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Homeinns Hotel Group – IPO: ‘F-1’ on 10/4/06 – EX-4.4

On:  Wednesday, 10/4/06, at 3:39pm ET   ·   Accession #:  1193125-6-202672   ·   File #:  333-137800

Previous ‘F-1’:  None   ·   Next:  ‘F-1/A’ on 10/13/06   ·   Latest:  ‘F-1/A’ on 4/25/07

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

10/04/06  Home Inns & Hotels Mgmt Inc.      F-1                   27:7.9M                                   RR Donnelley/FA

Document/Exhibit                   Description                      Pages   Size 

 1: F-1         Registration Statement of a Foreign Private Issuer  HTML   2.27M 
 2: EX-3.1      Memorandum and Articles of Association of the       HTML    270K 
                          Registrant                                             
10: EX-4.10     Acting-In-Concert Agreement, Dated July 6, 2006     HTML     25K 
11: EX-4.11     Financing Transaction Agreement, Dated June 2005    HTML     27K 
 3: EX-4.2      Registrant's Specimen Certificate for Ordinary      HTML     17K 
                          Shares                                                 
 4: EX-4.4      Share Purchase Agreement, Dated November 24, 2003   HTML    529K 
 5: EX-4.5      Share Subscription Agreement, Dated May 24, 2004    HTML    278K 
 6: EX-4.6      Share Subscription Agreement, Dated September 15,   HTML    125K 
                          2004                                                   
 7: EX-4.7      Share Purchase Agreement, Dated January 24, 2005    HTML    754K 
 8: EX-4.8      Shareholders Agreement, Dated June 29, 2006         HTML    218K 
 9: EX-4.9      Subscription Agreement, Dated July 4, 2006          HTML     75K 
12: EX-5.1      Opinion of Maples and Calder                        HTML     33K 
13: EX-10.1     Employees' Stock Option Plan                        HTML     86K 
14: EX-10.2     Form of Indemnification Agreement                   HTML     56K 
15: EX-10.3     Employment Agreement Between the Registrant and     HTML     30K 
                          David Jian Sun                                         
16: EX-10.4     Employment Agreement Between the Registrant and     HTML     29K 
                          Rixin Liang                                            
17: EX-10.5     Employment Agreement Between the Registrant and     HTML     25K 
                          May Y. Wu                                              
18: EX-10.6     2006 Share Incentive Plan                           HTML     90K 
19: EX-21.1     Subsidiaries of the Registrant                      HTML     10K 
20: EX-23.1     Consent of Pricewaterhousecoopers Zhong Tian CPAs   HTML     12K 
                          Limited Company                                        
21: EX-23.2     Consent of Maples and Calder                        HTML     13K 
22: EX-23.4     Consent of Commerce and Finance Law Offices         HTML     13K 
23: EX-23.5     Consent of Terry Yongmin Hu                         HTML     11K 
24: EX-23.6     Consent of Kenneth Gaw                              HTML     11K 
25: EX-23.7     Consent of American Appraisal China Limited         HTML     12K 
26: EX-99.1     Code of Business Conduct and Ethics of the          HTML     50K 
                          Registrant                                             
27: EX-99.2     Opinion of Commerce & Finance Law Offices           HTML     19K 
                          Concerning Certain Prc Law Matters                     

Exhibit 4.4

SERIES B PREFERENCE SHARES PURCHASE AGREEMENT

This Series B Preference Shares Purchase Agreement (this “Agreement”) is made and entered into as of the 24^th day of November, 2003, by and among Home Inns & Hotels Management (Hong Kong) Limited, a Hong Kong company (the “Company”), and the parties listed on the Schedule of Investors attached to this Agreement as Exhibit A (each hereinafter individually referred to as an “Investor” and collectively referred to as the “Investors”).

WHEREAS, the Company desires to sell to the Investors, and the Investors desire to purchase from the Company, the Company’s Series B Preference Shares on the terms and conditions set forth in this Agreement;

NOW, THEREFORE, the parties hereby agree as follows:

1. AGREEMENT TO PURCHASE AND SELL SHARES.

1.1 Authorization. As of the Closing (as defined in Section 2 hereof), the Company will have authorized the issuance, pursuant to the terms and conditions of this Agreement, of up to Two Million Four Hundred and Seventeen Thousand Six Hundred Forty-Five (2,417,645) shares of the Company’s Series B Preference Shares (the “Purchased Shares”) having the rights, preferences, privileges and restrictions set forth in the Amended and Restated Articles of Association of the Company attached to this Agreement as Exhibit B (the “Restated Articles”), the Shareholders Agreement (as defined in Section 5.9).

1.2 Agreement to Purchase and Sell. The Company agrees to sell to each Investor at the Closing, and each Investor agrees, severally and not jointly, to purchase from the Company at the Closing, the number of Purchased Shares set forth opposite such Investor’s name on Exhibit A, at a price of US$0.3309 per share. The ordinary shares of the Company issuable upon conversion of the Purchased Shares will be collectively hereinafter referred to as the “Conversion Shares”.

2. CLOSING. The purchase and sale of the Purchased Shares will take place at the offices of Boughton Peterson Yang Anderson, 4009 Gloucester Tower, The Landmark, 11 Pedder Street, Central, Hong Kong, at 3:00 p.m. local time, on the 1^st day of December, 2003, or at such other time and place as the Company and Investors who have agreed to purchase a majority of the Purchased Shares listed on Exhibit A mutually agree upon (which time and place are referred to in this Agreement as the “Closing”). At the Closing, the Company will deliver to each Investor a certificate representing the number of Purchased Shares that such Investor has agreed to purchase hereunder as shown on Exhibit A against delivery to the Company by such Investor of the full purchase price for such Purchased Shares, paid by wire transfer of funds to the Company.

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to each Investor that, except as set forth in the Schedule of Exceptions (the “Schedule of Exceptions”) attached to this Agreement as Exhibit C (which Schedule of Exceptions shall be deemed to be representations and warranties to the Investors by the Company under this Section 3), the statements in this Section 3 are all true and complete immediately prior to the Closing. Except for subsections 3.1, 3.2, 3.3, 3.4, and 3.5 below, for purposes of this Section 3, all references to the “Company” shall include the Company and Home Inns Hotel Management (Beijing) Limited (the “China Sub”), a joint venture established under the laws of the People’s Republic of China (the “PRC”) by the Company and Capital Travel Resorts and Hotels Group Limited (“Capital Travel”).

3.1 Organization, Corporate Power and Qualification. The Company has been duly incorporated and organized, and is validly existing, under the laws of the Hong Kong Special Administrative Region of the People’s Republic of China (“Hong Kong”). The Company has the requisite corporate power and authority, to enter into and perform this Agreement, the Shareholders Agreement (the Agreement and the Shareholders Agreement are collectively referred to herein as the “Related Agreements”), to own and operate its properties and assets and to carry on its business as currently conducted and as presently proposed to be conducted. The Company is duly qualified to do business in all jurisdictions in which it is required to be so qualified as the Company’s business is currently conducted and as presently proposed to be conducted by the Company, except for jurisdictions in which failure to so qualify could not reasonably be expected to have a material adverse effect on the business, operations, affairs or condition (financial or otherwise) of the Company as currently conducted and as presently proposed to be conducted or in its properties or assets taken as a whole (a “Material Adverse Effect”). The China Sub has been duly incorporated and organized, and is validly existing, under the laws of the PRC. The China Sub has the requisite corporate power and authority to own and operate its properties and assets and to carry on its business as currently conducted and as presently proposed to be conducted. The China Sub is duly qualified to do business in all jurisdictions in which it is required to be so qualified as the China Sub’s business is currently conducted and as presently proposed to be conducted by the China Sub, except for jurisdictions in which failure to so qualify could not reasonably be expected to have a Material Adverse Effect.

3.2 Capitalization.

(a) Issued Share Capital. The capitalization of the Company immediately prior to Closing consists of an authorized share capital of HK$1,000,000.00 with the following issued share capital:

(i) Ordinary Shares. Eleven Million (11,000,000) issued and outstanding Ordinary Shares of par value of HK$0.005 each (the “Ordinary Shares”); and

(ii) Series A Preference Shares. Seventeen Million Two Hundred Forty-One Thousand Four Hundred (17,241,400) issued and outstanding Series A Preference Shares of par value of HK$0.005 each.

(b) Issue of Series B Preference Shares. Upon the Closing, Two Million Four Hundred and Seventeen Thousand Six Hundred Forty-Five (2,417,645) Series B Preference Shares of par value of HK$0.005 each will be issued. Upon the Closing, the rights, preferences and privileges of the Series A Preference Shares and Series B Preference Shares (collectively referred to as the “Preference Shares”) will be as stated in the Restated Articles and as provided by law.

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(c) Options, Warrants, Reserved Shares. Except for the conversion privileges of the Series A Preference Shares and Series B Preference Shares and the employee stock option plan of the Company whereby a maximum of 1,412,070 Ordinary Shares may be subject to options granted to employees (the “Stock Option Plan”), there are no outstanding options, warrants, rights (including conversion or preemptive rights) or agreement for the purchase or acquisition from the Company of any of its capital shares or any securities convertible into or ultimately exchangeable or exercisable for any of the Company’s capital shares. Apart from the exceptions noted herein or in the Schedule of Exceptions, no shares of the Company’s outstanding capital shares, or shares issuable upon exercise or exchange of any outstanding options, warrants or rights, or other shares issuable by the Company, are subject to any preemptive rights, rights of first refusal or other rights to purchase such shares (whether in favor of the Company or any other person), pursuant to any agreement or commitment of the Company.

(d) The outstanding capital shares of the Company are duly authorized and validly issued, fully paid and nonassessable, and have been approved by all requisite shareholder action.

(e) Outstanding Security Holders. The Investors have a complete list of all outstanding shareholders, option holders under the Stock Option Plan and other security holders of the Company.

3.3 Subsidiaries. The Company owns directly 88.45% of the issued and outstanding equity interests, and holds 88.45% of the voting shares, of the China Sub. The approved total investment amount of the China Sub is RMB$60,000,000, of which the registered capital amount is RMB$38,945,000. The Company owns directly 88.45% of the total registered capital of the China Sub. There are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal or similar rights, except for such rights which may be held by the Company) or agreements, orally or in writing, for the purchase or acquisition of any equity or other ownership interest of the China Sub. Subject to the exceptions stated in Schedule to Exceptions in Exhibit C hereof and other than the China Sub, the Company does not presently own or control, directly or indirectly, any interest in any other corporation, partnership, trust, joint venture, association, or other entity.

3.4 Due Authorization. All corporate action on the part of the Company’s directors and shareholders necessary for (i) the authorization, execution, delivery of, and the performance of all obligations of the Company under, the Related Agreements; (ii) the authorization, issuance, reservation for issuance and delivery of all of the Purchased Shares being sold under this Agreement and of the Conversion Shares; and (iii) the authorization of the Restated Articles has been taken or will be taken prior to the Closing. The Related Agreements, when executed and delivered, will constitute valid and legally binding obligations of the Company, enforceable in accordance with their respective terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization or others laws of general application relating to or affecting the enforcement of creditors’ rights generally and (ii) the effect of rules of law governing the availability of equitable remedies. Except in relation to the Series A Preference Shares of the Company, the Purchased Shares, when issued, sold and delivered in accordance with the terms of this Agreement, are not, and the Conversion Shares upon the conversion of the Purchased Shares will not be, subject to preemptive rights or other preferential rights in any present shareholders of the Company, will not be subject to any lien, and will not conflict with any provision of any agreement or instrument to which the Company is a party or by which it or its property is bound.

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3.5 Valid Issuance of Shares.

(a) The Purchased Shares, when paid for and then issued, as provided in this Agreement, will be duly authorized and validly issued, fully paid and nonassessable. The Conversion Shares have been duly and validly reserved for issuance upon conversion of the Purchased Shares and, when issued upon such conversion in accordance with the Restated Articles (assuming no change in the Restated Articles or in applicable law), will be duly authorized and validly issued, fully paid and nonassessable.

(b) Based in part on the representations made by the Investors in Section 4 hereof, the offer and sale of the Purchased Shares solely to the Investors in accordance with this Agreement are made in compliance with the laws of Hong Kong and all other applicable jurisdictions.

(c) The outstanding capital shares of the Company are duly authorized and validly issued, fully paid and nonassessable, and have been approved by all requisite shareholder action. Such capital shares, and all outstanding options, warrants, convertible notes and other securities of the Company, have been issued in full compliance with the laws of Hong Kong and all other applicable jurisdictions.

3.6 Governmental Consents. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any national, state or local governmental authority is required on the part of the Company in order to enable the Company to execute, deliver and perform its obligations under the Related Agreements except for such qualifications or filings under applicable securities laws as may be required in connection with the transactions contemplated by this Agreement. All such qualifications and filings will, in the case of qualifications, be effective on the Closing and will, in the case of filings, be made within the time prescribed by law.

3.7 Litigation. There are no actions, suits, claims, investigations or proceedings pending or, to the knowledge of the Company, threatened against the Company or against any officer or holder of more than five percent (5%) of the capital shares of the Company (other than any Investor) relating to such person’s performance of duties for the Company or relating to his, her or its share ownership in the Company, or any reasonable basis therefor, which could reasonably be expected to result, either in any case or in the aggregate, in a Material Adverse Effect or which directly or indirectly challenge the validity of this Agreement, the issuance of any of the Purchased Shares, or any action taken or to be taken pursuant hereto or thereto. Neither the Company nor any officer or holder of more than five percent (5%) of the capital shares of the Company (other than any Investor) is named in, subject to or in default under, nor are any of its assets bound by, any order, writ, injunction, decree, ruling or decision of any court, commission, board or other governmental agency. There are no actions, suits, claims, investigations or proceedings by the Company currently pending or that the Company currently intends to initiate.

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3.8 Certain Agreements of Officers and Key Employees.

(a) There are no existing contracts or engagements to which the Company is a party and in which any of the directors of the Company are directly or indirectly interested (other than service contracts).

(b) To the knowledge of the Company, no officer of the Company or the Key Employees (for purposes of this Agreement, “Key Employees” shall mean Qi Ji, Hui Chen, and Ri Xin Liang) of the Company is in violation of any term of any employment contract, patent disclosure agreement, proprietary information agreement, noncompetition agreement, or any other contract, agreement or understanding or any restrictive covenant relating to the right of any such officer or Key Employee to be employed by the Company because of the nature of the business conducted or presently proposed to be conducted by the Company or relating to the use of trade secrets or proprietary information of others, and the continued employment of the Company’s officers and Key Employees does not subject the Company to any liability to third parties. The Company has not received any communication from the former employer of an officer or Key Employee regarding such person’s existing or proposed role as a director, officer or employee of or consultant to the Company regarding or indicating the alleged violation of any term of any employment contract, patent disclosure agreement, proprietary information agreement, noncompetition agreement, or any other contract, agreement or understanding or any restrictive covenant relating to the right of any such person to be employed by the Company because of the nature of the business conducted by the Company or relating to the use of trade secrets or proprietary information of others.

3.9 Status of Proprietary Assets.

(a) As used in this Section 3.9,

(i) “Business” means the business of the Company as presently conducted and as presently proposed to be conducted, including without limitation the hotel investment, management and franchising services.

(ii) “Intellectual Property Rights” means worldwide common law and statutory rights in, to or associated with (i) patents, patent applications and invention disclosures, (ii) copyrights, copyrights registrations and copyright applications and “moral” rights, (iii) the protection of trade and industrial secrets and confidential information, (iv) trademarks, trade names, service marks and other designators of origin, (v) analogous rights to those set forth above, (vi) divisionals, continuations, continuation-in-part, renewals, reissuances, reexaminations, and extensions of the foregoing (as applicable), and all other industrial and/or proprietary rights in, to or associated with Technology or intangible intellectual property.

(iii) “Necessary Intellectual Property” means all Technology and Intellectual Property Rights used in and/or necessary to the conduct of the Business, including without limitation that Technology and those Intellectual Property Rights listed in Exhibit D.

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(iv) “Technology” means all inventions, works of authorship, know-how, show-how, data, databases, information, processes, procedures, techniques, documents, diagrams, source code, software, hardware, circuits, maskworks, algorithms, documentation and flowcharts.

(b) The Company owns and has good and valid title to, unencumbered by any liens, all Necessary Intellectual Property.

(c) The Company has not infringed, violated or misappropriated any Intellectual Property Right of any third party. The conduct of the Business does not conflict with, infringe, violate or misappropriate any Intellectual Property Right of any third party.

(d) There are no outstanding options, licenses, or agreements of any kind relating to the Necessary Intellectual Property, nor is the Company bound by or a party to any options, licenses or agreements of any kind with respect to the Technology or Intellectual Property Rights of any other person or entity.

(e) The Company has not received any communications alleging that the Company (or any of its employees or consultants) has violated, infringed or misappropriated or, by conducting its business, would violate, infringe or misappropriate any Intellectual Property Rights of any other person or entity.

(f) To the Company’s knowledge, no Key Employee is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with the use of such employee’s best efforts to promote the interest of the Company or that would conflict with the Business. Furthermore, to the Company’s knowledge, the carrying on of the Business by the employees of the Company will not conflict with or result in a breach of the terms, conditions, or provisions of, or constitute a default under, any contract, covenant or instrument under which such employee is now obligated.

(g) Neither the execution or delivery of this Agreement will conflict with or result in a breach of the terms, conditions, or provisions of, or constitute a default under, any contract, covenant or instrument under which the Company is now obligated.

3.10 Compliance with Law and Documents. The Company is not in violation or default of any provisions of its Memorandum and Articles of Association (or other similar charter documents), as amended to date, and the Company is in compliance with all applicable statutes, laws, regulations and executive orders of Hong Kong and all foreign countries or other governmental bodies and agencies having jurisdiction over the Company’s business or properties where such violation would have a Material Adverse Effect. The Company has not received any notice of any violation of any such statute, law, regulation or order that has not been remedied prior to Closing. The execution, delivery and performance of the Related Agreements and the consummation of the transactions contemplated hereby or thereby will not result in any such violation or default, or be in conflict with or result in a violation or breach of, with or without the passage of time or the giving of notice or both, the Company’s Memorandum and Articles of Association (or other similar charter documents), any judgment, order or decree of any court or arbitrator to which the Company is a party, or is subject, any agreement or contract of the Company, or a violation of any statute, law, regulation or order, or an event which results in the creation of any lien, charge or encumbrance upon any material assets of the Company.

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3.11 Registration Rights. Except as provided in the Shareholders Agreement, the Company is not under any obligation, under contract or law, to (i) register under the 1933 Act any of its currently outstanding securities or any of its securities which may hereafter be issued or (ii) list for public trading such securities in any jurisdiction or on any stock exchange or over-the-counter market.

3.12 Title to Property and Assets. The Company owns its properties and assets free and clear of all mortgages, deeds of trust, liens, encumbrances and security interests except for statutory liens for the payment of current taxes that are not yet delinquent and liens, encumbrances and security interests which arise in the ordinary course of business and which do not affect material properties and assets of the Company. With respect to the property and assets it leases, the Company is in material compliance with such leases and the Company holds valid leasehold interests in such assets free of any liens, encumbrances, security interests or claims of any party other than the lessors of such property and assets.

3.13 Certain Actions. From the date of this Agreement until Closing, the Company has not: (i) declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its capital shares; (ii) incurred any indebtedness for money borrowed or incurred any other liabilities individually in excess of Twenty Five Thousand U.S. Dollars (US$25,000) or in excess of One Hundred Thousand U.S. Dollars (US$100,000) in the aggregate; (iii) made any loans or advances to any person, other than ordinary advances for travel expenses and miscellaneous expenditures incurred in the ordinary course of business; (iv) sold, exchanged or otherwise disposed of any material assets or rights other than the sale of inventory in the ordinary course of its business; or (v) entered into any material transactions with any of its officers, directors or employees or any entity controlled by any of such individuals.

3.14 Activities Since Date of This Agreement. Since the date of this Agreement, there has not been:

(a) any damage, destruction or loss, whether or not covered by insurance, that has resulted in or could reasonably be expected to result in a Material Adverse Effect;

(b) any waiver by the Company of a valuable right or debt owed to it which has resulted in a Material Adverse Effect;

(c) any material change or amendment to a contract or arrangement by which the Company or any of its assets or properties is bound or subject;

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(d) any other event or condition of any character that could result in or could reasonably be expected to result in a Material Adverse Effect;

(e) any satisfaction or discharge of any lien, claim or encumbrance or payment of any obligation by the Company, except such a satisfaction, discharge or payment made in the ordinary course of business that is not material to the assets, properties, financial condition, operating results or business of the Company;

(f) any material change in any compensation arrangement or agreement with any Key Employee or director;

(g) except for the licensing of software in the ordinary course of business, any sale, assignment or transfer of any patents, trademarks, copyrights, trade secrets or other intangible assets;

(h) any resignation or termination of employment of any key officer of the Company;

(i) receipt of notice that there has been a loss of, or material order cancellation by, any major customer of the Company;

(j) any mortgage, pledge, transfer of a security interest in, or lien, created by the Company, with respect to any of its properties or assets, except liens for taxes not yet due or payable;

(k) any loans or guarantees made by the Company to or for the benefit of its employees, officers or directors, or any members of their immediate families, other than travel advances and other advances made in the ordinary course of its business;

(l) any declaration, setting aside or payment or other distribution in respect of any of the Company’s capital shares, or any direct or indirect redemption, purchase or other acquisition of any of such shares by the Company; or

(m) any agreement or commitment by the Company to do any of the things described in this Section 3.14.

3.15 Insurance. The Company has in full force and effect such insurance policies, in such amounts (subject to reasonable deductibles) as are carried by similar companies, including casualty and liability insurance policies.

3.16 Tax Returns and Payments. The Company has timely filed all tax returns and reports required by law. All tax returns and reports of the Company are true and correct in all material respects. The Company has paid all taxes and other assessments due, except those, if any, currently being contested by it in good faith which are listed in the Schedule of Exceptions.

3.17 Minute Books. The minute books of the Company contain a complete record of all meetings, consents and actions of the board of directors and the shareholders of the Company since the time of its incorporation, accurately reflecting all transactions referred to in such minutes in all material respects.

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3.18 Labor Agreements and Actions. The Company is not bound by or subject to any contract, commitment or arrangement with any labor union, and to the Company’s knowledge, no labor union has requested, sought or attempted to represent any employees, representatives or agents of the Company. There is no strike or other labor dispute involving the Company pending nor, to the Company’s knowledge, threatened, nor is the Company aware of any labor organization activity involving its employees. The Company is not aware that any officer or Key Employee intends to terminate their employment with the Company, nor does the Company have any present intention to terminate the employment of any of its officers or employees.

3.19 Interested Party Transactions. To the knowledge of the Company, no officer or director of the Company or any “affiliate” or “associate” (as those terms are defined in Rule 405 promulgated under the 1933 Act) of any such person has had, either directly or indirectly, a material interest in: (i) any person or entity which purchases from or sells, licenses or furnishes to the Company any goods, property, technology, intellectual or other property rights or services; or (ii) any contract or agreement to which the Company is a party or by which it may be bound or affected.

3.20 Assumptions or Guaranties of Indebtedness of Other Persons. The Company has not assumed, guaranteed, endorsed or otherwise become directly or contingently liable on (including, without limitation, liability by way of agreement, contingent or otherwise, to purchase, to provide funds for payment, to supply funds to or otherwise invest in the debtor or otherwise to assure the creditor against loss), any indebtedness of any other person.

3.21 Shares Restriction Agreements. Each person who, pursuant to any benefit, bonus or incentive plan of the Company, holds any currently outstanding shares or other securities of the Company or any option, warrant or right to acquire such shares or other securities, has entered into or is otherwise bound by, an agreement granting the Company a right of first refusal with respect to all such shares. The Company has furnished to the solicitors to the Investors true and complete copies of the forms of all such share restriction agreements.

3.22 Limitation. The provisions of this Section 3.22 shall operate to limit the liability of the Company in respect of any claim for breach of any of the representations, warranties and covenants of the Company under Section 3 of this Agreement. The parties hereto agree as follows:

(a) the maximum aggregate liability of the Company in respect of all such claims shall not exceed the aggregate total paid by the Investors for the Purchased Shares.

(b) No such claim shall be brought against the Company unless:

(i) written particulars thereof (stating in reasonable detail the specific matter in respect of which the claim is made) shall have been notified in writing to the Company before the expiration of three (3) years from the date of the Closing; and

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(ii) the amount of the claim is not less than Twenty-Five Thousand U.S. Dollars (US$25,000).

4. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF INVESTORS. Each Investor hereby represents and warrants to, and agrees with, the Company, severally and not jointly, that:

4.1 Authorization. The Related Agreements constitute such Investor’s valid and legally binding obligations, enforceable in accordance with its terms except as may be limited by (i) applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and (ii) the effect of rules of law, governing the availability of equitable remedies. Each Investor represents that such Investor has full power and authority to enter into the Related Agreements.

4.2 Purchase for Own Account. The Purchased Shares to be purchased by such Investor hereunder will be acquired for investment for such Investor’s own account, not as a nominee or agent, and not with a view to the public resale or distribution thereof within the meaning of the 1933 Act, and such Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. If not an individual, such Investor also represents that such Investor has not been formed for the specific purpose of acquiring Purchased Shares.

4.3 Disclosure of Information. At no time was the Investor presented with or solicited by any publicly issued or circulated newspaper, mail, radio, television or other form of general advertising or solicitation in connection with the offer, sale and purchase of the Purchased Shares. Such Investor has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the Purchased Shares to be purchased by such Investor under this Agreement. Such Investor further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Purchased Shares and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to such Investor or to which such Investor had access. The foregoing, however, does not in any way limit or modify the representations and warranties made by the Company in Section 3.

4.4 Investment Experience. Such Investor understands that the purchase of the Purchased Shares involves substantial risk, has evaluated the risks of the purchase of the Purchased Shares and can afford a complete loss of his or her investment, and has no need for liquidity in connection with the purchase of the Purchased Shares. Such Investor: (i) has experience as an investor in securities of companies in the development stage and acknowledges that such Investor is able to fend for itself, can bear the economic risk of such Investor’s investment in the Purchased Shares and has such knowledge and experience in financial or business matters that such Investor is capable of evaluating the merits and risks of this investment in the Purchased Shares and protecting its own interests in connection with this investment and/or (ii) has a preexisting personal or business relationship with the Company and certain of its officers, directors or controlling persons of a nature and duration that enables such Investor to be aware of the character, business acumen and financial circumstances of such persons. In formulating a decision to invest in the Company and evaluating the suitability of an investment in the Purchased Shares, such Investor has not relied or acted on the basis of any representations or other information (whether oral or written) purported to be given on behalf of the Company except as set forth herein and independent investigations made by the Investor or representative(s) of the Investor. Such Investor is aware and acknowledges that (i) the Purchased Shares involve a material degree of risk of diminution or loss of such Investor’s investment and there is no assurance of any income from such investment; and (ii) it may not be possible for the Investor to liquidate its investment readily in case of an emergency.

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4.5 Accredited Investor Status. Unless otherwise expressly indicated on Exhibit A to this Agreement, such Investor is an “accredited investor” within the meaning of Regulation D promulgated under the 1933 Act.

4.6 No Breach of Applicable Laws. In subscribing for the Purchased Shares, the Investor will not be in breach of any applicable laws, including those relating to money laundering or proceeds of crime in any applicable jurisdiction.

5. CONDITIONS TO INVESTORS’ OBLIGATIONS AT CLOSING. The obligations of each Investor under Section 2 of this Agreement are subject to the fulfillment or waiver, on or before the Closing, of each of the following conditions, the waiver of which shall not be effective against any Investor who does not consent to such waiver, which consent may be given by written, oral or telephone communication to the Company, its solicitors or to the solicitors to the Investors:

5.1 Representations and Warranties True. Each of the representations and warranties made by the Company in Section 3 hereof shall be true and complete on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the date of the Closing.

5.2 Performance. The Company shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing and shall have obtained all approvals, consents and qualifications necessary to complete the purchase and sale described herein.

5.3 Restated Articles Effective. The Restated Articles shall have been duly adopted by the Company by all necessary corporate action of its board of directors and shareholders and shall be in full force and effect, and shall have been duly filed with the Hong Kong Companies Registry within thirty (30) days of the Closing.

5.4 Compliance Certificate. The Company shall have delivered to each Investor at the Closing a certificate signed on its behalf by one of its directors certifying that the conditions specified in Sections 5.1, 5.2 and 5.3 hereof have been fulfilled and stating that there shall have been no Material Adverse Effect not previously disclosed to the Investors in writing.

5.5 Compliance with Securities Laws. The Company shall have obtained all necessary permits and qualifications, or have the availability of exemptions therefrom, required by any applicable jurisdiction for the offer and issuance of the Purchased Shares to the Investors.

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

5.7 Secretary’s Certificate. The Investors shall have received from the Company’s Secretary a certificate dated as of the Closing having attached thereto the following:

(a) Corporate Actions. A copy of the resolutions of the board of directors and the shareholders of the Company approving the Restated Articles and providing for the authorization of the Purchased Shares, the approval of the Related Agreements, the issuance of the Purchased Shares and the other matters contemplated hereby and thereby.

(b) Authorized Signatories. A list containing the names of the officers of the Company authorized to sign this Agreement, the certificates for the Purchased Shares and the other documents, instruments or certificates to be delivered pursuant to this Agreement by the Company or any of its officers, together with the true signatures of such officers.

5.8 Board of Directors. The Company’s board of directors shall be comprised of five (5) members being Qi Ji, Eric Ku Chun Lin, Nan Peng Shen, Jerry Sze, and Su Yang Zhang.

5.9 No Material Change. There shall have been no Material Adverse Effect in the business, financial condition, or assets of the Company, since the date of this Agreement.

5.10 Shareholders Agreement. The Shareholders Agreement in the form attached to this Agreement as Exhibit E (the “Shareholders Agreement”) shall have been executed by the Company and the Parties (as such term is defined in the Shareholders Agreement) and delivered to the Investors.

5.11 Minimum Shares Purchased. A minimum of Two Million Four Hundred and Seventeen Thousand Six Hundred Forty-Five (2,417,645) Purchased Shares shall be purchased by the Investors at the Closing for a minimum aggregate purchase price of Eight Hundred Thousand U.S. Dollars (US$800,000) in the individual amounts set forth on Exhibit A.

5.12 Banking Instructions. The Company shall have implemented into its official bank instructions the approval procedures set forth in Section 8.7 of the Shareholders Agreement.

6. CONDITIONS TO THE COMPANY’S OBLIGATIONS AT CLOSING. The obligations of the Company to each Investor under this Agreement are subject to the fulfillment or waiver on or before the Closing of each of the following conditions by such Investor:

6.1 Representations and Warranties. The representations and warranties of such Investor contained in Section 4 shall be true and complete on the date of the Closing with the same effect as though such representations and warranties had been made on and as of the Closing.

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6.2 Payment of Purchase Price. Each Investor shall have delivered to the Company the purchase price specified for such Investor on Exhibit A in accordance with the provisions of Section 2.

7. GENERAL PROVISIONS.

7.1 Survival of Warranties. The representations, warranties and covenants of the Company and the Investors contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of any of the Investors, their solicitors or the Company, as the case may be.

7.2 Successors and Assigns. Except as otherwise provided in this Agreement, this Agreement, and the rights and obligations of the parties hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives.

7.3 Governing Law. This Agreement will be governed by and construed in accordance with the laws of Hong Kong.

7.4 Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered will be deemed an original, and all of which together shall constitute one and the same agreement.

7.5 Titles and Headings. The titles, captions and headings of this Agreement are included for ease of reference only and will be disregarded in interpreting or construing this Agreement. Unless otherwise specifically stated, all references herein to “sections” and “exhibits” will mean “sections” and “exhibits” to this Agreement.

7.6 Notices. Any and all notices required or permitted to be given to a party pursuant to the provisions of this Agreement will be in writing and will be effective and deemed to provide such party sufficient notice under this Agreement on the earliest of the following: (i) at the time of personal delivery, if delivery is in person; (ii) at the time of transmission by facsimile, addressed to the other party at its facsimile number specified herein (or hereafter modified by subsequent notice to the parties hereto), with confirmation of receipt made by both telephone and printed confirmation sheet verifying successful transmission of the facsimile; or (iii) one (1) business day after deposit with an express overnight courier for deliveries within Asia, or two (2) business days after such deposit for deliveries outside of Asia, with proof of delivery from the courier requested.

All notices not delivered personally or by facsimile will be sent with charges prepaid and properly addressed to the party to be notified at the address or facsimile number as follows, or at such other address or facsimile number as such other party may designate by one of the indicated means of notice herein to the other parties hereto as follows:

(a) if to an Investor, at such Investor’s respective address as set forth on Exhibit A hereto; and

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(b) if to the Company, marked “Attention: President,” at Home Inns & Hotels Management (Hong Kong) Limited, Room 2001, The Centrium, 60 Wyndham Street, Central, Hong Kong.

7.7 No Finder’s Fees. Each party represents that it neither is nor will be obligated for any finder’s or broker’s fee or commission in connection with this transaction. Each Investor agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finders’ or broker’s fee (and any asserted liability) for which the Investor or any of its officers, partners, employees, or representatives is responsible. The Company agrees to indemnify and hold harmless each Investor from any liability for any commission or compensation in the nature of a finder’s or broker’s fee (and any asserted liability) for which the Company or any of its officers, employees or representatives is responsible.

7.8 Costs, Expenses. Each party shall bear its own costs and expenses (including legal expenses) in respect of the negotiation, preparation, execution and carrying into effect of this Agreement, the Shareholders Agreement and other agreements and contracts incidental to this Agreement.

7.9 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and holders representing at least eighty percent (80%) of the aggregate number of voting shares of the Company then outstanding on an as-converted-to-Ordinary-Share basis (excluding any of such shares that have been sold to the public or pursuant to Rule 144 of the U.S. Securities and Exchange Commission). Any amendment or waiver effected in accordance with this Section 7.9 shall be binding upon each holder of any voting shares of the Company at the time outstanding, each future holder of such securities, and the Company. No delay or failure to require performance of any provision of this Agreement shall constitute a waiver of that provision as to that or any other instance. No waiver granted under this Agreement as to any one provision herein shall constitute a subsequent waiver of such provision or of any other provision herein, nor shall it constitute the waiver of any performance other than the actual performance specifically waived.

7.10 Severability. If any provision of this Agreement is determined by any court or arbitrator of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such provision will be enforced to the maximum extent possible given the intent of the parties hereto. If such clause or provision cannot be so enforced, such provision shall be stricken from this Agreement and the remainder of this Agreement shall be enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not enforceable) never been contained in this Agreement. Notwithstanding the forgoing, if the value of this Agreement based upon the substantial benefit of the bargain for any party is materially impaired, which determination as made by the presiding court or arbitrator of competent jurisdiction shall be binding, then both parties agree to substitute such provision(s) through good faith negotiations.

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7.11 Entire Agreement. The Related Agreements and the documents referred to herein and therein, together with all the exhibits hereto and thereto, constitute the entire agreement and understanding of the parties with respect to the subject matter of this Agreement, and supersede any and all prior understandings and agreements, whether oral or written, between or among the parties hereto with respect to the specific subject matter hereof.

7.12 Further Assurances. The parties agree to execute such further documents and instruments and to take such further actions as may be reasonably necessary to carry out the purposes and intent of this Agreement.

7.13 Adjustments for Share Splits, Etc. Wherever in this Agreement there is a reference to a specific number of Ordinary Shares or Preference Shares of the Company of any class or series, then, upon the occurrence of any subdivision, combination or share dividend of such class or series of shares, the specific number of shares so referenced in this Agreement shall automatically be proportionally adjusted to reflect the effect on the outstanding shares of such class or series of shares by such subdivision, combination or share dividend.

7.14 Facsimile Signatures. This Agreement may be executed and delivered by facsimile and upon such delivery the facsimile signature will be deemed to have the same effect as if the original signature had been delivered to the other party. The original signature copy shall be delivered to the other party by express overnight delivery. The failure to deliver the original signature copy and/or the nonreceipt of the original signature copy shall have no effect upon the binding and enforceable nature of this Agreement.

7.15 Third Parties. Nothing in this Agreement, express or implied, is intended to confer upon any person, other than the parties hereto and their successors and assigns, any rights or remedies under or by reason of this Agreement.

7.16 Costs And Attorneys’ Fees. In the event that any action, suit or other proceeding is instituted concerning or arising out of this Agreement or any transaction contemplated hereunder, the prevailing party shall recover all of such party’s costs and attorneys’ fees reasonably incurred in each such action, suit or other proceeding, including any and all appeals or petitions therefrom.

[Signature Page Follows]

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

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SERIES B PREFERENCE SHARES PURCHASE AGREEMENT

LIST OF EXHIBITS

EXHIBIT A

Schedule of Investors

A-1

EXHIBIT B

Form of Restated Articles

B-1

Certificate of Incorporation No. 758133

NEW

MEMORANDUM

AND

ARTICLES OF ASSOCIATION

OF

HOME INNS & HOTELS

MANAGEMENT (HONG KONG) LIMITED

(As adopted by special resolution passed on 1 December 2003)

Incorporated the 28th day of May 2001

INCORPORATED IN HONG KONG

(Reprinted in November 2003)

THE COMPANIES ORDINANCE (Chapter 32)

Company Limited by Shares

NEW

MEMORANDUM OF ASSOCIATION

OF

HOME INNS & HOTELS MANAGEMENT (HONG KONG) LIMITED

(As adopted by special resolution passed on 1 December 2003)

1.	The name of the Company is HOME INNS & HOTELS MANAGEMENT (HONG KONG) LIMITED

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And it is hereby declared that the word “company” in this clause shall be deemed to include any partnership or other body of persons whether incorporated or not incorporated and whether dornielled in Hong Kong or elsewhere and the intention is that the objects specified in each paragraph of this Clause shall, except where otherwise expressed in such paragraph, be independent main objects and shall be in nowise limited or restricted by reference to or inference from the terms of any other paragraph or the name of the Company.

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We, the several persons, whose names, addresses and descriptions are hereto subscribed, are desirous of being formed into a Company in pursuance of this Memorandum of Association, and we respectively agree to take the number of shares in the capital of the Company set opposite to our respective names: -

DATED 4th May 2001

WITNESS to the above signatures:

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THE COMPANIES ORDINANCE (Chapter 32)

Company Limited by Shares

NEW

ARTICLES OF ASSOCIATION

OF

HOME INNS & HOTELS MANAGEMENT (HONG KONG) LIMITED

(As adopted by special resolution passed on 1 December 2003)

PRELIMINARY

INTERPRETATION

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PRIVATE COMPANY

THE OFFICE

SHARES

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JOINT HOLDERS OF SHARES

SHARE CERTIFICATES

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CONVERSION RIGHTS OF PREFERENCE SHARES

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- 11 -

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CALL ON SHARES

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FORFEITURE

LIEN

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TRANSFER OF SHARES

TRANSMISSION OF SHARES

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PROVIDED always that the Directors may at any time give notice requiring any such person to elect either to be registered himself or to transfer the share, and if the notice is not complied with within 90 days the Directors may thereafter withhold payment of all dividends or other monies payable in respect of the share until the requirements of the notice have been complied with.

STOCK

INCREASE OF CAPITAL

ALTERATIONS OF SHARE CAPITAL

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MODIFICATION OF RIGHTS

GENERAL MEETINGS

NOTICE OF GENERAL MEETINGS

PROVIDED that a meeting of the Company shall, notwithstanding that it is called by shorter notice than that specified in this Article, be deemed to have been duly called if it is so agreed: -

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PROCEEDINGS AT GENERAL MEETINGS

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VOTING

PROXIES

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CORPORATIONS ACTING BY REPRESENTATIVES

DIRECTORS

DIRECTORS’ REMUNERATION

POWERS OF DIRECTORS

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APPOINTMENT AND REMOVAL OF DIRECTORS

ALTERNATE DIRECTORS

DISQUALIFICATION OF DIRECTORS

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DIRECTORS’ INTERESTS

MANAGING DIRECTORS AND OTHER APPOINTMENTS

PROCEEDINGS OF DIRECTORS

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MINUTES

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Any such minutes of any meeting of the Directors, or any committee, or of the Company, if purporting to be signed by the Chairman of such meeting, or by the Chairman of the next succeeding meeting shall be receivable as prima facie evidence of the matters stated in such minutes.

THE SEAL

SECRETARY

DIVIDENDS AND RESERVES

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CAPITALISATION OF RESERVES ETC.

PROVIDED that a share premium account and a capital redemption reserve fund may, for the purposes of this Article, only be applied in the paying up of unissued shares to be issued to members of the Company as fully paid bonus shares.

ACCOUNTS AND AUDITORS

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PROVIDED that this Article shall not require a copy of those documents to be sent to any person of whose address the Company is not aware nor to more than one of the joint holders of any shares or debentures.

NOTICES

No other person shall be entitled to receive notices of general meetings.

WINDING UP

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INDEMNITY

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Names, Addresses and Descriptions of Subscribers

For and on behalf of

HAREFIELD LIMITED

(Sd.) CHAN SHUK YI

CHAN SHUK YI, Authorised Representative

    Offshore Chambers,

    P.O. Box 217,

    Apia, Samoa

      Corporation

For and on behalf of

FERNSIDE LIMITED

(Sd.) CHAN SHUK YI

CHAN SHUK YI, Authorised Representative

    Offshore Chambers,

    P.O. Box 217,

    Apia, Samoa

      Corporation

DATED 4th May 2001

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EXHIBIT C

Schedule of Exceptions

This is the Schedule of Exceptions set forth as Exhibit C (the “Schedule of Exceptions”) to that certain Series B Preference Shares Purchase Agreement of even date (the “Agreement”) by and among Home Inns & Hotels Management (Hong Kong) Limited (the “Company”) and the parties listed on the Schedule of Investors attached to the Agreement as Exhibit A (the “Investors”). Any disclosures made under the heading of one section of this Schedule of Exceptions may apply to and/or qualify disclosures made under one or more other sections. Section headings are provided for convenience only. Unless otherwise defined, any capitalized terms in this Schedule of Exceptions shall have the same meanings assigned to such terms in the Agreement. Nothing in this Schedule of Exceptions constitutes an admission of any liability or obligation of the Company to any third party, nor an admission against the Company’s interests.

Exceptions to Section

2.

,zIn respect of the representations and warranties given by the Company to each Investor pursuant to Section 3 of this Agreement and in particular with respect to Section 3.3, it is noted that (“Home Inns Shanghai”) is a subsidiary of the China Sub with a 90% interest held by the China Sub and a 10% interest held on trust by Qi Ji through a Loan and Undertaking Agreement.

4.

Furthermore, in respect of the representations and warranties given by the Company to each Investor pursuant to Section 3 of this Agreement and in particular with respect to Section 3.3, it is noted that the China Sub and Home Inns Shanghai have established two companies in China named Home Inns Suzhou and Home Inns Hangzhou .

C-1

C-2

EXHIBIT D

List of Intellectual Property Rights

The China Sub has filed the following trademark applications in the PRC with respect to the trademark

D-1

EXHIBIT E

Form of Shareholders Agreement

E-1

SHAREHOLDERS AGREEMENT

This Shareholders Agreement (the “Agreement”) is made as of 1 December, 2003, by and among Home Inns & Hotels Management (Hong Kong) Limited, a Hong Kong company (the “Company”), with its registered office at Room 2001, 20th Floor, The Centrium, 60 Wyndham Street, Central Hong Kong and the entities and individuals set forth on Exhibit A hereto (collectively, the “Shareholders”, and each individually, a “Shareholder”).

RECITALS

A. The Company and certain Shareholders entered into a shareholders agreement dated the 28^th day of February, 2003 (the “February Agreement”) for the purposes of regulating their relationship with each other and certain aspects of the affairs of and their dealings with the Company.

B. On the 8^th day of April, 2003, the existing 827,586 issued and unissued ordinary shares of HK$1.00 each in the capital of the Company were sub-divided into 200 ordinary shares of HK$0.005 each and the existing 172,414 issued and unissued series A preference shares of HK$1.00 each in the capital of the Company were sub-divided into 200 series A preference shares of HK$0.005 each.

C. Pursuant to certain reorganizations, Top Sterling International Limited (“Top Sterling”) is the registered holder of 9,000,000 Ordinary Shares (as hereinafter defined) and none of Ctrip.com International Limited, Ctrip.com Limited or Zhao Li own any Ordinary Shares in the Company.

D. Top Sterling International Limited and the Company executed a Deed of Adherence to the February Agreement dated the 24^th day of November, 2003.

E. Pursuant to a Series A Preference Shares Purchase Agreement dated the 28^th day of February, 2003, (the “Series A Purchase Agreement”) the Shareholders set forth on Exhibit B hereto (collectively, the “Investors”, and each individually, an “Investor”) own the respective number of Series A Shares (as hereinafter defined) as set forth opposite each such Shareholder’s name on Exhibit A.

F. The Company and the Investors have entered into a Series B Preference Shares Purchase Agreement (the “Series B Purchase Agreement”) pursuant to which the Investors will purchase shares of the Company’s Series B Preference Shares of par value HK$0.005 per share (the “Series B Shares”), as set forth opposite each such Investors’ name on Exhibit A.

G. The Shareholders currently or may in the future own Ordinary Shares issued by the Company and the Shareholders shall own, as of the Closing (as such term is defined in the Series B Purchase Agreement), the respective number of Ordinary Shares as set forth opposite each such Shareholder’s name on Exhibit A.

H. The Company and the Shareholders have agreed and it is a condition to the closing of the transactions contemplated by the Series B Purchase Agreement that forthwith upon the termination of the February Agreement under a deed of cancellation to be entered into between the Company and the Shareholders (the “Cancellation Agreement”), the Company and the Shareholders enter into this new Agreement on the terms and conditions hereinafter set out.

NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and contained (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows:

1. Certain Definitions.

For purposes of this Agreement, the following terms have the following meanings:

1.1 “Articles of Association” means the Articles of Association of the Company as the same may be amended from time to time.

1.2 “Commission” shall mean the United States Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

1.3 “Conversion Shares” means the Ordinary Shares issued or issuable pursuant to conversion of the Series A Shares or the Series B Shares.

1.4 “Holder” shall mean any person or entity holding Registrable Securities (including Preference Shares).

1.5 “Hong Kong” means the Hong Kong Special Administrative Region of the People’s Republic of China.

1.6 “Initiating Holders” shall mean any Holders who in the aggregate hold at least fifty percent (50%) of the outstanding Registrable Securities held by the Holders.

1.7 “IPO” means (i) the Company’s sale or listing of its Ordinary Shares in a firm commitment underwritten public offering at a price per Ordinary Share of not less than three (3) times the per-share purchase price of each Series A Share as set forth in Section 1.2 of the Series A Purchase Agreement (as adjusted to reflect share dividends, share splits and similar adjustments made from 28 February 2003 onwards including without limitation the sub-division of each Series A Shares of HK$1.00 in the capital of the Company into 200 Series A Shares of HK$0.005 pursuant to the resolutions of the shareholders of the Company dated 8 April 2003) on an internationally recognized stock exchange or (ii) the merger of the Company with and into a company whose shares are listed on an internationally recognized stock exchange, the average closing price of which shares on such exchange over the thirty (30) day period following the effectiveness of such merger being no less than either three (3) times the per-share purchase price of each Series A Share as set forth in Section 1.2 of the Series A Purchase Agreement (as adjusted to reflect share dividends, share splits and similar adjustments made from 28 February 2003 onwards including without limitation the sub-division of each Series A Shares of HK$1.00 in the capital of the Company into 200 Series A Shares of HK$0.005 pursuant to the resolutions of the shareholders of the Company dated 8 April 2003).

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1.8 “Key Shareholders” means the following: AsiaStar IT Fund L.P. (“AsiaStar”), IDG Technology Venture Investments, LP (“IDG”), Top Sterling, Qi Ji, and Nan Peng Shen.

1.9 “Memorandum” means the Memorandum of Association of the Company as the same may be amended from time to time.

1.10 “Ordinary Shares” means the ordinary shares of the Company of par value HK$0.005 per share.

1.11 “Pro-Rata Share” means, as to each Key Shareholder’s Right of Co-Sale, the percentage determined by dividing (i) the number of shares of Stock held by the Key Shareholder by (ii) the total number of shares of Stock held by all the Key Shareholders and the Seller.

1.12 “Preference Shares” means the Series A Shares and the Series B Shares.

1.13 “Public Listing Expenses” shall mean all expenses, except as otherwise stated below, incurred by the Company in complying with Section 9.4 hereof, including, without limitation, all qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company, the expense of any special audits incident to or required by any such listing (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company) and the reasonable fees and disbursements of one counsel for all Holders.

1.14 “Registrable Securities” means the Conversion Shares and the Ordinary Shares of the Company issued and outstanding immediately after the Closing (as such term is defined in the Series B Purchase Agreement)(including any Ordinary Shares of the Company issued after the Closing (as such term is defined in the Series B Purchase Agreement) in respect of such Conversion Shares or Ordinary Shares upon any share split, share dividend, recapitalization, or similar event); provided, however, that the Ordinary Shares or other securities shall only be treated as Registrable Securities if and so long as they have not been (A) sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction, or (B) sold or are available for sale in a single sale in the opinion of counsel for the Company in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act so that all transfer restrictions and restrictive legends with respect thereto are removed upon the consummation of such sale.

1.15 The terms “register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.

1.16 “Registration Expenses” shall mean all expenses, except as otherwise stated below, incurred by the Company in complying with Sections 9.1, 9.2 and 9.3 hereof, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company, blue sky fees and expenses, the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company) and the reasonable fees and disbursements of one counsel for all Holders.

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1.17 “Right of Co-Sale” means the right of co-sale provided to the Key Shareholders in Section 4 of this Agreement.

1.18 “Right of First Refusal” means the right of first refusal provided to the Company and the Key Shareholders in Section 3 of this Agreement.

1.19 “Securities Act” means the U.S. Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

1.20 “Seller” means any Party proposing to Transfer Stock.

1.21 “Selling Expenses” shall mean all underwriting discounts, selling commissions and share transfer taxes applicable to the securities registered by the Holders and, except as set forth above, all reasonable fees and disbursements of counsel for any Holder.

1.22 “Series A Shares” means the Company’s Series A Preference Shares of par value HK$0.005 per share.

1.23 “Stock” means and includes all Ordinary Shares issued and outstanding at the relevant time plus all Ordinary Shares issuable upon conversion or exchange of any convertible securities, including, without limitation, preference shares and debt securities then outstanding, which are by their own terms then convertible into or exchangeable for Ordinary Shares.

1.24 “subsidiary” shall have the meaning ascribed thereto in Section 2 of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong).

1.25 “Transfer” means and includes any sale, transfer or other disposition, whether voluntary or involuntary, except:

(a) any transfers of Stock by a Seller to the Seller’s spouse, siblings, parents, lineal descendants or antecedents or trusts for the benefit of the Seller or the Seller’s spouse, siblings, parents or lineal descendants or antecedents or transfers of Stock by the Seller by devise or descent; provided, that, in all cases, the transferee or other recipient executes a counterpart copy of this Agreement and becomes bound thereby in the same manner as the Seller;

(b) by operation of law;

(c) any transfer to the Company pursuant to the terms of this Agreement or such other agreement entered into between the Company and a Shareholder; or

(d) any transfers of Stock by an Investor to (i) a shareholder, partner, retired partner, member, or beneficiary of such Investor or subsequent transferee, (ii) any immediate family member, trust or beneficiary of the estate of such Investor or subsequent transferee, (iii) any affiliated fund within the same fund management group as such Investor, or (iv) an entity that is controlled by, controls, or is under common control with the Investor.

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2. Restrictions on Transfer.

2.1 General. Top Sterling, Qi Ji, Nan Peng Shen, Hui Chen, and Ri Xin Liang shall not, without the prior written consent of the holders of a majority of the then outstanding Preference Shares, sell, assign, transfer, pledge or otherwise dispose of such person’s interest in any number of shares of Stock exceeding thirty percent (30%) of the total number of shares of Stock as set forth on Exhibit A for such person, in a transaction or series of transactions; provided, however, that, after the requisite approval by the holders of the outstanding Preference Shares, such a proposed transfer would continue to be subject to the Right of First Refusal and Right of Co-Sale.

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2.2 Notice of Proposed Transfer. Prior to the Seller Transferring any of his or her Stock, the Seller shall deliver to the Company and the Key Shareholders a written notice (the “Transfer Notice”) stating: (i) the Seller’s bona fide intention to sell or otherwise Transfer such shares of Stock (such Stock, the “Offered Stock”); (ii) the name, address and phone number of each proposed purchaser or other transferee (“Proposed Transferee”); (iii) the aggregate number of shares of Offered Stock to be Transferred to each Proposed Transferee; and (iv) the bona fide cash price or other consideration for which the Seller proposes to Transfer the Offered Stock (the “Offered Price”).

3. Right of First Refusal.

3.1 Exercise by the Company. The Company has the Right of First Refusal to purchase all or any part of the Offered Stock, if the Company gives written notice of the exercise of such right to the Seller within fifteen (15) days (the “Notice Period”) after the last date on which the Transfer Notice is, pursuant to Section 12.5 hereof, deemed to be effective as to the Company or a Key Shareholder, as the case may be. In the event that the Company elects not to purchase all of the Offered Stock, the remaining shares of Offered Stock may be purchased by the Key Shareholders as set forth in Section 3.2 below. Within five (5) days after expiration of the Notice Period, the Company will give written notice (the “Company’s Expiration Notice”) to the Seller and the Key Shareholders specifying either (A) that all of the Offered Stock was purchased by the Company exercising its Right of First Refusal or (B) that the Company waived its right to purchase the specified number of Offered Stock.

3.2 Exercise by the Key Shareholders. In the event the Company does not purchase all of the Offered Stock, each Key Shareholder (excluding the Seller) shall have the Right of First Refusal to purchase its pro rata share of the remaining Offered Stock. For purposes of this Section 3.2, a Key Shareholder’s pro rata share shall be determined by dividing (i) the number of Stock held by such Key Shareholder, exclusive of the Ordinary Shares issued in connection with any stock option plan that may be implemented by the Company from time to time, by (ii) the total number of Stock held by all the Key Shareholders (excluding the Seller and exclusive of the Ordinary Shares issued in connection with any stock option plan that may be implemented by the Company from time to time). If any Key Shareholder (excluding the Seller) desires to exercise its Right of First Refusal pursuant to this Section 3.2, such Key Shareholder must, within a fifteen (15) day period after the Company’s Expiration Notice, give written notice (the “Shareholder’s Notice Period”) to the Seller and to the Company of such Key Shareholder’s election to purchase the Offered Stock.

3.3 Purchase Price. The purchase price for the Offered Stock to be purchased by the Company or by a Key Shareholder exercising its Right of First Refusal under this Agreement will be the Offered Price, and will be payable as set forth in Section 3.4 hereof. If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration will be determined by the board of directors of the Company (the “Board of Directors”) in good faith, which determination will be binding upon the Company, each Key Shareholder and the Seller, absent fraud or error.

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3.4 Payment. Payment of the purchase price for the Offered Stock purchased by the Company will be made within fifteen (15) days after the end of the Notice Period. Payment of the purchase price for the Offered Stock purchased by the Key Shareholders will be made within fifteen (15) days after the end of the Shareholder’s Notice Period. Payment of the purchase price will be made, at the option of the Company or the Key Shareholder (excluding the Seller), as the case may be, (i) in cash, (ii) by cancellation of all or a portion of any outstanding indebtedness of the Seller to the Company or the Key Shareholders, as the case may be, or (iii) by any combination of the foregoing.

3.5 Rights as a Shareholder. If the Company or a Key Shareholder exercises its respective Right of First Refusal to purchase all or any part of the Offered Stock, then, upon the date that the notice of such exercise by the Company or Key Shareholder is deemed to be effective as to the Seller pursuant to Section 12.5 hereof (the “Transfer Date”), the Seller will have no further rights as a holder with respect to such shares of the Offered Stock except the right to receive payment for such shares of the Offered Stock from the Company or Key Shareholder in accordance with the terms of this Agreement. The Seller will forthwith cause all certificate(s) evidencing such Offered Stock to be surrendered to the Company for Transfer to the Company or Key Shareholder, as the case may be.

3.6 Seller’s Right To Transfer. If the Company or Key Shareholders have not elected to purchase all or any portion of the Offered Stock, then, with respect to that portion of Offered Stock that will not be purchased by the Company or Key Shareholders pursuant to Section 3 hereof, the Seller may Transfer such portion of the Offered Stock, which the Company and Key Shareholders have not elected to purchase, to any Proposed Transferee named in the Transfer Notice, at the Offered Price or at a higher price; provided that such Transfer shall still be subject to the Right of Co-Sale as defined in Section 4 hereof; provided further that such Transfer (i) is consummated within ninety (90) days after the end of the Notice Period, (ii) is on terms no more favorable than the terms proposed in the Transfer Notice and (iii) is in accordance with all the terms of this Agreement. If the Offered Stock is not so Transferred during such ninety (90) day period, then the Seller may not Transfer any of such Offered Stock without complying again in full with the provisions of this Agreement.

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4. Right of Co-Sale.

4.1 Exercise by the Key Shareholders. To the extent that the Company and the Key Shareholders do not exercise their respective Right of First Refusal with respect to all the Offered Stock pursuant to Section 3 hereof, then each Key Shareholder that notifies Seller in writing within fifteen (15) days after the end of the Shareholder’s Notice Period (the “Co–Sale Period”) shall have the right to participate in such sale of shares on the same terms and conditions as specified in the Transfer Notice subject to the terms of this Section 4. Each Key Shareholder who delivers a notice pursuant to the preceding sentence (a “Selling Key Shareholder”) may sell, pursuant to the Selling Key Shareholder’s Right of Co-Sale, up to that number of shares of Stock held by such Selling Key Shareholder equal to the product obtained by multiplying the number of shares of the remaining Offered Stock by such Selling Key Shareholder’s Pro-Rata Share. The Selling Key Shareholder shall indicate on such notice the number of shares of Stock it then holds that it wishes to sell pursuant to this Section 4 (the “Selling Key Shareholder Shares”). The sale of the Selling Key Shareholder Shares shall occur within twenty-five (25) days from the beginning of the Co–Sale Period (the “Closing”). This Right of Co–Sale shall not apply with respect to Offered Stock sold to the Company or a Key Shareholder pursuant to the Right of First Refusal.

4.2 Consummation of Co-Sale. A Selling Key Shareholder may exercise the Right of Co-Sale by delivering to the Seller at or before the Closing, one or more certificates, properly endorsed for Transfer, representing a number of shares not to exceed the number of shares to which Selling Key Shareholder is entitled in Section 4.1, representing such Stock to be Transferred by the Seller on behalf of the Selling Key Shareholder. If the Selling Key Shareholder does not hold a certificate in that series, class or type of stock representing the number of securities to be sold by such Selling Key Shareholder pursuant to this Section 4, then the Company shall promptly issue a certificate representing the proper number of shares to be sold pursuant to this Right of Co-Sale. Following the Closing, the Company shall deliver a certificate for the remaining balance of the securities held by the Selling Key Shareholder, if any, to such Selling Key Shareholder. At the Closing, such certificates or other instruments will be Transferred and delivered to the Proposed Transferee as set forth in the Transfer Notice in consummation of the Transfer of the Offered Stock pursuant to the terms and conditions specified in the Transfer Notice, and the Seller will remit, or will cause to be remitted, to each Selling Key Shareholder, within ten (10) days after such Closing, that portion of the proceeds of the Transfer to which each Selling Key Shareholder is entitled by reason of each Selling Key Shareholder’s participation in such Transfer pursuant to the Right of Co-Sale.

5. Multiple Series, Class or Type of Stock.

If the Offered Stock consists of more than one series, class or type of Stock, the Seller has the right to Transfer hereunder each such series, class or type; provided that if, as to the Right of Co-Sale, a Selling Key Shareholder does not hold any of such series, class or type, and the Proposed Transferee is not willing, at the Closing, to purchase some other series, class or type of Stock from such Selling Key Shareholder, or is unwilling to purchase any Stock from such Selling Key Shareholder at the Closing, then such Selling Key Shareholder will have the put right (the “Put Right”) set forth in Section 6.2 hereof.

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6. Refusal to Transfer; Put Right.

6.1 Refusal to Transfer. Any attempt by any Seller to Transfer any Stock in violation of any provision of this Agreement will be void. The Company will not be required (i) to transfer on its books any Stock that has been sold, gifted or otherwise Transferred in violation of this Agreement, or (ii) to treat as owner of such Stock, or to accord the right to vote or pay dividends to any purchaser, donee or other transferee to whom such Stock may have been so Transferred.

6.2 Put Right. If a Seller Transfers any Stock in contravention of a Key Shareholder’s Right of Co-Sale under this Agreement (a “Prohibited Transfer”), or if the Proposed Transferee of Offered Stock desires to purchase a class, series or type of stock offered by the Seller but not held by a Key Shareholder or the Proposed Transferee is unwilling to purchase any Stock from a Key Shareholder, such Key Shareholder may, by delivery of written notice to such Seller (a “Put Notice”) within ten (10) days after the later of (i) the Closing as defined in subsection 4.1 above, or (ii) the date on which such Key Shareholder becomes aware of the Prohibited Transfer or the terms thereof, and in addition to such other remedies as may be available at law, require such Seller to purchase from such Key Shareholder, for cash or such other consideration as the Seller received in the Prohibited Transfer or at the Closing, a number of shares of Stock (of the same class or type as Transferred in the Prohibited Transfer or at the Closing if such Key Shareholder then owns Stock of such class or type; otherwise Series A Shares, Series B Shares or Ordinary Shares) having a purchase price equal to the aggregate purchase price that the Key Shareholder would have received in the closing of such Prohibited Transfer if such Key Shareholder had elected to exercise its Right of Co-Sale with respect thereto or in the Closing if the Proposed Transferee had been willing to purchase the Stock of the Key Shareholder. The closing of such sale to the Seller will occur within ten (10) days after the date of such Key Shareholder’s Put Notice to such Seller.

7. Restrictive Legend and Stop-Transfer Orders.

7.1 Legends. Each Party understands and agrees that the Company will cause the legends set forth below, or legends substantially equivalent thereto, to be placed upon any certificate(s) or other documents or instruments evidencing ownership of Stock by the Party issued after the date of this Agreement:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AND MAY ONLY BE SOLD, DISPOSED OF OR OTHERWISE TRANSFERRED IN COMPLIANCE WITH CERTAIN RIGHTS OF FIRST REFUSAL AND RIGHTS OF CO-SALE AS SET FORTH IN A CERTAIN AGREEMENT DATED 24 NOVEMBER, 2003 ENTERED INTO BY THE HOLDER OF THESE SHARES, THE COMPANY AND CERTAIN SHAREHOLDERS OF THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE REGISTERED OFFICE OF THE COMPANY. SUCH RIGHTS OF FIRST REFUSAL AND RIGHTS OF CO-SALE ARE BINDING ON CERTAIN TRANSFEREES OF THESE SHARES.

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A 180-DAY MARKET STAND-OFF RESTRICTION AS SET FORTH IN A CERTAIN AGREEMENT DATED 24 NOVEMBER, 2003 BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE REGISTERED OFFICE OF THE ISSUER. AS A RESULT OF SUCH AGREEMENT, THESE SHARES MAY NOT BE TRADED PRIOR TO 180 DAYS AFTER THE EFFECTIVE DATE OF THE INITIAL PUBLIC OFFERING OF THE ORDINARY SHARES OF THE ISSUER HEREOF. SUCH RESTRICTION IS BINDING ON TRANSFEREES OF THESE SHARES.

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7.2 Stop Transfer Instructions. In order to ensure compliance with the restrictions referred to herein, each Party agrees that the Company may issue appropriate “stop transfer” certificates or instructions.

7.3 Transfers. No securities shall be Transferred unless (i) such Transfer is made in compliance with applicable securities laws and (ii) prior to such Transfer, the transferee or transferees, who prior to such Transfer are not already parties to this Agreement, sign a counterpart to this Agreement pursuant to which such transferee(s) agrees to be bound by the terms of this Agreement. The Company shall not be required (a) to transfer on its books any shares that shall have been Transferred in violation of any of the provisions of this Agreement or (b) to treat as the owner of such shares or to accord the right to vote as such owner or to pay dividends to any transferee to whom such shares shall have been so Transferred.

8. Affirmative Covenants.Financial Information.

(a) So long as a Party, or an entity that is controlled by, controls, or is under common control with the Party, holds two percent (2%) or more of the outstanding capital shares of the Company on an as-converted basis, the Company will provide the following reports to each such Party:

(i) As soon as practicable after the end of each fiscal year, and in any event within ninety (90) days thereafter, audited financial statements of Home Inns Hotel Management (Beijing) Limited (the “China Sub”) as of the end of such fiscal year prepared in reasonable detail, in accordance with generally accepted accounting principles in China (“China GAAP”), and audited by an internationally recognized public accountant.

(ii) As soon as practicable after the end of each month, and in any event no later than twenty (20) days thereafter, a balance sheet of the China Sub as of the end of each such month, and statements of income and cash flows of the China Sub for such month and for the current fiscal year to date, prepared in reasonable detail in accordance with China GAAP, with the exception that no notes need be attached to such statements.

(b) The rights granted pursuant to this Section 8.1 may not be assigned or otherwise conveyed by the Parties or by any subsequent transferee of any such rights without the prior written consent of the Company except for transfers to (i) a shareholder, partner, retired partner, member, or beneficiary of such Party or subsequent transferee, (ii) any immediate family member, trust or beneficiary of the estate of such Party or subsequent transferee, (iii) any affiliated fund within the same fund management group as such Party, or (iv) an entity that is controlled by, controls, or is under common control with the Party.

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8.2 Reservation of Ordinary Shares. The Company will at all times reserve and keep available, solely for issuance and delivery upon the conversion of the Preference Shares, all Ordinary Shares issuable from time to time upon such conversion.

8.3 Quarterly Board Meetings. The Board of Directors shall hold meetings at least once every three (3) months.

8.4 Director Insurance. If not already entered into, the Company shall enter into standard indemnification agreements with the members of the Board of Directors in the form attached to this Agreement as Exhibit C.

8.5 Director Expenses. The Company shall reimburse each member of the Board of Directors for his/her expenses incurred directly in relation to such member’s services on the Board of Directors.

8.6 Restriction on Bank Account. The proceeds from the sale of the Series B Shares pursuant to the Series B Purchase Agreement shall be deposited into a fixed account of the Company on which AsiaStar and IDG shall be designated a co-signatory (the “Main Account”). The Company shall be entitled to individual draw-downs from the Main Account upon the consent of both AsiaStar and IDG to each such draw-down. Funds drawn down from the Main Account pursuant to the foregoing procedure shall be deposited in an account of the Company separate from the Main Account and shall be utilized by the Company in its discretion.

8.7 Termination of Covenants. The covenants set forth in Sections 8.1 through 8.6 shall terminate and be of no further force or effect on the earlier of: (i) an IPO, (ii) any consolidation or merger involving the Company which results in the shareholders of the Company immediately prior to such transaction failing to own (in substantially the same percentages) more than 50% of the voting power of the surviving corporation, or (iii) the sale of all or substantially all assets of the Company.

9. Registration Rights.

9.1 Requested Registration.

(a) Request for Registration. In case the Company shall receive from Initiating Holders a written request that the Company effect any registration, qualification or compliance with respect to all or a part of the Registrable Securities, the aggregate proceeds of which, net of underwriting discounts and selling commissions, equal or exceed US$5,000,000, the Company will:

(i) promptly give written notice of the proposed registration, qualification or compliance to all other Holders; and

(ii) as soon as practicable, use its best efforts to effect such registration, qualification or compliance (including, without limitation, appropriate qualification under securities laws of applicable jurisdictions and appropriate compliance with applicable governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within twenty (20) days after receipt of such written notice from the Company;

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Provided, however, that the Company shall not be obligated to take any action to effect any such registration, qualification or compliance pursuant to this Section 9.1:

(1) In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act or other applicable securities laws;

(2) Prior to six (6) months after the effective date of the Company’s first registered public offering of its equity securities;

(3) During the period starting with the date sixty (60) days prior to the Company’s estimated date of filing of, and ending on the date six (6) months immediately following the effective date of, any registration statement pertaining to securities of the Company (other than a registration of securities in a transaction under Rule 145 promulgated under the Securities Act (“Rule 145”) or with respect to an employee benefit plan), provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective;

(4) After the Company has effected two (2) such registrations pursuant to this subparagraph 9.1(a), and such registrations have been declared or ordered effective; or

(5) If the Initiating Holders may dispose of shares of Registrable Securities pursuant to a registration statement on Form F-3 pursuant to a request made under Section 9.3 hereof.

(b) Underwriting. In the event that a registration pursuant to Section 9.1 is for a registered public offering involving an underwriting, the Company shall so advise the Holders as part of the notice given pursuant to Section 9.1(a)(i). In such event, the right of any Holder to registration pursuant to Section 9.1 shall be conditioned upon such Holder’s participation in the underwriting arrangements required by this Section 9.1, and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent requested shall be limited to the extent provided herein.

The Company shall (together with all Holders proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company, but subject to reasonable approval of a majority in interest of the Initiating Holders. Notwithstanding any other provision of this Section 9.1, if the managing underwriter advises the Initiating Holders in writing that marketing factors require a limitation of the number of shares to be underwritten, then the Company shall so advise all holders of Registrable Securities and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated, among all Holders in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders at the time of filing the registration statement; provided, however, that the number of shares of Registrable Securities to be included in such underwriting and registration shall not be reduced unless all other securities of the Company are first entirely excluded from the underwriting and registration. No Registrable Securities excluded from the underwriting by reason of the underwriter’s marketing limitation shall be included in such registration. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder or other person to the nearest 100 shares.

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If any Holder of Registrable Securities disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company, the managing underwriter and the Initiating Holders. The Registrable Securities and/or other securities so withdrawn shall also be withdrawn from registration, and such Registrable Securities shall not be transferred in a public distribution prior to ninety (90) days after the effective date of such registration, or such other shorter period of time as the underwriters may require.

9.2 Company Registration.

(a) Notice of Registration. If at any time or from time to time the Company shall determine to register any of its securities, either for its own account or the account of a security holder or holders, other than (i) a registration relating solely to employee benefit plans, or (ii) a registration relating solely to a Rule 145 transaction, the Company will:

(i) promptly give to each Holder written notice thereof; and

(ii) include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within twenty (20) days after receipt of such written notice from the Company, by any Holder.

(b) Underwriting. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 9.2(a)(i). In such event the right of any Holder to registration pursuant to Section 9.2 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company and the other holders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company. Notwithstanding any other provision of this Section 9.2, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may limit the number of Registrable Securities to be included in such registration and underwriting. No such reduction shall reduce the amount of securities of the selling Holders included in the registration below thirty percent (30%) of the total amount of securities included in such registration, unless such offering is the initial public offering and such registration does not include shares of any other selling shareholders, in which event any or all of the Registrable Securities of the Holders may be excluded in accordance with the immediately preceding sentence. The Company shall so advise all Holders and other holders distributing their securities through such underwriting and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all the Holders in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holder at the time of filing the Registration Statement. To facilitate the allocation of shares in accordance with the above provisions, the Company may round the number of shares allocated to any Holder or other person to the nearest 100 shares. If any Holder disapproves of the terms of any such underwriting, he may elect to withdraw therefrom by written notice to the Company and the managing underwriter. Any securities excluded or withdrawn from such underwriting shall be withdrawn from such registration, and shall not be transferred in a public distribution prior to ninety (90) days after the effective date of the registration statement relating thereto, or such other shorter period of time as the underwriters may require.

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(c) Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 9.2 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. Selling Expenses of such withdrawn registration shall be borne by the Company.

9.3 Registration on Form F-3. If any Holder or Holders request that the Company file a registration statement on Form F-3 (or any successor form to Form F-3) for a public offering of shares of the Registrable Securities the reasonably anticipated aggregate price to the public of which, net of underwriting discounts and commissions, would equal or exceed US$500,000, and the Company is a registrant entitled to use Form F-3 to register the Registrable Securities for such an offering, the Company shall use its best efforts to cause such Registrable Securities to be registered for the offering on such form and to cause such Registrable Securities to be qualified in such jurisdictions as such Holder or Holders may reasonably request; provided, however, that the Company shall not be required to effect more than one registration pursuant to this Section 9.3 in any six (6) month period. The Company shall inform other Holders of the proposed registration and offer them the opportunity to participate. The substantive provisions of Section 9.1(b) shall be applicable to each registration initiated under this Section 9.3.

9.4 Public Listing. In the event the Company shall receive from Initiating Holders a written request that the Company effect a listing (other than a request pursuant to Section 9.1 hereof) of the Company and its shares on an internationally recognized stock exchange or over-the-counter market (a “Public Listing”), the Company shall use its best efforts to effect such Public Listing (including, without limitation, appropriate qualification under securities laws of applicable jurisdictions and appropriate compliance with applicable governmental requirements or regulations).

9.5 Expenses. All Registration Expenses incurred in connection with all registrations pursuant to Sections 9.1, 9.2 and 9.3 shall be borne by the Company. All Selling Expenses shall be borne by the Holders of the securities so registered pro rata on the basis of the number of their shares so registered. All Public Listing Expenses shall be borne by the Company.

9.6 Procedures. In the case of each registration, qualification, compliance or Public Listing effected by the Company pursuant to this Section 9, the Company will keep each Holder advised in writing as to the initiation of each such registration, qualification, compliance, and Public Listing and as to the completion thereof. With respect to a registration effected pursuant to Section 9.1, 9.2 or 9.3, the Company will, at its expense:

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(a) Prepare and file with the governmental agencies with proper jurisdiction a registration statement with respect to such securities and use its best efforts to cause such registration statement to become and remain effective for at least one hundred eighty (180) days or until the distribution described in the registration statement has been completed; and

(b) Furnish to the Holders participating in such registration and to the underwriters of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities.

9.7 Indemnification.

(a) The Company will indemnify each Holder, each of its officers, directors, trustees and partners, and each person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which registration, qualification, compliance or Public Listing has been effected pursuant to this Section 9, and each underwriter, if any, and each person who controls any underwriter within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages or liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification, compliance or Public Listing, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation by the Company of the Securities Act, the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), or any other national, federal or state securities law or any rule or regulation promulgated thereunder applicable to the Company in connection with any such registration, qualification, compliance or Public Listing, and the Company will reimburse each such Holder, each of its officers, trustees and directors, and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by any Holder, controlling person or underwriter and stated to be specifically for use therein; provided, however, that with respect to a registration effected pursuant to Section 9.1, 9.2 or 9.3, the foregoing indemnity agreement is subject to the condition that, insofar as it relates to any such untrue statement, alleged untrue statement, omission or alleged omission made in a preliminary prospectus on file with the Commission at the time the registration statement becomes effective or the amended prospectus filed with the Commission pursuant to Rule 424(b) (the “Final Prospectus”), such indemnity agreement shall not inure to the benefit of any underwriter or any Holder, if there is no underwriter, if a copy of the Final Prospectus was not furnished to the person asserting the loss, liability, claim or damage at or prior to the time such action is required by the Securities Act, unless such Final Prospectus was not furnished to the person asserting the loss, liability, claim or damage as a result of the Company’s failure to provide the Final Prospectus pursuant to Section 9.6(b) above.

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(b) Each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance pursuant to Section 9.1, 9.2 or 9.3 is being effected, indemnify the Company, each of its directors and officers, each underwriter, if any, of the Company’s securities covered by such a registration statement, each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, and each other such Holder, each of its officers, trustees and directors and each person controlling such Holder within the meaning of Section 15 of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, such other Holders, such directors, officers, trustees, persons, underwriters or control persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder and stated to be specifically for use therein; provided, however, that the foregoing indemnity agreement is subject to the condition that, insofar as it relates to any untrue statement, alleged untrue statement, omission or alleged omission made in a preliminary prospectus on file with the Commission at the time the registration statement becomes effective or in the Final Prospectus, such indemnity agreement shall not inure to the benefit of any underwriter or any Holder, if there is no underwriter, if a copy of the Final Prospectus was not furnished to the person asserting the loss, liability, claim or damage at or prior to the time such action is required by the Securities Act. Notwithstanding the foregoing, the liability of each Holder under this subsection (b) shall be limited to an amount equal to the proceeds to such Holder from the sale of Registrable Securities as contemplated herein, less any applicable underwriting discounts and commissions; provided, however, such limitation shall not apply in the case of willful fraud by such Holder.

(c) Each party entitled to indemnification under this Section 9.7 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and the Indemnifying Party shall have the option to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party’s expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 9 unless the failure to give such notice is materially prejudicial to an Indemnifying Party’s ability to defend such action and provided further, that the Indemnifying Party shall not assume the defense for matters as to which there is a conflict of interest or separate and different defenses. No claim may be settled without the consent of the Indemnifying Party (which consent shall not be unreasonably withheld). No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.

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(d) If the indemnification provided for in this Section 9.7 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable considerations; provided that in no event shall any contribution by a Holder under this Subsection 9.7(d) exceed an amount equal to the proceeds to such Holder from the sale of Registrable Securities as contemplated herein, less any applicable underwriting discounts and commissions, except in the case of willful fraud by such Holder. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission.

(e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

(f) The obligations of the Company and the Holders under this Section 9.7 shall survive the completion of any offering of Registrable Securities in a registration statement or Public Listing under this Section 9, and otherwise.

9.8 Information by Holder. The Holder or Holders of Registrable Securities included in any registration shall furnish to the Company such information regarding such Holder or Holders, the Registrable Securities held by them and the distribution proposed by such Holder or Holders as the Company may reasonably request in writing and as shall be required in connection with any registration, qualification or compliance referred to in this Section 9.

9.9 Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of restricted securities to the public without registration, after such time as a public market exists for the Ordinary Shares of the Company in the United States, the Company agrees to use its best efforts to:

(a) Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act (“Rule 144”), at all times after the effective date that the Company becomes subject to the reporting requirements of the Securities Act or the Exchange Act.

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(b) File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements);

(c) So long as the Investor owns any restricted securities, to furnish to the Investor forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 (at any time after ninety (90) days after the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as the Investor may reasonably request in availing itself of any rule or regulation of the Commission allowing the Investor to sell any such securities without registration.

9.10 Transfer of Rights. The rights to cause the Company to effectuate a Public Listing and the rights to cause the Company to register securities granted to the Investors under Sections 9.1, 9.2, 9.3 and 9.4 may be assigned to a transferee or assignee in connection with any transfer or assignment of Registrable Securities by the Investor provided that: (i) such transfer may otherwise be effected in accordance with applicable securities laws, (ii) the Company is given prompt notice of the transfer, (iii) such assignee or transferee agrees to be bound by the terms of this Agreement, and (iv) such assignee or transferee is 1) any partner, retired partner, affiliated partnership of any holder which is a partnership, or any member of any holder which is a limited liability company, 2) any immediate family member or trust for the benefit of any individual holder, or 3) any transferee who acquires at least two hundred thousand (200,000) shares of the Company’s Registrable Securities (as adjusted for any share split, recapitalization or the like).

9.11 Standoff Agreement. Each Holder hereby agrees, in connection with the Company’s initial public offering of its equity securities pursuant to a registration statement filed under the Securities Act or a Public Listing, upon request of the Company or the underwriters managing such initial public offering of the Company’s securities, not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any equity securities of the Company without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days) from the effective date of such registration or Public Listing as may be requested by the Company or such underwriters; provided that all officers and directors of the Company and holders of at least one percent (1%) of the Company’s voting securities enter into similar agreements.

9.12 Delay. If the Company shall furnish to such Holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Company or its shareholders for a registration statement to be filed, or a Public Listing to be effectuated, in the near future, then the Company’s obligation to use its best efforts to register, qualify or comply under Section 9.1 or 9.4, as applicable, shall be deferred for a period not to exceed one hundred twenty (120) days from the date of receipt of written request from the Initiating Holders.

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9.13 Termination. The rights to cause the Company to register securities granted to Holders under Sections 9.1, 9.2, and 9.3 shall expire on the earlier of (i) such time as such Holder is able to dispose of all its shares in a three (3) month period pursuant to Rule 144, or (ii) five (5) years after the IPO.

10. Board of Directors and Articles of Association.

10.1 Agreement to Vote. For so long as each of AsiaStar, IDG, and Top Sterling continues to hold Series A Shares, Series B Shares, Conversion Shares, or Ordinary Shares, each time the shareholders of the Company meet, or act by written consent in lieu of meeting, for the purpose of electing directors, each of the aforementioned shareholders agrees to vote such shares then held by each such shareholder for the election of the following individuals to the Board of Directors: (i) the two (2) individuals nominated by Top Sterling, who initially shall be Nan Peng Shen and Qi Ji (the “Top Sterling Directors”); (ii) the two (2) individuals nominated by AsiaStar (the “AsiaStar Directors”), who initially shall be Eric Ku Chun Lin and Jerry Sze; and (iii) the one (1) individual nominated by IDG (the “IDG Director”), who initially shall be Su Yang Zhang. The AsiaStar Directors and the IDG Directors shall be referred to herein collectively as the “Preference Shares Directors”.

10.2 Control of Certain Board Actions. In the event that the China Sub fails to meet the respective financial targets for either fiscal year 2003 or fiscal year 2004 as set forth in Exhibit D attached hereto (the “Trigger Event”), Top Sterling shall cause the Top Sterling Directors, as members of the Board of Directors, to cast their votes in favor of, or to affirmatively consent to, any and all actions, as approved by the Preference Shares Directors, with respect to the business operations of the Company and/or the employment, retention, or dismissal of any member of the Company’s management staff; provided, however, that should the Trigger Event occur by virtue of the China Sub’s failure to meet the said financial targets for fiscal year 2003, the Trigger Event shall not be deemed to occur by virtue of China Sub’s failure to meet the said financial targets for fiscal year 2004. Top Sterling’s obligation under this Section 10.2 shall expire upon the first anniversary of the Trigger Event.

10.3 Alternate Directors. Pursuant to Article 94 of the Articles of Association, each member of the Board of Directors shall be entitled to appoint and remove, from time to time and without the consent of any other member of the Board of Directors, any person to act as his/her alternate on the Board of Directors.

10.4 Articles of Association. The Company shall abide by all of its obligations under the Memorandum and Articles of Association, as amended to date; provided, however, the Articles of Association shall be consistent with this Agreement as far as practicable and in the event of any conflict between the provisions of this Agreement and the Articles of Association, the terms of this Agreement shall prevail as among the parties hereto so as to regulate the way in which they exercise their rights as shareholders of the Company. The parties hereto further agree that, in case of such conflict, the Articles of Association shall be amended, to the extent permitted by relevant law, to reflect the agreement of the parties hereunder.

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10.5 Charter Documents of China Sub. The joint venture contract and the articles of association (along with any other charter documents) of the China Sub (collectively, the “Charter Documents”) shall share the essence of this Agreement as far as practicable and in the event of any conflict between the provisions of this Agreement and the Charter Documents, the terms of this Agreement shall supercede the terms of the Charter Documents as among the parties hereto so as to regulate the way in which they exercise any power of decision with respect to the affairs of the China Sub. The parties hereto further agree that, in case of such conflict, the Charter Documents shall be amended, to the extent permitted by relevant law, to reflect the agreement of the parties hereunder.

11. Matters Requiring Special Approval.

11.1 Matters of the Company Requiring the Approval of the Shareholders. Notwithstanding any provisions of this Agreement or of the Articles of Association, no resolution shall be passed or other decision or action taken by or on behalf of the Company, or the Board of Directors, concerning any of the following matters with respect to the Company without the affirmative vote or consent recorded in writing of the holders of at least eighty percent (80%) of its outstanding voting shares, and the Company shall procure, as applicable, that no resolution shall be passed or other decision of action taken by or on behalf of the China Sub or any subsidiary of the Company (the “Relevant Subsidiary”) concerning any of the following matters with respect to the China Sub or Relevant Subsidiary, as applicable, without the affirmative vote or consent recorded in writing of the holders of at least eighty percent (80%) of the outstanding voting shares of the Company:

(a) the creation or adoption by the Company, the China Sub, or the Relevant Subsidiary of any employee stock option plan;

(b) any consolidation, subdivision, conversion, increase or reduction of the share capital of the Company, the China Sub, or the Relevant Subsidiary or the alteration of any rights attaching thereto in any way;

(c) any change to the Memorandum or Articles of Association, the Charter Documents, or the memorandum or articles of association (or other similar charter documents) of the Relevant Subsidiary;

(d) the acquisition by the Company, the China Sub, or the Relevant Subsidiary, of any other entity or assets with a value in excess of US$200,000;

(e) the consolidation or merger of the Company, the China Sub, or the Relevant Subsidiary which results in the shareholders of the Company, the China Sub, or the Relevant Subsidiary, as applicable, immediately prior to such transaction failing to own (in substantially the same percentages) more than 50% of the voting power of the surviving entity; and

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(f) the adoption of a resolution for the voluntary liquidation or winding up of the Company, the China Sub, or the Relevant Subsidiary or scheme of arrangement or appointment of a liquidator; provided, however, that this subsection (f) shall be of no force and effect after the expiration of the one (1) year period after the Closing (as such term is defined in the Series B Purchase Agreement).

11.2 Matters of the Company Requiring the Approval of the Board of Directors. Notwithstanding any provisions of this Agreement or of the Articles of Association, no resolution shall be passed or other decision or action taken by or on behalf of the Company, or the Board of Directors, concerning any of the following matters with respect to the Company without the affirmative vote or consent recorded in writing of at least eighty-one percent (81%) of the members of the Board of Directors and the Company shall procure, as applicable, that no resolution shall be passed or other decision of action taken by or on behalf of the China Sub or the Relevant Subsidiary concerning any of the following matters with respect to the China Sub or Relevant Subsidiary, as applicable, without the affirmative vote or consent recorded in writing of at least eighty-one percent (81%) of the members of the Board of Directors:

(a) the entering into of any contract or transaction outside the ordinary course of business of the Company, the China Sub, or the Relevant Subsidiary, as applicable, in excess of US$200,000;

(b) the granting of any guarantee, indemnity or security or the creation of any mortgage, charge or encumbrance in respect of any part of the assets or undertaking of the Company, the China Sub, or the Relevant Subsidiary in excess of US$200,000;

(c) any significant change to the business of the Company, the China Sub, or the Relevant Subsidiary to areas materially different from the current products and/or services offered;

(d) declare, make, or pay any distribution of capital, income, and/or dividends to the security holders of the Company, the China Sub, or the Relevant Subsidiary, as applicable;

(e) repurchase or cancel any capital stock of the Company, the China Sub, or the Relevant Subsidiary;

(f) enter into any material transaction with any member of the Board of Directors, officer, employee, or shareholder of the Company or any company controlled, directly or indirectly, by a member of the Board of Directors, officer, employee or shareholder of the Company not in the ordinary course of business or on terms more favorable than those provided to unrelated third parties under similar circumstances;

(g) the appointment of or change in the auditor of the Company, the China Sub, or the Relevant Subsidiary, unless such auditor is a “Big 4” accounting firm; and

(h) the sale, transfer, lease, assignment or other disposal of a material part of the undertaking, property and/or assets of the Company, the China Sub, or the Relevant Subsidiary with a book value (as reflected in its respective financial statements) in excess of US$200,000 or the entering into of any contract to do so.

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11.3 Liquidation or Winding Up After One Year. Notwithstanding any provisions of this Agreement or of the Articles of Association and commencing upon the expiration of the one (1) year period after the Closing (as such term is defined in the Series B Purchase Agreement), no resolution shall be passed or other decision or action taken by or on behalf of the Company, or the Board of Directors, concerning any of the following matters with respect to the Company and the Company shall procure, as applicable, that no resolution shall be passed or other decision of action taken by or on behalf of the China Sub or the Relevant Subsidiary concerning any of the following matters with respect to the China Sub or Relevant Subsidiary, as applicable, without (i) the affirmative vote or consent recorded in writing of all three of the Preference Shares Directors or (ii) the affirmative vote or consent recorded in writing of holders of all of the then outstanding Preference Shares:

(a) the adoption of a resolution for the voluntary liquidation or winding up of the Company, the China Sub, or the Relevant Subsidiary or scheme of arrangement or appointment of a liquidator.

12. Miscellaneous.

12.1 Term and Termination. This Agreement shall become effective upon the Closing (as such term is defined in the Series B Purchase Agreement). The restriction on transfer set forth in Section 2.1 hereof, the covenants set forth in Sections 10.2 and 11 hereof, the Right of First Refusal, and the Right of Co-Sale will terminate upon the earliest to occur of (i) an IPO, (ii) any consolidation or merger involving the Company which results in the shareholders of the Company immediately prior to such transaction failing to own (in substantially the same percentages) more than 50% of the voting power of the surviving corporation, or (iii) the sale of all or substantially all assets of the Company. This Agreement shall terminate in respect of any Shareholder (but shall continue between the other parties to this Agreement (if more than one) but not otherwise) if at any time as a result of a transfer of Ordinary Shares or Preference Shares made in accordance with this Agreement that Shareholder holds no Ordinary Shares and Preference Shares in the capital of the Company but without prejudice to any rights which any party may have against any other party arising prior to such termination.

12.2 Waivers and Amendments. Except as otherwise set forth herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by holders of at least 80% of the Preference Shares and Ordinary Shares held by the Parties immediately after the Closing (as such term is defined in the Series B Purchase Agreement). Upon the effectuation of each such waiver, consent, amendment or modification, the Company shall promptly give written notice thereof to the record holders of the Preference Shares and the Ordinary Shares who have not previously consented thereto in writing.

12.3 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of Hong Kong. The parties hereto submit to the non-exclusive jurisdiction of the courts of Hong Kong.

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12.4 Entire Agreement. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subjects hereof.

12.5 Notices, etc. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid or by overnight courier, or otherwise delivered by hand or by messenger, addressed (i) if to an Investor, at the Investor’s address, as shown on Exhibit B hereto, or at such other address as the Investors shall have furnished to the Company in writing, or (ii) if to a Shareholder, at the Shareholder’s address, as shown on Exhibit A hereto, or at such other address as the Shareholders shall have furnished to the Company in writing, or (iii) if to the Company, to its address set forth on the cover page of this Agreement and addressed to the attention of the President, or at such other address as the Company shall have furnished to the Investors.

Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given when delivered if delivered personally or by overnight courier, or, if sent by mail, at the earlier of its receipt or five (5) calendar days after the same has been deposited in a regularly maintained receptacle for the deposit of mail, addressed and mailed as aforesaid.

12.6 Severability of this Agreement. If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

12.7 Titles and Subtitles. The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

12.8 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

12.9 Delays or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing to the Investor, upon any breach or default of the Company under this Agreement, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character by the Investor of any breach or default under this Agreement, or any waiver by the Investor of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in writing and that all remedies, either under this Agreement, or by law or otherwise afforded to the Investor, shall be cumulative and not alternative.

12.10 Share Splits. All references to the number of shares in this Agreement shall be appropriately adjusted to reflect any share split, share dividend or other change in the Company’s capital which may be made by the Company after the Closing (as such term is defined in the Series B Purchase Agreement).

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12.11 Further Assurances. The Parties and the Company will execute such further assurances and other documents and instruments and do such further acts and other things as may be necessary to implement and carry out the intent of this Agreement.

12.12 Assignment. This Agreement shall be binding on the parties hereto and their respective successors and shall inure to the benefit of each of them and their respective successors and permitted assigns. The benefit of this Agreement may not, except as otherwise herein provided, be assigned or transferred in whole or in part by any Party without the prior consent of the other Parties.

12.13 Interpretation. References in this Agreement to:

(a) words importing the singular include the plural and vice versa;

(b) words importing one gender include all other genders;

(c) Sections and Exhibits are references to sections and exhibits to this Agreement unless otherwise specified;

(d) the headings are inserted for convenience only and shall not affect the construction of this Agreement;

(e) any legislation shall include any legislation which amends, consolidates or replaces the same or which has been amended, consolidated or replaced by the same and shall include any subsidiary and subordinate legislation made under the relevant legislation;

(f) “including” or similar expressions are not words of limitation; and

(g) words and expressions defined in the body of this Agreement (including its exhibits) shall have the meanings thereby attributed to them whenever the context requires.

12.14 Confidentiality. The Parties undertake to each other and the Company that they will not at any time hereafter use or divulge or communicate to any person other than to officers or employees of the Company whose province it is to know the same or on the instructions of the Board of Directors any confidential information concerning the business, accounts, finance or contractual arrangements or other dealings, transactions or affairs of the Company which may come to their knowledge and they shall use their best endeavors to prevent the publication or disclosure of any confidential information concerning such matters by themselves, their respective employees and officers; provided, however, that AsiaStar and IDG may disclose such information to its respective partners, principals, employees, and legal and financial advisors. The obligations of each of the Parties contained in this Section 12.14 shall continue without limit in point in time but shall cease to apply to any information coming into the public domain otherwise than by breach by any such Party of its said obligations; provided that nothing contained in this Section 12.14 shall prevent any Party from disclosing such information to the extent required in or in connection with legal proceedings arising out of this Agreement or any matter relating to or in connection with the Company. All notes and memoranda (whether in the form of originals, reproductions or electronically stored data) of any trade secrets or confidential information concerning the business of the Company or any of its suppliers, agents, distributors or customers which shall be acquired, received or made by a Party during the continuance of this Agreement shall be the property of the Company and shall be surrendered by the Party to someone duly authorized by the Company in that behalf at the termination of this Agreement or at the request of the Board of Directors at any time during the continuance of this Agreement.

[SIGNATURE PAGE FOLLOWS]

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

SIGNATURE PAGE ONE TO SHAREHOLDERS AGREEMENT

IDG TECHNOLOGY VENTURE INVESTMENTS, LP

By: IDG Technology Venture Investments, LLC, its General Partner

Series B Preference Shares Holders

ASIASTAR IT FUND L.P.

IDG TECHNOLOGY VENTURE INVESTMENTS, LP

By: IDG Technology Venture Investments, LLC, its General Partner

SIGNATURE PAGE TWO TO SHAREHOLDERS AGREEMENT

EXHIBIT A

SHAREHOLDERS

EXHIBIT B

INVESTORS

EXHIBIT C

FORM OF INDEMNIFICATION AGREEMENT

INDEMNIFICATION AGREEMENT

THIS AGREEMENT made as of the              day of                     , 2003

BETWEEN:

OF THE FIRST PART

OF THE SECOND PART

NOW THEREFORE that in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, and other good and valuable consideration, the sufficiency and receipt of which is hereby acknowledged, the parties hereto (the “Parties”) agree, each with the other, as follows:

ARTICLE 1

INDEMNIFICATION PROVISIONS

1.1 Indemnity

Subject to Clause 1.3 hereof, the Company hereby agrees to indemnify and save harmless the Director against all liabilities, suits, damages, costs, charges and expenses including any amount paid to settle an action or satisfy a judgement, actually and reasonably incurred by the Director (collectively, the “Expenses”) and without limiting the foregoing, such indemnity shall be in respect of any Expenses relating to a civil, criminal, or administrative action or proceeding to which the Director is made a party, witness, or other participant by reason of being or having been a director of the Company including an action brought by the Company if:

1

1.2 No Presumption

The determination of any action, suit or proceeding by judgment, order, settlement, conviction or otherwise shall not, of itself, create a presumption that the Director did not act honestly and in good faith and in the best interests of the Company, and that the Director did not exercise the care, diligence and skill of a reasonably prudent party and, with respect to any criminal action or proceeding, did not have reasonable grounds to believe that his conduct was unlawful.

1.3 Scope of Indemnity

The Company hereby agrees to indemnify Director to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company’s Memorandum and Articles of Association, or statute. In the event of any change after the date of this Agreement in any applicable law, statute or rule which expands the right of the Company to indemnify the Director, it is the intent of the Parties that Director shall enjoy by this Agreement the greater benefits afforded by such change. In the event of any change in any applicable law, statute or rule which narrows the right of the Company to indemnify the Director, such change, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the Parties’ rights and obligations hereunder.

1.4 Nonexclusivity

The indemnification provided by this Agreement shall be in addition to any rights to which Director may be entitled under the Company’s Memorandum and Articles of Association, any agreement, any vote of shareholders or disinterested directors, the Hong Kong Companies Ordinance, or otherwise. The indemnification provided under this Agreement shall continue as to Director for any action Director took or did not take while serving as a director of the Company even though Director may have ceased to serve in such capacity.

1.5 Partial Indemnification

If Director is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses incurred in connection with any claim, but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Director for the portion of such Expenses to which Director is entitled.

2

ARTICLE 2

GENERAL PROVISIONS

2.1 Further Assurances

The Parties shall execute such further assurances and other documents and instruments and do such further and other things as may be necessary to implement and carry out the intent of this Agreement.

2.2 Entire Agreement

The provisions herein constitute the entire agreement between the Parties, and supersede all previous expectations, understandings, communications, representations and agreements, whether verbal or written, between the Parties with respect to the subject matter hereof.

2.3 Severability

If any provision of this Agreement is unenforceable or invalid for any reason whatsoever, such unenforceable or invalid provisions of this Agreement shall be severable from this Agreement and the remaining provisions shall remain enforceable to the fullest extent permitted by law.

2.4 Governing Law

This Agreement shall be governed by and construed in accordance with the laws of Hong Kong.

2.5 Gender

Wherever the singular and masculine are used throughout this Agreement, the same shall be construed as meaning the plural or feminine, or a body corporate, where the context or the Parties hereto so require.

2.6 Headings

The headings in this Agreement form no part of this Agreement and shall be deemed to have been inserted for convenience only.

2.7 Counterparts

This Agreement may be executed in one or more counterparts, each of which may be executed by less than all of the Parties, each of which shall be enforceable against the Parties actually executing such counterparts, and all of which together shall constitute one instrument.

[SIGNATURE PAGE FOLLOWS]

3

IN WITNESS WHEREOF the Parties have executed these presents under his hand and seal in case of the Director and in the presence of the duly authorized signatories in the case of the Company as of the day and year first above written.

4

EXHIBIT D

FINANCIAL TARGETS

4

HOME INNS & HOTELS MANAGEMENT (HONG KONG) LIMITED

SHAREHOLDERS AGREEMENT

Date: 1 December 2003

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Dates Referenced Herein

This ‘F-1’ Filing		Date		Other Filings
Filed on:		10/4/06		None on these Dates
		4/12/02
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