)	 	In the event of any conflict between the provisions of the Principal Agreement and this
Supplemental Agreement, the provisions of this Supplemental Agreement shall prevail.

	(d)	 	This Supplemental Agreement may be executed by the parties hereto in counterparts and by
different parties on separate counterparts, each of which when so executed and delivered shall
be an original but all of which shall together constitute one and the same instrument.

	(e)	 	This Supplemental Agreement and the Principal Agreement constitute the entire and only
agreement between the parties hereto with respect to the subject matter hereof.

	(f)	 	Time shall be of the essence as regards any date or period mentioned in this Supplemental
Agreement, or any date or period substituted for the same by the agreement of the parties
otherwise.

	(g)	 	Section 12 (Miscellaneous) of the Principal Agreement shall be incorporated herein by
reference and shall apply mutatis mutandis to this Agreement.

[intentionally left blank]

 

 

 

IN WITNESS whereof this Supplemental Agreement has been executed on the date and year said above
written.

	 	 	 	 	 	 	 
	INSCOM HK
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	SIGNED BY Tian Yuan

	 	 	)	 	 	 
	a director, for and on behalf of

	 	 	)	 	 	/s/ Tian Yuan
	INSCOM HK LIMITED

	 	 	)	 	 	 
	in the presence of

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	/s/ Han Chunying
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	INSCOM BVI
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	SIGNED BY Tian Yuan

	 	 	)	 	 	 
	a director, for and on behalf of

	 	 	)	 	 	/s/ Tian Yuan
	INSCOM GROUP LIMITED

	 	 	)	 	 	 
	in the presence of

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	/s/ Han Chunying
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	The Company
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	SIGNED BY Tian Yuan

	 	 	)	 	 	 
	a director, for and on behalf of

	 	 	)	 	 	/s/ Tian Yuan
	INSCOM HOLDING LIMITED

	 	 	)	 	 	 
	in the presence of

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	/s/ Han Chunying
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Apollo
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	SIGNED BY Tian Yuan

	 	 	)	 	 	 
	authorized signatory for and on behalf

	 	 	)	 	 	/s/ Tian Yuan
	of APOLLO & MUSE HOLDING

	 	 	)	 	 	 
	LIMITED, in the presence of

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	/s/ Han Chunying
	 	 	 	 	 	 

 

 

 

	 	 	 	 	 	 	 
	CSH
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	SIGNED BY Feng Zhuojun

	 	 	)	 	 	 
	a director, for and on behalf of

	 	 	)	 	 	/s/ Feng Zhuojun
	CLEVER STAR HOLDINGS LIMITED

	 	 	)	 	 	 
	in the presence of

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	/s/ Zhu Jiusheng
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	CISG
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	SIGNED BY Hu Yinan

	 	 	)	 	 	 
	a director, for and on behalf of

	 	 	)	 	 	/s/ Hu Yinan
	CISG HOLDING LIMITED

	 	 	)	 	 	 
	in the presence of

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	/s/ Zhu Jiusheng
	 	 	 	 	 	 

 

 

 

DATED THE 29TH DAY OF JULY 2010

(1) INSCOM HK LIMITED

and

(2) INSCOM GROUP LIMITED

and

(3) INSCOM HOLDING LIMITED

and

(4) APOLLO & MUSE HOLDING LIMITED

and

(5) CLEVER STAR HOLDINGS LIMITED

and

(6) CISG HOLDINGS LTD

SUBSCRIPTION and SHARES PURCHASE

and SHAREHOLDERS AGREEMENT

relating to

INSCOM HOLDING LIMITED

STEVENSON, WONG & CO.

4/F & 5/F, Central Tower

No. 28 Queen’s Road Central

Hong Kong

Ref.: LFC/HLO(P)/68611/09(Comm)

 

 

 

THIS SUBSCRIPTION AND SHARES PURCHASE AND SHAREHOLDERS AGREEMENT is made on the 29th day
of July 2010.

BETWEEN:-

	(1)	 	INSCOM HK LIMITED, a company incorporated under the laws of the HKSAR (under company number
1457225) whose registered office is situate at 12/F Ruttonjee House, 11 Duddell Street,
Central, Hong Kong. (“INSCOM HK”);

	(2)	 	INSCOM GROUP LIMITED, a company incorporated under the laws of the British Virgin Islands
(under company number 1584027) whose registered office is situate at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands (“INSCOM BVI”);

	(3)	 	INSCOM HOLDING LIMITED, a company incorporated under the laws of the British Virgin Islands
(under company number 1584021) whose registered office is situate at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands (the “Company”);

	(4)	 	APOLLO & MUSE HOLDING LIMITED, a company incorporated under the laws of British Virgin
Islands (under company number 1584020) whose registered office is situate at P.O. Box 957,
Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands (“Apollo”);

	(5)	 	CLEVER STAR HOLDINGS LIMITED, a company incorporated under the laws of British Virgin Islands
(under company number 1593866) whose registered office is situate at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands (“CSH”);

	(6)	 	CISG HOLDINGS LTD., a company incorporated under the laws of the British Virgin Islands
(under company number 599853) whose registered office is situate at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands (“CISG” or “Subscriber”).

WHEREAS:-

	(A)	 	The Company is a private limited company incorporated and subsisting under the laws of the
British Virgin Islands and as at the date hereof has an authorized capital of US$50,000
divided into 50,000 shares of US$1.00 each, of which 10,000 Ordinary Shares have been issued
and fully paid. Corporate information of the Company is set out in Schedule 1 of this
Agreement.

 

 

 

	(B)	 	As at the date hereof, the Company is the legal and beneficial owner of the entire issued
share capital of INSCOM BVI, which in turn owns the entire issued share capital of INSCOM HK.
Corporate information of INSCOM BVI and INSCOM HK is set out in Schedules 3A and 3B of this
Agreement respectively. INSCOM HK owns the entire equity interests in
 (“Ying Si Kang”) as at the date hereof, which is a wholly
foreign owned enterprise incorporated in PRC. Corporate
information of Ying Si Kang is set out in Schedule 3C of this Agreement. Through the
structure of variable interests entities (“VIE”), Ying Si Kang has exercised effective
control and management over the following two PRC companies: -

	 	(i)	 	 (SZ Xinbao Investment); and

	 
	 	(ii)	 	 (SZ InsCom E-Commerce).

(SZ Xinbao Investment and SZ InsCom E-Commerce are collectively referred to as the “First
PRC Subsidiaries” and individually, a “First PRC Subsidiary”. The current corporate
information of each First PRC Subsidiary is set out in Schedule 3D of this Agreement.)

	(C)	 	CISG, a private limited company incorporated and subsisting under the laws of the British
Virgin Islands, is a wholly owned subsidiary of CNinsure Inc., a company incorporated in the
Cayman Islands and whose shares are listed on NASDAQ under symbol CISG.

	(D)	 	As at the date hereof, Apollo is legal and beneficial owner of 7,788 Ordinary Shares of the
Company constituting 77.88% of the entire issued share capital of the Company. Apollo has
agreed to sell and CISG has agreed to purchase the Sale Shares (as defined below) in
accordance with the terms of this Agreement.

	(E)	 	The Subscriber has agreed to subscribe and the Company has agreed to issue and allot to the
Subscriber such number of Subscription Shares (as defined below) in accordance with the terms
of this Agreement.

	(F)	 	Immediately upon Closing of the Subscription and Shares Purchase, CISG shall procure its
beneficial equity interests in the following PRC companies be transferred to Ying Si Kang or
its associated companies in the PRC: -

	 	(i)	 	 (“HN Fanhua Anlian Insurance”);

	 
	 	(ii)	 	 (“HZ Fanhua Zhixin Insurance”);

	 
	 	(iii)	 	 (“TJ Fanhua Xianghe Insurance”);

	 
	 	(iv)	 	 (“FZ Fanhua Guoxin Insurance”);

	 
	 	(v)	 	 (“CS Lianyi Insurance”); and

	 
	 	(vi)	 	 (“NB Baolian Insurance”).

(HN Fanhua Anlian Insurance, HZ Fanhua Zhixin Insurance, TJ Fanhua Xianghe Insurance, FZ
Fanhua Guoxin Insurance, CS Lianyi Insurance and NB Baolian Insurance are collectively
referred to as the “Second PRC Subsidiaries” and individually, a “Second PRC Subsidiary”.
The current corporate information of each Second PRC Subsidiary is set out in Schedule 3E of
this Agreement.)

	(G)	 	The Parties are desirous of entering into this Agreement to set out the terms and conditions
of the Subscription and Shares Purchase and to establish certain matters
pertaining to the operation and management of the Group and to regulate certain rights and
obligations among themselves with respect thereto.

 

 

 

NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and of other
good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties hereto agree as follows:-

ARTICLE I

DEFINITIONS

Section 1.1 Definitions. As used herein and unless otherwise expressly stipulated, the
following terms shall have the following meanings (such meanings to be equally applicable to both
the singular and plural forms of the terms defined):

“Approved Accounts” shall mean the consolidated balance sheet and profit and loss accounts of the
Company for a relevant financial period to be prepared by the Company in accordance with US GAAP
and approved by Supermajority of the Board. For the purpose of this Agreement, the following terms
of, “2011 Approved Accounts”, “2012 Approved Accounts” and “2013 Approved Accounts” shall
accordingly be construed to mean the Approved Accounts for the respective financial periods of (i)
1 January 2011 to 31 December 2011, (ii) 1 January 2012 to 31 December 2012 and (iii) 1 January
2013 to 31 December 2013.

“Accounts” shall mean the consolidated financial statements of the Company and INSCOM HK and INSCOM
BVI for the financial year ended the Accounts Date (including the notes thereto).

“Accounts Date” shall mean 30th June 2010.

“Affiliate” of any Person shall mean any other Person that, directly or indirectly through one or
more intermediaries, controls, is controlled by or is under common control with, such Person. The
term “control” means the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.

“Agreement” shall mean this subscription and shares purchase and shareholders agreement, together
with the Schedules hereto, as modified, supplemented or amended from time to time.

“Articles of Association” shall mean the Memorandum and Articles of Association of the Company, as
modified, supplemented or amended from time to time in accordance with the terms hereof and
thereof.

“Associates” shall have the same meaning as ascribed thereto under the Listing Rules.

“Board” or “Board of Directors” shall mean the board of directors of the Company.

“Business” shall mean the business being undertaken and will continue to be undertaken by the Group
in accordance with Section 2.2 of this Agreement.

 

 

 

“Business Day” shall mean any day except a Saturday, Sunday or other day on which commercial
banking institutions in any one of China, Hong Kong or New York City is authorized or required to
close.

“Capital Event” shall mean IPO or such other means of capital raising as approved by Supermajority
of the Board, or a sale of majority of assets or the business of the Group to an unconnected third
party, or a merger of the Company with another operation or company, or allotment of new shares,
securities in and of the Company thereby resulting in the change of controlling shareholder(s) of
the Company and Control of the Board of Directors.

“China” or “PRC” shall mean the People’s Republic of China.

“Closing” shall mean completion of the Subscription and Shares Purchase on the Closing Date. The
corporate structure immediate after Closing is set out in Schedule 2 of this Agreement.

“Closing Date” shall mean the date when all Closing conditions set out in Section 5.1 are fulfilled
or such other date as the Company and the Subscriber shall agree in writing upon which Subscription
and Shares Purchase shall be completed in accordance with Section 5.2 and in any event shall not be
later than 1st October 2010.

“Closing Accounts” shall mean the consolidated financial statements in respect of the Company and
INSCOM HK and INSCOM BVI for the period from 1st April 2010 to the Closing Date (such
financial statements comprising a balance sheet and a profit and loss accounts) which shall be
prepared and provided by the Company.

“Company Shareholder(s)” shall mean Apollo, CSH, and CISG and any shareholders of the Company for
so long as it/he/she is a shareholder registered in the Register of Members of the Company.

“Control” shall have the meaning provided in the definition of “Affiliate” in this Section 1.1.

“Directors” shall mean members of the board of directors of the Company.

“Due Diligence Reports” shall mean collectively the Legal Due Diligence Report and the Financial
Due Diligence Report.

“Encumbrances” shall mean any mortgage, charge, pledge, lien, equities, hypothecation or other
encumbrance, priority of security interest, deferred purchase, title retention, leasing,
sale-and-repurchase or sale-and-lease back arrangement whatsoever over or in any property, assets
or rights of whatsoever nature and includes any agreement for any of the same.

“Entire Issued Share Capital” shall mean all issued shares of the Company including both Ordinary
Shares and Preference Shares.

“Existing Shareholders” shall mean Apollo, and CSH.

“Financial Due Diligence Report” shall mean the financial due diligence report to be prepared by
CISG.

 

 

 

“Future Finance” shall mean any further finance, working capital required by the Group for
operation of the business.

“Governmental Authority” shall mean the government of China or any other country or any provincial,
state or political subdivision thereof and any administration, agency, court, commission or other
authority exercising executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including, without limitation, any stock or commodities exchange or other
quasi-governmental entity established to perform such functions.

“Group” shall mean the Company, INSCOM BVI, INSCOM HK, Ying Si Kang, the First PRC Subsidiaries,
the Second PRC Subsidiaries and their respective Subsidiaries, Affiliates, Associates, and any
other company which becomes the holding company of the Company or which owns or carries on all or
substantially all of the business, assets and undertaking of the Company and the term “Group
Company(ies)” shall be construed as any member(s) of the Group.

“HK$” shall mean dollars in the lawful currency of HKSAR.

“HKSAR” shall mean Hong Kong Special Administrative Region of China.

“Intellectual Property Rights” or “IP Rights” shall mean patents, trade marks, service marks, trade
names, internet domain names, rights in designs, copyright (including rights in computer software
and databases) and rights in know-how and other intellectual property rights, in each case whether
registered or unregistered and including applications for the grant of any such rights and all
rights or forms of protection having equivalent or similar effect anywhere in the world.

“IP Works” shall mean any item of Technical Information in which Intellectual Property Rights
subsist.

“IPO” shall mean listing of the Ordinary Shares or such other shares, securities in the capital of
(a) the Company; or (b) any other company which becomes the holding company of the Company or which
owns or carries on all or substantially all of the business, assets and undertaking of the Company
on The Stock Exchange of Hong Kong Limited or NASDAQ or other internationally recognized stock
exchange or securities exchange through an initial public offering or otherwise as approved by the
Company Shareholders.

“Know-How” shall mean information, data, know-how or experience whether patentable or not including
but not limited to all design, operating instructions, machinery designs, products specifications,
blue prints and any other technical and commercial information relating thereto.

“Legal Due Diligence Report” shall mean the due diligence report to be prepared by the Subscriber
setting out the results of their review regarding the legality of the business and such other
related legal issues arising from matters contemplated under the Business Plan.

 

 

 

“Listing Rules” shall mean the Rules Governing the Listing of Securities of The Stock Exchange of
Hong Kong Limited and that the term “Other Applicable Securities Rules” shall mean such applicable
rules governing listing of securities of National Association of Securities Dealers Automated
Quotation System or other internationally recognized stock exchange or securities exchange.

“NASDAQ” shall mean the National Association of Securities Dealers Automated Quotation System.

“Net Profit” shall mean the total earnings after income taxes, depreciation, amortization, interest
and other expenses as determined by the Company in accordance with US GAAP. For the purpose of this
Agreement, the Net Profit shall exclude any extraordinary one-time gain or loss for a particular
financial year end unless such exclusion is agreeable by CISG. For the purpose of this Agreement,
the following terms of “2011 Net Profit”, “2012 Net Profit” and “2013 Net Profit” shall be
construed to mean Net Profit for the financial years of 2011, 2012 and 2013 as shown in the 2011
Approved Accounts, 2012 Approved Accounts and 2013 Approved Accounts respectively.

“Ordinary Shares” shall mean the ordinary shares of US$1.00 each of the Company as provided in the
Articles of Association.

“Parties” shall mean the Company, INCOM HK, INSCOM BVI, Apollo, CSH, and CISG and their respective
successors and permitted transferees in accordance with the terms of this Agreement.

“Person” shall mean any individual, corporation, partnership, joint venture, association, trust,
limited liability company or any other entity or organization, including a governmental or
political subdivision or an agency, unit or instrumentality thereof.

“Performance Benchmark” shall mean the performance targets to be achieved by the Group as more
particularly set out in Section 6.1.

“Preference Shares” shall mean the preference shares of US$1.00 each of the Company.

“Regulatory Approvals” shall mean any license, approval, authorization or consent of, or filing,
registration or qualification with, or notice to, any Governmental Authority which is required to
be made or obtained by the Company and/or its Subsidiaries in connection with the conduct of their
businesses as contemplated by this Agreement and the Articles of Association.

“RMB” shall mean Renminbi, the lawful currency of China.

“Sale Shares” shall mean 6,588 existing Ordinary Shares legally and beneficially owned by Apollo
which shall be sold by Apollo to CISG in accordance with the terms of this Agreement.

“Shares” shall mean Ordinary Shares and Preference Shares.

 

 

 

“Shares Purchase” shall mean the purchase of Sale Shares by CISG as provided in Article III of this
Agreement.

“Shares Purchase Consideration” shall have the meaning provided in Section 3.2.

“Subscription” shall mean the subscription of Subscription Shares by CISG as provided in Article IV
of this Agreement.

“Subscription Consideration” shall have the meaning provided in Section 4.2.

“Subscription Shares” shall mean 69,250 Preference Shares to be subscribed for by the Subscriber,
representing about 87% of the entire issued share capital of the Company as enlarged by the
Subscription.

“Subsidiary” of any Person shall mean any other Person of which the first Person, directly or
indirectly: (i) has the power to appoint or remove a majority of the board of directors or, if such
other Person does not have a board of directors, other individuals performing similar functions; or
(ii) controls 50% or more of the issued shares or securities of such other Person having power to
vote; “Subsidiaries” shall be construed accordingly.

“Supermajority” shall mean the affirmative vote of at least two Directors, at least one of which is
a Director appointed by CISG.

“Technical Information” shall mean all identifiable Know-How, experience, data, designs, drawings,
specifications, testing procedures and all other technical or commercial information relating to
the business whether in human or machine readable form and whether stored electronically or
otherwise.

“Transfer” shall mean any sale, assignment, conveyance, pledge, mortgage or other disposition.

“USD” shall mean dollars in the lawful currency of the United States of America.

“US GAAP” shall mean Generally Accepted Accounting Principles as may from time to time be adopted
by the Financial Accounting Standards Board.

“Warranties” shall mean the representations and warranties given in the terms as set out in Article
VII and Schedule 4 of this Agreement.

Section 1.2 Principles of Construction. All references to articles, sections and exhibits
are to articles, sections and exhibits in or to this Agreement unless otherwise specified. The
words “hereof”, “herein”, and “hereunder” and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

 

 

 

ARTICLE II

THE COMPANY; COOPERATION

Section 2.1 Cooperation. Each of the Parties shall cooperate and ensure due performance and
observance of all the terms and conditions of this Agreement (in so far as that Party is
responsible for the compliance of such terms and conditions as contemplated under this Agreement).

Section 2.2 Business. Unless otherwise agreed by CISG, the Group shall, through the
operation of members of the Group, carry out the Business in China.

Section 2.3 Creation of Preference Shares. Each of Apollo, CSH and the Company agrees that
prior to Closing, the Company shall create, and Apollo and CSH shall procure the Company to create,
a class of Preference Shares in addition to the existing class of Ordinary Shares, and the
authorized share capital of the Company shall consist of 10,000 authorized Ordinary Shares and
70,000 Preference Shares. Holders of the Preference Shares will enjoy the rights and privileges as
set out in Schedule 6 of this Agreement.

Section 2.4 Corporate Restructuring. Each of the Parties shall cooperate with each other
in carrying out the corporate restructuring of the Group within 3 months after Closing whereby CISG
shall procure the equity interests in the Second PRC Subsidiaries be transferred to Ying Si Kang or
its associated companies in the PRC at the consideration calculated with reference to the
investment sum of RMB 395,000,000. The conditions to closing of the acquisition of equity interests
in the Second PRC Subsidiaries shall include (a) completion of the share purchase and subscription
under this Agreement; (b) relevant board and shareholders’ approval of the Company in respect of
the acquisition and the transaction contemplated therein; and (c) all consents, permits from
relevant Governmental Authority as well as all third party consents which are legally required for
completion of the acquisition of equity interests in the Second PRC Subsidiaries having been duly
obtained. CISG will use its best effort to achieve the corporate restructuring. The Parties agree
to cooperate with each other and take all reasonable action as proposed by CISG (including granting
time extension to CISG after 3 months period) with a view to complete the corporate restructuring.
In the event that the corporate restructuring can not be completed within the time to be agreed by
the Parties, this Agreement will be terminated and the Parties will restore to the position before
entering into this Agreement.

ARTICLE III

SHARES PURCHASE

Section 3.1 Purchase of Sale Shares. Subject to CISG’s satisfaction of all the conditions
set forth in Section 5.1, Apollo, as legal and beneficial owner, shall sell and CISG, relying on
the Warranties, shall purchase the Sale Shares on the Closing Date or such later date by mutual
agreement between Apollo and CISG free from Encumbrances and with all rights now or hereafter
becoming attached to the Sale Shares (including, the right to receive all dividends and
distributions declared, made or paid on the Sale Shares or in respect of them on or after the date
of this Agreement).

Section 3.2 Consideration for the Shares Purchase. The consideration for the purchase of
the Sale Shares shall be in the sum of RMB84,000,000 (or the USD equivalent to RMB84,000,000 at
such an exchange rate to be quoted by the remitting bank at the date when remittance shall be made
by CISG) which shall be paid by CISG to Apollo in clear and available fund (or such other means of
payment as agreed between Apollo and CISG) within 3 months from the Closing Date.

 

 

 

ARTICLE IV

THE SUBSCRIPTION

Section 4.1 The Subscription. Subject to the Subscriber’s satisfaction of all the
conditions set forth in Section 5.1, the Subscriber agrees to subscribe for and the Company agrees
to issue to the Subscriber or its nominee(s) the Subscription Shares free from all Encumbrances on
the Closing Date or such later date as when such conditions are satisfied or waived.

Section 4.2 Consideration for the Subscription. In consideration of the Company’s
allotment of the Subscription Shares to the Subscriber, the Subscriber shall pay RMB 395,000,000
(or the USD equivalent to RMB 395,000,000 at such an exchange rate to be quoted by the remitting
bank at the date immediately before the remittance shall be made by the Subscriber) to the Company
upon Closing.

ARTICLE V

CONDITIONS TO CLOSING; CLOSING

Section 5.1 Conditions to Closing of the Subscription and Share Purchase. The obligation
of the Subscriber or CISG to effect the Closing of the Subscription and Share Purchase under this
Agreement is subject to the fulfillment, prior to or at the Closing, of each of the following
conditions (any or all of which, to the extent permitted by law, may be waived by written agreement
of the Subscriber or CISG):

	(a)	 	Representations and Warranties. The representations and warranties of each of the
Parties contained in Section 7.1 and Schedule 4 of this Agreement shall be true and correct in
all material respects on and as of the Closing Date with the same effect as though made again
on and as of such date.

	(b)	 	Performance of Obligations. Each of the other Parties shall have performed and
complied in all material respects with all obligations and covenants required to be performed
or complied with by it on or prior to the Closing Date.

	(c)	 	No Government Injunction/Consents from Governmental Authority. There is not pending
or threatened any action, proceeding or investigation that seeks any governmental injunction
or restraining order issued by a court of competent jurisdiction against the Company and/or
any member of the Group. All consents, permits from relevant Governmental Authority as well as
all third party consents which are legally required for completion of the Subscription and
Shares Purchase having been duly obtained.

	(d)	 	No Material Adverse Change. There shall not have occurred any material adverse
change in the financial markets, governmental regulations and business environment in China.
The Subscriber being satisfied that consummation of any of the transactions contemplated by
this Agreement would not produce a material adverse effect on the Group or the business of the
Group.

 

 

 

	(e)	 	Due Diligence Reports. In addition to Section 5.1(a)-(d), the Subscriber’s
obligation to effect Closing is further subject to the Subscriber being satisfied with the
results of the Due Diligence Reports in which:-

	 	(i)	 	the Legal Due Diligence Report has confirmed such legal issues including but
not limited to:-

	 	(aa)	 	legality of the First PRC Subsidiaries’ operation of the Business
in China in accordance with the details of the Business Plan;

	 	(bb)	 	legality of such other issues incidental to matters, transactions
contemplated under the Business Plan; and

	 	(cc)	 	legality of the entities of the Group outside China.

	 	(ii)	 	the Financial Due Diligence Report has confirmed satisfaction of such
accounting issues incidental to matters, transactions contemplated under the Business
Plan including but not limited to: -

	 	(aa)	 	satisfaction of such accounting issues incidental to matters,
transactions contemplated under the Business Plan;

	 	(bb)	 	accuracy of the financial statements which have been submitted by
the Company and/ or Apollo to CISG. In particular, the Financial Due Diligence
Report shall confirm that the Group has no liabilities other than those which
have been disclosed;

	(f)	 	Business Plan. The business plan shall have been finalized to the satisfaction of
the Subscriber setting out relevant information as the Subscriber may require including but
not limited to description of the organizational structure, business strategy and production
expansion plan, analysis of market conditions and regulatory environment, utilization of
Subscription Consideration by the Company, investment plan and financial projection of the
business for the next 3 years following Closing.

	(g)	 	Closing Accounts. The Company shall have produced the Closing Accounts to the
Subscriber and the Subscriber being satisfied (i) with the financial position and other issues
and matters as reflected in the Closing Accounts; (ii) that there shall be no material
deviations or changes between the Closing Accounts and the Accounts; and (iii) that the
Company shall have a book value of net cash asset of not less than RMB10,000,000 or equivalent
sum in USD. For the avoidance of doubt, “net cash asset” shall mean net asset in cash as shown
in the Closing Accounts.

	(h)	 	satisfaction of financial review of the Company whereby it is substantiated that the net cash
asset of the Company shall not be less than RMB 10,000,000 or equivalent sum in USD; and

 

 

 

	(i)	 	Other Conditions to Closing. Such other conditions as CISG may require and considers
to be necessary in the course of conducting the due diligence of the Group.

Section 5.2 Closing of the Subscription and Shares Purchase.

	(a)	 	Company’s Obligations. Subject to satisfaction of all the conditions set out in
Section 5.1, Closing shall take place on the Closing Date. At Closing and in so far as the
Subscription is concerned, the Company shall and the Existing Shareholders shall procure the
Company to deliver to the Subscriber:-

	 	(i)	 	duly executed sealed share certificate(s) issued in the name of CISG or its
nominee(s) in respect of the Subscription Shares in favor of the Subscriber and/ or its
nominee(s);

	 	(ii)	 	certified true copies of the board resolutions as referred to in Section
5.2(c);

	 	(iii)	 	shareholders resolution approving the amendments to the Articles of
Association; and

	 	(iv)	 	such other documents (including any power of attorney under which any document
required to be delivered under this Section shall have been executed and any waivers or
consents) as the Subscriber may require to enable the Subscriber and/or its nominee(s)
to be registered as holders of the Subscription Shares.

	(b)	 	Apollo’s Obligations. Subject to satisfaction of all the conditions set out in
Section 5.1, Closing shall take place on the Closing Date. At Closing and in so far as the
Shares Purchase is concerned, Apollo shall cause to deliver to CISG:

	 	(i)	 	original share certificate(s) in respect of the Sale Shares;

	 	(ii)	 	the duly completed and executed instrument(s) of transfer and sold notes by
Apollo in favor of CISG or its nominee(s) in respect of the Sale Shares;

	 	(iii)	 	a copy of the Company’s register of members, certified by a director of the
Company as true and complete as of the Closing Date, updated to show CISG or its
nominee(s) as the holder of the Sale Shares of the Company; and

	 	(iv)	 	a certified copy of the written resolutions of the directors of Apollo
authorizing the Share Purchase.

	(c)	 	Board Resolutions of the Company. On or prior to Closing, the Company shall pass and
the Existing Shareholders shall cause the Company to pass board resolutions to the effect
that:

	 	(i)	 	the Subscription Shares be allotted and issued to the Subscriber on the Closing
Date, for cash at the Subscription Consideration;

 

 

 

	 	(ii)	 	the transfer of the Sale Shares shall be approved for registration and the relative
share certificates issued to CISG or its nominee(s);

	 	(iii)	 	the Subscriber or CISG or its nominee(s) be entered into the register of
members of the Company as holder of the Subscription Shares and the Sale Shares;

	 	(iv)	 	the appointment of Mr. Chunlin Wang and Mr. Peng Ge or such other person as
nominated by the Subscriber or CISG as directors of the Company;

	 
	 	(v)	 	the appointment of Mr. Chunlin Wang as chairman of the Board of Directors; and

	 	(vi)	 	such other matters to be dealt with and resolved upon as the Subscriber or CISG
shall require for the purpose of giving effect to the provisions of this Agreement.

ARTICLE VI

PERFORMANCE BENCHMARK

SHARE ADJUSTMENT MECHANISM

Section 6.1 Performance Benchmark. As an inducement to the Subscriber’s agreement to
subscribe for the Subscription Shares, each of Apollo, CSH and the Company hereby undertakes to use
its/his/her best endeavors to achieve the following targets:-

“the 2011, 2012 and 2013 Net Profit shall not be less than RMB 102,600,000, RMB 136,300,000 and
RMB 170,200,000 respectively.”

Section 6.2 Non Fulfillment of the Performance Benchmark/ Shares Adjustment Mechanism.

	(a)	 	In the event that Performance Benchmark is not fulfilled in any single year of 2011, 2012 and
2013, CISG shall have the right to demand Apollo to pay to CISG an amount equivalent to such
portion of net profit that falls short of the Performance Benchmark for that particular year
(“Cash Compensation”) within 15 days upon the delivery of the Approved Accounts of that
particular year. For the avoidance of doubt, the aggregate Cash Compensation for 2011, 2012
and 2013 shall not in any event exceed the total amount of RMB84,000,000.

	(b)	 	In the event that the Performance Benchmark in any single year of 2011, 2012 and 2013 is less
than 70% of the target mentioned in Section 6.1, CISG shall, in addition and without prejudice
to Cash Compensation, have the right to demand CSH in any of such year to transfer such number
of shares (“Compensation Shares”) constituting 3% of the entire issued share capital of the
Company at a nominal consideration of USD1.00 to CISG or its nominee(s) within 15 days upon
the delivery of the Approved Accounts of that particular year. For the avoidance of doubt,
CISG shall have the right to demand CSH to transfer a total number of the Compensation Shares
representing 9% of the entire issued share capital of the Company at a total nominal
consideration of USD3.00 if the Net Profit for all the years of 2011, 2012 and 2013 is less
than 70% of the target mentioned in Section 6.1.

 

 

 

ARTICLE VII

REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS

Section 7.1 Warranties of All Parties. Each Party hereby represents and warrants to the
other Parties that on the date hereof and as of the Closing Date:-

	(a)	 	Corporate Status, Power and Authority. Such Party has full power and authority
(corporate or otherwise) to enter into and perform its/his obligations under this Agreement.

	(b)	 	Authorization and Enforceability. The execution and delivery of this Agreement and
the performance of the obligations hereunder has been duly authorised (corporate or otherwise)
by such Party and this Agreement constitutes valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms.

	(c)	 	Regulatory Approvals. No consent, waiver, approval or authorization of any
Governmental Authority or any filing, registration or qualification with or notice to, any
Governmental Authority is required on the part of such Party in connection with such Party’s
execution or delivery of this Agreement or the performance of any of its obligations
hereunder.

	(d)	 	Litigation. To the best knowledge of such Party after having made due inquiry, there
are no judicial or administrative actions, proceedings or investigations pending or threatened
against such Party that questions the validity, binding nature and enforceability of this
Agreement or the ability of such Party to perform the obligations under this Agreement. In the
event that the Company has came to the knowledge of the aforesaid, Apollo and CSH shall
forthwith notify CISG.

	(e)	 	Encumbrances. Unless with the unanimous consent of the board of directors, all the
shareholders of the Company warrants and undertakes that they shall not mortgage, charge,
pledge, lien or have other form of security or encumbrance on, over or affecting any of their
equity interest in the Company.

Section 7.2 General Warranties by the Company, Apollo and CSH.

	(a)	 	In consideration of CISG entering into this Agreement, each of the Company, Apollo and CSH
hereby:-

	 	(i)	 	warrants, represents and undertake to CISG that on the date hereof and as of
the Closing Date, each statement set out in Schedule 4 of this Agreement and this
Article is true, accurate and not misleading;

	 	(ii)	 	warrants, represents and undertakes to CISG that the entry into and performance
of this Agreement by the Parties (other than CISG) will not be contrary to any
applicable law;

 

 

 

	 	(iii)	 	undertakes to CISG that prior to the Closing Date, if any of the Warranties is
discovered by the Company and/or Apollo and/or CSH to be untrue, inaccurate or
misleading or any of the Warranties has not been fully and/or punctually carried out
in any respect, or in the event of the Company and/or Apollo and/or CSH becoming
unable or failing to do anything required under this Agreement to be done by any one
of them on or before the Closing Date and if any of the aforesaid comes to the
knowledge of the Company and/or Apollo and/or CSH, the Company and/or Apollo and/or
CSH shall forthwith notify CISG, and in all these events, CISG shall have the
absolute discretion to postpone completion of the Subscription and/or Share Purchase
for three (3) months and require the Company and/or Apollo and/or CSH to rectify the
aforesaid events. In the event that such event(s) shall not have been rectified to
the satisfaction of CISG within three (3) months from the Closing Date, CISG shall
have the right not to complete the Subscription and/or Share Purchase and may by
notice in writing rescind this Agreement, in which event the Parties shall be
discharged from their respective further obligations hereunder on a no recourse
basis except for their obligations under Section 10.3 and Articles XI and XII.

	(b)	 	The Warranties shall be separate and independent and save as expressly provided shall not be
limited by reference to any other section or anything in this Agreement or the Schedules.

	(c)	 	The Warranties shall be deemed to be repeated as at the Closing Date as if all references
therein to the date of this Agreement were references to the Closing Date.

Section 7.3 Indemnity on Warranties. Each of Apollo and CSH hereby agrees and undertakes,
jointly and severally, to indemnify CISG or the relevant Group Company and to keep the same
indemnified in respect of their costs (including their legal costs) and expenses which CISG and/or
the relevant Group Company may reasonably incur either before or after the commencement of any
arbitration or other proceedings brought by CISG in connection with:-

	(a)	 	the settlement of any claim that any of the Warranties are untrue or misleading or have been
breached;

	(b)	 	any arbitration proceedings in which CISG claims that any of the Warranties are untrue or
misleading or have been breached and in which the arbitral order is given for CISG; or

(c) the enforcement proceedings of any such arbitral order.

Section 7.4 Guarantee and Indemnity

	(a)	 	In consideration of CISG’s entering into this Agreement, each of Apollo and CSH as primary
obligor hereby, jointly and severally, unconditionally and irrevocably guarantees by way of
continuing guarantee to CISG the due and punctual performance and observance by the Company
and the Existing Shareholders of their respective obligations, commitments, undertakings,
agreements, Warranties, indemnities and covenants under or pursuant to this Agreement and,
agrees to indemnify and keep indemnified CISG in full from and against all liabilities,
losses, damages, claims, costs and expenses (including properly 

 

 

 

incurred reasonable legal
costs and expenses on a full indemnity basis) which CISG may suffer through or arising from any breach by the Company
and/or Existing Shareholders of such obligations, commitments, undertakings, agreements,
Warranties, indemnities or covenants. Each of Apollo and CSH as primary obligor,
unconditionally and irrevocably agrees that if either the Company or the Existing
Shareholders shall fail to discharge the liability undertaken or expressed to be undertaken
by it/them under or pursuant to this Agreement, Apollo and CSH shall forthwith upon demand
unconditionally perform (or procure performance of) and shall satisfy (or procure the
satisfaction of) the obligation or liability in regard to which such default has been made
in the manner prescribed by this Agreement so that the same benefits shall be conferred on
CISG as it would have received if such obligation or liability had been duly performed and
satisfied by the Company and/or Existing Shareholders. Each of Apollo and CSH hereby waives
all rights which it may have to require CISG to proceed first against or claim payment from
the Company and/or Existing Shareholders.

	(b)	 	The guarantee and indemnity set out in this Section 7.4(a) shall be a continuing security to
CISG for all obligations, commitments, undertaking, Warranties, indemnities and covenants on
the part of the Company and Existing Shareholders under or pursuant to this Agreement
notwithstanding any settlement of account or other matter or thing whatsoever and is in
addition and without prejudice to and not in substitution for any rights or security which
CISG may now or hereafter have or hold for the performance and observance of the obligations,
commitments, undertakings, agreements, Warranties, indemnities and covenants of the Company
and/or Existing Shareholders under or in connection with this Agreement.

	(c)	 	The obligations of Apollo and CSH under this Section shall not be affected by any matter or
thing which but for this provision might operate to affect or prejudice those obligations,
including without limitation:-

	 	(i)	 	any time or indulgence granted to, or composition with, the Company and/or the
Existing Shareholders or any other person;

	 	(ii)	 	the taking, variation, renewal or release of, or neglect to perfect or enforce
this Agreement or any right, guarantee, remedy or security from or against the Company
and/or the Existing Shareholders or any other person;

	 	(iii)	 	any unenforceability or invalidity of any obligation of the Company and/or the
Existing Shareholders, so that this Section shall be construed as if there were no such
unenforceability or invalidity;

	 	(iv)	 	the liquidation, bankruptcy, winding-up, receivership of the Company and/or the
Existing Shareholders or other member of the Group; and

	 	(v)	 	any other act, matter, event or omission which but for this provision would or
might operate to discharge, impair or otherwise affect the liabilities of Apollo and
CSH hereunder.

 

 

 

Section 7.5 Legitimate Fund. CISG warrants and undertakes that the consideration for the
Subscription and Share Purchase shall be from legal and legitimate fund.

Section 7.6 Termination of Agreement. In consideration of the Parties entering into this
Agreement, each of the Company and the Existing Shareholders hereby irrevocably agrees and confirms
that as between each of them, any and all agreement between the Company and the Existing
Shareholders shall be replaced and superseded by this Agreement in its entirety upon execution of
this Agreement.

ARTICLE VIII

TRANSFER OF SHARE OR OTHER EQUITY INTERESTS

Section 8.1 Prohibited Transfer by Apollo and CSH. None of Apollo and CSH shall Transfer
or otherwise Encumber any Ordinary Shares or any other equity interest in the Company now or
hereafter owned or held by any of them without obtaining the prior written approval of CISG. In the
event that Apollo or CSH (“Selling Shareholder”) has an intention to Transfer any Ordinary Shares
or other equity interest in the Company, the relevant Selling Shareholder shall provide all
relevant information regarding the intended transfer/encumbrance and the intended transferee(s) to
CISG which will seriously consider whether or not to grant such a written approval. For the purpose
of putting this Section 8.1 into full effect, each of Apollo and CSH undertakes and warrants that
except with the prior written approval of CISG, the Control of Apollo and CSH shall not be changed
or modified in any respect and shall not enter into any agreement/arrangement in relation to such a
change of Control. The prohibition mentioned herein shall be automatically removed upon the
completion of a fully underwritten IPO.

Section 8.2 Right of First Refusal. Each of the Existing Shareholders (collectively the
“Selling Shareholders” and each a “Selling Shareholder”) who contemplates to sell any of its Shares
(“Offered Shares”) in the Company to any Person shall inform CISG and comply with the provisions
set out in Schedule 5 of this Agreement.

Section 8.3 Co-Sale Rights. The Existing Shareholders shall have the right, exercisable
upon written notice to CISG, in the event that CISG contemplates to sell any of its Shares, to
participate in such sale of the Shares on the same terms and conditions.

Section 8.4 Deed of Adherence. No transfer of shares by any selling Party to any third
party shall be entered into the Company’s share register and all parties hereto shall procure that
unless such third party has first entered into a deed of adherence with all parties hereto other
than the selling Party pursuant to which such third party shall agree, inter alia, to be bounded by
all the restrictions of, and to discharge all duties and obligations as set out in this Agreement
as if it were an original party hereto. Such deed of adherence shall be in such form as such other
parties shall reasonably require.

 

 

 

ARTICLE IX

DIRECTORS, OFFICERS; SHAREHOLDER VOTING

Section 9.1 Number and Appointment of Directors. (a) Unless otherwise agreed by the
Subscriber, the Board of Directors shall consist of three (3) directors of whom two (2) shall be
appointed by CISG and one (1) shall be appointed by Apollo; (b) Constitution of the board of
directors of each of the Group Companies shall be the same as the Company and that all Directors
shall be appointed as directors of the Group Companies unless otherwise agreed by the Subscriber.
Any Director who ceases to be a director of the Company shall cease to be a director of the Group
Companies; (c) Each Director shall be entitled to appoint any person or any other Director to be
his alternate and each alternate shall have one vote for every Director whom he represents in
addition to any vote of his own; (d) If the Subscriber shall cease to hold any Ordinary Shares, it
shall procure the resignation of all those Directors nominated by it and will indemnify the other
Party and the Group against any claims which may be brought by such Directors.

Section 9.2 Vacancy; Removal. In the event that the position of a Director becomes vacant
for any reason (including the death, disability or resignation of any such Director) and not
replaced by another Director to be appointed by the original Company Shareholder which initially
appointed such Director and approved by a Supermajority of the Board of Directors, the Company
Shareholders shall vote their shares of Ordinary Shares to elect as replacement Director as a
person appointed by the Company Shareholder(s) that originally appointed or is now entitled to
appoint the Director whose office is vacant. A Director shall be removed with or without cause upon
and only upon the affirmative vote of the Company Shareholders in accordance with this Section 9.2,
the Articles of Association of the Company and the provisions of applicable law. Each Company
Shareholder shall vote its shares for the removal of a Director only upon the request of the
Company Shareholder(s) that originally appointed or is now entitled to appoint such Director.
Otherwise than in accordance with the provisions herein, no Company Shareholder shall vote for the
removal of a Director. Any Company Shareholder removing a Director shall be responsible for and
shall indemnify the other Company Shareholders and the Group against any claim of whatever nature
arising out of such removal.

Section 9.3 Quorum. The quorum for a Directors meeting shall be at least two (2) Directors
of which one (1) shall be the director appointed by CISG.

Section 9.4 Right to Convene and the conduct of Meeting.

	(a)	 	The Board shall meet as required provided that any Director may call a Board meeting by not
less than seven (7) days’ notice in writing to the Company specifying the business to be
transacted thereat. Directors may participate in a meeting of the Board by means of telephone
conference or similar communications equipment whereby all persons participating in the
meeting can hear each other and such participation shall constitute presence in person.
Resolutions of the Board may be passed by resolution signed by all the Directors.

	(b)	 	A shareholder of the Company or any member of the Group may call a general meeting of the
relevant company by not less than seven (7) days’ notice in writing to the Company. The quorum
for shareholders’ meetings shall be two (2) and must consist of at least one (1) person being
the authorized representative or proxy for CISG.

	(c)	 	Each Company Shareholder will exercise or refrain from exercising any voting rights or other
powers of control so as to ensure the passing of any and every resolution necessary or
desirable to procure that the affairs of the Group are conducted in accordance with the
provisions of this Agreement and otherwise to give full effect to the provisions of this
Agreement and likewise to ensure that no resolution is passed which does not accord with
such provisions.

 

 

 

Section 9.5 Power of the Directors. The business and affairs of the Company shall be
managed and controlled by the Board of Directors and that subject to Section 10.1 hereof, questions
arising in any meeting of the Board shall be decided by a simple majority of votes and the chairman
of the Board (if any) shall not have a second or casting vote.

Section 9.6 Shareholders’ Meeting. A meeting of shareholders is duly constituted if, at
the commencement of the meeting, there are present in person or by proxy not less than 50 percent
of the votes of the shares entitled to vote on Resolutions of Shareholders to be considered at the
meeting.

Section 9.7 Right to Appoint Chief Financial Officer. The Chief Financial Officer and the
relevant executive officers handling the finance and accounts of the Company shall be selected by
CISG.

Section 9.8 Compliance The Company shall observe and adhere to all the constitution and
rules and regulation which are currently enforced by CISG including financial centralization
system, financial internal control system, commercial conduct standards and fully comply with the
Sarbanes-Oxley Act 2002.

ARTICLE X

MANAGEMENT

Section 10.1 Management. The Company and any member of the Group shall not carry out, and
the Company Shareholders shall procure the Group not to carry out, any of the following actions
except as expressly required or permitted by this Agreement or approved by a Supermajority of the
Board of Directors:-

	(a)	 	issuing or agreeing to issue any shares of any class in any member of the Group or any loan
capital, securities or other rights, having attached thereto a right of conversion into or
exchange for any shares or any equity interest in any member of the Group.

	(b)	 	acquiring, merging or consolidating with or into any other company, or reconstructing or
amalgamating its business or, promoting or taking any steps to effect its winding up or
passing of any resolution to liquidate it or applying to any court of competent jurisdiction
for an order to convene a meeting of creditors or any class of creditors or members or any
class of members or to sanction any such compromise or arrangement.

	(c)	 	incorporating any subsidiary or acquiring further interest or permit the disposal or dilution
of its interest, directly or indirectly, in any subsidiary or acquire shares or interests in
any company, joint venture, partnership or such other business entities or dispose of any
 shares or interests in any company or acquire or dispose of any loans or loan capital.

 

 

 

	(d)	 	commencing, acquiring or expanding any new line of business which does not fall within the
business or engaging in any other business activities other than those contemplated under
the Business Plan.

	(e)	 	engaging in any material investments or disposals of assets of the Company outside the
ordinary course of business. For this purpose, a “material investment” or a “material
disposal” means an investment or a disposal which has a book value of more
than RMB5,000,000.00.

	(f)	 	borrowing any money or obtaining any credit advance in any form from any parties which incurs
an accumulated indebtedness in excess of RMB5,000,000.00 over any 12 months period.

	(g)	 	creating or allowing to subsist any security interest and/or Encumbrances over any of the
Group’s assets in excess of an accumulated sum of RMB5,000,000.00 over any 12 months period.

	(h)	 	entering into any contract or arrangement other than in the ordinary course of business and
involving an one-off transaction sum of more than RMB5,000,000.00 or series of transactions of
the same or similar nature involving an accumulated sum of more than RMB5,000,000.00 over any
12 months period.

	(i)	 	issuing or agreeing to issue any shares, options or convertible bonds to any Person at a
price lower than the Effective Subscription Price.

	(j)	 	repurchasing or redemption of stocks/shares/securities or debt instruments (except to the
extent such debt is due in accordance with its terms and conditions issued by any Group
Company.

	(k)	 	committing to any capital expenditure not previously approved by annual budget of the Group
and in excess of RMB5,000,000.00 over any 12 months period.

	 
	(l)	 	declaring or paying any dividends.

	(m)	 	entering into any connected transaction(s) (as defined in the Listing Rules) between any
member of the Group of the one part and connected persons (as defined in the Listing Rules) of
the other part.

	(n)	 	changing or amending the Memorandum and Articles of Association of any member of the Group
other than those amendments which are necessary to accord with the provisions of this
Agreement.

	(o)	 	altering its accounting year end or changing its secretary, or accounting policies, practices
and procedures.

	 
	(p)	 	changing the size of the Board of Directors.

 

 

 

	(q)	 	the appointment of senior managerial staff, including the chief executive officer, chief
financial officer and such other key staff members receiving an annual remuneration of more
than RMB1,000,000.00.

	 
	(r)	 	approval of the annual budget and business plan of the Group.

	(s)	 	entering into or modifying, varying any employment contract, remuneration package or benefit
scheme in respect of senior managerial staff members;.

	(t)	 	acquiring, hiring or leasing of any automobile, apartment for any staff member of the
management team of the Group.

	(u)	 	altering the arrangement regarding appointment of authorized signatories of bank accounts of
the Group.

	(v)	 	lending any money to any person (otherwise than by way of deposit with a bank or other
financial institution the normal business of which includes the acceptance of deposits) or
granting any credit to any person (except to its customers in the normal course of business.

	 
	(w)	 	direct or indirect provision of any guarantees to any parties.

	 
	(x)	 	pledging of the stocks or shares of any member of the Group to any parties/persons.

	(y)	 	varying, modifying or abrogating any of the rights attaching to any of the stocks or shares
of any member of the Group.

	(z)	 	increasing its nominal share capital, reducing its share capital or share premium account or
capital redemption reserve fund, or sub-dividing or consolidating any of the stocks of any
member of the Group.

	(aa)	 	granting or agreeing to grant any option over or right to acquire or purchase or redeem any
 shares or stocks of any member of the Group.

	 
	(bb)	 	consolidate, subdivide or convert any of its share capital of any member in the Group.

	(cc)	 	passing any resolution the result of which would be its winding up, liquidation or
receivership save as otherwise expressly provided in this Agreement, or make any composition
or arrangement with creditors.

	(dd)	 	issuing any debentures or other securities convertible into shares or debentures or
interests.

	(ee)	 	offering the Ordinary Shares or other securities of the Company or any member of the Group
for subscription by the general public by initial public offering either on The Stock Exchange
of Hong Kong Limited or other stock exchange or securities exchange of other parts of the
world.

 

 

 

	(ff)	 	determining the relevant stock exchange or securities exchange for the IPO as well as
the appropriate timing for the IPO application and IPO valuation.

	(gg)	 	approval of the terms and conditions regarding the Share Incentive Scheme upon which the
Management Incentive Shares or any part thereof will be granted.

	(hh)	 	entering into any contract or arrangement not at arm’s length (including but
not limited
to the terms pursuant to which any Ordinary Shares or other securities in the Company will be
issued and allotted to any potential subscribers or investors.

	(ii)	 	doing or failing to do anything which has the effect of breaching, varying or modifying the
terms of this Agreement.

For the purpose of this Section 10.1, any reference to a sum of monies shall include monies
incurred/involved in a single transaction as well as the aggregate of all sums of monies
incurred/involved in a series of transactions of the same or substantially the same nature.

Section 10.2 Use of the Subscription Consideration. The Parties agree that the Subscription
Consideration or any part thereof shall only be used as working capital of the Group or for further
acquisitions of other companies as may be approved by Supermajority of the Board.

Section 10.3 Confidentiality. Subject to as hereinafter expressly appears and save and
except expressly approved by all the parties in writing, each of the parties to this Agreement
shall maintain and shall procure that their respective appointees as directors of the Company shall
maintain strict confidence and secrecy in respect of all information of a proprietary commercial
and trading nature received by them or it directly or indirectly pursuant to this Agreement, and
each of the parties to this Agreement shall use its best endeavours to procure that its respective
officers, directors and associates (if any) shall likewise maintain strict confidence and secrecy
in respect of such information.

	(a)	 	For the purposes of this Clause, “Confidential Information” means all information of a
confidential nature disclosed (whether in writing, verbally or by any other means and whether
directly or indirectly) by one party (the “Disclosing Party”) to any other party (the
“Receiving Party”) whether before or after the date of this Agreement.

	(b)	 	During the term of this Agreement and within one year after the termination or expiration of
this Agreement for any reason whatsoever the Receiving Party shall:

	 	(i)	 	keep the Confidential Information confidential;

	 	(ii)	 	not disclose the Confidential Information to any other person other than with
the prior written consent of the Disclosing Party or being compelled by law or in
accordance with Section 10.3 hereof; and

	 	(iii)	 	not use the Confidential Information for any purpose other than the
performance of its obligations under this Agreement.

 

 

 

	(c)	 	During the term of this Agreement the Receiving Party may disclose the Confidential
Information to its employees (the “Recipient”) to the extent that it is necessary for the
purposes of this Agreement.

	(d)	 	The Receiving Party shall procure that each Recipient is made aware of and complies with all
the Receiving Party’s obligations of confidentiality under this Agreement as if the Recipient
was a party to this Agreement.

	(e)	 	The obligations contained in Section 10.3 hereof shall not apply to any Confidential
Information which:-

	 	(i)	 	is at the date of this Agreement or at any time after the date of this
Agreement comes into the public domain other than through breach of this Agreement by
the Receiving Party or any Recipient; or

	 	(ii)	 	can be shown by the Receiving Party to the reasonable satisfaction of the
Disclosing Party to have been known to the Receiving Party prior to it being disclosed
by the Disclosing Party to the Receiving Party; or

	 	(iii)	 	subsequently comes lawfully into the possession of the Receiving Party from a
third party; or

	 	(iv)	 	is required to be disclosed to the relevant Governmental Authority in
compliance with relevant laws and regulations applicable to that Party or the relevant
Listing Rules or any applicable rules in relation to any applicable stock exchange.

Section 10.4 Financial Information. The Company shall deliver to each Company Shareholder
the following financial and management information at the following intervals:

	(a)	 	Quarterly Financial Statements. Within 35 days after the close of each fiscal
quarterly accounting period ending after the date hereof, the consolidated balance sheet of
the Company and its Subsidiaries as at the end of such quarterly period and the related
statements of income, shareholders’ equity and cash flow for such quarterly period and (if
different) for that portion of the fiscal year that has elapsed with the last day of such
quarterly period, and in each such case setting forth comparative figures for the
corresponding periods in the prior fiscal year, all of which shall be prepared in accordance
with US GAAP applied on a consistent basis.

	(b)	 	Annual Financial Statements. Within 120 days after the close of each fiscal year of
the Company, the consolidated balance sheet of the Company and its Subsidiaries as of the end
of such fiscal year and the related statements of income, shareholders’ equity and cash flow
for such fiscal year, in each case setting forth comparative figures for the preceding fiscal
year, all of which shall be prepared in accordance with US GAAP applied on a consistent basis.

	(c)	 	Monthly Management Reports. Within 15 days after the close of each fiscal monthly
accounting period ending after the date hereof, the Company shall prepare and submit to the
Company Shareholders management reports setting out operational, management and financial
conditions of the Group in order to enable the Subscriber ascertaining the latest
position of business activities undertaken by the Group and the Group’s financial position.

 

 

 

	(d)	 	Annual Budget. Within 30 days before the end of each year, the Company shall prepare
and submit to the Company Shareholders its estimated detailed financial budget for the
following financial year.

	(e)	 	Any other information in relation to the business activities, operation and financial
condition of the Group that the Directors may reasonably request from time to time.

The financial statements and management reports referred to under this section shall be in such
form as the Subscriber may reasonably request in writing.

Section 10.5 Anti-dilution.

	(a)	 	If the Company wishes to issue (“Further Issuance”) any further Ordinary Shares or any other
 shares in the capital of the Company or any loan capital, securities or other rights which
having attached thereto a right of conversion into or exchange for any Ordinary Shares or any
equity interest in the Company, the Company shall give and the Existing Shareholders shall
procure the Company to give notice (the “Company’s Notice”) to CISG stating the total number
of additional Ordinary Shares or any shares to be issued or which could be issued upon
exercise of a right of conversion or exchange pursuant to the Further Issuance and the price
for such Further Issuance to be subscribed for CISG shall have the option but not the
obligation to subscribe at the price set forth in the Company’s Notice for that proportion of
Further Issuance equivalent to the percentage (%) which the number of Ordinary Shares held by
CISG bears to the total number of issued Ordinary Shares of the Company at the time when the
Company’s Notice is issued. Such option may be exercised by CISG by serving a notice to the
Company at any time within 20 Business Days following CISG’s receipt of the Company’s Notice
and accompanied by payment in full for that proportion of the Further Issuance to be
subscribed for. The Company hereby agrees that any Further Issuance will be at a price that is
not less than CISG’s price pursuant to this Subscription. The Parties hereby expressly
acknowledge, confirm and agree the purpose of this Section 10.5 is to offer an anti- dilution
protection in favor of CISG so that if CISG shall have elected to exercise the option
hereunder, its shareholdings in the Company will not be diluted notwithstanding the Further
Issuance.

	(b)	 	If and whenever the Ordinary Shares by reason of any consolidation or sub-division shall
become of a lesser nominal amount, CISG will proportionally be issued with additional Ordinary
Shares at a nominal consideration so that CISG’s shareholdings in the Company immediately upon
such consolidation or sub-division will remain the same as its shareholdings in the Company
immediately before such consolidation or sub-division.

Section 10.6 Specific Right of the Existing Shareholders. If no Capital Event shall have
been completed within three (3) years from Closing, each of the Existing Shareholders shall be
entitled to require CISG to purchase its Shares at the price to be negotiated and determined by the
relevant Existing Shareholder and CISG.

 

 

 

ARTICLE XI

DISPUTE RESOLUTION

Section 11.1 Arbitration. Any dispute, controversy or claim arising out of or
relating to this Agreement shall be settled by arbitration administered by the Hong Kong
International Arbitration Centre in accordance with the UNCITRAL Arbitration Rules as at present in
force and as may be amended by the provisions of this Section. The arbitration shall be the sole
and exclusive forum for resolution of such dispute, controversy or claim, and the award rendered
shall be final and binding. Judgment on the award rendered may be entered in any court having
jurisdiction thereof.

Section 11.2 Procedures.

	(a)	 	The number of arbitrators shall be three, one of whom shall be appointed by the Party
asserting a claim against the other Party or Parties, one of whom shall be appointed by the
Party or Parties (acting together), as the case may be, against whom a claim has been
asserted, and the third of whom shall be selected by mutual agreement, if possible, within
thirty days of the selection of the second arbitrator and thereafter by the administering
authority. In the event the Party against whom a claim has been asserted fails to appoint the
second arbitrator within 15 days after the first arbitrator is appointed by the Party
asserting a claim, then the administering authority shall select the second and third
arbitrators after expiration of the said 15 days.

	(b)	 	The language of arbitration shall be conducted in the English language and any foreign
language documents presented at such arbitration shall be accompanied by an English
translation thereof. The arbitration shall be held in HKSAR.

	(c)	 	Any award of the arbitrators (i) shall be in writing, (ii) shall state the reasons upon which
such award is based and (iii) may include an award of costs, including reasonable attorney’s
fees and disbursements.

	(d)	 	Any Party may make an application to the arbitrators seeking injunctive relief to maintain
the status quo until such time as the arbitration award is rendered or the dispute,
controversy or claim is otherwise resolved. Any Party may apply to any court having
jurisdiction hereof and seek injunctive relief in order to maintain the status quo until such
time as the arbitration award is rendered or the dispute, controversy or claim is otherwise
resolved.

ARTICLE XII

MISCELLANEOUS

Section 12.1 Notices. All notices, requests, communications (and including service of
legal process out of the courts of HKSAR) to any Party hereunder shall be in writing (including
facsimile or similar writing and overnight express mail or courier delivery) and shall be given to
the respective agents at the address/facsimile number set forth in this Agreement hereto or to such
other address/facsimile number as such Party may hereafter specify for the purpose by notice to the
other Parties in the manner provided in this Section.

 

 

 

	 	 	 	 	 
	 

	 	If to INSCOM HK:	 	 
	 

	 	Address:
	 	
	 

	 	Fax No.:
	 	0755-83521432
	 

	 	Attention:
	 	Mr. Tian Yuan 
	 
	 	 	 	 
	 

	 	If to INSCOM BVI:	 	 
	 

	 	Address:
	 	
	 

	 	Fax No.:
	 	0755-83521432
	 

	 	Attention:
	 	Mr. Tian Yuan 
	 
	 	 	 	 
	 

	 	If to the Company:	 	 
	 

	 	Address:
	 	
	 

	 	Fax No.:
	 	0755-83521432
	 

	 	Attention:
	 	Mr. Tian Yuan 
	 
	 	 	 	 
	 

	 	If to Apollo:	 	 
	 

	 	Address:
	 	
	 

	 	Fax No.:
	 	0755-83521432
	 

	 	Attention:
	 	Mr. Tian Yuan 
	 
	 	 	 	 
	 

	 	If to CSH:	 	 
	 

	 	Address:
	 	
	 

	 	Fax No.:
	 	020-61262893
	 

	 	Attention:
	 	Ms. Feng Zhuo Jun 
	 
	 	 	 	 
	 

	 	If to CISG	 	 
	 

	 	Address:
	 	
	 

	 	Fax No.: 	 	020-61262893
	 

	 	Attention:
	 	Mr. Hu Yi Nan 

All such notices, requests and other communications shall be deemed received (i) if given by
facsimile transmission, when transmitted to the facsimile number specified in this Section and
confirmation of receipt is received, and (ii) if given by overnight express mail or courier
delivery or any other means permitted by this Section, when received; provided, that if the
date of receipt hereunder is not a Business Day, the notice, request or communication shall be
deemed not to have been received until the next succeeding Business Day in the place of receipt.

Section 12.2 Amendments and Waivers. Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and is executed by each of the
Parties hereto. No failure or delay by any Party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law. Upon the occurrence of an IPO event, the Parties hereto agree
that Articles 8, 9 & 10 shall be amended accordingly for the purpose of complying with all
applicable rules and regulations of the relevant stock or securities exchange.

 

 

 

Section 12.3 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of and be enforceably by the respective successors and assigns of the Parties;
provided, however, that none of the Parties may assign or Transfer any of its rights or
obligations hereunder except in accordance with the provisions stipulated in this Agreement.

Section 12.4 Conflict with Articles of Association. In the event of any conflict between
the Articles of Association and this Agreement, the provisions of this Agreement shall prevail.

Section 12.5 Expenses. If Closing shall take place, the Company shall bear the following
costs and expenses incurred in this transaction (“Agreed Transaction Expenses”) including (a) legal
costs for the preparation, negotiation, execution, delivery and performance of this Agreement; (b)
audit fees for preparation of the Approved Accounts for the financial year of [*] and conduct of
audit review for the first six months of [*] and (c) valuation expenses and that all these Agreed
Transaction Expenses shall be paid by the Subscriber to the relevant professional parties direct.
Subject to the Subscriber undertaking to duly settle the Agreed Transaction Expenses, the
Subscription Consideration payable by the Subscriber shall correspondingly be reduced by a sum
equivalent to the Agreed Transaction Expenses. If for any reason Closing shall not take place, (i)
the Company shall be fully responsible for audit fees and expenses and that (ii) the Company and
Subscriber shall bear all legal expenses and valuation fees in equal share. Other than the Agreed
Transaction Expenses, each Party shall bear its own costs and expenses in connection with the
Subscription.

Section 12.6 Severability. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby, and any such term or provision to the extent
determined to be invalid, illegal or unenforceable shall be replaced by a valid, legal and
enforceable provision that comes as close as possible to carrying out the intent and effect of the
defective term or provision.

Section 12.7 Further Assurances. The Parties will execute and deliver such further
instruments and do such further acts and things as may be required to carry out the intent and
purposes of this Agreement into full effect.

Section 12.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the HKSAR.

Section 12.9 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the
same instrument. The English language text of this Agreement shall prevail over any translation
thereof.

Section 12.10 Force Majeure. The failure or delay of any of the Parties to perform any
obligation under this Agreement solely by reason of acts of God, acts of government, riots, wars,
terrorism, or other causes beyond its reasonable control (“Force Majeure”) shall not be deemed to
be a breach of this Agreement; provided, however, that the Party so prevented from complying
herewith shall not have procured such Force Majeure, shall have used reasonable diligence to avoid
such Force Majeure or ameliorate its effects, and shall continue to take all actions reasonably
within its power to comply as fully as possible with the terms of this Agreement. Except where the
nature of the event shall prevent it from doing so, the Party suffering such
Force Majeure shall notify the other Parties in writing promptly after the occurrence of such Force
Majeure and shall in every circumstance, to extent reasonable and lawful under the circumstances,
use its best efforts to remove or remedy such event.

 

 

 

Section 12.11 Headings Descriptive. The headings of the several articles and sections of
this Agreement are inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.

Section 12.12 Integration. This Agreement (including the Exhibits and Schedules hereto,
which are incorporated herein and made an integral part hereof) hereof constitute the entire and
only agreement between the Parties with respect to the subject matter hereof and supersede all
prior agreements commitments or understandings, whether written or verbal, that the Parties hereto
or thereto may have had with respect to the subject matter thereof.

 

 

 

IN WITNESS whereof this Agreement has been executed on the date and year said above written.

INSCOM HK 

	 	 	 	 	 	 	 
	SIGNED BY: Tian Yuan

	 	 	)	 	 	 
	Power
of attorney of a director, for and on behalf of

	 	 	)	 	 	/s/ Tian Yuan
	INSCOM HK LIMITED

	 	 	)	 	 	 
	in the presence of

	 	 	)	 	 	 

INSCOM BVI

	 	 	 	 	 	 	 
	SIGNED BY: Tian Yuan

	 	 	)	 	 	 
	a director, for and on behalf of

	 	 	)	 	 	/s/ Tian Yuan
	INSCOM GROUP LIMITED

	 	 	)	 	 	 
	in the presence of

	 	 	)	 	 	 

The Company

	 	 	 	 	 	 	 
	SIGNED BY: Tian Yuan

	 	 	)	 	 	 
	a director, for and on behalf of

	 	 	)	 	 	/s/ Tian Yuan
	INSCOM HOLDING LIMITED

	 	 	)	 	 	 
	in the presence of

	 	 	)	 	 	 

Apollo

	 	 	 	 	 	 	 
	SIGNED BY: Tian Yuan

	 	 	)	 	 	 
	Power
of attorney of a director, for and on behalf of

	 	 	)	 	 	/s/ Tian Yuan
	APOLLO & MUSE HOLDING Limited

	 	 	)	 	 	 
	in the presence of
	 	 	 	 	 	 

 

 

 

CSH

	 	 	 	 	 	 	 
	SIGNED BY:Feng Zhuojun

	 	 	)	 	 	 
	a director, for and on behalf of

	 	 	)	 	 	/s/ Feng Zhuojun
	CLEVER STAR HOLDINGS LIMITED

	 	 	)	 	 	 
	in the presence of

	 	 	)	 	 	 

CISG

	 	 	 	 	 	 	 
	SIGNED BY:Hu Yinan

	 	 	)	 	 	 
	a director, for and on behalf of

	 	 	)	 	 	/s/ Hu Yinan
	CISG HOLDINGS LTD.

	 	 	)	 	 	 
	in the presence of

	 	 	)	 	 	 

 

 

 

SCHEDULE 1

Corporate Information of the Company

	 	 	 	 	 
	(1) Name of the Company
	 	:	 	InsCom Holding Limited
	 
	 	 	 	 
	(2) Company No.
	 	:	 	1584021
	 
	 	 	 	 
	(3) Date of Incorporation
	 	:	 	7 May, 2010
	 
	 	 	 	 
	(4) Place of Incorporation
	 	:	 	British Virgin Islands
	 
	 	 	 	 
	(5) Registered Address
	 	:	 	P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands
	 
	 	 	 	 
	(6) Directors
	 	:	 	Yuan Tian
	 
	 	 	 	 
	(7) Authorized Share Capital
	 	:	 	US$50,000 divided into 50,000 shares of US$1.00 each
	 
	 	 	 	 
	(8) Issued Share Capital
	 	:	 	US$10,000
	 
	 	 	 	 
	(9) Shareholders
	 	 	 	 

	 	 	 	 	 	 	 
	Name of Shareholder	 	No. of Shares	 	Percentage holdings	 
	 
	 	 	 	 	 	 
	Apollo & Muse Holding Limited
	 	7,788 ordinary	 	 	77.88	%
	 
	Clever Star Holdings Limited
	 	2,212 ordinary	 	 	22.12	%

 

 

 

This Schedule is provided with

English Translation for Reference

SCHEDULE 2

Corporate Structure of the Company immediately after Closing

 

 

 

SCHEDULE 3A

Corporate Information of INSCOM BVI

(as at the date of the Agreement)

	 	 	 	 	 
	(1) Name of the Company
	 	:	 	InsCom Group Limited
	 
	 	 	 	 
	(2) Company No.
	 	:	 	1584027
	 
	 	 	 	 
	(3) Date of Incorporation
	 	:	 	7 May, 2010
	 
	 	 	 	 
	(4) Place of Incorporation
	 	:	 	British Virgin Islands
	 
	 	 	 	 
	(5) Registered Address
	 	:	 	P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands
	 
	 	 	 	 
	(6) Directors
	 	:	 	Yuan Tian
	 
	 	 	 	 
	(7) Authorized Share Capital
	 	:	 	50,000 shares of a single class each with a par value US$1.00
	 
	 	 	 	 
	(8) Issued Share Capital
	 	:	 	US$1
	 
	 	 	 	 
	(9) Shareholders
	 	 	 	 

	 	 	 	 	 	 	 	 	 
	Name of Shareholder	 	No. of Shares	 	 	Percentage holdings	 
	 
	 	 	 	 	 	 	 	 
	InsCom Holding Limited
	 	 	1	 	 	 	100	%

 

 

 

SCHEDULE 3B

Corporate Information of INSCOM HK

(as at the date of the Agreement)

	 	 	 	 	 
	(1) Name of the Company
	 	:	 	InsCom HK Limited
	 
	 	 	 	 
	(2) Company No.
	 	:	 	1457225
	 
	 	 	 	 
	(3) Date of Incorporation
	 	:	 	17 May, 2010
	 
	 	 	 	 
	(4) Place of Incorporation
	 	:	 	Hong Kong
	 
	 	 	 	 
	(5) Registered Address
	 	:	 	12/F  Ruttonjee House, 11 Duddell Street, Central, Hong Kong
	 
	 	 	 	 
	(6) Directors
	 	:	 	Yuan Tian
	 
	 	 	 	 
	(7) Issued Share Capital
	 	:	 	HK$1.00
	 
	 	 	 	 
	(8) Shareholders
	 	 	 	 

	 	 	 	 	 	 	 	 	 
	Name of Shareholder	 	No. of Shares	 	 	Percentage holdings	 
	 
	 	 	 	 	 	 	 	 
	InsCom Group Limited
	 	 	1	 	 	 	100	%

 

 

 

SCHEDULE 3C

Corporate Information of Ying Si Kang

(as at the date of the Agreement)

	 	 	 	 	 
	(1) Name of the Company
	 	:	 	Ying Si Kang Information Technology (Shenzhen)Co., Ltd
	 
	 	 	 	 
	(2) License No.
	 	:	 	440301503378995
	 
	 	 	 	 
	(3) Date of Incorporation
	 	:	 	15 July, 2010
	 
	 	 	 	 
	(4) Place of Incorporation
	 	:	 	PRC
	 
	 	 	 	 
	(5) Registered Address
	 	:	 	2108-2110-35 Tower A, Jiahe Huaqiang Buiding, Shennan Road, Futian District, Shenzhen
	 
	 	 	 	 
	(6) Legal Representative
	 	:	 	Yuan Tian
	 
	 	 	 	 
	(7) Registered Capital
	 	:	 	US$1,200,000.00
	 
	 	 	 	 
	(8) Shareholders
	 	 	 	 

	 	 	 	 	 
	Name of Shareholder	 	Percentage holdings	 
	 
	 	 	 	 
	InsCom HK Limited
	 	 	100	%

 

 

 

SCHEDULE 3D

Corporate Information of the First PRC Subsidiaries

(as at the date of the Agreement)

	 	 	 	 	 
	(1) Name of the Company
	 	:	 	Shenzhen Xinbao Investment Co., Ltd
	 
	 	 	 	 
	(2) License No.
	 	:	 	440301104741339
	 
	 	 	 	 
	(3) Date of Incorporation
	 	:	 	12 June, 2010
	 
	 	 	 	 
	(4) Place of Incorporation
	 	:	 	PRC
	 
	 	 	 	 
	(5) Registered Address
	 	:	 	2108-2110-28 Tower A, Jiahe Huaqiang Buiding, Shennan Road, Futian District, Shenzhen
	 
	 	 	 	 
	(6) Legal Representative
	 	:	 	Yuan Tian
	 
	 	 	 	 
	(7) Registered Capital
	 	:	 	RMB30,000.00
	 
	 	 	 	 
	(8) Shareholders
	 	 	 	 

	 	 	 	 	 
	Name of Shareholder	 	Percentage holdings	 
	 
	 	 	 	 
	Yuan Tian
	 	 	50	%
	 
	 	 	 	 
	Fei Xiao
	 	 	50	%

 

 

 

	 	 	 	 	 
	(1) Name of the Company
	 	:	 	Shenzhen InsCom E-Commerce Co., Ltd
	 
	 	 	 	 
	(2) License No.
	 	:	 	440301103498934
	 
	 	 	 	 
	(3) Date of Incorporation
	 	:	 	2 June, 2004
	 
	 	 	 	 
	(4) Place of Incorporation
	 	:	 	PRC
	 
	 	 	 	 
	(5) Registered Address
	 	:	 	Unit A, Olympics Building7/F, Shangbao Road, Futian District, Shenzhen
	 
	 	 	 	 
	(6) Legal Representative
	 	:	 	Yuan Tian
	 
	 	 	 	 
	(7) Registered Capital
	 	:	 	RMB3,000,000.00
	 
	 	 	 	 
	(8) Shareholders
	 	 	 	 

	 	 	 	 	 
	Name of Shareholder	 	Percentage holdings	 
	 
	 	 	 	 
	Yuan Tian
	 	 	50	%
	 
	 	 	 	 
	Fei Xiao
	 	 	50	%

 

 

 

SCHEDULE 3E

Corporate Information of the Second PRC Subsidiaries

(as at the date of the Agreement)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Registered	 	 	 	 	 
	Company	 	 	 	 	 	Date of	 	 	Capital	 	 	Legal	 	 
	Name	 	License No.	 	 	Incorporation	 	 	(RMB)	 	 	Representative	 	Shareholders
	HN Fanhua Anlian
Insurance Agency
Co.,Ltd
	 	 	410192100013786	 	 	29 Jan, 2008	 	 	3,000,000	 	 	Jun Zhang	 	Meidiya: 51%
Jingshi: 49%
	HZ Fanhua Zhixin
Insurance Agency
Co.,Ltd
	 	 	330102000013189	 	 	4 Jan, 2008	 	 	5,000,000	 	 	Yu Zeng	 	Meidiya: 51%
Jingshi: 49%
	TJ Fanhua Xianghe
Insurance Agency
Co.,Ltd
	 	 	120102000011824	 	 	23 Nov, 2007	 	 	2,000,000	 	 	Changhua Mu	 	Meidiya: 70%
Zhiyong: 30%
	FZ Fanhua Guoxin
Insurance Agency
Co.,Ltd
	 	 	350102100011038	 	 	24 Jan, 2008	 	 	5,000,000	 	 	Xiaomin Gong	 	Fanhua
Invesntment: 70%
Jingshi: 30%
	CS Lianyi Insurance
Agency Co.,Ltd
	 	 	430102000040432	 	 	19 Dec,2007	 	 	5,000,000	 	 	Jiangrong Xu	 	Meidiya: 70%
Jingshi: 30%
	NB Baolian
Insurance Agency
Co.,Ltd
	 	 	330215000013767	 	 	25 May, 2009	 	 	2,000,000	 	 	Guangqing Ying	 	Meidiya: 51%
Jingshi: 49%

NOTE:

In the table above, Guangdong Meidiya Investment Co., Ltd is referred to as Meidiya, Chengdu
Jingshi Investment Co., Ltd is referred to as Jingshi, Sichuan Zhiyong Investment Co., Ltd is
referred to as Zhiyong and Fujian Fanhua Investment Co., Ltd is referred to as Fanhua Investment.

 

 

 

SCHEDULE 4

Warranties

Save as disclosed in writing prior to execution of this Agreement, the Existing Shareholders hereby
represents and warrants to the Subscriber that all representations and statements of fact set out
in this Schedule or otherwise contained in this Agreement are and will be true in all material
respects as at the date hereof and as at Closing.

	1.	 	GENERAL

	 
	1.1	 	Accuracy of recitals and schedules

	 
	 	 	The information and particulars relating to the Group as set out in
the recitals and Schedules to this Agreement are true and accurate in
all respects.

	 
	1.2	 	Memorandum and articles of association, statutory books and returns

	 	(A)	 	Copies of articles of association of each member of Group which have been given
to the Subscriber are accurate and complete in all respects and have annexed or
incorporated copies of all resolutions or agreements required to be so annexed or
incorporated by the rules and regulations governing companies in the PRC.

	 	(B)	 	The statutory books and registers of the Group have been properly kept and no
notice or allegation that any of them is incorrect or should be rectified has been
received.

	 	(C)	 	All returns and particulars, resolutions and other documents which any member
of the Group is required by law to file with or deliver to the relevant authorities
have been correctly made up and duly filed or delivered.

	1.3	 	Ownership of Interest

	 	(A)	 	The PRC Subsidiaries have been duly incorporated and are validly existing under
the laws of the PRC and have full power, authority and legal right to own their assets
and carry on the business.

	 	(B)	 	Save and except already disclosed to the Subscriber in writing by the Existing
Shareholders, no person is entitled or has claimed to be entitled to require any member
of Group to issue any share equity or loan capital either now or at any future date
whether contingently or not.

	 	(C)	 	Save and except already disclosed to the Subscriber in writing by the Existing
Shareholders, there is no option, right of pre-emption, right to acquire, mortgage,
charge, pledge, lien or other form of security or encumbrance on, over or affecting any
of the equity interest of the Group nor is there any commitment to give or create any
of the foregoing, and no person has claimed to be entitled to any of the foregoing.

 

 

 

	1.4	 	Subsidiaries, associations and branches

Save and except already disclosed to the Subscriber in writing by the Existing Shareholders,
the Company has no subsidiaries nor is it a member of any partnership or other
unincorporated association, joint venture or consortium.

	1.5	 	Ownership of assets

	 
	 	 	The Group is the legal and beneficial owner of its assets as set out in the Accounts.

	 
	1.6	 	Vulnerable antecedent transactions

	 
	 	 	The Group has taken no steps to be a party to a transaction and has not entered into any disposition of property pursuant
to or as a result of which an asset owned, purportedly owned or otherwise held by any member of the Group is liable to be
transferred or re-transferred to another person or which gives or may give rise to a right of compensation or other payment
in favor of another person.

	 
	1.7	 	Compliance with statutes

	 	(A)	 	Each member of the Group has conducted its business in accordance with all
applicable laws, regulations and rules issued by the relevant PRC government
authorities and has not committed any criminal, illegal or unlawful act.

	 	(B)	 	To the best belief and knowledge of the Existing Shareholders, neither the
Group, nor any of its officers, agents or employees (during the course of their
duties), has done or omitted to do anything which is a contravention of any statute,
order, regulation or the like giving rise to any fine, penalty or other liability or
sanction on the part of the Group which could have produced adverse effect on the
normal operation of the Group.

	 	(C)	 	The Group has not committed any breach of contract or statutory duty or other
unlawful act which could lead to a claim for damages being made against it and no event
has occurred which would entitle any third party to terminate any contract or any
benefit enjoyed by the Group.

	1.8	 	Licenses and consents

	 
	 	 	All necessary licenses, approvals and/or permits for undertaking the
business by the Group have been validly issued to the Group Companies
by the Governmental Authorities and that the Existing Shareholders are
not aware of anything that might result in the revocation, suspension
or modification of any of such licenses, approvals and permits or any
circumstances that might prejudice their renewal.

	 
	1.9	 	Litigation

	 
	 	 	The Existing Shareholders do not have actual knowledge and have not received any written
notice that:-

	 	(A)	 	the Group is engaged in any litigation or arbitration proceedings.

 

 

 

	 	(B)	 	the Group has done or omitted to do anything which will give rise to any
litigation or arbitration proceedings by or against the Group, and

	 	(C)	 	the Group is the subject of any investigation, inquiry or enforcement
proceedings or process by any governmental, administrative or regulatory body.

	1.10	 	Insolvency

	 	(A)	 	Save as disclosed prior to signing of this Agreement, the Existing Shareholders
have not received any written notice or verbal indication from any party in which:-

	 	(i)	 	any receiver, liquidator, provisional administrator or other person
carrying on similar function has been appointed in respect of any Group or in
respect of the whole or any part of the assets or undertaking of any Group; and

	 	(ii)	 	any winding up or administrative order has been made and no
petition has been presented for such an order in respect of any Group.

	 	 	 	Save as disclosed prior to signing of this Agreement, the Existing Shareholders have
not received any notice in which:-

	 	(i)	 	any meeting has been convened at which a resolution shall be
proposed, any resolution has been passed, any petition has been presented and any
order has been made for the winding up or dissolution of any Group Company or for
an administrative order in respect of any Group Company; or

	 	(ii)	 	any Group Company has stopped or suspended payment of its debts,
become unable to pay its debts (within the meaning of Section 178 of the
Companies Ordinance or any similar provisions under the applicable laws in PRC)
or otherwise become insolvent.

	 	(B)	 	Save as disclosed prior to signing of this Agreement, the Existing Shareholders
have not received any written notice in which any circumstances have arisen which entitle
any person to take any action, appoint any person, commence proceedings or obtain any
order.

	 	(C)	 	Save as disclosed prior to signing of this Agreement, the Company, INSCOM HK and
INSCOM BVI have not carried on any actual business operation in any part of the world and
have not entered into any contract, agreement (whether verbal or in writing) with any
Person.

 

 

 

	2.	 	ACCOUNTS AND FINANCIAL

	 
	2.1	 	Accuracy of the Accounts

The Accounts

	 	(A)	 	to the best knowledge and belief of the Existing Shareholders, the Accounts
have been prepared in accordance with US GAAP and laws and regulations of PRC.

	 	(B)	 	are complete and accurate in all material respects and give, a true and fair
view of the state of affairs and financial position of the Group Companies as at the
Account Date.

	 	(C)	 	are true, accurate and complete, in all material respects with regard to
capital commitments, assets and liabilities (actual and contingent), profits and loss
and the financial position of the Group Companies as at the Account Date.

	 	(D)	 	are not materially and adversely affected by any unusual or non-recurring
items.

	 
	 	(E)	 	fully disclose all the assets of the Group Companies as at the Account Date.

	 	(F)	 	fully disclose and make full provision or reserve for all actual liabilities,
and

	 	(G)	 	fully disclose and make provision or reserve for or note all contingent
liabilities, capital or burdensome commitments and deferred taxation.

	2.2	 	Book debts

Other than the loans and liabilities as shown in the Accounts, if any, the Group Companies
has no outstanding book debts or indebtedness as at the Account Date.

	2.3	 	Books and records

	 
	 	 	All accounts, books, ledgers, and other financial records of the Group Companies:-

	 	(A)	 	to the best knowledge and belief of the Existing Shareholders, all accounts,
books, ledgers, and other financial records of the Group Companies have been properly
maintained and contain accurate records of all matters required to be entered in them
in accordance with US GAAP, and applicable statutes and regulations of PRC; and

	 	(B)	 	give a true and fair view of the matters which ought to appear in them.

	2.4	 	Dividends and distributions

	 	(A)	 	No dividend or other distribution of profits or assets has been or agreed to be
declared, made or paid by the Group Companies since the Account Date.

	 	(B)	 	All dividends or other distributions of profits or assets declared, made or
paid since the respective dates of incorporation of the Group Companies have been
declared, made and paid in accordance with the applicable PRC statutes and regulations
and the respective articles of association (or equivalent documents) of each member of
the Group Companies.

 

 

 

	2.5	 	Bank and other borrowings

	 	(A)	 	The Group Companies have made no bank borrowings other than those as shown in
the Accounts.

	 	(B)	 	The Group Companies has no outstanding mortgages, charges, debentures or other
loan capital or bank overdrafts, bank or other borrowings, loans or other indebtedness,
financial facilities, finance leases or hire purchase commitments or any guarantees or
other contingent liabilities other than those as shown in the Accounts.

	 	(C)	 	No material outstanding indebtedness of any member of the Group Companies has
become payable by reason of default by any member of the Group Companies and no event
of default has occurred or is pending which with the lapse of time or the fulfillment
of any condition or the giving of notice may result in any such indebtedness becoming
so payable prior to maturity.

	2.6	 	Loan capital and guarantees

	 
	 	 	Save as disclosed in the Accounts, the Group Companies have no and has
not incurred any loan capital or any liability.

	 
	2.7	 	Loans

	 
	 	 	The Group Companies have not lent any money to any parties which has
not been repaid to it or owns the benefit of any debt (whether present
or future) other than debts accrued to it in the ordinary course of
its business.

	 
	2.8	 	Working capital

	 	(A)	 	The Group Companies have sufficient working capital for the purposes of
operating their existing businesses.

	 	(B)	 	Save as disclosed in writing prior to signing of this Agreement or transactions
contemplated under this Agreement, the Group Companies have no material outstanding
capital commitment and is not engaged in any scheme or project requiring expenditure of
capital of a significant sum.

	2.9	 	Liabilities

	 	(A)	 	Save as disclosed in the Accounts, there are no liabilities (including
contingent liabilities) which are outstanding on the part of the Group Companies other
than those incurred in the ordinary and proper course of business since the Account
Date.

	 	(B)	 	The Company, INSCOM HK and INSCOM BVI have not incurred any liabilities
(including contingent liabilities) since incorporation.

 

 

 

	2.10	 	Financing Arrangements

	 
	In relation to all financing arrangements (including all mortgages,
overdrafts and other loan or financial facilities) to which any Group
Companies is a party:-

	 	(A)	 	there has been no contravention of or non-compliance with any provision of any
such document.

	 	(B)	 	no steps for the enforcement of any encumbrances or the early repayment of the
indebtedness have been taken or threatened;

	 	(C))	 	 there has not been any alteration in the terms and conditions of any of the
said arrangements or facilities all of which are in full force and effect.

	 	(D)	 	nothing has been done or omitted to be done whereby the continuance of the said
arrangements and facilities in full force and effect might be affected or prejudiced.

	 	(E)	 	none of the arrangements is dependent on the guarantee of or on any security
provided by a third party.

	 	(F)	 	no consent is required from the lenders of such financing arrangements for the
entering into and completion of the transactions contemplated under this Agreement, and

	 	(G)	 	none of the facilities may be terminated, or mature prior to its stated
maturity as a result of completion of the Subscription or any matter contemplated by
this Agreement.

	2.11	 	Position since the Account Date

	 
	 	 	Since the Account Date:-

	 	(A)	 	the Group Companies have conducted the business of the Group Companies in a
normal and proper manner.

	 	(B)	 	the Group Companies have not entered into any unusual contract or commitment or
otherwise departs from its normal course of trading.

	 
	 	(C)	 	there has been no material adverse change to the Accounts since Account Date.

	 	(D)	 	there has not been any sale or transfer by the Group Companies of any material
tangible or intangible assets other than in the ordinary course of business, any
mortgage or pledge or the creation of any security interest, lien, or encumbrance on
any such asset, or any lease of property, including equipment, other than tax liens
with respect to taxes not yet due and statutory rights of customers in inventory and
other assets.

	 	(E)	 	there has not been any damage, destruction, or loss, whether covered by
insurance or not, materially adversely affecting the business of the Group Companies
(taken as a whole.

 

 

 

	 	(F)	 	there has not been making of any material loan, advance, indemnity or guaranty
by the Group Companies to or for the benefit of any person except the creation of
accounts receivables in the ordinary course of business.

	 	(G)	 	there has not been any material adverse change in the business, financial
condition, operations, or assets of the Group Companies (taken as a whole. And

	 
	 	(H)	 	there has not been an agreement to do any of the foregoing.

	3.	 	COMMERCIAL

	 
	3.1	 	Effect of Transactions contemplated under this Agreement

	 
	 	 	Neither the execution of this Agreement nor the compliance with the
terms of this Agreement does and will:-

	 	(A)	 	conflict with, or result in the breach of, or constitute a default under, any
of the terms, conditions or provisions of any agreement or instrument to which the
Group Companies is a party, or any provision of the memorandum or articles of
association or other corresponding constitutional documents of the Group Companies or
any encumbrances, lease, contract, order, judgement, award, injunction, regulation or
other restriction or obligation of any kind or character by which or to which any asset
of the Group Companies is bound or subject.

	 	(B)	 	relieve any person from any obligation to the Group Companies or cause any
person to determine any such obligation or any right or benefit enjoyed by the Group
Companies, or to exercise any right, whether under an agreement with or otherwise in
respect of the Group Companies.

	 	(C)	 	result in the creation, imposition, crystallization or enforcement of any
encumbrance whatsoever on any of the assets of the Group Companies, and

	 	(D)	 	result in any present or future indebtedness of the Group Companies becoming
due and payable or capable of being declared due and payable prior to its stated
maturity.

	3.2	 	Trading contracts

Save as disclosed prior to this Agreement, the Group Companies have duly observed and
performed the terms and conditions on its part to be observed and performed under its
trading contracts.

	3.3	 	Material contracts

There are no agreements concerning the Group Companies which provide that they can be
terminated as a result of completion of the Subscription or a change in the composition of
the board of directors of the Group Companies.

 

 

 

	3.4	 	Agreements restricting business

	 	(A)	 	Each member of the Group Companies is not a party to any agency,
distributorship, marketing, purchasing, manufacturing or licensing agreement or
arrangement, or any restrictive trading or other agreement or arrangement which in any
way restricts its freedom to carry on business.

	 	(B)	 	The Group Companies are not a party to any undertaking or assurances given to
any court or governmental agency which is still in force.

	3.5	 	Defaults under agreements

	 	(A)	 	On or prior to the Closing Date, the Group Companies are not and will not with
the lapse of time become:-

	 	(1)	 	in default under any agreement or covenant to which it is a party
or in respect of any other obligations or restrictions binding upon it; and

	 	(2)	 	to the best information and belief of the Existing Shareholders,
liable in respect of any breach of representation or warranty given under any
agreement to which it is a party.

	 	(B)	 	On or prior to the Closing Date, no threat or claim of default under any
agreement, instrument or arrangement to which any member of the Group Companies is a
party has been made and is outstanding against it and there is nothing whereby any such
agreement, instrument or arrangement may be prematurely terminated or rescinded by any
other party or whereby the terms thereof may be materially worsened as against the
relevant member of Group Companies.

	3.6	 	Other party’s defaults

	 
	 	 	No party to any agreement with or under an obligation to the Company
is (1) in default under it, being a default which would be material in
the context of its financial or trading position and there are no
circumstances likely to give rise to such a default; or (2) incapable
of performing its obligations or granting any rights thereunder.

	 
	3.7	 	No powers of attorney

	 
	 	 	The Group Companies have not granted any power of attorney or similar
authority which remains in force as at the date of this Agreement.

	4.	 	TAXATION

	(A)	 	Each Group Company has complied with all other relevant legal requirements relating to
registration or notification for Taxation purposes.

	 
	(B)	 	Each member of Group Company has:-

	 	(i)	 	duly and punctually paid all Taxation which it has become liable to pay and is
under no liability to pay any penalty or interest in connection with any claim for
Taxation and has not paid any tax which it was and is not properly due to pay.

	 	(ii)	 	taken all necessary steps to obtain any repayment of or relief from Taxation
available to it.

 

 

 

	(C)	 	The returns which ought to have been made by or in respect of any member of Group Companies
for any Taxation purposes have been made and all such returns are up-to-date correct and on a
proper basis and are not the subject of any dispute with any Taxation or other relevant
authority and there are no present circumstances known to the Existing Shareholders which are
likely to give rise to any such dispute and provision has been made in the Accounts for all
amounts which were or would have been shown by any such return to be payable by the Company.

	(D)	 	The provisions (if any) included in the Accounts are sufficient to cover all Taxation in
respect of all periods ending on or before the Account Date for which the Group Companies was
then or might at any time thereafter become or have become liable.

	5.	 	INTELLECTUAL PROPERTY

	(A)	 	No member of the Group has entered into any agreements, arrangement or understanding (whether
legally enforceable or not) for the licensing or otherwise permitting the use or exploitation
of the IP Rights.

	(B)	 	None of the IP Works is currently being infringed, misused or used without authorization by
any third party and none of it has been so infringed, misused or used without authorization
during the last three years nor will it be so infringed, misused or used and no third party
has threatened any such infringement, misuse or unauthorized use.

	(C)	 	To the best belief and knowledge of the Existing Shareholders, there are no circumstances
under which the Group’s right to use IP Works may be prohibited or terminated.

	(D)	 	The activities of the Group Companies do not infringe or otherwise involve the misuse or
unauthorized use of any industrial or intellectual property rights of third parties. None of
the IP Rights has been wrongfully or unlawfully acquired by the Group Companies. No claim
under any warranty contained in such documentation has been made or intimated nor are there
any reasonable grounds on which any such claim could be made.

 

 

 

	(E)	 	The Group has taken all steps open to it to preserve its IP Works including, but not limited
to take all reasonable steps to preserve the confidentiality of all know-how, confidential
information and trade secrets used in the Business, including ensuring that all such know-how,
information and secrets are fully documented and held in a secure location in the possession
or control of the Group, are only disclosed to such employees and other persons to whom
disclosure is necessary in the normal conduct of the business of the Group and who are aware
of, and accept in writing an obligation to maintain, the confidentiality thereof.

	(F)	 	The Group has not in the past been carrying on the business in such a way as to infringe any
intellectual property right of any person, does not do so as at the date of this Agreement,
and it will not do so prior to Closing.

	6.	 	PROPERTIES

	 
	 	 	None of the Group has owned any real property in the PRC or elsewhere.

 

 

 

SCHEDULE 5

Rights of First Refusal

	1.	 	The relevant Selling Shareholder shall first give a notice in writing within 7 days after
receipt of the offer (the “Transfer Notice”) from any third party (“Prospective Purchaser”) to
CISG informing that he/she/it has received such an offer. The Transfer Notice shall specify:-

	 	(a)	 	the number of stocks which the Prospective Purchaser wishes to acquire (the
“Offered Shares”);

	 
	 	(b)	 	the name of the Prospective Purchaser;

	 
	 	(c)	 	the price which the Prospective Purchaser has offered for the Offered Shares
(if any); and

	 
	 	(d)	 	details of any other material terms of the offer made by the Prospective
Purchaser (if any) and any other material terms or circumstances known to the relevant
Selling Shareholder which affect or may affect the offer.

	2.	 	CISG (“Purchasing Shareholder”) may within a period of 15 Business Days after receipt of the
Transfer Notice require the relevant Selling Shareholder to sell the Relevant Shares to CISG
under the same terms and conditions.

	 
	3.	 	None of the Existing Shareholders shall Transfer or agree to transfer or enter into any
arrangement for the transfer of the Offered Shares or any part thereof to the Prospective
Purchaser or its nominees unless the provisions set out herein have been duly complied with.

 

 

 

SCHEDULE 6

Rights and Privileges of Preference Shares

The Preference Shares shall have the following rights:

	 	 	 	 	 
	(a) Total Issue Price:	 	Subscription Consideration
	 
	 	 	 	 
	(b) Dividends:	 	The registered holders of the Preference
Shares shall have the same entitlement to the
dividends as that of the registered holders
of the Ordinary Shares.
	 
	 	 	 	 
	(c) Liquidation Preference

	 	(1)
	 	In the event of any Liquidation Event:
	 
	 

	 	(i)
	 	the holders of the Preference Shares
shall be entitled to receive, prior to any
distribution to the holders of the Ordinary
Shares or any other class or series of
Shares:
	 
	 	 	 	 
	 

	 	 	 	(I) an amount per Preference Share (as
adjusted for any share splits, share
dividends, combinations, recapitalizations or
the like) as calculated as follows:
	 
	 	 	 	 
	 

	 	 	 	= Subscription Consideration/ [[69,250] +
Number of Additional Preference Shares issued
(if any)];
	 
	 	 	 	 
	 

	 	 	 	(II) all accrued or declared but unpaid
dividends on the Preference Shares; and
	 
	 	 	 	 
	 

	 	 	 	(III) interest on both (I) and (II) at an
interest rate of [30]% per annum accrued from
Closing Date to the date of Liquidation Event
	 
	 	 	 	 
	 

	 	 	 	((I), (II) and (III) collectively referred to
as the “Preference Amount”).
	 
	 	 	 	 
	 

	 	 	 	If upon such liquidation, dissolution or
winding up of the Company, the assets
available to be distributed among the holders
of Preference Shares shall be insufficient to
permit the payment in full of the Preference
Amount, the entire assets of the Company to
be distributed shall be distributed ratably
among the holders of the Preference Shares;
and
	 
	 	 	 	 
	 

	 	(ii)
	 	after the distribution of the
aforementioned Preference Amount, any
remaining funds or assets of the Company
legally available for distribution to
shareholders shall be distributed pro rata
among the holders of the Preference Shares
(on an as-converted basis) together with the
holders of the Ordinary Shares.

 

 

 

	 	 	 	 	 
	 

	 	(2)
	 	For the purpose of this Schedule,
“Liquidation Events” shall mean liquidation,
dissolution or winding up of the Company,
either voluntary or involuntary, and be
deemed to include any merger, acquisition or
sale of voting control of the Company as a
result of which its existing shareholders
will not retain a majority of the voting
power in the new controlling entity of the
Group, a sale of all or substantial part of
the Company’s assets.
	 
	 	 	 	 
	(d) Voting Rights:	 	The registered holders of the Preference
Shares shall have the same voting rights as
those of the registered holders of the
Ordinary Shares at any general meeting of the
Company.
	 
	 	 	 	 
	(e) Redemption:	 	CISG shall have the right to demand the
Company to redeem the Preference Shares held
by CISG for cash at RMB 400 million (or the
USD equivalent to RMB 400 million at such an
exchange rate to be quoted by the remitting
bank at the date when redemption shall be
made by the Company) prior to the occurrence
of IPO.
	 
	 	 	 	 
	(f) Profit Entitlement	 	CISG shall be entitled to all of the dividend
or other distribution of the profit of the
Group prior to the occurrence of IPO and CISG
shall have the right to demand the Company to
pay to CISG the dividend or other
distribution of profit prior to the
occurrence of IPO.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00188-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00188-of-00352.parquet"}]]