EXHIBIT 4.5
SHAREHOLDERS AGREEMENT
by and among
E-house (China) Investments Holding Limited
[CHINESE CHARACTERS]
Ordinary Shareholders
and
Certain Investors
dated as of March 28, 2006
TABLE OF CONTENTS
CLAUSE PAGE
ARTICLE 1 DEFINITIONS............................................................................ 1
ARTICLE 2 PREEMPTIVE RIGHTS...................................................................... 6
ARTICLE 3 TRANSFER OF SHARES..................................................................... 7
ARTICLE 4 RIGHT OF FIRST REFUSAL; CO-SALE RIGHT.................................................. 8
ARTICLE 5 BOARD OF DIRECTORS AND MANAGEMENT...................................................... 11
ARTICLE 6 MATTERS REQUIRING INVESTORs' APPROVAL.................................................. 13
ARTICLE 7 INFORMATION AND INSPECTION RIGHTS...................................................... 15
ARTICLE 8 COVENANTS OF COMPANY AND ORDINARY SHAREHOLDERS......................................... 16
ARTICLE 9 PUBLIC OFFERING........................................................................ 17
ARTICLE 10 LEGEND ON SHARE CERTIFICATES......................................................... 18
ARTICLE 11 DURATION OF AGREEMENT................................................................ 18
ARTICLE 12 MISCELLANEOUS........................................................................ 18
SCHEDULE 1 ORDINARY SHAREHOLDERS................................................................ 27
SCHEDULE 2 INVESTORS............................................................................ 28
EXHIBIT A FORM OF DEED OF ADHERENCE............................................................ 29
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SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (this "AGREEMENT") is made as of March 28, 2006 by
and among E-house (China) Investments Holding Limited [CHINESE CHARACTERS], an
exempted company with limited liability organized and existing under the laws of
the Cayman Islands with company registration no. CR-139297 (the "COMPANY"), each
of the Ordinary Shareholders listed in Schedule 1 attached hereto (each, an
"ORDINARY SHAREHOLDER" and collectively, the "ORDINARY SHAREHOLDERS"), CHF
Investment Limited, a limited liability company organized and existing under the
laws of the British Virgin Islands ("CHF"), a wholly-owned subsidiary of China
Harvest Fund, L.P., a limited liability partnership organized and existing under
the laws of the Cayman Islands ("CHINA HARVEST"), DLJ Real Estate Capital
Partners III, L.P., a limited liability partnership organized and existing under
the laws of Delaware, U.S.A ("DLJ"), RECP III Co-Investors A, L.P., a limited
liability partnership organized and existing under the laws of Delaware, U.S.A
("RECP"), and other investors listed on Schedule 2 attached hereto (each an
"INVESTOR" and collectively, the "INVESTORS").
RECITALS
WHEREAS, the Investors have agreed to subscribe for a certain number of Series A
Preferred Shares (as defined below) of the Company pursuant to the Series A
Preferred Shares Subscription Agreement, dated as of March 28, 2006 (the
"SUBSCRIPTION AGREEMENT");
WHEREAS, in connection with the Investors' subscription for such Series A
Preferred Shares and as a condition precedent to the completion of such
subscription, the parties hereto desire to enter into this Agreement to provide
for certain rights and related obligations of the Investors in respect of
information, voting, share transfers and other matters.
NOW, THEREFORE, in consideration of the foregoing premises and certain other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1 DEFINITIONS
As used in this Agreement, and unless the context requires a different meaning,
the following terms shall have the following respective meanings, and all
capitalized terms used but not otherwise defined herein shall have the
respective meanings ascribed to them in the Subscription Agreement:
"ACCEPTANCE NOTICE" shall have the meaning ascribed to it in Section 4.4 hereof.
"ACCEPTANCE PERIOD FOR EQUITY EQUIVALENTS" shall have the meaning ascribed to it
in Section 2.1 hereof.
"AFFILIATE" shall mean with respect to any Person, any other Person that (a)
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned Person. For
purposes of this definition, "CONTROL" (including with correlative meanings, the
terms "CONTROLLING", "CONTROLLED BY" and under "COMMON CONTROL WITH") 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.
"ARTICLES OF ASSOCIATION" shall mean the Memorandum and Articles of Association
of the Company, as amended from time to time.
"ASSOCIATE" shall mean, with respect to any Person, any corporation or other
business organization of which such Person is a senior officer or partner, any
trust or estate in which such Person has a substantial beneficial interest or as
to which such Person serves as a trustee or in a similar capacity, or any
spouse, children, grandchildren, parents, parents-in-law or siblings or spouse
of such Person or a trust primarily for the benefit of any of the foregoing.
"ANNUAL BUDGET" shall mean the annual budget of the Company and/or the PRC
Subsidiary adopted by the Board of the Company and/or the PRC Subsidiary, as may
be amended from time to time.
"BOARD" shall mean the board of directors of the Company or any of its
Subsidiaries, as the context requires, as constituted from time to time.
"BOARD OF ARBITRATION" shall have the meaning ascribed to it in Section 12.2(a)
hereof.
"BONA FIDE PURCHASER" shall mean any Person who or which has delivered a good
faith written offer to purchase all or any portion of the Shares held by any
Shareholder.
"BUSINESS PLAN" shall mean the annual business plan of the Company and/or the
PRC Subsidiary adopted by the Board of the Company and/or the PRC Subsidiary, as
may be amended from time to time.
"COMPANY SHARE PLAN" shall mean an employee share ownership plan to be
established by the Company pursuant to which shares will be granted out of the
Company Share Pool.
"COMPANY SHARE POOL" shall mean the pool of 3,636,364 Ordinary Shares which
shall be transferred from On Chance Inc. to certain management personnel and
employees of the Company and its Subsidiaries, including the Management Team but
excluding the Chief Financial Officer of the Company appointed for a Qualified
IPO, covering five percent (5%) of the aggregate number of issued and
outstanding shares (including Ordinary Shares and the Series A Preferred Shares)
of the Company on an as-converted and fully diluted basis as of the Closing
Date, which shall be only granted pursuant to the Company Share Plan.
"COMPANY'S NOTICE OF INTENTION TO SELL" shall have the meaning ascribed to it in
Section 2.1 hereof.
"COMPETITOR" shall mean any Person that engages in or will engage in the real
estate intermediary service business in China (including Hong Kong, Macau and
Taiwan) as determined by the Board of the Company.
"CONFIDENTIAL INFORMATION" shall mean information of a confidential nature
created, discovered, prepared or otherwise developed by the Company or any of
its Subsidiaries, which is generally unavailable to the public and has a
material economic value in the business in which the Company or any of its
Subsidiaries is engaged. Such Confidential Information includes but is not
limited to, customer lists, pricing, marketing and sales strategies, employee
and consultant
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rosters and other business or financial information or know-how developed by or
disclosed to the Company or any of its Subsidiaries.
"CONTINGENT OBLIGATION" shall mean as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument or arrangement (whether
in writing or otherwise) to which such Person is a party or by which it or any
of such Person's property is bound.
"CO-SALE SHARES" shall have the meaning ascribed to it in Section 4.7 hereof.
"DISPOSE" or "DISPOSITION" (and any derivatives thereof) shall mean (i) a
voluntary or involuntary sale, assignment, mortgage, grant, pledge,
hypothecation, exchange, transfer, conveyance or other disposition (whether
involving the legal or beneficial interest), and (ii) any agreement, contract or
commitment to do any of the foregoing.
"DISPOSITION NOTICE" shall have the meaning ascribed to it in Section 4.2
hereof.
"DISPOSING SHAREHOLDER" shall have the meaning ascribed to it in Section 4.1
hereof.
"EQUITY EQUIVALENTS" shall mean any and all shares, interests, participations or
other equivalents (however designated) of equity capital of the Company (or any
of its Subsidiaries, as the case may be) and any rights to acquire the
foregoing, including without limitation, any rights to acquire securities
exercisable for, convertible into or exchangeable for the foregoing.
"EXCESS OFFERED SHARES" shall have the meaning ascribed to it in Section 4.3
hereof.
"FIRST REFUSAL ALLOCATION" shall have the meaning ascribed to it in Section 4.3
hereof.
"FIRST REFUSAL RIGHT" shall have the meaning ascribed to it in Section 4.1
hereof.
"GROUP" shall mean the Company and its Subsidiaries, collectively.
"IFRS" shall mean the International Financial Reporting Standards promulgated by
the International Accounting Standards Board (IASB) (which includes standards
and interpretations approved by the IASB and International Accounting Principles
issued under previous constitutions), together with its pronouncements thereon
from time to time, and applied on a consistent basis.
"INDEBTEDNESS" shall mean, as to any Person, without duplication, (i) all
indebtedness (including principal, interest, fees and charges) of such Person
for borrowed money or for the deferred purchase price of property or services,
any obligation for the payment of money and any obligation evidenced by bonds,
debentures, notes or similar instruments, (ii) the available amount of all
letters of credit or obligations in respect of bankers acceptances issued for
the account of such Person and all unpaid drawings with respect thereto, (iii)
all liabilities secured by any Lien on any property or assets owned by such
Person, whether or not such liabilities have been assumed by such Person, (iv)
the aggregate amount required to be capitalized under leases under which such
Person is the lessee, (v) all guaranties and similar undertakings to assume or
pay the Indebtedness for borrowed money of other Person, and (vi) any Contingent
Obligation of such Person incurred in respect of any Indebtedness referred to in
(i) to (v) above.
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"INTELLECTUAL PROPERTY RIGHTS" shall mean all patents, trademarks, service
marks, trade names, copyrights, rights in software, domain names, know-how,
rights in design and inventions, licenses and other intellectual property
rights, being used to conduct the business of the Company and its Subsidiaries
as now operated.
"INVESTOR" shall have the meaning ascribed to it in the preamble hereof.
"INVESTOR DIRECTOR" shall have the meaning ascribed to it in Section 5.1 hereof.
"JUNHENG" shall mean Junheng Investment Limited, an international business
company organized and existing under the laws of the British Virgin Islands.
"LIEN" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other), charge, claim, restriction
or preference, priority, right or other security interest or preferential
arrangement of any kind or nature whatsoever (excluding preferred share and
equity related preferences) including without limitation, those created by,
arising under or evidenced by any conditional sale or other title retention
agreement, or any financing lease having substantially the same economic effect
as any of the foregoing.
"OFFERED SHARES" shall have the meaning ascribed to it in Section 4.2 hereof.
"OFFEREES" shall have the meaning ascribed to it in Section 4.1 hereof.
"ON CHANCE" shall mean On Chance Inc., an international business company
organized and existing under the laws of the British Virgin Islands.
"ORDINARY SHAREHOLDERS" shall have the meaning ascribed to it in the preamble.
"ORDINARY SHARES" shall mean the ordinary shares, par value US$0.001 per share,
of the Company.
"ORDINARY SHAREHOLDERS" shall mean the holders of Ordinary Shares.
"PERMITTED TRANSFEREE" shall mean:
(a) in the case of the Investors:
(i) any Affiliate of the Investors;
(ii) any investment fund in which either China Renaissance Capital
Investment Inc. or DLJ Real Estate Capital Partners, Inc. acts as
the manager, general partner or investment adviser;
(iii) any unitholder, shareholder, partner or participant in any fund
referred to in (ii) above in a general distribution of assets of
such fund;
(iv) any manager, general partner or investment adviser of any fund
referred to in (ii) above (or any officer, employee or partner of
any such manager, general partner or investment adviser);
(v) a trust for the benefit of any officer, employee or partner referred
to in (iv) above (and/or his or her family members);
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(vi) any trustee, nominee or custodian of any person referred to in
(i)-(v) above; and
(vii) any limited partner or any Affiliate of the limited partner of the
Investors.
(b) in the case of any Ordinary Shareholder:
(i) any other Ordinary Shareholder; and
(ii) any Affiliate of any Ordinary Shareholder.
provided, however, that it shall be a term of any such transfer that if
the transferee is a Permitted Transferee pursuant to (a) or (b) above and
at any time ceases to be a Permitted Transferee, it shall forthwith
transfer the Shares acquired pursuant to Article 3 hereof and the rights
and obligations under this Agreement to a Permitted Transferee of the
original transferor and procure the agreement of such Permitted Transferee
as above, provided, however, the immediately preceding sentence shall not
require the transfer back to an investment fund referred to in (a)(ii)
above when the transferee ceases to be a Permitted Transferee by reason of
termination, dissolution or other similar winding up of the investment
fund.
"PERSON" shall mean any individual, partnership, corporation, limited liability
company, joint venture, trust, firm, association, unincorporated organization or
other entity.
"PRC SUBSIDIARY" shall mean Shanghai Real Estate Consultant and Sales (Group)
Co., Limited [CHINESE CHARACTERS], a wholly foreign-owned enterprise established
under the laws of the PRC.
"PROJECTIONS" shall mean the annual business projections of the Company and/or
its PRC Subsidiary adopted by the Board of the Company and/or its PRC
Subsidiary, as may be amended from time to time.
"QUALIFIED IPO" shall mean the closing of a firm underwritten initial public
offering, on the Hong Kong Stock Exchange, the NASDAQ National Market or any
other internationally recognized stock exchange acceptable to the Investors, of
Ordinary Shares of the Company (or American depository receipts representing the
same) at a price per share (calculated on an as converted and fully-diluted
basis) implying a pre-offering market capitalization of the Company of at least
US$225 million and raising no less than US$45 million to the Company (net of any
underwriter's discounts or commissions).
"RENMINBI" or "RMB" shall mean the lawful currency of the PRC.
"SERIES A PREFERRED SHARES" shall mean the convertible redeemable participating
series A preferred shares, par value US$ 0.001 per share, of the Company.
"SHAREHOLDERS" shall mean the Investors and the Ordinary Shareholders, their
respective successors and permitted assigns, and any other holder of shares of
equity capital of the Company.
"SHARES" shall mean, with respect to any Shareholder, (i) the shares of equity
capital of the Company, including without limitation, Ordinary Shares and Series
A Preferred Shares, held at
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any time by such Shareholder, and (ii) any option, warrant, or other right held
at any time by such Shareholder, exercisable for shares of equity capital of the
Company.
"SMART CREATE" shall mean Smart Create Group Limited, an international business
company organized and existing under the laws of the British Virgin Islands.
"SUBSCRIPTION AGREEMENT" shall have the meaning ascribed to it in the Recitals
hereof.
"SUBSIDIARY" shall mean, with respect to any Person, a corporation or other
entity of which 50% or more of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person. Unless
otherwise qualified, all references to a "SUBSIDIARY" or to "SUBSIDIARIES" in
this Agreement shall refer to a Subsidiary or Subsidiaries of the Company.
ARTICLE 2 PREEMPTIVE RIGHTS
2.1 If at any time the Company wishes to issue any Equity Equivalents to any
Person or Persons, the Company shall promptly deliver a notice of its
intention to sell (the "COMPANY'S NOTICE OF INTENTION TO SELL") to the
Investors setting forth a description of the Equity Equivalents to be
sold, the proposed purchase price thereof and terms of sale. Upon receipt
of the Company's Notice of Intention to Sell, the Investors shall have the
right to purchase, at the price and on the terms stated in the Company's
Notice of Intention to Sell, a number of the Equity Equivalents equal to
the product of (i) a fraction, the numerator of which is the Investors'
aggregate ownership of Equity Equivalents (calculated on an as converted
and fully-diluted basis) and the denominator of which is the number of the
Company's total issued and outstanding Equity Equivalents, multiplied by
(ii) the number of Equity Equivalents to be issued. Such election is to be
made by the Investors by written notice to the Company within thirty (30)
calendar days after receipt by the Investors of the Company's Notice of
Intention to Sell (the "ACCEPTANCE PERIOD FOR EQUITY EQUIVALENTS").
2.2 If effective acceptances shall not be received pursuant to Section 2.1
above in respect of all the Equity Equivalents which are the subject of
the Company's Notice of Intention to Sell, then the Company may, at its
election, during a period of sixty (60) calendar days following the
expiration of the Acceptance Period for Equity Equivalents, sell and issue
the remaining Equity Equivalents to another Person or Persons at a price
and upon terms not more favorable to such Person than those stated in the
Company's Notice of Intention to Sell; provided, however, that in each
case such Person shall agree in writing with the parties hereto to be
bound by and to comply with all applicable provisions of this Agreement by
executing a form of Deed of Adherence substantially in the form attached
hereto as Exhibit A. In the event the Company has not sold the Equity
Equivalents, or entered into an agreement to sell the Equity Equivalents,
within such sixty (60) calendar day period, the Company shall not
thereafter issue or sell any Equity Equivalents without first offering
such securities to the Investors in the manner provided in Section 2.1
hereof. Failure by the Investors to exercise their preemptive rights under
this Article 2 with respect to any sale and issuance of Equity Equivalents
shall not affect their right to exercise such rights with respect to any
subsequent sale and issuance of Equity Equivalents.
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2.3 If the Investor gives the Company notices pursuant to the provisions of
this Article 2 that the Investor desires to purchase all or any of the
Equity Equivalents it is entitled to purchase, payment therefor shall be
made by check or wire transfer, against issuance of such Equity
Equivalents at the executive offices of the Company, within thirty (30)
calendar days after such notice is delivered to the Company. In the event
that the Company's Notice of Intention to Sell specifies that
consideration other than cash is to be paid in connection with any
issuance of Equity Equivalents, in lieu of such other consideration, the
Investors will be entitled to pay the cash equivalent of such other
consideration, as determined in good faith by the Board of the Company.
2.4 The preemptive rights contained in this Article 2 shall not apply to any
of the following: (a) any Series A Preferred Shares issued pursuant to the
Subscription Agreement, or (b) any Ordinary Shares or Equity Equivalents
issued (i) as a share dividend to holders of Ordinary Shares or Series A
Preferred Shares or upon any subdivision or combination of Ordinary
Shares, (ii) upon the conversion of any equity security or debt security
of the Company duly issued on or prior to the date hereof, in each case,
convertible into Ordinary Shares, (iii) upon the exercise of any option,
warrant or other right to subscribe for, purchase or otherwise acquire
either Ordinary Shares or any equity security or debt security convertible
into Ordinary Shares, issued prior to the date hereof, (iv) upon the
conversion of any Series A Preferred Shares, (v) in connection with a
business combination, including the Company's acquisition of another
company by merger, consolidation, scheme of arrangement or asset purchase
or other reorganization, provided such transactions shall have been
approved in accordance with Article 8 hereof; or (vi) pursuant to a
Qualified IPO.
2.5 Notwithstanding anything contained herein to the contrary, the Company
shall not issue any Equity Equivalent prior to the Qualified IPO unless
otherwise approved by the Shareholders.
ARTICLE 3 TRANSFER OF SHARES
3.1 None of the Ordinary Shareholders shall, directly or indirectly, effect a
Disposition of any of his, her or its Shares, except (i) to its Permitted
Transferee when such Permitted Transferee shall agree in writing with the
parties hereto to be bound by and to comply with all applicable provisions
of this Agreement by executing a form of Deed of Adherence substantially
in the form attached hereto as Exhibit A, or (ii) as permitted by Section
3.2 and Article 4 hereof. The Ordinary Shareholders shall not circumvent
the restrictions set forth in this Article 3 and Article 4 hereof by
Disposing of, directly or indirectly, their beneficial interests in the
Company, including without limitation, by way of a Disposition of shares
they hold in the relevant Ordinary Shareholders or a Disposition of all or
substantially all of the assets of the Company or any of its Subsidiaries.
3.2 Notwithstanding anything contrary contained in this Agreement but subject
to Section 4.7 hereof, each of On Chance and Junheng may Dispose of an
aggregate of not more than ten percent (10%) of its Shares at any time
prior to a Qualified IPO at a price per share implying the valuation of
the Company will generate an internal rate of return of at least thirty
percent (30%) to the Investors, unless otherwise approved by the
Investors.
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3.3 Notwithstanding anything to the contrary herein, each of the Investors
may, whether in a single transaction or in a series of transactions,
Dispose of not more than 49% of the Series A Preferred Shares held by it
at Closing at any time prior to a Qualified IPO to any third party who is
not a Permitted Transferee, provided, however, that the Investor shall
not, in any event, Dispose of any of its Shares to any Competitor.
3.4 Any purported Disposition in violation of this Agreement shall be null and
void and the Company shall not recognize any such Disposition, or record
such transfer in its register of members, or accord to any such purported
transferee any rights as a shareholder.
ARTICLE 4 RIGHT OF FIRST REFUSAL; CO-SALE RIGHT
4.1 If any Shareholder or an employee of the Company who becomes a Shareholder
pursuant to the Company Share Plan (the "DISPOSING SHAREHOLDER") proposes
to Dispose of any Shares (other than a Disposition of Ordinary Shares in a
Qualified IPO or to a Permitted Transferee in accordance with Article 3
hereof), the other Shareholders (including the Investors) (the "OFFEREES")
shall have a right of first refusal (the "FIRST REFUSAL RIGHT") and a
co-sale right with respect to such Disposition as provided in this Section
4.7 below, provided, however, that no Shareholder shall, in any event,
Dispose of any of its Shares to any Competitor.
4.2 If the Disposing Shareholder receives an offer from a Bona Fide Purchaser
to acquire Shares and the Disposing Shareholder proposes to accept such
offer, the Disposing Shareholder shall send a written notice (the
"DISPOSITION NOTICE") to the Company, which notice shall state (i) the
name of the Disposing Shareholder, (ii) the name and address of the
proposed Bona Fide Purchaser, (iii) the number of Shares to be Disposed
(the "OFFERED SHARES"), (iv) the amount and form of the proposed
consideration for the Disposition, (v) any other material business
relations between the Disposing Shareholder and the Bona Fide Purchaser,
and (vi) the other terms and conditions of the proposed Disposition. In
the event that the proposed consideration for the Disposition includes
consideration other than cash, the Disposition Notice shall include a
calculation of the then fair market value of such consideration and an
explanation of the basis for such calculation as determined by an
internationally recognized investment bank or appraisal firm reasonably
acceptable to the Board of the Company. The Company shall deliver a copy
of the Disposition Notice to the Offerees within five (5) Business Days of
its receipt thereof.
4.3 For a period of thirty (30) calendar days after delivery of a Disposition
Notice by the Company to the Offerees, the Offerees shall have the right,
exercisable by each Offeree through the delivery of an Acceptance Notice
as provided in Section 4.4, to purchase in aggregate all or a portion of
the Offered Shares at the same purchase price and upon the other terms and
conditions set forth in the Disposition Notice. Each Offeree shall have
the right to purchase a number of Offered Shares (such Offeree's "FIRST
REFUSAL ALLOCATION") equal to the total number of Offered Shares
multiplied by a fraction, the numerator of which is the number of Shares
held by such Offeree on a fully-diluted basis and the denominator of which
is the total number of Shares held by all Offerees on a fully-diluted
basis. In addition, in the event that one or more Offerees declines or is
deemed pursuant to Section 4.4 to have waived its First Refusal Right,
each Offeree
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electing to exercise its First Refusal Right (an "ELECTING OFFEREE") shall
have the right as provided in Section 4.4 to purchase all or a portion of
the Offered Shares constituting the aggregate First Refusal Allocations of
the Offerees, which decline or are deemed to have waived their respective
First Refusal Right (the "EXCESS OFFERED SHARES"). Each Offeree may assign
to its Permitted Transferee its right to acquire Offered Shares pursuant
to this Section 4.
4.4 The First Refusal Right of each Offeree under Section 4.3 shall be
exercisable by delivering written notice of exercise (an "ACCEPTANCE
NOTICE") within the time period set forth in Section 4.3 hereof to the
Disposing Shareholder, with a copy to each of the other Offerees. Each
Acceptance Notice shall include a statement of (i) the number of Shares
held by such Offeree on a fully-diluted basis and (ii) the maximum number
of Excess Offered Shares (up to the total number of Offered Shares less
such Offeree's First Refusal Allocation) that such Offeree is willing to
purchase, if any. An Acceptance Notice shall be irrevocable and shall
constitute a binding agreement by such Offeree to purchase the relevant
number of the Offered Shares determined in accordance with Sections 4.3
and 4.5. The failure of an Offeree to give an Acceptance Notice within the
time period set forth in Section 4.3 hereof shall be deemed to be a waiver
of such Offeree's First Refusal Right.
4.5 Each Electing Offeree shall have the right to purchase the number of
Excess Offered Shares specified in such Electing Offeree's Acceptance
Notice; provided that, if the number of Excess Offered Shares is less than
the aggregate number of Excess Offered Shares that the Electing Offerees
have indicated a willingness to purchase in their Acceptance Notices, the
Excess Offered Shares shall be allocated as necessary such that each
Electing Offeree shall have a right to purchase (i) not less than the
total number of Excess Offered Shares multiplied by a fraction, the
numerator of which is the number of Shares held by such Electing Offeree
and the denominator of which is the total number of Shares held by all
Electing Offerees, in each case on a non-diluted basis, and (ii) not more
than the maximum number of Excess Offered Shares specified in such
Electing Offeree's Acceptance Notice.
4.6 Except to the extent the Offerees elect to purchase the Offered Shares
under Section 4.3, the Disposing Shareholder may Dispose of the Offered
Shares to the Bona Fide Purchaser identified in the Disposition Notice on
the terms and conditions set forth in the Disposition Notice; provided,
however, that the Disposition is made within three (3) months after the
giving of the Disposition Notice.
4.7 Notwithstanding anything to the contrary herein, if the Disposing
Shareholder is entitled to sell the Offered Shares subject to the
Disposition Notice to the Bona Fide Purchaser and/or to the Electing
Offerees, the Disposing Shareholder shall so notify in writing the other
Shareholders, including the Investors, and no such sale shall be made
unless and until such Shareholders shall have been afforded the right
exercisable upon written notice to the Company and the Disposing
Shareholder within thirty (30) calendar days after receipt of such notice
from the Disposing Shareholder, to participate in the sale of Shares at
the same time and on the same terms and conditions under which the
Disposing Shareholder will sell the Disposing Shareholder's Offered Shares
to the Bona Fide Purchaser and/or the Electing Offerees (as the case may
be), provided, however, neither
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the Disposing Shareholder nor any of the other Shareholders who elect to
participate in the subject sale of the Offered Shares (collectively, the
"Co-Selling Shareholders") shall Dispose of any of its shares to a
Competitor under any circumstances. The Ordinary Shareholders, on the one
hand, may collectively sell all or any part of that number of Shares (the
"CO-SALE SHARES") held by such Ordinary Shareholders equal to 50% of the
aggregate number of Offered Shares covered by the relevant Disposition
Notice or Disposition Notices (as the case may be), and the Investors, on
the other hand, may collectively sell all or any part of that number of
Co-Sale Shares held by such Investors equal to 50% of the aggregate number
of Offered Shares covered by the relevant Disposition Notice or
Disposition Notices (as the case may be). To the extent that a Co-Selling
Shareholder participates in the subject sale of Offered Shares hereunder,
the Disposing Shareholder shall be required to proportionately reduce the
number of its Shares included in the Offered Shares. No Transfer of the
Co-Sale Shares shall be made on terms and conditions, including the form
of consideration, different from those contained in the Disposition Notice
unless the Disposing Shareholder re-offers the Offered Shares subject to
the Disposition Notice to the Shareholders in accordance with this Section
4.
4.8 The closing of any purchase of the Offered Shares or the Co-Sale Shares by
the Electing Offerees and/or the Bona Fide Purchaser shall be held at the
principal office of the Company at 11:00 a.m. local time on the
forty-fifth (45th) calendar day after the giving of the Disposition Notice
or at such other time and place as the parties to the transaction may
agree. The said forty-five (45) calendar day period shall be extended for
an additional period of up to forty-five (45) calendar days if necessary
to obtain any regulatory approvals required for such purchase and payment.
At such closing, the Disposing Shareholders and/or the Co-Selling
Shareholders shall, in addition to the delivery of certificates
representing the Offered Shares and/or the Co-Sale Shares, deliver duly
executed instruments of transfer and the Disposing Shareholders' and/or
Co-Selling Shareholders' portion of the requisite transfer taxes, if any.
Such Offered Shares and/or Co-Sale Shares shall be free and clear of any
Lien (other than Liens arising hereunder or attributable to actions by the
Offerees and/or the Bona Fide Purchaser), and the Disposing Shareholder
shall so represent and warrant and shall further represent and warrant
that it is the beneficial and record owner of such Offered Shares. The
Investors shall only be obligated to represent and warrant that it is the
beneficial and record owner of the Co-Sale Shares. Each Electing Offeree
and/or each Bona Fide Purchaser purchasing the Offered Shares and/or the
Co-Sale Shares shall deliver at such closing (or on such later date or
dates as may be provided in the Disposition Notice with respect to payment
of consideration by the proposed Bona Fide Purchaser) payment in full of
the purchase price. At such closing, all of the parties to the transaction
shall execute such additional documents as may be necessary or appropriate
to effect the sale of the Offered Shares and/or the Co-Sale Shares to the
Electing Offerees and/or the Bona Fide Purchaser. Any stamp duty or
transfer taxes or fees payable on the transfer of any Offered Shares
and/or the Co-Sale Shares shall be borne and paid equally by the Disposing
Shareholders and the Co-Selling Shareholders on the one hand, and the
relevant Electing Offerees and/or the Bona Fide Purchaser on the other. At
such closing, the Bona Fide Purchaser shall agree in writing with the
parties hereto to be bound by and
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to comply with all applicable provisions of this Agreement by executing a
form of Deed of Adherence substantially in the form attached hereto as
Exhibit A.
4.9 The Parties agree that the Disposition restrictions in this Agreement and
in other Transaction Documents shall not be capable of being avoided by
the holding of Shares indirectly through a company or other entity that
can itself be sold in order to dispose of an interest in Shares free of
such restrictions.
ARTICLE 5 BOARD OF DIRECTORS AND MANAGEMENT
5.1 After the date hereof, so long as the Investors hold no less than
fifty-one percent (51%) of the issued and outstanding Series A Preferred
Shares, at an annual or extraordinary general meeting called for such
purpose, or by written resolution in lieu of a meeting, the Shareholders
agree to vote the Shares owned of record or beneficially by them and to
otherwise exercise their powers in relation to the Company (a) to maintain
a nine (9) member Board of the Company, (b) to elect to the Board of
Directors of the Company two (2) nominees designated by the Investors
(each an "INVESTOR DIRECTOR"); (b) one (1) nominee designated by Smart
Create; (c) six (6) nominees designated jointly by Junheng and On Chance,
and (d) to appoint one Investor Director or one such person as designated
by the Investors to each of the Company's audit committee and compensation
committee. All such directors shall hold office until their resignation,
death or incapacity or until their respective successors shall have been
elected and shall have qualified. Any vacancy shall be filled by the
part(ies) entitled to designate such director hereunder, which shall be
deemed to have a proxy to exercise the vote or provide the consent of such
director until the appointment of such director to the Board. The Company
shall provide to such directors the same information concerning the
Company and its Subsidiaries, and access thereto, that is provided to
other members of the Board of the Company. The reasonable travel expenses
incurred by any such director in attending any such meetings shall be
reimbursed by the Company to the extent consistent with the Company's then
existing policy of travel and reimbursement.
5.2 The Company shall and the Ordinary Shareholders shall procure the Company
to, cause the Board of the PRC Subsidiary to be composed of the same
nominees designated by such Persons pursuant to Section 5.1.
5.3 In addition to the rights of the Investors to appoint the Investor
Directors, each of the Investors shall be entitled, by notice in writing
to the Company, to appoint one (1) person, respectively, as observers to
attend and speak at, either in person or by teleconference, any and all
meetings of the Board of the Company and its Subsidiaries and all
committee meetings thereof. The Company shall provide to such observers
the same information concerning the Company and its Subsidiaries, and
access thereto, provided to members of the Board of the Company and its
Subsidiaries and such committees thereof.
For purposes of this Section 5.3, (i) DLJ and RECP shall be collectively
deemed as one Investor, and (ii) Farallon Capital Partners, L.P., Farallon
Capital Institutional Partner, L.P., Farallon Capital Institutional
Partners II, L.P., Farallon Capital Institutional Partner III, L.P. and
Farallon Capital Offshore Investors II, L.P. shall be collectively deemed
as one Investor.
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5.4 The parties hereto will cause the Board of the Company and the PRC
Subsidiary to meet at least once every quarter on as regular a basis as
possible by giving at least fifteen (15) calendar day's prior notice of
such meeting and the agenda of such meeting. A quorum of the Board of the
Company and the PRC Subsidiary shall consist of at least five (5) members
of the Board, including at least one (1) Investor Director who shall
attend such meeting, provided that the Company and the PRC Subsidiary
shall give reasonable prior notice to all the Board members (including the
Investor Directors). A board meeting properly called that does not have
the requisite quorum shall automatically reconvene one week from the
original date of such meeting, or such other place and time as may be
agreed, with the same agenda and the quorum shall be deemed to exist at
such reconvened meeting.
5.5 Members of the Boards of the Company and each of the Subsidiaries or any
committee thereof may participate in a meeting of the relevant Board or
such committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can
hear each other and participation in a meeting pursuant to this provision
shall constitute presence in person at such meeting. A resolution in
writing (in one or more counterparts), signed by all the directors for the
time being or all the members of a committee of directors (an alternate
director being entitled to sign such resolution on behalf of his
appointer) shall be as valid and effective as if it had been passed at a
meeting of the directors or committee, as the case may be, duly convened
and held.
5.6 The Company shall indemnify and hold harmless each director appointed
pursuant to Section 5.1 who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative by
reason of the fact that he is or was a director of the Company, or is or
was a director of the Company serving at the request of the Company as a
director of another company, partnership, joint venture, trust, employee
benefit plan or other enterprise, against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful.
5.7 Except for the current Chief Financial Officer of the Company and the PRC
Subsidiary as of the Closing Date, the Investors shall have the right (but
not the obligation) to nominate the Chief Financial Officer of the Company
and the PRC Subsidiary subject to the approval of the Board of the Company
and the PRC Subsidiary, as the case may be. If so nominated, the Chief
Financial Officer may only be removed by the Board of the Company or the
PRC Subsidiary, in which case, the Investors shall have the right to
nominate a replacement, subject to approval by the Board of the Company or
the PRC Subsidiary, as the case may be.
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ARTICLE 6 MATTERS REQUIRING INVESTORS' APPROVAL
The Shareholders shall exercise their powers in relation to the Company to
procure that the Company will not and shall procure that none of the Company's
Subsidiaries, as the case may be as set forth in Section 6.1 through Section
6.19 hereof, will take any of the following actions without the prior approval
of at least a majority (which shall include the Investor Directors) of the
members present in person or by proxy at a duly constituted meeting of the
Board, provided that the Investors and/or the Investor Directors shall not
unreasonably withhold such approval:
6.1 (a) Adoption of or amendment to the Articles of Association of the Company
and the BVI Subsidiary or similar constitutive documents of the PRC
Subsidiary, and (b) adoption of or amendment to the Articles of
Association or similar constitutive documents of any of the Subsidiaries
of the Company (other than the BVI Subsidiary and the PRC Subsidiary)
which would cause a Material Adverse Effect to the Business or Condition
of the Group;
6.2 Adoption of or amendment to the Company's and/or the PRC Subsidiary's
Business Plan, Projections and Annual Budget, provided that (i) such
Business Plan, Projections or Annual Budget will contain a reasonable
level of details as mutually agreed by the Company and the Investors; (ii)
the Company may carry out the Business Plan, Projections or the Annual
Budget of the preceding year as if approved for the current year if the
Business Plan, Projections or Annual Budget of the current year is not
approved by the Investors, and (iii) if the Business Plan, Projections or
Annual Budget of the current year is partially approved by the Investors,
the Company may carry out such Business Plan, Projections or Annual Budget
to the extent of such partial approval;
6.3 Issuance by the Company, the BVI Subsidiary or the PRC Subsidiary of any
Equity Equivalents or any instruments that are convertible into Equity
Equivalents of the Company, the BVI Subsidiary or the PRC Subsidiary,
which are not included in the Company's or PRC Subsidiary's Business Plan,
Projections and/or Annual Budget;
6.4 Any merger, acquisition, consolidation, recapitalization of the Company,
the BVI Subsidiary or the PRC Subsidiary, or sale of all or substantially
all of the assets or equity interest of the Company, the BVI Subsidiary or
the PRC Subsidiary;
6.5 Establishment of or investment in any Subsidiary or Affiliate of the
Company or execution of any joint venture agreement or shareholders
agreement that requires investment of more than US$500,000 and is not
included in the Business Plan, Projections and/or Annual Budget or beyond
the Company's and/or the PRC Subsidiary's ordinary course of business;
6.6 Any capital expenditure in excess of US$500,000 over the amount set out in
the Business Plan, Projections or Annual Budget, or any investments in an
inherently risky matter such as investments in stock markets and currency
markets;
6.7 Payment of annual compensation to, or increase of annual compensation of
any of, the five most highly compensated employees of the Company, the BVI
Subsidiary or the
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PRC Subsidiary, other than as set out in the Business Plan, Projections
and/or Annual Budget;
6.8 Declaration or payment of any dividend or making of any distribution on or
with respect to any Shares;
6.9 Any filing by or against the Company , the BVI Subsidiary or the PRC
Subsidiary for the appointment of a receiver, administrator or other form
of external manager for the winding up, liquidation, bankruptcy or
insolvency of the Company, the BVI Subsidiary or the PRC Subsidiary, or
the passing of any resolution in respect of the same;
6.10 Repurchase by the Company, the BVI Subsidiary or the PRC Subsidiary of any
outstanding Shares or other Equity Equivalents (with the exception of
repurchases from terminated employees and directors of shares purchased or
share options granted under the Company Share Plan), or any other
reduction or similar change of capital structure of the Company, the BVI
Subsidiary or the PRC Subsidiary;
6.11 Any assignment, disposal or grant of a license of any Intellectual
Property Rights or trade secrets, or the failure to apply for, maintain,
defend or otherwise protect any material Intellectual Property Rights or
trade secrets;
6.12 Engagement in any new line of business or cessation of any existing line
of business other than in the Company's or the PRC Subsidiary's ordinary
course of business;
6.13 Any increase or decrease in the number of directors constituting the Board
of the Company or the PRC Subsidiary or any committee thereof;
6.14 Appointment and removal of the Chief Executive Officer and the Chief
Financial Officer of the Company or the PRC Subsidiary, subject to Section
5.7 hereof;
6.15 Any change to the accounting policies of the Company or any of its
Subsidiaries unless otherwise required by applicable Laws;
6.16 Settlement of any litigation or arbitration claim involving total payments
by or to the Company, the BVI Subsidiary or the PRC Subsidiary in excess
of US$100,000;
6.17 Incurrence of any Indebtedness not contemplated in the Annual Budget, or
materially altering the terms of any existing Indebtedness with an
outstanding amount of US$500,000 or more in such manner having a Material
Adverse Effect on the Business or Condition of the Group;
6.18 Appointment or removal of the auditor(s) of the Company or the PRC
Subsidiary; and
6.19 Entering into any transaction involving the Company, the BVI Subsidiary or
the PRC Subsidiary, on the one hand, and any senior officer, director or
Affiliate of the Company, the BVI Subsidiary or the PRC Subsidiary, or any
Associate of such senior officer, director or Affiliate, on the other
hand.
The Shareholders shall exercise their powers and otherwise act to ensure
that the Company or its Subsidiaries, as applicable, will be fully
authorized to take other actions that are not required to be approved in
accordance with this Article 6 so long as they are
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approved by a simple majority of the members present in person or by proxy
at a duly constituted meeting of the Board.
Notwithstanding anything contained herein to the contrary, the Investors
covenant and agree that the Investors shall not, in exercising their
rights under this Agreement and the other Transaction Documents, interfere
with the management and business operations of the Company and its
Subsidiaries.
If any Shareholder considers desirable, the Shareholder may require that
any of the above actions shall be adopted, pursuant to the Articles of
Association, at an annual or extraordinary general meeting called for such
purpose, or by written resolution in lieu of a meeting, by the affirmative
vote of the Shareholders (including CHF) holding at least a majority of
the Shares present, in person or by proxy, at such meeting. Such adoption
is in lieu of, not in addition to, the approval of the Board.
ARTICLE 7 INFORMATION AND INSPECTION RIGHTS
7.1 The Company shall deliver to each of the Investors (including any
Permitted Transferee of each of the Investors) so long as the Investors
hold no less than fifty-one percent (51%) of the total issued and
outstanding Series A Preferred Shares:
(a) on a monthly basis, within thirty (30) calendar days after the end of each
month: (i) management accounts prepared according to principles agreed to
with the Investors; and (ii) a report on any material developments on the
Company's operations or financial condition. The Company shall procure the
Chief Executive Officer and members of the Management Team to be available
to discuss such management accounts and report with the Investors or the
Investor Directors by teleconference on such notice as may be specified by
the Investor Directors;
(b) on an annual basis, within ninety (90) calendar days after the end of each
financial year: (i) audited financial statements prepared in accordance
with IFRS, with the auditor's report, letter from the management of the
Company, and other communication between the auditor and the Company, and
(ii) a report on business operations during the financial year, including
matters that may have a material adverse effect on the Company's
operations and financial condition, unless such report has already been
provided to the Board of the Company;
(c) at least thirty (30) calendar days before the beginning of each financial
year, a draft annual budget to be reviewed by the Investors;
(d) thirty (30) calendar days advance notice of general meetings of
shareholders and of meetings of the Board, with the relevant agenda and
minutes, (ii) prompt notice of any material litigation, material judgment
against the Company, and any other event that may have a Material Adverse
Effect on the Business or Condition of the Group (iii) prompt written
notice of any notice from any regulatory or governmental authority of the
Company's or any of its Subsidiaries' non-compliance with any regulation,
and (iv) prompt written notice of any material change in the nature or
scope of the Company's or any of its Subsidiaries' operations; and
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(e) such other information relating to the financial condition, business or
corporate affairs of the Company and its Subsidiaries as the Investors may
from time to time reasonably request, provided, however, the Company shall
not be obligated under this Section 7.1 to provide information that it
deems in good faith to be a trade secret or similar confidential
information.
7.2 The Company shall permit the Shareholders (including their authorized
representatives), at all reasonable times during normal business hours and
as often as may be reasonably requested and upon reasonable advance
written notice, to visit and inspect the Company's and any of its
Subsidiaries' properties, at such Shareholder's expenses, to examine its
books of account and records and to discuss the Company's and any of its
Subsidiaries' affairs, finances and accounts with its officers, directors
and auditors; provided, however, the Company shall not be obligated to
provide access to any information which it reasonably considers to be
trade secret or similar confidential information, and provided further
that no such inspection, examination or inquiry, the failure to conduct
same, nor any knowledge of any Investor, including without limitation, any
knowledge obtained by such Shareholder in connection with any such
inspection, investigation or inquiry, shall constitute a waiver of any
rights the Shareholder may have under any representation, warranty,
covenant, term or agreement under this Agreement or the Subscription
Agreement.
ARTICLE 8 COVENANTS OF COMPANY AND ORDINARY SHAREHOLDERS
8.1 Without limiting any other covenants and provisions hereof, the Company
and the Ordinary Shareholders (other than Smart Create) covenant and agree
that until the date of the Qualified IPO, the Company will, and the
Ordinary Shareholders shall procure the Company to, perform and observe,
the following covenants and provisions, and will cause each of its
Subsidiaries to perform and observe the following covenants and provisions
that are applicable to such Subsidiaries.
(a) The Company shall, and shall procure that its Subsidiaries shall, take all
steps promptly to obtain and maintain all necessary patent, trademark,
copyright and software registrations, in the Company's reasonable
commercial judgment with advice of counsel, in all relevant jurisdictions,
for the effective protection of the Intellectual Property Rights of the
Company and its Subsidiaries.
(b) The Company shall cause each Person now or hereafter employed by it or any
Subsidiary, or engaged by it or any Subsidiary as a consultant, if such
Person has access to the Confidential Information, to enter into an
employee proprietary information and inventions assignment agreement in
form and substance reasonably satisfactory to the Investors.
(c) The Company shall at all times reserve and keep available out of its
authorized share capital, solely for the purpose of issuance upon
conversion of the Series A Preferred Shares, the maximum number of shares
of equity capital that may be issuable upon such conversion. The Shares
issued upon conversion shall, when issued in accordance with the Articles
of Association, be duly and validly issued and fully paid and
non-assessable.
- 16 -
The Company shall issue such equity capital in accordance with the
provisions of the Articles of Association and shall otherwise comply with
the terms thereof.
(d) The Company shall comply, and shall cause each of its Subsidiaries to
comply, in all material respects with all Laws and with the directions of
each Governmental Authority having jurisdiction over them or their
business or property.
(e) The Company shall, and shall cause the PRC Subsidiary to, maintain or
cause to be maintained with financially sound and reputable insurers,
public liability and property damage insurance with respect to their
respective businesses and Assets and Properties against loss or damage of
the kinds and in the coverage amounts customarily carried or maintained by
companies of established reputation engaged in similar businesses in the
PRC.
(f) The Company shall, and shall cause the PRC Subsidiary to, (i) keep proper
books of record and account, in which full and correct entries shall be
made of all financial transactions, the Assets and Properties and
businesses of the Company and its Subsidiaries in accordance with IFRS
consistently applied to the Company and its Subsidiaries as a whole.
(g) The Company shall duly perform any covenant set forth in Section 7.2 of
the Subscription Agreement.
(h) The Company shall, and shall cause the PRC Subsidiary to, discharge all
payments of principal, interest and other amounts due under any
Indebtedness as the same becomes due and payable.
(i) The Company shall grant the Investors the right to acquire the terms and
conditions that are granted by the Company to other investors in any
future financing by or through whatever means including without limitation
equity or debt financing or sale and that are more favorable than the
terms and conditions granted to the Investors under the Transaction
Documents, and have such more favorable terms and conditions apply to the
Series A Preferred Shares.
ARTICLE 9 PUBLIC OFFERING
9.1 The Shareholders (including the Investors) shall use their best endeavors
to conduct a Qualified IPO prior to December 31, 2008.
9.2 Without prejudice to the provision set forth in Section 9.1 hereof, the
Ordinary Shareholders and the Company hereby agree that the Investors and
the Company shall work together to determine in good faith the terms,
conditions and timing of any initial public offering of the Company's
Ordinary Shares, including a Qualified IPO, which shall be subject to the
unanimous approval of the Board of the Company. Neither any Shareholder
(including the Investors) nor the Company shall withhold or delay such
Qualified IPO when the conditions required for such Qualified IPO are met
in the opinion of an internationally recognized investment bank appointed
by the Board of the Company.
- 17 -
ARTICLE 10 LEGEND ON SHARE CERTIFICATES
Each existing or replacement certificate for Shares now owned or hereafter
acquired by a Shareholder shall bear the following legend upon its face:
"THE SALE, TRANSFER OR ENCUMBRANCE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN SHAREHOLDERS'
AGREEMENT, DATED AS OF MARCH 28, 2006 BY AND AMONG E-HOUSE (CHINA) INVESTMENT
HOLDINGS LIMITED AND CERTAIN HOLDERS OF SHARES OF E-HOUSE (CHINA) INVESTMENT
HOLDINGS LIMITED, AS SUCH AGREEMENT MAY BE AMENDED. COPIES OF SUCH AGREEMENT MAY
BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE TO THE SECRETARY OF E-HOUSE
(CHINA) INVESTMENT HOLDINGS LIMITED."
ARTICLE 11 DURATION OF AGREEMENT
The rights and obligations of each Shareholder under this Agreement shall
terminate (a) as to such Shareholder upon the redemption or transfer of all
Shares legally or beneficially owned by such Shareholder in accordance with this
Agreement, or (b) upon the consummation of a Qualified IPO.
ARTICLE 12 MISCELLANEOUS
12.1 Governing Law
This Agreement shall be governed by, and construed in accordance with, the
laws of Hong Kong without giving effect to any choice of law rule.
12.2 Arbitration
(a) Except as otherwise provided in this Agreement, any dispute, controversy
or claim arising out of or in connection with this Agreement, or the
breach, termination or validity thereof, shall be finally settled by a
board of arbitration (the "BOARD OF ARBITRATION") at the Hong Kong
International Arbitration Center under the rules of the United Nations
Commission on International Trade Law. The language used in the arbitral
proceedings shall be English.
(b) The Board of Arbitration shall comprise of three (3) members. The claimant
or claimants (collectively) and the respondent or respondents
(collectively) in the arbitral proceeding shall each select one (1) member
to the Board of Arbitration and the third member shall be selected by
mutual agreement of the other members, or if the other members fail to
reach agreement on a third member within twenty (20) calendar days after
their selection, such third member shall thereafter be selected by the
Hong Kong International Arbitration Centre upon application made to it for
such purpose by either of the members.
(c) The arbitral proceeding shall accord the right of cross-examination of
witnesses, the right to provide witnesses, including expert witnesses, and
the right to make both written and oral submissions.
(d) The arbitral award made and granted by the Board of Arbitration shall be
final, binding and incontestable and may be used as a basis for judgment
thereon in any court having
- 18 -
jurisdiction. All costs of arbitration (including without limitation,
those incurred in the appointment of arbitrator) shall be borne by the
losing party unless otherwise apportioned in the arbitral award.
(e) No person who is, or has been, an employee or agent of, or consultant or
counsel to, the Shareholders, the Company or any of their respective
Affiliates shall be eligible to act as an arbitrator at any time.
(f) This Agreement and the rights and obligations of the Shareholders and the
Company shall remain in full force and effect pending the award in any
arbitration proceeding hereunder.
12.3 Specific Performance
The parties to this Agreement agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed
in accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties to this Agreement shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement, this
being in addition to any other remedy to which they are entitled at law or
in equity. Pending the conclusion of the arbitration proceedings set forth
in Section 12.2, any party hereto shall be entitled to seek an
interlocutory injunction from any court of competent jurisdiction. Each
party irrevocably agrees that the courts of Hong Kong shall have
non-exclusive jurisdiction and each Party irrevocably waives any right
that it may have to object to an action being brought in such courts, to
claim that the action has been brought in an inconvenient forum, or to
claim that such courts do not have jurisdiction.
12.4 Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns, legal representatives
and heirs; provided, however, the Company and the Ordinary Shareholders
shall not assign their rights and obligations under this Agreement without
the prior written consent of the Investors.
12.5 Notices.
All notices, demands and other communications provided for or permitted
hereunder shall be made in writing and shall be registered or certified
first-class mail, return receipt requested, telecopier (with receipt
confirmed), courier service or personal delivery:
(a) if to the Company:
c/o Shanghai Real Estate Consultant & Sales (Group) Co., Limited
17th Floor, Merchandise Harvest Building (East)
333 North Chengdu Road
Shanghai 200041, China
Fax No.: +86 21 5298 0009
Attention: Zhou Xin
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with a copy to:
Jones Day
30th Floor, Shanghai Kerry Center
1515 Nanjing Road West
Shanghai 200040, China
Fax No.: +86 21 5298 6569
Attention: Winston Zhao
(b) if to the Ordinary Shareholders: to the addresses set forth in Schedule 1.
(c) if to the Investors: to the addresses set forth in Schedule 2.
with a copy to:
Clifford Chance LLP
40th Floor Bund Center
222 Yan An East Road
Shanghai 200002, China
Fax No.: +86 21 6335 0337
Attention: Yanping Cao
or to such other address or addresses as shall have been furnished in
writing to the other parties hereto. All such notices and communications
shall be deemed to have been duly given: when delivered by hand, if
personally delivered; when delivered by courier, if delivered by
commercial express courier service; or if faxed, when receipt is
acknowledged.
12.6 Confidentiality
Each party agrees that it will maintain the confidentiality of any
Confidential Information of the Company; provided, however, that such
obligations of confidentiality shall not apply to (i) information which is
on the date hereof or any time thereafter in the public domain otherwise
than as a result of (A) a breach by that party of this Section 12.6 or (B)
a breach of a confidentiality obligation by the disclosure, where the
breach was known to that party; (ii) information the disclosure of which
is necessary in order to comply with applicable law, the order of any
court, the requirements of a stock exchange or other governmental or
regulatory authority or to obtain tax or other clearances or consents from
any relevant authority; (iii) information disclosed by any Shareholder to
a bona fide purchaser of any Shares; (iv) information disclosed by the
Investors to any potential Investor in an investment fund directly or
indirectly holding interest in the Investors; or (v) information disclosed
by the Investors to their directors, officers, employees, partners,
accountants and attorneys where such persons or entities are under
appropriate nondisclosure obligations to the Investors.
12.7 Amendment and Waivers
Except as otherwise provided herein, neither this Agreement nor any
provision hereof shall be modified, changed, discharged or terminated
except by an instrument in writing signed by (a) the Company, (b) the
holders of at least two thirds of the Ordinary Shares
- 20 -
and Series A Preferred Shares outstanding, and (c) the holders of at least
two thirds of the Series A Preferred Shares outstanding (including the
Investors).
12.8 Counterparts
This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
12.9 Severability
If any one or more of the provisions contained in this Agreement, or the
application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially
impair the benefits of the remaining provisions of this Agreement. The
parties hereto further agree to replace such invalid, illegal or
unenforceable provision of this Agreement with a valid, legal and
enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such invalid, illegal or
unenforceable provision.
12.10 Conflicts and Inconsistencies
If and to the extent there are conflicts or inconsistencies between the
provisions of this Agreement and those of the Articles of Association, the
terms of this Agreement shall control as between the Shareholders only.
The parties hereto agree to take all actions necessary or advisable, as
promptly as practicable after the discovery of such conflict or
inconsistency, to amend the Articles of Association so as to eliminate
such conflict or inconsistency.
12.11 Entire Agreement
This Agreement, together with the exhibits and schedules hereto, and the
other Transaction Documents is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein. There are no
other restrictions, promises, warranties or undertakings, other than those
set forth or referred to herein or therein. This Agreement, together with
the exhibits and schedules hereto, supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
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12.12 Right of Delegation
Notwithstanding anything contained in this Agreement to the contrary, any
and all of the rights, powers, discretions and consents of CHF as a
Shareholder of the Company under this Agreement may be delegated to and/or
exercised by China Renaissance Capital Investment Inc., a company
organized and existing under the laws of the Cayman Islands, or its
Affiliate, subsidiaries or any other investment manager, investment
adviser or general partner authorized from time to time to act on behalf
of CHF and/or by some other person or persons nominated by CHF for the
time being.
Notwithstanding anything contained in this Agreement to the contrary, any
and all of the rights, powers, discretions and consents of DLJ and RECP as
Shareholders of the Company under this Agreement may be delegated to
and/or exercised by DLJ Real Estate Capital Partners, Inc., a limited
liability company organized and existing under the laws of Delaware,
U.S.A, or its Affiliate, subsidiaries or any other investment manager,
investment adviser or general partner authorized from time to time to act
on behalf of DLJ and/or RECP and/or by some other person or persons
nominated by DLJ and/or RECP for the time being.
[REMAINDER OF PAGE INTERNATIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered by their respective officers hereunto duly authorized as of the
date first above written.
E-HOUSE (CHINA) INVESTMENTS HOLDING LIMITED
[CHINESE CHARACTERS]
By: /s/
--------------------------------------
Name:
Title:
CHF INVESTMENT LIMITED
By: /s/
--------------------------------------
Name: Hung Shih
Title: Director
RECP E-HOUSE INVESTORS LTD.
BY: DLJ REAL ESTATE CAPITAL PARTNERS III, L.P.
By: /s/
--------------------------------------
Name:
Title:
E-HOUSE CO-INVESTORS, LTD.
BY: RECP III CO-INVESTORS A, L.P.
By: /s/
--------------------------------------
Name:
Title:
JUNHENG INVESTMENT LIMITED
By: /s/
--------------------------------------
Name:
Title:
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FARALLON CAPITAL PARTNERS, L.P.
FARALLON CAPITAL INSTITUTIONAL PARTNERS, L.P.
FARALLON CAPITAL INSTITUTIONAL PARTNERS II, L.P.
FARALLON CAPITAL INSTITUTIONAL PARTNERS III, L.P.
FARALLON CAPITAL OFFSHORE INVESTORS II, L.P.
By: /s/
--------------------------------------
By: Farallon Partners, L.L.C., its General Partner
Name: Mark C. Wehrly
Title: Managing Member
SMART CREATE GROUP LIMITED
By: /s/
--------------------------------------
Name:
Title:
ON CHANCE INC.
By: /s/
--------------------------------------
Name:
Title:
SIG CHINA INVESTMENT ONE, LTD.
By: /s/
--------------------------------------
By: Susquehanna Asia Investment, LLLP
Name: Michael L. Spolan
Title: Vice President
Susquehanna Asia Investment, LLLP
(authorized agent)
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SCHEDULE 1
ORDINARY SHAREHOLDERS
- 25 -
SCHEDULE 2
INVESTORS
- 26 -
EXHIBIT A
FORM OF DEED OF ADHERENCE
Reference is made to the [transfer document], dated [-] between [transferor]
(the "TRANSFEROR") and the undersigned, pursuant to which the Transferor shall
sell to the undersigned, and the undersigned shall purchase from the Transferor,
[number and type of shares] of [-], par value US$[0.01], for consideration equal
to [consideration]. It is a condition to the completion of such sale and
purchase that the undersigned become a party to that certain Shareholders
Agreement, dated [-], 2006, by and among E-house (China) Investments Holding
Limited and its shareholders (the "SHAREHOLDERS AGREEMENT").
Accordingly, by execution of this Deed of Adherence, the undersigned ratifies
and shall become a party to the Shareholders Agreement, and shall be fully bound
by, and subject to, all of the covenants, terms and conditions of the
Shareholders Agreement applicable to or binding on the Transferor (including
without limitation Article 4 thereof) as though it is an original party thereto
and shall be deemed a Shareholder (as defined in the Shareholders Agreement) for
all purposes thereunder. The undersigned authorizes this signature page to be
attached to and made part of the Shareholders Agreement.
This Deed of Adherence shall be governed by and construed in accordance with the
laws of Hong Kong without giving effect to any choice of law rule.
The address of the undersigned for purposes of all notices under the
Shareholders Agreement is: [-]
[NAME OF NEW SHAREHOLDER]
By: _____________________________
Name:
Title:
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