EXHIBIT 4.11
EXECUTION VERSION
SECOND AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT
AMONG
YINGLI POWER HOLDING COMPANY LTD.,
XXXXXXXXX XXXX,
YINGLI GREEN ENERGY HOLDING COMPANY LIMITED,
INSPIRATION PARTNERS LIMITED
AND
THE INVESTORS LISTED ON SCHEDULE I ATTACHED HERETO
DATED AS OF DECEMBER 15, 2006
TABLE OF CONTENTS
PAGE
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Section 1. Certain Definitions.......................................... 2
Section 2. Purchase Price Adjustment.................................... 7
2.1 The 2006 Adjustment.......................................... 7
2.2 The 2007 Adjustment.......................................... 8
2.3 Conversion................................................... 9
Section 3. Financial Statements and Reports; Information and Inspection
Rights; Confidentiality...................................... 9
3.1 Financial Statements and Reports to Shareholders............. 9
3.2 Information and Inspection Rights............................ 9
3.3 Confidentiality.............................................. 10
Section 4. Corporate Governance......................................... 10
4.1 Board Composition............................................ 10
4.2 Audit Committee.............................................. 11
4.3 Compensation Committee....................................... 12
4.4 Other Board Committees....................................... 12
4.5 Meetings of the Board; Quorum; Telephonic Meetings........... 12
4.6 Action by Written Consent.................................... 12
4.7 Expenses..................................................... 12
4.8 Indemnification.............................................. 12
4.9 Governance of Subsidiaries................................... 12
Section 5. Right of Participation....................................... 12
5.1 Right of Participation With Respect to New Securities........ 12
5.2 Issuance Notice.............................................. 13
5.3 Sale of New Securities....................................... 13
Section 6. Right of First Refusal; Co-Sale Right........................ 14
6.1 Right of First Refusal....................................... 14
6.2 Co-Sale Right................................................ 15
6.3 Sale by the Founder.......................................... 17
6.4 No Adverse Effect............................................ 17
6.5 Exempt Transfers............................................. 17
6.6 Prohibited Transfer.......................................... 18
6.7 Restrictions on the Transfer by the Preferred Shareholders... 18
Section 7. Demand Registration.......................................... 18
7.1 Request for Registration on Form Other Than Form F-3......... 18
7.2 Request for Registration on Form F-3......................... 19
7.3 Right of Deferral............................................ 20
7.4 Registration of Other Securities in Demand Registration...... 22
7.5 Underwriting in Demand Registration.......................... 22
7.6 Other Securities Laws in Demand Registration................. 25
7.7 Other Registration Rights.................................... 25
Section 8. Piggyback Registration....................................... 25
8.1 Notice of Piggyback Registration and Inclusion of Registrable
Securities................................................... 25
8.2 Underwriting in Piggyback Registration....................... 26
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TABLE OF CONTENTS
(continued)
PAGE
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Section 9. Expenses of Registration..................................... 27
Section 10. Termination of Registration Rights........................... 28
Section 11. Registration Procedures and Obligations...................... 28
Section 12. Information Furnished by Holder.............................. 29
Section 13. Indemnification.............................................. 30
13.1 Company's Indemnification of the Holders..................... 30
13.2 Holder's Indemnification of Company.......................... 30
13.3 Condition to Indemnity....................................... 31
13.4 Indemnification Procedure.................................... 31
13.5 Contribution................................................. 32
13.6 Conflicts.................................................... 32
13.7 Survival of Obligations...................................... 32
Section 14. Lock-Up...................................................... 32
Section 15. No Action Letter............................................. 33
Section 16. Reports Under the Exchange Act............................... 33
Section 17. Transfer of Rights........................................... 34
Section 18. Legend; Stop Transfer Instructions........................... 34
18.1 Legend....................................................... 34
18.2 Stop Transfer Instructions................................... 35
Section 19. Covenants.................................................... 36
Section 20. Conflict with Charter Documents.............................. 39
Section 21. Miscellaneous................................................ 39
21.1 Governing Law................................................ 40
21.2 Dispute Resolution........................................... 40
21.3 Counterparts and Facsimile Execution......................... 40
21.4 Headings..................................................... 40
21.5 Notices...................................................... 40
21.6 Amendments and Waivers....................................... 41
21.7 Severability................................................. 41
21.8 Entire Agreement; Successors and Assigns..................... 41
21.9 Assignability................................................ 41
21.10 Termination.................................................. 42
21.11 Director and Officer Insurance............................... 42
Schedule I List of the Series B Shareholders
Appendix A Form of Investor Representation Letter
-ii-
SECOND AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
THIS SECOND AMENDED AND RESTATED SHAREHOLDERS AGREEMENT, dated as of
December 15, 2006 (the "AGREEMENT"), is entered into by and among Yingli Green
Energy Holding Company Limited, an exempted company organized under the laws of
the Cayman Islands (the "COMPANY"), Yingli Power Holding Company Ltd., an
international business company incorporated under the laws of the British Virgin
Islands (the "HOLDCO"), Xx. Xxxxxxxxx Xxxx (together with the Holdco,
collectively, the "FOUNDER"), Inspiration Partners Limited, an international
business company incorporated under the laws of the British Virgin Islands (the
"SERIES A SHAREHOLDER"), and the investors listed on Schedule I attached hereto
(the "SERIES B SHAREHOLDERS", and together with the Series A Shareholder, the
"PREFERRED SHAREHOLDERS"). The Founder, the Series A Shareholder and the Series
B Shareholders shall be collectively referred to as the "SHAREHOLDERS", and
together with the Company, the "PARTIES".
RECITALS
WHEREAS:
(A) The Company, the Founder and the Series B Shareholders have
entered into an Amended and Restated Series B Preferred Share Purchase Agreement
as of even date herewith (the "SERIES B PURCHASE AGREEMENT"), pursuant to which
the Series B Shareholders are purchasing a certain number of Series B Shares,
par value US$0.01 per share, of the Company (the "SERIES B SHARES");
(B) The execution and delivery of this Agreement is a condition
precedent to the purchase by the Series B Shareholders of the Series B Shares
under the Series B Purchase Agreement;
(C) In connection with the issuance and sale of Series A Shares, par
value US$0.01 per share, of the Company (the "SERIES A SHARES") pursuant to a
Series A Preferred Share Purchase Agreement, dated as of September 20, 2006 (the
"SERIES A PURCHASE AGREEMENT"), the Company, the Founder and the Series A
Shareholder entered into a Shareholders Agreement, dated as of September 20,
2006 (the "SERIES A SHAREHOLDERS AGREEMENT");
(E) In connection with the issuance and sale of a certain number of
the Series B Shares to Baytree (Investments) Mauritius Pte Ltd, the Company, the
Holdco, the Founder, the Series A Shareholder and Baytree (Investments)
Mauritius Pte Ltd. entered into the Amended and Restated Shareholders Agreement,
dated December 5, 2006 (the "PRIOR SERIES B SHAREHOLDERS AGREEMENT"), which
amended and restated the Series A Shareholders Agreement in its entirety;
(F) In connection with the purchase of the Series B Shares described
in paragraph (A) above, the parties to the Prior Series B Shareholders Agreement
desire to amend and restate the Prior Series B Shareholders Agreement in its
entirety pursuant to the terms set forth in this Agreement; and
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(E) The parties to the Prior Series B Shareholders Agreement have
agreed that the Prior Series B Shareholders Agreement shall be of no further
force and effect and further that the rights granted to the parties hereto under
this Agreement shall supersede the rights granted to such parties under the
Prior Series B Shareholders Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, covenants and agreements of the Parties contained herein, the Parties
hereby amend and restate the Prior Series B Shareholders Agreement in its
entirety as follows:
SECTION 1. Certain Definitions. As used in this Agreement, the following
terms have the following respective meanings:
"2006 ACTUAL EARNINGS" has the meaning set forth in Section 2.1 of
this Agreement.
"2007 ACTUAL EARNINGS" has the meaning set forth in Section 2.2 of
this Agreement.
"AFFILIATE" means, in respect of a Person, any other Person that
directly or indirectly through one or more intermediaries, Controls, is
Controlled by, or is under common Control with, such Person, including,
without limitation, any general partner, officer or director of such Person
and any venture capital fund now or hereafter existing which is controlled
by or under common control with one or more general partners or shares the
same management company with such Person.
"AGREEMENT" has the meaning set forth in the preamble to this
Agreement.
"ARTICLES OF ASSOCIATION" means the Second Amended and Restated
Memorandum and Articles of Association of the Company.
"BLUE SKY" means the statutes of any state of the United States of
America regulating the sale of corporate securities within that state.
"BOARD" means the Company's board of directors as constituted from
time to time.
"BUSINESS DAY" means any day other than Saturday, Sunday or any other
day on which banks in Hong Kong or the People's Republic of China (the
"PRC") are authorized or required by law to close.
"COMMISSION" means the United States Securities and Exchange
Commission, as constituted from time to time, or any successor agency
charged with administering the Securities Act and/or the Exchange Act.
"CONTROL" with respect to any third Person means the possession,
directly or indirectly, of the power or the ability to direct or cause the
direction of the management and affairs of such third Person whether,
through the ownership of voting securities, as
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trustee or executor, by contract or otherwise, including, without
limitation, the ownership, directly or indirectly, of securities having the
power to elect a majority of the board of directors or similar body of such
third Person.
"CONVERSION SHARES" means, collectively, the Series A Conversion
Shares and the Series B Conversion Shares.
"CONVERTIBLE BONDS" means the US$85,000,000 Bonds due 2008 issued by
the Company under the Trustee Deed, dated November 13, 2006, between the
Company and DB Trustees (Hong Kong) Limited, which are convertible into
Ordinary Shares.
"CO-SALE RIGHT" has the meaning set forth in Section 6.2 of this
Agreement.
"DAMAGES" has the meaning set forth in Section 13.1 of this Agreement.
"EXCHANGE ACT" means the United States Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission
promulgated thereunder, all as from time to time in effect.
"FORM F-3" means Form F-3 issued by the Commission or any
substantially similar form then in effect.
"FOUNDERS" has the meaning set forth in Section 6.1 of this Agreement.
"FOUNDER SHARES" has the meaning set forth in Section 6.1 of this
Agreement.
"GROUP" means the Company, the Operating Subsidiary and their
respective subsidiaries from time to time, and "GROUP COMPANY" means, as
applicable, each of the Company, the Operating Subsidiary, and their
respective subsidiaries from time to time.
"HOLDER" means any holder of outstanding Registrable Securities.
"ICC" has the meaning set forth in Section 21.2 of this Agreement.
"INVESTOR REPRESENTATION LETTER" has the meaning set forth in Section
18.1 of this Agreement.
"ISSUANCE NOTICE" has the meaning set forth in Section 5.2 of this
Agreement.
"LEAD SERIES B SHAREHOLDER" means Baytree Investments (Mauritius) Pte
Ltd.; provided, however, that if Baytree Investments (Mauritius) Pte Ltd.,
together with its Affiliates, holds less than thirty three percent (33%) of
the Series B Shares, the term Lead Series B Shareholder shall mean the
holders of more than fifty percent (50%) of the Series B Shares in the
aggregate then outstanding on a fully diluted, as converted basis.
"MAJORITY OF THE SERIES A SHAREHOLDERS" means holders of more than
fifty percent (50%) of the Series A Shares in the aggregate then
outstanding on a fully diluted, as-converted basis.
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"NEW SECURITIES" means any shares of the Company, whether now
authorized or not, and any rights, options, or warrants to purchase shares
of the Company, and securities of any type whatsoever that are, or may
become, convertible into shares of the Company, provided that "New
Securities" does not include: (a) any Preferred Shares purchased under the
Series B Purchase Agreement; (b) Ordinary Shares issuable upon conversion
of the Preferred Shares; (c) Ordinary Shares issuable upon conversion of
the Convertible Bonds; (d) securities offered to the public pursuant to a
Registration Statement; (e) Ordinary Shares issuable pursuant to the
exercise of warrants, rights or options, issued or issuable to officers,
directors, and employees of, and consultants to, any Group Company pursuant
to stock option plans to be adopted by the Company, provided that the
number of such Ordinary Shares shall not exceed five percent (5%) of the
Ordinary Shares Equivalent after giving effect to the closing of the
issuance of the Series B Shares under the Series B Purchase Agreement; (f)
shares issued without consideration pursuant to a stock dividend, stock
sub-division, or similar transaction; (g) all Ordinary Shares or other
securities hereafter issued in connection with or as consideration for
acquisition or licensing of technology; (h) Ordinary Shares issuable
pursuant to the exercise of the warrant, dated August 28, 2006, granted by
the Company to TB Management Company Limited (the "TB MANAGEMENT WARRANT");
and (i) the Warrant and Warrant Shares (each as defined in the Series B
Purchase Agreement).
"ORDINARY SHARES" means the Company's Ordinary Shares, par value
US$0.01 per share.
"ORDINARY SHARES EQUIVALENT" means, collectively, the issued and
outstanding Ordinary Shares and the Ordinary Shares into which the issued
and outstanding Preferred Shares and other securities are convertible.
"OPERATING SUBSIDIARY" means Baoding Tianwei Yingli New Energy
Resources Co., Ltd., a Sino-foreign joint venture with limited liability
registered and existing under the laws of the PRC.
"PARTIES" has the meaning set forth in the preamble to this Agreement.
"PERSON" means any individual, sole proprietorship, partnership,
estate, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity, governmental or regulatory
authority or other entity of any kind or nature.
"PREFERRED SHARES" means Series A Shares and/or Series B Shares, as
the case may be.
"PREFERRED SHAREHOLDER" has the meaning set forth in the preamble to
this Agreement.
"PREFERRED SHAREHOLDER NOMINEE" has the meaning set forth in Section
4.1(b) of this Agreement.
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"PRIOR SERIES B SHAREHOLDERS AGREEMENT" has the meaning set forth in
the recitals to this Agreement.
"PRO RATA SHARE" means, with respect to any Shareholder, the ratio of:
(a) the total number of Ordinary Shares Equivalent held by such Shareholder
immediately before the proposed allotment and issue of New Securities to
(b) the total number of Ordinary Shares Equivalent held by all Shareholders
immediately before the proposed allotment and issue of New Securities.
"QUALIFIED IPO" means the closing of the Company's first firm
commitment, underwritten public offering of Ordinary Shares or shares
representing Ordinary Shares in connection with which Ordinary Shares or
shares representing Ordinary Shares are listed and become publicly traded
on an internationally recognized securities exchange or the NASDAQ Global
Market, provided, however, that such listing shall result in net proceeds
(after payment of the underwriters' discounts and commissions and the
offering-related expenses) to the Company of at least US$100 million and
(b) a total market capitalization of the Company of at least US$750
million.
"REGISTER", "REGISTERED", and "REGISTRATION" means a registration of
securities effected by preparing and filing a registration statement on
Form X-0, X-0, XX-0, F-3 or S-3 in compliance with the Securities Act, or
on any comparable form in connection with a registration in a jurisdiction
other than the United States (collectively, a "REGISTRATION STATEMENT"),
and the declaration or ordering of the effectiveness of that Registration
Statement by the Commission.
"REGISTRABLE SECURITIES" means, collectively, the Series A Registrable
Securities and the Series B Registrable Securities.
"REGISTRATION EXPENSES" means all expenses incurred by the Company in
complying with Section 7 or 8 of this Agreement, including, without
limitation, all federal and state Registration, qualification, and filing
fees, printing expenses, any fees, commissions, expenses and disbursements
of underwriters customarily paid by similarly situated companies in
connection with underwritten offerings of equity securities to the public,
fees and disbursements of counsel for the Company and reasonable fees and
disbursements of one special counsel for all Holders (if different from
counsel to the Company), Blue Sky fees and expenses, and the expense of any
special audits incident to or required by any Registration.
"REGISTRATION STATEMENT" has the meaning set forth in the definition
of "Registration," above.
"RELATED PARTY" means, with respect to any Person, (a) any Affiliate
of such Person, (b) each Person that serves as a director, officer,
partner, member, executor, or trustee of such Person (or in any other
similar capacity), (c) any Person with respect to which such Person serves
as a general partner or trustee (or in any other similar capacity), and (d)
any Person that has direct or indirect beneficial ownership of voting
securities or other voting interests representing at least ten percent
(10%) of the outstanding voting
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power or equity securities or other equity interests (a "MATERIAL
INTEREST") in such Person.
"RESTRICTED SECURITIES" has the meaning set forth in Section 18.1(b)
of this Agreement.
"RIGHT OF FIRST REFUSAL" has the meaning set forth in Section 6.1 of
this Agreement.
"RIGHT OF PARTICIPATION" has the meaning set forth in Section 5.1 of
this Agreement.
"SECURITIES ACT" means the United States Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated
thereunder, all as from time to time in effect.
"SELLING EXPENSES" means all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities pursuant to
this Agreement.
"SERIES A CONVERSION SHARES" means, collectively, Series A Shares then
outstanding on a fully diluted, as-converted basis.
"SERIES A INITIATING HOLDERS" means holders who in the aggregate hold
at least thirty-three percent (33%) of the Series A Registrable Securities.
"SERIES A NOMINEE" has the meaning set forth in Section 4.1(a) of this
Agreement.
"SERIES A REGISTRABLE SECURITIES" means (a) the Ordinary Shares issued
or issuable upon conversion or exercise of any of the Series A Shares and
(b) Ordinary Shares issued or issuable pursuant to stock sub-divisions,
stock dividends and similar distributions to the Series A Shareholders, or
in exchange for or in replacement of the Ordinary Shares referred to clause
(a) above, excluding in all cases, however, any Series A Registrable
Securities sold by a Person in a transaction in which its rights under
Sections 7 or 8 hereof are not assigned or any shares for which
registration rights have terminated pursuant to Section 10.
"SERIES A SHARE" has the meaning set forth in the recitals to this
Agreement.
"SERIES A SHAREHOLDER" has the meaning set forth in the preamble to
this Agreement.
"SERIES B CONVERSION SHARES" means, collectively, Series B Shares then
outstanding on a fully diluted, as-converted basis.
"SERIES B INITIATING HOLDERS" means the Lead Series B Shareholder.
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"SERIES B NOMINEE" has the meaning set forth in Section 4.1(c) of this
Agreement.
"SERIES B REGISTRABLE SECURITIES" means (a) the Ordinary Shares issued
or issuable upon conversion or exercise of any of the Series B Shares and
the Warrants (as defined in the Series B Purchase Agreement) and (b)
Ordinary Shares issued or issuable pursuant to stock sub-divisions, stock
dividends and similar distributions to the Series B Shareholders, or in
exchange for or in replacement of the Ordinary Shares referred to clause
(a) above, excluding in all cases, however, any Series B Registrable
Securities sold by a Person in a transaction in which its rights under
Sections 7 or 8 hereof are not assigned or any shares for which
registration rights have terminated pursuant to Section 10.
"SERIES B SHARE" has the meaning set forth in the recitals to this
Agreement.
"SERIES B SHAREHOLDER" has the meaning set forth in the preamble to
this Agreement.
"SHARE" means any Ordinary Share, a Series A Preferred Share and/or a
Series B Preferred Share, as the case may be.
"SHAREHOLDERS" has the meaning set forth in the preamble to this
Agreement.
"STOCK OPTION CHARGES" means any charges to the Company's earnings
made pursuant to US GAAP as a result of the Company's issuance of employee
stock options, provided, however, that if the number of Ordinary Shares
issued under such stock options, when added together with the number of
Ordinary Shares issued under any other outstanding stock options granted by
the Company, exceeds five percent (5%) of the Ordinary Shares Equivalent
after giving effect to the closing of the issuance of the Series B Shares
under the Series B Purchase Agreement, such stock options shall be
considered in calculating the Stock Option Charges only after they have
been approved in writing by each of the Preferred Shareholder Nominees.
"SUBSIDIARY" has the meaning set forth in the Series B Purchase
Agreement.
"TRANSFER NOTICE" has the meaning set forth in Section 6.1 of this
Agreement.
"UNDERWRITERS' REPRESENTATIVE" has the meaning set forth in Section
7.5(a) of this Agreement.
"US GAAP" means generally accepted accounting principles in the United
States, consistently applied throughout the specified period and in the
immediately prior comparable period.
SECTION 2. Purchase Price Adjustment.
2.1 The 2006 Adjustment. If the Operating Subsidiary's consolidated
profit after taxes, excluding any non-recurring or extraordinary items for the
year ended December 31,
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2006 and adding back Stock Option Charges (the "2006 ACTUAL EARNINGS"), as
determined by the audited consolidated statements of income of the Operating
Subsidiary for such year as prepared by a "big four" accounting firm in
accordance with US GAAP, is less than US$35 million (or its RMB equivalent), the
Founder shall, and the Company shall take all steps and actions necessary and
desirable to cause the Founder to, within thirty (30) days following date of the
audit report containing the 2006 Actual Earnings:
(a) transfer to the Series A Shareholder, for no consideration, such
number of Ordinary Shares that the aggregate ownership percentage of the equity
interests in the Company held by the Series A Shareholder on a fully-diluted,
as-converted basis, immediately following such transfer, shall be equal to the
aggregate purchase price for the Series A Shares paid by the Series A
Shareholder under the Series A Purchase Agreement, divided by 51% of the product
of the 2006 Actual Earnings times eight (8), as further adjusted solely for the
dilutive effects of any and all subsequent equity and equity-linked issuances by
the Company following the closing of the transactions contemplated by Series A
Purchase Agreement up to the date of such transfer; and
(b) transfer to the Series B Shareholders, for no consideration and on
a prorated basis, such number of Ordinary Shares that the aggregate ownership
percentage of the equity interests in the Company held by all of the Series B
Shareholders on a fully-diluted, as-converted basis, immediately following such
transfer, shall be equal to the aggregate purchase price for the Series B Shares
paid by all of the Series B Shareholders under the Series B Purchase Agreement,
divided by the sum of (i) the aggregate purchase price paid by all of the Series
B Shareholders under the Series B Purchase Agreement plus (ii) the product of
(x) 53.98%, times (y) the 2006 Actual Earnings times sixteen (16), as further
adjusted solely for the dilutive effects of any and all subsequent equity and
equity-linked issuances by the Company approved by the Board (with the consent
of the Series B Nominee) following the closing of the transactions contemplated
by the Series A Purchase Agreement up to the date of such transfer.
2.2 The 2007 Adjustment.
(a) If the Company's consolidated profit after taxes, excluding any
non-recurring or extraordinary items and adding back Stock Option Charges, for
the year ended December 31, 2007 (the "2007 ACTUAL EARNINGS"), as determined by
the audited consolidated statements of income of the Company for such year as
prepared by a "big four" accounting firm in accordance with US GAAP, is less
than US$70 million, the Founder shall, and the Company shall take all steps and
actions necessary and desirable to cause the Founder to, within five (5)
Business Days following date of the audit report containing the 2007 Actual
Earnings, transfer to the Series B Shareholders, for no consideration, such
number of Ordinary Shares that the aggregate ownership percentage of the equity
interests in the Company held by all of the Series B Shareholders on a
fully-diluted, as-converted basis, immediately following such transfer, shall be
equal to the aggregate purchase price paid by all of the Series B Shareholders
under the Series B Purchase Agreement, divided by the sum of the aggregate
purchase price paid by all of the Series B Shareholders under the Series B
Purchase Agreement plus the product of (x) 53.98%, times (y) the 2007 Actual
Earnings, times (z) the product of sixteen (16) times the 2006 Actual Earnings
divided by US$70 million, as further adjusted solely for the dilutive effects of
any and all subsequent equity and equity-linked issuances by the Company
approved by the Board (with
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the consent of the Series B Nominee) following the closing of the transactions
contemplated by the Series A Purchase Agreement up to the date of such transfer.
(b) If the 2007 Actual Earnings is less than 1.5 times the 2006 Actual
Earnings, the Founder shall transfer to the Series A Shareholders, for no
consideration, such number of Ordinary Shares that the aggregate value of the
equity interests in the Company held by the Series A Shareholder on a
fully-diluted, as-converted basis, immediately following such transfer, shall be
equal to the aggregate purchase price for the Series A Shares paid by the Series
A Shareholder under the Series A Purchase Agreement, divided by 51% of the
product of the 2007 Actual Earnings times 5.3, as further adjusted solely for
the dilutive effects of any and all subsequent equity and equity-linked
issuances by the Company following the closing of the transactions contemplated
by the Series A Purchase Agreement up to the date of such transfer.
2.3 Conversion. Within the fifteen (15) days of a transfer of shares
under Section 2.1 or Section 2.2, the Founder and the Company shall cause, as
soon as reasonably practicable, any Ordinary Shares transferred pursuant to
Section 2.1 or Section 2.2 hereof, as the case may be, to be converted into
Series A Shares at the conversion ratio of one Ordinary Share to one Series A
Share (with respect to any Ordinary Shares transferred to the Series A
Shareholder), or into Series B Shares at the conversion ratio of one Ordinary
Share to one Series B Share (with respect to any Ordinary Shares transferred to
the Series B Shareholders), subject to further adjustments as provided in the
Articles of Association.
SECTION 3. Financial Statements and Reports; Information and Inspection
Rights; Confidentiality
3.1 Financial Statements and Reports to Shareholders.
(a) The Company shall keep true and accurate books of account and
records in reasonable detail, prepared in accordance with US GAAP and make
available to the holders of the Preferred Shares: (i) within thirty (30) days
after the end of each month, an unaudited unconsolidated monthly income
statement, balance sheet, and cash flow statement of the Operating Subsidiary;
(ii) within one hundred twenty (120) days after the end of each fiscal year of
the Company, an audited consolidated balance sheet of the Company (or, in the
case of financial statements as of and for the year ended December 31, 2006, the
Operating Subsidiary) as of the end of such year and audited consolidated
statements of income and cash flow for such year, which year-end financial
statements shall be prepared in accordance with US GAAP consistently applied and
accompanied by an unqualified opinion of a "big four" firm of independent public
accountants; and (iii) at least thirty (30) days prior to the end of each fiscal
year of the Group, the annual budget of the Group for the next fiscal year. In
addition, upon the written request by any Preferred Shareholder, which, together
with its Affiliates, owns at least twenty-five percent (25%) of the Series A
Conversion Shares or at least twenty-five percent (25%) of the Series B
Conversion Shares, as the case may be, the Company shall provide any other
information to such holder as such holder may reasonably request.
(b) Notwithstanding anything in this Agreement to the contrary, the
Company may cease providing the information set forth in this Section 3.1(a)
during the period starting from the date sixty (60) days prior to the Company's
good faith estimate of the effective date of,
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and ending on a date one hundred eighty (180) days after the effective date of,
the Registration effecting the Company' initial public offering pursuant to a
Registration Statement, provided that such estimated date of the Registration
Statement is not postponed by more than ninety (90) days.
3.2 Information and Inspection Rights. The Company covenants and
agrees that, commencing on the date of this Agreement,
(a) Each Preferred Shareholder, which, together with its Affiliates,
owns at least twenty-five percent (25%) of the Series A Conversion Shares or at
least twenty-five percent (25%) of the Series B Shares, as the case may be,
shall have standard inspection rights of the facilities, records and books of
the Group, including without limitation, discussing the business, operations and
conditions of the Group with its directors, officers, employees, accountants,
legal counsel and investment bankers, provided that (i) such rights shall be
exercised reasonably and at the expense of such holder and (ii) the Company
shall not be obligated to provide information which, in the reasonable opinion
of the Company, would be highly confidential relating to the business and
operations of the Company or would adversely affect the attorney-client
privilege between the Company and its counsel; and
(b) the Company shall, as soon as reasonably practicable, notify each
Preferred Shareholder of all matters which in the Company's reasonable opinion
is reasonably expected to cause a material adverse change to the ability of the
Company and its subsidiaries to conduct their respective businesses as now
conducted or own, use or lease their respective assets and properties as now
owned, used or leased.
3.3 Confidentiality. Each Preferred Shareholder agrees that it will
keep confidential and will not disclose, divulge or use for any purpose, other
than to monitor its investment in the Company, any confidential information
obtained from any Group Company pursuant to the terms of this Agreement, unless
such confidential information (i) is known or becomes known to the public in
general (other than as result of a breach of this Section 3.3) by such Preferred
Shareholder), (ii) is or has been independently developed or conceived by the
such Preferred Shareholder without use of the Company's confidential information
or (iii) is or has been made known or disclosed to such Preferred Shareholder by
a third party without a breach of any obligation of confidentiality such third
party may have to the Company; provided, however, that such Preferred
Shareholder may disclose confidential information (a) to its attorneys,
accountants, consultants and other professionals to the necessary to obtain
their services in connection with monitoring its investment in the Company, (b)
to any prospective investor of any Registrable Securities from such Preferred
Shareholder as long as such prospective investor agrees to be bound by the
provisions of this Section 3.3, (c) to any Affiliate, partner, member,
stockholder or wholly owned subsidiary of such Preferred Shareholder on a "need
to know" basis, or (d) as may otherwise be required by law, provided that such
Preferred Shareholder takes reasonable steps to minimize the extent of any such
required disclosure. Such Preferred Shareholder shall be liable for any breach
of this Section 3.3 by any person set forth in clauses (a), (b) and (c) of the
preceding sentence in this Section 3.3.
SECTION 4. Corporate Governance.
10
4.1 Board Composition.
(a) The Board shall consist of no more than seven (7) directors. The
alteration of the maximum size of the Board shall require the affirmative votes
of at least the Majority of the Series A Shareholders and the Lead Series B
Shareholder, voting separately as two classes. The board of directors of the
Operating Subsidiary shall consist of nine (9) directors, four (4) of which
shall be appointed by the Company, one (1) of which shall be appointed by the
Series A Shareholder and one (1) of which shall be appointed by the Lead Series
B Shareholder.
(b) If and for so long as the Series A Shareholder, together with its
Affiliates, holds at least thirty-three percent (33%) of the Series A Conversion
Shares, the Series A Shareholder shall be entitled to appoint, or to remove from
office and replace one (1) person as a director of each of the Company and the
Operating Subsidiary (the "SERIES A NOMINEE"), following prior consultation with
the Company. If the Series A Shareholder, together with its Affiliates, ceases
to hold at least thirty-three percent (33%) of the Series A Conversion Shares,
the Series A Shareholder shall remove the Series A Nominee, or cause the Series
A Nominee to resign, from the board of directors of each of the Company and the
Operating Subsidiary, in each case, immediately following the appointment by the
Founder of a replacement director therefor.
(c) If and for so long as the Lead Series B Shareholder, together with
its Affiliates, holds at least thirty-three percent (33%) of the Series B
Conversion Shares, the Lead Series B Shareholder shall be entitled to appoint,
or to remove from office and replace a person to each of the board of directors
of the Company and the Operating Subsidiary (each, a "SERIES B NOMINEE" and
together with the Series A Nominee, the "PREFERRED SHAREHOLDER NOMINEES"),
following prior consultation with the Company. If the Lead Series B Shareholder,
together with its Affiliates, ceases to hold at least thirty-three percent (33%)
of the Series B Conversion Shares, the Lead Series B Shareholder shall remove
the Series B Nominee, or cause the Series B Nominee to resign, from the board of
directors of each of the Company and the Operating Subsidiary, in each case,
immediately following the appointment by the Founder of a replacement director
therefor. Any appointment or removal of independent directors of the Company
and/or its Subsidiaries shall be subject to the written consent of the Series B
Nominee, if any.
(d) The Preferred Shareholders shall procure that their respective
nominees that are directors of the Operating Subsidiary shall cast their votes
or otherwise act in ways that are consistent with the board resolutions and/or
shareholder resolutions of the Company.
(e) The Preferred Shareholder Nominees shall have the right to appoint
alternates or proxies to attend any meeting of the Board or the board of
directors of the Operating Subsidiary and to vote on matters before the Board or
the board of directors of the Operating Subsidiary on the behalf of the
Preferred Shareholders.
(f) The Founder agrees that, at each meeting of the shareholders of
the Company called for the purpose of electing the members of the Board, it
shall vote all of its shares in the Company to elect each Preferred Shareholder
Nominee as a member of the Board. The Company agrees that, at each meeting of
the shareholders of the Operating Subsidiary for the purpose of electing the
members of the board of the Operating Subsidiary, it shall vote all of
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its equity interest in the Operating Subsidiary and take all other necessary
steps and actions to nominate, designate and elect each of the Series A Nominee
and the Series B Nominee as a member of the board of the Operating Subsidiary.
4.2 Audit Committee. The Company shall establish and maintain an Audit
Committee, which shall consist of no more than five (5) directors and include
the Series A Nominee and the Series B Nominee. The chairperson of the Audit
Committee shall be designated by the mutual agreement of the Series A Nominee
and the Series B Nominee.
4.3 Compensation Committee. The Company shall establish and maintain a
Compensation Committee, which shall consist of no more than five (5) directors.
The Compensation Committee shall make recommendations to the full Board for such
matters as management compensation, the Company's benefit plans, and matters
relating to the Company's option plans, if any, which shall include the Series A
Nominee and the Series B Nominee.
4.4 Other Board Committees. All other Board committees formed from
time to time shall include the Series A Nominee and the Series B Nominee as
members.
4.5 Meetings of the Board; Quorum; Telephonic Meetings. The Board
shall meet at least once every three calendar months. A quorum for any meeting
of the Board shall consist of more than fifty percent (50%) of all the
directors, provided that the quorum shall include the Series A Nominee and the
Series B Nominee. The quorum for any committee meeting of the Board shall
include the Series A Nominee and the Series B Nominee. The Directors may
participate in a meeting of the Board by means of a conference telephone or
other communication equipment through which all persons participating in such
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.
4.6 Action by Written Consent. Any action required or permitted to be
taken by the Board, either at a meeting or otherwise, may be taken without a
meeting if the Directors unanimously consent thereto in writing and the writing
or writings are filed with the minutes of the meeting of the Board.
4.7 Expenses. The Company shall reimburse the Preferred Shareholder
Nominee for all reasonable expenses incurred by such nominee relating to Board's
activities, including but not limited to, expenses incurred to attend Board
meetings.
4.8 Indemnification. The Company's Memorandum of Association or
Articles of Association shall provide for indemnification for the directors of
the Company to the extent permissible under applicable law.
4.9 Governance of Subsidiaries. Each party hereto will use its best
efforts to procure that the Operating Subsidiary and any other Group Company
take actions only as directed or permitted by the Company's Board of Directors.
SECTION 5. Right of Participation.
5.1 Right of Participation With Respect to New Securities. Subject to
the provisions of Sections 5.2 and 5.3, the Company grants to each holder of the
Preferred Shares
12
then outstanding the right of participation (the "RIGHT OF PARTICIPATION") to
purchase its Pro Rata Share of New Securities which the Company may, from time
to time prior to the Qualified IPO, propose to allot and issue; provided that,
with respect to each such proposed allotment and issuance, (i) no Series A
Shareholder may exercise its Right of Participation unless the Majority of the
Series A Shareholders elect to exercise such right and (ii) no Series B
Shareholder may exercise its Right of Participation unless the Lead Series B
Shareholder elects to exercise such right. The Company shall offer to each
holder of the Preferred Shares for subscription up to its Pro Rata Share of the
New Securities on the same terms and at the same price at which the Company
proposes to allot and issue the New Securities.
5.2 Issuance Notice.
(a) In the event the Company proposes to issue New Securities, it
shall give the holders of the Preferred Shares then outstanding a written notice
(the "ISSUANCE NOTICE") of the Company's intention, describing the type of New
Securities, the price, the terms upon which the Company proposes to issue the
same, an offer for subscription the aggregate number of New Securities that
holders of the Series A Shares as a single class and holders of the Series B
Shares as a single class are each entitled to purchase pursuant to Section 5.1
of this Agreement, a statement that all such holders shall have thirty (30) days
from the date of receipt of the Issuance Notice to accept the offer for
subscription under the Issuance Notice (the "ISSUANCE NOTICE PERIOD), and a
statement that no such holder shall be entitled to exercise the Right of
Participation unless (i) in the case of the Series A Shareholders, the Majority
of the Series A Shareholders must exercise such right and (ii) in the case of
the Series B Shareholders, the Lead Series B Shareholder must exercise such
right.
(b) If the Majority of the Series A Shareholders elect to exercise the
Right of Participation within the Issuance Notice Period, each such holder may
elect to purchase up to its Pro Rata Share of the New Securities for the price
and upon the terms specified in the Issuance Notice by (a) giving written notice
to the Company within the Issuance Notice Period and (b) sending payment for its
Pro Rata Share of New Securities to the Company.
(c) If the Lead Series B Shareholder elects to exercise the Right of
Participation within the Issuance Notice Period, each such holder may elect to
purchase up to its Pro Rata Share of the New Securities for the price and upon
the terms specified in the Issuance Notice by (a) giving written notice to the
Company within the Issuance Notice Period and (b) sending payment for its Pro
Rata Share of New Securities to the Company.
5.3 Sale of New Securities.
(a) If the Majority of the Series A Shareholders fail to exercise the
Right of Participation within the Issuance Notice Period, the Company shall have
sixty (60) days thereafter to sell or enter into an agreement (pursuant to which
the sale of New Securities covered by the Issuance Notice shall be closed, if at
all, within thirty (30) days after the date of such agreement) to allot and
issue the New Securities, at a price and upon general terms no more favorable to
the subscriber of the New Securities than specified in the Issuance Notice. If
the number of New Securities which the Majority of the Series A Shareholders
elect to subscribe in the aggregate is less the aggregate number of New
Securities that the Series A Shareholders are
13
entitled to purchase as stated in the Issuance Notice, the Company shall have
sixty (60) days thereafter to sell or enter into an agreement (pursuant to which
the sale of New Securities covered by the Issuance Notice shall be closed, if at
all, within thirty (30) days after the date of such agreement) to allot and
issue up to such number of the New Securities as equal to the difference between
the number of New Securities which the Majority of the Series A Shareholders
elect to subscribe in the aggregate and the aggregate number of New Securities
that the Series A Shareholders are entitled to purchase as stated in the
Issuance Notice, at a price and upon general terms no more favorable to the
subscriber of the New Securities than specified in the Issuance Notice. In the
event the Company has not allotted and issued the New Securities within this
ninety (90) day period, the Company shall not thereafter allot or issue any New
Securities without first offering the New Securities to holders of the Series A
Shares in the manner provided above.
(b) If the Lead Series B Shareholder fails to exercise the Right of
Participation within the Issuance Notice Period, the Company shall have sixty
(60) days thereafter to sell or enter into an agreement (pursuant to which the
sale of New Securities covered by the Issuance Notice shall be closed, if at
all, within thirty (30) days after the date of such agreement) to allot and
issue the New Securities, at a price and upon general terms no more favorable to
the subscriber of the New Securities than specified in the Issuance Notice. If
the number of New Securities which the Lead Series B Shareholder elects to
subscribe in the aggregate is less the aggregate number of New Securities that
the Series B Shareholders are entitled to purchase as stated in the Issuance
Notice, the Company shall have sixty (60) days thereafter to sell or enter into
an agreement (pursuant to which the sale of New Securities covered by the
Issuance Notice shall be closed, if at all, within thirty (30) days after the
date of such agreement) to allot and issue up to such number of the New
Securities as equal to the difference between the number of New Securities which
the Lead Series B Shareholder elects to subscribe in the aggregate and the
aggregate number of New Securities that the Series B Shareholders are entitled
to purchase as stated in the Issuance Notice, at a price and upon general terms
no more favorable to the subscriber of the New Securities than specified in the
Issuance Notice. In the event the Company has not allotted and issued the New
Securities within this ninety (90) day period, the Company shall not thereafter
allot or issue any New Securities without first offering the New Securities to
holders of the Series B Shares in the manner provided above.
SECTION 6. Right of First Refusal; Co-Sale Right.
6.1 Right of First Refusal.
(a) Subject to the provisions of this Section 6.1 and Sections 6.5 and
6.7 of this Agreement, if the Founder proposes to sell or otherwise transfer,
directly or indirectly ("TRANSFER"), any interest in any Ordinary Shares or
other voting securities of the Company now owned or subsequently acquired by the
Founder (the "FOUNDER SHARES"), then each holder of the Preferred Shares shall
have a right of first refusal (the "RIGHT OF FIRST REFUSAL") to purchase the
Founder Shares proposed to be Transferred; provided that with respect each such
Transfer, (i) no Series A Shareholder may exercise its Right of First Refusal
unless the Majority of the Series A Shareholders elect to exercise such right
and (ii) no Series B Shareholder may exercise its Right of First Refusal unless
the Lead Series B Shareholder elects to exercise such right.
14
(b) The Founder shall give a written notice (the "TRANSFER NOTICE") to
each holder of the Preferred Shares describing fully the proposed Transfer,
including the number of shares proposed to be Transferred, the proposed Transfer
price, the name and address of the proposed Transferee and a statement that no
such holder may exercise the Right of First Refusal unless (i) in the case of
the Series A Shareholders, the Majority of the Series A Shareholders must
exercise such right and (ii) in the case of the Series B Shareholders, the Lead
Series B Shareholder must exercise such right. The Transfer Notice shall be
accompanied by a written certification by the Founder that the proposed
transferee is a bona fide purchaser and the Transfer Notice constitutes a
binding commitment of the Founder and the proposed transferee, with or without
conditions, for the Transfer of that Founder Shares subject to the Right of
First Refusal of the Majority of the Series A Preferred Shareholders or the Lead
Series B Shareholder, as the case may be.
(c) The holders of the Preferred Shares shall then have the right to
purchase up to all of the Founder Shares subject to the Transfer Notice at a
price per share equal to the proposed per share transfer price, by delivery of a
notice of exercise of the Right of First Refusal within thirty (30) days after
the date the Transfer Notice is delivered to such holders; provided that (i) in
the case of the Series A Shareholders, the Majority of the Series A Shareholders
has elected to exercise the Right of First Refusal and (ii) in the case of the
Series B Shareholders, the Lead Series B Shareholder has elected to exercise the
Right of First Refusal.
6.2 Co-Sale Right.
(a) General. If the Founder proposes to Transfer any Founder Shares or
any interest therein to any person or entity, each holder of the Preferred
Shares shall have the right, exercisable upon written notice to the Founder
within thirty (30) days after the date the Transfer Notice is delivered to such
holder, to participate in such sale of the Founder Shares on substantially the
same terms and conditions applicable to the Founder (the "CO-SALE RIGHT");
provided, however, that (i) the Co-Sale Right shall not apply to any Transfer of
Founder Shares pursuant to the exercise of the Right of First Refusal under
Section 6.1 and (ii) with respect to each such Transfer, (A) no Series A
Shareholder may exercise its Co-Sale Right unless the Majority of the Series A
Shareholders elect to exercise such right and (B) no Series B Shareholder may
exercise its Co-Sale Right unless the Lead Series B Shareholder elects to
exercise such right.
(b) Notice of Exercise.
(i) Notice of exercise of the Co-Sale Right shall indicate the
number of Founder Shares each holder of the Preferred Shares wishes to Transfer
under the Co-Sale Right and include an acknowledgment from such holder that it
may not exercise its Co-Sale Right unless (A) in the case of the Series A
Shareholders, the Majority of the Series A Shareholders must exercise such right
and (ii) in the case of the Series B Shareholders, the Lead Series B Shareholder
must exercise such right.
(ii) If the Majority of the Series A Shareholders elect to
exercise the Co-Sale Right, the holders of the Series A Shares may Transfer in
the aggregate up to the number of shares of Founder Shares equal to the product
obtained by multiplying the aggregate
15
number of the Founder Shares proposed to be Transferred as set out in the
Transfer Notice by a fraction, (x) the numerator of which is the number of
Shares held in the aggregate by such Majority of the Series A Shareholders
immediately before the Transfer and (y) the denominator of which is the total
number of the Shares held, in the aggregate, by the Founder and such Majority of
the Series A Shareholders immediately before the Transfer. If the Majority of
the Series A Shareholders exercise their Co-Sale Right in accordance with the
terms and conditions set forth in this Section 6.2, the Founder may Transfer its
Shares only if the proposed transferee completes the purchase of the shares
which such Majority of the Series A Shareholders seek to sell pursuant to the
exercise of the Co-Sale Right.
(iii) If the Lead Series B Shareholder elects to exercise the
Co-Sale Right, the holders of the Series B Shares may Transfer in the aggregate
up to the number of shares of Founder Shares equal to the product obtained by
multiplying the aggregate number of the Founder Shares proposed to be
Transferred as set out in the Transfer Notice by a fraction, (x) the numerator
of which is the number of Shares held in the aggregate by such Lead Series B
Shareholder immediately before the Transfer and (y) the denominator of which is
the total number of the Shares held, in the aggregate, by the Founder and such
Lead Series B Shareholder immediately before the Transfer. If the Lead Series B
Shareholder exercises its Co-Sale Right in accordance with the terms and
conditions set forth in this Section 6.2, the Founder may Transfer its Shares
only if the proposed transferee completes the purchase of the shares which such
Lead Series B Shareholder seeks to sell pursuant to the exercise of the Co-Sale
Right.
(c) Delivery of Certificates.
(i) The Majority of the Series A Shareholders shall effect their
participation in the Transfer under this Section 6.2 by, promptly or no later
than fifteen (15) days after the exercise of such Majority of the Series A
Shareholders of the Co-Sale Right, delivering to the Founder for Transfer to the
prospective purchaser one or more certificates, properly endorsed for Transfer,
which represent the type and number of the Series A Shares which such Majority
of the Series A Shareholders elect to Transfer; provided, however, that if the
prospective purchaser objects to the delivery of the Series A Shares in lieu of
Ordinary Shares, such Majority of the Series A Shareholders shall first convert
the Series A Shares into Ordinary Shares and deliver Ordinary Shares as provided
in this Section 6.2. The Company agrees to make any such conversion concurrent
with and contingent upon the actual Transfer of such shares to the prospective
purchaser.
(ii) The Lead Series B Shareholder shall effect its participation
in the Transfer under this Section 6.2 by, promptly or no later than fifteen
(15) days after the exercise of such Lead Series B Shareholder of the Co-Sale
Right, delivering to the Founder for Transfer to the prospective purchaser one
or more certificates, properly endorsed for Transfer, which represent the type
and number of the Series B Shares which such Lead Series B Shareholder elects to
Transfer; provided, however, that if the prospective purchaser objects to the
delivery of the Series B Shares in lieu of Ordinary Shares, such Lead Series B
Shareholder shall first convert the Series B Shares into Ordinary Shares and
deliver Ordinary Shares as provided in this Section 6.2. The Company agrees to
make any such conversion concurrent with and contingent upon the actual Transfer
of such shares to the prospective purchaser.
16
(d) Sales Proceeds.
(i) The stock certificate or certificates that the Majority of
the Series A Shareholders deliver to the Founder pursuant to Section 6.2(c)(i)
shall be transferred to the prospective purchaser in consummation of the sale of
the Founder Shares pursuant to substantially the same terms and conditions as
specified in the Transfer Notice, and the Founder shall upon receiving the same
from the prospective purchaser concurrently remit to each holder constituting
such Majority of the Series A Shareholders on a prorated basis the portion of
the sale proceeds to which such Majority of the Series A Shareholders is
entitled by reason of its participation in the Transfer. To the extent that any
prospective purchaser or purchasers prohibit assignment or otherwise refuse to
purchase shares or other securities from such Majority of the Series A
Shareholders, the Founder shall not Transfer to the prospective purchaser or
purchasers any Series A Shares unless and until, simultaneously with the sale,
the Founder purchases those shares or other securities from such Majority of the
Series A Shareholders.
(ii) The stock certificate or certificates that the Lead Series B
Shareholder deliver to the Founder pursuant to Section 6.2(c)(ii) shall be
transferred to the prospective purchaser in consummation of the sale of the
Founder Shares pursuant to substantially the same terms and conditions as
specified in the Transfer Notice, and the Founder shall upon receiving the same
from the prospective purchaser concurrently remit to the Lead Series B
Shareholder on a prorated basis the portion of the sale proceeds to which the
Lead Series B Shareholder is entitled by reason of its participation in the
Transfer. To the extent that any prospective purchaser or purchasers prohibit
assignment or otherwise refuse to purchase shares or other securities from the
Lead Series B Shareholder, the Founder shall not Transfer to the prospective
purchaser or purchasers any Series A Shares unless and until, simultaneously
with the sale, the Founder purchases those shares or other securities from the
Lead Series B Shareholder.
(e) Purchase and Sales Agreement. The terms and conditions of any sale
pursuant to this Section 6.2 shall be memorialized in, and governed by, a
written purchase and sales agreement with customary terms and provisions for
such a transaction; provided that the Majority of the Series A Shareholders or
the Majority of the Series A Shareholders, as the case may be, shall not be
required to give any representations or warranties other than those reasonably
requested relating to its title in and ownership of the shares and information
relating to such majority or in connection with complying with the relevant
exemptions of the Securities Act.
6.3 Sale by the Founder. Subject to Section 6.6, if and to the extent
that either or both of the Majority of the Series A Shareholders or the Lead
Series B Shareholder do not exercise its Right of First Refusal or Co-Sale Right
with respect to the sale of the Founder Shares subject to the Transfer Notice
within the relevant prescribed period, the Founder may, not later than ninety
(90) days following delivery to such Majority of the Series A Shareholders
and/or the Lead Series B Shareholder, as the case may be, of the Transfer
Notice, conclude a bona fide Transfer of all of the Founder Shares covered by
the Transfer Notice on terms and conditions not more favorable to the transferee
or transferor than those described in the Transfer Notice. Any proposed Transfer
on terms and conditions more favorable than those described in the Transfer
Notice, as well as any subsequent proposed transfer of any Founder Shares by the
Founder, shall
17
again be subject to the Right of First Refusal and the Co-Sale Right held by the
Majority of the Series A Shareholders and/or the Lead Series B Shareholder, as
the case may be, and shall require compliance by the Founder with the procedures
described in this Section 6.
6.4 No Adverse Effect. The exercise or non-exercise by either or both
of the Majority of the Series A Shareholders or the Lead Series B Shareholder of
the Right of First Refusal or the Co-Sale Right shall not adversely affect their
rights to participate in subsequent transfers of Founder Shares by the Founder
subject to the provisions of this Section 6.
6.5 Exempt Transfers.
(a) Notwithstanding the foregoing, the Right of Refusal and the
Co-Sale Right shall not apply to any transfer or transfers of Founder Shares by
the Founder to its Affiliates or the Company's employees, provided that such
employee transferee shall agree to the same transfer restrictions set out in
this Section 6.
(b) Notwithstanding the foregoing, the Right of First Refusal or the
Co-Sale Right shall not apply to the sale of any Founder Shares to the public
pursuant to a Registration Statement filed with, and declared effective by, the
Commission under the Securities Act (or with respect to a Registration in a
jurisdiction other than the United States, with or by an equivalent agency under
applicable law in such jurisdiction).
6.6 Prohibited Transfer. No sale of the Shares to a transferee under
Section 6.5 shall be effective if a purpose or effect of such transfer shall
have been to circumvent the provisions in Sections 6.1 and 6.2. Each Shareholder
shall remain responsible for the performance of this Agreement by each
transferee of such Shareholder to whom the Shares are transferred. If any
Affiliate of any Shareholder to whom the Shares are transferred pursuant to
Section 6.5 ceases to be an Affiliate of such Shareholder from whom it acquired
such Shares pursuant to such provision, such Person shall re-convey such Shares
to such transferring Shareholder as soon as reasonably practicable after such
Person knows of its upcoming change of status immediately prior thereto. If such
change of status is not known until after its occurrence, the former Affiliate
shall make such transfer to such transferring Shareholder as soon as practicable
after the former Affiliate receives notice thereof.
6.7 Restrictions on the Transfer by the Preferred Shareholders. Any
Preferred Shares, or any classes of shares of the Company, held by the Preferred
Shareholders are freely transferable, subject to restrictions under applicable
laws, provided, however, that (i) the holders of the Preferred Shares shall give
advance written notice to the Company with respect to a proposed transfer of
such shares, and (ii) such holders shall not transfer such shares to any Person
whose principal business is, in the good faith determination of two-thirds of
the members of the Board (not counting the Series A Nominees in the event that
the Series A Shares are being proposed to be transferred and not counting the
Series B Nominees in the event that the Series B Shares are being proposed to be
transferred), in direct competition with the principal business of the Company
at the time of such transfer. In addition to the foregoing, for a period of one
year (1) following the date of the Series A Shareholders Agreement, the Series A
Shareholder (or its Affiliates) shall not transfer shares of the Company
representing, on an aggregated basis, more than 50% of the Series A Shares (as
determined on a fully-diluted, as-converted basis) to a
18
Person other than Affiliates of the Series A Shareholder without the prior
written consent of the Company, which consent shall not be unreasonably
withheld.
SECTION 7. Demand Registration.
7.1 Request for Registration on Form Other Than Form F-3.
(a) Subject to the terms of this Agreement, in the event that the
Company receives from the Series A Initiating Holders at any time six (6) months
after the closing of the Company's initial public offering of Ordinary Shares
under a Registration Statement (other than a Registration of securities in a
Rule 145 transaction or of securities being offered to the employees of the
Group Companies pursuant to a stock option, stock purchase or similar plan, a
Registration on any form that does not include substantially the same
information as would be required to be included in a Registration Statement
covering the sale of the Registrable Securities, or a Registration in which the
only Ordinary Shares issuable upon conversion of debt securities that are also
being Registered), a written request that the Company effect any Registration
with respect to the Series A Registrable Securities on a form other than Form
F-3 for an offering of the then outstanding Series A Registrable Securities, the
Company shall (x) within ten (10) days of the receipt thereof, give written
notice of the proposed Registration to all other holders of the Registrable
Securities, and (y) as soon as practicable, use commercially reasonable efforts
to effect the Registration of the Series A Registrable Securities specified in
the request, together with any Registrable Securities of any other Holder of
Registrable Securities as are specified in a written request from such Holder
given within twenty (20) days after written notice from the Company. The Company
shall not be obligated to take any action to effect any Registration pursuant to
this Section 7.1(a) after the Company has effected two (2) Registrations
pursuant to this Section 7.1(a) and each Registration has been declared
effective. The substantive provisions of Section 7.5 in respect of the Series A
Registrable Securities shall be applicable to the Registration initiated under
this Section 7.1(a).
(b) Subject to the terms of this Agreement, in the event that the
Company receives from the Series B Initiating Holders at any time six (6) months
after the closing of the Company's initial public offering of Ordinary Shares
under a Registration Statement (other than a Registration of securities in a
Rule 145 transaction or of securities being offered to the employees of the
Group Companies pursuant to a stock option, stock purchase or similar plan, a
Registration on any form that does not include substantially the same
information as would be required to be included in a Registration Statement
covering the sale of the Registrable Securities, or a Registration in which the
only Ordinary Shares issuable upon conversion of debt securities that are also
being Registered), a written request that the Company effect any Registration
with respect to the Series B Registrable Securities on a form other than Form
F-3 for an offering of the then outstanding Series B Registrable Securities, the
Company shall (x) within ten (10) days of the receipt thereof, give written
notice of the proposed Registration to all other holders of the Registrable
Securities, and (y) as soon as practicable, use commercially reasonable efforts
to effect the Registration of the Series B Registrable Securities specified in
the request, together with any Registrable Securities of any other Holder of
Registrable Securities as are specified in a written request from such Holder
given within twenty (20) days after written notice from the Company. The Company
shall not be obligated to take any action to effect any Registration pursuant to
this Section 7.1(b) after the Company has effected two (2) Registrations
19
pursuant to this Section 7.1(b) and each Registration has been declared
effective. The substantive provisions of Section 7.5 in respect of the Series B
Registrable Securities shall be applicable to the Registration initiated under
this Section 7.1(b).
7.2 Request for Registration on Form F-3.
(a) If the Series A Initiating Holders request that the Company file a
Registration Statement on Form F-3 (or any successor form to Form F-3, or any
comparable form for a Registration in a jurisdiction other than the United
States) for a public offering, of shares of Series A Registrable Securities, the
reasonably anticipated aggregate price to the public of which, net of Selling
Expenses, would not be less than US$5,000,000, and the Company is a registrant
entitled to use Form F-3 or comparable form to Register the Series A Registrable
Securities for an offering, the Company shall use commercially reasonable
efforts to cause those Series A Registrable Securities to be Registered for the
offering on that form and to cause those Series A Registrable Securities to be
qualified in jurisdictions as the Holder or Holders of the Series A Registrable
Shares may reasonably request. The Company shall not be required to effect more
than one Registration pursuant to this Section 7.2(a) in any twelve (12) month
period. The substantive provisions of Section 7.5 in respect of the Series A
Registrable Securities shall be applicable to each Registration initiated under
this Section 7.2(a).
(b) If the Series B Initiating Holders request that the Company file a
Registration Statement on Form F-3 (or any successor form to Form F-3, or any
comparable form for a Registration in a jurisdiction other than the United
States) for a public offering, of shares of Series B Registrable Securities, the
reasonably anticipated aggregate price to the public of which, net of Selling
Expenses, would not be less than US$5,000,000, and the Company is a registrant
entitled to use Form F-3 or comparable form to Register the Series B Registrable
Securities for an offering, the Company shall use commercially reasonable
efforts to cause those Series B Registrable Securities to be Registered for the
offering on that form and to cause those Series B Registrable Securities to be
qualified in jurisdictions as the Holder or Holders of the Series B Registrable
Shares may reasonably request. The Company shall not be required to effect more
than one Registration pursuant to this Section 7.2(b) in any twelve (12) month
period. The substantive provisions of Section 7.5 in respect of the Series B
Registrable Securities shall be applicable to each Registration initiated under
this Section 7.2(b).
7.3 Right of Deferral. Notwithstanding anything in this Section 7 to
the contrary, the Company shall not be obligated to file a Registration
Statement pursuant to this Section 7:
(a) in any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting that
Registration, qualification, or compliance, unless the Company is already
subject to service in that jurisdiction and except as may be required by the
Securities Act or other applicable law in a jurisdiction other than the United
States in which the Registration is being effected;
(b) if the Company, within fifteen (15) days of the receipt of the
request of any Series A Initiating Holder(s), gives notice of its bona fide
intention to effect the filing of a Registration Statement with the Commission
or comparable regulatory agency for a Registration
20
in a jurisdiction other than the United States (other than a Registration of
securities in a Rule 145 transaction or of securities being offered to the
employees of the Group Companies pursuant to a stock option, stock purchase or
similar plan, a registration relating to a corporate reorganization, a
registration on any form that does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Series A Registrable Securities, or a registration in
which the only Ordinary Shares being registered is Ordinary Shares issuable upon
conversion of debt securities that are also being registered), then the Company
shall have the right to defer such filing for a period of not more than one
hundred twenty (120) days after receipt of the request of the Holders of the
Series A Registrable Shares requesting Registration pursuant to Section 7.1(a)
or Section 7.2(a), provided that the Company may not utilize this right more
than once in every twelve (12) month period and that the Company shall not
Register any other shares during such twelve (12) month period. Any Registration
of Series A Registrable Securities as a result of such efforts shall be deemed
to have been initiated by the Company, not by the Series A Initiating Holders
under Section 7.1(a), and the original request by the Series A Initiating
Holders to Register Registrable Securities shall instead be deemed a request to
include the Series A Registrable Securities specified in the request in such
Registration under Section 8;
(c) if the Company, within fifteen (15) days of the receipt of the
request of any Series B Initiating Holder(s), gives notice of its bona fide
intention to effect the filing of a Registration Statement with the Commission
or comparable regulatory agency for a Registration in a jurisdiction other than
the United States (other than a Registration of securities in a Rule 145
transaction or of securities being offered to the employees of the Group
Companies pursuant to a stock option, stock purchase or similar plan, a
registration relating to a corporate reorganization, a registration on any form
that does not include substantially the same information as would be required to
be included in a registration statement covering the sale of the Series B
Registrable Securities, or a registration in which the only Ordinary Shares
being registered is Ordinary Shares issuable upon conversion of debt securities
that are also being registered), then the Company shall have the right to defer
such filing for a period of not more than one hundred twenty (120) days after
receipt of the request of the Holders of the Series B Registrable Shares
requesting Registration pursuant to Section 7.1(b) or Section 7.2(b), provided
that the Company may not utilize this right more than once in every twelve (12)
month period and that the Company shall not Register any other shares during
such twelve (12) month period. Any Registration of Series B Registrable
Securities as a result of such efforts shall be deemed to have been initiated by
the Company, not by the Series B Initiating Holders under Section 7.1(b), and
the original request by the Series B Initiating Holders to Register Registrable
Securities shall instead be deemed a request to include the Series B Registrable
Securities specified in the request in such Registration under Section 8;
(d) within one hundred eighty (180) days immediately following the
effective date of any Registration Statement pertaining to the securities of the
Company (other than a Registration of securities in a Rule 145 transaction or of
securities being offered to the employees of the Group Companies pursuant to a
stock option, stock purchase or similar plan, a Registration relating to a
corporate reorganization, a Registration on any form that does not include
substantially the same information as would be required to be included in a
Registration Statement covering the sale of any Series A Registrable Securities
or any Series B Registrable
21
Securities, or a Registration in which the only Ordinary Shares being Registered
is Ordinary Shares issuable upon conversion of debt securities that are also
being Registered);
(e) in the case of a proposed Registration under Section 7.1(a) or
Section 7.2(a), if the Company furnishes to the Series A Initiating Holders a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board it would be materially detrimental to the Company
and its shareholders for a Registration Statement to be filed in the near
future. Then the Company's obligation to use its commercially reasonable efforts
to file a Registration Statement shall be deferred for a period not to exceed
one hundred twenty (120) days from the receipt of the request to file the
Registration by such Holder provided that the Company shall not exercise the
right contained in this Section 7.3(e) more than once in any twelve (12) month
period and provided further, that during such one hundred twenty (120) day
period the Company shall not file a Registration Statement with respect to the
public offering of securities of the Company (other than a Registration of
securities in a Rule 145 transaction or of securities being offered to the
employees of the Group Companies pursuant to a stock option, stock purchase or
similar plan, a Registration on any form that does not include substantially the
same information as would be required to be included in a Registration Statement
covering the sale of the Series A Registrable Securities, or a Registration in
which the only Ordinary Shares issuable upon conversion of debt securities that
are also being Registered); or
(f) in the case of a proposed Registration under Section 7.1(b) or
Section 7.2(b), if the Company furnishes to the Series B Initiating Holders a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board it would be materially detrimental to the Company
and its shareholders for a Registration Statement to be filed in the near
future. Then the Company's obligation to use its commercially reasonable efforts
to file a Registration Statement shall be deferred for a period not to exceed
one hundred twenty (120) days from the receipt of the request to file the
Registration by such Holder provided that the Company shall not exercise the
right contained in this Section 7.3(f) more than once in any twelve (12) month
period and provided further, that during such one hundred twenty (120) day
period the Company shall not file a Registration Statement with respect to the
public offering of securities of the Company (other than a Registration of
securities in a Rule 145 transaction or of securities being offered to the
employees of the Group Companies pursuant to a stock option, stock purchase or
similar plan, a Registration on any form that does not include substantially the
same information as would be required to be included in a Registration Statement
covering the sale of the Series B Registrable Securities, or a Registration in
which the only Ordinary Shares issuable upon conversion of debt securities that
are also being Registered).
7.4 Registration of Other Securities in Demand Registration. Any
Registration Statement filed pursuant to the request of any Holder under this
Section 7 may, subject to the provisions of Section 7.5, include Ordinary Shares
of the Company other than Registrable Securities.
7.5 Underwriting in Demand Registration.
(a) Notice of Underwriting.
22
(i) If the Series A Initiating Holders intend to distribute the
Series A Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to this Section 7, and the Company shall include that information in
the written notice referred to in Section 7.1(a) or 7.2(a) of this Agreement. In
such event, the right of any Holder of the Series A Registrable Securities to
Registration pursuant to this Section 7 shall be conditioned upon such Holder's
agreement to participate in the underwriting arrangement required by this
Section 7.5 in respect of the Series A Registrable Securities, and the inclusion
of that Holder's Series A Registrable Securities in the underwriting to the
extent provided herein. The Company shall (together with all Holders of the
Series A Registrable Securities proposing to distribute their securities through
the underwriting) enter into an underwriting agreement with the representative
(the "UNDERWRITERS' REPRESENTATIVE") of the underwriter or underwriters selected
for the underwriting by the Company and reasonably acceptable to Holders of a
majority of the Series A Registrable Securities that are being proposed to be
distributed through such underwriting.
(ii) If the Series B Initiating Holders intend to distribute the
Series B Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to this Section 7, and the Company shall include that information in
the written notice referred to in Section 7.1(b) or 7.2(b) of this Agreement. In
such event, the right of any Holder of the Series B Registrable Securities to
Registration pursuant to this Section 7 shall be conditioned upon such Holder's
agreement to participate in the underwriting arrangement required by this
Section 7.5 in respect of the Series B Registrable Securities, and the inclusion
of that Holder's Series B Registrable Securities in the underwriting to the
extent provided herein. The Company shall (together with all Holders the Series
B Registrable Securities proposing to distribute their securities through the
underwriting) enter into an underwriting agreement with the representative (the
"UNDERWRITERS' REPRESENTATIVE") of the underwriter or underwriters selected for
the underwriting by the Company and reasonably acceptable to Holders of a
majority of the Series B Registrable Securities that are being proposed to be
distributed through such underwriting.
(b) Inclusion of Other Holders in Demand Registration.
(i) If the Company, officers or directors of the Company holding
Ordinary Shares other than Registrable Securities, or holders of securities
other than Registrable Securities, request inclusion of such Ordinary Shares or
other securities in the Registration, the Series A Initiating Holders or the
Series B Initiating Holders, as the case may be and to the extent they deem
advisable and consistent with the goals of that Registration, may, in their
reasonable discretion, on behalf of all Series A Holders (in the case of the
Series A Initiating Holders) or on behalf of all Series B Holders (in the case
of the Series B Initiating Holders), as the case may be, offer to any or all of
the Company, those officers or directors, and the holders of securities other
than Registrable Securities that such Ordinary Shares or other securities be
included in the underwriting and may condition that offer on the acceptance by
those persons of the terms of this Section 7.
(ii) If the number of shares included pursuant to Section
7.5(b)(i) exceeds the number of shares of Series A Registrable Securities
included by all Holders of the Series A Registrable Securities, the Registration
shall be treated as governed by Section 8 of this
23
Agreement in respect of the Series A Registrable Securities rather than this
Section 7, and it shall not count as a Registration for purposes of this Section
7 in respect of the Series A Registrable Securities.
(iii) If the number of shares included pursuant to Section
7.5(b)(i) exceeds the number of shares of Series B Registrable Securities
included by all Holders of the Series B Registrable Securities, the Registration
shall be treated as governed by Section 8 of this Agreement in respect of the
Series B Registrable Securities rather than this Section 7, and it shall not
count as a Registration for purposes of this Section 7 in respect of the Series
B Registrable Securities.
(c) Marketing Limitation in Demand Registration.
(i) Notwithstanding anything in this Section 7 to the contrary,
if the Underwriters' Representative advises the Series A Initiating Holders in
writing that marketing factors (including, without limitation, the aggregate
number of Ordinary Shares requested to be Registered, the general condition of
the market, and the status of the persons proposing to sell securities pursuant
to the Registration) require a limitation of the number of shares to be
underwritten, then the Series A Initiating Holders shall so advise all Holders
of Series A Registrable Securities which would otherwise be underwritten
pursuant hereto, and the number of shares of Series A Registrable Securities
that may be included in the Registration and underwriting shall be allocated
among all Holders thereof in proportion, as nearly as practicable, to the
respective amounts of Series A Registrable Securities entitled to inclusion in
that Registration held by such Holders of the Series A Registrable Securities at
the time of filing the Registration Statement; provided that securities
described in Section 7.5(b)(i) shall first be excluded from such Registration,
and that at least twenty-five percent (25%) of the Registrable Securities
requested by the Series A Initiating Holders to be included in such Registration
and underwriting shall be so included. No Series A Registrable Securities or
other securities excluded from the underwriting by reason of this Section
7.5(c)(i) shall be included in such Registration Statement. To facilitate the
allocation of shares in accordance with the above provisions, the Company and
the Underwriters' Representative may round the number of shares allocated to any
Holder of the Series A Registrable Securities to the nearest one hundred (100)
shares.
(ii) Notwithstanding anything in this Section 7 to the contrary,
if the Underwriters' Representative advises the Series B Initiating Holders in
writing that marketing factors (including, without limitation, the aggregate
number of Ordinary Shares requested to be Registered, the general condition of
the market, and the status of the persons proposing to sell securities pursuant
to the Registration) require a limitation of the number of shares to be
underwritten, then the Series B Initiating Holders shall so advise all Holders
of Series B Registrable Securities which would otherwise be underwritten
pursuant hereto, and the number of shares of Series B Registrable Securities
that may be included in the Registration and underwriting shall be allocated
among all Holders thereof in proportion, as nearly as practicable, to the
respective amounts of Series B Registrable Securities entitled to inclusion in
that Registration held by such Holders of the Series B Registrable Securities at
the time of filing the Registration Statement; provided that securities
described in Section 7.5(b)(i) shall first be excluded from such Registration,
and that at least fifteen percent (15%) of the Registrable
24
Securities requested by the Series B Initiating Holders to be included in such
Registration and underwriting shall be so included. No Series B Registrable
Securities or other securities excluded from the underwriting by reason of this
Section 7.5(c)(ii) shall be included in such Registration Statement. To
facilitate the allocation of shares in accordance with the above provisions, the
Company and the Underwriters' Representative may round the number of shares
allocated to any Holder of the Series B Registrable Securities to the nearest
one hundred (100) shares.
(d) Right of Withdrawal in Demand Registration. If any Holder of
Registrable Securities or, or a holder of other securities entitled (upon
request) to be included in such Registration, disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the Underwriter's Representative, and the Series A Initiating
Holders or the Series B Initiating Holders, as the case may be, delivered at
least seven (7) Business Days prior to the effective date of the Registration
Statement. The securities so withdrawn shall also be withdrawn from the
Registration Statement, and such securities shall not be transferred in a public
distribution prior to one hundred eighty (180) days after the effective date of
such Registration, or such other period of time as the underwriters may require.
7.6 Other Securities Laws in Demand Registration. In the event of any
Registration pursuant to this Section 7, the Company shall exercise its
commercially reasonable endeavors to Register and qualify the securities covered
by the Registration Statement under the securities laws of any other
jurisdictions in the United States as shall be reasonably appropriate for the
distribution of the securities; provided, however, that: (a) the Company shall
not be required to do business or to file a general consent to service of
process in any such state or jurisdiction; and (b) notwithstanding anything in
this Agreement to the contrary, in the event any jurisdiction in which the
securities shall be qualified imposes a non-waivable requirement that expenses
incurred in connection with the qualification of the securities be borne by
selling shareholders, the expenses shall be payable pro rata by the selling
shareholders.
7.7 Other Registration Rights. The Company and the Founder hereby
jointly and severally (i) represent and warrant to the Preferred Shareholders
that the Company has not granted any rights to any shareholder or other person
with respect to the Registration of securities of the Company and (ii) covenant
that the Company will not, and the Founder will not permit the Company to, grant
any such rights to any Person without the prior written consent of each of (a)
Holders holding at least a majority of the Series A Registrable Securities and
(b) the Lead Series B Shareholder.
SECTION 8. Piggyback Registration.
8.1 Notice of Piggyback Registration and Inclusion of Registrable
Securities. Subject to the terms of this Agreement, if the Company decides to
Register any of its Ordinary Shares (either for its own account or the account
of a security holder or holders (other than Holders exercising their demand
rights pursuant to Section 7 of this Agreement)) (other than a Registration
relating solely to the sale of securities to participants in a Company stock
plan, a Registration relating to a corporate reorganization or other transaction
under Rule 145 of the Securities Act, a Registration on any form that does not
include substantially the same
25
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities, or a Registration in which the
only Ordinary Shares being registered is Ordinary Shares issuable upon
conversion of debt securities that are also being Registered), the Company
shall: (a) promptly give each Holder written notice thereof (which shall include
a list of the jurisdictions in which the Company intends to attempt to qualify
those securities under the applicable Blue Sky or other securities laws); and
(b) include in that Registration (and any related qualification under Blue Sky
laws or other compliance), and in any underwriting involved therein, all the
Registrable Securities specified in a written request delivered to the Company
by any Holder within twenty (20) days after delivery of the written notice from
the Company. The Company shall have the right to terminate or withdraw any
Registration initiated by it under this Section 8 prior to the effectiveness of
such Registration whether or not any Holder has elected to include securities in
such Registration.
8.2 Underwriting in Piggyback Registration.
(a) Notice of Underwriting in Piggyback Registration. If the
Registration of which the Company gives notice is for a Registered public
offering involving an underwriting, the Company shall so advise the Holders as a
part of the written notice given pursuant to Section 8.1. In such event, the
right of any Holder to Registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in such underwriting to the extent provided in this
Section 8. All Holders proposing to distribute their securities through the
underwriting shall (together with the Company and any other holders distributing
their securities through the underwriting) enter into an underwriting agreement
with the Underwriter's Representative for such offering. The Holders shall have
no right to participate in the selection of the underwriters for an offering
pursuant to this Section 8.
(b) Marketing Limitation in Piggyback Registration. Notwithstanding
anything in this Section 8 to the contrary, if the Underwriter's Representative
advises the Holders seeking Registration of Registrable Securities pursuant to
this Section 8 in writing that marketing factors (including, without limitation,
the aggregate number of Ordinary Shares requested to be Registered, the general
condition of the market, and the status of the persons proposing to sell
securities pursuant to the Registration) require a limitation of the number of
shares to be underwritten, the Underwriters' Representative (subject to the
allocation priority set forth in Section 8.2(c)) may:
(i) in the case of the Company's initial public offering pursuant
to a Registration Statement, exclude some or all Registrable Securities from the
Registration and underwriting; and
(ii) in the case of any Registered public offering subsequent to
the initial public offering, limit the number of shares of Registrable
Securities to be included in the Registration and underwriting, to not less than
thirty-five percent (35%) of the Series A Registrable Securities and not less
than twenty five percent (25%) of the Series B Registrable Securities requested
to be included in the Registration.
(c) Allocation of Shares in Piggyback Registration. If the
Underwriter's Representative limits the number of shares to be included in a
Registration pursuant to Section
26
8.2(b), the number of shares to be included in the Registration shall be
allocated among all other Holders and other holders of securities (other than
Registrable Securities) requesting and legally entitled to include securities in
that Registration, in the following order of priority:
(i) first, to the Company, to the extent it is offering shares
for its own account; and
(ii) next, to Holders of Registrable Securities requesting
inclusion of Registrable Securities in the offering, in proportion, as nearly as
practicable, to the respective amounts of securities (including the Registrable
Securities), which such Holders would otherwise be entitled to include in the
Registration;
(iii) next, to the other holders requesting inclusion of such
securities (other than Registrable Securities) in the offering, in proportion,
as nearly as practicable to the respective amounts of securities which such
other holders would otherwise be entitled to include in the Registration.
For any Registration subsequent to an initial public offering, the
number of Registrable Securities that may be included in the Registration and
underwriting under Section 8.2(b)(ii) shall not be reduced to (i) less than
thirty-five percent (35%) of the Series A Registrable Securities without the
prior consent of at least a majority of the Holders of the Series A Registrable
Securities who have requested their Series A Registrable Securities to be
included in the Registration and underwriting or (ii) less than twenty five
percent (25%) of the Series B Registrable Securities requested to be included in
the Registration without the prior consent of the Lead Series B Shareholder who
has requested its Series B Registrable Securities be included in the
Registration and underwriting. No Registrable Securities or other securities
excluded from the underwriting by reason of this Section 8.2(c) shall be
included in the Registration Statement. To facilitate the allocation of shares
in accordance with the above provisions, the Company and the Underwriters'
Representative may round the number of shares allocated to any Holder to the
nearest one hundred (100) shares.
(d) Withdrawal in Piggyback Registration. If any Holder disapproves of
the terms of any underwriting, the Holder may elect to withdraw therefrom by
written notice to the Company and the Underwriter's Representative delivered at
least seven days prior to the effective date of the Registration Statement. Any
Registrable Securities or other securities excluded or withdrawn from the
underwriting shall be withdrawn from the Registration.
SECTION 9. Expenses of Registration.
(a) All Registration Expenses reasonably incurred in connection with
up to two (2) Registrations pursuant to Section 7.1(a), two (2) Registrations
pursuant Section 7.1(b) and unlimited Registrations pursuant to Sections 7.2 and
8 shall be borne by the Company. All Registration Expenses incurred in
connection with any other Registration, qualification or compliance shall be
apportioned among the Holders, and other holders, including the Company, of the
securities so Registered on the basis of the number of shares Registered.
(b) Notwithstanding the above, the Company shall not be required to
pay for any expenses of any Registration proceeding commenced pursuant to
Section 7 if (i) in the case
27
of a Registration under Section 7.1(a), the Registration request is subsequently
withdrawn at the request of the Holders of a majority of the Series A
Registrable Securities to be Registered (which Holders shall bear those
expenses), unless the Holders of a majority of the Series A Registrable
Securities agree to forfeit their right to one (1) corresponding Registration
pursuant to Section 7.1(a) and (ii) in the case of a Registration under Section
7.1(b), the Registration request is subsequently withdrawn at the request of the
Lead Series B Shareholder (which Holders shall bear those expenses), unless the
Lead Series B Shareholder agrees to forfeit its right to one (1) corresponding
Registration pursuant to Section 7.1(b); provided, however, that if at the time
of such withdrawal, such Holders have learned of a material adverse change in
the condition, business, or prospects of the Company not known to such Holders
at the time of their request for such Registration, and have withdrawn their
request for Registration with reasonable promptness after learning of such
material adverse change, then the Holders shall not be required to pay any such
expenses and such Registration shall not constitute the use of a Registration
under Section 7. All Selling Expenses shall be borne by the holders of the
securities Registered pro rata on the basis of the number of shares Registered.
SECTION 10. Termination of Registration Rights. The rights of any Holder to
cause the Company to Register securities granted under Sections 7 and 8 and to
receive notices pursuant to Section 7 and Section 8 of this Agreement shall
terminate on the earlier of: (a) five (5) years after the consummation of a
Qualified IPO; (b) with respect to such Holder, after a Qualified IPO or the
Company's initial public offering of securities pursuant to a Registration
Statement, if following such Qualified IPO or initial public offering, such
Holder, together with its Affiliates, holds less than one percent (1%) of the
outstanding Ordinary Shares, (c) with respect to such Holder, when such Holder
is eligible to sell all of the Registrable Securities held by it (together with
any Affiliate of such Holder with whom such Holder must aggregate its sales
under Rule 144) either (i) under Rule 144 within any ninety (90) day period
without volume limitations or (ii) under Rule 144(k), or (d) with respect to
such Holder's right with respect to Registration of Registrable Securities in
any jurisdiction other than the United States, when that Holder is eligible to
sell all of its Registrable Securities under a provision of that jurisdiction's
securities laws comparable to Rule 144 or 144(k).
SECTION 11. Registration Procedures and Obligations. Whenever required
under this Agreement to effect the Registration of any Registrable Securities,
the Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the Commission (or comparable regulatory
agency with respect to a Registration in a jurisdiction other than the United
States) a Registration Statement with respect to such Registrable Securities and
use its commercially reasonable efforts to cause that Registration Statement to
become effective, and, upon the request of the Holders of a majority of the
Registrable Securities Registered thereunder, keep the Registration Statement
effective for up to ninety (90) days, or if earlier, until the distribution
contemplated by the Registration has been completed.
(b) Prepare and file with the Commission (or comparable regulatory
agency for a Registration in a jurisdiction other than the United States), such
amendments and supplements to such Registration Statement and the prospectus
used in connection with such Registration Statement as may be necessary to
comply with the provisions of the Securities Act
28
(or, with respect to a Registration in a jurisdiction other than the United
States, other applicable law in a jurisdiction other than the United States)
with respect to the disposition of all securities covered by such Registration
Statement;
(c) Furnish to the Holders the number of copies of a prospectus,
including a preliminary prospectus, required by the Securities Act (or, with
respect to a Registration in a jurisdiction other than the United States, other
applicable law in a jurisdiction other than the United States), and such other
documents as the underwriters may reasonably request in order to facilitate the
disposition of such Registrable Securities;
(d) Otherwise use its commercially reasonable efforts to comply with
the Securities Act, the Exchange Act and any other applicable rules and
regulations of the Commission, and make available to the securities holders, as
soon as reasonably practicable, an earnings statement covering the period of at
least twelve (12) months after the effective date of such Registration
Statement, which earnings statement shall satisfy Section 11(a) of the
Securities Act and any applicable regulations thereunder, including Rule 158;
(e) Use its commercially reasonable efforts to Register and qualify
the securities covered by the Registration Statement under the securities or
Blue Sky laws of any other jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required to qualify to do
business or file a general consent to service of process in any such states or
jurisdictions, and provided further that if any jurisdiction in which the
securities shall be qualified imposes a non-waivable requirement that expenses
incurred in connection with the qualification of the securities be borne by
selling shareholders, such expenses shall be payable pro rata by selling
shareholders;
(f) Appoint a qualified independent underwriter, if necessary under
the circumstances or if reasonably requested by the Holders of more than fifty
percent (50%) of the Registrable Securities in any Registration made pursuant to
the terms hereof;
(g) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering, provided that each Holder
participating in the underwriting shall also enter into and perform its
obligations under such an agreement;
(h) Notify each Holder of Registrable Securities covered by the
Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in the Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(i) Provide a transfer agent and registrar for all Registrable
Securities Registered pursuant to the Registration Statement and a CUSIP number
for all such Registrable Securities, in each case not later than the effective
date of such Registration;
(j) Use its commercially reasonable efforts to furnish, at the request
of any Holder requesting Registration of Registrable Securities pursuant to this
Agreement, on the date
29
that Registrable Securities are delivered to the underwriters for sale in
connection with a Registration pursuant to this Agreement, (i) an opinion, dated
the date of the sale, of the counsel representing the Company for the purposes
of such Registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, and (ii) a "comfort" letter
dated the date of the sale, from the independent certified public accountants of
the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any; and
(k) Use its commercially reasonable efforts to list the Registrable
Securities on the primary exchange upon which similar securities issued by the
Company are then traded.
SECTION 12. Information Furnished by Holder. It shall be a condition
precedent of the Company's obligations under this Agreement that each Holder of
Registrable Securities included in any Registration furnish to the Company
information regarding such Holder, the Registrable Securities held by it and the
distribution of such Registrable Securities proposed by such Holder as the
Company may reasonably request.
SECTION 13. Indemnification.
13.1 Company's Indemnification of the Holders. In the event any
Registrable Securities are included in a Registration Statement under this
Agreement, to the extent permitted by law, the Company shall indemnify each
Holder, each of its officers, directors, partners and legal counsel, and each
person controlling such Holder, with respect to which Registration,
qualification, or compliance of Registrable Securities has been effected
pursuant to this Agreement, and each underwriter, if any, and each person who
controls such underwriter within the meaning of Section 15 of the Securities Act
against all claims, losses, damages, liabilities, or actions in respect thereof
(collectively, "DAMAGES") arising out of or based upon any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus or
other document (including any related Registration Statement) incident to any
Registration, qualification, or compliance, or are based on 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, or any violation by
the Company of any rule or regulation promulgated under the Securities Act,
Exchange Act, applicable Blue Sky laws, or other applicable laws in the
jurisdiction other than the United States in which the Registration occurred,
applicable to the Company and relating to action or inaction required of the
Company in connection with any Registration, qualification, or compliance, and
the Company shall reimburse each such Holder, its directors, partners, legal
counsel and independent accountant, each such underwriter, and each such person
who controls such Holder or any such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability, or action; provided, however, that the
indemnity contained in this Section 13.1 shall not apply to amounts paid in
settlement of any Damages if settlement is effected without the consent of the
Company (which consent shall not unreasonably be withheld); and provided,
further, that the Company will not be liable in any case to the extent that any
Damages arise out of or are based upon any untrue statement or omission based
upon written information furnished to the Company by a Holder, underwriter, or
controlling person and stated to be for use in connection with the offering of
securities of the Company.
30
13.2 Holder's Indemnification of Company. In the event any Registrable
Securities are included in a Registration Statement under this Agreement, to the
extent permitted by law, each Holder shall, if Registrable Securities held by
that Holder are included in the securities as to which Registration,
qualification or, compliance is being effected pursuant to this Agreement,
indemnify the Company, each of its directors and officers, each legal counsel
and independent accountant of the Company, each underwriter, if any, of the
Company's securities covered by the Registration Statement, each person who
controls the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other Holder, each of its officers, directors, and
constituent partners, and each person controlling such other Holder, against all
Damages arising out of or based upon any untrue statement (or alleged untrue
statement) of a material fact contained in any Registration Statement,
prospectus, offering circular, or other document, or 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, or any violation by the
Holder of any rule or regulation promulgated under the Securities Act, Exchange
Act, applicable Blue Sky laws, or other applicable laws in the jurisdiction
other than the United States in which the Registration occurred, applicable to
such Holder and relating to action or inaction required of such Holder in
connection with any Registration, qualification, or compliance, and shall
reimburse the Company, such other Holders, directors, officers, partners,
persons, law firms and accounting firms, underwriters or control persons for any
legal and any other expenses reasonably incurred in connection with
investigating or defending any claim, loss, damage, liability, or action, in
each case to the extent, but only to the extent, that the untrue statement (or
alleged untrue statement) or omission (or alleged omission) or violation is made
in that Registration Statement, prospectus, offering circular, or other document
in reliance upon and in conformity with written information furnished to the
Company by such Holder and stated to be specifically for use in connection with
the offering of securities of the Company, provided, however, that the indemnity
contained in this Section 13.2 shall not apply to amounts paid in settlement of
any Damages if settlement is effected without the consent of such Holder (which
consent shall not be unreasonably withheld) and provided, further, that such
Holder's liability under this Section 13.2 shall not exceed the Holder's
proceeds (less underwriting discounts and selling commissions) from the offering
of securities made in connection with such Registration, except in the case of
fraud or willful misconduct by such Holder.
The obligations of the Holders under this Section 13.2 shall be
several, and not joint and several, among the Holders whose Registrable
Securities are included in the Registration.
13.3 Condition to Indemnity. The foregoing indemnity agreements of the
Company and the Holders are subject to the condition that, insofar as they
relate to any violation made in a preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the Commission at the time the
Registration Statement in question becomes effective or the amended prospectus
filed with the Commission pursuant to Rule 424(b) (the "FINAL PROSPECTUS"), such
indemnity agreement shall not inure to the benefit of any person if a copy of
the Final Prospectus was furnished to the indemnified party and was not
furnished to the person asserting the loss, liability, claim or damage at or
prior to the time such action is required by the Securities Act.
31
13.4 Indemnification Procedure. Promptly after receipt by an
indemnified party under this Section 13 of notice of the commencement of any
action, the indemnified party shall, if a claim is to be made against an
indemnifying party under this Section 13, notify the indemnifying party in
writing of the commencement thereof and generally summarize the action. The
indemnifying party shall have the right to participate in and to assume the
defense of that claim; provided, however, that the indemnifying party shall be
entitled to select counsel for the defense of the claim with the approval of any
parties entitled to indemnification, which approval shall not be unreasonably
withheld; provided further, however, that if either party reasonably determines
that there may be a conflict between the position of the Company and the Holders
in conducting the defense of the action, suit, or proceeding by reason of
recognized claims for indemnity under this Section 13, then counsel for such
party shall be entitled to conduct the defense to the extent reasonably
determined by counsel to be necessary to protect the interests of such party.
The failure to notify an indemnifying party promptly of the commencement of any
action, if prejudicial to the ability of the indemnifying party to defend the
action, shall relieve the indemnifying party, to the extent so prejudiced, of
any liability to the indemnified party under this Section 13, but the omission
to notify the indemnifying party shall not relieve the party of any liability
that the party may otherwise have to any indemnified party otherwise under this
Section 13.
13.5 Contribution. If the indemnification provided for in this Section
13 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any Damages, then the indemnifying party, in
lieu of indemnifying the indemnified party hereunder, shall contribute to the
amount paid or payable by the indemnified party as a result of those Damages in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party, on the one hand, and of the indemnified party, on the other
hand, in connection with the statements or omissions that resulted in Damages as
well as any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the indemnifying or the indemnified party and the parties' relative
intent, knowledge, access to information, and opportunity to correct or prevent
the statement or omission. No Holder will be required to contribute any amount
in excess of the net proceeds received from the sale of all such Registrable
Securities offered and sold by such Holder pursuant to such Registration
Statement, except in the case of fraud or willful misconduct by such Holder; and
no person or entity guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) will be entitled to contribution from
any person or entity who was not guilty of such fraudulent misrepresentation.
13.6 Conflicts. Notwithstanding the foregoing, to the extent that
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control; provided however, that the provision in any such
underwriting agreement pertaining to indemnification and contribution will be
(i) substantially similar to those contained herein, or (ii) typical of such
provisions found in underwriting agreements of companies similarly situated to
the Company.
32
13.7 Survival of Obligations. The obligations of the Company and
Holders under this Section 13 shall survive the completion of any offering of
Registrable Securities in a Registration Statement under this Agreement or
otherwise. No indemnifying party, in the defense of any such claim or
litigation, shall, except with the consent of each indemnified party, consent to
entry of any judgment or enter into any settlement which admits fault on behalf
of the indemnified party or which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability with respect to such claim or litigation.
SECTION 14. Lock-Up. Each Holder hereby agrees that, if requested by the
Company or the Underwriter's Representative (if any) in connection with the
Company's initial public offering, such Holder shall not sell, contract to sell,
make any short sale of, loan, grant any option for the purchase of, pledge,
charge or otherwise transfer or dispose of any Registrable Securities or other
securities of the Company without the prior written consent of the Company or
the Underwriter's Representative, as the case may be, for such period of time
(not to exceed one hundred eighty (180) days) following the effective date of a
Registration Statement of the Company filed under the Securities Act (or other
applicable law in a jurisdiction other than the United States in which a
Registration occurred) as may be requested by the Underwriter's Representative
or pursuant to any regulations or rules of the stock exchange on which shares of
the Company are listed. The obligations of Holders under this Section 14 shall
be conditioned upon similar agreements being in effect with each other
shareholder who is an officer, director, or five percent (5%) shareholder of the
Company. The Company shall not release any of the shareholders who is an
officer, director, or five percent (5%) shareholder of the Company from the
lock-up without first releasing the Holders.
SECTION 15. No Action Letter. Notwithstanding anything else in this
Agreement, if: (a) the Company obtains from the Commission (or comparable
regulatory agency in case of Registration in a jurisdiction other than the
United States) a "no-action" letter in which the Commission or such comparable
regulatory agency has indicated that it will take no action if, without
Registration under the Securities Act or comparable law, any Holder disposes of
Registrable Securities covered by any request for Registration made under
Section 7 of this Agreement in the specific manner in which the Holder proposes
to dispose of Registrable Securities included in that request (such as
including, without limitation, inclusion of the Registrable Securities in an
underwriting initiated by either the Company or the Holders) and that the
Registrable Securities may be sold to the public without Registration in
accordance with an established procedure or Rule-based "safe harbor" without
unreasonable legal risk or uncertainty, then the Registrable Securities included
in the request shall not be eligible for Registration under this Agreement. Any
Registrable Securities not so disposed of shall be eligible for Registration in
accordance with the terms of this Agreement with respect to other proposed
dispositions to which this Section 15 does not apply. The Registration rights of
the Holders of Registrable Securities set forth in this Agreement are
conditioned upon the conversion of the Registrable Securities with respect to
which Registration is sought into Ordinary Shares prior to the effective date of
the Registration Statement.
SECTION 16. Reports Under the Exchange Act. With a view to making available
to Holders the benefits of Rule 144 promulgated under the Securities Act and any
other rule or regulation of the Commission that may at any time permit a Holder
to sell securities of the
33
Company to the public without Registration or pursuant to a Registration on Form
F-3, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144, at all times after ninety (90) days after
the effective date of the first Registration Statement filed by the Company for
the offering of its securities to the public so long as the Company is subject
to the periodic reporting requirements under Section 13 or 15(d) of the Exchange
Act;
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
(c) furnish to any Holder, so long as the Holder owns any Registrable
Securities, promptly upon written request (i) a written statement by the Company
that it has complied with the reporting requirements of Rule 144 (at any time
after ninety (90) days after the effective date of the first Registration
Statement filed by the Company), the Securities Act, and the Exchange Act (at
any time after it has become subject to reporting requirements thereunder), or
that it qualifies as a registrant whose securities may be resold pursuant to
Form F-3 (at any time after it so qualifies); (ii) a copy of the most recent
annual or quarterly report of the Company and any other reports and documents
filed by the Company; and (iii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the Commission
which permits the selling of any such securities without Registration or
pursuant to that form;
(d) with respect to a Registration in a jurisdiction other than the
United States, take actions similar to those set forth in paragraphs (a), (b),
(c) and (d) of this Section 16 with a view to making available to Holders the
benefits of the corresponding provision or provisions of that jurisdiction's
securities laws; and
(e) at the request of a Holder, use its best efforts to enable such
Holder to sell the maximum number of Registrable Securities permitted under Rule
144, including without limitation promptly issuing appropriate instructions to
the Company's share transfer agent to remove legends from such Holder's share
certificates, causing the Company's counsel to issue legal opinions to support
such instructions, and if applicable promptly issuing appropriate instructions
to the Company's share registrar and depository agent to convert such Holder's
shares into depository receipts or similar instruments to be deposited into such
Holder's brokerage account(s). The Company acknowledges that time is of the
essence with respect to its obligations under this Section 16(e), and that any
unreasonable delay will cause the Holders irreparable harm and constitutes a
material breach of its obligations hereunder.
SECTION 17. Transfer of Rights. The rights to cause the Company to Register
Registrable Securities under this Agreement may be assigned (but only with all
related obligations) by a Holder to (i) another Holder of Registrable Securities
who already possesses registration rights granted under this Agreement, (ii) a
transferee or assignee acquiring five percent (5%) or more of the Ordinary
Shares Equivalent, (iii) an affiliated limited partnership, a limited partner,
or general partner or other Affiliates of a Holder, provided that (x) the
Company is, within reasonable time after such transfer, furnished with written
notice of the name and
34
address of such transferee or assignee and the securities with respect to which
such registration rights are being assigned, (y) such assignment shall be
effective only if immediately following such transfer the further disposition of
such securities by the transferee or assignee is restricted under the Securities
Act and (z) such Holder shall procure that the transferee or assignee of such
Holder's Registrable Securities execute a deed of adherence to this Agreement.
SECTION 18. Legend; Stop Transfer Instructions.
18.1 Legend.
(a) Each certificate representing shares or securities of the Company
now or hereafter owned by Shareholders who are not U.S. persons (as such term is
defined by Regulation S under the Securities Act) and any transferee of such
shares and securities shall be endorsed with the following legend:
"THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF
AN AMENDED AND RESTATED SHAREHOLDERS AGREEMENT BY AND BETWEEN THE HOLDER
HEREOF, THE COMPANY AND CERTAIN OTHER SHAREHOLDERS OF THE COMPANY. COPIES
OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF
THE COMPANY."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES TO
BE ISSUED UPON THEIR CONVERSION (IF APPLICABLE) HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND MAY NOT
BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS BY OR ON BEHALF
OF ANY U.S. PERSON, UNLESS REGISTERED UNDER THE SECURITIES ACT OR AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. IN ORDER TO TRANSFER OR
EXERCISE ANY INTEREST IN THESE SECURITIES, THE BENEFICIAL HOLDER MUST
FURNISH TO THE COMPANY EITHER (A) A WRITTEN CERTIFICATION THAT IT IS NOT A
U.S. PERSON AND THE PREFERRED SHARES ARE NOT BEING CONVERTED ON BEHALF OF A
U.S. PERSON OR (B) A WRITTEN OPINION OF COUNSEL TO THE EFFECT THAT THE
SECURITIES DELIVERED UPON CONVERSION OF THESE SECURITIES HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OR THAT THE DELIVERY OF SUCH SECURITIES
IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. EACH
BENEFICIAL HOLDER BY ACCEPTING AN INTEREST IN THESE SECURITIES AGREES THAT
ANY HEDGING TRANSACTION INVOLVING SUCH SECURITIES OR THE SECURITIES TO BE
ISSUED UPON CONVERSION OF SUCH SECURITIES MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE SECURITIES ACT. TERMS IN THIS LEGEND HAVE THE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT."
35
(b) Each certificate representing shares or securities of the Company
now or hereafter owned by Shareholders who are U.S. persons (as such term is
defined by Regulation S under the Securities Act) (the "RESTRICTED SECURITIES")
and any transferee of the Restricted Securities shall be endorsed with the
following legend:
"THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF
AN AMENDED AND RESTATED SHAREHOLDERS AGREEMENT BY AND BETWEEN THE HOLDER
HEREOF, THE COMPANY AND CERTAIN OTHER SHAREHOLDERS OF THE COMPANY. COPIES
OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF
THE COMPANY."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES TO
BE ISSUED UPON THEIR CONVERSION (IF APPLICABLE) HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AMENDED (THE "SECURITIES ACT").
THESE SECURITIES ARE "RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE
144(A)(3) UNDER THE SECURITIES ACT, AND MAY ONLY BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED (1) INSIDE THE UNITED STATES TO A PERSON WHOM THE
HOLDER AND THE BENEFICIAL OWNER REASONABLY BELIEVE IS A QUALIFIED
INSTITUTIONAL BUYER ("QIB") AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QIB IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT,
(2) OUTSIDE THE UNITED STATES TO A PERSON OTHER THAN A U.S. PERSON (AS SUCH
TERMS ARE DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (IF AVAILABLE), OR
(4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, IN EACH CASE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE LAWS
OF THE STATES, TERRITORIES AND POSSESSION OF THE UNITED STATES GOVERNING
THE OFFER AND SALE OF SECURITIES. THE PURCHASER OF THESE SECURITIES, BY ITS
ACCEPTANCE HEREOF, ACKNOWLEDGES THE RESTRICTIONS ON THE TRANSFER OF THESE
SECURITIES SET FORTH HEREIN AND AGREES THAT IT SHALL TRANSFER THESE
SECURITIES ONLY AS PROVIDED IN THE FOREGOING TRANSFER RESTRICTIONS.
IF REQUESTED BY THE COMPANY OR BY ITS AGENT, THE PURCHASER AGREES TO
PROVIDE THE INFORMATION NECESSARY TO DETERMINE WHETHER THE TRANSFER OF
THESE SECURITIES IS PERMISSIBLE UNDER THE SECURITIES ACT."
36
In connection with any transfer of the Restricted Securities, the
Shareholders and transferee of the Restricted Securities will deliver to the
Company such opinions or counsel, certificates and/or other information as the
Company may reasonably require in form reasonably satisfactory to the Company to
confirm that the transfer complied with the foregoing transfer restrictions, as
applicable. In the case of a transfer of the Restricted Securities pursuant to
Rule 144A under the Securities Act, the Company shall make available to holders
and transferees of such Restricted Securities a form of investor representation
letter, substantially in the form attached hereto as Appendix A (the "INVESTOR
REPRESENTATION LETTER"), and shall not effect in its share register any
attempted transfer of such Restricted Securities in violation of the foregoing
transfer restrictions or without delivery of an Investor Representation Letter
duly executed by the transferee of such Restricted Securities.
18.2 Stop Transfer Instructions. The Parties hereto agree that the
Company may instruct its transfer agent to impose transfer restrictions on the
shares represented by certificates bearing the legend referred to in Section
18.1 to enforce the provisions of this Agreement, and the Company agrees
promptly to do so.
SECTION 19. Covenants.
(a) In addition to any other rights provided by law and the provisions
of the Articles of Association or Memorandum of Association of the Company, the
Company and the Founder shall not, and shall procure that the Company and the
Operating Subsidiary shall not, without first obtaining the affirmative vote of
the Majority of the Series A Shareholders and the Lead Series B Shareholder then
outstanding, voting as separate classes, or a written consent of each of the
Majority of the Series A Shareholders and the Lead Series B Shareholder:
(i) Issue or sell any equity, equity-related or debt securities
of any Group Company, other than (i) Ordinary Shares to be issued upon
conversion of the Series A Preferred Shares or the Series B Preferred
Shares, (ii) upon the exercise of the TB Management Warrant, and (iii)
upon the exercise of options granted under stock option plans approved
by the Board, provided that the number of such Ordinary Shares shall
not exceed five percent (5%) of the Ordinary Shares Equivalent after
giving effect to the closing of the issuance of the Series B Shares
under the Series B Purchase Agreement;
(ii) Redeem, acquire or otherwise purchase any Ordinary Shares or
any preferred stock or any other securities of the Company, or any
equity or securities of other Group Companies, other than any such
securities from an employee or consultant of the Company upon
termination of such person's employment or consulting arrangement, as
the case may be, with the Company or in connection with a corporate
reorganization within the Group (as approved by the Board (including
the approval of each of the Series A Nominee and the Series B
Nominee);
(iii) Make any acquisitions, merger or consolidation, enter into
a joint venture arrangement or incorporate any subsidiary in excess of
US$3 million in aggregate, unless such action and the terms thereof
have been approved by the
37
Board (including the approval of each of the Series A Nominee and the
Series B Nominee); provided, however, that the foregoing provision
shall not apply in the event that the Company or any Subsidiary forms
a joint venture enterprise outside the PRC with an aggregate
investment amount of less than US$5 million;
(iv) Acquire any shares, securities or interests in any Person
other than an Affiliate of the Company in excess of US$ 3 million in
aggregate, including any joint venture entities in which the Company
or its Affiliates hold an equity interest, in excess of US$ 3 million
in aggregate, unless such action and the terms thereof have been
approved by the Board (including the approval of each of the Series A
Nominee and the Series B Nominee);
(v) Sell, lease, dispose of or otherwise transfer all or
substantially all of the assets of any Group Company;
(vi) Incur any indebtedness or assume any financial obligation or
issue, assume, guarantee or create any liability for borrowed money
from any Person other than an Affiliate of the Company in excess of
US$3 million in aggregate at any time outstanding unless such
liability is incurred (A) pursuant to a budget or business plan
approved by (x) the Board and (y) the Majority of the Series A
Shareholders and the Lead Series B Shareholder, voting as two separate
classes (the "BUDGET" or the "BUSINESS PLAN", as applicable), or (B)
otherwise approved by the Board (including the approval of each of the
Series A Nominee and the Series B Nominee);
(vii) Extend any loan to, or guarantee any indebtedness or
financial obligations of, any Person other than an Affiliate of the
Company, including any joint venture entities in which the Company or
its Affiliates hold an equity interest unless pursuant to a Budget or
Business Plan or otherwise approved by the Board (including the
approval of each of the Series A Nominee and the Series B Nominee);
(viii) Approve or make any capital expenditure in excess of US$3
million of any Group Company unless such capital expenditure is made
pursuant to a Budget or Business plan or otherwise approved by the
Board (including the approval of each of the Series A Nominee and the
Series B Nominee);
(ix) Enter into any transaction with the Founder or any of their
respective Affiliates in excess of US$1 million in aggregate, unless
in connection with an employment or consulting arrangement with a
Group Company approved by the Compensation Committee of the Board
(including the approval of each of the Series A Nominee and the Series
B Nominee);
(x) Enter into any transaction with any other Group Company or
any of their respective Affiliates in excess of US$3 million in
aggregate, except for
38
any purchase of silicon raw materials by the Operating Subsidiary from
any of its Affiliates or any purchase or supply of PV products among
the Operating Subsidiary and its non-PRC Subsidiaries; provided,
however, that (i) the Company shall certify in writing to the Lead
Series B Shareholder within one (1) month after such transaction that
such transaction is on an arm length basis and in the ordinary course
of business, and (ii) to the extent applicable, the establishment of
such non-PRC Subsidiaries shall be approved by each of the Preferred
Shareholder Nominees in writing.
(xi) Approve annual budgets and business plans;
(xii) Appoint, terminate or change the terms of employment
(including an increase in compensation in a twelve-month period by
more than ten percent (10%) in the aggregate compared to the
immediately preceding twelve-month period) with respect to the ten
(10) most highly compensated employees of the Company;
(xiii) Amend, repeal or modify the Memorandum or Articles of
Association of the Company, any equivalent articles of association,
joint venture contract or any by-laws, or other constitutional
documents of any Group Company;
(xiv) Declare or pay any dividends or any other distributions to
any of the Shareholders;
(xv) Make any material change in the accounting methods or
policies or appoint, remove or change the independent public
accountants other than as required by applicable law, regulations or
accounting standards;
(xvi) Dissolve, liquidate, wind up, recapitalize, reorganize or
commence any bankruptcy proceedings with respect to any Group Company;
(xvii) Change the principal business activities of the Company or
the Operating Subsidiary's registered capital other than through a
Transfer to an Affiliate of the Company or the Operating Subsidiary;
(xviii) Effect a recapitalization, reclassification or
reorganization of its shares or the or registered capital of any Group
Company, unless approved by the Board (including the approval of each
of the Series A Nominee and the Series B Nominee); and
(xix) Issue or grant any securities to the chief executive
officer, the chief financial officer, the chief operating officer and
the chief technology officer of the Company and any person who is not
an employee of a Group Company, unless such issuance and grant to such
person has been approved by the Board (including the approval of each
of the Series A Nominee and the Series B Nominee).
39
(b) Restrictions on Transfer. Unless otherwise provided in this
Agreement, the Company and the Founder undertake to the Preferred Shareholders
that they will not transfer, alienate or dispose of any share capital of the
Company and the Operating Subsidiary held by them (as applicable) or otherwise
create any encumbrance on any share capital of the Company and the Operating
Subsidiary held by them (as applicable) without the written consent of each of
(i) the Majority of the Series A Shareholders and (ii) the Lead Series B
Shareholder.
(c) Availability of Ordinary Shares. The Company hereby covenants that
at all times there shall be made available, free of any liens, for issuance and
delivery upon conversion of the Shares such number of Ordinary Shares or other
shares in the share capital of the Company as are from time to time issuable
upon conversion of the Preferred Shares, from time to time, and will take all
steps necessary to increase its authorized share capital to provide for
sufficient number of Ordinary Shares issuable upon conversion of the Preferred
Shares.
(d) Taxes. The Company and each Subsidiary shall pay, as soon as
reasonably practicable, all lawful taxes imposed on the income, profits,
property or business thereof when due and payable. The Company will reasonably
cooperate and will cause the Subsidiaries to reasonably cooperate with the
Investors to assist the Investors in compliance with any applicable tax Laws in
the respective home country of the Investors.
(e) Incorporation of Certain Provisions from the Articles of
Association. The following provisions of the Articles of Association are hereby
incorporated by reference into this Agreement and shall be enforceable as if
such provisions were part of this Agreement: (i) Article 53 (Indemnification and
Exculpation of Directors and Officers; and (ii) Clauses (D) (Liquidation
Rights), (E) (Conversion Rights) and (F) (Redemption) of Schedule I.
Notwithstanding anything to the contrary in this Agreement, (i) any amendment or
waiver of any of the foregoing provisions of the Articles of Association may be
effected in accordance with the terms of the Articles of Association and
applicable law without regard to any terms of this Agreement (including without
limitation Section 21.6 hereof), (ii) no amendment or waiver of any provision of
the Articles of Association shall result in an amendment or waiver of any
provision of this Agreement (except that in the case of an amendment or waiver
of any of the foregoing provisions of the Articles of Association, such
provisions (as amended or waived) shall automatically be incorporated by
reference herein as so amended or waived without the necessity of any further
action or approval of the parties to this Agreement) and (iii) no amendment or
waiver of any provision of this Agreement (including without limitation this
Section 19(e)) shall be deemed to effect an amendment or waiver of any provision
of the Articles of Association.
(f) Payment of Taxes. Within thirty (30) days after the consummation
of the Capital Increase, the Warrantors shall procure the Operating Subsidiary
to pay in full any and all amounts of the unpaid taxes and overdue social
welfare funds as set forth in Section 2.10 of the Disclosure Schedules of the
Series B Purchase Agreement.
(g) FOTIC. Within thirty (30) days after the Closing, the Warrantors
shall procure the Operating Subsidiary to enter into an amendment to the
agreement between the Operating Subsidiary and China Foreign Economic and Trade
Trust & Investment Co., Ltd., as set forth in Section 2.04 of the of the
Disclosure Schedules of the Series B Purchase Agreement to the reasonable
satisfaction of the Lead Series B Shareholder.
40
SECTION 20. Conflict with Charter Documents. In the event of any conflict
or inconsistency between the provisions of this Agreement and the provisions of
the Company's Articles or Memorandum of Association or other constitutional
documents, the parties shall, notwithstanding the conflict or inconsistency, act
so as to effect the intent of this Agreement to the extent possible under the
circumstances and shall promptly take all reasonable steps to amend the
conflicting constitutional documents to conform to this Agreement to the extent
possible.
SECTION 21. Miscellaneous.
21.1 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of New York, without regard to principles of
conflicts of law.
21.2 Dispute Resolution. Any controversy or claim arising out of or
relating to this Agreement, or any breach of this Agreement, shall be initiated,
maintained and finally determined by binding arbitration under the rules of
conciliation and arbitration of the International Chamber of Commerce (the
"ICC"); and the site of the arbitration, unless the parties agree otherwise,
shall be in Hong Kong. The arbitral tribunal shall be appointed within thirty
(30) days of the notice of dispute, and shall consist of three arbitrators, one
of which shall be appointed by the Preferred Shareholders and one by the Company
and the third by the Preferred Shareholders and the Company jointly; provided,
however, that if the Preferred Shareholders and the Company shall be unable to
select the third arbitrator within such thirty (30)-day period, such third
arbitrator shall be chosen by the International Court of Arbitration of the ICC.
Judgment upon any award rendered may be entered in any court having jurisdiction
thereof, or application may be made to such court for a judicial acceptance of
the award and an order of enforcement, as the case may be. Any award pursuant to
such proceeding shall be granted in U.S. Dollars. The fees and costs of the
arbitration shall be shared equally by all disputing parties. The arbitrators
shall award legal fees, disbursements and other expenses to the prevailing party
for such amounts as determined by the arbitrators to be appropriate.
21.3 Counterparts and Facsimile Execution. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. Any
counterpart or other signature delivered by facsimile shall be deemed for all
purposes as being a good and valid execution and delivery of this Agreement by
that party.
21.4 Headings. The headings of the Sections of this Agreement are for
convenience and shall not by themselves determine the interpretation of this
Agreement.
21.5 Notices. Except as may be otherwise provided herein, all notices,
requests, waivers and other communications made pursuant to this Agreement shall
be in writing and shall be conclusively deemed to have been duly given (i) when
hand delivered to the other party; (ii) when received when sent by facsimile at
the number set forth below (or hereafter amended by subsequent notice to the
parties hereto), with printed confirmation sheet verifying successful
transmission of the facsimile; (iii) ten (10) Business Days after deposit in the
mail as certified mail, postage prepaid and addressed to the other party as set
forth below; or (iv) five (5) Business Days after deposit with an overnight
delivery service, postage prepaid, addressed to the
41
parties as set forth below, provided that the sending party receives a
confirmation of delivery from the delivery service provider.
(a) If to the Series A Preferred Shareholder, to:
Inspiration Partners Limited
AZIA Center, Xxxx 0000X
0000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxx, Xxxxxx'x Xxxxxxxx of China 200120
Facsimile No.: x00 00 00000000
Attn: Xxxxxx Xx and Xxxxxxx Xxxx
(b) If to the Series B Preferred Shareholders, to their respective
addresses set forth below their names in Schedule I attached hereto.
(c) If to the Founder or the Company, to:
Yingli Green Energy Holding Company Ltd.
No. 3055 Middle Fuxing Road
Baoding, People's Republic of China
Facsimile No.: x00 000 0000 000
Attn: Conghui Liu
Each person making a communication hereunder by facsimile shall
promptly confirm by telephone to the person to whom such communication was
addressed each communication made by it by facsimile pursuant hereto but the
absence of such confirmation shall not affect the validity of any such
communication. A party may change or supplement the addresses given above, or
designate additional addresses, for purposes of this Section 21.5 by giving the
other parties written notice of the new address in the manner set forth above.
21.6 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company, the Founder and Holders (other than the
Founder) of at least a majority of the Registrable Securities then outstanding
held by such Holders (other than the Founder). Any amendment or waiver effected
in accordance with this paragraph shall be binding upon each Holder of any
Registrable Securities then outstanding, each future Holder of all such
Registrable Securities, and the Company.
21.7 Severability. In case any provision of this Agreement 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.
21.8 Entire Agreement; Successors and Assigns. Except as specifically
referenced in this Agreement, this Agreement, together with any Exhibits to this
Agreement, constitute the entire contract among the Parties with respect to the
subject matter of this Agreement. Any prior or contemporaneous agreement,
discussion, understanding, or correspondence among the parties (including any
prior representations or warranties given by the
42
Parties) regarding the purchase of shares of the Company, including the Series A
Shareholders Agreement and the Prior Series B Shareholders Agreement, is
superseded by this Agreement. Subject to the exceptions specifically set forth
in this Agreement, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective executors, administrators, heirs,
successors, and assigns of the Parties to this Agreement.
21.9 Assignability. Subject to Section 18, the rights and obligation
under this Agreement shall not be assignable by any party without the prior
written consent of all the other Parties, except that the assignment by the
Preferred Shareholders of their rights and obligations hereunder to their
respective Affiliates provided that any such Affiliate agrees in writing to be
bound by all of the terms, conditions and provisions contained herein.
21.10 Effectiveness. This Agreement shall be effective upon the
Closing (as defined in the Series B Purchase Agreement) until termination
thereof pursuant to Section 21.11 hereof.
21.11 Termination. The provisions of this Agreement, except for
Sections 1, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 20 and 21 and other
provisions that by their express terms survive termination, shall cease to have
effect immediately upon a Qualified IPO and no parties shall have any rights or
obligations under these provisions (save as excepted above) save for any
obligations arising in connection prior to the Qualified IPO.
21.12 Director and Officer Insurance. If the Series B Nominee
continues to be a director of the Company following a Qualified IPO, the Company
shall obtain on commercially reasonable terms and maintain a director and
officer insurance policy or policies with an internationally reputable insurance
company and the coverage, term and policy limits of such insurance policy or
policies shall be reasonably satisfactory to the Series B Nominee.
[Remainder of this page intentionally left blank]
43
IN WITNESS WHEREOF, each of the Parties hereto has caused this
Agreement to be duly executed by its respective authorized officers:
YINGLI GREEN ENERGY HOLDING COMPANY
LIMITED
By: /s/ Xxxxxxxxx Xxxx
------------------------------------
Name: Xxxxxxxxx Xxxx
Title: Chairman and Chief Executive
Officer
YINGLI POWER HOLDING COMPANY LTD.
By: /s/ Xxxxxxxxx Xxxx
------------------------------------
Name: Xxxxxxxxx Xxxx
Title: Director
/s/ Xxxxxxxxx Xxxx
------------------------------------
Xxxxxxxxx Xxxx
SERIES A SHAREHOLDER:
INSPIRATION PARTNERS LIMITED
By: /s/ Xxxxxx Xx
------------------------------------
Name: Xxxxxx Xx
Title: Director
SERIES B SHAREHOLDERS:
BAYTREE INVESTMENTS (MAURITIUS) PTE LTD.
By: /s/ Xxxxxxx Xxxx
------------------------------------
Name: Xxxxxxx Xxxx
Title: Director
CREATION WAY ASSET MANAGEMENT LTD.
By: /s/ Xxxxx Xxx
------------------------------------
Name: Xxxxx Xxx
Title: Director
INCEI, S.A.
By: /s/ Xxx Xxxxx Xx Xxx
------------------------------------
Name: Xxx Xxxxx Fu Lee
Title: Chairman
X.X. XXXXXX SECURITIES LTD.
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Managing Director
For and on behalf of X.X. Xxxxxx
Securities (Asia Pacific) Limited as
agent for X.X. Xxxxxx Securities Ltd.
BENCHMARK EUROPE II, L.P.
as nominee for
Benchmark Europe II, L.P.
Benchmark Europe Founders' Fund II, L.P.
and related individuals
By: Benchmark Management (UK) LLP
its manager
By: /s/ Xxxx Xxxxxx
------------------------------------
Member
TB HOLDINGS LTD.
By: /s/ Xxxxxx Xx
------------------------------------
Name: Xxxxxx Xx
Title: Director
NEW HORIZON KEENSOLAR INVESTMENT CO.,
LTD.
By: /s/ Xxxxxxxx Xx
------------------------------------
Name: Xxxxxxxx Xx
Title: Managing Partner
XXXX INVESTMENTS LLC
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
DBS NOMINEES (PRIVATE) LIMITED
By: /s/ Xxxxxx Xxx Tzai Win
------------------------------------
Name: Xxxxxx Xxx Tzai Win
Title: Managing Director
KWR INTERNATIONAL LTD.
By: /s/ Xxxxxx Xxxx
------------------------------------
Name: Xxxxxx Xxxx
Title: Director
MODERN PEAKVIEW LIMITED
By: /s/ Xxx Xxx
------------------------------------
Name: Xxx Xxx
Title: Authorized Signatory
DAEDALUS HOLDINGS, L.L.C.
By: Farallon Capital Management, L.L.C.,
its manager
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Member
PCM DIRECT CAPITAL FUND
By: /s/ Xxxxxx Xx
------------------------------------
Name: Xxxxxx Xx
Title: Director
THE TRUSTEES OF COLUMBIA UNIVERSITY
IN THE CITY OF NEW YORK
By: /s/ XX Xxxxxxxx
------------------------------------
Name: XX Xxxxxxxx
Title: President and CEO, Columbia
Investment Management Co., LLC
SCHEDULE I
LIST OF THE SERIES B SHAREHOLDERS
INVESTORS ADDRESS
--------- -------
Baytree Investments (Mauritius) Pte 00X Xxxxxxx Xxxx,
Ltd. #00-00 Xxxxx 0,
Xxx Xxxxxx@Xxxxxxx, Xxxxxxxxx 000000
Fax No.: x00 0000 0000
Attention: Xxxxxxx Xxxx, Xxxxxx Xxxxxx and
Xxxx Xx
Creation Way Asset Management Ltd. Portcullis Trustnet Xxxxxxxx Road Town,
Tortola, British Virgin Island
Fax No.: 000-0000 0000
Attention: Xxxxx Xxx
INCEI, S.A. Xxxxx Xxxxx x Xxxxx, 0-xxxx 00000 Xxxxxxxx
Xxxxxxx, Xxxxx
Fax No.: _________________________________
Attention: _______________________________
X.X. Xxxxxx Securities Ltd. 000 Xxxxxx Xxxx,
Xxxxxx, XX0X 0XX
Xxxxxx Xxxxxxx
Attention: c/o Xxxxxx X Xxxxxx
00/X Xxxxxx Xxxxx
0 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Fax No.: x000 0000 0000
Benchmark Europe II., L.P. 00 Xxxxxxxxx Xxxxxx, Xxxxxx X0X 0XX United
as nominee for Kingdom
Benchmark Europe II, L.P. Fax No: x00(0)00 0000 0000
Benchmark Europe Founders' Fund II, Attention: Xxxxxx Xxxxx / Xxxx Xxxxxx
L.P.
and related individuals
TB Holdings Ltd. AZIA Center, Xxxx 0000X,0000 Xxxxxxxx Xxxx
Xxxx Xxxxxxxx X.X.Xxxxx 000000
Fax No.: x00 00 0000 0000
Attention: Xxxxxx Xx and Xxxxxxx Xxxx
The Trustees of Columbia University 000 Xxxxxxxxx Xxx. 63rd floor
in the City of Xxx Xxxx Xxx Xxxx, XX 00000
Fax No.: _________________________________
Attention: _______________________________
New Horizon Keensolar Investment Xxx Xxx Tower 1204, 89 Xxx Xxx Street,
Co., Ltd Xxxxxxxxx Xxxxxxxx, Xxxxxxx Xxxxx 000000
Fax No.: x00 00-0000-0000
Attention: Kawada Xxxxx
Xxxx Investments LLC 0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
XXX
Fax No.: x0-000-000-0000
Attention: Xxxxxxx X. Xxxxx, President
Daedalus Holdings, L.L.C. c/o Farallon Capital Management, L.L.C.
Xxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxx Xxxx
Copy to: Xxxx Xxx
PCM Direct Capital Fund c/o Prime Capital Management Company
Limited
Xxxx 0000, Xxx Xxxxx, Xxxxx Xxxxxxxxxx
Xxxxx, 000 Xxxxx'x Xxxx
Xxxxxxx, Xxxx Xxxx
Fax Number: 000-0000-0000
Attention: Director
DBS Nominees (Private) Limited 0 Xxxxxxx Xxx, XXX Xxxxxxxx Xxxxx 0,
#00-00, Xxxxxxxxx 000000
Fax No.: (00) 0000-0000
Attention: Xxxxxx Xxx Tzai Win,
Managing Director
KWR International Ltd. X.X. Xxx 0000, Xxxxxxxx Xxxxxxxxxxxxxx
Xxxxxx, Xxxxxxxx, Mahe Seychelles.
Fax No.: x000-0000-0000
Attention: Xxxxxx Xxxx
Modern Peakview Limited Palm Grove House, P.O. Box 438 Road Town,
Tortola
British Virgin Islands
Fax No.: x00-00-0000-0000
Attention: Xxx Xxx
APPENDIX A
FORM OF INVESTOR REPRESENTATION LETTER
[Date]
[Yingli Green Energy Holding Company Ltd.
No. 3055 Middle Fuxing Road
Baoding, People's Republic of China
Facsimile No.: x00 000 0000 000
Attn: Conghui Liu]
(If applicable)
[Share Transfer Agent]
[Address]
[Facsimile Number]
[Attention]
YINGLI GREEN ENERGY HOLDING COMPANY LTD.
SERIES B PREFERRED SHARES
Dear Sirs,
Reference is made to the Series B preferred shares (the "Shares") of Yingli
Green Energy Holding Company Ltd. (the "Company"), par value US$0.01 per share,
issued pursuant to that certain Amended and Restated Series B Preferred Share
Purchase Agreement, dated December 15, 2006 (the "PURCHASE AGREEMENT"), by and
among the Company, Yingli Power Holding Company Ltd., Xxxxxxxxx Xxxx and the
investors listed on Schedule I attached thereto. Capitalized terms used herein
but not otherwise defined herein shall have the meanings set forth in the
Purchase Agreement.
This letter is being delivered to request a transfer of Shares to the
undersigned (the "TRANSFEREE").
Upon transfer, the share certificates representing the Shares that have been
transferred to the Transferee shall be registered in the name of the new owner
as follows:
Name: ___________________________________________________
[If applicable, add: as nominee for the transferee]
Address: ________________________________________________
Taxpayer ID Number: _____________________________________
The undersigned represents and warrants to you that:
A. the Transferee or an investment advisor acting on its behalf has received
and reviewed information as it deems necessary in order to make its
investment decision;
B. that the Transferee understands that any subsequent transfer of the Shares
and securities issuable upon the conversion of the Shares (the "CONVERSION
SHARES") is subject to certain restrictions and conditions set forth in the
Purchase Agreement and the Shareholders Agreement and that it agrees to be
bound by, and not to resell, pledge or otherwise transfer the Shares or the
Conversion Shares except in compliance with such restrictions and
conditions and the Securities Act;
C. that the Transferee is a qualified institutional buyer (a "QIB") as defined
in Rule 144A of the U.S. Securities Act of 1933, as amended (the
"SECURITIES ACT"), purchasing the Shares for its own account or for the
account of one or more QIBs;
D. that the Transferee is aware, and each beneficial owner of the Shares has
been advised, that any sale to it is being made in reliance on an exemption
from the registration requirements of the Securities Act;
E. that no Shares or Conversion Shares have been registered under the
Securities Act or any applicable U.S. state securities laws, that the
Shares and the Conversion Shares are "restricted securities" within the
meaning of Rule 144(a)(3) under the Securities Act and that no Shares or
Conversion Shares may be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons (as defined in Regulation S of
the Securities Act) except as set forth below;
F. if in the future the Transferee decides to resell, pledge or otherwise
transfer the Shares or the Conversion Shares or any beneficial interests
therein, it will do so, only (a) inside the United States to a person whom
the Transferee reasonably believes is a QIB pursuant to an exemption from
registration under the Securities Act, (b) outside the United States to a
person other than a U.S. person in compliance with Regulation S of the
Securities Act, (c) pursuant to another exemption from registration under
the Securities Act (if available) or (d) pursuant to an effective
registration statement under the Securities Act, in each case, in
accordance with the Securities Act and applicable laws of the states,
territories and possession of the Untied States governing the offer and
sale of securities;
G. the Transferee will, and will require each subsequent holder of Shares or
Conversion Shares to, notify any purchaser of an interest in a Note or
Conversion Shares of the resale restrictions referred to in paragraphs (E)
and (F) above, if then applicable;
H. that the Transferee is a sophisticated investor that, in the normal course
of its business, invests in or purchases securities similar to the Shares
and the Conversion Shares and has knowledge and experience in investment
matters;
I. that the Transferee and each account for which it is acting has such
knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of its investment in the Shares and the
Conversion Shares, and it and any accounts
for which it is acting are each able to bear the economic risk of its or
any such accounts' investment for an indefinite period of time;
J. that the Transferee is acquiring the Shares purchased by it for its own
account or for one or more accounts (each of which is a QIB) as to each of
which it exercises sole investment discretion and has full power to make
the foregoing acknowledgements, representations and agreements on behalf of
each such account, and not with a view to any resale, distribution or other
disposition of the Shares, subject, nevertheless, to the understanding that
the disposition of its property shall at all times be and remain within its
control;
K. that the Transferee acknowledges that (a) none of the Company, any of its
affiliates or any person acting on their behalf has made any representation
to it, express or implied, with respect to the Company, its business or
financial condition, the Shares or the Conversion Shares, (b) it conducted
and relied on its own investigation with respect to making an investment in
the Shares; (c) it received all information that it believes is necessary
or appropriate in connection with making an investment in the Shares;
L. that, on each day from the date on which it acquires the Shares through and
including the date on which it disposes of its interests in such U.S.
Securities, either that (a) the Transferee is not an "employee benefit
plan" as defined in Section 3(3) of ERISA subject to Title I of ERISA, a
"plan" (defined in Section 4975(e)(1) of the Code subject to Section 4975
of the Code (including without limitation, an individual retirement
account), an entity whose underlying assets include the assets of any such
employee benefit plan or plan, or a governmental or church plan which is
subject to any federal, state or local law that is substantially similar to
the provisions of Section 406 of ERISA or Section 4975 of the Code or (b)
the Transferee's purchase, holding and disposition of such U.S. Securities
(including, if applicable, the receipt of any Guaranty or Entitlement) will
not result in a prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code (or, in the case of a governmental or church plan,
any substantially similar federal, state or local law) unless an exemption
is available with respect to such transactions and all the conditions of
such exemption have been satisfied;
M. that the Transferee acknowledges that the Company and others will rely upon
the truth and accuracy of the foregoing acknowledgements, representations
and agreements, and it agrees that if any of such acknowledgements,
representations or agreements made by it are no longer accurate, it shall
promptly notify the Company;
N. that the Transferee acknowledges that it assumes all economic risk of loss
that may occur as a result of changes in the prices of the Shares and the
Conversion Shares in accordance with the terms of the Shares, and that it
will not look directly or indirectly on the Company or its affiliates to
indemnify it for such loss, and that it expressly holds the Company and its
affiliates harmless in respect of any such loss; and
O. that the Transferee is not a member of the public in the Cayman Islands.
The Transferee understands that the Company, the Share Transfer Agent (if any)
and any of their affiliates will rely upon the truth and accuracy of the
foregoing covenants, representations and certifications and agrees that if any
of the covenants, representations and certifications deemed to have been made by
it by its purchase of the Shares is no longer accurate, it shall promptly notify
the Company and the Share Transfer Agent (if any).
----------------------------------------
[Name of Transferee]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
