AGREEMENT AND PLAN OF MERGER BY AND AMONG FOSUN INDUSTRIAL CO., LIMITED HANMAX INVESTMENT LIMITED TONSUN INTERNATIONAL COMPANY LIMITED AND TONGJITANG CHINESE MEDICINES COMPANY Dated as of October 29, 2010
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ARTICLE I THE MERGER; CLOSING; EFFECTIVE TIME |
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1.1 The Merger |
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1.2 Closing |
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1.3 Effective Time |
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ARTICLE II MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE SURVIVING CORPORATION |
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2.1 The Memorandum and Articles of Association |
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ARTICLE III DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION |
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3.1 Directors |
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3.2 Officers |
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ARTICLE IV EFFECT OF THE MERGER ON ISSUED SHARE CAPITAL; MERGER CONSIDERATION; EXCHANGE OF
CERTIFICATES |
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4.1 Effect on Issued Share Capital |
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4.2 Exchange of Certificates |
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4.3 Treatment of Stock Plans |
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4.4 Adjustments to Prevent Dilution |
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ARTICLE V REPRESENTATIONS AND WARRANTIES |
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5.1 Representations and Warranties of the Company |
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5.2 Representations and Warranties of the Strategic Investor, the
Controlling Shareholder and Merger Sub |
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ARTICLE VI COVENANTS |
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6.1 Conduct of Business Pending the Merger |
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6.2 Acquisition Proposals |
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6.3 Preparation of the Proxy Statement and Schedule 13E-3 |
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6.4 Shareholders Meeting |
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6.5 Filings; Other Actions; Notification |
38 |
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6.6 Access and Reports |
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6.7 Stock Exchange Delisting |
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6.8 Publicity |
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6.9 Financing |
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6.10 Expenses |
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6.11 Indemnification; Directors’ and Officers’ Insurance |
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6.12 Takeover Statutes |
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6.13 Resignations |
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6.14 Participation in Litigation |
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6.15 Confidentiality Agreement |
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6.16 Management |
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6.17 Voting at the Shareholders Meeting |
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ARTICLE VII CONDITIONS |
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7.1 Conditions to Each Party’s Obligation to Effect the Merger |
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7.2 Conditions to Obligations of the Strategic Investor, the
Controlling Shareholder and Merger Sub |
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7.3 Conditions to Obligation of the Company |
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ARTICLE VIII TERMINATION |
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8.1 Termination by Mutual Consent |
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8.2 Termination by Either the Strategic Investor and the Controlling
Shareholder or the Company |
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8.3 Termination by the Company |
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8.4 Termination by the Strategic Investor and the Controlling Shareholder |
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8.5 Effect of Termination and Abandonment |
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8.6 Termination by the Company |
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ARTICLE IX MISCELLANEOUS AND GENERAL |
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9.1 Non-Survival of Representations and Warranties and Agreements |
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9.2 Modification or Amendment |
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9.3 Waiver of Conditions |
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9.4 Counterparts; Signatures |
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9.5 Governing Law and Venue; Waiver of Jury Trial; Specific Enforcement |
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9.6 Notices |
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9.7 Entire Agreement |
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9.8 No Third Party Beneficiaries |
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9.9 Severability |
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9.10 Interpretation; Absence of Presumption |
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9.11 Assignment |
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9.12 Attorneys’ Fees |
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9.13 Remedies |
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9.14 Certain Definitions |
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THE MERGER; CLOSING; EFFECTIVE TIME
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MEMORANDUM AND ARTICLES OF ASSOCIATION
OF THE SURVIVING CORPORATION
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
EFFECT OF THE MERGER ON ISSUED SHARE CAPITAL;
MERGER CONSIDERATION; EXCHANGE OF CERTIFICATES
(a) | Merger Consideration. Each ordinary share, par value $0.001 per share, of the Company (a “Share” or, collectively, the “Shares”), including Shares represented by American Depositary Shares, each representing four Shares (the “ADSs”), issued and outstanding immediately prior to the Effective Time, other than the Excluded Shares (as defined below) shall be cancelled in exchange for the right to receive $1.125 in cash per Share without interest (the “Per Share Merger Consideration”). As each ADS represents four Shares, each ADS issued and outstanding immediately prior to the Effective Time, other than ADSs representing Excluded Shares, shall represent the right to receive $4.50 in cash without interest (the “Per ADS Merger Consideration”) pursuant to the terms and conditions set forth in the Deposit Agreement (as defined below). At the Effective Time, all of the Shares shall cease to be outstanding, shall be cancelled and shall cease to exist. Each certificate formerly representing any of the Shares (a “Share Certificate”) or non-certificated Shares represented by book-entry (“Book-Entry Shares”) (other than Excluded Shares) shall thereafter represent only the right to receive the Per Share Merger Consideration without interest, and any Dissenting Shares (as defined below) shall thereafter represent only the right to receive the applicable payments set forth in Section 4.2(f). For purposes of this Agreement, “Excluded Shares” means, collectively, (i) Shares owned by any of the Strategic Investor, the Controlling Shareholder, Merger Sub or any other direct or indirect wholly owned Subsidiary of the Company, the Strategic Investor or the Controlling Shareholder, and in each case not held on behalf of third parties, and (ii) Shares (“Dissenting Shares”) owned by holders of Shares who have validly exercised and not effectively withdrawn or lost their appraisal rights pursuant to Section 238 of the Cayman Companies Law (“Dissenting Shareholders”) (each of the Shares described in clauses (i) and (ii), an “Excluded Share”). |
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(b) | Merger Consideration, the Strategic Investor, the Controlling Shareholder. Each Share issued and outstanding immediately prior to the Effective Time and owned by any of the Strategic Investor, the Controlling Shareholder, Merger Sub or any other direct or indirect wholly owned Subsidiary of the Strategic Investor or the Controlling Shareholder and Shares owned by any direct or indirect wholly owned Subsidiary of the Company, and in each case not held on behalf of third parties, shall, by virtue of the Merger and without any action on the part of the holder of such Shares, cease to be outstanding, shall be cancelled and shall cease to exist without payment of any consideration or distribution therefor. |
(c) | Merger Sub. At the Effective Time, each ordinary share, par value $0.001 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into one fully paid and non-assessable ordinary share, par value $0.001 per share, of the Surviving Corporation. |
(d) | Untraceable Shareholders. Remittances for the Per Share Merger Consideration shall not be sent to shareholders who are untraceable unless they notify the Paying Agent (as defined below) of their current contact details. A Company shareholder will be deemed to be untraceable if (i) he has no registered address in the register of members (or branch register) maintained by the Company or, (ii) on the last two consecutive occasions on which a dividend has been paid by the Company a cheque payable to such shareholder either (a) has been sent to such shareholder and has been returned undelivered or has not been cashed or, (b) has not been sent to such shareholder because on an earlier occasion a cheque for a dividend so payable has been returned undelivered, and in any such case no valid claim in respect thereof has been communicated in writing to the Company or, (c) notice of the Company shareholders meeting has been sent to such shareholder and has been returned undelivered. |
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(a) | Paying Agent. At the Effective Time, the Controlling Shareholder shall deposit, or shall cause to be deposited, with a paying agent selected by the Strategic Investor and Controlling Shareholder with the Company’s prior approval (such approval not to be unreasonably withheld, conditioned or delayed) (the “Paying Agent”), for the benefit of the holders of Shares, a cash amount in immediately available funds sufficient for the Paying Agent to make payments under Section 4.1(a) and Section 4.2(f) (such aggregate cash amount being hereinafter referred to as the “Exchange Fund”). |
(b) | Exchange Procedures. Promptly after the Effective Time (and in any event within (x) five business days in the case of record holders and (y) three business days in the case of the Depository Trust Company (“DTC”) on behalf of beneficial holders holding through brokers, nominees, custodians or through a third-party), the Surviving Corporation shall cause the Paying Agent to mail (or in the case of DTC, deliver) to each registered holder of Shares (other than holders of Excluded Shares) immediately prior to the Effective Time (i) a letter of transmittal in customary form specifying that delivery shall be effected, and risk of loss and title to the Share Certificates and Book-Entry Shares shall pass, only upon delivery of the Share Certificates (or affidavits of loss in lieu of the Share Certificates as provided in Section 4.2(e)) and Book-Entry Shares to the Paying Agent, such letter of transmittal to be in such form and have such other provisions as the Strategic Investor, the Controlling Shareholder and the Company may reasonably agree, and (ii) instructions for effecting the surrender of the Share Certificates (or affidavits of loss in lieu of the Share Certificates as provided in Section 4.2(e)) and Book-Entry Shares in exchange for the Per Share Merger Consideration, as applicable. Upon surrender of a Share Certificate (or affidavit of loss in lieu of the Share Certificate as provided in Section 4.2(e)) or Book-Entry Shares to the Paying Agent in accordance with the terms of such letter of transmittal, duly executed, the holder of such Share Certificate or Book-Entry Shares shall be entitled to receive in exchange therefor a cheque, in the amount (after giving effect to any required tax withholdings as provided in Section 4.2(g)) equal to (x) the number of Shares represented by such Share Certificate (or affidavit of loss in lieu of the Share Certificate as provided in Section 4.2(e)) or the number of Book-Entry Shares multiplied by (y) the Per Share Merger Consideration, and the Share Certificate or Book-Entry Shares so surrendered shall forthwith be marked as cancelled. The Surviving Corporation shall make arrangements for the Depositary (as defined herein) to distribute the Per ADS Merger Consideration to ADS holders (net of any applicable withholding taxes) pro rata to their holdings of ADSs upon surrender by them of the ADSs. The Surviving Corporation will pay any applicable fees, charges and expenses of the Depositary and government charges (other than withholding taxes if any) due to or incurred by the Depositary in connection with distribution of the Per ADS Merger Consideration to ADS holders. No interest will be paid or accrued on any amount payable upon due surrender of the Share Certificates or Book-Entry Shares. In the event of a transfer of ownership of Shares that is not registered in the register of members of the Company, a cheque for any cash to be exchanged upon due surrender of the Share Certificate or Book-Entry Shares may be issued to such transferee if the Share Certificates or Book-Entry Shares formerly representing such Shares is presented to the Paying Agent, accompanied by all documents reasonably required to evidence and effect such transfer and to evidence that any applicable share transfer taxes have been paid or are not applicable. |
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(c) | Transfers. From and after the Effective Time, no transfers of Shares shall be effected in the register of members of the Company. If, after the Effective Time, any Share Certificate or Book-Entry Shares are presented to the Surviving Corporation, the Strategic Investor, the Controlling Shareholder or the Paying Agent for transfer, such Share Certificates or Book-Entry Shares shall be cancelled and (except for Excluded Shares) exchanged for the cash amount in immediately available funds to which the holder of the Share Certificate or Book-Entry Shares is entitled pursuant to this Article IV. |
(d) | Termination of Exchange Fund. Any portion of the Exchange Fund (including the proceeds of any investments of the Exchange Fund) that remains unclaimed by the shareholders of the Company for nine (9) months after the Effective Time shall be delivered to the Surviving Corporation. Any holder of Shares (other than Excluded Shares) who has not theretofore complied with this Article IV shall thereafter look only to the Surviving Corporation for payment of the Per Share Merger Consideration to which such holder is entitled pursuant to this Article IV upon due surrender of its Share Certificates (or affidavits of loss in lieu of the Share Certificates) or Book-Entry Shares, without any interest thereon. Notwithstanding the foregoing, none of the Surviving Corporation, the Strategic Investor, the Controlling Shareholder, the Paying Agent, the Depositary or any other Person shall be liable to any former holder of Shares for any amount properly delivered to a public official pursuant to applicable abandoned property, escheat or similar Laws. |
(e) | Lost, Stolen or Destroyed Certificates. In the event any Share Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Share Certificate to be lost, stolen or destroyed and, if reasonably required by the Strategic Investor and the Controlling Shareholder or by the Paying Agent, the posting by such Person of a bond in customary amount and upon such terms as may be reasonably required by the Strategic Investor and the Controlling Shareholder or the Paying Agent as indemnity against any claim that may be made against it or the Surviving Corporation with respect to such Share Certificate, the Paying Agent will issue a cheque in the amount (after giving effect to any required tax withholdings) equal to (x) the number of Shares represented by such lost, stolen or destroyed Share Certificate multiplied by (y) the Per Share Merger Consideration. |
(f) | Dissenters’ Rights. No Person who has validly exercised their appraisal rights pursuant to Section 238 of the Cayman Companies Law shall be entitled to receive the Per Share Merger Consideration with respect to the Shares owned by such Person unless and until such Person shall have effectively withdrawn or lost such Person’s appraisal rights under the Cayman Companies Law. Each Dissenting Shareholder shall be entitled to receive only the payment resulting from the procedure in Section 238 of the Cayman Companies Law with respect to Shares owned by such Dissenting Shareholder. The Company shall give the Controlling Shareholder and the Strategic Investor (i) prompt notice of any written demands for appraisal, attempted withdrawals of such demands, and any other instruments served pursuant to applicable Law that are received by the Company relating to Company shareholders’ rights of appraisal and (ii) the opportunity to direct all negotiations and proceedings with respect to demand for appraisal under the Cayman Companies Law. The Company shall not, except with the prior written consent of the Strategic Investor and the Controlling Shareholder, voluntarily make any payment with respect to any demands for appraisal, offer to settle or settle any such demands or approve any withdrawal of any such demands. |
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(g) | Withholding Rights. Each of the Paying Agent and Depositary, without double counting, shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Shares, Company Options or Company Awards such amounts as it reasonably determines in good faith it is required to deduct and withhold with respect to Taxes. To the extent that amounts are so withheld by the Paying Agent or Depositary, such withheld amounts (i) shall be remitted by the Paying Agent or Depositary to the applicable Governmental Entity, and (ii) shall be treated for all purposes of this Agreement as having been paid to the holder of Shares, Company Options or Company Awards in respect of which such deduction and withholding was made by the Paying Agent or Depositary. |
(h) | Termination of Deposit Agreement. As soon as reasonably commercially practicable after the Effective Time, the Surviving Corporation shall provide notice to The Bank of New York Mellon (the “Depositary”) to terminate the deposit agreement dated March 21, 2007 between the Company and the Depositary (the “Deposit Agreement”) in accordance with its terms. |
(i) | Agreement of Fair Value. The Strategic Investor, Controlling Shareholder, Merger Sub and the Company respectively agree that the Per Share Merger Consideration represents the fair value of the Shares for the purposes of Section 238(8) of the Cayman Companies Law. |
(a) | Treatment of Options. At the Effective Time, each outstanding option to purchase Shares (a “Company Option”) under the Stock Plan (as defined in Section 5.1(b)(i)), vested or unvested, shall be cancelled and converted into the right to receive, as soon as reasonably practicable after the Effective Time, an amount in cash equal to (x) the total number of Shares subject to the Company Option immediately prior to the Effective Time multiplied by (y) the excess, if any, of the Per Share Merger Consideration over the exercise price per Share of such Company Option. For the avoidance of doubt, for purposes of this Agreement, the share option granted by Xx. Xxxxxxxx Xxxx to Xx. Xxxxxxx Xxxxx Xxxxx Xxxx pursuant to the Agreement Relating to Option to Purchase Ordinary Shares of Tongjitang Chinese Medicines Company dated December 15, 2008 among Xx. Xxxxxxxx Xxxx, Xx. Xxxxxxx Xxxxx Xxxxx Xxxx and the Company shall not be deemed to be either a Company Option or any of the Company Awards (as defined below). |
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(b) | Company Awards. At the Effective Time, each right of any kind, contingent or accrued, to acquire or receive Shares or benefits measured by the value of Shares, and each award of any kind consisting of Shares that may be held, awarded, outstanding, payable or reserved for issuance under the Stock Plan and any other Company Benefit Plans (as defined in Section 5.1(h)(i)), other than Company Options (the “Company Awards”), vested or unvested, shall be cancelled and converted into the right to receive, as soon as reasonably practicable, an amount in cash equal to (x) the number of Shares subject to such Company Awards immediately prior to the Effective Time multiplied by (y) the Per Share Merger Consideration (or, if the Company Award provides for payments to the extent the value of the Shares exceed a specified reference price, the amount, if any, by which the Per Share Merger Consideration exceeds such reference price). |
(c) | Corporate Actions. At or prior to the Effective Time, the Company, the board of directors of the Company or the compensation committee of the board of directors of the Company, as applicable, shall adopt any resolutions and take any actions which are reasonably necessary to effectuate the provisions of Sections 4.3(a) and 4.3(b). The Company shall take all reasonable actions necessary to ensure that from and after the Effective Time neither the Strategic Investor, the Controlling Shareholder nor the Surviving Corporation will be required to deliver Shares or other capital stock of the Company to any Person pursuant to or in settlement of Company Options or Company Awards. |
REPRESENTATIONS AND WARRANTIES
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(a) | Organization, Good Standing and Qualification. Each of the Company and its Subsidiaries is a legal entity duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization and has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and is in good standing as a foreign corporation or other legal entity in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so organized, qualified or in good standing, or to have such power or authority, is not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect or prevent or materially impair the consummation of the transactions contemplated by this Agreement. | ||
(b) | Capital Structure. |
(i) | The authorized share capital of the Company consists of 500,000,000 Shares, of which, as of the date of this Agreement, 104,066,526 Shares (including outstanding shares of restricted stock) are outstanding. All of the outstanding Shares have been duly authorized and are validly issued, fully paid and nonassessable. As of the date of this Agreement, there are 4,000,000 Shares subject to outstanding options and no Shares subject to outstanding restricted share units under the Company’s 2006 Share Incentive Plan, as amended on October 24, 2007 and October 30, 2008 (the “Stock Plan”). Each of the outstanding shares of capital stock or other securities of each of the Company’s wholly owned Subsidiaries, which are set forth in Section 5.1(b)(i) of the Company Disclosure Schedule (“Wholly Owned Subsidiaries”), has been duly authorized, and validly issued, and is fully paid and nonassessable and owned by the Company or by a direct or indirect wholly owned Subsidiary of the Company, free and clear of any lien, charge, pledge, security interest, claim or other encumbrance (each, a “Lien”) other than Permitted Liens. Neither the Company nor any wholly owned subsidiary of the Company holds any of the ADSs or any securities entitled thereto. Each of the outstanding shares of capital stock or other securities that are directly or indirectly owned by the Company of each of the Company’s Subsidiaries that are not Wholly Owned Subsidiaries, which are set forth in Section 5.1(b)(i) of the Company Disclosure Schedule (“Non-Wholly Owned Subsidiaries”), has been duly authorized, and validly issued, and is fully paid and nonassessable and owned by the Company or by a direct or indirect Wholly Owned Subsidiary, free and clear of any Lien other than Permitted Liens. Except as set forth in Section 5.1(b)(i) of the Company Disclosure Schedule, there are no preemptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or rights of any kind that obligate the Company or any of its Subsidiaries to issue or sell any shares of capital stock or other securities of the Company or any of its Subsidiaries or any securities or obligations convertible or exchangeable into or exercisable for, or giving any Person a right to subscribe for or acquire, any securities of the Company or any of its Subsidiaries, and no securities or obligations evidencing such rights are authorized, issued or outstanding. The Company does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the shareholders of the Company on any matter. |
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(ii) | In all material respects, each Company Option (A) was granted in compliance with all applicable Laws and all of the terms and conditions of the Stock Plan, (B) has an exercise price per Share equal to or greater than the fair market value of a Share on the date of such grant, and (C) has a grant date identical to the date on which the Company’s board of directors or compensation committee actually awarded such Company Option. |
(c) | Corporate Authority; Approval and Fairness. |
(i) | The Company has all requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform its obligations under this Agreement and to consummate the Merger and the transactions contemplated hereby in accordance with the terms hereof, subject only to adoption of this Agreement by a majority in number of the holders of the Shares representing at least 75% in value of the Shares present and voting in person or by proxy as a single class and entitled to vote on such matter at a shareholders’ meeting duly called and held for such purpose (the “Requisite Company Vote”). This Agreement has been duly executed and delivered by the Company and constitutes a valid and binding agreement of the Company enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights and to general equity principles (the “Bankruptcy and Equity Exception”). |
(ii) | The board of directors of the Company, based upon the recommendation of the Independent Committee, has determined that the Merger is fair to, and in the best interests of, the Company and its shareholders, approved and declared advisable this Agreement and the Merger and the other transactions contemplated hereby and resolved to recommend approval of this Agreement to the holders of Shares (the “Company Recommendation”), (B) the board of directors of the Company directed that this Agreement be submitted to the holders of Shares for their approval, and (C) the Independent Committee has received the Opinion. A true and correct copy of the Opinion will be included in the Proxy Statement. |
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(d) | Consents and Approvals; No Violations; Certain Contracts. |
(i) | Other than the filings and/or notices pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (including the joining of the Company in the filing of the Schedule 13E-3, the furnishing of Form 6-K with the Proxy Statement, and the filing or furnishing of one or more amendments to the Schedule 13E-3 and such Form 6-K to respond to comments of the SEC, if any, on such documents), under any applicable requirements, if any, and any notices to, approvals of, or consents or clearances by, any other PRC, United States federal, state, local or other non-United States court or Governmental Entity (as defined below) with jurisdiction over enforcement of any applicable antitrust or competition Laws (“Governmental Antitrust Entity”, and such approvals collectively, the “Company Approvals”), no notices, reports or other filings are required to be made by the Company with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by the Company from, any domestic, multinational or foreign governmental or regulatory authority, agency, commission, body, court or other legislative, executive or judicial governmental entity (each a “Governmental Entity”), in connection with the execution, delivery and performance of this Agreement by the Company and the consummation of the Merger and the other transactions contemplated hereby, except those that the failure to make or obtain are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect or prevent or materially impair the consummation of the transactions contemplated by this Agreement. |
(ii) | The execution, delivery and performance of this Agreement by the Company does not, and the consummation of the Merger and the other transactions contemplated hereby will not, constitute or result in (A) a breach or violation of, or a default under, the memorandum and articles of association of the Company or the comparable governing documents of any of its Subsidiaries, (B) with or without notice, lapse of time or both, a material breach or violation of, assuming (solely with respect to performance of this Agreement and consummation of the Merger and the other transactions contemplated hereby) compliance with the matters referred to in Section 5.1(d)(i), any Law to which the Company or any of its Subsidiaries is subject, (C) with or without notice, lapse of time or both, a breach or violation of, a termination, cancellation or modification (or right of termination, cancellation or modification) or default under, the payment of additional fees, the creation or acceleration of any obligations under or the creation of a Lien on any of the assets of the Company or any of its Subsidiaries pursuant to any agreement, lease, license, contract, settlement, consent, note, mortgage or indenture (each, a “Contract”) binding upon the Company or any of its Subsidiaries not otherwise terminable by the other party thereto on 90 days’ or less notice, (D) a breach or violation of or a termination, cancellation or modification (or right of termination, cancellation or modification) or default or right of first refusal or similar right under any investment agreement, shareholders agreement or any other similar agreement to which the Company or any of its Subsidiaries is a party or by which any of them are otherwise bound, or (E) any change in the rights or obligations of any party under any Contract binding upon the Company or any of its Subsidiaries, except, in the case of clause (C), (D) or (E) above, for any such breach, violation, termination, default, creation, acceleration or change that is not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect or prevent or materially impair the consummation of the transactions contemplated by this Agreement. |
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(e) | Company Reports; Financial Statements. |
(i) | The Company has filed or furnished, as applicable, all forms, statements, certifications, reports and documents required to be filed or furnished by it with the SEC pursuant to the Exchange Act or the Securities Act of 1933, as amended (the “Securities Act”), since December 31, 2008 (the “Applicable Date”) (the forms, statements, reports and documents filed or furnished since the Applicable Date and those filed or furnished subsequent to the date of this Agreement, including any amendments thereto, the “Company Reports”). No Subsidiary of the Company is or has been required to file or furnish any periodic reports with the SEC. Each of the Company Reports, at the time of its filing or being furnished complied or, if not yet filed or furnished, will comply when filed or furnished in all material respects with the applicable requirements of the Securities Act, the Exchange Act, applicable accounting standards and the Xxxxxxxx-Xxxxx Act of 2002 (the “Xxxxxxxx-Xxxxx Act”), and any rules and regulations promulgated thereunder applicable to the Company Reports. As of their respective dates (or, if amended prior to the date of this Agreement, as of the date of such amendment), the Company Reports did not, and any Company Reports filed with or furnished to the SEC subsequent to the date of this Agreement will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading. |
(ii) | The Company maintains internal control over financial reporting (as defined in Rule 13a-15 or 15d-15, as applicable, under the Exchange Act). Such internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with United States generally accepted accounting principles (“GAAP”) and includes policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the asset of the Company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on its financial statements. |
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(iii) | Each of the consolidated balance sheets included in or incorporated by reference into the Company Reports (including the related notes and schedules) fairly presents, or, in the case of Company Reports filed after the date of this Agreement, will fairly present, in all material respects, the consolidated financial position of the Company and its consolidated Subsidiaries as of its date, and each of the consolidated statements of income, changes in shareholders’ equity and cash flows included in or incorporated by reference into the Company Reports (including any related notes and schedules) fairly presents, or in the case of Company Reports filed after the date of this Agreement, will fairly present, in all material respects, the results of operations, changes in shareholders’ equity and cash flows, as the case may be, of such companies for the periods set forth therein (subject, in the case of unaudited interim statements, to normal year-end audit adjustments and the exclusion of certain notes in accordance with the rules of the SEC relating to unaudited financial statements), in each case in accordance with GAAP, Regulation S-X of the SEC and the rules and standards of the Public Company Accounting Oversight Board except as may be noted therein. |
(f) | Absence of Certain Changes. Since December 31, 2009, (i) the Company and its Subsidiaries have conducted their respective businesses in all material respects in the ordinary course of business consistent with past practice, and (ii) there has not been: |
(A) | any change in the financial condition, business or results of their operations or any circumstance, occurrence or development of which the Company has Knowledge which, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect; |
(B) | any declaration, setting aside or payment of any dividend or other distribution with respect to any shares of capital stock of the Company or any of its Subsidiaries (except for dividends or other distributions by any Subsidiary to the Company or to any Subsidiary of the Company); |
(C) | any material change in any method of accounting or accounting practice by the Company or any of its Subsidiaries; |
(D) | (1) any increase in the compensation or benefits payable or to become payable to its officers or employees (except for increases in the ordinary course of business and consistent with past practice) or (2) any establishment, adoption, entry into or amendment of any collective bargaining, bonus, profit sharing, equity, thrift, compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, except to the extent required by applicable Law; or | ||
(E) | any agreement to do any of the foregoing. |
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(g) | Litigation and Liabilities. There are no civil, criminal, administrative or other actions, suits, claims, oppositions, litigations, hearings, arbitrations, investigations or other proceedings (“Actions”) pending or, to the Knowledge of the Company, threatened in writing against the Company or any of its Subsidiaries or obligations or liabilities of the Company or any of its Subsidiaries, whether or not accrued, contingent or otherwise, that would be required to be reflected or reserved against in a consolidated balance sheet of the Company prepared in accordance with GAAP (“Liabilities”) or the notes thereto if such balance sheet were prepared as of the date hereof, except (i) as reflected or reserved against in the Company’s consolidated balance sheets (and the notes thereto) included in the Company Reports filed after the Applicable Date but prior to the date of this Agreement, (ii) for Liabilities incurred in the ordinary course of business since the date of the most recent balance sheet included in the Company Reports, (iii) for Liabilities incurred pursuant to the transactions contemplated by this Agreement, or (iv) Liabilities that are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect or prevent or materially impair the consummation of the transactions contemplated by this Agreement. Neither the Company nor any of its Subsidiaries is a party to or subject to the provisions of any judgment, order, writ, injunction, decree, award, stipulation or settlement (“Judgment”) of any Governmental Entity which is, individually or in the aggregate, reasonably likely to have a Material Adverse Effect or prevent or materially impair the consummation of the transactions contemplated by this Agreement. |
(h) | Employee Benefits. |
(i) | All benefit and compensation plans, employment agreements, contracts, policies or arrangements covering current or former employees of the Company and its Subsidiaries and current or former directors of the Company, including “employee benefit plans” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and deferred compensation, severance, stock option, stock purchase, stock appreciation rights, Company stock-based, incentive and bonus plans (the “Company Benefit Plans”), including Company Benefit Plans maintained outside of the United States primarily for the benefit of Employees working outside of the United States, are listed in Section 5.1(h) of the Company Disclosure Schedule. True and complete copies of all Company Benefit Plans listed in Section 5.1(h) of the Company Disclosure Schedule, including any trust instruments, insurance contracts, actuarial reports and, with respect to any employee stock ownership plan, loan agreements forming a part of any Company Benefit Plans, and all amendments thereto have been provided or made available to the Strategic Investor and the Controlling Shareholder. | ||
(ii) | None of the Company Benefit Plans was or is subject to ERISA. |
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(iii) | Except for any acceleration of vesting specifically provided for or contemplated by this Agreement, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby (either alone or in conjunction with another event, such as a termination of employment) will (i) result in any payment becoming due to any current or former director or current or former employee of the Company or any of its Subsidiaries under any of the Company Benefit Plans or otherwise; (ii) increase any benefits otherwise payable under any of the Company Benefit Plans; or (iii) result in any acceleration of the time of payment or vesting of any such benefits. |
(iv) | There is no outstanding order against the Company Benefit Plans that is, and would reasonably be expected to be, material. |
(v) | The Company is not obligated, pursuant to any of the Company Benefit Plans or otherwise, to grant any options to purchase Shares to any Employees, consultants or directors of the Company after the date hereof. |
(i) | Compliance with Laws; Licenses. |
(i) | The businesses of each of the Company and its Subsidiaries have not been, since December 31, 2009, and are not being conducted in violation of any applicable United States federal, state or local, non-United States national, provincial or local, or multinational law, statute or ordinance, common law, or any rule, regulation, directive, treaty provision legally binding on the Company and its Subsidiaries, Judgment, agency requirement, license or permit of any Governmental Entity (collectively, “Laws”), including Laws enforced by the State Food and Drugs Administration of China (“SFDA”), except, individually or in the aggregate, as would not have a Material Adverse Effect or prevent or materially impair the consummation of the transactions contemplated by this Agreement. Neither the Company nor any of its Subsidiaries is debarred under the Law of the PRC on the Administration of Pharmaceuticals (the “Pharmaceutical Law”) or otherwise excluded from or restricted in any manner from participation in, any government program related to pharmaceutical products. No investigation, audit or review by any Governmental Entity with respect to the Company or any of its Subsidiaries is pending or, to the Knowledge of the Company, threatened, nor has any Governmental Entity notified the Company of its intention to conduct the same, except for such investigations or reviews the outcome of which are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect or prevent or materially impair the consummation of the transactions contemplated by this Agreement. As of the date hereof, neither the Company nor any of its Subsidiaries has received any written notice or communication of any material noncompliance with any applicable Laws that has not been cured as of the date of this Agreement. |
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(ii) | The Company and its Subsidiaries each has made application or obtained, renewed and is in compliance with all permits, licenses, certifications, approvals, registrations, consents, authorizations, franchises, variances, exemptions and orders issued or granted by a Governmental Entity (“Licenses”) necessary to conduct its business as presently conducted, except those the absence of which would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect or prevent or materially impair the consummation of the transactions contemplated by this Agreement. There is no reasonable basis for the Company and any of its Subsidiaries to believe that any National Drugs Standard (as defined below) for its products, where application for such standard is currently pending, will not be granted or obtained, free from any condition or requirement, compliance with which could reasonably be expected to have a Material Adverse Effect on the Company or any of its Subsidiaries or which the Company or any of its Subsidiaries could not reasonably be expected to be able to satisfy. “National Drugs Standard” means the final state production standard for a medicine required under the Administrative Measures of Medicine Registration dated February 28, 2005 or July 10, 2007 issued by the SFDA, whichever is applicable. |
(iii) | Each of the products, product candidates and active pharmaceutical ingredients publicly commercialized by the Company and its Subsidiaries is being and at all times since December 31, 2009 has been, developed, tested, manufactured, handled, marketed, distributed, and stored, as applicable, in compliance in all material respects with all applicable Laws of the PRC, except, in each case, as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. The Company and its Subsidiaries have established a product recall system and periodic safety update reporting requirements and are in compliance with such system and requirements as applicable. |
(iv) | Neither the Company nor any of its Subsidiaries is subject to any pending or, to the Knowledge of the Company, threatened, investigation by the SFDA or any other Governmental Entity in the PRC or elsewhere pursuant to anti-corruption Laws with respect to corrupt practices in the procurement by Governmental Entities, hospitals and other healthcare providers of pharmaceutical products and services, including acceptance of kickbacks or other illegal gains and benefits or other applicable anti-corruption Laws. Neither the Company nor any of its Subsidiaries has, nor, to the Knowledge of the Company, has any officer or employee of the Company or any of its Subsidiaries, been convicted of any violation of such anti-corruption Laws. Neither the Company nor any of its Subsidiaries has Knowledge that it has solicited, received, paid or offered to pay any remuneration, directly or indirectly, overtly or covertly, in cash or kind for the purpose of making or receiving any referral which violated any applicable anti-corruption Law. None of the Company, its Subsidiaries and, to the Knowledge of the Company, any director, officer, agent, employee or affiliate of the Company or any of its Subsidiaries, has taken any action, directly or indirectly, that would result in a violation by such persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder |
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(v) | The Company has made available to Strategic Investor and Controlling Shareholder (A) complete and accurate copies of each investigative new drug application (“IND”), and each similar regulatory filing in the PRC or elsewhere made by or on behalf of the Company and its Subsidiaries, including all supplements and amendments, (B) any correspondence received from the SFDA and similar non-PRC Governmental Entities that concerns a product of the Company or its Subsidiaries covered by an IND described in clause (A) above, and (C) all existing written records relating to all material discussions and all meetings between the Company or its Subsidiaries and the SFDA or similar non-PRC regulatory Governmental Entities. |
(vi) | All preclinical tests and clinical trials were, during one year prior to the date of this Agreement, and if still pending, are being conducted by the Company and its Subsidiaries in all material respects in accordance with protocols filed with the appropriate Governmental Entities for each such test or trial, as the case may be, and with standard medical and scientific research procedures including good clinical practice and good laboratory practice regulations; neither the Company nor its Subsidiaries have received any written notices or other correspondence from the SFDA or from any other PRC, U.S. or other government or drug or medical device regulatory agency requiring the termination, suspension or modification of any clinical trials conducted by the Company or any of its Subsidiaries; and the Company and its Subsidiaries have each operated and currently are in compliance in all material respects with all applicable rules, regulations and policies of PRC Governmental Entities and, to the Knowledge of the Company, of other non-PRC Governmental Entities. |
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(vii) | With respect to all third party suppliers of key raw materials used by the Company or its Subsidiaries, the Company has inspected all third party suppliers and to its Knowledge, each such third party supplier: (A) has complied and is complying in all material respects with all applicable Laws, including Laws enforced by the SFDA and any similar non-PRC Governmental Entity; (B) has all permits to perform its obligations as third party supplier and all such permits are in full force and effect, except as either individually or in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect; and (C) has not been debarred under the Pharmaceutical Law, or other pharmaceutical Laws in the PRC or other jurisdiction or otherwise excluded from or restricted in any manner from participation in, any government program related to pharmaceutical products. |
(viii) | All inventory of key starting material, reagents, active pharmaceutical ingredient and/or product have been manufactured, handled, stored and distributed in accordance with applicable Laws, including good manufacturing practice and good supply practice in all material respects. The Company and its Subsidiaries have sufficient inventory of key starting materials, reagents, active pharmaceutical ingredients and/or products in order to operate business in the ordinary course. |
(ix) | The Company is aware of, and has been advised as to, the content of the Rules on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors jointly promulgated by the PRC Ministry of Commerce, the State Assets Supervision and Administration Commission, the State Tax Administration, the State Administration of Industry and Commerce, the China Securities Regulatory Commission (the “CSRC”) and the State Administration of Foreign Exchange (“SAFE”) on August 8, 2006 (the “M&A Rules”). The Merger and the consummation of the transactions contemplated by this Agreement are not and will not be at the Closing Date affected by the M&A Rules or any official clarifications, guidance, interpretations or implementation rules in connection with or related to the M&A Rules, including the guidance and notices issued by the CSRC on September 8 and September 21, 2006 (collectively, the “M&A Rules and Related Clarifications”). As of the date hereof, the M&A Rules and Related Clarifications did not and do not require the Company to obtain the approval of the CSRC prior to the Effective Time, or the consummation of the transactions contemplated by this Agreement. |
(x) | The Company and its Subsidiaries have taken all reasonable steps to comply with, and to cause their respective shareholders to comply with, any applicable rules and regulations of the PRC Tax authority, including taking reasonable steps to require their shareholders to complete any registration and other procedures required under applicable rules and regulations of the PRC Tax authority. |
(xi) | To the extent applicable, the Company and its Subsidiaries have taken all reasonable steps to comply with any applicable rules and regulations of the SAFE. |
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(j) | Material Contracts. |
(i) | Except for this Agreement and except for Contracts filed as exhibits to the Company Reports, as of the date of this Agreement, none of the Company or its Subsidiaries is a party to or bound by: |
(A) | any Contract that would be required to be filed by the Company pursuant to Item 4 of the Instructions to Exhibits of Form 20-F under the Exchange Act; |
(B) | any Contract involving the payment or receipt of amounts by the Company or any of its Subsidiaries, or relating to indebtedness for borrowed money or any financial guaranty, of more than $1,000,000 in any calendar year on its face; |
(C) | any Contract that contains a put, call or similar right pursuant to which the Company or any of its Subsidiaries could be required to purchase or sell, as applicable, any equity interests of any Person or assets that have a fair market value or purchase price of more than $1,000,000; |
(D) | any Contract relating to the formation, creation, operation, management or control of any joint venture; |
(E) | any Contract between the Company or any of its Subsidiaries and any director or executive officer of the Company or any Person beneficially owning five percent or more of the outstanding Shares required to be disclosed pursuant to Item 7B or Item 19 of Form 20-F under the Exchange Act; and |
(F) | any non-competition Contract or other Contract that limits or purports to limit in any material respect the type of business in which the Company or its Subsidiaries may engage, the type of goods or services which the Company or its Subsidiaries may manufacture, produce, import, export, offer for sale, sell or distribute or the manner or locations in which any of them may so engage in any business or use their assets. |
(ii) | Each of the Material Contracts is valid and binding on the Company or its Subsidiaries, as the case may be, and, to the Knowledge of the Company, each other party thereto, and is in full force and effect, except for such failures to be valid and binding or to be in full force and effect as would not, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. There is no breach or default under any Material Contracts by the Company or its Subsidiaries and no event has occurred that with the lapse of time or the giving of notice or both would constitute a breach or default thereunder by the Company or its Subsidiaries, in each case except as would not, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. |
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(k) | Properties. |
(i) | Except in any such case as is not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect, with respect to real property owned by the Company or any of its Subsidiaries, and all buildings, structures, improvements, and fixtures thereon (the “Owned Real Property”), (A) the Company or its applicable Subsidiary has good and marketable title, or valid granted long term land use rights and building ownership rights, as applicable, to the Owned Real Property, free and clear of any Encumbrance, and (B) there are no outstanding options or rights of first refusal to purchase the Owned Real Property, or any portion of the Owned Real Property or interest therein. |
(ii) | With respect to real property leased, subleased or licensed to the Company or its Subsidiaries (the “Leased Real Property”), the lease, sublease or license for such property is valid, legally binding, enforceable and in full force and effect, except in each case, for such invalidity, failure to be binding or unenforceability that is not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect. |
(iii) | Except in any such case as is not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect, the Company and its Subsidiaries have good and marketable title to, or a valid and binding leasehold interest in, all other properties and assets (excluding Owned Real Property, Leased Real Property and Intellectual Property (as defined in Section 5.1(p)), in each case free and clear of all Encumbrances. |
(iv) | For purposes of this Section 5.1(k) only, “Encumbrance” means any Lien, mortgage, easement, covenant, or other restriction or title matter or encumbrance of any kind in respect of such asset, but specifically excludes: (a) encumbrances for current Taxes or other governmental charges not yet due and payable; (b) mechanics’, carriers’, workmen’s, repairmen’s or other like encumbrances arising or incurred in the ordinary course of business as to which there is no default on the part of the Company or any of its Subsidiaries and reflected on or specifically reserved against or otherwise disclosed in the Company’s consolidated balance sheets (and the notes thereto) included in the Company Reports filed prior to the date of this Agreement; and (c) other encumbrances that do not, individually or in the aggregate, materially impair the continued use, operation, value or marketability of the specific parcel of Owned Real Property to which they relate or the conduct of the business of the Company and its Subsidiaries as presently conducted. |
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(l) | Takeover Statutes. No “business combination,” “fair price,” “moratorium,” “control share acquisition” or other similar anti-takeover statute or regulation save for Cayman Companies Law or any similar anti-takeover provision in the Company’s memorandum and articles of association (each, a “Takeover Statute”) is applicable to the Company, the Shares, the Merger or the other transactions contemplated by this Agreement. |
(m) | Environmental Matters. Except for such matters that, individually or in the aggregate, are not reasonably expected to result in a Material Adverse Effect: (i) the Company and its Subsidiaries are in compliance with all applicable Environmental Laws; (ii) no property currently or, to the Knowledge of the Company, formerly owned or operated by the Company or any of its Subsidiaries has been contaminated with any Hazardous Substance in a manner that could reasonably be expected to require remediation or other action pursuant to any Environmental Law; (iii) neither the Company nor any of its Subsidiaries has received any written notice, demand, letter, claim or request for information alleging that the Company or any of its Subsidiaries is in violation of or liable under any Environmental Law; and (iv) neither the Company nor any of its Subsidiaries is subject to any order, decree or injunction with any Governmental Entity or agreement with any third party concerning liability under any Environmental Law or relating to Hazardous Substances. As used herein, the term “Environmental Law” means any applicable PRC local, provincial or national statute, Law, regulation, order, decree, permit or authorization relating to: (A) the protection of health, safety or the environment or (B) the handling, use, transportation, disposal, release or threatened release of any Hazardous Substance. This Section 5.1(m) constitutes the only representations and warranties of the Company with respect to any Environmental Law. As used herein, the term “Hazardous Substance” means any substance that is: (A) listed, classified, regulated under any Environmental Law as hazardous substance, toxic substance, pollutant, contaminant or oil or (B) any petroleum product or by-product, asbestos-containing material, polychlorinated biphenyls or radioactive material. |
(n) | Taxes and Tax Returns. The Company and each of its Subsidiaries (i) have prepared in good faith and duly and, in cases where the statute of limitations would still be open, timely filed (taking into account any extension of time within which to file) all income, franchise, and similar Tax Returns (as defined herein) and all other material Tax Returns required to be filed by any of them and all such filed Tax Returns are complete and accurate in all material respects; and (ii) have paid all material Taxes (as defined below) that are shown as due on such filed Tax Returns and any material Taxes that the Company or any of its Subsidiaries are obligated to withhold from amounts owing to any employee, creditor or third party, except with respect to matters contested in good faith. As of the date of this Agreement, there are not pending or, to the Knowledge of the Company, threatened, any audits, examinations, investigations or other proceedings in respect of Taxes or Tax matters. There are not, to the Knowledge of the Company, any unresolved questions or claims concerning the Company’s or any of its Subsidiaries’ Tax liability that are, individually or in the aggregate, reasonably likely to have a Material Adverse Effect and are not disclosed or provided for in the Company Reports. |
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(o) | Labor Matters. As of the date of this Agreement, except as would not, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect, (i) there is no dispute with the directors of the Company or any of its Subsidiaries or with any of the employees or former employees of the Company or any of its Subsidiaries, (ii) each of the Company and its Subsidiaries is in compliance in all material respects with all applicable Laws of the PRC, respecting employment, employment practices, labor, terms and conditions of employment and wages and hours, in each case, with respect to each of their current (including those on layoff, disability or leave of absence, whether paid or unpaid), former, or retired employees, officers, consultants, independent contractors providing individual services, agents or directors of the Company or any Subsidiary of the Company (collectively, “Employees”); and (iii) neither the Company nor any of its Subsidiaries is liable for any material payment to any trust or other fund or to any governmental or administrative authority, with respect to unemployment compensation benefits, social security or other benefits for Employees. |
(p) | Intellectual Property. |
(i) | Except in any such case as is not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect, (A) to the Company’s Knowledge, the Company and its Subsidiaries own or have sufficient rights to use all Intellectual Property that is used in their respective businesses as currently conducted (the “Company IP”); (B) all of the registrations and applications included in the Company IP owned by, and to the Knowledge of the Company, the Company IP exclusively licensed by the Company and its Subsidiaries, are subsisting; and (C) all of the Company IP are free and clear of any Encumbrance. |
(ii) | Except in any such case as is not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect, (A) neither the conduct of the business of the Company and/or the conduct of the business of each of its Subsidiaries nor the Company IP infringes, dilutes, misappropriates or otherwise violates any Intellectual Property rights of any third party; and (B) to the Knowledge of the Company, no third party is infringing, diluting, misappropriating or otherwise violating any Company IP owned or exclusively licensed by the Company or its Subsidiaries. |
(iii) | Except in any such case as is not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect, the Company and its Subsidiaries take and have taken commercially reasonable measures to maintain, preserve and protect the confidentiality of all Trade Secrets, and to the Company’s Knowledge, such Trade Secrets have not been used, disclosed or discovered by any Person except pursuant to valid and appropriate non-disclosure and/or license agreements or pursuant to obligations to maintain confidentiality arising by operation of law. |
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(iv) | This Section 5.1(p) constitutes the only representations and warranties of the Company with respect to any Company IP and infringement of Intellectual Property rights of any third party. |
(q) | Insurance. The Company has made available to the Strategic Investor and the Controlling Shareholder accurate and complete copies of all material insurance policies and all material self insurance programs and arrangements relating to the business, assets, liabilities and operations of the Company and its Subsidiaries. Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, all such insurance is in full force and effect. The Company has no reason to believe that it or any of its Subsidiaries will not be able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted at a cost that would not result in a Material Adverse Effect. Neither the Company nor any of its Subsidiaries has been denied any insurance coverage which it has sought or for which it has applied. |
(r) | Brokers and Finders. Neither the Company nor any of its officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders’ fees in connection with the Merger or the other transactions contemplated in this Agreement, except that the Company has employed the Financial Advisor. The Company has made available to the Strategic Investor and the Controlling Shareholder a complete and accurate copy of all agreements pursuant to which any advisor to the Company is entitled to any fees and expenses in connection with any of the transactions contemplated by this Agreement. |
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(s) | No Additional Representations. |
(i) | Except for the representations and warranties made by the Company in this Section 5.1, neither the Company nor any other Person makes any express or implied representation or warranty with respect to the Company or its Subsidiaries or their respective businesses, operations, assets, liabilities, conditions (financial or otherwise) or prospects, and the Company hereby disclaims any such other representations or warranties. In particular, without limiting the foregoing disclaimer, neither the Company nor any other Person makes or has made any representation or warranty to the Strategic Investor, the Controlling Shareholder, Merger Sub, or any of their affiliates or Representatives (as defined below) with respect to (i) any financial projection, forecast, estimate, budget or prospect information relating to the Company, any of its Subsidiaries or their respective businesses, or (ii) except for the representations and warranties made by the Company in this Section 5.1, any oral or written information presented to the Strategic Investor, the Controlling Shareholder, Merger Sub or any of their respective affiliates, officers, directors, employees, agents, consultants, investment bankers, lenders, attorneys, accountants and other advisors or representatives (collectively, “Representatives”) in the course of their due diligence investigation of the Company, the negotiation of this Agreement or in the course of the transactions contemplated hereby. |
(ii) | Notwithstanding anything contained in this Agreement to the contrary, the Company acknowledges and agrees that none of the Strategic Investor, the Controlling Shareholder, Merger Sub or any other Person has made or is making any representations or warranties relating to the Strategic Investor, the Controlling Shareholder or Merger Sub whatsoever, express or implied, beyond those expressly given by the Strategic Investor, the Controlling Shareholder and Merger Sub in Section 5.2 hereof, including any implied representation or warranty as to the accuracy or completeness of any information regarding the Strategic Investor, the Controlling Shareholder or Merger Sub furnished or made available the Company, or any of its Representatives. |
(a) | Organization, Good Standing and Qualification. Each of the Strategic Investor, the Controlling Shareholder and Merger Sub is a legal entity duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization and has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so organized, qualified or in such good standing, or to have such power or authority, would not, individually or in the aggregate, reasonably be expected to prevent or materially impair the ability of the Strategic Investor, the Controlling Shareholder and Merger Sub to consummate the Merger and the other transactions contemplated by this Agreement. Each of the Strategic Investor, the Controlling Shareholder and Merger Sub has made available to the Company complete and correct copies the Strategic Investor’s, the Controlling Shareholder’s and Merger Sub’s memorandum and articles of association, or similar governing documents, as currently in effect. |
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(b) | Corporate Authority. Each of the Strategic Investor, the Controlling Shareholder and Merger Sub has all requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform its obligations under this Agreement and to consummate the Merger and the transactions contemplated hereby in accordance with the terms hereof. This Agreement has been duly executed and delivered by each of the Strategic Investor, the Controlling Shareholder and Merger Sub and is a valid and binding agreement of the Strategic Investor, the Controlling Shareholder and Merger Sub, enforceable against each of the Strategic Investor, the Controlling Shareholder and Merger Sub in accordance with its terms, subject to the Bankruptcy and Equity Exception. |
(c) | Consents and Approvals; No Violations. |
(i) | Other than the filings and/or notices pursuant to Section 13 of the Exchange Act (including the joining of the Controlling Shareholder and Strategic Investor (and certain of their Affiliates) in the filing of the Schedule 13E-3, the filing or furnishing of one or more amendments to the Schedule 13E-3 to respond to comments of the SEC, if any, on the Schedule 13E-3, and the filing of a Schedule 13D with the SEC), and any notices to, approvals of, or consents or clearances by, any Governmental Antitrust Entity (the “Strategic Investor and Controlling Shareholder Approvals”), no notices, reports or other filings are required to be made by the Strategic Investor, the Controlling Shareholder or Merger Sub with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by the Strategic Investor, the Controlling Shareholder or Merger Sub from, any Governmental Entity in connection with the execution, delivery and performance of this Agreement by the Strategic Investor, the Controlling Shareholder and Merger Sub and the consummation by the Strategic Investor, the Controlling Shareholder and Merger Sub of the Merger and the other transactions contemplated hereby, except those that the failure to make or obtain are not, individually or in the aggregate, reasonably likely to prevent or materially impair the ability of the Strategic Investor, the Controlling Shareholder or Merger Sub to consummate the Merger and the other transactions contemplated by this Agreement. |
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(ii) | The execution, delivery and performance of this Agreement by the Strategic Investor, the Controlling Shareholder and Merger Sub do not, and the consummation by the Company and Merger Sub of the Merger and the other transactions contemplated hereby will not, constitute or result in (A) a breach or violation of, or a default under, the memorandum and articles of association, or similar governing documents, of the Strategic Investor, the Controlling Shareholder or Merger Sub or the comparable governing instruments of any of their respective Subsidiaries, (B) with or without notice, lapse of time or both, a material breach or violation of, assuming (solely with respect to performance of this Agreement and consummation of the Merger and the other transactions contemplated hereby) compliance with the matters referred to in Section 5.2(c)(i), any Law to which the Strategic Investor, the Controlling Shareholder or any of their Subsidiaries is subject or (C) with or without notice, lapse of time or both, a breach or violation of, a termination, cancellation or modification (or right of termination, cancellation or modification) or default under, the payment of additional fees, the creation or acceleration of any obligations under or the creation of a Lien on any of the assets of the Strategic Investor, the Controlling Shareholder or any of their Subsidiaries pursuant to any Contract binding upon the Strategic Investor, the Controlling Shareholder or any of their Subsidiaries, except in the case of clause (C) for any such breach, violation, termination, default, creation or acceleration that would not, individually or in the aggregate, reasonably be likely to prevent or materially impair the ability of the Strategic Investor, the Controlling Shareholder or Merger Sub to consummate the Merger and the other transactions contemplated hereby. |
(d) | Available Funds. |
(i) | The Strategic Investor, the Controlling Shareholder and Merger Sub have available or will have available to them, as of the Effective Time (the “Financing Date”), all funds necessary for the payment to the Paying Agent of the aggregate amount of the Exchange Fund and any other amounts required to be paid in connection with the consummation of the Merger and the other transactions contemplated by this Agreement and to pay all related fees and expenses. |
(ii) | The Controlling Shareholder has delivered to the Company a true and complete copy of an executed facility agreement obligating an unaffiliated third-party lender to provide debt financing to the Controlling Shareholder in an aggregate amount set forth therein, subject to the terms and conditions thereof (as amended or modified to date, the “Facility Agreement”), the proceeds of which shall be used to consummate the Merger and the other transactions contemplated by this Agreement (the “Financing”). The Facility Agreement is in full force and effect, and none of the commitments in the Facility Agreement has been amended, modified, withdrawn or terminated in any respect, and except as set forth in the Facility Agreement, no such amendment, modification, withdrawal or termination is contemplated by the Controlling Shareholder, or to the Knowledge of the Controlling Shareholder, any other party thereto. The Facility Agreement is a valid, binding and enforceable obligation of the Controlling Shareholder and, to the Controlling Shareholder’s Knowledge, is enforceable against the lender or lenders under the Facility Agreement (the “Lenders”) in accordance with its terms. There are no conditions precedent related to the funding under the |
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Financing, except those expressly set forth in the Facility Agreement (the “Disclosed Conditions”). As of the date of this Agreement, neither the Strategic Investor nor the Controlling Shareholder (A) has any Knowledge that any event has occurred which, with or without notice, lapse of time or both, would constitute a default or breach on the part of the Strategic Investor, the Controlling Shareholder or Merger Sub or any direct investor in any of the foregoing under any term or condition of the Facility Agreement or otherwise be reasonably likely to result in any portion of the Financing contemplated thereby to be unavailable as of the Financing Date; and (B) has any reason to believe that any of the Disclosed Conditions or the funding of any amounts thereunder will not be satisfied in a timely manner or that the Financing will not be made available to the Controlling Shareholder as of the Financing Date. The Strategic Investor, the Controlling Shareholder, Merger Sub and their respective Affiliates have fully paid any and all commitment fees or other fees required by the terms of the Facility Agreement to be paid on or before the date hereof. The proceeds from the Financing constitute all of the borrowings required to be provided by the Controlling Shareholder for the consummation of the Merger and other transactions contemplated by this Agreement. There are no side letters or other agreements, arrangements or understandings relating to the Financing to which the Strategic Investor, the Controlling Shareholder or Merger Sub or any of their Affiliates is a party or by which they are bound. |
(e) | Capitalization of Merger Sub. The authorized share capital of Merger Sub consists solely of 50,000,000 ordinary shares, par value $0.001 per share, all of which are validly issued and outstanding. All of the issued and outstanding capital stock of Merger Sub is, and at the Effective Time will be, owned by the Controlling Shareholder and the Strategic Investor or a direct or indirect wholly owned Subsidiary of the Controlling Shareholder or the Strategic Investor. Merger Sub has not conducted any business prior to the date of this Agreement and has no, and prior to the Effective Time will have no, assets, liabilities or obligations of any nature other than those incident to its formation and capitalization and pursuant to this Agreement and the Merger and the other transactions contemplated by this Agreement. |
(f) | Brokers and Finders. No broker, finder or investment banker is entitled to any brokerage, finders’ or other fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Strategic Investor, the Controlling Shareholder or Merger Sub. |
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(g) | Schedule 13E-3; Proxy Statement; Other Information. None of the information provided by the Strategic Investor, the Controlling Shareholder or Merger Sub with respect to itself or its Affiliates for inclusion in the Schedule 13E-3 or the proxy statement (the “Proxy Statement”) relating to the Merger to be prepared in connection with the Shareholders’ Meeting, which will form part of the Schedule 13E-3 (the “Strategic Investor and Controlling Shareholder Information”) will, in the case of the Schedule 13E-3, as of the date of its filing and the date of each amendment or supplement thereto and, in the case of the Proxy Statement, (i) at the time of the mailing of the Proxy Statement or any amendments or supplements thereto and (ii) at the time of the Shareholders’ Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, the Strategic Investor, the Controlling Shareholder and Merger Sub make no representation or warranty with respect to any information that is contained or incorporated by reference in the Proxy Statement or the Schedule 13E-3 other than with respect to the Strategic Investor and Controlling Shareholder Information as set forth in this paragraph. |
(h) | Solvency. None of the Strategic Investor, the Controlling Shareholder or Merger Sub is entering into the transactions contemplated hereby with the intent to hinder, delay or defraud either present or future creditors. Immediately after giving effect to all of the transactions contemplated hereby, including the Financing and the payment of the Per Share Merger Consideration, the Per ADS Merger Consideration and the aggregate amount of consideration payable in respect of Company Options and Company Awards in accordance with Section 4.3(a) and (b), respectively, any other repayment or refinancing of debt that may be contemplated in the Facility Agreement and payment of all related fees and expenses, assuming (i) satisfaction of the conditions to the obligation of the Strategic Investor, the Controlling Shareholder and Merger Sub to consummate the Merger as set forth herein, or the waiver of such conditions, and (ii) the accuracy of the representations and warranties of the Company set forth in Section 5.1 (for such purposes, such representations and warranties shall be true and correct in all material respects, and the representations and warranties set forth in Section 5.1(e), (g), (k) and (n) shall be true and correct in all respects), the Surviving Corporation will be solvent. |
(i) | Certain Actions. Other than as expressly set forth in the Schedule 13D filed with the SEC by the Strategic Investor and the Controlling Shareholder, as amended prior to the date hereof, there are no Contracts between the Strategic Investor, the Controlling Shareholder or Merger Sub, on the one hand, and any member of the Company’s management, directors or stockholders, on the other hand, as of the date hereof, that relate in any way to the Company or the transactions contemplated hereby. |
(j) | Title to Shares. Each of the Strategic Investor, the Controlling Shareholder and Merger Sub has and, immediately prior to the Effective Time, will have valid title to the Shares as set forth on Section 5.2(j) of the Disclosure Schedule, free and clear of all liens, encumbrances, equities or adverse claims, which constitute all of the Shares owned by each of the Strategic Investor, the Controlling Shareholder and Merger Sub, whether in the form of Shares or ADSs. |
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(k) | No Additional Representations. |
(i) | Except for the representations and warranties made by the Strategic Investor, the Controlling Shareholder and Merger Sub in this Section 5.2, none of the Strategic Investor, the Controlling Shareholder or Merger Sub makes any express or implied representation or warranty with respect to the Strategic Investor, the Controlling Shareholder and Merger Sub or their respective businesses, operations, assets, liabilities, conditions (financial or otherwise) or prospects, and each of the Strategic Investor, the Controlling Shareholder and Merger Sub hereby disclaims any such other representations or warranties. |
(ii) | Notwithstanding anything contained in this Agreement to the contrary, each of the Strategic Investor, the Controlling Shareholder and Merger Sub acknowledges and agrees that none of the Company, its Subsidiaries, Representatives or any other Person has made or is making any representations or warranties relating to the Company, its Subsidiaries or any other Person whatsoever, express or implied, beyond those expressly given by the Company in Section 5.1 hereof, including any implied representation or warranty as to the accuracy or completeness of any information regarding the Company and its Subsidiaries furnished or made available the Strategic Investor, the Controlling Shareholder and Merger Sub, or any of their respective Representatives. Without limiting the generality of the foregoing, each of the Strategic Investor, the Controlling Shareholder and Merger Sub acknowledges that no representations or warranties are made with respect to any projections, forecasts, estimates, budgets or prospect information of the Company or its Subsidiaries that may have been made available to any of the Strategic Investor, the Controlling Shareholder and Merger Sub or any of their respective Representatives. |
COVENANTS
(a) | Operation of the Company’s Business. Except as required by applicable Law or as expressly contemplated by this Agreement, the Company covenants and agrees as to itself and its Subsidiaries that, from the date of this Agreement until the earlier of the Effective Time or the termination of this Agreement in accordance with Article VIII, the business of it and its Subsidiaries shall be conducted only in the ordinary course and, to the extent consistent therewith, it and its Subsidiaries shall use their respective commercially reasonable efforts to preserve their business organizations intact and maintain its existing relations and goodwill with Governmental Entities, customers, suppliers, licensors, licensees, distributors, creditors, lessors, employees and business associates. Without limiting the generality of, and in furtherance of, the foregoing, from the date of this Agreement until the earlier of the Effective Time or the termination of this Agreement in accordance with Article VIII, except (A) as otherwise expressly required or permitted by this Agreement or as required by Law; (B) as the Strategic Investor and the Controlling Shareholder may approve in advance in writing, which approval shall not be unreasonably withheld, conditioned or delayed; provided, however, that the Controlling Shareholder shall be deemed to have approved if the Controlling Shareholder does not object within two weeks after a written request for such approval is delivered to the Controlling Shareholder by the Company; or (C) as set forth in Section 6.1(a) of the Company Disclosure Schedule, the Company will not and will not permit its Subsidiaries to: |
(i) | adopt or propose any change in its memorandum and articles of association or other applicable governing instruments; |
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(ii) | effect any scheme of arrangement, merge or consolidate the Company or any of its Subsidiaries with any other Person, except for any such transactions among wholly owned Subsidiaries of the Company that are not obligors or guarantors of third party indebtedness, or other than in the ordinary course, restructure, reorganize or completely or partially liquidate or otherwise enter into any Contracts imposing material changes or material restrictions on its assets, operations or businesses; |
(iii) | acquire, directly or indirectly, whether by purchase, merger, consolidation, scheme of arrangement or acquisition of stock or assets or otherwise, any assets, securities, properties, interests, or businesses or make any investment (whether by purchase of stock or securities, contributions to capital, loans to, or property transfers), in each case, other than (A) in the ordinary course of business, (it being understood and agreed that the acquisition of all or substantially all of the assets or outstanding shares or other equity securities of any Person is not in the ordinary course of business), or (B) if not in the ordinary course of business, with a value or purchase price (including the value of assumed liabilities) not in excess of $1,000,000 in any transaction or related series of transactions or acquisitions; |
(iv) | issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, or redeem, purchase or otherwise acquire, any shares of capital stock of the Company or any of its Subsidiaries, or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities, other than in connection with (A) the exercise of Company Options or Company Awards, (B) the withholding of Company securities to satisfy tax obligations with respect to Company Options or Company Awards, (C) the acquisition by the Company of its securities in connection with the forfeiture of Company Options or Company Awards, (D) the acquisition by the Company of its securities in connection with the net exercise of Company Options or Company Awards in accordance with the terms thereof, (E) the issuance of Company securities as required to comply with any Company Benefit Plan or employment agreement as in effect on the date of this Agreement, or (F) pursuant to Contracts in effect as of the date of this Agreement; |
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(v) | create or incur (A) any lien or other security interest on any Company Intellectual Property owned or exclusively licensed or that is material and non-exclusively licensed by the Company or any of its Subsidiaries outside the ordinary course of business or (B) any Lien on any other assets of the Company or any of its Subsidiaries having a value in excess of $1,000,000, in each case, other than Permitted Liens; |
(vi) | make any loans, advances, guarantees or capital contributions to or investments in any Person (other than the Company or any direct or indirect wholly owned Subsidiary of the Company) in excess of $1,000,000 in the aggregate except pursuant to Contracts in effect as of the date of this Agreement which have either been filed as exhibits to the Company Reports filed with the SEC or identified in Section 5.1(j) of the Company Disclosure Schedule; |
(vii) | declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock (except for dividends paid by any Subsidiary to the Company or to any other Subsidiary and periodic dividends and other periodic distributions by Non-Wholly-Owned Subsidiaries in the ordinary course consistent with past practices), or enter into any Contract with respect to the voting of its capital stock; |
(viii) | reclassify, split, combine, subdivide, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock; |
(ix) | incur, alter, amend or modify, any indebtedness for borrowed money or guarantee such indebtedness of another Person, or permit any Subsidiary of the Company to guarantee any indebtedness of the Company, other than the incurrence or guarantee of indebtedness in the ordinary course of business not to exceed $1,000,000 in the aggregate, including any borrowings under the existing credit facilities of the Company and its Subsidiaries to fund working capital needs, and such other actions taken in the ordinary course of business consistent with past practice; |
(x) | issue or sell any debt securities or warrants or other rights to acquire any debt security of the Company or any of its Subsidiaries; |
(xi) | make or authorize any capital expenditure in excess of $300,000 per project or related series of projects of $1,000,000 in the aggregate, other than expenditures necessary to maintain existing assets in good repair and expenditures contemplated by the Company’s budget and approved development plans as of the date of this Agreement included in Section 6.1(a) of the Company Disclosure Schedule; |
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(xii) | make any changes with respect to accounting policies or procedures materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries, except as required by changes in applicable generally accepted accounting principles or Law; |
(xiii) | settle any Action before a Governmental Entity by or against the Company or any of its Subsidiaries or relating to any of their business, properties or assets, other than settlements (A) entered into in the ordinary course of business consistent with past practice, (B) requiring of the Company and its Subsidiaries only the payment of monetary damages not exceeding $100,000 and (C) not involving the admission of any wrongdoing by the Company or any of its Subsidiaries; |
(xiv) | engage in the conduct of any new line of business material to the Company and its Subsidiaries, taken as a whole; |
(xv) | create any new Subsidiaries; |
(xvi) | enter into, amend or modify, in any material respect, or terminate, or waive any material rights under, any Material Contract (or Contract that would be a Material Contract if such Contract had been entered into prior to the date hereof), any material manufacturing or supply agreement for any of the Company’s material products or material compounds, or material IP Contract that is reasonably expected to result in a Material Adverse Effect; |
(xvii) | make or change any material Tax election, materially amend any Tax Return (except as required by applicable Law), enter into any material closing agreement with respect to Taxes, surrender any right to claim a material refund of Taxes, settle or finally resolve any material controversy with respect to Taxes or materially change any method of Tax accounting; |
(xviii) | (A) with regard to material Intellectual Property owned or licensed by the Company or any of its Subsidiaries, transfer, sell, license, mortgage, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any material Intellectual Property, other than licenses or other Contracts granted in the ordinary course of business, or cancellation, abandonment, allowing to lapse or expire such Intellectual Property that is no longer used or useful in any of the Company’s or its Subsidiaries’ respective businesses or pursuant to Contracts in effect prior to the date of this Agreement; and (B) with regard to other assets, transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any material assets, licenses, operations, rights, product lines, businesses or interests therein of the Company or its Subsidiaries, including capital stock of any of its Subsidiaries, except in connection with services provided in the ordinary course of business, sales of products in the ordinary course of business and sales of obsolete assets and except for sales, leases, licenses or other dispositions of assets with a fair market value not in excess of $500,000 in the aggregate, other than pursuant to Contracts in effect as of the date of this Agreement; |
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(xix) | except as required pursuant to existing written plans or Contracts in effect as of the date of this Agreement or as set forth in Section 5.1(h) of the Company Disclosure Schedule or as otherwise required by applicable Law, (A) enter into any new employment or compensatory agreements (including the renewal of any consulting agreement) with any employee, consultant or director of the Company or any of its Subsidiaries other than agreements that are entered into in the ordinary course of business with new hire employees who are not officers or directors, (B) grant or provide any severance or termination payments or benefits to any director, officer or employee of the Company or any of its Subsidiaries other than normal payments and benefits in the ordinary course of business consistent with past practice, (C) increase the compensation, bonus or pension, welfare, severance or other benefits of, pay any bonus to, or make any new equity awards to any director, officer or employee of the Company or any of its Subsidiaries, in each case other than to non-officer employees in the ordinary course of business consistent with past practice, (D) establish, adopt, amend or terminate any Company Benefit Plan (except as required by Law) or amend the terms of any outstanding equity-based awards, (E) take any action to accelerate the vesting or payment, or fund or in any other way secure the payment, of compensation or benefits under any Company Benefit Plan, to the extent not already provided in any such Company Benefit Plan, (F) materially change any actuarial or other assumptions used to calculate funding obligations with respect to any Company Benefit Plan or to change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP, or (G) forgive any loans to directors, officers or employees of the Company or any of its Subsidiaries; or |
(xx) | agree, authorize or commit to do any of the foregoing. |
(b) | Operation of the Strategic Investor’s, the Controlling Shareholder’s and Merger Sub’s Business. Each of the Strategic Investor, the Controlling Shareholder and Merger Sub agrees that, from the date hereof to the Effective Time, it shall not: (i) take any action that is intended to or would reasonably be likely to result in any of the conditions to effecting the Merger becoming incapable of being satisfied; or (ii) take any action or fail to take any action which would, or would be reasonably likely to, individually or in the aggregate, prevent, materially delay or materially impede the ability of the Strategic Investor, the Controlling Shareholder or Merger Sub to consummate the Merger or the other transactions contemplated by this Agreement. |
(c) | No Control of Other Party’s Business. Nothing contained in this Agreement is intended to give the Strategic Investor, the Controlling Shareholder or Merger Sub, directly or indirectly, the right to control or direct the Company’s or its Subsidiaries’ operations prior to the Effective Time, and nothing contained in this Agreement is intended to give the Company, directly or indirectly, the right to control or direct the Strategic Investor’s, the Controlling Shareholder’s or Merger Sub’s or operations. Prior to the Effective Time, each of the Strategic Investor, the Controlling Shareholder, Merger Sub and the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries respective operations. Nothing in this Section 6.1(c) shall be deemed or construed to restrict the Strategic Investor or Controlling Shareholder from exercising the rights and powers arising out of their ownership of ordinary shares of the Company pursuant to the Company’s memorandum and articles of association and the Cayman Companies Law. |
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(a) | No Solicitation or Negotiation. The Company agrees that, except as expressly permitted by this Section 6.2, from the date of this Agreement until the Effective Time or, if earlier, the termination of this Agreement in accordance with Article VIII, neither it nor any of its Subsidiaries nor any of the officers and directors of it or any of its Subsidiaries shall, and that it shall use its reasonable best efforts to instruct and cause its and its Subsidiaries’ Representatives not to, directly or indirectly: |
(i) | initiate, solicit or knowingly encourage any inquiries or the making of any proposal or offer that constitutes, or could reasonably be expected to lead to, any Acquisition Proposal; |
(ii) | engage in, continue or otherwise participate in any discussions or negotiations regarding, or provide any non-public information to any Person relating to, any Acquisition Proposal; or |
(iii) | otherwise knowingly facilitate any effort or attempt to make an Acquisition Proposal. |
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(b) | No Change of Recommendation or Alternative Acquisition Agreement. The board of directors of the Company and the Independent Committee shall not: |
(i) | withhold, withdraw, qualify or modify (or publicly propose or resolve to withhold, withdraw, qualify or modify), in a manner adverse to the Strategic Investor and the Controlling Shareholder, the Company Recommendation with respect to the Merger; or |
(ii) | except as expressly permitted by, and after compliance with, Section 8.3(a), cause or permit the Company to enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement or other agreement (other than a confidentiality agreement referred to in Section 6.2(a) entered into in compliance with Section 6.2(a)) (an “Alternative Acquisition Agreement”) relating to any Acquisition Proposal. |
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(c) | Certain Permitted Disclosure. Nothing contained in this Section 6.2 shall be deemed to prohibit the Company from complying with its disclosure obligations under United States federal or state Law, or other applicable Law, with regard to an Acquisition Proposal; provided, however, that if such disclosure includes a Change of Recommendation or has the substantive effect of withdrawing or adversely modifying the Company Recommendation, such disclosure shall be deemed to be a Change of Recommendation and the Strategic Investor and the Controlling Shareholder shall have the right to terminate this Agreement as set forth in Section 8.4 (it being understood that a statement by the Company that describes the Company’s receipt of an Acquisition Proposal and the operation of this Agreement with respect thereto, or any “stop, look or listen” communication that contains only the information set forth in Rule 14d-9(f) under the Exchange Act shall not be deemed a Change of Company Recommendation or be deemed to have the substantive effect of withdrawing or adversely modifying the Company Recommendation). |
(d) | Existing Discussions. The Company agrees that it will: (i) immediately cease and cause to be terminated any existing activities, discussions or negotiations with any Persons conducted heretofore with respect to any Acquisition Proposal; (ii) take the necessary steps to promptly inform the individuals or entities referred to in the first sentence of this Section 6.2(d) of the obligations undertaken in this Section 6.2; and (iii) promptly request each Person that has executed a confidentiality agreement on or after January 1, 2009, in connection with such Person’s consideration of acquiring the Company or any of its Subsidiaries to return or destroy all confidential information heretofore furnished to such Person by or on behalf of the Company or any of its Subsidiaries. |
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(e) | Notice. The Company agrees that it will promptly (and, in any event, within 24 hours) notify the Strategic Investor and the Controlling Shareholder if any proposals or offers with respect to an Acquisition Proposal are received by, any such information is requested from, or any such discussions or negotiation are sought to be initiated or continued with, it or any of its Representatives indicating, in connection with such notice, the name of such Person, the material terms and conditions of any proposals or offers (including, if applicable, copies of any written requests, proposals or offers, including proposed agreements) and if the Company has any intention to provide confidential information to such Person, and thereafter shall keep the Strategic Investor and the Controlling Shareholder informed, on a reasonably current basis (and in any event within 24 hours of the occurrence of any material changes, developments, discussions or negotiations) of the status and terms of any such Acquisition Proposal, indication, inquiry or request and of any material changes in the status and terms of any such Acquisition Proposal, indication, inquiry or request (including the material terms and conditions thereof). Without limiting the foregoing, the Company shall promptly (and in any event within 24 hours) notify the Strategic Investor and the Controlling Shareholder orally and in writing if it determines to initiate actions concerning an Acquisition Proposal as permitted by this Section 6.2. The Company shall not, and shall cause its Subsidiaries not to, enter into any confidentiality agreement with any Person subsequent to the date of this Agreement that prohibits the Company from providing such information to the Strategic Investor and the Controlling Shareholder. |
(a) | As soon as reasonably practicable following the date of this Agreement, the Company, with the assistance and cooperation of the Strategic Investor, the Controlling Shareholder and Merger Sub, shall prepare and furnish the Proxy Statement in preliminary form to the SEC. The Company shall cause the Proxy Statement to be mailed to the shareholders of the Company as promptly as reasonably practicable after having cleared the SEC comments on the Schedule 13E-3. Each of the Strategic Investor, the Controlling Shareholder, Merger Sub and the Company shall furnish all information concerning itself and its affiliates that is required to be included in the Proxy Statement. No filing of, or amendment or supplement to, the Proxy Statement will be made by the Company without providing Strategic Investor and Controlling Shareholder a reasonable opportunity to review and comment thereon except as required by applicable Law. Each of the Company, the Strategic Investor and the Controlling Shareholder shall promptly advise the other of any comments received from the SEC with respect to the Proxy Statement. If at any time prior to the Effective Time any information relating to the Company, the Controlling Shareholder, the Strategic Investor or Merger Sub, or any of their respective Affiliates, directors or officers, should be discovered by the Company, the Controller Shareholder, the Strategic Investor or Merger Sub which should be set forth in an amendment or supplement to the Proxy Statement, so that such document would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they are made, not misleading, the party which discovers such information shall promptly notify the other party and an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and, to the extent required by Law, disseminated to the shareholders of the Company. |
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(b) | Concurrently with furnishing the Proxy Statement to the SEC, the Strategic Investor, the Controlling Shareholder, Merger Sub, their Affiliates and the Company shall prepare and file with the SEC, the Schedule 13E-3. The Strategic Investor, the Controlling Shareholder, Merger Sub and the Company shall cause the Schedule 13E-3 to comply with the rules and regulations promulgated by the SEC and respond promptly to any comments of the SEC or its staff regarding the Schedule 13E-3. Each party agrees to provide the other party and its counsel with copies of any comments that such party or its counsel may receive from the staff of the SEC regarding the Schedule 13E-3 promptly after receipt thereof. Each of the Strategic Investor, the Controlling Shareholder, Merger Sub and the Company shall furnish all information concerning itself and its affiliates that is required to be included in the Schedule 13E-3. Each of the Controlling Shareholder, the Strategic Investor, Merger Sub, their counsel, the Company, and its counsel shall be given an opportunity to review and comment on the Schedule 13E-3 and each supplement, amendment or response to comments with respect thereto prior to filing with the SEC. |
(a) | Cooperation. Subject to the terms and conditions set forth in this Agreement, the Company, the Controlling Shareholder, the Strategic Investor and Merger Sub and their respective Representatives shall cooperate with each other and use (and shall cause their respective Subsidiaries to use) their respective reasonable best efforts to take or cause to be taken all actions, and do or cause to be done all things, reasonably necessary, proper or advisable on its part under this Agreement and applicable Laws to consummate and make effective the Merger and the other transactions contemplated by this Agreement as soon as reasonably practicable, including preparing, execution and filing as promptly as reasonably practicable all documentation to effect all necessary notices, reports and other filings and to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party and/or any Governmental Entity in order to consummate the Merger or any of the other transactions contemplated by this Agreement. |
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(b) | Information. Subject to the right of the Company to withhold such portions of documents or information to the extent relating to pricing or other matters that are highly sensitive if the exchange of such information (or portions thereof) were to occur (provided, however, that the foregoing limitation shall not be applicable to any information required to be described or disclosed in the Schedule 13E-3), the Company, the Controlling Shareholder, the Strategic Investor and Merger Sub each shall, upon request by the other, furnish the other with all information concerning itself, its Subsidiaries, directors, officers and shareholders and such other matters as may be reasonably necessary or advisable in connection with the Proxy Statement, the Schedule 13E-3, or any other statement, filing, notice or application made by or on behalf of the Strategic Investor, the Controlling Shareholder, Merger Sub, the Company or any of their respective Subsidiaries to any third party and/or any Governmental Entity in connection with the Merger and the transactions contemplated by this Agreement. |
(c) | Status. Subject to applicable Laws and as required by any Governmental Entity, the Company, Controlling Shareholder, Strategic Investor and Merger Sub each shall keep the other apprised of the status of matters relating to completion of the transactions contemplated hereby, including promptly furnishing the other with copies of notices or other communications received by Strategic Investor, Controlling Shareholder, Merger Sub or the Company, as the case may be, or any of its Subsidiaries, from any Governmental Entity with respect to the Merger and the other transactions contemplated by this Agreement. The Company shall give reasonably prompt notice to Strategic Investor, Controlling Shareholder and Merger Sub of any change, fact or condition that is reasonably expected to result in a Material Adverse Effect or of any failure of any condition to Strategic Investor’s, Controlling Shareholder’s and Merger Sub’s respective obligations to effect the Merger. Strategic Investor, Controlling Shareholder and Merger Sub shall give reasonably prompt notice to the Company of any change, fact or condition that is reasonably expected to prevent or materially impair the consummation of the transactions contemplated by this Agreement or of any failure of any condition to the Company’s obligations to effect the Merger. |
(d) | Antitrust Matters. |
(i) | Subject to the terms and conditions set forth in this Agreement, without limiting the generality of the undertakings pursuant to this Section 6.5, each of the Company, the Controlling Shareholder, the Strategic Investor and Merger Sub agrees to promptly provide to each and every Governmental Antitrust Entity non-privileged information and documents (i) requested by any Governmental Antitrust Entity or (ii) that are necessary, proper or advisable to permit consummation of the transactions contemplated by this Agreement in accordance with Section 7.1(b), and use its reasonable best efforts to take or cause to be taken all other actions necessary, proper or advisable consistent with this Section 6.5(d) to cause the expiration or termination of the applicable waiting periods, or receipt of required authorizations, as applicable, under all applicable antitrust Laws as soon as practicable. |
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(ii) | In furtherance and not in limitation of the covenants of the parties contained herein, if any objections are asserted with respect to the transactions contemplated hereby under any Law or if any suit is instituted (or threatened to be instituted) by the Federal Trade Commission, the Department of Justice or any other applicable Governmental Entity or any private party challenging any of the transactions contemplated hereby as violative of any Law or which would otherwise prevent, materially impede or materially delay the consummation of the transactions contemplated hereby, each of the Strategic Investor, the Controlling Shareholder, Merger Sub and the Company shall use its reasonable best efforts to resolve any such objections or suits so as to permit consummation of the transactions contemplated by this Agreement, including selling, holding separate or otherwise disposing of or conducting its business in a manner which would resolve such objections or suits or agreeing to sell, hold separate or otherwise dispose of or conduct its business in a manner which would resolve such objections or suits or permitting the sale, holding separate or other disposition of, any of its assets or the assets of its Subsidiaries or the conducting of its business in a manner which would resolve such objections or suits so long as such actions, individually or in the aggregate, do not have, and would not be reasonably likely to have, a Material Adverse Effect; provided, however, that the Company may expressly condition any such sale, holding separate or other disposal, and any agreement to take any such action or to conduct its business in any manner, upon the consummation of the Merger and the other transactions contemplated hereby. |
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(a) | The Controlling Shareholder shall use its commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper or advisable to satisfy the Disclosed Conditions, and to consummate the Financing on the terms and conditions described in the Facility Agreement (or on other terms that would not adversely impact the ability of Controlling Shareholder to timely consummate the transactions contemplated by this Agreement), including using commercially reasonable efforts to satisfy on a timely basis all covenants, terms and conditions applicable to the Controlling Shareholder in the Facility Agreement that are within its control, including the Disclosed Conditions. In the event that all conditions in the Facility Agreement required to be satisfied by the Controlling Shareholder have been satisfied, or upon funding, will be satisfied, in the Controlling Shareholder’s good faith judgment, |
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the Controlling Shareholder shall use its commercially reasonable efforts to cause the Lenders to fund the Financing on the Financing Date and otherwise enforce its rights under the Facility Agreement. The Controlling Shareholder shall not, and shall not permit any of its Affiliates to, without the prior written consent of the Company, take or fail to take any action or enter into any transaction, including any merger, acquisition, joint venture, disposition, lease, contract or debt or equity financing, that could reasonably be expected to materially impair, delay or prevent obtaining the Financing. The Controlling Shareholder shall give the Company prompt notice of any material breach by any party under the Facility Agreement of which the Controlling Shareholder becomes aware or any communications from Lender to the effect that it may not provide any portion of the financing contemplated by the Facility Agreement. In the event that any portion of the Financing becomes unavailable in the manner or from the sources contemplated in the Facility Agreement despite the Controlling Shareholder’s commercially reasonable efforts to obtain the Financing, (i) Controlling Shareholder shall promptly notify the Company, and (ii) Controlling Shareholder shall use its commercially reasonable efforts to arrange to obtain any such portion of the Financing from alternative sources, on terms that are no less favorable to the Controlling Shareholder, as promptly as practicable following the occurrence of such event, including entering into definitive agreements with respect thereto. In connection with its obligations under this Section 6.9, the Controlling Shareholder shall be permitted to amend, modify or replace the Facility Agreement; provided that the Controlling Shareholder shall not permit any replacement of, or amendment or modification to be made to, or any waiver of any material provision or remedy under, the Facility Agreement that would be reasonably likely to cause any delay in the satisfaction of the conditions set forth in Article VII or would reasonably be expected to prevent or materially impair or delay obtaining the Financing as required by the Controlling Shareholder to meet its obligations under this Agreement. The Controlling Shareholder shall keep the Company reasonably informed of the status of Controlling Shareholder’s efforts to arrange the Financing. |
(b) | The Company shall, and shall cause each of its Subsidiaries to, reasonably cooperate in connection with the arrangement of the Financing as may be reasonably requested by the Controlling Shareholder (provided that such requested cooperation does not unreasonably interfere with the ongoing operations of the Company and its Subsidiaries). Such cooperation by the Company and its Subsidiaries shall include, at the reasonable request of the Controlling Shareholder, (i) delivering such officer’s and other certificates as required by the Facility Agreement and as are, in the good faith determination of the persons executing such certificates, accurate, (ii) entering into such agreements and arrangements as required by the Facility Agreement, including agreements to pledge, guarantee, grant security interests in, and otherwise grant liens on, the Company’s or its Subsidiaries’ assets, provided, that no obligation of the Company or its subsidiaries under any such agreement, pledge, guarantee or grant contemplated by this clause (ii) shall be effective until the Effective Time, (iii) using its commercially reasonable efforts to cause its independent registered public accountants to deliver such comfort letters as required by the Facility Agreement, (iv) providing the Controlling Shareholder and its Financing sources as promptly as practicable with financial and other pertinent information with respect to the Company and its Subsidiaries as required by the Facility Agreement, (v) making the Company’s executive officers and other relevant employees reasonably available to assist the Lenders providing the Financing, and (vi) taking all corporate actions, subject to the occurrence of the Closing, to permit consummation of the Financing and the direct borrowing or incurrence of all proceeds of the Financing by the Surviving Corporation immediately following the Effective Time. |
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(a) | The indemnification, advancement and exculpation provisions of certain indemnification agreements by and among the Company and its directors and certain executive officers, as in effect at the Effective Time shall not be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would adversely affect the rights thereunder of individuals who at the Effective Time were directors, officers or employees of the Company. The Strategic Investor and the Controlling Shareholder shall cause the Surviving Corporation to comply with all such indemnification, advancement and exculpation provisions under the memorandum and articles of association of the Company as in effect on the date hereof, Cayman Companies Law, or otherwise, except to the extent prohibited by applicable Law. The Memorandum and Articles of Association will contain provisions with respect to exculpation and indemnification that are at least as favorable to the directors, officers or employees of the Company as those contained in the memorandum and articles of association of the Company as in effect on the date hereof, except to the extent prohibited by the Cayman Companies Law or any other applicable Law, which provisions will not be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would adversely affect the rights thereunder of individuals who, immediately prior to the Effective Time, were directors, officers or employees of the Company, unless such modification is required by Law. |
(b) | From and after the Effective Time, the Surviving Corporation shall comply with all of the Company’s obligations, and shall cause its Subsidiaries to comply with their respective obligations to indemnify and hold harmless (including any obligations to advance funds for expenses) (i) the present and former officers and directors thereof against any and all costs or expenses (including reasonable attorneys’ fees and expenses), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement in connection with any actual or threatened claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative (“Damages”), arising out of, relating to or in connection with any acts or omissions occurring or alleged to occur prior to or at the Effective Time to the extent provided under the Company’s or such Subsidiaries’ respective organizational and governing documents or agreements in effect on the date hereof and to the fullest extent permitted by the Cayman Companies Law or any other applicable Law, including the approval of this Agreement, the Merger or the other transactions contemplated by this Agreement or arising out of or pertaining to the transactions contemplated by this Agreement provided that such indemnification shall be subject to any limitation imposed from time to time under applicable Law; and (ii) such persons against any and all Damages arising out of acts or omissions in connection with such persons serving as an officer, director or other fiduciary in any entity if such service was at the request or for the benefit of the Company or any of its Subsidiaries. |
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(c) | The Surviving Corporation shall, and the Strategic Investor and the Controlling Shareholder shall cause the Surviving Corporation to, maintain the Company’s and its Subsidiaries’ existing directors’ and officers’ liability insurance (including for acts or omissions occurring in connection with this Agreement and the consummation of the transactions contemplated hereby) covering each Person covered as of the Effective Time by the Company’s officers’ and directors’ liability insurance policy (each such Person, an “Indemnified Party”) on terms with respect to coverage and amount no less favorable than those of such policy in effect on the date hereof for a period of six years after the Effective Time; provided, however, that, subject to the immediately succeeding sentence, in no event shall the Surviving Corporation be required to expend in any one year an amount in excess of 300% of the current annual premium paid by the Company for such insurance. In addition, the Company may and, at the Strategic Investor’s and the Controlling Shareholder’s request, the Company will, purchase a six-year “tail” prepaid policy prior to the Effective Time on terms and conditions no less advantageous to the Indemnified Parties than the existing directors’ and officers’ liability insurance maintained by the Company. If such “tail” prepaid policies have been obtained by the Company prior to the Closing, the Surviving Corporation shall, and the Strategic Investor and the Controlling Shareholder shall cause the Surviving Corporation to, maintain such policies in full force and effect, and continue to honor the respective obligations thereunder, and all other obligations under this Section 6.11(c) shall terminate. |
(d) | If the Strategic Investor, the Controlling Shareholder, the Surviving Corporation or any of their respective successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving company or entity of such consolidation or merger, or (ii) transfers or conveys all or substantially all of its properties and assets to any Person, then the obligations of the Strategic Investor, the Controlling Shareholder, or the Surviving Corporation, as the case may be, that are set forth under this Section 6.11 shall survive, and to the extent necessary, proper provision shall be made so that the successors and assigns of the Strategic Investor, the Controlling Shareholder or the Surviving Corporation, as the case may be, shall assume the obligations set forth in this Section 6.11. |
(e) | The provisions of this Section 6.11 shall survive the consummation of the Merger and are intended to be for the benefit of, and shall be enforceable by, each of the Indemnified Parties and their heirs and legal representatives, each of which shall be a third-party beneficiary of the provisions of this Section 6.11. |
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(f) | The agreements and covenants contained in this Section 6.11 shall not be deemed to be exclusive of any other rights to which any such present or former director or officer of the Company or any of its Subsidiaries is entitled, whether pursuant to Law, contract or otherwise. Nothing in this Agreement is intended to, shall be construed to or shall release, waive or impair any rights to directors’ and officers’ insurance claims under any policy that is or has been in existence with respect to the Company or any of its Subsidiaries or their respective officers, directors and employees, it being understood and agreed that the indemnification provided for in this Section 6.11 is not prior to or in substitution for any such claims under any such policies. |
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CONDITIONS
(a) | Shareholder Approvals. This Agreement and the transactions contemplated hereby, including the Merger, shall have been duly adopted by holders of Shares constituting the Requisite Company Vote at the Shareholders Meeting in accordance with applicable Law and the memorandum and articles of association of the Company. |
(b) | Regulatory Consents. All governmental and third party consents required to be obtained prior to the Effective Time by the Company, the Controlling Shareholder or the Strategic Investor or any of their respective Subsidiaries shall have been obtained (and shall remain in full force and effect) or any applicable waiting period thereunder shall have been terminated or shall have expired. |
(c) | No Injunction. No court or other Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any Law (whether temporary, preliminary or permanent) that is in effect which restrains, enjoins or otherwise prohibits consummation of the Merger (collectively, an “Injunction”). |
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(a) | Representations and Warranties. (i) Subject to the initial clause of Section 5.1, the representations and warranties of the Company set forth in this Agreement shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date); and (ii) the Strategic Investor and the Controlling Shareholder shall have received at the Closing a certificate signed on behalf of the Company by the Chief Executive Officer of the Company to the effect that such officer has read this Section 7.2(a) and the conditions set forth in this Section 7.2(a) have been satisfied; provided, however, that notwithstanding anything to the contrary, this Section 7.2(a) shall be deemed to have been satisfied even if such representations or warranties are not so true and correct unless the failure of such representations or warranties to be so true and correct, individually or in the aggregate, is reasonably likely to have a Material Adverse Effect (it being understood that, for purposes of determining the accuracy of such representations and warranties, all Material Adverse Effect qualifications and other materiality qualifications contained in a particular representation or warranty shall be disregarded). |
(b) | Performance of Obligations of the Company. The Company shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date, and the Strategic Investor and the Controlling Shareholder shall have received a certificate signed on behalf of the Company by the Chief Executive Officer of the Company to such effect. |
(c) | No Material Adverse Effect. Since the date of this Agreement, there shall not have occurred any change, event, circumstance or development that has had or is reasonably likely to have, a Material Adverse Effect. |
(d) | Dissenting Shareholders. The holders of no more than 5% of the Shares shall not have validly served a notice of dissent under Section 238(5) of the Cayman Companies Law. |
(a) | Representations and Warranties. (i) The representations and warranties of the Strategic Investor, the Controlling Shareholder and Merger Sub set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), and (ii) the Company shall have received at the Closing certificates signed on behalf of the Strategic Investor, the Controlling Shareholder and Merger Sub by, respectively, a designated director of the Strategic Investor, a designated director of the Controlling Shareholder and by the Chief Executive Officer of Merger Sub to the effect that such Person has read this Section 7.3(a) and the conditions set forth in this Section 7.3(a) have been satisfied. |
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(b) | Performance of Obligations of the Strategic Investor, the Controlling Shareholder and Merger Sub. Each of the Strategic Investor, the Controlling Shareholder and Merger Sub shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date, and the Company shall have received certificates signed on behalf of the Strategic Investor, the Controlling Shareholder and Merger Sub by, respectively, a designated director of the Strategic Investor, a designated director of the Controlling Shareholder and by the Chief Executive Officer of Merger Sub to such effect. |
(c) | Financing. The Controlling Shareholder shall have delivered a notification from CITIC Bank International Limited, as agent (the “Agent”) on behalf of the Lenders confirming that all of the Disclosed Conditions to the Facility Agreement have been satisfied, except (i) evidence of the issuance by the Registrar of Companies of the Cayman Islands of the certificate of merger and (ii) conditions that have been waived by the Agent (acting on the instructions of the Lenders). |
TERMINATION
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(a) | Except as provided in paragraphs (b) or (c) below, in the event of termination of this Agreement and the abandonment of the Merger pursuant to this Article VIII, this Agreement shall become void and of no effect with no liability to any Person on the part of any party hereto (or of any of its Representatives or Affiliates); provided, however, and notwithstanding anything in the foregoing to the contrary, that (i) no such termination shall relieve any party hereto of any liability or damages to the other party hereto resulting from any willful or intentional material breach by a party of its representations, warranties, covenants or other agreements set forth in this Agreement and (ii) the provisions set forth in Section 8.3(a)(ii), this Section 8.5 and Section 9.1 shall survive the termination of this Agreement. |
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(b) | In the event that (i) a bona fide Acquisition Proposal shall have been made to the Company or any Person shall have publicly announced an intention (whether or not conditional) to make a bona fide Acquisition Proposal with respect to the Company (and such Acquisition Proposal or publicly announced intention shall not have been publicly withdrawn without qualification at least (A) 20 business days prior to, with respect to any termination pursuant to Section 8.2(a), the date of termination, and (B) at least 10 business days prior to, with respect to termination pursuant to Section 8.2(b), the date of the Shareholders Meeting) and thereafter this Agreement is terminated by either the Controlling Shareholder and the Strategic Investor acting together or the Company pursuant to Section 8.2(a) or 8.2(b), (ii) this Agreement is terminated (A) by the Strategic Investor and the Controlling Shareholder pursuant to Section 8.4 or (B) by the Company pursuant to Section 8.2(b) and, on or prior to the date of the Shareholders Meeting any event giving rise to the Strategic Investor’s and the Controlling Shareholder’s right to terminate under Section 8.4 shall have occurred or (iii) this Agreement is terminated by the Company pursuant to Section 8.3(a), then, in each case, the Company shall promptly, but in no event later than five business days after the date of such termination, pay the Buyer Parties an aggregate termination fee of $2.5 million (the “Termination Fee”) payable by wire transfer of same day funds. The right of the Controlling Shareholder and Strategic Investor to receive payment of the Termination Fee from the Company shall be the sole and exclusive remedy of the Buyer Parties against the Company Parties for any loss or damage suffered as a result of the failure of the Merger to be consummated or for a breach or failure to perform hereunder or otherwise, and upon payment of the Termination Fee, none of the Company Parties shall have any further liability or obligation relating to or arising out of this Agreement or the transactions contemplated hereby (except that the Company shall also be obligated with respect to Section 8.5(d)). It is understood and agreed that payment of the Termination Fee represents the reasonable estimate of actual damages by the Company, the Controlling Shareholder, the Strategic Investor and Merger Sub and does not constitute a penalty. |
(c) | In the event that this Agreement is terminated pursuant to (i) Section 8.3(b), then the responsible member or members of the Buyer Parties shall promptly but in no event later than five business days after the date of such termination, pay the Company a termination fee in the amount of $2.5 million, or (ii) Section 8.3(c), then the Controlling Shareholder shall promptly, but in no event later than five business days after the date of such termination, pay the Company a termination fee in the amount of $2.0 million, plus in each case all out-of-pocket costs and expenses incurred by the Company and its Subsidiaries in connection with the proposed Merger, including without limitation all legal and financial advisory fees, fees of the Independent Committee members, and other fees and expenses incurred by the Company and its Subsidiaries in negotiating and executing the Merger and the Company’s cooperation under Section 6.9(b) (the “Buyer Termination Fee”) payable by wire transfer of same day funds to an account designated in writing by the Company’s Chief Operating Officer. Subject to Section 9.5(d), the Company’s right to receive payment of the Buyer Termination Fee from the Buyer Parties shall be the sole and exclusive remedy of the Company Parties against the Buyer Parties for any loss or damage suffered as a result of the failure of the Merger to be consummated or for a breach or failure to perform hereunder or otherwise, and upon payment of the Buyer Termination Fee, none of the Buyer Parties shall have any further liability or obligation relating to or arising out of this Agreement or the transactions contemplated hereby (except that the Buyer Parties shall also be obligated with respect to Section 8.5(d)). It is understood and agreed that payment of the Buyer Termination Fee represents the reasonable estimate of actual damages by the Company, the Controlling Shareholder, the Strategic Investor and Merger Sub and does not constitute a penalty. |
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(d) | Each of the parties hereto acknowledges that the agreements contained in this Section 8.5 are an integral part of the transactions contemplated hereby, and that without these agreements, the other party would not enter into this Agreement. Accordingly, if the Company or the responsible member or members of the Buyer Parties, as the case may be, fails to timely pay the Termination Fee or the Buyer Termination Fee, as the case may be, and, in order to obtain such amount due, the Company or the Buyer Parties, as the case may be, commences a suit which results in a judgment against the other party for the payment of the Termination Fee or the Buyer Termination Fee, as the case may be, such paying party shall pay the other party its reasonable and documented costs and expenses (including reasonable and documented attorneys’ fees) in connection with such suit, together with interest on such amount at the prime lending rate prevailing during such period as published in The Wall Street Journal, calculated on a daily basis from the date such payment was required to be paid until the date such payment was actually received. |
MISCELLANEOUS AND GENERAL
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(a) | This Agreement shall be deemed to be made in and in all respects shall be interpreted, construed and governed by and in accordance with the Laws of the Cayman Islands without regard to the conflicts of law principles thereof. |
(b) | EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. |
(c) | The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with or relating to, this Agreement or the transactions contemplated hereby shall be brought in a court of the Cayman Islands, and each of the parties hereby irrevocably consents to the exclusive jurisdiction of such court (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 9.6 shall be deemed effective service of process on such party. |
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(d) | The parties agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that the Buyer Parties do not perform the provisions of this Agreement under any of Sections 6.9(a), 6.11 or 6.15 (including failing to take such actions as are required to comply thereunder) in accordance with the specified terms or otherwise breaches any of such provisions. The parties acknowledge and agree that the parties shall be entitled to an injunction, specific performance and other equitable relief to prevent breaches of such provisions and to enforce specifically the terms and provisions thereof, this being in addition to any other remedy to which they are entitled at law or in equity. Notwithstanding the foregoing, it is explicitly agreed that the Company shall be entitled to seek specific performance of the Controlling Shareholder’s obligation to cause the Financing to be funded to fund the Merger only in the event that all conditions in Sections 7.1, 7.2 and 7.3 have been satisfied (or with respect to certificates to be delivered at Closing, are capable of being satisfied upon the Closing) or waived at the time the Closing would have occurred but for the failure of the Financing to be funded. |
(a) | If to the Strategic Investor, the Controlling Shareholder or Merger Sub: |
0xx Xxxxx,
Xxxxx X, Xxxxxxx Medical Device Park,
No. 1019
Shenzhen, China
Attention: Xxxxxxxx Xxxx
Facsimile: x00 000 0000 0000
e-mail: xxxxxx@xxxxxxxxxx.xxx
Xx. 0 Xxxx Xxxxxx Xxxx
Xxxxxxxx 000000
Xxxxx
Attention: Xxxxxxx Xxxx
Facsimile: x00 00 0000 0000
e-mail: xxxxxxxxxxx@xxxxxxxxxxx.xxx
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Suite 3401, China World Tower 2
China World Trade Center
1 Jianguomenwai Dajie
Beijing 100004, PRC
Attention: Xxxxx Xxxxxxx
Facsimile: x00 00 0000 0000
e-mail: xxxxx.xxxxxxx@xxxxxxxxxxxxx.xxx
0000 Xxx Xxxxxxxx Xxxxxx
0 Xxxxxxxxx Xxxxx, Xxxxxxx
Xxxx Xxxx
Xxxxxxxxx: Xxxxx Xxxx
Facsimile: (x000) 0000 0000
e-mail: xxxxx.xxxx@xxxxxxxxxxx.xxx
0xx Xxxxx,
Xxxxx X, Xxxxxxx Medical Device Park,
No. 1019
Shenzhen, China
Attention: Xxxxxx Xxxx, Chief Operating Officer
Facsimile: (x00) 000 0000 0000
e-mail: xxxxxxxxxx@xxxxxxxxxx.xxx
0xx Xxxxx,
Xxxxx X, Xxxxxxx Medical Device Park,
No. 1019
Shenzhen, China
Attention: Yongcun Chen, Director
e-mail: xxxxxx@xxxxxxxxxx.xxx
000 Xxxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Louis P.A. Lehot
Facsimile: (x0-000) 000-0000
e-mail: xxxxxx@xxxxxxxxxxxxxx.xxx
2606 The Centrium
00 Xxxxxxx Xxxxxx
Xxxx Xxxx
Facsimile: (x0-000) 000 0000
e-mail: xxxxxx@xxxxxxxxxxxx.xxx
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(a) | For the purposes hereof, (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires; (ii) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including the schedules and annexes hereto) and not to any particular provision of this Agreement, and Article, Section, paragraph, and clause references are to the Articles, Sections, paragraphs, and clauses to this Agreement unless otherwise specified; (iii) the word “including” and words of similar import when used in this Agreement shall mean “including without limitation” unless the context otherwise requires or unless otherwise specified; (iv) the word “or” shall not be exclusive; (v) provisions shall apply, when appropriate, to successive events and transactions; (vi) all references to any period of days shall be deemed to be to the relevant number of calendar days unless otherwise specified; and (vii) the “$” sign shall each mean the lawful currency of the United States of America. |
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(b) | The parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a 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 provision of this Agreement. |
(a) | “Acquisition Proposal” means (i) any proposal or offer with respect to a merger, joint venture, partnership, consolidation, dissolution, liquidation, tender offer, recapitalization, reorganization, share exchange, business combination, scheme of arrangement or similar transaction involving the Company or any of its Subsidiaries and (ii) any acquisition by any Person, or proposal or offer, which if consummated would result in any Person becoming the beneficial owner of, directly or indirectly, in one or a series of related transactions, 15% or more of the total voting power or of any class of equity securities of the Company or those of any of its Subsidiaries, or 15% or more of the consolidated total assets (including equity securities of its Subsidiaries) of the Company, in each case other than the transactions contemplated by this Agreement. |
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(b) | “Actions” shall have the meaning set forth in Section 5.1(g) |
(c) | “ADSs” shall have the meaning set forth in Section 4.1(a). |
(d) | “Affiliate” of any Person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person, where “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a Person, whether through the ownership of voting securities, by contract, as trustee or executor, or otherwise. |
(e) | “Agent” shall have the meaning set forth in Section 7.3(c). |
(f) | “Agreement” refers to this agreement and plan of merger. |
(g) | “Applicable Date” shall have the meaning set forth in Section 5.1(e)(i). |
(h) | “Alternative Acquisition Agreement” shall have the meaning set forth in Section 6.2(b)(ii). |
(i) | “Bankruptcy and Equity Exception” shall have the meaning set forth in Section 5.1(c)(i). |
(j) | “Book-Entry Shares” shall have the meaning set forth in Section 4.1(a). |
(k) | “business day” shall mean have the meaning set forth in Section 1.2. |
(l) | “Buyer Parties” shall mean, collectively, the Strategic Investor, the Controlling Shareholder, Merger Sub and Xx. Xxxxxxxx Xxxx. |
(m) | “Buyer Termination Fee” shall have the meaning set forth in Section 8.5(c). |
(n) | “Cayman Companies Law” shall have the meaning set forth in Section 1.1. |
(o) | “Cayman Plan of Merger” shall have the meaning set forth in Section 1.3. |
(p) | “Change of Recommendation” shall have the meaning set forth in Section 6.2(b). |
(q) | “Closing” and “Closing Date” shall have meanings set forth in Section 1.2. |
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(r) | “Company” shall have the meaning set forth in the Preamble. | ||
(s) | “Company Approvals” shall have the meaning set forth in Section 5.1(d)(i). | ||
(t) | “Company Awards” shall have the meaning set forth in Section 4.3(b). | ||
(u) | “Company Benefit Plans” shall have the meaning set forth in Section 5.1(h)(i). | ||
(v) | “Company Disclosure Schedule” shall have the meaning set forth in Section 5.1. | ||
(w) | “Company IP” shall have the meaning set forth in Section 5.1(p)(i). | ||
(x) | “Company Option” shall have the meaning set forth in Section 4.3(a). | ||
(y) | “Company Parties” shall mean, collectively, the Company and its Subsidiaries. | ||
(z) | “Company Recommendation” shall have the meaning set forth in Section 5.1(c)(ii). | ||
(aa) | “Company Reports” shall have the meaning set forth in Section 5.1(e)(i). | ||
(bb) | “Confidentiality Agreement” shall have the meaning set forth in Section 6.6. | ||
(cc) | “Constituent Corporations” shall have the meaning set forth in the Preamble. | ||
(dd) | “Continuing Shareholders” shall have the meaning set forth in the Preamble. | ||
(ee) | “Contract” shall have the meaning set forth in Section 5.1(d)(ii). | ||
(ff) | “Controlling Shareholder” shall have the meaning set forth in the Preamble. For avoidance of doubt, references to Controlling Shareholder shall not include Xx. Xxxxxxxx Xxxx in his capacity as an officer and director of the Company. | ||
(gg) | “CSRC” shall have the meaning set forth in Section 5.1(i)(ix). | ||
(hh) | “Damages” shall have the meaning set forth in Section 6.11(b). | ||
(ii) | “Depositary” shall have the meaning set forth in Section 4.2(h). | ||
(jj) | “Deposit Agreement” shall have the meaning set forth in Section 4.2(h). | ||
(kk) | “Disclosed Conditions” shall have the meaning set forth in Section 5.2(d)(ii). |
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(ll) | “Dissenting Shareholders” shall have the meaning set forth in Section 4.1(a). | ||
(mm) | “Dissenting Shares” shall have the meaning set forth in Section 4.1(a). | ||
(nn) | “DTC” shall have the meaning set forth in Section 4.2(b). | ||
(oo) | “Effective Time” shall have the meaning set forth in Section 1.3. | ||
(pp) | “Employees” shall have the meaning set forth in Section 5.1(o). | ||
(qq) | “Encumbrance” shall have the meaning set forth in Section 5.1(k)(iv). | ||
(rr) | “Environmental Law” shall have the meaning set forth in Section 5.1(m). | ||
(ss) | “ERISA” shall have the meaning set forth in Section 5.1(h)(i). | ||
(tt) | “Exchange Act” shall have the meaning set forth in Section 5.1(d)(i). | ||
(uu) | “Exchange Fund” shall have the meaning set forth in Section 4.2(a). | ||
(vv) | “Excluded Share” and “Excluded Shares” shall have the meaning set forth in Section 4.1(a). | ||
(ww) | “Facility Agreement” shall have the meaning set forth in Section 5.2(d)(ii). | ||
(xx) | “FCPA” shall have the meaning set forth in Section 5.1(i)(iv). | ||
(yy) | “Financial Advisor” shall have the meaning set forth in the Recitals. | ||
(zz) | “Financing” shall have the meaning set forth in Section 5.2(d)(ii). | ||
(aaa) | “Financing Date” shall have the meaning set forth in Section 5.2(d)(i). | ||
(bbb) | “GAAP” shall have the meaning set forth in Section 5.1(e)(ii). | ||
(ccc) | “Governmental Antitrust Entity” shall have the meaning set forth in Section 5.1(d)(i). | ||
(ddd) | “Governmental Entity” shall have the meaning set forth in Section 5.1(d)(i). | ||
(eee) | “Hazardous Substance” shall have the meaning set forth in Section 5.1(m). | ||
(fff) | “IND” shall have the meaning set forth in Section 5.1(i)(v). | ||
(ggg) | “Indemnified Party” shall have the meaning set forth in Section 6.11(c). |
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(hhh) | “Independent Committee” shall have the meaning set forth in the Recitals. | ||
(iii) | “Injunction” shall have the meaning set forth in Section 7.1(c). | ||
(jjj) | “Intellectual Property” shall have the meaning set forth in Section 5.1(p)(iv). | ||
(kkk) | “Judgment” shall have the meaning set forth in Section 5.1(g). | ||
(lll) | “Knowledge” shall mean, with respect to the Company, the Chief Financial Officer, Chief Operating Officer and Chief Technology Officer of the Company, and with respect to any other party hereto, any C-level officer of such party or any employees of such party with equivalent titles. | ||
(mmm) | “Laws” shall have the meaning set forth in Section 5.1(i)(i). | ||
(nnn) | “Leased Real Property” shall have the meaning set forth in Section 5.1(k)(ii). | ||
(ooo) | “Lenders” shall have the meaning set forth in Section 5.2(d)(ii). | ||
(ppp) | “Liabilities” shall have the meaning set forth in Section 5.1(g). | ||
(qqq) | “Licenses” shall have the meaning set forth in Section 5.1(i)(ii). | ||
(rrr) | “Lien” means, with respect to any asset (including any security) any option, claim, mortgage, lien, pledge, charge, security interest or encumbrance or restrictions of any kind in respect of such asset. | ||
(sss) | “Material Adverse Effect” means any change or effect, event, violation, circumstance, occurrence, state of facts or development (any such item, an “Effect”) that is, or would reasonably be expected to be, either individually or in the aggregate with all changes, effects, events, violations, circumstances, occurrences, states of fact or developments, materially adverse to the business, results of operations or financial condition of the Company and its Subsidiaries, taken as a whole; provided that no Effect, alone or in combination, related to or arising out of any of the following shall be taken into account in determining whether a Material Adverse Effect may exist: (A) circumstances generally affecting the pharmaceutical industry (which changes or developments, in each case, do not materially disproportionately affect the Company and its Subsidiaries taken as a whole, as compared to other companies participating in the same industry as the Company); (B) changes affecting the United States or PRC economy or political conditions in the United States, PRC, Hong Kong or the Cayman Islands in general or any acts of terrorism, military actions or war (which changes or developments, in each case, do not materially disproportionately affect the Company and its Subsidiaries taken as a |
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whole, as compared to other companies participating in the same industry as the Company), (C) the announcement of this Agreement or pendency of the transactions contemplated by this Agreement or the identity of the Strategic Investor or the Controlling Shareholder as the acquiror of the Company; (D) any change in the Company’s stock price or trading volume (it being understood that any change in the Company underlying or contributing to such change in stock price or trading volume may be taken into account in determining whether there exists a Material Adverse Effect); (E) any changes in applicable Law or GAAP; (F) any failure to meet internal or published projections, forecasts or revenue or earnings predictions for any period (provided that the underlying causes of such failures shall not be excluded); (G) actions or omissions of the Company or any of its Subsidiaries taken with the consent, authorization, approval, involvement or knowledge of the Strategic Investor, the Controlling Shareholder, Merger Sub or Xx. Xxxxxxxx Xxxx; (H) any breach of this Agreement by the Strategic Investor, the Controlling Shareholder or the Merger Sub; or (I) any amendment to, termination of or failure of a condition under the Share Transfer Agreement by and between the Company and Guizhou Huixian Investment Management Co., Ltd. dated as of September 21, 2010. | |||
(ttt) | “Material Contract” shall have the meaning set forth in Section 5.1(j)(i). | ||
(uuu) | “M&A Rules” shall have the meaning set forth in Section 5.1(i)(ix). | ||
(vvv) | “M&A Rules and Related Clarifications” shall have the meaning set forth in Section 5.1(i)(ix). | ||
(www) | “Memorandum and Articles of Association” shall have the meaning set forth in Section 2.1. | ||
(xxx) | “Merger” shall have the meaning set forth in the Recitals. | ||
(yyy) | “Merger Sub” shall have the meaning set forth in the Preamble. | ||
(zzz) | “Non-Wholly Owned Subsidiary” shall have the meaning set forth in Section 5.1(b)(i). | ||
(aaaa) | “NYSE” shall have the meaning set forth in Section 6.7. | ||
(bbbb) | “Opinion” shall have the meaning set forth in the Recitals. | ||
(cccc) | “Owned Real Property” shall have the meaning set forth in Section 5.1(k)(i). | ||
(dddd) | “Paying Agent” shall have the meaning set forth in Section 4.2(a). | ||
(eeee) | “Per ADS Merger Consideration” shall have the meaning set forth in Section 4.1(a). | ||
(ffff) | “Per Share Merger Consideration” shall have the meaning set forth in Section 4.1(a). |
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(gggg) | “Permitted Liens” means (i) Liens for Taxes, assessments and governmental charges or levies not yet due and payable or that are being contested in good faith and by appropriate proceedings; (ii) mechanics’, carriers’, workmen’s, repairmen’s, materialmen’s or other Liens or security interests that secure a liquidated amount that are being contested in good faith and by appropriate proceedings; (iii) leases, subleases and licenses (other than capital leases and leases underlying sale and leaseback transactions); (iv) Liens imposed by applicable Law; (v) pledges or deposits to secure obligations under workers’ compensation Laws or similar legislation or to secure public or statutory obligations; (vi) pledges and deposits to secure the performance of bids, trade contracts, leases, surety and appeal bonds, performance bonds and other obligations of a similar nature, in each case in the ordinary course of business; (vii) easements, covenants and rights of way (unrecorded and of record) and other similar restrictions of record, and zoning, building and other similar restrictions, in each case that do not adversely affect in any material respect the current use of the applicable property owned, leased, used or held for use by the Company or any of its Subsidiaries; (viii) Liens the existence of which are specifically disclosed in the notes to the consolidated financial statements of the Company included in any Company Reports filed prior to the date of this Agreement; and (ix) any other Liens that do not secure a liquidated amount, that have been incurred or suffered in the ordinary course of business and that would not, individually or in the aggregate, have a Material Adverse Effect or a material effect on the Company or the ability of Controlling Shareholder to obtain the Financing. |
(hhhh) | “Person” shall mean any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, Governmental Entity or other entity of any kind or nature. |
(iiii) | “Pharmaceutical Law” shall have the meaning set forth in Section 5.1(i)(i). |
(jjjj) | “PRC” means the People’s Republic of China, but solely for the purposes of this Agreement, excluding the Hong Kong S.A.R., the Macau Special Administrative Region and the islands of Taiwan. |
(kkkk) | “Proxy Statement” shall have the meaning set forth in Section 5.2(g). | ||
(llll) | “Representatives” shall have the meaning set forth in Section 5.1(s)(i). |
(mmmm) | “Requisite Company Vote” shall have the meaning set forth in Section 5.1(c)(i). |
(nnnn) | “SAFE” shall have the meaning set forth in Section 5.1(i)(ix). |
(oooo) | “Xxxxxxxx-Xxxxx Act”: shall have the meaning set forth in Section 5.1(e)(i). |
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(pppp) | “SEC” shall have the meaning set forth in Section 5.1. | ||
(qqqq) | “Securities Act” shall have the meaning set forth in Section 5.1(e)(i). | ||
(rrrr) | “SFDA” shall have the meaning set forth in Section 5.1(i)(i). | ||
(ssss) | “Share” and “Shares” shall have the meaning set forth in Section 4.1(a). | ||
(tttt) | “Share Certificate” shall have the meaning set forth in Section 4.1(a). | ||
(uuuu) | “Shareholders Meeting” shall have the meaning set forth in Section 6.4. | ||
(vvvv) | “Stock Plan” shall have the meaning set forth in Section 5.1(b)(i). | ||
(wwww) | “Strategic Investor” shall have the meaning set forth in the Preamble. |
(xxxx) | “Strategic Investor and Controlling Shareholder Approvals” shall have the meaning set forth in Section 5.2(c)(i). |
(yyyy) | “Strategic Investor and Controlling Shareholder Information” shall have the meaning set forth in Section 5.2(g). |
(zzzz) | “Subsidiary” shall mean, with respect to any party, any corporation, limited liability company, partnership or similar entity of which (x) such party or any other Subsidiary of such party is a general partner or (y) at least a majority of the securities (or other interests having by their terms ordinary voting power to elect a majority of the board of directors or other performing similar functions with respect to such corporation or other organization) is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries, or by such party and one or more of its Subsidiaries. |
(aaaaa) | “Superior Proposal” means a bona fide Acquisition Proposal, which was not obtained in material violation of Section 6.2, and which would result in any Person (or its shareholders, members or other equity owners) becoming the beneficial owner, directly or indirectly, of more than 50% of the assets (on a consolidated basis) or more than 50% of the total voting power of the equity securities of the Company that the board of directors of the Company (acting through the Independent Committee) has determined in its good faith judgment is reasonably likely to be consummated in accordance with its terms, taking into account all legal, financial and regulatory aspects of the proposal and the Person making the proposal, and would, if consummated, result in a transaction more favorable to the Company’s shareholders from a financial point of view than the transaction contemplated by this Agreement (after taking into account any revisions to the terms of the transaction contemplated by this Agreement pursuant to Section 6.2(b)). |
(bbbbb) | “Surviving Corporation” shall have the meaning set forth in Section 1.1. |
(ccccc) | “Takeover Statute” shall have the meaning set forth in Section 5.1(l). |
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(ddddd) | “Tax” or “Taxes” means all taxes (whether United States federal, state, local or non-United States national provincial or local) including all income, profits, franchise, gross receipts, environmental, customs duty, capital stock, net worth, severances, stamp, payroll, sales, employment, use, property, withholding, excise, production, value added, goods and services, occupancy, transfer and other taxes, duties or assessments of any nature whatsoever, together with all interest, penalties and additions imposed with respect to such amounts. |
(eeeee) | “Tax Return” means all returns, forms, reports and other documentation required to be filed with, or supplied to, any United States federal, state, local or non-United States national provincial or local tax authority with respect to Taxes (and any amendments, supplements and supporting documentation thereto). |
(fffff) | “Termination Date” shall have the meaning set forth in Section 8.2. | ||
(ggggg) | “Termination Fee” shall have the meaning set forth in Section 8.5(b). | ||
(hhhhh) | “Trade Secrets” shall have the meaning set forth in Section 5.1(p). | ||
(iiiii) | “Wholly Owned Subsidiary” shall have the meaning set forth in Section 5.1(b)(i). |
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Tongjitang Chinese Medicines Company, a Cayman Islands company |
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By: | ||||||||
Name: | ||||||||
Title: | ||||||||
Fosun Industrial Co., Limited, a company incorporated in Hong Kong |
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By: | ||||||||
Name: | ||||||||
Title: | ||||||||
Hanmax Investment Limited, a British Virgin Islands company |
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By: | ||||||||
Name: | ||||||||
Title: | ||||||||
Tonsun International Company Limited, a Cayman Islands company |
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By: | ||||||||
Name: | ||||||||
Title: | ||||||||
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XXXX XX XXXXXX
(1) | TONSUN INTERNATIONAL COMPANY LIMITED, an exempted company incorporated under the laws of the Cayman Islands on 20 October 2010, with its registered office situate at Cricket Square, Xxxxxxxx Drive, XX Xxx 0000, Xxxxx Xxxxxx, XX0-0000, Cayman Islands (“Tonsun”); and |
(2) | TONGJITANG CHINESE MEDICINES COMPANY, an exempted company incorporated under the laws of the Cayman Islands on 16 May 2006, with its registered office situate at XX Xxx 000, Xxxxxx Xxxxx, Xxxxx Xxxxxx, XX0-0000, Cayman Islands (“Tongjitang” or “Surviving Company” and together with Tonsun, the “Constituent Companies”). |
(a) | Tonsun and Tongjitang have agreed to merge (the “Merger”) on the terms and conditions contained or referred to in an agreement (the “Agreement”) dated [•] 2010 made between Fosun Industrial Co. Limited; Hanmax Investment Limited; Tonsun and Tongjitang, a copy of which is attached as Annex A to this Plan of Merger and under the provisions of Part XVI of the Companies Law (2010 Revision) (the “Companies Law”). |
(b) | This Plan of Merger is made in accordance with section 233 of the Companies Law. |
1. | The Constituent Companies to the Merger are Tonsun International Company Limited and Tongjitang Chinese Medicines Company. |
2. | The name of the Surviving Company shall be Tongjitang Chinese Medicines Company. |
3. | Each Constituent Company has and the Surviving Company shall have its registered office at Cricket Square, Xxxxxxxx Drive, XX Xxx 0000, Xxxxx Xxxxxx, XX0-0000, Xxxxxx Xxxxxxx. |
4. | Immediately prior to the Merger the authorized share capital of Tonsun was U.S.$50,000 divided into 50,000,000 ordinary shares of US$0.001 par value per share all of which have been issued. |
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5. | Immediately prior to the Merger the authorized share capital of Tongjitang was U.S.$500,000 divided into 500,000,000 ordinary shares of US$0.001 par value per share of which 104,066,526 ordinary shares had been issued fully paid. |
6. | The authorized share capital of the Surviving Company shall be U.S.$50,000 divided into 50,000,000 ordinary shares of US$0.001 par value per share. |
7. | Each issued and outstanding ordinary share of Tonsun shall be converted into and continue as an ordinary share of the Surviving Company in accordance with the provisions of the Agreement. |
8. | On the Effective Date (as defined below) the shares of the Surviving Company shall: |
(a) | be entitled to one vote per share; |
(b) | be entitled to such dividends as the Board of Directors may from time to time declare; |
(c) | in the event of a winding-up or dissolution of the Surviving Company, whether voluntary or involuntary or for the purpose of a reorganization or otherwise or upon any distribution of capital, be entitled to the surplus assets; and |
(d) | generally be entitled to enjoy all of the rights attaching to shares; |
9. | The Merger shall take effect on [SPECIFY DATE]/or [ten days] after the date this Plan of Merger is registered by the Registrar of Companies (the “Effective Date”). |
10. | On the Effective Date the rights, property of every description including choses in action, and the business, undertaking, goodwill, benefits, immunities and privileges of each of the Constituent Companies shall immediately vest in the Surviving Company which shall be liable for and subject to, in the same manner as the Constituent Companies, all mortgages, charges, security interests, contracts, obligations, claims, debts and liabilities of each of the Constituent Companies. |
11. | The Memorandum of Association and Articles of Association of Tonsun immediately prior to the Effective Date shall be the Memorandum of Association and Articles of Association of the Surviving Company (save for references to the name). |
12. | There are no amounts or benefits payable to the directors of the Constituent Companies on the Merger becoming effective. |
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13. | The names and addresses of the directors of the Surviving Company are as follows: |
NAME
|
ADDRESS | |
Xxxxxxxx XXXX
|
Room 3030, Four Seasons Place 0 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxx Xxxx |
|
Xxxx XX
|
Xx. 00, Xxxx 0, Xxxxxxxx 00 No. 21 Jigui Road, Yunyan District Guiyang City, Guizhou Province, P.R.China |
|
Xxxxxxx XXX
|
Room 602, Xx. 00, Xxxx 000 Xxxxxxxxxx Xxxx, Xxxxxxxx, X.X.Xxxxx |
14.
|
(a) | Tonsun International Company Limited as secured creditor; and |
(b) | Tongjitang Chinese Medicines Company as secured creditor. |
15. | The directors of Tongjitang may terminate this Plan of Merger immediately prior to the Effective Date in the event that financing has not been made available under the terms of a facility agreement dated 24 September 2010 made between Hanmax Investment Limited as borrower, CITIC Bank International Limited as arranger, CITIC Bank International Limited as original lender, CITIC Bank International Limited as agent, and CITIC Bank International Limited as security trustee, or through such alternative sources as permitted by the Agreement. |
Director |
Director |
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(the “Agreement”)
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