EQUITY COMMITMENT AGREEMENT
EXECUTION VERSION
This Equity Commitment Agreement (this "Agreement") dated April 25, 2014 by and among Giant Group Holdings Limited, an exempted company with limited liability incorporated and existing under the Laws of the Cayman Islands ("Holdco"), CDH Wealth Management Company Limited, an exempted company with limited liability incorporated and existing under the Laws of the Cayman Islands (the "New Sponsor"), Baring Asia Private Equity Fund V, L.P., a limited partnership organized and existing under the Laws of the Cayman Islands ("Baring LP"), Hony Capital Fund V, L.P., a limited partnership organized and existing under the Laws of the Cayman Islands ("Hony LP" and, together with Baring LP, the "Other Sponsors") and Union Sky Holding Group Limited, a business company with limited liability incorporated and existing under the laws of the British Virgin Islands ("Union Sky" and, together with the Other Sponsors, the "Other Investors").
1. Equity Commitment and Other Covenants.
(a) Subject to the consent (the "Bank Approval") of the financial institutions providing the Debt Financing (the "Banks") and the other terms and conditions set forth herein, the New Sponsor shall, at or immediately prior to the Closing, cause the Sponsor Fund to purchase, directly or indirectly, equity interests of Holdco on the same terms and conditions as the Other Investors and pay, or cause to be paid, to Holdco in immediately available funds an aggregate cash purchase price equal to US$150,000,000 (such amount, the "Equity Commitment"), which will be (i) contributed by Holdco to Parent and (ii) used by Parent solely for the purpose of funding, to the extent necessary to fund, such portion of the Merger Consideration required to be paid by Parent to consummate the Merger pursuant to and in accordance with the Merger Agreement, together with related fees and expenses, and Holdco shall issue (and the Other Investors shall cause Holdco to issue) such equity interests to the Sponsor Fund or its designated subsidiary as would be required to give the Sponsor Fund a percentage interest in Holdco equal to the Sponsor Fund's pro rata contribution to the capital of Holdco as of immediately after the Closing.
(b) The New Sponsor may effect the funding of the Equity Commitment directly through a wholly-owned subsidiary of the Sponsor Fund.
(c) The New Sponsor shall, as soon as practicable following the date hereof, and in any event within 15 days of the date hereof, deliver to Weil, Gotshal & Xxxxxx LLP ("WGM") and Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx P.C. (“WSGR”), counsel to the buyer consortium for the Debt Financing, relevant documents providing reasonable evidence of the commitments by the investors in the Sponsor Fund to fund the Equity Commitment (subject to the terms and conditions set forth herein), which documents shall, if necessary, be provided to the Banks in connection with seeking the Bank Approval.
(d) Subject to receipt of (i) a written notice from the Special Committee of the Board of Directors of the Company (the "Special Committee") by May 12, 2014 granting its consent to the Equity Commitment and confirming that the Company will enter into those agreements contemplated by Section 1(e) hereof to which the Company will be party (the “Special Committee Consent”), and (ii) the Bank Approval (including in the form of approving a revised form of Facility Agreement (as defined in the Debt Commitment Letter) adding the New Sponsor as an Equity Investor (as such term is defined under the Facility Agreement)) by May 20, 2014, in each case of clauses (i) and (ii), subject only to the condition subsequent that on or prior to May 30, 2014, the New Sponsor shall deliver, or cause the Sponsor Fund to deliver, to WGM and WSGR, copies of bank statements or alternatively, other written evidence, in form and substance reasonably satisfactory to the Other Investors, providing reasonable evidence that the aggregate amount in United States dollars standing to the credit of the Sponsor Fund is not less than US$150,000,000 (the “Written Evidence”), the New Sponsor shall deliver, or cause the Sponsor Fund to deliver, to WGM and WSGR the Written Evidence on or prior to May 30, 2014.
(e) Upon the receipt by the parties hereto of the Special Committee Consent and the Bank Approval and the receipt by WGM and WSGR of the Written Evidence, whichever is later:
(i) the New Sponsor shall cause the Sponsor Fund to execute and deliver (A) an equity commitment letter (the "Sponsor Fund Equity Commitment Letter") in substantially the same form as the equity commitment letter entered by each of the Other Sponsors on March 17, 2014 (each, an "Other Sponsor Equity Commitment Letter"), providing for an equity commitment in an amount equal to the Equity Commitment, which shall replace the Equity Commitment in this Agreement, (B) a limited guarantee (the "Sponsor Fund Limited Guarantee") in substantially the same form as the limited guarantees executed by the Other Investors in favor of the Company on March 17, 2014 (each, a "Limited Guarantee"), providing that the Sponsor Fund will be responsible for a portion of the obligations described therein (pro rata with the Other Investors based on their expected ownership in Holdco as of immediately after the Closing), (C) an adherence agreement in order to become a party to that certain Interim Investors Agreement, dated as of March 17, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the "Interim Investors Agreement"), by and among Xx. Xxxxx Xxx ("Xx. Xxx"), Xxxxx Holding Group Limited ("Xxxxx"), Union Sky, Baring SPV, and Xxxx Xxxxx Enterprises Limited ("Hony SPV"), as amended pursuant to Section 1(e)(iii)(C) and Section 2(d), and (D) an adherence agreement in order to become a party to that certain Consortium Agreement, dated as of November 25, 2013 (as amended, restated, supplemented or otherwise modified from time to time, the "Consortium Agreement"), by and among Mr. Shi, Vogel, Union Sky and Baring SPV, to which Hony SPV joined as a party on January 12, 2014;
(ii) (A) Baring LP shall reduce its funding pursuant to the equity commitment contemplated by its Other Sponsor Equity Commitment Letter by US$100,000,000 (the "Amended Baring Equity Commitment") and (B) Hony LP shall reduce its funding pursuant to the equity commitment contemplated by its Other Sponsor Equity Commitment Letter by US$50,000,000 (the "Amended Hony Equity Commitment"); and
(iii) (A) the parties hereto that are party to each Other Sponsor Equity Commitment Letter shall execute and deliver an amended equity commitment letter to provide for the Amended Baring Equity Commitment and the Amended Hony Equity Commitment, as applicable, (B) the parties hereto that are party to each Limited Guarantee shall execute and deliver an amended limited guarantee to reduce the Guaranteed Percentage (as defined in such Limited Guarantee) pro rata with the Other Investors based on their expected ownership in Holdco as of immediately after the Closing, and (C) the parties hereto shall cause the Interim Investors Agreement to be amended and restated to (w) reflect the Equity Commitment, the Amended Baring Equity Commitment and the Amended Hony Equity Commitment, (x) provide that the Sponsor Fund and Other Investors shall share the fees, expenses and disbursements incurred in connection with the Merger in accordance with Section 1.6 of the Interim Investors Agreement as if the Investor Equity Commitment (as defined in the Interim Investors Agreement) of the Sponsor Fund equals the Equity Commitment, (y) include the reasonable fees, expenses and disbursements up to US$150,000 payable to Xxxxxxxx & Xxxxx by the New Sponsor in the Approved Legal Fees (as defined in the Interim Investors Agreement) and (z) provide the Sponsor Fund with substantially similar shareholder, governance and other rights as the Other Sponsors (including the Sponsor Fund’s right to designate one director to the board of directors of Holdco).
(f) The New Sponsor shall promptly provide, and shall cause the Sponsor Fund to promptly provide, all information reasonably requested by each Bank in connection with such Bank's client identification and "know your customer" procedures.
(g) The New Sponsor shall ensure the funds at the Sponsor Fund’s disposal is at all times between the date of the Written Evidence and the Closing maintained at a level sufficient for the Sponsor Fund to pay the Equity Commitment under Section 1(a) and the Sponsor Fund Equity Commitment Letter; provided that the Sponsor Fund may invest such amount in short term or other investment products as reasonably determined by the New Sponsor.
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(h) Subject to receipt of the Special Committee Consent and Bank Approval, the New Sponsor shall deliver, or cause the Sponsor Fund to deliver, one Business Days prior to the Closing Date, to WGM and WSGR, copies of bank statements or alternatively, other written evidence, in form and substance reasonably satisfactory to the Other Investors, providing reasonable evidence that the aggregate amount in United States dollars standing to the credit of the Sponsor Fund is not less than US$300,000,000 (taking into consideration of the amount of the Equity Commitment previously funded pursuant to Section 1(d)).
(a) Within one Business Day after the Closing Date, Union Sky shall sell and transfer to the Sponsor Fund or a wholly-owned subsidiary of the Sponsor Fund, and the New Sponsor shall cause the Sponsor Fund or a wholly-owned subsidiary of the Sponsor Fund to purchase from Union Sky, 4,166,667 ordinary shares of Holdco at a per share price equal to the Per Share Merger Consideration, which represents an aggregate purchase price of US$50,000,000 (the “Post-Closing Union Sky Transfer”).
(b) Within one Business Day after the Closing Date, Holdco shall issue and allocate 8,333,333 ordinary shares of Holdco to the Sponsor Fund or a wholly owned subsidiary of the Sponsor Fund at a per share price equal to the Per Share Merger Consideration, which represents an aggregate purchase price of US$100,000,000 (the "Post-Closing New Issuance"), provided however that the proceeds from such Post-Closing New Issuance shall be used solely for acquisitions of third party companies, assets or businesses by Holdco or any of its wholly-owned subsidiaries unless all parties hereto agree otherwise. All Other Investors shall cause Holdco to comply with and perform its obligations under the immediately preceding sentence.
(c) The New Sponsor shall cause the Sponsor Fund or a wholly-owned subsidiary of the Sponsor Fund to (i) enter into a customary subscription agreement with Holdco for the Post-Closing New Issuance (the "Post-Closing Subscription Agreement"), and (ii) complete the Post-Closing New Issuance in accordance with the terms thereof.
(d) The parties hereto agree and acknowledge that the Post-Closing Union Sky Transfer shall not be subject to any co-sale right or right of first refusal of other shareholders of Holdco (the "Transfer Restriction Carve-out") and the parties hererto shall cause that certain Shareholders Agreement Term Sheet attached to the Interim Investors Agreement as Exhibit B thereto to be amended and restated to reflect the Transfer Restriction Carve-out in connection with the amendment of the Interim Investors Agreement contemplated by Section 1(e)(iii)(C).
(e) Holdco and Union Sky shall use their reasonable best efforts to obtain any waiver, consent or approval from any Person required in connection with the sale, transfer or issuance of ordinary shares of Holdco pursuant to Section 2 of this Agreement.
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6. Governing Law. This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby shall be interpreted, construed and governed by and in accordance with the Laws of the State of New York without regard to the conflicts of Law principles thereof.
(a) Any disputes, actions and proceedings against any party or arising out of or in any way relating to this Agreement shall be submitted to the Hong Kong International Arbitration Centre ("HKIAC") and resolved in accordance with the Arbitration Rules of HKIAC in force at the relevant time and as may be amended by this Section 7(a). The place of arbitration shall be Hong Kong. The official language of the arbitration shall be English and the arbitration tribunal shall consist of three arbitrators (each, an "Arbitrator"). The claimant(s), irrespective of number, shall nominate jointly one Arbitrator; the respondent(s), irrespective of number, shall nominate jointly one Arbitrator; and a third Arbitrator will be nominated jointly by the first two Arbitrators and shall serve as chairman of the arbitration tribunal. In the event the claimant(s) or respondent(s) or the first two Arbitrators shall fail to nominate or agree the joint nomination of an Arbitrator or the third Arbitrator within the time limits specified by the Rules, such Arbitrator shall be appointed promptly by the HKIAC. The arbitration tribunal shall have no authority to award punitive or other punitive-type damages. The award of the arbitration tribunal shall be final and binding upon the disputing parties. Any party to an award may apply to any court of competent jurisdiction for enforcement of such award and, for purposes of the enforcement of such award, the parties irrevocably and unconditionally submit to the jurisdiction of any court of competent jurisdiction and waive any defenses to such enforcement based on lack of personal jurisdiction or inconvenient forum.
(b) Notwithstanding the foregoing, the parties hereto consent to and agree that in addition to any recourse to arbitration as set out in this Section 7, any party may, to the extent permitted under the Laws of the jurisdiction where application is made, seek an interim injunction from a court or other authority with competent jurisdiction and, notwithstanding that this Agreement is governed by the Laws of the State of New York, a court or authority hearing an application for injunctive relief may apply the procedural Law of the jurisdiction where the court or other authority is located in determining whether to grant the interim injunction. For the avoidance of doubt, this Section 7(b) is only applicable to the seeking of interim injunctions and does not restrict the application of Section 7(a) in any way.
(a) The Other Sponsors shall have the right to terminate this Agreement if the New Sponsor shall fail to comply with its obligations under Section 1(d) hereof on or prior to June 4, 2014.
(b) (i) Sections 1(a) through 1(f) and Section 3 hereof will terminate automatically and immediately upon the earliest to occur of (A) the valid termination of the Merger Agreement in accordance with its terms, (B) the Closing, at which time the New Sponsor’s obligation to cause the Sponsor Fund to fund the Equity Commitment will be discharged but subject to the performance of such obligation and (C) the execution of the Sponsor Fund Equity Commitment Letter, the Sponsor Fund Limited Guarantee and the adherence agreements contemplated by Section 1(e) hereof by the parties thereto, and (ii) this Agreement (other than Sections 1(a) through 1(f) and Section 3 hereof) will terminate automatically and immediately upon the valid termination of the Merger Agreement in accordance with its terms or, if the Merger is consummated, upon the last to occur of (A) the execution of Post-Closing Subscription Agreement by the parties thereto, and (B) the completion of the Post-Closing Union Sky Transfer.
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12. Definitions and Interpretation.
(a) Capitalized terms used in this Agreement and not otherwise defined herein have the meanings ascribed to such terms in the Merger Agreement.
(b) Headings are used for reference purposes only and do not affect the meaning or interpretation of this Agreement. When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. The word "including" and words of similar import when used in this Agreement will mean "including, without limitation," unless otherwise specified.
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CDH Wealth Management Company Limited | ||
By: | /s/ Xxx Xxxx | |
Name: Xxx Xxxx | ||
Title: Director |
[signature page to equity commitment Agreement]
Giant Group Holdings Limited | ||
By: | /s/ Yuzhu Shi | |
Name: Yuzhu Shi | ||
Title: Director |
[signature page to equity commitment Agreement]
Union Sky Holding Group Limited | ||
By: | /s/ Yuzhu Shi | |
Name: Yuzhu Shi | ||
Title: Director |
[signature page to equity commitment Agreement]
The Baring Asia Private Equity Fund V, L.P. | ||
By: | Baring Private Equity Asia GP V, L.P. | |
acting as its general partner | ||
By: | Baring Private Equity Asia GP V Limited | |
acting as its general partner | ||
By: | /s/ Xxxxxxxxx Xxxx Xxxx | |
Name: Xxxxxxxxx Xxxx Xxxx | ||
Title: Director | ||
By: | /s/ Xxxxxx Xxxxxxxxxx | |
Name: Xxxxxx Xxxxxxxxxx | ||
Title: Director |
[signature page to equity commitment Agreement]
Hony Capital Fund V, L.P. | ||
Acting by its sole general partner | ||
Hony Capital Fund V GP, L.P. | ||
Acting by its sole general partner | ||
Hony Capital Fund V GP Limited | ||
By: | /s/ Xxxx Xxxx Xxxx | |
Name: Xxxx Xxxx Xxxx | ||
Title: Authorized Signatory |
[signature page to equity commitment Agreement]