PURCHASE AGREEMENT
Exhibit 4.4
Execution Copy
This Purchase Agreement (this “Agreement”), dated as of May 7, 2009, is by and between
Xxxxx.xxx International, Ltd., a company organized under the laws of the Cayman Islands (the
“Purchaser”), and Home Inns & Hotels Management Inc., a company organized under the laws of
the Cayman Islands (the “Company”). The Purchaser and the Company are sometimes herein
referred to each as a “Party,” and collectively as the “Parties.”
W I T N E S S E T H:
WHEREAS, the Company and the Purchaser desire to provide for the issuance, sale and purchase
of the number of ordinary shares of the Company, par value US$0.005 per share (“Shares”) as
set forth in Section 1.1, on the terms and conditions set forth in this Agreement; and
WHEREAS, the Company and the Purchaser desire to make certain representations, warranties,
covenants and agreements in connection with the issuance, sale and purchase and related
transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties,
covenants and agreements herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the
Company and the Purchaser agree as follows:
ARTICLE I
PURCHASE AND SALE
Section 1.1 Issuance, Sale and Purchase of Shares. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations and warranties set forth
herein, the Company agrees to issue, sell and deliver to the Purchaser, free and clear of any
pledge, mortgage, security interest, encumbrance, lien, charge, assessment, claim or restriction of
any kind or nature other than those imposed by the Memorandum and Articles of Association of the
Company, and the Purchaser agrees to purchase from the Company, on the Closing Date (as defined
below), 7,514,503 Shares (the “Purchase Shares”).
Section 1.2 Purchase Price. The total consideration payable by the Purchaser to
the Company (the “Purchase Price”) shall be US$50,000,000 and shall consist of two
payments: (a) US$20,000,000 on the Closing Date (the “First Payment”), and (b)
US$30,000,000 within 30 calendar days of the Closing Date (the “Second Payment”).
Section 1.3 Closing.
(a) Upon the terms and subject to the conditions of this Agreement, the closing (the
“Closing”) of the purchase and sale of the Purchase Shares shall be held at the offices of
Shearman & Sterling LLP, 12th Floor, Gloucester Tower, The Landmark, 15 Queen’s Road
Central, Hong Kong, on the fourteenth calendar day following the signing of this Agreement, or any
other date and time that is agreed upon in writing by the Company and the
Purchaser (the date on which the Closing actually occurs, the “Closing Date”). At the
Closing, (a) the Purchaser shall deliver the First Payment to the Company by wire transfer in
immediately available funds, and (b) the Company shall deliver or cause to be delivered to the
Purchaser certificate(s) representing the Purchase Shares, registered in the name of the Purchaser
(or its nominee), and any and all other documents as may be reasonably requested by Purchaser or
required by the laws of the Cayman Islands to effect the issuance and sale of the Purchase Shares
and entry into the register of members of the Company. Of the Purchase Shares, 3,005,801 Shares
shall be marked as fully paid in the register of members and 4,508,702 Shares shall be marked as
unpaid, pending the delivery of the Second Payment.
(b) Within 30 calendar days of the Closing Date, the Purchaser shall deliver the Second
Payment to the Company by wire transfer in immediately available funds. Immediately upon receipt of
the Second Payment, the Company shall update the register of members to show that all Purchase
Shares have been fully paid.
Section 1.4 Closing Conditions.
(a) Conditions of the Purchaser for the Closing. The obligation of the Purchaser to
purchase and pay for the Purchase Shares as contemplated by this Agreement is subject to the
satisfaction, on or before the Closing Date, of the following conditions, any of which may be
waived by the Purchaser in its sole discretion:
(i) The Registration Rights Agreement between the Company and the Purchaser dated as of the
date hereof, substantially in the form attached as Exhibit A hereto (the “Registration
Rights Agreement”), shall have been executed and delivered by the Company.
(ii) All corporate and other actions required to be taken by the Company in connection with
the issuance and sale of the Purchase Shares shall have been completed.
(iii) The Company shall have provided to the Purchaser a legal opinion of Cayman Islands
counsel to the Company dated as of the Closing Date, substantially in the form attached as
Exhibit B hereto.
(iv) The representations and warranties of the Company contained in Section 2.1 of
this Agreement that are qualified as to materiality or Material Adverse Effect (as defined herein)
shall have been true and correct on the date of this Agreement and on and as of the Closing Date,
and any representations or warranties not so qualified shall have been true and correct in all
material respects on the date of this Agreement and on and as of the Closing Date; and the Company
shall have performed and complied in all material respects with all, and not be in breach or
default in any material respect under any, agreements, covenants, conditions and obligations
contained in this Agreement that are required to be performed or complied with on or before the
Closing Date. As used herein, “Material Adverse Effect” shall mean any event, fact,
circumstance or occurrence that, individually or in the aggregate with any other events, facts,
circumstances or occurrences, results in or would reasonably be expected to result in a material
adverse change in or a material adverse effect on any of (i) the financial condition, assets,
liabilities, results of operations, business, or operations of the Company taken as a whole, except
to the extent that any such Material Adverse Effect results from (w) changes in the trading price
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of the Company’s American depositary shares, (x) the public disclosure of the transactions
contemplated hereby in accordance with the terms of this Agreement, (y) changes in generally
accepted accounting principles that are generally applicable to comparable companies, or (z)
changes in general economic and market conditions; or (ii) the ability of the Company to consummate
the transactions contemplated by this Agreement and to timely perform its material obligations
under this Agreement.
(v) No governmental authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any law (whether temporary, preliminary or permanent) that is in
effect and restrains, enjoins, prevents, prohibits, imposes any damages or penalties that are
substantial in relation to the Company, or otherwise makes illegal the consummation of the
transactions contemplated by this Agreement; and no action, suit, proceeding or investigation shall
have been instituted by a governmental authority of competent jurisdiction or threatened that seeks
to restrain, enjoin, prevent, prohibit, impose any damages or penalties that are substantial in
relation to the Company, or otherwise makes illegal the consummation of the transactions
contemplated by this Agreement.
(b) Conditions of the Company. The obligation of the Company to issue and sell the
Purchase Shares to be sold to and purchased by the Purchaser as contemplated by this Agreement are
subject to the satisfaction, on or before the Closing Date, of each of the following conditions,
any of which may be waived in writing by the Company in its sole discretion:
(i) The Registration Rights Agreement shall have been executed and delivered by the Purchaser.
(ii) All corporate and other actions required to be taken by the Purchaser in connection with
the purchase of the Purchase Shares shall have been completed.
(iii) The representations and warranties of the Purchaser contained in Section 2.2 of
this Agreement shall have been true and correct in all material respects on the date of this
Agreement and on and as of the Closing Date; and the Purchaser shall have performed and complied in
all material respects with all, and not be in breach or default in any material respect under any,
agreements, covenants, conditions and obligations contained in this Agreement that are required to
be performed or complied with on or before the Closing Date.
(iv) No governmental authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any law (whether temporary, preliminary or permanent) that is in
effect and restrains, enjoins, prevents, prohibits, imposes any damages or penalties that are
substantial in relation to the Company, or otherwise makes illegal the consummation of the
transactions contemplated by this Agreement; and no action, suit, proceeding or investigation shall
have been instituted by a governmental authority of competent jurisdiction or threatened that seeks
to restrain, enjoin, prevent, prohibit, impose any damages or penalties that are substantial in
relation to the Company, or otherwise makes illegal the consummation of the transactions
contemplated by this Agreement.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser, as of the date hereof and as of the Closing Date, as
follows:
(a) Organization and Authority. The Company is a company duly incorporated as an
exempted company with limited liability, validly existing and in good standing under the laws of
the Cayman Islands. The Company has all requisite power and authority to carry on its business as
it is currently being conducted. The Company has all necessary corporate power and authority to
enter into this Agreement and to perform its obligations hereunder. The execution and delivery by
the Company of this Agreement and the performance of its obligations hereunder have been duly
authorized by all requisite action on the part of the Company and its shareholders. This Agreement
constitutes the valid and legally binding obligations of the Company, enforceable in accordance
with its respective terms and conditions, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application affecting enforcement
of creditors’ rights generally, and (ii) as limited by laws relating to the availability of
specific performance, injunctive relief, or other equitable remedies.
(b) Capitalization.
(i) The authorized share capital of the Company consists of 200,000,000 Shares, of which, as
of the date of this Agreement, 71,413,780 Shares are issued and outstanding (not including 121,075
restricted shares owned by members of management or 584,648 shares being held in the form of
American depositary shares for issuance under the Company Stock Plans, as defined below). All
issued and outstanding Shares of the Company are validly issued, fully paid and nonassessable. As
of the date of this Agreement, no Shares are held in treasury and no Shares are reserved for future
issuance except as provided in Employee Stock Option Plan and the 2006 Share Incentive Plan
(collectively, the “Company Stock Plans”), the vesting and exercisability of which shall
not accelerate due to this Agreement or the Closing. Except for the Company Stock Plans and the
Company’s zero coupon convertible senior bonds due 2012, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or any of its subsidiaries or obligating the Company or any of its
subsidiaries to issue or sell any shares of capital stock of, or other equity interests in, the
Company or any of its subsidiaries. All Shares subject to issuance as aforesaid, upon issuance on
the terms and subject to the conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and nonassessable. There are no
outstanding contractual obligations of the Company or any of its subsidiaries to repurchase, redeem
or otherwise acquire any capital stock of the Company or any of its subsidiaries or to provide
funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any
subsidiary or any other Person. As used herein, “Person” means an individual, corporation,
partnership, limited partnership, limited liability company, syndicate, person (including, without
limitation, a “person” as defined in Section 13(d)(3) of the Securities and Exchange Act of 1934,
as amended (the “Exchange Act”)),
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trust, association or entity or government, political subdivision, agency or instrumentality of a
government.
(ii) All outstanding Shares and all outstanding awards under the Company Stock Plans and all
outstanding shares of capital stock of each of the Company’s subsidiaries have been issued and
granted in compliance with (i) all applicable Securities Laws and other applicable laws and (ii)
all requirements set forth in applicable contracts. Except for the Company’s zero coupon
convertible senior bonds due 2012, the Company or any of its subsidiaries has not issued any notes,
bonds or other debt securities, or any option, warrant or other right to acquire the same, of the
Company or any of its subsidiaries. “Securities Laws” means the United States Securities
Act of 1933, as amended (the “Securities Act”), the Exchange Act, the listing rules of, or
any listing agreement with Nasdaq Global Market and any other applicable law regulating securities
or takeover matters.
(c) Due Issuance of the Purchase Shares. The Purchase Shares have been duly
authorized and, when issued and delivered to and paid for by the Purchaser pursuant to this
Agreement, will be validly issued, fully paid and non-assessable and free and clear of any pledge,
mortgage, security interest, encumbrance, lien, charge, assessment, claim or restriction of any
kind or nature, except for restrictions arising under the Securities Act and upon delivery and
entry into the register of members of the Company will transfer to the Purchaser good and valid
title to the Purchase Shares.
(d) Noncontravention. Neither the execution and the delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, will (i) violate any provision of the
Memorandum and Articles of Association or other constitutional documents of the Company or its
subsidiaries or violate any constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government, governmental entity or court to
which the Company is subject, or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of or creation of an encumbrance under, create in any party the
right to accelerate, terminate, modify, or cancel, or require any notice under, any agreement,
contract, lease, license, instrument, or other arrangement to which the Company is a party or by
which the Company is bound or to which any of the Company’s assets are subject. There is no
action, suit or proceeding, pending or threatened against the Company that questions the validity
of this Agreement or the right of the Company to enter into this Agreement or to consummate the
transactions contemplated hereby or thereby.
(e) Consents and Approvals. Neither the execution and delivery by the Company of this
Agreement, nor the consummation by the Company of any of the transactions contemplated hereby, nor
the performance by the Company of this Agreement in accordance with its terms requires the consent,
approval, order or authorization of, or registration with, or the giving notice to, any
governmental or public body or authority or any third party, except such as have been obtained,
made or given.
(f) Compliance with Laws. The business of the Company is not being conducted in
violation of any law or government order applicable to the Company except for violations which do
not and would not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
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(g) SEC Filings; Financial Statements.
(i) The Company has filed all forms, reports and documents required to be filed by it with the
Securities and Exchange Commission (the “SEC”) since October 26, 2006, including (i) its
annual reports on Form 20-F for the fiscal years ended December 31, 2006, 2007 and 2008,
respectively, and (ii) all other forms, reports and other registration statements filed by the
Company with the SEC since October 26, 2006 (the forms, reports and other documents referred to in
clauses (i) and (ii) above being, collectively, the “SEC Reports”). The SEC Reports (i)
complied as to form in all material respects with the requirements of the Securities Act, or the
Exchange Act, as the case may be, and the rules and regulations promulgated thereunder, and (ii)
did not, at the time they were filed, or, if amended, as of the date of such amendment, contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the circumstances under
which they were made, not misleading.
(ii) Each of the consolidated financial statements (including, in each case, any notes
thereto) contained in the SEC Reports was prepared in accordance with United States generally
accepted accounting principles (“GAAP”) applied on a consistent basis throughout the
periods indicated (except as may be indicated in the notes thereto) and each fairly presents, in
all material respects, the consolidated financial position, results of operations and cash flows of
the Company and its consolidated subsidiaries as at the respective dates thereof and for the
respective periods indicated therein (subject, in the case of unaudited statements, to normal
year-end adjustments which would not have had, and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect).
(iii) Except as and to the extent set forth on the audited consolidated balance sheet of the
Company and the consolidated subsidiaries as at December 31, 2008, including the notes thereto (the
“Balance Sheet”), neither the Company nor any subsidiary has any liability or obligation of
any nature (whether accrued, absolute, contingent or otherwise) that would be required to be
disclosed in accordance with GAAP, except for liabilities and obligations, incurred in the ordinary
course of business consistent with past practice since December 31, 2008, which would not,
individually or in the aggregate, prevent or materially delay consummation of any of the
transactions or otherwise prevent or materially delay the Company from performing its obligations
under this Agreement and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. None of the Company or its subsidiaries is a party to any
contract or any commitment providing for an interest rate, currency or commodity swap, derivative,
forward purchase or sale or other transaction similar in nature or effect or involving any
off-balance sheet financing.
(h) Events Subsequent to Most Recent Fiscal Period. Since December 31, 2008, there
has not occurred any Material Adverse Effect or any event, fact, circumstance or occurrence that
would reasonably be expected to result in a Material Adverse Effect.
(i) The Company is not a “passive foreign investment company” (a “PFIC”), as defined
in the U.S. Internal Revenue Code of 1986, as amended (the “Code”), for the year ended
December 31, 2008. The Company has no plan or intention to take any action that would result in
the Company becoming a PFIC for the current year or any future year.
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(j) Litigation. There are no actions by or against the Company or affecting the
business or any of the assets of the Company pending before any governmental authority, or, to the
Company’s knowledge, threatened to be brought by or before any governmental authority that would
reasonably be expected to result in a Material Adverse Effect.
Section 2.2 Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Company as of the date hereof and as of the Closing Date, as
follows:
(a) Due Formation. The Purchaser is a company duly incorporated as an exempted
company with limited liability, validly existing and in good standing under the laws of the Cayman
Islands, with full power and authority to own and operate and to carry on its business in the
places and in the manner as currently conducted.
(b) Authority. The Purchaser has full power and authority to enter into, execute and
deliver this Agreement and each agreement, certificate, document and instrument to be executed and
delivered by the Purchaser pursuant to this Agreement and to perform its obligations hereunder.
The execution and delivery by the Purchaser of this Agreement and the performance by the Purchaser
of its obligations hereunder have been duly authorized by all requisite actions on its part.
(c) Valid Agreement. This Agreement has been duly executed and delivered by the
Purchaser and constitutes the legal, valid and binding obligation of the Purchaser, enforceable
against it in accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application affecting enforcement
of creditors’ rights generally, and (ii) as limited by laws relating to the availability of
specific performance, injunctive relief, or other equitable remedies.
(d) Consents. Neither the execution and delivery by the Purchaser of this Agreement
nor the consummation by it of any of the transactions contemplated hereby nor the performance by
the Purchaser of this Agreement in accordance with its terms requires the consent, approval, order
or authorization of, or registration with, or the giving of notice to, any governmental or public
body or authority or any third party, except as have been obtained, made or given.
(e) No Conflict. Neither the execution and delivery by Purchaser of this Agreement,
nor the consummation by it of any of the transactions contemplated hereby, nor compliance by
Purchaser with any of the terms and conditions hereof will contravene any existing agreement,
federal, state, county or local law, rule or regulation or any judgment, decree or order applicable
to, or binding upon, Purchaser.
(f) Status and Investment Intent.
(i) Experience. The Purchaser has sufficient knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and risks of its investment in
the Purchase Shares. The Purchaser is capable of bearing the economic risks of such investment,
including a complete loss of its investment.
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(ii) Purchase Entirely for Own Account. The Purchaser is acquiring the Purchase
Shares that it is purchasing pursuant to this Agreement for investment for its own account for
investment purposes only and not with the view to, or with any intention of, resale, distribution
or other disposition thereof. The Purchaser does not have any direct or indirect arrangement, or
understanding with any other persons to distribute, or regarding the distribution of the Shares in
violation of the Securities Act or any other applicable state securities law.
(iii) Restricted Securities. The Purchaser acknowledges that the Purchase Shares are
“restricted securities” that have not been registered under the Securities Act or any applicable
state securities law. The Purchaser further acknowledges that, absent an effective registration
under the Securities Act, the Purchase Shares may only be offered, sold or otherwise transferred
(i) to the Company, (ii) outside the United States in accordance with Rule 904 of Regulation S
under the Securities Act or (iii) pursuant to an exemption from registration under the Securities
Act.
(iv) Information. The Purchaser has been furnished access to all materials such
Purchaser has requested relating to the Company and its subsidiaries and other due diligence
information and documents, including certain balance sheet and income statement data of the Company
on a consolidated basis for the first quarter of 2009, and the Purchaser has been afforded the
opportunity to ask questions of and receive answers from representatives of the Company concerning
the foregoing, including the terms and conditions of this Agreement. The Purchaser has consulted
to the extent deemed appropriate by such Purchaser with such Purchaser’s own advisers as to the
financial, tax, legal and related matters concerning an investment in the Purchase Securities and
on that basis believes that an investment in the Purchase Securities is suitable and appropriate
for such Purchaser.
(v) No Broker. No broker, investment banker or other person is entitled to any
broker’s, finder’s or other similar fee or commission in connection with the execution and delivery
of this Agreement or the Registration Rights Agreement or the consummation of any of the
transactions contemplated by this Agreement based upon arrangements made by or on behalf of the
Purchaser.
(g) Financing. The Purchaser has sufficient funds available to it to purchase all of
the Purchase Shares pursuant to this Agreement.
ARTICLE III
COVENANTS
Section 3.1 Lock-Up. The Purchaser agrees that it will not, without the prior
written consent of the Company, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option, right or warrant
for the sale of, lend or otherwise dispose of or transfer any of the Purchase Shares or (ii) enter
into any swap or any other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of any of the Purchase Shares prior
to the date 270 days
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after the Closing Date, except to a direct or indirect wholly-owned subsidiary of the
Purchaser that shall be bound by this Agreement as if such subsidiary were a party (“Related
Transferee”).
Section 3.2 Standstill.
(a) The Purchaser hereby agrees that, without the prior written approval of the Company, the
Purchaser and its affiliates will not, for a period of 180 days from the date of this Agreement,
acquire more than an additional 5% of the total outstanding Shares of Voting Securities (as defined
below) of the Company, calculated on a basis that includes all Shares actually outstanding.
“Voting Securities” shall mean the Shares (including Shares represented by the Company’s
American depositary shares) and any other securities entitled to vote generally for the election of
directors of the Company. For the avoidance of doubt, the Purchase Shares acquired by the
Purchaser on the Closing Date are not “additional” Shares for purposes of this section 3.2(a).
(b) The Purchaser hereby agrees that, without the prior written approval of the Company, the
Purchaser will not, and will use its reasonable efforts to cause its affiliates not to, for a
period of 18 months from the date of this Agreement, directly or indirectly, acting alone or with
others, assist, support, encourage, finance, participate with or advise any other person’s or
entity’s efforts to:
(i) propose a merger, business combination, tender or exchange offer, share exchange,
recapitalization, consolidation or other similar transaction involving the Company or any of its
subsidiaries;
(ii) propose or offer to purchase, lease or otherwise acquire all or a substantial portion of
the assets of the Company or any of its subsidiaries;
(iii) form, join or in any way participate in a “group” (as defined in Section 13(d)(3) of the
Exchange Act), or act in concert with any person with respect to the securities of the Company or
any of its subsidiaries in an attempt to circumvent the provisions of this Agreement;
(iv) solicit or participate in the solicitation of any proxies or consents with respect to the
voting securities of the Company or any of its subsidiaries; or
(v) enter into any substantial discussions or arrangements with any third party with respect
to any of the foregoing.
Section 3.3 Further Assurances. From the date of this Agreement until the earlier
of the Closing Date or the termination of this Agreement in accordance with Section 5.2,
the Parties shall use their best efforts to fulfill or obtain the fulfillment of the conditions
precedent to the consummation of the transactions contemplated hereby.
Section 3.4 Between the date of this Agreement and the Closing, the Company and its
subsidiaries shall operate their respective businesses only in the ordinary course consistent with
past practice.
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ARTICLE IV
ADDITIONAL AGREEMENTS
Section 4.1 Rights to Purchase New Voting Securities.
(a) For a period of 180 days beginning from the date of this Agreement, in the event that the
Company proposes to issue new Voting Securities, the Purchaser shall have the right to purchase, in
lieu of the Person to whom the Company proposed to issue such new Voting Securities, in accordance
with paragraph (b) below, a number of shares of new Voting Securities equal to the product of (i)
the total number or amount of shares of new Voting Securities which the Company proposes to issue
at such time and (ii) a fraction, the numerator of which shall be the total number of Purchase
Shares which the Purchaser owns at such time, and the denominator of which shall be the total
number of Shares of the Company then outstanding (prior to the issuance of new Voting Securities).
The rights given by the Company under this Section 4.1(a) shall terminate if unexercised within ten
(10) days after receipt of the Notice of Issuance referred to in paragraph (b) below.
(b) For a period of 180 days beginning from the date of this Agreement, in the event that the
Company proposes to undertake an issuance of new Voting Securities, it shall give written notice (a
“Notice of Issuance”) of its intention to the Purchaser, describing all material terms of
the new Voting Securities, the price and all material terms upon which the Company proposes to
issue such new Voting Securities. The Purchaser shall have ten (10) days from the date of the
Notice of Issuance to agree to purchase its pro rata share of such new Voting Securities (as
determined pursuant to paragraph (a) above) for the same consideration and otherwise upon the terms
specified in the Notice of Issuance by giving written notice to the Company, and stating therein
the quantity of new Voting Securities to be purchased by the Purchaser. Upon the expiry of such
ten (10) day period, if the Purchaser has not provided such written notice to the Company it shall
be deemed to have refused to participate in the offering of new Voting Securities and the Company
may issue such new Voting Securities to any other Person, as determined by the Company’s board.
The Company shall take all steps necessary to include the provisions of this Section 4.1 in the
Memorandum and Articles of Association of the Company as soon as reasonably practicable after the
date of this Agreement.
ARTICLE V
INDEMNIFICATION
Section 5.1 Indemnification. Each of the Company and the Purchaser (an
“Indemnifying Party”) shall indemnify and hold each other and their directors, officers and
agents (collectively, the “Indemnified Party”) harmless from and against any losses,
claims, damages, liabilities, judgments, fines, obligations, expenses and liabilities of any kind
or nature whatsoever, including but not limited to any investigative, legal and other expenses
incurred in connection with, and any amounts paid in settlement of, any pending or threatened legal action
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or proceeding, but excluding consequential damages, special or incidental damages, indirect
damages, punitive damages, lost profits, and diminution in value (collectively, “Losses”)
resulting from or arising out of: (i) the breach of any representation or warranty of such
Indemnifying Party contained in this Agreement or in any schedule or exhibit hereto; or (ii) the
violation or nonperformance, partial or total, of any covenant or agreement of such Indemnifying
Party contained in this Agreement for reasons other than gross negligence or willful misconduct of
such Indemnified Party. Notwithstanding the foregoing, the Indemnifying Party shall have no
liability (for indemnification or otherwise) with respect to any Losses in excess of the aggregate
total of the Purchase Price. In calculating the amount of any Losses of an Indemnified Party
hereunder, there shall be subtracted the amount of any insurance proceeds and third-party payments
received by the Indemnified Party with respect to such Losses, if any.
Section 5.2 Notice of Claims; Procedures. If an Indemnified Party makes any claim
against an Indemnifying Party for indemnification, the claim shall be in writing and shall state in
general terms the facts upon which such Indemnified Party makes the claim. In the event of any
claim or demand asserted against an Indemnified Party by a third party upon which the Indemnified
Party may claim indemnification, the Indemnifying Party shall give written notice to the
Indemnified Party within 30 days after receipt from the Indemnified Party of the claim referred to
above, indicating whether such Indemnifying Party intends to assume the defense of the claim or
demand. If an Indemnifying Party assumes the defense, such Indemnifying Party shall have the right
to fully control and settle the proceeding, provided, that, any such settlement or compromise shall
be permitted hereunder only with the written consent of the Indemnified Party, which consent shall
not be unreasonably withheld or delayed. If the Indemnifying Party elects not to assume the
defense or fails to make such an election with the 30-day period, the Indemnified Party may, at its
option, defend, settle, compromise or pay such action or claim; provided, that, any such settlement
or compromise shall be permitted hereunder only with the written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld or delayed.
Section 5.3 Basket and Cap. Notwithstanding anything to the contrary in this
Agreement, except in the case of fraud or willful misconduct, (i) the Indemnifying Party shall not
be obligated to indemnify an Indemnified Party under Section 5.1, except if and to the
extent that the aggregate Losses incurred by the Indemnified Party as a result of all Losses that
would otherwise be subject to indemnification under Section 5.1 exceeds the sum of
US$500,000 (the “Basket Amount”), and then such Indemnified Party shall be entitled to
indemnification only for the portion of its Losses that exceeds the Basket Amount, (ii) the
Indemnifying Party shall not be responsible for indemnifying any Indemnified Party for any
individual claims where the Losses relating thereto are less than US$50,000 and such items shall
not be aggregated for purposes of clause (i) above, and (iii) the aggregate Liability of the
Indemnifying Party to the Indemnified Party for indemnification under this Section 5.1
shall be limited to the Purchase Price.
Section 5.4 Third Party Claims.
(a) If any third party shall notify any Indemnified Party in writing with respect to any
matter involving a claim by such third party (a “Third Party Claim”) which such Indemnified
Party believes would give rise to a claim for indemnification against the Indemnifying Party under
this Article IV, then the Indemnified Party shall promptly (i) notify the
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Indemnifying Party thereof in writing within thirty (30) days of receipt of notice of such
claim and (ii) transmit to the Indemnifying Party a written notice (“Claim Notice”)
describing in reasonable detail the nature of the Third Party Claim, a copy of all papers served
with respect to such claim (if any), and the basis of the Indemnified Party’s request for
indemnification under this Agreement; provided, however, that no delay on the part
of the Indemnified Party in so notifying the Company shall relieve the Company of any obligation
under Section 5.1 with respect thereto unless (and then solely to the extent) the Company
is prejudiced thereby.
(b) Subject to Section 5.4(d) below, upon receipt of a Claim Notice with respect to a
Third Party Claim, the Indemnifying Party shall have the right to assume the defense of any Third
Party Claim by notifying the Indemnified Party in writing that the Indemnifying Party elects to
assume the defense of such Third Party Claim, and upon delivery of such notice by the Indemnifying
Party, the Indemnifying Party shall have the right to defend such Third Party Claim with counsel,
selected by it, who is reasonably satisfactory to the Indemnified Party, by all appropriate
proceedings, which proceedings shall be prosecuted actively and diligently by the Indemnifying
Party to a final conclusion or settled. Notwithstanding the foregoing, the Indemnifying Party
shall not be entitled to consent to the entry of a judgment or enter into any compromise or
settlement with respect to such Third Party Claim without the prior written consent of the
Indemnified Party (which shall not be unreasonably withheld).
(c) If requested by the Indemnifying Party, the Indemnified Party agrees, at the sole cost and
expense of the Indemnifying Party, to cooperate with the Indemnifying Party and its counsel in
contesting any Third Party Claim which the Indemnifying Party elects to contest, including the
making of any related counterclaim against the Person asserting the Third Party Claim or any cross
complaint against any Person. The Indemnified Party shall have the right to receive copies of all
pleadings, notices and communications with respect to any Third Party Claim, other than any
privileged communications between the Indemnifying Party and its counsel, and shall be entitled, at
its sole cost and expense, to retain separate co-counsel and participate in, but not control, any
defense or settlement of any Third Party Claim assumed by the Indemnifying Party pursuant to
Section 5.4(b); provided, however, if, based on written advice of counsel,
the Indemnified Party concludes that there is a reasonable likelihood of a conflict of interest
between the Indemnifying Party and the Indemnified Party with respect to such Third Party Claim,
the Indemnifying Party shall bear the reasonable costs and expenses of one counsel to the
Indemnified Party in connection with such defense.
(d) If (i) the Indemnifying Party fails to notify the Indemnified Party within the thirty (30)
days after receipt of any Claim Notice that the Indemnifying Party elects to assume the defense of
any Third Party Claim pursuant to Section 5.4(b), (ii) the Indemnifying Party elects to
assume the defense of any Third Party Claim pursuant to Section 5.4(b) but fails to
diligently prosecute or settle such Third Party Claim, (iii) the Indemnifying Party and the
Indemnified Party are parties to the same proceeding (or, assuming the veracity of the facts
alleged by the party bringing the Third Party Claim, the Indemnifying Party and the Indemnified
Party may become parties to the same proceeding) and the Indemnified Party determines in good faith
that a conflict of interest exists between the Indemnifying Party and the Indemnified Party, (iv)
the Indemnified Party determines in good faith that there is a reasonable possibility that it will
be prejudiced in any material respect beyond the ambit of such Third Party Claim by the
Indemnifying Party’s control of the defense and proceedings with respect to any Third Party
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Claim, or (v) such Third Party Claim is a claim by a governmental tax authority, then (A) the
Indemnified Party shall have the right to assume full control of the defense and proceedings with
respect to such Third Party Claim, and the Indemnified Party may compromise or settle such Third
Party Claim without consulting with, or obtaining consent from, the Indemnifying Party in
connection therewith (it being understood and agreed that the Indemnifying Party shall not be bound
by any such compromise or settlement entered into without its consent) and (B) the Indemnifying
Party shall reimburse the Indemnified Party promptly and periodically for the costs of defending
against the Third Party Claim (including fees and disbursements of no more than one counsel per
jurisdiction (such counsel reasonably acceptable to the Indemnifying Party) reasonably incurred in
connection with such Third Party Claim). The Indemnified Party shall have full control of such
defense and proceedings, although the Indemnifying Party shall be entitled to participate in any
defense or settlement controlled by the Indemnified Party pursuant to this Section 5.4(d)
at its sole expense. Any compromise or settlement of a Third Party Claim effected by the
Indemnified Party without the Indemnifying Party’s consent shall not be dispositive of the amount
of any Losses with respect to such Third Party Claim.
(e) In the event any Indemnified Party should have a claim against the Indemnifying Party
hereunder which does not involve a Third Party Claim, the Indemnified Party shall promptly transmit
to the Indemnifying Party a written notice (the “Indemnity Notice”) describing in
reasonable detail the nature of the claim, the Indemnified Party’s best estimate of the amount of
Losses attributable to such claim and the basis of the Indemnified Party’s request for
indemnification under this Agreement; provided that no delay on the part of the Indemnified Party
in delivering the Indemnity Notice pursuant to this Section 5.4(e) shall relieve the
Indemnifying Party of any obligation hereunder unless (and then solely to the extent) the
Indemnifying Party is prejudiced thereby. If the Indemnifying Party does not notify the
Indemnified Party within thirty (30) days from its receipt of the Indemnity Notice that the
Indemnifying Party disputes such claim (the “Dispute Notice”), the Indemnifying Party shall
be deemed to have accepted and agreed with such claim.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Survival of the Representations and Warranties. All representations
and warranties made by any Party shall survive for two years and shall terminate and be without
further force or effect on the second anniversary of the date hereof, except as to (i) any claims
thereunder which have been asserted in writing pursuant to Section 5.1 against the Party
making such representations and warranties on or prior to such second anniversary, and (ii) the
Company’s representations contained in Section 2.1(a), (b) and (c) hereof, each of which
shall survive indefinitely.
Section 6.2 Termination. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned at any time prior to Closing, (i) by mutual agreement of the
Parties, (ii) by any Party in the event that the Closing has not occurred by June 30, 2009 (the
“Termination Date”), provided, however, that the right to terminate this
Agreement pursuant to this clause (ii) shall not be available to any Party whose willful breach of
this Agreement has
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resulted in the failure of the Closing to occur on or before the Termination Date. Nothing in
this Section 6.2 shall be deemed to release any Party from any liability for any breach of
this Agreement prior to the effective date of such termination and after the effective date of
Article V (Indemnification).
Section 6.3 Governing Law; Jurisdiction. This Agreement shall be governed and
interpreted in accordance with the laws of the State of New York without giving effect to the
conflicts of law principles thereof. Each of the Parties hereto (a) irrevocably and
unconditionally submits to the exclusive jurisdiction of the courts of the State of New York and
any court of the United States located in the Borough of Manhattan in New York City with respect to
all actions and proceedings arising out of or relating to this Agreement and the transactions
contemplated hereby, (b) agrees that all claims with respect to any such action or proceeding shall
be heard and determined in such courts and agrees not to commence any action or proceeding relating
to this Agreement or the transactions contemplated hereby except in such courts, (c) irrevocably
appoints Law Debenture Corporate Services Inc. as agent upon whom process may be served in any such
action or proceeding (d) irrevocably and unconditionally waives any objection to the laying of
venue of any action or proceeding arising out of this Agreement or the transactions contemplated
hereby and irrevocably and unconditionally waives the defense of an inconvenient forum, and (e)
agrees that a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
Section 6.4 Amendment. This Agreement shall not be amended, changed or modified,
except by another agreement in writing executed by the Parties hereto.
Section 6.5 Binding Effect. This Agreement shall inure to the benefit of, and be
binding upon, each of the Company and the Purchaser and their respective heirs, successors and
permitted assigns and legal representatives.
Section 6.6 Assignment. Neither this Agreement nor any of the rights, duties or
obligations hereunder may be assigned by the Company or the Purchaser without the express written
consent of the other Parties, except that the Purchaser may assign all or any of its rights and
obligations hereunder to any affiliate of Purchaser without the consent of the other Parties,
provided that no such assignment shall relieve the Purchaser of its obligations hereunder if such
assignee does not perform such obligations. Any purported assignment in violation of the foregoing
sentence shall be null and void.
Section 6.7 Notices. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly given on the date of
actual delivery if delivered personally to the Party or Parties to whom notice is to be given, on
the date sent if sent by telecopier, tested telex or prepaid telegram, on the next business day
following delivery to Federal Express properly addressed or on the day of attempted delivery by the
U.S. Postal Service if mailed by registered or certified mail, return receipt requested, postage
paid, and properly addressed as follows:
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If to Purchaser, at: | Xxxxx.xxx International, Ltd. 0X, Xxxxx Xxxxxxxx Xx. 00 Xx Xxxx Xxxx Xxxxxxxx 200335, PRC Fax: x00-00 0000-0000 Attn: Xxxx Xxx Xxx, CFO |
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With copy to: | Shearman & Sterling LLP 12 Floor, Gloucester Tower Landmark, 00 Xxxxx’x Xxxx Xxxxxxx Xxxx Xxxx Fax: x000 0000-0000 Attn: Xxxxxxx X. Puff |
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If to the Company, at: | Home Inns & Hotels Management Inc. Xx. 000 Xxx Xxx Xxxx Xx Xxx Xxxxxxxx Xxxxxxxx 000000, PRC Fax: x00-00 0000-0000 Attn: Xxx Xx, CFO |
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With copy to: | Xxxxxx & Xxxxxxx LLP 00xx Xxxxx, Xxx Xxxxxxxx Xxxxxx 0 Xxxxxxxxx Xxxxx, Xxxxxxx Xxxx Xxxx Fax: x000 0000-0000 Attn: Xxxxx X. Xxxxx |
Any Party may change its address for purposes of this Section 6.7 by giving the other
Parties hereto written notice of the new address in the manner set forth above.
Section 6.8 Entire Agreement. This Agreement constitutes the entire understanding
and agreement between the Parties hereto with respect to the matters covered hereby, and all prior
agreements and understandings, oral or in writing, if any, between the Parties with respect to the
matters covered hereby are merged and superseded by this Agreement.
Section 6.9 Severability. If any provisions of this Agreement shall be
adjudicated to be illegal, invalid or unenforceable in any action or proceeding whether in its
entirety or in any portion, then such provision shall be deemed amended, if possible, or deleted,
as the case may be, from the Agreement in order to render the remainder of the Agreement and any
provision thereof both valid and enforceable, and all other provisions hereof shall be given effect
separately therefrom and shall not be affected thereby.
Section 6.10 Fees and Expenses. Except as otherwise provided in this Agreement,
the Company will bear all expenses incurred in connection with the negotiation, preparation and
execution of this Agreement.
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Section 6.11 Public Announcements. None of the Parties to this Agreement shall
make, or cause to be made, any press release or public announcement in respect of this Agreement or
the transactions contemplated by this Agreement or otherwise communicate with any news media
without the prior written consent of the Purchaser and the Company unless otherwise required by
Securities Law or other applicable law, and the Parties to this Agreement shall cooperate as to the
timing and contents of any such press release, public announcement or communication.
Section 6.12 Specific Performance. The Parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement were not performed in accordance
with the terms hereof and that the Parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity.
Section 6.13 Headings. The headings of the various articles and sections of this
Agreement are inserted merely for the purpose of convenience and do not expressly or by implication
limit, define or extend the specific terms of the section so designated.
Section 6.14 Execution in Counterparts. For the convenience of the Parties and to
facilitate execution, this Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute but one and the same
instrument.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and
year first above written.
Xxxxx.xxx International, Ltd. |
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By: | ||||
Name: | ||||
Title: | ||||
Home Inns & Hotels Management Inc. |
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By: | ||||
Name: | ||||
Title: | ||||
[SIGNATURE PAGE TO PURCHASE AGREEMENT]