CONSORTIUM AGREEMENT BY AND BETWEEN HANMAX INVESTMENT LIMITED AND FOSUN INDUSTRIAL CO., LIMITED Dated as of April 8, 2010
Exhibit 99.7
BY AND BETWEEN
HANMAX INVESTMENT LIMITED
AND
FOSUN INDUSTRIAL CO., LIMITED
Dated
as of April 8, 2010
TABLE OF CONTENTS
Clause | Page | |||||
1. | Purpose of Agreement |
2 | ||||
2. | Arrangements for the Formulation of the Proposal |
2 | ||||
3. | Internal and External Approvals |
3 | ||||
4. | Further Agreements |
4 | ||||
5. | Transaction Costs |
4 | ||||
6. | Limitation of Liability |
4 | ||||
7. | Exclusivity |
5 | ||||
8. | Termination |
5 | ||||
9. | Announcements and Confidentiality |
6 | ||||
10. | Notices |
7 | ||||
11. | Warranties |
8 | ||||
12. | General |
8 | ||||
13. | Definitions and Interpretation |
10 | ||||
Schedules | ||||||
Schedule 1 | Proposal |
16 | ||||
Schedule 2 | Commitment Letter |
17 | ||||
Schedule 3 | Schedule 13D |
18 |
THIS
CONSORTIUM AGREEMENT is made as of April 8, 2010, by and between HANMAX INVESTMENT
LIMITED, a company incorporated in the British Virgin Islands (Controlling Shareholder); and FOSUN
INDUSTRIAL CO., LIMITED, a company incorporated in Hong Kong (Strategic Investor). The Controlling
Shareholder and the Strategic Investor are collectively referred to as the Parties.
Capitalized terms used in this Agreement and not defined at their first usage have the
meanings assigned to them in clause 13.1. Certain references used in this Agreement are defined in
clauses 13.3, 13.4 and 13.6;
WHEREAS, the Parties propose to undertake a going private transaction (Transaction) with
respect to Tongjitang Chinese Medicines Company (the Target), a company listed on the New York
Stock Exchange (NYSE), in which Controlling Shareholder currently holds 52,675,584, or
approximately 50.6%, of the issued and outstanding shares (not including outstanding share
options), and Strategic Investor currently holds 33,403,392, or approximately 32.1%, of the
issued and outstanding shares (and does not own any options, warrants or other rights to subscribe
for ordinary shares or any securities convertible into or exchangeable for ordinary shares). The
purpose of the Transaction is to acquire the shares of Target held by shareholders other than
Controlling Shareholder and Strategic Investor, delist Target from the NYSE and deregister Target
under the United States Securities Exchange Act of 1934, as amended (Exchange Act);
WHEREAS, in connection with the Transaction, the Parties propose to establish a joint venture
company (Newco) under the laws of the Cayman Islands as the vehicle to acquire the shares of Target
held by shareholders other than the Parties. Controlling Shareholder and Strategic Investor will
hold 67.9% and 32.1%, respectively, of the equity interest in the Newco. Upon the completion of
the Transaction, Newco will be merged with and into Target, with Target being the surviving
company;
WHEREAS, following unanimous approval by the Parties, the Parties will submit a joint,
non-binding proposal (the Proposal) for the acquisition of all of the shares of Target not held by
the Parties (the Acquisition), the form of which is attached hereto as Schedule 1, to the board of
directors of Target;
WHEREAS, in accordance with the terms of this Agreement, the Parties will cooperate to (a)
evaluate Target, including conducting due diligence enquiries; (b) participate in a process that
may lead to agreement upon the Proposal; (c) consider and, if agreed, deliver a final Proposal to
Target that may lead to the Acquisition; (d) fund Newco for the expenses and costs of the
Transaction; (e) consider and participate in the negotiation of the terms of documentation
governing the relationship among the Parties, including the Memorandum and Articles of Association
of Newco and a shareholders’ agreement of Newco (Shareholders’ Agreement); (f) consider and
participate in the negotiation of the terms of documentation leading to the Acquisition (in which
negotiations the Parties expect that Target will be represented by a special committee of
independent and disinterested directors of Target), including the Proposal to Target’s board of
directors and an agreement and plan of merger among Controlling Shareholder, Strategic Investor,
Newco and Target (Merger Agreement); (g) enable Controlling Shareholder to enter into arrangements
with providers of debt finance to finance the Acquisition as set forth in the Commitment Letter
attached hereto as Schedule 2; and (h) enter into any required documentation, proceed to make any
necessary offer or obtain any required shareholder approvals to complete the Acquisition;
1
WHEREAS, in connection with the submission of the Proposal to the board of directors of
Target, the Parties will be required to file a statement of beneficial ownership on Schedule 13D
with
the United States Securities and Exchange Commission (SEC) disclosing their delivery of the
Proposal and certain additional information. A single Schedule 13D is proposed to be filed by all
the Parties and it will acknowledge that by virtue of their concerted action in delivering the
Proposal with the intention to consummate the Acquisition, the Parties could be deemed to be a
“group” under Section 13(d) of the Exchange Act. A form of the proposed Schedule 13D, which would
supersede Controlling Shareholder’s existing Schedule 13G and Strategic Investor’s existing
Schedule 13D with respect to their ownership of Target’s shares, is attached hereto as Schedule 3;
NOW, THEREFORE, in consideration of the premises, the Parties, intending to be legally bound,
agree as follows:
1. PURPOSE OF AGREEMENT
1.1 Participation in Transaction. The Parties agree to participate in the Transaction
on the terms of this Agreement.
1.2 Proposal. The Parties shall: (a) work jointly together to formulate the Proposal
in accordance with this Agreement; (b) conduct due diligence enquires into the Target and its
business; (c) arrange debt financing for the Transaction as set forth in clause 2.4; and (d)
negotiate the terms of the Documentation and any other transaction documents required in connection
with the Proposal in accordance with clause 4.1.
1.3 Structure of the Proposal. Unless the Parties otherwise agree, if the Proposal is
successful, the Parties shall incorporate Newco with the following shareholdings:
Name | Proportion | |||
Controlling Shareholder |
67.9 | % | ||
Strategic Investor |
32.1 | % |
The Shareholding proportion set forth above is allocated in consideration of, and is
conditional upon the Controlling Shareholder providing the cash necessary to purchase the total
Shareholdings in Target held by holders of Target’s Shares other than Controlling Shareholder and
Strategic Investor.
1.4 Binding Agreement. The terms of this Agreement are intended to be legally binding
on the Parties and to create legal relations between them.
2. ARRANGEMENTS FOR THE FORMULATION OF THE PROPOSAL
2.1 Proposal Process requirements. Each Party shall participate in the Proposal
Process and, to the extent commercially practicable, use its best efforts to: (a) comply with the
Protocols and ensure that neither it nor its employees, agents or representatives cause (by their
action or omission) the other Party to breach the Protocols; (b) participate in meetings with the
Special Committee and its advisors; and (c) execute any confidentiality and third party agreements
reasonably required by the Target related to the Proposal Process.
2
2.2 Information sharing and roles.
(a) Subject to clause 2.2(c), the Parties shall cooperate in good faith in connection with the
formulation of the Proposal, including by (i) sharing all information reasonably necessary to
evaluate the Target, including technical, operational, legal, accounting and financial materials
and relevant consulting reports and studies; (ii) providing each other with all information
required
concerning the other Party or any other matter relating to it, its funding arrangements (if
any), in connection with the Transaction and any other information one Party may require in respect
of the other Party and its Affiliates for inclusion in the Documentation; (iii) providing timely
responses to requests by each other for information, so as to meet the timeframes and deadlines
under this Agreement; (iv) applying the level of resources and expertise that each Party considers
is necessary and appropriate to meet its obligations under this Agreement; and (v) conducting
negotiations with the Special Committee, its advisors and other parties in connection with the
Transaction.
(b) The Parties shall work together in good faith to agree on necessary public statements
about their intentions in relation to the Target. The issuance of any such public statement shall
be subject to clause 9.1.
(c) Except as may otherwise be required by law (including in connection with any Documentation
required to be filed with or submitted to any governmental agency), no Party is required to make
available any information which it considers to be commercially sensitive information, or which is
otherwise held subject to an obligation of confidentiality.
2.3 Appointment of Advisors.
(a) The
Parties agree that Xxxxx & XxXxxxxx shall be engaged as U.S.
legal counsel to
provide U.S. legal services
to the Parties in relation to the Transaction
(including, without limitation, the preparation and filing of all
Documentation required to be filed by the Parties with the SEC and review of all Documentation
required to be filed by the Target with the SEC in connection with the Transaction as well as
coordination of the Transaction with other Advisors).
(b) The appointments under clause 2.3(a) do not limit the right of the Parties to appoint
additional Advisors to perform any function agreed by the Parties.
(c) The Parties shall (i) agree to the scope and engagement terms of the Advisors prior to
their engagement; and (ii) engage all Advisors on terms that provide for work undertaken and
reports prepared to be for the benefit of: (A) the Parties; and (B) any vehicle established by the
Parties for the purposes of the Transaction (including Newco).
(d) If a Party requires separate representation in connection with specific issues arising out
of the Proposal or the Transaction or other matters contemplated by the Documentation, it may
retain other Advisors to advise them. Each Party which engages separate Advisors will be solely
responsible for the fees and expenses of any such advisors.
2.4 Financing. Prior to consummation of the Transaction, Controlling Shareholder will
obtain a committed US dollar debt facility to finance the Transaction (other than Transaction costs
to be funded in accordance with clause 5) on terms substantially as set forth in the Commitment
Letter and otherwise mutually agreed by Controlling Shareholder and Strategic Investor.
A true and complete copy of the Commitment Letter issued by the financial institution named therein
is set forth in Schedule 2. Unless otherwise agreed, the debt facility (or other acquisition
financing for the Transaction) shall be without recourse to the Parties, Newco, the Target or
subsidiaries of Newco or the Target other than shares in Controlling Shareholder and Controlling
Shareholder’s shares in Newco, the Target and/or subsidiaries of Newco or the Target, and shall not
confer upon lenders any right to subscribe for shares in Newco or any of its Affiliates.
3
3. INTERNAL AND EXTERNAL APPROVALS
3.1 Approvals. Each Party shall use its reasonable diligence to obtain all respective
internal approvals as soon as reasonably practicable to participate in the Transaction. A Party
shall notify the other Party immediately when all respective internal approvals are obtained or if
it becomes aware that it will not, or is unlikely to, obtain necessary approvals. Each Party shall
bear the cost of obtaining its own internal approval required in connection with the Proposal and
the Transaction and the Parties shall bear the cost of obtaining any external approval required in
connection with the Proposal, as necessary, in accordance with clause 5.
3.2 Waivers and consents. Each Party shall use its reasonable diligence to obtain all
applicable governmental, statutory, regulatory or other consents, licenses, waivers or exemptions
required to empower it to enter into and to perform its obligations under the Shareholders’
Agreement and any ancillary agreement(s). Each Party shall bear the cost of obtaining any such
waivers and consents required to be obtained solely by such Party. The costs of obtaining any such
waivers and consents required to be obtained by both Parties as a condition to consummation of the
Transaction shall be borne by the Parties in accordance with clause 5.
4. FURTHER AGREEMENTS
4.1 Prior to submission of the Proposal, the Parties shall negotiate in good faith to agree
the terms of any other agreements between the Parties required to support the Proposal or to
regulate the relationship between the Parties.
5. TRANSACTION COSTS
5.1 Sharing of Transaction Costs. Within seven Business Days after the establishment
of Newco, the Parties agree to deposit US$1 million (US$1,000,000) in cash into a bank account
designated by Newco in proportion to their shareholdings in Newco to finance the fees and expenses
payable in relation to the Transaction (other than fees and costs incurred by a Party requiring
separate representation as contemplated by clause 2.3(d) and the fees and costs incurred by a Party
to obtain internal approvals as contemplated by clause 3.1 or waivers and consents applicable
solely to a Party as contemplated by clause 3.2). If this amount is insufficient, the Parties agree
to continue to contribute in proportion to their shareholdings. If the Transaction cannot be
completed due to the unilateral breach of either Party, the Party in breach shall be responsible
for all fees related to the Transaction, including but not limited to the legal fees of legal
counsels, costs associated with the establishment and deregistration of Newco, service fees of
independent financial advisors and legal counsels appointment by the independent board committee of
Target and financing and commitment fees associated with the financing of the Transaction.
6. LIMITATION OF LIABILITY
6.1 Limitation of Liability. The obligations of each Party under this Agreement are
several (and not joint or joint and several) and each Party’s obligation for fees and costs
pursuant to clause 5 is capped to such Party’s Respective Proportion. The Parties shall share the
Liability (if any) in respect of each and every Claim in their Respective Proportions, except where
the Claim has arisen as a result of the fraud, willful misconduct or breach of this Agreement by a
Party in which case the Liability for the Claim will rest solely with the Party who has committed
the act of fraud or willful misconduct or the breach. If the amount paid by a Paying Party is more
than the Paying Party’s Respective Proportion of the relevant Liability, the other Party shall
immediately upon demand pay to the Paying Party such sum as may be necessary to ensure that each
Party bears only its Respective Proportion of such Liability.
4
7. EXCLUSIVITY
7.1 Subject to clause 8, during the Exclusivity Period each Party shall:
(a) work exclusively with the other Party to implement the Transaction, including to (i)
evaluate the Target; (ii) formulate the terms of the Proposal, including the amount to be paid, by
the date for submission of the Proposal or any other date agreed by the Parties; (iii) prepare and
submit the Proposal and Merger Agreement to the Target; and (iv) conduct negotiations, prepare and
finalize the Documentation and other documents referred to in clause 4.
(b) not, without the foreknowledge and written consent of the other Party, directly or
indirectly, either alone or with any of its Connected Persons: (i) make a Competing Proposal or
join with, invite, any other person to be involved in the making of any Competing Proposal; (ii)
finance or offer to finance any Competing Proposal, including by offering any equity or debt
finance in support of any Competing Proposal; (iii) acquire or dispose of, after the date of the
Agreement, an interest in the Securities except as contemplated under this Agreement and the
Documentation with the written consent of the other Party; or (iv) aid, abet, counsel or induce any
other person in doing any of the things mentioned in clauses 7.1(a) or 7.1(b).
(c) notify the other Party immediately if it or any of its Connected Persons or
Representatives receives any approach or communication with respect to any Competing Proposal and
shall disclose to the other Party the identity of any other persons involved and the nature and
content of the approach or communication.
7.2 This clause 7 and the Exclusivity Period survive termination of the Agreement.
8. TERMINATION
8.1 Failure to agree. If the Parties are unable to agree on the material terms of the
Proposal (whether the purchase price, terms of any Documentation, or any other matter that will
prevent the Parties from submitting a Proposal) then (a) the Parties may cease their participation
in the Transaction; and (b) this Agreement shall terminate, following which the provisions of
clause 8.6 will apply. If, after submission of the Proposal, the Parties are unable to agree either
(a) as between themselves upon the material terms of the Transaction or (b) with the Special
Committee on the material terms of a Transaction which the Special Committee agrees to recommend to
the public shareholders of the Target, then (i) Parties may cease their participation in the
Transaction; and (ii) this Agreement shall terminate, following which the provisions of clause 8.6
will apply.
8.2 Withdrawal. A Party may withdraw from the arrangements contemplated by this
Agreement (the Withdrawing Party) by written notice to the other Party (the Continuing Party) at
any time prior to submission of a Proposal. This Agreement shall terminate on the date of the
notice of withdrawal and clause 8.5 will apply. Following submission of the Proposal, no Party
shall be entitled to withdraw and the Parties shall be bound by the terms of this Agreement
(including the obligations to fund the costs and expenses of the Transaction).
8.3 Termination for cause.
(a) If a Material Adverse Change or an Insolvency Event occurs in respect of any Party (the
Affected Party), the other Party (the Continuing Party) may provide written notice to the Affected
Party that this Agreement will terminate with respect to the Affected Party.
(b) If a notice of termination is provided under this clause 8.3, this Agreement shall
terminate on the date specified in the notice of termination and the provisions of clause 8.5 will
apply.
5
8.4 Other termination events. This Agreement shall automatically terminate: (a) by
unanimous agreement of the Parties; or (b) upon execution by the Parties of the Documentation and
the documents contemplated under clause 4.
8.5 Effect of termination for withdrawal/cause. Upon termination of this Agreement
under clause 8.2 or clause 8.3; (a) the obligations of exclusivity under clause 7 shall continue to
bind the Withdrawing Party or Affected Party; (b) if requested by the Continuing Party, the
Withdrawing Party or Affected Party shall provide all shared Advisors with a release of their
obligations owing to the Withdrawing Party or Affected Party. Any Advisors appointed under this
Agreement may continue to advise the Continuing Party with respect to the Proposal and the
Transaction; and (c) clauses 5 (Transaction Costs), to the extent of any unpaid costs and fees or
costs and fees becoming payable after termination, 8 (Termination), 9.2 (Announcements and
Confidentiality — Confidentiality), 10 (Notices) and 12 (General) shall continue to bind the
Parties but the Parties shall otherwise not be liable to each other in relation to this Agreement,
other than in respect of a breach of this Agreement occurring prior to termination.
8.6 Effect of termination for failure to agree/other termination events. Upon
termination of this Agreement under clauses 8.1 or 8.4: (a) the Parties shall jointly own but may
use separately all of the due diligence information, advice and work product in relation to the
Transaction and the Parties agree that any Advisors appointed under this Agreement may continue to
advise, separately, any of the Parties; and (b) clauses 5 (Transaction Costs), to the extent of any
unpaid costs and fees or costs and fees becoming payable after termination, 7 (Exclusivity), 8
(Termination), 9.2 (Announcements and Confidentiality — Confidentiality), 10 (Notices) and 12
(General) shall continue to bind the Parties but the Parties shall otherwise not be liable to each
other in relation to this Agreement, other than in respect of a breach of this Agreement occurring
prior to termination.
8.7 Return of Confidential Information upon termination. Upon termination of this
Agreement for any reason, each Party shall except to the extent a copy of such information is
required to be maintained by a Party for regulatory purposes (a) return all information (including
Confidential Information) relating to the projects, business affairs or finances of or relating to
the other Party and the Target (including its Connected Persons), contained in any material in its
possession or control but excluding information that is jointly owned pursuant to clause 8.6; and
(b) procure the return to the other Party of all information (including Confidential Information)
relating to the projects, business affairs or finances of or relating to the Party and the Target
(including its Connected Persons), contained in any material in the possession or control of any of
their employees, agents or Advisors.
9. ANNOUNCEMENTS AND CONFIDENTIALITY
9.1 Announcements. No announcements regarding the subject matter of this Agreement
shall be issued by any Party without the prior written consent of the other Party, which consent
shall not be unreasonably withheld or delayed, except to the extent that any such announcements are
required by law, a court of competent jurisdiction, a regulatory body or international stock
exchange. Any announcement to be made by Newco or its Affiliates in connection with the Transaction
shall be jointly coordinated and agreed by the Parties.
9.2 Confidentiality.
(a) Except as permitted under clause 9.3, each Party shall not, and shall procure that its
Representatives do not, without the prior written consent of the other Party, disclose (i) the
existence, content or effect of this Agreement or any other agreement entered into in connection
with this Agreement; (ii) the fact or content of negotiations leading up to or relating to this
Agreement; (iii) any information received or obtained by it or its Representatives regarding the
other Party or its
Representatives; (iv) any Confidential Information received by it (Recipient) from the other
Party (Discloser). Each Party shall procure that neither the Recipient, nor its Representatives
shall use any Confidential Information for any purpose other than for the purposes of this
Agreement or the Transaction;
6
(b) Subject to clause 9.2(c), each Party must safeguard and return to the Discloser any
Confidential Information which falls within paragraph (a) of the definition of Confidential
Information, on demand, or in the case of electronic data (other than any electronic data stored on
the back up tapes of the Recipient’s hardware), destroy at the option of the Discloser, any
Confidential Information contained in any material in its or its Representatives’ possession or
control.
(c) The Recipient may retain in a secure archive a copy of the Confidential Information
referred to in clause 9.2(b) if the Confidential Information is required to be retained by the
Continuing Party for regulatory purposes.
(d) The Parties acknowledge that, in relation to Confidential Information relating to the
projects, business affairs or finances of the Parties, the obligations contained in clause 9.2(a)
continue to apply after a period of two years following termination of this Agreement unless
otherwise agreed in writing.
9.3 Permitted disclosures. A Party may make disclosures (a) to those of its Advisors,
Representatives or Affiliates as the Party reasonably thinks necessary to give effect to or enforce
this Agreement but only on a confidential basis; (b) if required by law or a court or competent
jurisdiction, the SEC or another regulatory body or international stock exchange having
jurisdiction over a Party or pursuant to whose rules and regulations such disclosure is required to
be made, but only as far as practicable and lawful after the form and terms of that disclosure have
been notified to the other Party and the other Party has had a reasonable opportunity to comment on
the form and terms of disclosure; or (c) if the information has already come into the public domain
through no fault of that Party, its Representatives, shareholders, investors or Affiliates.
9.4 Indemnity. Each Recipient agrees to indemnify and hold harmless the Discloser from
and against all losses, costs, demands and liabilities of whatsoever nature (but excluding any
indirect or consequential losses, costs, demands and liabilities) arising directly out of any
breach of the terms of this clause by the Recipient or by any person to whom the Confidential
Information is disclosed by the Recipient.
10. NOTICES
Any notice, request, instruction or other document to be given hereunder by any Party to the
other Party shall be in writing and delivered personally or sent by registered or certified mail,
postage prepaid, by facsimile, overnight courier or electronic mail:
If to Controlling Shareholder:
Hanmax Investment Limited
0xx Xxxxx, Xxxxx X, Xxxxxxx Medical Device Park,
0000 Xxxxxx Xxxxxx, Xxxxxxx Xxxxxxxx,
Xxxxxxxx, 000000, Guangdong Province,
People’s Republic of China
Attention: Xxxx Xxxxxxxx
Facsimile: (00) 000 0000 0000
e-mail: xxxxxx00@xxx.000.xxx
0xx Xxxxx, Xxxxx X, Xxxxxxx Medical Device Park,
0000 Xxxxxx Xxxxxx, Xxxxxxx Xxxxxxxx,
Xxxxxxxx, 000000, Guangdong Province,
People’s Republic of China
Attention: Xxxx Xxxxxxxx
Facsimile: (00) 000 0000 0000
e-mail: xxxxxx00@xxx.000.xxx
7
If to Strategic Investor:
Fosun Industrial Co., Limited
28/F, Three Pacific Place,
1 Queen’s Road East
Hong Kong
Attention: Xxxx Xxxxxxx
Facsimile: (000) 0000 0000
e-mail: xxxxxxxxxxx@xxxxxxxxxxx.xxx
Fosun Industrial Co., Limited
28/F, Three Pacific Place,
1 Queen’s Road East
Hong Kong
Attention: Xxxx Xxxxxxx
Facsimile: (000) 0000 0000
e-mail: xxxxxxxxxxx@xxxxxxxxxxx.xxx
or to such other address or facsimile number as such party may hereafter specify for the purpose by
notice to the other parties hereto. All such notices, requests and other communications shall be
deemed received on the date of receipt by the recipient thereof if received prior to 5 p.m. on a
business day in the place of receipt. Otherwise, any such notice, request or communication shall be
deemed to have been received on the next succeeding business day in the place of receipt.
11. WARRANTIES
11.1 Warranties. Each Party represents and warrants in respect of itself to the other
Party, as an inducement to that Party to enter into this Agreement, that (a) it has full power and
authority to execute, and perform its obligations under, this Agreement and to proceed with the
Proposal and the Transaction; (b) the execution, delivery and performance of this Agreement has
been properly authorized by all required corporate action of such Party; (c) the execution,
delivery and performance of this Agreement will not violate the provisions of the charter or
bylaws, memorandum or articles of association or other constituent document of such Party or
conflict with or constitute a breach of or default under any agreement to it is a Party or by which
or any of its assets or property is bound; (d) this Agreement constitutes a valid and binding
obligation on it in accordance with its terms; (e) it is not the subject of any Insolvency Event;
and (f) it has made adequate arrangements to ensure that the required funds are available to effect
payment in full for its Respective Proportion of the fees, costs and expenses of the Transaction
and, in the case of the Controlling Shareholder, the cash contributions required by clause 1.3.
11.2 Separate Warranties. Each warranty in clause 11.1 is a separate warranty. The
interpretation of any warranty may not be restricted by reference to or inference from any other
warranty.
11.3 Reliance. Each Party acknowledges that the other Parties have entered into this
Agreement on the basis of and reliance upon (among other things) the representations and warranties
in clause 11.1 and have been induced by them to enter into this Agreement.
12. GENERAL
12.1 Entire agreement. This Agreement constitutes the entire agreement between the
Parties and supersedes any previous oral or written agreements or arrangements between them
relating to its subject matter. Nothing in this clause 12.1 shall operate to limit or exclude any
liability of either Party for, or remedy against either Party in respect of, any fraudulent
misrepresentation.
12.2 Further assurances. Each Party shall, at its own expense whenever reasonably
requested by another Party promptly do (and procure that each of its Affiliates do), everything
reasonably necessary to give full effect to this Agreement.
8
12.3 Indemnities. It is not necessary for a Party to incur expense or make payment
before enforcing a right of indemnity under this Agreement.
12.4 Severability. If any provision of this Agreement is held by any tribunal or
court of competent jurisdiction to be illegal, invalid or unenforceable in any respect under the
law of any jurisdiction, then that provision shall (so far as it is illegal, invalid or
unenforceable) be given no effect and shall be deemed not to be included in this Agreement but
without invalidating any of the remaining provisions of this Agreement. Any provision of this
Agreement held illegal, invalid or unenforceable only in part or degree shall remain in full force
and effect to the extent not held illegal, invalid or unenforceable. The Parties shall then use all
reasonable endeavors to replace the illegal, invalid or unenforceable provision(s) the effect of
which is as close as possible to the intended effect of the illegal, invalid or unenforceable
provision(s).
12.5 Variation, waiver and consent. A variation, waiver or consent by a Party of any
provision or right under this Agreement is binding on the Party granting the variation, waiver or
consent only if it given in writing and is signed by the Party or on behalf of the Party granting
the variation, waiver or consent. A single or partial exercise of a right by a Party does not
preclude another or further exercise or attempted exercise of that right or the exercise of another
right. Failure by a Party to exercise or delay in exercising a right does not prevent its exercise
or operate as a variation or waiver. A variation consent or waiver is effective only in the
specific instance and for the specific purpose for which it is given.
12.6 Language. The official text of this Agreement and any Notices given or made shall
be in English. In the event of any dispute concerning the construction or interpretation of this
Agreement, reference shall be made only to the agreement as written in English and not to any
translation into any other language.
12.7 Assignment. Neither Party shall be entitled to assign the benefit or burden of
any provision of this Agreement without the prior written consent of the other Party.
12.8 Rights and remedies cumulative.
(a) No failure or delay by either Party in exercising any right or remedy provided by law or
under or pursuant to this Agreement shall impair such right or remedy or operate to be construed as
a waiver or variation of it or preclude its exercise at any subsequent time. No single or partial
exercise of any right or remedy by either Party shall preclude any other or further exercise of
such right or remedy or the exercise of any right or remedy.
(b) The rights, powers and remedies provide by this Agreement are cumulative and are in
addition to any rights, powers and remedies provided by law.
12.9 No partnership or agency. The Parties are independent and nothing in this
Agreement constitutes either Party as the trustee, fiduciary, agent, employee, partner or joint
venturer of the other Party.
12.10 Counterparts. This Agreement may be executed in counterparts and all
counterparts taken together shall constitute one document. This Agreement shall not be effective
until each Party has executed at least one counterpart.
9
12.11 Governing law and arbitration. The construction, validity and performance of
this Agreement shall be governed by the laws of the Cayman Islands. Any claim or controversy that
may arise between the Parties to this Agreement in connection with the performance of the terms of
this Agreement shall be referred to and/or settled exclusively by arbitration in accordance with
the rules
and procedures of the International Chamber of Commerce (“ICC”). The Parties shall agree on a
single arbitrator, or by one arbitrator appointed by each Party and a third arbitrator appointed by
the other arbitrators. If a Party to this Agreement fails to appoint an arbitrator within four (4)
weeks after notice of a claim or controversy, such appointment shall be made by the ICC. All such
arbitration proceedings shall be held in Hong Kong. The language of the arbitration shall be in
English. Each Party agrees to comply in all respects with any award made in any such proceeding
and to the entry of a judgment in any jurisdiction upon any award rendered in such proceeding.
12.12 Service of process. Each Party agrees that a document required to be served in
proceedings relating to or concerning this Agreement may be served at its address for service of
Notices under clause 10.
13. DEFINITIONS AND INTERPRETATION
13.1 Definitions. In this Agreement, unless the context requires otherwise:
“Advisors” means the Advisors and/or consultants of the Parties or of a Party, as the case may
be, appointed in accordance with clause 2.3.
“Affected Party” has the meaning given in clause 8.3(a).
“Affiliate” means, with respect to any person, any other person that, directly or indirectly,
Controls, is Controlled by or is under common Control with such specified person and “Affiliates”
shall be construed accordingly.
“Agreement” means this consortium agreement.
“Budget” means the budgeted financial costs and expenses to be incurred by the Parties in
connection with the Proposal Process, which has been separately initialed by the Parties in its
agreed form contemporaneously with the execution of this Agreement.
“Business Day” means any day (other than a Saturday) on which banks generally are open in the
People’s Republic of China for the transaction of normal banking business.
“Claim” means a claim against any one or more of the Parties arising from or relating to the
Transaction in respect of which a Party is, or is sought to be, made liable to pay any sum of money
to any person other than a Party (or any of their respective Connected Parties), whether on a joint
and several basis or on any other basis.
“Commitment Letter” means the commitment letter issued by the lender to the Controlling
Shareholder and approved in writing by the Controlling Shareholder and the Strategic Investor as
set forth in Schedule 2.
“Competing Proposal” means a proposal, offer or invitation to the Company, other made by the
Parties, that involves the acquisition of Control of the Target, a sale of all or a substantial
part of the assets of the Target, a restructuring or recapitalization of the Target, or some other
transaction that in each case would adversely affect, prevent or materially reduce the likelihood
of a consummated Transaction with Parties.
“Confidential Information” includes all information, technical data, trade secrets or know-how
(whether provided to a Party before or after the date of this Agreement) (a) relating to the
projects, business affairs or finances of or relating to the Discloser and/or its Affiliates
(whether or not in existence at commencement of this Agreement), and includes all information,
technical data, trade secrets or know-how relating to research, products, software, services,
developments, inventions,
processes, designs, drawings, engineering, marketing, clients, suppliers, or arrangements with
clients and suppliers of the Discloser or its Affiliates; (b) the existence or terms of, and any
negotiations or discussions relating to, the Proposal; and/or (c) provided to either Party by the
Advisors for the purposes of evaluating the Proposal.
10
“Connected Person” means a person connected with another as determined in accordance with
clause 13.3.
“Continuing Party” has the meaning given in clause 8.2.
“Control” means the ownership of, or the ability to direct, directly or indirectly:
(a) in the case of a corporation or body corporate: (i) a majority of the issued shares
entitled to vote for election of directors (or analogous persons) of such body corporate; (ii) the
appointment or removal of directors having a majority of the voting rights exercisable at meetings
of the board of directors (or analogous body or bodies, including, without limiting the generality
of the foregoing, management boards and supervisory boards) of such body corporate on all or
substantially all matters; (iii) a majority of the voting rights exercisable at general meetings of
the members of such body corporate on all, or substantially all, matters; or
(b) in the case of any other person, a majority of the voting rights in such person; or
(c) in the case of a corporation or body corporate or any other person, the direct or indirect
possession of the power to direct or cause the direction of the management, policies or investment
funds of the same (whether through the ownership of voting securities, by a management or advisory
agreement, by contract, by agency or howsoever otherwise),
and “Controlled” shall be construed accordingly;
“Discloser” has the meaning given in clause 9.2(a).
“Documentation” means the documentation required to implement the Transaction, including, as
applicable, the Proposal, Memorandum and Articles of Association of Newco, the Shareholders’
Agreement (the agreed form of which has been separately initialed by the Parties contemporaneously
with the execution of this Agreement), the Merger Agreement, financing documentation, reports,
schedules and filings with the SEC and other governmental agencies, and ancillary documentation.
“Exclusivity Period” means the period commencing on the date of this Agreement and ending 12
months after the date this Agreement terminates or such other date as is agreed in writing between
the Parties.
“Insolvency Event” means in respect of a Party, the happening of one or more of the following
events (a) a receiver, or receiver and manager, of its property is appointed, whether by a court or
otherwise; (b) an administrator is appointed to it; (c) it enters into a compromise or arrangement
with its creditors or a class of them; (d) it commences to be wound up or ceases to carry on
business;(e) it is insolvent or presumed insolvent under any applicable legislation; (f) execution
or similar process is levied against its property; or (g) anything having a substantially similar
effect to any of the above events happens under the laws of any applicable jurisdiction.
“Liability” means a liability to pay a sum of money arising pursuant to a Claim (which sum is
deemed to include all legal and other costs, damages, losses and expenses incurred in connection
with (or arising directly or indirectly from) defending, disputing or otherwise dealing with any
such Claim) where the liability arises from a judgment given by a court of competent jurisdiction,
the final decision given in any arbitration proceedings or the agreed settlement of the Claim.
11
“Material Adverse Change” means a material adverse change to the financial position of a Party
from its financial position as at the date of this Agreement which materially affects the ability
of the affected party to: (a) comply with its obligations under this Agreement; or (b) obtain or
provide financing to complete the Transaction on the terms contemplated in this Agreement.
“Notice” means any request, election, proposal, consent, notice, demand, petition, request for
arbitration or other communication.
“Parties” means the parties to this Agreement and “Party” means any one of them.
“Paying Party” means a Party who pays an amount in or towards satisfaction of a Liability.
“Proposal” means the final joint proposal by or on behalf of the Parties to the Target that
may lead to the Transaction which shall be non-binding and subject, among other matters, to the
negotiation and execution of definitive agreements relating to the Transaction.
“Proposal Process” means the process by which the Parties acquire the Target as described in
the preamble of this Agreement.
“Protocols” means, in connection with the Proposal Process, any data room, other information
delivery or management protocols entered into by Newco, a Party or a Connected Person of a Party.
“Recipient” has the meaning given in clause 9.2(a).
“Representative” of a Party includes an officer, employee, agent, auditor, Advisor, financier,
insurance broker, partner, associate, consultant, joint venturer or sub-contractor of that Party or
an Affiliate of that Party.
“Respective Proportion” means, with respect to a Party, the proportion that the equity in
Newco held by the Party (as set out in clause 1.3 or as otherwise agreed by the Parties) bears to
the whole of the equity in Newco.
“SEC” means the United States Securities and Exchange Commission.
“Securities” means shares, debentures, stocks, bonds, notes, interests in a collective
investment scheme, units, warrants, options, derivative instruments, and any other securities which
are convertible into or exercisable for shares in the Target.
“Special Committee” means a special committee of independent directors of Target which the
Parties expect will be established upon or shortly after submission of the Proposal to Target and
which will be responsible for, among other matters, negotiating the terms of the Transaction on
behalf of the public shareholders of Target and determining whether the Transaction is fair to such
public shareholders.
“Target” has the meaning given in the preamble.
“Transaction” has the meaning given in the preamble.
“Transaction Costs” means the fees and expenses paid or payable to third party advisory or
consulting firms or personnel engaged by or on behalf of the Parties in accordance with this
Agreement in respect of the Transaction to provide professional advice in relation to the
Transaction, including any costs as set out in the Budget; and
“Withdrawing Party” has the meaning given in clause 8.2.
13.2 Statutory provisions. All references to statutes, statutory provisions,
enactments, directives or regulations shall include references to any consolidation, re-enactment,
modification or
replacement of the same, any statute, statutory provision, enactment, directive or regulation
of which it is a consolidation, re-enactment, modification or replacement and any subordinate
legislation in force under any of the same from time to time.
12
13.3 Connected Persons. The following provisions shall apply to determine whether one
person is connected with another for the purposes of this Agreement:
(a) a person is connected with an individual if that person is the individual’s spouse or
civil partner, or is a relative of the individual or of the individual’s spouse or civil partner of
the individual or of the individual’s spouse or civil partner;
(b) except in relation to (i) acquisitions or disposals of partnership assets pursuant to bona
fide commercial arrangements and (ii) a limited partnership in which a person held a limited
partnership interest on or prior to the date of this Agreement and with respect to which neither
such person nor any Connected Person of such person exercises management or control, a person is
connected with any person with whom he is in partnership, and with the spouse or civil partner or
relative of any individual with whom he is in partnership;
(c) a body corporate is connected with another body corporate (i) if the same person has
Control of both, or a person has Control of one and persons connected with him, or he and persons
connected with him, have Control of the other; or (ii) if a group of two or more persons has
Control of each body corporate, and the groups either consist of the same persons or could be
regarded as consisting of the same persons by treating (in one or more cases) a member of either
group as replaced by a person with whom he is connected;
(d) a body corporate is connected with another person if that person has Control of it or if
that person and persons connected with him together have Control of it; or
(e) any two or more persons acting together to secure or exercise Control of a body corporate
shall be treated in relation to that company as connected with one another and with any person
acting on the directions of any of them to secure or exercise Control of the body corporate.
13.4 Agreed form. Any reference to a document in the “agreed form” is to the form of
the relevant document in the terms agreed by the Parties.
13.5 Preamble and schedules. References to this Agreement include the preamble and
schedules which form part of this Agreement for all purposes. References in this Agreement to the
Parties, the preamble, schedules and clauses are references respectively to the Parties and their
legal personal representatives, successors and permitted assigns, the preamble and schedules to,
and clauses of, this Agreement.
13.6 Meaning of references. In this Agreement, unless the context requires otherwise:
(a) words importing one gender shall be treated as importing any gender, words importing
individuals shall be treated as importing corporations and vice versa, words importing the singular
shall be treated as importing the plural and vice versa, and words importing the whole shall be
treated as including a reference to any part thereof;
(b) references to a “person” shall include any individual, firm, body corporate,
unincorporated association, government, state or agency of state, association, joint venture or
partnership, in each case whether or not having a separate legal personality. References to a
“company” shall be construed so as to include any company, corporation or other body corporate
wherever and however incorporated or established;
13
(c) references to the word “include” or “including” (or any similar term) are not to be
construed as implying any limitation and general words introduced by the word “other” (or any
similar term) shall not be given a restrictive meaning by reason of the fact that they are preceded
by words indicating a particular class of matters;
(d) any reference to “writing” or “written” includes any method of reproducing words or text
in a legible and non-transitory form;
(e) references to “indemnify” and to “indemnifying” any person against any losses by reference
to any matter includes indemnifying and keeping that person indemnified against all losses from
time to time made, suffered or incurred as a direct or indirect consequence of or which would not
have arisen but for that matter;
(f) References to any document (including this Agreement) are references to that document as
amended, consolidated, supplemented, novated or replaced from time to time; and
(g) references to “US$” are to the lawful currency of the United States of America, as at the
date of this Agreement.
13.7 Headings. Clause and paragraph headings and the table of contents are inserted
for ease of reference only and shall not affect construction.
13.8 Negotiation of the Agreement. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event that an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of
the authorship of any provisions of this Agreement.
14
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered as of
the date first written above.
HANMAX INVESTMENT LIMITED |
||||
By: | /s/ Xxxxxxxx Xxxx | |||
Name: | Xxxxxxxx Xxxx | |||
Title: | Director | |||
FOSUN INDUSTRIAL CO., LIMITED |
||||
By: | /s/ Xxxx Xxxx | |||
Name: | Xxxx Xxxx | |||
Title: | Chairman of the Board of Directors | |||
15
Schedule 1
[Proposal]
16
Schedule 2
[Commitment Letter]
17
Schedule 3
[Schedule 13D]
18