EXHIBIT 4.9
EXECUTION COPY
DATED 1 JULY 2006
(1) MR. QU XIAO HUA
(2) HSBC HAV2 (III) LIMITED
and
(3) JAFCO ASIA TECHNOLOGY FUND II
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PUT OPTION AGREEMENT
IN RESPECT OF
CANADIAN SOLAR INC.
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BAKER & MCKENZIE
THIS AGREEMENT is made on the 1st day of July 2006
BETWEEN:
(1) MR. QU XIAO HUA, holder of Canadian Passport Number BC289772 and whose
residential address being at 4056 Jefton Crescent, Mississauga, Ontario,
Canada L5L 1Z3 (the "FOUNDER");
(2) HSBC HAV 2 (III) LIMITED, a company incorporated in the Cayman Islands with
its registered office at 2nd Floor, Strathvale House, North Church Street,
George Town, Grand Cayman, Cayman Islands (the "FUNDS"); and
(3) JAFCO ASIA TECHNOLOGY FUND II, a Cayman Islands exempted company with its
registered office at PO Box 309GT, Ugland House, South Church Street,
George Town, Grand Cayman, Cayman Islands ("JAFCO").
The Funds and JAFCO shall be referred to collectively as the "INVESTORS" and
individually as an "INVESTOR".
WHEREAS:
(A) Canadian Solar Inc. (the "COMPANY") is a corporation continued under the
laws of Canada. Particulars of the Company are set out in Schedule 1.
(B) The Company, the Founder, the Investors and other parties entered into (i)
a subscription agreement on 16 November 2005 in relation to the issue of
Convertible Notes to the Investors and (ii) four supplemental agreements
relating thereto dated 28 February 2006, 29 March 2006, 9 June 2006 and the
date of today respectively (collectively, the "SUBSCRIPTION AGREEMENTS").
The same parties also entered into an investment agreement relating to the
Company on 30 November 2005 (the "INVESTMENT AGREEMENT").
(C) Pursuant to the Subscription Agreements, the Company issued to the Funds
Convertible Notes of an aggregate principal amount of US$7,750,000 and to
JAFCO Convertible Notes of an aggregate principal amount of US$4,000,000.
All the Convertible Notes are outstanding as at the date hereof.
(D) Each of the parties hereto acknowledges that each Investor was requested by
the Company and the Founder to convert all its outstanding Convertible
Notes into Common Shares, or any other Shares issued or issuable in respect
thereof upon any stock split, subdivision, reorganisation or the like, or
issued or issuable as stock dividend in respect of such Common Shares (the
"CONVERSION SHARES") as an Optional Conversion (the "CONVERSION"). As a
condition to the Conversion and in consideration of each Investor agreeing
to conduct the Conversion, the Founder shall grant an option to each
Investor to require the Founder to purchase all of the Conversion Shares
from the relevant Investor or its Affiliate on the terms and conditions set
out in this Agreement.
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(E) It is contemplated by the parties and the Company that the Common Shares
(including the Conversion Shares) will undergo a share split immediately
following the Conversion, and accordingly the price for the option set out
herein will be adjusted.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, THE PARTIES HEREBY AGREE AS
FOLLOWS:
1. INTERPRETATION
1.1 In this Agreement, capitalized terms shall have the meanings as set out in
the Subscription Agreements, unless otherwise defined.
1.2 In this Agreement:
(A) the headings are inserted for convenience only and shall not affect
the construction and interpretation of this Agreement;
(B) unless the context requires otherwise, words incorporating the
singular shall include the plural and vice versa and words importing a
gender shall include every gender;
(C) references herein to Clauses, Recitals and Schedules are to clauses
and recitals of and schedules to this Agreement; and
(D) all Recitals and Schedules form part of this Agreement and shall have
the same force and effect as if expressly set out in the body of this
Agreement and any reference to this Agreement shall include such
Recitals and Schedules.
2. PUT OPTION
2.1 In consideration of each Investor agreeing to conduct the Conversion, the
Founder hereby grants to each of the Investors severally an option (the
"PUT OPTION") to require the Founder to purchase all of the Conversion
Shares held by each Investor or its Affiliate (the "TRANSFER") at the
option price ("OPTION PRICE") calculated in accordance with the following
provisions:
Option Price = US$5.770563156 per Conversion Share,
on the basis that (i) a total of 5,668,421 Common Shares are currently in
issue before the Conversion; (ii) the maximum number of Common Shares that
may be issued pursuant to the ESOP shall be 1,000,000; (iii) an aggregate
of 2,036,195.824 Common Shares are expected to be issued to all Investors
upon the full conversion of all Convertible Notes of an aggregate principal
amount of US$11,750,000.
2.2 In the event the Common Shares shall be increased by share split,
subdivision, or other similar transaction into a greater number of Common
Shares, the Option Price then in effect shall, concurrently with the
effectiveness of such event, be decreased
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in proportion to the percentage increase in the outstanding number of
Common Shares. In the event the outstanding Common Shares shall be
decreased by a reverse share split, combination, consolidation, or other
similar transaction into a smaller number of Common Shares, the Option
Price then in effect shall, concurrently with the effectiveness of such
event, be increased in proportion to the percentage decrease in the
outstanding number of Common Shares.
For the avoidance of doubt, where the Common Shares shall undergo a share
split immediately following the Conversion on a 1 for 1.168130772 basis and
where the maximum number of Common Shares that may be issued pursuant to
the ESOP shall remain 1,000,000 notwithstanding the share split:
Option Price = US$4.94 per Conversion Share,
on the basis that the aggregate shareholding of all Investors in the
Company following the share split shall be 23.79%.
2.3 Subject to Clause 2.4 below, the Put Option may be exercisable from time to
time in whole or in part.
2.4 The Put Option is exercisable by each of the Investors, by serving a
written option notice (the "OPTION NOTICE") on the Founder in accordance
with Clause 7 and
(A) at any time from 31 March 2007 (inclusive) to 10 April 2007
(inclusive) in the event that the Company has not completed a
Qualified IPO on or before 31 March 2007; or
(B) at any time after the occurrence and during the continuance of an
Event of Default upon written demand from any of the Investors, which
demand may be served by the Investors at any time following the date
on which such Event of Default becomes known to such Investor.
2.4 The Option Notice shall, concurrently with delivery to the Founder, be
delivered to the other Investor(s). Upon receipt of the Option Notice, the
other Investor(s) may also elect to exercise the Put Option by delivering a
separate option notice ("SECOND OPTION NOTICE") to the Founder (copying all
other Investors) within ten (10) days of the receipt of the Option Notice.
2.5 For the purpose of Clause 2.4(B) above, the Founder hereby undertakes with
each of the Investors that upon him becoming aware of the occurrence of any
Event of Default, he will promptly give written notice thereof to each of
the Investors.
2.6 Any Option Notice served by any Investor pursuant to Clause 2 shall contain
a statement to the effect that such Investor wishes to exercise the Put
Option and shall set out in as much details as reasonably possible
particulars of the event which forms the basis for the exercise of the Put
Option, the number of Conversion Shares to be transferred by such Investor
or its Affiliate pursuant to the said notice, the Option Price and the
place where the Transfer of the Conversion Shares shall take place.
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2.7 The completion of the Transfer of the Conversion Shares upon exercise of
the Put Option by an Investor pursuant to Clauses 2.4 and/or 2.5 shall take
place as soon as possible after the Investor or its Affiliate has provided
the Founder with a certificate under section 116 of the Income Tax Act
(Canada) as referred to in Clause 2.9, whereupon the Founder shall deliver
to such Investor or its Affiliate payment of the Option Price in respect of
the total number of the Conversion Shares stated in the Option Notice, or
in the Second Option Notice, as the case may be. Upon receipt of the
payment aforesaid, such Investor or its Affiliate shall deliver to the
Founder or its nominee the relevant shares certificate(s) in respect of the
said Conversion Shares and duly executed instrument of transfer. At such
completion, the Investor or its Affiliate shall represent and warrant that
the Conversion Shares subject to the Put Option are free and clear of all
Encumbrances and Liens (other than those imposed by this Agreement, the
Investment Agreement, the Registration Rights Agreement and the Articles of
Incorporation and By-Laws) and that the Investor or its Affiliate has full
authority to transfer such shares to the Founder or his nominee.
2.8 Provided that each Investor or its Affiliate provides the Founder with a
certificate under section 116 of the Income Tax Act (Canada) with the
appropriate certificate limit, the Option Price payable to any Investor or
its Affiliate shall be paid to such Investor or its relevant Affiliate, by
way of banker's draft or cashier's order, in United States dollars in full
without any deduction or withholding for or on account of any present or
future taxes, levies, imposes, duties or other charges, fees, withholdings,
restrictions or conditions, and without set-off, counterclaim or any
deduction whatsoever.
2.9 Where applicable, the Founder shall procure the approval of the Company's
board of directors on each Transfer of the Conversion Shares.
2.10 Subject to the provisions of Clause 2.4, the parties hereto agree that
there shall be no limit to the timing and numbers of Option Notices.
2.11 The right of each Investor to exercise the Put Option shall be independent
of the decision of the other Investor. For avoidance of doubt, one Investor
may require the Founder to complete a Transfer even if the other Investor
does not so require.
2.12 The Founder agrees to bear all taxes and stamp duty, if any, payable on
each Transfer.
2.13 The parties hereto acknowledge that any Transfer (a) shall be free from the
transfer restrictions imposed on the Investors in the Investment Agreement
but (b) shall not otherwise affect or prejudice the rights of any Investor
under the Investment Agreement, the Subscription Agreements, the
corresponding certificates of the Convertible Notes, the Registration
Rights Agreement and the Articles of Incorporation and By-Laws.
3. VARIATION
No variation of this Agreement (or any document entered into pursuant to
this Agreement) shall be valid unless it is in writing and signed by or on
behalf of each of the parties hereto.
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4. SUCCESSORS AND ASSIGNS
All rights, covenants and agreements of the parties hereto contained in
this Agreement shall, except as otherwise provided herein, be binding upon
and inure for the benefit of their respective successors or permitted
assigns, provided that the Founder shall not assign any of his rights under
this Agreement without the prior written consent of all of the Investors.
Notwithstanding anything to the contrary in this Agreement, each of the
Investor is entitled to assign its rights in and benefit of this Agreement
to any third parties to which such Investor shall have transferred the
beneficial ownership of the Conversion Shares (or any interest therein held
by such Investor).
5. FURTHER ASSURANCE
Each party hereto shall do or procure to be done all such further acts and
things, and execute or procure the execution of all such other documents,
as the other parties may from time to time reasonably require for the
purpose of giving to the other parties the full benefit of all of the
provisions of this Agreement.
6. WAIVER; SEVERANCE
6.1 The failure of any party hereto at any time to require performance or
observance by any other party of any provision of this Agreement shall in
no way affect the right of such first party to require performance of that
provisions; and any waiver by any party of any breach of any provision of
this Agreement shall not be construed as a waiver of any continuing or
succeeding breach of such provision, a waiver of the provision itself or a
waiver of any right under this Agreement.
6.2 Should any provision of this Agreement be declared null and void by any
competent government agency or court this shall not effect the other
provisions of this Agreement which are capable of severance and which shall
continue unaffected.
7. NOTICES
7.1 Notices or other communications required to be given by any party hereto
pursuant to this Agreement shall be written in English and may be delivered
personally or sent by registered airmail or postage prepaid, by a
recognized courier service or by facsimile transmission to the address of
the other relevant parties set forth below. The dates on which such notices
shall be deemed to have been effectively given shall be determined as
follows:
(A) notices given by personal delivery shall be deemed effectively given
on the date of personal delivery;
(B) notices given by registered airmail or postage prepaid shall be deemed
effectively given on the fifth (5th) Business Day after the date on
which they were mailed (as indicated by the postmark);
(C) notices given by courier shall be deemed effectively given on the
second (2nd) Business Day after they were sent by recognized courier
service; and
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(D) notices given by facsimile transmission shall be deemed effectively
given immediately following confirmation of its transmission as
recorded by the sender's facsimile machine.
TO THE FOUNDER:
Address: [chinese characters]
(Building A6, Export
Processing Zone
Suzhou New & Hi-Tech District
Jiangsu Province 215151
The People's Republic of
China)
Fax Number: 86-512-62696016
TO THE FUNDS:
c/o HSBC Private Equity (Asia) Ltd.
Address: Level 17, 1 Queen's Road
Central
Hong Kong
Fax Number: +852 2845-9992
Attention: The Managing Director
TO JAFCO:
c/o JAFCO Investment (Asia Pacific) Ltd
Address: 6 Battery Road
#42-01 Singapore 049909
Fax Number: +65 6221-3690
Attention: The President
With a copy to:
JAFCO Investment (Hong Kong) Ltd.
Address: 30/F Two International Finance
Centre
8 Finance Street
Central
Hong Kong
Fax Number: +852 2536-1979
Attention: General Manager
Email: All E-mail correspondence to
vincent.chan@jafcoasia.com and
sam.lai@jafcoasia.com
7.2 Any party may at any time change its address or fax number for service of
notices in writing delivered to the other parties in accordance with this
Clause 7.
8. COUNTERPARTS
This Agreement may be executed in any number of counterparts and by the
parties hereto on separate counterparts, each of which when so executed
shall be an original, but all of which shall together constitute one and
the same instrument.
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9. PROCESS AGENTS
9.1 Each party hereby irrevocably appoints the person set out opposite its name
below as its respective agent to accept service of process in Hong Kong in
any legal action or proceedings arising out of this Agreement, service upon
whom shall be deemed completed whether or not such service of process is
forwarded to such party by its agent or received by it, and each party
warrants and undertakes to the other parties that the agent appointed by it
hereunder is a company incorporated in Hong Kong and the address of such
agent set out below is its registered office address in Hong Kong:
AGENT /
PARTY REGISTERED OFFICE ADDRESS
- ---------------- ----------------------------------------------------
For the Founder: Key Consultant Limited
Address: Unit 710, 7th Floor, Bank of America Tower,
12 Harcourt Road, Central, Hong Kong
The Funds HSBC Private Equity (Asia) Ltd.
Address: Level 17, 1 Queen's Road Central, Hong Kong
JAFCO JAFCO Investment (Hong Kong) Ltd.
Address: 30/F Two International Finance Centre,
8 Finance Street, Central, Hong Kong
9.2 If a process agent appointed by any party pursuant to Clause 9 ceases to be
able to act as such or to have a registered office address in Hong Kong,
the party which appoints such process agent shall appoint a new process
agent, which shall be a company incorporated in Hong Kong, and to deliver
to the other parties, before the expiry of fourteen (14) days from the date
on which such process agent ceases to be able to act as such or to have a
registered office address in Hong Kong, a copy of the written acceptance of
appointment by that new process agent.
9.3 Nothing in this Agreement shall affect the right to serve process in any
other manner permitted by law or the right to bring proceedings in any
other jurisdiction for the purposes of the enforcement or execution of any
judgement or other settlement in any other courts.
10. GOVERNING LAW
This Agreement is governed by and shall be construed in accordance with the
laws of Hong Kong.
11. DISPUTE RESOLUTION
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11.1 Any dispute, controversy or claim arising out of or connected with this
Agreement or the interpretation, breach, termination or validity hereof,
including a dispute as to the validity or existence of this Agreement,
shall be resolved by way of arbitration upon the request of any of the
parties in dispute with notice to the other parties.
11.2 Arbitration under this Clause 11 shall be conducted in Hong Kong, under the
auspices of the Hong Kong International Arbitration Centre (the "HKIAC") by
three arbitrators (the "ARBITRATORS") pursuant to the rules of the United
Nations Commission on International Trade Law (the "UNCITRAL RULES"), save
that, unless the parties in dispute agree otherwise:
(A) the three Arbitrators shall be appointed by the HKIAC; and
(B) the parties agree to waive any right of appeal against the arbitration
award.
11.3 The arbitration shall be administered by HKIAC in accordance with HKIAC's
procedures for arbitration.
11.4 Each party shall cooperate with the others in making full disclosure of and
providing complete access to all information and documents requested by
another party in connection with such arbitration proceedings, subject only
to any confidentiality obligations binding on the disclosing party.
11.5 The award of the arbitral tribunal shall be final and binding upon the
disputing parties, and a prevailing party may apply to any court of
competent jurisdiction for enforcement of such award.
11.6 The cost of the arbitration (including the reasonable and properly incurred
fees and expenses of the lawyers appointed by each party to the
arbitration) shall be borne by the party or parties against whom the
arbitration award is made or otherwise in accordance with the ruling of the
arbitration tribunal.
11.7 Any party shall be entitled to seek preliminary injunctive relief, if
possible, from any court of competent jurisdiction pending the constitution
of the arbitral tribunal.
12. JAFCO'S RIGHTS
All parties acknowledge and agree that any rights of JAFCO under this
Agreement may, without prejudice to the rights of JAFCO to exercise any
such rights, be exercised by JAFCO Investment (Asia Pacific) Ltd. ("JIAP")
or any other fund manager of JAFCO or their nominees (each, a "JAFCO
MANAGER"), unless JAFCO has (a) given notice to the other parties that any
such rights cannot be exercised by JIAP or a JAFCO Manager; and (b) not
given notice to the other parties that such notice given under paragraph
(a) above has been revoked.
IN WITNESS WHEREOF this Agreement has been executed by the parties the day and
year first before written.
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SCHEDULE 1
PARTICULARS OF THE COMPANY
NAME: Canadian Solar Inc.
DATE OF INCORPORATION: 22 October 2001
PLACE OF ORGANISATION: Canada
REGISTERED OFFICE: 4056 Jefton Crescent. Mississauga, Ontario,
Canada L5L 1Z3
ISSUED CAPITAL (AS OF THE 5,668,421 Common Shares with no nominal or par
DATE HEREOF): value
SHAREHOLDERS AS AT THE DATE
HEREOF: SHAREHOLDER NO. OF EQUITY SECURITIES HELD
- --------------------------- ----------- -----------------------------
QU Xiao Hua 5,668,421 Common Shares
CONVERTIBLE NOTES ISSUED AND
OUTSTANDING AS AT THE DATE PRINCIPAL AMOUNT OF
HEREOF: HOLDER THE CONVERTIBLE NOTES
- ---------------------------- --------- ---------------------
The Funds US$7,750,000
JAFCO US$4,000,000
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SIGNED, SEALED and DELIVERED )
as a Deed by ) /s/
QU XIAO HUA )
in the presence of:- )
/s/
10
SIGNED by Victor Leung )
for and on behalf of ) /s/
HSBC HAV2 (III) LIMITED )
in the presence of:- )
/s/
- -------------------------------------
Laetitia K.W. Yu
Witness
11
SIGNED by Hiroshi Yamada )
for and on behalf of ) /s/
JAFCO ASIA TECHNOLOGY FUND II )
in the presence of:- Liu Xiao Ning /s/ )
12
DATED JULY 28, 2006
(1) MR. QU XIAO HUA
(2) HSBC HAV2 (III) LIMITED
(3) JAFCO ASIA TECHNOLOGY FUND II
AND
(4) JAFCO ASIA TECHNOLOGY FUND II
(BARBADOS) LIMITED
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SUPPLEMENTAL PUT OPTION AGREEMENT
IN RESPECT OF
CANADIAN SOLAR INC.
----------
THIS SUPPLEMENTAL AGREEMENT is made on the 28th day of July 2006
BETWEEN:
(1) MR. QU XIAO HUA, holder of Canadian Passport Number BC289772 and whose
residential address being at 4056 Jefton Crescent, Mississauga, Ontario,
Canada L5L 1Z3 (the "FOUNDER");
(2) HSBC HAV 2 (III) LIMITED, a company incorporated in the Cayman Islands with
its registered office at 2nd Floor, Strathvale House, North Church Street,
George Town, Grand Cayman, Cayman Islands (the "FUNDS");
(3) JAFCO ASIA TECHNOLOGY FUND II, a Cayman Islands exempted company with its
registered office at PO Box 309GT, Ugland House, South Church Street,
George Town, Grand Cayman, Cayman Islands ("JAFCO CAYMAN"); and
(4) JAFCO ASIA TECHNOLOGY FUND II (BARBADOS) LIMITED, a Corporation
incorporated under the laws of Barbados and with its registered office
situate at 13, 8th Avenue Belleville in the parish of St. Michael in
Barbados ("JAFCO BARBADOS").
The Funds and JAFCO Barbados shall be referred to collectively as the
"INVESTORS" and individually as an "INVESTOR".
WHEREAS:
(A) The Founder, the Funds and JAFCO Cayman entered into a put option agreement
(the "PUT OPTION AGREEMENT") on July 1, 2006, pursuant to which, each of
the Funds and JAFCO Cayman shall have the right to request the Founder to
purchase certain number of Conversion Shares from each of them.
(B) JAFCO Cayman and JAFCO Barbados entered into a share sale and purchase
agreement on July 17, 2006 (the "SHARE SALE AND PURCHASE AGREEMENT").
Further to and in connection with the said Share Sale and Purchase
Agreement, JAFCO Cayman and JAFCO Barbados entered into an assignment
agreement dated July 17, 2006, pursuant to which, JAFCO Cayman assigns to
JAFCO Barbados all its rights under the Put Option Agreement.
(C) The parties hereto are desirous of modifying certain terms in the Put
Option Agreement on the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
promises hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, THE PARTIES HEREBY
AGREE AS FOLLOWS:
3. AMENDMENTS TO THE PUT OPTION AGREEMENT
The parties hereto agree that, in order to conform to the original intention of
the parties, Clause 2.4 of the Put Option Agreement shall be deleted in its
entirety and replaced with the following and such replacement shall take effect
on the date of the Put Option Agreement:
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"2.4 THE PUT OPTION IS EXERCISABLE BY EACH OF THE INVESTORS, BY SERVING A
WRITTEN OPTION NOTICE (THE "OPTION NOTICE") ON THE FOUNDER IN ACCORDANCE WITH
CLAUSE 7 AND
(A) AT ANY TIME FROM 31 MARCH 2007 (INCLUSIVE) TO 10 APRIL 2007
(INCLUSIVE) IN THE EVENT THAT THE COMPANY HAS NOT COMPLETED AN IPO ON
OR BEFORE 31 MARCH 2007; OR
(B) AT ANY TIME AFTER THE OCCURRENCE AND DURING THE CONTINUANCE OF AN
EVENT OF DEFAULT UPON WRITTEN DEMAND FROM ANY OF THE INVESTORS, WHICH
DEMAND MAY BE SERVED BY THE INVESTORS AT ANY TIME FOLLOWING THE DATE
ON WHICH SUCH EVENT OF DEFAULT BECOMES KNOWN TO SUCH INVESTOR."
2. MISCELLANEOUS
2.1 Definitions. In this Supplemental Agreement, capitalized terms shall have
the meanings as set out in the Put Option Agreement, unless otherwise defined.
2.2 Assignment. This Supplemental Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns. No party to this Supplemental Agreement shall assign any of its rights
hereunder without the written consent of the other parties.
2.3 Counterparts. This Supplemental Agreement may be executed in counterparts,
each of which shall be deemed to be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument.
2.4 Survival. All other provisions of the Put Option Agreement which are not
specifically amended pursuant to Clause 1 of this Supplemental Agreement shall
survive this Supplemental Agreement and continue in full force and effect.
2.5 Governing Law. This Supplemental Agreement is governed by and shall be
construed in accordance with the laws of Hong Kong.
[SIGNATURE PAGES FOLLOW]
2
SIGNED, SEALED and DELIVERED )
as a Deed by )
QU XIAO HUA ) /s/
in the presence of:- )
3
SIGNED by Victor Leung )
for and on behalf of )
HSBC HAV2 (III) LIMITED ) /s/
in the presence of:- )
4
SIGNED by CHAN CHUN HUNG VINCENT )
for and on behalf of )
JAFCO ASIA TECHNOLOGY FUND II ) /s/
in the presence of:- Wong Yun Pun /s/ )
SIGNED by HIROSHI YAMADA )
for and on behalf of )
JAFCO ASIA TECHNOLOGY FUND II )
(BARBADOS) LIMITED ) /s/
in the presence of:- Liu Xiao Ning /s/ )
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