Exhibit 1.1
CHINA NEPSTAR CHAIN DRUGSTORE LTD.
_________ AMERICAN DEPOSITARY SHARES
REPRESENTING
_________ ORDINARY SHARES
(PAR VALUE US$0.0001 PER SHARE)
----------
UNDERWRITING AGREEMENT
_________, 2007
Xxxxxxx Xxxxx (Asia) L.L.C.
68th Floor, Xxxxxx Kong Center
0 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
4 World Financial Center
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
As Representatives of the several Underwriters
named in Schedule I attached hereto.
Ladies and Gentlemen:
China Nepstar Chain Drugstore Ltd., an exempted company incorporated in the
Cayman Islands (the "Company"), proposes, subject to the terms and conditions
stated herein, to issue and sell to the Underwriters named in Schedule I
attached hereto (the "Underwriters"), acting severally and not jointly, an
aggregate of _________ American Depositary Shares representing _________
ordinary shares, par value US$0.0001 per share (the "Ordinary Shares"), of the
Company and, at the election of the Underwriters, up to _________ additional
American Depositary Shares representing _________ Ordinary Shares. The aggregate
of _________ American Depositary Shares representing _________ Ordinary Shares
to be sold by the Company is herein called the "Firm ADSs", and the aggregate of
_________ American Depositary Shares representing _________ additional Ordinary
Shares to be sold by the Company is herein called the "Optional ADSs". The Firm
ADSs and the Optional ADSs that the Underwriters elect to purchase pursuant to
Section 2 hereof are herein collectively called the "ADSs". The Ordinary Shares
represented by the Firm ADSs are hereinafter called the "Firm Shares" and the
Ordinary Shares represented by the Optional ADSs are hereinafter called the
"Optional Shares", and the Firm Shares and the Optional Shares are herein
collectively called the "Shares".
The ADSs are to be issued pursuant to a deposit agreement (the "Deposit
Agreement"), to be dated as of _________, 2007, among the Company, JPMorgan
Chase Bank, N.A., as depositary (the "Depositary"), and holders from time to
time of the American Depositary Receipts (the "ADRs") issued by the Depositary
and evidencing the ADSs. Each ADS will initially represent the right to receive
_________ Ordinary Shares deposited pursuant to the Deposit Agreement.
The Company hereby acknowledges that, as part of the proposed offering of
the ADSs, it has requested the Representatives to administer a directed share
program (the "Directed Share Program") under which up to _________ Firm ADSs, or
____% of the Firm ADSs to be purchased by the Underwriters (the "Reserved
ADSs"), shall be reserved for sale by the Representatives at the initial public
offering price to the Company's officers, directors, employees and consultants
and other persons having a relationship with the Company as designated by the
Company (the "Directed Share Participants") as part of the distribution of the
ADSs by the Underwriters, subject to the terms of this Agreement, the applicable
rules, regulations and interpretations of the Financial Industry Regulatory
Authority, Inc. ("FINRA") (formerly, the National Association of Securities
Dealers, Inc.) and all other applicable laws, rules and regulations. The number
of ADSs available for sale to the general public will be reduced to the extent
that Directed Share Participants purchase Reserved ADSs. The Underwriters may
offer any Reserved ADSs not purchased by Directed Share Participants to the
general public on the same basis as the other ADSs being issued and sold
hereunder. The Company has supplied the Representatives with the names,
addresses and telephone numbers of the individuals or other entities which the
Company has designated to be participants in the Directed Share Program. It is
understood that any number of those so designated to participate in the Directed
Share Program may decline to do so.
It is understood by all the parties that the Underwriters are offering ADSs
in the United States and internationally outside of the People's Republic of
China (the "PRC"), which, for purposes of this Agreement only, excludes Taiwan,
The Hong Kong Special Administrative Region and The Macau Special Administrative
Region.
1. Each of the Company and Xxxxx Xxxxx, chairman of the Company's board
of directors and the controlling person of the Company (the "Controlling
Person"), jointly and severally represents and warrants to, and agrees with,
each of the Underwriters that:
(i) A registration statement on Form F-1 (File No.
333-_________) (the "Initial Registration Statement") in respect of
the Shares has been filed with the U.S. Securities and Exchange
Commission (the "Commission"); the Initial Registration Statement and
any post-effective amendment thereto, each in the form heretofore
delivered to you, and, excluding exhibits thereto, to you for each of
the other Underwriters, have been declared effective by the Commission
in such form; other than a registration statement, if any, increasing
the size of the offering (a "Rule 462(b) Registration Statement"),
filed pursuant to Rule 462(b) under the U.S. Securities Act of 1933,
as amended (the "Act"), which became or will become effective upon
filing, no other document with respect to the Initial Registration
Statement has heretofore been filed with the Commission; and no stop
order suspending the effectiveness of the Initial Registration
Statement, any post-effective amendment thereto or the Rule 462(b)
Registration Statement, if any, has been issued and no proceeding for
that purpose has been initiated or threatened by the Commission (any
preliminary prospectus included in the Initial Registration Statement
or filed with the Commission pursuant to Rule 424(a) of the rules and
regulations of the Commission under the Act is hereinafter called a
"Preliminary Prospectus"; the various parts of the Initial
Registration Statement and the Rule 462(b) Registration Statement, if
any, including all exhibits thereto and including the information
contained in the form of final prospectus filed
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with the Commission pursuant to Rule 424(b) under the Act in
accordance with Section 5 hereof and deemed by virtue of Rule 430A
under the Act to be part of the Initial Registration Statement at the
time it was declared effective, each as amended at the time such part
of the Initial Registration Statement became effective or such part of
the Rule 462(b) Registration Statement, if any, became or hereafter
becomes effective, are hereinafter collectively called the
"Registration Statement"; the Preliminary Prospectus relating to the
Shares and the ADSs that was included in the Registration Statement
dated ________, 2007 is hereinafter called the "Pricing Prospectus";
such final prospectus, in the form first filed pursuant to Rule 424(b)
under the Act, is hereinafter called the "Prospectus"; and any "issuer
free writing prospectus" as defined in Rule 433 under the Act relating
to the Shares and the ADSs is hereinafter called an "Issuer Free
Writing Prospectus");
(ii) No order preventing or suspending the use of any
Preliminary Prospectus or any Issuer Free Writing Prospectus has been
issued by the Commission, and each Preliminary Prospectus, at the time
of filing thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations of the
Commission thereunder, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through the Representatives expressly for use therein;
(iii) For the purposes of this Agreement, the "Applicable
Time" is ___:___ __m (New York City time) on the date of this
Agreement; the Pricing Prospectus as supplemented by those Issuer Free
Writing Prospectuses and other documents listed in Schedule II
attached hereto, taken together (collectively, the "Pricing Disclosure
Package"), as of the Applicable Time, did not include any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and each
Issuer Free Writing Prospectus listed in Schedule II attached hereto
does not conflict with the information contained in the Registration
Statement, the Pricing Prospectus or the Prospectus and each such
Issuer Free Writing Prospectus, as supplemented by and taken together
with the Pricing Disclosure Package as of the Applicable Time, did not
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty
shall not apply to statements or omissions made in an Issuer Free
Writing Prospectus in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through the
Representatives expressly for use therein;
(iv) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration
Statement or the Prospectus will conform, in all material respects to
the requirements of the Act and the rules and regulations of the
Commission thereunder and do not and will not, as of the applicable
effective date as to the Registration Statement and any amendment
thereto and as of the applicable filing date as to the Prospectus and
any amendment or supplement thereto, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
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conformity with information furnished in writing to the Company by an
Underwriter through the Representatives expressly for use therein;
(v) A registration statement on Form F-6 (File No.
333-______) in respect of the ADSs has been filed with the Commission;
such registration statement in the form heretofore delivered to you
and, excluding exhibits, to you for each of the other Underwriters,
has been declared effective by the Commission in such form; no other
document with respect to such registration statement has heretofore
been filed with the Commission; no stop order suspending the
effectiveness of such registration statement has been issued and no
proceeding for that purpose has been initiated or, to the Company's
best knowledge after due inquiry, threatened by the Commission (the
various parts of such registration statement, including all exhibits
thereto, each as amended at the time such part of the registration
statement became effective, being hereinafter called the "ADS
Registration Statement"); and the ADS Registration Statement when it
became effective conformed, and any further amendments thereto will
conform, in all material respects to the requirements of the Act and
the rules and regulations of the Commission thereunder, and did not,
as of the applicable effective date, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
(vi) A registration statement on Form 8-A (File No.
000-______) in respect of the registration of the Shares and the ADSs
under the U.S. Securities Exchange Act of 1934, as amended (the
"Exchange Act"), has been filed with the Commission; such registration
statement in the form heretofore delivered to you and, excluding
exhibits, to you for each of the other Underwriters, has been declared
effective by the Commission in such form; no other document with
respect to such registration statement has heretofore been filed with
the Commission; no stop order suspending the effectiveness of such
registration statement has been issued and no proceeding for that
purpose has been initiated or, to the Company's best knowledge after
due inquiry, threatened by the Commission (the various parts of such
registration statement, including all exhibits thereto, each as
amended at the time such part of the registration statement became
effective, being hereinafter called the "Form 8-A Registration
Statement"); and the Form 8-A Registration Statement when it became
effective conformed, and any further amendments thereto will conform,
in all material respects to the requirements of the Exchange Act and
the rules and regulations of the Commission thereunder, and did not
and will not, as of the applicable effective date, contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading;
(vii) Neither the Company nor any of its subsidiaries and
consolidated affiliates (each a "Subsidiary" and collectively,
"Subsidiaries") has sustained since the date of the latest audited
financial statements included in the Pricing Prospectus any material
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Pricing Prospectus; and,
since the respective dates as of which information is given in the
Registration Statement and the Pricing Prospectus, there has not been
(A) any change in the share capital or any material change in
short-term debt or long-term debt of the Company or any of its
Subsidiaries, or (B) any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position,
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shareholders' equity, earnings, results of operations or prospects of
the Company and its Subsidiaries taken as a whole, otherwise than as
set forth or contemplated in the Pricing Prospectus;
(viii) Each of the Company and its Subsidiaries has good and
marketable title to all real property and good and marketable title to
all personal property owned by it, in each case, free and clear of all
liens, encumbrances and defects except such as are described in the
Pricing Prospectus or such as do not materially affect the value of
such property and do not interfere with the use made and proposed to
be made of such property by each of the Company and its Subsidiaries;
any real property and buildings held under lease or sublease by the
Company and its Subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such
property and buildings by the Company and its Subsidiaries; and
neither the Company nor any of its Subsidiaries has received any
notice of any material claim that has been asserted by anyone adverse
to the rights of the Company or any Subsidiary under any of the leases
or subleases mentioned above, or affecting or questioning the rights
of the Company or such Subsidiary to the continued possession of the
leased or subleased premises under any such lease or sublease;
(ix) The Company and its Subsidiaries maintain insurance
covering their respective properties as the Company reasonably deems
adequate; such insurance insures against such losses and risks to an
extent which is adequate in accordance with customary industry
practice to protect the Company and its Subsidiaries and their
respective businesses; all such insurance is fully in force on the
date hereof and will be fully in force at the time of purchase and
each additional time of purchase, if any; neither the Company nor any
of its Subsidiaries has reason to believe that it will not be able to
renew any such insurance as and when such insurance expires or to
obtain comparable coverage from similar insurance institutions as may
be necessary or appropriate to conduct its business as currently
conducted; and there is no material insurance claim made by or against
the Company or any of its Subsidiaries, pending, outstanding or, to
the Company's best knowledge after due inquiry, threatened and no
facts or circumstances exist which would reasonably be expected to
give rise to any such claim and all due premiums in respect thereof
have been paid;
(x) The Company has been duly incorporated and is validly
existing as a company in good standing under the laws of the Cayman
Islands, with power and authority (corporate and other) to own, lease
and operate its properties and conduct its business as described in
the Pricing Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction; and
each of the Subsidiaries has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with power and authority (corporate or
other) to own, lease and operate its properties and conduct its
business as described in the Pricing Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business and
is in good standing under the laws of each other jurisdiction in which
it owns or leases properties or conducts any business so as to require
such qualification, except for the failure to be so qualified in any
such jurisdiction would not have a material adverse effect on the
current or future financial position, shareholders' equity, earnings,
results of
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operations or prospects of the Company and its Subsidiaries or the
transactions contemplated in this Agreement or the performance by the
Company or the Controlling Person of its obligations hereunder;
(xi) Neither the Company nor any of its Subsidiaries has sent
or received any communication regarding termination of, or intent not
to renew, any of the contracts or agreements referred to or described
in the Pricing Prospectus, the Prospectus or any Issuer Free Writing
Prospectus, or referred to or described in, or filed as an exhibit to,
the Registration Statement, and no such termination or non-renewal has
been, to the Company's best knowledge after due inquiry, threatened by
the Company or any of its Subsidiaries or any other party to any such
contract or agreement;
(xii) Each of the Company and its Subsidiaries has all
necessary licenses, franchises, concessions, consents, authorizations,
approvals, orders, certificates and permits of and from, and has made
all declarations and filings with, all governmental agencies to own,
lease, license and use its properties, assets and conduct its business
in the manner described in the Pricing Prospectus, except where the
lack of which would not, individually or in the aggregate, have a
material adverse effect on the current or future financial position,
shareholders' equity, earnings, results of operations or prospects of
the Company and its Subsidiaries or the transactions contemplated in
this Agreement or the performance by the Company or the Controlling
Person of its obligations hereunder; and such licenses, franchises,
concessions, consents, authorizations, approvals, orders, certificates
or permits contain no material restrictions or conditions not
described in the Pricing Prospectus; and except as described in the
Pricing Prospectus, neither the Company nor any of its Subsidiaries
has a reasonable basis to believe that any regulatory body is
considering modifying, suspending or revoking any such licenses,
consents, authorizations, approvals, orders, certificates or permits,
and the Company and its Subsidiaries are in compliance with the
provisions of all such licenses, consents, authorizations, approvals,
orders, certificates or permits;
(xiii) Neither the Company nor any of its Subsidiaries is (A)
in breach of or in default under any laws, regulations, rules, orders,
decrees, guidelines or notices of the PRC, the Cayman Islands or any
other jurisdiction where it was incorporated or operates, (B) in
breach of or in default under any approval, consent, waiver,
authorization, exemption, permission, endorsement or license granted
by any court or governmental agency or body of any stock exchange
authorities ("Governmental Agency") in the PRC, the Cayman Islands or
any other jurisdiction where it was incorporated or operates, (C) in
violation of its constituent documents or (D) in default in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which
it is a party or by which it or any of its properties may be bound;
(xiv) The Company has an authorized and paid-in capitalization
as set forth in the Pricing Prospectus and the Prospectus, and all of
the issued share capital of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and all of
the issued Ordinary Shares conform to the description of the Ordinary
Shares contained in the Pricing Prospectus and the Prospectus; all of
the issued share capital of each of the Subsidiaries of the Company
have been duly and validly authorized and issued, and are fully paid
and non-assessable; all of the equity interests of each of Shenzhen
Nepstar Pharmaceutical Electronic Technologies Ltd. ("Nepstar
Electronic") and
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Shenzhen Nepstar Commerce Development Ltd. ("Nepstar Commerce") are
owned by the Company, free and clear of all liens, encumbrances,
equities or claims; Nepstar Electronic and Nepstar Commerce own the
equity interests of Shenzhen Nepstar Pharmaceutical Company Ltd.
("Nepstar Pharmaceutical") in the percentages set forth in the Pricing
Prospectus under the caption "Our Corporate Structure", free and clear
of all liens, encumbrances, equities or claims; the holders of
outstanding Ordinary Shares are not entitled to preemptive or other
rights to acquire the Shares or the ADSs; there are no outstanding
securities convertible into or exchangeable for, or warrants, rights
or options to purchase from the Company, or obligations of the Company
to issue, Ordinary Shares or any other class of share capital of the
Company except as set forth in the Pricing Prospectus under the
captions "Capitalization", "Management -- 2007 Share Incentive Plan"
and "Related Party Transactions"; the Shares, when issued and
delivered against payment therefor, may be freely deposited by the
Company with the Depositary against issuance of ADRs evidencing ADSs;
the ADSs, when issued and delivered against payment therefor, will be
freely transferable by the Company to or for the account of the
several Underwriters and (to the extent described in the Pricing
Prospectus) the initial purchasers thereof; and there are no
restrictions on subsequent transfers of the ADSs under the laws of the
Cayman Islands, the PRC or the United States except as described in
the Pricing Prospectus under the captions "Description of Share
Capital", "Description of American Depositary Shares" and "Shares
Eligible for Future Sale";
(xv) Except as described in the Registration Statement
(excluding the exhibits thereto), the Pricing Prospectus and the
Prospectus, (A) no person has any preemptive rights, resale rights,
rights of first refusal or other rights to purchase any Ordinary
Shares or shares of any other share capital of or other equity
interests in the Company and (B) no person has the right to act as an
underwriter or as a financial advisor to the Company in connection
with the offer and sale of the ADSs;
(xvi) The Shares to be issued underlying the ADSs to be sold
by the Company to the Underwriters hereunder have been duly and
validly authorized and, when issued and delivered against payment
therefor as provided herein, will be duly and validly issued and fully
paid and non-assessable and will conform in all material respects to
the description of the Ordinary Shares contained in the Prospectus;
(xvii) All of the Ordinary Shares issuable upon the mandatory
conversion of the outstanding series A redeemable convertible
preferred shares (the "Preferred Stock") as described in the Pricing
Prospectus have been duly authorized and reserved for issuance; and,
prior to or concurrently with the First Time of Delivery (as defined
in Section 4 hereof), all of the Preferred Stock will be converted
into Ordinary Shares and all such Ordinary Shares will be duly
authorized, validly issued and fully paid and non-assessable;
(xviii) Except as disclosed in the Pricing Prospectus, there are
no contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of
the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered
pursuant to the Registration Statement, the ADS Registration Statement
or in any securities being registered pursuant to any other
registration statement filed by the Company under the Act;
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(xix) This Agreement has been duly authorized, executed and
delivered by the Company and the Controlling Person and constitutes a
valid and legally binding agreement of the Company and the Controlling
Person, enforceable in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, reorganization and similar
laws of general applicability relating to or affecting creditors'
rights and to general equity principles;
(xx) The Deposit Agreement has been duly authorized and, when
executed and delivered by the Company and the Depositary, will
constitute a valid and legally binding agreement of the Company,
enforceable in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, reorganization and similar
laws of general applicability relating to or affecting creditors'
rights and to general equity principles; upon issuance by the
Depositary of ADRs evidencing ADSs and the deposit of Shares in
respect thereof in accordance with the provisions of the Deposit
Agreement, such ADRs will be duly and validly issued and the persons
in whose names the ADRs are registered will be entitled to the rights
specified therein and in the Deposit Agreement; and the Deposit
Agreement and the ADRs conform in all material respects to the
descriptions thereof contained in the Prospectus;
(xxi) All dividends and other distributions declared and
payable on the share capital of the Company may under the current laws
and regulations of the Cayman Islands be paid to the Depositary, and
all such dividends and other distributions will not be subject to
withholding or other taxes under the laws and regulations of the
Cayman Islands and are otherwise free and clear of any other tax,
withholding or deduction in the Cayman Islands and without the
necessity of obtaining any consents, approvals, authorizations,
orders, registrations, clearances or qualifications of or with any
Governmental Agency having jurisdiction over the Company or any of its
Subsidiaries or any of their respective properties (hereinafter
referred to as "Governmental Authorizations") in the Cayman Islands;
(xxii) Dividends declared with respect to after tax retained
earnings on the equity interests of each of Nepstar Electronic and
Nepstar Commerce may under the current laws and regulations of the PRC
be paid to the Company in Renminbi that may be converted into U.S.
dollars and, subject to the successful completion of PRC formalities
required for such remittance, freely transferred out of the PRC, and
all such dividends and other distributions are not subject to
withholding or other taxes under the current laws and regulations of
the PRC and are otherwise free and clear of any other tax, withholding
or deduction in the PRC, and without the necessity of obtaining any
Governmental Authorization in the PRC;
(xxiii) Dividends declared with respect to after tax retained
earnings on the equity interests of Nepstar Pharmaceutical may under
the current laws and regulations of the PRC be paid to Nepstar
Electronic and Nepstar Commerce in Renminbi, and all such dividends
and other distributions are not and, except as disclosed in the
Pricing Prospectus, will not be subject to withholding or other taxes
under the laws and regulations of the PRC and are otherwise free and
clear of any other tax, withholding or deduction in the PRC, and
without the necessity of obtaining any Governmental Authorization in
the PRC;
(xxiv) The issue and sale of the Shares to be sold by the
Company hereunder and the deposit of the Shares being deposited with
the Depositary against issuance of the ADRs evidencing the ADSs and
the execution and delivery of this Agreement and the
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compliance by the Company with all of the provisions of this Agreement
and the Deposit Agreement and the consummation of the transactions
contemplated herein, therein and in the Registration Statement will
not (A) conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its Subsidiaries pursuant
to, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound or to which any of the property or assets of the
Company or any of its Subsidiaries is subject, (B) result in any
violation of the provisions of the constituent documents of the
Company or any of its Subsidiaries, or (C) result in any violation of
any statute or any order, rule or regulation of any Governmental
Agency having jurisdiction over the Company or any of its Subsidiaries
or any of their properties or assets;
(xxv) No consent, approval, authorization, order,
registration, clearance or qualification of or with any Governmental
Agency is required for the issue and sale of the Shares or the ADSs,
for the deposit of the Shares being deposited with the Depositary
against issuance of ADRs evidencing the ADSs to be delivered or the
consummation by the Company of the transactions contemplated by this
Agreement and the Deposit Agreement, except (A) the registration under
the Act of the Shares and the ADSs and listing of the Shares and the
ADSs on the New York Stock Exchange ("NYSE"), (B) such Governmental
Authorizations as have been duly obtained and are in full force and
effect and copies of which have been furnished to you and (C) such
Governmental Authorizations as may be required under state securities
or Blue Sky laws or any laws of jurisdictions outside the Cayman
Islands and the United States in connection with the purchase and
distribution of the Shares and ADSs by or for the respective accounts
of the several Underwriters;
(xxvi) ADSs have been approved for listing on the NYSE, subject
to notice of issuance;
(xxvii) No stamp or other issuance or transfer taxes or duties
and no capital gains, income, withholding or other taxes are payable
by or on behalf of the Underwriters to the government of the Cayman
Islands or the PRC, or any political subdivision or taxing authority
thereof or therein in connection with: (A) the deposit with the
Depositary of the Shares by the Company against the issuance of ADRs
evidencing the ADSs, (B) the sale and delivery by the Company of the
Shares and the ADSs to or for the respective accounts of the several
Underwriters or (C) the sale and delivery by the Underwriters of the
Shares and the ADSs to the initial purchasers thereof in the manner
contemplated by this Agreement;
(xxviii) Neither the Company nor any of its Subsidiaries has
taken, directly or indirectly, any action which was designed to or
which has constituted or which might reasonably be expected to cause
or result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares
and the ADSs;
(xxix) The statements set forth in the Pricing Prospectus under
the captions "Description of Share Capital" and "Description of
American Depositary Shares", insofar as they purport to constitute a
summary of the terms of the Ordinary Shares and the ADSs,
respectively, and under the captions "Taxation" and "Underwriting",
insofar as they purport
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to describe the provisions of the laws and documents referred to
therein, constitute accurate, complete and fair summaries regarding
the matters described therein in all material respects;
(xxx) Other than as set forth in the Pricing Prospectus, there
are no legal, arbitration or governmental proceedings or regulatory or
administrative inquiries or investigations pending to which the
Controlling Person, the Company or any of its Subsidiaries is a party
or of which any property of the Controlling Person, the Company or any
of its Subsidiaries is the subject (A) that, if determined adversely
to the Controlling Person, the Company or any of its Subsidiaries,
would individually or in the aggregate have a material adverse effect
on the current or future financial position, shareholders' equity,
earnings, results of operations or prospects of the Company and its
Subsidiaries or the transactions contemplated in this Agreement or the
performance by the Company or the Controlling Person of its
obligations hereunder, or (B) that are required to be described in the
Registration Statement and are not so described; and except as set
forth in the Pricing Prospectus, to the Company's best knowledge after
due inquiry, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(xxxi) The Company is not and, after giving effect to the
offering and sale of the Shares and ADSs and the application of the
proceeds thereof, will not be an "investment company", as such term is
defined in the U.S. Investment Company Act of 1940, as amended (the
"Investment Company Act");
(xxxii) Each of this Agreement and the Deposit Agreement is in
proper form to be enforceable against the Company in the Cayman
Islands in accordance with its terms; to ensure the legality,
validity, enforceability or admissibility into evidence in the Cayman
Islands of this Agreement or the Deposit Agreement, it is not
necessary that this Agreement or the Deposit Agreement be filed or
recorded with any court or other authority in the Cayman Islands or
that any stamp or similar tax in the Cayman Islands be paid on or in
respect of this Agreement, the Deposit Agreement or any other
documents to be furnished hereunder;
(xxxiii) The Registration Statement, the Pricing Prospectus, the
Prospectus, any Issuer Free Writing Prospectus and the ADS
Registration Statement and the filing of the Registration Statement,
the Pricing Prospectus, the Prospectus, any Issuer Free Writing
Prospectus and the ADS Registration Statement with the Commission have
been duly authorized by and on behalf of the Company, and the
Registration Statement and the ADS Registration Statement have been
duly executed pursuant to such authorization by and on behalf of the
Company;
(xxxiv) There are no contracts or documents which are required
to be described in the Registration Statement, the Pricing Prospectus,
the Pricing Disclosure Package or the Prospectus or to be filed as
exhibits to the Registration Statement which have not been so
described and filed as required;
(xxxv) In each case, (A) each of the Company and its
Subsidiaries owns, possesses, licenses, or has other rights to use
trademarks, trade names, Internet domain names, technology, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary rights) and other intellectual property necessary or used
in any material respect to conduct its business in the manner in which
it is being conducted and in
10
the manner in which it is contemplated as set forth in the Pricing
Prospectus (collectively, the "Intellectual Property"); (B) none of
the material copyrights owned or licensed by the Company or any of its
Subsidiaries is unenforceable or invalid; (C) neither the Company nor
any of its Subsidiaries has received any notice of violation or
conflict with (and neither the Company nor any of its Subsidiaries
knows of any basis for violation or conflict with) rights of others
with respect to the Intellectual Property; (D) there are no pending
or, to the Company's best knowledge after due inquiry, threatened
actions, suits, proceedings or claims by others that allege the
Company or any of its Subsidiaries is infringing any patent, trade
secret, trademark, service xxxx, copyright or other intellectual
property or proprietary right; (E) the discoveries, inventions,
products or processes of the Company and its Subsidiaries referenced
in the Pricing Prospectus, to the Company's best knowledge after due
inquiry, do not violate or conflict with any intellectual property or
proprietary right of any third person, or any discovery, invention,
product or process that is the subject of a patent application filed
by any third person; and (F) the Company and its Subsidiaries are not
in breach of, and have complied in all material respects with all
terms of, any license or other agreement relating to the Intellectual
Property; to the extent any Intellectual Property is sublicensed to
the Company or any of its Subsidiaries by a third party, such
sublicensed rights shall continue in full force and effect if the
principal third party license terminates for any reason; and there are
no contracts or other documents related to the Intellectual Property
required to be described in or filed as an exhibit to the Registration
Statement other than those described in or filed as an exhibit to the
Registration Statement;
(xxxvi) The Company does not expect to be a Passive Foreign
Investment Company ("PFIC") within the meaning of Section 1297(a) of
the United States Internal Revenue Code of 1986, as amended, for the
taxable year 2007, and does not expect to become a PFIC in the
foreseeable future;
(xxxvii) Except as set forth in the Registration Statement and
the Pricing Prospectus, the Company has not sold, issued or
distributed any shares during the six-month period preceding the date
hereof, including any sales pursuant to Rule 144A, Regulation D or
Regulation S promulgated under the Act, other than shares issued
pursuant to employee benefit plans, qualified share option plans or
other employee compensation plans or pursuant to outstanding options,
rights or warrants;
(xxxviii)The Company is a "foreign private issuer" within the
meaning of Rule 405 under the Act;
(xxxix) KPMG, who has audited certain financial statements of
the Company and its Subsidiaries, is the independent registered public
accounting firm of the Company as required by the Act and the rules
and regulations of the Commission thereunder and are independent in
accordance with the requirements of the United States Public Company
Accounting Oversight Board;
(xl) Except as disclosed in the Pricing Prospectus, no
material indebtedness (actual or contingent) and no material contract
or arrangement is outstanding between the Company or any of its
Subsidiaries and any director or executive officer of the Company or
any of its Subsidiaries or any person connected with such director or
executive officer (including his/her spouse, infant children, any
company or undertaking in which he/she holds a controlling interest);
and there are no material relationships or transactions between the
Company or any of its Subsidiaries on the one hand and its affiliates,
officers
11
and directors or their shareholders, customers or suppliers on the
other hand which, although required to be disclosed, are not disclosed
in the Pricing Prospectus;
(xli) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that: (A)
transactions are executed in accordance with management's general or
specific authorizations; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles in the United States ("US
GAAP"); (C) access to assets is permitted only in accordance with
management's general or specific authorization; (D) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate actions are taken with respect to
any differences; and (E) the Company has made and kept books, records
and accounts which, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of assets of such entity;
(xlii) The Company has established and maintains and evaluates
"disclosure controls and procedures" (as such term is defined in Rule
13a-15 and 15d-15 under the Exchange Act) and "internal control over
financial reporting" (as such term is defined in Rule 13a-15 and
15d-15 under the Exchange Act); such disclosure controls and
procedures are designed to ensure that material information relating
to the Company, including its Subsidiaries, is made known to the
Company's chief executive officer and chief financial officer by
others within those entities, and such disclosure controls and
procedures are effective to perform the functions for which they were
established; the Company's independent registered public accounting
firm has been advised of: (A) all significant deficiencies, if any, in
the design or operation of internal controls which could adversely
affect the Company's ability to record, process, summarize and report
financial data; and (B) all fraud, if any, whether or not material,
that involves management or other employees who have a role in the
Company's internal controls; all material weaknesses, if any, in
internal controls have been identified to the Company's independent
registered public accounting firm; such internal control over
financial reporting has been designed by the Company's chief executive
officer and chief financial officer, or under their supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with US GAAP; since the date of the most recent
evaluation of such disclosure controls and procedures and internal
controls, there have been no significant adverse changes in internal
controls or in other factors that could significantly affect internal
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses; and the Company has taken all
necessary actions to ensure that, upon and at all times after the
filing of the Registration Statement, the Company and its Subsidiaries
and their respective officers and directors, in their capacities as
such, will be in compliance in all material respects with the
applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002 (the
"Xxxxxxxx-Xxxxx Act") and the rules and regulations promulgated
thereunder;
(xliii) Neither the Company nor any of its Subsidiaries has any
material obligation to provide retirement, healthcare, death or
disability benefits to any of the present or past employees of the
Company or any of its Subsidiaries, or to any other person;
(xliv) No material labor dispute, work stoppage, slow down or
other conflict with the employees of the Company or any of its
Subsidiaries exists or, to the Company's best knowledge after due
inquiry, is threatened; and the Company is not aware of any existing
or imminent labor disturbance by the employees of any of its or any
Subsidiary's principal
12
suppliers, manufacturers or contractors, which, in either case, would
individually or in the aggregate have a material adverse effect on the
current or future financial position, shareholders' equity, earnings,
results of operations or prospects of the Company and its
Subsidiaries;
(xlv) The section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Critical
Accounting Policies" in the Pricing Prospectus truly, accurately and
completely in all material respects describes: (A) accounting policies
which the Company believes are the most important in the portrayal of
the Company's financial condition and results of operations and which
require management's most difficult, subjective or complex judgments
("Critical Accounting Policies"); (B) judgments and uncertainties
affecting the application of Critical Accounting Policies; and (C) the
likelihood that materially different amounts would be reported under
different conditions or using different assumptions; and the Company's
Board of Directors and management have reviewed and agreed with the
selection, application and disclosure of Critical Accounting Policies
and have consulted with its legal counsel and independent registered
public accounting firm with regard to such disclosure;
(xlvi) Since the date of the latest financial statements
included in the Pricing Prospectus, neither of the Company nor any of
its Subsidiaries has: (A) entered into or assumed any contract, (B)
incurred or agreed to incur any liability (including any contingent
liability) or other obligation, (C) acquired or disposed of or agreed
to acquire or dispose of any business or any other asset or (D)
assumed or acquired or agreed to assume or acquire any liabilities
(including contingent liabilities), that would, in any of clauses (A)
through (D) above, be material to the Company and its Subsidiaries and
that are not otherwise described in the Pricing Prospectus;
(xlvii) The section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity
and Capital Resources" in the Pricing Prospectus accurately and fully
describes: (A) all material trends, demands, commitments, events,
uncertainties and risks, and the potential effects thereof, that the
Company believes would materially affect liquidity and are reasonably
likely to occur; and (B) all off-balance sheet transactions,
arrangements, and obligations, including, without limitation,
relationships with unconsolidated entities that are contractually
limited to narrow activities that facilitate the transfer of or access
to assets by the Company or any of its Subsidiaries, such as
structured finance entities and special purpose entities that are
reasonably likely to have a material effect on the liquidity of the
Company or any of its Subsidiaries or the availability thereof or the
requirements of the Company or any of its Subsidiaries for capital
resources;
(xlviii) No holder of any of the Shares or the ADSs after the
consummation of the transactions contemplated by this Agreement or the
Deposit Agreement is or will be subject to any personal liability in
respect of any liability of the Company by virtue only of its holding
of any such Shares or ADSs; and except as set forth in the Pricing
Prospectus, there are no limitations on the rights of holders of the
Shares or the ADSs to hold, vote or transfer their securities;
(xlix) The audited consolidated financial statements (and the
notes thereto) of the Company included in the Pricing Prospectus and
the Prospectus fairly present in all material respects the
consolidated financial position of the Company as of the dates
13
specified and the consolidated results of operations, shareholders'
equity, cash flows and changes in consolidated financial position of
the Company for the periods specified, and such financial statements
have been prepared in conformity with US GAAP applied on a consistent
basis throughout the periods presented (other than as described
therein); the summary and selected consolidated financial data and the
unaudited financial results for the six months ended June 30, 2007 and
the selected unaudited quarterly financial results of the three months
ended September 30, 2007 included in the Pricing Prospectus and the
Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited consolidated
financial statements included therein;
(l) Under the laws of the Cayman Islands, each holder of
ADRs evidencing ADSs issued pursuant to the Deposit Agreement shall be
entitled, subject to the Deposit Agreement, to seek enforcement of its
rights through the Depositary or its nominee registered as
representative of the holders of the ADRs in a direct suit, action or
proceeding against the Company;
(li) All amounts payable by the Company in respect of the
ADRs evidencing the ADSs or the underlying Shares shall be made free
and clear of and without deduction for or on account of any taxes
imposed, assessed or levied by the Cayman Islands or any authority
thereof or therein (except such income taxes as may otherwise be
imposed by the Cayman Islands on payments hereunder to an Underwriter
whose net income is subject to tax by the Cayman Islands or
withholding, if any, with respect to any such income tax) nor are any
taxes imposed in the Cayman Islands on, or by virtue of the execution
or delivery of, such documents;
(lii) All returns, reports or filings which ought to have been
made by or in respect of the Company and its Subsidiaries for taxation
purposes as required by the law of the jurisdictions where the Company
and its Subsidiaries are incorporated, managed or engage in business
have been made and all such returns are correct and on a proper basis
in all material respects and are not the subject of any dispute with
the relevant revenue or other appropriate authorities except as may be
being contested in good faith and by appropriate proceedings; the
provisions included in the audited consolidated financial statements
as set out in the Pricing Prospectus included appropriate provisions
required under US GAAP for all taxation in respect of accounting
periods ended on or before the accounting reference date to which such
audited accounts relate for which the Company was then or might
reasonably be expected thereafter to become or have become liable; and
neither the Company nor any of its Subsidiaries has received notice of
any tax deficiency with respect to the Company or any of its
Subsidiaries;
(liii) The Company has provided or made available to you true,
correct, and complete copies of all documentation pertaining to any
extension of credit in the form of a personal loan made, directly or
indirectly, by the Company or any of its Subsidiaries to any director
or executive officer of the Company; and since December 31, 2006, the
Company has not, directly or indirectly, including through any of its
Subsidiaries: (A) extended credit, arranged to extend credit, or
renewed any extension of credit, in the form of a personal loan, to or
for any director or executive officer of the Company, or to or for any
family member or affiliate of any director or executive officer of the
Company; or (B) made any material modification, including any renewal
thereof, to any term of any personal loan to any director or executive
officer of the Company, or any family member or affiliate of any
director or executive officer, which loan was outstanding on December
31, 2006, that (x) is
14
outstanding on the date hereof and (y) constitutes a violation of any
applicable law or regulation;
(liv) Any statistical and market-related data included in the
Pricing Prospectus and the Prospectus are based on or derived from
sources that the Company believes to be reliable and accurate, and the
Company has obtained the written consent for the use of such data from
such sources to the extent required;
(lv) The application of the net proceeds from the offering of
ADSs, as described in the Prospectus, will not contravene any
provision of any current and applicable laws or the current
constituent documents of the Company or any of its Subsidiaries or
contravene the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement, note, lease or
other agreement or instrument currently binding upon the Company or
any of its Subsidiaries or any Governmental Authorization applicable
to any of the Company or any of its Subsidiaries;
(lvi) There are no contracts, agreements or understandings
between the Company and any person that would give rise to a valid
claim against the Company or any Underwriter for a brokerage
commission, finder's fee or other like payment in connection with the
issuance and sale of the ADSs;
(lvii) Under the laws of the Cayman Islands, the courts of the
Cayman Islands will recognize and give effect to the choice of law
provisions set forth in Section 15 hereof and enforce judgments of
U.S. courts obtained against the Company to enforce this Agreement;
under the laws of the PRC, the choice of law provisions set forth in
Section 15 hereof will be recognized by the courts of the PRC and any
judgment obtained in any New York state or U.S. federal courts located
in the Borough of Manhattan, The City of New York, New York (each a
"New York Court") arising out of or in relation to the obligations of
the Company under this Agreement will be recognized in PRC courts
subject to the applicable provisions of the Civil Procedure Law of the
PRC relating to the enforceability of foreign judgments;
(lviii) None of the Company, any of its Subsidiaries, and any
director, officer, agent, employee or other person associated with or
acting on behalf of the Company or any of its Subsidiaries, has used
any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expenses relating to a political activity, made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices
Act of 1977; or made any unlawful bribe, payoff, influence payment,
kickback, payment or rebate;
(lix) The descriptions of the events and transactions (the
"Restructuring") set forth in the Pricing Prospectus under the caption
"Our Corporate Structure" constitute accurate, complete and fair
summaries regarding the matters described therein in all material
respects;
(lx) The Restructuring has been carried out and completed in
compliance with applicable law or statute, rule or regulation of any
Governmental Agency having jurisdiction over the Company or any of its
Subsidiaries or any of their properties (including but not limited to
the Ministry of Commerce, the State Administration of Industry and
Commerce
15
and the State Administration of Foreign Exchange of the PRC),
including, without limitation, the Administrative Measures of Foreign
Investment in the Commercial Sector promulgated by the Ministry of
Commerce of the PRC on April 16, 2004 (the "Administrative Measures")
and the Foreign Investment Industrial Guidance Catalogue promulgated
by the National Development and Reform Commission and the Ministry of
Commerce of the PRC on November 30, 2004 (the "Catalogue"), and (A)
does not violate, breach, contravene or otherwise conflict with any
applicable PRC laws, rules or regulations, (B) contravene the articles
of association, business license or other constituent documents of the
Company or any of its Subsidiaries, or (C) conflict with or result in
a breach of violation of any of the terms or provisions of, or
constitute a default under, any license, indenture, mortgage, deed of
trust, loan agreement, note, lease or other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which
the Company or any of its Subsidiaries is bound or to which any of the
property or assets of the Company or any of its Subsidiaries is
subject;
(lxi) The corporate structure of the Company (including the
shareholding structure of each of the Subsidiaries incorporated in the
PRC (the "PRC Subsidiaries")) after the completion of the
Restructuring complies, and after the consummation of the offering and
sale of the Shares and ADSs, will comply, with all applicable PRC
laws, rules and regulations, including, without limitation, the
Administrative Measures and the Catalogue, and does not violate,
breach, contravene or otherwise conflict with any applicable PRC laws,
rules or regulations; and the corporate structure of the Company
(including the shareholding structure of each of the Company's PRC
Subsidiaries) has not been challenged by any PRC Governmental Agency,
and there are no legal, arbitration, governmental or other proceedings
(including, without limitation, governmental investigations or
inquiries) pending before or threatened or contemplated by any PRC
Governmental Agency in respect of such corporate structure of the
Company; and after the consummation of the offering and sale of the
Shares and ADSs, the corporate structure of the Company (including the
shareholding structure of each of the Company's PRC Subsidiaries)
would not be challenged by any PRC Governmental Agency;
(lxii) All Governmental Authorizations required under the PRC
laws, rules and regulations in connection with the Restructuring have
been duly granted, made or unconditionally obtained in writing and are
in full force and effect, and no such Governmental Authorization has
been withdrawn or revoked or is subject to any condition precedent
which has not been fulfilled or performed;
(lxiii) Each of the Company and its Subsidiaries that were
incorporated outside of the PRC has taken, or is in the process of
taking, all reasonable steps to comply with, and to ensure compliance
by each of its shareholders, option holders, directors, officers,
employees and Directed Share Participants that is, or is directly or
indirectly owned or controlled by, a PRC resident or citizen with any
applicable rules and regulations of the relevant PRC government
agencies (including but not limited to the State Administration of
Foreign Exchange) relating to overseas investment by PRC residents and
citizens or overseas listing by offshore special purpose vehicles
controlled directly or indirectly by PRC companies and individuals,
such as the Company (the "PRC Overseas Investment and Listing
Regulations"), including, without limitation, requesting each
shareholder, option holder, director, officer, employee [and Directed
Share Participants] that is, or is directly or indirectly owned or
controlled by, a PRC resident or citizen to complete any registration
and
16
other procedures required under applicable PRC Overseas Investment and
Listing Regulations;
(lxiv) (i) None of the Company's Subsidiaries, affiliates,
employees, agents and directors and officers: (a) does any business
with or involving the government of, or any person or project located
in, any country targeted by any of the economic sanctions promulgated
by any Executive Order issued by the President of the United States or
administered by the United States Treasury Department's Office of
Foreign Assets Control (the "OFAC"); or (b) supports or facilitates
any such business or project, in each case other than as permitted
under such economic sanctions; (ii) the Company is not controlled
(within the meaning of the Executive Orders or regulations
promulgating such economic sanctions or the laws authorizing such
promulgation) by any such government or person; (iii) the proceeds
from the offering of the ADSs contemplated hereby will not be used to
fund any operations in, to finance any investments, projects or
activities in, or to make any payments to, any country, or to make any
payments to, or finance any activities with, any person targeted by
any of such economic sanctions; and (iv) the Company maintains and has
implemented adequate internal controls and procedures to monitor and
audit transactions that are reasonably designed to detect and prevent
any use of the proceeds from the offering of the ADSs contemplated
hereby that is inconsistent with any of the Company's representations
and obligations under clause (iii) of this paragraph;
(lxv) The Company and its Subsidiaries and their respective
properties, assets and operations are in compliance with, and the
Company and each of its Subsidiaries hold all permits, authorizations
and approvals required under Environmental Laws (as defined below) ,
except where the lack of which individually or in the aggregate would
not have a material adverse effect on the current or future financial
position, shareholders' equity, earnings, results of operations or
prospects of the Company and its Subsidiaries or the transactions
contemplated in this Agreement or the performance by the Company or
the Controlling Person of its obligations hereunder; there are no
past, present or reasonably anticipated future events, conditions,
circumstances, activities, practices, actions, omissions or plans that
could reasonably be expected to give rise to any material costs or
liabilities to the Company or any of its Subsidiaries under, or to
interfere with or prevent compliance by the Company or any of its
Subsidiaries with, Environmental Laws, except where the lack of which
individually or in the aggregate would not have a material adverse
effect on the current or future financial position, shareholders'
equity, earnings, results of operations or prospects of the Company
and its Subsidiaries or the transactions contemplated in this
Agreement or the performance by the Company or the Controlling Person
of its obligations hereunder; none of the Company and its Subsidiaries
(A) is the subject of any investigation, (B) has received any notice
or claim, (C) is a party to or affected by any pending or threatened
action, suit or proceeding, (D) is bound by any judgment, decree or
order or (E) has entered into any agreement, in each case relating to
any alleged violation of any Environmental Law or any actual or
alleged release or threatened release or cleanup at any location of
any Hazardous Materials (as defined below) (as used herein,
"Environmental Law" means any national, provincial, municipal or other
local or foreign law, statute, ordinance, rule, regulation, order,
notice, directive, decree, judgment, injunction, permit, license,
authorization or other binding requirement, or common law, relating to
health, safety or the protection, cleanup or restoration of the
environment or natural resources, including those relating to the
distribution, processing, generation, treatment, storage, disposal,
transportation, other handling or release or threatened release of
Hazardous Materials, and "Hazardous Materials" means any material
17
(including, without limitation, pollutants, contaminants, hazardous or
toxic substances or wastes) that is regulated by or may give rise to
liability under any Environmental Law);
(lxvi) Neither the Company nor any of its Subsidiaries has
entered into any memorandum of understanding, letter of intent,
definitive agreement or any similar agreements with respect to a
merger or consolidation or a material acquisition or disposition of
assets, Intellectual Property, business units or businesses;
(lxvii) There are no affiliations or associations between (A)
any member of the FINRA and (B) the Company or any of the Company's
officers, directors or 5% or greater security holders or any
beneficial owner of the Company's unregistered equity securities that
were acquired at any time on or after the 180th day immediately
preceding the date the Registration Statement was initially filed with
the Commission, except as disclosed in the Pricing Prospectus;
(lxviii) The Registration Statement, each Preliminary Prospectus,
the Pricing Prospectus, the Prospectus and each Issuer Free Writing
Prospectus comply, and any further amendments or supplements thereto
will comply, with any applicable laws or regulations of any
jurisdiction in which any Preliminary Prospectus, the Pricing
Prospectus, the Prospectus or any Issuer Free Writing Prospectus is
distributed in connection with the Directed Share Program; and no
Governmental Authorization, other than those heretofore obtained, is
required in connection with the offering of the Reserved ADSs in any
jurisdiction where the Reserved ADSs are being offered;
(lxix) The Company has not offered, or caused the Underwriters
to offer, ADSs to any person pursuant to the Directed Share Program
with the intent to influence unlawfully (i) a customer or supplier of
the Company or any of its Subsidiaries to alter the customer's or
supplier's level or type of business with the Company or any of its
Subsidiaries, or (ii) a trade journalist or publication to write or
publish favorable information about the Company or any of its
Subsidiaries or any of their respective products or services;
(lxx) There are no business relationships or related-party
transactions involving the Company or any of its Subsidiaries or any
other person required to be described in the Registration Statement,
each Preliminary Prospectus, the Pricing Prospectus or the Prospectus
which have not been described as required;
(lxxi) Each "forward-looking statement" (within the meaning of
Section 27A of the Act or Section 21E of the Exchange Act) contained
in the Registration Statement, each Preliminary Prospectus, the
Pricing Prospectus, the Prospectus and each Issuer Free Writing
Prospectus, if any, has been made or reaffirmed with a reasonable
basis and in good faith;
(lxxii) The issuance and sale of the Shares and the ADSs, the
listing and trading of the ADSs on the NYSE or the consummation of the
transactions contemplated by this Agreement and the Deposit Agreement
is not and will not be, as of the date hereof or at each Time of
Delivery, adversely affected by the Rules on Mergers and Acquisitions
of Domestic Enterprises by Foreign Investors jointly promulgated by
the Ministry of Commerce, the State Assets Supervision and
Administration Commission, the State Tax Administration, the State
Administration of Industry and Commerce, the China Securities
Regulatory Commission and the State Administration of Foreign Exchange
of the PRC on
18
August 8, 2006 (the "M&A Rules") or any official clarifications,
guidance, interpretations or implementation rules in connection with
or related to the M&A Rules (collectively, the "M&A Rules and Related
Clarifications");
(lxxiii) As of the date of the Pricing Prospectus and as of the
date hereof, the M&A Rules and Related Clarifications did not and do
not apply to the issuance and sale of the Shares and the ADSs, the
listing and trading of the ADSs on the NYSE, or the consummation of
the transactions contemplated by this Agreement and the Deposit
Agreement; and
(lxxiv) The statements set forth in the Pricing Prospectus under
the captions "Risk Factors -- Risks Related to Doing Business in China
-- The approval of the PRC Securities Regulatory Commission, or the
CSRC, may be required in connection with this offering under a
recently adopted PRC regulation. Any requirement to obtain prior CSRC
approval could delay this offering and a failure to obtain this
approval, if required, could have a material adverse effect on our
business, operating results, reputation and trading price of our ADSs,
and may also create uncertainties for this offering", when taken
together with the statements under "Regulation -- Provisions Regarding
Mergers and Acquisitions of Domestic Enterprises by Foreign
Investors", are fair and accurate summaries of the matters described
therein, and nothing has been omitted from such summaries which would
make the same misleading in any material respect.
In addition, any certificate signed by any officer of the Company or any of
its Subsidiaries or by the Controlling Person and delivered to the Underwriters
or counsel for the Underwriters in connection with the offering of the ADSs
shall be deemed to be a representation and warranty by the Company or the
Controlling Person, as to matters covered thereby, to each of the Underwriters.
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at a purchase price per
ADS of US$____, the number of Firm ADSs (to be adjusted by you so as to
eliminate fractional shares) determined by multiplying the aggregate number of
Firm ADSs to be sold by the Company by a fraction, the numerator of which is the
aggregate number of Firm ADSs to be purchased by such Underwriter as set forth
opposite the name of such Underwriter in Schedule I attached hereto and the
denominator of which is the aggregate number of Firm ADSs to be purchased by all
of the Underwriters from the Company hereunder and (b) in the event and to the
extent that the Underwriters shall exercise the election to purchase Optional
ADSs as provided below, the Company agrees to sell to each of the Underwriters,
and each of the Underwriters agrees, severally and not jointly, to purchase from
the Company, at the purchase price per ADS set forth in clause (a) of this
Section 2, that portion of the number of Optional ADSs as to which such election
shall have been exercised (to be adjusted by you so as to eliminate fractional
shares) determined by multiplying such number of Optional ADSs by a fraction,
the numerator of which is the maximum number of Optional ADSs which such
Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I attached hereto and the denominator of which is the
maximum number of Optional ADSs that all of the Underwriters are entitled to
purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to _________ Optional ADSs, at the purchase price per ADS set
forth in the paragraph above, for the sole purpose of covering sales of shares
in excess of the number of Firm ADSs. Any such election to purchase Optional
ADSs shall be made in proportion to the maximum number of Optional ADSs to be
sold by the Company with respect to the Optional ADSs to be sold by the Company.
Any such election to purchase
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Optional ADSs may be exercised only by written notice from you to the Company,
given within a period of 30 calendar days after the date of this Agreement and
setting forth the aggregate number of Optional ADSs to be purchased and the date
on which such Optional ADSs are to be delivered, as determined by you but in no
event earlier than the First Time of Delivery (as defined in Section 4 hereof)
or, unless you and the Company otherwise agree in writing, earlier than two or
later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm ADSs, the
several Underwriters propose to offer the Firm ADSs for sale upon the terms and
conditions set forth in the Prospectus.
4. (a) The ADSs to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as the Representatives may request upon at least forty-eight hours' notice
to the Company prior to a Time of Delivery (as defined below), shall be
delivered by or on behalf of the Company to the Representatives, through the
facilities of The Depository Trust Company ("DTC"), for the account of such
Underwriter, against payment by or on behalf of such Underwriter of the purchase
price therefor by wire transfer of Federal (same-day) funds to the account
specified by the Company to the Representatives at least forty-eight hours in
advance of such Time of Delivery. The Company will cause the certificates
representing the ADSs to be made available for checking at least twenty-four
hours prior to the Time of Delivery with respect thereto at the office of DTC or
its designated custodian. The time and date of such delivery and payment shall
be, with respect to the Firm ADSs, 9:30 a.m., New York City time, on _________,
2007 or such other time and date as the Representatives and the Company may
agree upon in writing, and, with respect to the Optional ADSs, 9:30 a.m., New
York City time, on the date specified by the Representatives in the written
notice given by the Representatives of the Underwriters' election to purchase
such Optional ADSs, or such other time and date as the Representatives and the
Company may agree upon in writing. Such time and date for delivery of the Firm
ADSs is herein called the "First Time of Delivery", such time and date for
delivery of the Optional ADSs, if not the First Time of Delivery, is herein
called the "Second Time of Delivery", and each such time and date for delivery
is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 8 hereof, including the
cross-receipt for the ADSs and any additional documents requested by the
Underwriters pursuant to Section 8(s) hereof, will be delivered at the
offices of Xxxxxxxx & Xxxxxxxx LLP, 00xx Xxxxx, Xxxx Xxxxx'x Xxxx Xxxxxxx,
Xxxx Xxxx (the "Closing Location"), and the ADSs will be delivered as
specified in Section (a) above, all at such Time of Delivery. A meeting
will be held at the Closing Location at 4:00 p.m., Hong Kong time, on the
New York Business Day next preceding such Time of Delivery, at which
meeting the final drafts of the documents to be delivered pursuant to the
preceding sentence will be available for review by the parties hereto. For
the purposes of this Section 4, "New York Business Day" shall mean each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by
law or executive order to close.
5. The Company agrees with each of the Underwriters:
(i) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier
time as may be required by Rule 430A(a)(3) under the Act; to make no
further amendment or any supplement to the Registration Statement or the
Prospectus prior to the last Time of Delivery which shall be disapproved by
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you promptly after reasonable notice thereof; to advise you, promptly after
it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any amendment
or supplement to the Prospectus has been filed and to furnish you copies
thereof; to file promptly all material required to be filed by the Company
with the Commission pursuant to Rule 433(d) under the Act; to advise you,
promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or other prospectus in respect of the
ADSs, of the suspension of the qualification of the ADSs for offering or
sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission for
the amending or supplementing of the Registration Statement, any
Preliminary Prospectus, the Prospectus or any Issuer Free Writing
Prospectus or for additional information; in the event of such request for
amendment or supplement, to provide you and your counsel copies of any
proposed amendment or supplement for review and comment a reasonable amount
of time prior to any proposed filing and to file no such amendment or
supplement which shall be disapproved by you; and, in the event of the
issuance of any stop order or of any order preventing or suspending the use
of any Preliminary Prospectus or other prospectus or suspending any such
qualification, promptly to use its best efforts to obtain the withdrawal of
such order;
(ii) Promptly from time to time to take such action as you may
reasonably request to qualify the ADSs for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with
such laws so as to permit the continuance of sales and dealings therein in
such jurisdictions for as long as may be necessary to complete the
distribution of the ADSs, provided that in connection therewith the Company
shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction;
(iii) Prior to 10:00 a.m., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time to
time, to furnish the Underwriters with written and electronic copies of the
Prospectus in such quantities as you may reasonably request, and, if the
delivery of a prospectus (or in lieu thereof, the notice referred to in
Rule 173(a) under the Act) is required at any time prior to the expiration
of nine months after the time of issue of the Prospectus in connection with
the offering or sale of the ADSs and if at such time any event shall have
occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when
such Prospectus (or in lieu thereof, the notice referred to in Rule 173(a)
under the Act) is delivered, not misleading, or, if for any other reason it
shall be necessary during such same period to amend or supplement the
Prospectus in order to comply with the Act, to notify you and upon your
request to prepare and furnish without charge to each Underwriter and to
any dealer in securities as many written and electronic copies as you may
from time to time reasonably request of an amended Prospectus or a
supplement to the Prospectus which will correct such statement or omission
or effect such compliance; and in case any Underwriter is required to
deliver a prospectus (or in lieu thereof, the notice referred to in Rule
173(a) under the Act) in connection with sales of any of the ADSs at any
time nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, to prepare and deliver
to such Underwriter as many written and electronic copies as you may
request of an amended or supplemented Prospectus complying with Section
10(a)(3) of the Act;
21
(iv) To furnish to you as early as practicable prior to the time of
purchase and any additional time of purchase, as the case may be, but not
later than two business days prior thereto, a copy of the latest available
unaudited interim and monthly consolidated financial statements, if any, of
the Company and its Subsidiaries which have been read by the Company's
independent registered public accounting firm, as stated in their letter to
be furnished pursuant to Section 8(h) hereof;
(v) To make generally available to its security holders as soon as
practicable, but in any event not later than sixteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), a consolidated earnings statement of the Company and its
Subsidiaries (which need not be audited) complying with Section 11(a) of
the Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158);
(vi) During the period beginning from the date hereof and continuing
to and including the date 180 days after the date of the Prospectus (the
"Lock-Up Period") not to offer, sell, contract to sell, pledge, grant any
option to purchase, purchase any option or contract to sell, right or
warrant to purchase, make any short sale, file a registration statement
with respect to, or otherwise dispose of (including entering into any swap
or other arrangement that transfers to another, in whole or in part, any of
the economic consequence of ownership interests, whether or not such swap
or other transaction is to be settled by delivery of ADSs, Ordinary Shares
or such other securities, in cash or otherwise), except as provided
hereunder, (A) any ADSs or Ordinary Shares or securities of the Company
that are substantially similar to the ADSs or Ordinary Shares, including
but not limited to any options or warrants to purchase Ordinary Shares or
any securities that are convertible into or exchangeable for, or that
represent the right to receive, ADSs or Ordinary Shares or any such
substantially similar securities; and (B) any ordinary shares of the
Subsidiaries or depositary shares or depositary receipts representing such
ordinary shares, including but not limited to any securities that are
convertible into or exchangeable for or that represent the right to receive
such ordinary shares or such depositary shares or depositary receipts or
any such substantially similar securities without your prior written
consent; provided, however, the restrictions in this section 5(vi) shall
not apply to (x) the ADSs and the Ordinary Shares underlying such ADSs to
be sold under this Agreement and (y) grants of options and restricted
shares made pursuant to the Company's employee share incentive plan
existing on the date of this Agreement and which is described in the
Pricing Prospectus ; provided, further, that if (1) during the last 17 days
of the initial Lock-Up Period, the Company releases earnings results or
announces material news or a material event or (2) prior to the expiration
of the initial Lock-Up Period, the Company announces, or if the
Representatives determine, that it will release earnings results during the
15-day period following the last day of the initial Lock-Up Period, then in
each case the Lock-Up Period will be automatically extended until the
expiration of the 18-day period beginning on the date of release of the
earnings results or the announcement of the material news or material
event, as applicable, unless the Representatives waive, in writing, such
extension; and the Company will provide the Representatives and each
shareholder subject to the Lock-Up Period pursuant to the lockup letters
described in Section 8(p) with prior notice of any such announcement that
gives rise to an extension of the Lock-Up Period;
22
(vii) During the Lock-Up Period, to cause each of the Subsidiaries not
to offer, sell, contract to sell, pledge, grant any option to purchase,
purchase any option or contract to sell, right or warrant to purchase, make
any short sale, file a registration statement with respect to or otherwise
dispose of (including entering into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequence
of ownership interests, whether or not such swap or other transaction is to
be settled by delivery of ADSs, Ordinary Shares or such other securities,
in cash or otherwise), except as provided hereunder and under this
Agreement: (A) any ADSs or Ordinary Shares or any securities of the Company
that are substantially similar to the ADSs or Ordinary Shares, including
but not limited to any securities that are convertible into or exchangeable
for, or that represent the right to receive, ADSs or Ordinary Shares or any
such substantially similar securities; and (B) any ordinary shares of such
Subsidiary or any other Subsidiary or depositary shares or depositary
receipts representing such ordinary shares, including but not limited to
any securities that are convertible into or exchangeable for or that
represent the right to receive such ordinary shares or such depositary
shares or depositary receipts or any such substantially similar securities,
without your prior written consent; provided, however, that if (1) during
the last 17 days of the initial Lock-Up Period, the Company releases
earnings results or announces material news or a material event or (2)
prior to the expiration of the initial Lock-Up Period, the Company
announces, or if the Representatives determine, that the Company will
release earnings results during the 15-day period following the last day of
the initial Lock-Up Period, then in each case the Lock-Up Period will be
automatically extended until the expiration of the 18-day period beginning
on the date of release of the earnings results or the announcement of the
material news or material event, as applicable, unless the Representatives
waive, in writing, such extension; and the Company will provide the
Representatives and each shareholder subject to the Lock-Up Period pursuant
to the lockup letters described in Section 8(p) with prior notice of any
such announcement that gives rise to an extension of the Lock-Up Period;
(viii) To furnish to its shareholders as soon as practicable after the
end of each fiscal year an annual report (in English) (including a balance
sheet and statements of income, shareholders' equity and cash flows of the
Company and its Subsidiaries prepared in conformity with US GAAP and
audited by independent registered public accounting firm) and, as soon as
practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the effective
date of the Registration Statement), to make available to its shareholders
consolidated summary financial information of the Company and its
Subsidiaries for such quarter in reasonable detail;
(ix) During a period of three years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to shareholders, and to
deliver to you (i) as soon as they are available, copies of any reports and
financial statements furnished to or filed with the Commission or any
securities exchange on which any class of securities of the Company is
listed; and (ii) such additional information concerning the business and
financial condition of the Company as you may from time to time reasonably
request (such financial statements to be on a consolidated basis to the
extent the accounts of the Company and its Subsidiaries are consolidated in
reports furnished to its shareholders generally or to the Commission);
(x) To use the net proceeds received by it from the sale of the ADSs
pursuant to this Agreement in the manner specified in the Pricing
Prospectus and the Prospectus under the caption "Use of Proceeds" and in a
manner such that the Company will be in compliance with any applicable
laws, rules and regulations of any Governmental Agency having jurisdiction
over the Company or its Subsidiaries including, without limitation, the
requirement to repatriate the net proceeds received by it into the PRC
under the applicable regulations of the Ministry of Commerce and the State
Administration of Foreign Exchange of the PRC; not to use any of the
proceeds from the offering of the ADSs contemplated hereby to fund any
operations in, to finance any investments, projects or activities in, or to
make any payments to, any country, or to make any payments to, or finance
any activities with, any person, targeted by any of the economic sanctions
promulgated by any Executive Order issued by the President of the United
States or administered by the OFAC; and to maintain and implement adequate
internal controls and procedures to monitor and audit transactions that are
reasonably designed to detect and prevent any use of the proceeds from the
offering of the ADSs contemplated hereby that is inconsistent with any of
the Company's representations and obligations under the preceding sentence;
23
(xi) Prior to each Time of Delivery to deposit Ordinary Shares with
the Depositary in accordance with the provisions of the Deposit Agreement
and otherwise to comply with the Deposit Agreement so that ADRs evidencing
ADSs will be executed (and, if applicable, countersigned) and issued by the
Depositary against receipt of such Ordinary Shares and delivered to the
Underwriters at such Time of Delivery;
(xii) Not to (and to cause its affiliates not to) take, directly or
indirectly, any action which is designed to or which constitutes or which
would reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company or facilitate the
sale or resale of the Shares and the ADSs;
(xiii) To use its best efforts to include for listing of the Shares
and ADSs on the NYSE;
(xiv) To file with the Commission such information on Form 20-F as may
be required by Rule 463 under the Act;
(xv) If the Company elects to rely upon Rule 462(b), the Company shall
file a Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on the date of this
Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or
give irrevocable instructions for the payment of such fee pursuant to Rule
111(b) under the Act. The Company shall give the Representatives notice of
any filings made pursuant to the Exchange Act or the rules or regulations
of the Commission under the Exchange Act within 48 hours prior to the
Applicable Time; the Company will give the Representatives notice of its
intention to make any such filing from the Applicable Time to the Time of
Delivery and will furnish the Representatives with copies of any such
documents a reasonable amount of time prior to such proposed filing, as the
case may be, and will not file or use any such document to which the
Representatives or counsel for the Underwriters shall object;
(xvi) Upon request of any Underwriter, to furnish, or cause to be
furnished, to such Underwriter an electronic version of the Company's
trademarks, servicemarks and corporate logo for use on the website, if any,
operated by such Underwriter for the purpose of facilitating the on-line
offering of the ADSs (the "License"); provided, however, that the License
shall be used solely for the purpose described above, is granted without
any fee and may not be assigned or transferred;
24
(xvii) To indemnify and hold each of the Underwriters harmless against
any documentary, stamp or similar issuance or transfer taxes, duties or
fees and any transaction levies, commissions or brokerage charges,
including any interest and penalties, which are or may be required to be
paid in connection with the creation, allotment, issuance, offer and
distribution of the Shares and ADSs to be sold by the Company and the
execution and delivery of this Agreement and the Deposit Agreement;
(xviii) To comply with Rule 433(d) under the Act (without reliance on
Rule 164(b) under the Act) and with Rule 433(g) under the Act;
(xix) Prior to each Time of Delivery, to issue no press release or
other communication directly or indirectly and hold no press conferences
with respect to the Company or any of its Subsidiaries, the financial
condition, results of operations, business, properties, assets, or
liabilities of the Company or any of its Subsidiaries, or the offering of
the ADSs, without your prior consent;
(xx) Prior to or concurrently with the First Time of Delivery, to
effect the conversion of all Preferred Stock into ordinary shares and to
ensure that all such ordinary shares are duly authorized, validly issued
and fully paid and non-assessable prior to or concurrently with the First
Time of Delivery;
(xxi) Not, at any time at or after the execution of this Agreement,
to, directly or indirectly, offer or sell any Shares or ADSs by means of
any "prospectus" (within the meaning of the Act), or use any "prospectus"
(within the meaning of the Act) in connection with the offer or sale of the
Shares or ADSs, in each case other than the Prospectus; and
(xxii) To cause each Directed Share Participant to execute a Lock-Up
Agreement (as defined in Section 8(p) hereof) and otherwise to cause the
Reserved ADSs to be restricted from sale, transfer, assignment, pledge or
hypothecation to such extent as may be required by the FINRA and its rules,
and to direct the transfer agent to place stop transfer restrictions upon
such Reserved ADSs during the Lock-Up Period or any such longer period of
time as may be required by the FINRA and its rules; and to comply with all
applicable securities and other laws, rules and regulations in each
jurisdiction in which the Reserved ADSs are offered in connection with the
Directed Share Program.
6. (a) The Company represents and agrees that, without the prior consent of
the Representatives, it has not made and will not make any offer relating to the
Shares and the ADSs that would constitute a "free writing prospectus" as defined
in Rule 405 under the Act; each Underwriter represents and agrees that, without
the prior consent of the Company and the Representatives, it has not made and
will not make any offer relating to the Shares and the ADSs that would
constitute a free writing prospectus; any such free writing prospectus the use
of which has been consented to by the Company and the Representatives is listed
on Schedule II attached hereto;
(b) The Company has complied and will comply with the requirements of
Rule 433 under the Act applicable to any Issuer Free Writing Prospectus,
including timely filing with the Commission or retention where required and
legending; and the Company represents that it has satisfied and agrees that
it will satisfy the conditions under Rule 433 under the Act to avoid a
requirement to file with the Commission any electronic road show; and
25
(c) The Company agrees that if at any time following issuance of an
Issuer Free Writing Prospectus any event occurred or occurs as a result of
which such Issuer Free Writing Prospectus would conflict with the
information in the Registration Statement, the Pricing Prospectus or the
Prospectus or would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances then prevailing, not misleading,
the Company will give prompt notice thereof to the Representatives and, if
requested by the Representatives, will prepare and furnish without charge
to each Underwriter an Issuer Free Writing Prospectus or other document
which will correct such conflict, statement or omission; provided, however,
that this representation and warranty shall not apply to any statements or
omissions in an Issuer Free Writing Prospectus made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through the Representatives expressly for use therein.
7. The Company covenants and agrees with each of the several Underwriters
that the Company will pay or cause to be paid (i) all the fees, disbursements
and expenses of the Company's counsel and accountants in connection with the
registration of the Shares and ADSs and all other expenses in connection with
the preparation, printing, reproduction and filing of the Registration
Statement, the ADS Registration Statement, the Form 8-A Registration Statement,
any Preliminary Prospectus, the Pricing Prospectus, any Issuer Free Writing
Prospectus and the Prospectus and amendments or supplements thereto, and the
mailing and delivering of copies thereof to the Underwriters and to dealers,
(ii) the cost of printing or producing any Agreement among Underwriters, this
Agreement, the Deposit Agreement, any dealer agreements, any powers of attorney,
any closing documents (including compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the ADSs, (iii)
all expenses in connection with the qualification of the Shares and the ADSs for
offering and sale under state or foreign securities laws as provided in Section
5 hereof, including the fees and disbursements of counsel for the Underwriters
in connection with such qualification and in connection with any Blue Sky
surveys or legal investment surveys and the preparation, printing and delivery
to the Underwriters of copies of the Blue Sky surveys and any supplements
thereto, (iv) all fees and expenses in connection with the application for
including the ADSs for listing on the NYSE and any registration thereof under
the Exchange Act, (v) all fees and expenses in connection with any required
review by the FINRA of the terms of the sale of the Shares and the ADSs,
including the fees and disbursements of counsel for the Underwriters in
connection with such FINRA matters, (vi) the fees and disbursements of any
transfer agent or registrar for the ADSs, (vii) all the costs and expenses
relating to presentations or meetings undertaken in connection with the
marketing of the offering and sale of the ADSs to prospective investors and the
Underwriters' sales forces, including, without limitation, expenses associated
with the production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations, travel,
accommodation and meal expenses, and other road show expenses incurred by the
Underwriters, the officers of the Company and any such consultants, and the cost
of any aircraft chartered in connection with the road show, (viii) all fees,
expenses and disbursements of counsel to the Underwriters in connection with the
transactions contemplated by this Agreement, (ix) the reasonable out-of-pocket
expenses incurred by the Underwriters in connection with the transactions
contemplated by this Agreement, up to a maximum of US$1,500,000 plus any sales,
use or similar taxes (including additions to such taxes, if any), (x) the costs
and expenses of qualifying the ADSs for inclusion in the book-entry settlement
system of the DTC, (xi) all expenses and taxes arising as a result of the
deposit by the Company of the Shares with the Depositary and the issuance and
delivery of the ADRs evidencing ADSs in exchange therefor by the Depositary to
the Company, of the sale and delivery of the ADSs and the Shares by the Company
to or for the account of the Underwriters and of the sale and delivery of the
ADSs
26
and the Shares by the Underwriters to each other and to the initial purchasers
thereof in the manner contemplated under this Agreement, including, in any such
case, any the Cayman Islands income, capital gains, withholding, transfer or
other tax asserted against an Underwriter by reason of the purchase and sale of
an ADS or a Share pursuant to this Agreement, (xii) the fees and expenses of the
Depositary as agreed by the Company and the Depositary and any custodian
appointed under the Deposit Agreement, other than the fees and expenses to be
paid by holders of ADRs (other than the Underwriters in connection with the
initial purchase of ADSs), (xiii) the fees and expenses of the Authorized Agent
(as defined in Section 15 hereof), (xiv) the cost of preparing the ADRs; and
(xv) all other costs and expenses incident to the performance of the Company's
obligations hereunder which are not otherwise specifically provided for in this
Section.
8. The obligations of the Underwriters hereunder, as to the ADSs to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and the Controlling Person herein are, at and as of such Time of
Delivery, true and correct, the condition that the Company shall have performed
all of their respective obligations hereunder theretofore to be performed, and
the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) under the Act within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in
accordance with Section 5 hereof; all material required to be filed by the
Company pursuant to Rule 433(d) under the Act shall have been filed with
the Commission within the applicable time period prescribed for such filing
by Rule 433; if the Company has elected to rely upon Rule 462(b) under the
Act, the Rule 462(b) Registration Statement shall have become effective by
10:00 p.m., Washington, D.C. time, on the date of this Agreement; no stop
order suspending the effectiveness of the Registration Statement or any
part thereof shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; no stop order
suspending or preventing the use of the Prospectus or any Issuer Free
Writing Prospectus shall have been initiated or threatened by the
Commission; and all requests for additional information on the part of the
Commission shall have been complied with to your reasonable satisfaction;
(b) Xxxxxxxx & Xxxxxxxx LLP, United States counsel to the
Underwriters, shall have furnished to you such written opinion and letter,
dated such Time of Delivery, with respect to the matters as you may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters;
(c) Commerce & Finance Law Offices, PRC counsel to the Underwriters,
shall have furnished to you such written opinion or opinions, dated such
Time of Delivery, with respect to the same matters covered in subsection
(e) below as well as such other related matters as you may reasonably
request, and such counsel shall have received such papers and information
as they may reasonably request to enable them to pass upon such matters;
(d) __________, United States counsel to the Company, shall have
furnished to you their written opinion, dated such Time of Delivery, in
form and substance satisfactory to you, to the effect that:
(i) The statements made in the Pricing Disclosure Package and the
Prospectus under the caption "Description of American Depositary
Shares", insofar as they purport to constitute summaries of the terms
of the ADSs, the ADRs and the Deposit Agreement, constitute accurate
summaries of such provisions in all material respects;
27
(ii) The statements made in the Pricing Disclosure Package and
the Prospectus under the caption "Shares Eligible for Future Sale",
insofar as they purport to constitute summaries of certain provisions
of U.S. federal securities laws and regulations and certain provisions
of the lock-up agreements, shareholders agreement and share option
plan referred to therein, constitute accurate summaries of such
provisions in all material respects;
(iii) The statements made in the Pricing Disclosure Package and
the Prospectus under the caption "Underwriting", insofar as they
purport to constitute summaries of certain provisions of this
Agreement, constitute accurate summaries of such provisions in all
material respects;
(iv) The statements made in the Pricing Disclosure Package and
the Prospectus under the caption "Taxation -- United States Federal
Income Tax Consequences", insofar as they purport to constitute
summaries of matters of U.S. federal tax law and regulations or legal
conclusions with respect thereto, constitute accurate summaries of the
matters described therein in all material respects;
(v) This Agreement has been duly executed and delivered by each
of the Company and the Controlling Person in accordance with the law
of the state of New York;
(vi) The Deposit Agreement has been duly executed and delivered
by the Company in accordance with the law of the state of New York
and, assuming that the Deposit Agreement is the valid and legally
binding obligation of the Depositary, constitutes a valid and legally
binding obligation of the Company enforceable against the Company in
accordance with its terms;
(vii) Assuming due authorization, execution, issuance and
delivery by the Depositary of the ADRs evidencing the ADSs against the
deposit of the Shares in accordance with the provisions of the Deposit
Agreement and payment therefor in accordance with this Agreement, such
ADRs will be duly and validly issued, and persons in whose names such
ADRs are registered will be entitled to the rights specified therein
and in the Deposit Agreement;
(viii) Assuming the validity of such actions under Cayman Islands
law, under the law of the State of New York relating to personal
jurisdiction, each of the Company and the Controlling Person has,
pursuant to Section 15 of this Agreement, validly and irrevocably
submitted to the personal jurisdiction of the New York state or U.S.
federal courts located in the Borough of Manhattan, The City of New
York, New York in any action or proceeding arising out of or relating
to this Agreement, has, to the extent permitted by applicable law,
validly and irrevocably waived any objection to the venue of a
proceeding in any such court, and has validly and irrevocably
appointed CT Corporation System, currently located at 000 Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as its authorized service of process
agent for the purposes described in this Agreement; and service of
process effected on such agent will be effective to confer in the
manner set forth in Section 15 of this Agreement and will be effective
to confer valid personal jurisdiction over the Company and the
Controlling Person;
(ix) Assuming the validity of such actions under Cayman Islands
law, under the law of the State of New York relating to personal
jurisdiction, the Company has, pursuant to
28
Section 20 of the Deposit Agreement, validly and irrevocably submitted
to the personal jurisdiction of the New York state or U.S. federal
courts located in the Borough of Manhattan, The City of New York, New
York in any action or proceeding arising out of or relating to the
Deposit Agreement has, to the extent permitted by applicable law,
validly and irrevocably waived any objection to the venue of a
proceeding into any such court, and has validly and irrevocably
appointed CT Corporation System, currently located at 000 Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as its authorized service of process
agent for the purposes described in the Deposit Agreement; and service
of process effected in the manner set forth in Section 20 of the
Deposit Agreement will be effective to confer valid personal
jurisdiction over the Company;
(x) The issuance by the Company of the Shares to be represented
by the ADSs, the deposit of the Shares with the Depositary against the
issuance of the ADSs represented by the ADRs pursuant to the Deposit
Agreement, the sale of the ADSs and the execution, delivery and
performance by the Company of the Deposit Agreement and this Agreement
will not (A) violate, breach, or result in a default under, any
agreement or other instrument governed by the law of the State of New
York of the Company or any of the Subsidiaries that has been filed as
an exhibit to the Registration Statement or (B) violate any U.S.
federal or New York state statute or any rule or regulation that has
been issued pursuant to any such U.S. federal or New York state
statute or, to such counsel's knowledge, any order of any U.S. federal
or New York state court, governmental agency or body having
jurisdiction over the Company, the Subsidiaries or any of their
respective properties;
(xi) The execution, delivery and performance by the Controlling
Person of this Agreement will not (A) violate, breach, or result in a
default under, any agreement or other instrument governed by the law
of the State of New York of the Company, the Controlling Person or any
of the Subsidiaries that has been filed as an exhibit to the
Registration Statement or (B) violate any U.S. federal or New York
state statute or any rule or regulation that has been issued pursuant
to any such U.S. federal or New York state statute or, to such
counsel's knowledge, any order of any U.S. federal or New York state
court, governmental agency or body having jurisdiction over the
Controlling Person or any of his properties;
(xii) No consent, approval, authorization, order, registration or
qualification of or with any U.S. federal or New York state
governmental agency or body, or to such counsel's knowledge, any U.S.
federal or New York state court is required for the issuance by the
Company of the Ordinary Shares to be represented by the ADSs, the
deposit of Ordinary Shares and the issuance of ADSs represented by
ADRs pursuant to the Deposit Agreement, the sale of the ADSs and the
compliance by the Company with the provisions of the Deposit Agreement
or this Agreement, except for the registration under the Act and the
Exchange Act of the Shares and the ADSs, and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the
purchase and distribution of the ADSs by the Underwriters;
(xiii) No consent, approval, authorization, order, registration
or qualification of or with any U.S. federal or New York state
governmental agency or body, or to such counsel's knowledge, any U.S.
federal or New York state court is required for the compliance by the
Controlling Person with the provisions of this Agreement, except for
the registration under
29
the Act and the Exchange Act of the Shares and the ADSs, and such
consents, approvals, authorizations, registrations or qualifications
as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the ADSs by the
Underwriters;
(xiv) Each of the Registration Statement and the ADS Registration
Statement has become effective under the Act; the Prospectus was filed
with the Commission on _________, 2007 pursuant to Rule 424(b) of the
rules and regulations of the Commission under the Act; and, to such
counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued or proceeding for that purpose
has been instituted or threatened by the Commission;
(xv) To such counsel's knowledge, there are no contracts or
documents of a character required to be filed as exhibits to the
Registration Statement that are not filed as required;
(xvi) The Company is not, and after giving effect to the offering
and sale of the ADSs and the application of the proceeds thereof as
described in the Pricing Disclosure Package and the Prospectus, would
not be on the date hereof, an "investment company" within the meaning
of, and subject to regulation under, the U.S. Investment Company Act
of 1940, as amended;
(xvii) Each of the Registration Statement, as of the date it
became effective under the Act, the Prospectus, as of its date, and
the ADS Registration Statement, as of the date it became effective
under the Act, appeared, on its face, to be appropriately responsive,
in all material respects, to the I requirements of the Act and the
applicable rules and regulations of the Commission thereunder (in each
case other than the financial statements or other financial
information contained therein, as to which such counsel need express
no opinion); and
(xviii) Nothing has come to such counsel's attention that causes
such counsel to believe that (a) either the Registration Statement or
the ADS Registration Statement, as of the respective date it became
effective under the Act, contained any untrue statement of a material
fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading, (b) the Pricing Disclosure Package, as of _______ p.m.
(New York City time) on _________, 2007 (being the Applicable Time
designated in this Agreement) or as of the date hereof, contained or
contains any untrue statement of a material fact or omitted or omits
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or (c) the Prospectus as of its date or as of the date
hereof, contained or contains any untrue statement of a material fact
or omitted or omits to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, except that such counsel
expresses no belief in any of clauses (a), (b) or (c) above with
respect to the financial statements or other financial data contained
in or omitted from the Registration Statement, the Pricing Disclosure
Package, the Prospectus or the ADS Registration Statement.
In rendering such opinion, ____________ may state that they express no
opinion as to the laws of any jurisdiction outside the United States;
30
(e) Haiwen & Partners, PRC counsel to the Company, shall have furnished to
you such written opinion or opinions, dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) Nepstar Electronic has been duly organized and is validly existing
as a limited liability company under the laws of the PRC and its business
license is in full force and effect; Nepstar Electronic has been duly
qualified as a foreign invested enterprise and a high- and new-technology
enterprise under the PRC Enterprise Income Tax Law that is entitled to a
preferential income tax rate in the PRC; 100% of the equity interests of
Nepstar Electronic are owned by the Company and to the best of such
counsel's knowledge after due inquiry, such equity interests are free and
clear of all liens, encumbrances, equities or claims; the articles of
association, the business license and other constituent documents of
Nepstar Electronic comply with the requirements of applicable laws of the
PRC and are in full force and effect; Nepstar Electronic has full power and
authority (corporate and other) and all consents, approvals,
authorizations, orders, registrations, clearances and qualifications of or
with any Governmental Agency having jurisdiction over Nepstar Electronic or
any of its properties required for the ownership or lease of property by it
and the conduct of its business and has the legal right and authority to
own, use, lease and operate its assets and to conduct its business in the
manner presently conducted and as described in the Prospectus;
(ii) Nepstar Commerce has been duly organized and is validly existing
as a limited liability company under the laws of the PRC and its business
license is in full force and effect; Nepstar Commerce has been duly
qualified as a foreign invested enterprise; 100% of the equity interests of
Nepstar Commerce are owned by the Company and to the best of such counsel's
knowledge after due inquiry, such equity interests are free and clear of
all liens, encumbrances, equities or claims; the articles of association,
the business license and other constituent documents of Nepstar Commerce
comply with the requirements of applicable laws of the PRC and are in full
force and effect; Nepstar Commerce has full power and authority (corporate
and other) and all consents, approvals, authorizations, orders,
registrations, clearances and qualifications of or with any Governmental
Agency having jurisdiction over Nepstar Commerce or any of its properties
required for the ownership or lease of property by it and the conduct of
its business and has the legal right and authority to own, use, lease and
operate its assets and to conduct its business in the manner presently
conducted and as described in the Prospectus;
(iii) Nepstar Pharmaceutical has been duly organized and is validly
existing as a limited liability company under the laws of the PRC and its
business license is in full force and effect; 35% and 65% of the equity
interests of Nepstar Pharmaceutical are owned by Nepstar Electronic and
Nepstar Commerce, respectively, and to the best of such counsel's knowledge
after due inquiry, such equity interests are free and clear of all liens,
encumbrances, equities or claims; the articles of association, the business
license and other constituent documents of Nepstar Pharmaceutical comply
with the requirements of applicable PRC Laws and are in full force and
effect; Nepstar Pharmaceutical has full power and authority (corporate and
other) and has all consents, approvals, authorizations, orders,
registrations, clearances and qualifications of or with any, Governmental
Agency having jurisdiction over Nepstar Pharmaceutical or any of its
properties required for the ownership or lease of property by it and the
conduct of its business and has the legal right and authority to own, use,
lease and operate its assets and to conduct its business in the manner
presently conducted and as described in the Prospectus;
31
(iv) All of the issued shares of capital stock of Nepstar Electronic
have been duly and validly authorized and issued and are fully paid and
non-assessable; Nepstar Electronic has obtained all approvals,
authorizations, consents and orders, and has made all filings and
registrations, which are required under PRC laws and regulations for the
ownership interest by the Company in Nepstar Electronic; and there are no
outstanding rights, warrants or options to acquire, or instruments
convertible into or exchangeable for, nor any agreements or other
obligations to issue or other rights to convert any obligation into, any
equity interest in Nepstar Electronic;
(v) All of the issued shares of capital stock of Nepstar Commerce have
been duly and validly authorized and issued and are fully paid and
non-assessable; Nepstar Commerce has obtained all approvals,
authorizations, consents and orders, and has made all filings and
registrations, which are required under PRC laws and regulations for the
ownership interest by the Company in Nepstar Commerce; and there are no
outstanding rights, warrants or options to acquire, or instruments
convertible into or exchangeable for, nor any agreements or other
obligations to issue or other rights to convert any obligation into, any
equity interest in Nepstar Commerce;
(vi) All of the issued shares of capital stock of Nepstar
Pharmaceutical have been duly and validly authorized and issued and are
fully paid and non-assessable; Nepstar Pharmaceutical has obtained all
approvals, authorizations, consents and orders, and has made all filings
and registrations, which are required under PRC laws and regulations for
the ownership interest by Nepstar Electronic and Nepstar Commerce in
Nepstar Pharmaceutical; and there are no outstanding rights, warrants or
options to acquire, or instruments convertible into or exchangeable for,
nor any agreements or other obligations to issue or other rights to convert
any obligation into, any equity interest in Nepstar Pharmaceutical;
(vii) Each of the Company's PRC Subsidiaries has legal and valid title
to all of its properties and assets, free and clear of all liens, charges,
encumbrances, equities, claims, defects, options and restrictions; each
lease agreement to which it is a party is duly executed and legally
binding; its leasehold interests are fully protected by the terms of the
lease agreements, which are valid, binding and enforceable in accordance
with their respective terms under PRC law; and, to the best of such
counsel's knowledge after due inquiry, none of the Company and its PRC
Subsidiaries owns, operates, manages or has any other right or interest in
any other material real property of any kind, except as described in the
Prospectus;
(viii) Each of the Company's PRC Subsidiaries has the corporate power
to enter into and perform its obligations under each of the agreements (the
"Restructuring Agreements") entered into in connection with the
Restructuring to which it is a party and has taken all necessary corporate
action to authorize the execution, delivery and performance of, and has
authorized, executed and delivered, each of the Restructuring Agreements to
which it is a party; and each of the Restructuring Agreements to which it
is a party constitutes a valid and legally binding obligation of such
party, enforceable in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;
32
(ix) The execution and delivery by each of the Company's PRC
Subsidiaries of, and the performance by each of the Company's PRC
Subsidiaries of its obligations under, each of the Restructuring Agreements
to which it is a party and the consummation by each of the Company's PRC
Subsidiaries of the transactions contemplated therein will not: (A)
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which it is a
party or by which it is bound or to which any of its properties or assets
is bound or to which any of its properties or assets is subject; (B) result
in any violation of the provisions of its articles of association, business
license; or (C) result in any violation of any laws of the PRC;
(x) Each of the Restructuring Agreements is in proper legal form under
the laws of the PRC for the enforcement thereof against each of the parties
thereto in the PRC without further action by any of the parties thereto;
and to ensure the legality, validity, enforceability or admissibility in
evidence of each of the Restructuring Agreements in the PRC, it is not
necessary that any such document be filed or recorded with any court or
other authority in the PRC or that any stamp or similar tax be paid on or
in respect of any of the Restructuring Agreements (in the case any such
stamp or tax is required, the Company or its relevant Subsidiaries have
duly paid the stamp or tax as of the date hereof);
(xi) The descriptions of the Restructuring set forth in the Pricing
Disclosure Package and the Prospectus under the caption "Our Corporate
Structure" are accurate, complete and fair;
(xii) The Restructuring has been carried out and completed in
compliance with all applicable PRC laws and regulations, including, without
limitation, the Administrative Measures and the Catalogue, and does not (A)
contravene any provision of applicable law or statute, rule or regulation
of any PRC Governmental Agency (including but not limited to the Ministry
of Commerce, the State Administration of Industry and Commerce and the
State Administration of Foreign Exchange of the PRC) having jurisdiction
over any of the Company's PRC Subsidiaries or any of their properties, (B)
contravene the articles of association, business license or other
constituent documents of any of the Company's PRC Subsidiaries, or (C)
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any license, indenture,
mortgage, deed of trust, loan agreement, note, lease or other agreement or
instrument to which any of the Company's PRC Subsidiaries is a party or by
which such PRC Subsidiary is bound or to which any of the property or
assets of the Company or any of its Subsidiaries is subject;
(xiii) All Governmental Authorizations required under the PRC laws,
rules and regulations in connection with the Restructuring have been duly
granted, made or unconditionally obtained in writing and are in full force
and effect, and no such Governmental Authorization has been withdrawn or
revoked or is subject to any condition precedent which has not been
fulfilled or performed;
(xiv) The corporate structure of the Company (including the
shareholding structure of each of the Company's PRC Subsidiaries) after the
completion of the Restructuring complies, and after the offering and sale
of the Shares and ADSs, will comply with all applicable PRC laws, rules and
regulations, including, without limitation, the Administrative Measures and
the Catalogue, and does not violate, breach, contravene or circumvent or
otherwise conflict with any applicable PRC laws, rules or regulations;
33
(xv) To the best of such counsel's knowledge after due inquiry, the
corporate structure of the Company (including the shareholding structure of
each of the Company's PRC Subsidiaries) has not been challenged by any PRC
Governmental Agency, and there are no legal, arbitration, governmental or
other proceedings (including, without limitation, governmental
investigations or inquiries) pending before or threatened or contemplated
by any PRC Governmental Agency in respect of such corporate structure of
the Company, and nothing has come to such counsel's attention after due
inquiry that causes such counsel to believe that after the consummation of
the offering and sale of the Shares and ADSs, the corporate structure of
the Company (including the shareholding structure of each of the Company's
PRC Subsidiaries) would be challenged by any PRC Governmental Agency;
(xvi) Each of the Company's PRC Subsidiaries has all necessary
licenses, consents, authorizations, approvals, orders, certificates and
permits of and from, and has made all declarations and filings with, all
Governmental Agencies to own, lease, license and use its properties, assets
and conduct its business in the manner described in the Prospectus and such
licenses, consents, authorizations, approvals, orders, certificates or
permits contain no materially burdensome restrictions or conditions not
described in the Prospectus; except as described in the Prospectus, none of
the Company's PRC Subsidiaries has any reason to believe that any
regulatory body is considering modifying, suspending or revoking any such
licenses, consents, authorizations, approvals, orders, certificates or
permits and each of the Company's PRC Subsidiaries is in compliance with
the provisions of all such licenses, consents, authorizations, approvals,
orders, certificates or permits in all material respects;
(xvii) All dividends and other distributions declared and payable upon
the equity interests in Nepstar Electronic or Nepstar Commerce may under
the current laws and regulations of the PRC be paid to the Company in
Renminbi that may be converted into U.S. dollars and freely transferred out
of the PRC, and all such dividends and other distributions are not and,
except as disclosed in the Prospectus, will not be subject to withholding
or other taxes under the laws and regulations of the PRC and, except as
disclosed in the Prospectus, are otherwise free and clear of any other tax,
withholding or deduction in the PRC, and without the necessity of obtaining
any Governmental Authorization in the PRC;
(xviii) All dividends and other distributions declared and payable
upon the equity interests in Nepstar Pharmaceutical may under the current
laws and regulations of the PRC be paid to Nepstar Electronic or Nepstar
Commerce in Renminbi that may be converted into U.S. dollars and freely
transferred out of the PRC, and all such dividends and other distributions
are not and, except as disclosed in the Prospectus, will not be subject to
withholding or other taxes under the laws and regulations of the PRC and,
except as disclosed in the Prospectus, are otherwise free and clear of any
other tax, withholding or deduction in the PRC, and without the necessity
of obtaining any Governmental Authorization in the PRC;
(xix) To the best of such counsel's knowledge after due inquiry,
neither the Company nor any of its Subsidiaries is (A) in breach of or in
default under any laws, regulations, rules, orders, decrees, guidelines or
notices of the PRC, (B) in breach of or in default under any approval,
consent, waiver, authorization, exemption, permission, endorsement or
license granted by any Governmental Agency in the PRC, (C) in violation of
34
their respective constituent documents, business licenses or permits or (D)
in default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage, deed
of trust, loan agreement, lease or other agreement or instrument to which
it is a party or by which it or any of its properties may be bound;
(xx) The statements in the Prospectus under "Prospectus Summary",
"Risk Factors", "Our Corporate Structure", "Management's Discussion and
Analysis of Financial Condition and Results of Operations", "Our Industry",
"Business", "Regulation", "Management", "Related Party Transactions",
"Taxation" and "Enforcement of Civil Liabilities" to the extent such
statements relate to matters of PRC law or regulation or to the provisions
of documents therein described, are true and accurate in all material
respects, and nothing has been omitted from such statements which would
make the same misleading in any material respect;
(xxi) Each of the PRC Entities has a valid right to use the
Intellectual Property as currently used or as currently contemplated to be
used as described in the Prospectus;
(xxii) To the best of such counsel's knowledge after due inquiry, none
of the Company and its Subsidiaries is infringing, misappropriating or
violating any intellectual property right of any third party in the PRC;
and no Intellectual Property is subject to any outstanding decree, order,
injunction, judgment or ruling restricting the use of such Intellectual
Property in the PRC that would impair the validity or enforceability of
such Intellectual Property;
(xxiii) No security interests or other liens have been created with
respect to any of the Intellectual Property;
(xxiv) No stamp or other issuance or transfer taxes or duties and no
capital gains, income, withholding or other taxes are payable by or on
behalf of the Underwriters to the government of the PRC or to any political
subdivision or taxing authority thereof or therein in connection with (a)
the deposit with the Depositary of Shares against the issuance of ADRs
evidencing the ADSs, (b) the sale and delivery by the Company of the ADSs
and the Shares to or for the respective accounts of the Underwriters or (c)
the sale and delivery outside the PRC by the Underwriters of the ADSs and
the Shares to the initial purchasers thereof in the manner contemplated
herein;
(xxv) The irrevocable submission of each of the Company and the
Controlling Person to the jurisdiction of any New York Court, the waiver by
each of the Company and the Controlling Person of any objection to the
venue of a proceeding in a New York Court, the waiver and agreement not to
plead an inconvenient forum, the waiver of sovereign immunity and the
agreement of each of the Company and the Controlling Person that this
Agreement and the Deposit Agreement, as applicable, shall be construed in
accordance with and governed by the laws of the State of New York are
legal, valid and binding under the laws of the PRC and will be respected by
PRC courts; service of process effected in the manner set forth in this
Agreement and the Deposit Agreement will be effective, insofar as PRC law
is concerned, to confer valid personal jurisdiction over each of the
Company and the Controlling Person; and any judgment obtained in a New York
Court arising out of or in relation to the obligations of each of the
Company and the Controlling Person under this Agreement and the Deposit
35
Agreement will be recognized in PRC courts subject to the conditions
described under the caption "Enforceability of Civil Liabilities" in the
Prospectus;
(xxvi) The indemnification and contribution provisions set forth in
Section 9 hereof and Section 16 of the Deposit Agreement do not contravene
the public policy or laws of PRC;
(xxvii) To the best of such counsel's knowledge and other than as set
forth in the Prospectus, there are no legal, arbitration or governmental
proceedings or regulatory or administrative inquiries or investigations
pending to which the Controlling Person, the Company or any of its PRC
Subsidiaries is a party or of which any property of the Controlling Person,
the Company or any of its PRC Subsidiaries is the subject which, if
determined adversely to the Controlling Person, the Company or any such PRC
Subsidiary would individually or in the aggregate have a material adverse
effect on the current or future consolidated financial position,
shareholders' equity, earnings, results of operations or prospects of the
Company or any of its PRC Subsidiaries or which would reasonably be
expected to materially and adversely affect the properties or assets
thereof or the consummation of the transactions contemplated in this
Agreement or the performance by the Company or the Controlling Person of
its obligations thereunder; and, to the best of such counsel's knowledge
after due inquiry, no such proceedings, inquiries or investigations are
threatened or contemplated by any Governmental Agency or threatened by
others;
(xxviii) The issue and sale of the Shares and the ADSs being delivered
at such Time of Delivery and the deposit of the Shares with the Depositary
against issuance of the ADRs evidencing the ADSs to be delivered at such
Time of Delivery and the compliance by the Company with all of the
provisions of this Agreement and the Deposit Agreement, the compliance by
the Controlling Person with all of the provisions of this Agreement, and
the consummation of the transactions herein and therein contemplated will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument known to such
counsel to which any of the Company's PRC Subsidiaries or the Controlling
Person is a party or by which any of the Company's PRC Subsidiaries or the
Controlling Person is bound or to which any of the property or assets of
any of the Company's PRC Subsidiaries or the Controlling Person is subject,
nor will such action result in any violation of the provisions of the
articles of association, business license or any other constituent
documents of any of the Company's PRC Subsidiaries or any statute or any
order, rule or regulation known to such counsel of any Governmental Agency
having jurisdiction over any of the Company's PRC Subsidiaries or the
Controlling Person;
(xxix) No Governmental Authorization of or with any Governmental
Agency in the PRC is required for the issue and sale of the Shares and the
ADSs, the deposit of the Shares with the Depositary against issuance of the
ADRs evidencing the ADSs to be delivered at such Time of Delivery or the
consummation of the transactions contemplated by this Agreement and the
Deposit Agreement;
(xxx) None of the Company's PRC Subsidiaries is in violation of its
articles of association, business license or any other constituent
documents or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or
36
instrument to which it is a party or by which it or any of its properties
may be bound;
(xxxi) The application of the net proceeds to be received by the
Company from the sale of ADSs as contemplated by the Pricing Disclosure
Package and the Prospectus will not contravene any provision of applicable
PRC laws, rules or regulations, or the articles of association, the
business or other constituent documents of any of the Company's PRC
Subsidiaries or contravene the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement,
note, lease or other agreement or instrument binding upon any of the
Company's PRC Subsidiaries, or any judgment, order or decree of any
Governmental Agency in the PRC;
(xxxii) Although such counsel does not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in the
Registration Statement, the Pricing Disclosure Package or the Prospectus,
they have no reason to believe that (a) any part of the Registration
Statement or any further amendment thereto made by the Company prior to
such Time of Delivery (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion), when
such part or amendment became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; (b) the
Pricing Disclosure Package, as of the Applicable Time and as of such Time
of Delivery, contained any untrue statement of a material fact or omitted
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; (c) each Issuer Free Writing Prospectus listed on Schedule II
attached hereto conflicted with the information contained in the
Registration Statement, the Pricing Disclosure Package or the Prospectus
and each such Issuer Free Writing Prospectus, as supplemented by and taken
together with the Pricing Disclosure Package as of the Applicable Time and
as of such Time of Delivery, contained any untrue statement of a material
fact or omitted to state any material fact required necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; or (d) as of its date and as of such Time of
Delivery, the Prospectus or any further amendment or supplement thereto
made by the Company prior to such Time of Delivery (other than the
financial statements and related schedules therein, as to which such
counsel need express no opinion) contained or contains an untrue statement
of a material fact or omitted or omits to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(xxxiii) The entry into, and performance or enforcement of this
Agreement or the Deposit Agreement in accordance with its respective terms
will not subject any of the Underwriters or the Depositary to any
requirement to be licensed or otherwise qualified to do business in the
PRC, nor will any Underwriter or the Depositary be deemed to be resident,
domiciled, carrying on business through an establishment or place in the
PRC or in breach of any laws or regulations in the PRC by reason of entry
into, performance or enforcement of this Agreement or the Deposit
Agreement;
(xxxiv) No Governmental Authorization of or with any Governmental
Agency in the PRC (including, without limitation, the approvals of the
China Securities Regulatory Commission and the Ministry of Commerce under
the M&A Rules and Related Clarifications) is required for the issue and
sale of the Shares and the ADSs, the listing of
37
the ADSs on the NYSE, the deposit of the Shares with the Depositary against
issuance of the ADRs evidencing the ADSs to be delivered at such Time of
Delivery or the consummation of the transactions contemplated by this
Agreement and the Deposit Agreement; and the issue and sale of the Shares
and the ADSs being delivered at such Time of Delivery and the deposit of
the Shares with the Depositary against issuance of the ADRs evidencing the
ADSs to be delivered at such Time of Delivery and the compliance by the
Company with all of the provisions of this Agreement and the Deposit
Agreement and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation of
any law or statute or any order, rule or regulation of any Governmental
Agency in the PRC (including, without limitation, the M&A Rules and Related
Clarifications);
(xxxv) To the best of such counsel's knowledge, none of the Company's
PRC Subsidiaries has taken any action nor have any steps been taken or
legal or administrative proceedings been commenced or threatened for the
winding up, dissolution or liquidation or for the suspension, withdrawal,
revocation or cancellation of any of their respective business license or
articles of association, as applicable;
(xxxvi) To the best of such counsel's knowledge, no pending or
threatened labor problem or dispute with the employees of any of the
Company's PRC Subsidiaries exist;
(xxxvii) None of the Company's PRC Subsidiaries has material legal
obligations to provide housing benefits or retirement benefits, death or
disability benefits (or other actual or contingent employee benefits or
perquisites) to any present or past employees, whether permanent or
temporary, of such company;
(xxxviii) To the best of such counsel's knowledge, all notices and
public announcements to the creditors of the Company and any of its
affiliates, subsidiaries and shareholders required to be made in connection
with the Restructuring have been duly made pursuant to the applicable PRC
law, and no valid objection has been raised to the Restructuring within the
prescribed period;
(xxxix) Other than the Restructuring Agreements, there are no other
material documents or agreements, written or oral, that have been entered
into by the Company, or any of its affiliates or subsidiaries in connection
with the Restructuring;
(xl) To the best of such counsel's knowledge, there are no outstanding
guarantees or contingent payment obligations of any of the Company's PRC
Subsidiaries in respect of indebtedness of third parties except as
disclosed in the Prospectus;
(xli) The choice of law provisions set forth in this Agreement and the
Deposit Agreement will be recognized by PRC courts;
(xlii) All returns, reports or filings which ought to have been made
by or in respect of each of the Company's PRC Subsidiaries for taxation
purposes as required by the law of the PRC have been made and all such
returns are correct and on a proper basis in all material respects and are
not the subject of any dispute with the relevant tax, revenue or other
appropriate authorities; all taxes and other assessments of a similar
nature (whether imposed directly or through withholding) including any
interest, additions to tax or penalties applicable thereto due or claimed
to be due from such authorities have been paid
38
in full; and none of the Company's PRC Subsidiaries g has received notice
of any tax deficiency;
(xliii) There are no reporting obligations under PRC law on non-PRC
resident holders of the Shares offered in this offering;
(xliv) As a matter of PRC law, no holder of the Shares will be subject
to any personal liability, or be subject to a requirement to be licensed or
otherwise qualified to do business or be deemed domiciled or resident in
the PRC, by virtue only of holding the Shares. There are no limitations
under PRC law on the rights of holders of the Shares to hold, vote, or
transfer their securities nor any statutory pre-emptive rights or transfer
restrictions applicable to the Shares; and
(xlv) This Agreement has been duly authorized, executed and delivered
by the Controlling Person and constitutes a valid and legally binding
agreement of the Controlling Person enforceable in accordance with its
terms; to ensure the legality, validity, enforceability or admissibility
into evidence in the PRC of this Agreement, it is not necessary that this
Agreement be filed or recorded with any court or other authority in the
PRC.
In giving such opinion, such counsel may state that (A) with respect to all
matters of United States federal and New York State law they have relied upon
the opinions of United States counsel for the Company delivered pursuant to
paragraph (d) of this Section 8 and (B) with respect to all matters of Cayman
Islands law they have relied upon the opinions of Cayman Islands counsel for the
Company delivered pursuant to paragraph (f) of this Section 8;
(f) Xxxxxxx Xxxx & Xxxxxxx, Cayman Islands counsel for the Company
shall have furnished to you their written opinion, dated such Time of
Delivery, in form and substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a company in good standing under the laws of the Cayman
Islands, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus;
(ii) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued share capital of the Company
(including the Shares being delivered at such Time of Delivery) have
been duly and validly authorized and issued and are fully paid and
non-assessable; the holders of outstanding shares of share capital of
the Company are not entitled to preemptive or other rights to acquire
the ADSs to be deposited by the Company or to be purchased from the
Company under this Agreement which have not been complied with; the
Shares to be deposited by the Company may be freely deposited by the
Company with the Depositary against issuance of ADRs evidencing ADSs;
and the ADSs and the Shares to be sold by the Company are freely
transferable by the Company to or for the account of the several
Underwriters in the manner contemplated herein;
(iii) To the best of such counsel's knowledge, after having
conducted a search of the register of writs and other originating
processes, and other than as set forth in the Prospectus, there are no
legal, arbitration or governmental proceedings or regulatory or
39
administrative inquiries or investigations pending to which the
Company or any of its Subsidiaries is a party or of which any property
of the Company or any of its Subsidiaries is the subject which, if
determined adversely to the Company or any of its Subsidiaries, would
individually or in the aggregate have a material adverse effect on the
current or future consolidated financial position, shareholders'
equity, earnings, results of operations or prospects of the Company
and its Subsidiaries, taken as a whole or which would reasonably be
expected to materially and adversely affect the properties or assets
thereof or the consummation of the transactions contemplated in this
Agreement or the performance by the Company of its obligations
thereunder; and, to the best of such counsel's knowledge, no such
proceedings, inquiries or investigations are threatened or
contemplated by any Governmental Agency or threatened by others;
(iv) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding
agreement of the Company enforceable in accordance with its terms,
subject, as to enforceability, to bankruptcy, insolvency,
reorganization and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles;
(v) The Deposit Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding
agreement of the Company, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, fraudulent
transfer, moratorium, reorganization and similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles;
(vi) Each of this Agreement and the Deposit Agreement is in
proper form to be enforceable against the Company in the Cayman
Islands in accordance with its terms; to ensure the legality,
validity, enforceability or admissibility into evidence in the Cayman
Islands of this Agreement or the Deposit Agreement, it is not
necessary that this Agreement or the Deposit Agreement be filed or
recorded with any court or other authority in the Cayman Islands or
that any stamp or similar tax in the Cayman Islands be paid on or in
respect of this Agreement, the Deposit Agreement or any other
documents to be furnished hereunder or thereunder;
(vii) The issue and sale of the Shares and the ADSs being
delivered at such Time of Delivery and the deposit of the Shares with
the Depositary against issuance of the ADRs evidencing the ADSs to be
delivered at such Time of Delivery and the execution, delivery and
compliance by the Company with all of the provisions of this
Agreement, and the Deposit Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument known to such counsel
to which the Company is a party or by which the Company is bound or to
which any of the property or assets of the Company is subject, nor
will such action result in any violation of the provisions of the
constituent documents of the Company or any statute or any order, rule
or regulation known to such counsel of any Governmental Agency having
jurisdiction over the Company or any of their respective properties;
(viii) No Governmental Authorization of or with any Governmental
Agency in the Cayman Islands is required for the issue and sale of the
Shares and the ADSs, the deposit of the Shares with the Depositary
against issuance of the ADRs evidencing the ADSs to be
40
delivered at such Time of Delivery or the consummation of the
transactions contemplated by this Agreement and the Deposit Agreement;
(ix) The statements set forth in the Prospectus under the caption
"Description of Share Capital", insofar as they purport to constitute
a summary of the terms of the Ordinary Shares are accurate, complete
and fair;
(x) The statements set forth in the Prospectus under the caption
"Taxation -- Cayman Islands Taxation", insofar as they purport to
describe the provisions of the laws and documents referred to therein,
are accurate, complete and fair;
(xi) No stamp or other issuance or transfer taxes or duties and
no capital gains, income, withholding or other taxes are payable by or
on behalf of the Underwriters to the Cayman Islands or to any
political subdivision or taxing authority thereof or therein in
connection with (A) the deposit with the Depositary of Shares by the
Company against the issuance of ADRs evidencing the ADSs, (B) the sale
and delivery by the Company of the ADSs and the Shares to or for the
respective accounts of the Underwriters or (C) the sale and delivery
outside the Cayman Islands by the Underwriters of the ADSs and the
Shares to the initial purchasers thereof in the manner contemplated
herein;
(xii) Insofar as matters of the Cayman Islands law are concerned,
the Registration Statement and the filing of the Registration
Statement with the Commission have been duly authorized by and on
behalf of the Company; and the Registration Statement has been duly
executed pursuant to such authorization by and on behalf of the
Company;
(xiii) The Company's agreement to the choice of law provisions
set forth in Section 15 hereof will be recognized by the courts of the
Cayman Islands; the Company can xxx and be sued in their own names
under the laws of the Cayman Islands; the irrevocable submission of
the Company to the exclusive jurisdiction of a New York Court, the
waiver by the Company of any objection to the venue of a proceeding of
a New York Court and the agreement of the Company that this Agreement
shall be governed by and construed in accordance with the laws of the
State of New York are legal, valid and binding; service of process
effected in the manner set forth in Section 15 hereof will be
effective, insofar as the law of the Cayman Islands is concerned, to
confer valid personal jurisdiction over the Company; and judgment
obtained in a New York Court arising out of or in relation to the
obligations of the Company under this Agreement would be enforceable
against the Company in the courts of the Cayman Islands;
(xiv) The indemnification and contribution provisions set forth
in Section 9 hereof and Section 16 of the Deposit Agreement do not
contravene the public policy or laws of the Cayman Islands;
(xv) All dividends and other distributions declared and payable
on the share capital of the Company may under the current laws and
regulations of the Cayman Islands be paid to the Depositary and freely
transferred out of the Cayman Islands, and all such dividends and
other distributions will not be subject to withholding or other taxes
under the laws and regulations of Cayman Islands and are otherwise
free and clear of any other tax, withholding or deduction in the
Cayman Islands and without the necessity of obtaining any Governmental
Authorization in the Cayman Islands;
41
(xvi) The Company is not in violation of its constituent
documents or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any
license, indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which it is a party or by which it or
any of its properties may be bound; the Restructuring does not (A)
contravene any provision of applicable Cayman Islands law or statute,
rule or regulation of any Governmental Agency having jurisdiction over
the Company or any of its properties, (B) contravene the articles of
association, business license or other constituent documents of the
Company, or (C) conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
license, indenture, mortgage, deed of trust, loan agreement, note,
lease or other agreement or instrument to which the Company is a party
or by which the Company is bound or to which any of the property or
assets of the Company is subject.
In giving such opinion, such counsel may state that (A) with respect to all
matters of United States federal and New York law they have relied upon the
opinions of United States counsel for the Company delivered pursuant to
paragraph (d) of this Section 8 and (B) with respect to all matters of PRC law
they have relied upon the opinions of PRC counsel for the Company delivered
pursuant to paragraph (e) of this Section 8;
(g) Xxxxxxxx Chance LLP, counsel for the Depositary, shall have
furnished to you their written opinion, dated such Time of Delivery, in
form and substance satisfactory to you, to the effect that:
(i) The Deposit Agreement has been duly authorized, executed and
delivered by the Depositary and constitutes a valid and binding
agreement of the Depositary enforceable against the Depositary in
accordance with its terms, except as enforcement of it may be limited
by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or similar laws of general application relating to or
affecting creditors' rights and by general principles of equity;
(ii) Upon execution and delivery by the Depositary of ADRs
evidencing the ADSs against the deposit of Shares in accordance with
the provisions of the Deposit Agreement, the ADRs will be duly and
validly issued and will entitle the holders thereof to the rights
specified therein and in the Deposit Agreement; and
(iii) The ADS Registration Statement has been filed and declared
effective and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the ADS Registration Statement or any
part thereof has been issued and no proceedings for that purpose have
been instituted or are pending or contemplated under the Act and the
ADS Registration Statement, and each amendment as of their respective
effective dates, complied as to form in all material respects with the
requirements of the Act and the rules and regulations of the
Commission thereunder;
(h) On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:30 a.m., New York City time, on the effective date of
any post-effective amendment to the Registration Statement filed subsequent
to the date of this Agreement and also at each Time of Delivery, KPMG shall
have furnished to you a letter or letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you, to the effect
set forth in Annex I attached hereto;
42
(i) No Preliminary Prospectus, Pricing Prospectus, Issuer Free Writing
Prospectus or Prospectus or amendment or supplement to the Registration
Statement, the Preliminary Prospectus, the Pricing Prospectus or the
Prospectus shall have been filed to which you shall have objected in
writing;
(j) (A) Neither the Company nor any of its Subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Pricing Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Pricing Prospectus, and (B) since the respective dates as of which
information is given in the Pricing Prospectus there shall not have been
any change in the share capital or short-term debt or long-term debt of the
Company or any of its Subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, shareholders' equity, earnings, results of
operations or prospects of the Company and its Subsidiaries, otherwise than
as set forth or contemplated in the Pricing Prospectus, the effect of
which, in any such case described in clause (A) or (B), is in your judgment
so material and adverse as to make it impracticable or inadvisable to
proceed with the public offering or the delivery of the Shares being
delivered at such Time of Delivery on the terms and in the manner
contemplated in the Prospectus;
(k) All outstanding shares of Preferred Stock have been converted into
Ordinary Shares in accordance with the terms of the Preferred Stock;
(l) Certificates in negotiable form representing all of the Shares
underlying the ADSs to be sold by the Company hereunder will be placed in
custody with ________, as custodian for the Depositary;
(m) On or after the Applicable Time there shall not have occurred any
of the following: (i) a suspension or material limitation in trading in
securities generally on Nasdaq, the NYSE, The Stock Exchange of Hong Kong
Limited or the London Stock Exchange or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices have been required,
by any of said exchanges or by such system or by order of the Commission,
the FINRA or any other regulatory authority; (ii) a suspension or material
limitation in trading in the Company's securities on the NYSE; (iii) a
general moratorium on commercial banking activities in New York, London,
Hong Kong, the PRC or the Cayman Islands declared by the relevant
authorities, or a material disruption in commercial banking or securities
settlement or clearance services in the United States, the United Kingdom,
Hong Kong, the PRC or the Cayman Islands; (iv) a change or development
involving a prospective change in taxation affecting the Company, any of
its Subsidiaries or the Shares or the ADSs or the transfer thereof; (v) the
enactment, publication, decree or other promulgation of any statute,
regulation, rule or order of any Governmental Agency materially affecting
the business or operations of the Company or its Subsidiaries; (vi) the
outbreak or escalation of hostilities or act of terrorism involving the
United States, the United Kingdom, Hong Kong, the PRC or the Cayman Islands
or the declaration by the United States, the United Kingdom, Hong Kong, the
PRC or the Cayman Islands of a national emergency or war; or (vii) the
occurrence of any other calamity or crisis or any change in financial,
political or economic conditions or currency exchange rates or controls in
the United States, the United Kingdom, Hong Kong, the PRC, the Cayman
Islands or elsewhere, if the effect of any such event specified in clauses
(v), (vi) or (vii), in the sole judgment of the Representatives, makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares and the ADSs being delivered at such Time of
Delivery on the terms and in the manner contemplated in the Prospectus;
43
(n) The ADSs to be sold by the Company at such Time of Delivery shall
have been duly approved, subject to notice of the issuance, for listing on
the NYSE;
(o) The Depositary shall have furnished or caused to be furnished to
you at such Time of Delivery certificates satisfactory to you evidencing
the deposit with it of the Shares being so deposited against issuance of
ADRs evidencing the ADSs to be delivered by the Company at such Time of
Delivery, and the execution, countersignature (if applicable), issuance and
delivery of ADRs evidencing such ADSs pursuant to the Deposit Agreement;
(p) Each party set forth in Annex II attached hereto shall have
entered into an agreement (each a "Lock-Up Agreement") whereby during the
period beginning from the date hereof and continuing to and including the
date 180 days after the date of the Prospectus, such party shall not,
except as provided hereunder offer, sell, contract to sell, pledge, grant
any option to purchase, purchase any option or contract to sell, right or
warrant to purchase, make any short sale, file a registration statement
with respect to, or otherwise dispose of (including entering into any swap
or other arrangement that transfers to another, in whole or in part, any of
the economic consequence of ownership interests): (A) any ADSs or Ordinary
Shares or any securities of the Company that are substantially similar to
the ADSs or Ordinary Shares, including but not limited to any securities
that are convertible into or exchangeable for, or that represent the right
to receive, ADSs or Ordinary Shares or any such substantially similar
securities; and (B) any ordinary shares of any of the Subsidiaries or
depositary shares or depositary receipts representing such ordinary shares,
including but not limited to any securities that are convertible into or
exchangeable for or that represent the right to receive such ordinary
shares or such depositary shares or depositary receipts or any such
substantially similar securities (in each case other than pursuant to a
bona fide gift by an individual to a donee or a sale or transfer by an
entity to an affiliate, provided that such donee or affiliate agrees to be
bound in writing by the restrictions set forth therein), without your prior
written consent, except for ADSs and shares of common stock represented
thereby being sold hereunder (a form of such Lock-Up Agreement is attached
as Annex III attached hereto);
(q) At each Time of Delivery, the Chief Financial Officer of the
Company shall have furnished to you an officer's certificate, dated as of
such Time of Delivery, in form and substance satisfactory to you, to the
effect set forth in Annex IV attached hereto;
(r) The Company shall have complied with the provisions of Section
5(iii) hereof with respect to the furnishing of Prospectuses on the New
York Business Day next succeeding the date of this Agreement; and
(s) The Company and the Controlling Person shall have furnished or
caused to be furnished to you at such Time of Delivery certificates of
officers of the Company and the Controlling Person, respectively,
satisfactory to you as to the accuracy of the representations and
warranties of the Company and the Controlling Person, respectively, herein
at and as of such Time of Delivery, as to the performance by the Company
and the Controlling Person of all of their respective obligations hereunder
to be performed at or prior to such Time of Delivery, and as to such other
matters as you may reasonably request, including, without limitation,
certificates of officers of the Company satisfactory to you with respect to
the memorandum and articles of association and other organizational
documents of the Company, all resolutions of the board of directors of the
Company and other corporate actions relating to this Agreement and the
authorization, issue and sale of the Shares and ADSs and the incumbency and
specimen signatures of signing officers, and the Company shall have
furnished or caused to be furnished
44
certificates as to the matters set forth in subsections (a), (j) and (k) of
this Section, and as to such other matters as you may reasonably request.
9. (a) The Company and the Controlling Person, jointly and severally, will
indemnify and hold harmless each Underwriter against any losses, claims,
expenses, damages or liabilities, joint or several, to which such Underwriter
may become subject, under the Act or otherwise, insofar as such losses, claims,
expenses, damages or liabilities (or actions in respect thereof, including to
the extent of the aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever; provided, that any such settlement is
effected with the written consent of the Company and the Controlling Person)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement, the ADS Registration
Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus,
or any amendment or supplement thereto, any Issuer Free Writing Prospectus or
any "issuer information" filed or required to be filed pursuant to Rule 433(d)
under the Act, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
the Company and the Controlling Person shall not be liable in any such case to
the extent that any such any losses, claims, expenses, damages or liabilities
arise out of or are based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in the Registration Statement, the ADS
Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or
the Prospectus, or any amendment or supplement thereto, or any Issuer Free
Writing Prospectus in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representatives
expressly for use therein.
(b) Without limitation of and in addition to its obligations under the
other paragraphs of this Section 9, the Company and the Controlling Person,
jointly and severally, agree to indemnify, defend and hold harmless the
Independent Underwriter (as defined in Section 9(e) hereof), its affiliates,
directors, officers, employees and agents and each person who controls the
Independent Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, and the successors and assigns of all of the foregoing
persons, from and against any losses, claims, expenses, damages or liabilities
(including the reasonable cost of investigation) which, jointly or severally,
the Independent Underwriter or any such person may incur, insofar as such
losses, claims, expenses, damages or liabilities arise out of or are based upon
the Independent Underwriter's acting as a "qualified independent underwriter"
(within the meaning of FINRA Conduct Rule 2720) in connection with the offering
contemplated by this Agreement, and the Company and the Controlling Person agree
to reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by it in connection with investigating or defending
any such losses, claims, expenses, damages or liabilities. Section 9(e) shall
apply equally to any action brought against the Independent Underwriter or any
such person in respect of which indemnity may be sought against the Company or
the Controlling Person pursuant to the immediately preceding sentence, except
that the Company and the Controlling Person shall be liable for the expenses of
one separate counsel (in addition to any local counsel) for the Independent
Underwriter and any such person, separate and in addition to counsel for the
persons who may seek indemnification pursuant to Section 9(a) in any such
action.
(c) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company and the Controlling Person against any losses, claims,
expenses, damages or liabilities to which the Company or the Controlling Person
may become subject, under the Act or otherwise, insofar as such losses, claims,
expenses, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, the ADS Registration Statement,
any Preliminary Prospectus, the Pricing Prospectus or the
45
Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing
Prospectus, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in the Registration Statement, the ADS
Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or
the Prospectus, or any amendment or supplement thereto, or any Issuer Free
Writing Prospectus, in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representatives
expressly for use therein; and will reimburse the Company and the Controlling
Person for any legal or other expenses reasonably incurred by the Company or the
Controlling Person in connection with investigating or defending any such action
or claim as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against an indemnifying party
under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof. In the case of parties indemnified pursuant to subsection
(a) above, counsel to the indemnified parties shall be selected by the
Representatives. The indemnifying party shall be entitled to participate therein
at its own expense and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (which shall not, except with the
consent of the indemnified party, be counsel to the indemnified party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances;
provided, that, if indemnity is sought pursuant to subsection (b) above, then,
in addition to the fees and expenses of such counsel for the indemnified
parties, the indemnifying party shall be liable for the reasonable fees and
expenses of not more than one counsel (in addition to any local counsel)
separate from its own counsel and that of the other indemnified parties for the
Independent Underwriter in its capacity as a "qualified independent underwriter"
and all persons, if any, who control the Independent Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act in connection
with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances if, in
the reasonable judgment of the Independent Underwriter, there may exist a
conflict of interest between the Independent Underwriter and the other
indemnified parties. Any such separate counsel for the Independent Underwriter
and such control persons of the Independent Underwriter shall be designated in
writing by the Independent Underwriter. No indemnifying party shall, without the
written consent of the indemnified parties, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action (including any litigation or any investigation or proceeding
by any governmental agency or body, commenced or threatened) or claim in respect
of which indemnification or contribution may be sought hereunder (whether or not
the indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of each indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
46
(e) If the indemnification provided for in this Section 9 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a),
(b) or (c) above in respect of any losses, claims, expenses, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, expenses, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative benefits received by the Company and the Controlling
Person on the one hand and the Underwriters on the other from the offering of
the ADSs. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law or if the indemnified party failed
to give the notice required under subsection (d) above, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company and the Controlling Person on the one
hand and the Underwriters on the other in connection with the statements or
omissions, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Controlling Person on the one hand and
the Underwriters on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received by
the Company and the Controlling Person bear to the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the U.S. Prospectus. The Company, the Controlling
Person and the Underwriters agree that Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated (the "Independent Underwriter") will not receive any additional
benefits hereunder for serving as the Independent Underwriter in connection with
the offering and sale of the ADSs. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Controlling Person on the
one hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, the Controlling Person and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
subsection (e) were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (e). The amount paid or payable by an indemnified
party as a result of the losses, claims, expenses, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (e) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating, preparing or defending any
such action (including any litigation or any investigation or proceeding by any
governmental agency or body, commenced or threatened) or claim. Notwithstanding
the provisions of this subsection (e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the ADSs underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company and the Controlling Person under this
Section 9 shall be in addition to any liability which the Company and the
Controlling Person may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act and to each affiliate and selling agent of any Underwriter;
and the obligations of the Underwriters under this Section 9 shall be in
addition to any liability which the respective Underwriters may otherwise have
and shall extend, upon the same terms and conditions, to each officer and
director of the Company (including any person who, with his or her consent, is
named in the
47
Registration Statement as about to become a director of the Company) and to each
person, if any, who controls the Company within the meaning of the Act.
10. (a) If any Underwriter shall default in its obligation to purchase the
ADSs which it has agreed to purchase hereunder at a Time of Delivery, you may in
your discretion arrange for you or another party or other parties to purchase
such ADSs on the terms contained herein. If within thirty-six hours after such
default by any Underwriter you do not arrange for the purchase of such ADSs,
then the Company shall be entitled to a further period of thirty-six hours
within which to procure another party or other parties satisfactory to you to
purchase such ADSs on such terms. In the event that, within the respective
prescribed periods, you notify the Company that you have so arranged for the
purchase of such ADSs, or the Company notifies you that they have so arranged
for the purchase of such ADSs, you or the Company shall have the right to
postpone such Time of Delivery for a period of not more than seven days, in
order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments or
supplements to the Registration Statement or the Prospectus which in your
opinion may thereby be made necessary. The term "Underwriter" as used in this
Agreement shall include any person substituted under this Section with like
effect as if such person had originally been a party to this Agreement with
respect to such ADSs.
(b) If, after giving effect to any arrangements for the purchase of the
ADSs of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such ADSs which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the ADSs to be purchased at such Time of Delivery, then the Company shall have
the right to require each non-defaulting Underwriter to purchase the number of
ADSs which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of ADSs which such Underwriter
agreed to purchase hereunder) of the ADSs of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
ADSs of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such ADSs which
remains unpurchased exceeds one-eleventh of the aggregate number of all the ADSs
to be purchased at such Time of Delivery, or if the Company shall not exercise
the right described in subsection (b) above to require non-defaulting
Underwriters to purchase ADSs of a defaulting Underwriter or Underwriters, then
this Agreement (or, with respect to the Second Time of Delivery, the obligations
of the Underwriters to purchase, and of the Company to sell, the Optional ADSs)
shall thereupon terminate, without liability on the part of any non-defaulting
Underwriter, the Company, except for the expenses to be borne by the Company and
the Underwriters as provided in Section 7 hereof and the indemnity and
contribution agreements in Section 9 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
11. The respective indemnities and contribution provisions in Section 9,
and the agreements, representations, warranties and other statements of the
Company, the Controlling Person and the several Underwriters, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the ADSs.
48
12. If this Agreement shall be terminated pursuant to Section 10 hereof,
neither the Company nor the Controlling Person shall then be under any liability
to any Underwriter except as provided in Sections 7 and 9 hereof; but, if for
any other reason, any ADSs are not delivered by or on behalf of the Company as
provided herein, the Company will, upon the occurrence of any failure to
complete the sale and delivery of the ADSs, promptly (and, in any event, not
later than 30 days), jointly and severally, reimburse the Underwriters through
you for all out-of-pocket expenses approved in writing by you, including fees
and disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the ADSs not so delivered,
but the Company shall then be under no further liability to any Underwriter in
respect of the ADSs not so delivered except as provided in Sections 1, 7 and 9
hereof.
13. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you. All statements, requests, notices and agreements hereunder shall
be in writing, and if to the Underwriters shall be delivered or sent by mail,
telex or facsimile transmission to you as the Representatives in the case of
Xxxxxxx Sachs (Asia) L.L.C., at 00xx Xxxxx, Xxxxxx Xxxx Xxxxxx, 0 Xxxxx'x Xxxx
Xxxxxxx, Xxxx Xxxx, facsimile number: (000) 0000-0000, Attention: Legal
Department; and in the case of Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated, at 4 World Financial Center, 000 Xxxxxx Xxxxxx, Xxx Xxxx, XX
00000, facsimile number: __________, Attention: _____________ and with a copy to
Xxxxxxx Xxxxx (Asia Pacific) Limited, at 00/X, 0 Xxxxxx Xxxx, Xxxx Xxxx,
Xxxxxxxxx: Xxxxxx Xxx, if to the Company shall be delivered or sent by mail,
telex or facsimile transmission to China Nepstar Chain Drugstore Ltd., 0xx
Xxxxx, Xxxxx X, Xxxxxxxxxxx Xxxxxxxx, Xxxxxx Road, Nanshan District, Shenzhen,
Guangdong Province, 518054, People's Republic of China; if to the Controlling
Person shall be delivered or sent by mail, telex or facsimile transmission to
China Nepstar Chain Drugstore Ltd., 0xx Xxxxx, Xxxxx X, Xxxxxxxxxxx Xxxxxxxx,
Xxxxxx Road, Nanshan District, Shenzhen, Guangdong Province, 518054, People's
Republic of China; provided, however, that any notice to an Underwriter pursuant
to Section 9(c) hereof shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in its underwriters'
questionnaire, or telex constituting such questionnaire, which address will be
supplied to the Company by you upon request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
14. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and the Controlling Person and, to the extent
provided in Sections 9 and 11 hereof, the officers and directors of the Company
and each person who controls the Company or any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the ADSs from any Underwriter shall be deemed
a successor or assign by reason merely of such purchase.
15. Each of the parties hereto irrevocably (i) agrees that any legal suit,
action or proceeding against the Company or the Controlling Person brought by
any Underwriter or by any person who controls any Underwriter arising out of or
based upon this Agreement or the transactions contemplated hereby may be
instituted in any New York Court, (ii) waives, to the fullest extent it may
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any such proceeding and (iii) submits to the exclusive
jurisdiction of such courts in any such suit, action or proceeding. Each of the
Company and the Controlling Person has appointed CT Corporation System, 000
Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, as its authorized agent (the "Authorized
Agent") upon whom process may be served in any such action arising out of or
based on this Agreement or the transactions contemplated hereby which may be
instituted in any New York Court by any Underwriter or by any person who
controls any Underwriter, expressly consents to the jurisdiction of any such
court in respect of any such action, and waives any other requirements of or
objections to personal jurisdiction with respect thereto. Such appointment shall
be irrevocable. Each of
49
the Company and the Controlling Person represents and warrants that the
Authorized Agent has agreed to act as such agent for service of process and
agrees to take any and all action, including the filing of any and all documents
and instruments, that may be necessary to continue such appointment in full
force and effect as aforesaid. Service of process upon the Authorized Agent and
written notice of such service to the Company shall be deemed, in every respect,
effective service of process upon the Company and the Controlling Person as the
case may be.
16. In respect of any judgment or order given or made for any amount due
hereunder that is expressed and paid in a currency (the "judgment currency")
other than United States dollars, the Company and the Controlling Person, as the
case may be, will indemnify each Underwriter against any loss incurred by such
Underwriter as a result of any variation as between (i) the rate of exchange at
which the United States dollar amount is converted into the judgment currency
for the purpose of such judgment or order and (ii) the rate of exchange at which
an Underwriter is able to purchase United States dollars with the amount of the
judgment currency actually received by such Underwriter. The foregoing indemnity
shall constitute a separate and independent obligation of the Company and the
Controlling Person and shall continue in full force and effect notwithstanding
any such judgment or order as aforesaid. The term "rate of exchange" shall
include any premiums and costs of exchange payable in connection with the
purchase of or conversion into United States dollars.
17. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
18. Each of the Company and the Controlling Person acknowledges and agrees
that (i) the purchase and sale of the ADSs pursuant to this Agreement is an
arm's-length commercial transaction between the Company and the several
Underwriters, (ii) in connection therewith and with the process leading to such
transaction each Underwriter is acting solely as a principal and not the agent
or fiduciary of the Company or the Controlling Person, (iii) no Underwriter has
assumed an advisory or fiduciary responsibility in favor of the Company or the
Controlling Person with respect to the offering contemplated hereby or the
process leading thereto (irrespective of whether such Underwriter has advised or
is currently advising the Company or the Controlling Person on other matters) or
any other obligation to the Company or the Controlling Person except the
obligations expressly set forth in this Agreement and (iv) each of the Company
and the Controlling Person has consulted its own legal, accounting, tax,
regulatory, and financial advisors to the extent it deemed appropriate. Each of
the Company and the Controlling Person agrees that it will not claim that the
Underwriters, or any of them, has rendered advisory services of any nature or
respect, or owes a fiduciary or similar duty to the Company or the Controlling
Person, in connection with such transaction or the process leading thereto.
19. This Agreement constitutes the entire agreement among the parties and
supersedes all prior agreements and understandings (whether written or oral)
among the Company and the Underwriters, or any of them, with respect to the
subject matter hereof.
20. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
21. Each of the Company, the Controlling Person and the Underwriters
irrevocably waives, to the fullest extent permitted by law, any and all rights
to trial by jury in any legal proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby.
50
22. This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same instrument.
23. Notwithstanding anything herein to the contrary, the Company is
authorized to disclose to any persons the U.S. Federal and State income tax
treatment and tax structure of the potential transaction and all materials of
any kind (including tax opinions and other tax analyses) provided to the Company
relating to that treatment and structure, without the Underwriters imposing any
limitation of any kind. However, any information relating to the tax treatment
and tax structure shall remain confidential (and the foregoing sentence shall
not apply) to the extent necessary to enable any person to comply with
securities laws. For this purpose, "tax structure" is limited to any facts that
may be relevant to that treatment.
If the foregoing is in accordance with your understanding, please sign and
return to us [seven] counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement among each of the Underwriters, the Company
and the Controlling Person. It is understood that your acceptance of this letter
on behalf of each of the Underwriters is pursuant to the authority set forth in
a form of Agreement among Underwriters, the form of which shall be submitted to
the Company and the Controlling Person for examination upon request, but without
warranty on your part as to the authority of the signers thereof.
Very truly yours,
China Nepstar Chain Drugstore Ltd.
By:
--------------------------------
Name:
Title:
Xxxxx XXXXX
------------------------------------
51
Accepted as of the date hereof on behalf of each of the Underwriters
Xxxxxxx Sachs (Asia) L.L.C
By:
-----------------------------
Name:
Title:
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
By:
-----------------------------
Name:
Title:
52
SCHEDULE I
NUMBER OF OPTIONAL ADSS TO
TOTAL NUMBER OF FIRM ADSS BE PURCHASED IF MAXIMUM
UNDERWRITER TO BE PURCHASED OPTION EXERCISED
------------------------- --------------------------
Xxxxxxx Sachs (Asia) L.L.C...................................
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated...................................
CLSA Limited.................................................
------------------------- --------------------------
TOTAL
========================= ==========================
SCH-I
SCHEDULE II
(a) Issuer Free Writing Prospectuses not included in the Pricing
Disclosure Package: _____________
(b) Materials other than the Pricing Prospectus that comprise the Pricing
Disclosure Package:_____________
SCH-II
ANNEX I
FORM OF COMFORT LETTER
Pursuant to Section 8(h) of the
Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
They are independent certified public accountants with respect to the Company
and its Subsidiaries within the meaning of the Act and the applicable published
rules and regulations thereunder;
(i) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined
by them and included in the Prospectus or the Registration Statement
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations thereunder; and, if applicable, they have made a review in
accordance with standards established by the American Institute of
Certified Public Accountants of the unaudited consolidated interim
financial statements, selected financial data, pro forma financial
information, financial forecasts and/or condensed financial statements
derived from audited financial statements of the Company for the
periods specified in such letter, as indicated in their reports
thereon, copies of which have been separately furnished to the
representatives of the Underwriters (the "Representatives");
(ii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus as indicated in their reports thereon
copies of which have been separately furnished to the Representatives
and on the basis of specified procedures including inquiries of
officials of the Company who have responsibility for financial and
accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (v)(A)(i)
below comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations, nothing came to their attention that cause them to
believe that the unaudited condensed consolidated financial statements
do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations;
(iii) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K
and on the basis of limited procedures specified in such letter
nothing came to their attention as a result of the foregoing
procedures that caused them to believe that this information does not
conform in all material respects with the disclosure requirements of
Items 8 and 11 of Form 20-F and Regulation S-K;
(iv) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and
other information referred to below, a reading of the latest available
interim financial statements of the Company and its Subsidiaries,
inspection of the minute books of the Company and its Subsidiaries
since the date of the latest audited financial statements included in
the Prospectus, inquiries of officials of the Company and its
Subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
ANNEX I-1
(A) (i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the related published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited consolidated
financial statements included in the Prospectus;
(C) the unaudited financial statements which were not included in
the Prospectus but from which were derived any unaudited condensed
financial statements referred to in clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in clause (B) were not determined on a
basis substantially consistent with the basis for the audited
consolidated financial statements included in the Prospectus;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder or the pro
forma adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
share capital (other than issuances of share capital upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest financial statements
included in the Prospectus) or any increase in the consolidated
long-term debt of the Company and its Subsidiaries, or any decreases
in consolidated net current assets or shareholders' equity or other
items specified by the Representatives, or any increases in any items
specified by the Representatives, in each case as compared with
amounts shown in the latest balance sheet included in the Prospectus,
except in each case for changes, increases or decreases which the
Prospectus discloses have occurred or may occur or which are described
in such letter; and
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in clause (E) there were any decreases in consolidated net revenues
or operating profit or the total or per share amounts of consolidated
net income or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each case
as compared with the comparable period of the preceding year and with
any other period of corresponding length specified by the
Representatives, except in each case for decreases or increases which
the Prospectus discloses have occurred or may occur or which are
described in such letter; and
ANNEX I-2
(V) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraph
(iii) above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted
auditing standards, with respect to certain amounts, percentages and
financial information specified by the Representatives, which are
derived from the general accounting records of the Company and its
Subsidiaries, which appear in the Prospectus, or in Part II of, or in
exhibits and schedules to, the Registration Statement specified by the
Representatives, and have compared certain of such amounts,
percentages and financial information with the accounting records of
the Company and its Subsidiaries and have found them to be in
agreement.
ANNEX I-3
ANNEX II
PARTIES TO EXECUTE LOCK-UP AGREEMENT
Xxxxx Xxxxx
Xxxxxxxx Xxxx
Jiaxin Xxxx
Xxxxxx Xxxxxx Xxxx
Zixin Xxxx
Liangping Mou
Xxxxxxx Xxxxx
Xxx Xxx
Ranting Qian
Xxxxxx Xxxx
Feng Tu
Xxxx Xxxxx
China Neptunus Drugstore Holding Ltd.
Bonusgo Limited
GS Capital Partners 2000, L.P.
GS Capital Partners 2000 Employee Fund, X.X.
Xxxxxxx Sachs Direct Investment Fund 2000, L.P.
GS Capital Partners 2000 Offshore, L.P.
GS Capital Partners 2000 GmbH & Co. Beteiligungs KG
ANNEX II-1
ANNEX III
FORM OF LOCK-UP AGREEMENT
CHINA NEPSTAR CHAIN DRUGSTORE LTD.
LOCK-UP AGREEMENT
___________, 2007
Xxxxxxx Xxxxx (Asia) L.L.C.
68th Floor, Xxxxxx Kong Center
0 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
4 World Financial Center
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
As Representatives of the several Underwriters named in Schedule I
attached hereto.
Re:
China Nepstar Chain Drugstore Ltd.
Ladies and Gentlemen:
The undersigned understands that you, as representatives (the
"Representatives"), propose to enter into an
underwriting agreement, on behalf
of the several underwriters named in Schedule I to such agreement (collectively,
the "Underwriters"), with
China Nepstar Chain Drugstore Ltd., a company
incorporated in the Cayman Islands (the "Company") and certain other parties
named in such agreement, providing for a public offering of American Depositary
Shares (the "ADSs") representing ordinary shares of the Company, par value
US$0.0001 per share (the "Ordinary Shares"), pursuant to a Registration
Statement on Form F-1 (File No. 333-______) and a Registration Statement on Form
F-6 (File No. 333-______) to be filed with the U.S. Securities and Exchange
Commission (the "SEC").
In consideration of the agreement by the Underwriters to offer and sell the
ADSs, and of other good and valuable consideration the receipt and sufficiency
of which is hereby acknowledged, the undersigned agrees that, during the period
beginning from the date of the final Prospectus covering the public offering of
the ADSs and continuing to and including the date 180 days after the date of
such final Prospectus (the "Lock-Up Period"), the undersigned will not offer,
sell, contract to sell, pledge, grant any option to purchase, purchase any
option or contract to sell, right or warrant to purchase, make any short sale,
file a registration statement with respect to, or otherwise dispose of
(including entering into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequence of ownership
interests, whether or not such swap or other transaction is to be settled by
delivery of ADSs, Ordinary Shares or such other securities, in cash or
otherwise): (A) any ADSs or Ordinary Shares or any securities of the Company
that are substantially similar to the ADSs or Ordinary Shares, including but not
limited to any securities that are convertible into or exchangeable for, or that
represent the right to receive, ADSs or Ordinary Shares or any such
substantially similar securities; and (B) any ordinary shares of the
Subsidiaries or depositary shares or depositary receipts representing such
ordinary shares, including but not limited to any securities that are
convertible into or exchangeable for or that represent the right to receive such
common shares or such depositary shares or depositary receipts or any such
substantially similar securities, whether now owned or hereinafter acquired,
owned directly by the undersigned (including
ANNEX III-1
holding as a custodian) or with respect to which the undersigned has beneficial
ownership within the rules and regulations of the SEC (in each case other than
pursuant to a bona fide gift by an individual to a donee or a sale or transfer
by an entity to an affiliate; provided that such donee or affiliate agrees to be
bound in writing by the restrictions set forth herein), without your prior
written consent; provided, however, that if (1) during the last 17 days of the
initial Lock-Up Period, the Company releases earnings results or announces
material news or a material event or (2) prior to the expiration of the initial
Lock-Up Period, the Company announces, or if the Representatives determine that
it will release earnings results during the 15-day period following the last day
of the initial Lock-Up Period, then in each case the Lock-Up Period will be
automatically extended until the expiration of the 18-day period beginning on
the date of release of the earnings results or the announcement of the material
news or material event, as applicable, unless the Representatives waive, in
writing, such extension. The undersigned understands that the Company will
provide the Representatives and the undersigned with prior notice of any such
announcement that gives rise to an extension of the Lock-Up Period.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
offering. The undersigned further understands that this Lock-Up Agreement is
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors, and assigns.
This Lock-Up Agreement shall terminate upon the expiration of the Lock-Up
Period or in the event that there is no delivery of, and payment for, the ADSs
pursuant to the
underwriting agreement, upon three days' prior written notice of
such non-delivery and non-payment given by the undersigned to you.
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ANNEX III-2
Very truly yours,
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Exact Name of Shareholder
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Authorized Signature
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Title
ANNEX III-3
