NOTE PURCHASE AGREEMENT
EXHIBIT
3.2
EXECUTION
VERSION
This
Note Purchase Agreement
(the
“Agreement”)
is
made as of April 23, 2008, by and between Beams
Power Investment Limited,
a
company with limited liability registered under the BVI Business Companies
Act, 2004 (as amended) of the British Virgin Islands (the “Issuer”),
with
its registered office located at Akara Building, 00 Xx
Xxxxxx
Xxxxxx,
Xxxxxxxx Cay I, Road Town, Tortola, British Virgin Islands, and Warburg
Pincus Private Equity IX, L.P.
(the
“Buyer”).
A. The
Issuer and the Buyer are executing and delivering this Agreement in reliance
upon the exemption from securities registration afforded by Section 4(1) of
the
Securities Act of 1933, as amended (the “Securities
Act”).
B. As
of the
date hereof, the Issuer owns an aggregate of 36,000,000 shares of common stock,
par value U.S.$0.0001 per share (the “Common
Stock”),
of
Synutra International, Inc., a Delaware corporation (the “Company”).
C. The
Buyer
wishes to purchase from the Issuer, and the Issuer wishes to sell to the Buyer,
upon the terms and conditions stated in this Agreement, that senior exchangeable
note, in the form attached hereto as Exhibit
A,
in the
aggregate principal amount of U.S.$30,000,000, which note shall be exchangeable
into Common Stock held by the Issuer, in accordance with the terms thereof
(as
may be amended, supplemented, restated or otherwise modified from time to time,
the “Note”).
D. Contemporaneously
with the execution and delivery of this Agreement, the Company, the Issuer
and
the Buyer are executing and delivering a Registration Rights Agreement,
substantially in the form attached hereto as Exhibit
B
(as may
be amended, supplemented, restated or otherwise modified from time to time,
the
“Registration
Rights Agreement”),
pursuant to which the Company will agree to provide certain registration rights
with respect to the Registrable Securities (as defined in the Registration
Rights Agreement) under the Securities Act and the rules and regulations
promulgated thereunder, and applicable state securities laws.
E. Contemporaneously
with the execution and delivery of this Agreement, the Issuer is executing
and
delivering to the Buyer, as a purchaser of the Note and as collateral agent
(the
"Collateral
Agent"),
a
Share Pledge Agreement, substantially in the form attached hereto as
Exhibit
C
(as may
be amended, supplemented, restated or otherwise modified from time to time,
the
“Pledge
Agreement”),
pursuant to which the Issuer will pledge certain shares of Common Stock held
by
the Issuer as collateral for its obligations under the Note.
F. Contemporaneously
with the execution and delivery of this Agreement, the Issuer is executing
and
delivering to the Buyer a purpose statement on Form FR G-3 disclosing, among
other things, the amount of the Note proceeds and the purpose for which the
Note
proceeds will be used by the Issuer.
G. The
Note
will rank senior to all outstanding and future indebtedness of the
Issuer.
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NOW,
THEREFORE,
the
Issuer and the Buyer hereby agree as follows:
1. DEFINITIONS.
In
addition to those terms defined above and elsewhere in this Agreement, for
the
purposes of this Agreement, the following terms shall have the meanings set
forth below:
“Affiliate”
means,
with respect to any Person, any other Person which directly or indirectly
through one or more intermediaries controls, is controlled by, or is under
common control with, such Person.
“Business
Day”
means
any day other than Saturday, Sunday or other day on which commercial banks
in
Hong Kong Special Administrative Region, People’s Republic of China are
authorized or required by law to remain closed.
“Company Competitor”
means
any Person engaged in the business which is directly or indirectly competitive
with the business of the Company or any Company Subsidiary, as described in
the
Company’s periodic reports currently or hereinafter filed with the
SEC.
“Company Subsidiary”
means
a“significant
subsidiary” of the Company as such term is defined under Rule 1-02(w) of
Regulation S-X promulgated
under
the rules and regulations of the SEC
as in
effect on the date hereof, except
for, if applicable, Qingdao Xxxxx Xxxx Dairy Co., Ltd.
“Contingent
Obligation”
means,
as to any Person, any direct or indirect liability, contingent or otherwise,
of
that Person with respect to any indebtedness, lease, or other obligation of
another Person if the primary purpose or intent of the Person incurring such
liability, or the primary effect thereof, is to provide assurance to the obligee
of such liability that such liability will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
liability will be protected (in whole or in part) against loss with respect
thereto, provided
that
indemnification provisions not otherwise constituting a guarantee shall not
be
deemed to be a “Contingent Obligation”.
“Effectiveness
Date”
has
the
meaning set forth in the Registration Rights Agreement.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“Exchange
Shares”
means
the shares of Common Stock delivered or deliverable upon exchange of the
Note.
“GAAP”
means
United States generally accepted accounting principles, consistently
applied.
“Indebtedness”
of
any
Person means, without duplication (i) all indebtedness for borrowed money,
(ii)
all obligations issued, undertaken or assumed as the deferred purchase price
of
property or services, including (without limitation) “capital leases” which
would be shown as a liability on the balance sheet in accordance with GAAP
(other than trade payables entered into in the ordinary course of business),
(iii) all reimbursement or payment obligations with respect to letters of
credit, surety bonds and other similar instruments, (iv) all obligations
evidenced by notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the acquisition of
property, assets or businesses, (v) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property), (vi) all monetary obligations under
any
leasing or similar arrangement which, in connection with GAAP, consistently
applied for the periods covered thereby, is classified as a capital lease,
(vii)
all indebtedness referred to in clauses (i) through (vi) above secured by (or
for which the holder of such Indebtedness has an existing right, contingent
or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment
of
such indebtedness, and (viii) all Contingent Obligations in respect of
indebtedness or obligations of others of the kinds referred to in clauses (i)
through (vii) above.
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Issuer
"Knowledge”,
"information",
"belief"
or
"awareness"
means
the knowledge, information, belief or awareness, respectively, which
the Issuer would have if the Issuer had made due and reasonable
enquiries of the applicable matter(s).
“Material
Adverse Effect”
means
any event, change or occurrence that, individually or together with any other
event, change or occurrence, has a material adverse impact on (i) the assets,
liabilities, financial condition, business, or results of operations of the
Issuer, the Company and the Company Subsidiaries, taken as a whole, or (ii)
the
ability of the Issuer to perform its obligations under the Transaction Documents
or the Company to perform its obligations under the Registration Rights
Agreement.
“Nasdaq”
means
The Nasdaq Stock Market, Inc.
“Permitted
Liens”
means
(i) mechanics’, carriers’, or workmen’s, repairmen’s or similar liens arising or
incurred in the ordinary course of business, (ii) liens for taxes, assessments
and other governmental charges that are not due and payable or which may
hereafter be paid without penalty or which are being contested in good faith
by
appropriate proceedings and (iii) other imperfections of title or encumbrances,
if any, that do not, individually or in the aggregate, materially impair the
use
or value of the property to which they relate.
“Person”
means
an individual, corporation, partnership, limited liability company, trust,
business trust, association, joint stock company, joint venture, sole
proprietorship, unincorporated organization, governmental authority or any
other
form of entity not specifically listed herein.
“Registrable
Securities”
has
the
meaning set forth in the Registration Rights Agreement.
“Registration
Statement”
has
the
meaning set forth in the Registration Rights Agreement.
“Required
Holders”
has
the
meaning set forth in the Note.
“SEC”
means
the United States Securities and Exchange Commission.
“Securities”
means
the Note and Exchange Shares.
“Subsidiary”
of
any
subject Person means another Person, an amount of the voting securities, other
voting ownership or voting partnership interests of which is sufficient to
elect
at least a majority of its Board of directors or other governing body (or if
there are no such voting interests, 50% or more of the equity interests of
which) is owned directly or indirectly by such subject Person.
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“Transaction
Documents”
means
this Agreement, the Note, the Registration Rights Agreement and the Pledge
Agreement.
2. PURCHASE
AND SALE OF NOTE.
(a) Purchase
of Note.
(i) Note. Subject
to the satisfaction (or waiver) of the conditions set forth in Section 6 and
Section 7 below, the Issuer shall issue and sell to the Buyer, and the Buyer
agrees to purchase from the Issuer on the Closing Date (as defined below),
the
Note in the aggregate principal amount of U.S.$30,000,000 (the “Closing”).
(ii) Closing.
The
date and time of the Closing (the “Closing
Date”)
shall
be 10:00 a.m., New York City time, on the date hereof (or such other time and
date as is mutually agreed to by the Issuer and the Buyer) after notification
of
satisfaction (or waiver) of the conditions to the Closing set forth in Section
6
and Section 7 below at the offices of Paul, Hastings, Xxxxxxxx & Xxxxxx LLP,
21 22/F Bank of China, 1 Garden Road, Central Hong Kong.
(iii) Purchase
Price.
The
aggregate purchase price for the Note to be purchased by the Buyer at the
Closing (the “Purchase
Price”)
shall
be U.S.$30,000,000.
(b) Form
of Payment.
On the
Closing Date, (i) the Buyer shall pay its Purchase Price to the Issuer for
the
Note to be issued and sold to the Buyer at the Closing, by wire transfer of
immediately available funds in accordance with the Issuer’s written wire
instructions and (ii) the Issuer shall deliver to the Buyer the Note
(allocated in the principal amounts as the Buyer shall request) which the Buyer
is then purchasing hereunder, duly executed on behalf of the Issuer in favor
of
the Buyer.
3. BUYER’S
REPRESENTATIONS AND WARRANTIES.
The
Buyer
represents and warrants that:
(a) Organization
and Existence.
The
Buyer is a validly existing limited partnership and has all requisite
partnership power and authority to invest in the Securities pursuant to this
Agreement.
(b) Authorization.
The
execution, delivery and performance by the Buyer of the Transaction Documents
have been duly authorized, and the Transaction Documents constitute the valid
and legally binding obligations of the Buyer, enforceable against the Buyer
in
accordance with their respective terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability, relating to or affecting creditors’ rights
generally.
(c) Purchase
Entirely for Own Account.
The
Securities to be received by the Buyer hereunder will be acquired for the
Buyer’s own account, not as nominee or agent, and not with a view to the resale
or distribution of any part thereof in violation of the Securities Act, and
the
Buyer has no present intention of selling, granting any participation in, or
otherwise distributing the same in violation of the Securities Act. The Buyer
is
not a broker-dealer registered with the SEC under the Exchange Act, or an entity
engaged in a business that would require it to be so registered.
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(d) Investment
Experience.
The
Buyer acknowledges that it can bear the economic risk and complete loss of
its
investment in the Securities and has such knowledge and experience in financial
or business matters that it is capable of evaluating the merits and risks of
the
investment in the Securities contemplated hereby.
(e) Disclosure
of Information.
The
Buyer acknowledges having had an opportunity to receive all information related
to the Company and the Issuer requested by it and to ask questions of and
receive answers from the Issuer regarding businesses of the Company and the
Issuer. Neither such inquiries nor any other investigation conducted by or
on
behalf of the Buyer or its representatives or counsel shall modify, amend or
affect the Buyer’s right to rely on the truth, accuracy and completeness of the
Issuer’s representations and warranties contained in the Transaction Documents.
The Buyer understands that it is not relying on any representation of any kind
made by the Company or the Issuer regarding the Company, the Issuer, the
Securities or any other matter other than as set forth in the Transaction
Documents.
(f) Restricted
Securities.
The
Buyer understands that the Securities are characterized as “restricted
securities” under the U.S. federal securities laws inasmuch as they are being
acquired from the Issuer in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may not be
resold without registration under the Securities Act or exemption therefrom;
provided,
however,
that by
making the representations herein, the Buyer does not agree to hold any of
the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the Securities Act and pursuant
to
the applicable terms of the Transaction Documents.
(g) Accredited
Buyer.
The
Buyer is an accredited investor as defined in Rule 501(a) of Regulation D,
as
amended, under the Securities Act.
(h) No
General Solicitation.
The
Buyer did not learn of the investment in the Securities as a result of any
public advertising or general solicitation.
(i) Brokers
and Finders.
No
Person will have, as a result of the transactions contemplated by the
Transaction Documents, any valid right, interest or claim against or upon the
Company, the Issuer or the Buyer for any commission, fee or other compensation
pursuant to any agreement, arrangement or understanding entered into by or
on
behalf of the Buyer.
4. REPRESENTATIONS
AND WARRANTIES OF THE ISSUER.
The
Issuer represents and warrants to and for the benefit of the Buyer, as
of the
date hereof and as of the Closing Date, except
as
set forth in the SEC Documents (as defined below), as
follows:
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(a) Organization,
Good Standing and Qualification.
(i) The
Issuer is a company duly organized, validly existing and in good standing under
the laws of the British Virgin Islands and has all requisite corporate power
and
authority to carry on its business as now conducted and to own and lease its
properties. The Issuer has furnished to the Buyer true and complete copies
of
the Issuer's Memorandum of Association and Articles of Association, as amended
and in effect as of the date hereof (the "Issuer
Articles").
The
Issuer is not in violation of any provision of the Issuer Articles. The Issuer
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property makes such qualification necessary, except
where the failure to so qualify, would not have a Material Adverse Effect.
To
the Issuer's Knowledge, no proceeding has been instituted in any jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail, such
power and authority or qualification.
(ii) The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to carry on its business as now conducted and to own and lease
its
properties. The Company is not in violation of any provision of the Company’s
Certificate of Incorporation, including any certificate of designations, or
the
Company’s Bylaws. The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the conduct
of
its business or its ownership or leasing of property makes such qualification
necessary, except where the failure to so qualify, would not have a Material
Adverse Effect. To the Issuer's Knowledge, no proceeding has been instituted
in
any jurisdiction revoking, limiting or curtailing or seeking to revoke, limit
or
curtail, such power and authority or qualification.
(iii) Each
Company Subsidiary is duly formed, validly existing and in good standing under
the laws of its jurisdiction of organization, with full power and authority
to
conduct its business as currently conducted and to own or lease its properties.
The Issuer has, if requested, made available for the Buyer’s review, true and
complete copies or the articles of incorporation and bylaws (or comparable
organizational documents) of each Company Subsidiary. To the Issuer's Knowledge,
no Company Subsidiary is in violation of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or
charter documents. Each Company Subsidiary is duly qualified to do business
as a
foreign corporation and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property makes such
qualification necessary, except where the failure to so qualify, would not
have
a Material Adverse Effect. To the Issuer's Knowledge, no proceeding has been
instituted in any jurisdiction revoking, limiting or curtailing or seeking
to
revoke, limit or curtail, such power and authority or qualification. Qingdao
Xxxxx Xxxx Dairy Co., Ltd. is currently in a voluntary winding-up
process.
As
of the
date hereof, the Issuer owns an aggregate of 36,000,000 fully paid and
nonassessable shares of Common Stock free and clear of any and all liens, (a)
11,000,000 of which are evidenced by Common Stock certificate number SII-04525,
dated April 16, 2007, and (b) 25,000,000 of which are evidenced by Common Stock
certificate number SII-04524, dated April 16, 2007. The Issuer has good and
valid title to all such shares, and all of the outstanding shares of capital
stock of the Company are validly issued and are fully paid, non-assessable
and
free of any preemptive and similar rights. Except as described in the SEC
Documents available on the SEC’s XXXXX system, the Company owns all of the
capital stock or membership interests of each Company Subsidiary free and clear
of any and all liens, security interest and any other encumbrances or
restrictions, and all of the outstanding shares of capital stock of each Company
Subsidiary are validly issued and are fully paid, non-assessable and free of
any
preemptive and similar rights. The Company has no Subsidiaries except for the
entities set forth in Schedule
I
attached
hereto. The Issuer has no subsidiaries other than the Company, the Company
Subsidiaries, and subsidiaries of the Company which are not Company
Subsidiaries.
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(b) Authorization.
Each of
the Company and the Issuer has full corporate power and authority and has taken
all requisite action necessary for (i) the authorization, execution and delivery
of the Transaction Documents to which it is a party, and (ii) the authorization
of the performance of its obligations hereunder or thereunder. The Board of
Directors of each of the Company and the Issuer has duly authorized the
execution and delivery of the Transaction Documents to which it is a party
and
its consummation of the transactions contemplated hereby and thereby, and such
execution, delivery and consummation does not require (A) any further filing,
consent, or authorization by the Issuer, the Company or the Board of Directors
or shareholders of the Issuer or the Company, or (B) any consent of, action
by
or in respect of, or filing, submission or registration with, or giving of
any
notice to, any Person, governmental body, agency, or official. Each of the
Company and the Issuer has duly executed and delivered the Transaction Documents
to which it is a party and such Transaction Documents constitute the legal,
valid and binding obligations of it, enforceable against it in accordance with
their respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to
or affecting creditors’ rights generally, and to the unenforceability of
indemnification provisions that may be against public policy.
(c) Capitalization.
The SEC
Documents available on the SEC’s XXXXX system set forth as of the date hereof:
(a) the authorized capital stock of the Company; (b) the number of shares of
capital stock issued and outstanding; (c) the number of shares of capital stock
available for issuance pursuant to the Company’s stock and incentive plans, if
any; (d) the number of shares of capital stock issuable and reserved for
issuance pursuant to securities exercisable for, or convertible into or
exchangeable for any shares of capital stock of the Company; (e) the number
of
shares of Common Stock for which the Issuer and its Affiliates are the
"beneficial owners" (as defined for purposes of Rule 13d-3 of the Exchange
Act).
All of the issued and outstanding shares of capital stock of the Company are
duly authorized, validly issued, fully paid and non-assessable and free of
preemptive and similar rights and were issued in compliance with all applicable
federal and state securities laws and any rights of third parties. Except as
set
forth in the SEC Documents available on the SEC’s XXXXX system, no securities of
the Company are entitled to preemptive or similar rights, and no Person has
any
right of first refusal, preemptive right, right of participation, or any similar
right to participate in the transactions contemplated by the Transaction
Documents. Except as set forth in the
SEC
Documents available on the SEC’s XXXXX system,
there
are no outstanding options, warrants, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights
or
obligations convertible into or exchangeable for, or giving any Person any
right
to subscribe for or acquire, any shares of capital stock of the Company, or
contracts by which the Company or any Company Subsidiary is or may become bound
to issue additional shares of capital stock of the Company, or securities or
rights convertible or exchangeable into shares of capital stock of the Company.
Except as set forth in the SEC Documents available on the SEC’s XXXXX system,
and as provided in the Registration Rights Agreement, no Person has the right
to
require the Company to register any securities of the Company under the
Securities Act, whether on a demand basis or in connection with the registration
of securities of the Company for its own account or for the account of any
other
Person. There are no outstanding securities or instruments of the Company or
any
Company Subsidiary that contain any redemption or similar provisions, and there
are no contracts, commitments, understandings or arrangements by which the
Company or any Company Subsidiary is or may become bound to redeem or otherwise
acquire any security of the Company or any Company Subsidiary. Except as set
forth in the SEC Documents available on the SEC’s XXXXX system, the Company or
one of the Company Subsidiaries has the unrestricted right to vote, and (subject
to limitations imposed by applicable law) to receive dividends and distributions
on, all capital securities of the Company Subsidiaries as owned by the Company
or any such Company Subsidiary.
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(d) Valid
Issuance.
The
Note has been duly and validly authorized and, when issued and paid for pursuant
to this Agreement, will be validly issued, and will be free and clear of all
taxes, liens, claims, restrictions on transfer, preemptive rights, rights of
first refusal or other encumbrances of any nature (other than those created
by
the Buyer pursuant to the Pledge Agreement), except for restrictions on transfer
set forth in the Transaction Documents or imposed by applicable securities
laws.
The transfer of the Exchange Shares deliverable upon exchange of the Note in
accordance with the terms thereof has been duly and validly authorized by the
Issuer's Board of Directors and, upon transfer, such Exchange Shares will be
validly issued, fully paid and nonassessable, and will be free and clear of
all
taxes, liens, claims, restrictions on transfer, preemptive rights, rights of
first refusal or other encumbrances of any nature (other than those created
by
the Buyer pursuant to the Pledge Agreement), except for restrictions on transfer
set forth in the Transaction Documents or imposed by applicable securities
laws.
(e) Consents.
The
execution, delivery and performance by the Issuer of the Transaction Documents,
and the execution, delivery and performance by the Company of the Registration
Rights Agreement, and the transactions contemplated thereby requires no consent
of, action by or in respect of, or filing, submission or registration with,
or
giving of any notice to, any Person, governmental body, agency, or official
except (i) the filing with the SEC of a current report on Form 8-K, (ii) the
filing with the SEC of one or more Registration Statements in accordance with
the requirements of the Registration Rights Agreement and (iii) those that
have
been made or obtained prior to the date of this Agreement. The Issuer is unaware
of any facts or circumstances that might prevent the Company or the Issuer
from
obtaining or effecting any of the registration, application or filings pursuant
to the preceding sentence.
(f) SEC
Documents.
During
the three (3) years prior to the date hereof, the Company has filed all reports,
schedules, forms, statements and other documents required to be filed by it
with
the SEC pursuant to the reporting requirements of the Securities Act and the
Exchange Act (all of the foregoing filed prior to the date hereof and all
exhibits included therein and financial statements, notes and schedules thereto
and documents incorporated by reference therein being hereinafter referred
to as
the "SEC
Documents").
The SEC
Documents as amended as of the date of this Agreement, complied in all material
respects with the requirements of the Exchange Act and the Securities Act and
the rules and regulations of the SEC promulgated thereunder, and none of the
SEC
Documents as amended as of the date of this Agreement, contained any untrue
statement of a material fact or omitted to state a 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.
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(g) Financial
Statements.
The
financial statements filed with the SEC as a part of the Annual Report on Form
10-K/A filed with the SEC on January 14, 2008 and Quarterly Report on Form
10-Q
filed with the SEC on February 12, 2008 present fairly, in all material
respects, the financial position of the Company and its consolidated
subsidiaries as of and at the dates indicated and the results of their
operations and cash flows for the periods specified therein, subject, in the
case of interim financial statements, to the normal year-end adjustments which
are not expected to be material in amount. Such financial statements have been
prepared in conformity with generally accepted accounting principles as applied
in the United States and in effect as of the date of the applicable financial
statements and supporting schedules, as applicable, applied on a consistent
basis throughout the periods involved, except as may be expressly stated in
the
related notes thereto, and comply in all material respects with the Securities
Act, the Exchange Act and the applicable rules and regulations of the SEC
thereunder. Except as set forth in such financial statements included in the
SEC
Documents filed prior to the date hereof, neither the Company nor any of its
Subsidiaries has incurred any liabilities, contingent or otherwise, except
those
incurred in the ordinary course of business consistent with past practice,
none
of which ordinary course liabilities, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.
(h) Absence
of Material Changes.
Since
December 31, 2007, there have not been any changes in the assets, liabilities,
financial condition, business or results of operation of the Issuer, the Company
or to the Issuer's Knowledge, any Company Subsidiary, which has had or would
reasonably be expected to have a Material Adverse Effect.
(i) No
Conflict, Breach, Violation or Default.
Neither
the execution, delivery and performance of the Transaction Documents by the
Company or the Issuer nor the consummation of any of the transactions
contemplated thereby will (i) conflict with or result in a violation of the
Issuer Articles, or any certificate of incorporation, certificate of formation,
any certificate of designations or other constituent documents of the Company
or
to the Issuer's Knowledge, any Company Subsidiary, the Company’s Bylaws or to
the Issuer's Knowledge, bylaws of any Company Subsidiary, (ii) give rise to
the
right to terminate, cancel, amend or accelerate the due date of any payment
under (with or without notice, lapse or time or both), or conflict with or
result in a breach of any term or provision of, or constitute a default (or
any
event which with notice or lapse of time or both would constitute a default)
under, or require any consent or waiver under or result in the execution or
imposition of any lien, charge or encumbrance upon the properties or assets
of
the Issuer, the Company or to the Issuer's Knowledge, any Company Subsidiary
pursuant to the terms of, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Issuer, the Company or any Company
Subsidiary is a party or by which the Company or any Company Subsidiary is
bound
or to which any of its assets or properties is subject, or (iii) result in
a
violation of any law, rule, regulation, order, judgment, injunction, decree
or
other restriction of any court or governmental authority, or the bylaws and
rules of Nasdaq to which the Issuer, the Company or any Company Subsidiary
is
subject (including federal and state securities laws and regulations), or by
which any property or asset of the Issuer, the Company or any Company Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii),
such
as would not reasonably be expected to have a Material Adverse Effect. None
of
the Issuer, the Company or to the Issuer's Knowledge, any Company Subsidiary,
individually and on a consolidated basis, is as of the date hereof, and after
giving effect to the transactions contemplated hereby to occur at the Closing,
will be, Insolvent. For purposes of this Section 4(i),
"Insolvent"
means,
with respect to any Person, (i) the present fair saleable value of such Person's
assets is less than the amount required to pay such Person's total Indebtedness,
(ii) such Person is unable to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured, (iii) such Person intends to incur or believes that it will incur
debts
that would be beyond its ability to pay as such debts mature or (iv) such Person
has unreasonably small capital with which to conduct the business in which
it is
engaged as such business is now conducted and is proposed to be
conducted.
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(j) Tax
Matters.
Each of
the Company and to the Issuer's Knowledge, each Company Subsidiary has timely
prepared and filed all tax returns, foreign and domestic, required to have
been
filed by it with all appropriate governmental agencies and timely paid all
taxes
shown thereon or otherwise owed by it, except where failure to do so would
not
reasonably be expected to have a Material Adverse Effect. The charges, accruals
and reserves on the books of the Company and to the Issuer's Knowledge, each
Company Subsidiary in respect of taxes for all fiscal periods are adequate
in
all material respects, and there are no material unpaid assessments against
the
Company or any Company Subsidiary. All taxes and other assessments and levies
that the Company or any Company Subsidiary are required to withhold or to
collect for payment have been duly withheld and collected and paid to the proper
governmental entity or third party when due. There are no tax liens or claims
pending or, to the Issuer's Knowledge, threatened against the Company or any
Company Subsidiary or any of their respective assets or property, other than
Permitted Liens. There are no tax audits or investigations pending, which if
adversely determined would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. There are no outstanding tax sharing
agreements or other such arrangements between the Company, any Company
Subsidiary and any other Person. Neither the Company nor any Company Subsidiary
has any deferred compensation arrangements and has not paid or is not required
to pay any deferred compensation which would be subject to Section 409A of
the
Internal Revenue Code of 1986, as amended (the "Code").
(k) Title
to Properties.
Except
as specified in the SEC Documents, the Company and the Company Subsidiaries
have
good and marketable title in fee simple to all real property owned by them
that
is material to their respective businesses and good and marketable title in
all
personal property owned by them that is material to their respective businesses,
in each case free and clear of all liens, except for Permitted Liens. Any real
property and facilities held under lease by the Company and the Company
Subsidiaries are held by them under valid, subsisting and enforceable leases
of
which the Company and the Company Subsidiaries are in compliance, with such
exceptions as are not material and do not materially interfere with the use
made
and proposed to be made of such property and buildings by the Company and each
Company Subsidiary.
(l) Certificates,
Authorities and Permits.
The
Company and each Company Subsidiary possesses all certificates, approvals,
authorizations or permits (“Permits”)
issued
by the appropriate foreign, federal, state or local governmental agency or
body
necessary to conduct its business as now operated by it and as described in
the
SEC Documents, all of which are valid and in full force and effect, except
where
the lack of such Permits, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect. Neither the Company nor to the
Issuer's Knowledge, any Company Subsidiary has received any written notice
of
proceedings relating to the revocation or modification of any such
Permit.
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(m) Labor
Matters.
There
is no strike, labor dispute or union organization activities pending or, to
the
Issuer's Knowledge, threatened between the Company or any Company Subsidiary
and
their respective employee except as would not, individually or in the aggregate,
reasonably be expected to have in a Material Adverse Effect. To the Issuer's
Knowledge, no employee of the Company or any Company Subsidiary belongs to
any
union or collective bargaining unit. The Company and each Company Subsidiary
have complied in all material respects with all applicable foreign, federal,
state and local laws related to employment.
(n) Intellectual
Property.
The
Company and each Company Subsidiary own or possess, or can acquire on reasonable
terms, all material patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks
service marks and trade names currently employed by them in connection with
the
business now operated by them and as described in the SEC Documents
(collectively, the "Intellectual
Property Rights").
Neither the Company nor to the Issuer's Knowledge, any Company Subsidiary has
received any notice of infringement of or conflict with asserted rights of
others with respect to any of the foregoing which would, individually or in
the
aggregate, reasonably be expected to have a Material Adverse Effect.
(o) Environmental
Matters.
Neither
the Company nor, to the Issuer's Knowledge, any Company Subsidiary is in
violation of any law, statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to
the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous
or
toxic substances (collectively, “Environmental
Laws”)
except
for any violation which would not, individually or in the aggregate, reasonably
be expected to have or result in a Material Adverse Effect. Neither the Company
nor, to the Issuer's Knowledge, any Company Subsidiary owns or operates any
real
property contaminated with any substance that is subject to any Environmental
Laws, is liable for any off-site disposal or contamination pursuant to any
Environmental Laws, or is subject to any claim relating to any Environmental
Laws, which contamination, liability or claim would, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(p) Absence
of Litigation.
There
are no pending or, to the Issuer's Knowledge, threatened actions, suits,
proceedings, inquiries or investigations against or affecting the Issuer, the
Company, any Company Subsidiary or any of their respective properties or any
of
the officers and directors of the Issuer, the Company or any Company Subsidiary
in their capacities as such. The SEC has not issued any stop order or other
order suspending the effectiveness of any registration statement filed by the
Company under the Exchange Act or the Securities Act.
(q) Insurance
Coverage.
Except
as described in the SEC Documents available on the XXXXX system, the Company
and
each Company Subsidiary are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses being conducted and the properties owned or
leased by the Company and each Company Subsidiary. The Issuer has no reason
to
believe that the Company will not be able to renew the Company's and each
Company Subsidiary's existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a Material Adverse
Effect.
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(r) Compliance
with Nasdaq Continued Listing Requirements.
The
Common Stock is listed on the Nasdaq. The Company is in compliance with all
applicable Nasdaq listing or maintenance requirements. Except as described
in
the SEC Documents available on the SEC’s XXXXX system, to the Issuer's Knowledge
the Company has not received any written notice with respect to the delisting
of
the Common Stock from the Nasdaq. Except as disclosed in the SEC Documents,
the
Issuer has no knowledge of any facts or circumstances that would reasonably
lead
to delisting or suspension of the Common Stock by Nasdaq in the foreseeable
future.
(s) Bankruptcy.
None of
the Issuer, the Company or to the Issuer's Knowledge, any Company Subsidiary
has
taken any steps to seek protection pursuant to any bankruptcy law nor does
the
Issuer have any knowledge or reason to believe that its creditors or the
creditors of the Company or any Company Subsidiary intend to initiate
involuntary bankruptcy proceedings or any knowledge of any fact that would
reasonably lead a creditor to do so.
(t) Compliance.
None of
the Issuer, the Company or to the Issuer's Knowledge, any Company Subsidiary
(i)
is in default under or in violation of (and no event has occurred that has
not
been waived that, with notice or lapse of time or both, would result in a
default by the Issuer, the Company or a Company Subsidiary, as applicable,
under), nor has the Issuer, the Company or to the Issuer's Knowledge, any
Company Subsidiary received notice of a claim that it is in default under or
that it is in violation of, any indenture, loan or credit agreement or any
other
agreement or instrument to which it is a party or by which it or any of its
properties is bound (whether or not such default or violation has been waived),
(ii) is in violation of any order of any court, arbitrator or governmental
body,
or (iii) is or has been in violation of any law, statute, rule or regulation
of
any governmental authority, including without limitation all foreign, federal,
state and local laws relating to taxes, environmental protection, occupational
health and safety, product quality and safety and employment and labor matters,
except in each case as would not, have or reasonably be expected to result
in a
Material Adverse Effect.
(u) Brokers
and Finders.
No
Person will have, as a result of the transactions contemplated by the
Transaction Documents, any valid right, interest or claim for any commission,
fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Company or the Issuer. The
Issuer shall be responsible for the payment of any placement agent's fees,
financial advisory fees, or brokers' commissions (other than for persons engaged
by the Buyer or its investment advisor) relating to or arising out of the
transactions contemplated hereby in connection with the sale of the Note. None
of the Issuer or any of its Affiliates has engaged any placement agent or other
agent in connection with the sale of the Note.
(v) No
General Solicitation.
None of
the Company, the Issuer or any Person acting on their behalf has conducted
any
general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) in connection with the offer or sale
of
the Note.
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(w) Market
Stabilization.
None of
the Company or the Issuer, or, to the Issuer's Knowledge, any Person acting
on
behalf of any of the foregoing, has: (i) taken or will take prior to the
Closing, directly or indirectly, any action designed to or that might reasonably
be expected to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of
the
price of the Common Stock or any security of the Company to facilitate the
sale
or resale of any of the Securities; (ii) sold, bid for, purchased, or paid
any
compensation for soliciting purchases of, any of the Securities; or (iii) paid
or agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Company.
(x) Questionable
Payments.
Neither
the Company nor, to the Issuer's Knowledge, any of its directors, officers,
employees, agents or other Persons acting on behalf of the Company, on behalf
of
the Company or in connection with its business: (a) has used any corporate
funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
relating to political activity; (b) has made any direct or indirect unlawful
payments to any governmental officials or employees from corporate funds; (c)
has established or maintained any unlawful or unrecorded fund of corporate
monies or other assets; (d) has made any false or fictitious entries on the
books and records of the Company; (e) has made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment of any nature;
or
(f) has violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977.
(y) Internal
and Disclosure Controls.
The
Company and to the Issuer's Knowledge, each Company Subsidiary maintain a system
of internal accounting controls sufficient to provide reasonable assurance
that:
(i) transactions are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability; (iii) access to assets is permitted only in accordance
with management’s general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
Management of the Company has: (x) established and implemented disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15 and 15d-15)
for
the Company and the Company Subsidiaries and designed such disclosure controls
and procedures to ensure that material information relating to the Company,
including the Company Subsidiaries, is made known to the certifying officers
by
others within those entities; and (y) disclosed, based on its most recent
evaluation, to the Buyer and the Company’s outside auditors and the audit
committee of the Company's Board of Directors: (1) all significant deficiencies
and material weaknesses in the design or operation of internal controls over
financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) which
are
reasonably likely to adversely affect in any material respect the Company’s
ability to record, process, summarize and report financial data; and (2) any
fraud, whether or not material, that involves management or other employees
who
have a significant role in the Company’s internal control over financial
reporting. The Company’s certifying officers have evaluated the effectiveness of
the Company’s controls and procedures as of the end of the period covered by the
most recently filed periodic report under the Exchange Act (such date, the
“Evaluation
Date”).
The
Company presented in its most recently filed periodic report under the Exchange
Act the conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no significant
changes in the Company’s internal controls (as such term is defined in Item
307(b) of Regulation S-K promulgated by the SEC) or, to the Issuer's Knowledge,
in other factors that could significantly affect the Company’s internal
controls. The books, records and accounts of the Company accurately and fairly
reflect, in all material respects, the transactions in, and dispositions of,
the
assets of, and the results of operations of, the Company. The Company maintains
and to the Issuer's Knowledge, will continue to maintain a standard system
of
accounting established and administered in accordance with GAAP and the
applicable requirements of the Exchange Act.
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(z) Independent
Accountants.
Deloitte Touche Tohmatsu CPA Ltd. is the Company’s independent registered public
accounting firm as required by the Exchange Act and the rules and regulations
of
the SEC thereunder.
(aa) Investment
Company.
The
Company is not and, after giving effect to the transactions contemplated by
the
Transaction Documents, will not be, required to register as an “investment
company,” as such term is defined in the Investment Company Act of 1940, as
amended.
(bb) Disclosure;
No Undisclosed Events, Liabilities, Developments or
Circumstances.
The
Issuer confirms that neither it, nor any other Person acting on its behalf,
has
provided the Buyer or its agents or counsel with any information that
constitutes or could reasonably be expected to constitute material, nonpublic
information regarding the Company. All disclosure provided to the Buyer
regarding the Issuer and its business furnished by or on behalf of the Issuer
is
true and correct as of the date hereof and as of the date hereof does not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of
the
circumstances under which they were made, not misleading.
(cc) Private
Resale.
Subject
to the accuracy of the Buyer’s representations in Section 3
hereof,
the offer and sale of the Note by the Issuer to the Buyer is exempt from the
registration requirements of the Securities Act.
(dd) Ranking
of Note.
As of
the date of this Agreement, the Issuer has no indebtedness for borrowed
money.
5. COVENANTS.
(a) Best
Efforts.
Each
party hereto shall use its best efforts timely to satisfy each of the conditions
to be satisfied by it as provided in Section 6 and Section 7 of this
Agreement.
(b) Reporting
Status.
Until
the date on which the Note, or any portion thereof, is not outstanding (the
“Reporting
Period”),
the
Issuer shall use its commercially reasonable efforts to cause the Company to
timely file all reports required to be filed with the SEC pursuant to the
Exchange Act and to not terminate its status as an issuer required to file
reports under the Exchange Act even if the Exchange Act or the rules and
regulations thereunder would no longer require or otherwise permit such
termination, and the Issuer shall use its commercially reasonable efforts to
cause the Company to gain and thereafter maintain its eligibility to register
the Exchange Shares for resale by the Buyer on Form S-3 as promptly as possible
after the date hereof, unless the Board of Directors of the Company determines
in good faith that this is not in the best interests of the
Company.
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(c) Listing.
The
Issuer shall use its commercially reasonable efforts to cause the Company to
maintain the listing of all of the Registrable Securities upon national
securities exchange and automated quotation system, if any, upon which the
Common Stock is then listed (subject to official notice of issuance) and to
maintain, in accordance with the Note, such listing of all Registrable
Securities from time to time issuable under the terms of the Transaction
Documents. The Issuer shall use its commercially reasonable efforts to cause
the
Company to maintain the Common Stock’s authorization for quotation on Nasdaq.
The Issuer shall not, and shall use its commercially reasonable efforts to
cause
the Company to not, take any action that would be reasonably expected to result
in the delisting or suspension of the Common Stock on Nasdaq. The Issuer shall
use its commercially reasonable efforts to cause the Company to pay all fees
and
expenses in connection with satisfying its obligations under this Section
5(c).
(d) 8-K
Filing.
On or
before 5:30 p.m., New York City time, on the first Business Day following the
execution date of the Registration Rights Agreement, the Issuer shall use its
commercially reasonable efforts to cause the Company to file a Current Report
on
Form 8-K describing the terms of the transactions contemplated by the
Registration Rights Agreement in the form required by the Exchange Act and
attaching the Registration Rights Agreement (including all attachments, the
“8-K
Filing”).
Subject to the foregoing, the Issuer shall not, and the Issuer shall use its
commercially reasonable efforts to cause the Company and each Company Subsidiary
to not, issue any press releases or any other public statements with respect
to
the transactions contemplated hereby; provided,
however,
that the
Company shall be entitled, without the prior approval of the Buyer, to make
any
press release or other public disclosure with respect to such transactions
(i)
in substantial conformity with the 8-K Filing and contemporaneously therewith
and (ii) as is required by applicable law and regulations (provided that in
the
case of clause (i) the Issuer shall use its commercially reasonable efforts
to
cause the Buyer to be consulted by the Company in connection with any such
press
release or other public disclosure prior to its release). Notwithstanding
anything herein to the contrary, without the prior written consent of the Buyer,
the Issuer shall not, and shall use all reasonable efforts to cause the Company
and each Company Subsidiary and any Affiliate of the Company or Company
Subsidiary to not, disclose the name of the Buyer or any Affiliate thereof
in
any filing, announcement, release or otherwise unless such disclosure is
required by applicable law.
(e) Corporate
Existence.
During
the Reporting Period, the Issuer shall not be party to any Issuer Fundamental
Transaction (as defined in the Note) unless the Issuer is in compliance with
the
applicable provisions governing such Issuer Fundamental Transactions set forth
in Section 2(a)(ii) and Section 4(b) of the Note.
(f) Register.
The
Issuer shall maintain at its principal executive offices (or, subject to the
written approval of the Required Holders, such other office or agency of the
Issuer as it may designate by notice to each holder of the Notes), a register
for the Note in which the Issuer shall record the name and address of the Person
in whose name the Note has been issued (including the name and address of each
transferee), the principal amount of Note held by such Person and the number
of
Exchange Shares issuable upon exchange of the Note, and shall keep the register
open and available at all times during business hours for inspection of the
Buyer or its legal representatives; provided
that the
Buyer and its permitted assignees of the Note should bear the reasonable
expenses incurred by the Issuer in connection with any such
inspection.
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(g) No
Carry of Margin Stock.
The
Issuer shall not use any proceeds from the Note to "carry" any "margin stock,"
each as defined in Regulation U.
(h) Change
of “Accredited Investor” Status.
The
Buyer and its permitted assignees of the Note should promptly inform the Issuer
regarding any changes to their respective “accredited investor” (as defined in
Rule 501(a) of Regulation D, as amended, under the Securities Act) status as
long as it holds any portion of the Note.
(i) Lock-up
Agreement.
In the
event the Buyer is issued any Exchange Shares during the lock-up period set
forth in the lock-up agreement entered into by the Issuer and each of the
Company's directors and executive officers with the underwriters for the first
underwritten public offering of shares of Common Stock by the Company pursuant
to a registration statement declared effective by the SEC after the date of
this
Agreement (the "Lock-up
Agreement"),
the
Buyer shall agree to be subject to the terms of such Lock-up Agreement;
provided
that
in the
event the underwriters for such offering terminate any Lock-up Agreement or
waive any condition or provision of any Lock-up Agreement for the Issuer, the
underwriters shall be required to simultaneously terminate Buyer's lock-up
agreement or waive such condition or provision in the Buyer's lock-up agreement,
respectively; and
provided further that
the
lockup period in the Lock-up Agreement shall not extend for a period of more
than 180 days from the date of the underwriting agreement for such underwritten
public offering.
(j) Transfer
Taxes.
The
Issuer and the Buyer shall each bear fifty percent (50%) of all documentary,
stamp, stamp duty reserve, excise, transfer, sales, excise, use or other similar
taxes (other than income or similar taxes) imposed or collected by any
governmental or regulatory authority resulting from the sale and transfer
of the Note by the Issuer to the Buyer.
6. CONDITIONS
TO THE ISSUER’S OBLIGATION TO SELL.
The
obligation of the Issuer hereunder to issue and sell the Note to the Buyer
at
the Closing and to take the other actions to be taken by the Issuer at and
after
the Closing are subject to the satisfaction, at or before the Closing Date,
of
each of the following conditions, provided that these conditions are for the
Issuer’s sole benefit and may be waived by the Issuer at any time in its sole
discretion by providing the Buyer with prior joint written notice
thereof:
(i) The
Buyer
shall have executed each of the Transaction Documents to which it is a party
and
delivered the same to the Issuer.
(ii) The
Collateral Agent shall have executed and delivered the Pledge
Agreement.
(iii) The
Buyer
shall have delivered the Purchase Price for the Note to the order of the Issuer
pursuant to the instructions attached as Schedule II hereto, by wire transfer
of
immediately available funds.
(iv) The
representations and warranties of the Buyer shall be true and correct in all
material respects (except for those representations and warranties that are
qualified by materiality, which shall be true and correct in all respects)
as of
the date when made and as of the Closing Date as though made at that time
(except for representations and warranties that speak as of a specific date,
which shall be true and correct as of such specified date), and the Buyer shall
have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Buyer at or prior to the Closing
Date.
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(v) The
Buyer
shall have executed the Cross Receipt, dated as of the Closing Date, in the
form
of Exhibit D
attached
hereto, and delivered the same to the Issuer.
7. CONDITIONS
TO THE BUYER’S OBLIGATION TO PURCHASE.
The
obligation of the Buyer hereunder to purchase the Note at the Closing and to
take the other actions to be taken by the Buyer at the Closing is subject to
the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided
that
these
conditions are for the Buyer’s sole benefit and may be waived by the Buyer at
any time in its sole discretion by providing the Issuer with prior written
notice thereof:
(i) Each
of
the Company and the Issuer shall have duly executed and delivered to the Buyer
each of the Transaction Documents to which it is a party.
(ii) The
Buyer
shall have received the opinion of Xxxxxx and Xxxxxx, the Issuer's outside
British Virgin Islands counsel, dated as of the Closing Date, in substantially
the form of Exhibit E
attached
hereto.
(iii) The
Buyer
shall have received the opinion of O'Melveny & Xxxxx LLP, the Issuer's
outside U.S. counsel, dated as of the Closing Date, in substantially the form
of
Exhibit F
attached
hereto.
(iv) The
Issuer shall have delivered to the Buyer a certificate evidencing the good
standing of the Issuer in the British Virgin Islands as of a date within twenty
(20) days prior to the Closing Date.
(v) The
Issuer shall have delivered to the Buyer a certified copy of the Issuer
Articles, as certified by the Registrar of Companies of the British Virgin
Islands within twenty (20) days prior to the Closing Date.
(vi) The
Issuer shall have delivered to the Buyer a certificate, executed by the director
of the Issuer and dated as of the Closing Date, certifying the resolutions
adopted by the Issuer's Board of Directors approving the transactions
contemplated by the Transaction Documents, certifying the current versions
of
the Issuer Articles and certifying as to the signatures and authority of Persons
signing the Transaction Documents and related documents on behalf of the Issuer
in the form attached hereto as Exhibit
G.
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(vii) The
Issuer shall have delivered to the Buyer a certificate, executed by the
Secretary of the Company and dated as of the Closing Date, certifying the
resolutions adopted by the Company's Board of Directors approving the
Registration Rights Agreement and the transactions contemplated thereby,
certifying the current versions of the Company Certificate of Incorporation
and
Company Bylaws and certifying as to the signatures and authority of Persons
signing the Transaction Documents and related documents on behalf of the Company
in the form attached hereto as Exhibit
H.
(viii) Each
representation and warranty of the Issuer, together or individually, shall
be
true and correct in all material respects (except for those representations
and
warranties that are qualified by materiality or a Material Adverse Effect,
which
shall be true and correct in all respects) as of the date when made and as
of
the Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date, which shall be true and correct
as
of such specified date) and the Issuer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by it or them at or prior to the Closing Date. The Buyer shall have
received a certificate from the Issuer, executed by the director of the Issuer
and dated as of the Closing Date, to the foregoing effect and as to such other
matters as may be reasonably requested by the Buyer in the form attached hereto
as Exhibit
G.
(ix) The
Issuer shall have obtained any and all consents, permits, approvals,
registrations and waivers necessary or appropriate for consummation of the
sale
and issuance of the Note and the consummation of the other transactions
contemplated by the Transaction Documents to be consummated on or prior to
the
Closing Date, all of which shall be in full force and effect.
(x) The
shares of Common Stock shall not have been suspended, as of the Closing Date,
by
the SEC or Nasdaq from trading on Nasdaq nor shall suspension by the SEC or
Nasdaq have been threatened, as of the Closing Date, either (A) in writing
by
the SEC or Nasdaq or (B) by falling below the minimum listing maintenance
requirements of Nasdaq.
(xi) No
judgment, writ, order, injunction, award or decree of or by any court, or judge,
justice or magistrate, including any bankruptcy court or judge, or any order
of
or by any governmental authority, shall have been issued, and no action or
proceeding shall have been instituted by any governmental authority, enjoining
or preventing the consummation of the transactions contemplated by the
Transaction Documents.
(xii) The
Buyer
shall have perfected its security interest in and to the Pledged Collateral
(as
defined in the Pledge Agreement) to the reasonable satisfaction of the Buyer.
(xiii) The
Issuer shall have delivered
to the Collateral Agent (as defined in the Pledge Agreement) the certificates
representing the Pledged Stock (as
defined in the Pledge Agreement) and the Powers (as defined in the Pledge
Agreement).
(xiv) The
Company’s delivery to the Buyer of a written consent and waiver of ABN AMRO Bank
N.V., Hong Kong Branch ("ABN")
of all
matters set forth in the Registration Rights Agreement pursuant to the
Registration Rights Agreement, dated April 19, 2007, by and between the Company
and ABN.
(xv) All
financing statements filed in favor of ABN covering shares of Common Stock
held
by the Issuer shall have terminated in their entirety.
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(xvi) The
Company’s delivery to the Buyer of an executed authorization letter of ABN in
the form attached hereto as Exhibit
I.
(xvii) The
Issuer shall have executed the Cross Receipt, dated as of the Closing Date,
in
the form of Exhibit D
attached
hereto, and delivered the same to the Buyer.
8. TERMINATION.
In
the
event that the Closing shall not have occurred on or before five (5) Business
Days from the date hereof, this Agreement shall terminate automatically without
further actions from the parties.
9. MISCELLANEOUS.
(a) Governing
Law; Jurisdiction; Jury Trial.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision
or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State
of
New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of
the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction
of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. The Issuer hereby appoints CT Corporation
System, with offices located at 000 Xxxxxx Xxxxxx, Xxx Xxxx, XX 00000, as its
agent for service of process in New York. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner permitted
by
law. EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
(b) Counterparts.
This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided
that
a
facsimile or a .PDF signature shall be considered due execution and shall be
binding upon the signatory thereto with the same force and effect as if the
signature were an original, not a facsimile or a .PDF signature.
(c) Headings.
The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
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(d) Severability.
If any
provision of this Agreement is prohibited by law or otherwise determined to
be
invalid or unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable,
and the invalidity or unenforceability of such provision shall not affect the
validity of the remaining provisions of this Agreement so long as this Agreement
as so modified continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does
not
substantially impair the respective expectations or reciprocal obligations
of
the parties or the practical realization of the benefits that would otherwise
be
conferred upon the parties. The parties will endeavor in good faith negotiations
to replace the prohibited, invalid or unenforceable provision(s) with a valid
provision(s), the effect of which comes as close as possible to that of the
prohibited, invalid or unenforceable provision(s).
(e) Entire
Agreement; Amendments.
This
Agreement and the other Transaction Documents supersede all other prior oral
or
written agreements between the Buyer, the Issuer, their Affiliates and Persons
acting on their behalf with respect to the matters discussed herein, and this
Agreement, the other Transaction Documents and the instruments referenced herein
and therein contain the entire understanding of the parties with respect to
the
matters covered herein and therein; and, except as specifically set forth herein
or therein, neither the Issuer nor the Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Issuer and the Required Holders, and any amendment to this Agreement made in
conformity with the provisions of this Section 9(e)
shall be
binding on all Buyers and holders of Securities as applicable; provided,
however,
that
any amendment to this Agreement that adversely or disproportionately affects
any
particular holder shall require the prior written consent of such holder. No
provision hereof may be waived other than by an instrument in writing signed
by
the party against whom enforcement is sought. No such amendment shall be
effective to the extent that it applies to less than all of the holders of
the
applicable Securities then-outstanding. No consideration shall be offered or
paid to any Person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents unless the same consideration
also
is offered to all of the parties to the Transaction Documents or holder of
Notes, as the case may be. The Issuer has not, directly or indirectly, made
any
agreements with any holder of the Notes relating to the terms or conditions
of
the transactions contemplated by the Transaction Documents except as set forth
in the Transaction Documents. Without limiting the foregoing, the Issuer
confirms that, except as set forth in this Agreement, the Buyer has made any
commitment or promise or has any other obligation to provide any financing
to
the Company, the Issuer or otherwise.
(f) Notices.
Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile or electronic mail or other mean reasonably
designed to effect delivery with delivery confirmation (provided confirmation
of
transmission is mechanically or electronically generated and kept on file by
the
sending party); or (iii) one (1) Business Day after deposit with an overnight
courier service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall
be:
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If
to the
Issuer:
Beams
Power Investment Limited
c/o
Xxxxxxx Xxxx
Shenglong
Garden
Xx.
000
Xxxxxxxxxx
Xxxxxxxx
Xxxxxxxx
Xxxxxxx,
000000, PRC
Facsimile:
x00-00-0000-0000
E-mail:
xxxxxxxxxx@xxxxx.xxx
With
a
copy which shall not constitute notice to:
O’Melveny
& Xxxxx LLP
37st
Floor,
Yintai
Center, Office Tower, Xx.0 Xxxxxxxxxxxxx Xxxxxx
Xxxxxxx
000000, Xxxxx
Attention:
Xxxxx Xxxxxxx
Fax:
x00-00-0000-0000
If
to the
Buyer:
Warburg
Pincus Private Equity IX, L.P.
c/o
Warburg Pincus LLC
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxxxxxx Xxxxx
Fax:
(000) 000-0000
with
a
copy (for informational purposes only) to:
Paul,
Hastings, Xxxxxxxx & Xxxxxx LLP
19th
Floor,
Yintai
Center, Office Xxxxx
0
Xxxxxxxxxxxxx Xxxxxx
Xxxxxxx
000000, Xxxxx
Attention:
Xxxx Xxxxxxx
Fax:
x00-00-0000-0000
or
to
such other address and/or facsimile number and/or to the attention of such
other
Person as the recipient party has specified by written notice given to each
other party five (5) days prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated
by
the sender’s facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided
by an
overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from an overnight courier service in accordance
with clause (i), (ii) or (iii) above, respectively.
Any
document shall be deemed to have been duly served if marked for the attention
of
the agent for service of process at its address (as set forth in Section
9(a)
hereof)
or such other address in the United States as may be notified to the party
wishing to serve the document and delivered in accordance with the notice
provisions set forth in this Section 9(f)
hereof.
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If
the
Issuer's agent for service of process at any time ceases for any reason to
act
as such, the Issuer shall appoint a replacement agent having an address for
service in the United States and shall notify each Buyer in writing of the
name
and address of the replacement agent. Failing such appointment and notification,
each Buyer shall be entitled by notice to the Issuer to appoint a replacement
agent to act on the Issuer's behalf. The provisions of this Section 9(f)
applying
to service on an agent for service of process apply equally to service on a
replacement agent.
(g) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns, including any purchasers of the Notes.
The Issuer shall not assign or transfer this Agreement or any rights or
obligations hereunder without the prior written consent of the Required Holders,
including by way of an Issuer Fundamental Transaction (unless the Issuer is
in
compliance with the applicable provisions governing such Issuer Fundamental
Transaction, as set forth in the Note). The Buyer shall not assign or transfer
the Note or any portion thereof that, individually or collectively, represents
more than U.S.$24,000,000 in principal under the Note; provided
that
in no
event shall the Buyer assign or transfer the Note or any portion thereof to
a
Company Competitor.
(h) No
Third Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.
(i) Survival.
Unless
this Agreement is terminated under Section 8
hereof,
the representations and warranties of the Buyer and the Issuer contained herein
and the agreements and covenants set forth herein shall survive the Closing
and
the delivery and exercise of exchange rights on the Note, as
applicable.
(j) Further
Assurances.
Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
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(k) Indemnification.
(i) In
consideration of the Buyer’s execution and delivery of the Transaction Documents
and acquiring the Securities thereunder and in addition to all of the Issuer’s
other obligations under the Transaction Documents, the Issuer shall defend,
protect, indemnify and hold harmless the Buyer and its shareholders, partners,
members, officers, directors, employees and agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the “Indemnitees”)
from
and against any and all actions, causes of action, suits claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys’ fees
and disbursements (the “Indemnified
Liabilities”),
incurred by any Indemnitee, at any time during the period commencing on the
Closing Date and ending on the 18-month anniversary of the Closing Date, as
a
result of, or arising out of, or relating to (a) any misrepresentation or breach
of any representation or warranty made by the Issuer in the Transaction
Documents or any other certificate, instrument or document delivered by or
on
behalf of the Issuer, (b) any breach of any covenant, agreement or obligation
of
the Issuer contained in the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby or (c) any cause of
action, suit or claim brought or made against such Indemnitee by a third party
and arising out of or resulting from (i) the execution, delivery, performance
or
enforcement of the Transaction Documents or any other certificate, instrument
or
document contemplated hereby or thereby, (ii) any transaction financed or to
be
financed in whole or in part, directly or indirectly, with the proceeds of
the
issuance of the Note, or (iii) the status of the Buyer or holder of the
Securities as a potential investor in the Company pursuant to the transactions
contemplated by the Transaction Documents in the case of clause (c)(i), (ii)
or
(iii), caused directly or indirectly by the willful misconduct or negligence
of
the Issuer. The Issuer shall not be required to make any indemnification payment
pursuant to this Section 9(k)
(A)
until such time as the total amount of all Indemnified Liabilities (including
the Indemnified Liabilities arising from all matters under this Agreement that
have been directly or indirectly suffered or incurred by any one or more of
the
Indemnitees, or to which any one or more of the Indemnitees has or have
otherwise become subject), exceeds U.S.$300,000; provided
that
if the
total amount of such Indemnified Liabilities exceeds U.S.$300,000, the
Indemnitees shall be entitled to be indemnified against and compensated and
reimbursed for the entire amount of all such Indemnified Liabilities, and not
merely the portion of such Indemnified Liabilities exceeding U.S.$300,000;
and
provided
further that
the
limitation on the indemnification obligations of the Issuer set forth in this
sentence shall not apply to (y) any breach arising directly or indirectly from
any circumstance of which the Issuer had actual knowledge on or prior to the
Closing Date, or (z) any breach of Section 4(u)
hereof.
The aggregate amount recoverable by Indemnitees for Indemnified Liabilities
under the Transaction Documents with respect to claims made by third parties
shall in no event exceed U.S.$10,000,000, provided
that
for the
avoidance of doubt, such limitation with respect to indemnification for
third-party claims shall not in any manner be construed as limiting amounts
recoverable in connection with the Issuer's other obligations under the
Transaction Documents.
(ii) To
the
extent that the foregoing undertaking by the Issuer may be unenforceable for
any
reason, the Issuer shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities that is permissible under
applicable law. Except as otherwise set forth herein, the mechanics and
procedures with respect to the rights and obligations under this Section
9(k)
shall be
the same as those set forth in Section 6 of the Registration Rights Agreement.
(l) No
Strict Construction.
The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent, and no rules of strict construction
will
be applied against any party.
(m) Remedies.
The
Buyer and each holder of the Securities shall have all rights and remedies
set
forth in the Transaction Documents and all rights and remedies which such
holders have been granted at any time under any other agreement or contract
and
all of the rights which such holders have under any law. Any Person having
any
rights under any provision of this Agreement shall be entitled to enforce such
rights specifically (without posting a bond or other security), to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. Furthermore, each party hereto
recognizes that in the event that it fails to perform, observe, or discharge
any
or all of its obligations under the Transaction Documents, any remedy at law
may
prove to be inadequate relief to the other party. Each party therefore agrees
that the other party shall be entitled to seek temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages and without posting a bond or other security.
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23
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(n) Rescission
and
Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting
any
similar provisions of) the Transaction Documents, whenever the Buyer or a holder
of the Note (or any portion thereof) exercises a right, election, demand or
option under a Transaction Document and the Company or the Issuer, as
applicable, does not timely perform its related obligations within the periods
therein provided, then the Buyer or the holder of the Note (or any portion
thereof) may rescind or withdraw, in its sole discretion from time to time
upon
written notice to the Company or the Issuer, as applicable, any relevant notice,
demand or election in whole or in part without prejudice to its future actions
and rights.
(o) Payment
Set Aside.
To the
extent that the Issuer makes a payment or payments to the Buyer or a holder
of
the Note (or any portion thereof) hereunder or pursuant to any of the other
Transaction Documents or the Buyer or the holder of the Note (or any portion
thereof) enforces or exercises their rights hereunder or thereunder, and such
payment or payments or the proceeds of such enforcement or exercise or any
part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid
or otherwise restored to the Issuer, a trustee, receiver or any other Person
under any law (including, without limitation, any bankruptcy law, foreign,
state
or federal law, common law or equitable cause of action), then to the extent
of
any such restoration the obligation or part thereof originally intended to
be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not
occurred.
(p) Currency.
Unless
otherwise indicated, all dollar amounts referred to in this Agreement are in
U.S. dollars. All amounts owing under this Agreement or any Transaction Document
shall be paid in U.S. dollars. All amounts denominated in other currencies
shall
be converted in the U.S. dollar equivalent amount in accordance with the
Exchange Rate on the date of calculation. “Exchange
Rate”
means,
in relation to any amount of currency to be converted into U.S. dollars pursuant
to this Agreement, the U.S. dollar exchange rate as published in the Wall Street
Journal on the relevant date of calculation.
(q) Judgment
Currency.
(i)
If
for
the purpose of obtaining or enforcing judgment against the Issuer in any court
in any jurisdiction it becomes necessary to convert into any other currency
(such other currency being hereinafter in this Section 9(q)
referred
to as the “Judgment
Currency”)
an
amount due in U.S. dollars under this Agreement, the conversion shall be made
at
the Exchange Rate prevailing on the Business Day immediately
preceding;
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24
-
(1)
the
date
of actual payment of the amount due, in the case of any proceeding in the courts
of New York or in the courts of any other jurisdiction that will give effect
to
such conversion being made on such date; or
(2)
the
date
on which the foreign court determines, in the case of any proceeding in the
courts of any other jurisdiction (the date as of which such conversion is made
pursuant to this Section being hereinafter referred to as the “Judgment
Conversion Date”).
(ii)
If
in the
case of any proceeding in the court of any jurisdiction referred to in Section
9(q)(i)(2)
above,
there is a change in the Exchange Rate prevailing between the Judgment
Conversion Date and the date of actual payment of the amount due, the applicable
party shall pay such adjusted amount as may be necessary to ensure that the
amount paid in the Judgment Currency, when converted at the Exchange Rate
prevailing on the date of payment, will produce the amount of U.S. dollars
which
could have been purchased with the amount of Judgment Currency stipulated in
the
judgment or judicial order at the Exchange Rate prevailing on the Judgment
Conversion Date.
(iii) Any
amount
due
from the Issuer under this provision shall be due as a separate debt and shall
not be affected by judgment being obtained for any other amounts due under
or in
respect of this Agreement.
(r) Costs.
Subject
to Section 5(j)
hereof,
each party shall bear
its own
costs, including attorneys’ fees and expenses, in connection with Transaction
Documents and the transactions contemplated thereby, except as otherwise
expressly provided herein and therein.
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25
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EXECUTION
VERSION
IN
WITNESS WHEREOF,
the
Issuer and the Buyer have caused their respective signature page to this Note
Purchase Agreement to be duly executed as of the date first written
above.
|
ISSUER:
|
||
|
BEAMS
POWER INVESTMENT LIMITED
|
||
|
By:
|
/s/
Xxxxxxx Xxxx
|
|
|
Name:
Xxxxxxx Xxxx
|
||
|
Title:
Sole Director
|
||
|
BUYER:
|
||
|
WARBURG
PINCUS PRIVATE EQUITY IX, L.P.
|
||
|
By:
Warburg Pincus IX LLC, its general partner
|
||
|
By:
Warburg Pincus Partners, LLC, its sole member
|
||
|
By:
Warburg Pincus & Co., its managing member
|
||
|
By:
|
/s/
Xxxxx X. Xxxxxxx
|
|
|
Name:
Xxxxx X. Xxxxxxx
|
||
|
Title:
Partner
|
||
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