Exhibit 1.1
[7,700,000] COMMON SHARES
CANADIAN SOLAR INC.
UNDERWRITING AGREEMENT
November [-], 2006
DEUTSCHE BANK SECURITIES INC.
00 Xxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
XXXXXX BROTHERS INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
As Representatives of the several
Underwriters named in Schedule 1 attached hereto,
Ladies and Gentlemen:
Canadian Solar Inc., a Canadian corporation (the "COMPANY) and
certain shareholders of the Company named in Schedule 2 attached hereto (the
"SELLING SHAREHOLDERS") propose to sell an aggregate of - common shares (the
"FIRM SHARES") of the Company with no par value (the "COMMON SHARES"). Of the -
Firm Shares, - are being sold by the Company and - by the Selling Shareholders.
In addition, the Company and the Selling Shareholders propose to grant to the
underwriters (the "UNDERWRITERS") named in Schedule 1 attached to this agreement
(this "AGREEMENT") an option to purchase up to an aggregate of - additional
Common Shares on the terms set forth in Section 3 (the "OPTION SHARES"). The
Firm Shares and the Option Shares, if purchased, are hereinafter collectively
called the "SHARES." This is to confirm the agreement concerning the purchase of
the Shares from the Company and the Selling Shareholders by the Underwriters.
1. Representations, Warranties and Agreements of the Company. The
Company warrants and agrees that:
(a) A registration statement on Form F-1 relating to the Shares has
(i) been prepared by the Company in conformity with the requirements of
the Securities Act of 1933, as amended (the "SECURITIES ACT"), and the
rules and regulations (the "RULES AND REGULATIONS") of the Securities and
Exchange Commission (the "COMMISSION") thereunder; (ii) been filed with
the Commission; and (iii) been declared effective by the Commission.
Copies of such registration statements and any amendment thereto have been
delivered by the Company to you as the representatives (the
"REPRESENTATIVES") of the Underwriters. As used in this Agreement:
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(i) "APPLICABLE TIME" means [ ] [a.m.][p.m.] (New York City
time) on the date of this Agreement;
(ii) "DELIVERY DATE" has the meaning set forth in Section 5
hereof;
(iii) "EFFECTIVE DATE" means the date and time as of which
such registration statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission;
(iv) "ISSUER FREE WRITING PROSPECTUS" means each "free writing
prospectus" (as defined in Rule 405 of the Rules and Regulations)
prepared by or on behalf of the Company or used or referred to by
the Company in connection with the offering of the Shares;
(v) "PRELIMINARY PROSPECTUS" means any preliminary prospectus
relating to the Shares included in such registration statement or
filed with the Commission pursuant to Rule 430A of the Rules and
Regulations;
(vi) "PRICING DISCLOSURE PACKAGE" means, as of the Applicable
Time, the most recent Preliminary Prospectus, together with each
Issuer Free Writing Prospectus filed with the Commission or used by
the Company on or before the Applicable Time, other than a road show
that is an Issuer Free Writing Prospectus but is not required to be
filed under Rule 433 of the Rules and Regulations.
(vii) "PROSPECTUS" means the final prospectus relating to the
Shares, as filed with the Commission pursuant to Rule 424(b) of the
Rules and Regulations; and
(viii) "REGISTRATION STATEMENT" means such registration
statement, as amended as of the Effective Date, including any
Preliminary Prospectus or the Prospectus and all exhibits to such
registration statement.
Any reference to the "MOST RECENT PRELIMINARY PROSPECTUS" shall be deemed
to refer to the latest Preliminary Prospectus included in the Registration
Statement or filed pursuant to Rule 430A prior to or on the date hereof.
The Commission has not issued any order preventing or suspending the use
of any Preliminary Prospectus or the Prospectus or suspending the
effectiveness of the Registration Statement, and no proceeding or
examination for such purpose has been instituted or threatened by the
Commission.
(b) The Company was not at the time of initial filing of the
Registration Statement and at the earliest time thereafter that the
Company or another offering participant made a bona fide offer (within the
meaning of Rule 164(h)(2) of the Rules and Regulations) of the Shares, is
not on the date hereof and will not be on the applicable Delivery Date an
"ineligible issuer" (as defined in Rule 405).
(c) The Registration Statement conformed and will conform in all
material respects on the Effective Date and on the applicable Delivery
Date, and any amendment to the Registration Statement filed after the date
hereof will conform in all material
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respects when filed, to the requirements of the Securities Act and the
Rules and Regulations. The Preliminary Prospectus conformed, and the
Prospectus will conform, in all material respects when filed with the
Commission pursuant to Rule 430A and on the applicable Delivery Date to
the requirements of the Securities Act and the Rules and Regulations.
(d) The Registration Statement did not, as of the 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; provided that no representation or warranty is
made as to information contained in or omitted from the Registration
Statement in reliance upon and in conformity with written information
furnished to the Company through the Representatives by or on behalf of
any Underwriter specifically for inclusion therein, which information is
specified in Section 10(e).
(e) The Prospectus will not, as of its date and on the applicable
Delivery 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, in the light of the circumstances under which they
were made, not misleading; provided that no representation or warranty is
made as to information contained in or omitted from the Prospectus in
reliance upon and in conformity with written information furnished to the
Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein, which information is specified in
Section 10(e).
(f) The Pricing Disclosure Package did not, as of the Applicable
Time, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that the price of the Shares and
disclosures directly relating thereto will be included on the cover page
of the Prospectus; provided that no representation or warranty is made as
to information contained in or omitted from the Pricing Disclosure Package
in reliance upon and in conformity with written information furnished to
the Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein, which information is specified in
Section 10(e).
(g) Each Issuer Free Writing Prospectus (including, without
limitation, any road show that is a free writing prospectus under Rule
433), when considered together with the Pricing Disclosure Package as of
the Applicable Time, 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, except that the
price of the Shares and disclosures directly relating thereto will be
included on the cover page of the Prospectus.
(h) Each Issuer Free Writing Prospectus conformed or will conform in
all material respects to the requirements of the Securities Act and the
Rules and Regulations on the date of first use, and the Company has
complied with all prospectus delivery and any filing requirements
applicable to such Issuer Free Writing Prospectus pursuant to the
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Rules and Regulations. The Company has not made any offer relating to the
Shares that would constitute an Issuer Free Writing Prospectus without the
prior written consent of the Representatives. The Company has retained in
accordance with the Rules and Regulations all Issuer Free Writing
Prospectuses that were not required to be filed pursuant to the Rules and
Regulations. The Company has taken all actions necessary so that any "road
show" (as defined in Rule 433 of the Rules and Regulations) in connection
with the offering of the Shares will not be required to be filed pursuant
to the Rules and Regulations.
(i) The Company has been duly organized, is validly existing and in
good standing as a corporation or other business entity under the laws of
its jurisdiction of organization and is duly qualified to do business and
in good standing as a foreign corporation or other business entity in each
jurisdiction in which its ownership or lease of property or the conduct of
its businesses requires such qualification, except where the failure to be
so qualified or in good standing could not, in the aggregate, reasonably
be expected to have a material adverse effect on the condition (financial
or otherwise), results of operations, shareholders' equity, properties,
business or prospects of the Company and its subsidiaries taken as a whole
(a "MATERIAL ADVERSE EFFECT"); the Company has all power and authority
necessary to own or hold its properties and to conduct the businesses in
which it is engaged.
(j) The Company does not own or control, directly or indirectly, any
corporation, association or entity other than CSI Solartronics (Changshu)
Ltd., CSI Solar Manufacture Ltd., CSI Solar Technologies Inc., CSI Central
Solar Power Co., Ltd., CSI Solarchip International Co., Ltd. or Changshu
CSI Advanced Solar Inc. (each a "PRC SUBSIDIARY"). Each PRC Subsidiary has
been duly organized and validly exists as a corporation, partnership or
limited liability company in good standing under the laws of the PRC. The
liability of the Company or any other equity investor in respect of equity
interests held in each PRC Subsidiary is limited to its investment
therein. Each of the PRC Subsidiaries has all requisite power and
authority to carry on its business as it is currently being conducted and
as described in the most recent Preliminary Prospectus, and to own, lease
and operate its respective properties. Each PRC Subsidiary's business
license is in full force and effect. Each of the PRC Subsidiaries is duly
qualified to do business and is in good standing as a foreign corporation,
partnership or limited liability company in each jurisdiction in which the
character or location of its properties (owned, leased or licensed) or the
nature or conduct of its business makes such qualification necessary,
except for those failures to be so qualified or in good standing which
(individually or in the aggregate) could not reasonably be expected to
have a Material Adverse Effect. The Articles of Association of each PRC
Subsidiary comply with the requirements of applicable PRC law, including
the PRC Company Law, and are in full force and effect.
(k) The Company has an authorized capitalization as set forth in
each of the most recent Preliminary Prospectus and the Prospectus, and all
of the issued shares of capital shares of the Company have been duly
authorized and validly issued, are fully paid and non-assessable, conform
to the description thereof contained in each of the most recent
Preliminary Prospectus and the Prospectus and were issued in compliance
with
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U.S. federal and state, Canadian provincial and other applicable
securities laws and not in violation of any preemptive right, resale
right, right of first refusal or similar right. All of the Company's
options, warrants and other rights to purchase or exchange any securities
for shares of the Company's capital shares have been duly authorized and
validly issued, conform to the description thereof contained in each of
the most recent Preliminary Prospectus and the Prospectus and were issued
in compliance with all U.S. federal and state, Canadian provincial and
other applicable securities laws. All of the issued shares of capital
shares of each subsidiary of the Company have been duly authorized and
validly issued, are fully paid and non-assessable and are owned directly
or indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims, except for such liens, encumbrances, equities or
claims as could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect and were issued in compliance with PRC and other
applicable securities laws and not in violation of any preemptive right,
resale right, right of first refusal or similar right.
(l) The Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly authorized and, upon payment and
delivery in accordance with this Agreement, will be validly issued, fully
paid and non-assessable, will conform to the description thereof contained
in each of the most recent Preliminary Prospectus and the Prospectus, will
be issued in compliance with all U.S. federal and state, Canadian
provincial and other applicable securities laws and will be free of
statutory and contractual preemptive rights, rights of first refusal and
similar rights.
(m) The Shares are freely transferable by the Company to or for the
account of the several Underwriters and (to the extent described in the
most recent Preliminary Prospectus) the initial holders thereof; and,
except as disclosed in the most recent Preliminary Prospectus, there are
no restrictions on subsequent transfers of the Shares under the laws of
Canada, provided the recipient is not resident in Canada, or the United
States. No holder of the Shares is or will be subject to personal
liability solely by reason of being such a holder.
(n) In October 2006, Xxxxx Xx transferred common shares of the
Company to ATS Automation Tooling Systems Inc. ("ATS") satisfying any and
all of his or the Company's obligations that may have arisen under the
September 2001 letter of intent by and between ATS and Xxxxx Xx.
(o) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement. This
Agreement has been duly and validly authorized, executed and delivered by
the Company.
(p) The execution, delivery and performance of this Agreement by the
Company, the consummation of the transactions contemplated hereby and the
application of the proceeds from the sale of the Shares as described under
"Use of Proceeds" in each of the most recent Preliminary Prospectus and
the Prospectus will not (i) conflict with or result in a breach or
violation of any of the terms or provisions of, impose any lien, charge or
encumbrance upon any property or assets of the Company and its
subsidiaries, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement,
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license 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; (ii) result in any
violation of the provisions of the articles or by-laws (or similar
organizational documents) of the Company or any of its subsidiaries; or
(iii) result in any violation of any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over the Company or any of its subsidiaries or any of their properties or
assets.
(q) No consent, approval, authorization or order of, or filing or
registration with, any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties or assets is required for the execution, delivery and
performance of this Agreement by the Company, the consummation of the
transactions contemplated hereby, the application of the proceeds from the
sale of the Shares as described under "Use of Proceeds" in each of the
most recent Preliminary Prospectus and the Prospectus, except for the
registration of the Shares under the Securities Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), applicable state or foreign securities laws and the
by-laws and rules of the National Association of Securities Dealers, Inc.
(the "NASD") or NASD Regulation, Inc. ("NASDR") in connection with the
purchase and sale of the Shares by the Underwriters.
(r) Except as identified in the most recent Preliminary 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 Securities 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 or in any securities
being registered pursuant to any other registration statement filed by the
Company under the Securities Act.
(s) The Company has not sold or issued any securities that would be
integrated with the offering of the Shares contemplated by this Agreement
pursuant to the Securities Act, the Rules and Regulations or the
interpretations thereof by the Commission.
(t) Xxxxx Xx'x right to any retained earnings of the Company and any
of its subsidiaries that he held as of February 28, 2006 has been fully
exercised, implemented and given full effect to.
(u) The Company is not and will not be responsible for any
withholding tax or other tax or duty, including any interest or penalty
amounts, that may become payable under Canadian law, or the law of any
Canadian province, in connection with the convertible notes issued by the
Company to HSBC HAV2 (III) Limited and JAFCO Asia Technology Fund II in
November 2005 and March 2006.
(v) Neither the Company nor any of its subsidiaries has sustained,
since the date of the latest audited financial statements included in the
most recent Preliminary 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, and since such date, there has not been any
change in the capital shares or long-term borrowings of the Company or any
of its subsidiaries or any adverse change, or any development involving a
prospective adverse change, except as could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(w) Since the date as of which information is given in the most
recent Preliminary Prospectus, the Company has not (i) incurred any
liability or obligation, direct or contingent, other than liabilities and
obligations that were incurred in the ordinary course of business, (ii)
entered into any material transaction not in the ordinary course of
business or (iii) declared or paid any dividend on its capital shares.
(x) The financial statements (including the related notes and
supporting schedules) included in the most recent Preliminary Prospectus
comply as to form in all material respects with the requirements of
Regulation S-X under the Securities Act and present fairly the financial
condition, results of operations and cash flows of the entities purported
to be shown thereby at the dates and for the periods indicated and have
been prepared in conformity with accounting principles generally accepted
in the United States applied on a consistent basis throughout the periods
involved.
(y) Deloitte Touche Tohmatsu CPA Ltd., who have certified certain
financial statements of the Company and its consolidated subsidiaries,
whose report appears in the most recent Preliminary Prospectus and who
have delivered the initial letter referred to in Section 9(i) hereof, are
independent public accountants as required by the Securities Act and the
Rules and Regulations.
(z) The Company and each of its subsidiaries have good and
marketable title to all real property and good and marketable title to all
personal property owned by them, in each case free and clear of all liens,
encumbrances and defects, except such as are described in the most recent
Preliminary Prospectus or such as do not materially affect the value of
such property and do not materially interfere with the use made and
proposed to be made of such property by the Company and its subsidiaries;
and all assets held under lease by the Company and its subsidiaries are
held by them under valid, subsisting and enforceable leases, with such
exceptions as do not materially interfere with the use made and proposed
to be made of such assets by the Company and its subsidiaries.
(aa) Except as described in the most recent Preliminary Prospectus,
the Company and each of its subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for the
conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar businesses
in similar industries. All policies of insurance of the Company and its
subsidiaries are in full force and effect; the Company and its
subsidiaries are in compliance with the terms of such policies in all
material respects; and neither the Company nor any of its subsidiaries has
received notice from any insurer or agent of such
8
insurer that capital improvements or other expenditures are required or
necessary to be made in order to continue such insurance; there are no
claims by the Company or any of its subsidiaries under any such policy or
instrument as to which any insurance company is denying liability or
defending under a reservation of rights clause; and neither the Company
nor any such subsidiary has any reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that could not reasonably be expected to
have a Material Adverse Effect.
(bb) The statistical and market-related data included under the
captions "Prospectus Summary," "Risk Factors," "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Our
Business" in the most recent Preliminary Prospectus and the consolidated
financial statements of the Company and its subsidiaries included in the
most recent Preliminary Prospectus are based on or derived from sources
that the Company believes to be reliable and accurate in all material
respects; and the selected operating data of the Company included under
the captions "Summary Financial and Operating Data", "Selected
Consolidated Financial and Operating Data" and "Our Business" are based on
or derived from the Company's internal records and are reliable and
accurate in all material respects.
(cc) The Company is not, and as of the applicable Delivery Date and,
after giving effect to the offer and sale of the Shares and the
application of the proceeds therefrom as described under "Use of Proceeds"
in the most recent Preliminary Prospectus and the Prospectus, will not be,
(i) an "investment company" within the meaning of such term under the
Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY ACT"),
and the rules and regulations of the Commission thereunder.
(dd) Except as described in the most recent Preliminary Prospectus,
there are no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or of which any property or
asset of the Company or any of its subsidiaries is the subject that could,
in the aggregate, if determined adversely to the Company or any of its
subsidiaries, reasonably be expected to have a Material Adverse Effect or
could, in the aggregate, reasonably be expected to have a material adverse
effect on the performance of this Agreement or the consummation of the
transactions contemplated hereby; and to the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
(ee) There are no legal or governmental proceedings or contracts or
other documents of a character required to be described in the
Registration Statement or the most recent Preliminary Prospectus or, in
the case of documents, to be filed as exhibits to the Registration
Statement, that are not described and filed as required. Neither the
Company nor any of its subsidiaries has knowledge that any other party to
any such contract, agreement or arrangement has any intention not to
render full performance as contemplated by the terms thereof; and that
statements made in the most recent Preliminary Prospectus under the
captions "Prospectus Summary," "Risk Factors," "Management's Discussion
and Analysis of Financial Condition and Results of
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Operations", "Our Business," "Management," "Principal and Selling
Shareholders," "Related Party Transactions," "Chinese Government
Regulations," "Description of Share Capital," "Shares Eligible for Future
Sale" and "Underwriting" insofar as they purport to constitute summaries
of the terms of statutes, rules or regulations, legal or governmental
proceedings or contracts and other documents, constitute accurate
summaries of the terms of such statutes, rules and regulations, legal and
governmental proceedings and contracts and other documents in all material
respects.
(ff) No relationship, direct or indirect, exists between or among
the Company, on the one hand, and the directors, officers, shareholders,
customers or suppliers of the Company, on the other hand, that is required
to be described in the most recent Preliminary Prospectus or the
Prospectus which is not so described.
(gg) No labor disturbance by the employees of the Company or its
subsidiaries exists or, to the knowledge of the Company, is imminent that
could reasonably be expected to have a Material Adverse Effect.
(hh) The Company and each of its subsidiaries have filed all
national, central government, federal, state, provincial and local and
foreign income, franchise and other tax returns required to be filed
through the date hereof, subject to permitted extensions, and have paid
all taxes due thereon, except for any such taxes that would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect; and
no tax deficiency has been determined adversely to the Company or any of
its subsidiaries, nor does the Company have any knowledge of any tax
deficiencies that could, in the aggregate, reasonably be expected to have
a Material Adverse Effect.
(ii) Neither the Company nor any of its subsidiaries (i) is in
violation of its articles or by-laws (or similar organizational
documents), (ii) is in default, and no event has occurred that, with
notice or lapse of time or both, would constitute such a default, in the
due performance or observance of any term, covenant or condition contained
in any indenture, mortgage, deed of trust, loan agreement, license 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 subject or (iii) is
in violation of any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over it or its property
or assets or has failed to obtain any license, permit, certificate,
franchise or other governmental authorization or permit necessary to the
ownership of its property or to the conduct of its business, except in the
case of clauses (ii) and (iii), to the extent any such conflict, breach,
violation or default could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(jj) The Company and each of its subsidiaries (i) make and keep
accurate books and records and (ii) maintain and have maintained effective
internal control over financial reporting as defined in Rule 13a-15 under
the Exchange Act and a system of internal accounting controls sufficient
to provide reasonable assurance that (A) transactions are executed in
accordance with management's general or specific authorization, (B)
transactions are recorded as necessary to permit preparation of the
Company's financial statements in conformity with accounting principles
generally
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accepted in the United States and to maintain accountability for its
assets, (C) access to the Company's assets is permitted only in accordance
with management's general or specific authorization and (D) the recorded
accountability for the Company's assets is compared with existing assets
at reasonable intervals and appropriate action is taken with respect to
any differences.
(kk) (i) The Company and each of its subsidiaries have established
and maintain disclosure controls and procedures (as such term is defined
in Rule 13a-15 under the Exchange Act), (ii) such disclosure controls and
procedures are designed to ensure that the information required to be
disclosed by the Company and its subsidiaries in the reports they will
file or submit under the Exchange Act is accumulated and communicated to
management of the Company and its subsidiaries, including their respective
principal executive officers and principal financial officers, as
appropriate, to allow timely decisions regarding required disclosure to be
made and (iii) such disclosure controls and procedures are effective to a
reasonable level of assurnace to perform the functions for which they were
established.
(ll) Except as described in the most recent Preliminary Prospectus,
since the date of the most recent balance sheet of the Company and its
consolidated subsidiaries reviewed or audited by Deloitte Touche Tohmatsu
CPA Ltd. and the audit committee of the board of directors of the Company,
(i) the Company has not been advised of (A) any significant deficiencies
in the design or operation of internal controls that could adversely
affect the ability of the Company and each of its subsidiaries to record,
process, summarize and report financial data, or any material weaknesses
in internal controls and (B) any fraud, whether or not material, that
involves management or other employees who have a significant role in the
internal controls of the Company and each of its subsidiaries, and (ii)
since that date, there have been no significant changes in internal
controls or in other factors that could significantly affect internal
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.
(mm) As of the date of this Agreement, there is no failure on the
part of the Company and any of the Company's directors or officers, in
their capacities as such, to comply with the provisions of the
Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations promulgated in
connection therewith.
(nn) The section entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Critical Accounting
Policies" in the most recent Preliminary Prospectus accurately and fully
describes (A) the accounting policies that the Company believes are the
most important in the portrayal of the Company's financial condition and
results of operations and that require management's most difficult,
subjective or complex judgments ("CRITICAL ACCOUNTING POLICIES"); (B) the
judgments and uncertainties affecting the application of the Critical
Accounting Policies; and (C) the likelihood that materially different
amounts would be reported under different conditions or using different
assumptions and an explanation thereof. The Company's board of directors
and senior management have reviewed and agreed with the selection,
application and disclosure of the Critical Accounting Policies and have
consulted with the Company's independent accountants with regard to such
disclosure.
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(oo) The Company and each of its subsidiaries have such permits,
licenses, franchises, certificates of need and other approvals or
authorizations of governmental or regulatory authorities ("PERMITS") as
are necessary under applicable law to own their properties and conduct
their businesses in the manner described in the most recent Preliminary
Prospectus, except for any of the foregoing that could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect; each
of the Company and its subsidiaries has fulfilled and performed all of its
obligations with respect to the Permits, and no event has occurred that
allows, or after notice or lapse of time would allow, revocation or
termination thereof or results in any other impairment of the rights of
the holder or any such Permits, except for any of the foregoing that could
not reasonably be expected to have a Material Adverse Effect.
(pp) The Company and each of its subsidiaries own or possess
adequate rights to use all patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service xxxx
registrations, copyrights, licenses, software, systems and technology
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures) necessary
for the conduct of their respective businesses and have no reason to
believe that the conduct of their respective businesses will conflict
with, and have not received any notice of any claim of conflict with, any
such rights of others, except for any of the foregoing that would not
reasonably be expected to have a Material Adverse Effect.
(qq) The Company and each of its subsidiaries (i) are in compliance
with all laws, regulations, ordinances, rules, orders, judgments, decrees,
permits or other legal requirements of any governmental authority,
including without limitation any international, national, state,
provincial, regional, or local authority, relating to the protection of
human health or safety, the environment, or natural resources, or to
hazardous or toxic substances or wastes, pollutants or contaminants
("ENVIRONMENTAL LAWS") applicable to such entity, which compliance
includes, without limitation, obtaining, maintaining and complying with
all permits and authorizations and approvals required by Environmental
Laws to conduct their respective businesses, and (ii) have not received
notice of any actual or alleged violation of Environmental Laws, or of any
potential liability for or other obligation concerning the presence,
disposal or release of hazardous or toxic substances or wastes, pollutants
or contaminants. Except as described in the most recent Preliminary
Prospectus, (A) there are no proceedings that are pending, or known to be
contemplated, against the Company or any of its subsidiaries under
Environmental Laws in which a governmental authority is also a party, (B)
the Company and its subsidiaries are not aware of any issues regarding
compliance with Environmental Laws, or liabilities or other obligations
under Environmental Laws or concerning hazardous or toxic substances or
wastes, pollutants or contaminants, that could reasonably be expected to
have a material effect on the capital expenditures, earnings or
competitive position of the Company and its subsidiaries, and (C) none of
the Company and its subsidiaries anticipates material capital expenditures
relating to Environmental Laws.
(rr) Neither the Company nor any of its subsidiaries, nor, to the
knowledge of the Company, any director, officer, agent, employee or other
person affiliated with or
12
acting on behalf of the Company or any of its subsidiaries, has (i) used
any corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expense relating to political activity; (ii) made any
direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; (iii) violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of
1977; or (iv) made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment.
(ss) The operations of the Company and its subsidiaries are and have
been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all jurisdictions, the rules and regulations thereunder and
any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the
"MONEY LAUNDERING LAWS") and no action, suit or proceeding by or before
any court or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company,
threatened, except, in each case, as would not reasonably be expected to
have a Material Adverse Effect.
(tt) Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or any of its subsidiaries is currently subject
to any U.S. sanctions administered by the Office of Foreign Assets Control
of the U.S. Treasury Department ("OFAC"); and the Company will not
directly or indirectly use the proceeds of the offering, or lend,
contribute or otherwise make available such proceeds to any subsidiary,
joint venture partner or other person or entity, for the purpose of
financing the activities of any person currently subject to any U.S.
sanctions administered by OFAC.
(uu) Each Preliminary 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 foreign
jurisdictions in which such Preliminary Prospectus, Prospectus or such
Issuer Free Writing Prospectus, as amended or supplemented, if applicable,
are distributed in connection with the Directed Share Program. No consent,
approval, authorization or order of, or filing or registration with, any
court or governmental agency or body, other than such as have been
obtained, is required under the securities laws and regulations of any
foreign jurisdiction in which the Directed Shares are offered or sold
outside the United States.
(vv) The Company has not offered, or caused Deutsche Bank Securities
Inc. to offer, Shares to any person pursuant to the Directed Share Program
with the specific intent to unlawfully influence (i) a customer or
supplier of the Company to alter the customer's or supplier's level or
type of business with the Company or (ii) a trade journalist or
publication to write or publish favorable information about the Company,
its business or its products.
13
(ww) The Company has not distributed and, prior to the later to
occur of any Delivery Date and completion of the distribution of the
Shares, will not distribute any offering material in connection with the
offering and sale of the Shares other than any Preliminary Prospectus, the
Prospectus, any Issuer Free Writing Prospectus to which the
Representatives have consented in accordance with Section 1(h) or 6(a)(vi)
and any Issuer Free Writing Prospectus set forth on Schedule 4 hereto and,
in connection with the Directed Share Program described in Section 4, the
enrollment materials prepared by Deutsche Bank Securities Inc.
(xx) The Company has not taken and will not take, directly or
indirectly, any action designed to or that has constituted or that could
reasonably be expected to cause or result in the stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the shares of the Shares.
(yy) The Shares have been approved for listing, subject to official
notice of issuance and evidence of satisfactory distribution, on the
Nasdaq Global Market.
(zz) Upon the sale of the Shares contemplated by this Agreement, the
Company does not expect to become a "passive foreign investment company"
(as defined in Section 1297 of the U.S. Internal Revenue Code of 1986, as
amended (the "CODE"), and the regulations promulgated thereunder) for the
taxable year ending December 31, 2006 and expects to operate in such a
manner so as not to become a PFIC in future taxable years.
(aaa) No stamp, issue, registration, documentary, transfer or other
similar taxes and duties, including interest and penalties, are payable in
Canada on or in connection with the issuance and sale of the Shares by the
Company or the execution and delivery of this Agreement.
(bbb) The section entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity" in the most
recent Preliminary Prospectus accurately and fully describes 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. Neither the Company
nor any subsidiary has any off-balance sheet arrangements.
(ccc) Except as disclosed in the most recent Preliminary Prospectus,
there are no outstanding guarantees or other contingent obligations of the
Company or any subsidiary that could reasonably be expected to have a
Material Adverse Effect.
(ddd) Except as set forth in the most recent Preliminary Prospectus,
the Company has no obligation to provide retirement, death or disability
benefits to any of the present or past employees of the Company or any
subsidiary, or to any other person.
(eee) Except as disclosed in the most recent Preliminary Prospectus,
none of the Company or any of the subsidiaries is currently prohibited,
directly or indirectly, from paying any dividends or other distributions,
or from making any other distribution on its equity interest; all
dividends and other distributions declared and payable upon the equity
14
interests in the Company and the subsidiaries may be converted into
foreign currency that may be freely transferred out of Canada or the PRC
as the case may be, and all such dividends and other distributions are not
and, will not be, subject to withholding or other taxes under the laws and
regulations of Canada or the PRC and, are otherwise free and clear of any
other tax, withholding or deduction in Canada and the PRC, in each case
without the necessity of obtaining any consent in Canada or the PRC,
except such as have been obtained.
(fff) None of the Company or any of the subsidiaries nor any of
their properties, assets or revenues are entitled to any right of immunity
on the grounds of sovereignty from any legal action, suit or proceeding,
from set-off or counterclaim, from the jurisdiction of any court, from
service of process, from attachment prior to or in aid of execution of
judgment, or from other legal process or proceeding for the giving of any
relief or for the enforcement of any judgment. The irrevocable and
unconditional waiver and agreement of the Company in this Agreement not to
plead or claim any such immunity in any legal action, suit or proceeding
based on this Agreement is valid and binding under the laws of the PRC and
Canada.
(ggg) The Company is a "foreign private issuer" as defined in Rule
405 under the Securities Act.
(hhh) Other than the Selling Shareholders or their affiliates, there
are no affiliations or associations between any member of the NASD and any
of the officers or directors of the Company or the subsidiaries, or
holders of 5% or greater of the securities of the Company.
(iii) The choice of the laws of the State of New York as the
governing law of this Agreement is a valid choice of law under the laws of
the PRC and Canada and will be honored by courts in the PRC and Canada.
The Company has the power to submit, and, pursuant to Section 18 of this
Agreement, has legally, validly, effectively and irrevocably submitted, to
the personal jurisdiction of any court of the State of New York or the
United State District Court for the Southern District of the State of New
York (each, a "New York Court") and has validly and irrevocably waived any
objection to the laying of venue of any suit, action or proceeding brought
in any such court; and the Company has the power to designate, appoint and
authorize, and pursuant to Section 18 of this Agreement has legally,
validly, effectively and irrevocably designated, appointed and authorized,
an authorized agent for service of process in any action arising out of or
relating to this Agreement, the Prospectus, the Registration Statement or
the offering of the Shares in any New York Court, and service of process
effected on such authorized agent will be effective to confer valid
personal jurisdiction over the Company as provided in Section 18 hereof.
(jjj) This Agreement is in proper form to be enforceable in the PRC
and Canada in accordance with its terms; to ensure the legality, validity,
enforceability or admissibility into evidence in the PRC and Canada of
this Agreement, it is not necessary that this Agreement be filed or
recorded with any court or other authority in the PRC or Canada (other
than court filings in the ordinary course of proceedings) or that any
stamp
15
or similar tax in the PRC or Canada (other than nominal stamp or similar
tax payable in the ordinary course of proceedings) be paid on or in
respect of this Agreement, or any other documents to be furnished
hereunder.
(kkk) Any final judgment for a fixed or readily calculable sum of
money rendered by a New York Court having jurisdiction under its own
domestic laws in respect of any suit, action or proceeding against the
Company based upon this Agreement and any instruments or agreements
entered into for the consummation of the transactions contemplated herein
and therein (i) would be recognized and enforced against the Company
without re-examination of the merits of the cause of action in respect of
which the original judgment was given or re-litigation of the matters
adjudicated upon or payment of any stamp, registration or similar tax or
duty by the courts of Canada, provided that (A) such courts had proper
jurisdiction over the parties subject to such judgment; (B) such courts
did not contravene the rules of natural justice of Canada; (C) such
judgment was not obtained by fraud; (D) the enforcement of the judgment
would not be contrary to the public policy of Canada; (E) no new
admissible evidence relevant to the action is submitted prior to the
rendering of the judgment by the courts of Canada; and (F) there is due
compliance with the correct procedures under the laws of Canada, and (ii)
may be recognized and enforced against the Company without re-examination
of the merits of the cause of action in respect of which the original
judgment was given or re-litigation of the matters adjudicated upon or
payment of any stamp, registration or similar tax or duty by the courts of
the PRC, provided that (A) the judgment was not contrary to the public
policy, state sovereignty or security of the PRC, (B) the judgment was not
given or obtained by fraud, (C) the judgment was not based on clear
mistake of law or fact, (D) the judgment was not directly or indirectly
for the payment of taxes or other charges of a like nature or of a fine or
other penalty, (E) the judgment was for a definite sum of money, (F) the
judgment was final and conclusive, (G) adequate service of process has
been effected and the defendant has had a reasonable opportunity to be
heard, (H) such judgments do not conflict with any other valid judgment in
the same matter between the same parties, (I) an action between the same
parties in the same matter is not pending in any PRC court at the time the
lawsuit is instituted in the New York Court, and (J) the requirements of
the PRC Civil Procedures Law based either on treaties between the PRC and
the United States or on reciprocity between such jurisdictions were met.
The Company is not aware of any reason why the enforcement in Canada or
the PRC of such a New York Court judgment would be, as of the date hereof,
contrary to public policy of Canada or contrary to the public policy,
state sovereignty or security of the PRC.
(lll) The Company is aware of and has been advised as to, the
content of 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 ("CSRC") and the State
Administration of Foreign Exchange of the PRC on August 8, 2006 (the "M&A
Rules"), in particular the relevant provisions thereof which purport to
require offshore special purpose vehicles, or SPVs, formed for listing
purposes and controlled directly or indirectly by PRC companies or
individuals, to obtain the approval of the CSRC prior to
16
the listing and trading of their securities on an overseas stock exchange;
the Company has received legal advice specifically with respect to the M&A
Rules from its PRC counsel and the Company understands such legal advice;
(mmm) Based on the advice of the Company's PRC counsel, the Company
believes the issuance and sale of the Shares, the listing and trading of
the Shares on the Nasdaq Global Market or the consummation of the
transactions contemplated by this Agreement is not and will not be, as of
the date hereof or at each Delivery Date, subject to or adversely affected
by the M&A Rules or any official clarifications, guidance, interpretations
or implementation rules in connection with or related to the M&A Rules,
including the clarification and notices issued by the CSRC on September 8
and September 21, 2006 (collectively, the "M&A RULES AND RELATED
CLARIFICATIONS");
(nnn) The statements set forth in the most recent Preliminary
Prospectus under the captions "Risk Factors - There may be some
uncertainty surrounding a recently adopted PRC regulation that requires
certain offshore listings to be approved by the China Securities
Regulatory Commission" 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.
(ooo) The Company has taken all reasonable steps to comply with, and
all reasonable steps to ensure compliance by all of the Company's
shareholders and option holders who are PRC residents or PRC citizens with
any applicable rules and regulations of the State Administration of
Foreign Exchange (the "SAFE RULES AND REGULATIONS"), including without
limitation, requiring each shareholder and option holder that is, or is
directly or indirectly owned or controlled by, a PRC resident or PRC
citizen to complete any registration and other procedures required under
applicable SAFE Rules and Regulations.
Any certificate signed by any officer of the Company and delivered
to the Representatives or counsel for the Underwriters in connection with the
offering of the Shares shall be deemed a representation and warranty by the
Company, as to matters covered thereby, to each Underwriter.
2. Representations, Warranties and Agreements of the Selling
Shareholders. Each Selling Shareholder, severally and not jointly, represents,
warrants and agrees that:
(a) Neither the Selling Shareholder nor any person acting on behalf
of the Selling Shareholder (other than, if applicable, the Company and the
Underwriters) has used or referred to any "free writing prospectus" (as
defined in Rule 405), relating to the Shares.
(b) The Selling Shareholder has, and immediately prior to any
Delivery Date on which the Selling Shareholder is selling Shares, the
Selling Shareholder will have, good and valid title to, or a valid
"security entitlement" within the meaning of Section 8-501 of the New York
Uniform Commercial Code (the "UCC") in respect of, the Shares to be sold
by the Selling Shareholder hereunder on such Delivery Date, free and clear
of all liens, encumbrances, equities or claims, other than pursuant to
this Agreement; and upon delivery of such Shares and payment of the
purchase price therefor as herein contemplated, assuming each Underwriters
has no notice of any adverse claim, each Underwriter will receive good and
marketable title to such Shares free and clear of all liens, encumbrances,
equities or claims.
17
(c) The Shares to be sold by the Selling Shareholder hereunder is
subject to the interest of the Underwriters, and the obligations of the
Selling Shareholder hereunder shall not be terminated by any act of the
Selling Shareholder, by operation of law or the occurrence of any other
event.
(d) The Selling Shareholder has full right, power and authority,
corporate or otherwise, to enter into this Agreement.
(e) This Agreement has been duly and validly authorized, executed
and delivered by or on behalf of the Selling Shareholder.
(f) The execution, delivery and performance of this Agreement by the
Selling Shareholder and the consummation by the Selling Shareholder of the
transactions contemplated hereby do not and will not (i) 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, license or other agreement or instrument to which the Selling
Shareholder is a party or by which the Selling Shareholder is bound or to
which any of the property or assets of the Selling Shareholder is subject,
(ii) result in any violation of the provisions of the charter, by-laws or
deed of trust (or similar organizational documents) of the Selling
Shareholder or (iii) result in any violation of any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Selling Shareholder or the property or assets of the
Selling Shareholder.
(g) No consent, approval, authorization or order of, or filing or
registration with, any court or governmental agency or body having
jurisdiction over the Selling Shareholder or the property or assets of the
Selling Shareholder is required for the execution, delivery and
performance of this Agreement by the Selling Shareholder.
(h) The Selling Shareholder has not taken and will not take,
directly or indirectly, any action that is designed to or that has
constituted or that could reasonably be expected to cause or result in the
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the shares of the Shares.
(i) Such Selling Shareholder has not distributed and will not
distribute, prior to the later of the last Delivery Date and the
completion of the Underwriters' distribution of the Shares, any offering
material in connection with the offering and sale of the Shares, including
any free writing prospectus.
(j) Other than as disclosed in the most recent Preliminary
Prospectus, such Selling Shareholder does not have any registration or
other similar rights to have any equity or debt securities registered for
sale by the Company under the Registration Statement or included in this
offering.
18
(k) Such Selling Shareholder does not have, or has waived prior to
the date hereof, any preemptive right, co-sale right or right of first
refusal or other similar right to purchase any of the Shares that are to
be sold by the Company to the Underwriters pursuant to this Agreement; and
such Selling Shareholder does not own any warrants, options or similar
rights to acquire, and does not have any right or arrangement to acquire,
any capital shares, right, warrants, options or other securities from the
Company, other than those described in the most recent Preliminary
Prospectus.
(l) Except as disclosed in the most recent Preliminary Prospectus,
there are no contracts, agreements or understandings between such Selling
Shareholder 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 this offering.
(m) The Shares delivered at each Delivery Date by such Selling
Shareholder will be freely transferable by such Selling Shareholder to or
for the respective accounts of the several Underwriters and (to the extent
described in the most recent Preliminary Prospectus) to the initial
purchasers thereof.
(n) 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 Canada, or any
political subdivision or taxing authority thereof or therein, in
connection with the sale and delivery by such Selling Shareholder of the
Shares to or for the respective accounts of the Underwriters or the sale
and delivery by the Underwriters of the Shares to the initial purchasers
thereof.
(o) Such Selling Shareholder has reviewed the Registration Statement
and the Prospectus and neither the Prospectus nor any amendments or
supplements thereto (including any prospectus wrapper) under the heading
"Principal and Selling Shareholders" includes any untrue statement of a
material fact relating to such Selling Shareholder or omits to state a
material fact necessary in order to make the statements therein relating
to such Selling Shareholder, in the light of the circumstances under which
they were made, not misleading. Such Selling Shareholder is not prompted
to sell the Shares by any information concerning the Company that is not
set forth in the Registration Statement, the Pricing Disclosure Package
and the Prospectus.
Any certificate signed by any Selling Shareholder and delivered to
the Representatives or counsel for the Underwriters in connection with this
Agreement shall be deemed a representation and warranty by such Selling
Shareholder, as to matters covered thereby, to each Underwriter.
3. Purchase of the Shares by the Underwriters. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 6,300,000 Firm Shares
and each Selling Shareholder agrees to sell the number of shares of the Firm
Shares set forth opposite its name in Schedule 2 hereto, severally and not
jointly, to the several Underwriters, and each of the Underwriters, severally
and not jointly, agrees to purchase the number of Firm Shares set forth opposite
that Underwriter's name in Schedule 1 hereto. Each Underwriter shall be
obligated to purchase from
19
the Company and from each Selling Shareholder that number of Firm Shares that
represents the same proportion of the number of Firm Shares to be sold by the
Company and by each Selling Shareholder as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule 1 represents of the total
number of Firm Shares to be purchased by all of the Underwriters pursuant to
this Agreement. The respective purchase obligations of the Underwriters with
respect to the Firm Shares shall be rounded among the Underwriters to avoid
fractional shares, as the Representatives may determine.
In addition, the Company grants to the Underwriters an option to
purchase up to an additional 700,000 Option Shares and each Selling Shareholder
grants to the Underwriters an option to purchase up to the number of Option
Shares set forth opposite such Selling Shareholder's name in Schedule 2 hereto,
severally and not jointly. Such option is exercisable in the event that the
Underwriters sell more shares of Common Shares than the number of Firm Shares in
the offering and as set forth in Section 5 hereof. Any such election to purchase
Option Shares shall be made in proportion to the maximum number of Option Shares
to be sold by the Company and each Selling Shareholder as set forth in Schedule
2 hereto. Each Underwriter agrees, severally and not jointly, to purchase the
number of Option Shares (subject to such adjustments to eliminate fractional
shares as the Representatives may determine) that bears the same proportion to
the total number of Option Shares to be sold on such Delivery Date as the number
of Firm Shares set forth in Schedule 1 hereto opposite the name of such
Underwriter bears to the total number of Firm Shares.
The price of both the Firm Shares and any Option Shares purchased by
the Underwriters shall be $- per share.
The Company and the Selling Shareholders shall not be obligated to
deliver any of the Firm Shares or Option Shares to be delivered on the
applicable Delivery Date, except upon payment for all such Shares to be
purchased on such Delivery Date as provided herein.
4. Offering of Shares by the Underwriters. Upon authorization by the
Representatives of the release of the Firm Shares, the several Underwriters
propose to offer the Firm Shares for sale upon the terms and conditions to be
set forth in the Prospectus.
It is understood that approximately - Firm Shares (the "DIRECTED
SHARES") will initially be reserved by the several Underwriters for offer and
sale upon the terms and conditions to be set forth in the Prospectus and in
accordance with the rules and regulations of the National Association of
Securities Dealers, Inc. (the "NASD") to employees of the Company and its
subsidiaries and persons having business relationships with the Company and its
subsidiaries who have heretofore delivered to Deutsche Bank Securities Inc.
offers or indications of interest to purchase shares of Firm Shares in form
satisfactory to Deutsche Bank Securities Inc. (such program, the "DIRECTED SHARE
PROGRAM") and that any allocation of such Firm Shares among such persons will be
made in accordance with timely directions received by Deutsche Bank Securities
Inc. from the Company; provided that under no circumstances will Deutsche Bank
Securities Inc. or any Underwriter be liable to the Company or to any such
person for any action taken or omitted in good faith in connection with such
Directed Share Program. It is further understood that any Directed Shares not
affirmatively reconfirmed for purchase by any participant in the Directed Share
Program by [ ]:00 A.M., New York City time, on the date
20
hereof or otherwise are not purchased by such persons will be offered by the
Underwriters to the public upon the terms and conditions to be set forth in the
Prospectus.
The Company agrees to pay all fees and disbursements incurred by the
Underwriters in connection with the Directed Share Program and any stamp duties
or other taxes incurred by the Underwriters in connection with the Directed
Share Program.
5. Delivery of and Payment for the Shares. Delivery of and payment
for the Firm Shares shall be made at 10:00 A.M., New York City time, on the
third full business day following the date of this Agreement or at such other
date or place as shall be determined by agreement between the Representatives
and the Company. This date and time are sometimes referred to as the "INITIAL
DELIVERY DATE." Delivery of the Firm Shares shall be made to the Representatives
for the account of each Underwriter against payment by the several Underwriters
through the Representatives of the respective aggregate purchase prices of the
Firm Shares being sold by the Company and the Selling Shareholders to or upon
the order of the Company and the Selling Shareholders by wire transfer in
immediately available funds to the accounts specified by the Company and the
Selling Shareholders. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of each Underwriter hereunder. The Company and the Selling
Shareholders shall deliver the Firm Shares through the facilities of DTC unless
the Representatives shall otherwise instruct.
The option granted in Section 3 will expire 30 days after the date
of this Agreement and may be exercised in whole or from time to time in part by
written notice being given to the Company and the Selling Shareholders by the
Representatives; provided that if such date falls on a day that is not a
business day, the option granted in Section 3 will expire on the next succeeding
business day. Such notice shall set forth the aggregate number of Option Shares
as to which the option is being exercised, the names in which the Option Shares
are to be registered, the denominations in which the Option Shares are to be
issued and the date and time, as determined by the Representatives, when the
Option Shares are to be delivered; provided, however, that this date and time
shall not be earlier than the Initial Delivery Date nor earlier than the second
business day after the date on which the option shall have been exercised nor
later than the fifth business day after the date on which the option shall have
been exercised. Each date and time the Option Shares are delivered is sometimes
referred to as an "OPTION SHARES DELIVERY DATE," and the Initial Delivery Date
and any Option Shares Delivery Date are sometimes each referred to as a
"DELIVERY DATE."
Delivery of the Option Shares by the Company and the Selling
Shareholders and payment for the Option Shares by the several Underwriters
through the Representatives shall be made at 10:00 A.M., New York City time, on
the date specified in the corresponding notice described in the preceding
paragraph or at such other date or place as shall be determined by agreement
between the Representatives and the Company. On the Option Shares Delivery Date,
the Company and the Selling Shareholders shall deliver or cause to be delivered
the Option Shares to the Representatives for the account of each Underwriter
against payment by the several Underwriters through the Representatives of the
respective aggregate purchase prices of the Option Shares being sold by the
Company and the Selling Shareholders to or upon the order of the Company and the
Selling Shareholders by wire transfer in immediately available funds to the
account specified by the Company and the Selling Shareholders. Time shall be of
the essence,
21
and delivery at the time and place specified pursuant to this Agreement is a
further condition of the obligation of each Underwriter hereunder. The Company
and the Selling Shareholders shall deliver the Option Shares through the
facilities of DTC unless the Representatives shall otherwise instruct.
6. Further Agreements of the Company and the Underwriters. (a) The
Company agrees:
(i) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under
the Securities Act not later than the Commission's close of business on
the second business day following the execution and delivery of this
Agreement; to make no further amendment or any supplement to the
Registration Statement or the Prospectus prior to the last Delivery Date
except as provided herein; to advise the Representatives, promptly after
it receives notice thereof, of the time when any amendment or supplement
to the Registration Statement or the Prospectus has been filed and to
furnish the Representatives with copies thereof; to advise the
Representatives, 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 the Prospectus or any Issuer Free Writing
Prospectus, of the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, of the initiation or threatening of
any proceeding or examination for any such purpose or of any request by
the Commission for the amending or supplementing of the Registration
Statement, the Prospectus or any Issuer Free Writing Prospectus or for
additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of the Prospectus
or any Issuer Free Writing Prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its withdrawal;
(ii) To furnish promptly to each of the Representatives and to
counsel for the Underwriters a signed copy of the Registration Statement
as originally filed with the Commission, and each amendment thereto filed
with the Commission, including all consents and exhibits filed therewith;
(iii) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably request: (A)
conformed copies of the Registration Statement as originally filed with
the Commission and each amendment thereto (in each case excluding exhibits
other than this Agreement and the computation of per share earnings), (B)
each Preliminary Prospectus, the Prospectus and any amended or
supplemented Prospectus and (C) each Issuer Free Writing Prospectus; and,
if the delivery of a prospectus is required at any time after the date
hereof in connection with the offering or sale of the Shares or any other
securities relating thereto and if at such time any events 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 is delivered, not misleading, or, if for any other reason
it shall be necessary to amend or supplement the Prospectus in order to
comply with the Securities Act, to notify the Representatives and, upon
their request, to file such document and to prepare and furnish without
charge to
22
each Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an amended or
supplemented Prospectus that will correct such statement or omission or
effect such compliance;
(iv) To file promptly with the Commission any amendment or
supplement to the Registration Statement or the Prospectus that may, in
the judgment of the Company or the Representatives, be required by the
Securities Act or requested by the Commission;
(v) Prior to filing with the Commission any amendment or supplement
to the Registration Statement or the Prospectus, to furnish a copy thereof
to the Representatives and counsel for the Underwriters and obtain the
consent of the Representatives to the filing;
(vi) Not to make any offer relating to the Shares that would
constitute an Issuer Free Writing Prospectus without the prior written
consent of the Representatives.
(vii) To retain in accordance with the Rules and Regulations all
Issuer Free Writing Prospectuses not required to be filed pursuant to the
Rules and Regulations; and if at any time after the date hereof any event
shall have occurred as a result of which any Issuer Free Writing
Prospectus, as then amended or supplemented, would conflict with the
information in the Registration Statement, the most recent Preliminary
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 under which
they were made, not misleading, or, if for any other reason it shall be
necessary to amend or supplement any Issuer Free Writing Prospectus, to
notify the Representatives and, upon their request, to file such document
and to prepare and furnish without charge to each Underwriter as many
copies as the Representatives may from time to time reasonably request of
an amended or supplemented Issuer Free Writing Prospectus that will
correct such conflict, statement or omission or effect such compliance;
The Company has complied and will comply with the requirements of Rule 433
with respect to each Issuer Free Writing Prospectus including, without
limitation, all prospectus delivery, filing, record retention and
legending requirements applicable to each such Issuer Free Writing
Prospectus; and the Company has caused there to be made available at least
one version of a "bona fide electronic road show" (as defined in Rule 433
under the Securities Act) in a manner that causes the Company not to be
required, pursuant to Rule 433(d) under the Securities Act, to file with
the Commission any road show. The Company shall retain, in accordance with
the Rules and Regulations, all Issuer Free Writing Prospectuses not
required to be filed pursuant to the Rules and Regulations.
(viii) As soon as practicable, but in any event not later than
twelve months, after the Effective Date to make generally available to the
Company's security holders and to deliver to the Representatives an
earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Securities Act and the Rules
and Regulations (including, at the option of the Company, Rule 158 of the
Securities Act);
23
(ix) The Company consents to the use and delivery of the Preliminary
Prospectus by the Underwriters in accordance with Rule 430 and Section
5(b) of the Securities Act.
(x) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Shares for offering
and sale under the securities laws of such jurisdictions as the
Representatives 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 Shares;
provided that in connection therewith the Company shall not be required to
(i) qualify as a foreign corporation in any jurisdiction in which it would
not otherwise be required to so qualify, (ii) file a general consent to
service of process in any such jurisdiction or (iii) subject itself to
taxation in any jurisdiction in which it would not otherwise be subject;
(xi) For a period commencing on the date hereof and ending on the
180th day after the date of the Prospectus (the "LOCK-UP PERIOD"), not to,
directly or indirectly, (1) offer for sale, sell, pledge or otherwise
dispose of (or enter into any transaction or device that is designed to,
or could be expected to, result in the disposition by any person at any
time in the future of) any shares of Common Shares or securities
convertible into or exchangeable for Common Shares (other than the Shares
and shares issued pursuant to employee benefit plans, qualified shares
option plans or other employee compensation plans existing on the date
hereof or pursuant to currently outstanding options, restricted shares,
warrants or rights), or sell or grant options, rights or warrants with
respect to any shares of Common Shares or securities convertible into or
exchangeable for Common Shares (other than the grant of options or
restricted shares pursuant to option plans existing on the date hereof),
(2) enter into any swap or other derivatives transaction that transfer to
another, in whole or in part, any of the economic benefits or risks of
ownership of such shares of Common Shares, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of
Common Shares or other securities, in cash or otherwise, (3) file or cause
to be filed a registration statement, including any amendments, with
respect to the registration of any shares of Common Shares or securities
convertible, exercisable or exchangeable into Common Shares or any other
securities of the Company (other than any registration statement on Form
S-8) or (4) publicly disclose the intention to do any of the foregoing, in
each case without the prior written consent of the Representatives, on
behalf of the Underwriters, and to cause each officer, director and
shareholder of the Company set forth on Schedule 3 hereto to furnish to
the Representatives, prior to the Initial Delivery Date, a letter or
letters, substantially in the form of Exhibit A hereto (the "LOCK-UP
AGREEMENTS"); notwithstanding the foregoing, if (1) during the last 17
days of the Lock-Up Period, the Company issues an earnings release or
material news or a material event relating to the Company occurs or (2)
prior to the expiration of the Lock-Up Period, the Company announces that
it will release earnings results during the 16-day period beginning on the
last day of the Lock-Up Period, then the restrictions imposed in the
preceding paragraph shall continue to apply until the expiration of the
18-day period beginning on the issuance of the earnings release or the
announcement of the material news or the occurrence of the material event,
unless the Representatives, on behalf of the Underwriters, waive such
extension in writing;
24
(xii) To apply the net proceeds from the sale of the Shares being
sold by the Company as set forth in the Prospectus;
(xiii) During the period of two years from the effective date of the
Registration Statement, the Company will furnish to the Underwriters
copies of all reports or other communications (financial or other)
furnished to shareholders or from time to time published or publicly
disseminated by the Company, and will deliver to the Underwriters, (A) as
soon as they are available, copies of any reports, financial statements
and proxy or information statements furnished to or filed with the
Commission or any national securities exchange on which any class of
securities of the Company is listed; and (B) such additional information
concerning the business and financial condition of the Company as the
Underwriters may from time to time reasonably request (such financial
information to be on a consolidated basis to the extent the accounts of
the Company and its subsidiaries are consolidated in reports furnished to
its security holders generally or to the Commission), in each case, to the
extent they are not otherwise publicly available on the Commission's
website.
(xiv) The Company will use its best efforts to list the Shares on
the Nasdaq Global Market and maintain the listing of the Shares on the
Nasadaq Global Market.
(xv) The Company, during the period when a prospectus (or, in lieu
thereof, the notice referred to in Rule 173(a) under the Securities Act)
is required to be delivered under the Securities Act in connection with
the offer or sale of the Shares, will file all reports and other documents
required to be filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and the Rules and
Regulations within the time periods required thereby.
(xvi) If the Company elects to rely upon Rule 462(b) under the
Securities Act, the Company shall file a Rule 462(b) Registration
Statement with the Commission in compliance with Rule 462 by [10:00 p.m.]
(Eastern 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 Registration Statement or give irrevocable instructions for the
payment of such fee pursuant to Rule 111(b) under the Securities Act.
(xvii) The Company will use its best efforts to do and perform all
things required to be done or performed under this Agreement by the
Company prior to each Delivery Date and to satisfy all conditions
precedent to the delivery of the Firm Shares and the Option Shares.
(xviii) The Company will not take, and will cause its affiliates
(within the meaning of Rule 144 under the Securities Act) not to take,
directly or indirectly, any action which constitutes or is designed to
cause or result in, or which could reasonably be expected to constitute,
cause or result in, the stabilization or manipulation of the price of any
security to facilitate the sale or resale of the Shares.
(xix) The Company will not, without the prior written consent of the
Representative, make any offer relating to the Shares that would
constitute an Issuer Free
25
Writing Prospectus. Prior to the last Delivery Date, the Company will not
distribute any offering material in connection with the Offering other
than any Preliminary Prospectus, the Prospectus, any Issuer Free Writing
Prospectus to which the Representative has previously consented in writing
and any Issuer Free Writing Prospectus set forth on Schedule 4 hereto.
(xx) The Company will indemnify and hold each Underwriter 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 to be sold by the Company and the
execution and delivery of this Agreement; provided, however, that the
Company shall not be responsible for any such taxes, duties, fees, levies
or charges that arise as a result of the distribution of the Shares by any
Underwriter in a manner other than that as is customary in such
transactions.
(xxi) The Company shall comply with the SAFE Rules and Regulations,
and shall use reasonable efforts to cause its option holders and
shareholders that are, or that are directly or indirectly owned or
controlled by, PRC residents or PRC citizens, to comply with the SAFE
Rules and Regulations applicable to them in connection with the Company,
including without limitation, requiring each shareholder and option
holder, that is, or is directly or indirectly owned or controlled by, a
PRC resident or PRC citizen to complete any registration and other
procedures required under applicable SAFE Rules and Regulations.
(xxii) Prior to the Initial Delivery Date, the Company will purchase
insurance covering the Company, its directors and officers for liabilities
or losses arising in connection with this offering, including, without
limitation, liabilities or losses arising under the Securities Act, the
Exchange Act and the Rules and Regulations; and
(xxiii) To comply with all applicable securities and other
applicable laws, rules and regulations in each foreign jurisdiction in
which the Directed Shares are offered in connection with the Directed
Share Program.
(b) Each Underwriter severally agrees that such Underwriter shall
not include any "issuer information" (as defined in Rule 433) in any "free
writing prospectus" (as defined in Rule 405) used or referred to by such
Underwriter without the prior consent of the Company (any such issuer
information with respect to whose use the Company has given its consent,
"PERMITTED ISSUER INFORMATION"); provided that (i) no such consent shall be
required with respect to any such issuer information contained in any document
filed by the Company with the Commission prior to the use of such free writing
prospectus and (ii) "issuer information," as used in this Section 6(b), shall
not be deemed to include information prepared by or on behalf of such
Underwriter on the basis of or derived from issuer information.
7. Further Agreements of the Selling Shareholders. Each Selling
Shareholder agrees, severally and not jointly:
26
(a) During the Lock-Up Period, not to, directly or indirectly,
(1) offer for sale, sell, pledge or otherwise dispose of (or enter
into any transaction or device that is designed to, or could be
expected to, result in the disposition by any person at any time in
the future of) any shares of Common Shares or securities convertible
into or exchangeable for Common Shares, (2) enter into any swap or
other derivatives transaction that transfers to another, in whole or
in part, any of the economic benefits or risks of ownership of such
shares of Common Shares, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common
Shares or other securities, in cash or otherwise, (3) make any
demand for or exercise any right or file or cause to be filed a
registration statement, including any amendments, with respect to
the registration of any shares of Common Shares or securities
convertible, exercisable or exchangeable into Common Shares or any
other securities of the Company or (4) publicly disclose the
intention to do any of the foregoing, in each case without the prior
written consent of the Representatives, on behalf of the
Underwriters; notwithstanding the foregoing, if (1) during the last
17 days of the Lock-Up Period, the Company issues an earnings
release or material news or a material event relating to the Company
occurs or (2) prior to the expiration of the Lock-Up Period, the
Company announces that it will release earnings results during the
16-day period beginning on the last day of the Lock-Up Period, then
the restrictions imposed in the preceding paragraph shall continue
to apply until the expiration of the 18-day period beginning on the
issuance of the earnings release or the announcement of the material
news or the occurrence of the material event, unless the
Representatives on behalf of the Underwriters, waive such extension
in writing.
(b) Prior to engaging in any transaction or taking any other
action that is subject to the terms of Section 7(a) during the
period from the date of this Agreement to and including the 34th day
following the expiration of the Lock-Up Period, it will give notice
thereof to the Company and will not consummate such transaction or
take any such action unless it has received written confirmation
from the Company that the Lock-Up Period (as such may have been
extended pursuant to Section 7(a)) has expired.
(c) Neither the Selling Shareholder nor any person acting on
behalf of the Selling Shareholder (other than, if applicable, the
Company and the Underwriters) shall use or refer to any "free
writing prospectus" (as defined in Rule 405), relating to the
Shares.
(d) To notify promptly the Company and the Representatives if,
at any time prior to the date on which the distribution of the
Shares as contemplated herein and in the Prospectus has been
completed, as determined by the Representatives, such Selling
Shareholder has knowledge of the occurrence of any event relating to
such Selling Shareholder as a result of which the Prospectus or the
Registration Statement, in each case as then amended or
supplemented, would include an untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein (except in the case of the
27
Registration Statement), in the light of the circumstances under
which they were made not misleading.
(e) To do and perform all things to be done and performed
under this Agreement prior to any Delivery Date and to satisfy all
conditions precedent of such Selling Shareholder to the delivery of
the Shares to be sold by such Selling Shareholder pursuant to this
Agreement.
(f) To deliver to the Representatives prior to the Initial
Delivery Date a properly completed and executed United States
Treasury Department Form W-8BEN.
(g) Severally and not jointly to indemnify and hold each
Underwriter 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 execution and delivery of this Agreement or the purchase of
Shares by the Underwriters pursuant hereto and the purchase of
Shares by the Underwriters pursuant hereto and against any taxes,
interest and penalties for which the Underwriters may be liable in
respect of the purchase of the Shares from the Selling Shareholder
(but not the sale of the Shares by the Underwriter).
(h) To pay any and all taxes payable by it in respect of the
transfer or sale by the Selling Shareholder of Shares pursuant
hereto, to file any and all tax returns required to be filed in
connection with such transfer and sale and to severally and not
jointly indemnify the Underwriters against any taxes, interest and
penalties for which the Underwriters may be liable in connection
with any failure by the Selling Shareholder to fulfill such
obligations.
8. Expenses. The Company agrees, whether or not the transactions
contemplated by this Agreement are consummated or this Agreement is terminated,
to pay all costs, expenses, fees and taxes incident to and in connection with
(a) the authorization, issuance, sale and delivery of the Shares and any stamp
duties or other taxes payable with regard thereto, and the preparation and
printing of certificates for the Shares; (b) the preparation, printing and
filing under the Securities Act of the Registration Statement (including any
exhibits thereto), any Preliminary Prospectus, the Prospectus, any Issuer Free
Writing Prospectus and any amendment or supplement thereto; (c) the distribution
of the Registration Statement (including any exhibits thereto), any Preliminary
Prospectus, the Prospectus, any Issuer Free Writing Prospectus and any amendment
or supplement thereto, all as provided in this Agreement; (d) the production and
distribution of this Agreement, any supplemental agreement among the
Underwriters, and any other related documents in connection with the offering,
purchase, sale and delivery of the Shares; (e) the filing fees incident to
securing any required review by the National Association of Securities Dealers,
Inc. (the "NASD") of the terms of sale of the Shares (including related fees and
expenses of counsel to the Underwriters); (f) the inclusion of the Shares on the
Nasdaq Global Market; (g) the qualification of the Shares under the securities
laws of the several jurisdictions as provided in Section 6(a)(ix) and the
preparation, printing and distribution of a Blue Sky Memorandum (including
related fees and expenses of counsel to the Underwriters); (h)
28
the offer and sale of shares of the Shares by the Underwriters in connection
with the Directed Share Program, including the fees and disbursements of counsel
to the Underwriters related thereto, the costs and expenses of preparation,
printing and distribution of the Directed Share Program material and all stamp
duties or other taxes incurred by the Underwriters in connection with the
Directed Share Program; (i) the investor presentations on any "road show"
undertaken in connection with the marketing of the Shares, including, without
limitation, expenses associated with any electronic roadshow, travel and lodging
expenses of the representatives and officers of the Company and the cost of any
aircraft chartered in connection with the road show; and (j) all other costs and
expenses incident to the performance of the obligations of the Company under
this Agreement; provided that, except as provided in this Section 8 and in
Section 13, the Underwriters shall pay their own costs and expenses, including
the costs and expenses of their counsel, any transfer taxes on the Shares which
they may sell and the expenses of advertising any offering of the Shares made by
the Underwriters.
9. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of the Company
and the Selling Shareholders contained herein, to the performance by the Company
and the Selling Shareholders of their respective obligations hereunder, and to
each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 6(a)(i); the Company shall
have complied with all filing requirements applicable to any Issuer
Free Writing Prospectus used or referred to after the date hereof;
no stop order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of the Prospectus or
any Issuer Free Writing Prospectus shall have been issued and no
proceeding or examination for such purpose shall have been initiated
or threatened by the Commission; and any request of the Commission
for inclusion of additional information in the Registration
Statement or the Prospectus or otherwise shall have been complied
with.
(b) No Underwriter shall have discovered and disclosed to the
Company on or prior to such Delivery Date that the Registration
Statement, the Prospectus or the Pricing Disclosure Package, or any
amendment or supplement thereto, contains an untrue statement of a
fact which, in the opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP,
counsel for the Underwriters, is material or omits to state a fact
which, in the opinion of such counsel, is material and is required
to be stated therein or is necessary to make the statements therein
not misleading.
(c) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement, the
Shares, the Registration Statement, the Prospectus and any Issuer
Free Writing Prospectus, and all other legal matters relating to
this Agreement and the transactions contemplated hereby shall be
reasonably satisfactory in all material respects to counsel for the
Underwriters, and the Company and the Selling Shareholders shall
have furnished to such counsel all documents and information that
the Underwriters may reasonably request to enable them to pass upon
such matters.
29
(d) Xxxxxx & Xxxxxxx LLP shall have furnished to the
Representatives its written opinion, as U.S. counsel to the Company,
addressed to the Underwriters and dated such Delivery Date, in form
and substance reasonably satisfactory to the Representatives,
substantially in the form attached hereto as Exhibit B-1.
(e) The counsel(s) for the Selling Shareholders shall have
furnished to the Representatives its written opinion, as counsel to
the Selling Shareholders, addressed to the Underwriters and dated
such Delivery Date, in form and substance reasonably satisfactory to
the Representatives, substantially in the form attached hereto as
Exhibit B-2.
(f) WeirFoulds LLP shall have furnished to the Representatives
its written opinion, as Canadian counsel to the Company, addressed
to the Underwriters and dated such Delivery Date, in form and
substance reasonably satisfactory to the Representatives,
substantially in the form attached hereto as Exhibit B-3.
(g) Chen & Co. Law Firm shall have furnished to the
Representatives its written opinion, as PRC counsel to the Company,
addressed to the Underwriters and dated such Delivery Date, in form
and substance reasonably satisfactory to the Representatives,
substantially in the form attached hereto as Exhibit B-4.
(h) The Representatives shall have received from each of
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, Xxxxxx Xxxx Xxxxxxxx & Xxxxxxxx LLP
and Haiwen & Partners, the respective U.S., Canadian and PRC counsel
for the Underwriters, such opinions, dated such Delivery Date, with
respect to the issuance and sale of the Shares, the Registration
Statement, the Prospectus and the Pricing Disclosure Package and
other related matters as the Representatives may reasonably require,
and the Company shall have furnished to such counsel such documents
as they reasonably request for the purpose of enabling them to pass
upon such matters.
(i) At the time of execution of this Agreement, the
Representatives shall have received from Deloitte Touche Tohmatsu
CPA Ltd. a letter, in form and substance satisfactory to the
Representatives, addressed to the Underwriters and dated the date
hereof (i) confirming that they are independent public accountants
within the meaning of the Securities Act and are in compliance with
the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission, and
(ii) stating, as of the date hereof (or, with respect to matters
involving changes or developments since the respective dates as of
which specified financial information is given in the most recent
Preliminary Prospectus, as of a date not more than three days prior
to the date hereof), the conclusions and findings of such firm with
respect to the financial information and other matters ordinarily
covered by accountants' "comfort letters" to underwriters in
connection with registered public offerings.
(j) With respect to the letter of Deloitte Touche Tohmatsu CPA
Ltd. referred to in the preceding paragraph and delivered to the
Representatives concurrently with the execution of this Agreement
(the "INITIAL LETTER"), the
30
Company shall have furnished to the Representatives a letter (the
"BRING-DOWN LETTER") of such accountants, addressed to the
Underwriters and dated such Delivery Date (i) confirming that they
are independent public accountants within the meaning of the
Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule
2-01 of Regulation S-X of the Commission, (ii) stating, as of the
date of the bring-down letter (or, with respect to matters involving
changes or developments since the respective dates as of which
specified financial information is given in the Prospectus, as of a
date not more than three days prior to the date of the bring-down
letter), the conclusions and findings of such firm with respect to
the financial information and other matters covered by the initial
letter and (iii) confirming in all material respects the conclusions
and findings set forth in the initial letter.
(k) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chief Executive
Officer and its Chief Financial Officer stating that:
(i) The representations, warranties and agreements of
the Company in Section 1 are true and correct on and as of
such Delivery Date, and each of the Company has complied with
all its agreements contained herein and satisfied all the
conditions on its part to be performed or satisfied hereunder
at or prior to such Delivery Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued; and no proceedings or
examination for that purpose have been instituted or, to the
knowledge of such officers, threatened; and
(iii) They have carefully examined the Registration
Statement, the Prospectus and the Pricing Disclosure Package,
and, in their opinion, (A) (1) the Registration Statement, as
of the Effective Date, (2) the Prospectus, as of its date and
on the applicable Delivery Date, or (3) the Pricing Disclosure
Package, as of the Applicable Time, did not and do not contain
any untrue statement of a material fact and did not and do not
omit to state a material fact required to be stated therein or
necessary to make the statements therein (except in the case
of the Registration Statement, in the light of the
circumstances under which they were made) not misleading,
except, in the case of the Pricing Disclosure Package, that
the price of the Shares and disclosures directly relating
thereto are included on the cover page of the Prospectus, and
(B) since the Effective Date, no event has occurred that
should have been set forth in a supplement or amendment to the
Registration Statement, the Prospectus or any Issuer Free
Writing Prospectus that has not been so set forth.
(l) Each Selling Shareholder shall have furnished to the
Representatives on such Delivery Date a certificate, dated such
Delivery Date, signed by, or on
31
behalf of, the Selling Shareholder stating that the representations,
warranties and agreements of the Selling Shareholder contained
herein are true and correct on and as of such Delivery Date and that
the Selling Shareholder has complied with all its agreements
contained herein and has satisfied all the conditions on its part to
be performed or satisfied hereunder at or prior to such Delivery
Date.
(m) (i) Neither the Company nor any of its subsidiaries shall
have sustained, since the date of the latest audited financial
statements included in the most recent Preliminary 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 or
(ii) since such date there shall not have been any change in the
capital shares or long-term or short-term borrowings of the Company
or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the condition
(financial or otherwise), results of operations, shareholders'
equity, properties, management, business or prospects of the Company
and its subsidiaries taken as a whole, the effect of which, in any
such case described in clause (i) or (ii), is, in the judgment of
the Representatives, 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 on such Delivery Date on
the terms and in the manner contemplated in the Prospectus.
(n) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in
securities generally on the NYSE, the NASDAQ Global Market or the
American Stock Exchange or in the over-the-counter market, or
trading in any securities of the Company on any exchange or in the
over-the-counter market, shall have been suspended or materially
limited or the settlement of such trading generally shall have been
materially disrupted or minimum prices shall have been established
on any such exchange or such market by the Commission, by such
exchange or by any other regulatory body or governmental authority
having jurisdiction, (ii) a banking moratorium shall have been
declared by federal, state or local authorities in the United
States, Canada, the PRC or Germany, (iii) any of the United States,
Canada, the PRC or Germany shall have become engaged in hostilities,
there shall have been an escalation in hostilities involving the
United States, Canada, the PRC or Germany or there shall have been a
declaration of a national emergency or war by the United States,
Canada, the PRC or Germany or (iv) there shall have occurred such a
material adverse change in general economic, political or financial
conditions, including, without limitation, as a result of terrorist
activities after the date hereof (or the effect of international
conditions on the financial markets in the United States shall be
such), as to make it, in the judgment of the Representatives,
impracticable or inadvisable to proceed with the public offering or
delivery of the Shares being delivered on such Delivery Date on the
terms and in the manner contemplated in the Prospectus.
(o) There shall not be any adverse legislative or regulatory
developments related to the M&A Rules and Related Clarifications
which in the sole judgment
32
of the Representatives (after consultation with the Company if
practicable) would make it inadvisable to proceed with the public
offering or the delivery of the Shares being delivered at such
Delivery Date on the terms and in the manner contemplated in this
Agreement (including any such development that results in either PRC
counsel to the Company or PRC counsel to the Underwriters not being
able to confirm, at such Delivery Date, the respective opinions of
such counsel.
(p) The Nasdaq Global Market shall have approved the Shares
for listing, subject only to official notice of issuance and
evidence of satisfactory distribution.
(q) The Lock-Up Agreements between the Representatives and the
officers, directors and shareholders of the Company set forth on
Schedule 3, delivered to the Representatives on or before the date
of this Agreement, shall be in full force and effect on such
Delivery Date.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
10. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each
Underwriter, its directors, officers and employees and each person,
if any, who controls any Underwriter within the meaning of Section
15 of the Securities Act, from and against any loss, claim, damage
or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability
or action relating to purchases and sales of Shares), to which that
Underwriter, director, officer, employee or controlling person may
become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of
a material fact contained in (A) any Preliminary Prospectus, the
Registration Statement, the Prospectus or in any amendment or
supplement thereto, (B) any Issuer Free Writing Prospectus or in any
amendment or supplement thereto, (C) any Permitted Issuer
Information used or referred to in any "free writing prospectus" (as
defined in Rule 405) used or referred to by any Underwriter, (D) any
"road show" (as defined in Rule 433) not constituting an Issuer Free
Writing Prospectus (a "NON-PROSPECTUS ROAD SHOW") or (E) any Blue
Sky application or other document prepared or executed by the
Company (or based upon any written information furnished by the
Company for use therein) specifically for the purpose of qualifying
any or all of the Shares under the securities laws of any state or
other jurisdiction (any such application, document or information
being hereinafter called a "BLUE SKY APPLICATION"), (ii) the
omission or alleged omission to state in any Preliminary Prospectus,
the Registration Statement, the Prospectus, any Issuer Free Writing
Prospectus or in any amendment or supplement thereto or in any
Permitted Issuer Information, any Non-Prospectus Road Show or any
Blue Sky Application, any material fact required to be stated
therein or necessary to make the statements therein not
33
misleading or (iii) any act or failure to act or any alleged act or
failure to act by any Underwriter in connection with, or relating in
any manner to, the Shares or the offering contemplated hereby, and
which is included as part of or referred to in any loss, claim,
damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Company shall
not be liable under this clause (iii) to the extent that it is
determined in a final judgment by a court of competent jurisdiction
that such loss, claim, damage, liability or action resulted directly
from any such acts or failures to act undertaken or omitted to be
taken by such Underwriter through its gross negligence or willful
misconduct), and shall reimburse each Underwriter and each such
director, officer, employee or controlling person promptly upon
demand for any legal or other expenses reasonably incurred by that
Underwriter, director, officer, employee or controlling person in
connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Company shall not
be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, any
untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration
Statement, the Prospectus, any Issuer Free Writing Prospectus or in
any such amendment or supplement thereto or in any Permitted Issuer
Information, any Non-Prospectus Road Show or any Blue Sky
Application, in reliance upon and in conformity with written
information concerning such Underwriter furnished to the Company
through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein, which information consists
solely of the information specified in Section 10(f). The foregoing
indemnity agreement is in addition to any liability which the
Company may otherwise have to any Underwriter or to any director,
officer, employee or controlling person of that Underwriter.
(b) The Selling Shareholders, severally and not jointly in
proportion to the number of Shares to be sold by each of them
hereunder, shall indemnify and hold harmless each Underwriter, its
directors, officers and employees, and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the
Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability
or action relating to purchases and sales of Shares), to which that
Underwriter, director, officer, employee or controlling person may
become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of
a material fact contained in any Preliminary Prospectus, the
Registration Statement, the Prospectus, any Issuer Free Writing
Prospectus or in any amendment or supplement thereto or in any
Permitted Issuer Information, any Non-Prospectus Road Show, any Blue
Sky Application or any "free writing prospectus" (as defined in Rule
405), prepared by or on behalf of the Selling Shareholder or used or
referred to by the Selling Shareholder in connection with the
offering of the Shares in violation of Section 7(d) (a "SELLING
SHAREHOLDER FREE WRITING PROSPECTUS") or (ii) the omission or
alleged omission
34
to state in any Preliminary Prospectus, Registration Statement, the
Prospectus, any Issuer Free Writing Prospectus or in any amendment
or supplement thereto or in any Permitted Issuer Information, any
Non-Prospectus Road Show, any Blue Sky Application or any Selling
Shareholder Free Writing Prospectus, any material fact required to
be stated therein or necessary to make the statements therein not
misleading, and shall reimburse each Underwriter, its directors,
officers and employees and each such controlling person promptly
upon demand for any legal or other expenses reasonably incurred by
that Underwriter, its directors, officers and employees or
controlling persons in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred. The liability of each
Selling Shareholder under the indemnity agreement contained in this
paragraph shall be limited to an amount equal to the total proceeds
from the offering of the Shares purchased under the Agreement
received by such Selling Shareholder, as set forth in the table on
the cover page of the Prospectus; provided, however, that each
Selling Shareholder shall be liable in any such case only to the
extent that any such loss, claim, damage, liability or action arises
out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement, the Prospectus, any Issuer
Free Writing Prospectus or any such amendment or supplement or in
any Permitted Issuer Information or any Non-Prospectus Road Show in
reliance upon and in conformity with written information concerning
such Selling Shareholder furnished to the Company by such Selling
Shareholder specifically for inclusion therein, which information is
limited to the information set forth in the Prospectus under the
caption "Principal and Selling Shareholders," or arises out of, or
is based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in any Selling Shareholder Free
Writing Prospectus.. The foregoing indemnity agreement is in
addition to any liability that the Selling Shareholders may
otherwise have to any Underwriter or any officer, employee or
controlling person of that Underwriter.
(c) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company, each Selling Shareholder,
their respective directors, officers and employees, and each person,
if any, who controls the Company or such Selling Shareholder within
the meaning of Section 15 of the Securities Act, from and against
any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company, such Selling
Shareholder or any such director, officer, employee or controlling
person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement, the Prospectus, any Issuer
Free Writing Prospectus or in any amendment or supplement thereto or
in any Non-Prospectus Road Show or Blue Sky Application, or (ii) the
omission or alleged omission to state in any Preliminary Prospectus,
the Registration Statement, the Prospectus, any Issuer Free Writing
Prospectus or in any amendment or supplement thereto or in any
Non-Prospectus Road Show or Blue Sky Application, any material fact
required
35
to be stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information concerning such Underwriter furnished to the Company
through the Representatives by or on behalf of that Underwriter
specifically for inclusion therein, which information is limited to
the information set forth in Section 10(f). The foregoing indemnity
agreement is in addition to any liability that any Underwriter may
otherwise have to the Company, such Selling Shareholder or any such
director, officer, employee or controlling person.
(d) Promptly after receipt by an indemnified party under this
Section 10 of notice of any claim or the commencement of any action,
the indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under this Section 10, notify
the indemnifying party in writing of the claim or the commencement
of that action; provided, however, that the failure to notify the
indemnifying party shall not relieve it from any liability which it
may have under this Section 10 except to the extent it has been
materially prejudiced by such failure and, provided, further, that
the failure to notify the indemnifying party shall not relieve it
from any liability which it may have to an indemnified party
otherwise than under this Section 10. If any such claim or action
shall be brought against an indemnified party, and it shall notify
the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes,
jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably satisfactory to
the indemnified party. After notice from the indemnifying party to
the indemnified party of its election to assume the defense of such
claim or action, the indemnifying party shall not be liable to the
indemnified party under this Section 10 for any legal or other
expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that the Representatives shall
have the right to employ counsel to represent jointly the
Representatives and those other Underwriters and their respective
directors, officers, employees and controlling persons who may be
subject to liability arising out of any claim in respect of which
indemnity may be sought by the Underwriters against the Company or
any Selling Shareholder under this Section 10 if (i) the Company,
the Selling Shareholders and the Underwriters shall have so mutually
agreed; (ii) the Company and the Selling Shareholders have failed
within a reasonable time to retain counsel reasonably satisfactory
to the Underwriters; (iii) the Underwriters and their respective
directors, officers, employees and controlling persons shall have
reasonably concluded that there may be legal defenses available to
them that are different from or in addition to those available to
the Company and the Selling Shareholders; or (iv) the named parties
in any such proceeding (including any impleaded parties) include
both the Underwriters or their respective directors, officers,
employees or controlling persons, on the one hand, and the Company
and the Selling Shareholders, on the other hand, and representation
of both sets of parties by the same counsel would be inappropriate
due to actual or potential differing interests between them, and in
any such event the fees and expenses of
36
such separate counsel shall be paid by the Company and the Selling
Shareholders. No indemnifying party shall (i) without the prior
written consent of the indemnified parties (which consent shall not
be unreasonably withheld), settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which
indemnification or contribution may be or could have been sought
hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim,
action, suit or proceeding and does not include any findings of fact
or admissions of fault or culpability as to the indemnified party,
or (ii) be liable for any settlement of any such action effected
without its written consent (which consent shall not be unreasonably
withheld), but if settled with the consent of the indemnifying party
or if there be a final judgment for the plaintiff in any such
action, the indemnifying party agrees to indemnify and hold harmless
any indemnified party from and against any loss or liability by
reason of such settlement or judgment.
(e) If the indemnification provided for in this Section 10
shall for any reason be unavailable to or insufficient to hold
harmless an indemnified party under Section 10(a), 10(b), 10(c) or
10(g) in respect of any loss, claim, damage or liability, or any
action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be
appropriate to reflect the relative benefits received by the Company
and the Selling Shareholders, on the one hand, and the Underwriters,
on the other, from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also
the relative fault of the Company and the Selling Shareholders, on
the one hand, and the Underwriters, on the other, with respect to
the statements or omissions that resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits
received by the Company and the Selling Shareholders, on the one
hand, and the Underwriters, on the other, with respect to such
offering shall be deemed to be in the same proportion as the total
net proceeds from the offering of the Shares purchased under this
Agreement (before deducting expenses) received by the Company and
the Selling Shareholders, as set forth in the table on the cover
page of the Prospectus, on the one hand, and the total underwriting
discounts and commissions received by the Underwriters with respect
to the shares of the Shares purchased under this Agreement, as set
forth in the table on the cover page of the Prospectus, on the other
hand. The relative fault shall be determined by reference to whether
the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to
information supplied by the Company, the Selling Shareholders or the
Underwriters, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Selling
Shareholders and
37
the Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section 10(e) were to be determined
by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation that
does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 10(e) shall be deemed to
include, for purposes of this Section 10(e), any legal or other
expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 10(e), no Underwriter
shall be required to contribute any amount in excess of the amount
by which the net proceeds from the sale of the Shares underwritten
by it exceeds the amount of any damages that such Underwriter has
otherwise paid or become liable to pay by reason of any 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 Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as
provided in this Section 10(e) are several in proportion to their
respective underwriting obligations and not joint.
(f) The Underwriters severally confirm and the Company
acknowledges and agrees that the statements regarding delivery of
shares by the Underwriters set forth on the cover page of, and the
concession and reallowance figures and the paragraph relating to
stabilization by the Underwriters appearing under the caption
"Underwriting" in, the most recent Preliminary Prospectus and the
Prospectus are correct and constitute the only information
concerning such Underwriters furnished in writing to the Company by
or on behalf of the Underwriters specifically for inclusion in any
Preliminary Prospectus, the Registration Statement, the Prospectus,
any Issuer Free Writing Prospectus or in any amendment or supplement
thereto or in any Non-Prospectus Road Show.
(g) The Company shall indemnify and hold harmless Deutsche
Bank Securities Inc. (including their respective directors, officers
and employees) and each person, if any, who controls Deutsche Bank
Securities Inc. within the meaning of Section 15 of the Securities
Act ("REPRESENTATIVES ENTITIES"), from and against any loss, claim,
damage or liability or any action in respect thereof to which any of
the Representatives Entities may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action (i) arises out of, or is based upon, any untrue
statement or alleged untrue statement of a material fact contained
in any material prepared by or with the approval of the Company for
distribution to Directed Share Participants in connection with the
Directed Share Program or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, (ii) arises out of,
or is based upon, the failure of the Directed Share Participant to
pay for and accept delivery of Directed Shares that the Directed
Share Participant agreed to purchase or (iii) is otherwise related
to the Directed Share Program; provided that the Company shall not
be
38
liable under this clause (iii) for any loss, claim, damage,
liability or action that is determined in a final judgment by a
court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of the Representatives Entities.
The Company shall reimburse the Representatives Entities promptly
upon demand for any legal or other expenses reasonably incurred by
them in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as
such expenses are incurred.
11. Defaulting Underwriters. If, on any Delivery Date, any
Underwriter defaults in the performance of its obligations under this Agreement,
the remaining non-defaulting Underwriters shall be obligated to purchase the
Shares that the defaulting Underwriter agreed but failed to purchase on such
Delivery Date in the respective proportions which the number of shares of the
Firm Shares set forth opposite the name of each remaining non-defaulting
Underwriter in Schedule 1 hereto bears to the total number of shares of the Firm
Shares set forth opposite the names of all the remaining non-defaulting
Underwriters in Schedule 1 hereto; provided, however, that the remaining
non-defaulting Underwriters shall not be obligated to purchase any of the Shares
on such Delivery Date if the total number of Shares that the defaulting
Underwriter or Underwriters agreed but failed to purchase on such date exceeds
9.09% of the total number of Shares to be purchased on such Delivery Date, and
any remaining non-defaulting Underwriter shall not be obligated to purchase more
than 110% of the number of Shares that it agreed to purchase on such Delivery
Date pursuant to the terms of Section 3. If the foregoing maximums are exceeded,
the remaining non-defaulting Underwriters, or those other underwriters
satisfactory to the Representatives who so agree, shall have the right, but
shall not be obligated, to purchase, in such proportion as may be agreed upon
among them, all the Shares to be purchased on such Delivery Date. If the
remaining Underwriters or other underwriters satisfactory to the Representatives
do not elect to purchase the shares that the defaulting Underwriter or
Underwriters agreed but failed to purchase on such Delivery Date, this Agreement
(or, with respect to any Option Shares Delivery Date, the obligation of the
Underwriters to purchase, and of the Company to sell, the Option Shares) shall
terminate without liability on the part of any non-defaulting Underwriter or the
Company or the Selling Shareholders, except that the Company will continue to be
liable for the payment of expenses to the extent set forth in Sections 8 and 13.
As used in this Agreement, the term "Underwriter" includes, for all purposes of
this Agreement unless the context requires otherwise, any party not listed in
Schedule 1 hereto that, pursuant to this Section 11, purchases Shares that a
defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of
any liability it may have to the Company and the Selling Shareholders for
damages caused by its default. If other Underwriters are obligated or agree to
purchase the Shares of a defaulting or withdrawing Underwriter, either the
Representatives or the Company may postpone the Delivery Date for up to seven
full business days in order to effect any changes (including the prompt filing
by the Company of any amendments or supplement that in the opinion of counsel
for the Company or counsel for the Underwriters may be necessary in the
Registration Statement, the Prospectus or in any other document or arrangement.
12. Termination. The obligations of the Underwriters hereunder may
be terminated by the Representatives by notice given to and received by the
Company and the
39
Selling Shareholders prior to delivery of and payment for the Firm Shares if,
prior to that time, any of the events described in Sections 9(n) and 9(o) shall
have occurred or if the Underwriters shall decline to purchase the Shares for
any reason permitted under this Agreement.
13. Reimbursement of Underwriters' Expenses. If the Company or any Selling
Shareholder shall fail to tender the Shares for delivery to the Underwriters by
reason of any failure, refusal or inability on the part of the Company or any
Selling Shareholder to perform any agreement on their part to be performed, or
because any other condition to the Underwriters' obligations hereunder required
to be fulfilled by the Company or the Selling Shareholders is not fulfilled for
any reason or (b) the Underwriters shall decline to purchase the Shares for any
reason permitted under this Agreement, the Company will reimburse the
Underwriters for all reasonable out-of-pocket expenses (including fees and
disbursements of counsel) incurred by the Underwriters in connection with this
Agreement and the proposed purchase of the Shares, and upon demand the Company
shall pay the full amount thereof to the Representatives. If this Agreement is
terminated pursuant to Section 11 by reason of the default of one or more
Underwriters, the Company shall not be obligated to reimburse any defaulting
Underwriter on account of those expenses.
14. Research Analyst Independence. The Company acknowledges that the
Underwriters' research analysts and research departments are required to be
independent from their respective investment banking divisions and are subject
to certain regulations and internal policies, and that such Underwriters'
research analysts may hold views and make statements or investment
recommendations and/or publish research reports with respect to the Company
and/or the offering that differ from the views of their respective investment
banking divisions. The Company and the Selling Shareholders hereby waive and
release, to the fullest extent permitted by law, any claims that the Company or
the Selling Shareholders may have against the Underwriters with respect to any
conflict of interest that may arise from the fact that the views expressed by
their independent research analysts and research departments may be different
from or inconsistent with the views or advice communicated to the Company or the
Selling Shareholders by such Underwriters' investment banking divisions. The
Company and the Selling Shareholders acknowledge that each of the Underwriters
is a full service securities firm and as such from time to time, subject to
applicable securities laws, may effect transactions for its own account or the
account of its customers and hold long or short positions in debt or equity
securities of the companies that may be the subject of the transactions
contemplated by this Agreement.
15. No Fiduciary Duty. The Company and the Selling Shareholders acknowledge
and agree that in connection with this offering, sale of the Shares or any other
services the Underwriters may be deemed to be providing hereunder,
notwithstanding any preexisting relationship, advisory or otherwise, between the
parties or any oral representations or assurances previously or subsequently
made by the Underwriters: (i) no fiduciary or agency relationship between the
Company, the Selling Shareholders and any other person, on the one hand, and the
Underwriters, on the other, exists; (ii) the Underwriters are not acting as
advisors, expert or otherwise, to either the Company or the Selling
Shareholders, including, without limitation, with respect to the determination
of the public offering price of the Shares, and such relationship between the
Company and the Selling Shareholders, on the one hand, and the Underwriters, on
the other, is entirely and solely commercial, based on arms-length negotiations;
(iii) any duties
40
and obligations that the Underwriters may have to the Company or the Selling
Shareholders shall be limited to those duties and obligations specifically
stated herein; and (iv) the Underwriters and their respective affiliates may
have interests that differ from those of the Company and the Selling
Shareholders. The Company and the Selling Shareholders hereby waive any claims
that the Company or the Selling Shareholders may have against the Underwriters
with respect to any breach of fiduciary duty in connection with this offering.
16. Notices, Etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail or
facsimile transmission to Deutsche Bank Securities Inc., 00 Xxxx Xxxxxx,
0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000; Attention: Syndicate Manager, with a
copy to Deutsche Bank Securities Inc., 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: General Counsel, and to Xxxxxx Brothers Inc., 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Syndicate Registration (Fax:
000-000-0000), with a copy, in the case of any notice pursuant to Section
10(d), to the Director of Litigation, Office of the General Counsel, Xxxxxx
Brothers Inc., 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (Fax:
000-000-0000);
(b) if to the Company, shall be delivered or sent by mail or facsimile
transmission to the address of the Company set forth in the Registration
Statement, Attention: Xxxxx Xx (Fax: x00-000-0000-0000);
(c) if to HSBC HAV2 (III) Limited, shall be delivered or sent by mail
or facsimile transmission to HSBC Private Equity (Asia) Limited, Xxxxx 00,
0 Xxxxx'x Xxxx Xxxxxxx, Xxxx Xxxx, Xxxxxxxxx : Xxxxxx Xxxxx/Xxxxxxxx Xx
(Fax : 000-0000-0000); and
(d) if to JAFCO Asia Technology Fund II (Barbados) Limited, shall be
delivered or sent by mail or facsimile transmission to JAFCO Investment
(Asia Pacific) Limited, 0 Xxxxxxx Xxxx, #00-00, Xxxxxxxxx 000000 (Fax: +65
0000 0000).
Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof. The Company and the Selling Shareholders shall be
entitled to act and rely upon any request, consent, notice or agreement given or
made on behalf of the Underwriters by the Representatives.
17. Persons Entitled to Benefit of Agreement. This Agreement shall inure to
the benefit of and be binding upon the Underwriters, the Company, the Selling
Shareholders and their respective personal representatives and successors. This
Agreement and the terms and provisions hereof are for the sole benefit of only
those persons, except that (A) the representations, warranties, indemnities and
agreements of the Company and the Selling Shareholders contained in this
Agreement shall also be deemed to be for the benefit of the directors, officers
and employees of the Underwriters and each person or persons, if any, who
control any Underwriter within the meaning of Section 15 of the Securities Act
and (B) the
41
indemnity agreement of the Underwriters contained in Section 10(c) of this
Agreement shall be deemed to be for the benefit of the directors of the Company,
the officers of the Company who have signed the Registration Statement and any
person controlling the Company within the meaning of Section 15 of the
Securities Act. Nothing in this Agreement is intended or shall be construed to
give any person, other than the persons referred to in this Section 17, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
18. Submission to Jurisdiction, Etc. The Company and each Selling
Shareholder hereby submit to the non-exclusive jurisdiction of the U.S. federal
and New York state courts in the Borough of Manhattan, The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. The parties hereby irrevocably and
unconditionally waive any objection to the laying of venue of any lawsuit,
action or other proceeding in such courts, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such lawsuit, action or other proceeding brought in any such court has been
brought in an inconvenient forum. The Company and each Selling Shareholder
irrevocably appoint CT Corporation System, 000 Xxxxxx Xxxxxx, Xxx Xxxx, X.X.
00000, as its authorized agent in the Borough of Manhattan, The City of New
York, New York upon which process may be served in any such suit or proceeding,
and agrees that service of process upon such agent, and written notice of said
service to the Company or the Selling Shareholder, as the case may be, by the
person serving the same to the address provided in Section 16 shall be deemed in
every respect effective service of process upon the Company or the Selling
Shareholder in any such suit or proceeding. The Company and each Selling
Shareholder further agree to take any and all actions as may be necessary to
maintain such designation and appointment of such agent in full force and effect
for a period of seven years from the date of this Agreement.
19. Waiver of Immunity. With respect to any suit or proceeding arising out
of or relating to this Agreement or the transactions contemplated hereby, each
party irrevocably waives, to the fullest extent permitted by applicable law, all
immunity (whether on the basis of sovereignty or otherwise) from jurisdiction,
service of process, attachment (both before and after judgment) and execution to
which it might otherwise be entitled, and with respect to any such suit or
proceeding, each party waives any such immunity in any court of competent
jurisdiction, and will not raise or claim or cause to be pleaded any such
immunity at or in respect of any such suit or proceeding, including, without
limitation, any immunity pursuant to the U.S. Foreign Sovereign Immunities Act
of 1976, as amended.
20. Judgment Currency. The obligation of the Company and each Selling
Shareholder in respect of any sum due to any Underwriter under this Agreement
shall, notwithstanding any judgment in a currency other than U.S. dollars or any
other applicable currency (the "JUDGMENT CURRENCY"), not be discharged until the
first business day, following receipt by such Underwriter of any sum adjudged to
be so due in the Judgment Currency, on which (and only to the extent that) such
Underwriter may in accordance with normal banking procedures purchase U.S.
dollars or any other applicable currency with the Judgment Currency; if the U.S.
dollars or other applicable currency so purchased are less than the sum
originally due to such Underwriter hereunder, the Company and each Selling
Shareholder agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify such Underwriter against such
42
loss. If the U.S. dollars or other applicable currency so purchased are greater
than the sum originally due to such Underwriter hereunder, such Underwriter
agrees to pay to the Company or the Selling Shareholder, as the case may be, an
amount equal to the excess of the U.S. dollars or other applicable currency so
purchased over the sum originally due to such Underwriter hereunder.
21. Survival. The respective indemnities, representations, warranties and
agreements of the Company, the Selling Shareholders and the Underwriters
contained in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Shares and shall remain in full force and effect, regardless of any
investigation made by or on behalf of any of them or any person controlling any
of them.
22. Definition of the Terms "Business Day" and "Subsidiary". For purposes
of this Agreement, (a) "BUSINESS DAY" means each Monday, Tuesday, Wednesday,
Thursday or Friday that is not a day on which banking institutions in New York
are generally authorized or obligated by law or executive order to close and (b)
"SUBSIDIARY" has the meaning set forth in Rule 405 under the Securities Act.
23. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
24. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
25. Headings. The headings herein are inserted for convenience of reference
only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
43
If the foregoing correctly sets forth the agreement among the Company, the
Selling Shareholders and the Underwriters, please indicate your acceptance in
the space provided for that purpose below.
Very truly yours,
CANADIAN SOLAR INC.
By:
----------------------------------
Name:
Title:
HSBC HAV2 (III) LIMITED
By:
----------------------------------
Name:
Title:
JAFCO ASIA TECHNOLOGY FUND II
(BARBADOS) LIMITED
By:
----------------------------------
Name:
Title:
44
Accepted:
DEUTSCHE BANK SECURITIES INC.
XXXXXX BROTHERS INC.
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
DEUTSCHE BANK SECURITIES INC.
By:
--------------------------
Authorized Representative
By:
--------------------------
Authorized Representative
XXXXXX BROTHERS INC.
By:
--------------------------
Authorized Representative
SCHEDULE 1
Number of Shares of
Underwriters Firm Shares
----------------------------------------------------- -------------------
Deutsche Bank Securities Inc. ................
Xxxxxx Brothers Inc. .........................
Canadian Imperial Bank of Commerce ...........
Xxxxx Xxxxxxx & Co............................ -------------------
Total......................................... ===================
SCHEDULE 2
NUMBER OF NUMBER OF
FIRM SHARES NET PROCEEDS - OPTIONAL SHARES NET PROCEEDS -
SELLING SHAREHOLDERS TO BE SOLD FIRM SHARES TO BE SOLD* OPTIONAL SHARES*
-------------------- ---------- ------------ --------------- ----------------
HSBC HAV2 (III)
LIMITED
JAFCO ASIA
TECHNOLOGY FUND II
----------- -------------- --------------- ----------------
Total $ $
=========== ============== =============== ================
*Assumes option is exercised in full.
SCHEDULE 3
PERSONS DELIVERING LOCK-UP AGREEMENTS
Directors
Xxxxx Xxxxxxx Xx
Xxxxxx Xxxxx
Xxxx Xxx
Xxxxxx X. XxXxxxxxx
Xxxx-Xxxx Johanssom
Officers
Xxxxxxx Xxxxxxxxxxx
Xxxxxx Xxxxxxxxx
Xxxxx Xx
Bencheng Li
Chengbai Xxxx
Xxxxxx Wang
Shanglin Shi
Xxxxxxx Xxxxx
Xxxxxx Xxxxx
Genmao Chen
Shareholders
ATS Automation Tooling Systems Inc.
SCHEDULE 4
1. ISSUER USE FREE WRITING PROSPECTUSES (INCLUDED IN THE GENERAL DISCLOSURE
PACKAGE)
"Issuer Free Writing Prospectus" includes each of the following
documents:
[1. Final term sheet, dated ___________, a copy of which is attached
hereto.]
[2. ]
2. OTHER INFORMATION INCLUDED IN THE GENERAL DISCLOSURE PACKAGE
The following information is also included in the General Disclosure
Package:
1. The initial price to the public of the Shares.
2.
EXHIBIT A
LOCK-UP LETTER AGREEMENT
DEUTSCHE BANK SECURITIES INC.
00 Xxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
XXXXXX BROTHERS INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
As Representatives of the several
Underwriters named in Schedule 1,
Ladies and Gentlemen:
The undersigned understands that you and certain other firms (the
"UNDERWRITERS") propose to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") providing for the purchase by the Underwriters of
shares (the "SHARES") of Common Shares, no par value per share (the "COMMON
SHARES"), of Canadian Solar Inc., a Canadian corporation (the "COMPANY"), and
that the Underwriters propose to reoffer the Shares to the public (the
"OFFERING").
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of Xxxxxx
Brothers Inc. and Deutsche Bank Securities Inc., on behalf of the Underwriters,
the undersigned will not, directly or indirectly, (1) offer for sale, sell,
pledge, or otherwise dispose of (or enter into any transaction or device that is
designed to, or could be expected to, result in the disposition by any person at
any time in the future of) any shares of Common Shares (including, without
limitation, shares of Common Shares that may be deemed to be beneficially owned
by the undersigned in accordance with the rules and regulations of the
Securities and Exchange Commission and shares of Common Shares that may be
issued upon exercise of any options or warrants) or securities convertible into
or exercisable or exchangeable for Common Shares (other than the Shares), (2)
enter into any swap or other derivatives transaction that transfers to another,
in whole or in part, any of the economic benefits or risks of ownership of
shares of Common Shares, whether any such transaction described in clause (1) or
(2) above is to be settled by delivery of Common Shares or other securities, in
cash or otherwise, (3) make any demand for or exercise any right or cause to be
filed a registration statement, including any amendments thereto, with respect
to the registration of any shares of Common Shares or securities convertible
into or exercisable or exchangeable for Common Shares or any other securities of
the Company or (4) publicly disclose the intention to do any of the foregoing,
for a period
commencing on the date hereof and ending on the 180th day after the date of the
Prospectus relating to the Offering (such 180-day period, the "LOCK-UP PERIOD").
Notwithstanding the foregoing, if (1) during the last 17 days of the
Lock-Up Period, the Company issues an earnings release or material news or a
material event relating to the Company occurs or (2) prior to the expiration of
the Lock-Up Period, the Company announces that it will release earnings results
during the 16-day period beginning on the last day of the Lock-Up Period, then
the restrictions imposed by this Lock-Up Letter Agreement shall continue to
apply until the expiration of the 18-day period beginning on the issuance of the
earnings release or the announcement of the material news or the occurrence of
the material event. The undersigned hereby further agrees that, prior to
engaging in any transaction or taking any other action that is subject to the
terms of this Lock-Up Letter Agreement during the period from the date of this
Lock-Up Letter Agreement to and including the 34th day following the expiration
of the Lock-Up Period, it will give notice thereof to the Company and will not
consummate such transaction or take any such action unless it has received
written confirmation from the Company that the Lock-Up Period (as such may have
been extended pursuant to this paragraph) has expired.
In furtherance of the foregoing, the Company and its transfer agent are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Letter Agreement.
[Notwithstanding anything to the contrary contained herein, in the case of
ATS Automation Tooling Systems Inc. ("ATS"), the foregoing restrictions shall
not apply to (i) the transfer of Common Shares to an affiliate of ATS or to
Photowatt Technologies Inc. or its affiliates (provided that any such transferee
agrees in writing to be bound by the restrictions set forth herein until the
expiration of the Lock-Up Period, including any extension thereof as described
above), (ii) any Common Shares acquired by ATS in the open market or (iii)
participation by ATS in any tender offer involving the Common Shares.]
Notwithstanding anything to the contrary contained herein, in the case of
Xxxxx (Xxxxxxx) Qu, the foregoing restrictions shall not apply to pre-existing
pledges of Common Shares as of the date hereof as disclosed in the Prospectus
relating to the Offering, and any enforcement of such pledges.]
It is understood that, if the Company notifies the Underwriters that it
does not intend to proceed with the Offering, if the Underwriting Agreement does
not become effective, or if the Underwriting Agreement (other than the
provisions thereof which survive termination) shall terminate or be terminated
prior to payment for and delivery of the Shares, the undersigned will be
released from its obligations under this Lock-Up Letter Agreement.
The undersigned understands that the Company and the Underwriters will
proceed with the Offering in reliance on this Lock-Up Letter Agreement.
2
Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will only be made pursuant to
an Underwriting Agreement, the terms of which are subject to negotiation between
the Company, the Selling Shareholders named therein and the Underwriters.
[Signature page follows]
3
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement and that,
upon request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding upon the heirs, personal representatives, successors and assigns of
the undersigned.
Very truly yours,
By: ______________________________
Name:
Title:
Dated: _______________
1
SCHEDULE B-1
FORM OF OPINION OF XXXXXX & XXXXXXX LLP
Subject to customary assumptions and qualifications:
(i) The Underwriting Agreement has been duly executed and delivered by the
Company and the Selling Shareholders under the laws of the State of New York.
(ii) The execution and delivery of the Underwriting Agreement and the
issuance and sale of the Shares by the Company to you and the other Underwriters
pursuant to the Underwriting Agreement on the date hereof do not:
(a) violate any United States federal or New York statute, rule or
regulation applicable to the Company; or
(b) require any consents, approvals, or authorizations to be
obtained by the Company from, or any registrations, declarations or
filings to be made by the Company with, any governmental authority under
any United States federal or New York statute, rule or regulation
applicable to the Company that have not been obtained or made.
(iii) The Registration Statement has become effective under the Act. With
your consent, based solely on a telephonic confirmation by a member of the Staff
of the Commission on November [-], 2006, we confirm that no stop order
suspending the effectiveness of the Registration Statement has been issued under
the Act and no proceedings therefor have been initiated by the Commission. The
Prospectus has been filed in accordance with Rule 424(b) under the Act.
(iv) The Registration Statement at [-], 2006, and the Prospectus, as of
its date, appeared on their face to be appropriately responsive in all material
respects to the requirements for registration statements on Form F-1 under the
Act and the rules and regulations of the Commission thereunder; it being
understood, however, that we express no view with respect to Regulation S T or
the financial statements, schedules, or other financial data, included in,
incorporated by reference in, or omitted from, the Registration Statement or the
Prospectus. For purposes of this paragraph, we have assumed that the statements
made in the Registration Statement and the Prospectus are correct and complete.
(v) Upon indication by book entry that the Shares being sold by the
Selling Shareholders have been credited to a securities account maintained by
the Representatives at the Depository Trust Company ("DTC") and payment therefor
in accordance with the Underwriting Agreement, the Representatives will acquire
a security entitlement on behalf of the several Underwriters with respect to
such Shares and, under the NY UCC, an action based on an adverse claim to such
securities entitlement, whether framed in conversion, replevin, constructive
trust, equitable lien or other theory may not be asserted against the
Representatives.
(vi) The statements in the Prospectus under the captions "Shares Eligible
for Future Sale" insofar as they purport to describe or summarize certain
provisions of the
2
SCHEDULE B-1
documents or U.S. federal laws referred to therein, are accurate descriptions or
summaries in all material respects.
(vii) To the best of our knowledge, there are no contracts or documents of
a character required to be described in the Registration Statement or Prospectus
or to be filed as exhibits to the Registration Statement that are not described
or filed.
(viii) The Company is not, and immediately after giving effect to the sale
of the Shares in accordance with the Underwriting Agreement and the application
of the proceeds as described in the Prospectus under the caption "Use of
Proceeds," will not be required to be registered as an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(ix) Pursuant to Section [18] of the Underwriting Agreement, under the
laws of the State of New York each of the Company and the Selling Shareholders
has validly (i) chosen New York law to govern its rights and duties under the
Underwriting Agreement, (ii) submitted to the personal jurisdiction of state and
federal courts located in the City and County of New York in connection with an
action or proceeding arising out of or related to the Underwriting Agreement,
(iii) to the extent permitted by law, waived any objection to the venue of a
proceeding in any such court and (iv) appointed CT Corporation System as its
initial authorized agent for the purpose described in Section [18].
(x) Service of process in the manner described in Section [18] of the
Underwriting Agreement will be effective to confer valid personal jurisdiction
over the Company and the Selling Shareholders in connection with an action or
proceeding arising out of or related to the Underwriting Agreement in any such
court.
(xi) The statements in the Prospectus under the caption "Taxation - United
States Federal Taxation," insofar as they purport to summarize certain
provisions of the statutes and regulations referred to therein, are accurate
summaries in all material respects.
(xii) No facts came to such counsel's attention that caused it to believe
that:
- the Registration Statement, at the time it became effective on November
[-], 2006, including the information deemed to be a part of the Registration
Statement pursuant to Rule 430A under the Act, 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;
- the Preliminary Prospectus, as of [-] New York time on November [-],
2006 [(together with the Specified IFWPs)], contained an untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; or
- the Prospectus, as of its date or as of the date hereof, 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.
3
SCHEDULE B-2
FORM OF OPINION OF SELLING SHAREHOLDERS' COUNSEL
(i) Each Selling Shareholder is duly incorporated and validly existing
under the laws of the jurisdiction of its incorporation and is in good standing.
(ii) Each Selling Shareholder has full right, power and authority,
corporate or otherwise, to enter into this Agreement. The execution, delivery
and performance of this Agreement by each Selling Shareholder and the
consummation by each Selling Shareholder of the transactions contemplated hereby
do not (i) 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, license or other agreement or instrument known to such
counsel to which any Selling Shareholder is a party or by which any Selling
Shareholder is bound or to which any of the property or assets of any Selling
Shareholder is subject, (ii) result in any violation of the provisions of the
charter or by-laws (or similar organizational documents) of any Selling
Shareholder or (iii) result in any violation of any statute or any rule or
regulation, or any order known to such counsel issued by any court or
governmental agency or body having jurisdiction over any Selling Shareholder or
the property or assets of any Selling Shareholder.
(iii) No consent, approval, authorization or order of, or filing or
registration with, any court or governmental agency or body having jurisdiction
over any Selling Shareholder or the property or assets of any Selling
Shareholder is required for the execution, delivery and performance of this
Agreement by any Selling Shareholder and the consummation by any Selling
Shareholder of the transactions contemplated hereby.
(iv) The execution and delivery and performance by each Selling
Shareholder of the Agreement will not (A) violate, breach, or result in a
default under, any agreement or other instrument governed by the law of the
jurisdiction of incorporation of such Selling Shareholder, or (B) violate any
statute or any rule or regulation under the law of the jurisdiction of
incorporation of such Selling Shareholder that has been issued pursuant to any
such statute or, to our knowledge, any order of any governmental agency or body
having jurisdiction over such Selling Shareholder.
(v) The choice of New York law as the governing law of the Agreement is a
valid choice of law and would be recognized and given effect to in any action
brought before a court of competent jurisdiction in the jurisdiction of
incorporation of each Selling Shareholder.
(vi) The courts of the jurisdiction of incorporation of each Selling
Shareholder would recognize as a valid judgment, a final and conclusive judgment
in personam obtained in the U.S. federal or New York courts against such Selling
Shareholder based upon the Agreement under which a sum of money is payable.
(vii) The appointment of CT Corporation System to accept service of
process in the United States and the waiver by each Selling Shareholder of any
objection to the venue of a proceeding in U.S. federal and New York courts
pursuant to the Agreement is legal, valid and binding on such Selling
Shareholder.
4
(viii) It is not necessary or desirable to ensure the enforceability in
the jurisdiction of incorporation of the Selling Shareholders of the Agreement
that they be registered in any register kept by, or filed with, any governmental
authority or regulatory body in such jurisdiction.
(ix) The Agreement is in an acceptable legal form under the laws of the
jurisdiction of incorporation of each Selling Shareholder for enforcement
thereof against such Selling Shareholder in such jurisdiction in accordance with
its terms.
(x) No Selling Shareholder is entitled to any immunity under the laws of
the jurisdiction of its incorporation, whether characterized as sovereign
immunity or otherwise, from any legal proceedings to enforce the Agreement in
respect of itself or its property.
In rendering such opinion, such counsel may state that their opinion is
limited to matters governed by the federal laws of the United States of America
and the laws of the State of New York or such other jurisdiction in which the
Selling Shareholder is incorporated and that such counsel is not admitted in
Canada or the PRC.
5
SCHEDULE B-3
FORM OF OPINION OF WEIRFOULDS LLP
(i) The Company has been continued and organized, and is existing
under the Canada Business Corporations Act (the "CBCA"). The Company has all
necessary corporate power and authority to own or lease its property and to
carry on its business as described in the Prospectus.
(ii) The Company is duly registered or qualified to transact
business and is in good standing in the province of Ontario.
(iii) The Company has all necessary corporate power and authority to
execute and deliver the Underwriting Agreement and to perform its obligations
thereunder.
(iv) The execution and delivery of the Underwriting Agreement by the
Company and the performance of its obligations thereunder have been duly
authorized by all necessary corporate action on the part of the Company.
(v) The Underwriting Agreement has been duly executed by the Company
and, to the extent that delivery of such agreement is governed by the laws of
the Province of Ontario or the federal laws of Canada applicable therein, duly
delivered by the Company.
(vi) The execution and delivery of the Underwriting Agreement by the
Company and the performance of its obligations thereunder will not contravene,
conflict with, result in a breach of or constitute a default under, whether
after notice or lapse of time, or both, (i) the articles or by-laws of the
Company; (ii) any resolution of the directors (or any committee of directors) or
shareholders of the Company; (iii) any laws of the Province of Ontario or
federal laws of Canada applicable therein ("Ontario Law"); (iv) to the best of
our knowledge, any of the agreements or instruments the forms of which are
contained in in Exhibits 10.3, 10.9, 10.10, 10.11 and 10.2 to the Registration
Statement; or (v) to the best of our knowledge, any judgment, order or decree of
any governmental body, agency or court in Ontario having jurisdiction over the
Company or any of its subsidiaries.
(vii) The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus under the
heading "Description of Share Capital", namely an unlimited number of Common
Shares. No holder of Common Shares is or will be subject to personal liability
for any act, default, obligation or liability of the Company solely by reason of
being such a holder.
(viii) All of the Common Shares issued and outstanding immediately
prior to completion of the Offering have been duly and validly authorized and
issued, and are fully paid and non-assessable.
(ix) The Offered Shares that may be issued by the Company pursuant
to the Underwriting Agreement have been duly and validly authorized, and when
issued in accordance with the provisions of the Underwriting Agreement, will be
validly issued, and fully paid and non-assessable. The issuance of the Offered
Shares that may be issued by the Company pursuant to the Underwriting Agreement
will not be subject to any preemptive or other similar rights to
6
SCHEDULE B-3
acquire Common Shares under the articles or by-laws of the Company, or under the
CBCA, or under the Scheduled Agreements.
(x) No consent, approval, authorization or order of, or
qualification with, any governmental body or agency in Canada governed by the
laws of the Province of Ontario or the federal laws of Canada applicable therein
is required for the performance by the Company of its obligations under the
Underwriting Agreement; provided that no opinion is expressed with respect to
any offer and sale of the Offered Shares in any province or territory of Canada.
(xi) There are no restrictions on the first trade or transfer of the
Offered Shares following their issue, sale and delivery by the Company under the
articles or by-laws of the Company or the CBCA; provided that no opinion is
given with respect to any Canadian securities laws (including, without
limitation, any regulations and rules made pursuant to such laws together with
all published blanket orders, policy statements, decisions and notices of the
securities commissions in each province or territory of Canada, and the National
Policy Statements, National Instruments and Multilateral Instruments adopted and
applied by any of such jurisdictions ("Canadian Securities Laws")) that may be
applicable to any such first trade or transfer of the Offered Shares by or to
any person in any province or territory of Canada or subject to Canadian
Securities Laws.
(xii) The filing of the Registration Statement with the SEC has been
duly authorized by and on behalf of the Company.
(xiii) To the best of our knowledge, the Company has all franchises,
permits, authorizations, approvals and orders and other licenses and concessions
of and from all governmental bodies or agencies in Canada governed by the laws
of the Province of Ontario or the federal laws of Canada applicable therein that
are necessary to own or lease its properties located in Ontario and to conduct
its business as described in the Prospectus to the extent currently conducted in
Ontario except for such licenses, franchises, permits, authorizations, approvals
and orders the failure of which to obtain will not have a Material Adverse
Effect (as such term is defined in the Underwriting Agreement).
(xiv) To the best of our knowledge, other than as set forth in the
Registration Statement, there are no legal or governmental proceedings in Canada
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 a party is the subject
which, if determined adversely to the Company, would individually or in the
aggregate have a Material Adverse Effect on the current or future consolidated
financial position, shareholders' equity or results of operations of the Company
and, to the best of our knowledge, except as disclosed in the Registration
Statement, no such proceedings are threatened or contemplated by any
governmental body or agency in Canada governed by the laws of the Province of
Ontario or the federal laws of Canada applicable therein or threatened by
others.
(xv) To the best of our knowledge, the Company is not in violation
of any provision of its articles, by-laws, or other organizational documents.
7
SCHEDULE B-3
(xvi) The statements set forth in the Prospectus under "Risk Factors
-- You may have difficulties enforcing judgments obtained against us",
"Enforceability of Civil Liabilities", Management -- Duties of Directors",
"Management -- Term of Directors and Executive Officers", "Management --
Interested Transactions", "Management -- Remuneration and Borrowing",
"Management -- Qualification", "Description of Share Capital -- Shareholders'
Rights" and "Related Party Transactions" and the statements made in the
Registration Statement under "Part II -- Information Not Required To Be
Delivered To Offerees or Purchasers -- Indemnification", insofar as such
statements constitute matters of law or legal conclusions, have been reviewed by
us and fairly present the information disclosed therein in all material
respects.
(xvii) Subject to the qualifications, assumptions and limitations
set out therein, the statements set forth in the Registration Statement under
the caption "Taxation -- Material Canadian Federal Tax Considerations" fairly
summarize, in all material respects, the principal Canadian federal income tax
considerations generally applicable to a holder of Common Shares described
therein who acquires such Common Shares pursuant to the Registration Statement
and our opinion, filed as Exhibit 8.2 to the Registration Statement, is
confirmed and the Underwriters may rely upon such opinion as if it were
addressed to them.
(xviii) The form of definitive share certificate for the Common
Shares attached hereto as Exhibit "B" has been duly approved by the Company, and
complies with the articles and by-laws of the Company and with the CBCA.
(xix) No withholding tax imposed under the federal laws of Canada or
the laws of the Province of Ontario will be required to be withheld by the
Company or payable by an Underwriter in respect of the payment by the Company of
the commissions to such Underwriter, as contemplated by the Underwriting
Agreement, provided that such Underwriter deals at arm's length with the Company
(as such term is understood for purposes of the Income Tax Act (Canada)), that
such commissions are payable in respect of services rendered by the Underwriter
wholly outside of Canada that are performed in the ordinary course of business
carried on by the Underwriter that includes the performance of such services for
a fee and that such commissions are reasonable in the circumstances.
(xx) No goods and services tax imposed under the federal laws of
Canada will be payable by the Company in respect of the payment of commissions
to an Underwriter as contemplated by the Underwriting Agreement.
(xxi) No stamp duty, documentary taxes or similar taxes are payable
by the Company under the federal laws of Canada or the laws of the Province of
Ontario in connection with the issuance, sale and delivery of Offered Shares
pursuant to the Underwriting Agreement by the Company.
(xxii) A court of competent jurisdiction in the Province of Ontario
(an "Ontario Court") would give effect, as set out in Paragraph 23 below, to the
choice of the laws of the State of New York ("New York Law") to govern the
interpretation of the Underwriting Agreement in any action before such court,
provided that such choice of law is bona fide (in the sense that it was not made
with a view to avoiding the consequences of the laws of any other jurisdiction)
and legal and provided that such choice of law is not contrary to public policy,
as such term is
8
SCHEDULE B-3
understood under Ontario Law. To the best of our knowledge, the choice of New
York Law to govern the interpretation of the Underwriting Agreement was not made
with a view to avoiding the consequences of the laws of any other jurisdiction
and would not be contrary to public policy, as such term is understood under
Ontario Law.
(xxiii) If the Underwriting Agreement is sought to be enforced in
the Province of Ontario in accordance with the laws applicable thereto as chosen
by the parties, namely New York Law, an Ontario Court would, subject to
Paragraph 22 above, upon appropriate evidence as to such law being adduced,
apply such law, provided that none of the provisions of the Underwriting
Agreement or of applicable New York Law is contrary to public policy, as that
term is understood under Ontario Law; provided, however, that, in matters of
procedure, the Ontario Law will be applied, and that an Ontario Court will
retain discretion to decline to hear such action if it is contrary to public
policy, as that term is applied by an Ontario Court, or if it is not the proper
forum to hear such an action, or if concurrent proceedings are being brought
elsewhere. Insofar as we are aware, none of the terms of the Underwriting
Agreement are contrary to public policy, as that term is understood under the
laws of the Province of Ontario, and accordingly, it would not be contrary to
public policy for an Ontario Court to hear an action or proceeding to enforce
the Underwriting Agreement in Ontario.
(xxiv) The laws of the Province of Ontario and the federal laws of
Canada applicable therein permit an action to be brought in an Ontario Court on
a final and conclusive judgment in personam of a court in the state of New York
(a "New York Court") that is subsisting and unsatisfied respecting the
enforcement of the Underwriting Agreement and that is not impeachable as void or
voidable under New York Law for a sum certain if: (A) the court rendering such
judgment had jurisdiction over the judgment debtor as recognized by the Ontario
Court (and the submission to the non-exclusive jurisdiction of the New York
Court by the Company pursuant to the Underwriting Agreement will be sufficient
for that purpose, provided that the provisions of the Underwriting Agreement
regarding the service of process on the Company are duly complied with); (B)
such judgment was not obtained by fraud or in a manner contrary to natural
justice and the enforcement thereof would not be inconsistent with public policy
as such term is understood under the laws of the Province of Ontario or contrary
to any order made by the Attorney General of Canada under the Foreign
Extraterritorial Measures Act (Canada) or by the Competition Tribunal under the
Competition Act (Canada) in respect of certain judgments referred to therein;
(C) the enforcement of such judgment does not constitute, directly or
indirectly, the enforcement of foreign revenue, expropriatory or penal laws; and
(D) the action to enforce such judgment is commenced within the applicable
limitation periods under the laws of the Province of Ontario. It would not be
contrary to public policy, as that term is understood under the laws of the
Province of Ontario, for an Ontario Court to enforce such a judgment of a New
York Court in Ontario.
(xxv) All dividends and other distributions declared and payable on
the Common Shares to be paid in Canadian dollars may under the federal laws of
Canada or the laws of the Province of Ontario be converted into foreign currency
that, subject to any applicable withholding taxes, may be freely transferred out
of Canada, without the necessity of obtaining any permit, authorization,
approval or order from any governmental body or agency in Canada governed by the
laws of the Province of Ontario or the federal laws of Canada applicable in
Ontario.
(xxvi) The Bank of New York has been duly appointed the transfer
agent and registrar for the Common Shares at its principal offices in the City
of New York.
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SCHEDULE B-4
FORM OF OPINION OF CHEN & CO. LAW FIRM
Based on the foregoing, we are of the opinion that on the date hereof:
(i) Each of the PRC Group Companies has been duly incorporated and
is validly existing as a wholly foreign owned enterprise with legal person
status in good standing under the laws of the PRC. Except such as are described
in the Prospectus, the registered capital of the PRC Group Companies has been
duly paid and is owned by Canadian Solar Inc. directly, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity or any
third-party right.
(ii) Each of the PRC Group Companies has the legal right, power and
authority (corporate and other) to own, lease and operate its properties and to
conduct its business as described in the Prospectus. Each of the PRC Group
Companies possesses such approvals, consents, waivers, sanctions,
authorizations, filings, registrations, exemptions, permissions, endorsements,
qualifications and licenses ("Approvals") of the appropriate national,
provincial, municipal and local regulatory agencies or bodies necessary to
conduct the business now operated by it as described in the Prospectus and such
Approvals are in full force and effect. To the best of our knowledge after due
and reasonable inquiries, none of the PRC Group Companies has received any oral
or written notice of proceedings relating to the suspension, revocation or
modification of any such Approval, and we are not aware, after due and
reasonable inquiries, of any reason that will cause it to reasonably believe
that such Approvals (including any that are subject to periodic renewal) will
not be renewed by the relevant PRC authority.
(iii) All Approvals in the PRC required for the establishment and
the maintenance of the enterprise legal person status of each of the PRC Group
Companies have been duly issued and obtained and all such Approvals are valid
and in full force and effect, have not been revoked, withdrawn, suspended or
cancelled and are not subject to any condition other than the timely
contribution of capital by the Company as required by PRC laws and regulations,
and the annual inspection conducted by relevant government authorities, where
applicable. Each of the PRC Group Companies has complied with all applicable
registration and filing requirements under PRC law for its establishment and the
maintenance of its status and existence as an enterprise legal person.
(iv) Each of the PRC Group Companies can legally conduct its
business as described in the Prospectus and, to the best of our knowledge after
due and reasonable inquiries, the PRC Group Companies are not in violation of
any law or regulation of the PRC, (i) their articles of association or other
constituent or organizational documents, their business licenses or (ii) 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 known to us and to which any
of the PRC Group Companies is a party or by which it or any of their respective
properties is bound except, in the case of clause (ii) above, where such
violation or default would not, in the aggregate, reasonably be expected to
result in a Material Adverse Effect on the Company and its PRC Group Companies,
taken as a whole.
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(v) Each of the PRC Group Companies has proper title or right of use
to all real property and proper 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 Prospectus or such as do not materially affect the value of
such property or do not materially interfere with the use made and proposed to
be made of such property by the PRC Group Companies; and all assets held under
lease by the PRC Group Companies are held by them under valid, subsisting and
enforceable leases, with such exceptions as do not materially interfere with the
use made and proposed to be made of such assets by the Company and its PRC Group
Companies.
(vi) Each of the PRC Group Companies has taken all necessary
corporate and other actions and fulfilled all conditions and completed all
actions and things required by applicable PRC law (including the obtaining and
possessing of all relevant Approvals, if any) for the entering into, execution,
adoption, assumption, issue, delivery or the performance of their respective
obligations under the Agreement, and the representatives of each of the PRC
Group Companies (as the case may be) have been duly authorized to do so and no
such Approval has been revoked or amended. No additional approvals are required
from the China Securities Regulatory Commission, the State Council or any other
authority in the PRC for the performance by the PRC Group Companies of the
transaction contemplated under the Agreement in accordance with the Regulations
on Mergers and Acquisitions of Domestic Enterprises by Foreign Enterprises which
came into effect on September 8, 2006 and were further clarified on September
21, 2006. No further implementing rules or clarifications, as we know, have been
promulgated by the CSRC or any other PRC authority regarding the M&A rules since
September 21, 2006.
(vii) The execution, delivery and performance by the Company of its
obligations under the Agreement do not and will not contravene or result in a
breach or violation of (a) the articles of association of any of the PRC Group
Companies; (b) any agreement, instrument, arbitration award or judgment, order
or decree, by which the Company is bound and which are known to us after due and
reasonable inquiries, of any government authority or court in the PRC; or (c),
any agreement or instrument by which the Company is bound and which is governed
by PRC law known to us after due and reasonable inquiries.
(viii) None of the PRC Group Companies is entitled to any immunity
from any legal proceedings or other legal process or from enforcement, execution
or attachment in respect of their obligations in the transactions contemplated
under the Agreement.
(ix) All dividends and other distributions declared in Renminbi and
payable by any of the PRC Group Companies to the Company may be converted into
foreign currency and transferred out of the PRC in accordance with the
applicable laws and regulations of the PRC and the articles of association of
each of the PRC Group Companies.
(x) To the best of our knowledge after due and reasonable inquiries,
there is not any action, suit, proceeding, inquiry or investigation, pending or
threatened, to which any PRC Group Company is a party, or to which the property
of such PRC Group Company is subject, before or brought by any court or
governmental agency or body in the PRC, which might reasonably be expected to
result in a Material Adverse Effect, or which might reasonably be
11
expected to materially and adversely affect the properties or assets thereof or
the consummation of the transactions contemplated in the Agreement or the
Prospectus.
(xi) The information under "Chinese Government Regulations,"
"Related Party Transactions," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Our Business" and "Risk Factors" in the
Prospectus, to the extent that it constitutes summaries of PRC law or legal
conclusions in respect of PRC law, or summaries of PRC legal proceedings, or
summarizes the terms and provisions of documents governed by PRC law, has been
reviewed by us and is correct and accurate in all material respects; and our
opinion set forth under "Enforceability of Civil Liabilities" in the Prospectus
is confirmed. To the best of our knowledge, there are no PRC statutes or
regulations that might, in the aggregate, reasonably be expected to result in a
Material Adverse Effect on the Company and the PRC Group Companies taken as a
whole except as disclosed in the Prospectus.
(xii) The choice of the laws of the State of New York as the
governing law of the Agreement is a valid choice of law under the laws of the
PRC and courts of the PRC will honor this choice of law.
(xiii) Other than the shares to be offered to a PRC tax resident as
defined by Chinese tax laws under the Directed Share Program, no transaction
tax, stamp duty or similar tax or duty or withholding or other taxes are payable
by or on behalf of the Underwriters in the PRC with respect to (a) the sale and
delivery of the Shares as contemplated by the Agreement and the Prospectus, (b)
the holding or transfer of the Shares outside the PRC or (c) the execution,
delivery or enforcement of the Agreement; under the laws of the PRC, the Company
is not a resident of the PRC and accordingly (x) if determined not carrying on a
trade or business in the PRC for PRC tax purposes, the Company will not be
subject to income tax imposed in the PRC or any subdivision thereof, other than
PRC withholding tax on its income (excluding dividends) derived from the PRC,
(y) any dividends or distributions made by the Company on the Shares will not be
subject to any PRC withholding tax and (z) a holder or beneficial owner of the
Common Shares who is not a tax resident of the PRC will not be subject to any
PRC transaction tax, stamp duty or PRC similar tax or duty or PRC withholding or
other taxes upon any disposition of the Shares.
(xiv) Any final judgment for a fixed or readily calculable sum of
money rendered by any court of the State of New York or of the United States
located in the State of New York having jurisdiction under its own domestic laws
in respect of any suit, action or proceeding against the Company based upon the
Agreement may be declared enforceable against the Company by the courts of the
PRC in accordance with the requirements of PRC Civil Procedures Law if there are
treaties between the PRC and the United States of America providing for such
enforceability or reciprocity between jurisdictions to such effect, provided
that (a) the judgment was not contrary to the legal principles, public policy,
state sovereignty or security of the PRC, (b) the judgment was not given or
obtained by fraud, (c) the judgment was not based on clear mistake of law or
fact, (d) the judgment was not directly or indirectly for the payment of taxes
or other charges of a like nature or of a fine or other penalty, (e) the
judgment was for a definite sum of money, (f) the judgment was final and
conclusive, (g) adequate service of process has been effected and the defendant
has had a reasonable opportunity to be heard, (h) such judgments do not conflict
with any other valid judgment in the same matter between the
12
same parties, and (i) an action between the same parties in the same matter is
not pending in any PRC court at the time the lawsuit is instituted in the New
York Court.
(xv) To the best of our knowledge after due and reasonable
inquiries, no PRC Group Company is in breach of the terms and conditions of any
Approvals and there are no circumstances existing which might lead to
suspension, revocation or withdrawal of any such Approvals or any conditions
attached thereto being adversely altered.
(xvi) To the best of our knowledge after due and reasonable
inquiries, none of the PRC Group Companies 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 of any of the PRC
Group Companies (as the case may be) or for the suspension, withdrawal,
revocation or cancellation of any of their respective business licenses.
(xvii) To the extent disclosed in the Prospectus, each of the PRC
Group Companies possesses valid licenses in the patents in full force and effect
or otherwise, in terms of the patents and trademark disclosed in the prospectus,
has the legal right to use, or can acquire on reasonable terms, all material
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks and
trade names currently employed by them, and to the best of our knowledge after
due and reasonable inquiries none of the PRC Group Companies has received any
notice of infringement of or conflict with asserted rights of others with
respect to any of the foregoing.
(xviii) To the best of our knowledge after due and reasonable
inquiries, the PRC Group Companies are in compliance with any and all applicable
environmental laws in the PRC.
(xix) The execution, delivery and performance of the Agreement and
the consummation of the transactions contemplated therein and in the Prospectus
(including the issuance and sale of the Shares, compliance with the terms and
provisions thereof, and the use of the proceeds from the sale of the Shares as
described in the Registration Statement and the Prospectus under the caption
"Use of Proceeds" and compliance by the Company with its obligations under the
Agreement will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or 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 PRC Group Company pursuant to any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or any other agreement or instrument governed by the laws of the PRC,
known to us, to which the Company or such PRC Group Company is a party or by
which they may be bound, or to which any of their property or assets is subject
(except for such conflicts, breaches, defaults or liens, charges or encumbrances
that would not have a Material Adverse Effect), nor will such action result in
any violation of the provisions of the articles of association or other
organizational document of any PRC Group Company or any applicable treaty, law,
statute, rule, regulation, judgment, order, writ or decree, known to us, of any
government, government instrumentality or court in the PRC, having jurisdiction
over any of the PRC Group Companies or any of their properties, assets or
operations.
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(xx) To the best of our knowledge and after due and inquiries, there
are no outstanding guarantees or contingent payment obligations of the PRC Group
Companies in respect of indebtedness of third parties except as disclosed in the
Prospectus.
(xxi) The PRC Group Companies are subject to potential civil and
commercial law suits if any and none of the PRC Group Companies and their
properties, assets or revenues has any right of immunity, on any grounds, from
any legal action, suit or proceeding, from the giving of any relief in any such
legal action, suit or proceeding, from setoff or counterclaim, from the
jurisdiction of any court, from service of process, attachment upon or prior to
judgment, or attachment in aid of execution of judgment, or from execution of a
judgment, or other legal process or proceeding for the giving of any relief, or
for the enforcement of judgment in the PRC, with respect to their respective
obligations, liabilities or any other matter under or arising out of or in
connection with the Agreement.
(xxii) All descriptions in the Prospectus of contracts and other
documents governed by or under PRC law to which the Company or any PRC Group
Company is a party are accurate in all material respects; to the best of our
knowledge after due and reasonable inquiries, there are no material franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments to which any PRC Group Company is a party and which might, in the
aggregate, reasonably be expected to result in a Material Adverse Effect on the
Company or any PRC Group Company, taken as a whole, other than those described
or referred to in the Prospectus and the Registration Statement.
(xxiii) To the best of our knowledge after appropriate
investigation, none of the PRC Group Companies is in violation of its articles
of association or other organizational document and no default by any PRC Group
Company exists in the due performance or observance of any material obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement or
instrument governed by PRC law that is described or referred to in the
Prospectus.
(xxiv) After due and reasonable inquiries, no facts insofar as they
relate to matters of or relating to PRC law, PRC legal proceedings, or
agreements or documents governed by PRC law have come to our attention which
would lead us to believe that (i) the Registration Statement, at the time when
it became effective, or any amendment thereof made prior to the Closing Date, as
of the date of such amendment, contained any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, (ii) the Prospectus, as of its
date (or any amendment thereof or supplement thereto made prior to the
applicable Delivery Date as of the date of such amendment or supplement) and as
of the applicable Delivery Date, contained or contains an untrue statement of a
material fact or omitted or omits to state any 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 or (iii) the most
recent Preliminary Prospectus, together with the Issuer Free Writing
Prospectuses set forth on a schedule to such opinion acceptable to counsel to
the Underwriters, as of the Applicable Time, and except that the price of the
Stock and disclosures directly relating thereto are included on the cover page
of the Prospectus, contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or
14
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
We hereby consent to the use of this opinion in, and the filing of such opinion
as an exhibit to, the above-mentioned Registration Statement and to the
reference to our name under the headings "Risk Factors", "Enforceability of
Civil Liabilities", and "Legal Matters" in the Prospectus included in such
Registration Statement.
In rendering such opinion, we may rely, (as to matters of fact but
not as to legal conclusions), to the extent we deem proper, on certificates and
confirmations of responsible officers of the Company or any PRC Group Company
and public officials.
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