Exhibit 4.7
LDK SOLAR CO., LTD.
SERIES C PREFERRED SHARES PURCHASE AGREEMENT
THIS SERIES C PREFERRED SHARES PURCHASE AGREEMENT (this "AGREEMENT") is made as
of this December 15, 2006, by and among LDK Solar Co., Ltd., a company organized
and existing under the laws of the Cayman Islands (the "COMPANY"), Jiangxi LDK
Solar Hi-Tech Co., Ltd. (Chinese Characters LDK Chinese Characters), a company
organized and existing under the laws of the PRC (the "PRC SUBSIDIARY"), each of
the investors set forth in Schedule A attached hereto (each an "INVESTOR" and
collectively, the "INVESTORS") and Xx. Xxxx Xiaofeng (the "FOUNDER").
WITNESSETH
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings ascribed to
them in the Schedule of Definitions.
2. PURCHASE AND SALE OF SECURITIES
2.1 Sale and Issuance of Series C Preferred Shares
(i) The Company shall adopt on or before the Closing (defined below) the
Memorandum and Articles in substantially the form attached hereto as
Exhibit A and file such Memorandum and Articles with the Registrar of
Companies of the Cayman Islands within fifteen (15) days of such
adoption.
(ii) On or prior to the Closing, the Company shall have authorized (i) the
sale and issuance to the Investors of the Series C Preferred Shares
(defined below); and (ii) the issuance of the Conversion Shares upon
conversion of the Series C Preferred Shares pursuant to the Memorandum
and Articles. The Series C Preferred Shares shall have the rights,
preferences, privileges and restrictions set forth in the Memorandum
and Articles.
(iii) Subject to the terms and conditions of this Agreement, each Investor
agrees, severally and not jointly, to purchase at the Closing and the
Company agrees to sell and issue to each Investor at the Closing that
number of the Series C Preferred Shares set forth opposite such
Investor's name on Schedule A attached hereto for the purchase price
set forth thereon (collectively, the "SUBSCRIPTION PRICE"). It is
understood that the aggregate number of Series C Preferred Shares to
be issued by the Company at the Closing shall be 3,000,000 shares,
representing a 3.312% ownership in the Company immediately after the
Closing (the "INITIAL OWNERSHIP"). For the avoidance of doubt, the
calculation of the Initial Ownership hereunder and any adjustment to
such ownership under Section 2.4 shall be based on the total issued
and outstanding 75,000,000 Ordinary Shares plus the total issued and
outstanding 15,580,000 Preferred Shares, without consideration of any
shares issued pursuant to the Company Option Plan.
2.2 Closing
Subject to the satisfaction or waiver of the conditions to closing set
forth in Section 5 and Section 6 of this Agreement, the purchase and sale
of the Series C Preferred Shares set forth on Schedule A shall take place
at the offices of Xxxxxxxx Chance LLP, 40th Floor, the Bund Center, Xx. 000
Xxx Xx Xxxx Xxxx, Xxxxxxxx 000000, XXX, at 10:00 a.m., on or prior to
December 19, 2006, or at such other time and place as the Company and the
Investors may mutually agree upon orally or in writing (which time and
place are designated herein as the "CLOSING").
2.3 Closing Delivery
At the Closing, the Company shall deliver to each Investor a certificate or
certificates in form reasonably satisfactory to such Investor evidencing
the Series C Preferred Shares purchased by such Investor, registered in
such Investor's or its nominee's name as evidenced by delivery of a
certified copy of the Company's Register of Members, reflecting such
Investor's ownership of the Series C Preferred Shares purchased hereunder,
against delivery to the Company of the purchase price therefore in the
amount specified in column 4 of Schedule A attached hereto, by a wire
transfer of United States Dollars in immediately available funds or by
other payment methods mutually agreed to by Company and the Investors.
2.4 Ownership Adjustments
(i) Following the issue by the Auditor of the 2006 Audited Income
Statement:
(a) if the 2006 Net Earnings are equal to or more than the Guaranteed
2006 Net Earnings and the final ownership of the holders of the
Series A-1 Preferred Shares and the holders of the Series A-2
Preferred Shares (collectively, the "SERIES A SHAREHOLDERS") is
to remain unchanged in accordance with Section 2.4(i) of the
Share Purchase Agreement, dated as of July 28, 2006, by and among
the Company, the Founder and the Series A Shareholders, which is
amended by that certain Amendment to the Share Purchase Agreement
dated as of September 15, 2006 (as amended, the "SERIES A SHARE
PURCHASE AGREEMENT"), then the final ownership of the Investors
in the Company after adjustment (the "FINAL OWNERSHIP") shall
remain unchanged as the Initial Ownership of the Investors in the
Company. For purposes of this Section 2.4, the calculation of the
Final Ownership of the Investors in the Company and any
adjustment to such ownership hereunder shall be effected by
dividing the total number of issued and outstanding Series C
Preferred Shares by the sum of the total issued and --
outstanding Ordinary Shares (being 75,000,000) and the total
number of issued and outstanding Preferred Shares (defined
below), all on an as-converted basis, as of the date of the
Closing or the date of adjustment, as the case may be.
(b) if the 2006 Net Earnings are less than the Guaranteed 2006 Net
Earnings and the final ownership of the Series A Shareholders is
to be adjusted in accordance with Section 2.4(i)(b) of the Series
A Share Purchase Agreement, in order for the Final Ownership to
remain unchanged as the Initial Ownership of the Investors in the
Company, the respective Conversion Rate at which the Series A-1
Preferred Shares and the Series A-2 Preferred Shares
(collectively, the "SERIES A PREFERRED
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SHARES"), the Series B Preferred Shares and the Series C
Preferred Shares are converted into Ordinary Shares shall be
appropriately adjusted so that (A) the final ownership of the
Series A Shareholders in the Company (calculated by dividing the
total number of issued and outstanding Series A Preferred Shares
by the sum of the total number of issued and outstanding Ordinary
Shares (being 75,000,000) and the total number of issued and
outstanding Preferred Shares, all on an as-if converted basis, as
of the date of the adjustment) shall be equal to the number
derived from the formula set forth in Section 2.4(i)(b) of the
Series A Share Purchase Agreement; (B) the final ownership of the
Series B Shareholders in the Company (calculated by dividing the
total number of issued and outstanding Series B Preferred Shares
by the sum of the total number of issued and outstanding Ordinary
Shares (being 75,000,000) and the total number of issued and
outstanding Preferred Shares, all on an as-if converted basis, as
of the date of the adjustment) shall be equal to the initial
ownership of the Series B Shareholders as set forth in Section
2.1(iii) of the Series B Preferred Shares Purchase Agreement,
dated as of September 15, 2006, by and among the Company, the
Founder and the Series B Shareholders, which is amended by that
certain Amendment to the Series B Preferred Shares Purchase
Agreement, dated September 26, 2006 (as amended, the "SERIES B
SHARE PURCHASE AGREEMENT"); and (C) the Final Ownership of the
Investors in the Company shall be equal to the Initial Ownership
of the Investors in the Company.
(ii) Following the issue by the Auditor of the 2006/2007 Audited Income
Statement:
(a) If the 2006/2007 Net Earnings are equal to or more than the
Guaranteed 2006/2007 Net Earnings and the final ownership of the
Series B Shareholders in the Company is to remain unchanged in
accordance with Section 2.4(ii)(a) of the Series B Share Purchase
Agreement, then the Final Ownership shall remain unchanged as the
Initial Ownership of the Investors in the Company.
(b) If the 2006/2007 Net Earnings are less than the Guaranteed
2006/2007 Net Earnings and the final ownership of the Series B
Shareholders in the Company is to be adjusted in accordance with
Section 2.4(ii)(b) of the Series B Purchase Agreement, in order
for the Final Ownership to remain unchanged as the Initial
Ownership of the Investors in the Company, the respective
Conversion Rate at which the Preferred Shares are converted into
Ordinary Shares shall be appropriately adjusted so that (A) the
final ownership of the Series A Shareholders in the Company
(calculated by dividing the total number of issued and
outstanding Series A Preferred Shares by the sum of the total
number of issued and outstanding Ordinary Shares (being
75,000,000) and the total number of issued and outstanding
Preferred Shares, all on an as-if converted basis, as of the date
of the adjustment) shall remain unchanged as the ownership of the
Series A Shareholders adjusted, if any, according to Section
2.4(i)(b) of the Series A Share Purchase Agreement; (B) the final
ownership of the Series B Shareholders in the Company (calculated
by dividing the total number of issued and outstanding Series B
Preferred Shares by the sum of the total number of issued and
outstanding Ordinary Shares (being 75,000,000) and the total
number of issued and outstanding Preferred Shares, all on
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an as-if converted basis, as of the date of the adjustment) shall
be equal to the number derived from the formula set forth in
Section 2.4(ii)(b) of the Series B Share Purchase Agreement; and
(C) the Final Ownership of the Investors in the Company shall be
equal to the Initial Ownership of the Investors in the Company.
(iii) Following the issue by the Auditor of the 2007 Audited Income
Statement:
(a) if the 2007 Net Earnings are equal to or more than the Guaranteed
2007 Net Earnings, then the respective Conversion Rate of the
Preferred Shares shall be appropriately adjusted so that (A) the
final ownership of the Series A Shareholders in the Company
(calculated by dividing the total number of issued and
outstanding Series A Preferred Shares by the sum -- of the total
number of issued and outstanding Ordinary Shares (being
75,000,000) and the total number of issued and outstanding
Preferred Shares, all on an as converted basis, as of the date of
the adjustment) shall remain unchanged as the ownership of the
Series A Shareholders adjusted, if any, according to Section
2.4(i)(b) of the Series A Share Purchase Agreement; (B) the final
ownership of the Series B Shareholders in the Company (calculated
by dividing the total number of issued and outstanding Series B
Preferred Shares by the sum of the total number of issued and
outstanding Ordinary Shares (being -- 75,000,000) and the total
number of issued and outstanding Preferred Shares, all on an as
converted basis, as of the date of the adjustment) shall remain
unchanged as the ownership of the Series B Shareholders adjusted,
if any, according to Section 2.4(ii)(b) of the Series B Share
Purchase Agreement; and (C) the Final Ownership shall remain
unchanged as the Initial Ownership of the Investors in the
Company.
(b) if the 2007 Net Earnings are less than the Guaranteed 2007 Net
Earnings but are equal to or more than US$100,000,000, the Final
Ownership of the Investors in the Company shall be adjusted in
accordance with the following formula promptly following the
issue of the 2007 Audited Income Statement:
GE07
FO = IO x ----
AE07
For purposes of the foregoing formula, the following definitions
shall apply: (1) FO shall mean the Final Ownership after
adjustment in accordance with this Section 2.4(iii)(b); (2) IO
shall mean the Initial Ownership of the Investors in the Company;
(3) AE07 shall mean the actual 2007 Net Earnings; and (4) GE07
shall mean the Guaranteed 2007 Net Earnings.
The adjustment of the Final Ownership as contemplated in Section
2.4(iii)(b) above shall be effected by adjusting the respective
Conversion Rate of the Preferred Shares so that (A) the final
ownership of the Series A Shareholders (calculated by dividing
the total number of issued and outstanding Series A Preferred
Shares by the sum of the total number of issued and outstanding
Ordinary Shares (being 75,000,000) and the total number of issued
and outstanding Preferred Shares, all on an as-converted basis,
as of the date of the adjustment) shall remain unchanged as the
ownership of the Series A Shareholders adjusted, if any,
according to Section
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2.4(i)(b) of the Series A Share Purchase Agreement; (B) the final
ownership of the Series B Shareholders (calculated by dividing
the total number of issued and outstanding Series B Preferred
Shares by the sum of the total number of issued and outstanding
Ordinary Shares (being 75,000,000) and the total number of issued
and outstanding Preferred Shares, all on an as-converted basis,
as of the date of the adjustment) shall remain unchanged as the
ownership of the Series B Shareholders adjusted, if any,
according to Section 2.4(ii)(b) of the Series B Share Purchase
Agreement; and (C) the Final Ownership of the Investors in the
Company shall be equal to the number derived from the formula set
forth in Section 2.4(iii)(b) of this Agreement.
(c) if the 2007 Net Earnings are less than US$100,000,000 and the
final ownership of the Series A Shareholders is to be adjusted in
accordance with Section 2.4(ii)(b) of the Series A Share Purchase
Agreement, then the respective Conversion Rate of the Preferred
Shares shall be appropriately adjusted so that (A) the final
ownership of the Series A Shareholders (calculated by dividing
the total number of issued and outstanding Series A Preferred
Shares by the sum of the total number of the issued and
outstanding Ordinary Shares (being 75,000,000) and the total
number of issued and outstanding Preferred Shares, all on an
as-converted basis, as of the date of the adjustment) shall be
equal to the number derived from the formula set forth in Section
2.4(ii)(b) of the Series A Share Purchase Agreement; (B) the
final ownership of the Series B Shareholders (calculated by
dividing the total number of issued and outstanding Series B
Preferred Shares by the sum of the total number of the issued and
outstanding Ordinary Shares (being 75,000,000) and the total
number of issued and outstanding Preferred Shares, all on an
as-converted basis, as of the date of the adjustment) in the
Company shall remain unchanged as the ownership of the Series B
Shareholders adjusted, if any, according to Section 2.4(ii)(b) of
the Series B Share Purchase Agreement; and (C) the Final
Ownership of the Investors in the Company shall remain unchanged
as the ownership of the Investors adjusted according to Section
2.4(iii)(b) of this Agreement.
(iv) To effect the ownership adjustment as set forth in Sections 2.4(i),
(ii) and (iii) above, the applicable Conversion Rate of the Series A
Preferred Shares, the Series B Preferred Shares and the Series C
Preferred Shares shall be adjusted in accordance with the following
formulas:
TS
CR(A) = FO(A) x ---------
4,580,000
TS
CR(B) = FO(B) x ---------
8,000,000
TS
CR(C) = FO(C) x ---------
3,000,000
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For purposes of the foregoing formulas, the following definitions
shall apply: (1) CR(A) shall mean the effective Conversion Rate of the
Series A Preferred Shares at which the Series A Preferred Shares are
converted into Ordinary Shares in accordance with this Section 2.4;
(2) CR(B) shall mean the effective Conversion Rate of the Series B
Preferred Shares at which the Series B Preferred Shares are converted
into Ordinary Shares in accordance with this Section 2.4; (3) CR(C)
shall mean the effective Conversion Rate of the Series C Preferred
Shares at which the Series C Preferred Shares are converted into
Ordinary Shares in accordance with this Section 2.4; (4) FO(A) shall
mean the final ownership of the holders of the Series A Preferred
Shares in the Company as adjusted according to Section 2.4 of the
Series A Share Purchase Agreement; (5) FO(B) shall mean the final
ownership of the holders of the Series B Preferred Shares in the
Company as adjusted according to Section 2.4 of the Series B Share
Purchase Agreement; (6) FO(C) shall mean the Final Ownership of the
Investors in the Company as adjusted according to Section 2.4 hereof;
and (7) TS shall mean the total number of Ordinary Shares to be issued
and outstanding, on an as-converted basis, as of the date of the
Closing or the date of adjustment, as the case may be, which shall be
equal to the number derived from the following formula:
75,000,000
TS= -------------------
1-FO(A)-FO(B)-FO(C)
(v) Notwithstanding anything contained herein to the contrary, the
Investors agree not to make any adjustment to the ownership with
respect to the 2007 Audited Income Statement under Section 2.4(iii)
hereof if the 2007 Net Earnings is no less than US$104,500,000.
(vi) Notwithstanding the above, in the event a Qualified IPO consummates or
is expected to consummate prior to December 31, 2007, the Company
agrees to perform a special audit of the interim period covering the
number of complete months prior to such date. If the actual 2007 Net
Earnings is less than the Guaranteed 2007 Net Earnings, each on a pro
rata basis, then the Final Ownership of Investors in the Company shall
be adjusted, prior to the consummation of the Qualified IPO, in
accordance with the formulas and principles set forth in this Section
2.4, except the actual adjustment will be made on a pro rata basis.
For purpose of the pro rata adjustment to be made in accordance with
this Section 2.4(v), the Guaranteed 2007 Net Earnings allocable to the
first six (6) months of 2007 shall be US$50,000,000 and the Guaranteed
2007 Net Earnings allocable to the last six (6) months of 2007 shall
be US$60,000,000.
For the avoidance of doubt, both the pro rata Guaranteed 2007 Net
Earnings and the pro rata 2007 Net Earnings shall be calculated on a
monthly basis, and for purposes of this Section 2.4(vi), the pro rata
Guaranteed 2007 Net Earnings shall be derived from the following
formulas:
(A) if the Qualified IPO consummates prior to June 30, 2007,
US$50,000,000 x N
-----------------
6
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PNE =
(B) if the Qualified IPO consummates on or after July 1, 2007,
PNE= US$50,000,000 + US$10,000,000 x (N-6)
For purposes of the foregoing formulas, the following definitions
shall apply: (1) PNE shall mean the pro rata Guaranteed 2007 Net
Earnings and (2) N shall mean the number of complete months that have
been audited by the special audit pursuant to this Section 2.4(vi).
(vii) Notwithstanding the above, the parties hereto may agree from time to
time, based on legal advice mutually acceptable to the Company and the
Investors, on any other method to effect the adjustment to the final
ownership of the Series A Shareholders and the Final Ownership of the
Investors to be equal to the amounts derived from the formulas and
principles set forth in this Section 2.4. For the avoidance of doubt,
the Investors' Final Ownership after any adjustment made under this
Section 2.4 shall not be lower than their ownership before such
adjustment.
(viii) Notwithstanding anything contained herein to the contrary, in the
event there shall be any conflict between the provisions set forth in
this Section 2.4 and the provisions contained in the Memorandum and
Articles, then the provisions of the Memorandum and Articles shall
prevail.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY, THE PRC SUBSIDIARY AND THE
FOUNDER
The Company, the PRC Subsidiary and the Founder jointly and severally represent
and warrant to the Investors as of the date of this Agreement and as of the
Closing that, other than as set forth in the Disclosure Schedule (the
"DISCLOSURE SCHEDULE") with specific reference to the section to which exception
is being taken:
3.1 Organization, Good Standing and Qualification
(i) Each member of the Company Group is duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation. Each member of the Company Group has all requisite
corporate power and authority to carry on its business as now
conducted and as proposed to be conducted and is duly qualified to
transact business and is in good standing in each jurisdiction in
which it operates business and the failure to so qualify would have a
Material Adverse Effect.
(ii) The Company is an exempted company duly organized, validly existing
and in good standing under the laws of Cayman Islands, and has all
requisite corporate power and authority to carry on its business as
now conducted and as proposed to be conducted and is duly qualified to
transact business and is in good standing in each jurisdiction in
which it operates business and the failure to so qualify would have a
Material Adverse Effect. The Company is a holding company and since
its formation has not engaged in any business operation, been a party
to any agreement, contract or commitment, or incurred any liability or
obligation other than in the course of forming and holding its equity
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interest in the PRC Subsidiary and those relating solely to the
transactions contemplated under this Agreement and the Ancillary
Agreements.
(iii) The PRC Subsidiary is a wholly foreign-owned enterprise, duly
organized and validly existing under the laws of the PRC. The
formation of the PRC Subsidiary was duly approved by MOFCOM or its
authorized local counterpart. The PRC Subsidiary has the corporate
power and authority to own and operate its properties and to carry on
its business as specified in the scope of business in the business
license issued to the PRC Subsidiary.
3.2 Capitalization and Voting Rights
(i) The authorized capital is and as of the Closing will be US$15,000,000.
The authorized capital of the Company consists, or will consist
immediately prior to the Closing, of:
(a) Ordinary Shares. 134,000,000 ordinary shares, par value US$0.10
per share (the "ORDINARY SHARES"), of which 75,000,000 shares are
issued and outstanding, and 59,000,000 are reserved for issuance
upon conversion of the Preferred Shares issued and outstanding as
of the Closing Date, upon the exercise of the Warrants as well as
upon the exercise of stock options granted under the Company
Option Plan.
(b) Preferred Shares. 16,000,000 preferred shares, (1) 3,275,109 of
which have been designated Series A-1 Preferred Shares, par value
US$0.10 per share (the "SERIES A-1 PREFERRED SHARES"), 3,000,000
of which are issued and outstanding; (2) 1,724,891 of which have
been designated Series A-2 Preferred Shares, par value US$0.10
per share (the "SERIES A-2 PREFERRED SHARES"), 1,580,000 of which
are issued and outstanding; (3) 8,000,000 of which have been
designated Series B Preferred Shares, par value US$0.10 per share
(the "SERIES B PREFERRED SHARES"), all of which are issued and
outstanding; and (4) 3,000,000 of which have been designated
Series C Preferred Shares, par value US$0.10 per share (the
"SERIES C PREFERRED SHARES", together with the Series A-1
Preferred Shares, the Series A-2 Preferred Shares and the Series
B Preferred Shares, the "PREFERRED SHARES"), none of which has
been issued and outstanding.
(ii) The registered capital of the PRC Subsidiary is US$83,600,000 as of
the Closing, all of which is owned by the Company and has been fully
paid for.
(iii) On the date hereof and at the Closing, the issued and outstanding
share capital of the Company is and will be as set forth in Section
3.2(iii) of the Disclosure Schedule, which lists all shareholders
owning issued and outstanding shares of the Company, together with the
number held by each.
(iv) Section 3.2(iv) of the Disclosure Schedule shows an accurate and true
list of all outstanding securities of the Company and the PRC
Subsidiary and their respective holders to be in effect immediately
following the Closing.
(v) As of the date hereof and the Closing, except as provided in this
Agreement, the Ancillary Agreements, the Company Option Plan, the
Warrants and the rights and privileges of the Preferred Shares under
the Memorandum and Articles, there are no
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outstanding options, warrants, rights (including conversion or
preemptive rights and rights of first refusal), proxy or shareholders
agreements or agreements of any kind for the purchase or acquisition
from the Company or the PRC Subsidiary of any of their securities.
(vi) Except as may be provided by the terms of the Preferred Shares or as
otherwise set forth in Section 3.2(vi) of the Disclosure Schedule,
neither the Company nor the PRC Subsidiary is subject to any
obligation (contingent or otherwise) to purchase or otherwise acquire
or retire any equity interest held by its shareholders or to purchase
or otherwise acquire or retire any of its other outstanding
securities.
3.3 Group Structure
(i) Section 3.3(i) of the Disclosure Schedule lists each Group Company,
and correctly sets forth the capitalization of such Group Company, the
Company's ownership interest therein, the interest of any other Person
therein, the nature of legal entity which the Group Company
constitutes, the jurisdiction in which the Group Company was
organized, each jurisdiction in which the Group Company is required to
be qualified or licensed to do business as a foreign Person and a
brief summary of the Group Company's business.
(ii) Except in respect of any interest held in any Group Company, none of
the Company or the Group Companies has any Subsidiaries or owns or
controls, directly or indirectly, any interest in any other
corporation, partnership, trust, joint venture, association or other
entity. Except as set forth in Section 3.3(ii) of the Disclosure
Schedule, none of the Company or the Group Companies maintains any
offices or any branches.
(iii) In respect of any ownership interest held in a Group Company by the
Company or another Group Company, as described in Section 3.3(i) of
the Disclosure Schedule, (a) the Company or such Group Company holds
good and valid title to such ownership interest free and clear of all
restrictions on transfer or other encumbrances, other than those
restrictions on transfer or other encumbrances created by the
Ancillary Agreements or the constitutional documents, (b) such
ownership interest was acquired in compliance with all Applicable
Laws, including those promulgated by SAFE and those regulating the
offer, sale or issuance of securities generally, and (c) there are no
outstanding options or rights for the purchase or acquisition from the
Company or such Group Company of such ownership interest. There are no
outstanding options, warrants, rights (including registration,
conversion or preemptive rights and rights of first refusal), proxy or
shareholders agreements or agreements of any kind for the purchase or
acquisition from any Group Company of any of its equity. None of the
Group Companies is subject to any obligation (contingent or otherwise)
to purchase or otherwise acquire or retire any interest held by its
equity holders or to purchase or otherwise acquire or retire any of
its securities.
(iv) In respect of the PRC Subsidiary, as of the Closing, the full amount
of the registered capital thereof has been contributed, such
contribution has been duly verified by a certified accountant
registered in the PRC and the accounting firm employing such
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accountant, and the report of the certified accountant evidencing such
verification has been registered with the SAIC or its authorized local
counterpart.
3.4 Authorization
Each of the Company, the PRC Subsidiary and the Founder has all requisite
power and authority to execute and deliver this Agreement and each of the
Ancillary Agreements to which it is a party and to carry out and perform
its obligations thereunder. All corporate action on the part of each of the
Company, the PRC Subsidiary and their respective officers, directors and
shareholders necessary for the authorization, execution and delivery of
this Agreement and each of the Ancillary Agreements to which it is a party,
the performance of all obligations of each of the Company and the PRC
Subsidiary thereunder, and the authorization, issuance (or reservation for
issuance), sale and delivery by the Company of the Series C Preferred
Shares being sold hereunder and the Ordinary Shares issuable upon
conversion of such Series C Preferred Shares, has been taken or will be
taken prior to the Closing. This Agreement and each of the Ancillary
Agreements to which each of the Company, the PRC Subsidiary or the Founder
is a party have been duly executed and delivered by each of the Company,
the PRC Subsidiary and the Founder, and constitute valid and legally
binding obligations thereof, enforceable thereagainst in accordance with
its terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, and (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies. Any preemptive rights or rights of first refusal
with respect to the issuance of the Series C Preferred Shares or the
Ordinary Shares to be issued upon conversion of the Series C Preferred
Shares have been duly waived.
3.5 Valid Issuance of the Series C Preferred Shares
(i) The Series C Preferred Shares that are being purchased by or issued to
the Investors hereunder, when issued, sold and delivered in accordance
with the terms of this Agreement against payment of the Subscription
Price will be duly and validly issued, fully paid, and non-assessable,
and will be free of restrictions on transfer other than such
restrictions on transfer as may be imposed by this Agreement, the
Ancillary Agreements or the Memorandum and Articles. The Ordinary
Shares issuable upon conversion of the Series C Preferred Shares
purchased under this Agreement have been duly and validly reserved for
issuance and, upon issuance in accordance with the terms of the
Memorandum and Articles, will be duly and validly issued, fully paid,
and non-assessable and will be free of restrictions on transfer other
than such restrictions on transfer as may be imposed by this
Agreement, the Ancillary Agreements or the Memorandum and Articles.
(ii) All presently outstanding shares of the Company are duly and validly
issued, fully paid and non-assessable, and in each case such shares
have been issued in full compliance with the requirements of all
applicable securities laws and regulations, including to the extent
applicable, the Securities Act and all other antifraud and other
provisions of applicable securities laws and regulations.
3.6 Licenses
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(i) Section 3.6 of the Disclosure Schedule contains a true and complete
list of all Licenses used in and material to the business or
operations of the Group Companies, setting forth the owner, the
function and the expiration and renewal date of each. Prior to the
execution of this Agreement, the Company has delivered to the
Investors true and complete copies of all such Licenses.
(a) Each Group Company owns or validly holds all Licenses that are
necessary to conduct its business and own and operate its assets
and properties as presently conducted and operated, and can
obtain, without undue burden or expense, all Licenses for the
conduct of its businesses as currently conducted and as proposed
to be conducted;
(b) Each License listed in Section 3.6 of the Disclosure Schedule is
valid, binding and in full force and effect; and
(c) No Group Company is or has at any time been, or has received any
notice that it is or has at any time been, in default (or with
the giving of notice or lapse of time or both, would be in
default) under any such License.
(ii) Without limiting the generality of paragraph (i) above, all Licenses
required under PRC laws for the due and proper establishment and
operation of the PRC Subsidiary and the consummation of the
transactions contemplated hereby have been duly obtained from the
relevant Governmental Authority and are in full force and effect; all
filings and registrations with the relevant PRC Governmental Authority
required in respect of the PRC Subsidiary and its operations,
including but not limited to registration with MOFCOM, SAIC, and SAFE
have been duly and timely completed in accordance with the relevant
PRC laws; the consummation of the transactions contemplated under this
Agreement and each of the Ancillary Agreements will not result in a
termination or revocation of any of the Material Licenses; each Group
Company is in compliance with applicable requirements of the relevant
tax bureau, customs authorities and product registration authorities
to which it and its business are subject.
3.7 Consents
No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any Governmental
Authority or other third party on the part of any of the Company, the PRC
Subsidiary or the Founder will be required in connection with the
execution, delivery and performance of this Agreement and each of the
Ancillary Agreements and the consummation of the transactions contemplated
thereby which has not already been secured or effected or will be secured
or effected prior to the Closing.
3.8 Offering
The Series C Preferred Shares and the Ordinary Shares to be issued upon
conversion of the Series C Preferred Shares have not been, and will not be,
registered under the Securities Act and are made subject of sale and
purchase under this Agreement, to the extent they are so made herein,
pursuant to an exemption from registration requirements of the Securities
Act. Subject in part to the truth and accuracy of each Investor's
representations set forth in Section 4 of this Agreement,
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the offer, sale and issuance of the Series C Preferred Shares and the
Ordinary Shares to be issued upon conversion of the Series C Preferred
Shares (when issued), as contemplated by this Agreement, is exempt from the
registration and prospectus delivery requirements of the Securities Act and
any applicable securities laws, and neither the Company nor any authorized
agent acting on its behalf has taken or will take any action that would
cause the loss of such exemption.
3.9 Business Plan and Budget
The business plan and budget dated November 24, 2006, as amended (the "2006
BUSINESS PLAN AND BUDGET") was previously delivered to the Investors by the
Company and is attached as Exhibit C hereto. The 2006 Business Plan and
Budget, including an annual profit and loss projection of the PRC
Subsidiary for the fiscal years ending December 31, 2006 and 2007 as well
as for the fiscal period from July 1, 2006 to June 30, 2007, does not
contain any untrue statement of a material fact, nor does it omit to state
a material fact necessary to make the statements therein not misleading,
except that with respect to assumptions, projections and expressions of
opinion or predictions contained in the 2006 Business Plan and Budget, the
Company represents only it believes there is a reasonable basis therefor.
3.10 Books and Records; Minutes
All accounts, ledgers, material files, documents, instruments, papers,
books and records relating to the business, operations, conditions
(financial or other) of each member of the Company Group, results of
operations, and assets and properties of each member of the Company Group
(collectively, the "BOOKS AND RECORDS"), each as supplied to the Investors,
are true, correct, complete and current in all material respects, there are
no material inaccuracies or discrepancies of any kind contained or
reflected therein, and they have been maintained in accordance with
relevant legal requirements and industry standards, as applicable,
including the maintenance of an adequate system of internal controls. The
minute books of each member of the Company Group, as made available to
Investors and their representatives, contain complete and accurate records
of all meetings of and corporate actions or written consents by the
shareholders and the board of such member of the Company Group and, to the
extent that such minute books are deficient, all material information not
contained in such minutes has been conveyed to the Investors in other
written form.
3.11 Tax Matters
All Tax Returns required to be filed in respect of each member of the
Company Group have been duly and timely filed, have been prepared in
compliance with Applicable Law, and are true, correct and complete. All
Taxes due and payable by each member of the Company Group, whether or not
shown as due on such Tax Returns, have been fully paid when due. Each
member of the Company Group has established adequate reserves on their
respective books of account for all Taxes and for the liability for
deferred income Taxes payable in respect of such member of the Company
Group. There have been no extraordinary examinations or audits of any tax
returns or reports by any applicable governmental agency.
3.12 Independent Audit Reports
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(i) The Company has delivered to the Investors and attached as Section
3.12(i) of the Disclosure Schedule the independent audit reports (the
"INDEPENDENT AUDIT REPORTS") for the nine month period ended September
30, 2006, which have been prepared under US GAAP and audited by the
Auditor (the last date being the "REPORT DATE") and the financial
forecast for the twelve months ending December 31, 2007 of the
Company. The financial forecast is complete and correct in all
material respects and present fairly the financial condition and
position of the Company Group as of the Report Date, and is reviewed
and signed off by KPMG in accordance with the IFRS.
(ii) There are no debts, liabilities, or claims owed by or against any
member of the Company Group, of any nature, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, other than
liabilities set forth in the Independent Audit Reportor disclosed in
Section 3.12(ii) of the Disclosure Schedule. None of the members of
the Company Group is a guarantor or indemnitor of, or has provided
security for, any indebtedness of any Person.
(iii) Except as otherwise disclosed in Section 3.12(iii) of the Disclosure
Schedule, all of the accounts receivable and notes receivable owing to
each member of the Company Group, including without limitation all
accounts receivable and notes receivable set forth on the Review
Report, constitute valid and enforceable claims other than accounts
receivable and notes receivable which individually and in the
aggregate would not result in a Material Adverse Event if unpaid, and
are good and collectible in the ordinary course of business in all
material respects, net of any reserves shown on the Independent Audit
Report(which reserves are adequate and were calculated on a basis
consistent with IFRS), and no further goods or services are required
to be provided in order to complete the sales and to entitle such
Person to collect in full. There are no material contingent or
asserted claims, refusals to pay, or other rights of set-off with
respect to any member of the Company Group.
3.13 Absence of Changes
Since the Report Date, except as otherwise disclosed in Section 3.13 of the
Disclosure Schedule:
(i) None of the members of the Company Group has entered into any
transaction that was not in the ordinary course of business.
(ii) There has been no Material Adverse Event (individually or when
separate events are taken together) with respect to any member of the
Company Group or the Company Group taken as a whole.
(iii) None of the members of the Company Group has incurred any obligation
or liability except obligations or liabilities incurred in the
ordinary course of business.
(iv) There has been no resignation or termination of employment of any
Senior Manager of any member of the Company Group, and the Company has
no Knowledge of any impending resignation or termination of employment
of any Senior Manager of any member of the Company Group.
-13-
(v) There has been no labor dispute involving any member of the Company
Group or any of its respective employees and none is pending or
threatened.
(vi) There has been no material change in any compensation arrangement or
agreement with any employee of any member of the Company Group.
(vii) There have been no loans or guarantees made by any member of the
Company Group to or for the benefit of any Person, other than travel
advances and other advances made to employees in the ordinary course
of business.
(viii) There has been no waiver by any member of the Company Group of a
material right or debt owing to such member.
(ix) No member of the Company Group has purchased, acquired, sold, leased,
granted a security interest in, pledged, mortgaged, created a lien in,
or otherwise transferred a material portion of any material asset,
whether tangible or intangible, other than the sale of inventory in
the ordinary course of business and other than the creation of liens
for taxes not yet due or payable.
(x) There has been no material change to, or termination of, any Material
Contracts, no member of the Company Group has entered into any new
Material Contracts other than those listed in Section 3.15 of the
Disclosure Schedule, and there has been no change to the charter
document of any member of the Company Group.
(xi) There has been no declaration, setting aside or payment or other
distribution in respect of any of the share capital of any member of
the Company Group, or any direct or indirect redemption, purchase or
other acquisition of any such share capital by any member of the
Company Group.
(xii) None of the members of the Company Group has incurred any
indebtedness for money borrowed.
(xiii) There has been no damage to, destruction or loss of physical
property (whether or not covered by insurance) materially affecting
the business or operations of any member of the Company Group.
(xiv) There has been no agreement or commitment by any member of the
Company Group to do any of the things described in this Section 3.13.
3.14 Litigation
Except as set forth in Section 3.14 of the Disclosure Schedule, there are
no legal actions, suits, proceedings or claims pending in any jurisdiction
in which the members of the Company Group operate, are organized or
licensed to do business, or, to the Knowledge of the Company, threatened
(whether or not the defense thereof or liabilities in respect thereof are
covered by insurance), at law, in equity, in arbitration or before any
governmental entity or authority against or affecting the Business or
Condition of the Company Group or the Founder, or any of their respective
assets or properties, nor does the Company have Knowledge of any facts
which are likely to give rise to the same.
-14-
No injunction, writ, temporary restraining order, decree or any order of
any nature has been issued by any court or other Governmental Authority
purporting to enjoin or restrain the execution, delivery or performance of
this Agreement or the other Ancillary Documents. No member of the Company
Group has commenced or currently intends to initiate any legal action,
suit, proceeding or claim.
3.15 Material Contracts
Section 3.15 of the Disclosure Schedule lists each outstanding Contract to
which any member of the Company Group is a party or to which any member of
the Company Group or any of their respective properties is subject or by
which any thereof is bound that is deemed a Material Contract under this
Agreement.
(i) True and complete copies of the Material Contracts, including any
amendments and supplements to such Contracts, have been delivered to
the Investors or will be delivered to the Investors at least three (3)
Business Days prior to the Closing; provided the Company may redact
certain business sensitive information contained therein.
(ii) Unless otherwise noted on Section 3.15(ii) of the Disclosure Schedule,
each of the Material Contracts was entered into in the ordinary course
of business.
(iii) Each Material Contract is valid and subsisting, enforceable by the
parties thereto in accordance with its terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors'
rights generally, and (b) as limited by laws relating to the
availability of specific performance, injunctive relief or other
remedies in the nature of equitable remedies. Each member of the
Company Group has duly performed all its obligations under each
Material Contract to the extent that such obligations to perform have
accrued. No breach or default, alleged breach or default, or event
which would (with the passage of time, notice or both) constitute a
breach or default under any of the Material Contracts by any member of
the Company Group, as the case may be, or any other party or obligor
with respect thereto, has occurred, or as a result of this Agreement
or any Ancillary Agreement, or the performance hereof or thereof, will
occur.
(iv) Consummation of the transactions contemplated by this Agreement and
the Ancillary Agreements will not (and will not give any Person a
right to) terminate or modify any rights of, or accelerate or augment
any obligation of any member of the Company Group under any Material
Contract.
(v) Notwithstanding anything to the contrary provided herein, each of the
following Contracts is deemed to be a Material Contract and has been
identified in Section 3.15 of the Disclosure Schedule:
(a) any Contract that, after the Report Date, obligates any member of
the Company Group to pay an amount in excess of US$1,000,000;
(b) any Contract of the Company or any Group Company that has an
unexpired term of more than one (1) year valued in excess of
US$1,000,000;
-15-
(c) any Contract on which the business of any member of the Company
Group is substantially dependent or which is otherwise material
to the Business or Conditions of any member of the Company Group;
(d) any loan agreement, indenture, letter of credit, security
agreement, mortgage pledge agreement, deed of trust, bond, note,
or other agreement relating to the borrowing of money or to the
mortgaging, pledging, transferring of a security interest, or
otherwise placing an encumbrance on any material asset or
material part of the assets of any member of the Company Group,
in an amount in excess of US$1,000,000;
(e) any Contract involving a guarantee by the Company or any Group
Company of performance by any Person or involving any agreement
of the Company or any Group Company to indemnify or act as surety
for any Person, or any other Contract of the Company or any Group
Company to be contingently or secondarily liable for the
obligations of any Person;
(f) any Contract that limits or restricts the ability of any member
of the Company Group to compete or otherwise to conduct its
business in any manner or place;
(g) any joint venture, partnership, alliance or similar Contracts of
the Company or any Group Company involving a sharing of profits
or expenses (including joint development and joint marketing
contracts);
(h) any asset purchase agreement, share purchase agreement or other
Contract for acquisition by the Company or any Group Company of
assets or shares of another Person;
(i) any agreement for the divestiture of (1) any assets by or of any
member of the Company Group for consideration in excess of
US$1,000,000 or (2) any shares of capital stock of any member of
the Company Group;
(j) any sales agency, marketing or distributorship Contract the
termination or non-extension of which would result in a Material
Adverse Event;
(k) any Contract requiring performance on the part of the Company or
any Group Company in any country other than the PRC;
(l) any Contract of the Company or any Group Company that grants a
power of attorney, agency or similar authority to another Person
or entity, agency or similar authority to another Person or
entity;
(m) any Contract that contains a right of first refusal in respect of
the share capital of any member of the Company Group;
(n) all supply agreements with vendors for materials, parts and other
inputs for the Company's products and supply agreements with a
value in excess of US$1,000,000;
-16-
(o) all contracts with customers of the Company with a value (or
expected value) in excess of US$1,000,000; and
(p) any other Contract that was not made in the ordinary course of
business of the Company or any Group Company or not made at arm's
length.
3.16 Compliance with Laws
(i) Each member of the Company Group is, and at all times has been, in
full compliance with all Applicable Laws in any jurisdiction in which
it operates, owns assets or is organized or licensed to do business.
(ii) No event has occurred and no circumstance exists that (with or without
notice or lapse of time) (a) may constitute or result in a violation
by any member of the Company Group of, or a failure on the part of any
member of the Company Group to comply with, any Applicable Law, or (b)
may give rise to any obligation on the part of any member of the
Company Group to undertake, or to bear all or any portion of the cost
of, any remedial action of any nature.
(iii) None of the members of the Company Group has received any notice or
other communication (whether oral or written) from any governmental or
regulatory body regarding (a) any actual, alleged, possible, or
potential violation of, or failure to comply with, any Applicable Law,
including without limitation any applicable Environmental Laws and
Applicable Law relating to customs, transfer pricing, foreign exchange
and related import and export regulations or (b) any actual, alleged,
possible, or potential obligation on the part of any member of the
Company Group to undertake, or to bear all or any portion of the cost
of, any remedial action of any nature.
(iv) None of the members of the Company Group or the Founder, director,
agent, employee or any other person acting for or on behalf of such
member of the Company Group, has directly or indirectly (a) made any
contribution, gift, bribe, payoff, influence payment, kickback, or any
other improper payment in any form, whether in money, property, or
services to any person, including but not limited to any officer of
any Governmental Authority (w) to obtain favorable treatment in
securing business for such member or any other member of the Company
Group, (x) to pay for favorable treatment for business secured, (y) to
obtain special concessions or for special concessions already
obtained, for or in respect of such member or any other member of the
Company Group, or (z) in violation of any Applicable Law, or (b)
established or maintained any fund or assets in which such member of
the Company Group has proprietary rights that have not been recorded
in the Books and Records of such member of the Company Group, except,
in each case, for such payments which facilitate or expedite the
performance of routine government action and which was lawful under
the laws of the jurisdiction of such payments.
3.17 Real Property
(i) None of the members of the Company Group owns or has legal or
equitable title or other right or interest in any real property other
than the land use rights (the "LAND USE
-17-
RIGHTS") held by the Company Group as set forth in Section 3.17(i) of
the Disclosure Schedule or as held pursuant to Lease (as defined
below). True and complete copies of the certificates evidencing the
Land Use Rights have been delivered to each of the Investors or their
agents or professional advisers. Any land grant premium required under
Applicable Law in connection with securing such Land Use Rights has
been fully paid. The use of any real property by each of the members
of the Company Group has conformed to the intended use of such real
property as granted under the applicable Land Use Rights. The
particulars of the Land Use Rights as set out in Section 3.17(i) of
the Disclosure Schedule are true and complete.
(ii) Section 3.17(ii) of the Disclosure Schedule sets forth each leasehold
interest with the annual lease payment in excess of US$50,000 pursuant
to which any member of the Company Group holds any rights, titles or
interests of a tenant (each a "LEASE"), indicating the parties to such
Lease, the address of the property demised under the Lease, the rent
payable under the Lease and the term of the Lease. Each Lease
constitutes the entire agreement to which any member of the Company
Group is party with respect to the property demised thereunder, and a
true and complete copy of each such Lease has been delivered to the
Investors, together with all amendments, modifications, alterations
and other changes thereto. Each Lease is valid and subsisting,
enforceable against the parties thereto in accordance with its terms.
As of the date hereof, all conditions precedent to the enforceability
of each Lease have been satisfied and there exists no breach or
default, nor state of facts which, with the passage of time, notice,
or both, would result in a breach or default on the part of any party
to the Lease. Each member of the Company Group has accepted possession
of the property demised pursuant to each Lease and is in actual
possession thereof and has not sublet, assigned or hypothecated its
leasehold interest except as set forth on Section 3.17(ii) of the
Disclosure Schedule. The particulars of the Leases as set out in
Section 3.17(ii) of the Disclosure Schedule are true and complete.
(iii) Except as set forth in Section 3.17(iii) of the Disclosure Schedule,
each member of the Company Group has obtained property ownership
certification for the plants, buildings and improvements located on
land with respect to which it holds Land Use Rights (collectively, the
"IMPROVEMENTS"). The Improvements and the operation thereof are part
of a construction project plan approved by the applicable construction
commission for the jurisdiction where the Improvements are located and
do not (A) contravene any Applicable Law relating to zoning or
building or (B) violate any restrictive covenant or any provision, in
the case of either (i) or (ii), the effect of which could interfere
with or prevent the continued use of such Improvements for the purpose
for which they are now being used. All of the Improvements are in good
operating condition and in a state of reasonable maintenance and
repair (except for ordinary wear and tear) and are adequate for the
conduct of the business of each member of the Company Group as
currently conducted.
(iv) Each of the Land Use Rights and the Improvements is free and clear of
any and all encumbrances except for those identified in Section
3.17(iv) of the Disclosure Schedule. A true and complete copy of each
of the agreements relating to the encumbrances
-18-
identified in Section 3.17(iv) of the Disclosure Schedule (the
"MORTGAGES") has been delivered to each of the Investors.
(v) Except as set forth in Section 3.17(v) of the Disclosure Schedule,
none of the Company Group uses any real property in the conduct of its
business except insofar as it holds valid Land Use Rights or has
secured a Lease with respect thereto. No default or event of default
on the part of any member of the Company Group or event which, with
the giving of notice or passage of time or both, would constitute a
default or event of default has occurred and is continuing unremedied
or unwaived under the terms of any of the Land Use Rights, the Leases
or Mortgages. There exists no pending or threatened condemnation,
confiscation, dispute, claim, demand or similar proceeding with
respect to, or which could materially and adversely affect, the
continued use and enjoyment of any Land Use Right, Lease or
Improvement. The Land Use Rights, Leases and Mortgages are valid and
subsisting and are enforceable in accordance with the terms contained
therein in all material respects.
3.18 Personal Property
(i) The personal property of each member of the Company Group is
sufficient for the conduct of its business as currently conducted.
(ii) All personal property of each member of the Company Group which is
reflected in the Independent Audit Reporttherefor delivered to the
Investors under Section 3.12(i) or which has been acquired by any
member of the Company Group since the Report Date and which has not
been disposed of in the ordinary course of its business is owned by
such member of the Company Group free and clear of any encumbrances.
(iii) All machinery, tools and equipment of each member of the Company
Group (other than inventories) which are reflected in the Independent
Audit Reporttherefor delivered to the Investors under Section 3.12(i)
or which have been acquired thereby since the Report Date are in a
state of reasonable maintenance and repair (except for ordinary wear
and tear) and are adequate for the conduct of the business thereof as
currently operated.
(iv) The inventories of each member of the Company Group which are
reflected in the Independent Audit Reporttherefor delivered to the
Investors under Section 3.12(i) were, on the Report Date, in good
condition, and any inventories produced or acquired thereby after such
date (to the extent not sold or otherwise disposed of in the ordinary
course of business), are in good condition, are useable or useful in
the ordinary course of the business thereof and are not in excess of
reasonable requirements.
3.19 Entire Business
There are no material facilities, services, assets or properties shared
with any other entity, which are used in connection with the business
operations of the Company Group, and all of the facilities, services,
assets or properties owned by the Group Companies are sufficient to conduct
its business as proposed to be conducted.
3.20 Compliance with Other Instruments
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None of the members of the Company Group is in, nor will the conduct of
business of any of them as proposed to be conducted result in, any
violation, breach or default of the Memorandum and Articles or any other
constitutional documents (which include, as applicable, any articles of
incorporation, by-laws, joint venture contracts and the like), or of any
material respect of any term or provision of any mortgage, indenture,
contract, agreement or instrument to which any such member of the Company
Group is a party or may be bound, or of any provision of any judgment,
decree, order, statute, rule or regulation applicable to or binding upon
any of them. The execution, delivery and performance of and compliance with
each of the Agreement and the Ancillary Agreements, and the consummation of
the transactions contemplated thereby, will not result in any such
violation, breach or default, or be in conflict with or constitute, with or
without the passage of time or the giving of notice or both, either a
default under the Memorandum and Articles or any other such constitutional
documents, any such contract, agreement or instrument, or a violation of
any statutes, laws, regulations or orders, or an event which results in the
creation of any lien, charge or encumbrance upon any asset of the Company
Group.
3.21 Interested Party Transactions
No officer, director or shareholder, founder of the Company Group or any
Affiliate of any of them has had, either directly or indirectly, any
interest in (except less than 1% shareholdings for investment purposes in
securities of publicly held and traded companies), or is an officer,
director, employee or consultant of: (a) any person or entity which
purchases, leases or borrows from or sells, licenses, leases, lends or
furnishes to any member of the Company Group any goods, property,
technology, intellectual or other property rights or services; or (b) any
contract or agreement to which any member of the Company Group is a party
or by which it may be bound or affected, except as set forth in Section
3.21 of the Disclosure Schedule. All such contracts and agreements were
made on terms and conditions as favorable to such member of the Company
Group as, or more favourable to such member of the Company Group than,
would have been obtainable by it at the time in a comparable arm's-length
transaction with an unrelated party.
3.22 Intellectual Property Rights
(i) Each member of the Company Group owns or otherwise has the sufficient
legal right or license to use all Intellectual Property necessary to
permit the members of the Company Group to carry on their businesses
as currently conducted and as proposed to be conducted. No claims are
currently being asserted against any member of the Company Group, nor
is any member of the Company Group aware of any threatened claim or
demand, by any other Person (a) challenging or questioning the Company
Group's validity, enforceability, ownership or use of any of the
Intellectual Property owned or used by the Company Group or the
validity or effectiveness of any license or similar agreement with
respect thereto or (b) alleging any interference, infringement,
misappropriation or unfair competition or trade practices.
(ii) Section 3.22(ii) of the Disclosure Schedule sets forth a complete list
of the registered rights to, registration applications of, and
licenses under, any (a) trademarks, service marks and trade names; (b)
patents; (c) copyrights; (d) domain names of each member of the
Company Group.
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(iii) Each member of the Company Group has taken reasonable steps and
measures to establish and preserve ownership of or right to use all
Intellectual Property material to the operation of its business. Each
member of the Company Group has taken reasonable steps to register,
protect, maintain, and safeguard the Intellectual Property material to
its business, including any Intellectual Property for which improper
or unauthorized disclosure would impair its value or validity, and has
executed appropriate nondisclosure and confidentiality agreements and
made all appropriate filings, registrations and payments of fees in
connection with the foregoing. There is no infringement or
misappropriation by any other Person of any Intellectual Property of
any member of the Company Group. No proceedings or claims in which any
member of the Company Group alleges that any Person is infringing
upon, or otherwise violating, any Intellectual Property of any member
of the Company Group are pending, and none has been served, instituted
or asserted by any member of the Company Group.
(iv) Each member of the Company Group owns all rights in and to any and all
Intellectual Property used or planned to be used by such member of the
Company Group, or covering or embodied in any past, current or planned
activity, service or product of such member of the Company Group,
which Intellectual Property was made, developed, conceived, created or
written by any consultant retained, or any employee employed, by such
member of the Company Group. No former or current employee, and no
former or current consultant, of any member of the Company Group has
any rights in any Intellectual Property made, developed, conceived,
created or written by the aforesaid employee or consultant during the
period of his or her retention by such member of the Company Group
which can be asserted against such member of the Company Group, and
such member of the Company Group has no obligation to compensate any
former or current employee for the use of any such Intellectual
Property. Except as set forth on Section 3.22(iv) of the Disclosure
Schedule, each former and present employee and consultant of each
member of the Company Group has executed a Confidentiality, Assignment
of Inventions and Non-Competition Agreement in substantially the form
attached hereto as Exhibit D. None of the Company, the PRC Subsidiary
or the Founder is aware that any of the employees employed, or any of
the consultants retained by any member of the Company Group is in
violation thereof.
(v) No Intellectual Property owned by any member of the Company Group is
the subject of any security interest, lien, license or other Contract
granting rights therein to any other Person. The Company Group has not
(a) transferred or assigned, (b) granted an exclusive license to or
(c) provided or licensed in source code form, any Intellectual
Property owned by any member of the Company Group to any Person.
(vi) To the Knowledge of the Company, no patent, invention, device,
principle or any statute, law, rule, regulation, standard or code is
pending or proposed which would restrict the ability of any member of
the Company Group to use any of the Intellectual Property Rights used
in the conduct of their business.
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3.23 Labor Agreements and Actions; Employee Compensation
(i) Except as disclosed in Section 3.23 of the Disclosure Schedule, none
of the members of the Company Group is a party to or is bound by any
currently effective employment contract, deferred compensation
agreement, bonus plan, incentive plan, profit sharing plan, retirement
agreement, vacation, hospitalization, medical or other plan, policy,
trust or arrangement or other employee compensation agreement.
(ii) The Company is not aware that any of the Key Persons, senior officer
or key employee, or that any group of key employees, intends to
terminate their employment with the Company Group, nor does the
Company Group have a present intention to terminate the employment of
any of the foregoing. The employment of each of the Key Persons,
senior officer and key employee of each member of the Company Group is
terminable at the will of such member of the Company Group without
giving rise to a claim for compensation or damages (other than a
statutory severance or redundancy payment or statutory compensation
for unfair dismissal). Each members of the Company Group has complied
in all material respects with all Applicable Laws related to
employment.
(iii) None of the members of the Company Group has any liability (whether
legally binding or not) to make any payment to or for the benefit of
any employee, officer, consultant, independent contractor or agent in
respect of past service, pension or the termination of the employment
or engagement of that or any other person (including without
limitation, payments for wrongful or unfair dismissal, loss of office
or redundancy) that would have a Material Adverse Effect, other than
in respect to current month payroll expenses and related deductions in
relation to employee and employer contributions.
3.24 Benefit Plans
(i) None of the members of the Company Group has scheduled or agreed upon
future increases of benefit levels (or creations of new benefits) with
respect to any Benefit Plan, and no such increases or creation of
benefits have been proposed or made the subject of representations to
employees of the Company Group under circumstances which make such
employees reasonably expect that such increases will be granted. No
loan is outstanding between any member of the Company Group and any
employee.
(ii) Other than statutory social insurance plans operated under the
Applicable Laws of the PRC, no member of the Company Group provides or
is required to provide any retirement, social insurance, life
insurance, medical, dental or other welfare benefits provided on
ill-health, injury, death disability or on termination of employment
(whether voluntary or involuntary) to any current or former employees,
officers, consultants, independent contractors or agents of the
Company Group.
(iii) Each member of the Company Group has complied with all Applicable
Laws in all material respects relating to any of the Benefit Plans,
including by deducting and making all required contributions and
payments required to be made by or on behalf of any employees of the
Company Group to the relevant Governmental Authority, and no such
deductions have been challenged or disallowed by any Governmental
Authority or any employee of the Company Group. None of the members of
the Company Group has
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been delinquent in making any payment to or for the benefit of any
current or former employee, officer, consultant, independent
contractor or agent with respect to statutory social insurance plans
operated under the Laws of the PRC.
3.25 No State Assets
Except as set forth in Section 3.25 of the Disclosure Schedule, none of the
assets of any member of the Company Group constitute state-owned assets
and, inasmuch, are not required to undergo any form of valuation under
Applicable Law in the PRC governing the transfer of state-owned assets
prior to the consummation of the transactions contemplated herein or in any
of the Ancillary Agreements.
3.26 Conflict of Interest
Section 3.26 of the Disclosure Schedule lists all existing or potential
conflict of interest any Key Person may have with the members of the
Company Group, and all measures that have been taken or are planned to be
taken to address such conflicts.
3.27 Insurance
Section 3.27 of the Disclosure Schedule contains copies of all of the
insurance policies or programs of each of the members of the Company Group
in effect as of the date hereof that have an insured amount of at least
US$50,000,000, and indicates the insurer's name, policy number, expiration
date, amount of coverage, type of coverage, annual premiums, exclusions and
deductibles, that is in effect. All such policies are underwritten by
financially sound and reputable insurers, and are sufficient to satisfy all
Applicable Laws in all material respects. All such policies will remain in
full force and effect and will not in any way be affected by, or terminate
or lapse by reason of any of the transactions contemplated hereby.
3.28 Customers
Section 3.28 of the Disclosure Schedule contains a true, complete and
correct list of the ten largest customers of the Company Group taken as a
whole in terms of sales during the six-month period from January 1, 2006 to
June 30, 2006 and the twelve-month period ended December 31, 2005. There
exists no actual or, to the Knowledge of the Company, threatened
termination, cancellation or limitation of, or any adverse modification or
change in, the business relationship of the members of the Company Group or
their business with any customer or any group of customers whose purchases
are individually or in the aggregate material to the business of the
Company Group, and there exists no present condition or state of facts or
circumstances that would cause a Material Adverse Effect or prevent the
members of the Company Group from conducting their business after the
consummation of the transactions contemplated by this Agreement, in
substantially the same manner in which such business has heretofore been
conducted.
3.29 Suppliers
The total amount of silicon feedstock that has been delivered and will be
delivered under the currently effective supply contracts during the
financial years ending December 31, 2006 and 2007 is no less than 2,000
tons. The weighted average price per kilogram of such silicon feedstock is
no more than US$150.
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3.30 Environmental Matters
(i) The property, assets and operations of the members of the Company
Group are and have been in material compliance with all applicable
Environmental Laws. No Hazardous Materials have been released, on or
into any of the properties or premises of the Company and its
Subsidiaries, including without limitation, the ground water, in
contravention of Environmental Laws.
(ii) None of the properties, assets or operations of any of the members of
the Company Group is the subject of any governmental investigation
evaluating whether (i) any remedial action is needed to respond to a
release or threatened release of any Hazardous Materials into the
environment or (ii) any release or threatened release of any Hazardous
Materials into the environment is in contravention of any
Environmental Law.
None of the members of the Company Group has received any written notice or
claim, nor to the Knowledge of the Company, there are pending or threatened
lawsuits or proceedings against any of them with respect to violations of
an Environmental Law or any release or threatened release of any Hazardous
Materials into the environment.
3.31 Full Disclosure
The Company, the PRC Subsidiary and the Founder have provided each of the
Investors with all the information that such Investor has requested for
deciding whether to consummate the transactions contemplated under this
Agreement. None of this Agreement, any Ancillary Agreements or any other
statements or certificates or other materials made or delivered, or to be
made or delivered, to such Investor in connection herewith or therewith,
contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements herein or therein not
misleading. No representation or warranty by the Company, the PRC
Subsidiary or the Founder in this Agreement and no information or materials
provided to such Investor in connection with its due diligence
investigation of any member of the Company Group or the negotiation and
execution of this Agreement and the Ancillary Agreements contains or will
contain any untrue statement of a material fact or omits or will omit to
state any material fact required to be stated therein or necessary in order
to make the statement therein, in light of the circumstances in which they
are made, not misleading.
The Company, the PRC Subsidiary and the Founder acknowledge that each of
the Investors is entering into this Agreement in reliance on the
representations and warranties given herein and that the representations
and warranties have been given with the intention of inducing the Investors
to enter into this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each of the Investors hereby severally but not jointly represents and warrants
to the Company as of the date of this Agreement and as of the Closing that:
4.1 Authorization
Such Investor has full power and authority to enter into this Agreement,
and this Agreement, when executed and delivered by such Investor, will
constitute its valid and legally binding
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obligation, enforceable in accordance with its terms except (i) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium, and other
laws of general application affecting enforcement of creditors' rights
generally, and (ii) as limited by laws relating to the availability of
specific performance, injunctive relief, or other equitable remedies.
4.2 Purchase for Own Account
This Agreement is made with such Investor in reliance upon such Investor's
representation to the Company, which by such Investor's execution of this
Agreement such Investor hereby confirms, that the Series C Preferred Shares
to be acquired hereunder and the Ordinary Shares to be issued upon
conversion of the Series C Preferred Shares (collectively, the
"SECURITIES") will be acquired by such Investor for investment for such
Investor's own account, not as a nominee or agent, and not with a view to
the resale or distribution of any part thereof, and that such Investor has
no present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this Agreement, each of the
Investors further represents that it does not have any contract,
undertaking, agreement or arrangement with any Person to sell, transfer or
grant participations to such Person or to any third Person, with respect to
any of the Securities.
4.3 No Public Market
Such Investor understands that the Securities have not been, and will not
be, registered under the Securities Act, that no public market now exists
for the Securities, that the Company has made no assurances that a public
market will ever exist for the Securities, and that the Securities may not
be resold absent a registration under the Securities Act or an available
exemption from the registration requirements of the Securities Act.
4.4 Investment Experience
Such Investor acknowledges that it is able to bear the economic risk of
this investment and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of
its investment in the Securities.
4.5 Disclosure of Information
The Investors and their advisors have been furnished with all materials
relating to the business, finances and operations of any member of the
Company Group and materials relating to the securities which have been
requested by the Investors or their advisors. The Investors and their
advisors have been afforded the opportunity to ask questions of
representatives of any member of the Company Group and have received
answers to such questions, as the Investors deem necessary in connection
with its decision to subscribe for the Series C Preferred Shares. For the
avoidance of doubt, nothing in this Section 4.5 shall limit in any way the
scope of the warranties set forth in Section 3 of this Agreement or the
liability of the Company, the PRC Subsidiary or the Founder for breach
thereof.
4.6 Legends
Such Investor understands that the certificates evidencing the securities
issued pursuant to this Agreement may bear the following legend:
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"These securities have not been registered under the Securities Act of
1933, as amended. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with
respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required or
unless sold pursuant to Rule 144 of such Act."
5. CONDITIONS OF THE INVESTORS' OBLIGATIONS AT THE CLOSING
The obligations of each Investor under this Agreement at the Closing are subject
to the fulfillment on or before the Closing of each of the following conditions
unless waived by each Investor with respect to itself; provided, however, that
any waiver of a condition shall not be deemed a waiver of any breach of any
representation, warranty, agreement, term or covenant or of any
misrepresentation by the Company, the PRC Subsidiary or the Founder, except to
the extent expressly so waived.
5.1 Representations and Warranties
The representations and warranties of the Company, the PRC Subsidiary and
the Founder contained in Section 3 shall be true, correct and complete in
all material respects when made, and shall be true, correct and complete on
and as of Closing at which the Investors are acquiring the Series C
Preferred Shares with the same effect as though such representations and
warranties had been made on and as of the date of the Closing.
5.2 Performance
Each of the Company, the PRC Subsidiary and the Founder shall have
performed and complied with all agreements, obligations and conditions
contained in this Agreement in all material respects that are required to
be performed or complied with by it on or before the Closing.
5.3 Compliance Certificate
The Chief Executive Officer of the Company shall deliver to the Investors
at the Closing a certificate stating that the condition specified in
Section 5.1, 5.2, 5.5 and 5.19 have been fulfilled in all material respects
and stating that there shall have been no Material Adverse Change since the
Report Date.
5.4 Secretary's or Director's Certificate
The Investors shall have received a certificate from the Company, dated as
of the Closing Date and signed by the Secretary or a director of the
Company, certifying (a) that the attached copies of the organizational
documents of the Company and each of the members of the Company Group and
the resolutions of the Board of Directors and/or shareholders (as
appropriate) of the Company and the PRC Subsidiary approving this Agreement
and the Ancillary Agreements and the transactions contemplated hereby and
thereby, are all true, complete and correct and remain unamended and in
full force and effect, (b) that the incumbency and specimen signature of
each officer of the Company and the PRC Subsidiary executing each such
document or any other document delivered in connection herewith or
therewith on behalf of the Company, (c) that the attached copies of current
business licenses of the Company and each of the Group Companies are all
true, complete and correct and remain unamended and in full force and
effect, and (d) that the attached copy of a good standing certificate for
the Company is true, complete and correct.
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5.5 Governmental Consents and Approvals
Each of the Company, the PRC Subsidiary and the Founder shall have obtained
all authorizations, approvals, waivers or permits of any competent
Governmental Authority or regulatory body for the consummation of all of
the transactions contemplated by this Agreement that are required in
connection with the lawful issuance and sale of the Series C Preferred
Shares pursuant to this Agreement, and all such authorizations, approvals,
waivers and permits shall be effective as of the Closing.
5.6 Corporate Approval
The Investors shall have received true, complete and correct copies of the
resolutions of the Board of Directors and/or shareholders (as appropriate)
of the Company and the PRC Subsidiary and such other agreements, schedules,
exhibits, certificates, documents, financial information and filings which
are reasonably required in connection with or relating to the transactions
contemplated hereby, all in form and substance reasonably satisfactory to
the Investors.
5.7 Consents From Third Parties
Each of the Company, the PRC Subsidiary and the Founder shall have obtained
any necessary third-party consents required in connection with or relating
to the transaction contemplated hereby by virtue of Applicable Laws,
contractual obligations or otherwise.
5.8 Independent Audit Report
The Company shall have, at the Company's expense, prepared and submitted to
the Investors: (i) the Independent Audit Report and (ii) financial forecast
for the financial year ending December 31, 2007.
5.9 Due Diligence
The Investors shall have completed and be satisfied with the results of all
business, legal and financial due diligence, and any items requiring
correction identified by any Investor shall have been corrected to the
Investors' reasonable satisfaction. Without limiting the foregoing, the
Investors shall have received from the Company all documents and other
materials reasonably requested by the Investors for the purpose of
examining and determining the rights of the Company, the PRC Subsidiary or
any other members of the Company Group in and to any technology, products
and Proprietary Assets now used, proposed to be used in, or necessary to
the Company or the PRC Subsidiary's business as now conducted and proposed
to be conducted, and the status of its ownership rights in and to all such
technology, products and Proprietary Assets shall be reasonably
satisfactory to the Investors.
5.10 Approval of the Investment Committee
Each Investor's investment committee shall have approved the terms of the
investment, including this Agreement and all ancillary or related
agreements.
5.11 Proceedings and Documents
All corporate and other proceedings in connection with the transactions
contemplated at the
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Closing and all documents incident thereto shall be reasonably satisfactory
in form and substance to the Investors, and each Investor shall have
received all such counterpart original or other copies of such documents as
it may reasonably request.
5.12 Subscription for the Series C Preferred Shares Permitted by Applicable Laws
The subscription for the Series C Preferred Shares by the Investors
hereunder and the consummation of the transactions contemplated hereby (a)
shall not be prohibited by the Memorandum and Articles or any Applicable
Laws, (b) shall not subject the Investors to any penalty or other onerous
condition under or pursuant to any Applicable Law, and (c) shall be
permitted by all Applicable Laws to which the Investors or the transactions
contemplated by or referred to herein or in the other documents and
agreements contemplated hereby are subject; and the Investors shall have
received such certificates or other evidence as they may reasonably request
to establish compliance with this condition.
5.13 Memorandum and Articles
The Second Amended and Restated Memorandum and Articles (the "MEMORANDUM
AND ARTICLES") shall have been duly amended by all necessary action of the
Company's board of directors and shareholders in substantially the form
attached hereto as Exhibit A and such amendment shall be duly filed with
and registered by the Registrar of Companies of the Cayman Islands within
fifteen (15) days of the adoption of such amendment as required by the
applicable Cayman Islands law.
5.14 Shareholders Agreement
The Founder and the Company shall have entered into an Amended and Restated
Shareholders Agreement (the "SHAREHOLDERS AGREEMENT") in substantially the
form attached hereto as Exhibit E, and such agreement shall be in full
force and effect.
5.15 Opinion of the Company's Cayman Islands Counsel
The Investors shall have received from Xxxxxxx Xxxx & Xxxxxxx, Cayman
Islands counsel for the Company, an opinion, dated as of the Closing, in
the form attached hereto as Exhibit F.
5.16 Opinion of the Company's PRC Counsel
The Investors shall have received from Grandall Legal Group, PRC counsel
for the Company, an opinion, dated as of the Closing, substantially in the
form and to the effect of Exhibit G, and to such further effect as the
Investors may reasonably request.
5.17 Confidentiality, Commitment and Non-Competition Agreement
The Founder and Key Persons of each member of the Company Group with access
to confidential information shall have executed a Confidentiality,
Assignment of Inventions and Non-Competition Agreement dated on or before
the Closing, in the form attached hereto as Exhibit D.
5.18 Registration Rights Agreement
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The Company shall have agreed to grant the Investors certain registration
rights in accordance with the Second Amended and Restated Registration
Rights Agreement (the "REGISTRATION RIGHTS AGREEMENT") in substantially the
form attached hereto as Exhibit H.
5.19 No Litigation
No action, suit, proceeding, claim, arbitration or investigation shall have
been threatened or instituted against any of the Founder, the Company, the
PRC Subsidiary, any other members of the Company Group or any Investor (a)
seeking to restrain, prevent or change the transactions contemplated hereby
or questioning the validity or legality of any of such transactions, or (b)
which would, if resolved adversely to the Investors or the Company,
severally or in the aggregate, cause a Material Adverse Effect.
5.20 No Material Adverse Change
There shall not have occurred prior to the Closing any event or transaction
reasonably likely to have a Material Adverse Effect (the "MATERIAL ADVERSE
CHANGE").
5.21 Board Observers
The Company shall have duly appointed each of the persons designated in
writing by Financiere Natexis Singapore 4 Pte Ltd. and CDH SolarFuture
Limited at the Closing to be observers on the Board of Directors of the
Company.
5.22 No Material Judgment or Order
There shall not be on the Closing any judgment or order of a court of
competent jurisdiction or any ruling of any governmental entity or
authority or any condition imposed under any Applicable Law which, in the
reasonable opinion of the Investors, would prohibit the subscription of the
Series C Preferred Shares hereunder or subject the Investors to any penalty
or other onerous condition under or pursuant to any Applicable Law if the
Series C Preferred Shares were to be purchased hereunder or would cause a
Material Adverse Effect.
5.23 Hiring of Chief Operating Officer
The Company shall have delivered a legally binding offer letter to the
candidate who will be hired as the Chief Operating Officer, pursuant to
which the Chief Operating Officer will assume his position no later than
January 15, 2007.
5.24 Closing Condition Fulfilment Notice
Upon fulfilment of all the closing conditions set forth in this Section 5,
the Investors, through their legal counsel, shall have issued to the
Company a closing condition fulfilment notice acknowledging that all the
closing conditions set forth herein have been met.
6. CONDITIONS OF THE COMPANY'S, THE PRC SUBSIDIARY'S AND THE FOUNDER'S
OBLIGATIONS AT THE CLOSING
The obligations of the Company, the PRC Subsidiary and the Founder among
themselves and to the Investors under this Agreement at the Closing are subject
to the fulfillment on or before the Closing of each of the following conditions
by each of the Investors:
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6.1 Representations and Warranties
The representations and warranties of the Investors contained in Section 4
shall be true, correct and complete when made, and shall be true, correct
and complete on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the Closing.
6.2 Performance
Each of the Investors shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
7. COVENANTS
7.1 Covenants Until Closing
The Company, the PRC Subsidiary and the Founder covenant and agree with the
Investors that, at all times from and after the date hereof until the
Closing, the Company, the PRC Subsidiary and the Founder will comply with
the following covenants and provisions, except to the extent the Investors
may otherwise consent in writing.
(i) Governmental Authorization; Maintenance of Licenses
The Company and the PRC Subsidiary will, and the Founder will procure
the members of the Company Group to (i) proceed diligently and in good
faith and use all commercially reasonable efforts, as promptly as
practicable, to obtain all consents, approvals or actions of, to make
all filings with and to give all notices to Governmental Authorities
required of the Company or any Subsidiary to consummate the
transactions contemplated hereby, (ii) provide such other information
and communications to such Governmental Authorities as the Investors
or such Governmental Authorities may reasonably request in connection
with the consummation of the transactions contemplated hereby, (iii)
cooperate with the Investors in obtaining as promptly as practicable
all consents, approvals or actions of, making all filings with and
giving all notices to Governmental Authorities required of the
Investors to consummate the transactions contemplated hereby, and (iv)
ensure that all Licenses are, and will remain, in full force and
effect at all times following the Closing.
(ii) Dividends
The Company and the PRC Subsidiary will not, and the Founder will
procure the Company and the PRC Subsidiary not to, declare or issue
any dividends for any class of shares of the Company and the PRC
Subsidiary.
(iii) Major Transactions
The members of the Company Group shall not, and the Founder shall
ensure that the members of the Company Group shall not, effect any
merger, consolidation, scheme of arrangement, recapitalization, fund
raising or sale of all or substantially all of the assets of any
member of the Company Group without obtaining the consent of the
Investors
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prior to the actual execution of such activities. For the avoidance of
doubt, any business transactions that are in the ordinary course of
business of the Company and are consistent with the Company's past
practice are not subject to the foregoing restriction.
(iv) Notice and Cure
The members of the Company Group shall conduct their business in a
manner, and shall otherwise use all reasonable efforts, so as to
ensure that the representations and warranties set forth in Section 3
hereof shall continue to be true and correct on and as of the Closing
Date as if made on and as of the Closing. The Company, the PRC
Subsidiary and the Founder will notify the Investors promptly in
writing of, and will as soon as practicable provide the Investors with
true and complete copies of any and all information or documents
relating to, and will use all best efforts to cure before the Closing,
any event, transaction or circumstance occurring after the date of
this Agreement that causes or will cause any covenant or agreement of
any such party under this Agreement to be breached or that renders or
will render untrue any representation or warranty of any such party
contained in this Agreement as if the same were made on or as of the
date of such event, transaction or circumstance. The Company also will
notify the Investors promptly in writing of, and will use all best
efforts to cure, before the Closing, any violation or breach of any
representation, warranty, covenant or agreement made by the Company in
this Agreement, whether occurring or arising before, on or after the
date of this Agreement. No notice given pursuant to this Section
7.1(iv) shall have any effect on the representations, warranties,
covenants or agreements contained in this Agreement for purposes of
determining satisfaction of any condition contained herein or shall in
any way limit the Investors' right to seek any remedy available at law
or in equity.
(v) Fulfillment of Conditions
The Company, the PRC Subsidiary and the Founder will execute and
deliver at or prior to the Closing this Agreement and each of the
Ancillary Agreements that they are required hereby to execute and
deliver as a condition to the Closing, and will take all commercially
reasonable steps necessary or desirable and proceed diligently and in
good faith to satisfy the other conditions to the obligations of the
Investors contained in this Agreement and will not permit the Company
or any member of the Company Group to take or fail to take any action
that could reasonably be expected to result in the nonfulfillment of
any such condition.
(vi) Memorandum and Articles
The Founder hereby agrees to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary under the
Applicable Law to abide by the terms of the Memorandum and Articles,
as may be amended from time to time, and to cause each Group Company
to conduct its business as if bound by the Memorandum and Articles.
The Founder further agrees to execute and deliver, or cause to be
executed and delivered, such other documents, certificates, agreements
and other writings and to take, or cause to be taken, such other
actions as reasonably deemed necessary in order to
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consummate or implement expeditiously the provisions of the Memorandum
and Articles, each as may be amended from time to time.
7.2 Covenants After Closing
The Company, the PRC Subsidiary and the Founder covenant and agree with the
Investors that, at all times from and after the date hereof, they will
comply with the following covenants.
(i) Use of Proceeds
Without the Investors' prior written consent, the Subscription Price
paid by the Investors to the Company shall be only used by the Company
to implement business expansion, make capital expenditures and meet
general working capital needs of the PRC Subsidiary within the
business scope of solar energy in accordance with the Business Plan of
the Company and/or the PRC Subsidiary approved by the Investors. For
the avoidance of doubt, the Company shall not use any of the
Subscription Price to make payment for any indebtedness of any Group
Company or to settle any related party transactions.
(ii) Disclosure of Major Events
The Company covenants to disclose to all of its shareholders all major
events that may lead to liabilities of any of the members of the
Company Group, including without limitation, legal proceedings
threatened or taken against the Company Group.
(iii) Internal Control and Financial Management
The Company and the PRC Subsidiary shall use their best efforts to
adopt an internal control system that ensures the separation of
internal audit and financial control of the Company and the PRC
Subsidiary, respectively.
(iv) Regulatory Compliance
The Company, the PRC Subsidiary and the Founder shall cause all
shareholders of the Company and the PRC Subsidiary (or any successor
entity) to timely complete all required registrations and other
procedures with applicable governmental authorities, including without
limitation the State Administration of Foreign Exchange, if and when
required pursuant to applicable law, and shall ensure that at all
times the Company, the PRC Subsidiary and their respective
shareholders are in compliance with such requirements and that there
is no barrier to repatriation of profits, dividends and other
distributions from the PRC Subsidiary (or any successor entity) to the
Company.
(v) Key Man Insurance
Within ninety (90) days following the Closing, the Company shall
obtain key man insurance policy for the Founder, the terms and
conditions of which shall be to the reasonable satisfaction of the
Investors.
(vi) PRC Matters
Within ninety (90) days following the Closing, the Company shall
procure the PRC Subsidiary to obtain all permits, certificates,
authorizations and approvals required under
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any PRC environmental laws, regulations, ordinance and orders in
connection with the business operations of the PRC Subsidiary.
(vii) Unless the Board of Directors otherwise approves, including the
consent of the Investor Director which shall not be unreasonably
withheld, the Company shall procure the registration statement on Form
F-1 with respect to the registration of the Ordinary Shares in
connection with a Qualified IPO to be confidentially submitted to the
United States Securities and Exchange Commission no later than January
31, 2007.
8. CONFIDENTIALITY
8.1 Disclosure of Terms
Each party hereto agrees that it will maintain the confidentiality of the
terms and conditions of this Agreement, all exhibits and schedules attached
hereto (collectively, the "FINANCING TERMS") and the transactions
contemplated hereby of the Company; provided, however, such obligation of
confidentiality shall not apply to (i) information which was in the public
domain or otherwise known to the relevant party before it was furnished to
it by another party hereto or, after it was furnished to that party,
entered the public domain otherwise than as a result of (1) a breach by
that party of this Section 8.1 or (2) a breach of a confidentiality
obligation by the disclosing party, where the breach was known to that
party; (ii) information the disclosure of which is necessary in order to
comply with applicable law, the order of any court, the requirements of a
stock exchange or other governmental or regulatory authority or to obtain
tax or other clearances or consents from any relevant authority; (iii)
information disclosed by the Investors to a bona fide proposing purchaser
of any Series C Preferred Shares, (iv) information disclosed by the parties
hereto to their respective directors, managers, officers, employees,
partners, accountants and attorneys where such Persons or entities are
under appropriate nondisclosure obligation to the relevant party; or (v)
any disclosure by each Investor to such Investor's and/or fund manager's
and/or its Affiliate's legal counsel, fund manager, auditor, insurer,
accountant, consultant or to any officer, director, general manager,
limited partner, its fund manager, shareholder, investment counsel or
advisor, or employee of such Investor and/or its Affiliates; provided,
however, that any counsel, auditor, insurer, accountant, consultant,
officer, director, general partner, limited partner, fund manager,
shareholder, investment counsel or advisor, or employee shall be advised of
the confidential nature of the information or are under appropriate
non-disclosure obligation imposed by professional ethics, law or otherwise;
(vi) any disclosure of information by any Investor for fund and inter-fund
reporting purposes; and (vii) any disclosure required or necessary for the
parties hereto to comply with their respective obligations under the Series
A and Series B financing documents.
8.2 Press Releases
Notwithstanding any other provision of this Section 8, with respect to the
transactions contemplated under this Agreement, within sixty (60) days
after the Closing, the Company may issue a press release through any media
channels, including industrial conferences, disclosing the existence of
this Agreement and the transactions contemplated hereunder, provided that
such press release does not disclose the Financing Terms and is in a form
approved by the Investors. Any communication with the media or press
release (via any medium, including industrial conferences) that uses an
Investor's trade name or otherwise refers to an Investor's participation
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or involvement with the Company Group shall be subject to the prior written
approval of the Investors prior to the release or use of such communication
or press release.
8.3 OTHER INFORMATION
The provisions of this Section 8 shall survive the termination of this
Agreement and shall be in addition to, and not in substitution for, the
provisions of any separate nondisclosure agreement executed by any of the
parties hereto with respect to the transactions contemplated hereby.
9. MISCELLANEOUS
9.1 Survival
The warranties, representations and covenants of the Company, the PRC
Subsidiary, the Founder and each of the Investors contained in or made
pursuant to this Agreement and the indemnity given by the Company, the PRC
Subsidiary and the Founder pursuant to Section 9.2 shall survive the
execution and delivery of this Agreement and the Closing, and shall in no
way be affected by any investigation of the subject matter thereof made by
or on behalf of any of the Investors or the Company.
9.2 Indemnity
(i) The Company, the PRC Subsidiary and the Founder agree to, jointly and
severally, indemnify and hold harmless any Investor and such
Investor's directors, officers, employees, Affiliates, agents and
permitted assigns (each, an "INDEMNITEE"), against any and all
Indemnifiable Losses to such Indemnitee, directly or indirectly, as a
result of, or based upon or arising from any inaccuracy in or breach
of nonperformance of any of the representations, warranties, covenants
or agreements made by the Company, the PRC Subsidiary and the Founder
in or pursuant to this Agreement. For purposes of this Section,
"INDEMNIFIABLE LOSS" means, with respect to any Indemnitee, any
action, cost, damage, disbursement, expense, liability, loss,
deficiency, diminution in value, obligation, penalty or settlement of
any kind or nature, whether foreseeable or unforeseeable, including,
but not limited to, (i) interest or other carrying costs, penalties,
legal, accounting and other professional fees and expenses reasonably
incurred in the investigation, collection, prosecution and defense of
claims and amounts paid in settlement, that may be imposed on or
otherwise incurred or suffered by such Indemnitee and (ii) any taxes
that may be payable by such Indemnitee as a result of the
indemnification of any Indemnifiable Loss hereunder.
(ii) The Founder shall indemnify, defend and hold harmless the Company, any
Investor and their respective directors, officers, employees,
Affiliates, agents and permitted assigns, against any and all
Indemnifiable Losses to such Person, directly or indirectly resulting
from, arising out of or relating to any tax or other obligations as a
result of the Company's purchase of a 72.41% equity interest in the
PRC Subsidiary from Liuxin Industrial Limited at US$1.00.
(iii) The Investors shall indemnify, severally but not jointly, defend and
hold harmless the Company, the PRC Subsidiary and the Founder, their
respective directors, officers, employees, Affiliates, agents and
permitted assigns, against any and all Indemnifiable
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Losses to such Person, directly or indirectly resulting from, arising
out of or relating to any inaccuracy in or breach of nonperformance of
any of the representations, warranties, covenants or agreements made
by such Investor.
Notwithstanding anything contained herein to the contrary, the
indemnification obligations of the Investors pursuant to this Section
9.2(iii) hereof shall expire at Closing.
9.3 Successors and Permitted Assigns
Except as otherwise provided herein, (i) the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties hereto whose rights or
obligations hereunder are affected by such terms and conditions; (ii)
except or otherwise provided herein, this Agreement, and the rights and
obligations herein may be assigned by any Investor to any Affiliate of such
Investor, but not to any other person without the prior written consent of
the Company; and (iii) the Founder may not assign any of his rights or
delegate any of its obligations under this Agreement without the prior
written consent of each Investor. Subject to Section 9.2 above, nothing in
this Agreement, express or implied, is intended to confer upon any party
other than the parties hereto or their respective successors and permitted
assigns any rights, remedies, obligations, or liabilities under or by
reason of this Agreement, except as expressly provided in this Agreement.
9.4 Governing Law
This Agreement shall be governed by and construed under the laws of Hong
Kong, without regard to principles of conflicts of law thereunder.
9.5 Counterparts
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and the same instrument.
9.6 Titles and Subtitles
The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this
Agreement.
9.7 Notices
Any and all notices required or permitted under this Agreement shall be
given in writing in English and shall be provided by one or more of the
following means and shall be deemed to have been duly given (a) if
delivered personally, when received, (b) if transmitted by facsimile, on
the date of transmission with receipt of a transmittal confirmation, or (c)
if by international courier service, on the fourth (4th) Business Day
following the date of deposit with such courier service, or such earlier
delivery date as may be confirmed in writing to the sender by such courier
service.
9.8 Administrative Fee and Other Expenses
The Company shall bear its own costs in connection with this Agreement. At
the Closing, the Company shall also pay all costs and expenses reasonably
incurred by the Investors in connection
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with the negotiation, execution, delivery and performance of this
Agreement, the Ancillary Agreements and the transactions contemplated
hereby and thereby through the date of the Closing, including the fees of
counsel and other professional advisors to the Investors, up to a maximum
amount of US$50,000, plus reasonable out-of-pocket expenses. If any action
at law or in equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to
which such party may be entitled.
9.9 Amendments and Waivers
Any term of this Agreement may be amended and the observance of any term of
this Agreement may be waived (either generally or in a particular instance
and either retroactively or prospectively), only by an instrument signed by
(i) the Company, (ii) the Founder, and (iii) the holders of at least two
thirds (2/3) of the Series C Preferred Shares then outstanding or to be
subscribed as set forth in Schedule A of this Agreement. Notwithstanding
the foregoing, in the case of a proposed amendment or waiver of Section
2.1(iii) or Schedule A of this Agreement, such amendment or waiver shall
only be effective if an instrument is signed by each party to the
Agreement.
9.10 Severability
If one or more provisions of this Agreement are held to be unenforceable
under any Applicable Law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
9.11 Entire Agreement
This Agreement and the documents referred to herein, together with all
schedules and exhibits hereto and thereto, constitute the entire agreement
among the parties and no party shall be liable or bound to any other party
in any manner by any warranties, representations, or covenants except as
specifically set forth herein or therein; provided, however, that nothing
in this Agreement or any Ancillary Agreement shall be deemed to terminate
or supersede the provisions of any confidentiality and nondisclosure
agreements executed by the parties hereto prior to the date of this
Agreement, all of which agreements shall continue in full force and effect
until terminated in accordance with their respective terms.
9.12 Dispute Resolution
(i) Any dispute, controversy or claim arising out of or relating to this
Agreement, or the interpretation, breach, termination or validity
hereof, shall be resolved through consultation. Such consultation
shall begin immediately after one party hereto has delivered to the
other party hereto a written request for such consultation. If within
thirty (30) days following the date on which such notice is given the
dispute cannot be resolved, the dispute shall be submitted to
arbitration upon the request of either party with notice to the other.
(ii) The arbitration shall be conducted in Hong Kong under the auspices of
the Hong Kong International Arbitration Centre (the "CENTRE"). There
shall be three arbitrators. Each
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party hereto shall each select one arbitrator within thirty (30) days
after giving or receiving the demand for arbitration. Such arbitrators
shall be freely selected, and the parties shall not be limited in
their selection to any prescribed list. The Chairman of the Centre
shall select the third arbitrator, who shall be qualified to practice
law in Hong Kong. If either party does not appoint an arbitrator who
has consented to participate within thirty (30) days after selection
of the first arbitrator, the relevant appointment shall be made by the
Chairman of the Centre.
(iii) The arbitration proceedings shall be conducted in English. The
arbitration tribunal shall apply the Arbitration Rules of the Centre
in effect at the time of the arbitration. However, if such rules are
in conflict with the provisions of this Section 9.12, including the
provisions concerning the appointment of arbitrators, the provisions
of this Section 9.12 shall prevail.
(iv) The arbitrators shall decide any dispute submitted by the parties to
the arbitration strictly in accordance with the substantive law of
Hong Kong and shall not apply any other substantive law.
(v) Each party hereto shall cooperate with the other in making full
disclosure of and providing complete access to all information and
documents requested by the other in connection with such arbitration
proceedings, subject only to any confidentiality obligations binding
on such party.
(vi) The award of the arbitration tribunal shall be final and binding upon
the disputing parties, and either party may apply to a court of
competent jurisdiction for enforcement of such award.
(vii) Either party shall be entitled to seek preliminary injunctive relief,
if possible, from any court of competent jurisdiction pending the
constitution of the arbitral tribunal.
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
COMPANY:
LDK SOLAR CO., LTD.
By: /s/ Xxxx Xxxxxxxx
--------------------------------------------
Name: Xxxx Xxxxxxxx
Capacity: Chief Executive Officer
Address:
LDK Solar Co., Ltd.
Room 2303
Harbor Ring Xxxxx
Xx. 00 Xxxxxx Xxxxxx Xxxx
Xxxxxxxx 000000
Attention: Xx. Xxxx Xiaofeng & Xx. Xxxx Yonggang
Facsimile: (00-00) 0000-0000
PRC SUBSIDIARY:
JIANGXI LDK SOLAR HI-TECH CO., LTD.
By: /s/ Xxxx Xxxxxxxx
--------------------------------------------
Name: Xxxx Xxxxxxxx
Capacity: Chief Executive Officer
Address:
Hi-tech Industrial Park
Xinyu City, Jiangxi Province
People's Republic of China
Attention: Xx. Xxxx Xiaofeng
Facsimile: (0000) 0000-000
FOUNDER:
XXXX XXXXXXXX
By: /s/ Xxxx Xxxxxxxx
--------------------------------------------
Name: Xxxx Xxxxxxxx
Address:
LDK Solar Co., Ltd.
Room 2303
Harbor Ring Xxxxx
Xx. 00 Xxxxxx Xxxxxx Xxxx
Xxxxxxxx 000000
INVESTOR:
FINANCIERE NATEXIS SINGAPORE 4 PTE, LTD.
By: /s/ Xxxx Xxxx
--------------------------------------------
Name: Xxxx Xxxx (Xxxxx)
Capacity: Authorized Officer
Registered Address:
Financiere Natexis Singapore 4 Pte, Ltd.
Xxxx & Leow
27th Floor, Millennia Tower
0 Xxxxxxx Xxxxxx
Xxxxxxxxx 00000000
Notice Address:
Natexis Private Equity Asia Limited
Xxxxx 0000, 00/X Xxxxxxxx Xxxx Xxxxx
0000 Xxxxxxx Xxxx Xxxx
Xxxxxxxx, Xxxxx 000000
Attention: Xxxx Xxxx (Xxxxx)
Facsimile: (00-00) 0000-0000
INVESTOR:
CDH SOLARFUTURE LIMITED
By: /s/ Xxx Xxxxx Hua
--------------------------------------------
Name: Xxx Xxxxx Hua
Capacity: Director
Address:
Xxxxx 00, Xxx Xxxxxxx Xxxx
Xxxxxxxxx 000000
Attention: Xx. Xxx Xxxxx Hua
Facsimile: (00) 0000 0000
INVESTOR:
SHINE FIELD INVESTMENTS LIMITED
By: /s/ Xxxx Xx
--------------------------------------------
Name: Xxxx Xx
Capacity: Authorized Signatory
Address:
X.X. Xxx 000
Offshore Incorporations Centre
Road Town, Tortola, BVI
c/o Petrius Lui or Ignatius Seu
00xx Xxxxx Xxxxxxx Xxxxx
0 Xxxxxxxxx Xxxxx
Xxxx Xxxx
Attention: Petrius Lui or Ignatius Seu
Facsimile: (000) 0000-0000
INVESTOR:
CHINA ENVIRONMENT FUND 2002, LP.
By: /s/ Xxx Xxx
--------------------------------------------
Name: Xxx Xxx
Capacity: Authorized Signatory
Registered address:
X.X. Xxx 000
Xxxxxx Xxxx, Xxxxxx Xxxxxxx
Notice address:
x/x Xxxxxxxx Xxxxxxx Xxxxxxx Xxxxxxxxxx
X0000, XX Xxxxx, Xxxxxxxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxx 000000
Attention: Xx. Xxxxxxxxx Xxx
Facsimile: (00-00) 0000-0000
INVESTOR:
SILVERPOINTE INVESTMENTS LTD
By: /s/ Xxxx Xxxx
--------------------------------------------
Name: Xxxx Xxxx
Capacity: Director
Registered address:
Portcullis TrustNet (BVI) Limited
Portcullis TrustNet Xxxxxxxx
X.X. Xxx 0000, Xxxx Xxxx, Xxxxxxx,
Xxxxxxx Xxxxxx Xxxxxxx
Notice address:
0 Xxxxx Xxxxxx, #00-00 XXX Xxxxxxxx,
Xxxxxxxxx 000000
Attention: Chiang Xxxx Xxxxx
Telephone: (00) 0000-0000
INVESTOR:
MUS ROOSEVELT CHINA PACIFIC FUND L.P.
By: /s/ Jun Otsuka
--------------------------------------------
Name: Jun Otsuka
Capacity: Managing Director
Address of registered office:
c/o MUS Roosevelt Capital Partners, Ltd.
Offshore Incorporations (Cayman) Limited
Scotia Centre 4/F
P.O. Box 2804
Xxxxxx Town, Grand Cayman, Cayman Islands
With a copy to:
Mitsubishi UFJ Securities (HK) Capital, Limited
11/F, XXX Xxxxx
Xxx Xxxxxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Attention: Mr. Jun Otsuka (Managing Director)
Facsimile: (000) 0000-0000
INVESTOR:
TECH TEAM HOLDINGS LIMITED
By: /s/ Xxxx Xxxx
--------------------------------------------
Name: Xxxx Xxxx
Capacity: Director
Address:
0xx Xxxxx, Xxxxxx Xxxxxxxx, Xxxx Xxxx, Xxxxxxx,
Xxxxxxx Xxxxxx Xxxxxxx
Notice address:
000 Xxxxxxx Xxxx
Xxxxx 00-000
Xxxxxx, Xxxxxxxx
China 201204
Attention: Xxxxx Xxxx XXXX
Facsimile: (00-00) 0000-0000
INVESTOR:
BOFA CAPITAL COMPANY LIMITED
By: /s/ Lingyong Peng
--------------------------------------------
Name: Lingyong Peng
Capacity: Authorized Signatory
Registered address:
c/x Xxxxxx Finance BVI Limited, P.O. Box 173,
Kingston Xxxxxxxx, Road Town, Tortola,
British Virgin Islands
Notice address:
Xxxx 00X
Xxxxxxxx 0
Xxxxxxxxxx 0 Xxxx
Haidian District
Beijing, P.R.China
Attention: Xx. Xxxx Lingyong
Facsimile: (00-00) 0000 0000
SCHEDULE OF DEFINITIONS
"2006 BUSINESS PLAN AND BUDGET" has the meaning set forth in Section 3.9.
"2006 AUDITED INCOME STATEMENT" means the consolidated income statement of the
Company Group for the financial year ending December 31, 2006 audited and
approved by the Auditor in conformity with IFRS or US GAAP (which shall be the
same as the relevant accounting standards used in connection with the Company's
Qualified IPO).
"2006 NET EARNINGS" means the US Dollar equivalent (based on the then applicable
daily USD/CNY exchange rate set by the People's Bank of China and published by
the State Administration of Foreign Exchange at xxx.xxxx.xxx.xx for the Business
Day immediately prior to December 31, 2006, rounded to the nearest ten
thousandth USD) of the Net Earnings (as defined below) of the Company Group that
is stated in Renminbi as determined from the 2006 Audited Income Statement.
"2006/2007 AUDITED INCOME STATEMENT" means the consolidated income statement of
the Company Group for the financial period between July 1, 2006 and June 30,
2007 audited and approved by the Auditor in conformity with IFRS or US GAAP
(which shall be the same as the relevant accounting standards used in connection
with the Company's Qualified IPO).
"2006/2007 NET EARNINGS" means the US Dollar equivalent (based on the then
applicable daily USD/CNY exchange rate set by the People's Bank of China and
published by the State Administration of Foreign Exchange at xxx.xxxx.xxx.xx for
the Business Day immediately prior to June 30, 2007, rounded to the nearest ten
thousandth USD) of the Net Earnings (as defined below) of the Company Group that
is stated in Renminbi as determined from the 2006/2007 Audited Income Statement.
"2007 AUDITED INCOME STATEMENT" means the consolidated income statement of the
Company Group for the financial year ending December 31, 2007 audited and
approved by the Auditor in conformity with IFRS or US GAAP (which shall be the
same as the relevant accounting standards used in connection with the Company's
Qualified IPO).
"2007 NET EARNINGS" means the US Dollar equivalent (based on the then applicable
daily USD/CNY exchange rate set by the People's Bank of China and published by
the State Administration of Foreign Exchange at xxx.xxxx.xxx.xx for the Business
Day immediately prior to December 31, 2007, rounded to the nearest ten
thousandth USD) of the Net Earnings (as defined below) of the Company Group that
is stated in Renminbi as determined from the 2007 Audited Income Statement
"AFFILIATE" means, with respect to any given Person, a Person that Controls, is
Controlled by, or is under common Control with the given Person.
"AGREEMENT" has the meaning ascribed to it in the preamble.
"ANCILLARY AGREEMENTS" means, collectively, the Shareholders Agreement, the
Registration Rights Agreement, the Memorandum and Articles and any other
document or agreement contemplated by this Agreement.
"ANNUAL BUSINESS PLAN AND BUDGET" means the annual business plan and budget of
the Company and/or
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the PRC Subsidiary, as may be amended from time to time.
"APPLICABLE LAW" means, with respect to any Person, all applicable provisions of
all (a) constitutions, treaties, statutes, laws (including the common law),
codes, rules, regulations, ordinances or orders of any Governmental Authority,
(b) Governmental Approvals and (c) orders, decisions, injunctions, judgments,
awards and decrees of or agreements with any Governmental Authority.
"AUDITOR" means an independent accounting firm duly appointed by the Board of
Directors to serve as the Company's auditor, being one of the "Big-4"
international accounting firms.
"BOOKS AND RECORDS" has the meaning set forth in Section 3.10.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day on which
commercial banks in the PRC, Hong Kong or New York are authorized or required by
law or governmental order to close.
"BUSINESS OR CONDITIONS OF THE COMPANY GROUP" means the business, condition
(financial or otherwise), results of operation and assets and properties of the
Company Group taken as a whole.
"CENTER" means the Hong Kong International Arbitration Centre.
"CLOSING" has the meaning set forth in Section 2.2.
"COMPANY" has the meaning ascribed to it in the preamble.
"COMPANY GROUP" means the Company and all Group Companies, taken together.
"COMPANY OPTION PLAN" means an employee stock option plan adopted by established
by the Company on July 28, 2006 pursuant to which stock options may be granted
out of the Company Option Pool.
"COMPANY OPTION POOL" means an aggregate of 9,058,000 Ordinary Shares which
shall be reserved prior to the Closing, representing up to ten percent (10%) of
the total number of issued and outstanding shares of the Company on an as
converted and fully diluted basis immediately after the Closing, as may be
adjusted from time to time pursuant to the Company Option Plan, to be issued to
the Key Persons, officers, directors, consultants, employees or other service
providers of the Company from time to time pursuant to the Company Option Plan.
"COMPETITOR" means any Person that may be reasonably deemed to be engaged in any
business that develops, manufactures or produces solar grade silicon ingots and
wafers.
"CONTRACT" means any agreement, arrangement, bond, commitment, franchise,
indemnity, indenture, instrument, lease, license or binding understanding,
whether or not in writing.
"CONTROL" means, when used with respect to any Person, the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"Controlling" and "Controlled" have meanings correlative to the foregoing.
"CONVERSION RATE" means the effective conversion rate, initially at 1:1 and
subject to adjustment as provided in this Agreement and the Memorandum and
Articles, at which the Series A Preferred Shares, the Series B Preferred Shares
and the Series C Preferred Shares, respectively, are converted into Ordinary
Shares in accordance with the Memorandum and Articles.
-DS 1-
"CONVERSION SHARES" means shares issuable upon conversion of the Series C
Preferred Shares issued under this Agreement.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 3.
"ENVIRONMENT LAWS" means any applicable present national, territorial,
provincial, foreign or local law, common law doctrine, rule, order, decree,
judgment, injunction or regulation relating to environmental matters, including
those pertaining to land use, air, soil, surface water, ground water (including
the protection, cleanup, removal, remediation or damage thereof), public or
employee health or safety, together with any other laws (national, territorial,
provincial, foreign or local) relating to emissions, discharges, releases or
threatened releases of any pollutant or contaminant including without
limitation, medical, chemical, biological, biohazardous or radioactive waste and
materials, into ambient air, land, surface water, ground water, personal
property or structures.
"FINAL OWNERSHIP" has the meaning ascribed to it in Section 2.4(i)(a) hereof.
"FINANCING TERMS" has the meaning ascribed to it in Section 8.1 hereof.
"FOUNDER" has the meaning ascribed to it in the preamble.
"GOVERNMENTAL AUTHORITY" means any court, tribunal, arbitrator, authority,
agency, commission, official or other instrumentality of the PRC, any foreign
country or any domestic or foreign state, county, city or other political
subdivision including but not limited to MOFCOM and SAIC and their respective
local and provincial branches or departments.
"GROUP COMPANY" means a Person (other than a natural person) that is a
Subsidiary of the Company.
"GUARANTEED 2006 NET EARNINGS" means the guaranteed Net Earnings of the Company
Group for the financial year ending December 31, 2006, being an amount that is
US$30,000,000.
"GUARANTEED 2006/2007 NET EARNINGS" means the guaranteed Net Earnings of the
Company Group for the financial period between July 1, 2006 and June 30, 2007,
being an amount that is US$60,000,000.
"GUARANTEED 2007 NET EARNINGS" means the guaranteed Net Earnings of the Company
Group for the financial year ending December 31, 2007, being an aggregate amount
of US$110,000,000; it being understood that such guaranteed Net Earnings of the
Company Group for the six months ending June 30, 2007 are US$50,000,000 and that
for the six months ending December 31, 2007 are US$60,000,000.
"HAZARDOUS MATERIALS" means any chemical pollutant, contaminant, pesticide,
petroleum or petroleum product or by-product, radioactive substance, solid
waste, special, dangerous or toxic waste, hazardous or toxic substance, chemical
or material regulated, limited or prohibited under any Environmental Law.
"HONG KONG" means the Special Administrative Region of Hong Kong.
"IFRS" means the International Financial Reporting Standards promulgated by the
International Accounting Standards Board (IASB) (which includes standards and
interpretations approved by the IASB and International Accounting Principles
issued under previous constitutions), together with its pronouncements thereon
from time to time, and applied on a consistent basis.
"IMPROVEMENT" has the meaning set forth in Section 3.17(iii).
-DS 1-
"INDEMNITEE" has the meaning set forth in Section 9.2(i).
"INDEMNIFIABLE LOSS" has the meaning set forth in Section 9.2(i).
"INITIAL OWNERSHIP" has the meaning set forth in Section 2.1(iii).
"INTELLECTUAL PROPERTY" means any and all (i) patents, all patent rights and all
applications therefor and all reissues, reexaminations, continuations,
continuations-in-part, divisions, and patent term extensions thereof, (ii)
inventions (whether patentable or not), discoveries, improvements, concepts,
innovations and industrial models, (iii) registered and unregistered copyrights,
copyright registrations and applications, author's rights and works of
authorship (including artwork of any kind and software of all types in whatever
medium, inclusive of computer programs, source code, object code and executable
code, and related documentation), (iv) URLs, web sites, web pages and any part
thereof, (v) technical information, know-how, trade secrets, drawings, designs,
design protocols, specifications for parts and devices, quality assurance and
control procedures, design tools, manuals, research data concerning historic and
current research and development efforts, including the results of successful
and unsuccessful designs, databases and proprietary data, (vi) proprietary
processes, technology, engineering, formulae, algorithms and operational
procedures, (vii) trade names, trade dress, trademarks, domain names, and
service marks, and registrations and applications therefor, and (viii) the
goodwill of the business symbolized or represented by the foregoing, customer
lists and other proprietary information and common-law rights.
"INVESTOR" or "INVESTORS" has the meaning ascribed to it in the preamble.
"KEY PERSONS" means Xxxx Xxxxxxxx, Xxxx Yonggan, Zhu Liangbao and all the other
Persons listed in Exhibit I hereof.
"KNOWLEDGE" of a Party means the current actual knowledge of the executive
officers of such Party principally responsible for the management of the
business (including with respect to Intellectual Property) of such Party and its
Subsidiaries.
"LAND USE RIGHTS" has the meaning set forth in Section 3.17(i).
"LEASE" has the meaning set forth in Section 3.17(ii).
"LICENSES" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental Authority, including but not limited to
the Licenses set forth in Section 3.6 of the Disclosure Schedule and the
business licenses of the applicable Group Companies.
"MATERIAL ADVERSE CHANGE" has the meaning set forth in Section 5.20.
"MATERIAL ADVERSE EFFECT" means any (a) event, occurrence, fact, condition,
change or development that has had a material adverse effect on the Business or
Conditions of the Company Group, or (b) material impairment of the ability of
any member of the Company Group to perform their respective material obligations
hereunder or under each of the Ancillary Agreements, as applicable.
"MATERIAL ADVERSE EVENT" means any change, event or effect that (i) is or would
be materially adverse to the Business or Conditions of the Company Group or (ii)
is or would materially impair the validity or enforceability of this Agreement
against the Company, the PRC Subsidiary or the Founder or (iii) is or would
materially and adversely affect the Company, the PRC Subsidiary or the Founder's
ability to
-DS 1-
perform its obligations under this Agreement, any Ancillary Agreements or in
connection with the transactions contemplated hereunder or thereunder.
"MATERIAL CONTRACT" means, with respect to any Person, any outstanding Contract
material to the business of such Person as of or after the date hereof and
includes, but is not limited to, those Contracts deemed material by Section
3.15(v).
"MATERIAL LICENSES" means the Licenses set forth in Section 3.6 of the
Disclosure Schedule.
"MEMORANDUM AND ARTICLES" means the second amended and restated memorandum of
association and the second amended and restated articles of association of the
Company, as amended from time to time, attached hereto as Exhibit A.
"MOFCOM" means the Ministry of Commerce or, with respect to any matter to be
submitted for examination and approval by the Ministry of Commerce, any
government entity which is similarly competent to examine and approve such
matter under the laws of the PRC.
"MORTGAGE" has the meaning set forth in Section 3.17(iv).
"NET EARNINGS" shall mean the consolidated and normalized positive profit after
tax (less one-off, non-recurring and extraordinary items as well as stock
compensation charges which are required to be deducted from the Company's income
under the currently effective US GAAP or IFRS, if any, but plus any governmental
grants and subsidies) attributable to the shareholders of the Company Group as
audited by the Auditor in accordance with IFRS or US GAAP (which shall be the
same as the relevant accounting standards used in connection with the Company's
Qualified IPO).
"ORDINARY SHARES" has the meaning ascribed to it in Section 3.2(i)(a).
"PERSON" means any individual, corporation, partnership, limited partnership,
proprietorship, association, limited liability company, firm, trust, estate or
other enterprise or entity.
"PRC" means the People's Republic of China, but solely for the purposes of this
Agreement, excluding the Hong Kong Special Administrative Region, Macau Special
Administrative Region and Taiwan.
"PRC SUBSIDIARY" has the meaning ascribed to it in the preamble.
"PREFERRED SHARES" has the meaning set forth in Section 3.2(i)(b).
"PROPRIETARY ASSETS" means all patents, patent applications, trademarks, service
marks, trade names, copyrights, moral rights, maskworks, trade secrets,
confidential and proprietary information, compositions of matter, formulas,
designs, proprietary rights, know-how and processes of a company.
"QUALIFIED EXCHANGE" means (i) the New York Stock Exchange or the Nasdaq Stock
Market's National Market System, or (ii) any other exchange of recognized
international reputation and standing duly approved by the Company's Board of
Directors, including the affirmative vote of the Investor Director.
"QUALIFIED IPO" means an initial public offering on a Qualified Exchange that
values the Company at no less than US$1,210,000,000 immediately prior to the
initial public offering with a per share offering price of no less than US$11.00
and that results in aggregate net proceeds to the Company of at least
US$300,000,000. The selection of the lead underwriter(s) of the Qualified IPO
shall be led by the
-DS 1-
management of the Company and subject to the consent of the Investor Director,
which consent shall not be unreasonably withheld.
"REPORT DATE" has the meaning set forth in Section 3.12(i).
"INDEPENDENT AUDIT REPORTS" has the meaning set forth in Section 3.12(i).
"SAFE" means the Sate Administration of Foreign Exchange of the PRC, and any PRC
governmental body that is a successor thereto.
"SAIC" means the State Administration of Industry and Commerce or, with respect
to the issuance of any business license or filing or registration to be effected
with or by the State Administration of Industry and Commerce, any government
entity which is similarly competent to issue such business license or accept
such filing or registration under the laws of the PRC.
"SECURITIES" has the meaning set forth in Section 4.2.
"SECURITIES ACT" means the U.S. Securities Act of 1933, as amended.
"SENIOR MANAGER" means, with respect to any member of the Company Group, the
chief executive officer, the chief financial officer, the chief operating
officer, the chief technology officer and the vice presidents of such company.
"SERIES A SHAREHOLDERS" has the meaning set forth in Section 2.4(i)(a).
"SERIES A SHARE PURCHASE AGREEMENT" has the meaning set forth in Section
2.4(i)(a).
"SERIES A-1 PREFERRED SHARES" has the meaning set forth in Section 3.2(i)(b).
"SERIES A-2 PREFERRED SHARES" has the meaning set forth in Section 3.2(i)(b).
"SERIES B PREFERRED SHARES" has the meaning set forth in Section 3.2(i)(b).
"SERIES B SHARE PURCHASE AGREEMENT" has the meaning set forth in Section
2.4(i)(b).
"SERIES C PREFERRED SHARES" has the meaning set forth in Section 3.2(i)(b).
"SUBSIDIARY" means, with respect to any Person, a corporation or other entity
that is, directly or indirectly, controlled by such Person, by the possession of
the power to direct or cause the direction of the management and policies of
first mentioned Person, whether through the ownership of voting securities or
equity interest, by contract or otherwise.
"SUBSCRIPTION PRICE" has the meaning set forth in Section 2.1(iii).
"TAX" and "TAXES" means and includes any and all taxes, including any and all
income, gross receipts, franchise, license, severance, stamp, occupation,
premium, environmental, customs duties, capital stock, profits, unemployment,
disability, real property, personal property, transfer, registration, value
added, estimated, sales, use, excise, withholding, employment, payroll, social
security taxes, and similar assessments, charges, and fees (including interest,
penalties and additions to such taxes, penalties for failure to file or late
filing of any return, report or other filing, and any interest in respect of
such
-DS 1-
penalties and additions) imposed or assessed by any federal, state or local
taxing authority, including the Cayman Islands, Hong Kong or the PRC (or any
political subdivision thereof or therein).
"TAX RETURNS" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"US GAAP" means generally accepted accounting principles in the United States,
consistently applied.
"WARRANT" or "WARRANTS" means the Warrant(s) the Company issued to the holders
of the Series A-1 Preferred Shares and the holders of the Series A-2 Preferred
Shares pursuant to certain Warrant Purchase Agreement(s), each dated as of July
28, 2006.
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DISCLOSURE SCHEDULE
-DS 1-
SCHEDULE A
INVESTORS AT CLOSING
NUMBER OF SERIES C
PREFERRED SHARES
NAME ADDRESS SUBSCRIBED SUBSCRIPTION PRICE
-------------------------- ------------------------------------------ ------------------ ------------------
Financiere Natexis Natexis Private Equity Asia Limited 1,466,666 US$11,000,000
Singapore 4 Pte Ltd. Xxxxx 0000, 00/X Xxxxxxxx Xxxx Xxxxx
1038 Nanjing West Road, Shanghai, China
200041
Attention: Xxxx Xxxx (Xxxxx)
CDH SolarFuture Limited Xxxxx 00, Xxx Xxxxxxx Xxxx 1,066,667 US$ 8,000,000
Xxxxxxxxx 000000
Attention: Xx. Xxx Xxxxx Hua
Shine Field Investments Registered address: 333,333 US$ 2,500,000
Limited P.O. Box 957, Offshore Incorporations
Centre, Road Town, Tortola, BVI
Notice address:
c/o Petrius Lui or Ignatius Seu
00xx Xxxxx Xxxxxxx Xxxxx
0 Xxxxxxxxx Xxxxx
Xxxx Xxxx
Attention: Petrius Lui or Ignatius Seu
-SCH A-
China Environment Fund Registered address: 66,667 US$ 500,000
2002, LP. X.X. Xxx 000, Xxxxxx Xxxx, Xxxxxx Xxxxxxx
Notice address:
c/o Tsinghua Venture Capital Management
A 00-0, XX Xxxxx, Xxxxxxxx Xxxxxxx Xxxx,
Xxxxxxx, Xxxxx 100084
Attention: Xx. Xxxxxxxxx Xxx
Silverpointe Investments Registered address: 25,233 US$ 189,249
Ltd. Portcullis TrustNet (BVI) Limited
Portcullis TrustNet Xxxxxxxx
X.X. Xxx 0000, Xxxx Xxxx, Xxxxxxx, Xxxxxxx
Xxxxxx Xxxxxxx
Notice address:
0 Xxxxx Xxxxxx, #00-00 XXX Xxxxxxxx,
Xxxxxxxxx 000000
Attention: Chiang Xxxx Xxxxx
MUS Roosevelt China c/o MUS Roosevelt Capital Partners, Ltd. 20,049 US$ 150,366
Pacific Fund L.P. Offshore Incorporations (Cayman) Limited
Scotia Centre 4/F
P.O. Box 2804
Xxxxxx Town, Grand Cayman, Cayman Islands
With a copy to:
Mitsubishi UFJ Securities (HK) Capital,
Limited
11/F, XXX Xxxxx
Xxx Xxxxxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Attention: Mr. Jun Otsuka (Managing
Director)
-SCH A-
Tech Team Holdings Limited Registered address: 20,048 US$ 150,358
0xx Xxxxx, Xxxxxx Xxxxxxxx, Xxxx Xxxx,
Xxxxxxx, Xxxxxxx Xxxxxx Xxxxxxx
Notice address:
000 Xxxxxxx Xxxx
Xxxxx 00-000
Xxxxxx, Xxxxxxxx
China 201204
Attention: Xxxxx Xxxx XXXX
BOFA Capital Company Registered address: 1,337 US$ 10,027
Limited c/x Xxxxxx Finance BVI Limited, P.O. Box
173, Kingston Xxxxxxxx, Road Town,
Tortola, British Virgin Islands
Notice address:
Xxxx 00X
Xxxxxxxx 0
Xxxxxxxxxx 0 Xxxx
Haidian District
Beijing, P.R.China
Attention: Xx. Xxxx Lingyong
--------- -------------
TOTAL 3,000,000 US$22,500,000
========= =============
-SCH A-
EXHIBIT A
THIRD AMENDED AND RESTATED MEMORANDUM AND ARTICLES
-EXH A-
EXHIBIT B
[RESERVED]
-EXH B-
EXHIBIT C
2006 BUSINESS PLAN AND BUDGET
-EXH C-
EXHIBIT D
CONFIDENTIALITY, ASSIGNMENT OF INVENTIONS AND NON-COMPETITION AGREEMENT
-EXH D-
EXHIBIT E
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
-EXH E-
EXHIBIT F
OPINION OF THE COMPANY'S CAYMAN ISLANDS COUNSEL
-EXH F-
EXHIBIT G
OPINION OF THE COMPANY'S PRC COUNSEL
-EXH G-
EXHIBIT H
SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
-EXHIBIT H-
EXHIBIT I
KEY PERSONS
Peng Xxxxxxxx
Xxx Liangbao
Xxxx Xxxxxxxx
Xxxx Xxx
Xxxxxx Xxxxx
Yao Qiqiang
Kuo Lung Lin
Xxxxxxx Xx Xxxxxxx
Rosseio Pleiro
Xxx Xxxx Qiang
Xxxxxx Xxxxx
Fu Xxxxxxxx
Xxxxx Qiumao
Fu Xxxxx
Xxxxx Xxxxxxx
Xx Xxxxxxxx
Song Xxxx
Xxx Qinyun
Xxxxxx Xxxxxxx Cabrini
Xing Guo Xxxx
Xxxx Xxxxxxx
Xxxx Jianwen
EXH I
