Exhibit 1.1
SOLARFUN POWER HOLDINGS CO., LTD.
[-] AMERICAN DEPOSITARY SHARES
REPRESENTING
[-] ORDINARY SHARES
(PAR VALUE US$0.0001 PER SHARE)
--------------
UNDERWRITING AGREEMENT
_________, 2006
Xxxxxxx Xxxxx (Asia) L.L.C.,
00xx Xxxxx, Xxxxxx Xxxx Xxxxxx,
0 Xxxxx'x Xxxx Xxxxxxx,
Xxxx Xxxx
As Representative of the several Underwriters
named in Schedule I attached hereto.
Ladies and Gentlemen:
Solarfun Power Holdings Co., Ltd., an exempted company incorporated in the
Cayman Islands (the "Company"), proposes, subject to the terms and conditions
stated herein, to issue and sell to the Underwriters named in Schedule I
attached hereto (the "Underwriters") an aggregate of _________ American
Depositary Shares representing _________ ordinary shares, par value US$0.0001
per share (the "Ordinary Shares"), of the Company and, at the election of the
Underwriters, up to _________ additional American Depositary Shares representing
_________ Ordinary Shares, and the shareholders of the Company named in Schedule
II attached hereto (the "Selling Shareholders") propose, subject to the terms
and conditions stated herein, to sell to the Underwriters an aggregate of
_________ American Depositary Shares representing _________ Ordinary Shares and,
at the election of the Underwriters, up to _________ additional American
Depositary Shares representing _________ Ordinary Shares. The aggregate of
_________ American Depositary Shares representing _________ Ordinary Shares to
be sold by the Company and the Selling Shareholders is herein called the "Firm
ADSs", and the aggregate of _________ American Depositary Shares representing
_________ additional Ordinary Shares to be sold by the Company and the Selling
Shareholders is herein called the "Optional ADSs". The Firm ADSs and the
Optional ADSs that the Underwriters elect to purchase pursuant to Section 2
hereof are herein collectively called the "ADSs". The Ordinary Shares
represented by the Firm ADSs are hereinafter called the "Firm Shares" and the
Ordinary Shares represented by the Optional ADSs are hereinafter called the
"Optional Shares", and the Firm Shares and the Optional Shares are herein
collectively called the "Shares".
The ADSs are to be issued pursuant to a deposit agreement (the "Deposit
Agreement"), to be dated as of _________, 2006, among the Company, The Bank of
New York, as depositary (the
"Depositary"), and holders from time to time of the American Depositary Receipts
(the "ADRs") issued by the Depositary and evidencing the ADSs. Each ADS will
initially represent the right to receive _________ Ordinary Shares deposited
pursuant to the Deposit Agreement.
[The Company hereby acknowledges that, in connection with the proposed
offering of the ADSs, it has requested the Representative to administer a
directed share program (the "Directed Share Program") under which up to
_________ Firm ADSs, or [o]% of the Firm ADSs to be purchased by the
Underwriters (the "Reserved ADSs"), shall be reserved for sale by the
Representative at the initial public offering price to the Company's officers,
directors, employees and consultants and other persons having a relationship
with the Company as designated by the Company (the "Directed Share
Participants") as part of the distribution of the ADSs by the Underwriters,
subject to the terms of this Agreement, the applicable rules, regulations and
interpretations of the National Association of Securities Dealers, Inc. (the
"NASD") and all other applicable laws, rules and regulations. The number of ADSs
available for sale to the general public will be reduced to the extent that
Directed Share Participants purchase Reserved ADSs. The Underwriters may offer
any Reserved ADSs not purchased by Directed Share Participants to the general
public on the same basis as the other ADSs being issued and sold hereunder. The
Company has supplied the Representative with the names, addresses and telephone
numbers of the individuals or other entities which the Company has designated to
be participants in the Directed Share Program. It is understood that any number
of those so designated to participate in the Directed Share Program may decline
to do so.]
It is understood by all the parties that the Underwriters are offering ADSs
in the United States and internationally outside of the People's Republic of
China (the "PRC"), which, for purposes of this Agreement only, excludes Taiwan,
The Hong Kong Special Administrative Region and The Macau Special Administrative
Region.
Two forms of prospectus are to be used in connection with the offering and
sale of ADSs contemplated by the foregoing, one relating to the ADSs offered or
sold within the United States (the "U.S. Prospectus") and one relating to the
ADSs offered or sold outside the United States (the "International Prospectus").
The U.S. Prospectus will be identical to the International Prospectus except for
certain substitute pages, and copies of these prospectuses have been provided to
you. References herein to any "Prospectus" or "Preliminary Prospectus" (each as
defined below), whether as amended or supplemented, shall include both the U.S.
Prospectus and the International Prospectus.
1. (a) The Company and each of the Selling Shareholders, jointly and
severally, represents and warrants to, and agrees with, each of the Underwriters
that:
(i) A registration statement on Form F-1 (File No. 333-_________) (the
"Initial Registration Statement") in respect of the Shares has been filed
with the U.S. Securities and Exchange Commission (the "Commission"); the
Initial Registration Statement and any post-effective amendment thereto,
each in the form heretofore delivered to you, and, excluding exhibits
thereto, to you for each of the other Underwriters, have been declared
effective by the Commission in such form; other than a registration
statement, if any, increasing the size of the offering (a "Rule 462(b)
Registration Statement"), filed pursuant to Rule 462(b) under the U.S.
Securities Act of 1933, as amended (the "Act"), which became or will become
effective upon filing, no other document with respect to the Initial
Registration Statement has heretofore been filed with the Commission; and
no stop order suspending the effectiveness of the Initial Registration
Statement, any post-effective amendment thereto or the Rule 462(b)
Registration Statement, if any, has been issued and no proceeding for that
purpose has been initiated or threatened by the Commission (any
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preliminary prospectus included in the Initial Registration Statement or
filed with the Commission pursuant to Rule 424(a) of the rules and
regulations of the Commission under the Act is hereinafter called a
"Preliminary Prospectus"; the various parts of the Initial Registration
Statement and the Rule 462(b) Registration Statement, if any, including all
exhibits thereto and including the information contained in the form of
final prospectus filed with the Commission pursuant to Rule 424(b) under
the Act in accordance with Section 5(a) hereof and deemed by virtue of Rule
430A under the Act to be part of the Initial Registration Statement at the
time it was declared effective, each as amended at the time such part of
the Initial Registration Statement became effective or such part of the
Rule 462(b) Registration Statement, if any, became or hereafter becomes
effective, are hereinafter collectively called the "Registration
Statement"; the Preliminary Prospectus relating to the Shares and the ADSs
that was included in the Registration Statement immediately prior to the
Applicable Time (as defined in Section 1(iii) hereof) is hereinafter called
the "Pricing Prospectus"; such final prospectus, in the form first filed
pursuant to Rule 424(b) under the Act, is hereinafter called the
"Prospectus"; and any "issuer free writing prospectus" as defined in Rule
433 under the Act relating to the Shares and the ADSs is hereinafter called
an "Issuer Free Writing Prospectus");
(ii) No order preventing or suspending the use of any Preliminary
Prospectus or any Issuer Free Writing Prospectus has been issued by the
Commission, and each Preliminary Prospectus, at the time of filing thereof,
conformed in all material respects to the requirements of the Act and the
rules and regulations of the Commission thereunder, and did not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through the Representative expressly for use therein;
(iii) For the purposes of this Agreement, the "Applicable Time" is
___:___ __m (New York City time) on the date of this Agreement; the Pricing
Prospectus as supplemented by those Issuer Free Writing Prospectuses and
other documents listed in Schedule III attached hereto, taken together
(collectively, the "Pricing Disclosure Package"), as of the Applicable
Time, did not include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; and each Issuer Free Writing Prospectus listed in Schedule III
attached hereto does not conflict with the information contained in the
Registration Statement, the Pricing Prospectus or the Prospectus and each
such Issuer Free Writing Prospectus, as supplemented by and taken together
with the Pricing Disclosure Package as of the Applicable Time, did not
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not apply to
any statements or omissions made in an Issuer Free Writing Prospectus in
reliance upon and in conformity with information furnished in writing to
the Company by an Underwriter through the Representative expressly for use
therein;
(iv) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the rules and regulations of the
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Commission thereunder and do not and will not, as of the applicable
effective date as to the Registration Statement and any amendment thereto
and as of the applicable filing date as to the Prospectus and any amendment
or supplement thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Company by an Underwriter through the Representative
expressly for use therein;
(v) A registration statement on Form F-6 (File No. 333-______) in
respect of the ADSs has been filed with the Commission; such registration
statement in the form heretofore delivered to you and, excluding exhibits,
to you for each of the other Underwriters, has been declared effective by
the Commission in such form; no other document with respect to such
registration statement has heretofore been filed with the Commission; no
stop order suspending the effectiveness of such registration statement has
been issued and no proceeding for that purpose has been initiated or
threatened by the Commission (the various parts of such registration
statement, including all exhibits thereto, each as amended at the time such
part of the registration statement became effective, being hereinafter
called the "ADS Registration Statement"); and the ADS Registration
Statement when it became effective conformed, and any further amendments
thereto will conform, in all material respects to the requirements of the
Act and the rules and regulations of the Commission thereunder, and did
not, as of the applicable effective date, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
(vi) A registration statement on Form 8-A (File No. 000-______) in
respect of the registration of the Shares and the ADSs under the U.S.
Securities Exchange Act of 1934, as amended (the "Exchange Act"), has been
filed with the Commission; such registration statement in the form
heretofore delivered to you and, excluding exhibits, to you for each of the
other Underwriters, has been declared effective by the Commission in such
form; no other document with respect to such registration statement has
heretofore been filed with the Commission; no stop order suspending the
effectiveness of such registration statement has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission (the various parts of such registration statement, including all
exhibits thereto, each as amended at the time such part of the registration
statement became effective, being hereinafter called the "Form 8-A
Registration Statement"); and the Form 8-A Registration Statement when it
became effective conformed, and any further amendments thereto will
conform, in all material respects to the requirements of the Exchange Act
and the rules and regulations of the Commission thereunder, and did not and
will not, as of the applicable effective date, contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
(vii) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included in the
Pricing Prospectus any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Pricing
Prospectus; and, since the respective dates as of which information is
given in the Registration Statement and the Pricing Prospectus, there has
not been any change in the
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capital stock, short-term debt or long-term debt of the Company or any of
its subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, shareholders' equity,
results of operations or prospects of the Company or any of its
subsidiaries (a "Material Adverse Effect"), otherwise than as set forth or
contemplated in the Pricing Prospectus;
(viii) Each of the Company and its subsidiaries has good and
marketable title to all real property and good and marketable title to all
personal property owned by it, in each case, free and clear of all liens,
encumbrances and defects except such as are described in the Pricing
Prospectus or such as do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such
property by each of the Company and its subsidiaries; and any real property
and buildings held under lease by the Company and its subsidiaries are held
by them under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed to
be made of such property and buildings by the Company and its subsidiaries;
(ix) The Company and its subsidiaries maintain insurance covering
their respective properties, operations, product liabilities, personnel and
businesses as the Company reasonably deems adequate; such insurance insures
against such losses and risks to an extent which is adequate in accordance
with customary industry practice to protect the Company and its
subsidiaries and their respective businesses; all such insurance is fully
in force on the date hereof and will be fully in force at the time of
purchase and each additional time of purchase, if any; neither the Company
nor any of its subsidiaries has reason to believe that it will not be able
to renew any such insurance as and when such insurance expires; and there
is no material insurance claim made by or against the Company or any of its
subsidiaries, pending, threatened or outstanding and no facts or
circumstances exist which would reasonably be expected to give rise to any
such claim and all due premiums in respect thereof have been paid;
(x) The Company has been duly incorporated and is validly existing as
a company in good standing under the laws of the Cayman Islands, with power
and authority (corporate and other) to own, lease and operate its
properties and conduct its business as described in the Pricing Prospectus,
and has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other jurisdiction
in which it owns or leases properties or conducts any business so as to
require such qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified in any such
jurisdiction; and each of its subsidiaries has been duly incorporated and
is validly existing and in good standing (where applicable) under the laws
of its jurisdiction of incorporation, with power and authority (corporate
or other) to own, lease and operate its properties and conduct its business
as described in the Pricing Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such qualification, or
is subject to no material liability or disability by reason of the failure
to be so qualified in any such jurisdiction;
(xi) Neither the Company nor any of its subsidiaries has sent or
received any communication regarding termination of, or intent not to
renew, any of the contracts or agreements referred to or described in the
Pricing Prospectus, the Prospectus or any
5
Issuer Free Writing Prospectus, or referred to or described in, or filed as
an exhibit to, the Registration Statement, and no such termination or
non-renewal has been threatened by the Company or any of its subsidiaries
or any other party to any such contract or agreement;
(xii) Each of the Company and its subsidiaries has all necessary
licenses, franchises, concessions, consents, authorizations, approvals,
orders, certificates and permits of and from, and has made all necessary
declarations and filings with, all governmental agencies to own, lease,
license and use its properties, assets and conduct its business in the
manner described in the Pricing Prospectus, and such licenses, franchises,
concessions, consents, authorizations, approvals, orders, certificates or
permits contain no material restrictions or conditions not described in the
Pricing Prospectus; and except as described in the Pricing Prospectus,
neither the Company nor any of its subsidiaries has a reasonable basis to
believe that any regulatory body is considering modifying, suspending or
revoking any such licenses, consents, authorizations, approvals, orders,
certificates or permits, and the Company and its subsidiaries are in
compliance with the provisions of all such licenses, consents,
authorizations, approvals, orders, certificates or permits, except where
any non-compliance would not, individually or in the aggregate, have a
Material Adverse Effect;
(xiii) Neither the Company nor any of its subsidiaries is (A) in
breach of or in default under any laws, regulations, rules, orders,
decrees, guidelines or notices of the PRC, the Cayman Islands, the British
Virgin Islands (the "BVI") or any other jurisdiction where it was
incorporated or operates, (B) in breach of or in default under any
approval, consent, waiver, authorization, exemption, permission,
endorsement or license granted by any court or governmental agency or body
of any stock exchange authorities ("Governmental Agency") in the PRC, the
Cayman Islands, the BVI or any other jurisdiction where it was incorporated
or operates, (C) in violation of its constituent documents or (D) in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound, except, with
respect to (D), where any default would not, individually or in the
aggregate, have a Material Adverse Effect;
(xiv) The Company has an authorized and paid-in capitalization as set
forth in the Pricing Prospectus, and all of the issued shares of capital
stock of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and all of the issued Ordinary Shares conform
in all material respects to the description of the Ordinary Shares
contained in the Pricing Disclosing Package and the Prospectus; all of the
issued shares of capital stock of each of the subsidiaries of the Company
have been duly and validly authorized and issued, and are fully paid and
non-assessable; all of the issued shares of capital stock of each of the
subsidiaries except as otherwise set forth in the Pricing Prospectus) are
owned directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims; the holders of outstanding Ordinary
Shares are not entitled to preemptive or other rights to acquire the Shares
or the ADSs; there are no outstanding securities convertible into or
exchangeable for, or warrants, rights or options to purchase from the
Company, or obligations of the Company to issue, Ordinary Shares or any
other class of capital stock of the Company except as set forth in the
Pricing Prospectus under the captions "Capitalization", "Management -- 2006
Equity Incentive Plan" and "Related Party Transactions"; the Shares, when
issued and delivered against
6
payment therefor, may be freely deposited by the Company and the Selling
Shareholders with the Depositary against issuance of ADRs evidencing ADSs;
the ADSs, when issued and delivered against payment therefor, will be
freely transferable by the Company and the Selling Shareholders to or for
the account of the several Underwriters and (to the extent described in the
Pricing Prospectus) the initial purchasers thereof; and there are no
restrictions on subsequent transfers of the ADSs under the laws of the
Cayman Islands, the PRC or the United States except as described in the
Pricing Prospectus under the captions "Description of Share Capital",
"Description of American Depositary Shares" and "Shares Eligible for Future
Sale";
(xv) Except as described in the Registration Statement (excluding the
exhibits thereto), the Pricing Prospectus and the Prospectus, (A) no person
has any preemptive rights, resale rights, rights of first refusal or other
rights to purchase any Ordinary Shares or shares of any other capital stock
of or other equity interests in the Company and (B) no person has the right
to act as an underwriter or as a financial advisor to the Company in
connection with the offer and sale of the ADSs;
(xvi) The Shares to be issued underlying the ADSs to be sold by the
Company to the Underwriters hereunder have been duly and validly authorized
and, when issued and delivered against payment therefor as provided herein,
will be duly and validly issued and fully paid and non-assessable and will
conform in all material respects to the description of the Ordinary Shares
contained in the Prospectus;
(xvii) All of the Ordinary Shares issuable upon the mandatory
conversion of the outstanding Series A Convertible Preference Shares (the
"Preferred Stock") as described in the Pricing Prospectus have been duly
authorized and reserved for issuance; and, prior to or concurrently with
the First Time of Delivery (as defined in Section 4 hereof), all of the
shares of Preferred Stock will be converted into Ordinary Shares and all
such Ordinary Shares will be duly authorized, validly issued and fully paid
and non-assessable;
(xviii) Except as disclosed in the Pricing Prospectus, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of the
Company owned or to be owned by such person or to require the Company to
include such securities in the securities registered pursuant to the
Registration Statement, the ADS Registration Statement or in any securities
being registered pursuant to any other registration statement filed by the
Company under the Act;
(xix) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and legally binding agreement of the
Company, enforceable in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, reorganization and similar laws
of general applicability relating to or affecting creditors' rights and to
general equity principles;
(xx) The Deposit Agreement has been duly authorized and, when executed
and delivered by the Company and the Depositary, will constitute a valid
and legally binding agreement of the Company, enforceable in accordance
with its terms, subject, as to enforceability, to bankruptcy, insolvency,
reorganization and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles; upon issuance
by the Depositary of ADRs evidencing ADSs and the deposit of Shares in
respect
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thereof in accordance with the provisions of the Deposit Agreement, such
ADRs will be duly and validly issued and the persons in whose names the
ADRs are registered will be entitled to the rights specified therein and in
the Deposit Agreement; and the Deposit Agreement and the ADRs conform in
all material respects to the descriptions thereof contained in the
Prospectus under the caption "Description of American Depositary Shares";
(xxi) All dividends and other distributions declared and payable on
the shares of capital stock of the Company may under the current laws and
regulations of the Cayman Islands be paid to the Depositary, and all such
dividends and other distributions will not be subject to withholding or
other taxes under the laws and regulations of the Cayman Islands and are
otherwise free and clear of any other tax, withholding or deduction in the
Cayman Islands and without the necessity of obtaining any consents,
approvals, authorizations, orders, registrations, clearances or
qualifications of or with any Governmental Agency having jurisdiction over
the Company or any of its subsidiaries or any of their respective
properties (hereinafter referred to as "Governmental Authorizations") in
the Cayman Islands;
(xxii) All dividends and other distributions declared and payable on
the shares of capital stock of Linyang Solar Power Investment Holding Ltd
("Linyang BVI") may under the current laws and regulations of the BVI be
paid to the Company, and all such dividends and other distributions will
not be subject to withholding or other taxes under the laws and regulations
of the BVI and are otherwise free and clear of any other tax, withholding
or deduction in the BVI and without the necessity of obtaining any
Governmental Authorization in the BVI;
(xxiii) Except as disclosed in the Pricing Prospectus, dividends
declared with respect to after tax retained earnings on the shares of
capital stock of Jiangsu Linyang Solarfun Co., Ltd. ("Jiangsu Linyang") may
under the current laws and regulations of the PRC be paid to Linyang BVI in
U.S. dollars, subject to the successful completion of procedures required
by the relevant PRC laws and regulations on foreign exchange for such
remittances and all such dividends and other distributions will not be
subject to withholding or other taxes under the laws and regulations of the
PRC and are otherwise free and clear of any other tax, withholding or
deduction in the PRC, and without the necessity of obtaining any
Governmental Authorization in the PRC;
(xxiv) The issue and sale of the Shares to be sold by the Company
hereunder and the deposit of the Shares being deposited with the Depositary
against issuance of the ADRs evidencing the ADSs and the compliance by the
Company with all of the provisions of this Agreement and the Deposit
Agreement and the consummation of the transactions herein and therein
contemplated will not (A) conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its subsidiaries is
subject, (B) result in any violation of the provisions of the constituent
documents of the Company or any of its subsidiaries or (C) result in any
violation of any statute or any order, rule or regulation of any
Governmental Agency having jurisdiction over the Company or any of its
subsidiaries or any of their properties or assets, except, with respect to
(A), where any
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conflict, breach or violation, would not, individually or in the aggregate,
have a Material Adverse Effect;
(xxv) No consent, approval, authorization, order, registration,
clearance or qualification of or with any Governmental Agency is required
for the issue and sale of the Shares or the ADSs, for the deposit of the
Shares being deposited with the Depositary against issuance of ADRs
evidencing the ADSs to be delivered or the consummation by the Company of
the transactions contemplated by this Agreement and the Deposit Agreement,
except (A) the registration under the Act of the Shares and the ADSs and
listing of the Shares and the ADSs on the National Association of
Securities Dealers Automated Quotations Global Market System ("Nasdaq"),
(B) such Governmental Authorizations as have been duly obtained and are in
full force and effect and copies of which have been furnished to you and
(C) such Governmental Authorizations as may be required under state
securities or Blue Sky laws or any laws of jurisdictions outside the Cayman
Islands, the BVI and the United States in connection with the purchase and
distribution of the Shares and ADSs by or for the respective accounts of
the several Underwriters;
(xxvi) ADSs have been approved for quotation on Nasdaq, subject to
notice of issuance;
(xxvii) Neither the Company nor any of its subsidiaries is engaged in
any trading activities involving commodity contracts or other trading
contracts which are not currently traded on a securities or commodities
exchange and for which the market value cannot be determined;
(xxviii) No stamp or other issuance or transfer taxes or duties and no
capital gains, income, withholding or other taxes are payable by or on
behalf of the Underwriters to the government of the Cayman Islands, the BVI
or the PRC, or any political subdivision or taxing authority thereof or
therein in connection with: (A) the deposit with the Depositary of the
Shares by the Company and Selling Shareholders against the issuance of ADRs
evidencing the ADSs, (B) the sale and delivery by the Company and Selling
Shareholders of the Shares and the ADSs to or for the respective accounts
of the several Underwriters or (C) the sale and delivery by the
Underwriters of the Shares and the ADSs to the initial purchasers thereof
in the manner contemplated by this Agreement;
(xxix) Neither the Company nor any of its subsidiaries has taken,
directly or indirectly, any action which was designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares and the ADSs;
(xxx) The statements set forth in the Pricing Prospectus under the
captions "Description of Share Capital" and "Description of American
Depositary Shares", insofar as they purport to constitute a summary of the
terms of the Ordinary Shares and the ADSs, respectively, and under the
captions "Taxation" and "Underwriting", insofar as they purport to describe
the provisions of the laws and documents referred to therein, are accurate,
complete and fair in all material respects;
(xxxi) Other than as set forth in the Pricing Prospectus, there are no
legal, arbitration or governmental proceedings pending to which the Company
or any of its
9
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject (A) that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a Material Adverse Effect; or (B) that are required to be described in
the Registration Statement or the Pricing Prospectus and are not so
described; and except as set forth in the Pricing Prospectus, to the best
of the Company's knowledge after due inquiry, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others;
(xxxii) The Company is not and, after giving effect to the offering
and sale of the Shares and ADSs and the application of the proceeds
thereof, will not be an "investment company", as such term is defined in
the U.S. Investment Company Act of 1940, as amended (the "Investment
Company Act");
(xxxiii) Each of this Agreement and the Deposit Agreement is in proper
form to be enforceable against the Company in the Cayman Islands in
accordance with its terms; to ensure the legality, validity, enforceability
or admissibility into evidence in the Cayman Islands of this Agreement or
the Deposit Agreement, it is not necessary that this Agreement or the
Deposit Agreement be filed or recorded with any court or other authority in
the Cayman Islands or that any stamp or similar tax in the Cayman Islands
be paid on or in respect of this Agreement, the Deposit Agreement or any
other documents to be furnished hereunder;
(xxxiv) The Registration Statement, the Pricing Prospectus, the
Prospectus, any Issuer Free writing Prospectus and the ADS Registration
Statement and the filing of the Registration Statement, the Pricing
Prospectus, the Prospectus, any Issuer Free Writing Prospectus and the ADS
Registration Statement with the Commission have been duly authorized by and
on behalf of the Company, and the Registration Statement and the ADS
Registration Statement have been duly executed pursuant to such
authorization by and on behalf of the Company;
(xxxv) In each case, (A) each of the Company and its subsidiaries
owns, possesses, licenses or has other rights to use the patents and patent
applications, copyrights, trademarks, service marks, trade names, Internet
domain names, technology, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary rights) and other intellectual
property necessary or used in any material respect to conduct its business
in the manner in which it is being conducted and in the manner in which it
is contemplated as set forth in the Pricing Prospectus (collectively, the
"Intellectual Property"); (B) none of the material copyrights owned or
licensed by the Company or any of its subsidiaries is unenforceable or
invalid; (C) neither the Company nor any of its subsidiaries has received
any notice of violation or conflict with (and neither the Company nor any
of its subsidiaries knows of any basis for violation or conflict with)
rights of others with respect to the Intellectual Property; (D) there are
no pending or threatened actions, suits, proceedings or claims by others
that allege the Company or any of its subsidiaries is infringing any
patent, trade secret, trademark, service xxxx, copyright or other
intellectual property or proprietary right, except where such actions,
suits, proceedings or claims would not, individually or in the aggregate,
have a Material Adverse Effect; (E) the discoveries, inventions, products
or processes of the Company and its subsidiaries referenced in the Pricing
Prospectus do not violate or conflict with any intellectual property or
proprietary right of any third person, or any discovery, invention, product
or process that is the subject of a patent application filed by any third
person; and (F) the Company and its subsidiaries
10
are not in breach of, and have complied in all material respects with all
terms of, any license or other agreement relating to the Intellectual
Property; to the extent any Intellectual Property is sublicensed to the
Company or any of its subsidiaries by a third party, such sublicensed
rights shall continue in full force and effect if the principal third party
license terminates for any reason; and there are no contracts or other
documents related to the Intellectual Property required to be described in
or filed as an exhibit to the Registration Statement other than those
described in or filed as an exhibit to the Registration Statement;
(xxxvi) The Company does not expect to be a Passive Foreign Investment
Company ("PFIC") within the meaning of Section 1297(a) of the United States
Internal Revenue Code of 1986, as amended, for the taxable year 2006, and
will use its best efforts not to take any action that would result in the
Company becoming a PFIC in the future;
(xxxvii) Except as set forth in the Registration Statement and the
Pricing Prospectus, the Company has not sold, issued or distributed any
shares during the six-month period preceding the date hereof, including any
sales pursuant to Rule 144A, Regulation D or Regulation S promulgated under
the Act, other than shares issued pursuant to employee benefit plans,
qualified share option plans or other employee compensation plans or
pursuant to outstanding options, rights or warrants;
(xxxviii) The Company is a "foreign private issuer" within the meaning
of Rule 405 under the Act;
(xxxix) Ernst & Young Hua Ming, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants of the Company as required by the Act and the rules and
regulations of the Commission thereunder and are independent in accordance
with the requirements of the United States Public Company Accounting
Oversight Board;
(xl) Except as disclosed in the Pricing Prospectus, no material
indebtedness (actual or contingent) and no material contract or arrangement
is outstanding between the Company or any of its subsidiaries and any
director or executive officer of the Company or any of its subsidiaries or
any person connected with such director or executive officer (including
his/her spouse, infant children, any company or undertaking in which he/she
holds a controlling interest); and there are no material relationships or
transactions between the Company or any of its subsidiaries on the one hand
and its affiliates, officers and directors or their shareholders, customers
or suppliers on the other hand which, although required to be disclosed,
are not disclosed in the Pricing Prospectus;
(xli) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that: (A) transactions are
executed in accordance with management's general or specific
authorizations; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles in the United States ("US GAAP"); (C) access to
assets is permitted only in accordance with management's general or
specific authorization; (D) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate
actions are taken with respect to any differences; and (E) the Company has
made and kept books, records and accounts which, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of assets
of such entity;
11
(xlii) The Company has established and maintains and evaluates
"disclosure controls and procedures" (as such term is defined in Rule
13a-15 and 15d-15 under the Exchange Act) and "internal control over
financial reporting" (as such term is defined in Rule 13a-15 and
15d-15 under the Exchange Act); such disclosure controls and
procedures are designed to ensure that material information relating
to the Company, including its subsidiaries, is made known to the
Company's chief executive officer and chief financial officer by
others within those entities, and such disclosure controls and
procedures are effective to perform the functions for which they were
established; the Company's independent auditors and the Audit
Committee of the Board of Directors of the Company have been advised
of: (A) all significant deficiencies, if any, in the design or
operation of internal controls which could adversely affect the
Company's ability to record, process, summarize and report financial
data; and (B) all fraud, if any, whether or not material, that
involves management or other employees who have a role in the
Company's internal controls; all material weaknesses, if any, in
internal controls have been identified to the Company's independent
auditors; such internal control over financial reporting has been
designed by the Company's chief executive officer and chief financial
officer, or under their supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with US
GAAP; since the date of the most recent evaluation of such disclosure
controls and procedures and internal controls, there have been no
significant changes in internal controls or in other factors that
could significantly affect internal controls, including any corrective
actions with regard to significant deficiencies and material
weaknesses; and the Company has taken all necessary actions to ensure
that, upon and at all times after the filing of the Registration
Statement, the Company and its subsidiaries and their respective
officers and directors, in their capacities as such, will be in
compliance in all material respects with the applicable provisions of
the Xxxxxxxx-Xxxxx Act of 2002 (the "Xxxxxxxx-Xxxxx Act") and the
rules and regulations promulgated thereunder;
(xliii) Neither of the Company nor any of its subsidiaries has
any material obligation to provide retirement, healthcare, death or
disability benefits to any of the present or past employees of the
Company or any of its subsidiaries, or to any other person;
(xliv) No material labor dispute, work stoppage, slow down or
other conflict with the employees of the Company or any of its
subsidiaries exists or is threatened;
(xlv) The section entitled "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Critical
Accounting Policies and Estimates" in the Pricing Prospectus truly,
accurately and completely in all material respects describes: (A)
accounting policies which the Company believes are the most important
in the portrayal of the Company's financial condition and results of
operations and which require management's most difficult, subjective
or complex judgments ("Critical Accounting Policies"); (B) judgments
and uncertainties affecting the application of Critical Accounting
Policies; and (C) the likelihood that materially different amounts
would be reported under different conditions or using different
assumptions; and the Company's Board of Directors and management have
reviewed and agreed with the selection, application and disclosure of
Critical Accounting Policies and have consulted with its legal counsel
and independent accountants with regard to such disclosure;
12
(xlvi) Since the date of the latest audited financial statements
included in the Pricing Prospectus, neither of the Company nor any of
its subsidiaries has: (A) entered into or assumed any contract, (B)
incurred or agreed to incur any liability (including any contingent
liability) or other obligation, (C) acquired or disposed of or agreed
to acquire or dispose of any business or any other asset or (D)
assumed or acquired or agreed to assume or acquire any liabilities
(including contingent liabilities), that would, in any of clauses (A)
through (D) above, be material to the Company and its subsidiaries and
that are not otherwise described in the Pricing Prospectus;
(xlvii) The section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity
and Capital Resources" in the Pricing Prospectus accurately and fully
describes: (A) all material trends, demands, commitments, events,
uncertainties and risks, and the potential effects thereof, that the
Company believes would materially affect liquidity and are reasonably
likely to occur; and (B) all off-balance sheet transactions,
arrangements, and obligations, including, without limitation,
relationships with unconsolidated entities that are contractually
limited to narrow activities that facilitate the transfer of or access
to assets by the Company or any of its subsidiaries, such as
structured finance entities and special purpose entities
(collectively, "off-balance sheet arrangements") that are reasonably
likely to have a material effect on the liquidity of the Company or
any of its subsidiaries or the availability thereof or the
requirements of the Company or any of its subsidiaries for capital
resources;
(xlviii) No holder of any of the Shares or the ADSs after the
consummation of the transactions contemplated by this Agreement or the
Deposit Agreement is or will be subject to any personal liability in
respect of any liability of the Company by virtue only of its holding
of any such Shares or ADSs; and except as set forth in the Pricing
Prospectus, there are no limitations on the rights of holders of the
Shares or the ADSs to hold, vote or transfer their securities;
(xlix) The audited consolidated financial statements (and the
notes thereto) of the Company included in the Pricing Prospectus
fairly present in all material respects the consolidated financial
position of the Company as of the dates specified and the consolidated
results of operations and changes in consolidated financial position
of the Company for the periods specified, and such financial
statements have been prepared in conformity with US GAAP applied on a
consistent basis throughout the periods presented (other than as
described therein); the summary and selected consolidated financial
data and the preliminary unaudited financial results for the [[o]
months ended [o], 2006] included in the Pricing Prospectus present
fairly the information shown therein and have been compiled on a basis
consistent with that of the audited consolidated financial statements
included therein, subject, in the case of the preliminary unaudited
financial results, to the fact that such results are subject to
completion of the Company's normal quarter-end closing procedures and
review by the Company's independent accountants in accordance with
Statement of Auditing Standards No. 100;
(l) Under the laws of the Cayman Islands, each holder of ADRs
evidencing ADSs issued pursuant to the Deposit Agreement shall be
entitled, subject to the Deposit Agreement, to seek enforcement of its
rights through the Depositary or its nominee registered as
representative of the holders of the ADRs in a direct suit, action or
proceeding against the Company;
13
(li) All amounts payable by the Company in respect of the ADRs
evidencing the ADSs or the underlying Shares shall be made free and
clear of and without deduction for or on account of any taxes imposed,
assessed or levied by the Cayman Islands or any authority thereof or
therein (except such income taxes as may otherwise be imposed by the
Cayman Islands on payments hereunder to an Underwriter whose net
income is subject to tax by the Cayman Islands or withholding, if any,
with respect to any such income tax) nor are any taxes imposed in the
Cayman Islands on, or by virtue of the execution or delivery of, such
documents;
(lii) All returns, reports or filings which ought to have been
made by or in respect of the Company and its subsidiaries for taxation
purposes as required by the law of the jurisdictions where the Company
and its subsidiaries are incorporated, managed or engage in business
have been made and all such returns are correct and on a proper basis
in all material respects and are not the subject of any dispute with
the relevant revenue or other appropriate authorities except as may be
being contested in good faith and by appropriate proceedings; the
provisions included in the audited consolidated financial statements
as set out in the Pricing Prospectus included appropriate provisions
required under US GAAP for all taxation in respect of accounting
periods ended on or before the accounting reference date to which such
audited accounts relate for which the Company was then or might
reasonably be expected thereafter to become or have become liable; and
neither the Company nor any of its subsidiaries has received notice of
any tax deficiency with respect to the Company or any of its
subsidiaries;
(liii) The Company has provided or made available to you true,
correct, and complete copies of all documentation pertaining to any
extension of credit in the form of a personal loan made, directly or
indirectly, by the Company or any of its subsidiaries to any director
or executive officer of the Company; and since [September 30, 2006],
the Company has not, directly or indirectly, including through any of
its subsidiaries: (A) extended credit, arranged to extend credit, or
renewed any extension of credit, in the form of a personal loan, to or
for any director or executive officer of the Company, or to or for any
family member or affiliate of any director or executive officer of the
Company; or (B) made any material modification, including any renewal
thereof, to any term of any personal loan to any director or executive
officer of the Company, or any family member or affiliate of any
director or executive officer, which loan was outstanding on
[September 30, 2006], that (x) is outstanding on the date hereof and
(y) constitutes a violation of any applicable law or regulation;
(liv) Any statistical and market-related data included in the
Pricing Prospectus and the Prospectus are based on or derived from
sources that the Company believes to be reliable and accurate, and the
Company has obtained the written consent for the use of such data from
such sources to the extent required;
(lv) The application of the net proceeds from the offering of
ADSs, as described in the Prospectus, will not contravene any
provision of any current and applicable laws or the current
constituent documents of the Company or any of its subsidiaries or
contravene the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement, note, lease or
other agreement or instrument currently binding upon the Company or
any of its subsidiaries or any Governmental Authorization applicable
to any of the Company or any of its subsidiaries;
14
(lvi) There are no contracts, agreements or understandings
between the Company and any person that would give rise to a valid
claim against the Company or any Underwriter for a brokerage
commission, finder's fee or other like payment in connection with the
issuance and sale of the ADSs;
(lvii) Under the laws of the Cayman Islands, the courts of the
Cayman Islands will recognize and give effect to the choice of law
provisions set forth in Section 15 hereof and enforce judgments of
U.S. courts obtained against the Company to enforce this Agreement;
under the laws of the PRC, the choice of law provisions set forth in
Section 15 hereof will be recognized by the courts of the PRC and any
judgment obtained in any New York Court (as defined in Section 8(d)
hereof) arising out of or in relation to the obligations of the
Company under this Agreement will be recognized in PRC courts subject
to the applicable provisions of the Civil Procedure Law of the PRC
relating to the enforceability of foreign judgments;
(lviii) To the best knowledge of the Company after due inquiry,
none of the Company, its subsidiaries, directors, officers, agents,
employees or other persons associated with or acting on behalf of the
Company or any of its subsidiaries, has used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful
expenses relating to a political activity, made any direct or indirect
unlawful payment to any foreign or domestic government official or
employee from corporate funds; violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977; or made
any unlawful bribe, payoff, influence payment, kickback, payment or
rebate;
(lix) The descriptions of the events and transactions (the
"Restructuring") set forth in the Pricing Prospectus under the caption
"Our Corporate History and Structure" are accurate, complete and fair
in all material respects;
(lx) The Restructuring does not (A) contravene any provision of
applicable law or statute, rule or regulation of any Governmental
Agency having jurisdiction over the Company or any of its subsidiaries
or any of their properties (including but not limited to the Ministry
of Commerce, the State Administration of Industry and Commerce and the
State Administration of Foreign Exchange of the PRC), (B) contravene
the articles of association, business license or other constituent
documents of the Company or any of its subsidiaries, or (C) conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any license, indenture,
mortgage, deed of trust, loan agreement, note, lease or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject except, with respect to
(C), where any conflict, breach or violation would not, individually
or in the aggregate, result in a Material Adverse Effect;
(lxi) All Governmental Authorizations required in connection with
the Restructuring have been made or unconditionally obtained in
writing, and no such Governmental Authorization has been withdrawn or
is subject to any condition precedent which has not been fulfilled or
performed;
(lxii) Each of the Company and its subsidiaries that were
incorporated outside of the PRC has taken, or is in the process of
taking, all reasonable steps to comply with, and to ensure compliance
by each of its shareholders, option holders, directors, officers,
15
employees and [Directed Share Participants] that is, or is directly or
indirectly owned or controlled by, a PRC resident or citizen with any
applicable rules and regulations of the relevant PRC government
agencies (including but not limited to the Ministry of Commerce, the
National Development and Reform Commission and the State
Administration of Foreign Exchange) relating to overseas investment by
PRC residents and citizens or overseas listing by offshore special
purpose vehicles controlled directly or indirectly by PRC companies
and individuals, such as the Company (the "PRC Overseas Investment and
Listing Regulations"), including, without limitation, requesting each
shareholder, option holder, director, officer, employees [and Directed
Share Participants] that is, or is directly or indirectly owned or
controlled by, a PRC resident or citizen to complete any registration
and other procedures required under applicable PRC Overseas Investment
Regulations;
(lxiii) (i) None of the Company's subsidiaries, affiliates,
employees, agents and directors and officers in the United States: (a)
does any business with or involving the government of, or any person
or project located in, any country targeted by any of the economic
sanctions promulgated by any Executive Order issued by the President
of the United States or administered by the United States Treasury
Department's Office of Foreign Assets Control (the "OFAC"); or (b)
supports or facilitates any such business or project, in each case
other than as permitted under such economic sanctions; (ii) the
Company is not controlled (within the meaning of the Executive Orders
or regulations promulgating such economic sanctions or the laws
authorizing such promulgation) by any such government or person; (iii)
the proceeds from the offering of the ADSs contemplated hereby will
not be used to fund any operations in, to finance any investments,
projects or activities in, or to make any payments to, any country, or
to make any payments to, or finance any activities with, any person
targeted by any of such economic sanctions; and (iv) the Company
maintains and has implemented adequate internal controls and
procedures to monitor and audit transactions that are reasonably
designed to detect and prevent any use of the proceeds from the
offering of the ADSs contemplated hereby that is inconsistent with any
of the Company's representations and obligations under clause (iii) of
this paragraph;
(lxiv) The Company and its subsidiaries and their respective
properties, assets and operations are in compliance with, and the
Company and each of its subsidiaries hold all permits, authorizations
and approvals required under Environmental Laws (as defined below);
there are no past, present or reasonably anticipated future events,
conditions, circumstances, activities, practices, actions, omissions
or plans that could reasonably be expected to give rise to any
material costs or liabilities to the Company or any of its
subsidiaries under, or to interfere with or prevent compliance by the
Company or any of its subsidiaries with, Environmental Laws; none of
the Company and its subsidiaries (A) is the subject of any
investigation, (B) has received any notice or claim, (C) is a party to
or affected by any pending or threatened action, suit or proceeding,
(D) is bound by any judgment, decree or order or (E) has entered into
any agreement, in each case relating to any alleged violation of any
Environmental Law or any actual or alleged release or threatened
release or cleanup at any location of any Hazardous Materials (as
defined below) (as used herein, "Environmental Law" means any
national, provincial, municipal or other local or foreign law,
statute, ordinance, rule, regulation, order, notice, directive,
decree, judgment, injunction, permit, license, authorization or other
binding requirement, or common law, relating to health, safety or the
protection, cleanup or restoration of the environment or natural
resources, including those relating to the distribution, processing,
generation, treatment, storage, disposal, transportation, other
handling or release or
16
threatened release of Hazardous Materials, and "Hazardous Materials"
means any material (including, without limitation, pollutants,
contaminants, hazardous or toxic substances or wastes) that is
regulated by or may give rise to liability under any Environmental
Law);
(lxv) In the ordinary course of their business, the Company and
each of its subsidiaries conduct periodic reviews of the effect of the
Environmental Laws on their respective businesses, operations and
properties, in the course of which they identify and evaluate
associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for cleanup, closure of
properties or compliance with the Environmental Laws or any permit,
license or approval, any related constraints on operating activities
and any potential liabilities to third parties);
(lxvi) Neither the Company nor any of its subsidiaries has
entered into any memorandum of understanding, letter of intent,
definitive agreement or any similar agreements with respect to a
merger or consolidation or a material acquisition or disposition of
assets, technologies, business units or businesses;
(lxvii) There are no affiliations or associations between (A) any
member of the NASD and (B) the Company or any of the Company's
officers, directors or 5% or greater security holders or any
beneficial owner of the Company's unregistered equity securities that
were acquired at any time on or after the 180th day immediately
preceding the date the Registration Statement was initially filed with
the Commission, except as disclosed in the Registration Statement
(excluding the exhibits thereto), each Preliminary Prospectus, the
Pricing Prospectus and the Prospectus;
(lxviii) The Registration Statement, each Preliminary Prospectus,
the Pricing Prospectus, the Prospectus and each Issuer Free Writing
Prospectus comply, and any further amendments or supplements thereto
will comply, with any applicable laws or regulations of any
jurisdiction in which any Preliminary Prospectus, the Pricing
Prospectus, the Prospectus or any Issuer Free Writing Prospectus is
distributed in connection with the Directed Share Program; and no
Governmental Authorization, other than those heretofore obtained, is
required in connection with the offering of the Reserved ADSs in any
jurisdiction where the Reserved ADSs are being offered;
(lxix) The Company has not offered, or caused the Underwriters to
offer, ADSs to any person pursuant to the Directed Share Program with
the intent to influence unlawfully (i) a customer or supplier of the
Company or any of its subsidiaries to alter the customer's or
supplier's level or type of business with the Company or any of its
subsidiaries, or (ii) a trade journalist or publication to write or
publish favorable information about the Company or any of its
subsidiaries or any of their respective products or services;
(lxx) There are no business relationships or related-party
transactions involving the Company or any of its subsidiaries or any
other person required to be described in the Registration Statement,
each Preliminary Prospectus, the Pricing Prospectus or the Prospectus
which have not been described as required;
(lxxi) Each "forward-looking statement" (within the meaning of
Section 27A of the Act or Section 21E of the Exchange Act) contained
in the Registration Statement, each Preliminary Prospectus, the
Pricing Prospectus, the Prospectus and each Issuer Free
17
Writing Prospectus, if any, has been made or reaffirmed with a
reasonable basis and in good faith;
[(lxxii) Each of the Company and each of the Company's directors
that signed the Initial Registration Statement is aware of and has
been advised as to the content of the Rules on Mergers and
Acquisitions of Domestic Enterprises by Foreign Investors (the "PRC
Mergers and Acquisition Rules") jointly promulgated by the Ministry of
Commerce, the State Assets Supervision and Administration Commission,
the State Tax Administration, the State Administration of Industry and
Commerce, the China Securities Regulatory Commission (the "CSRC") and
the State Administration of Foreign Exchange of the PRC on August 8,
2006, including the relevant provisions thereof which purport to
require offshore special purpose vehicles formed for listing purposes
and controlled directly or indirectly by PRC companies or individuals,
to obtain the approval of the CSRC prior to the listing and trading of
their securities on an overseas stock exchange; the Company has
received legal advice specifically with respect to the PRC Mergers and
Acquisitions Rules from its PRC counsel and the Company understands
such legal advice; the Company has fully communicated such legal
advice from its PRC counsel to each of its directors that signed the
Initial Registration Statement and each director has confirmed that he
or she understands such legal advice; each director of the Company
that signed the Initial Registration Statement has received legal
advice to his or her satisfaction with respect to the PRC Mergers and
Acquisitions Rules and his or her fiduciary duties as a director of
the Company in respect of the PRC Mergers and Acquisitions Rules from
his or her PRC legal counsel or has declined to obtain such advice
after being offered by the Company for the Company to bear the cost of
any such advice; the Company and each director of the Company that
signed the Initial Registration Statement understand the potential
personal liability to which each director of the Company that signed
the Initial Registration Statement and the executive officers of the
Company may be subject in the event that the offering and sales of the
Shares and ADSs as contemplated in this Agreement or the quotation and
trading of the ADSs on Nasdaq were deemed not to be in compliance with
the PRC Mergers and Acquisitions Rules;
(lxxiii) The issuance and sale of the Shares and the ADSs, the
quotation and trading of the ADSs on Nasdaq or the consummation of the
transactions contemplated by this Agreement, the Deposit Agreement and
the Power of Attorney is not and will not be, as of the date hereof or
at each Time of Delivery, adversely affected by the PRC Mergers and
Acquisitions Rules or any official clarifications, guidance,
interpretations or implementation rules in connection with or related
to the PRC Mergers and Acquisitions Rules (collectively, the "PRC
Mergers and Acquisitions Rules and Related Clarifications");
(lxxiv) As of the date of the Pricing Prospectus and as of the
date hereof, the PRC Mergers and Acquisitions Rules did not and do not
apply to the issuance and sale of the Shares and the ADSs, the
quotation and trading of the ADSs on Nasdaq, or the consummation of
the transactions contemplated by this Agreement, the Deposit Agreement
and the Power of Attorney; and
(lxxv) The statements set forth in the Pricing Prospectus under
the captions "Risk Factors -- Risks Related to Doing Business in China
-- Our failure to obtain the prior approval of the China Securities
Regulatory Commission, or the CSRC, of the listing and trading of our
ADSs on the Nasdaq Global Market could significantly delay this
offering or could have a material adverse effect on our business,
operating results, reputation and
18
trading price of our ADSs, and may also create uncertainties for this
offering", when taken together with the statements under "PRC
Government Regulations -- Regulation of Overseas Listings", are fair
and accurate summaries of the matters described therein, and nothing
has been omitted from such summaries which would make the same
misleading in any material respect.]
In addition, any certificate signed by any officer of the Company or any of
its subsidiaries and delivered to the Underwriters or counsel for the
Underwriters in connection with the offering of the ADSs shall be deemed to be a
representation and warranty by the Company, as to matters covered thereby, to
each of the Underwriters.
(b) Each of the Selling Shareholders severally represents and warrants
as to and in respect of itself to, and agrees with, each of the
Underwriters and the Company that:
(i) Such Selling Shareholder, if an entity, has been duly
organized and is validly existing as a company or a limited
partnership, as the case may be, in good standing in its jurisdiction
of formation;
(ii) All Governmental Authorizations required for the deposit of
the Shares being deposited by such Selling Shareholder with the
Depositary against issuance of the ADRs evidencing the ADSs to be
delivered at each Time of Delivery (as defined in Section 4 hereof),
for the sale and delivery of the ADSs to be sold by such Selling
Shareholder hereunder and for the execution and delivery by such
Selling Shareholder of this Agreement, the Power of Attorney and the
Custody Agreement hereinafter referred to, and for the sale and
delivery of the ADSs to be sold by such Selling Shareholder hereunder,
have been obtained; and such Selling Shareholder has full right, power
and authority to enter into this Agreement, the Power of Attorney and
the Custody Agreement and to sell, assign, transfer and deliver the
ADSs to be sold by such Selling Shareholder hereunder;
(iii) The sale of the ADSs to be sold by such Selling Shareholder
hereunder, the deposit of the Shares by such Selling Shareholder with
the Depositary against issuance of the ADRs evidencing the ADSs to be
delivered by such Selling Shareholder at each Time of Delivery and the
compliance by such Selling Shareholder with all of the provisions of
this Agreement, the Deposit Agreement, the Power of Attorney and the
Custody Agreement and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any statute, indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which such Selling
Shareholder is a party or by which such Selling Shareholder is bound,
or to which any of the property or assets of such Selling Shareholder
is subject, nor will such action result in any violation of the
provisions of the constituent documents of such Selling Shareholder if
such Selling Shareholder is a corporation, the partnership agreement
of such Selling Shareholder if such Selling Shareholder is a
partnership or any statute or any order, rule or regulation of any
Governmental Agency having jurisdiction over such Selling Shareholder
or the property of such Selling Shareholder;
(iv) There are no affiliations or associations between any member
of the NASD and such Selling Shareholder, except as disclosed in the
Registration Statement (excluding the exhibits thereto), each
Preliminary Prospectus, the Pricing Prospectus and the Prospectus;
none of the proceeds received by such Selling Shareholder from the
sale of
19
the Shares and ADSs to be sold by such Selling Shareholder hereunder
will be paid to a member of the NASD or any affiliate of (or person
"associated with," as such terms are used in the Rules of the NASD)
such member;
(v) Such Selling Shareholder has, and immediately prior to each
Time of Delivery such Selling Shareholder will have, good and valid
title to the Shares to be represented by the ADSs to be sold by such
Selling Shareholder hereunder at such Time of Delivery, free and clear
of all liens, encumbrances, equities or claims; and, upon delivery of
the ADSs representing such Shares and payment therefor pursuant
hereto, good and valid title to such ADSs, free and clear of all
liens, encumbrances, equities or claims, will pass to the several
Underwriters;
(vi) Neither such Selling Shareholder nor any of its affiliates,
nor any person acting on its or their behalf has taken or will take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result
in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares or the ADSs;
(vii) The sale of the Shares to be sold by such Selling
Shareholder pursuant to this Agreement is not prompted by any material
information concerning the Company or any of its subsidiaries which is
not set forth in the Registration Statement (excluding the exhibits
thereto), each Preliminary Prospectus, the Pricing Prospectus and the
Prospectus;
(viii) Such Selling Shareholder has not, prior to the execution
of this Agreement, offered or sold any Shares by means of any
"prospectus" (within the meaning of the Act), or used any "prospectus"
(within the meaning of the Act) in connection with the offer or sale
of the Shares and ADSs, in each case other than the then most recent
Preliminary Prospectus;
(ix) The Registration Statement, any Preliminary Prospectus, the
Pricing Prospectus and the Prospectus complied and, as then amended or
supplemented, will comply with all applicable provisions of the Act
and the rules and regulations of the Commission thereunder; the
Registration Statement, as it relates to the Selling Shareholder, did
not, as of its effective time, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; at
no time during the period that begins on the earlier of the date of
such Preliminary Prospectus and the date such Preliminary Prospectus
was filed with the Commission and ends at the time of purchase did or
will any Preliminary Prospectus, as then amended or supplemented, as
such Preliminary Prospectus relates to such Selling Shareholder,
include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, and at no time during such period did or will any
Preliminary Prospectus, as then amended or supplemented, together with
any combination of one or more of the then issued Issuer Free Writing
Prospectuses, if any, in each case as they relate to the Selling
Shareholder, include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; and at no time during the period that begins on the
earlier of the date of the Prospectus and the date the Prospectus is
filed with the Commission and ends at the later of the time of
purchase, the latest additional time of purchase, if any, and the end
of the period during
20
which a prospectus is required by the Act to be delivered (whether
physically or through compliance with Rule 172 under the Act or any
similar rule) in connection with any sale of ADSs did or will the
Prospectus, as then amended or supplemented, as the Prospectus relates
to such Selling Shareholder, include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; and at no time during the period that
begins on the date of such Issuer Free Writing Prospectus and ends at
the time of purchase did or will any Issuer Free Writing Prospectus,
as such Issuer Free Writing Prospectus relates to such Selling
Shareholder, include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(x) The ADSs to be sold by such Selling Shareholder, when issued
and delivered against payment therefor, will be freely transferable by
the Selling Shareholders to or for the account of the several
Underwriters and (to the extent described in the Prospectus) the
initial purchasers thereof; and there are no restrictions on
subsequent transfers of such ADSs under the laws of the Cayman
Islands, the PRC or the United States except as described in the
Pricing Prospectus under the captions "Description of Share Capital",
"Description of American Depositary Shares" and "Shares Eligible for
Future Sale";
(xi) No stamp or other issuance or transfer taxes or duties and
no capital gains, income, withholding or other taxes are payable by or
on behalf of the Underwriters to the government of the Cayman Islands,
the BVI or the PRC, or any political subdivision or taxing authority
thereof or therein in connection with (A) the deposit with the
Depositary of the Shares by such Selling Shareholder against the
issuance of ADRs evidencing the ADSs to be sold by such Selling
Shareholder, (B) the sale and delivery by such Selling Shareholder of
the Shares and the ADSs to be sold by such Selling Shareholder to or
for the respective accounts of the Underwriters or (C) the sale and
delivery by the Underwriters of the Shares and such ADSs to the
initial purchasers thereof;
(xii) All amounts payable by such Selling Shareholder under this
Agreement shall be made free and clear of and without deduction for or
on account of any taxes imposed, assessed or levied by the Cayman
Islands, the BVI or the PRC or any authority thereof or therein, nor
are any taxes imposed in the Cayman Islands, the BVI or the PRC on, or
by virtue of the execution of this Agreement or the sale and delivery
of the Shares and ADSs;
(xiii) This Agreement has been duly authorized, executed and
delivered by or on behalf of such Selling Shareholder, and is
enforceable against such Selling Shareholder in accordance with its
terms, subject, as to enforceability, to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and
to general equity principles; and to ensure the legality, validity,
enforceability or admissibility into evidence in the Cayman Islands,
the BVI or the PRC of this Agreement, it is not necessary that this
Agreement be filed or recorded with any court or other authority in
the Cayman Islands, the BVI or the PRC or that any stamp or similar
tax in the Cayman Islands, the BVI or the PRC be paid on or in respect
of this Agreement or any other documents to be furnished hereunder;
21
(xiv) Other than this Agreement, there are no contracts,
agreements or understandings between such Selling Shareholder and any
person that would give rise to a valid claim against such Selling
Shareholder or any Underwriter for a brokerage commission, finder's
fee or other like payment in connection with the offer and sale of the
Shares and the ADSs;
(xv) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Shareholder will deliver to you prior to or
at the First Time of Delivery (as hereinafter defined) a properly
completed and executed United States Treasury Department Form W-8BEN
(or other applicable form or statement specified by Treasury
Department regulations in lieu thereof);
(xvi) Certificates in negotiable form representing all of the
Shares and ADSs to be sold by such Selling Shareholder hereunder have
been placed in custody under a Custody Agreement (the "Custody
Agreement"), in the form heretofore furnished to you, duly executed
and delivered by such Selling Shareholder to [Name of Custodian], as
custodian (the "Custodian"), and such Selling Shareholder has duly
executed and delivered a Power of Attorney (the "Power of Attorney"),
in the form set forth in Annex I attached hereto, appointing the
persons indicated in Schedule II attached hereto, and each of them, as
such Selling Shareholder's attorneys-in-fact (the "Attorneys-in-Fact")
with authority to execute and deliver this Agreement on behalf of such
Selling Shareholder, to determine the purchase price to be paid by the
Underwriters to the Selling Shareholders as provided in Section 2
hereof, to authorize the delivery of the Shares and ADSs to be sold by
such Selling Shareholder hereunder and otherwise to act on behalf of
such Selling Shareholder in connection with the transactions
contemplated by this Agreement and the Custody Agreement;
(xvii) The Shares represented by the certificates held in custody
for such Selling Shareholder under the Custody Agreement are subject
to the interests of the Underwriters hereunder; the arrangements made
by such Selling Shareholder for such custody, and the appointment by
such Selling Shareholder of the Attorneys-in-Fact by the Power of
Attorney, are to that extent irrevocable; the obligations of the
Selling Shareholders hereunder shall not be terminated by operation of
law, whether by the death or incapacity of any individual Selling
Shareholder or, in the case of an estate or trust, by the death or
incapacity of any executor or trustee or the termination of such
estate or trust, or in the case of a partnership or corporation, by
the dissolution of such partnership or corporation, or by the
occurrence of any other event; if any individual Selling Shareholder
or any such executor or trustee should die or become incapacitated, or
if any such estate or trust should be terminated, or if any such
partnership or corporation should be dissolved, or if any other such
event should occur, before the delivery of the Shares and ADSs
hereunder, certificates representing the Shares and ADSs shall be
delivered by or on behalf of the Selling Shareholders in accordance
with the terms and conditions of this Agreement and of the Custody
Agreement; and actions taken by the Attorneys-in-Fact pursuant to the
Powers of Attorney shall be as valid as if such death, incapacity,
termination, dissolution or other event had not occurred, regardless
of whether or not the Custodian, the Attorneys-in-Fact, or any of
them, shall have received notice of such death, incapacity,
termination, dissolution or other event; and
22
(xviii) (i) Neither such Selling Shareholder nor any of its
subsidiaries, affiliates, employees, agents and directors and officers
in the United States: (a) does any business with or involving the
government of, or any person or project located in, any country
targeted by any of the economic sanctions promulgated by any Executive
Order issued by the President of the United States or administered by
the OFAC; or (b) supports or facilitates any such business or project,
in each case other than as permitted under such economic sanctions;
(ii) such Selling Shareholder is not controlled (within the meaning of
the Executive Orders or regulations promulgating such economic
sanctions or the laws authorizing such promulgation) by any such
government or person; and (iii) the proceeds received by such Selling
Shareholder from the sale of ADSs pursuant to this Agreement will not
be used to fund any operations in, to finance any investments,
projects or activities in, or to make any payments to, any country, or
to make any payments to, or finance any activities with, any person
targeted by any of such economic sanctions.
In addition, any certificate signed by any Selling Shareholders (or, with
respect to any Selling Shareholder that is not an individual, any officer of
such Selling Shareholder or of any of such Selling Shareholder's subsidiaries)
or by any representative of the Selling Shareholders and delivered to the
Underwriters or counsel for the Underwriters in connection with the offering of
the ADSs shall be deemed to be a representation and warranty by such Selling
Shareholder, as to matters covered thereby, to each of the Underwriters.
2. Subject to the terms and conditions herein set forth, (a) the Company
and each Selling Shareholder agree, severally and not jointly, to sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company and each of the Selling Shareholders, at a
purchase price per ADS of US$____, the number of Firm ADSs (to be adjusted by
you so as to eliminate fractional shares) determined by multiplying the
aggregate number of Firm ADSs to be sold by the Company and each of the Selling
Shareholders as set forth opposite their respective names in Schedule II
attached hereto by a fraction, the numerator of which is the aggregate number of
Firm ADSs to be purchased by such Underwriter as set forth opposite the name of
such Underwriter in Schedule I attached hereto and the denominator of which is
the aggregate number of Firm ADSs to be purchased by all of the Underwriters
from the Company and all of the Selling Shareholders hereunder and (b) in the
event and to the extent that the Underwriters shall exercise the election to
purchase Optional ADSs as provided below, the Company and each Selling
Shareholder agree, severally and not jointly, to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company and each of the Selling Shareholders, at the purchase
price per ADS set forth in clause (a) of this Section 2, that portion of the
number of Optional ADSs as to which such election shall have been exercised (to
be adjusted by you so as to eliminate fractional shares) determined by
multiplying such number of Optional ADSs by a fraction, the numerator of which
is the maximum number of Optional ADSs which such Underwriter is entitled to
purchase as set forth opposite the name of such Underwriter in Schedule I
attached hereto and the denominator of which is the maximum number of Optional
ADSs that all of the Underwriters are entitled to purchase hereunder.
The Company and each Selling Shareholder, as and to the extent indicated in
Schedule II attached hereto, hereby grant, severally and not jointly, to the
Underwriters the right to purchase at their election up to _________ Optional
ADSs, at the purchase price per ADS set forth in the paragraph above, for the
sole purpose of covering sales of shares in excess of the number of Firm ADSs.
Any such election to purchase Optional ADSs shall be made in proportion to the
maximum number of Optional ADSs to be sold by the Company and each Selling
Shareholder as set forth in Schedule II attached hereto initially with respect
to the Optional ADSs to be sold by the Company and then among the Selling
Shareholders in proportion to the maximum number of Optional ADSs to be sold by
each Selling Shareholder as set forth in Schedule II
23
attached hereto. Any such election to purchase Optional ADSs may be exercised
only by written notice from you to the Company, given within a period of 30
calendar days after the date of this Agreement and setting forth the aggregate
number of Optional ADSs to be purchased and the date on which such Optional ADSs
are to be delivered, as determined by you but in no event earlier than the First
Time of Delivery (as defined in Section 4 hereof) or, unless you, the Company
and the Selling Shareholders otherwise agree in writing, earlier than two or
later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the ADSs, the several
Underwriters propose to offer the ADSs for sale upon the terms and conditions
set forth in the Prospectus.
4. (a) The ADSs to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as the Representative may request upon at least forty-eight hours' notice
to the Company and the Selling Shareholders prior to a Time of Delivery (as
defined below) (the "Notification Time"), shall be delivered by or on behalf of
the Company and the Selling Shareholders to the Representative, through the
facilities of The Depository Trust Company ("DTC"), for the account of such
Underwriter, against payment by or on behalf of such Underwriter of the purchase
price therefor by wire transfer of Federal (same-day) funds to the account(s)
specified by the Company and the Selling Shareholders to the Representative at
least forty-eight hours in advance of such Time of Delivery. The Company and the
Selling Shareholders will cause the certificates representing the ADSs to be
made available for checking at least twenty-four hours prior to the Time of
Delivery with respect thereto at the office of DTC or its designated custodian
(the "Designated Office"). The time and date of such delivery and payment shall
be, with respect to the Firm ADSs, 9:30 a.m., New York City time, on _________,
2006 or such other time and date as the Representative and the Company may agree
upon in writing, and, with respect to the Optional ADSs, 9:30 a.m., New York
City time, on the date specified by the Representative in the written notice
given by the Representative of the Underwriters' election to purchase such
Optional ADSs, or such other time and date as the Representative and the Company
may agree upon in writing. Such time and date for delivery of the Firm ADSs is
herein called the "First Time of Delivery", such time and date for delivery of
the Optional ADSs, if not the First Time of Delivery, is herein called the
"Second Time of Delivery", and each such time and date for delivery is herein
called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 8 hereof, including the
cross-receipt for the ADSs and any additional documents requested by the
Underwriters pursuant to Section 8(s) hereof, will be delivered at the
offices of Xxxxxxxx & Xxxxxxxx LLP, 00xx Xxxxx, Xxxx Xxxxx'x Xxxx Xxxxxxx,
Xxxx Xxxx (the "Closing Location"), and the ADSs will be delivered as
specified in Section (a) above, all at such Time of Delivery. A meeting
will be held at the Closing Location at 4:00 p.m., Hong Kong time, on the
New York Business Day next preceding such Time of Delivery, at which
meeting the final drafts of the documents to be delivered pursuant to the
preceding sentence will be available for review by the parties hereto. For
the purposes of this Section 4, "New York Business Day" shall mean each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by
law or executive order to close.
5. (a) The Company agrees with each of the Underwriters:
(i) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3)
24
under the Act; to make no further amendment or any supplement to the
Registration Statement or the Prospectus prior to the last Time of
Delivery which shall be disapproved by you promptly after reasonable
notice thereof; to advise you, promptly after it receives notice
thereof, of the time when any amendment to the Registration Statement
has been filed or becomes effective or any amendment or supplement to
the Prospectus has been filed and to furnish you copies thereof; to
file promptly all material required to be filed by the Company with
the Commission pursuant to Rule 433(d) under the Act; to advise you,
promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending
the use of any Preliminary Prospectus or other prospectus in respect
of the ADSs, of the suspension of the qualification of the ADSs for
offering or sale in any jurisdiction, of the initiation or threatening
of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration
Statement, any Preliminary Prospectus, the Prospectus or any Issuer
Free Writing Prospectus or for additional information; in the event of
such request for amendment or supplement, to provide you and your
counsel copies of any proposed amendment or supplement for review and
comment a reasonable amount of time prior to any proposed filing and
to file no such amendment or supplement which shall be disapproved by
you; and, in the event of the issuance of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus
or other prospectus or suspending any such qualification, promptly to
use its best efforts to obtain the withdrawal of such order;
(ii) Promptly from time to time to take such action as you may
reasonably request to qualify the ADSs for offering and sale under the
securities laws of such jurisdictions as you may request and to comply
with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to
complete the distribution of the ADSs, provided that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;
(iii) Prior to 10:00 a.m., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time
to time, to furnish the Underwriters with written and electronic
copies of the Prospectus in New York City in such quantities as you
may reasonably request, and, if the delivery of a prospectus (or in
lieu thereof, the notice referred to in Rule 173(a) under the Act) is
required at any time prior to the expiration of nine months after the
time of issue of the Prospectus in connection with the offering or
sale of the ADSs and if at such time any event shall have occurred as
a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made when such
Prospectus (or in lieu thereof, the notice referred to in Rule 173(a)
under the Act) is delivered, not misleading, or, if for any other
reason it shall be necessary during such same period to amend or
supplement the Prospectus in order to comply with the Act, to notify
you and upon your request to prepare and furnish without charge to
each Underwriter and to any dealer in securities as many written and
electronic copies as you may from time to time reasonably request of
an amended Prospectus or a supplement to the Prospectus which will
correct such statement or omission or effect such compliance; and in
case any Underwriter is required to deliver a prospectus (or in lieu
thereof, the notice referred to in Rule 173(a) under the Act) in
connection with sales of any of the ADSs at any time nine months or
more after the time of issue of the Prospectus, upon your request but
at the
25
expense of such Underwriter, to prepare and deliver to such
Underwriter as many written and electronic copies as you may request
of an amended or supplemented Prospectus complying with Section
10(a)(3) of the Act;
(iv) To furnish to you one copy for the Representative and one
copy for United States counsel to the Underwriters of the Registration
Statement, as initially filed with the Commission, and of all
amendments thereto (including all exhibits thereto and sufficient
copies of the foregoing (other than exhibits) for distribution of a
copy to each of the other Underwriters;
(v) To furnish to you as early as practicable prior to the time
of purchase and any additional time of purchase, as the case may be,
but not later than two business days prior thereto, a copy of the
latest available unaudited interim and monthly consolidated financial
statements, if any, of the Company and its subsidiaries which have
been read by the Company's independent public accountants, as stated
in their letter to be furnished pursuant to Section 8(h) hereof;
(vi) To make generally available to its security holders as soon
as practicable, but in any event not later than sixteen months after
the effective date of the Registration Statement (as defined in Rule
158(c) under the Act), a consolidated earnings statement of the
Company and its subsidiaries (which need not be audited) complying
with Section 11(a) of the Act and the rules and regulations of the
Commission thereunder (including, at the option of the Company, Rule
158);
(vii) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus (the "Lock-Up Period") not to offer, sell, contract to
sell, pledge, grant any option to purchase, purchase any option or
contract to sell, right or warrant to purchase, make any short sale,
file a registration statement with respect to, or otherwise dispose of
(including entering into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequence of
ownership interests), except as provided hereunder, (A) any ADSs or
Ordinary Shares or securities of the Company that are substantially
similar to the ADSs or Ordinary Shares, including but not limited to
any options or warrants to purchase Ordinary Shares or any securities
that are convertible into or exchangeable for, or that represent the
right to receive, ADSs or Ordinary Shares or any such substantially
similar securities; and (B) any ordinary shares of its subsidiaries or
depositary shares or depositary receipts representing such ordinary
shares, including but not limited to any securities that are
convertible into or exchangeable for or that represent the right to
receive such ordinary shares or such depositary shares or depositary
receipts or any such substantially similar securities (in each case
other than pursuant to employee stock option plans existing on the
date of this Agreement and which are described in the Pricing
Prospectus), without your prior written consent; provided, however,
that if (1) during the last 17 days of the initial Lock-Up Period, the
Company releases earnings results or announces material news or a
material event or (2) prior to the expiration of the initial Lock-Up
Period, the Company announces, or if the Representative determines,
that it will release earnings results during the 15-day period
following the last day of the initial Lock-Up Period, then in each
case the Lock-Up Period will be automatically extended until the
expiration of the 18-day period beginning on the date of release of
the earnings results or the announcement of the material news or
material event, as applicable, unless the Representative waives, in
writing, such extension; and the Company will provide the
Representative and each
26
shareholder subject to the Lock-Up Period pursuant to the lockup
letters described in Section 8(q) with prior notice of any such
announcement that gives rise to an extension of the Lock-Up Period;
(viii) During the Lock-Up Period, to cause each of its
subsidiaries not to offer, sell, contract to sell, pledge, grant any
option to purchase, purchase any option or contract to sell, right or
warrant to purchase, make any short sale, file a registration
statement with respect to any of the ADSs or Ordinary Shares or any
securities that are convertible into or exercisable or exchangeable
for the ADSs or Ordinary Shares, or otherwise dispose of (including
entering into any swap or other arrangement that transfers to another,
in whole or in part, any of the economic consequence of ownership
interests), except as provided hereunder and under this Agreement: (A)
any ADSs or Ordinary Shares or any securities of the Company that are
substantially similar to the ADSs or Ordinary Shares, including but
not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, ADSs or
Ordinary Shares or any such substantially similar securities; and (B)
any ordinary shares of such subsidiary or any other subsidiary or
depositary shares or depositary receipts representing such ordinary
shares, including but not limited to any securities that are
convertible into or exchangeable for or that represent the right to
receive such ordinary shares or such depositary shares or depositary
receipts or any such substantially similar securities, without your
prior written consent; provided, however, that if (1) during the last
17 days of the initial Lock-Up Period, the Company releases earnings
results or announces material news or a material event or (2) prior to
the expiration of the initial Lock-Up Period, the Company announces,
or if the Representative determines, that it will release earnings
results during the 15-day period following the last day of the initial
Lock-Up Period, then in each case the Lock-Up Period will be
automatically extended until the expiration of the 18-day period
beginning on the date of release of the earnings results or the
announcement of the material news or material event, as applicable,
unless the Representative waives, in writing, such extension; and the
Company will provide the Representative and each shareholder subject
to the Lock-Up Period pursuant to the lockup letters described in
Section 8(q) with prior notice of any such announcement that gives
rise to an extension of the Lock-Up Period;
(ix) To furnish to its shareholders as soon as practicable after
the end of each fiscal year an annual report (in English) (including a
balance sheet and statements of income, shareholders' equity and cash
flows of the Company and its consolidated subsidiaries prepared in
conformity with US GAAP and certified by independent public
accountants) and, as soon as practicable after the end of each of the
first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the effective date of the Registration
Statement), to make available to its shareholders consolidated summary
financial information of the Company and its subsidiaries for such
quarter in reasonable detail;
(x) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or
other communications (financial or other) furnished to shareholders,
and to deliver to you (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the
Commission or any securities exchange on which any class of securities
of the Company is listed; and (ii) such additional information
concerning the business and financial condition of the Company as you
may from time to time reasonably request (such financial statements to
27
be on a consolidated basis to the extent the accounts of the Company
and its subsidiaries are consolidated in reports furnished to its
shareholders generally or to the Commission);
(xi) To use the net proceeds received by it from the sale of the
ADSs pursuant to this Agreement in the manner specified in the Pricing
Prospectus and the Prospectus under the caption "Use of Proceeds" and
in a manner such that (i) the Company will be in compliance with any
applicable laws, rules and regulations of any Governmental Agency
having jurisdiction over the Company or its subsidiaries including,
without limitation, the requirement to repatriate the net proceeds
received by it into the PRC under the applicable regulations of the
Ministry of Commerce and the State Administration of Foreign Exchange
of the PRC; (ii) the Company will not use any of the proceeds from the
offering of the ADSs contemplated hereby to fund any operations in, to
finance any investments, projects or activities in, or to make any
payments to, any country, or to make any payments to, or finance any
activities with, any person, targeted by any of the economic sanctions
promulgated by any Executive Order issued by the President of the
United States or administered by the OFAC, (iii) the Company will
maintain and implement adequate internal controls and procedures to
monitor and audit transactions that are reasonably designed to detect
and prevent any use of the proceeds from the offering of the ADSs
contemplated hereby that is inconsistent with any of the Company's
representations and obligations under the preceding sentence, and (iv)
the Company will not use any of the proceeds from the offering of the
ADSs contemplated hereby in any way that is detrimental to the
environment;
(xii) Prior to each Time of Delivery to deposit Ordinary Shares
with the Depositary in accordance with the provisions of the Deposit
Agreement and otherwise to comply with the Deposit Agreement so that
ADRs evidencing ADSs will be executed (and, if applicable,
countersigned) and issued by the Depositary against receipt of such
Ordinary Shares and delivered to the Underwriters at such Time of
Delivery;
(xiii) Not to (and to cause its affiliates not to) take, directly
or indirectly, any action which is designed to or which constitutes or
which would reasonably be expected to cause or result in stabilization
or manipulation of the price of any security of the Company or
facilitate the sale or resale of the Shares and the ADSs;
(xiv) To use its best efforts to include for quotation the
Shares and ADSs on Nasdaq;
(xv) To file with the Commission such information on Form 20-F
as may be required by Rule 463 under the Act;
(xvi) If the Company elects to rely upon Rule 462(b), the
Company shall file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) by 10:00 p.m., Washington,
D.C. time, on the date of this Agreement, and the Company shall at the
time of filing either pay to the Commission the filing fee for the
Rule 462(b) Registration Statement or give irrevocable instructions
for the payment of such fee pursuant to Rule 111(b) under the Act;
(xvii) Upon request of any Underwriter, to furnish, or cause to
be furnished, to such Underwriter an electronic version of the
Company's trademarks, servicemarks and corporate logo for use on the
website, if any, operated by such Underwriter for the purpose
28
of facilitating the on-line offering of the ADSs (the "License");
provided, however, that the License shall be used solely for the
purpose described above, is granted without any fee and may not be
assigned or transferred;
(xviii) To indemnify and hold each of the Underwriters harmless
against any documentary, stamp or similar issuance or transfer taxes,
duties or fees and any transaction levies, commissions or brokerage
charges, including any interest and penalties, which are or may be
required to be paid in connection with the creation, allotment,
issuance, offer and distribution of the Shares and ADSs to be sold by
the Company and the execution and delivery of this Agreement and the
Deposit Agreement;
(xix) To comply with Rule 433(d) under the Act (without reliance
on Rule 164(b) under the Act) and with Rule 433(g) under the Act;
(xx) Prior to each Time of Delivery, to issue no press release or
other communication directly or indirectly and hold no press
conferences with respect to the Company or any of its subsidiaries,
the financial condition, results of operations, business, properties,
assets, or liabilities of the Company or any of its subsidiaries, or
the offering of the ADSs, without your prior consent;
(xxi) Not, at any time at or after the execution of this
Agreement, to, directly or indirectly, offer or sell any Shares or
ADSs by means of any "prospectus" (within the meaning of the Act), or
use any "prospectus" (within the meaning of the Act) in connection
with the offer or sale of the Shares or ADSs, in each case other than
the Prospectus; and
(xxii) To cause each Directed Share Participant to execute a
Lock-Up Agreement (as defined in Section 8(q) hereof) and otherwise to
cause the Reserved Shares to be restricted from sale, transfer,
assignment, pledge or hypothecation to such extent as may be required
by the NASD and its rules, and to direct the transfer agent to place
stop transfer restrictions upon such Reserved ADSs during the Lock-Up
Period or any such longer period of time as may be required by the
NASD and its rules; and to comply with all applicable securities and
other laws, rules and regulations in each jurisdiction in which the
Reserved ADSs are offered in connection with the Directed Share
Program.
(b) Each of the Selling Shareholders agrees with each of the
Underwriters:
(i) During the Lock-Up Period, such Selling Shareholder will not
offer, sell, contract to sell, pledge, grant any option to purchase,
purchase any option or contract to sell, right or warrant to purchase,
make any short sale, file a registration statement with respect to, or
otherwise dispose of (including entering into any swap or other
arrangement that transfers to another, in whole or in part, any of the
economic consequence of ownership interests), except as provided
hereunder and under this Agreement: (A) any ADSs or Ordinary Shares or
any securities of the Company that are substantially similar to the
ADSs or Ordinary Shares, including but not limited to any securities
that are convertible into or exchangeable for, or that represent the
right to receive, ADSs or Ordinary Shares or any such substantially
similar securities; and (B) any ordinary shares of any of the
Company's subsidiaries or depositary shares or depositary receipts
representing such ordinary shares, including but not limited to any
securities that are convertible into or exchangeable for or that
represent the right to receive such ordinary shares or such depositary
shares or depositary receipts or any such substantially similar
securities (in
29
each case other than pursuant to a bona fide gift by an individual to
a donee or a sale or transfer by an entity to an affiliate, provided
that such donee or affiliate agrees to be bound in writing by the
restrictions set forth therein), without your prior written consent;
provided, however, that if (1) during the last 17 days of the initial
Lock-Up Period, the Company releases earnings results or announces
material news or a material event or (2) prior to the expiration of
the initial Lock-Up Period, the Company announces, or if the
Representative determines that it will release earnings results during
the 15-day period following the last day of the initial Lock-Up
Period, then in each case the Lock-Up Period will be automatically
extended until the expiration of the 18-day period beginning on the
date of release of the earnings results or the announcement of the
material news or material event, as applicable, unless the
Representative waives, in writing, such extension; and the Company
will provide the Representative and each shareholder subject to the
Lock-Up Period pursuant to the lockup letters described in Section
8(q) with prior notice of any such announcement that gives rise to an
extension of the Lock-Up Period;
(ii) Prior to each Time of Delivery, to deposit, or cause to be
deposited on their behalf pursuant to the Custody Agreement, Ordinary
Shares with the Depositary in accordance with the provisions of the
Deposit Agreement and otherwise to comply with the Deposit Agreement
so that ADRs evidencing ADSs will be executed (and, if applicable,
countersigned) and issued by the Depositary against receipt of such
Ordinary Shares and delivered to the Underwriters at such Time of
Delivery;
(iii) Not to (and to cause its affiliates not to) take, directly
or indirectly, any action which is designed to or which constitutes or
which might reasonably be expected to cause or result in stabilization
or manipulation of the price of any security of the Company or
facilitate the sale or resale of the Shares or the ADSs;
(iv) To indemnify and hold each of the Underwriters harmless
against any documentary, stamp or similar issuance or transfer taxes,
duties or fees and any transaction levies, commissions or brokerage
charges, including any interest and penalties, which are or may be
required to be paid in connection with the creation, allotment,
issuance, offer and distribution of the Shares and ADSs to be sold by
such Selling Shareholder and the execution and delivery of this
Agreement;
(v) Not, at any time at or after the execution of this Agreement,
to offer or sell any Shares or ADSs by means of any "prospectus"
(within the meaning of the Act), or use any "prospectus" (within the
meaning of the Act) in connection with the offer or sale of the Shares
or ADSs, in each case other than the Prospectus;
(vi) To pay or cause to be paid all taxes, if any, on the
transfer and sale of the Shares and the ADSs being sold by such
Selling Shareholder;
(vii) To advise you promptly, and if requested by you, confirm
such advice in writing, so long as a prospectus is required by the Act
to be delivered (whether physically or through compliance with Rule
172 under the Act or any similar rule) in connection with any sale of
ADSs, of (A) any material change in the general affairs, management,
financial condition, results of operations or prospects of the Company
and its subsidiaries, (B) any change in information contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus and
any Issuer Free Writing Prospectuses, if any, relating to such Selling
Shareholder or (C) any new material information relating to the
Company or relating to any
30
matter stated in the Registration Statement, any Preliminary Prospectus,
the Prospectus and any Issuer Free Writing Prospectuses, if any, which
comes to the attention of such Selling Shareholder; and
(viii) Not to use any of the proceeds received by such Selling
Shareholder from the sale of the ADSs pursuant to this Agreement to fund
any operations in, to finance any investments, projects or activities in,
or to make any payments to, any country, or to make any payments to, or
finance any activities with, any person, targeted by any of the economic
sanctions promulgated by any Executive Order issued by the President of the
United States or administered by the OFAC, or in any manner that is not in
compliance with applicable laws, rules and regulations of any Governmental
Agency having jurisdiction over such Selling Shareholders including,
without limitation, the requirement for PRC residents or citizens to
repatriate the net proceeds received by such Selling Shareholders into the
PRC under the applicable regulation of the Ministry of Commerce and the
State Administration of Foreign Exchange of the PRC.
6. (a) The Company represents and agrees that, without the prior consent
of the Representative, it has not made and will not make any offer relating to
the Shares and the ADSs that would constitute a "free writing prospectus" as
defined in Rule 405 under the Act; each Underwriter represents and agrees that,
without the prior consent of the Company and the Representative, it has not made
and will not make any offer relating to the Shares and the ADSs that would
constitute a free writing prospectus; any such free writing prospectus the use
of which has been consented to by the Company and the Representative is listed
on Schedule III attached hereto;
(b) The Company has complied and will comply with the requirements of
Rule 433 under the Act applicable to any Issuer Free Writing Prospectus,
including timely filing with the Commission or retention where required and
legending; and the Company represents that it has satisfied and agrees that
it will satisfy the conditions under Rule 433 under the Act to avoid a
requirement to file with the Commission any electronic road show; and
(c) The Company agrees that if at any time following issuance of an
Issuer Free Writing Prospectus any event occurred or occurs as a result of
which such Issuer Free Writing Prospectus would conflict with the
information in the Registration Statement, the Pricing Prospectus or the
Prospectus or would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in light of the circumstances then prevailing, not misleading, the
Company will give prompt notice thereof to the Representative and, if
requested by the Representative, will prepare and furnish without charge to
each Underwriter an Issuer Free Writing Prospectus or other document which
will correct such conflict, statement or omission; provided, however, that
this representation and warranty shall not apply to any statements or
omissions in an Issuer Free Writing Prospectus made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through the Representative expressly for use therein.
7. [The Company and each of the Selling Shareholders, jointly and
severally, covenant and agree with each of the several Underwriters that the
Company and such Selling Shareholder will pay or cause to be paid (i) all the
fees, disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares and ADSs and all other expenses
in connection with the preparation, printing, reproduction and filing of the
Registration Statement, the ADS Registration Statement, the Form 8 Registration
Statement, any Preliminary Prospectus, the Pricing Prospectus, any Issuer Free
Writing Prospectus and the Prospectus and amendments or supplements thereto, and
the
31
mailing and delivering of copies thereof to the Underwriters and to dealers,
(ii) the cost of printing or producing any Agreement among Underwriters, this
Agreement, the Deposit Agreement, any dealer agreements, any powers of attorney,
any closing documents (including compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the ADSs, (iii)
all expenses in connection with the qualification of the Shares and the ADSs for
offering and sale under state or foreign securities laws as provided in Section
5 hereof, including the fees and disbursements of counsel for the Underwriters
in connection such qualification and in connection with any Blue Sky surveys or
legal investment surveys, (iv) all fees and expenses in connection with the
application for including the ADSs for quotation on Nasdaq and any registration
thereof under the Exchange Act, (v) all fees and expenses in connection with any
required review by the NASD of the terms of the sale of the Shares and the ADSs,
including the fees and disbursements of counsel for the Underwriters in
connection with such NASD matters, (vi) the fees and disbursements of any
transfer agent or registrar for the ADSs, (vii) all the costs and expenses
relating to presentations or meetings undertaken in connection with the
marketing of the offering and sale of the ADSs to prospective investors and the
Underwriters' sales forces, including, without limitation, expenses associated
with the production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations, travel,
accommodation and meal expenses, and other road show expenses incurred by the
Underwriters, the officers of the Company and any such consultants, and the cost
of any aircraft chartered in connection with the road show, (viii) the
reasonable out-of-pocket expenses [(including fees, disbursements and expenses
of counsel to the Underwriters)] incurred by the Underwriters in connection with
the transactions contemplated by this Agreement, (ix) the costs and expenses of
qualifying the ADSs for inclusion in the book-entry settlement system of the
DTC, (x) all expenses and taxes arising as a result of the deposit by the
Company and each of the Selling Shareholders of the Shares with the Depositary
and the issuance and delivery of the ADRs evidencing ADSs in exchange therefor
by the Depositary to the Company, of the sale and delivery of the ADSs and the
Shares by the Company to or for the account of the Underwriters and of the sale
and delivery of the ADSs and the Shares by the Underwriters to each other and to
the initial purchasers thereof in the manner contemplated under this Agreement,
including, in any such case, any the Cayman Islands income, capital gains,
withholding, transfer or other tax asserted against an Underwriter by reason of
the purchase and sale of an ADS or a Share pursuant to this Agreement, (xi) the
fees and expenses of the Depositary as agreed by the Company and the Depositary
and any custodian appointed under the Deposit Agreement, other than the fees and
expenses to be paid by holders of ADRs (other than the Underwriters in
connection with the initial purchase of ADSs), (xii) the fees and expenses of
the Authorized Agent (as defined in Section 15 hereof), (xiii) the cost of
preparing the ADRs; and (xiv) all other costs and expenses incident to the
performance of the Company's obligations hereunder which are not otherwise
specifically provided for in this Section.]
8. The obligations of the Underwriters hereunder, as to the ADSs to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and of the Selling Shareholders herein are, at and as of such Time
of Delivery, true and correct, the condition that the Company and the Selling
Shareholders shall have performed all of their respective obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) under the Act within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in
accordance with Section 5(a) hereof; all material required to be filed by
the Company pursuant to Rule 433(d) under the Act shall have been filed
with the Commission within the applicable time period prescribed for such
filing by Rule 433; if the Company has elected to rely upon Rule 462(b)
under the Act, the Rule 462(b) Registration
32
Statement shall have become effective by 10:00 p.m., Washington, D.C. time, on
the date of this Agreement; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; no stop order suspending or preventing the use of the Prospectus or
any Issuer Free Writing Prospectus shall have been initiated or threatened by
the Commission; and all requests for additional information on the part of the
Commission shall have been complied with to your reasonable satisfaction;
(b) ___________________, United States counsel to the
Underwriters, shall have furnished to you such written opinion and letter, dated
such Time of Delivery, with respect to the matters as you may reasonably
request, and such counsel shall have received such papers and information as
they may reasonably request to enable them to pass upon such matters;
(c) _________________, PRC counsel to the Underwriters, shall have
furnished to you such written opinion or opinions, dated such Time of Delivery,
with respect to the same matters covered in subsection (e) below as well as such
other related matters as you may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to enable
them to pass upon such matters;
(d) _______________________, United States counsel to the Company and
the Selling Shareholders, shall have furnished to you their written opinion,
dated such Time of Delivery, in form and substance satisfactory to you, to the
effect that:
(i) This Agreement has been duly executed and delivered by each
of the Company and the Selling Shareholders.
Each of the Custody Agreement and the Power of Attorney has been
duly executed and delivered by each Selling Shareholder, and
constitutes a valid and legally binding obligation of the Company and
such Selling Shareholder, enforceable against the Company and such
Selling Shareholder in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and similar
laws of general applicability relating to or affecting creditors'
rights and to general equity principles;
(ii) The Deposit Agreement has been duly executed and delivered
by the Company and, assuming that the Deposit Agreement has been duly
authorized, executed and delivered by the Depositary, constitutes a
valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and similar
laws of general applicability relating to or affecting creditors'
rights and to general equity principles;
(iii) Upon due issuance by the Depositary of ADRs evidencing ADSs
being delivered at such Time of Delivery against the deposit of
Ordinary Shares by the Company and the Selling Shareholders in
accordance with the provisions of the Deposit Agreement, such ADRs
will be duly and validly issued and will entitle the holders thereof
to the rights specified therein and in the Deposit Agreement;
(iv) [Upon payment of the purchase price for the ADSs to the
Selling Shareholders by the Underwriters and delivery to the
Depositary of the ADSs registered in the name of Cede & Co. or such
other nominee designated by the Depositary, the Underwriters will have
a security entitlement within the meaning of Section 8-501 of the
Uniform Commercial Code in effect in the State of New York (the "UCC")
with respect to such ADSs free of any adverse claim under Section
8-102 of the UCC;]
33
(v) The execution and delivery by the Company of each Opinion
Document to which it is a party do not, and the performance by the
Company of its obligations thereunder and the consummation of the
transactions contemplated thereby, including the issue and sale of the
Ordinary Shares and ADSs being delivered at such Time of Delivery to
be sold by the Company and the deposit of the Ordinary Shares being
deposited by the Company with the Depositary pursuant to the Deposit
Agreement, will not (a) result in a violation of Generally Applicable
Law, or any order, writ, judgment, injunction, decree, determination
or award listed in the Schedule to such counsel's opinion, or (b)
result in a breach of, a default under or the acceleration of (or
entitle any party to accelerate) the maturity of any obligation of the
Company under any agreement or document listed in the Schedule to such
counsel's opinion;
(vi) The execution and delivery by each of the Selling
Shareholders of each [Opinion Document] to which it is a party do not,
and the performance by such Selling Shareholder of its obligations
thereunder and the consummation of the transactions contemplated
thereby, including the sale of the Ordinary Shares and ADSs being
delivered at such Time of Delivery to be sold by such Selling
Shareholder and the deposit of the Ordinary Shares being deposited by
such Selling Shareholder with the Depositary pursuant to the Deposit
Agreement, will not: (a) result in a violation or award listed in the
Schedule to such counsel's opinion; or (b) result in a breach of, a
default under or the acceleration of (or entitle any party to
accelerate) the maturity of any obligation of such Selling Shareholder
under any agreement or document listed in the Schedule to such
counsel's opinion.
(vii) No consent, authorization, approval or other action by, and
no notice to or filing with, any United States Federal or New York
State governmental authority or regulatory body, or any third party
that is a party to any of the documents listed in the Schedule to such
counsel's opinion, is required for the due execution, delivery or
performance by the Company or any of the Selling Shareholders of any
Opinion Document to which it is a party, including the issue and sale
of the Ordinary Shares and ADSs being delivered at such Time of
Delivery to be sold by the Company and the deposit of the Ordinary
Shares being deposited by the Company with the Depositary pursuant to
the Deposit Agreement, except as have been obtained and are in full
force and effect under the Securities Act and as may be required under
the securities or blue sky laws of any state in the United States in
connection with the offer and sale of the Ordinary Shares and the
ADSs;
(viii) The statements in the Prospectus under the caption
"Description of American Depositary Shares," "Shares Eligible for
Future Sale" and "Underwriting," in each case, insofar as such
statements constitute summaries of legal matters or documents referred
to therein, fairly summarize in all material respects the legal
matters or documents referred to therein;
(ix) The statements in the Prospectus under the caption "Taxation
-- United States Federal Income Taxation", to the extent they
constitute matters of law or legal conclusions, have been reviewed by
us and fairly present the information disclosed therein in all
material respects;
(x) The Company is not an investment company under the Investment
Company Act of 1940, as amended;
34
(xi) A member of the SEC Staff has advised such counsel that the
Registration Statement and the ADS Registration Statement have been
declared effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement, the ADS
Registration Statement or the Form 8-A had been issued. The Prospectus
has been filed with the Commission pursuant to Rule 424(b) under the
Securities Act. To such counsel's knowledge, no proceedings for the
purpose of issuing a stop order with respect to the Registration
Statement, the ADS Registration Statement or the Form 8-A have been
instituted or are pending;
(xii) Under the laws of the State of New York relating to
submission to personal jurisdiction, each of the Company and the
Selling Shareholders has, pursuant to Section 15 of the Agreement and,
in the case of the Company, Section ____ of the Deposit Agreement,
validly and irrevocably submitted to the personal jurisdiction of any
state or federal court located in the Borough of Manhattan, The City
of New York, New York (each a "New York Court") in any action arising
out of or relating to this Agreement and, in the case of the Company,
the Deposit Agreement, has validly and irrevocably waived objections
to the laying of venue and any claim of inconvenient forum as set
forth in Section 15 of the Agreement and, in the case of the Company,
Section __ of the Deposit Agreement, and has validly and irrevocably
appointed CT Corporation System as its authorized agent for the
purpose described in Section 15 of the Agreement and, in the case of
the Company, Section __ of the Deposit Agreement; and service of
process effected on such agent in the manner set forth in Section 15
of the Agreement or, in the case of the Company, Section __ of the
Deposit Agreement, will be effective under the laws of the State of
New York to confer valid personal jurisdiction over each of the
Company and the Selling Shareholders in a New York Court;
(xiii) Subject to the limitations set forth in such counsel's
opinion, such counsel advises you that, on the basis of the
information such counsel gained in the course of performing the
services referred to in such counsel's opinion, in such counsel's
opinion, each of the Registration Statement and the Prospectus (other
than the financial statements and other financial data contained
therein or omitted therefrom, as to which such counsel expresses no
opinion), appears on its face to be appropriately responsive in all
material respects to the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder; and
(xiv) Subject to the limitations set forth in such counsel's
opinion, on the basis of the information such counsel gained in the
course of performing the services referred to in such counsel's
opinion, no facts came to such counsel's attention which gave them
reason to believe that (i) the Registration Statement (other than the
financial statements and other financial data contained therein or
omitted therefrom, as to which such counsel has not been requested to
comment), at the time it became effective, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, (ii) the Preliminary Prospectus dated , 2006
[, when considered with any Issuer Free Writing Prospectus] (other
than the financial statements and other financial data contained
therein or omitted therefrom, as to which such counsel has not been
requested to comment), at the Applicable Time, contained or contains
an untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
35
misleading, or (iii) the Prospectus (other than the financial
statements and other financial data contained therein or omitted
therefrom, as to which such counsel has not been requested to
comment), as of its date or such Time of Delivery, contained or
contains an untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(xv) Such counsel does not know of any amendment to the
Registration Statement required to be filed or of any contracts or
other documents of a character required to be filed as an exhibit to
the Registration Statement or required to be described in the
Registration Statement or the Prospectus which is not filed or
described as required.
In rendering such opinion, _____________________ may state that they
express no opinion as to the laws of any jurisdiction outside the United States;
(e) ____________________, PRC counsel to the Company and the Selling
Shareholders, shall have furnished to you such written opinion or opinions,
dated such Time of Delivery, in form and substance satisfactory to you, to
the effect that:
(i) Jiangsu Linyang has been duly organized and is validly
existing as a [limited liability company] under laws of the PRC and
its business license is in full force and effect; all of the equity
interest of Jiangsu Linyang are owned by Linyang BVI, an exempted
company incorporated in the British Virgin Islands, whose 100% equity
interest is directly owned by the Company; and to the best of such
counsel's knowledge after due inquiry, such equity interests are free
and clear of all liens, encumbrances, equities or claims; the articles
of association, the business license and other constituent documents
of Jiangsu Linyang comply with the requirements of applicable PRC Laws
and are in full force and effect; Jiangsu Linyang has full power and
authority (corporate and other) and has all consents, approvals,
authorizations, orders, registrations, clearances and qualifications
of or with any, Governmental Agency having jurisdiction over Jiangsu
Linyang or any of its properties required for the ownership or lease
of property by it and the conduct of its business and has the legal
right and authority to own, use, lease and operate its assets and to
conduct its business in the manner presently conducted and as
described in the Prospectus;
(ii) All of the equity interest of Jiangsu Linyang have been duly
and validly authorized and issued and are fully paid and
non-assessable; Jiangsu Linyang has obtained all approvals,
authorizations, consents and orders, and has made all filings and
registrations, which are required under PRC laws and regulations for
the ownership interest by Linyang BVI in Jiangsu Linyang; and there
are no outstanding rights, warrants or options to acquire, or
instruments convertible into or exchangeable for, nor any agreements
or other obligations to issue or other rights to convert any
obligation into, any equity interest in Jiangsu Linyang;
36
(iii) Jiangsu Linyang has legal and valid title to all of its
properties and assets, free and clear of all liens, charges,
encumbrances, equities, claims, defects, options and restrictions;
each lease agreement to which Jiangsu Linyang is a party is duly
executed and legally binding; the leasehold interests of Jiangsu
Linyang are fully protected by the terms of the lease agreements,
which are valid, binding and enforceable in accordance with their
respective terms under PRC law; and, to the best of such counsel's
knowledge after due inquiry, neither the Company nor any of its
subsidiaries owns, operates, manages or has any other right or
interest in any other material real property of any kind within the
territory of PRC, except as described in the Prospectus;
(iv) Jiangsu Linyang has no overseas subsidiaries;
(v) Jiangsu Linyang has the corporate power to enter into and
perform its obligations under each of the agreements (the
"Restructuring Agreements") entered into in connection with the
transactions as described in the Prospectus under the caption "Our
Corporate History and Structure" to which it is a party and has taken
all necessary corporate action to authorize the execution, delivery
and performance of, and has authorized, executed and delivered, each
of the Restructuring Agreements to which it is a party; and each of
the Restructuring Agreements to which Jiangsu Linyang is a party
constitutes a valid and legally binding obligation of Jiangsu Linyang,
enforceable in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;
(vi) The execution and delivery by Jiangsu Linyang of, and the
performance by Jiangsu Linyang of its obligations under, each of the
Restructuring Agreements to which it is a party and the consummation
by Jiangsu Linyang of the transactions contemplated therein will not:
(A) conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which Jiangsu Linyang is a party or by which Jiangsu
Linyang is bound or to which any of the properties or assets of
Jiangsu Linyang is bound or to which any of the properties or assets
of Jiangsu Linyang is subject; (B) result in any violation of the
provisions of the articles of association, business license of Jiangsu
Linyang; or (C) result in any violation of any laws of the PRC;
(vii) Each of the Restructuring Agreements is in proper legal
form under the laws of the PRC for the enforcement thereof against
each of the parties thereto in the PRC without further action by any
of the parties thereto; and to ensure the legality, validity,
enforceability or admissibility in evidence of each of the
Restructuring Agreements in the PRC, it is not necessary that any such
document be filed or recorded with any court or other authority in the
PRC or that any stamp or similar tax be paid on or in respect of any
of the Restructuring Agreements (in the case any such stamp or tax is
required, the Company or its relevant subsidiaries have duly paid the
stamp or tax as of the date hereof);
(viii) Jiangsu Linyang has all necessary licenses, consents,
authorizations, approvals, orders, certificates and permits of and
from, and has made all declarations and filings with, all Governmental
Agencies to own, lease, license and use its properties, assets and
conduct its business in the manner described in the Prospectus and
such licenses, consents, authorizations, approvals, orders,
certificates or permits contain no materially burdensome restrictions
or conditions not described in the Prospectus; except as described
37
in the Prospectus, Jiangsu Linyang has no reason to believe that any
regulatory body is considering modifying, suspending or revoking any
such licenses, consents, authorizations, approvals, orders,
certificates or permits and Jiangsu Linyang is in compliance with the
provisions of all such licenses, consents, authorizations, approvals,
orders, certificates or permits in all material respects;
(ix) All dividends and other distributions declared and payable
upon the equity interests in Jiangsu Linyang may under the current
laws and regulations of the PRC be paid to Linyang BVI in Renminbi
that may be converted into U.S. dollars and freely transferred out of
the PRC, and all such dividends and other distributions are not and,
except as disclosed in the Prospectus, will not be subject to
withholding or other taxes under the laws and regulations of the PRC
and, except as disclosed in the Prospectus, are otherwise free and
clear of any other tax, withholding or deduction in the PRC, and
without the necessity of obtaining any Governmental Authorization in
the PRC;
(x) To the best of such counsel's knowledge after due inquiry,
neither the Company nor any of its subsidiaries is (A) in breach of or
in default under any laws, regulations, rules, orders, decrees,
guidelines or notices of the PRC, (B) in breach of or in default under
any approval, consent, waiver, authorization, exemption, permission,
endorsement or license granted by any Governmental Agency in the PRC,
(C) in violation of their respective constituent documents, business
licenses or permits or (D) in default in the performance or observance
of any material obligation, agreement, covenant or condition contained
in any indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which it is a party or by which it or
any of its properties may be bound;
(xi) The statements in the Prospectus under "Prospectus Summary",
"Risk Factors", "Our Corporate History and Structure", "Management's
Discussion and Analysis of Financial Condition and Results of
Operations", "Our Industry", "Our Business", "PRC Government
Regulations", "Management", "Related Party Transactions", "Taxation"
and "Enforcement of Civil Liabilities" to the extent such statements
relate to matters of PRC law or regulation or to the provisions of
documents therein described, are true and accurate in all material
respects, and nothing has been omitted from such statements which
would make the same misleading in any material respect;
(xii) Jiangsu Linyang is the exclusive owner of all right, title
and interest in and to the Intellectual Property, and the Company or
Jiangsu Linyang has a valid right to use the Intellectual Property as
currently used or as currently contemplated to be used by the Company,
in each case, as described in the Prospectus;
(xiii) To the best of such counsel's knowledge after due inquiry,
none of the Company and its subsidiaries is infringing,
misappropriating or violating any intellectual property right of any
third party in the PRC; and no Intellectual Property is subject to any
outstanding decree, order, injunction, judgment or ruling restricting
the use of such Intellectual Property in the PRC that would impair the
validity or enforceability of such Intellectual Property;
(xiv) No security interests or other liens have been created with
respect to any of the Intellectual Property;
38
(xv) No stamp or other issuance or transfer taxes or duties and
no capital gains, income, withholding or other taxes are payable by or
on behalf of the Underwriters to the government of the PRC or to any
political subdivision or taxing authority thereof or therein in
connection with (a) the deposit with the Depositary of Shares against
the issuance of ADRs evidencing the ADSs, (b) the sale and delivery by
the Company and the Selling Shareholders of the ADSs and the Shares to
or for the respective accounts of the Underwriters or (c) the sale and
delivery outside the PRC by the Underwriters of the ADSs and the
Shares to the initial purchasers thereof in the manner contemplated
herein;
(xvi) The irrevocable submission of each of the Company and the
Selling Shareholders to the jurisdiction of any New York Court, the
waiver by each of the Company and the Selling Shareholders of any
objection to the venue of a proceeding in a New York Court, the waiver
and agreement not to plead an inconvenient forum, the waiver of
sovereign immunity and the agreement of each of the Company and the
Selling Shareholders that this Agreement and the Deposit Agreement
shall be construed in accordance with and governed by the laws of the
State of New York are legal, valid and binding under the laws of the
PRC and will be respected by PRC courts; service of process effected
in the manner set forth in this Agreement and the Deposit Agreement
will be effective, insofar as PRC law is concerned, to confer valid
personal jurisdiction over each of the Company and the Selling
Shareholders; and any judgment obtained in a New York Court arising
out of or in relation to the obligations of each of the Company and
the Selling Shareholders under this Agreement and the Deposit
Agreement will be recognized in PRC courts subject to the conditions
described under the caption "Enforceability of Civil Liabilities" in
the Prospectus;
(xvii) The indemnification and contribution provisions set forth
in Section 9 hereof and Section ____ of the Deposit Agreement do not
contravene the public policy or laws of PRC, insofar as matters of PRC
laws are concerned;
(xviii) To the best of such counsel's knowledge and other than as
set forth in the Prospectus, there are no legal, arbitration or
governmental proceedings pending to which the Company or Jiangsu
Linyang is a party or of which any property of Jiangsu Linyang is the
subject which, if determined adversely to Jiangsu Linyang would
individually or in the aggregate have a material adverse effect on the
current or future consolidated financial position, shareholders'
equity or results of operations of the Company or Jiangsu Linyang;
and, to the best of such counsel's knowledge after due inquiry, no
such proceedings are threatened or contemplated by any Governmental
Agency or threatened by others;
(xix) The issue and sale of the Shares and the ADSs being
delivered at such Time of Delivery and the deposit of the Shares with
the Depositary against issuance of the ADRs evidencing the ADSs to be
delivered at such Time of Delivery and the compliance by the Company
with all of the provisions of this Agreement and the Deposit
Agreement, the compliance by each of the Selling Shareholders with all
of the provisions of this Agreement, the Custody Agreement and the
Power of Attorney, and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument known to such counsel to which
Jiangsu Linyang is a party or by which Jiangsu Linyang is bound or to
which any of the property or assets of Jiangsu Linyang is subject, nor
will such action result in any violation of the provisions of the
articles of association, business license or any other
39
constituent documents of Jiangsu Linyang or any statute or any order,
rule or regulation known to such counsel of any Governmental Agency
having jurisdiction over Jiangsu Linyang or any of its properties;
(xx) No Governmental Authorization of or with any Governmental
Agency in the PRC (including, without limitation, the approvals of the
China Securities Regulatory Commission and the Ministry of Commerce
under the PRC Mergers and Acquisitions Rules) is required for the
issue and sale of the Shares and the ADSs, the quotation of the Shares
and ADSs on Nasdaq, the deposit of the Shares with the Depositary
against issuance of the ADRs evidencing the ADSs to be delivered at
such Time of Delivery or the consummation of the transactions
contemplated by this Agreement, the Deposit Agreement, the Custody
Agreement and the Power of Attorney; and the issue and sale of the
Shares and the ADSs being delivered at such Time of Delivery, the
quotation of the Shares and ADSs on Nasdaq, and the deposit of the
Shares with the Depositary against issuance of the ADRs evidencing the
ADSs to be delivered at such Time of Delivery, , the quotation of the
Shares and ADSs on Nasdaq, and the compliance by the Company with all
of the provisions of this Agreement and the Deposit Agreement, the
compliance by each of the Selling Shareholders with all of the
provisions of this Agreement, the [Custody Agreement] and the Power of
Attorney, and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation
of any law or statute or any order, rule or regulation of any
Governmental Agency in the PRC (including, without limitation, the PRC
Mergers and Acquisitions Rules).
(xxi) Jiangsu Linyang is not in violation of its articles of
association, business license or any other constituent documents or in
default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or instrument
to which it is a party or by which it or any of its properties may be
bound;
(xxii) The application of the net proceeds to be received by the
Company from the sale of ADSs as contemplated by the Prospectus will
not contravene any provision of applicable PRC law, rule or
regulation, or the articles of association, the business or other
constituent documents of Jiangsu Linyang or contravene the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement, note, lease or other agreement or
instrument binding upon Jiangsu Linyang, or any judgment, order or
decree of any Governmental Agency in the PRC;
(xxiii) The descriptions of the Restructuring set forth in the
Prospectus under the caption "Our Corporate History and Structure" are
accurate, complete and fair;
(xxiv) The Restructuring does not (A) contravene any provision of
applicable law or statute, rule or regulation of any Governmental
Agency having jurisdiction over Jiangsu Linyang or any of its
properties, (B) contravene the articles of association, business
license or other constituent documents of Jiangsu Linyang or (C)
conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, any license,
indenture, mortgage, deed of trust, loan agreement, note, lease or
other agreement or instrument to which Jiangsu Linyang is a party or
by which Jiangsu Linyang is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject;
40
(xxv) All Governmental Authorizations required under the laws of
the PRC in connection with the Restructuring have been made or
unconditionally obtained in writing and are in full force and effect,
and no such Governmental Authorization has been withdrawn or is
subject to any condition precedent which has not been fulfilled or
performed;
(xxvi) Although such counsel does not assume any responsibility
for the accuracy, completeness or fairness of the statements contained
in the Registration Statement or the Prospectus, they have no reason
to believe that (a) any part of the Registration Statement or any
further amendment thereto made by the Company prior to such Time of
Delivery (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion), when such
part or amendment became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; (b) the Pricing Disclosure Package, as of the Applicable
Time and as of such Time of Delivery, contained any untrue statement
of a material fact or omitted to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; (c) each
Issuer Free Writing Prospectus listed on Schedule III attached hereto
conflicted with the information contained in the Registration
Statement, the Pricing Disclosure Package or the Prospectus and each
such Issuer Free Writing Prospectus, as supplemented by and taken
together with the Pricing Disclosure Package as of the Applicable Time
and as of such Time of Delivery, contained any untrue statement of a
material fact or omitted to state any material fact required necessary
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; or (d) as of its date and
as of such Time of Delivery, the Prospectus or any further amendment
or supplement thereto made by the Company prior to such Time of
Delivery (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion) contained
or contains an untrue statement of a material fact or omitted or omits
to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading;
(xxvii) The entry into, and performance or enforcement of this
Agreement, the Deposit Agreement, the Custody Agreement or the Power
of Attorney in accordance with its respective terms will not subject
any of the Underwriters or the Depositary to any requirement to be
licensed or otherwise qualified to do business in the PRC, nor will
any Underwriter or the Depositary be deemed to be resident, domiciled,
carrying on business through an establishment or place in the PRC or
in breach of any laws or regulations in the PRC by reason of entry
into, performance or enforcement of this Agreement, the Deposit
Agreement, the Custody Agreement or the Power of Attorney; and
In giving such opinion, such counsel may state that (A) with respect to all
matters of United States federal and New York State law they have relied upon
the opinions of United States counsel for the Company delivered pursuant to
paragraph (d) of this Section 8 and (B) with respect to all matters of Cayman
Islands and BVI law they have relied upon the opinions of Cayman Islands and BVI
counsel for the Company delivered pursuant to paragraph (f) of this Section 8;
(f) _________________, Cayman Islands and BVI counsel for the Company
and the Selling Shareholders, shall have furnished to you their written
opinion, dated such Time of Delivery, in form and substance satisfactory to
you, to the effect that:
41
(i) The Company has been duly incorporated and is validly
existing as a company in good standing under the laws of the Cayman
Islands, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus;
(ii) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company (including the Shares being delivered at such Time of
Delivery) have been duly and validly authorized and issued and are
fully paid and non-assessable; the holders of outstanding shares of
capital stock of the Company are not entitled to preemptive or other
rights to acquire the ADSs to be deposited by the Company and the
Selling Shareholders or to be purchased from the Company and the
Selling Shareholders under this Agreement which have not been complied
with; the Shares to be deposited by the Company and the Selling
Shareholders may be freely deposited by the Company with the
Depositary against issuance of ADRs evidencing ADSs; and the ADSs and
the Shares to be sold by the Company and the Selling Shareholders are
freely transferable by the Company to or for the account of the
several Underwriters in the manner contemplated herein;
(iii) Linyang BVI has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the BVI;
and all of its issued shares of capital stock have been duly and
validly authorized and issued, are fully paid and non-assessable, and
are owned directly by the Company, free and clear of all liens,
encumbrances, equities or claims;
(iv) Each of the Selling Shareholders that is an entity has been
duly incorporated and is validly existing as a company in good
standing in its jurisdiction of incorporation;
(v) To the best of such counsel's knowledge, after having
conducted a search of the register of writs and other originating
processes, and other than as set forth in the Prospectus, there are no
legal, arbitration or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or of which any property
of the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect on the
current or future consolidated financial position, shareholders'
equity or results of operations of the Company and its subsidiaries,
taken as a whole; and, to the best of such counsel's knowledge, no
such proceedings are threatened or contemplated by any Governmental
Agency or threatened by others;
(vi) Each of this Agreement, the Custody Agreement and the Power
of Attorney has been duly authorized, executed and delivered by the
Company and the Selling Shareholders and constitutes a valid and
legally binding agreement of the Company and the Selling Shareholders
enforceable in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, reorganization and similar
laws of general applicability relating to or affecting creditors'
rights and to general equity principles;
(vii) The Deposit Agreement has been duly authorized, executed
and delivered by the Company and constitutes a valid and legally
binding agreement of the Company, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy,
42
insolvency, fraudulent transfer, moratorium, reorganization and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
(viii) Each of this Agreement and the Deposit Agreement is in
proper form to be enforceable against the Company in the Cayman
Islands in accordance with its terms; to ensure the legality,
validity, enforceability or admissibility into evidence in the Cayman
Islands of this Agreement or the Deposit Agreement, it is not
necessary that this Agreement or the Deposit Agreement be filed or
recorded with any court or other authority in the Cayman Islands or
that any stamp or similar tax in the Cayman Islands be paid on or in
respect of this Agreement, the Deposit Agreement or any other
documents to be furnished hereunder or thereunder;
(ix) The issue and sale of the Shares and the ADSs being
delivered at such Time of Delivery and the deposit of the Shares with
the Depositary against issuance of the ADRs evidencing the ADSs to be
delivered at such Time of Delivery and the compliance by the Company
with all of the provisions of this Agreement, and the Deposit
Agreement and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which the Company or
Linyang BVI is a party or by which the Company or Linyang BVI is bound
or to which any of the property or assets of the Company or Linyang
BVI is subject, nor will such action result in any violation of the
provisions of the constituent documents of the Company or any statute
or any order, rule or regulation known to such counsel of any
Governmental Agency having jurisdiction over the Company or Linyang
BVI or any of their respective properties;
(x) The sale of the ADSs to be sold by the Selling Shareholders
hereunder and the compliance by the Selling Shareholders with all of
the provisions of this Agreement, the Custody Agreement and the Power
of Attorney and the consummation of the transactions herein
contemplated will not conflict with or result in a breach or violation
of any terms or provisions of, or constitute a default under, any
statute, indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which a Selling
Shareholder is a party or by which a Selling Shareholder is bound, or
to which any of the property or assets of a Selling Shareholder is
subject, nor will such action result in any violation of the
provisions of the constituent documents of a Selling Shareholder or
any order, rule or regulation known to such counsel of any
Governmental Agency having jurisdiction over a Selling Shareholder or
the property of a Selling Shareholder;
(xi) No Governmental Authorization of or with any Governmental
Agency in the Cayman Islands is required for the issue and sale of the
Shares and the ADSs, the deposit of the Shares with the Depositary
against issuance of the ADRs evidencing the ADSs to be delivered at
such Time of Delivery or the consummation of the transactions
contemplated by this Agreement and the Deposit Agreement;
(xii) Immediately prior to such Time of Delivery each Selling
Shareholder had good and valid title to the Shares and ADSs to be sold
at such Time of Delivery by such Selling Shareholder under this
Agreement, free and clear of all liens, encumbrances, equities or
claims, and full right, power and authority to sell, assign, transfer
and deliver the Shares and ADSs to be sold by such Selling Shareholder
hereunder and thereunder; and, upon delivery of the ADSs representing
such Shares and payment therefore pursuant to
43
this Agreement, good and valid title to such ADSs, free and clear of
all liens, encumbrances, equities or claims, will be transferred to
each of the several Underwriters;
(xiii) The statements set forth in the Prospectus under the
caption "Description of Share Capital", insofar as they purport to
constitute a summary of the terms of the Ordinary Shares are accurate,
complete and fair;
(xiv) The statements set forth in the Prospectus under the
caption "Taxation -- Cayman Islands Taxation", insofar as they purport
to describe the provisions of the laws and documents referred to
therein, are accurate, complete and fair;
(xv) No stamp or other issuance or transfer taxes or duties and
no capital gains, income, withholding or other taxes are payable by or
on behalf of the Underwriters to the Cayman Islands or to any
political subdivision or taxing authority thereof or therein in
connection with (A) the deposit with the Depositary of Shares by the
Company and the Selling Shareholders against the issuance of ADRs
evidencing the ADSs, (B) the sale and delivery by the Company of the
ADSs and the Shares to or for the respective accounts of the
Underwriters or (C) the sale and delivery outside the Cayman Islands
by the Underwriters of the ADSs and the Shares to the initial
purchasers thereof in the manner contemplated herein;
(xvi) Insofar as matters of the Cayman Islands law are concerned,
the Registration Statement and the filing of the Registration
Statement with the Commission have been duly authorized by and on
behalf of the Company; and the Registration Statement has been duly
executed pursuant to such authorization by and on behalf of the
Company;
(xvii) Each of the Company's agreement and the Selling
Shareholders' agreement to the choice of law provisions set forth in
Section 15 hereof will be recognized by the courts of the Cayman
Islands; the Company and the Selling Shareholders can xxx and be sued
in their own names under the laws of the Cayman Islands; the
irrevocable submission of the Company and the Selling Shareholders to
the exclusive jurisdiction of a New York Court, the waiver by the
Company and the Selling Shareholders of any objection to the venue of
a proceeding of a New York Court and the agreement of the Company and
the Selling Shareholders that this Agreement shall be governed by and
construed in accordance with the laws of the State of New York are
legal, valid and binding; service of process effected in the manner
set forth in Section 15 hereof will be effective, insofar as the law
of the Cayman Islands is concerned, to confer valid personal
jurisdiction over the Company and the Selling Shareholders; and
judgment obtained in a New York Court arising out of or in relation to
the obligations of the Company or a Selling Shareholder under this
Agreement would be enforceable against the Company or such Selling
Shareholder, respectively, in the courts of the Cayman Islands;
(xviii) The indemnification and contribution provisions set forth
in Section 9 hereof and Section ____ of the Deposit Agreement do not
contravene the public policy or laws of the Cayman Islands or the BVI;
(xix) All dividends and other distributions declared and payable
on the shares of capital stock of the Company may under the current
laws and regulations of the Cayman Islands be paid to the Depositary
and freely transferred out of the Cayman Islands, and all
44
such dividends and other distributions will not be subject to
withholding or other taxes under the laws and regulations of Cayman
Islands and are otherwise free and clear of any other tax, withholding
or deduction in the Cayman Islands and without the necessity of
obtaining any Governmental Authorization in the Cayman Islands;
(xx) All dividends and other distributions declared and payable
on the shares of capital stock of Linyang BVI may under the current
laws and regulations of the BVI be paid to the Company and freely
transferred out of the BVI, and all such dividends and other
distributions will not be subject to withholding or other taxes under
the laws and regulations of the BVI and are otherwise free and clear
of any other tax, withholding or deduction in the BVI and without the
necessity of obtaining any Governmental Authorization in the BVI; and
(xxi) Neither the Company nor Linyang BVI is in violation of its
constituent documents or in default in the performance or observance
of any material obligation, agreement, covenant or condition contained
in any license, indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which it is a party or by
which it or any of its properties may be bound; the Restructuring does
not (A) contravene any provision of applicable Cayman Islands or BVI
law or statute, rule or regulation of any Governmental Agency having
jurisdiction over the Company, Linyang BVI or any of their properties,
(B) contravene the articles of association, business license or other
constituent documents of the Company or Linyang BVI, or (C) conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any license, indenture,
mortgage, deed of trust, loan agreement, note, lease or other
agreement or instrument to which the Company or Linyang BVI is a party
or by which the Company or Linyang BVI is bound or to which any of the
property or assets of the Company or Linyang BVI is subject.
In giving such opinion, such counsel may state that (A) with respect to all
matters of United States federal and New York law they have relied upon the
opinions of United States counsel for the Company delivered pursuant to
paragraph (d) of this Section 8 and (B) with respect to all matters of PRC law
they have relied upon the opinions of PRC counsel for the Company delivered
pursuant to paragraph (e) of this Section 8;
(g) ___________________________, counsel for the Depositary, shall
have furnished to you their written opinion, dated such Time of Delivery,
in form and substance satisfactory to you, to the effect that:
(i) The Deposit Agreement has been duly authorized, executed and
delivered by the Depositary and constitutes a valid and binding
agreement of the Depositary enforceable against the Depositary in
accordance with its terms, except as enforcement of it may be limited
by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or similar laws of general application relating to or
affecting creditors' rights and by general principles of equity;
(ii) Upon execution and delivery by the Depositary of ADRs
evidencing the ADSs against the deposit of Shares in accordance with
the provisions of the Deposit Agreement, the ADRs will be duly and
validly issued and will entitle the holders thereof to the rights
specified therein and in the Deposit Agreement; and
45
(iii) The ADS Registration Statement has been filed and declared
effective and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the ADS Registration Statement or any
part thereof has been issued and no proceedings for that purpose have
been instituted or are pending or contemplated under the Act and the
ADS Registration Statement, and each amendment as of their respective
effective dates, complied as to form in all material respects with the
requirements of the Act and the rules and regulations of the
Commission thereunder;
(h) On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:30 a.m., New York City time, on the effective date of
any post-effective amendment to the Registration Statement filed subsequent
to the date of this Agreement and also at each Time of Delivery, Ernst &
Young Hua Ming shall have furnished to you a letter or letters, dated the
respective dates of delivery thereof, in form and substance satisfactory to
you, to the effect set forth in Annex II attached hereto;
(i) No Preliminary Prospectus, Pricing Prospectus, Issuer Free Writing
Prospectus or Prospectus or amendment or supplement to the Registration
Statement, the Preliminary Prospectus, the Pricing Prospectus or the
Prospectus shall have been filed to which you shall have objected in
writing;
(j) (A) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Pricing Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Pricing Prospectus, and (B) since the respective dates as of which
information is given in the Pricing Prospectus there shall not have been
any change in the capital stock or short-term debt or long-term debt of the
Company or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, shareholders' equity, results of operations
or prospects of the Company and its subsidiaries, otherwise than as set
forth or contemplated in the Pricing Prospectus, the effect of which, in
any such case described in clause (A) or (B), is in your judgment so
material and adverse as to make it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares being delivered at
such Time of Delivery on the terms and in the manner contemplated in the
Prospectus;
(k) On or after the Applicable Time (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities or preferred
stock by any "nationally recognized statistical rating organization", as
that term is defined by the Commission for purposes of Rule 436(g)(2) under
the Act, and (ii) no such organization shall have publicly announced that
it has under surveillance or review, with possible negative implications,
its rating of any of the Company's debt securities or preferred stock;
(l) All outstanding shares of Preferred Stock have been converted into
Ordinary Shares in accordance with the terms of the Preferred Stock;
(m) Certificates in negotiable form representing all of the Shares
underlying the ADSs to be sold by the Company and each Selling Shareholder
hereunder will be placed in custody with the [Hongkong and Shanghai Banking
Corporation], as custodian for the Depositary;
46
(n) On or after the Applicable Time there shall not have occurred any
of the following: (i) a suspension or material limitation in trading in
securities generally on Nasdaq, the New York Stock Exchange, The Stock
Exchange of Hong Kong Limited or the London Stock Exchange; (ii) a
suspension or material limitation in trading in the Company's securities on
Nasdaq; (iii) a general moratorium on commercial banking activities in New
York, London, Hong Kong, the PRC or the Cayman Islands declared by the
relevant authorities, or a material disruption in commercial banking or
securities settlement or clearance services in the United States, the
United Kingdom, Hong Kong, the PRC or the Cayman Islands; (iv) a change or
development involving a prospective change in taxation affecting the
Company, any of its subsidiaries or the Shares or the ADSs or the transfer
thereof; (v) the enactment, publication, decree or other promulgation of
any statute, regulation, rule or order of any Governmental Agency
materially affecting the business or operations of the Company or its
subsidiaries; (vi) the outbreak or escalation of hostilities or act of
terrorism involving the United States, the United Kingdom, Hong Kong, the
PRC or the Cayman Islands or the declaration by the United States, the
United Kingdom, Hong Kong, the PRC or the Cayman Islands of a national
emergency or war; or (vii) the occurrence of any other calamity or crisis
or any change in financial, political or economic conditions or currency
exchange rates or controls in the United States, the United Kingdom, Hong
Kong, the PRC, the Cayman Islands or elsewhere, if the effect of any such
event specified in clauses (v), (vi) or (vii), in the sole judgment of the
Representative, makes it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares and the ADSs being delivered
at such Time of Delivery on the terms and in the manner contemplated in the
Prospectus;
(o) The ADSs to be sold by the Company and the Selling Shareholders at
such Time of Delivery shall have been duly included for quotation on
Nasdaq;
(p) The Depositary shall have furnished or caused to be furnished to
you at such Time of Delivery certificates satisfactory to you evidencing
the deposit with it of the Shares being so deposited against issuance of
ADRs evidencing the ADSs to be delivered by the Company and the Selling
Shareholders at such Time of Delivery, and the execution, countersignature
(if applicable), issuance and delivery of ADRs evidencing such ADSs
pursuant to the Deposit Agreement;
(q) Each party set forth in Annex III attached hereto shall have
entered into a lock-up agreement (each a "Lock-Up Agreement"), the form of
which is set forth in Annex IV attached hereto;
(r) The Company shall have complied with the provisions of Section
5(a)(iii) hereof with respect to the furnishing of Prospectuses on the New
York Business Day next succeeding the date of this Agreement;
(s) The Company and the Selling Shareholders shall have furnished or
caused to be furnished to you at such Time of Delivery certificates of
officers of the Company and of the Selling Shareholders, respectively,
satisfactory to you as to the accuracy of the representations and
warranties of the Company and the Selling Shareholders, respectively,
herein at and as of such Time of Delivery, as to the performance by the
Company and the Selling Shareholders of all of their respective obligations
hereunder to be performed at or prior to such Time of Delivery, and as to
such other matters as you may reasonably request, including, without
limitation, certificates of officers of the Company satisfactory to you
with respect to the memorandum and articles of association and other
organizational documents of the Company, all resolutions of the board of
directors of the Company and other corporate actions relating to this
Agreement and the authorization, issue and sale of the Shares and ADSs and
the incumbency and specimen
47
signatures of signing officers, and the Company and the Selling
Shareholders shall have furnished or caused to be furnished certificates as
to the matters set forth in subsections (a), (j) and (k) of this Section,
and as to such other matters as you may reasonably request;
(t) [There shall not be any litigation, proceedings, investigations,
processes for administrative sanctions or other actions initiated or
threatened by any Governmental Agency, in each case with due authority,
against or involving any party hereto, in the PRC or elsewhere, that seeks
to declare non-compliance, unlawful or illegal, under PRC laws, rules and
regulations or otherwise, the issuance and sales of the Shares and ADSs,
the quotation and trading of the ADSs on Nasdaq or the transactions
contemplated by this Agreement, the Deposit Agreement and the Power of
Attorney; and
(u) There shall not be any adverse legislative or regulatory
developments related to the PRC Mergers and Acquisitions Rules and Related
Clarifications which in the sole judgment of the Representative would make
it inadvisable or impractical to proceed with the public offering or the
delivery of the Shares and the ADSs being delivered at such Time of
Delivery on the terms and in the manner contemplated in this Agreement
(including any such development that results in either PRC counsel to the
Company or PRC counsel to the Underwriters not being able to confirm, on
the date of the Prospectus at a time prior to the execution of this
Agreement and at such Time of Delivery, the respective opinions of such
counsel, dated as of [-] and [-], respectively, attached hereto as Annex
[-] to this Agreement).]
9. (a) The Company and each of the Selling Shareholders, jointly and
severally, will indemnify and hold harmless each Underwriter against any losses,
claims, damages or liabilities, joint or several, to which such Underwriter may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (i) an untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, the ADS Registration Statement, any
Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any
amendment or supplement thereto, any Issuer Free Writing Prospectus or any
"issuer information" filed or required to be filed pursuant to Rule 433(d) under
the Act, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading or (ii) the Directed Share Program, and
will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however, that (x)
with respect to clause (i) of this paragraph, the Company and the Selling
Shareholders shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, the ADS Registration Statement, any Preliminary
Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or
supplement thereto, or any Issuer Free Writing Prospectus in reliance upon and
in conformity with written information furnished to the Company by any
Underwriter through the Representative expressly for use therein and (y) with
respect to clause (ii) of this paragraph, the Company and the Selling
Shareholders shall not be liable insofar as such loss, damage, expense,
liability or claim is finally judicially determined to have resulted from the
gross negligence or willful misconduct of the Underwriters in conducting the
Directed Share Program.
(b) Without limitation of and in addition to its obligations under the
other paragraphs of this Section 9, the Company agrees to indemnify, defend
and hold harmless [name of directed share program underwriter] (the "DSP
Underwriter") and its partners, directors and officers, and any person who
controls the DSP Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, and the successors and assigns of all of
the foregoing persons,
48
from and against any loss, damage, expense, liability or claim (including
the reasonable cost of investigation) which, jointly or severally, the DSP
Underwriter or any such person may incur under the Act, the Exchange Act,
the common law or otherwise, insofar as such loss, damage, expense,
liability or claim (i) arises out of or is based upon (x) any of the
matters referred to in clauses (i) through (ii) of Section 9(a) hereof, or
(y) any untrue statement or alleged untrue statement of a material fact
contained in any material prepared by or on behalf or with the consent of
the Company for distribution to Directed Share Participants in connection
with the Directed Share Program or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; (ii) is or was
caused by the failure of any Directed Share Participant to pay for and
accept delivery of Reserved Shares that the Directed Share Participant has
agreed to purchase; or (iii) otherwise arises out of or is based upon the
Directed Share Program, provided, however, that the Company shall not be
responsible under this clause (iii) for any loss, damage, expense,
liability or claim that is finally judicially determined to have resulted
from the gross negligence or willful misconduct of the DSP Underwriter in
conducting the Directed Share Program. Section 9(g) shall apply equally to
any action brought against the DSP Underwriter or any such person in
respect of which indemnity may be sought against the Company pursuant to
the immediately preceding sentence, except that the Company shall be liable
for the expenses of one separate counsel (in addition to any local counsel)
for the DSP Underwriter and any such person, separate and in addition to
counsel for the persons who may seek indemnification pursuant to Section
9(a) in any such action.
(c) Each of the Selling Shareholders will jointly and severally
indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, the ADS Registration
Statement, any Preliminary Prospectus, the Pricing Prospectus or the
Prospectus, or any amendment or supplement thereto, any Issuer Free Writing
Prospectus or any "issuer information" filed or required to be filed
pursuant to Rule 433(d) under the Act, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred, in each case to the extent that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the
Registration Statement, the ADS Registration Statement, any Preliminary
Prospectus, the Pricing Prospectus or the Prospectus, or any such amendment
or supplement, or any Issuer Free Writing Prospectus [or any "issuer
information" filed or required to be filed pursuant to Rule 433(d) under
the Act] in reliance upon and in conformity with written information
furnished to the Company or such Underwriter by such Selling Shareholder
expressly for use therein.
(d) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company and each Selling Shareholder against any losses,
claims, damages or liabilities to which the Company or such Selling
Shareholder may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the
ADS Registration Statement, any Preliminary Prospectus, the Pricing
Prospectus or the Prospectus, or any amendment or supplement thereto, or
any Issuer Free Writing Prospectus, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein
49
not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, the ADS Registration
Statement, any Preliminary Prospectus, the Pricing Prospectus or the
Prospectus, or any amendment or supplement thereto, or any Issuer Free
Writing Prospectus, in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representative expressly for use therein; and will reimburse the Company
and each Selling Shareholder for any legal or other expenses reasonably
incurred by the Company or such Selling Shareholder in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(e) Promptly after receipt by an indemnified party under subsection
(a), (b), (c) or (d) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under such
subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party (which shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses,
in each case subsequently incurred by such indemnified party, in connection
with the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified
party, effect the settlement or compromise of, or consent to the entry of
any judgment with respect to, any pending or threatened action or claim in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to
such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act,
by or on behalf of any indemnified party.
(f) If the indemnification provided for in this Section 9 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b), (c) or (d) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company and
the Selling Shareholders on the one hand and the Underwriters on the other
from the offering of the ADSs. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (e)
above, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company and the Selling Shareholders on the one hand and the Underwriters
on the other in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Shareholders on
the one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before
deducting expenses) received
50
by the Company and the Selling Shareholders bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or any Selling Shareholder on the one hand or the Underwriters on
the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company, each of the Selling Shareholders and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this subsection (f) were determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (f). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above in this subsection (f) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (f), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the ADSs underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Underwriters' obligations in this
subsection (f) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(g) The obligations of the Company and the Selling Shareholders under
this Section 9 shall be in addition to any liability which the Company and
the respective Selling Shareholders may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls
any Underwriter within the meaning of the Act and to each broker-dealer
affiliate of any Underwriter; and the obligations of the Underwriters under
this Section 9 shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company (including any
person who, with his or her consent, is named in the Registration Statement
as about to become a director of the Company) and any Selling Shareholder
and to each person, if any, who controls the Company or any Selling
Shareholder within the meaning of the Act.
10. (a) If any Underwriter shall default in its obligation to purchase the
ADSs which it has agreed to purchase hereunder at a Time of Delivery, you may in
your discretion arrange for you or another party or other parties to purchase
such ADSs on the terms contained herein. If within thirty-six hours after such
default by any Underwriter you do not arrange for the purchase of such ADSs,
then the Company and the Selling Shareholders shall be entitled to a further
period of thirty-six hours within which to procure another party or other
parties satisfactory to you to purchase such ADSs on such terms. In the event
that, within the respective prescribed periods, you notify the Company and the
Selling Shareholders that you have so arranged for the purchase of such ADSs, or
the Company and the Selling Shareholders notify you that they have so arranged
for the purchase of such ADSs, you or the Company and the Selling Shareholders
shall have the right to postpone such Time of Delivery for a period of not more
than seven days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments or supplements to the Registration Statement or the Prospectus which
in your opinion may thereby be made necessary. The term "Underwriter" as used in
this Agreement shall include any
51
person substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such ADSs.
(b) If, after giving effect to any arrangements for the purchase of
the ADSs of a defaulting Underwriter or Underwriters by you, the Company
and the Selling Shareholders as provided in subsection (a) above, the
aggregate number of such ADSs which remains unpurchased does not exceed
one-eleventh of the aggregate number of all the ADSs to be purchased at
such Time of Delivery, then the Company and the Selling Shareholders shall
have the right to require each non-defaulting Underwriter to purchase the
number of ADSs which such Underwriter agreed to purchase hereunder at such
Time of Delivery and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the number of ADSs
which such Underwriter agreed to purchase hereunder) of the ADSs of such
defaulting Underwriter or Underwriters for which such arrangements have not
been made; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
(c) If, after giving effect to any arrangements for the purchase of
the ADSs of a defaulting Underwriter or Underwriters by you, the Company
and the Selling Shareholders as provided in subsection (a) above, the
aggregate number of such ADSs which remains unpurchased exceeds
one-eleventh of the aggregate number of all the ADSs to be purchased at
such Time of Delivery, or if the Company and the Selling Shareholders shall
not exercise the right described in subsection (b) above to require
non-defaulting Underwriters to purchase ADSs of a defaulting Underwriter or
Underwriters, then this Agreement (or, with respect to the Second Time of
Delivery, the obligations of the Underwriters to purchase, and of the
Company and the Selling Shareholders to sell, the Optional ADSs) shall
thereupon terminate, without liability on the part of any non-defaulting
Underwriter, the Company or the Selling Shareholders, except for the
expenses to be borne by the Company and the Selling Shareholders and the
Underwriters as provided in Section 7 hereof and the indemnity and
contribution agreements in Section 9 hereof; but nothing herein shall
relieve a defaulting Underwriter from liability for its default.
11. The respective indemnities and contribution provisions in Section 9,
and the agreements, representations, warranties and other statements of the
Company, the Selling Shareholders and the several Underwriters, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any of the Selling Shareholders, or any officer or director or controlling
person of the Company, or any controlling person of any Selling Shareholder, and
shall survive delivery of and payment for the ADSs.
12. (a) This Agreement shall become effective when the parties hereto have
executed and delivered this Agreement.
(b) The obligations of the several Underwriters hereunder shall be
subject to termination in the absolute discretion of the Representative, if
any of the conditions set forth in Section 8 is not satisfied.
(c) If the Representative elects to terminate this Agreement as
provided in this Section 12, the Company, the Selling Shareholders and each
other Underwriter shall be notified promptly in writing.
52
(d) If this Agreement shall be terminated pursuant to Section 10
hereof, neither the Company nor any of the Selling Shareholders shall then
be under any liability to any Underwriter except as provided in Sections 7
and 9 hereof; but, if for any other reason, any ADSs are not delivered by
or on behalf of the Company and the Selling Shareholders as provided
herein, the Company and each of the Selling Shareholders will, upon the
occurrence of any failure to complete the sale and delivery of the ADSs,
promptly (and, in any event, not later than 30 days), jointly and
severally, reimburse the Underwriters through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for
the purchase, sale and delivery of the ADSs not so delivered, but the
Company and the Selling Shareholders shall then be under no further
liability to any Underwriter in respect of the ADSs not so delivered except
as provided in Sections 7 and 9 hereof.
13. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you. All statements, requests, notices and agreements hereunder shall
be in writing, and if to the Underwriters shall be delivered or sent by mail,
telex or facsimile transmission to you as the Representative at 68th Floor,
Xxxxxx Kong Center, 0 Xxxxx'x Xxxx Xxxxxxx, Xxxx Xxxx, facsimile number: (852)
2978-0440, Attention: Legal Department; if to the Company shall be delivered or
sent by mail, telex or facsimile transmission to Solarfun Power Holdings Co.,
Ltd. c/o Jiangsu Linyang Solarfun Co., Ltd., Xx. 000 Xxxxxxx Xxxx, Xxxxxx,
Xxxxxxx, 000000, People's Republic of China; if to any Selling Shareholder shall
be delivered or sent by mail, telex or facsimile transmission to such Selling
Shareholder c/o Linyang Solarfun Co., Ltd., Xx. 000 Xxxxxxx Xxxx, Xxxxxx,
Xxxxxxx, 000000, People's Republic of China, Attention: [o]; provided, however,
that any notice to an Underwriter pursuant to Section 9(e) hereof shall be
delivered or sent by mail, telex or facsimile transmission to such Underwriter
at its address set forth in its Underwriters' Questionnaire, or telex
constituting such Questionnaire, which address will be supplied to the Company
by you upon request. Any such statements, requests, notices or agreements shall
take effect upon receipt thereof.
14. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and the Selling Shareholders and, to the
extent provided in Sections 9 and 11 hereof, the officers and directors of the
Company and each person who controls the Company, any Selling Shareholder or any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No purchaser of any of the ADSs from any Underwriter
shall be deemed a successor or assign by reason merely of such purchase.
15. Each of the parties hereto irrevocably (i) agrees that any legal suit,
action or proceeding against the Company or the Selling Shareholder brought by
any Underwriter or by any person who controls any Underwriter arising out of or
based upon this Agreement or the transactions contemplated hereby may be
instituted in any New York Court, (ii) waives, to the fullest extent it may
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any such proceeding and (iii) submits to the exclusive
jurisdiction of such courts in any such suit, action or proceeding. Each of the
Company and the Selling Shareholders has irrevocably appointed CT Corporation
System, 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, as its authorized agent (the
"Authorized Agent") upon whom process may be served in any such action arising
out of or based on this Agreement or the transactions contemplated hereby which
may be instituted in any New York Court by any Underwriter or by any person who
controls any Underwriter, expressly consents to the jurisdiction of any such
court in respect of any such action, and waives any other requirements of or
objections to personal jurisdiction with respect thereto. Each of the Company
and the Selling Shareholders represents and warrants that the Authorized Agent
has agreed to act as such agent
53
for service of process and agrees to take any and all action, including the
filing of any and all documents and instruments, that may be necessary to
continue such appointment in full force and effect as aforesaid. Service of
process upon the Authorized Agent and written notice of such service to the
Company shall be deemed, in every respect, effective service of process upon the
Company and the Selling Shareholders as the case may be.
16. In respect of any judgment or order given or made for any amount due
hereunder that is expressed and paid in a currency (the "judgment currency")
other than United States dollars, the Company and the Selling Shareholders, as
the case may be, will indemnify each Underwriter against any loss incurred by
such Underwriter as a result of any variation as between (i) the rate of
exchange at which the United States dollar amount is converted into the judgment
currency for the purpose of such judgment or order and (ii) the rate of exchange
at which an Underwriter is able to purchase United States dollars with the
amount of the judgment currency actually received by such Underwriter. The
foregoing indemnity shall constitute a separate and independent obligation of
the Company and the Selling Shareholders and shall continue in full force and
effect notwithstanding any such judgment or order as aforesaid. The term "rate
of exchange" shall include any premiums and costs of exchange payable in
connection with the purchase of or conversion into United States dollars.
17. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
18. Each of the Company and the Selling Shareholders acknowledges and
agrees that (i) the purchase and sale of the ADSs pursuant to this Agreement is
an arm's-length commercial transaction between the Company and such Selling
Shareholders, on the one hand, and the several Underwriters, on the other, (ii)
in connection therewith and with the process leading to such transaction each
Underwriter is acting solely as a principal and not the agent or fiduciary of
the Company or any Selling Shareholder, (iii) no Underwriter has assumed an
advisory or fiduciary responsibility in favor of the Company or such Selling
Shareholder with respect to the offering contemplated hereby or the process
leading thereto (irrespective of whether such Underwriter has advised or is
currently advising the Company or any Selling Shareholder on other matters) or
any other obligation to the Company or such Selling Shareholder except the
obligations expressly set forth in this Agreement and (iv) each of the Company
and the Selling Shareholders has consulted its own legal and financial advisors
to the extent it deemed appropriate. Each of the Company and the Selling
Shareholders agrees that it will not claim that the Underwriters, or any of
them, has rendered advisory services of any nature or respect, or owes a
fiduciary or similar duty to the Company or any Selling Shareholder, in
connection with such transaction or the process leading thereto.
19. This Agreement constitutes the entire agreement among the parties and
supersedes all prior agreements and understandings (whether written or oral)
among the Company, the Selling Shareholders and the Underwriters, or any of
them, with respect to the subject matter hereof.
20. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
21. Each of the Company, the Selling Shareholders and the Underwriters
irrevocably waives, to the fullest extent permitted by law, any and all rights
to trial by jury in any legal proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby.
22. This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same instrument.
54
23. Notwithstanding anything herein to the contrary, each of the Company
and the Selling Shareholders is authorized to disclose to any persons the U.S.
Federal and State income tax treatment and tax structure of the potential
transaction and all materials of any kind (including tax opinions and other tax
analyses) provided to the Company and the Selling Shareholders relating to that
treatment and structure, without the Underwriters imposing any limitation of any
kind. However, any information relating to the tax treatment and tax structure
shall remain confidential (and the foregoing sentence shall not apply) to the
extent necessary to enable any person to comply with securities laws. For this
purpose, "tax structure" is limited to any facts that may be relevant to that
treatment.
Any person executing and delivering this Agreement as Attorney-in-Fact for
a Selling Shareholder represents by so doing that he has been duly appointed as
Attorney-in-Fact by such Selling Shareholder pursuant to a validly existing and
binding Power of Attorney which authorizes such Attorney-in-Fact to take such
action.
If the foregoing is in accordance with your understanding, please sign and
return to us [three] counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement among each of the Underwriters, the Company
and the Selling Shareholders. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is pursuant to the authority set
forth in a form of Agreement among Underwriters, the form of which shall be
submitted to the Company and the Selling Shareholders for examination upon
request, but without warranty on your part as to the authority of the signers
thereof.
Very truly yours,
Solarfun Power Holdings Co., Ltd.
By: ________________________
Name:
Title:
The Selling Shareholders named
in Schedule II attached hereto
By: ________________________
Name:
Title:
As Attorney-in-Fact acting on behalf
of each of the Selling Shareholders
named in Schedule II attached hereto
Accepted as of the date hereof on behalf of each of the Underwriters
Xxxxxxx Xxxxx (Asia) L.L.C
By: ________________________
Name:
Title:
55
SCHEDULE I
NUMBER OF OPTIONAL
ADSS TO BE
TOTAL NUMBER OF FIRM PURCHASED IF
ADSS TO BE MAXIMUM OPTION
UNDERWRITER PURCHASED EXERCISED
------------------------------- ---------------------------
Xxxxxxx Sachs (Asia) L.L.C................................
[NAME OF OTHER UNDERWRITERS]..............................
------------------------------- ---------------------------
TOTAL
=============================== ===========================
SCH-1
SCHEDULE II
NUMBER OF OPTIONAL
ADSS TO BE SOLD IF
TOTAL NUMBER OF FIRM MAXIMUM OPTION
ADSS TO BE SOLD EXERCISED
---------------------------- ---------------------------
The Company ................................................
The Selling Shareholders:
[INSERT NAMES]........................................
---------------------------- ---------------------------
TOTAL
============================ ===========================
SCH-II
SCHEDULE III
(a) Issuer Free Writing Prospectuses not included in the Pricing Disclosure
Package: [-]
(b) Materials other than the Pricing Prospectus that comprise the Pricing
Disclosure Package: [-]
SCH-III
ANNEX I
FORM OF POWER OF ATTORNEY
SOLARFUN POWER HOLDINGS CO., LTD.
AMERICAN DEPOSITARY SHARES
REPRESENTING
ORDINARY SHARES
(par value [-] per share)
---------------------
IRREVOCABLE POWER OF ATTORNEY OF SELLING SHAREHOLDER
_________, 2006
The undersigned is a shareholder of
Solarfun Power Holdings Co., Ltd., an
exempted company incorporated in the Cayman Islands (the "Company"). In
connection with the initial public offering of the American Depositary Shares
(the "ADSs"), each representing [-] ordinary shares, par value US$0.0001 per
share ("Ordinary Shares"), of the Company (the "Offering"), the undersigned
understands that the undersigned and certain other shareholders of the Company
(the undersigned and such other shareholders being hereinafter referred to as
the "Selling Shareholders") propose to sell Ordinary Shares of the Company, in
the form of ADSs, to the several underwriters (the "Underwriters") named in the
Underwriting Agreement (as defined below), represented by Xxxxxxx Xxxxx (Asia)
L.L.C. (the "Representative"), and that the Underwriters propose to offer such
ADSs to the public. The undersigned also understands that, in connection with
the public offering pursuant to the
Underwriting Agreement, the Company has
filed a Registration Statement (the "Registration Statement") with the United
States Securities and Exchange Commission (the "Commission") to register under
the Securities Act of 1933, as amended (the "1933 Act"), the Ordinary Shares to
be sold in the form of ADSs by the Selling Shareholders.
1. In connection with the foregoing, the undersigned hereby irrevocably
appoints [-] and [-], and either of them acting alone, as the attorneys-in-fact
(collectively the "Attorneys" and each individually an "Attorney") of the
undersigned, and agrees that the Attorneys, or either of them acting alone, may
also act as the attorneys-in-fact for any other Selling Shareholder, with full
power and authority in the name of, and for and on behalf of, the undersigned:
(a) to do all things necessary to sell, assign, transfer and deliver
to the Underwriters up to the number (the "Maximum Number") of ADSs set
forth opposite the name of the undersigned at the end of this Power of
Attorney pursuant to the
Underwriting Agreement;
(b) for the purpose of effecting such sale, to negotiate, execute,
deliver and perform the undersigned's obligations under (1) an
underwriting
agreement (the "
Underwriting Agreement") among the Company, the Selling
Shareholders and the Representative, as the representative of the several
Underwriters named therein (including the purchase price per ADS to be paid
by the Underwriters and the number (or method of determining the number) of
ADSs to be sold by the
ANNEX I-1
undersigned), as may be approved in the sole discretion of the Attorneys,
or either of them acting alone, such approval to be conclusively evidenced
by the execution and delivery of the
Underwriting Agreement by the
Attorneys, or either of them acting alone; and (2) an engagement letter,
dated [-], 2006 (the "Engagement Letter"), among the Company, the Selling
Shareholders and the Representative.
(c) to execute and deliver any amendments, modifications or
supplements to the
Underwriting Agreement and the Engagement Letter, to
amend, modify or supplement any of the terms thereof including, without
limitation, the terms of the offering, provided, however that no such
amendment shall increase the number of the ADSs to be sold by the
undersigned to more than the Maximum Number in the aggregate;
(d) to take any and all steps deemed necessary by the Attorneys, or
either of them acting alone, in connection with the sale of the ADSs with
respect to (i) the transfer on the books of the Company of the Ordinary
Shares underlying the ADSs, or on the records of the transfer agent, if
applicable, in order to effect the sale to the Underwriters, (ii) the
payment, out of the proceeds of such sale, of any expenses that are to be
borne by the undersigned in connection with the offer, sale and delivery of
the ADSs or any transfer taxes payable in connection with the transfer of
the ADSs to the Underwriters and (iii) the transmission to or as directed
by the undersigned of the proceeds from the sale of the ADSs (after
deducting all amounts payable by the undersigned pursuant to this Power of
Attorney, the
Underwriting Agreement and the Engagement Letter) and the
return to the undersigned of new certificates representing the excess, if
any, of the number of the Ordinary Shares over the number of the Ordinary
Shares underlying the ADSs sold to the Underwriters; to incur or authorize
the incurrence of any necessary or appropriate expense in connection with
the sale of the ADSs and to determine the amount of any transfer taxes;
(e) to join the Company in withdrawing the Registration Statement if
the Company should desire to withdraw such registration;
(f) to retain legal counsel in connection with any and all matters
referred to herein (which counsel may, but need not, be counsel for the
Company);
(g) to appoint an agent for service of process in the United States;
(h) to agree upon the allocation and to arrange payment therefor of
the expenses of the Offering (including, without limitation, the fees and
expenses of counsel referred to above) among the Company, the Underwriters
and the Selling Shareholders, including the undersigned;
(i) to authorize the appropriate book-entries, representing the
Ordinary Shares underlying the ADSs to be sold by the undersigned, if
applicable;
(j) to endorse with the registered seal of the undersigned on behalf
of the undersigned the certificate(s) representing the Ordinary Shares
underlying the ADSs, if applicable, to be sold by the undersigned, or a
transfer form or transfer forms attached to such certificate(s); and
(k) to make, execute, acknowledge and deliver all other contracts,
orders, receipts, notices, requests, instructions, certificates, letters
and other writings, including communications to the Commission (including a
request or requests for acceleration of the effective date of the
Registration Statement) and state securities law authorities, any
amendments to the
Underwriting Agreement, the Engagement Letter or any
agreement with the Company with regard to expenses,
ANNEX I-2
and certificates and other documents required to be delivered by or on
behalf of the undersigned pursuant to the Underwriting Agreement or the
Engagement Letter, and specifically to execute on behalf of the undersigned
stock powers and transfer instructions relating to the Ordinary Shares
underlying the ADSs to be sold by the undersigned, and in general to do all
things and to take all action which the Attorneys, or either of them acting
alone, may consider necessary or proper in connection with, or to carry out
and comply with, all terms and conditions of the Underwriting Agreement and
the Engagement Letter and the aforesaid sale of ADSs to the several
Underwriters.
2. The undersigned hereby makes, at and as of the date of this Power of
Attorney, with and to the several Underwriters each of the representations,
warranties, covenants and agreements of the undersigned as a Selling Shareholder
set forth in the Underwriting Agreement, and all such representations,
warranties, covenants and agreements are incorporated by reference herein in
their entirety (the representations, warranties and agreements being subject,
however, to the exception that orders or other authorizations that may be
required under the 1933 Act in connection with the purchase and distribution by
the Underwriters of the ADSs to be sold by the undersigned have not yet been
obtained).
The undersigned further:
(a) represents and warrants to, and agrees with, the several
Underwriters that this Power of Attorney and the Engagement Letter have
been duly executed and delivered by or on behalf of the undersigned and
constitute valid and binding agreements of the undersigned in accordance
with their respective terms; and
(b) (i) confirms to the several Underwriters the accuracy of the
information concerning the undersigned and the undersigned's shareholding
in the Company as set forth in the Registration Statement and Pricing
Prospectus (as defined in the Underwriting Agreement), dated [-], under the
caption "Principal and Selling Shareholders", a copy of which is publicly
available on XXXXX, (ii) also confirms to the several Underwriters the
accuracy of the information concerning the undersigned contained or to be
contained in any selling shareholder's questionnaire or other written
document furnished by the undersigned to the Company for purposes of the
Registration Statement or any prospectus (preliminary or final) contained
therein or filed pursuant to Rule 424 under the 1933 Act (as defined in the
Underwriting Agreement) or in any amendment or supplement thereto
(including any documents incorporated by reference therein), (iii) agrees
with the Company and the several Underwriters immediately to notify the
Company and promptly (but in any event within two business days thereafter)
to confirm the same in writing if, during the period or at the date(s)
referred to in paragraph 4 hereof, there should be any change affecting the
accuracy of the above-mentioned information, or if any subsequent version
of such section of the prospectus delivered to the undersigned should be
inaccurate, and (iv) agrees with the Company and the several Underwriters
that for all purposes of the representations, warranties, covenants and
agreements incorporated by reference herein from the Underwriting
Agreement, delivery of this Power of Attorney and the statements contained
herein constitute (and in the absence of any such notification as is
referred to in subclause (iii) given prior to the date on which the
Underwriting Agreement is executed and delivered by the undersigned will
constitute on a continuing basis) written information furnished by the
undersigned to the Company for use in the Registration Statement and any
such prospectus or prospectus supplement, amendment or supplement.
3. This Power of Attorney and all authority conferred hereby are granted
and conferred subject to the interests of the Underwriters and the other Selling
Shareholders; and, in consideration of those interests and for the purpose of
completing the transactions contemplated by the Underwriting
ANNEX I-3
Agreement and this Power of Attorney, this Power of Attorney and all authority
conferred hereby, to the extent enforceable by law, shall be deemed an agency
coupled with an interest and be irrevocable and not subject to termination by
the undersigned or by operation of law, whether by the death or incapacity of
the undersigned or any executor or trustee or the termination of any estate or
trust or by the dissolution or liquidation of any corporation or partnership or
by the occurrence of any other event, and the obligations of the Selling
Shareholder under the Underwriting Agreement similarly are not to be subject to
termination. If any such individual or any such executor or trustee should die
or become incapacitated or if any such estate or trust should be terminated or
if any such corporation or partnership should be dissolved or liquidated or if
any other such event should occur before the delivery of the ADSs to be sold by
the undersigned under the Underwriting Agreement, such ADSs shall be delivered
by or on behalf of the undersigned in accordance with the terms and conditions
of the Underwriting Agreement, and all other actions required to be taken under
the Underwriting Agreement shall be taken, and actions taken by the Attorneys,
or either of them acting alone, pursuant to this Power of Attorney shall be as
valid as if such death, incapacity, termination, dissolution, liquidation or
other event had not occurred, regardless of whether or not the Attorneys, or
either of them acting alone, shall have received notice of such death,
incapacity, termination, dissolution, liquidation or other event.
Notwithstanding the foregoing, if the Underwriting Agreement is not
executed and delivered on or prior to [-], 2006 then from and after such date
the undersigned shall have the power to revoke all authority hereby conferred by
giving written notice to each of the Attorneys that this Power of Attorney has
been terminated; subject, however, to all lawful action done or performed by the
Attorneys or either one of them, pursuant to this Power of Attorney prior to the
actual receipt of such notice.
4. The undersigned will immediately notify the Attorneys, the Company and
the Representative of the occurrence of any event which shall cause the
representations and warranties contained herein not to be true and correct
during the period of the public offering of the ADSs or at each Time of Delivery
(as defined in the Underwriting Agreement) for the ADSs pursuant to the
Underwriting Agreement.
5. The undersigned ratifies all that the Attorneys shall do by virtue of
and in accordance with this Power of Attorney. All actions may be taken by
either of the Attorneys alone. In the event that any statement, request, notice
or instruction given by one Attorney shall be inconsistent with that given by
another, any such statement, request, notice or instruction from [-] shall
prevail.
6. The undersigned agrees to hold the Attorneys, jointly and severally,
free and harmless from any and all loss, damage, liability or expense incurred
in connection herewith, including reasonable attorney's fees and costs, which
they, or either of them acting alone, may sustain as a result of any action
taken in good faith hereunder.
7. In case any provision in this Power of Attorney shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
8. If the undersigned is (i) acting as trustee or in any fiduciary or
representative capacity, the undersigned has also delivered duly certified
copies of each trust agreement, will, letters testamentary or other instrument
pursuant to which the undersigned is authorized to act as a Selling Shareholder;
(ii) a corporation, the undersigned has also delivered or prior to the closing
date of the Offering will deliver (A) duly certified resolutions of its board of
directors authorizing it to enter into this Power of Attorney, the Underwriting
Agreement and the Engagement Letter and duly certified copies of such
corporation's memorandum of association, articles of association, by-laws,
certificate of incorporation or other
ANNEX I-4
organizational documents or (B) an officer's certificate attesting to the
authority of the signatories; (iii) a partnership, the undersigned has also
delivered extracts of any applicable provisions of its partnership or limited
liability company agreement (and applicable provisions of the organizational
documents or partnership agreement(s) of the general partner(s) of such
partnership) authorizing such partnership to enter into this Power of Attorney,
the Underwriting Agreement and the Engagement Letter; (iv) a limited liability
company, the undersigned has also delivered extracts of any applicable
provisions of its limited liability company agreement (and applicable provisions
of the organizational documents or partnership or limited liability company
agreement(s) of the manager(s) or managing member(s) of such limited liability
company) authorizing such limited liability company to enter into this Power of
Attorney, the Underwriting Agreement and the Engagement Letter; or (v) any other
type of entity, the undersigned has also delivered extracts and certified copies
of similar documents authorizing such entity to enter into this Power of
Attorney, the Underwriting Agreement and the Engagement Letter.
9. The undersigned agrees to deliver such additional documentation
(including additional copies of the documentation referred to in the preceding
paragraph) as you, the Attorney, the Company or the Representative or any of
their respective counsel may reasonably request to effectuate or confirm
compliance with any of the provisions hereof or of the Underwriting Agreement,
all of the foregoing to be in form and substance reasonably satisfactory in all
respects to the party requesting such documentation.
10. THIS POWER OF ATTORNEY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
ANNEX I-5
Dated: ________
Maximum number of ADSs to be sold:
_____________ ADSs
Signature of Selling Shareholder:
--------------------------------
[INSERT FULL NAME OF SELLING SHAREHOLDER]
By:____________________________
Name:
Title:
[NOTE: SELLING SHAREHOLDERS'S SIGNATURE(S) ON THIS POWER OF ATTORNEY MUST BE
CERTIFIED BY [-], OFFICER OF THE COMPANY.]
Signature(s) certified by
By:
--------------------------------
Name: [-]
_________________________
You should sign in exactly the same manner as the Ordinary Shares of the
Company owned by you are registered and execute a separate Power of Attorney for
each different form in which shares are registered.
ANNEX I-6
ANNEX II
FORM OF COMFORT LETTER
Pursuant to Section 8(h) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
They are independent certified public accountants with respect to the Company
and its subsidiaries within the meaning of the Act and the applicable published
rules and regulations thereunder;
(i) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial
forecasts and/or pro forma financial information) examined by them and
included in the Prospectus or the Registration Statement comply as to form
in all material respects with the applicable accounting requirements of the
Act and the related published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited consolidated interim financial statements, selected financial
data, pro forma financial information, financial forecasts and/or condensed
financial statements derived from audited financial statements of the
Company for the periods specified in such letter, as indicated in their
reports thereon, copies of which have been [separately] furnished to the
representative of the Underwriters (the "Representative");
(ii) They have made a review in accordance with standards established
by the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the Prospectus as
indicated in their reports thereon copies of which [have been separately
furnished to the Representative] and on the basis of specified procedures
including inquiries of officials of the Company who have responsibility for
financial and accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (v)(A)(i) below
comply as to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations,
nothing came to their attention that cause them to believe that the
unaudited condensed consolidated financial statements do not comply as to
form in all material respects with the applicable accounting requirements
of the Act and the related published rules and regulations;
(iii) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on
the basis of limited procedures specified in such letter nothing came to
their attention as a result of the foregoing procedures that caused them to
believe that this information does not conform in all material respects
with the disclosure requirements of Items 8 and 11 of Form 20-F and
Regulation S-K;
(iv) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included in the Prospectus, inquiries
of officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and
ANNEX II-1
procedures as may be specified in such letter, nothing came to their
attention that caused them to believe that:
(A) (i) the unaudited consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the related published
rules and regulations, or (ii) any material modifications should be made to
the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus for them to be in conformity with generally accepted accounting
principles;
(B) any other unaudited income statement data and balance sheet items
included in the Prospectus do not agree with the corresponding items in the
unaudited consolidated financial statements from which such data and items
were derived, and any such unaudited data and items were not determined on
a basis substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included in the
Prospectus;
(C) the unaudited financial statements which were not included in the
Prospectus but from which were derived any unaudited condensed financial
statements referred to in clause (A) and any unaudited income statement
data and balance sheet items included in the Prospectus and referred to in
clause (B) were not determined on a basis substantially consistent with the
basis for the audited consolidated financial statements included in the
Prospectus;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the Act
and the published rules and regulations thereunder or the pro forma
adjustments have not been properly applied to the historical amounts in the
compilation of those statements;
(E) as of a specified date not more than five days prior to the date
of such letter, there have been any changes in the consolidated capital
stock (other than issuances of capital stock upon exercise of options and
stock appreciation rights, upon earn-outs of performance shares and upon
conversions of convertible securities, in each case which were outstanding
on the date of the latest financial statements included in the Prospectus)
or any increase in the consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net current assets or
shareholders' equity or other items specified by the Representative, or any
increases in any items specified by the Representative, in each case as
compared with amounts shown in the latest balance sheet included in the
Prospectus, except in each case for changes, increases or decreases which
the Prospectus discloses have occurred or may occur or which are described
in such letter; and
(F) for the period from the date of the latest financial statements
included in the Prospectus to the specified date referred to in clause (E)
there were any decreases in consolidated net revenues or operating profit
or the total or per share amounts of consolidated net income or other items
specified by the Representative, or any increases in any items specified by
the Representative, in each case as compared with the comparable period of
the preceding year and with any other period of corresponding length
specified by
ANNEX II-2
the Representative, except in each case for decreases or increases which
the Prospectus discloses have occurred or may occur or which are described
in such letter; and
(v) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraph (iii) above,
they have carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing standards, with
respect to certain amounts, percentages and financial information specified
by the Representative, which are derived from the general accounting
records of the Company and the subsidiaries, which appear in the
Prospectus, or in Part II of, or in exhibits and schedules to, the
Registration Statement specified by the Representative, and have compared
certain of such amounts, percentages and financial information with the
accounting records of the Company and the subsidiaries and have found them
to be in agreement.
ANNEX II-3
ANNEX III
PARTIES TO EXECUTE LOCK-UP AGREEMENT
[INSERT NAMES]
ANNEX III-1
ANNEX IV
FORM OF LOCK-UP AGREEMENT
SOLARFUN POWER HOLDINGS CO., LTD.
LOCK-UP AGREEMENT
___________, 2006
Xxxxxxx Xxxxx (Asia) L.L.C.,
00xx Xxxxx, Xxxxxx Xxxx Xxxxxx,
0 Xxxxx'x Xxxx Xxxxxxx,
Xxxx Xxxx
As Representative of the several Underwriters
named in Schedule I attached hereto.
Re:
Solarfun Power Holdings Co., Ltd.
Ladies and Gentlemen:
The undersigned understands that you, as representative (the
"Representative"), proposes to enter into an underwriting agreement (the
"Underwriting Agreement"), on behalf of the several underwriters named in
Schedule I thereto agreement (collectively, the "Underwriters"), with
Solarfun
Power Holdings Co., Ltd., a company incorporated in the Cayman Islands (the
"Company"), and the selling shareholders (the "Selling Shareholders") and
certain other parties named therein, providing for a public offering of American
Depositary Shares (the "ADSs") representing ordinary shares of the Company, par
value US$0.0001 per share (the "Ordinary Shares"), pursuant to a Registration
Statement on Form F-1 (File No. 333-______) and a Registration Statement on Form
F-6 (File No. 333-______) to be filed with the U.S. Securities and Exchange
Commission (the "SEC").
In consideration of the agreement by the Underwriter to offer and sell the
ADSs, and of other good and valuable consideration the receipt and sufficiency
of which is hereby acknowledged, the undersigned agrees that, during the period
beginning from the date of the final Prospectus covering the public offering of
the ADSs and continuing to and including the date 180 days after the date of
such final Prospectus (the "Lock-Up Period"), the undersigned will not offer,
sell, contract to sell, pledge, grant any option to purchase, purchase any
option or contract to sell, right or warrant to purchase, make any short sale,
file a registration statement with respect to, or otherwise dispose of
(including entering into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequence of ownership
interests): (A) any ADSs or Ordinary Shares or any securities of the Company
that are substantially similar to the ADSs or Ordinary Shares, including but not
limited to any securities that are convertible into or exchangeable for, or that
represent the right to receive, ADSs or Ordinary Shares or any such
substantially similar securities; and (B) any ordinary shares of the Company's
subsidiaries or controlled affiliates or depositary shares or depositary
receipts representing such ordinary shares, including but not limited to any
securities that are convertible into or exchangeable for or that represent the
right to receive such common shares or such depositary shares or depositary
receipts or any such substantially similar securities, whether now owned or
hereinafter acquired, owned directly by the undersigned (including holding as a
custodian) or with respect to which the undersigned has beneficial ownership
within the rules and regulations of the SEC (in each case other than pursuant to
a bona fide gift by an individual to a donee or a sale or transfer by an entity
to an affiliate; provided that such donee or affiliate agrees to be bound in
writing by the restrictions set forth herein), without your prior written
consent; provided, however, that if (1) during the last 17 days of the initial
Lock-Up Period, the Company releases earnings results or announces material news
or a material event or (2) prior to the expiration of the initial Lock-Up
Period, the Company announces, or if the Representative
ANNEX IV-1
determines that it will release earnings results during the 15-day period
following the last day of the initial Lock-Up Period, then in each case the
Lock-Up Period will be automatically extended until the expiration of the 18-day
period beginning on the date of release of the earnings results or the
announcement of the material news or material event, as applicable, unless the
Representative waive, in writing, such extension. The undersigned understands
that the Company will provide the Representative and the undersigned with prior
notice of any such announcement that gives rise to an extension of the Lock-Up
Period.
The undersigned understands that the Company, the Selling Shareholders and
the Underwriters are relying upon this Lock-Up Agreement in proceeding toward
consummation of the offering. The undersigned further understands that this
Lock-Up Agreement is irrevocable and shall be binding upon the undersigned's
heirs, legal representatives, successors, and assigns.
This Lock-Up Agreement shall terminate upon the expiration of the Lock-Up
Period or in the event that there is no delivery of, and payment for, the ADSs
pursuant to the underwriting agreement, upon three days' prior written notice of
such non-delivery and non-payment given by the undersigned to you.
Very truly yours,
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Exact Name of Shareholder
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Authorized Signature
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Title
ANNEX IV-2
